Engaging in Strategic Planning

The process of strategic planning involves several distinct but interrelated processes, which include:

• Assessing an organization's current situation.
• Envisioning and articulating an organization's desired future. 
• Formulating a strategy and identifying the strategic objectives to achieve it. 
• Implementing the strategy. 
• Monitoring the strategy to assure it is successfully implemented.

This article defines strategic planning and its benefits for organizations and outlines the steps in performing effective strategic planning. It provides practical tips for implementing strategic planning programs and closes with the discussion of the role of HR professionals in strategic planning, including how to approach strategic planning within the HR function itself.

Definition of Strategic Planning

Strategic planning is the process of identifying an organization's long-term goals and objectives and then determining the best ways to achieve them. The overall goal of strategic planning is to achieve competitive advantage (in the private sector) or efficiency and excellence (in the public and nonprofit sectors) through comprehensive, long-range planning.

Strategic planning has been characterized as a process that:

• Provides a roadmap for managing continuous change and securing an enduring future for an organization. 
• Determines where an organization is going so all organizational efforts can be pointed in that direction. 
• Involves long-term planning for periods generally ranging from three years up to two decades. 
• Involves major decisions, long-term commitments and a large number of resources.
• Avoids costly and disruptive surprises that prevent goals from being achieved and deals with issues in a timelier fashion to avoid crises. 

Strategic planning is distinguished from tactical planning, which is a process focused on courses of action to achieve short-term goals—usually within a year or less. Although strategic and tactical plans are developed separately, they are inseparable in achieving business success

Benefits of Strategic Planning

The long-term benefits of strategic planning are implicit in the definitions stated above. However, strategic planning also produces several benefits for the day-to-day productivity of an organization, including:

• Providing a sense of "ownership" at all levels of the organization.
• Providing a sense of direction that positively affects how work gets done. 
• Improving communications and relations between labor and management. 
• Eliminating disruptions.
• Keeping employees focused on the objectives at hand. 
• Providing guidance for future training and development initiatives. 
• Helping establish milestones to meet long-term organizational goals.

Because strategic planning typically affects every aspect of an organization's operations, the advantages of strategic planning are widespread, even though some may be subtle. Therefore, the full benefits of strategic planning may be difficult to quantify in terms of a strict return-on-investment (ROI) basis. Nevertheless, the advantages of strategic planning that can be established in a particular department or field are so readily recognizable that it is easy to extrapolate the expected benefits to other departments.

Implementation of Strategic Planning

Organizations must take several steps to implement strategic planning successfully. The strategic planning process begins with the organization's strategic planning team asking four critical questions, answers to which form the basis of the strategic planning process:

• Where are we now? (Assess the current situation.)
• Where do we want to be? (Envision and articulate a desired future.)
• How do we get there? (Formulate and implement a strategy and strategic objectives.)
• How will we know if we are on track toward our intended destination? (Establish a mechanism to evaluate progress.)

Michael Porter, a Harvard professor, described strategy as a "broad formula for how a business is going to compete." It is an organization's plan for controlling and using its resources in furtherance of its interests.

A strategy should broadly specify how the organization will create and sustain an advantage over its competitors. Some common strategies for achieving a competitive advantage include:

• Increasing cost-effectiveness.
• Distinguishing the organization though product innovation or service differentiation.
• Highlighting service and customer satisfaction.
• Striving to become the dominant player in a particular market.

After formulating the strategy that the organization will pursue, it is time to set strategic objectives. Strategic objectives are the major milestones an organization intends to pass along the way to achieving its ultimate destination. These are long-term objectives that set forth the specific results and broad progress that the organization seeks to achieve in three to five years. They may relate to issues such as sales, market segments, finances, operations, technologies, employment or profits.

Source: www.shrm.org     with selective paragraphs.