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HR Business Plan: What Is It and Why Do You Need It?

As a business owner, it is not enough to only have a business plan in place. In order to have a business run smoothly from top to bottom, every department must have a business plan. One of the first departments to focus on is the Human Resources (HR) department. This is because many of the compliance functions and hiring decisions are made from this department. It is the heart of any business in many ways and, as such, it should be treated with importance.

Why Does Every Business Need an HR Business Plan?

Just like a business needs a plan for success, so does the HR department. Real success for a business comes in the form of ensuring that all of the departments are working toward a common goal. The common goal is something that is outlined in the overall business plan. The department plan will look different for every department because they should all be working toward different goals, but at the end of the day, they should all still be working toward the ultimate goal of bringing the business together and making it better. Every business is different, and the HR business plan that is developed for one business may not be the exact same as it is for another business. As part of this process, it is important to analyze the needs of the specific business at hand. Another key component of this is that the Human Resources department should benchmark industry standards and requirements. Due to the heavy compliance requirements, this department is a bit different than many others within a business.

Another reason why it is so important to have an HR business plan is because every business wants to ensure compliance in all areas that require attention. The importance of this is that if this does not happen, the business could have a lot more trouble later on in the form of government fines or other penalties. Compliance is a big part of any business and HR department. If there is not a plan in place for things such as verifying that employees can legally work in the United States, minimum wage rules are met, and more, the business will be open to a lot of potential for risk. One way or another it will find you, and you will have to deal with it as a business if it is not kept up with from the beginning. By failing to take into account both the business and the regulatory needs of the department, you could be setting yourself up for failure before you even begin making your business profitable and successful. Do not make this mistake, like many other businesses have done, as it could end up costing you your business.

Why Is Your Standard Business Plan Not Enough?

A common question during the process is, why is there a need for a separate plan for the HR department? A business plan is designed to outline the goals and processes for the business as a whole. It does not take into account how things should be managed by various departments. It is still important to have a business plan, but it should be understood that it is not a document that can take into account all of these other factors that are important to the growth of the business. If you take a look at your business plan, you will find that, most likely, aspects such as compliance requirements and regulations have not been included. There are many different parts of HR that need to be a priority for the department, and there should also be a plan in place to determine how the department will serve the business and the employees. This should not be included in the overall business plan because it would be out of place and it would not be directly tied to the department and the goals of that department. This is why it makes the most sense to ensure the two are separate with ties that bind them, and that the HR department has ownership of their plan.

Steps to Take to Develop Your HR Business Plan

Once the business plan is created, it is time to develop the HR business plan. To do this, it is important to ensure that all areas are examined and that the goals of the business plan are in line with the business. Use these steps to develop your own HR business plan for your business:

  • Step One: Determine what is needed for the business from the HR department – It is imperative to know exactly what should come from the HR department. The following considerations should be outlined in your plan: the hiring needs for your employees, such as how many employees are needed at capacity and when to hire more people; onboarding schedules and orientation days to ensure employees are set up for success; employee performance reviews to document how employees are doing and when it is time to terminate (if applicable); payroll so everyone gets paid accurately and on time; and terminations. This is a good idea because there should not be a lot of time spent developing a plan for things that will not be handled by the HR department. As part of this process, it may be beneficial to develop a clear purpose and direction for the department. As part of the plan, there should be an outline for current requirements as well as a plan for future years and goals to work toward.
  • Step Two: Understand and review all of the detailed job descriptions that are in place for employees in this department – Whatever the staff make-up is for the department, like an HR Assistant or an HR Manager, it is best to line up their job descriptions with the expectations of the department. As part of this examination process, if there are components of their job descriptions that are not being performed or are being underperformed that would add value to your company, they should be included in the HR business plan. Put it in writing that these are the goals of the roles and the department. It is also important to detail why they should be a part of the process. To ensure that there is nothing missing from this component of your HR business plan, it is also smart to review an HR department audit book or program.
  • Step Three: Define specific HR functions – As part of this process, there may be some functions or action items that should be delegated to other departments because they make more sense. There may even be some that need to be added. Creating the right list of delegations within the department and the business helps to ensure that all departments are functioning to the best of their ability. If you have your HR department focusing on things such as providing the employee feedback, then you may want to delegate it to the department that makes more sense, such as management. There should not be any functions on the list that do not serve the needs of the business and the department.
  • Step Four: Determine how other departments view the HR department – HR is the heart of a business and, as such, there should be a desire to gain an honest assessment of satisfaction of the department. This information can be gathered from other executives in the company as well as other employees. Find out what their experience has been with the department and how they perceive the actions of the department. As part of this feedback, there could be some services that are wanted by employees that are not currently offered by the department. Try to find out how the HR department can better support the mission, vision, and goals of the business. Develop some questions to go in a survey to all employees and then hold a meeting to discuss the results and encourage open and honest feedback. This feedback from the outside looking in can be very valuable to the department and will provide the added perspective needed to truly grow the company as well as the department simultaneously.
  • Step Five: Get advice from other professionals in the field – While getting internal information and feedback is key, it can also be very beneficial to discuss the requirements of an HR department with other professionals in the field. There are entire organizations dedicated to HR and it can be easy to find recent published information from professional organizations in the field such as the Society for Human Resource Management (SHRM). Consider going to some local association meetings and talking to other professionals if you do not have connections with any in the area already. By looking at these things, it should be easy to develop a good scope of what the HR department should look like in terms of what the norms are in the field and assist with developing planning priorities.
  • Step Six: Use the internal and external information to create an HR business plan that works for the business – Develop a list of priorities for the department and go into depth on some of these items. With everything laid out, the department can determine exactly what is a priority, what may need to be expanded in the department, and how to focus the efforts. With all of this information available there should be a lot to work with, but it is important to prioritize things so the plan is well organized and formulated. List the major functions, outline what is missing, and then go into detail. As part of the HR business plan, it is important to be very thorough in this process because there needs to be clear direction in all things that should be completed within the department.
  • Step Seven: Re-delegate tasks – Now you have your HR business plan in place, re-delegate tasks to all members of the team to ensure that all components are captured and that you are moving in the right direction. It may take some time to get all of this down to a science in the department, but you will be on the right path in terms of how you want to run the department and the direction that you plan to go in over the next few years.

The Importance of Examination and Revision of Your Plan

Once there is an HR business plan in place, the work is not over. Just like with a business plan, it is important to continue to revisit the HR business plan on a regular basis. As the business grows and as goals are met, there will be some components of the HR business plan that will need to be updated. The plan should outline how things will be run for a successful HR department, but it is not meant to be a static document. It is one that will grow with the company, meaning that it will need to be examined at least every two years. Sometimes there may be no need to make any changes while other times a lot of changes will need to be made. It will depend on a variety of factors such as whether or not the department has implemented new technology, whether or not employment laws have changed, and even how much the business has grown. As there are many factors that can play into this, it is important to ensure it remains a living document that is updated as needed.

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