Guest contribution by Günter Flierl and Inken Schneider for Bridge imp
A brand new, sparkling corporate strategy is a wonderful thing. Whether it’s digitalisation or a refined product portfolio, all important factors were taken into account in the company’s reorientation. Wait a minute. Really all of them? Often, one crucial component is not taken into account at all or at least not strongly enough: the people side.
Requirements versus suitability
Every company has to face up to market developments – especially now, given the global changes brought about by COVID-19. It is essential to become more digital, for example with automated P2P (purchase to pay) purchasing processes, or more international (e.g. in reporting and annual financial statements). In addition, every company will strive to become more agile and faster.
The long-serving team is often unable to keep up, and in some cases may not even want to. After years without support and under the leadership of changing superiors, the teams have eventually reached a creative standstill. The gap between requirements and suitability is thus widening. This can have disastrous consequences for the entire value chain. In our previous positions, we have seen this in almost all areas: whether in purchasing, human resources, finance, etc. The situation becomes critical when key players in the company drop out or resign (often due to stress). In these situations, there is a risk of collapse in one area, often with fundamental implications for the entire company.
Practical experience
We would like to illustrate this with a concrete example: A private equity-led company with several national subsidiaries is to be floated on the stock exchange as the next step in its development. This step requires a well-positioned finance department, both for the major project of the IPO itself and for the resulting reporting obligations.
In the German subsidiary, the finance department has an appropriate number of staff for the current turnover. On closer inspection, however, it consists almost exclusively of accounting staff. Project work is only carried out by the department head, the treasury manager and the junior controller. In recent years, personnel decisions have never taken employee potential into account, only affordable salaries. This is now coming back to haunt the company: it is difficult to find sufficiently qualified and experienced finance staff at short notice. The IPO and day-to-day business with significantly increased requirements are at risk.
The problem with SMEs
In our experience, this discrepancy between corporate strategy and immature personnel strategy is very common. In these situations, we ask ourselves why the implementation of the strategy seems to come as such a surprise to the company and why it is not coordinated with long-term personnel planning and development. Is there too little communication between management and HR management? That is certainly part of the problem: there is too little discussion of strategic issues, with the focus instead on current vacancies and short-term priorities. Is HR management not required to engage in strategic personnel planning? This is the crux of the matter! In fact, it is usually only large corporations that have a specifically formulated personnel strategy. In SMEs, one usually searches for it in vain.
A possible solution
But how can corporate strategy and strategic personnel planning be linked? Long-term, sustainable success cannot be achieved if the two strategies do not go hand in hand. In a corporate environment, there is often enough capital available to compensate for this weakness. SMEs, on the other hand, have more limited resources. Moreover, they rarely have the expertise to tackle strategic workforce planning. This is because their HR departments are small and do not allow for specialisation in this area. In addition, they are often overburdened with operational tasks, leaving HR managers with no time for strategic tasks and planning approaches. This is exactly where we can support you by creating a solution for your company through strategy harmonization.
What does strategic personnel planning involve?
- First, derive future workforce requirements from the corporate strategy together with all departments. In addition, discuss possible future scenarios, such as how economic and labour market trends might develop and how strongly they should be reflected in the people strategy. The result includes concrete headcount figures for the individual departments and job families (i.e. groups of employees with similar tasks). On the other hand, it provides clarity about key positions and core competencies that will be needed in the company in the future.
- Second, create a talent portfolio of current employees that highlights existing and missing skills. In addition, record development potential as well as age and fluctuation risks. This is used to develop a possible staffing and succession plan. Companies benefit from this step through complete transparency about the strengths and weaknesses of their personnel.
- Third, develop and evaluate alternative courses of action: How can employees be trained early on or recruited to meet staffing needs and be prepared for future changes?
- The end result is a detailed action plan on how the company can proactively acquire the skills it will need in the future.
Remain adaptable
A certain degree of flexibility should always be maintained in the strategic planning process, because in today’s fast-paced world, it is quite possible that a 5-year strategy will need to be adjusted after just one year – as the coronavirus crisis has shown us. We therefore recommend rolling annual planning, including an annual review, rather than a one-off action.
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Inken Schneider has 20 years of management experience in human resources. She has supported companies in the automotive, mechanical and plant engineering, building materials and financial services sectors in the field of HR, from medium-sized companies to global corporations. A qualified lawyer, she works as a consultant, trainer and lecturer in human resources and personnel management (UAS Frankfurt, DHBW Heilbronn).
Günter Flierl has his roots in finance/controlling and has held several CFO positions. The financial strategist now has over 12 years of experience as an interim manager. His speciality is covering the entire value chain from purchasing to sales on the basis of sound numerical analysis.
PHOTO: STOCK.ADOBE.COM / oneinchpunch
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