Why it is high time HR had a seat at the planning table

Despite the ubiquity of well-worn corporate sayings like “our people are our greatest asset,” historically, little detail has gone into planning for the experience and output of said people. Human beings cannot easily be broken down into numbers and figures, and planning for their impact beyond their salary taken out of the hiring budget has been notoriously difficult.

However, corporate priorities are shifting toward better understanding employee retention and skills at the same time work models are becoming more flexible: Diversity, equity and inclusion (DEI) is center stage, and human resources practitioners are becoming more data driven. This sets the stage for HR to evolve from an observer or infrequent participant in the planning process to a core persona supporting or using corporate performance management (CPM) and financial planning and analysis (FP&A) tools and strategies.

The Take

HR’s historical involvement in corporate planning, if any, started and stopped at headcount planning (i.e., how many people to hire and what to pay them). However, changes around the organization are happening that offer new opportunities for HR to insert itself and its data into various planning processes. Headcount planning is evolving into skills and output/outcome planning, while data gathered on changes in work models and DEI efforts are being tied to employee experience (EX), engagement and retention numbers. These various evolutions also have the potential to inform downstream planning at the project and work management levels as they become more intricately connected to broader strategic plans. While this has the potential to radically change how HR interacts with corporate leadership, it will require deeper collaboration among HR and other departments, including finance, operations, facilities and IT. Beyond this, organizations must also mitigate their data silos and pursue data-driven decision-making throughout.

The skills and priorities enabling this shift

We understand the data measured by HR is now important to broader corporate strategy. Employee retention, engagement and upskilling are the top priority (32%) for 2024, according to the professionals surveyed in our Macroeconomic Outlook: Business Trends, Digital Transformation 2023 survey.

As the demand to understand employee retention and skills grows, HR is evolving its skills and technology strategy to better measure and analyze those EX elements. In our research, we see that over the past few years HR professionals have been focused on developing skills that would see them increase their impact on organizational strategy and become a stronger partner to the business.

More broadly, how HR views its role in the organization is also changing. Nearly half of the HR professionals in our Workforce Productivity & Collaboration, Employee Life Cycle & HR 2023 survey view the connection between corporate strategy and employee execution as one of their primary roles.

Organizations want a deeper focus on their people, and HR is changing its identity and abilities in a direction that supports that focus. Here we take a look at some of the changes in HR and the employee experience that could better inform cross-organizational planning and CPM.

Skills as a resource

One of the highest value shifts we will likely see in the involvement of HR in planning is the evolution of headcount planning into skills and outcome planning. Skills as a resource to be managed, grown, optimized and leveraged effectively represent a key dynamic for connecting EX investments (e.g., learning and development and upskilling) to business goals like revenue generation and profitability.

In our macroeconomic research, skills shortages are listed as the biggest obstacle organizations need to overcome in their digital transformation strategies. It is becoming clear to corporate leadership that skills are a resource to be prioritized and managed, and the top struggle in project planning (30%) is finding the right resources to execute plans, according to our Workforce Productivity & Collaboration, Work Execution Goals & Challenges 2023 survey.

Skills are also an obvious way for HR to meet its role of connecting strategy to execution, as skills are a prerequisite for certain business outcomes and for resource planning. Employees understand this as well, pointing out in our research that using skills in resource or project management is the top benefit (52%) of a modern skilling strategy. Managers, specifically, point out that understanding proficiency of skills (47%) and being able to connect them to business outcomes (44%) would help them better manage their teams.

Planning for changing workforces and new work models

Hybrid and remote work, and their support of increasingly dispersed and diverse workforces, create new pressures on planning and reporting. According to our Workforce Productivity & Collaboration, Digital Transformation 2023 survey, nearly half of respondents expect the majority of their workforce to return to the office full time, while the remaining half is split between expectations of hybrid work adoption and permanent remote work.

Returning to in-office work will be a point-in-time planning challenge that affects facilities, security, IT, HR and more. Both hybrid and in-office models affect operational expenditure planning for utilities and on-site staff, as well as lease agreements. However, these changes can affect HR in understanding its strategy in planning for remote-work technology stipends, voluntary benefits and more.

One of the bigger issues here is understanding the return-to-office or hybrid work model plan’s impact on the employee experience. If employee engagement and retention are core priorities, HR can supply data on engagement level or attrition risk of in-office versus remote employees so that leadership can make an informed decision about its work model strategy and understand the risk profile of whatever decision they make. Involving HR and its people analytics data has the potential to provide more visibility into the long-term impact of these changes in work models. As organizations become more geographically dispersed, too, there are new planning challenges that HR can help support as well, such as the tax complications that arise from cross-border payroll or supporting work visas for expatriates.

We are also beginning to see some planning tools and CPM strategies begin to more deeply support ESG (environmental, social and governance) and DEI reporting as well, adding to the visibility of increasingly geographically dispersed workforces. These help with elements like corporate branding — which can affect public perception, but also attract or deter potential job candidates — but the measurements involved with reporting on these things are getting more granular. Pay equity, for example, is a newer metric that requires specialized tools to understand, and could add new layers of transparency to an organization’s DEI reporting.

Potential roadblocks and challenges

One of the biggest challenges to preventing HR’s collaboration with planning or involvement in the process is a legacy mindset that finance, and finance alone, owns the planning process. Breaking down this barrier is critical to pursuing a whole organizational planning strategy that keeps the budget at the center and opens opportunities for participation from other departments.

Collaboration is key, and we know in our work execution research that it is a common struggle when planning important initiatives. “Silos across teams prevent effective collaboration and goal sharing,” was the second-highest response when asked about those struggles.

Of course, reshaping the planning mindset and improving collaboration are useless if the organization does not take a data-driven approach to decision-making. Only about 52% of the those we surveyed in our Work Execution Goals & Challenges survey say that most or all their strategic decisions are data-driven. This will be a necessary investment area for organizations looking to use HR data in their corporate planning.