Integrating Human Resource Planning and Development: The Unification of Strategic, Operational, and Human Resource Planning Systems Andrew O. Manzini, INTERCULTURAL Executive Summary Large sectors of our industry have plainly failed to anticipate possibly threatening future events, and the impact such events would have on the organization. In fact, many organiza- tions even failed to plan appropriate action to address the “worst case” scenario, other than reacting after the fact by directing large-scale layoffs and other “economies” which should have been paid attention to in the first place. It is also clear that the human resource func- tion has not had a significant role in decision making and strategic planning. This article explores how the human resource function can become proactive and future- oriented, by developing methods which will enable it to participate as an effective member of the planning function in organizations. It also makes a case for the need by human resource professionals to become more than familiar with the process of strategic and operational plan- ning, because only with such knowledge, they will be able to develop a human resource plan- ning system which is truly business-oriented, and integrated with the entire organization. The article then outlines various tools and systems which can help achieve this strategic integration at the technical and management level. The changing nature of competition, uncertainties in the economic climate, and streamlining of organizations are among the many current developments calling for a more integrated approach to strategic business, operational, and human resource planning. Future profit and cost structures, will increasingly reflect the thoughtfulness with which these are designed and coordinated. In order to design an effective human resource planning and development process that will truly address the needs of complex, modern organizations with changing personnel needs, three fairly distinct kinds of planning must be accounted for and they must be integrated ina system in which all three types of plan- ning are linked at key interfaces and jointly maintained as a single planning system. The three kinds of planning are: 1) Strategic Planning, whose purpose is nothing less than the survival of the or- ganization in a competitive environment, and which provides the long-range “demand” forecasts for human and other resources in the years ahead; 2) Operational Planning, which represents “what we know for sure” about human resource demand and other work require- ments of day-to-day operations, now and in the immediate future; and 3) Human Resource Planning, which gen- erates availability forecasts of the quality and quantity of people needed to meet short- and long-term demand, and which incorporates human resource development programs and policies. The latter are designed to create the types and numbers of human resources needed from now on, at costs commensurate with their contribu- tion to organizational goals. These three kinds of planning are differ- ent in concept, perspective and techniques. Each requires fundamentally different kinds of data and analysis. Strategic planning may deal with the sweep of historical change, for example, and usually must account for uncertainties through a range of scenarios based on long-term INTEGRATING HUMAN RESOURCE PLANNING AND DEVELOPMENT 79changes that are never wholly predictable Operational planning, in contrast, is based on the realities of immediate, day-to-day production of goods or services, and known relationships between costs, time, resources, and output. Human resource planning is neither as abstract as strategic planning nor as concrete as operational planning, and focuses instead on the actual people, individually and collectively, who will be needed to meet both short-term operational demand and the long-range requirements of strategic plans. The purpose of an integrated system is not to eliminate these differences, or to homogenize the analytical frameworks and specialized techniques used by specialists in each area. Rather, the goal of integration is to identify and incorporate planning factors that are truly interdependent, systematically and consistently. For example, it is certainly possible to conduct strategic planning in an Ivy Tower, assuming that operational and human resource planning will take care of themselves. As developed by relatively isolated corporate planners, such strategic plans may be elegant, exciting, and mean- ingful as a response to changing environ- mental conditions. But the specific strate- gies prescribed by such planning may be wholly unfeasible, impossible to imple- ment because no one has seen to it that the managers and professionals needed to carry out the plans will be available to do the work. Strategic planning is an integrated system, linked at key points with both operational and human resource planning, forcing planners to consider both the realities of operational demand for human resources and the immediate and long- range availability of people needed to meet operational demand. For example, a strategy that calls for a certain level of production within five years is examined from an operational planning perspective to see how many people, of what skills and competencies, and at what costs, will be needed. Operational planning takes into account the concrete realities of produc- tion, based on historical data, changing technology, and production estimates. Thus, each strategy or combination of strategies for producing X number of widgets results in a demand forecast for human resources of certain numbers and types. In an integrated system, this fore- cast can be compared with availability forecasts that result from human resource planning and development, to identify variances and costs of closing these gaps. Unfeasible strategies can be identified early, and discarded or modified as appro- priate. Using “what if” analysis in an inte- grated system, planners can assign realistic cost and time estimates to each preliminary strategy. Neither can operational planning operate effectively as a “stand alone” system, especially in companies and industries affected by technological change in the workplace, shifting markets, or new pressure from global competitors with lower operating costs. New workplace technology may upset tried-and-true manpower loading or resource allocation formulas: virtually overnight, the organiza- tion may find that a large part of its workforce has obsolete skills, or may be faced with a need for new skills that can only be acquired through hasty, expensive recruiting, accelerated training and devel- opment, or costly raids on competitors’ human resources. Similarly, human resource planning that proceeds without the guidance and control of strategic and operational planning— without, in short, considering human resource demand factors—will be simply unrealistic, a collection of wish-lists and meaningless availability forecasts with no particular relevance to organizational human resource needs. The human resource availability forecasts produced by such a system would be valid if nothing, changed in the organization, but will almost certainly result in dangerous mis- matches of people and needs in changing 80 HUMAN RESOURCE PLANNING, VOLUME 1. NUMBER 2markets, not environments, and in compa- nies impacted by technology. Human Resource Gaps or Variances In the broadest sense, the reason for inte- grating human resource planning with strategic and operational planning is the identification of human resource gaps or variances between supply and availability. Resource gaps represent shortages of people, surpluses, or a mixed bag of variances for different types of skills, managers, professionals, and other types of human resources. They are derived by comparing Demand Forecasts and Availa- bility Forecasts. Too often, the chief concern of human resource professionals has been what to do about projected changes in human resource requirements, without first iden- tifying exactly what these changes will be. It is far easier and more clearly within the province of human resource departments to concentrate on programs that address variances than it is to accurately forecast what these variances will be. The underlying goal of the integrated system is the creation of a process by which the demand forecasts that emerge from strategic and operational planning, can be quantitatively compared with the availability forecasts that result from human resource programs. The model system discussed here makes an important assumption about the nature of human resource supply or availability: the availa- bility forecasts are inherently interactive. They start with a baseline forecast predi- cated on future availability of present staff (promotions, demotions, lateral moves, retirements, and other forms of attrition through time). Once this preliminary forecast is compared to demand and a variance is identified, certain interventions to bring availability in line with demand will be necessary. Then, and only then, the focus shifts to the nature and objectives of the development programs—succession planning, career management, appraisal, etc.—that address gaps. The resulting second forecast reflects the results of intervening in the system in order to change the demographics of the employee population. Because the most important (and costly) human resources anticipated by this system are managers and professionals, the focus here is on career management, succession planning, and appraisal sys- tems. In some organizations, human resource programs that shape the long- range availability of people may place greater emphasis on skills training or other programs, but the critical concept is this: “availability” of human resources in a stra- tegically integrated planning and develop- ment system is a product of today’s human resources and the development programs used to shape availability over the plan- ning cycle. Few organizations can afford to view availability of human resources in any other way. As work requirements become increasingly specialized in the information age, as the commitment of workers to organizational goals become the sine qua non of productivity improvement, and as management planning and leadership increasingly distinguish successful org; zations from their competitors, the positive effects of long-range personnel planning and development become increasingly apparent. On the negative side, the costs of personnel to the organization—especially benefits-laden managers and profes- sionals—are soaring, and must be con- trolled in ways that do the least damage to organizational service or production goals. This is not to say that the organization will never again need to hire people beyond entry levels from the external labor market, or that attrition will not have some effects on the existing, developing workforce. Rather, this inward focus on present employees and today’s development programs forms the baseline for availabil- ity forecasts, a baseline that is realistic, organization-specific, and within the INTEGRATING HUMAN RESOURCE PLANNING AND DEVELOPMENT — 81control of planners responsible for shaping the human resources needed by the future organization. Thus, a comparison of demand forecasts based on strategic and operational plan- ning and availability forecasts based on human resource planning produces resource gaps that can be intelligently addressed through development programs, hiring, allocation of resources, or any of a broad range of interventions affecting human resources levels and capabilities. In an integrated system, where a change in one variable (such as plant investment) can be linked to its effects on other variables (such as personnel costs), planners have the means to select interventions that have optimal costs, time frames, and other impacts on overall organizational objec- tives. Examples of what some of these forecasts might show are given in Exhibits 1 through 3. Exhibit 1 shows a consolidated demand forecast; Exhibit 2 shows a variance fore- cast; and Exhibit 3 shows the specific numerical variance data. Some Additional Reasons for an Inte- grated System: The Survival of Credible Human Reasource Programs The overriding reason for integrating human resource planning and develop- ment with strategic and operational plan- ning is to assure that personnel programs and policies work to achieve immediate and long-range corporate goals. Strategic and operational plans specify demands— for professionals of given competencies, managers with certain skills, leaders of the business, and workers trained and moti- vated to perform given tasks. In an inte- grated system, the primary purpose of human resource planning is to meet these demands, by providing the kinds and numbers of people needed, when they are needed, to meet organizational objectives. In addition, however, there are “side effect” advantages to an effectively inte- grated system that works to improve the operation, credibility, and internal efficiency of human resource programs. Human resource programs simply work better when they have been shaped by organizational goals, and when employees at all levels are able to perceive direct linkages between personnel programs and policies and the continuing and long-range goals of the organization. Most obviously, integrated planning should eliminate or minimize the need for force reductions through mass dismissals or layoffs. The cause of layoffs are not always foreseeable, but in many cases the need for sudden, indiscriminate reductions in force can be predicted by strategic planning. At least one scenario developed by corporate planners may anticipate the merger, business downturn, technology, or other business reason for cost-cutting layoffs, and contingency planning for this eventuality should include ways to obviate the need for across-the-board dismissals. Where strategic planning and human resource planning are integrated, surplus personnel or operations that may be dis- continued can be phased out gradually. Attrition, redeployment, training and retraining, and a range of other human resource programs and policies—from reduced hiring to restructured career planning—can become part of the strategy for avoiding the surplus variance that may necessitate layoffs at a future time. Layoffs are an extreme case. Inadequate or nonexistent integration can also have less dramatic, but equally harmful impacts in the long run, on the operation and credi- bility of personnel activities. For example: * Career planning, whose purpose is to merge corporate and individual goals through progress along career paths, can become little more than an academic exercise unrelated to the realities of a changing organization if strategic plans have not been accounted for. A major part of the management workforce may be preparing itself for jobs that will no longer exist by the time they are ready. Develop- ment activities will have no necessary 82 HUMAN RESOURCE PLANNING, VOLUME 11, NUMBER 2MANPOWER Exhibit 1 Consolidated Demand Forecast Manpower Variance Forecast Total - all Projects Cumulative by Status 3600 2400 7 SCHEDULED PROJECTS. 1200 ACTIVE PROJECTS 600 aN aut uN aN we we au ww su aN 1983 1988 1985 1906 1987 INTEGRATING HUMAN RESOURCE PLANNING AND DEVELOPMENT 83Exhibit 2 Manpower Variance Forecast 3600 es 7 nasronen oeuano ronecast ae MANPOWER AVAILABILITY FORECAST MANPOWER — MANPOWER VARIANCE FORECAST an aN One a a ae aN au aN ou wn 1983 1908 1985 1986 1987 Time 84 HUMAN RESOURCE PLANNING, VOLUME 11, NUMBER 2Exhibit 3 z 9 ¢ 6z Loe visor ott BONVIWA 97006 sse6 €0%6 886 veelt exiat OeEZ) TIVAV GANNYTd oue ovel ove oes 0 0 0 UI M3N vLe6 eartt eeL6 eer0L £926 6isol ozolr ‘aNvWaa SANSWLY¥d30 TV NOISAG 900 66 'NINGY Tv ‘Ld30 TIv 09 be 68 69 s ‘ ret sesh eon BONVIAVA, o'eoz zosoz oro002 zeeet ee6st 29202 sisoz ©6902 “IVAW GANNVTd o8t 06 09 962 4 0 0 o ‘SauiH M3N Pelee beriz 69902 Lele veeee e1zee osozz rset anvwaa SINAWLYWd30 TY /NIUSINIONS $00 66 NING TI 1d30 Tv 09 oO Z v z ‘ ' 0 0 ONVILVA, 92 ez ez te te ze ee ze AIWAY G3NNVTd 0 ° 0 0 0 ° 0 ° SauIH M3N 98 se ee ee ee ee ee ze anvwaa SINAWLYvda0 TV AILNOSXa 100 66 ‘NINGY TIy “Ld3G TY OO ©6 a ey ee se ° oe on ONVIEA, eeese bk s1ze9 E2969 ezo0c reas eosee O%89 “IVAW GANNVTd o-oos! o-ooe! o6e ose oe gaz 0 ° ‘S3¥IH MaN gs ve6 esave esoee seler wives sever egeze oresz9 anvwaa SANSWLYYd30 TV W101 000 66 ‘NINGY TH “Ld30 Tv OO 986) S864 vee! e861 zaret zartt 2e/01 za/60 3000 SSV10 ‘dW AG JONVINWA ® ALITISVTIVAY ONVNG 1SVO3HO4 HIMOdNVW. BAZ AVIS - ANVdNNOD Thy HOS LS¥O3HOS 29/82/60 31VG 1HOdau aiqey Beg soul, 85 INTEGRATING HUMAN RESOURCE PLANNING AND DEVELOPMENTrelationship to future needs, surpluses will not be anticipated, periodic crash pro- grams to meet unexpected demand, or costly outside recruiting will send clear messages to all participants in the career management program. They will wonder, “How can | plan a career in a company that doesn’t know where it’s going?” * Performance appraisal, where designed as both a way to effectively compensate people for their contributions to organizational goals and as a develop- ment tool to shape specific management skills and talents, must be based on criteria that express actual value to the organiza- tion. If the continuing and long-range needs of the organization have not been used to define these values, people will not know which kinds of skills, behavior, accomplishments, or other factors should be rewarded, nurtured, and developed. * Potential appraisal, which seeks to assess the future capabilities of men and women to lead the organization, requires a future view of what the organization will be, and what kinds of leadership and management qualities will be most valu- able in the years ahead. Increasingly, as the skills of managers become more spe- cialized and leadership qualities become more complex, the definition of a good manager is situational, and inextricably tied to corporate goals. The criteria used when appraising potential must account for the leadership qualities needed by the future organization, which may include a range from “technological innovators” to “financial caretakers.” * Succession planning, the purpose of which is to plan the sequence of personnel moves so that candidates for management positions are known in advance of actual need, also requires a realistic view of the future organization. Individual succession plans that fail through no fault of individ- ual managers - because of unforeseen changes in human resource demand or availability - must be minimized to sustain the succession planning system’s credibil- ity, and prevent unwanted turnover 86 HUMAN RESOURCE PLANNING, VOLUME 11, NUMBER 2 among managers being groomed for higher positions Each of these human resource programs —and others including training, manage- ment development, recruitment, and sometimes benefits and other compen sation—is based on personnel needs fore- cast by human resource planning, To the extent such planning is inaccurate, fails to anticipate shortages or surpluses in critical areas, or otherwise results in mismatches of forecasts and actual human resources needed by the organization of the future, these programs are fatally flawed. Neither the organization nor individual partici- pants will benefit from the time and effort expended in reaching their false goals, accomplishing personnel department objectives that have no relevance to organ- izational needs, or “succeeding” in any sense that is limited by parochial human resource department objectives Ina human resource program based on forecasts that turn out to be inaccurate, successful participants are much like the unwitting victims of the old joke about the short-sighted team of doctors, who agreed that “The operation was a success but the patient died.” Instead of dying, however, the individual participants who have “done everything right” and seen their efforts come to nothing are more likely to become turnover statistics, demoralized employees, or, at best, half-hearted partici- pants in future human resource programs such a career planning, training and appraisals. Strategic Planning: Critical Framework for Long-Term Demand Forecasts The strategic planning process is an inte- grated system that begins with an assess- ment of the organization's mission, objec- tives, financial goals or constraints, and marketing situation and plans. The next step is the development of environmental scenarios that relate the organization to its external environment, dealing with such factors as the state of the economy, antici- pated regulatory or legal impacts, competi-tive factors, technological change, or social change. Strategies for achieving organizational objectives in a different environment can then be developed, and their business implications systematically assessed. The predominant business implication for present purposes is human resources, the quality and quantity of people needed to accomplish strategic objectives, but a comprehensive system also looks at finan- cial resources, market data, and techno- logical change, as well as an overall evalu- ation of the organization's strengths and weaknesses. For organizations embarking on the development of integrated strategic plan- ning system for the first time, the first step is an often painstaking analysis of the organization itself, its past history, present strengths and weaknesses, current policies and procedures, and prospective plans. One approach to this phase of develop- ment, “organization development,” includes procedures that locate the critical mass of the most powerful managers in the organization, and enlists their active participation both in the diagnosis itself and in the initial development of the integrated planning system . Whatever technology is used, or what- ever the current status of strategic plan- ning in the organization, an integrated system requires determination of both internal and external factors affecting btra- tegic plans, as well as the scenarios of future existence and the strategies them- selves. The internal factors that must be understood and incorporated into the system derive from data that can usually be subsumed in the categories of (1) fi- nance, (2) resources and technology, and (3) the organization's core mission. (1) Financial Goals and Objectives The traditional point of departure for strategic planning in profit-making enter- prises has been the development of criteria reflecting bottom-line results. Manage- ment’s performance is usually measured by short-term profits, often to the exclusion of every other factor, resulting in a pres- sure to produce that is not necessarily compatible with strategic planning for the long-term viability of the organization. In the long run, once a human-resource- based strategic planning system is operational and effective, the economic benefits of such a system will be reflected in both short-term cost reductions and business profits realized through more effective utilization of resources. The costs of personnel, which today account for some 40 percent of operating costs in the average U.S. organization, are reduced through programs that more efficiently distribute compensation, train and develop the right numbers and skills of people, reduce costly turnover and the need for expensive forays into external labor mar- kets for experienced workers, and provide the management stability and expertise necessary for profitable operation. Meanwhile, however, planning must usually incorporate the existing criteria of profitability, focusing on such financial goals as return-on-investment and profit margins. In addition, attention must be given to a range of financial costs, which vary from one organization to the next— from costs of materials and sales to over- head expenses. (2) Evaluation of Resources and Technology If strategic planning is to proceed from the existing nature of the organization, the basis of planning must em sis of resources and capal include: * Financial status, which may indicate the level of resources available for the implementation of different strategies; * Production performance, or how well the organization is doing its work, usually measured in terms of productivity (not to be confused with profitability, a financial factor); INITECR ATINIG ETAL AN REGOIIRCE PLANING ANID REVELOPMENT en* Marketing considerations, including evaluation of both customers and competitors; * Research and development implications, the imminent or foresceable technologies that can change production performance, markets, financial plans, and human resource requirements; and * Human resources, the skills and talents of the organization's people and their ability to adapt to future needs. As is immediately evident, strategic planning requires analysis of data derived from both operational planning and human resource planning, where information is being gathered simultaneously in the development of an integrated system. Initially, this analysis should lead to a preliminary evaluation of existing operat- ing results and prospects, a view premised ona continuation of programs and policies already in place. In addition, organiza- tional diagnosis can reveal the strengths and weaknesses of the organization in its current position, a view developed through procedures that involve key managers in the strategic planning process. (3) Definition of Core Mission A key goal in the evaluation of the organization's current existence is the definition of its core mission, the organization's raison d'etre Goals and objectives are often not the same as, or even compatible with, the core mission of the organization as a whole. Goals are often functional or departmental, based on the relatively parochial view of department heads or different constituen- cies. In strategic planning, this means that one group may be making plans based on an entirely different view of the future than another. The core mission should be as explicit and sharply defined as possible. But it is more important that it reflect the vision agreed upon by a consensus of top man- agement that is implicit in long-range plans. For example, the O.M. Scott Com- pany spent a year deciding between two possible core missions: The first was “to make fertilizers” and the second was “to keep lawns green.” The final choice of the second alternative led to product diversifi- cation and investment in a variety of facilities to produce chemicals and imple- ments “to keep lawns green.” Economic and Environmental Scenarios At the same time that strategic planners are coming to grips with the realities of the internal organization, external factors that will impinge on future plans must be evaluated. Usually through the develop- ment of economic and environmental scenarios, planners attempt to both identify external factors that will affect the organi- zation, and present the impacts of such change on strategic plans. In environmental scanning, the basis for scenarios, planners assume the heady role of predicting what the future will look like, the conditions that will prevail in govern- ment, society, the economy, and their industry as far away as 10 or more years into the future. Uncertainties abound, of course, from the pace of technological change to the possibility of wars and natural disasters. But the planning process requires realizing that the future will come whether we plan for it or not, that it will not be the same as the present in every way, and that it can be better met through planning. Ideally, scenarios based on environmental change should suggest “the realm of the possible” in strategic plan- ning, that is, the broadest possible depic- tion of the opportunities for new products, changing markets, different economic conditions, and other factors affecting the organization Strategy Development and Selection Generalized scenarios, together with the results of the internal evaluation of the organization and its resources, should first lead to the broadest conceivable range of 88 HUMAN RESOURCE ’LANNING, VOLUME 11, NUMBER 2possible strategies, for achieving specific goals ina different future. At this stage in the strategic planning process, diversity and open-ended creativity are virtues that assure that no important avenue of change is ignored by long-range planning. Eventually, however, the systematic integration of operational and human resources planning with strategic planning permits planners to examine each pro- posed strategy for its feasibility. For example, each scenario and its accompany- ing strategy will imply needs for certain levels of resources, including human resources. Thanks to the analytical tools used in operational planning, these needs can be quite specific: X number of chemical engineers, at these locations doing this sort of work, within this time frame. Will these engineers be available, accord- ing to our human resource planning system? What training or development will be required? How many will have to be hired? What will they cost? Development of the Business Plan The answers to these and other ques- tions may indicate that the strategy requir- ing these human resources is simply not feasible, or that it cannot be carried out without a major reallocation of resources affecting more important organizational objectives. Thus, in an integrated system, the development of the business plan and its strategies in inextricably linked with the products of operational and human re- source planning. For each scenario and alternate scenario, and each strategy based on one or more of these scenarios, explicit determinations are possible regarding present human resource “demand,” as created by operations, and “supply” or human resource availability, a product of HR planning and development. When all three major components of the planning system are in place and inte- grated, “what-if” analysis showing the impacts of change in one area on other areas is possible. For example, if a strategy calls for the acquisition of technology that will create surplus workers in one job category and a shortage of skills in another (determined through the tools of opera- tional planning, discussed below), the human resource planning and develop- ment system can identify these variances and point to the least-costly effective inter- ventions. Operational Planning: People As Costs Operational planning, the analysis and determination of the numbers, types, and costs of people needed to perform the existing work of the organization and to reach short-term objectives, is the reality- based cornerstone of human resource planning. Together with strategic plan- ning, operational planning results in the “demand side” of human resource fore- casting. The two kinds of planning, though inseparable in an integrated system, are fundamentally different in concepts and procedures. Operational planning focuses on current or known operations and their human re- source requirements. It produces “bottom- up” forecasts of human resource demand. At any given time, the operational plan is a specification of the organization's level of activity, defined in terms of resources and costs needed to accomplish specific units of production, levels of service, sales, or other operational objectives. Its concepts are concrete and are based on empirical reality. The analysis is of known relationships between operational output and the con- version of resources—including human resources—needed to achieve outputs. In human resource planning as practiced in recent years, the emphasis on “strategic” abstractions and long-range change has often come at the expense of attention to the realities of operational planning. As strategic planners with a long view, we are perhaps too often beguiled by the idea of change. The world on the horizon, new possibilities in different environments, new technology and its impacts, market trends, INTEGRATING HUMAN RESOURCE PLANNING AND DEVELOPMENT 99and the long-range differences from today’s world are far more interesting to think about and analyze than the prosaic details of operations as they exist today. Too often, present operations engage our attention only to the extent they are going to be changed by new technology, different products or services, or change in the people required to do tomorrow’s work. But to understand the impacts of change —and especially to plan proactively to create desired change—managers must first understand what it is that is being changed. Operational planning can be quite complex in the modern organization, but in over-simplified terms the issue is this: How can a planner understand the impact of a surplus or shortage of ten people in a certain job position unless the planner knows what these people actually do, what they contribute to the resource- conversion process, and what they cost? The methods and content of operational planning are different in every industry and are rarely the same in any two organi- zations. In most large, complex enter- prises, operational research and planning is based on highly sophisticated manage- ment science techniques, including statisti cal tools designed to quantify relationships between time, resources, and results. Moreover, while the operational plan- ning process is virtually unique in every organization, its inherent frame of refer- ence is the measurement of costs. Its goals invariably focus on cost maintenance or reduction. The operational planner, with no control over sales, can only affect organizational profits by reducing costs to the minimum level needed to fulfill opera- tional goals, which may be as diverse as completion of a multimillion-dollar hydro- electric plant and the ongoing mainte- nance of a 24-hour newspaper stand. Because no two organizations operate in exactly the same way, even if they are making the same product, the understand- ing of operational planning is invariably organization-specific. Human Resource Planning and Development in an Ingegrated Planning System The future availability of human resources is an integrated planning and development system depends, first and foremost, on today’s human resources and the programs in place that will shape the human resources of tomorrow. This. proposition is the central rationale of the strategically integrated system: its “truth” is a consequence of the accuracy of strate- gic planning forecasts and operational planning requirements that define future human resource needs or demand, and the design and implementation of human resource programs to meet that demand in the years ahead. In an integrated system, human resource programs such as career management, appraisals, and succession planning are both the cause and effect of long-range human resource forecasts. If the system is properly designed, human resource pro- grams have been shaped to meet the needs of the organization for different kinds and numbers of people. In the other direction, human resource programs (especially career planning) provide the basis for availability forecasts, specifically showing the human resources of the future, their capabilities, numbers, and even names. And, the analysis of variance between demand forecasts and availability forecasts can be a critical decision-making factor in selecting a strategy, as discussed earlier. Performance Appraisals With Strategic Implications An effectively integrated performance appraisal system helps shape the qualities and capabilities of human resources needed to do the work of the organization, today and in the years ahead. Properly designed, its goals are essentially strategic; such a system identifies, rewards, and helps to create the talents and capabilities a ee 90 HUMAN RESOURCE PLANNING, VOLUME 11, NUMBER 2required by the organization to success- fully accomplish strategic objectives. Conceptually, an ideal performance appraisal system looks at individual pasts in order to create an organizational future. The framework and criteria for assessing past performance, the techniques and standards used to rank or rate employees, and the functional relationship of apprais- als to compensation, career development, training, or other human resource pro- grams are merely technicalities of implem- entation. The overriding issue should be specific organizational requirements, as determined by the systematic analysis of the variance between human resource demand and availability. Too often, the strategic purpose of per- formance appraisal is overlooked or inade- quately considered by human resource professionals caught up in one or more of the highly interesting, secondary issues that swirl about this often controversial subject. Examples of such issues include: Are performance appraisals inherently susceptible to unfairness when initiated by supervisors, because supervisors feel threatened by ambitious subordinates? How can we measure the intangibles of good management practices that do not necessarily produce short-term, quantifi- able results? How does anyone measure professional performance, especially in relatively new disciplines? What can be done about the subjectivity of dozens or even hundreds of different raters? Should the results of performance appraisals be linked directly to compensation, or are they primarily a development tool? What effects do performance appraisals have on performance? Do they create problems between subordinates and supervisors? Do they discourage more workers than they motivate? create a vulnerability to EEO litigation? take up too much of everyone's time? Are they an effective means of motivating employees to higher performance levels? These are not unimportant issues: failure to resolve a serious deficiency in any of these areas could sabotage the most care- fully planned appraisal system. But they are issues relating to the mechanics or functioning of an appraisal system, not its overriding purpose. To consider them first or solely would be analogous to beginning a trip by first selecting your favorite auto- mobile, having it tuned or even customized to suit your personal needs and comforts, and loading it up for a journey without thinking about where you're going on the trip, or why. An airplane might be a better way to go. Potential Appraisal and Leadership Needs Like performance appraisal, potential appraisal systems in an integrated, strate- gic human resource planning and develop- ment system are designed and imple- mented on the basis of organization- specific needs for managers, especially top managers who will lead the organization in the years ahead. Unlike performance appraisal, which looks to the past, potential appraisal attempts to assess the future capabilities of managers. Thus, it presup- poses a planning view of future organiza- tional needs. The most difficult part of potential ap- praisal is also its most important aspe evaluation of people for future positions in upper management, leadership positions where job descriptions are often progres- sively less precise. As every human re- source professional knows, job descriptions are easiest to write for the lowest positions in the organization, and become more difficult for jobs requiring greater responsi- bility and leadership. At the top, such intangibles as innovation, team-building ability, integrity, vision, and the ability to get things done become as important, or perhaps more important, than technical skills or professional competency. In virtually every field of endeavor, lead- ership qualities defy easy measurement, and the predictive value of pre-leadership performance, criteria, or tests is largely accidental. Historians debate whether “the INTEGRATING HUMAN RESOURCE PLANNING AND DEVELOPMENT 91times make the man” or vice versa. In professional sports, it is axiomatic that “great players make lousy managers” (in part because they haven’t the patience or understanding to help and lead less natu- rally talented athletes). In science, great discoveries may be made by solitary gen- iuses, but the organizational efforts needed to bring them to fruition are usually led by talented bureaucrats. In organizations with a clear mission, however, the task of assessing future leaders is simplified by the definition of job requisites that match organizational goals. One company may need managers who can cut costs; another will need vigorous mar- keting; others will require advanced techni- cal expertise. Moreover, the overall strate- gic goals of the organization may indicate different kinds of needs for different de- partment heads — an innovator in research and an accountant in purchasing, for example. Career Management in an Integrated System Career management's purpose is to merge the career plans and goals of indi- viduals with the objectives of the organiza- tion, through procedures and policies that help individuals identify and act upon the convergence of individual aspirations and corporate needs. Its overall aims—most importantly the development of managers to meet the needs of the organization in the years ahead—are dictated by frankly organization-specific requirements. To realize its aims, however, career manage- ment requires the active, informed parti pation of the individuals who careers are being managed. To a great extent, all successful managers select themselves for career progression through more diligent effort, the acquisi- tion of needed skills and education, career path choices, and whatever other activities are perceived as requisite to organizational approval and promotion. Effective career management not only recognizes this reality, but uses it to assure that the right kinds of managers and professionals will be available, in the right places and in sufficient numbers, to meet the needs of organizational demand requirements. In an integrated career management sys- tem, based on valid strategic planning, and guided by a commitment to open commu- nication, these objectives can be realized: * Availability forecasting, if network flow techniques are used to forecast human resource availability and are based on the individual and aggregate career paths of managers, the capabilities of developmental activities, and attrition factors; * The marriage of goals, a reality-based unification of what employees expect from the organization and what the organization needs from individual employees; * Developmental needs, the identification of management training, job-rotation, or other programs needed now and in the years to come, along with standards for tracking the effectiveness of develop- mental programs; © Procedural uniformity in a system that treats all participants fairly, provides equal opportunities, and relates all career progressions to the stated, openly communicated needs of the organiza- tion; and * Enhanced employee involvement, as fully informed employees participate in a system made credible by its connection to strategic plans, select career paths based on clearly defined position requirements, consult regularly about possible changes, and are systematically reminded of their progress (or lack of it) along chosen paths. Not all organizations, and not the same organization at all times in its history, will have the same reasons for career manage- ment, of course. Some will be guided by the need to develop more technically oriented managers. Others may be enter- 92 HUMAN RESOURCE PLANNING, VOLUME 11, NUMBER 2ing different lines of business that require different managerial skills. Some may be seeking ways to thin the ranks of mid-level managers seeking promotions in the years ahead. Strategic plans should guide the specific purposes of the career manage- ment system. As suggested earlier, all human resource programs work to create human resource availability. When a career planning, system has been developed on the basis of overall strategic plans, however, this HR function can become the basis for actual forecasts of the numbers and types of people who will be available to the organi- zation in the years ahead. Network flow models based on career paths combine the salient features of both change models and optimization models: they not only show the planner what has-happened and will happen because of past patterns of force movement and individual plans, but permit the planner to control availability by changing factors in the model, such as tenure in a given job or training require- ments. Succession Planning in Integrated System The primary task of succession planning is to plan the sequence of personnel moves so that candidates for key positions are known in advance of actual need. This prior identification permits development to improve managers’ readiness to assume specific positions, and provides concrete decision-making information needed to reduce the chances of poor choices, or the adverse impacts on the organization that can result from vacancies that disrupt the continuity of management. The goals of succession planning can be imply stated: * To identify the critical positions in management; * To identify coming vacancies in those positions, including new positions created by strategic plans; and * To identify the managers who will move into these positions. Although apparently simple, the attain- ment of these objectives in most large organizations requires a systematic or mechanistic approach. Even if only a few jobs are considered critical, a change in one of these jobs could have widespread repercussions in the organization, creating movement far down the organizational hierarchy or in a distant department. More importantly, the systematic collec- tion and organization of succession plan- ning information permits such systems to more accurately and effectively address the needs of strategic planning, which may require a wealth of specific information about managers’ qualifications, salary levels, tenure, appraisal ratings, develop- ment experiences, and other data relevant to the needs of higher positions. Huge amounts of data alone will not make the succession planning system responsive to strategic aims. Although the procedures and system itself may benefit from data mechanization, its overall perspective and guiding policies should be shaped by strategic plans. The procedures may well provide a list of “the best and brightest” or identify the top candidate for a given job, but if such managers do not fit with future organizational needs the succession plan- ning system will have failed. Conclusion: Business Impacts on Integration The concepts involved in the strategi- cally integrated system are not difficult to understand. Taken separately, they are not particularly new to business planning. The design and implementation of such a system, however, may require an enormous change effort in some complex organizations, because the system requires the integration of planning and operational data that is either not currently available, exists in a range of different forms, is controlled by turf-conscious department heads, or has simply never been sought before by management. Whatever the effort, or however long the development of a comprehensive, inte- INTEGRATING HUMAN RESOURCE PLANNING AND DEVELOPMENT 93,grated planning system such as this may require, the results of such a system can make the job worthwhile, if not essential to organizational survival. The development of the right mix of human resource skills and talents needed by the changing organization, especially the cost-effective development of the managers and professionals most essential to the realization of changing business goals, represents a challenge for long-range business planning. Management positions in today’s complex business environment are increasingly specialized, require rising, levels of technical and professional compe- tencies spurred by the pace of technologi- cal change, and in well managed compa- nies are increasingly filled by people committed to organization-specific goals and objectives. Too often, however, management devel- opment is seen primarily or solely as a “human resource program,” a function of personnel department planners and func- tional specialists with little involvement or knowledge in the areas of strategic plan- ning and operational planning. Human resource heads receive their marching orders from corporate planning, at best, and rarely participate in the decisions that affect current and future demand for the human resources they are charges with “developing.” Human resources will shape the com- petitive positions of organizations in the years ahead, and human resource planning and development is increasingly perceived as the business planning system for the future. If human resource planning is to meet the demands of its role, however, a first requirement is that is must be truly integrated with strategic and operational planning. 94 HUMAN RESOURCE PLANNING, VOLUME 11, NUMBER 2Copyright © 2002 EBSCO Publishing