HRM 498 Week 2 Developing a Strategic HR Plan Example

A Three-Year Strategic HR Plan to Staff the Backlog: Environmental Scan, Workforce Forecast, Five Initiatives, an HR Scorecard and the Budget at Front Range Infrastructure Group

[Student Name]

University of Phoenix

HRM/498: Strategic Human Resource Management and Emerging Issues

Week 2 Assignment

[Instructor Name]

[Date]

Front Range Infrastructure Group and all figures are composites written for a model paper; planning methods and research findings come from the sources listed and are stated generally.

Week 1 found that Front Range Infrastructure Group, the composite Denver engineering and construction firm, declined six projects worth about $310 million last year for lack of project managers and licensed engineers, and identified five gaps between its strategy and its HR practices. The executive committee asked the chief people officer for a three-year plan that would let the firm bid on the work available. A strategic HR plan earns its name when it produces specific people for specific business goals by specific dates. This paper presents that plan.

Environmental Scan

Several external forces shape the plan. Federal infrastructure funding will sustain public project volume in the region for several years. Demand for civil engineers is strong nationally, and public agencies offer stable jobs with pensions that attract mid-career engineers. Colorado's pay equity law requires salary ranges in job postings and limits use of pay history, making pay competitiveness visible. About 22 percent of Front Range's senior project managers are 58 or older. Hybrid work expectations among engineers have changed what candidates seek.

Internal Assessment

Front Range's strengths include a reputation for quality, interesting projects and strong field safety. Weaknesses include no development path to project management, pay below market for project managers and senior engineers and performance management that rewards billable hours over project outcomes.

Forecasting Demand

The business plan targets winning 25 percent more work by year three. Each project manager can lead about $40 million of annual work, and each requires about two to three licensed engineers. Demand therefore rises from 160 to about 190 project managers and from 420 to about 480 engineers over three years.

Forecasting Supply

With 14 percent annual turnover among project managers and expected retirements, about 70 of the current 160 will leave over three years. Internal promotions from engineering have averaged five a year. Without new initiatives, the firm would have about 105 of its current project managers plus 15 promoted, about 120, against a need of 190, a gap of 70. For engineers, turnover of 10 percent a year and promotions out to project management create a gap of about 150 hires over three years.

Why Focus on a Few Roles

According to Becker and Huselid (2006), the payoff from HR spending is greatest when it is concentrated on the strategic jobs whose performance most affects the business, rather than spread evenly. Front Range's plan follows that logic: most of its spending targets project managers and senior engineers, who are roughly 33 percent of headcount yet determine whether the firm can bid on and deliver projects. Trades workers and support staff benefit from broader practices, but the plan's distinctive investments go where the bottleneck is. Spreading the same budget across all 1,800 employees would leave the bottleneck unsolved.

Strategic HR Goals

The plan sets four goals: reduce project manager turnover to 8 percent, promote 15 engineers a year into project management, hire 50 engineers a year and have a ready successor for each of the 20 most senior project leaders.

Initiative One: The Project Manager Academy

An 18-month program will prepare high-potential engineers to manage projects, combining courses in scheduling, cost control and client management with assignments as assistant project managers on live projects and mentoring by senior project managers.

Initiative Two: Market Pay

Project manager and senior engineer pay will move to the 60th percentile of market over two years, with posted ranges meeting Colorado law, and a retention bonus paid at project completion for project managers on major jobs.

Initiative Three: Outcome-Based Performance Management

Project managers' reviews and bonuses will weight safety, schedule, budget and client satisfaction rather than billable hours, aligning rewards with the differentiation strategy.

Initiative Four: Succession Planning

Each senior project leader will have an identified successor with a development plan, reviewed twice a year by the executive committee.

Initiative Five: Pipelines

Partnerships with three regional engineering schools for co-ops and internships, and a program recruiting veterans with engineering and construction experience, will expand the supply of entry-level engineers.

The HR Scorecard

Becker et al. (2001) proposed an HR scorecard that links HR deliverables to the business outcomes they drive. Front Range's scorecard tracks project manager and engineer turnover, academy graduates promoted, time to fill engineering roles and successor readiness, linked to business measures: bids submitted versus opportunities, backlog staffed and projects delivered on schedule.

Budget

The academy costs about $900,000 a year including participants' time, market pay adjustments about $2.4 million a year at full implementation, completion bonuses about $800,000, pipelines about $300,000 and systems and administration about $200,000, about $4.6 million a year. If the plan lets the firm bid on half of the work it now declines, the added margin of roughly $15 million a year far exceeds the cost.

Timeline and Owners

Year one: launch the academy, implement the first pay adjustment, redesign performance management and identify successors. Year two: second pay adjustment, first academy graduates, full pipeline partnerships. Year three: review and refine. The chief people officer owns the plan, with initiative leads in operations and HR.

Risks to the Plan

The biggest threats to success are external funding, competitors and internal resistance. Public infrastructure funding could slow, reducing the work available; the plan's pay and pipeline commitments would then be scaled back. Competitors could match pay increases, eroding the market position; the academy and outcome-based rewards are harder to copy. Senior project managers could resist mentoring because it competes with billable work; mentoring is therefore counted in their performance goals. Naming risks in advance follows the logic of fit, which treats HR strategy as a set of choices that must hold up as conditions change (Wright & McMahan, 1992).

Review

The executive committee will review the scorecard quarterly and the plan annually, adjusting for changes in funding, the labor market and the backlog.

Conclusion

Front Range's strategic HR plan starts from the business goal of bidding on available work, forecasts a gap of about 70 project managers and 150 engineers over three years and closes it with five initiatives aimed at the causes found in Week 1. An HR scorecard ties the plan to business results, and its cost of about $4.6 million a year is small compared with the margin on work the firm now turns away.

References

Becker, B. E., & Huselid, M. A. (2006). Strategic human resources management: Where do we go from here? Journal of Management, 32(6), 898-925. https://doi.org/10.1177/0149206306293668

Becker, B. E., Huselid, M. A., & Ulrich, D. (2001). The HR scorecard: Linking people, strategy, and performance. Harvard Business School Press.

Wright, P. M., & McMahan, G. C. (1992). Theoretical perspectives for strategic human resource management. Journal of Management, 18(2), 295-320. https://doi.org/10.1177/014920639201800205