What is the Value of Strategic Planning in Modern Business?

Written by Brett Price, Sales & Marketing Director of The Appointments Group

Many companies spend a significant amount of time on strategic planning but some executives believe that it is little more than a dog and pony show and see little benefit from the investment.



So what is current thinking on the value of strategic planning?

The practice originated in the 1960's as an attempt to combine short term and long term planning. The process most commonly involves a core group of planners undertaking the following steps:-

1. Establish a Mission or Vision. What does the organisation want to achieve? 
2. Set goals. What is to be achieved for the organisation to achieve its vision? 
3. Objectives. Break down goals into specific measurable objectives that can be monitored. 
4. Identify internal Strengths and Weaknesses, assess external environment for Opportunities and Threats.  
5. Evaluate and Select Strategic Options. 
6. Actions and Tasks. Identify steps that individuals and teams must take to execute strategy.
7. Control. Establish a system to compare actual with planned performance,and to rectify under performance. 

The basic aim of strategic planning is to link daily organisational decisions with a vision of where the organisation wants to be at some pointin the future, usually 3 to 5 years.
In the 1980's many management experts were questioning whether the traditional model of strategic planning was inadequate in an environment forced to deal with what appeared to be a new paradigm of constant change as a result of two Oil Crises and the arrival of what seemed to be an unending stream of new technologies. 

The revised attitude to strategic management was that:-

• It is impossible to predict the future. Change is discontinuous and unpredictable and planning has to reflect this. 

• Planning now involves the identification of new ideas and trends as they occur and to quickly mobilise resources required to capitalise on them. 

• The role of senior managers is to support and develop the ideas of middle managers and frontline staff because only they are in a position to know what the customer wants and predict latest market trends in a rapidly changing environment. 

• As unexpected and chance events are now the norm, organisations must learn to respond promptly, exhibit flexibility, spontaneity and creativity when reacting to customer demands and changing market circumstances.          

Has the rapid pace of the modern world rendered strategic planning irrelevant?

Despite claims to the contrary there is plenty of evidence demonstrating that strategic planning is still a worthwhile process. There have been a number of studies which advocate a positive effect of strategic planning on company performance. A review of twenty six researchers of small businesses found a positive relationship between strategic planning and organisational performance. Another study found evidence that supported a relationship between strategic planning and financial performance.The use of strategic planning in small business firms is claimed to be increasing over time because of the belief in the benefits of enhancing corporate performance. 

Kaplan and Beinhocker (2003) undertook an in depth analysis of the strategic planning processes of thirty companies, some of whom had a long term history of success and others that had made serious strategic blunders. They concluded that the true value of strategic planning was to make sure that key decision makers have a solid understanding of the key issues, agree on important assumptions and share a common understanding of the facts surrounding the business. This serves as a solid foundation upon which good strategic decisions can be made despite a constantly changing environment.In essence, it was concluded that companies that achieve success used strategic planning not to generate strategic plans so much as a learning tool to create"prepared minds", for success.

References: McGrath and Bates (2013) The Little Book of Big Management Theories. Pearson Press.

Interviews: The Vital Gateway through which Talent enters your Organisation.

An interview conducted well can result in employment of superior talent which can be invaluable in achieving a competitive edge. Done badly, an interview can result in the employment of a dud who is a drag on the business for months or even years.

Here are X tips to assist in you developing an interview style to maximise your chances of recognising and hiring top talent.

1. Determining the skills and experience required to perform the job at hand. First and foremost identify the attributes which you are seeking to hire, in terms of training, skills and experience. For example Degree qualified in agronomy, 5 years’ experience in technical sales of crop chemicals, highly developed communication skills and demonstrated ability to manage a field sales team.

2. Preparation for the Interview. Thoroughly review the resume of candidates before they arrive to identify the degree to which they appear to fulfil the job requirements. Devise some questions to enable you to gain a more in depth understanding about the skills and experience relating to the role. It is a good idea to prepare similar questions for each candidate to enable a comparison of their response at the end of the interview process. Questions should be directed at identifying the degree to which a candidate fulfils each of the selection criteria. They should be open ended to provide the opportunity for a candidate to elaborate on their skills and experience.

3. Conducting the Interview. Begin by introducing yourself and any other attendees. Explain the format of the interview and offer a brief overview of your company including what it does, its size, growth plans and culture (the way we do things around here). Provide an engaging description on offer including upcoming projects and career progression opportunities. Ask prepared questions and remember that all questions should be directed at identifying skills. Listen carefully to responses and take notes for future reference. Be aware of attempts to evade questions and probe deeper if required. Pay careful attention to the applicant’s personal style, attitudes and values which may be relevant to the selection criteria or the culture of your company.

4. Conclusion of the Interview. Ask the applicant if they have any questions about the role or the company. This is a good way to test if they have thought through the position and listened through the interview process. Thank the applicant for their time and interest and inform them when they are likely to find out the decision.

5. Following the Interview. It is a good idea to summarise your notes as soon as the applicant leaves. This will ensure that you capture your impressions of their personality, skills and abilities whilst fresh in your mind. This can then be used later for comparison with other applicants. Ensure you maintain a professional image by notifying unsuccessful candidates in a timely and personable manner.

6. Including more than one interviewer. The use of multiple interviewers or an interview panel can increase the reliability of the process. Separate and subsequent interviews are now common practice amongst many companies who believe it improves the process even further.

7. Always conduct thorough reference checks. No matter how impressed you might be with a candidate.

8. Comply with Legislative Regulations. Equal employment opportunity legislation aims to ensure that applicants are assessed on merit in the recruitment process. On this basis questions relating to gender, age, marital status, race, religion or political beliefs are viewed as discriminatory and are therefore illegal .

Following these eight simple techniques will assist you to make the right hiring decisions more consistently.

Hiring for Good Cultural Fit

Like people, organisations have personality. Corporate culture defines the collective values, beliefs, attitudes and behaviours shared by a group of people who work together. Common cultural values include teamwork, integrity, and respect for the individual. Various companies share some cultural values but what does differ between organisations is how much certain values are emphasised and rewarded within the organisation.

A simple example of a poor cultural fit would be for an introverted person who prefers peace and quiet in which to work, to join an organisation which encourages open plan offices and high interaction with other staff. Time spent on internal communications represents another example of cultural difference between organisations. Some people are good at keeping everybody in the loop and others are independent workers, focussed on tasks and typically preferring to communicate only at milestones or on completion of a job. A further example is where an organisation places significant emphasis on managers coaching and developing talent. A candidate with a strong skill set who lacks the motivation or ability to develop others may not be a good cultural fit for such an organisation.

Good cultural fit is associated with many positive outcomes. In 2005 Kristof-Brown statistically analysed a large number of studies on cultural fit. From their study they concluded that employees who fit well with their organisation, co-workers and supervisor:-

• Had greater job satisfaction

• Identified more with their company

• Were more likely to remain with their organisation

• Were more committed and

• Showed superior job performance.

• Like people, organisations have personality.

Psychologists have estimated that the correlation between good cultural fit and these positive outcomes is around 40%, which means that cultural fit accounts for about half of the variation between employees in determining job satisfaction.

Successful companies understand the values that are core to their culture and they consistently hire people who practice those values and project that image. The challenge for employers is to possess an insight into their own cultures and to be able to articulate it to prospective employers and assess their fit. Behavioural interviews can be useful in screening for cultural fit. For example, "Describe the work environment where you believe you were most productive?" "Give me some examples of how you resolved conflict at work?"

The first round of candidate selection should clearly be on the basis of who best fulfils the background and experience required to do the job. In the second round of screening cultural fit is an important consideration. If candidates are judged equal on ability then final selection should be based on identifying the best person who fits the culture.

Candidates should also be mindful of their own preferences in culture when making a decision to join a company. Research prior to an interview can be invaluable. In addition, questions on culture at the interview will enable you to find out the type of attitudes, values and shared expectations which exist in the company. For a prospective employee such factors can have a significant impact on job satisfaction and career success.

Recruitment - Outsource or In-House

Of all the business functions you could outsource, for many companies recruiting functions are not always at the top of the list but there are sound reasons to consider outsourcing in the same way as outsourcing other functions such as marketing. Here are a few questions to consider in helping to decide which approach is best for your company:-

1. Which approach will provide the best outcome in terms of quality of candidates?
Most companies agree that people and the skills they bring are a firm's most valuable asset yet many companies compromise on the quality of the candidates they attract by not providing sufficient resources in time, effort or expenditure to the recruitment process, resulting in poor outcomes for the company and/or candidates and higher staff turnover which can be a hidden but very significant expense.

 

2. What resources are required internally to be an effective self-recruiter?
Having an HR Manager or HR department does not necessarily mean a company has the resources to be an effective recruiter of skilled people. These days an HR Manager's primary functions are often to build a positive work culture, deal with conflict, ensure compliance, induct new employees, manage the workplace training program as well as often also doing payroll. These are all internally focussed activities and they are vitally important to the business. Recruitment is an externally focussed activity, requiring a depth of industry knowledge, identifying where the talent is and who is seeking a change.

A number of companies have recognised that the traditional HR Department model of recruiting no longer works in the modern world for this reason, and have subsequently developed a new section or department employing a team of Talent Finders whose job it is to acquaint themselves with the talent in the market and hiring according to the companies requirements. This can be an effective model but whether it is a fit for a particular company depends on the size of the company, the number of vacancies it expects to fill annually and how broad a skill set they will be required to employ. The reality is that to have an effective team of Talent Finders can be an expensive proposition for even large companies. The outsourcing option is an effective means of accessing talent finding skills only when required, and remains a variable cost, whereas an in-house team becomes a constant overhead cost to the business. It is interesting to note that even many of the larger multinational companies use outsourcing because of the realisation that their in-house teams cannot compete with specialists who are constantly operating in and therefore increasing their knowledge of the market.

3. How has recent technology changed the process of sourcing talent?
The advance of technology has improved speed and easy access to information, elements highly prized in a competitive environment.

The rise of online jobs boards, social media and the like have significantly changed the recruitment industry. Some believed that the easy access to information would result in a trend of more companies to conduct their own hiring. There appears to be no evidence that this is occurring and it is probably because increased access to information has significantly complicating the hiring process rather than simplified it. What recruitment consultants do that technology cannot is to match the information they have of the talent market with the specific requirements of the company they are recruiting for. A good recruitment consultant will actively gain an understanding of his/her client's company, its culture and hiring needs and evaluate candidates, make judgements and offer opinions as to a candidate's match with the organisation and its needs.

Is it worthwhile to advertise over Christmas/New Year?

Two years ago, I wrote an article for this newsletter, concerning seasonality in recruiting from the point of view of both candidates, i.e. the times of the year when candidates were looking to change jobs, and employers, i.e. when employers were most looking to hire.

The conclusion I drew was: "it depends". That is "it depends" on the industry, in particular if there is seasonality in the business and when bonuses are paid. For example you don't go looking for winemakers in vintage because most winemakers are up to their gumboots in grapes and have little else on their minds other than fermenting grapes. Similarly the best time to recruit an accountant is not around the new financial year. A bonus for a salesperson often falls due in July, so June is not a popular month to move.

On a similar vein and as it is nearing Christmas, I thought I would tackle the question of "does the festive season affect recruiting?". This thought is prompted because some of our clients have raised the question "Is it worthwhile to advertise vacancies over the Christmas/New Year period?".

A decade or more ago, I would have said yes, the "festive season" does affect recruiting, because job vacancy advertising, before the formation of internet job boards, shrank to practically nil over the Christmas and New Year period. Some 15 years ago, practically the only advertising medium was newspapers and candidates were conditioned by long precedent that there were very few positions advertised until the 3rd or 4th week of January. In addition most candidates on holidays in those days didn't have access to a printer and so had to wait until they were back at work to submit an application.

All this has changed since the advent of internet job boards and more recently, Smartphone's and tablet computers. For example, I read last weekend that the average person on holidays expected to spend three hours per week on their Smartphone/tablet/laptop, checking emails and work matters. Work has invaded the annual leave period, especially for anyone who has a portable device.

Candidates are nowadays checking job boards and receiving job emails from job boards, getting job notifications by Twitter and from Facebook friends, seven days a week, 52 weeks a year. Because most ads are up on job boards for 28 days (versus the one day of newspapers), candidates can now check at their leisure for job opportunities all through their holidays. In addition, a resume can easily be sent by email or uploaded from your Smartphone or wherever in the "Cloud" you keep it.

One of the key factors here is that people who are often passive candidates (i.e. those not actively looking for a new role) can become active searchers over the vacation period. Whilst on holiday they have the time to search for new roles and more importantly they have the time to think about change. Thus some of the best candidates can come onto the market and so it is important to be there, ready to tell them about a marvelous new role.

Of course people don't just take holidays over the Christmas and New Year break, but a sizeable portion do take at least a week to two weeks over this period and to miss out on this opportunity just because of an outmoded impression that the whole nation turns off would be unfortunate.

From an employer's / recruitment point of view, the sensible thing to do is to plan to advertise across the "festive season". After all the relatively modest cost of internet advertising and the potential benefit is such that you can't afford to miss the opportunity.

Recognise Behavioural Questions and Be Prepared for Them.

A common interview technique is the use of behavioural interviewing. The basis for this type of interviewing is that past behaviour is an accurate indicator of future behaviour and behaviour is closely linked to performance.

The behavioural questions asked will relate to the selection criteria for the role you are being interviewed for, so if you have an understanding of the selection criteria then you will be able to prepare for some behavioural questions.

Recognising a behavioural question.
Behavioural questions are different from hypothetical questions, which focus on what you would do in a certain situation.

The often start with, "Tell me about a specific situation when… ". or, "Give me an example of when you had to……".

The interviewer will be looking for four elements to be present in your answer. These elements can be most easily remembered as the STAR format:-

Situation – Identifying a specific situation which you were faced with (preferably but not necessarily in the work environment)

Task – Outline the task which you were required to achieve

Action – Describe the action you took

Result – Explain the outcome from your actions

The key to providing a good answer to a behavioural question is to come up with a credible example with a positive outcome resulting from your actions or at least it being a valuable learning experience. If the example doesn't result in a "happy ending" then you should choose another example.

To practise answering behavioural questions, make a list of the selection criteria for the job and reflect on examples of your past achievements which demonstrate your capability in each criteria.

Examples of Behavioural Questions


Describe a time when you were under pressure of meeting multiple deadlines.

What did you do to get organised and achieve what was required of you? (Selection criteria – time management)

Give me an example of a time when you saw the opportunity to make a work process better or more efficient.

What did you do and what was the outcome? (Selection criteria – demonstrating initiative).

Tell me about a time when you were let down in a group or team.

What did you do and what was the outcome? (Selection criteria – teamwork).

What is Best Practice in Employee Turnover Rates?

Many companies have concerns about the availability of skilled labour to meet their projected demands. While hiring new and qualified employees is critical to meeting future demands, retaining existing employees and their skills is equally critical.

One way to track how effective a company is at retaining current employees is to look at its employee turnover ratio and compare individual performances to industry benchmarks.

Employee turnover is generally calculated as the number of employees who were terminated, quit or retired during a given period (typically quarterly or annually) divided by the average number of employees, multiplied by 100. Such calculations generally exclude probationary, part-time and temporary workers.

Rate of employee turnover can be influenced by a number of factors:-

• Type of Industry – What are considered normal turnover varies between industries

• State of the Economy – employees will be less inclined to voluntarily change employment under difficult economic conditions.

• Company Factors – size of company, level of engagement with employees, strategic factors.

Reported employee turnover rates most commonly range anywhere from 2% to 30% per annum. It is not surprising that most benchmarking reports suggests that having a lower-than-average employee turnover ratio is better than having a higher-than-average ratio.

From a profitability standpoint, research suggests that it’s important to be better than average in turnover ratio but it is also worth stressing that achieving best-in-class performance should not be a company’s sole objective. Other important strategic initiatives in a company can have a positive or a negative impact on turnover ratio. The real message is that balance is extremely important. You want to retain your key people and strong performers but you also want to have new people entering the organisation who can bring new skills, provide a fresh perspective and ideas for improvement.

One of the major concerns associated with having a higher than average staff turnover rate is the cost to the organisation in two areas:-

• The high direct cost of hiring new talent. This can be exacerbated by the shortage of skilled personnel which is currently common in many industry sectAgPeople rs.

• The loss in organisational efficiency associated with the constant loss of skilled and experienced people.

It is generally accepted that staff turnover is an important KPI to be measured and benchmarked in and between companies. Six percent turnover is often cited as a healthy balance between retention of existing skills. Concern may be warranted if turnover is found to be 15% or higher. Under such circumstances analysis of quality of leadership and employee satisfaction and engagement may well be justified to determine the root cause and to enable the development of tactics to reduce it to a level in line with existing company strategy.