Like most organizational functions, Human Resources entails a variety of deadlines and milestones for initiatives and actions throughout the year. Naturally, the year-end period is no different. But for some leaders, a focus on checking tactical HR items off the list during this time can mean insufficient attention paid to charting the broader strategic direction of the organization, weighing how the decisions made for one area may affect others, and considering the implications on the workforce moving forward. Here, we explore how organizations can better balance devoting ample time to framing the future of the company while still closing out year-end HR loops.
Commit to Collaboration and Strategic Focus
Some CEOs struggle at year-end with placing the right level of focus on strategic collaboration and higher-level thinking. This can happen as a result of them getting too deep into the trenches of tactical activities. It often occurs with leaders who ascended from a more tactical role or who simply grew accustomed to pitching in out of necessity to “get things done” while growing the business.
A common year-end outcome of this “in the trenches” mindset is a rationalization on the part of the CEO that they (perhaps along with the CFO) can adequately represent the views of HR as strategic planning commences, check some HR-oriented items off the list themselves, and not bring focused HR expertise to the table. This is a risky proposition that suggests an under appreciation of the perspectives that stem from HR’s direct connection to the workforce. If HR leadership is not a direct participant in the strategic planning that happens at year-end, miscommunication and overlap of effort can occur, causing many undesirable ripple effects.
In short, HR leadership needs to be a principal part of strategic planning to ensure alignment on organizational objectives is achieved and that the implications of decisions are fully understood. They need to work together with the CEO, CFO, and other key leaders to collectively agree on priorities and approaches for a wide range of issues to ensure the workforce is fully enabled and empowered to deliver on those objectives.
Don’t Wait Too Long to Begin Closing Out Key Loops
For many HR focus areas, the year-end period is too late to start. That’s not to say, however, that leaders should use that as a reason to take shortcuts if they find themselves in that boat. Just be mindful that waiting too long to begin focusing on key items may bring about re-activeness and hasty decisions that are not optimal. This often leads to misguided agreements or relationships with the wrong business partners that are entered into with a rationalization of checking something off the list or moving it onto a partner’s plate.
Benefits is a good example of an area that really should be addressed before year end. If you’ve not done so prior to that period however, it is important evaluate the benefits you offer to determine whether they align with shifts in demands and needs from your workforce. Generally, employees today want and expect more benefits than what has been traditionally offered in the way of healthcare and retirement planning. Benefits such as preventive and wellness programs, mental well-being, tuition reimbursement, periodic telecommuting, and more can make a big difference in being able to keep and attract workers. Additionally, with 401(k) and similar plans, it’s vital to check plan requirements related to required year-end data submission dates to avoid potential penalties. Many plans require data submission between January 31 and February 15. Consider requesting early testing to mitigate potential issues.
A comprehensive strategic HR calendar can be extremely helpful in mitigating these issues. An effective calendar will identify key initiatives, milestones, deadlines, and related considerations or steps that are expected to be especially impactful and require added preparedness in the year ahead. It should also note dependencies on other groups or leaders, such as times when they will need to provide information or input. The year-end period is a great time to review the HR calendar, assess it for gaps, and update accordingly for the year ahead.
Assess Previous Year Performance for Future Impact
Along with assessing your HR calendar and preparing it for the year ahead, year-end is also a great time for objectively reviewing the relative strengths and weaknesses of the strategies and plans you developed and followed for the current year. Focused discussion in each of these key areas yields insights that will strengthen your HR strategies and plans moving forward. This may include:
- Performance Management – Are we seeing the performance improvement we need and driving the right behaviors?
- Recognition and Rewards – Does anything need to change in how we’ve approached incentives, bonus monies, and related recognition programs?
- HR Information Systems – Is the data required to optimally inform decisions and actions available and accessible for those who need it?
- Recruitment and Staffing – How well are our current recruitment and hiring practices working? Will they be sufficient to support us moving forward?
- Work Design and Classification – Do we have the right people doing the right things?
- Regulatory Compliance – Are we aware of any changes in requirements? What areas of compliance management are the most difficult and how can we improve them?
The list above represents only a portion of the breadth and depth of initiatives and elements that HR typically is responsible for. While it’s important to review these regularly, year-end provides an opportunity to review these and other areas across a longer period. Most importantly, it allows for exploration that is paired with understanding of the company’s broader strategic plan for the year ahead and beyond.
Developing an HR Scorecard is a good way to assess these and similar areas and get a better sense of whether HR is performing as an effective strategic partner in alignment with the overall strategy of the organization, executives and line managers. Essentially, the HR scorecard helps one visualize how HR is doing across key performance areas (e.g. costs, retention, staffing, development, performance management).
Closing Out the Year Strong
For business leaders, the year-end period can naturally instill a sense of wanting to get through the tactical items required to formally close out the current year so they can have a moment to exhale before diving into the year ahead. But when tactical elements take away from the time required to properly focus on strategic planning for the future that fully incorporates the expertise and perspectives of key functional areas such as HR, planning is weakened and risks are introduced.
Have questions on how to strengthen your strategic planning and HR operations for the year ahead? Request a free consultation from a vcfo expert who can help.