17 Nov 2018
In this latest blog series, we have been focusing on how HR is integral in the IBP process and how it can be hampered if HR is overlooked. Ultimately, integrating this function Into every step In the IBP process is essential in ensuring that the right people resources are in place at the right time to execute the organisation's planned activities. In our final instalment, we highlight the last two steps of the IBP process which look at finalising plans and incorporating HR in the forecasting, alignment and strategic phases.
Integrated Reconciliation (IR), best thought of as a process in its own right rather than just another step in IBP, is intended to continuously identify and resolve misalignment between plans, across the organisation, at the lowest possible level. These plans include the plans for Product, Demand and Supply, along with inputs from the enabling, support functions and strategic initiatives, influenced by the HR team.
The IR process ensures that the entire organisation is heading in the same direction, and that the newly reconciled 24-month plan meets the organisation’s commitments, including the annual plan or budget, performance goals and strategic objectives. It addresses the identified issues and potential issues across the planning horizon.
An effective Integrated Reconciliation process requires the organisation’s leadership team to empower the next level down in the management structure to work together, across functional boundaries. This is to resolve misalignment issues and gaps to committed plans at the lowest practicable level in the organisation. The HR function can play a vital role here, identifying and communicating the behavioural changes required by the leadership team and Integrated Reconciliation participants for IR to be effective. If they have the skill set, HR can also provide feedback and coaching as those new behaviours are adopted.
The Reconciliation Review is conducted at the conclusion of the Integrated Reconciliation process for each monthly IBP cycle, prior to the Management Business Review (Step 5). It reviews the combined outputs from the plans for Product, Demand and Supply, along with inputs from the enabling, support functions and strategic initiatives.
The final step in the monthly IBP cycle, the Management Business Review, is chaired by the CEO or MD, and attended by their leadership team as well as the Integrated Business Planning Leader. The HR Director attends and is expected to be able to provide input on any issues and decisions required where people are a factor. As with all participants in the MBR, the HR Director is tasked with adopting a ‘best for business’ mentality during the review and when contributing to decision making, rather than the traditional ‘best for my function’ approach that is often the case in many ineffective management processes.
As part of the leadership team, the HR Director is expected to sign-off on the latest joined-up company plan submitted that month. This indicates that the plan is the result of aligned functional, enabler and project plans across the organisation. Where the latest plan shows a gap to the committed annual plan, performance goals, or strategy, the leadership team, including the HR Director is expected to agree on and take accountability for the gap closing actions.
One area where the HR function has a considerable role to play is in enabling the organisation to reset or refine objectives for teams and individuals, where the latest plans approved through the IBP process make existing objectives sub-optimal. The ability to adjust the criteria on which performance is measured is essential if the performance management system is to effectively support execution of the plans agreed through IBP. Think of the monthly IBP process as a ‘check and correct’ process; it is vital the criteria upon which individuals and teams are measured and rewarded keeps pace with any corrections in the IBP plan.
The composition of HR teams and their remit varies from organisation to organisation, but no matter who gets involved, it is important HR plays an active role in the IBP process. When times get tough, the first thing an organisation typically does is cut people-related expenses (training, development etc). If this is done without understanding the impact on future capability and capacity and organisation can get stuck in a short-term cycle of destroying potential growth or success. Which role is HR playing in your IBP process?
This blog was taken from Oliver Wight’s latest white paper, People Watching: HR’s Role in Integrated Business Planning, which is available for free download here.
Partner, Oliver Wight International
Stuart is based in Sydney, Australia but has spent 20 years working in key change agent roles in major manufacturing organisations around the world. Whilst gaining deep knowledge in a number of industries including metals and FMCG he has developed extensive experience in improving and linking processes across organisations and supply chains to enable the successful deployment of strategy.