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If you don’t know where you’re going, how will you know when you get there? That’s why every organization needs a statement of its purpose or mission, and a strategy for planning its future.

Organizational strategy

Managers are responsible for allocating resources to achieve their organization’s stated goals, and this is where organizational strategy comes into play. Successful management of resources depends on effective planning. Managers need to set the organizations’ strategic direction and develop a plan to implement the strategy.

That plan defines the organization’s path into the future, and implementing it involves making decisions about the allocation of resources to reach the goals.

Organizational resources include intellectual capital, products, and financial capital, but the most important resource of all is human capital – the people who make it all happen. And because most organizations spend the largest percentage of their dollars on their labor force, firms that align their people strategies with their organizational ones are the most successful.

If you don’t know where you’re going, how will you know when you get there? It all starts with deciding what the organization wants to achieve throughout a reasonable period of time. In the past, standard business practice was to plan for long periods, such as five, 10, or 20 years – but, in today’s volatile business climate, most organizations plan for shorter periods such as one, three, or at most five years.

For your organization to remain competitive, it is essential to revisit your strategic plan frequently, and explore the business climate in your organization’s field to understand changes that may affect your company and its strategy. Strategy development involves evaluating the organization’s current business situation and determining where it wants to go in the future. Managing strategy is never “cast in concrete” – it is a continuous, recurring process.

Developing a strategic plan

The most enlightened organizations include human resources (HR) in the development of the strategic plan, so that the human resources plan can link directly to the strategic plan (discussed later in this chapter).

The typical approach to strategic planning is a three-step process:

1. Establish why the organization exists, its mission.