66 Long Range Planning, Vol. 21, No. 1, pp. 66 to 72, 1988 Printed in Great Britain 0024~301/88 $3.00 + .OO Pcrgarnon Journals Ltd. zyxwvut Strategic Planning for Human Resources Let’s Get Started zyxwvutsrqponmlkjihgfedcba Stella A4. Nkomo This article sets forth a basic starting framework for a strategic human resource planning system. The framework involves several complex subsystems which require sustained effort and persistence in developing a workable model. The incom- plete practices often used by organizations run the risk of reducing human resource planning to an unproductive management activity, instead of recognizing it as an important component in the total strategic planning process of a business. Introduction In recent years considerable attention has been focused on strategic human resource planning as a means of directly linking organizational goals and stratcgics to human resource objectives and programmcs.’ ’ Governmental, economic, sociocul- tural and demographic changes during the 1970s are often cited as a major impetus for this heightened intcrcst.5 Advocates of human resource planning argue that the USC of formal human resource planning models in organizations will contribute to the effective and cfflcicnt utilization of human resources. While numerous models and approaches to human resource planning have been dcvcloped and proposed, a recent survcyh of Fortune 500 firms indicated that while 54 per cent of the firms prepare formal strategic human resource plans, only a small fraction (15 per cent) are currently using comprc- hensive systems. The few firms using fully inte- grated strategic human resource planning systems reported significant benefits in the areas of labour costs savings, employee satisfaction, employee pro- ductivity, management development and stafling effectiveness. Managers also felt that there had been a positive impact on overall organization perfor- mance. Further, few firms in the survey report an integral Stella M. Nkomo is Assistant Professor in the Department of Business Administration at the University of North Carolina at Charlotte. linkage between human resource planning and strategic business planning. Strategic human resource planning efforts appear to be carried out in isolation from strategic business planning or human resource planning decisions are trcatcd solely as a derivative of strategic business planning rather than a primary function. What is clear from this survey is that formal strategic human resource planning is still in its infancy even among Fortune 500 firms. This result suggests that the literature is far ahead of actual organizational practices. These findings raise an important question. Why have so few firms dcvcloped comprchcnsive stratc- gic human resource planning systems? Many poss- ible explanations exist. First, despite the lip service given to the clichk ‘Pcoplc arc our most important asset’, in many organizations people are viewed as an operating cost and not as a major corporate resource or investment. Most well-operated companies rou- tinely apply the ‘return on investment’ concept to their financial and production operations, yet fail to apply this concept to the management of their human rcsourccs. The prevailing assumption of most line managers is that appropriate human rcsourccs can bc found on short notice. Second, strategic planning for human rcsourccs has generally lagged behind planning for capital and financial resources. The human rcsourcc dimension of plan- ning has been largely treated as a short-term implementation issue rather than a driving force in the formulation of strategic plans. As a result most human resource planning has been essentially ‘employment planning’-the extrapolation of future human resource needs from the number of employees on the current payroll with little know- ledge and understanding of the strategic business objectives of the organization. The irony of this reality has been aptly described by Skinner:’ So the ultimate irony is that the personnel function--which deals with the most fundamental and central corporate competitive resource and that has the longest time horizon of