No matter the size of your company, you need a staffing plan. Just you? You still need one. Here’s why.

A staffing plan requires that you know what people you need and when you need them.

That means you must know what you want, what you need to do and how you are going to do it.

The two main approaches to ascertaining this information are described below:

• SOP (seat of the pants): Used frequently throughout business history, and extensively in the late Nineties. In this approach the desires of the CEO (top dog) are discussed over lunch with other (hopefully) senior staff members. Separately, each manager prepares a budget, including headcount for his department based on
  • what he thinks is needed to accomplish what the head honcho says she wants and
  • increasing his own leverage within the company (although his actual priorities frequently reverse these).

• OBO (operating plan w/ budgets and objectives): Definitely the road less traveled, although the road of preference for sustainable success. It requires the
  • identification of the specific annual objectives to achieve the company’s long term goals;
  • creation of a viable operating plan to achieve those objectives; and a
  • detailed financial plan by which to implement it.

While a staffing plan is the end result of SOP, it is a by-product of OBO—the actual end result being a detailed business roadmap for the year.

Although there are many variations, the SOP needs no further explanation, so we’ll focus on the OBO.

The OBO is composed of three interlocked plans

1. A description of the financial (increase revenues 10%, increase services to 25% of revenues, etc.) and quantified managerial (raise productivity 8%, reduce turnover 15%, etc.) targets the company is committed to achieving for the year.
2. A budget that states how much is to be spent that year and who is responsible for spending it.
3. The objectives (not always financial) defining the targets of the company for the year and assuring that the company achieves its long term twin goals of profitability and success.

Unfortunately, many companies either don’t or refuse to recognize that the above three parts are interrelated and must be tightly linked. They treat them as separate entities where any one of them may be both planned and changed without impacting the other two. Too often, a CEO or vice president will demand a reduction in a manager’s budget without recognizing (or admitting) the inherent domino effect:

• If the budget for an objective is eliminated,
• the objective must also be eliminated.
• If the objective is eliminated, the operating plan which depends on that objec­tive cannot be met.

The interlinking isn’t rocket science, but cause and effect, e.g., business is down > budget is reduced > people are laid off > objectives must change.

Worse, many, especially smaller companies, prefer using the SOP approach for the simple reason that developing these plans places constraints on aspirations and requires the CEO and her team to make hard choices. It’s work! It takes time!

Why bother? In short, because it means that all your managers (from executives down to the lowliest supervisor) can be relied on to execute the Operating Plan intelligently and without further direction.

How? By following the steps below (using common sense to modify them to fit your company) you get buy-in from every manager in the company, a statement of objectives incorporating the commitments of them all, and a budget which reflects the agreed spending level for every person with any kind of budget responsibility. (Remember, the further down you push budgetary responsibility the faster your people will grow.) The process ensures that all managers are completely informed of, and in total agreement with, their budgets, their objectives, and the Operating Plan.

Steps to take:

1. The CEO lists the top-level financial and managerial targets of the company.
2. The CFO then creates an income statement based on the CEO’s targets.
3. The two are distributed to the senior staff.
4. Each VP analyses the part for which she is responsible and decides what she will have to do to accomplish it, i.e., additional headcount, cooperation from other departments, etc.
5. The senior staff negotiates their inter-related needs.
6. The result of this negotiating process creates separate departmental budgets and may modify the original target objectives.
7. VPs may add departmental objectives to portion of the trial plan, e.g., a new computerized software release tracking system in engineering.
8. The result is a trial operating plan and budget.
9. The VPs then take the trial plan and budget to their own staff and repeat the negotiating process with their direct reports who then do it with theirs, etc.
10. The result is the first Detailed Budget and Operating Plan.
11. At this point the CEO may have to reconsider her initial ideas about what goals can be achieved at an acceptable level of expense.

Any change requires a revision of the plan and a repeat of the above steps—and multiple revisions are not unusual. Also usual are passionate discourse and heated discussions before a completely acceptable operating plan is produced.

The next big question is, who gets to see it? Although rarely done, the smartest companies make the overall Operating Plan and Objectives available to all knowledge workers via the company intranet.

Why? Because employees at all levels are happier (read: productive and innovative) when they know that their company knows what it’s doing, where it’s going, and how it’s going to get there.

Additionally, it enables management to execute the plan without detailed day-to-day supervision because the trade-offs have already been worked out and empowers lower levels of management through their inclusion.

Finally, and one of the most important side benefits to the process, micro-managers and those who believe that workers are all peons to be shoved around according to the manager’s whims will either change or go away.

This entry was posted on Monday, December 4th, 2006 at 11:27 am and is filed under Business info, Communication, Culture, Leadership, Motivation, Retention. You can follow any responses to this entry through the RSS 2.0 feed.
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