How CHROs Can Own and Operationalize the Annual Plan

Annual planning requires more than just setting financial targets. The executive leadership team must work together to align every team member with your company’s strategic goals and then operationalize the path to get there. 

It becomes challenging for CHROs to manage performance, effectively resource the business, and get ahead on the people strategy required to achieve the right outcomes if they’re not deeply involved in the planning process from day one. Tack on an evolving talent market, and any hiring delay can have long-term impacts. 

In a conversation with The Circle, Cara Brennan Allamano, Advisor and former Chief People Officer at Lattice, and Sandy Smith, former CFO at Segment and Board Member at Lattice, shared best practices to operationalize your annual plan, including taking ownership of the process, using the company’s strategic initiatives to guide the conversation, and collaborating in new ways with your CXO peers to set the business priorities.

Be a Plan Owner

In a survey of CHROs in The Circle, more than 75% said they viewed themselves as a “contributor” to the plan. Cara encouraged her peers to consider an evolution in their role to be more proactive than reactive during planning season. “To deliver as a talent leader, you have to be an owner of the annual plan,” said Cara. 

Earlier in her career,  Cara initially assumed the CFO and CEO led the annual planning process, and her role was to fill in the blanks on headcount and provide information to the finance leader when asked. With more experience, she took more initiative, so she began asking the finance leads what questions they wanted answered during this process and her team prepared those answers with data to back them up. That experience then shaped her current view: 

“My approach to annual planning evolved to proactively coming to the table with strategy and priorities that are aligned with the CEO, sharing work my team has done, and seeking alignment very early on.” – Cara Brennan Allamano, Advisor and former Chief People Officer, Lattice

In this leadership partnership, Cara believes that the CEO drives the strategy, the CFO manages the budget and financial rigor, and the CHRO is accountable for talent and everything under it. The CFO and the CHRO are equals in terms of contributing to the annual plan delivered to the CEO and the board. Sandy emphasized that CFOs want their CHROs as equal partners. 

“The sooner the Chief People Officer is in the annual planning conversation, the sooner the two of us can evaluate our talent strategy against our financial projections.” – Sandy Smith, former CFO at Segment and Board Member at Lattice

While the CFO often sets the annual planning timeline, the CHRO can partner with them on key milestones and deadlines. Ideally, you want to kick this process off as early as possible – which typically means August or September for most companies.

Begin with the Strategic Imperatives, not the Headcount Questions

In order to have effective conversations about hiring, CHROs should first align their CXO peers on the larger business priorities. One tactic that Cara has found effective is to create a templated questionnaire that every function fills out. It includes the following criteria:

1. A SWOT analysis of the team to help leaders evaluate their function’s strengths, weaknesses, opportunities, and threats. 
2. Organizational design to evaluate  the team structure and helps to identify optimal ways of working. 
3. Succession planning to prepare for who will fill key leadership positions in the future. 
4. Talent review to evaluate employee strengths and skills gaps.
5. Performance data using talent density metrics to indicate how the team performs against its goals. 
6. Compensation to assess employee costs. 

In Cara’s experience, the HR business partners, in partnership with their executive, drove filling out this template with their teams. Cara was then able to elevate her own role as an executive to remove obstacles that got in the way of this process, articulate and evangelize the “why” behind planning, and set the tone around the partnership and ownness throughout the business.

Once all of the forms were submitted, the CHRO and CFO could evaluate them against the larger business priorities. Cara warns that it might take three annual cycles to fully realize this way of working, especially if your HRBP team is still maturing. In the first year, expect to do a “ride along” with your HRBPs as a CHRO. In the second year, team members may take on more of the work, but not do it perfectly, so oversight is still required. By the third year, you’ll hopefully be in a position where the team has built those muscles and they are consistently delivering what is expected. 

Cara finds that the headcount planning piece becomes one of the easiest parts of the process once you have answered these strategic questions first and have accurate data from talent reviews and performance management to inform your approach. 

Aim for Progress Over Perfection (at least to start)

One common process blocker that Sandy has observed is that CXO leaders might put off the questionnaire because they are so focused on getting it “right” that they have a case of analysis paralysis. “I tell people we can’t boil the ocean,” said Sandy. “We need to get on with planning.” 

One tactic she uses is to have her executive peers spend 30 minutes with her whiteboarding where they believe the company wants to be in three years and then highlight how their departments can support it. Focus on the “tentpoles you have to stand up if there are any hopes of getting the rocket ship to the moon,” she said. Then, Sandy sequences the priorities: What needs to be done in the first year? The second? The third? She doesn’t always expect the executives to hit upon a perfect answer in those 30 minutes. More so, this is about getting people moving on generating ideas and then refining them on the way to the final decisions. 

Another tactic Sandy has used for peers who aren’t fully participating in the process is to draft for them five things she thinks the business needs to accomplish in the next year. Then she goes to the functional leader and says, Here is what I am hearing from you about our business. What would you say? “Of course, they start editing and after a couple of rounds of feedback and ideas, we will all come out with our rough set of five top priorities for the next year,” she said. She refers to the working doc as a “mediated draft”. 

“We all know we will make the draft better together. But until you have that draft, you don’t have anything,” said Sandy.

Future Planning, Today: Prepare For How AI and Fractional Roles Will Impact Resourcing

Just as conversations about location and flexibility have now become a standard part of the employee hiring experience, so too will the topic of AI. Cara goes so far as to say, “If your company is not planning for AI capacity in the next two years, something is missing for your business.” Companies still need time to grow into their AI capabilities, but now is the time to figure that out. Otherwise, you could overhire next year as your AI technology reduces workloads across the employee base. 

A slightly less hyped, but equally important workforce planning trend is the increase of fractional work. There are talented people who are open and available to fractional work across industries, and companies can benefit from their expertise at a lower cost than hiring someone full time. “As people leaders, it is incumbent on us to have a point of view on fractional talent for our business” said Cara. 

The Takeaway:

The annual planning process is a team effort, but CHROs have an opportunity to be true owners in their craft by collaborating with CXO peers on setting the strategic initiatives, guiding the conversations on business resourcing, and making data-informed decisions on hiring considerations. By seeking alignment early on, and proactively leading the conversation, the CHRO establishes themselves as a key partner to the CFO and vital voice for the CEO and company.

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