Workforce Planning Making organizations more agile By Brian E. Wilkerson with Amanda Oldridge
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I N TODAYS business environment, the ability to rapidly understand the capabilities and trends in the marketplace adapt to market shifts can be a key differentiator. and can use that knowledge to make effective decisions Through workforce planning, an organization can about the talent pool. anticipate changes in both the marketplace and the World-class organizations are continuously executing workforce, and mobilize appropriate resources. A disciplined workforce planning. The purpose of workforce planning is approach to this process gives an organization the ability to enable the organization to meet its strategic objectives to change more quickly than its competitors and to more within the horizon of the strategic planning process. It lays effectively maximize its return on investments in talent. As a the groundwork for prudent use of assets. As such, it is not result, workforce planning can be the difference between a a static process that takes place once a year, but rather a successful business offering and a missed opportunity. dynamic activity that responds to changes in the business Many organizations, take a limited view of workforce and the environment. planning. For example, many companies see it as a process by which the business tells HR how many people it needs to Workforce Planning: process model hire, and HR gures out a plan to hire them. While certainly The workforce planning model begins with three inputs: a necessary part of the process, this limited view robs marketplace forces, workforce demographics and the the organization of the strategic value that well-executed companys strategic plan. Once these inputs are obtained, the workforce planning can provide. HR team translates the business objectives into organizational This article outlines the key elements of effective capabilities, competencies and/or directional statements. Gaps workforce planning and gives an overview of how to make between current and required future states are identied. Once workforce planning a foundation for strategy achievement. the plan is created, it is communicated to the organization and used as a basis to provide feedback to the workforce planning Workforce Planning: denition and strategic planning processes (see Figure 1). Workforce planning is the purposeful process by which an organization determines the future human resource Inputs to the Workforce Planning process requirements needed to achieve its strategic objectives. It One of the most important inputs is the environment in which requires an analysis of numerous factors, including current the business operates. Specically, the workforce planning staff, long- and short-term needs and weaknesses in the team must understand the marketplace forces that affect talent pool. It also calls for a detailed understanding of the the organization. This includes labor pools; the competition skills of the workforce and advanced decision support tools for talent in critical locations (which may be different from to help maximize the organizations talent pool. Its purview is the competition for products and services); the location the entire breadth and depth of an organization. Companies of potential talent; local economic indicators (such as that maintain an effective workforce planning process unemployment gures) in places where the company does business; and the rate of Figure 1: Workforce Planning corporate process new business growth in the relevant communities. In addition, an analysis of data Marketplace Forces Candidate related to the reputation Programs of the organization, the Buy perception of the company Build in the community and the Workforce Demographics Borrow relative importance of talent Acquire in the companys industry Trim can be valuable. When initiating Strategic Plan Translate to Assess Gaps Evaluate Options workforce planning, HR Dimensions and Costs/Benets an organization must take stock of its current Objectives workforce. Demographics Measurements (and not just data related Financials to equal opportunity rules) Implement Results Implement Plan Design Plan need to be collected. To effectively execute a
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workforce planning process, organizations need to know: Assessing gaps Labor cost The second step calls for a gap analysis. This includes a Location comparison of what the organization has with what it needs Skills/competencies to meet the strategic objectives. In this step, the team Attrition. This includes information about voluntary balances long- and short-term needs by using the strategic and managed attrition. plan as a guide. Dynamics history. This includes past data that describe The types of questions that should be addressed in this elements such as employee turnover, hiring rates and step are: types, and level of resource action activity. Will structure changes better allow the organization Strategic planning output may take the form of specic to achieve its goals? business objectives or critical success factors that the Where are more people needed? Fewer? company must execute in the next period, or it may be Which skills are lacking? In surplus? (a skills inventory) a higher-level blueprint. It is important to assess the Will the tools used in the past support the future direction? affordability of options. The best strategies for lling talent Will the tools needed to support the strategy require new skills? gaps are useless if there is no money to fund them or if How expensive will the change be? funding them takes resources away from other critical In which skills/location, etc., is the organization investing? business investments. The practical nature of workforce Which areas should it de-emphasize? planning requires a forward, What are the critical positions? Where are the retention risks?
Translating into HR dimensions Evaluating options
The rst step of workforce planning is to translate the The third step is to determine which HR initiatives and programs business objectives in the organizations strategic plan into are the best t for the organization, which most effectively HR dimensions. HR dimensions are strategic human-capital- address gaps, and which have the most positive impact on related areas of focus, such as organizational capabilities, the strategic plan. The workforce planning team needs to competencies and directional statements. HR leaders must identify alternatives that will enable the organization to gain the consider the HR implications of executing each business necessary talent within the specic time frame to achieve the objective and the capabilities necessary to support achieving strategic objectives. To accomplish this, the team rst inspects the objective. Of course, this is not a process that HR the overall mechanisms to change the workforce (see Figure undertakes alone. Once an HR dimension is identied, the 2). Selected methods for closing talent gaps should t the workforce planning team must test the connection between organizations culture, marketplace, strategy and values. having a particular capability and achieving a certain business objective. Figure 2: Mechanisms to change the workforce For the process to truly work, the HR implications of the Buy - recruit & hire talent strategy must be understood. This includes the impact on headcount, labor cost, skills and locations. Analysis will Build - develop & promote talent from determine which metrics support all the objectives and which within the organization support only some. Borrow - contact for talent Cross-functional discussions about the link between Acquire - purchase entire companies that contain talent and achieving objectives are crucial. For example, the needed talent companys strategy may call for an increased presence in the Asian marketplace. The HR leader, using the cross-functional Trim - reduce number of employees workforce planning team, could translate that objective into expanding headcount throughout Asia. However, the Next, each initiative must be evaluated on cost, benet and workforce planning team must also be aware of potential value. The team should create budgets for each option, evaluate conicts in metrics. opportunity costs, determine capacity requirements and test Using the example above, a metric to assess the proposed affordability. Achievable options should be closely associated expansion might be total workforce headcount. However, if the with nancial goals and/or the organizations budget. The overall workforce is being reduced, this metric would not be impact on the current organization also is taken into account. appropriate because it would not indicate the success of the Asian expansion. The planning team or HR leader would need Designing the Workforce Plan to identify a metric that accurately assesses the success or The fourth step is to determine and design the workforce failure of the increased presence in Asia. plan itself. Plans vary from organization to organization but
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Effective workforce planning can mean the difference between average performance and market leadership
generally include many of the following elements:
Links to business objectives
to support the organizations strategic objectives. Workforce planning inuences all the other talent management Program/initiative description processes, and these processes inuence the plan itself. Timing of work efforts An organization must understand the impact its workforce Targets and/or milestones planning process and plan have on recruiting, performance Metrics management, succession planning, scheduling/assignment, Workforce dynamics forecast learning and development, and career development. Workforce statics forecast Many organizations fail in this area. Talent management Plan update process processes disconnected from the workforce planning Feedback process process are similar to strategic initiatives disconnected Risks and contingencies from the strategic plan results will not align with where The goal of the workforce plan is to articulate what will be the company needs to go. Full integration of processes done, when and by whom. Since many stakeholders are involved, throughout the workforce planning and employment life cycle it is important to identify the owners of programs or tasks. is critical but difcult to achieve. In most organizations, these processes have long been disconnected, and often HR does Implementing the Workforce Plan not have the tools to achieve full integration. The fth step is to implement the workforce plan. This In such cases, robust talent management systems can provide includes communicating the plan across the organization, a signicant advantage. These systems not only help manage rolling it out and monitoring the status of the implementation. individual talent management processes, they also help integrate In an organization with an ongoing focus on workforce them into a comprehensive workforce planning framework. planning, training the management team is straightforward. But in an organization new to this process, the task is Conclusion complex. In the end, managers are the ones who determine An effective workforce planning process is more than a few the success or failure of any workforce plan, so this step discussions about what the company will need in the future. is critical. Too many organizations assume the appropriate It is a blueprint of how to put in place the kind of workforce management capability and are disappointed in their the company needs, it sets out the structure, preparation and workforce planning results. teamwork that will require. Companies that have adopted a disciplined approach to workforce planning have improved Interpreting results their readiness for change and their ability to respond to The sixth and nal step is to monitor results of the market shifts. These companies also better anticipate the implementation and to assess their impact on the needs of their business, their marketplace and their workforce. organizations workforce and strategic plans. Progress HR leaders who provide a powerful, positive impact against the plan should be measured and reported regularly, on corporate objectives see workforce planning as a key this involves understanding the mechanism for tracking lever. Understanding the workforce, laying out a plan of progress against workforce plan initiatives as well as action and implementing the workforce plan better enables updating and resetting the forecasts when necessary. the HR team, and the organization overall, to achieve the Depending on the difference between the strategy and organizations strategic objectives. Effective workforce the results, HR leaders should analyze why the organization planning can mean the difference between average fell short (or overachieved), understand the impact on the performance and market leadership. overall business and determine further actions. Depending on how much the plan has diverged from its original intent, HR leaders may need to update the workforce plan or even provide feedback on the corporate strategic Amanda Oldridge planning process. Principal Consultant, Talent Brian E. Linking to other Management, Wilkerson, talent processes Human Capital Global Head Orchestrating all the talent management Group, of Talent elements drives the effectiveness of HR Hong Kong Management programs and determines HRs ability amanda.oldridge@watsonwyatt.com brian.wilkerson@watsonwyatt.com