Workforce Planning – adding value beyond numbers.


During the ‘Strategic inflection point’ as described by Andy Grove, (Intel, - book “Only the paranoid survive”) an organization is tempted to opt for either layoff or restructuring as a strategic choice to improve immediate performance. This sounds as an appropriate option considering it's visible & instant results. As Drucker suggests, the key activity that’s required in the course of transforming an organization is a wholesale shifting of resources from what was appropriate for the old idea of the business to what is appropriate for the new. And as stated by Grove, “Your best people—their knowledge, skills and expertise—are an equally important resource.” [Tweet this] He further says, “it doesn’t take much self-confidence to downsize a company—after all, how can you go wrong by shuttering factories and laying people off if the benefits of such actions are going to show up in tomorrow’s bottom line and will be applauded by the financial community?”  

However, according to many management authors, in the long run, that may not be a wise decision. According to Jim Collins, (Good to Great) “It would be a mistake a tragic mistake, indeed to think that the way you ignite a transition from good to great is by wantonly swinging the ax  on vast numbers of hard working people. Endless restructuring and mindless hacking were never part of the good-to-great model.” 

It clearly outlines the fact that if we really want to survive in this VUCA world then management of our people should be our first priority. It significantly enhances the importance of Workforce Planning in today’s environment especially for the long-term survival of the organization. Needless to say, an effective workforce planning process will assist organization leaders to make informed decision to effectively manage their people.     

Workforce Planning is an important activity for all HR Professionals in any organization. As rightly stated by Gary Hamel that “people are all there is to an organization” and hence planning for optimally utilizing this valuable resource becomes essential and more indispensible. Importance of planning is underscored very correctly by Benjamin Franklin. He says, - "When you fail to plan you plan to fail." [Tweet this]

Different authors have defined this process in different perspectives. As they say, if we ask three people what is Workforce Planning, we will get five different definitions. However, we will consider the simple one that is clearly described by Ralph Christensen, in his book ‘Roadmap to strategic HR’

“The workforce plan is a component of the HRP and the business plan that: 
  • Clearly identifies the number and skills of people that are needed to succeed in the business.
  • Is grounded in business strategy and human resources business drivers.
  • Establishes the transition plan to move from current to the future workforce.
  • Is an integrated part of the overall business plan.” 
However, alignment of Workforce Plan with the organizational strategy is essential for delivering maximum value. In fact, the success of this plan hinges on its appropriate integration with overall organizational strategy.   

In layman’s terminology, it is nothing but an analysis of ‘demand for’ and ‘supply of’ employees. And all other activities such as recruitment, transfer, promotion, succession, training, performance management etc. carried out in line with this plan to achieve organization's strategic objectives. It’s such a simple concept on paper, however, equally challenging for successful implementation in any organization. As stated by Michael Bergdahl, (Walmart) “90 percent of strategy is execution; ideas truly are often quite easy to come up with, it’s the implementation that’s always tough.”  Theoretically it’s a simple process, then why there are so many issues in implementation? That reminds me of another quote, “The best battle plan lasts until the first sight of the enemy” - Helmuth von Moltke. [Tweet this]

No doubt that the ‘Planning’ is essential whereas it is the successful implementation that produces concrete ‘results’. HR may design an excellent workforce plan; however it needs buy-in & support from all other stakeholders (line-managers) in the organization for its successful implementation. It becomes crucial while dealing with the ownership issue, and hence requires inclusion & involvement of all constituents of HR (Recruiting, Staffing, and Corporate) and Line Managers or Functional Leaders. Normally consultants hold a workshop to secure buy-in from all the stakeholders.  

A robust workforce plan should cover attrition / retention tactics since it is an integral part of the plan. Imagine we are trying to fill a pot which has a leakage problem. We keep on pouring water in and it goes out from the leakage. Unless we try and repair the leakage first we would never be able to fill the pot. Needless to say that if we take care of the attrition that will certainly result in the reduction in recruitment costs and improve overall workforce management.      

Levels of Workforce Planning:

There are mainly three different levels in this process as very well defined by Aberdeen Group Report, “Workforce Planning: Mapping the road to success” (pdf) (May 2014):

Operational - (Basic) – Looking ahead days and weeks
Short-Term (Intermediate) – near-term planning for skills, capabilities, and staffing requirements
Long-Term (Strategic) – Looking out 18 months or longer and planning for future business needs

The following image clearly depicts these three levels from basic to strategic.   


Image Source: The Newman Group

Workforce Planning Process:

Workforce planning is the process that provides strategic direction to talent management activities to ensure an organization has the right people in the right place at the right time and at the right price to execute its business strategy. Normally companies look at workforce solely as a cost item and ignore the value of people’s talent as a required strategic resource. One must go beyond just the head count numbers and consider developing a plan that is broad in scope. According to Ralph Christensen, it must consider following areas: 
  • External environment forecast, Industry Trends, Demographics, Demand & Supply Factors
  • Internal Analysis, Core Capabilities, Competencies, Skill sets needed
  • Workforce forecast by Skill Set, Job, Numbers, Timing
  • Transition Plan (How we move from current to future workforce). 
Workforce Planning Process is shown in the following image. 



In case it’s a greenfield project, we can begin with a pilot program in one business unit of the company. And upon successful implementation, it can be rolled out in other business units &/or locations. The clear output of this process is the identification of Talent Gaps (either Surplus or Shortage). It certainly helps us in identifying whether currently available headcount & skills (competencies) will meet tomorrow’s demand.

An effective staffing plan must be developed to take care of the talent requirements. Companies must seriously think about investing in social media platforms these days (as an additional source of supply of workforce) since it is becoming preferred choice for most of the millennials. In fact, developing an employer brand can result in attracting right people. The organization own finance budgets and are regularly reviewed quarterly or even monthly. And the same logic can be applied to review & ownership of the process for workforce planning. The constant review of the plan will result in reducing recruitment costs, and will provide a concrete base for the development of a pipeline for future.  

Solutions or Tools used for Workforce Planning: 

Using software tools available in the market would definitely assist in ameliorating the administrative burden involved in the process and provide accurate, valid data projections, trends based on demand and supply of talent. A key differentiator for these solutions is their scenario planning and predictive modeling capabilities. According to webinar – “Future Trends in Workforce Planning” following solutions are used today by organizations for this process. 
  • Spreadsheets – 32%
  • Planning from HR Application – 20%
  • Custom Workforce Planning Solution – 18%
  • Finance Budgeting and Planning – 15%
  • Dedicated Workforce Planning Solution – 15% 
However, according to AberdeenReport [ “Workforce Planning: Mapping the road to success”] (pdf)  "over half 54% of organizations indicate that they still have manual or spreadsheet-based workforce planning capabilities". No doubt that automated software solutions have an edge over manual processes as shown in the following image.  































The report further says, “Given the multiple facets that are involved in workforce planning - budget information, productivity information, skills and capabilities, schedules, and much more - automated tools make sense to bring all the stages together. Organizations with automated workforce planning tools are more than twice as likely to indicate that their workforce planning processes are focused on closing the gaps in workforce skills and competencies required for business plans.”

Now for us to upgrade from spreadsheets to implement more strategic process a robust roadmap is needed. We may refer to Bersin & Associates report “The Modern Approach to Workforce Planning: Best Practices in Today’sEconomy” (pdf) (April 2009) which narrates their Workforce Planning Maturity Model as shown in the following image. The process of transition is very well covered in this report which also suggests best practices to transition from level 1 to level 4, you may download the report for further insights. 























Each and every organization is unique and hence needs customized solution that is best suited for their needs and requirements. And hence getting off the shelf tool may not be a wise option especially when there is a plethora of choices available in the market.  It also becomes essential because any software implementation is a gigantic task in itself which consume a lot of time, energy, resources and efforts of all the stakeholders.

In the similar context before implementing any new management fad / restructuring or ‘best practices’ successful in other companies, it is essential to note views of Mr. Paul Kearns. He says, “Like many paradoxes in life, it might be hard to understand why organizations go for quick fixes and simplistic solutions when what they obviously need is a long-term strategy.” He further says, “Well-worn analogies may turn into clichés, but the difference between the indiscriminate use of ad-hoc HR initiatives and a clearly focused HR strategy is very much like that between the sower who throws seed into the wind and the one who uses a seed drill. Both will achieve some germination, but the latter is bound to achieve a greater yield.”

Key issues involved in Workforce Planning:

Environment Scanning: Business cycles have a direct impact on the workforce of any organization and appropriate prediction of the conditions may assist in effective handling of the situation by taking proactive steps rather than reactive actions. Similarly technological changes that significantly impact any business process result in affecting numbers and specific skills of the workforce. Predicting them may not be possible however we can update ourselves about developments in the field and be prepared for dealing with them proactively.

Restructuring: This issue is being discussed in the beginning. A thorough and careful planning is needed for the success of such initiative by calculating the ramifications on different skills and number of employees. We cannot assume that we may reduce the number of people and carry on the same work with fewer workers without any significant changes in the process. It certainly is not possible and may result in rehiring the laid-off employees. “Downsizing belatedly attempts to correct the mistakes of the past; it is not about creating the markets of the future.” - Hamel & Prahalad [Tweet this]

Quantifying skills: It’s not an easy task to quantify skills, know-how & characteristics, of employees. The process of the job analysis should result in clearly reflecting real skills, know-how and characteristics in each job or job families. Then it would be possible for us to quantify and track them. However, even then it is not possible to accurately quantify them properly in the workforce plan.   

Staffing projections: No matter which tool we are using for forecasting, it’s next to impossible to predict which employees are going to quit & when. And the situation becomes more precarious when they are hi-performers and hi-potentials who are crucial for strategic success. According to the book “The Alliance” (by Reid Hoffman & Ben C.) the average turnover at work is less than four years so ‘lifetime employment’ strategies are out of date. This emerging trend poses a substantial challenge for HR professionals.
   
Support from Top Management: As for any other HR initiative, support from top management is vital for the success of the workforce plan. It is crucial, how seriously the top management views this initiative and backs it up throughout the process to succeed.

Buy-in & ownership: As discussed earlier, support from all other participants of the process mainly from Line Managers, Functional Leaders is critical in the success of the workforce plan. HR has an important responsibility to secure buy-in from all the participants and share the ownership of this process so as to enable it to succeed. As Josh Bersin says [Report: Predictions for 2015] “Remember that the issues of employee performance, retention, and engagement are not HR problems—they are management problems.” He further says, “Hold leaders accountable for more than just performance—they are responsible for employee engagement, employee development, and developing their own successors.”

This list can go on since there are many activities covered under the heading of Workforce Planning, and may not be able to include them all here. You may add them in the comments, along with your valuable views.   


In conclusion, it’s our ability to predict the future accurately that will help us to deal with the problem of workforce planning. As said by Andrews Grove, Intel, “But data are about the past, and strategic inflection points are about the future.” [Tweet this] No matter which tools and techniques we may use it’s the flexibility of the workforce plan & its appropriate alignment with the organizational strategy that will help us to survive and thrive. Because “All our knowledge is about the past, but all our decisions are about the future.” – Ian Wilson [Tweet this]

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