How strategic workforce planning is securing HR’s role in the business, by Infohrm’s CEO, Peter Howes.
Now, more than anytime within my 35 years of experience, workforce planning is performing a pivotal role within many organisations. Even though most developed countries are slowly emerging from the worst economic recession in over 70 years, the demand for workforce planning has increased significantly, especially over the last 12 months.
Contrary to some conventional wisdom, this growth has not been driven primarily by restructurings and downsizing in the current recession. Rather, effective workforce planning is increasingly recognised as one of the critical human capital initiatives that will position organisations for success once they emerge from the economic downturn.
In fact, following a workforce planning survey conducted by Infohrm earlier this year, one of the key insights is that companies do not achieve best practice in workforce planning based on how long they have been undertaking workforce planning activities. Best practice comes from what you do and how you do it.
Workforce planning taking centre stage
According to the survey, 81% of survey respondents are reaping the benefits of workforce planning, while 7% of surveyed organisations were categorised as best practice organisations in the application of workforce planning – organisations with an ability to demonstrate a clear impact of workforce planning as well as return on investment.
Workforce planning strategies are moving beyond the traditional focus on attraction and retention, with 75% of the leading organisations also using career paths as a means to execute on business strategy.
Deployment of career path strategies significantly expands the talent management toolkit, bringing added value. Other popular strategic staffing strategies developed as a result of the WFP process include partnering with educational institutions, increasing the range of supply resources, job redesign and shifting the desired mix of permanent, casual and contract labour.
A blueprint for best practice: Key points to remember from leading organisations
1. Organisations that implement strategic workforce planning see demonstrable improvement in both human capital and financial metrics.
2. Despite difficult economic conditions, organisations are planning to increase the level of investment in workforce planning across 2010.
3. Best practice organisations differ from their peers in a number of important ways. Specifically, they are more likely to:
• adjust their workforce plans to reflect changing economic conditions
• invest in workforce planning as a tool to support business strategy, not as a tool to address workforce issues.
• incorporate multiple scenarios in their planning efforts.
• invest in specific talent management initiatives as a result of risks identified through the workforce planning process.
• use advanced technologies (e.g. beyond spreadsheets) in support of workforce planning efforts.
• prioritise a different, more business relevant, set of competencies for individuals involved in workforce planning.
• regularly manage the workforce planning process outside of Human Resources (for example, within finance, or within lines of business).
4. HR departments that implement workforce planning are seen as more strategic compared to other organisations HR departments.
Strong foundations build success
Workforce planning is about identifying people strategies to support the effective execution of the business plan. Using a combination of both qualitative and quantitative processes results in more credible, understandable and robust strategy rather than a process based on ‘intuition’ without the analysis of numbers.
Strategic analysis, demand forecasting using multiple scenarios, supply forecasting and strategy development are core to an effective workforce planning process. The strategy development phase is critical and is the tipping point for effective strategic workforce planning. When supported by a robust process and a forecast analysis of skills and numbers, this phase takes acknowledgement of future risks and more importantly, the conviction to take action.
Another effective strategic workforce planning method is to integrate the planning process into the business. A combination of a solid understanding of business planning processes and effective communication and influencing skills are becoming sought-after workforce planning qualities.
One size does not fit all
40% of all organisations’ surveyed conduct workforce planning on critical job roles. Organisations seeking to make the most impact with workforce planning are encouraged to focus only on key roles within the organisation.
The one size fits all approach is rarely effective. Strategies that target specific functions or roles have more impact than strategies designed for the whole organisation. As an organisation’s workforce planning practice matures, forecasting typically moves beyond critical job roles to focus more on critical risk areas within the business.
Other practices that we recommend for organisations getting started with workforce planning:
• The forecast period must span at least 3+ years
• Scenarios should be developed and used to build multiple forecasts
• Forecasts should be built for specific critical job roles, not the entire workforce
• Competencies as well as headcount should be required for each critical job role
• Forecast numbers should be rounded – it’s a forecast, not a budget
• Focus should be paid primarily to the gap (the delta between demand and supply)
• Build a strategic staffing strategy to address the gap.
Peter Howes is Chief Executive Officer at Infohrm. To access a copy of Infohrm’s Workforce Planning Survey results, please visit www.infohrm.com
