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Strategic Workforce Planning

2017

Strategic Workforce Planning

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Agenda

 What is Strategic Workforce Planning?

 Why do we need Strategic Workforce Planning?

 The evolution of Strategic Workforce Planning

 Practical framework to mitigate workforce risk and deal with the challenges of change

 Challenges of implementation

 Building a business case

What is Strategic Workforce

Planning?

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What is Strategic Workforce Planning?

 People support most of the strategic capabilities and people have the skills needed to deploy the strategy

‘People make the strategy happen’

 Strategic workforce planning is the practice of mapping an organization’s people strategy with its business strategy so they work in sync.

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Strategic Workforce Planning

…is a proactive approach which plans to provide:

The Right People (numbers and skill set)

at the Right Place (location, roles)

for the Right Time (duration)

at the Right Cost (pay and rewards).

to ensure successful completion of business objectives.

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Two Critical Advantages

 It helps leaders understand whether they have or can obtain the workforce to execute their business strategy.

 It also assists HR leaders in reorganizing, shaping, and deploying the workforce to deliver on their companies’ business objectives.

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Strategic Workforce Planning

Why do we need Strategic Workforce

Planning?

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Centre for Generational Kinetics, 2015

What Does the Future Hold?

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Centre for Generational Kinetics, 2015

What Does the Future Hold?

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Centre for Generational Kinetics, 2015

What Does the Future Hold?

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The Deloitte Millennial Survey, 2016

Will They Stay or Will They Go?

> 6 months 6 months to 1 year > 1 to 2 years > 2 to 5 years > 5 to 10 years > 10 years Would never leave Don’t know

11%

7%

22%

19%

12%

13%

5%

11%

66%27% expect to leaveexpect to stay

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Increasing Importance to organizations

 Workforce Demographics – Loss of ‘baby boomers’ from the workforce and lower birth

rate means the workforce will decline by 29% by 2050

 Changing Career Patterns – Traditional retirement in the early sixties has been

replaced to an undefined retirement age

– Expectations of greater job fulfilment, flexible employment patterns are majorly shifting career paths

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Strategic Workforce Planning

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Did you know?

of the jobs in the 21st century require skills possessed by 20% of the workforce60%60%

Job skills and competencies required in the future are changing faster than the skills training being provided

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Increasing Importance to organizations

 Current and Projected Labour Shortages – Despite investment in higher education, there are

significant skills gaps in scientific, technical, engineering and maths disciplines.

– Some 80 per cent of the talent gap in organizations stem from a lack of appropriately qualified candidates.

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Increasing Importance to organizations

 Globalization/Flexible Workforce

– As the mix of employment arrangements becomes more diverse, managing these relationships and evaluating the costs and benefits of different staffing scenarios becomes important

– Many company’s businesses shift to emerging markets, which means employers must weigh the costs and benefits of shifting their workforce to these locations

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Increasing Importance to organizations

 Mergers and Acquisitions

– As the result of a merger or acquisition, companies need to assess gaps and redundancies and expand their talent management strategy

 Evolution of Technology and Tools

– As technology becomes more sophisticated, and organizations succeed in integrating their IT systems and databases, they reach a higher plane of possibility, for example: workforce analytics, metrics

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Increasing Importance to organizations

 Plan for Uncertainties and Anticipating Change

– Companies will need to adapt, so they can keep the business running smoothly with one hand, while preparing for a different future with the other

• Political uncertainties • Regulatory changes • Economic conditions • Market/Industry changes

The Evolution of Strategic Workforce Planning

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Strategic Workforce Planning

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Evolution of Workforce Planning

Headcount Planning

 Workforce analysis is on internal factors only

– e.g., supply/demand gaps

 Assumption that a stable environment exists

 Business decisions made at this stage exposes a larger amount of risk

 Forward looking time plan is very short

– e.g., recruitment plans to address gaps

 No linkage to the business strategy

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Evolution of Workforce Planning

Workforce Analytics

 Focus on internal trend analysis

– e.g., metrics, relationships among key variables

 Measures of turnover, engagement and performance review data to determine upward/downward trends

 May include data from Finance department

 Data examined is longer term and both present/past

 No linkage to the business strategy

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Evolution of Workforce Planning

Workforce Planning

 Both internal trends and external factors are considered for impact on labour

 May include data from Risk Management or Budgeting department

 Begin to focus on predictive capabilities, creating forecasts incorporating multiple ‘what if’ scenarios (Forecasting and Scenario Modeling)

 Still disconnected from business strategy

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Evolution of Workforce Planning

Strategic Workforce Planning

 Identifies roles that have greatest impact on business objectives

 May include data from Marketing department

 Aim to protect and develop those skills to ensure a pipeline for future (hard to fill or skills that take a long time to develop)

 Business strategy drives business objectives

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State of Workforce Planning

 SWP remains in its infancy in many organizations and those leading the workforce planning function have realized that it is a journey of several years both in execution and leadership adoption

?

A Practical Framework for Strategic Workforce Planning

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 When developing the framework for your organization’s strategic workforce plan, there is no ‘one’ official framework

 The framework can be quite simple. Complexity is added when you try to execute each of the steps within the existing framework of your business

 Most planning is structured as a 3-5 year plan

 Plan length varies by market instability, industry maturity, technology adoption, business growth, etc.

Building a Framework

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Strategic Workforce Planning Framework

Determine roles of interest

Establish the current state and analyze historical trends

Determine desired forecasting scenarios

Perform gap assessments (in headcount and skills)

Establish action plans

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Step 1: Roles of Interest

 Focus on roles that yield the most value (which ones are critical or pivotal to the company?)

 Assess the roles and not the people in the roles  Classification of roles can be impacted by corporate

culture For example:

• Silos = all roles are important • Difficult financial times = nervous

 May be easier to explain “looking” at roles tied to the execution of the business strategy in the next 3-5 years

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2×2 Grid Method

D if

fi cu

lt y

to O

b ta

in

Importance to the Business

Strategic HR

Tactical HR

• Competitors in same area • Desirable work location • University produces

graduates in field

• Broad decision making • Across organization

boundaries • Adapts to changing

circumstances

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Segmentation

Role Category

Strategic Drives strategy

Core Directly supports strategic core

Supportive Needs to be in place to move forward

Misaligned Redeploy

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Differentiated Workforce

1. Assess the Strategic Choice – How will we compete?

2. Identify Strategic Capabilities – What must we do exceptionally well to win?

3. Identify Strategic Positions – Is there significant amount of variability in the performance

levels of employees in these roles?

4. Identify behaviours to classify employees as A,B,C – Remove C’s from A roles, place A’s in A roles, set development

targets for B’s in A roles

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Step 2: Current State and Historical Trend

 Create a master list of significant past events

 Determine impact of events on critical roles identified (added or subtracted from headcount)

– e.g., acquisition, restructuring, outsourcing, economic decline forcing a hold off of retirement plans, added new skill set requirements to the role, could link to turnover

 Typically, 3-5 year timeline

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Step 3: Forecasting Scenarios

 Run scenarios of the future, focused on critical roles identified

 SWOT analysis can be useful

 Determine scenarios with internal customers

– e.g., factors affecting the business may already have been analyzed to determine strategic objectives or financial plans

 If HR tries to develop these scenarios on their own, they are less likely to be viewed as credible

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Step 4: Gap Assessment

 Headcount gap – determine internal supply – Natural attrition rates (approx. 5-year trend) – Retirement predictions – Internal career moves – Acquisitions, consolidations and opening new

locations – Revenue growth/decline, efficiency gains (redundant

talent)

 Competencies gap – Skills/competencies of today and tomorrow

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Step 5: Action Plans

 Identify who is impacted by the scenario outcomes and create an action plan for each – Recruitment team, training group, IT department for

computer/software needs, finance budgeting, benefits group for financial/administrative impact

 Establish costs associated with each action plan – Implementation cost vs. more than a one-time cost – e.g., Hire from outside or train staff, cost of loyalty of

remaining staff if termination vs. retraining

 Identify risks of action plan – If it’s cheaper to buy talent, is talent available?

What are the challenges of implementing a

Strategic Workforce Plan?

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Challenges to Successful Planning

 Strategic Workforce Planning is Complex – A workforce does not behave in linear fashion; it flows as

people are promoted or transferred, take sabbaticals, resign, and retire

 Business Conditions Change Swiftly – HR strategies also must be reviewed and updated regularly

to account for opportunities and threats as they arise

 Lack of Resources – Collecting information is an ongoing activity and can take

several years to see results

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Challenges to Successful Planning

 Technologies – Inconsistent numbers can destroy strategic workforce

planning’s credibility. Technology is needed to establish consistent, organization-wide data collection

 Environment – Developing sound models and proving their reliability is

more difficult in business units or functions where headcount and turnover rates are lower

 Strategic HR Partner – Identifying business strategies: It’s here that HR develops

or deepens understanding of the business plans, and helps the business leader think through the people impacts

Building a Business Case

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of organizations have recruiting as one of

their top three priorities

of organizations have goal and

performance management as the next priority

PwC Annual HR Technology Survey

54%

47%

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What’s the Rationale?

 Aging demographics is probably the number one justification for workforce planning today

 Business units are more able and willing to work with HR to identify specific roles that, if left unfilled, could damage the organization’s bottom line and simultaneously deliver greater returns if properly filled

 Large mature organizations may have areas of growth and areas of decline – a need to gain efficiencies to maintain profitability

 Growth modes and releasing talent on downturns – savings on shortages and surpluses

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Tie to the Business Plan

 Learn the business logic

 The forecasted economic conditions

 The impact of possible political uncertainties and elections

 Market and industry conditions

 Changing technologies

 Possible changes in regulations

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How does it deliver value?

 Supports the budgeting process

 Supports the strategic/business planning process

 Acts as a mechanism for identifying critical roles

 Identifies shortage of qualified talent to fill critical roles

 Serves as a mechanism for identifying critical talent

 Identifies skills gaps in the workforce

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7 Tips for SWP Leaders

1. Build a business case to convince importance to the company’s future over other initiatives

2. People doing SWP work are typically one level below the people who support and fund the concept, find allies in functions outside of HR

3. Leaders may not know what they need. Logic first, numbers later

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7 Tips for SWP Leaders

4. Build on previous success, such as succession planning, or pilot SWP in select business units

5. Establish definitive and consistent data that will be used company wide

6. Create a common language to describe competencies, jobs and other workforce data

7. Ensure that data is updated regularly

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“Bringing together the right information with the right people will dramatically improve a company’s ability to develop and act on strategic

business opportunities.”

Bill Gates, former chief executive and current chairman of Microsoft

Summary

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 Be proactive of right people, right place, right time and cost

 Determine critical roles  Establish the current state and analyze historical

trends  Determine desired forecasting scenarios  Perform gap assessments (in headcount and skills)  Establish action plans

 Build your case