To Boost Productivity Companies Turn to Strategic Workforce Planning
“In many companies, traditional workforce planning was an onerous process that HR Imposed on management,” says Mary B. Young, Senior Research Associate with The Conference Board and author of a new study on strategic workforce planning. “Too often, the net result was a humongous report, blinding spreadsheets and a dizzying amount of data that provided very little value to the business.”
The relatively new field of strategic workforce planning, however, involves analyzing and forecasting the talent that companies need to execute their business strategy. It is aimed at helping companies make sure they have the right people in the right place at the right time and at the right price. As a management process, it is increasingly being used to help control labor costs, assess talent needs, make informed business decisions and assess human capital needs and risks as part of overall enterprise risk management.
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The new study from The Conference Board, Strategic Workforce Planning: Forecasting Human Capital Needs to Execute Business Strategy, reports that forces driving strategic workforce planning include: current movement and projected labor shortages’ globalization; the growing use of contingent, flexible workers; the need to leverage human capital to enhance return; mergers and acquisitions; and the evolution of workplace technology tools.
“Strategic workforce planning enables the organizations to slice-and-dice its workforce data to discover critical issues, compare different groups, understand patterns and trends, home in on critical segments of the workforce such as mature workers and top performers, and customize its approach to managing different segments of its workforce,” Young explains. “By enabling leaders to see across lines of business, workforce planning can leverage talent within a company. Ultimately, the same workforce planning database tools will enable employees to shop for new jobs, assess their own developmental needs and prepare for career moves inside the organization.”
The crux of strategic workforce planning is conversation and an inquiry process, rather than relying on spreadsheets crammed with tiny numbers. To engage senior executives in workforce planning, the process must focus on understanding the strategic business plan and its broad implications for the company’s workforce.
Most companies are still in the process of fully implementing strategic workforce planning without realizing its ultimate potential. The Conference Board study found that some organizations have enhanced the simple gap analysis of workforce demand versus supply which constitutes traditional workforces planning by adopting the logic an analytical tools of other corporate functions, such as finance, strategic planning, risk management and marketing. Yet even organizations that say they’re “not yet there”, report that strategic workforce planning is already delivering value by:
- Generating insights and knowledge executives can use to make business decisions.
- Providing deeper and more nuanced understanding of workforce dynamics that was previously available.
- Enabling organizations to manage human capital more efficiently – for example, by evaluating the long-term impacts of various staff options and creating stronger internal job markets.
- Enabling human resources (HR) to realize its long-held desire to become a player and a valued contributor to high-level business strategy decisions.
The Conference Board report recommends that organizations build on previous successes, such as succession planning or embryonic workforce planning efforts, as a first step in company-wide implementation. It also stresses that HR look for partners in departments such as finance and information technology (IT) to move the process forward.
Hewlett-Packard (HP) and IBM are two of the companies described in The Conference Board report as committed to relying on strategic workforce planning, which must be customized to the specific conditions and needs of each company. In IBM’s case, HR and finance departments help senior business leaders plan realistically to execute their business strategy and manage drivers of labor costs. For HP, high level discussions and a two-way educational process between business leaders and HR emphasize the qualitative over the quantitative.
“While no organization claims to have achieved it yet, many believe that the ultimate payoff from strategic workforce planning will be a vibrant, internal job market that transcends the boundaries between business units and geographies,” Young conclude. “The company will be able to mine employees data to locate talent anywhere in the organization, woo passive job candidates, and find the best use for each employee.”