Workforce planning (WFP) activity is on the rise, according to a survey conducted last fall by the Institute for Corporate Productivity (i4cp). Nearly three out of four companies surveyed reported WFP activity — up 6 percent from i4cp’s 2009 survey. Further, more than a third said they planned to adopt a new workforce planning process within the year.
A critical question remains: Does WFP have the needed business impact? Fewer than one in six companies in the 2011 survey rated their efforts as highly or very highly effective. For the majority, workforce planning is still largely an operational and tactical function with little impact on competitive position and business results. And only one in five in the 2009 survey reported that workforce planning is used to a high or very high degree to influence business decision making.
For learning professionals, the 2011 WFP survey and final report, “Workforce Planning: Closing the Business Impact Gap” offer insights from high-performing companies to enhance the business impact of workforce planning. These high-performing companies, which reported higher levels of revenue growth, market share, profitability and customer satisfaction than others in the survey, simply did more WFP than their low-performing counterparts. These activities included reviewing and building business strategy, action planning, supply and demand forecasting, gap analysis, environmental scanning and scenario planning.
High-performing companies reported nearly double levels of WFP effectiveness and strategic workforce planning activity than the average. These companies reported looking out at least three to five years in their talent planning, and their activities include needs assessment, environmental scanning, scenario building and critical position segmentation. Finally, nearly a third report that WFP was used to a high or very high degree to influence business decisions, which suggests many companies are still at the beginning stages of their WFP journeys.
To enhance WFP’s impact, examining economic and workforce trends underlying growth should be learning leaders’ first step. Next, they should recognize that WFP is an evolutionary process, requiring champion and sponsor support to overcome challenges. Once that understanding, patience and support are in place, they can focus on specific strategies to improve WFP’s business impact.
Trends Impacting Workforce Planning
More than 20 years of study by i4cp researchers on workforce and talent planning point to several reasons why WFP activity is slowly increasing. These include:
• More human capital measurement: Tight economics mean companies are measuring more to leverage investment and cut costs. “People are our most important asset” has moved from business platitude to business metric in many high-performing companies. For example, i4cp’s 2010 Talent Management Measurement Survey documented 20 percent of companies had a “disciplined and cohesive effort” to gather and use employee-related metrics in their organizations. Nearly 44 percent reported using regular workforce analytics/reports.
• Increased use of predictive analytics and big data: High performers have gone further with advanced measurement approaches, specifically predictive analytics and statistics. Technology and the ability to manage big data sets have given rise to predictive analytics to identify core relationships in performance data. Advanced modeling and statistical analysis skills have come into high demand, according to i4cp’s 2011 WFP survey. Identifying relationships through correlation has, in turn, led to better identification of critical workforce segments that add more to the bottom line or enhance growth and innovation.
• More focus on environmental scanning and creative scenario planning: Economic and social events have created more interest in environmental scanning, a tool used to monitor internal and external environments for new trends and events that may impact business outcomes. This scanning leads practitioners to think about the “what-ifs” and consider different scenarios when planning for the future rather than merely forecasting based on historical trends. Scenario planning has become a means for organizations to anticipate different futures and plan for the workforce implications.
• Demand for evidenced-based decisions: Another consequence of the tough economic environment has been a continued hunger for data-driven, evidence-based human capital decisions. Evidence-based analytics require more advanced math and modeling techniques. Demand for these advanced skill sets is increasing.
Evolution, Not Revolution
While much may be new about WFP and its potential, WFP is not a new concept. Its popular definition — getting the right people with the right skills at the right place at the right time — has been voiced historically in successive human capital management contexts.
Organizations typically build their WFP capabilities in stages. Initially, many companies begin with simple operational planning. They gradually build expertise and role clarity in workforce planning teams, and learning leaders step in to build tactical capability. As they progress, teams become increasingly cross functional, bridging silos among operational, finance, IT, HR and learning professionals.
The normal progression is to move from operational to tactical to strategic WFP. Operational WFP includes headcount forecasting, scheduling/coverage and staffing requisitions. It typically looks out weeks or at most months. Tactical WFP includes staffing plans, budget reconciliation and training schedules. It typically looks out no more than a year. Strategic WFP includes business planning, needs assessment and scenarios. It typically looks out three to five years or beyond.
Many companies are building WFP capabilities by enhancing skills in business acumen, clarifying the roles and resources dedicated to WFP teams, and, where needed, searching for the requisite analytical and technical skills and supporting technology.
A number of challenges hinder steady progress in workforce planning. The top three challenges include lack of resources, technologies that do not share data effectively and a rapidly changing business environment. Other challenges include a lack of workforce planning know-how, ineffective communications across business functions and unreliable data.
A key factor in the successful evolution of WFP capability is sponsorship. Learning leaders should be especially aware of what and how information is reported to higher levels of the organization. WFP has the attention of the CEO in a third of organizations and of the board in a fifth of organizations, according to i4cp research, but not always with the messaging that accompanies business impact or action planning.
Strategies to Enhance WFP Impact
With knowledge of trends and enough sponsorship in place, learning leaders can undertake specific strategies to enhance their organization’s WFP efforts. Here are a few that should be top of the list.
Environmental scanning: Track both the external and internal environment for significant trends and events that impact the business, and what skills may be needed. This requires keeping a close eye on emerging product and labor market trends. Efficient scanning requires consistent monitoring of events, the business press and government reports to identify the driving forces behind an industry. When environmental scans are done well, they can reveal new market opportunities that alter the business and learning strategies.
Environmental scanning can entail monitoring formal educational curriculums to ensure they produce graduates with the right mix of skills. For example, have university leadership development programs modified their offerings to equip incoming leaders with the requisite analytical skills? What gaps in analytical capability exist that learning needs to fill?
In addition to outward-looking observation, learning needs to have its finger on the pulse of existing corporate development programs to identify what is working and what is not and to determine the most effective delivery channels.
Closing skill gaps: Another key role for learning leaders is to identify and close skill gaps in the organization. This begins with constructing supply and demand models of the workforce. The first step is to characterize the current workforce’s skills. This is the current supply. Using knowledge of internal workforce dynamics such as learning trends and hiring, termination and retirement rates, it is possible to estimate the future supply of skills absent any external considerations (Figure 1).
The business strategy identifies the types of skills needed now and in the future. The shortfall between the supply and demand of skills is the skills gap. The build vs. buy decision comes into play here, and learning’s challenge is to develop and implement a strategy to ensure the requisite skills and competencies are in place in time. A simple action planning process may be the best way to close this learning gap. The balance of the gap is addressed through staffing, and when necessary, acquisitions.
The learning team at Qualcomm, a mobile technology and services provider, favors — when appropriate — building the right skills internally rather than buying them. The team’s internal consulting model partners with HR and the business to constantly assess skills needs and develops learning plans for each division to ensure there is an internal talent pipeline to fulfill the company’s overall strategic plans. “Learning is part of the WFP team,” said Nancy Crosby, Qualcomm’s senior director for learning and development.
Minimizing culture gaps: Too often, the focus on skills and competencies and their respective gaps leaves another important dimension of workforce effectiveness neglected. Learning professionals can play a key part in ensuring a cultural fit in management and leadership roles. An organization’s culture continuously evolves, sometimes smoothly and sometimes with jolts stemming from acquisitions or other system shocks such as regulatory or competitive challenges. Qualcomm takes a proactive approach on this front. It regularly conducts formal interviews with executives and key senior managers who have joined the company in the past year and asks them about cultural assimilation issues. The results are fed back to the staffing team to ensure candidate assessments minimize potential cultural clashes that could derail careers and impact business results.
Building internal capability: The rapid adoption of workforce analytics and WFP has exposed a gap in HR capability: analytical, statistical and business acumen skills are in short supply relative to organizations’ demand for them to bolster their workforce analytics and planning teams, according to i4cp’s 2011 WFP survey.
GE Energy, for example, realized it needs to build and firmly establish WFP capabilities. As part of that effort, Nicholas Garbis, strategic workforce planning leader for GE Energy, launched a WFP certification program that involves a series of short training modules, some of which are delivered in advance and others just in time over the course of a WFP project. The WFP project must be completed and signed off on by HR and business leaders before the certificate is awarded by the head of HR.
“Our intent is to have strategic workforce planning become a competency for our HR generalists, and to do this through WFP projects. We also want to have this capability spreading across other parts of HR and into our business functions,” Garbis said. He also said beyond the HR learning objectives there is a much larger space where learning is needed in workforce planning. “We need our learning partners to be engaged in helping us assess and then deliver the training that will keep the right amount of talent moving into our critical roles, whether it is from internal or external sources.”
Analytics and WFP are rapidly becoming core competencies that organizations cannot do without. Only 38 percent of organizations report they have the in-house skills required to successfully execute WFP, according to i4cp’s 2011 WFP survey. Learning can take the initiative to develop analytics and WFP curriculums customized to their organization’s specific needs and culture.
The Workforce Planning Team
Learning needs to align itself with the organization’s WFP team. I4cp’s research reveals that most organizations’ WFP teams are cross-functional. But while they generally include representatives from HR, operations, finance, marketing as well as business managers, learning is often absent. This must change given learning’s vital role in identifying and closing skills gaps as part of the WFP process.
Black Hills Corp., a diversified energy company, is an exception. Its organizational development team, which includes responsibility for learning and development, is responsible for WFP. “I can’t think of learning and WFP being separated, especially when it comes to strategic workforce planning,” said Beth Peters, Black Hills’ organizational development specialist.
Black Hills’ WFP activities were triggered by impending loss of critical skills through retirements. “We need to emphasize building the skills and capabilities internally due to thin labor markets where we operate and talent shortages in key technical professions,” Peters said.
One important outcome of learning’s involvement in the WFP team is a validation and strengthening of the business case for enterprise-wide learning and development investment dollars for the board and C-suite. Learning professionals need to be active in this process and play a leadership role in the socialization of WFP across the organization.
Amy Armitage is the director of member research programs at i4cp. Amit Mohindra is vice president, workforce intelligence, for McKesson Corp. They can be reached at editor@CLOmedia.com.Filed under: Leadership Development