“To win in the marketplace, you first have to win in the workplace.”
Doug Conant. Former CEO, Campbell Soups.
Winning in the marketplace is non-negotiable for organisations that are desirous of growth, profitability and maximum returns to stakeholders. While the marketplace battles are won by having a superior strategy designed to outperform competition, the workplace battles are resolved by having the right number of suitably qualified professionals, at the right time and in the right place to execute the strategy.
With the much talked-about war for talent, the alarming pace of global and local economic change and the aggressive drive for innovation, HR Leaders and Business Executives find themselves having to answer these critical questions with increasing urgency:
- How do we ensure our organisation has a workforce with the capabilities and capacity to achieve our strategic objectives?
- How will the ongoing technology changes and innovation impact the workforce?
- How many and what types of jobs will be needed to meet the new workforce demands?
- In what ways can we proactively identify workforce problems, manage risk and minimise crisis management cycles that can impact our business strategy?
- How can we ensure workforce plans are integrated into business, performance and financial planning processes with a clear focus on achieving the business strategy?
- How do we optimise the use of human, financial and other resources?
- How do we develop the core capabilities and build the technical skills required by the business now and in the future?
- How do we develop workforce skills that take time to grow, ensuring they are available when and where we need them?
While organisations cannot predict the future, they can and should prepare adequately for it. Indeed, leading organisations proactively and systematically take actions to ensure that they have the human resource capability to meet their current and future business requirements. These organisations have made Strategic Workforce Planning a critical force in their drive to win in the marketplace.
Strategic Workforce Planning: What It Is
According to Bersin and Associates, although 92% of companies conduct some level of workforce planning, only 21% take a strategic long-term approach to addressing the talent demand, talent supply and the actions necessary to close the gap between the two. The research also revealed that only 25% of workforce plans are effective at helping business leaders forecast revenue and operating budgets.
Unlike traditional or operational workforce planning which more often than not is the Human Resource Team’s Responsibility, Strategic Workforce Planning is a shared responsibility between business leaders across the organisation – Finance, IT, Strategic Planning, Risk Management and/or Budgeting. It feeds directly from the business strategy, requiring an understanding of both the general and line of business-specific strategic plans for execution to be successful.
Strategic workforce planning always requires business leaders to segment roles – differentiating jobs that are mission-critical and those that are not, employees at risk for attrition or those who will be hard to replace. Its strength comes from its ability to hone in on critical talent segments, studying their current and historical data, needs and motivations, and develop a responsive targeted talent strategy for the critical segments.
The Strategic Workforce Planning Process
If HR’s most important deliverable is to build the organisational capability required to execute strategy, then arguably the most important competence that HR needs to have is the ability to conduct Strategic Workforce Planning effectively.
The 7-step process below demonstrates a proven roadmap for developing a Strategic Workforce Plan.
- Start with Strategic Intent
It all begins with the strategy. HR, together with the line Executives, should review the business strategy at the Corporate, Business Line and Functional (Departmental) Levels, capturing critical business priorities and understanding the non-negotiable drivers of success.
- Identify Strategic Capabilities
Strategic capabilities can be defined as the set of capacities, resources, and skills that build long-term competitive advantage for organisations. In simpler terms, this is a list of core areas any organisation must be so good at they cannot be ignored and it is informed by the business objectives. Ideally, these should be no more than 3 to 5.
- Determine Strategic Positions
- Do all roles contribute equally to strategy execution? Which ones contribute more? Less?
- Which roles have the potential to accelerate the achievement of the business strategy?
- Which competencies are vital to executing strategy?
The roles identified here are the roles that are directly responsible for delivering on the strategic capabilities identified in step 2 above.
- Identify Strategic Players
Certain individuals occupying strategic positions have excelled in their roles. These are the strategic players. The knowledge, skills and attributes they possess which have helped them excel in their roles are identified and then becomes a success profile to be codified as a point of reference.
- Conduct Strategic Talent InventoryRoles are only as effective as the people who occupy them. Therefore, it is important to conduct an assessment of each incumbent in a strategic position in a bid to determine whether or not the organisation has ‘A players’ in the ‘A roles’.
- Close identified Gaps
By now, the 5 earlier stages would have thrown up gaps in the capabilities, quality and numbers of strategic players. The next step is to address them. Figure 1 below shows the popular combination of gap closing strategies which can be utilised at this point.
- Report, Monitor, Measure & Adjust
Having clearly defined what is needed to deliver on your strategic intent, the next step is to develop reporting, monitoring, measuring frameworks and associated templates to ensure the process is self-sustaining. Software programmes that ease some aspects of talent analytics can help at this stage.
- Start with Strategic Intent
Case Study: How HP Got it Right
At HP, long before HR Business Partners begin analysing workforce data and running the numbers, they sit down with the heads of HP’s business strategy to discuss business strategy, the workforce implications and options for ensuring the company has the right people to execute the strategy. It’s a qualitative conversation that uses simple tools and everyday language to educate all parties. HR staff develop a deep understanding of the business while executives discover exactly how changing business strategy creates new workforce demands. For SWP to succeed at HP, HR may facilitate the process, but the businesses own it.
They analyse past plans, not to show what they have done wrong as they realise that wrong is relative to what they are trying to achieve. Looking back gets executives’ attention and demonstrates that not planning might prevent them from being successful in the future. It also enables them to make their workforce plans proactive, they can make more accurate forecasts and are prepared for rather than react when unexpected events occur.
They point out that proactiveness is not always possible, for instance in a start-up or high-growth business, but it should remain strategic.
Their annual strategic workforce planning process begins at the top with surprisingly simple set of tools – the language used is simple English, not HR terminologies. Only at a later stage do the businesses define and execute their operational workforce plan.
They also note that although environmental scanning was an on-going process – gathering and identifying external factors that affect the workforce – it is important that such data be factored into the workforce plan.
- There was a high-level discussion and tw0-way educational process between business leaders and HR where they emphasised qualitative over quantitative.
- They used simple tools to capture high-level overview of business strategy and its workforce implications.
- The final step was operational workforce planning.
In the words of Larry Bossidy “We do not think ourselves into a new way of acting, we act ourselves into a new way of thinking.”
Deciding to embark on a strategic workforce planning is one thing, successful implementation is another. The good news is that several organisations have faced similar challenges and the way they have met these challenges provides valuable lessons for us:
- Making the process and tools simple and efficient to use
- Developing HR staff’s capabilities and comfort level with the strategic workforce planning process
- Developing definitive and consistent data company-wide
- Establishing a common language to describe skills, experience and jobs so that talent can be leveraged throughout the organisation
- Integrating strategic workforce planning with business and budget planning
- Institutionalising strategic workforce plans and planning into the fabric of the organisation
Workforce Group has partnered with various organisations to ensure they have the right people in critical wealth creation roles in the short, medium and long-term. We have a deep understanding of the changing business environment, the challenges internal HR departments face in creating and implementing strategic workforce plans and can support with the right approach, frameworks and tools to address your unique needs.