Workforce planning, especially “strategic workforce planning,” does not work in most organizations. While workforce planning in all its forms and variations is emerging as the hot HR topic for 2012 and continues to gain momentum, I fear it is doomed to become the HR “flavor of the month” in most organizations.
Why is Workforce Planning Hot?
Many are discovering workforce planning for the first time as the “Great Recession” fades into memory. Organizations, especially in the US, were absolutely blind-sided by the recession. They were unaware of the nature and extent of risks in a highly leveraged and globally interdependent economy. From the human capital perspective, they were unaware of which positions and employees create value, compounding the panic brought on by the recession. It is both the fear it will happen again and the memory of the pain motivating organizations to invest in Workforce Planning now.
The reality is Workforce Planning has been around for decades and used extensively by the military. Experts in the field believe the reason it failed to take hold in Corporate America in the 1960s and 1970s is we lacked the technological capability to fully utilize the models and methodology. The technology problem has since been solved with multiple software providers competing to sell the slickest human capital modeling and analytics packages.
What Is Workforce Planning And How Is Strategic Workforce Planning Different?
It is like “how many licks does it take to get to the center of a Tootsie Pop?” – the world may never know or it’s stealing from an IBM consultant on how to define ERP systems – “it’s whatever the prospect thinks it is.”
Put simply, workforce planning is the process an organization uses to determine the skills and human capital needed to accomplish the organization’s mission. Strategic workforce planning is identifying the skills and human capital that will create a competitive advantage for the organization.
I do not mean to be disparaging, but in many organizations “Strategic Workforce Planning” is plain old workforce planning with the “strategic” label slapped on to make it appear more important and to secure funding.
As I built a Workforce Planning center of excellence in the mid-2000s, I realized there were three distinct types of workforce planning: operational, tactical, and strategic. I created the Workforce Planning hierarchy to help my colleagues and the business understand the different workforce populations, different time horizons, and most importantly, different purposes of each level.
Strategic Workforce Planning is the top of the triangle. It is about creating a competitive advantage and has a long-term time horizon, typically three or more years. Strategic workforce planning concerns a subset of the workforce, roughly 15–30%. Strategic workforce planning attempted for the entire organization will die due to sheer weight and complexity.
I have used multiple labels for the “Tactical” or middle level, of workforce planning (so I admit to contributing to the confusion regarding what “workforce planning” is). In my experience, this is the area most technology and HR practitioners play. It is about adding value to the business and has a one-year time horizon. A majority of the workforce is within this scope, roughly 50–80%.
Operational workforce planning, the bottom of the triangle, is about delivering, or to be frank, “getting shit done.” This is the logistical dimension of workforce planning and typically how managers understand the term “workforce planning.” The time horizon is less than one year, and in call centers, which have perfected this level of workforce planning, it is week-to-week and managed by the hour. The entire workforce is within bounds at the Operational level.
My claim has always been the trick is how to get these three levels working together as a single system – I am no longer certain this is possible.
Why Workforce Planning Does Not Work.
Let me count the ways (and I will try to address each one)…over-promising, lack of common understanding, misplaced ownership, confusion with succession planning, and the electric car phenomenon.
The Silver Bullet Solution?
The new threat to Workforce Planning is over-promising. See some of the vendor claims of the benefits of adopting “workforce planning:”
- From Success Factors Website:
When done well, workforce analytics and planning initiatives deliver measurable impact on business results by increasing organizations’ profits per FTE by 11% - Intelligent Human Capital Management, 2011
- From Oracle Website:
Oracle Hyperion Workforce Planning software is a special-purpose planning module that makes headcount, salary, and compensation planning fast and efficient across the enterprise. Designed with pre-built functionality and best practices that are ready to use right out of the box, it simplifies the planning of workforce and workforce related expenses…It also automatically and seamlessly links your workforce expense plans into Oracle Hyperion Planning Plus, to deliver accurate and real-time awareness of the business impact of your workforce decisions on your overall expense plans.
- From Sage Website:
Strategic workforce planning (emphasis added) is a continuous process and, supported by the ConnX Workforce Planning software module, your business will have a future supply of capable and effective talent, minimizing exposure to shifting tenure trends.
Workforce Planning software captures the skills required for positions and those held by employees in order to perform a skills-gap analysis. Individual personal development plans can then be created by employees, managers, or HR.
The employees’ personal development plan is integrated with their career plan in ConnX and the employee’s progression is then mapped throughout your organization. Integration with ConnX Learning & Education enables the employee to link to available training courses that provide the skills required for their development plan.
Succession planning tools within ConnX Workforce Planning enable HR to identify and plan for employee turnover. It also provides the tools to distinguish replacement candidates within your current workforce.
So according to these vendors,
what people issues can’t "workforce planning" cure?
“Workforce Planning” is …?
It is the breadth of benefits of workforce planning that leads to a lack of common understanding among stakeholders dooming many workforce planning efforts. Instead of recognizing the subtleties, business leaders often dismiss HR out of hand as not understanding the realities of business.
But it is not just an issue of “HR speak” – some of the fiercest debates over defining the purpose and scope of workforce planning occur among our HR brethren. The reality, which no one wants to admit, is these debates are often offensive measures designed to prevent workforce planning efforts from changing how HR functions operate. It is the threat of this all-encompassing process perceived as a locust invasion that dooms its ultimate success from within.
Whose baby is it?
Workforce planning, strategic or otherwise, has the greatest impact when it is a business process owned by the business. Research has repeatedly shown that when Workforce Planning is perceived as an HR process for the benefit of HR, Workforce Planning fails (i4cp, 2010).
I have preached HR’s role is to be stewards (or nanny) of the process but not to take an ownership role. Yet the reality is HR usually introduces the process to the organization, is the most knowledgeable about the process, and leads the process steps. Of course, under these circumstances, the organization will perceive HR as the owner.
Identifying the next CEO is strategic, right?
Often a driver of workforce planning is the succession planning process. Succession planning, especially in publicly traded companies, is mandated by the Board to be completed on an annual basis. This time-intensive and highly confidential process is the bane of many HR departments’ existences. There is a great desire to simplify, make the process easier, and have the process add value to the business rather than be a self-imposed compliance activity. Here is the logical leap many organizations take…
Strategic workforce planning is about planning for the critical roles. Succession planning is about planning for leadership roles. Leadership roles are critical to the success of the organization. Therefore, Succession Planning equals Workforce Planning.
Many organizations with whom I have worked either started Workforce Planning as a way to cure the challenges of Succession Planning or insisted the two processes must be tied together. The confusion this causes is another reason Strategic Workforce Planning often fails.
Why don’t we have an electric car?
When gas prices creep above $4.00 a gallon and speculation becomes sport, as Americans we decry, “where is the electric car?” Since the oil embargo of the 1970s there has been an on-again/off-again demand for the “electric car” and yet, forty years later, widespread access and adoption has remained elusive. Why?
While conspiracy theories run rampant, I believe the truth lies with the foundational economic principles of supply, demand, and opportunity cost. When gas prices are high, we will invest in alternatives to the combustion engine, but as soon as gas prices drop, the math and our resolve fall apart. We conveniently forget the underlying risks still exist and fuel prices will rise again, and we go back to driving our SUVs.
Similarly, talent shortages, reorganizations, and other business disruptions cause panicked demands for workforce planning, only to see the panic, and therefore the demand, fade away once stability is restored and “certainty” reigns.
The Problem Is In The Planning
After working with dozens of clients and witnessing so many of their efforts falling short, I have come to the conclusion the problem with workforce planning is the “planning.” There are two issues with “planning,” the end and the means.
The word “plan” has a particular meaning in Corporate America. “Plans” are revered like contracts or commandments. To not meet plan (or exceed plan in some cultures) is the equivalent of a moral failing – a black mark that tarnishes one’s permanent record. Examples of business plans include: financial plan, operating plan, sales plan, performance management plan, or (cringe) a performance improvement plan (PIP). In the case of all of these plans, targets are set, progress is monitored and consequences result. And then HR comes along with our strategic workforce “planning” process, which is not tangible and feels “touchy-feely.”
Even if management understands and agrees the workforce planning process addresses a real business issue but is a different animal than traditional business planning, there is still a question of whether management is capable of workforce planning.
Workforce planning requires a defined business strategy. In my experience, many organizations lack this foundational building block; they confuse strategy with defining success. A business strategy is the method or approach to bring about a desired result. Examples of business strategies include being the low-cost provider, the first to market, a fast follower, etc. Without a clear business strategy, there is no way to determine the workforce needs of the future.
But let’s say your business understands the purpose of workforce planning (hurdle 1) and has a clear, well understood business strategy (hurdle 2), workforce planning success is still not guaranteed. In my experience, third hurdle, articulating what skills and human capital will be needed in the future, often called “demand forecasting,” is the biggest obstacle of all.
Workforce demand forecasting is tricky if not impossible for most business leaders. Often the challenge arises because the fundamentals are not in place. But even my most sophisticated clients have struggled with this process of truly looking forward and expressing what skills the organization will need more and less of in the future.
While I am critical of the workforce planning process as practiced by most organizations, there is no doubt I have seen value in some of the underlying workforce planning process. I am encouraging my clients to think about “strategic workforce preparation” instead of pursuing strategic workforce planning. It seems to me “preparation” is what our leaders are asking for, not planning.
What’s the difference? Preparation is about being nimble and agile. Preparation is about insight and not being surprised. Preparation is about reacting more quickly than your competition. As the old joke goes, you don’t need to outrun the bear, you just need to outrun the competition. Or as economists say, a “relative competitive advantage.”
There are six workforce planning processes that are key to achieving Strategic Workforce Preparedness
- Determine a Workforce “Point of View” – this is developing and understanding your organization’s human capital philosophy
- Segment the Workforce – this is developing clear criteria to identify which roles are “critical” rather than relying on Justice Stewart’s definition for pornography (you recognize it when you see it)
- Create Internal Supply Profiles – for critical roles, developing a deeper understanding of the supply and predictive measures
- Create External Availability Profiles – for critical roles, develop a “sixth sense” of where talent is located, the direction demand for talent is trending, and assess your organization risk
- Develop Future State Skills and Competency Models – what skills will you need more and which skills will you need less?
- Build Business Scenarios – what is the implication of different business scenarios with regard to your workforce?
We want the HR function to be successful and are happy to assist organizations with avoiding the pitfalls of workforce planning and preparing the workforce for the future in a meaningful way. If you need help or are interested in learning more, please consider attending our Strategic Workforce Preparation HR Boot Camp or contact the Head Coach directly.