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Identifying business value in workforce planning

Thursday, November 27, 2008
Identifying business value in workforce planning

Upheaval in the global economy has affected businesses all over the world – in all industries. Yours may well be one of them – and you may be wondering if there is something you might have done to be better prepared. Even the very best laid plans may not have averted the workforce turmoil many organisations are facing – but there are companies that are better prepared through strategic workforce planning.

To survive and remain competitive, especially today, planning for tomorrow’s workforce is critical. Businesses need to ensure that they have the right skill sets in the right numbers to attain the agility to adapt quickly if workforce needs change because of business, economical, or political conditions, and to prepare to meet different contingencies that may prevail in the future.

There is only one way to accomplish this: strategic workforce planning. Only by thinking through the ramifications of various future scenarios on the workforce can a company proactively apply insight rather than solely react (sometime panic-stricken) to changing, unanticipated conditions.

Every company has a business plan that guides its future – whether it is made up of new product plans, market expansion, global growth, or adding to or revising the services it offers. But new research by the Human Capital Institute and Hr consultancy Aruspex suggests that when it comes to human capital planning for the future, companies in the main are at best looking at tactical, operational staffing issues. Rarely is there investigation into the scenarios that could come into play and perhaps radically impact their labour requirements. It is this operational view that has left many companies woefully unprepared for the challenges they face today.

Today, distinctions can be identified among companies in their progress toward strategic workforce planning. According to our research, most companies (56 per cent) have no workforce planning instituted currently – although 36 per cent of the more than 300 companies participating in our study have plans to begin workforce planning within 12 months. And while workforce planning has evolved from demand-driven personnel planning of yesteryear to a more operational stance, it is in general far from the strategic planning evidenced in others areas of the business today.

Workforce planning as an inherent part of corporate strategy is just emerging; our research demonstrates that most companies are not actively developing plans that consider their workforces of the future, even the near future (two to three years out) and those companies that are actively implementing true strategic workforce planning are primarily in the initial years of roll-out.

Most companies that are engaged in planning are mired in operational activities, and, predictably, produce operational results. They report their return on the operational planning investment in three areas: an ongoing advantage in knowing what skills the organisation will need and the ability to hire or develop people as needed; better preparedness for business contingencies; and improved ability to adapt to meet new conditions.

These companies report that their greatest benefits from workforce planning are derived in corporate operations, followed by HR and staffing, and third, in the delivery of services. Despite these steps in operational planning, organisations require the discipline of better strategic planning for their future workforce in order to derive benefits that are actually core to the organisation’s business goals.

By comparison, companies that actively employed strategic planning demonstrated the following results:

• Solid analysis of the strategies and trends which impact on the workforce in the future

• Documented insight into the trends impacting the workforce, including the effect retirements and other trends will have on the future workforce

• Clearly defined future workforce gaps with solutions for these gaps

• Measurable action plans to be incorporated into a human capital operating plan

• Regular automated progress checks against the plan, and

• A definition of the targeted future workforce.

None of us has a crystal ball – the future in today’s world is certainly not at all clear. But through the discipline of strategic, rather than operational workforce planning, HR professionals and their business units can work together to consider the possible, even likely, scenarios in the future, and analyse the implications for the businesses’ workforce if those scenarios come to pass. Workforce planning is essential; today’s planners will benefit their companies most by moving to a more strategic model for that plan.

By Dr. Katherine Jones, research fellow, Human Capital Institute

25 November 2008

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