How Strategic Workforce Planning adds Business Value
The main reason why your business (and workforce) initiatives are not having the requisite levels of outcomes and impact comes down to two questions:
Does your organisation know what workforce [size, shape, capabilities, mix] is needed now?
What about in 3-5 years’ time?
Because the overwhelming majority of people answer “no” to both questions, this is the source of all evil – ok, maybe not evil but it certainly is not a great place to start. I actually think it is downright scary!
How else do you answer what is fundamentally the most important question for your organisation – what is our purpose, and what will it take to achieve it?
You see, whilst more people will answer “yes” to question one, it is still such a small minority. And usually upon further probing, it turns out that perhaps the answer is more like a maybe, or yes with a triple-shot of caveat. You see, they assume that the organisation knows the answer because it is still functioning and that means that the workforce they have today is the one they need, so tick the box. Or because rostering or short-term workforce planning is happening, they must have it covered. Or their recruitment team have their pipeline planned as they are busy backfilling current turnover without the org really knowing if they will need those exact same roles in the future (refer question 2 above).
However, as in question two, fast forward a year or two, or five, and pretty much no-one answers “yes”. And yet every single organisation knows that they will look somehow different in five years’ time – and what are organisations? The workforce! It never ceases to amaze me that we all know change is coming, is inevitable, is here already – but don’t really have any way to understand what this means for our organisation/workforce. And, to beat the broken drum (mixed metaphors anyone?) the workforce is usually their largest cost and most definitely is their biggest asset.
“So why does this really matter?” I hear you asking.
I assure you, the impact of not knowing the answers to these 2 questions is so destructive for organisations…if you don’t know what workforce you need today and in the future, how on earth are you going to execute your strategic and operating imperatives? Like seriously, HOW??? We can no longer just assume the requisite workforce will materialise on demand and that the way we have always done things will cut it. It seems that “organisation” and “workforce” are seen as two separate entities, so that in planning for the future, organisations actually cover everything else except the workforce. According to BCG, “no company can have a bona fide strategic business plan without also having a corresponding workforce plan" and yet proper workforce planning is just not done – refer inability of most to answer “yes” to questions 1 and 2 above.
The workforce is the key execution vehicle for organisations.
Unless your organisations USP is hand-painted pet rocks (and maybe even then still) it will, in one way or another, need to integrate technology into the what, where and how it does what it does - it will need to digitise. McKinsey have put developing talent and skills throughout the organisation “as one of the most important factors for success in a digital change effort” and that “success is also more likely when organisations scale up their workforce planning and talent development”. As mentioned in my previous article, HBR indicates that Digital Transformation (DT) risk is the #1 concern of directors, CEOs and senior execs with methods for addressing this (scenario planning, leveraging workforce, proactive change management etc) all hitting the elements of SWP. Sounds like a call to action to me…
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Working out what workforce is needed in the face of shifting core business drivers plus integrating the myriad of any step-changes such as transformation, “Future of Work”, mergers, digitisation, new markets, divestment, or cost-reduction is essential. Every company is navigating all things change and is seeking true organisational effectiveness in the face of this. This is why this is truly a business problem, now hitting the radar of C-Suites and Boards alike. Pick up your favourite consulting house’s annual survey and the top concern for most organisations will be around issues with talent/skills.
The Australian Institute of Company Directors says “directors should be satisfied that they have the skills available to meet their resource needs, and that there is a plan in place to ensure that these skills are developed or acquired to satisfy future demand”. Boards are now asking their leadership teams the same questions raised above: do you know “what skills our business needs to meet its current objectives and how might this change over time?” Do you really want to be the one to answer “no”? The world is just changing too rapidly for us to feel our way through this.
As a CEO, if you don’t know what workforce you need today and how that needs to shift over the next 1,2 or 5 years, how do you know what you should be doing to ensure you can deliver on your organisation’s purpose?
For leadership and HR, how do you actually know . . .
What, when and where to hire?
How to create the right EVP to appeal to the specific nuances, demographics, market dynamics etc of the roles you need to fill?
Where you should be investing your learning and development programs to ensure you have the future capabilities needed for your org?
What skills are the critical enablers of your company’s plans and how you can make sure they are in place?
Whether issues with turnover or retirement really matter in the face of your organisations changing needs?
How are you really enabling your business to deliver its strategy through the key execution vehicle, the workforce, of which you are the custodian?
And the impact of not having clear answers to all of the above is HUGE, not only in terms of significant cost wasted on the wrong programs, but the lost commercial opportunity resulting from org risk exposure and failure to deliver! We may think we are being leaders by setting the vision, but how are we really enabling our business if we don’t have those answers? How do you really create the right call to action for your leadership team to think ahead? To not waste resources on unnecessary actions?
Let’s look at one area of significant workforce spend, Learning and Development (I already dished on culture here). Forbes estimates that leadership development is a $366 billion global industry, and yet McKinsey says that the majority of these fail to create desired results. One of the main reasons for this is the “one size fits all” mentality and approach of most training programs. Organisations need to have “the clarity to offer the two or three things that matter most to the organisation, not just the 46 things that look like leadership”. Even further, this needs to be nuanced by different workforce segments and their unique trajectories. SWP is absolutely the way to distil the myriad of potential capability shifts to truly create this alignment of the workforce to current and future organisational imperatives.
According to EY, employers are only getting moderate returns on their investment in L&D. They say that out of the $12 billion invested by Australian companies in L&D, approximately a third – yes that is $4 billion - is going to waste. This is because most L&D is focused on developing skills that were relevant yesterday, not skills for tomorrow so their delivery is not future proofing worker’s careers at all, nor is it delivering organisations a future ready workforce that is needed for their own context. Alternatively, blanket “future skills” programs are being offered that make HR feel all warm and fuzzy inside as they roll out another “digital skills” program, but don’t really align to the specific and unique needs of the organisation. Again, undertaking proper SWP and translating business objectives into requisite skills and capabilities gives organisations this critical insight into what they need so they can overcome this issue.
If your organisation does not know the workforce it needs today and how that should shape and shift into the future, your organisation is going to be lucky to survive, forget thrive. And CEOs and their leadership teams are going to not only feel the pressure from the top-down as Boards start demanding the answers to questions 1 and 2, but employees themselves are going to put pressure on from the bottom-up as well (vice anyone?) If you can’t be socially responsible, provide the right suite of (tailored) EVP and initiatives to attract/ motivate/ retain, and assure them that you are appropriately investing in their development, they aren’t going to join you, they aren’t going to want to stick around. SWP remains the only way to really align business strategy and imperatives to the workforce, to ensure that initiatives actually have the impact and outcomes needed.
So, my dear readers, if you can put your hand on your heart and feel confident that your organisation truly knows the workforce size/shape/capabilities/mix that it needs now and how that will need to shape and shift into the future, then sincere congrats! You really are in the minority, and I ask you to please reach out to me so I can bump up that side of the statistic in our research (and notify my broker!) For those who don’t know the answer, I really would love to know: how do you know that what you are working on really matters to your organisation? Again, how do you answer what is fundamentally THE most important question for your organisation – what is our purpose, and what will it take to achieve it?
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ABOUT THE AUTHOR
Alicia Roach is the Co-Founder and Director of QHR and a recognised thought leader in Strategic Workforce Planning and Analytics. QHR has now created the eQ8 Strategic Workforce Planning Platform, to help organisations accelerate their planning for Transformation and the Future of Work using the most sophisticated technology available. You can contact her to learn more at aliciaroach@qhr.com.au or by visiting https://www.qhr.com.au.