Why you can’t afford to NOT do Strategic Workforce Planning
So you may or may not have seen my recent article detailing the continued plight of Strategic Workforce Planning (SWP), and the common reasons it is not done. Beyond business or HR readiness, a major reason relates to investment. There are companies who want to do SWP, but say “we just don’t have the budget” or “we just can’t afford to do it”. Well, let me tell you now – your company can’t afford to NOT do it!
First, let’s level-set a couple of things:
Every single organisation is facing some sort of change
What is change? Transformation
What is being transformed? Organisations
What are organisations? The people in them, the workforce.
And one more:
Every organisation has business objectives (I nearly wrote business strategy, but I am not entirely convinced that is correct . . .)
What are business objectives? The key factors that a business must execute to achieve success
How do we deliver those objectives? Through the key execution vehicle, the workforce.
So, we can see immediately that whatever an organisation is trying to achieve, whatever change it is facing, the workforce is both a means and an end. Unfortunately, when many think about transformation, they just think it is about investing in technology. Or, when they think about their business objectives, companies think they can achieve those “organically”. That is, without any proper planning on who will be capable of delivering said objectives with quality and on time. However, this is just not realistic.
It really is true that organisations that fail to (workforce) plan, plan to fail.
Let’s look at how this plays out across a few items that are key priorities for many right now.
Technology
Technology is great (is that the most intelligent thing you have read today?) It is an amazing enabler for individuals, societies and organisations alike. Seriously, can you imagine life without your smartphone? OK, so perhaps you would have more quality time in nature or less RSI in your right thumb, but it would mean you would need to actually walk into a bank branch, talk to your mother in law in person, or write someone a letter…with actual pen and paper! However, investing in technology alone is not enough. Technology is changing the way organisations function – and with the workforce making up what an organisation is, this means that the who, what, how, why and even where of work is changing. You can’t just buy a system and declare transformation success.
Harvard Business Review acknowledges that in fact “Digital Transformation is Not About Technology” .
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”.
Take Amazon, one of the most advanced tech co’s on the planet, who just recently announced it will spend $700m to retrain its workforce to adapt to tech disruption. Recognising that there are always “pieces of work that will be done by people” and that reskilling is a critical enabler of transformation, whilst also addressing talent shortages (they were struggling to fill their open positions and had to find a 2nd HQ location for this reason). Plus it is good social responsibility and an “opportunity to up-skill the population”.
We have worked with a number of organisations at various stages of digital transformation journeys. And we have come in at various stages of their success... or delayed potential. Take one large utilities company that planned on transforming its customer experience and journey through some really smart tech. The whole business case was predicated on reductions in the workforce by removing the need for many basic transactions and processes. What transpired was:
Removing the low level transactions meant that the customer service representatives now had to deal with higher complexity customer interactions – they had not been trained properly to do so;
A whole bunch of the workforce had been made redundant that could have actually been effectively reskilled;
Customers did not transition as quickly as planned as the correct customer change management folk were not in place, however there was no longer enough workforce to deal with traditional channel volumes, meaning:
handling/wait times ballooned;
customer drop-offs and complaints increased; and
NPS dropped.
No one had planned properly for the skills required to operationalise the new tech. Both in terms of supporting it and, arguably more importantly, in being able to leverage the new customer insights and data that would be available.
By introducing SWP mid-way through the journey, the company was able to define the capabilities required under different trajectories. This identified a holistic workforce change program that could not only bring the agenda back on track through alignment of capabilities to milestones across all the moving dimensions, but actually accelerate the transformation through increasing workforce (and customer) readiness.
Or take another company that had an aggressive growth plan in a digital offering, substantially different to its core business. Executing this plan required “digital skills” – I loosely use “digital skills” as a blanket term and because that is pretty much what Every Single Organisation to whom we speak tells us that they want. Defining what those “digital skills” mean in relation to the strategy and plans though is something that is often not done (AKA, they will just materialise when we need them) or is qualitatively assessed (so, who is hiring what and when?). And, since Every Single Organisation is also wanting said skills, they are hard to come by. Or, they no longer want to work as employees but as freelancers in the much-lauded “gig economy”. Or, they just don’t want to work for a stodgy old industrial company, Uber is way sexier after all! All of which this company experienced.
So basically they couldn’t deliver on this super awesome new offering in which they had invested (tech) heavily, with super awesome commercial benefits, just because they didn’t have the workforce….cue sad music :( Luckily through SWP, they were able to re-baseline, define what they need and integrate that with the external challenges around supply and demand, to develop targeted and niche offerings, EVP, and “outside the box” strategies to ensure requisite workforce did actually materialise. A little bit of SWP magic.
HBR indicates that Digital Transformation (DT) risk is the #1 concern of directors, CEOs and senior execs. They say that a whopping 70% of DT initiatives do not reach their goals, and that (sit down) $900 billion (yes – BILLION) went to waste in the last year alone because of this. With HBR identifying ways to address this ranging from figuring out your business strategy (tick – SWP is a key facilitator of this through its scenario planning and exec alignment), to leveraging insiders (tick – SWP is all about your workforce), to recognising employees’ fear of being replaced (tick again – refer “Culture” below). Isn’t the potential payoff from giving it a go, and the potential impact from not, worth it?
HBR indicates that $900 billion went to waste in the last year alone due to failed digital transformation.
Culture
Ahhhh culture... hot on everyone’s agendas as if it is some new approach. “Culture eats strategy for breakfast” and “culture is king” – let’s be real, efforts to drive culture have been around for a while now. And organisations need more than culture alone to achieve, thrive, succeed. Don’t get me wrong - I believe in culture, I think it can make or break organisations. However, cultural change needs to be grounded on the basis of a solid organisational foundation. Investing time, effort and money in cultural change can quickly be undermined when organisations find themselves reacting and fire-fighting due to poor planning. You can build a culture of governance, compliance and risk-management, or collaboration, trust and innovation – but when the rubber hits the road, the business environment changes or major milestones are missed, then what?
Let’s take another organisation we have worked with. Truly committed to building a great culture, investing heavily in engagement and measures of organisational health over a period of about 5 years. And it was going great – the org health measures were increasing constantly, engagement was high, cultural signals were strong – it was good times, onwards and upwards! But then something happened in the external environment that meant the business was facing some pressure, margins were tight and getting tighter, volumes were dropping off. Cue: React! Cost cuts and sweeping workforce redundancies masked as well-thought-through “restructures”. People were distraught and fearful in an uncertain future, not knowing if they would even have a job. Trust and collaboration went out the window. The culture quickly became one of fear, uncertainty and broken promises. Had the organisation undertaken SWP, understood the link of the workforce to its business volumes, scenario planned for possible occurrences and so on – it would have:
had a basis to have been less reactive;
been better placed to make considered adjustments in the face of change;
been able to have open conversations with employees about what business trajectories meant for them; and
understood if there were any reskilling opportunities, or if they could use natural attrition to weather the reductions and so on.
In under 3 months, the culture was radically damaged – years of effort and investment wiped out in a fraction of the time!
This could have been substantially mitigated. Along with the broader benefits, social responsibility of retraining and reskilling, and being a decent organisation who communicates to its people. The company failed to anticipate what business fluctuations could mean for its operating model. Unwinding its rigid structure is still costing investors tens of millions.
Leadership
Culture is one thing. Of which a key element is leadership – “starts at the top” right? Leadership investment is higher than ever – giving leaders the skills to navigate change, innovate, drive transformation, and be better people. All readily accomplished by connecting in an immersive environment whilst blindfolded, walking across hot coals and breathing fire in Patagonia ;)
But if these amazing leaders are not clear and aligned about not only what their vision is, but what it takes to get there, they will have little chance to actually execute. Leadership is important, but for leaders to lead their organisations to success, planning is critical. The planning must be tangible, tying in customer and operational delivery to workforce capability. The world is evolving too rapidly for vision alone.
McKinsey indicates that organisations who use scenario modelling are 2.4 times more likely to have successful digital transformation. Those with a dynamic and co-owned plan 2.9 times more likely to realise success. “Lack of leadership alignment” is one of the main blocks to successful transformation and is something we come across frequently, along with “lack of requisite skills”. The dynamic scenario planning of proper Strategic Workforce Planning overcomes these, bringing the common denominator of the workforce to interpret business imperatives, creating a cohesiveness, alignment and acceleration that truly enables transformation.
You can have the best vision and leadership in the cosmos, but if you don’t have the right execution vehicle in place (the workforce), what does it matter? We have been in rooms of large listed companies where the dialogue from SWP has uncovered complete misalignment in business vision and direction between a CEO, COO and CFO (ie. leadership who had all undoubtedly been through many rounds of best-in-class leadership training) – and then brought them back together, with the bonus of now also having clarity on the achievability of the strategy.
So what is the “so what?”
From the HR perspective, SWP is not just another item in the HR toolkit and to-do list – it defines what that list should be in the first place. It has been said that there is a “realisation that HR is doing too much, and that the list of HR initiatives is far too long…employees and senior management are looking for more impact, with less effort” and that HR should limit their focus to the “most urgent business issues” (Side note: this does not mean sacrificing your functional integrity and becoming an order taker for the business).
HR is being increasingly asked to step up, to create that link between the workforce and what the business needs to achieve. It is not good enough to put “strategic and commercial” on the LinkedIn profile. You have to show what you did to really impact the business beyond best practice HR toolkits. According to Forbes,
“CHRO’s must grow their own knowledge in workforce planning… understand and strategise in advance of emerging trends that will have huge impacts on organisations and workforce”.
Interestingly – and please don’t shoot the messenger - but recruiters we speak to are increasingly being given mandates to look for HR leaders who are either “extremely analytical” or from a non-HR, business/finance/commercial background. As custodians of the workforce, now is the time to really take HR to the next level, it is super exciting!
From the business perspective, it is powerfully compelling. Borrowed from my previous article (with my permission, don’t worry), the impact of SWP is HUGE. Unlike many initiatives around the workforce which can deliver cost optimisation, SWP does this (and better IMHO). It also delivers top-line impact – think revenue growth and ROE. According to Sierra-Cedar,
companies who do SWP experience an average of 10% higher business outcomes such as revenue per employee, ROE or profit per employee.
They are also realising an average of 12% higher talent outcomes in engagement, succession and retention. Not optimising the workforce, too much of the wrong capabilities or wrong cost base – significant. Missing business goals, milestones or customer demand... catastrophic!
So if you are continuing your business, transformation or HR initiatives, without really creating that link between business objectives and the workforce, you may be throwing money away ($900 billion anyone?!?!) You may not have the budget already allocated to SWP, but that is most likely because your organisation has not done SWP before. However, there is a reason SWP is increasingly hitting the radar of Boards and C-Suite alike – it is critical. So now is the time to make room in the budget and the make time to do this.
Undertaking a valuable SWP activity really could end up saving you money, saving your workforce, and saving your business.
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.
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