How to Build a Workforce Planning Strategy that Delivers Business Value
Workforce planning is a business activity. It is not an HR activity. As the COVID-19 pandemic continues to disrupt work and workforce models, the opportunity for workforce planning to support the business has never been greater. Recent studies confirm this: McKinsey showed that of the global executives surveyed, 70% said that two years from now they expect to use more temporary workers and contractors than they did before the COVID-19 crisis. In another study 79% of CEOs are concerned about skill availability impacting innovation, cost, quality and growth.
Workforce Planning - at its best!
At its best, workforce planning delivers millions of dollars to the enterprise through predicting where skills and workforce costs will be in the future and how to plan for them in the right locations, while managing existing costs.
In research conducted by Insight222 in the second half of 2020 across almost 50 global organisations, including in-depth studies of twelve Fortune 500 companies, we concluded that there are significant factors that leading companies perform when they “do workforce planning well.” These include:
They link their workforce planning activities directly and completely to the business strategy.
They focus on skills as well as cost and use new sources of external data to explore not just what skills and people they have got, but also what they need to find in the marketplace to succeed.
They measure the value of workforce planning and quantify the results in financial terms.
Conversely, we have seen that when workforce planning is done poorly, it is “hidden away” in HR, with individuals who don’t have strong business stakeholders engaged, use incomplete data and struggle to create impact. According to Gartner, only 12% of organisations are using talent data effectively to inform business decisions. Unfortunately, workforce plans get “lost” and the process gets taken over by Finance, who will provide a financial view of the workforce plan, without the necessary inspection of whether the skills exist or are in oversupply.
Key Insights
In our research in 2020 we uncovered a plethora of new information. There are however five key insights that we draw from the research as shown below — each of these is discussed further below. The entire research and practical guidelines is outlined in our 150-page guide Building the Future Organisation: A New Playbook for Workforce Planning. Click here to download a sample extract of the playbook.
Workforce Planning is not ‘just’ SWP
Workforce planning has been called SWP or Strategic Workforce Planning for many years. In fact, it is almost normal for people to interchangeably use the phrase Strategic Workforce Planning (or SWP) out of habit, even if the requirement is not strategic at all.
Our research in 2020 revealed that there are many forms of workforce planning and that it covers everything from the very tactical (“What do I need to plan for the next 2 weeks?”) to the very strategic (“How should my enterprise evolve over the next five years?”) and includes an operational, regional or geographical approach too.
2. Skills-based workforce planning is desired by nearly everyone!
According to our research, nearly all companies surveyed (90%) expressed a desire to build a skills-based workforce planning process. However, only a quarter of companies (26%) are actively doing so (see chart on the right).
3. Stakeholders are the key to success
The most common outcome of workforce planning is still to create insights that will drive HR decisions used by HR (see chart on the left). However, we also see that 50% of workforce planning activities are driving strategic decisions of senior executives. According to Gartner, the biggest barrier is HR’s difficulty getting access to relevant business execs.
Managing stakeholders throughout the process is becoming more important than ever. As an example, one global pharmaceutical company held a workforce planning bootcamp for all stakeholders to gain their commitment and ensure they were deeply involved. They developed the concept of “partnership bubbles” to secure collaboration across different functions.
4. Segmentation is important to deliver value
Conducting segmentation is a great way to prioritise workforce planning activities. Too often, companies can struggle to get early success with workforce planning because they try to do everything at once. By taking time to understand the business strategy and apply that focus to prioritising the critical workforce segments, workforce planning teams can identify the “burning platform” – that is, the best place to start.
One way to consider segmentation is to consider it against two axes (as shown below): ‘Impact on business value’ and ‘difficulty of replacing skills’.
5. Implementation is key to uncover the full benefit of workforce planning
Examples of workforce planning that pass the ultimate “so, what?” test are surprisingly rare. Many workforce planning projects are incorrectly marked ‘finished’ when a planning cycle has been established, a skills taxonomy has been created or top ten critical skills identified. But leading workforce planning experts don’t stop there. They quantify the outcomes as business benefits.
For example, a global technology company’s workforce planning team used scenario modelling to evaluate the impact of establishing a new facility at different sites. In this way, the team supported the company’s $75m investment in this building and created 1500 jobs across multiple areas of the business.
Another example shows the impact of the talent intelligence team at a global healthcare systems manufacturing company. that team created workforce plans that impacted over €2.58 billion worth of strategic company decisions and saved the business €600,000 in external research fees alone.
Teams and professionals at companies like these always look to quantify benefits. Not surprisingly, they are in much demand to help the business further.
Insight222 Nine Dimensions for Workforce Planning™
As a result of the research, we have developed a new framework at Insight222 to help organisations have structure and a practical guide for implementing workforce planning successfully. It is called the Insight222 Nine Dimensions for Workforce Planning™.
The first three dimensions provide the FOUNDATION – Strategy, Methodology and Segmentation. They embed the practice of workforce planning deeply in the business psyche and segment the workforce when needed to focus on those business areas, people, skills or locations that are most impactful to the business. Companies that are leading in workforce planning understand the significance of stakeholder management and collaborating with different functions across the business. Through these relationships, HR and Corporate Strategy professionals work in synergy to build effective workforce plans that meet financial and marketplace goals to build the future organisation.
The next three dimensions provide the RESOURCES needed – Skills, Technology and Data. A balanced and skilled team, good technology and access to high quality data are needed for impactful workforce planning. This is especially important when tackling skills-based workforce planning. Leading companies have refined their job architecture and started to identify “key” roles and critical skills to align with marketplace opportunities identified in the business strategy. Others have made progress in using internal and external data sources to comprehensively identify and assess current roles and skills as well as the future availability of these for business growth. In leading practices investment has been made in skilled workforce planning analysts, specialist technology and relevant data sources.
The final three dimensions deliver VALUE – Implementation, Measurement and Business Outcomes. Impactful workforce planning – if implemented well – delivers tangible value for an enterprise. The focus is on driving business outcomes, such as marketplace growth, innovation in R&D or financial success through sales and profitability of current products and services. The frequency of workforce planning modelling is less important than being able to respond to key business issues as they arise and deliver measurable results. In fact, workforce planning is most impactful when it is not considered a “one-off” process, but instead evolves into a dynamic series of activities, with ongoing evaluation of business impact
Next Steps
While our research concluded that there is “no one-size fits all” approach to workforce planning, we did uncover that each one of our leading companies did several of these Nine Dimensions to a superlative level.
In summary, while the old saying of workforce planning still exists to some extent – “the right people, in the right place, at the right time and at the right cost” - it is much more than that in the competitive world of the 2020s.
Workforce planning done well will accelerate your business strategy by providing recommendations based on fact, insight and deep knowledge of the workforce across the markets in which you operate.
We have developed A New Playbook for Workforce Planning, a 150-page guide which covers the insights from the research discussed in this article and outlines the Insight222 Nine Dimensions for Workforce Planning™ in detail. The Playbook gives HR practitioners practical guidance on delivering business value with workforce planning. It covers in detail the principles, methodologies and resources needed to sustain effective workforce planning. Click below to download a sample extract of the playbook.
For more information about the Insight222 Nine Dimensions for Workforce Planning™ including how to gain access to the full Playbook, please contact stacey.smith@insight222.com. Our full team is available at www.insight222.com.
Additional Resources
If you are an HR practitioner looking to develop your skills in workforce planning, take a look at the myHRfuture Academy. We have a variety of online courses for HR professionals aimed at supporting you grow your knowledge and build the skills you need to get started with workforce planning.
ABOUT THE AUTHOR
Jonathan Ferrar is a globally respected speaker, author, influencer and business adviser in HR strategy and people analytics. He has worked in corporate business for over 25 years for companies like Andersen Consulting (now Accenture) and IBM, where he served as an executive for more than ten years. He is a Board Member of the CIPD and advisor to the analytics company, TrustSphere. Currently, Jonathan is Chief Executive Officer and co-founder of people analytics and HR professional services firm, Insight222. He is regularly cited in HR Influencer lists such as ‘The 100 Most Influential People in HR’ (HR Weekly, January 2021) and ‘Top 100 HR Tech Influencers’ (HR Executive, May 2020). Additionally, Jonathan is a co-author of the people analytics book, The Power of People: Learn How Successful Organizations Use Workforce Analytics To Improve Business Performance (Pearson, 2017).