Strategic workforce planning can help HR create business success.
Identifying and investing in the right people is more important than ever. Strategic workforce planning is about overcoming this challenge, by identifying the right people, today and tomorrow, with the right skills, at the right cost. It is one of the most important roles we have in HR today and, I believe, will be at the very core of HR in the future. HR’s important decisions will increasingly move from hiring policies and defining training and development needs, to redesigning jobs, optimising the organisation’s design and winning the talent war.
Strategic workforce planning isn’t just about HR though. It’s key for everyone from the CEO to the CFO to business unit leaders, because people make strategy happen. Getting the right people is a key item on any CEO’s agenda.
For HR professionals wanting to make a material difference to their business’s success going forward, it’s vital to have a working knowledge of strategic workforce planning, which has two levels:
1. Optimising the workforce, which is mainly about improving the productivity of your people and identifying the workforce you need today; and
2. Scenario planning for the future, which looks at how to achieve the right workforce in the future that will turn your strategy into reality.
Understanding these two levels helps you appreciate the power and potential of strategic workforce planning but to really understand it on a practical level, you need to look at the ‘Five Rights’ which will help you make the most of your investment in people.
Right size
Size is all about numbers. Some businesses need more than they have, whilst others need less. Many companies experience both situations at the same time in different divisions.
So how do you know how many people you need, now and in the future? Of course, there are certain methodologies that need to be applied to make the process more robust and the outcome more accurate. But to have an indication, start by asking:
– Is the workload increasing or decreasing, and why?
– Are there disruptions in the environment that will impact staffing needs?
– Are there people shortages in any critical areas and are they temporary or permanent?
– Is there any room to reduce your workforce in any areas without compromising service quality and revenue?
– Does it make sense to outsource non-core business processes?
– Is technology leading to more changes or causing issues with productivity? and
– Are new technologies creating changes in your structure or in your productivity? This can reduce the number of people that you need. Are you ready to deal with the outcome?
Right shape
It’s easy to think about shape in terms of the layers of your organisational chart and the percentage of workforce at different levels. This is, of course, important as it has a direct impact on the workforce cost, but there is a critical question that needs to be answered first: does the composition of your workforce match your organisation’s needs and plans?
To get the right shape, it’s important to think through the issues of what is core and non-core, what needs to be fostered internally, and what should be outsourced. And once you know the answers, then you determine the right mix of leaders, senior managers, experts and professionals.
Steve Jobs used to remark that Apple was focused on innovation, technology and design – and, therefore, he didn’t want manufacturing within the firm. He was right, why maintain hordes of manufacturing staff when that’s not what will gain you competitive advantage and can be done better by other companies?
Right skills
‘Strategic capabilities’ are the set of skills you need to successfully implement your strategy. By nature, they vary by sector. For example, Telcos around the world are evolving their business models, moving from “Network Guarantor” to “Experience Provider” providing their customers with an attractive combination of targeted applications and content (such as access to music, video, games), digital, customer insights and customer experience experts become vitally important. In the oil industry, on the other hand, sound project management skills can mean the difference between success and failure.
In these changing times, with organisations that have many different functions and new ones in the pipeline, it can be difficult to determine which skills really matter. Leaders and managers often have a good sense of the skills that will be required in the future but this information can get lost in the daily pressures of the modern business environment. HR can help by maintaining that long-term view and considering how an evolving business model impacts strategic capabilities, whether you have the skills to deliver key processes in the future and which skills will be critical to success not just this year but also in the future. You could have capabilities today that are critical for the organisation but, in the future, they might not be critical anymore, and vice versa.
Don’t mistake skills with job titles/positions. These are two very different things. Titles are for free and you can name jobs anything that makes your attraction and retention easier, but that’s not a good reflection of the skills that you expect from the job holder. Adopt the habit and refer to your workforce requirements in terms of what kind of people you are looking for and what skill set they need to have, rather by job title.
Right site
Organisations are on the move. More and more companies are expanding their operations outside the region or developing a more integrated model. As companies grow and become more complex and global, there often appears to be a disconnect between where people are physically located and where they are needed. Over time, organisations’ business units can tend to create their own approaches that respond to local needs but aren’t necessarily what’s needed at a corporate level.
In addition, there is a) the operating model of an organisation and the approach chosen to serve the market, b) the labour costs of different geographies to consider and c) the skill set available in those markets. Helping your business determine which people are needed in which location can seem overwhelming. Start by answering these questions:
– Do strategic shifts (expansion into a new market) require a different distribution of staff across regions or locations?
– Where is the workload coming from, today and in the future?
– Do we have critical mass in the critical locations?
– Can we create hubs of experts to serve multiple locations?
– Are we currently in a high-cost area and should we relocate resources to a cheaper area? and
– What is the impact on service quality and revenue if we shift people to different locations?
Right spend
By concentrating on getting the right size, skills, shape and site, you’ll be getting the spend right and be focusing it on the areas that make the most business sense.
If you’re like many organisations for whom cost optimisation is the most pressing goal of strategic workforce planning, this may also be the starting point. To optimise those costs; consider benchmarking your people costs against similar organisations, using past figures to project the rising staff costs to see if it’s likely to grow in line with (or hopefully, more slowly than) your forecast revenues and considering options for cost savings through a different site (location) or shape (through outsourcing or/and different percentage mix of resources).
The result of focusing on the ‘Five Rights’ is a more efficient and effective workforce that’s closely tied to your business strategy. By identifying your strategic capabilities and finding people with the right skills early, you will create a competitive advantage for your company, help improve its economic performance and become an integral part of its strategic decisions.
Last but not least, strategic workforce planning is sometimes under the mandate of HR, and sometimes it is under a separate unit like Strategic Planning. There is no right or wrong, what’s important is that it is hosted by a unit that understands the big picture (strategy) and is able to translate it into workforce requirements.
Lisete Harris is Sector Head at Hay Group South Africa, www.haygroup.com/za.
This article appeared in the November 2015 issue of HR Future magazine.
