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What’s Old is New: The Quest for Excellence in Workforce Planning
Directionally Correct Newsletter, The #1 People Analytics Substack
By: Robert Motion & Cole Napper
This article is written to discuss: what goes around comes around, including workforce planning being a very hot topic right now.
Workforce planning (WFP) has been an on-again, off-again fad in Human Resources for the past 20+ years. It was popular during the Great Recession, and has seen a resurgence again as of late. The discipline of workforce planning predates people analytics and is one of it’s forebearers. Workforce planning evolved from “manpower planning” in manufacturing and military settings in the early 20th century. While many practitioners and Fortune 500 companies, alike, have attempted to conquer workforce planning, comprehensive success is still rare. Like Don Quixote, we continue to seek our own El Dorado. As two long time practitioners in this space who have “ridden the waves”, we are seeing an emerging trend in “what’s old is new”… with some modern twists.
So what do we mean by “what’s old is new”? Some tried and true lessons continue to be critical components for successful workforce planning in today’s world. We think the following six lessons are even more important today than ever:
Strategy is hard, but that doesn’t make WFP impossible.
Workforce planning can both help fight and respond to the Wall Street earnings cycle pressure
Process is necessary, but don’t overdo it
Analytics is and will continue to be king
Winning the war for talent requires Talent Intelligence
We can’t fall in love with our own ideas
Strategy is Hard, But That Doesn’t Make Workforce Planning Impossible
Strategy assuredly is difficult, and as such, workforce planning is also difficult. Making a winning business strategy if there were no competition, copycats, and infinite resources would be a cake-walk. But that is not the world in which any businesses operate. Workforce planning must follow workforce strategy, and workforce strategies cannot be built without there first being a business strategy. Simple enough, right?
The reality is that the business may not have a clear strategy, and even if it does, it is likely constantly evolving. Part of the beauty of workforce planning is that it forces difficult conversations around strategy. It can provide thought-provoking labor market trends, competitor talent movements, internal demographic analysis, and internal skills analysis. From there, it provides a forum for ideation through scenario planning. As such, we can potentially influence the business strategy by uniquely providing the talent-related opportunities and risks facing the business… as long as the business is willing to grant us a seat at the table.
In relation to strategy, we have a provocative question to ask: Could effective workforce planning save a failing business? If so, how? If not, are we not really as effective as we hope? Workforce planning SHOULD be able to save a failing business, but if that were the case, why are there so many previous “blue chip” companies that are in a managed decline? To us, the epitome of effective workforce planning is to breathe life and innovation into even the most struggling business. This would not be easy, mind you, but it should still be possible.
Workforce Planning Can Both Help Fight and Respond to The Wall Street Earnings Cycle Pressure
HR functions are being asked more and more in terms of providing data and metrics to Wall Street. Workforce planning, when done well, can do more than just provide basic metrics to Wall Street. It can balance costs today (to meet the short term business needs), while transforming the business to build and maintain innovation levels in the future. This is how you generate ROI by deliberate and strategic investment in talent. Perhaps what Wall Street should be asking is: “What is your talent quotient return on investment?”, rather than just “What is your headcount cost?”
Wall Street — and public entities more broadly — feed on immediacy (i.e., the constant pressure on quarterly earnings) to which workforce planning needs to respond. Strategic WFP often focuses on the longer term, looking at skills gaps and strategies over a multi-year timeline. In the eyes of a Wall Street analyst, “5 years is nice, but what about tomorrow/today?” In other words, “How can your process help us solve for our immediate needs?”
This is where Operational WFP (OWFP) and Strategic WFP (SWFP) should be tied at the hip to “feed the beast” of addressing immediate needs while still maintaining focus on the longer term. SWFP provides the compass heading to “good”; it specifies what talent needs and strategies the organization needs to take over the long term to ensure that it has the workforce to meet its business strategy. OWFP, by contrast, is looking at the near term… headcount, hiring, retention to meet current year needs.
These processes need to be symbiotic by informing and complementing one another. For example, Artificial Intelligence (AI) is today’s force du jour. Nearly every business is contemplating the strategic challenge of the impacts of AI. A strategic workforce plan would outline and quantify the critical roles, skills, and gaps needed to create the workforce necessary to achieve a company’s AI strategy. The company’s OWFP should incorporate and address these long-term AI needs through targeted hiring, development, and retention efforts.
Process is Necessary, But Don’t Overdo It
Excellence in workforce planning requires having a defined, disciplined approach to ensure consistent and accurate output. Common approachs, language/definitions, templates, models, and analytics all help drive alignment of purpose and outcomes. They also provide the necessary framework to create the end deliverable of the process - a workforce plan. That being said, consistency should not be confused with flexibility. Workforce planning should not become overly rigid in order to respond to the evolving needs of a rapidly changing business environment. When forced to follow “the process”, workforce planners may not be able to respond in a timely manner.
It also may not take into account any unique characteristics of the business. For example, focusing on a single role can lead to missing the forest from the trees in terms of business context and relevance. In these instances, a brilliantly conceived workforce plan can land with a thud when presented to leaders. Likewise, insisting on detailed workforce segmentation when the business lacks readiness can impact solution creation and commitment from leaders. It may be better to meet these leaders where they are and only focus on the select roles or departments that are keeping these leaders up at night instead. Providing a targeted elixir to a specific problem will yield more impact than a generic anecdote.
An important strategic choice point with workforce planning that often goes astray is the selection of where to focus WFP efforts. Does the process target a single department, a part of the business, specific segments such as revenue generating or R&D roles? The essence of SWFP is prioritizing strategic capabilities over others.
For example, one defense contractor’s implementation of phasing workforce segmentation. Strategic roles were identified in the first cycle, and then came a downturn in the form of defense sequestration in 2012. The CHRO asked to focus on transitional roles (roles that were going away). It was the right ask given the market, but the business was not ready for the conversation. The defense contractor’s leadership really needed to see the analysis in the context of the other segments (key/critical and core roles). Key roles were still keeping them up at night, and the analysis did not focus on them. It was important to pivot, otherwise support would have been lost.
Similarly, if you only look at part of the business, you always risk the irrelevance that comes from the “what about me” question. This doesn’t mean that you do a plan for every role, business, or segment…. Rather you acknowledge them via context and then explain why the plan focuses elsewhere (e.g., these areas drive business growth, are strategic for the future, etc.).
Workforce planning can feel like a cumbersome process when implemented incorrectly. Workforce planning is done best when it is embedded into the ways businesses operate already (e.g., business cycles, strategic planning cadences, executive retreats, etc.). Cole has often spoken about the concept of ‘minimum necessary force’ when applied to people analytics in the workplace. However, we think that adage applies equally well in the workforce planning context. What is the minimum effort that needs to be expended, without waste, to achieve the optimal result? In the workforce planning context, this often means don’t do too little, but more often than not, it also means don’t do too much. What is our strategy? What data does the business need to make decisions, operate, and execute? And how can we move the data from being plans to being plans that are put into action?
This concept of ‘minimum necessary force’ can help WFP become agile by focusing on effort and impact. Rather than trying to be all things for all people, we can instead focus on the greatest areas of lift with stakeholders.
Analytics Is and Will Continue to be King
The world today runs on data and analytics; it’s ubiquitous and everywhere — from our phones to our streaming services to our wearable devices. As WFP practitioners, influencing with data is THE key to gaining credibility with the business. It shows that WFP is not “touchy-freely HR”, but data-driven and quantified. Showing trends, distributions, etc. creates a more nuanced understanding of the workforce, risks, gaps, and potential results of interventions/initiatives. For example, saying that “attrition is high” will not get much attention from leaders. By contrast, the following statement would generate alarm bells and specific action: “attrition for our critical software engineers increased by 50% over the last year to 20% annually - twice that of our competitors.”
Anecdotes can run wild when left unchecked. In a prior role, Bob often had to combat hiring managers who would constantly complain about a staffing shortage of engineers. This was often a reaction to the voluntary departure of a handful of employees. Upon reviewing the data, workforce plans showed that there was not a shortage — hiring plans were minimal (say 100 or so) and on target and voluntary attrition was under 5%. Without getting a shared set of facts using data, the company would have been pouring resources to fight a problem that didn’t exist. Even worse, the organizations could overhire for non-existent needs, frustrating these new hires and costing the organization dearly.
Winning the War for Talent Requires Talent Intelligence
Talent intelligence (TI) in particular will play an increasing and pervasive role as companies adjust to the new normal of hyper-competition for skills. While we have long had access to this type of information, it will now be a crucial foundation to winning the “war for talent”. As roles have become more specialized, the battlefield is turning towards specific skills. It’s no longer sufficient to be a software engineer, rather, knowledge of specifics like generative AI and cloud infrastructure are critical in a world of cloud and edge computing. While there may be enough workers in the market, there continues to be an imbalance of supply and demand when looking at skills. Advances in AI may fill some of the workforce gap, but shortages will persist as long as overall workforce supply remain flat (or even decline).
Given these market dynamics, a “buy” strategy is a fool’s errand. Companies will not be able to hire their way out of workforce strategies. When they do choose to hire, firms will need to be targeted and deliberate in order to lure talent from the competition. Talent intelligence can help companies understand how to compete in this new normal. Like internal workforce data, TI is data-driven, but it applies this lens to external factors that impact talent decisions. TI looks at the labor market, competitors, and availability to provide a comprehensive assessment of where to locate work, how to position (EVP), how much to pay, and how to balance between “build, buy, bounce, and bind” strategies.
Workforce Planning Must Continue to Evolve with Technology
Technology has already come a long way as workforce planning tools are more mainstream. Talent intelligence tools have also matured over the past decade to expedite the understanding of supply and demand indicators. All of these applications are increasingly incorporating algorithms and predictive analytics to enhance the fidelity of workforce forecasts and insights. These models only promise to improve as machine learning tools further develop and have access to learn from larger, more comprehensive data sets of workforce trends and transactions.
And of course, AI can potentially be a game changer for the field. Generative AI engines can already be used to accelerate talent intelligence. A simple prompt can now automate research in seconds that once took hours to generate. Generative AI can also help automate and accelerate some of the qualitative and more labor-intensive activities involved in Strategic WFP by culling through interview notes, strategy documents, and skills assessments. Workforce planning has to embrace these technology trends as they all will help enhance data-driven decisions, insight, credibility, and drive relevance with customers.
We Can’t Fall in Love with Our Own Ideas.
Let’s face it: we, as practitioners, love this space. We have spent hours, years, careers, even lifetimes exploring and contributing to this discipline, and we do so with unbridled passion. That commitment and passion can come with a dark side: hubris. We forget that workforce planning is still a niche specialty that likely is foreign to most professionals. We will rattle off terms like “strategic workforce planning”, “segmentation”, or “forecasts” without taking others with us. We use jargon without explaining some of the most fundament tenets of WFP or how WFP can impact the business. As a result result, these fruits of our labors can fall upon deaf ears because we failed to relate to our audience.
Likewise, we can get wrapped up in the academia of WFP, whether it be our latest model, process, template, or tool. These finer details may be important to us, but we need to take a step back to drive relevance. We need to remember that one’s approach to WFP is an approach and not the approach. Each implementation must meet the unique needs and circumstances of the business environment in which it operates and therefore will likely vary from others. We should listen and learn from our peers in the field as we try to continually mature workforce planning as a discipline.
Workforce Planning is back in the limelight. It is both an art and a science that has its root in data and strategy. As such, we need to take wisdom from the past as much as we look forward. We need to ensure that our processes are lean and flexible to respond to the dynamics of immediacy. We have to embrace technology as an accelerant. We must to continually seek the next improvement to the discipline with humility. Workforce planning is more relevant today than ever, and new frontiers surely await as we forge ahead.
I hope you like this article. If so, I have a few more articles coming out soon. Stay tuned. If you are interested in learning more directly from me, please connect with me on LinkedIn.
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