strategic workforce planning

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STRATEGIC WORKFORCE PLANNING

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THE SHIFT FROM COST FOCUS TO VALUE FOCUS

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C-SUITE PRIORITIES SHIFT FROM COST FOCUS TO VALUE FOCUS

I want end-to-end process optimization

I need to drive down operational cost

I want cost effective flexible service

I want seamless brand and experiences

I want to drive [product/services innovation

I want to tackle emerging markets

I want seamless integration of acquisitions

I want business agility

I want to access good quality data

I want real-time data driven insights

Strategic Priorities


ANTICIPATING WORKFORCE AND BUSINESS RISKS

Sufficient qualified and highly qualified employees within the next 3,5,7 or 10 years

Getting the right balance between onshore and offshore capacity

Balancing the cost of contingency labor with flexibility required

Focusing on the capacity and capability of HR for workforce planning and talent management

CAPACITY RISK

External talent demand / supply and the increasing global market for skills

Managing recruitment / turnover cost

Taking account of the impact of organization changes and M&A activity

Taking account of social trends, market needs and competition

Managing impact on skills of new technologies and ways of working

SKILL RISKS

Aging population Demographic shifts –

different generations within the workforce

Different motivations for different worker groups

Matching worker flexibility with business demand

DEMOGRAPHIC RISKS


KEY FACTS ON WORKFORCE PLANNING The majority of organizations are ineffective when it comes to predicting

future talent demands.

Workforce planning fails when it is viewed as an HR issue rather than a business issue or when HR is conducting workforce planning activities alone.

Strategic workforce planning cannot happen overnight.

Organizations should have an enterprise wide consistent approach to workforce planning.

Understanding talent gaps is imperative to the success of a workforce planning process.

Sourcing is just one aspect of workforce planning.

Technology (modeling and planning software) can improve the workforce planning process for any company at any level of maturity in workforce planning.


THE SOURCES, CAUSES AND EFFECTS OF WORKFORCE RISKS

Demographic Shifts

Operating Pressures

Market & Economic Pressures

Today’s dynamics Potential workforce risks Related business risks

Age gaps Increasing diversity Changing attitudes High demand and short

supply of certain skill sets

Rising customer expectations

Growing technical demands Offshoring and outsourcing Globalizing operations Adapting quickly through

innovation and change

Growing earnings Cutting costs Shifting markets Raising energy and transport

costs

Loss of key skills and experience

Gaps between talent capabilities and business goals

Low employee engagement and motivation

High turnover Decreased productivity

Increased training and recruiting needs

Over-reliance on contingent workforce

Stagnant to slow revenue growth

Escalating labor related costs and shrinking margins

Customer service issues Quality control problems Sluggish product

development

Business management and transition issues

Low investor or supplier confidence


SIX AREAS WHERE HR SHOULD FOCUS ITS ATTENTION

Strategic workforce planning plays a significant role in 5 out of the 6 key challenges identified by senior HR leaders.Source: “Rethinking HR for a Changing World” 2012 KPMG International and the Economist Intelligence Unit Survey.

40%

20%

23%

26%

20%

20%

Retaining crucial skills

Expanding the global workforce

Adopting new technologies

Workforce planning

Succession planning

Managing a flexible workforce


KEY QUESTIONS How many people are needed to operate – and grow – the business

effectively? And, how do these people requirements break down by business line, function or level?

To what extent does the current workforce profile meet these requirements? How will these profiles be affected by future hiring, promotions, transfers, turnover and retirement?

How many people are needed to operate – and grow – the business effectively? And, how do these people requirements break down by business line, function or level?

To what extent does the current workforce profile meet these requirements? How will these profiles be affected by future hiring, promotions, transfers, turnover and retirement?

What skills and capabilities are most at risk? Where are there critical gaps, and how deep are they?

What new skills and capabilities are needed to support existing and new business products or services?

What is the trajectory for internal candidates to fill these roles? How easily can external candidates be found? Are there alternative sources for in demand, critical skills?

QUANTITY

QUALITY

LOCATION


WORKFORCE PLANNING FRAMEWORKLevel 1. Reactive

Staffing/Resourcing

2. Staffing/Resourcing Planning

3. Meeting Strategic Talent Needs 4. Optimized Talent Planning

5. Dynamic Talent-Business Planning

Operational Planning

Strategic Workforce PlanningStrategic Workforce

Optimization

Time Frame Now Typically 3–18 months Typically 2–5 years Typically 2–5 years Time for key workforce changes to flow through plus one year

Primary HR Focus

Recruiter - helps fill openings as they arise

Proactive Sourcer/Recruiter - manages short-term sourcing and recruiting needs

Talent Analyzer - helps plan for longer term vacanciesand talent needs

Talent Expert - identifies ways to improve important talent decisions and investments

Business Driver - leverages talent to help drive business decisions and long-term success

Data Talent Demand InputsActual job openingsLabor Market InputsLimited: Some salary data

Talent Demand InputsForecasted job openings over time horizon

Labor Market InputsModerate: reliable salary and talent pool data (available talent, graduation rates, turnover, etc)

Talent Demand InputsForecasted job openings, validated by historical turnover, promotion and retirement data

Model of labor productivity and business growth

Forecast of key talent capabilities over planning period

Labor Market InputsExtensive: salary data by existing labor markets and talent metrics data

Talent ‘market size’ estimates over time

Talent Demand InputsSame as Level 3 with more comprehensive model

Labor Market InputsSimilar data as in Level 3, but across broader range of viable talent markets

Understanding of major talent trends and risksTalent Management InputsPerformance data for individuals in strategic or large talent segments

Employee engagement and retention data

Same as Level 4, plus:Talent Demand InputsBroader view on productivity/growth options

Labor Market InputsEmphasis on strategies of key competitorsTalent Management InputsBusiness/strategy alignment dataTechnology InputsCurrent and forecasted technology to help automate/eliminate work

Analysis/Work How to effectively attract, source, select and onboard new talent

Effectiveness of various sources of hire

Estimation of staffing needs over the planning period

Sourcing planningPassive talent management outreach and management

Linked to budget process—both an input and output

Identification of critical capabilities and positions

Gap analysis—areas where future talent needs are likely to be unmet

Assessment of strategies to fill gapsImplementation plans for most compelling strategies to fill gaps

Linked to strategic planning process

Everything from Level 3 combined with analysis of applicable opportunities:Location optimization—analysis of opportunities to reduce costs or strengthen position/performance by shifting where work is done or where positions are sourced

Build versus buy—assessment of optimal internal and external sourcing mix for key roles

Engagement and retention—identify opportunities to optimize key talent metrics via job design, compensation and other talent policies

Evaluation of strategies (in combination)

Everything from Level 4 plus:“Right work” analysis—assessment of “waste” and redundancy in work that is being done, ability to leverage technology and opportunities to improve

Effective work structures—assessment of whether work is optimally organized and aligned

Identification of business opportunities that can leverage talent strengths

Evaluation of integrated talent/business strategies—helps drive business strategies

Outcomes OutputsFilled positionsSourcing/staffing metrics

ResultsGenerally poorer quality of hire or higher compensation costs (in comparison to Level 2)

Reduced vacancy costs

OutputsStaffing plansForecast staffing costsResultsIncreased quality of hire due to better pipeline management and planning

Reduced staffing and vacancy costs

OutputsEverything from Level 2, plus:Prioritization and agreement around critical capabilities and positions

Action plans and resources to address talent gaps

ResultsIncreased performance and capability in critical talent pools and critical skills

Reduced salary costs

OutputsEverything from Level 3, plus:Prioritization and agreement around opportunities to adjust talent strategies to improve productivity

Action plans and resources to address opportunities

ResultsIncreased performance and capability across broad segments of the workforce

Greater workforce productivity and efficiency

OutputsEverything from Level 4, plus:Prioritization and agreement around opportunities to leverage talent to grow the business

Action plans and resources to address opportunities

ResultsIncreased organizational performance due to the optimal mix of talent, technology, and processes

Better, more sustainable business outcomes


KEY ELEMENTS IN A STRATEGIC WORKFORCE PLANNING ELEMENTS

BusinessStrategy

SegmentRoles

Monitor andReport

EnvironmentalScan

ActionPlanning

Current StateAnalysis

Gap AnalysisScenarioPlanning

No ChangeFuture State

TargetedFuture State

Futuring


STRATEGIC WORKFORCE PLANNING PROCESS

Stra

teg

ic Settin

g

Current & future workforce

SegmentRoles

Criticality of roles and skills

Competency & productivity

gaps

Internal or external labor

markets

III

II

I

IV

Analysis

Quantity Quality Location

Recruit

Develop

Redeploy

Separation

Partner/Joint Venture

Insource

Outsource

Co-outsource

FuturingFe

asib

ility

Cost/In

vestm

ent

Valu

e

Tim

ing

Risk

s

Action Planning

Strategic Workforce

Plan


SPECTRUM OF ROLES

Those roles that are vital to achieving strategic goals. Roughly 10% to 15% of roles are strategic. Future success is compromised if these roles are not filled with extremely capable people.

STRATEGIC

Significant

Risk

These roles relate to operational excellence. Current success is compromised if there are issues in critical roles. Examples would be top operations, sales, and marketing roles. 20% to 25% of all jobs.

CORE

Moderate Risk

Those roles that keep the internal operation working smoothly, such as IT, operations, and HR roles. The majority of employees within the organization who support and process work. 60% to 70% of jobs (Ulrich, Smallwood and Sweetman 2008).

SUPPORTING

Short Term Risk

Employees in these roles can be redeployed. Roles me be outsourced.

MISALIGNED

No Risk


END

DEFINING APPROACH

Two potential approaches:

Horizontal approach (A): Complete each step after another for every organizational unit - Use to build consistent and comprehensive approach at the same pace across the organization

Vertical approach (B): Complete all steps for a chosen unit at once – then repeat with the next unit - Use for a pilot where limited resources and need to produce results or ‘fix’ a problem

Approach AAppro

ach

B

START

IMPACT

Hig

hLo

w

Narrow Broad

Step 5Integrate SWP processStep 4Implement HR actionsStep 3Define GAP closing strategiesStep 2Define workforce GAPsStep 1Understand long term business context


EFFICIENT

DEFINING OVERALL SCOPE

Organizational scop

ePlanning horizonFore

cast mod

elGAP closing

model

Integration of WF

costsFunctiona

l scop

eProcess

integratio

nData manage

mentEmployee evolution mod

el

Narrow

Operative (1-2 years)

Management

Forecast (easier in

the beginnin

g – complex in data

handling)

Based on qualitativ

e risk assessm

entNo costs

Low resolutio

n job clustersRecommendation

at the end of

the pilotExcel and

imports / exportsMovement only

by closing GAPs

EFFICIENT

BroadStrategic (incl.

longer steady state

demographic

analyses)

KPI / driver model (more

complex in the

beginning – less organiz. Involvem

ent)

Scenario simulatio

n with quantified value and risk driver

analysis

Total workforce costsHigh

resolution job

clusters with

professional levels

Definition of roles

and responsibilities – process notation

Data warehouse and BI integrati

onComplex position change model


FACTORS OF INFLUENCE

EVALUATING DEMAND FORECASTThe impact of business initiatives on the workforce transformation are determined by scenarios.

Based on the different evaluation of the factors of influence, two to three scenarios are developed which are used to determine the future workforce demand through the influence of the factors on the determinants of planning.

Regional

economic

development

Strategy –

reorganizatio

n of busine

ss areas

Regional

demographic development

Regional

potential of qualifi

ed employees

Customer

managementMarket competition

Technology

enablers

GROSS PERSONNEL

DEMAND

Output – quantity structure

Processes/added value

Competencies

Team size

Area of responsibility

Projects

DETERMINANTS OF PLANNING


GAP ANALYSIS OF THE FORECASTED DEMAND AND SUPPLY OF TALENT

Retirement Contractual termination

Attrition (Internal

movements)

Gap analysis Gap closing

AssessDemand

Simulate Supply

PLAN:MAKE-BUY

Gross Personnel Demand

Current workforce portfolio

Losses Workforce portfolio after

losses

Net Personnel Demand

Forecast Model

GAP Closing Model

Buy scenario

Sce

nari

o 1

Train Develop ReduceHire Outsource

120

110

100

90

80

70

60

50

40

30

20

10

Sce

nari

o 2

Make scenario

Train Develop ReduceHire Outsource

120

110

100

90

80

70

60

50

40

30

20

10

16

KPI DASHBOARDS PROVIDE ABILITY TO REVIEW EFFECTIVENESS SWP

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% L & D spend targeted at priority job families

% L&D spend targeted at critical capabilities

Learning and Development

% of agreed hires completed % of new hires retained after 1

yr % new hires sourced in China

and India % hires sourced via social

media

Talent acquisition

Turnover vs assumed turnover in the workforce planning scenario

Promotion rates vs assumed rates in the workforce planning scenario

Lateral moves vs assumed rates

Staff movements

Coverage for critical roles % of high potential in

succession pools

Succession

Age distribution./ average age Diversity distribution

Workforce demographics

Current surplus/shortfall by job family

Future year predicted surplus / shortfall by job family

Key gaps by grade

Workforce gaps

Career site visits. Cultural fit of applicants. Employer image rankings. Offer acceptance rate.

Employer brand

Absence rate Employee satisfaction survey

Workforce commitment