Ten Workforce Planning Practices That Leading Companies Use to Their Competitive Advantage

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1 RESEARCH Ten Workforce Planning Practices That Leading Companies Use to Their Competitive Advantage By Aaron Sorensen, Ph.D., Partner and Juan Pablo Gonzalez, Partner The evidence is clear: Strategic workforce planning is now seen as an important source of competitive advantage at many leading companies. According to the Society for Human Resource Management, more than 66% of organizations with more than 25,000 employees and 40% of all organizations surveyed conduct strategic workforce planning. Further evidence was presented at the 4th annual Talent Management Alliance Workforce Planning conference, which featured case studies from Proctor & Gamble, PepsiCo, IBM, Accenture, The Hershey Company, and a keynote address from Dr. Alec Levenson, Senior Research Scientist at USC s Center for Effective Organizations. Furthermore, there is evidence that the discipline is maturing. Axiom Consulting Partners examined the workforce planning (WFP) practices of 10 leading organizations in Among the important discoveries, workforce planning is becoming more integrated with talent management practices and workforce analytics and is being viewed a key component of strategic and operation planning. More specifically, our research uncovered 10 leading workforce planning practices that other companies should consider to improve this critical capability and build a sustainable competitive advantage.

2 WFP CENTER OF EXCELLENCE A center of excellence is a cross- functional team that is a shared strategic resource that transcends any one functional area or business unit. There are four components to consider when developing a center of excellence: People: A CoE brings together specialized expertise and provides education to build WFP skills in distributed functions. Process: A CoE establishes the decision rights and governance for WFP methods, tools and interpretation. It also develops and promotes industry best practices and internal best practices, seeking to create repeatable and automated processes wherever possible. Technology: A CoE drives WFP technology decisions in broader context, helping to define the right infrastructure for data management, analytics and disseminating WFP insights across the enterprise. Culture: A CoE promotes a collaborative atmosphere and an appreciation the value WFP. 1: Promote WFP as a line- owned core business process There was complete consensus among the executives we interviewed that WFP must be a line- owned core business process, not simply an HR function. In fact, these companies view workforce planning on par with financial and operational planning. Participants said that WFP is most valuable when it enables line leaders to make better decisions about how to plan their hiring in line with changing market conditions and with shifting strategic priorities. As one participant said: The annual WFP plan is aligned with our strategic plan, and comes together during the planning process that the business leader drives. The leaders among the companies we interviewed have already taken the time to lay the foundation for a total view of future talent needs by ensuring consistent data capture and management approaches across the enterprise. Someone needs to be the steward of the WFP process across the business, said a participant. Otherwise all the business units would be doing it their own way or not at all. Line leaders at both the enterprise and local level expect the WFP function to furnish them with complete, accurate, and timely data and analysis on workforce supply and demand. There was strong agreement that the WFP function creates the most value when it enables line leaders to make better decisions about human capital. 2: Establish a WFP Center of Excellence In the leading companies we interviewed, establishing a Center of Excellence was an important means of promoting common WFP methods and tools to ensure consistency and integration across the organization. With consistent methods and tools, the Center of Excellence is better able to integrate workforce data, which leads to more efficient and meaningful analysis by both members of the Center and the executive leadership team. In addition, having a Center of Excellence allows senior leaders to, as one participant said, deploy members on the team to dive in and come up with findings, insights and recommendations whenever a particularly vexing WFP problem arises. 3: Emphasize process and environment over technology Process trumps technology when it comes to creating the conditions for WFP success. Tools and technology are only a means to support the WFP process, participants said. In cases where companies built their WFP processes around the technical tools they planned to use, the typical result was poor uptake amongst line leaders about the purpose and intent of WFP in general. A veteran workforce planning practitioner confessed, We made the mistake of developing a very sophisticated tool kit that the HR Business Partners were to 2

3 use in the field but we failed because (the tools) were unsustainable. Other participants spoke highly of the value of processes that engaged others in building an appreciation for WFP. As one WFP leader said: Our ability to engage with the leadership team and help them understand the value of WFP was key to our success. Another participant said: What created the most impact for WFP was listening to our stakeholders and ensuring that we understood their needs and they understood our capabilities to address those needs. The bottom line: To create the conditions for WFP success, focus on process definition and stakeholder management first, before introducing tools and technology. 4: Promote standard and flexible methods and tools At leading companies, WFP standards represent a delicate balancing act. There is real value in having centrally managed tools and methodologies, but some degree of flexibility is essential to accommodate local business conditions and needs. Our WFP Center of Excellence is made up of consultants and quants that follow methodology and support the process, said one executive, but the focus and application is determined at the local level. The leading organizations invest more time in understanding the needs of their leaders as opposed to ensuring strict compliance with the stated methodology. Our tools and methods are centralized, one company said, but our process is decentralized. When this is the case, senior leaders are able to both have an enterprise- wide view of workforce demand and supply while TOP TEN PRACTICES FROM LEADERS IN WORKFORCE PLANNING Prevelance Practice None Some All 1 Promote WFP as a line- owned core business process Establish a WFP Center of Excellence Emphasize process and environment over technology Promote standard but flexible methods and tools Keep the WFP process agile Use pilots for proof of concept Integrate data capture with core business processes Focus data collection internally Continuously adapt talent taxonomies Align line leaders around common WFP practices The following practices were identified by all participants as creating value in workforce planning. The order that these practices are listed is generally based on the progression that leading companies take to establish an effective workforce planning capability. 3

4 providing line leaders the flexibility to collect and analyze data in the way that makes the most sense for their respective business units. 5: Keep the WFP process agile At leading companies workforce planning is not a one and done annual exercise. In addition to periodic calendar- driven WFP initiatives, these companies have the capability to rapidly deploy WFP resources to address emerging workforce challenges across the business. As one participant said, Our WFP consultants frequently conduct deep- dive analyses on critical roles that are key to our strategy or for businesses that are experiencing a talent acquisition challenge that cannot be addressed through the normal WFP process. That s not to say that process discipline isn t important. The common attitude well expressed by one study participant: We ve built variability into the process to allow for the necessary flexibility...we re trying to be less rigid now, but where we don t budge is on the timing and cadence of when and how the plan must be completed. A best practice for workforce planners, according to our research, is to proactively engage line leaders throughout the year in discussions about current and future talent needs, rather than waiting for regularly scheduled workforce planning tied to annual business planning. 6: Use pilots for proof of concept The example of companies that have successfully embedded workforce planning into their operations is instructive. Leading companies often use a WFP pilot to create an early, highly visible win. One participant explained how a particular situation provided the opportunity to conduct a pilot: We had a market that was doubling in size in our international market and turnover was off the charts, he said. We needed to help the local leadership team create a comprehensive workforce plan. The success of that pilot project established the reputation of our WFP group. The executives we interviewed believe that pilot projects create an environment where WFP can be replicated, scaled and pulled throughout the business, rather than being pushed on skeptical line leaders. As one leader who piloted WFP in her company explained: We re taken seriously because we ve been able to demonstrate real value. Plus, now there s more awareness across the business about our talent priorities. 7: Integrate data capture with core business processes In order to keep their WFP processes efficient, leading companies have found ways to integrate data- gathering efforts into their established business processes. For example, an organization can eliminate inefficiencies by allowing the WFP managers to collect workforce demand data from information already 4

5 resident in ERP or CRM systems such as SalesForce.com. However, even leading companies are challenged to proactively understand and quantify emerging workforce demands. The next frontier for us is to build the predictive model and develop a process whereby line leaders and recruiters can work together to identify likely demand well in advance of hiring, said one executive. Others are anticipating the possibilities of using predictive analytics to automate the work of linking demand and workforce requirements. 8: Focus data collection internally Leading companies realize far greater value from the collection and analysis of internal talent data than from external market data. The collection and analysis of external labor market data is commonly seen as too costly and too general to be useful when making staffing decisions. The information from local labor markets is often outdated and requires proportionally more effort to collect than it can pay back in positive impact. As one company noted: We prioritize our (external) data collection efforts because some data and analytical methods are only appropriate for specific, critical roles or where the talent supply is constrained. With internal data, however, the WFP function can positively impact profit margins by managing workforce deployment, productivity and labor costs, participants reported. 9: Continuously adapt talent taxonomies Across most industries the roles employees play are increasingly specialized. Hiring for more specialized jobs in turn necessitates a more specialized talent planning process. The way we staff projects is really changing, said a senior executive who also oversees WFP efforts at a large professional services firm, from a very homogenous one- size- fits- all talent strategy to a more complex strategy where we look to contractors, fixed- term employees, and use of delivery centers across the globe for specific expertise to fill projects. Moreover, as roles become more specialized, increasingly specific talent taxonomies are required. A talent taxonomy provides a common language and hierarchical framework for organizing talent data. Without sufficiently detailed and comprehensive taxonomies, even leading companies have trouble matching the skills and expertise of potential hires with the specific needs of their business. We haven t had a very specialized approach to talent planning, one participant said, but now we re moving in that direction because it s the reality of our business model. Leading companies are aligning their talent taxonomies to the language of the business and making the necessary adjustments to their HR information systems. 5

6 10: Align line leaders around common WFP practices Successful companies expect their WFP function to equip line leaders with the knowledge and self- service tools to address many of their WFP needs, which in turn allows the corporate WFP team to focus on the most pressing workforce challenges. The team establishes and prescribes standards for WFP methodologies and tools, and then empowers the line to utilize them. But that doesn t mean the core WFP team walks away. One participant explained, We ve established forums for direct and regular communication with all stakeholders, which enables us to sustain WFP. A seasoned WFP leader at a company which has HR Business Partners embedded throughout functions and geographies said: As a small team, we knew that in order to sustain WFP we need to build the skills of our colleagues so that they could have key conversations with the line, and know when and how to engage our group when they faced more complex challenges. In short, establishing the right mix of local empowerment and cross- department collaboration are keys to driving the enterprise- wide success of the WFP process. Conclusion The progress that leading companies have made offers important milestones for other firms to follow in building their own strategic workforce planning capabilities. The companies we spoke with understand that successful strategy execution relies on getting the right talent in the right positions, in the right roles, at the right time, and at the right cost. The recognition of the value of superior workforce planning practices is pervasive across their organizations, far beyond the confines of the Human Resources department. These companies continue to innovative and invest in improving their workforce planning capabilities in such areas as Centers of Excellence, pilot programs and common practices. Agility is a hallmark of their efforts to establish workforce planning as a core business process throughout the organization. They adapt talent taxonomies to marketplace realities; manage costs by leveraging internal data; avoid an overreliance on technological silver bullets; and balance the value of standards with the line s need for flexibility. This progress is impressive but we believe that it is also within reach of other companies who want to follow their example and use workforce planning as a source of sustainable competitive advantage. 6

7 About the Research Senior HR and line executives from 10 companies were interviewed in the Spring Industries represented include financial services, manufacturing, high technology, global restaurants and professional services. Areas of inquiry centered on the maturity of the firm s WFP capabilities; key enablers and barriers to building and sustaining WFP; the impact of external/industry changes; WFP impact and opportunities; WFP process management; tools, analytics and technology; and WFP critical success factors. In addition to this qualitative research, we conducted comprehensive secondary research to obtain further insight on workforce planning trends, complications and best practices. About Axiom Consulting Partners Axiom Alignment Model strategy For senior leaders who want to improve execution and results, Axiom Consulting Partners is a trusted advisor that helps them understand their situation more deeply, make choices with wisdom and take action more decisively. organization talent We help clients create and maintain better linkages among their strategy, organization design and talent. They value working with us because we listen more than tell, act rather than just recommend and deliver solutions that leave a lasting impact. To learn more visit About the Authors Aaron Sorensen, Ph.D., is a psychologist with a background in statistics and advanced analytics who brings unique insight to organization, leadership and workforce issues that impact profitability and constrain growth. Aaron speaks frequently on the topics of strategic workforce planning, succession planning, talent management, employee engagement and the employee value proposition, and human capital metrics. He has shared his perspectives with such organizations as The Conference Board, The Institute for Corporate Productivity (I4CP) WorldatWork, SIOP, HRMAC, NACUBO. Aaron is frequently published and quoted in periodicals that include Workspan, CFO.com, and HR Executive. He is a contributing author to The Talent Management Handbook chapter on strategic workforce planning. Aaron is a member of the Society of Industrial Organizational Psychologists (SIOP) and the American Psychological Association (APA). To reach Aaron, write to or call Juan Pablo Gonzalez has 25 years of professional experience as a management consultant and corporate executive. He is well regarded for his work advising leading organizations. Clients value the insight, expertise and collaborative approach that he shares in helping them address challenging problems. His expertise spans a range of critical issues including strategic planning, organization restructuring and post- merger integration, human resources strategy and strategic workforce planning. Based in Washington, D.C., Juan is a co- author of Shockproof: How to Hardwire Your Business for Lasting Success (Wiley, 2011) and a frequent speaker and author on the topics of strategy, organization design and talent. To reach Juan, write to or call Austin Brussels Chicago New York Washingt 2014 Axiom Consulting Partners, LLC. All righ

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