The what, why, when and how of Strategic Workforce Planning

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1 Future-proof your workforce The what, why, when and how of Strategic Workforce Planning Susan DeFazio

2 Table of contents 3 Introduction 5 What does good SWP look like? 7 Why SWP matters to risk & operational performance 9 When should SWP be applied? 11 How to build an SWP roadmap 13 Conclusion 2

3 Introduction The best-laid plans are nothing without the right people to implement them. Susan DeFazio This is why the mitigation of human capital risk is a high priority for all business leaders, especially those of us working in HR, organizational design, or senior leadership roles. However, few examples of organizations successfully futureproofing their talent supply exist. Too often, even when the concept of Strategic Workforce Planning (SWP) is raised inside organizations, the efforts to implement it are hampered by at least these three factors: 1. Lack of skills and experience 2. Lack of insightful, available workforce data 3. Lack of an available, proven model to follow The good news is, all of these issues can now successfully be addressed. By connecting strategic planning cycles with financial and talent management cycles, a genuine model for successful SWP can be developed for any business. Human capital is, and will be for the foreseeable future, the deciding factor in the success of business strategy. If you are ready to take the lead in addressing it inside your organization or on behalf of your clients, read on. 3

4 Human Capital: The productive wealth embodied in labor, skills and knowledge. (As defined by the OECD 1 ) 1 4

5 what does good swp look like? Even though most companies set growth ambitions, shareholder value targets and other benchmarks to reach, few align these with workforce planning analysis and forecasts. Few organizations do the work to determine what kind of talent is required to deliver on their strategic plan, let alone understand how wellplaced they are to find and keep that talent. This is why good SWP requires business leaders to clearly articulate how talent decisions and forecasts will power business results. Strategic workforce planning should have one aim: to enable strategy. To achieve that aim, good SWP must deliver the following: Determine the talent needed to deliver organizational capabilities Correlate internal and external supply and demand factors Generate robust insight for talent gap analysis for current and future states Create a supply chain methodology that is talent centric to ensure the future health and stability of your workforce Identify actions and investments required to address current and future state needs Enable judgments about the impacts of actions now that do not erode future value 5

6 What does good swp look like? Figure 1: Understanding the full scale of your talent supply chain corporate strategic plan Talent supply chain management Temporary staff Independent contractors/ freelancers operations human resources Workforce analytics Strategic workforce planning service providers (SOW) Alumni, retirees and interns Strategic workforce planning helps organizations understand what kind of talent is needed to achieve business outcomes. But much more than this, it helps organizations to understand all the factors that are affecting supply and demand (including psychographics, demographics and geography). SWP helps to manage risk as it makes clear the ways in which strategy will be operationalized through human capital. procurement Figure 2: So, what does good Strategic Workforce Planning look like? Simplified, this is SWP in practice > Talent management > organizational design > workforce solutions monitor & report full time employees Preparing for swp & business strategy alignment capability/ role segmentation It enables organizations to optimize results and, unsurprisingly, it is one action planning strategic workforce planning model environmental scanning of the most sought-after skills in business today. gap analysis current state analysis scenario planning/ futuring Source: Adapted from HCI by S DeFazio 6

7 Why SWP matters to risk & operational performance Nick Kemsley, Co-Director of the Henley Centre for HR Excellence, explicitly states that in today s business environment: HR activity has a strategic relevance which it may have lacked before 2. HR practitioners must step up to mitigate risk and ensure that businesses are prepared for the future, no matter how uncertain it may seem. There are numerous factors affecting human capital continuity which directly correlate to business performance risk, and that HR practitioners must help plan for. These include: Demographics and the ageing population Generational trends and psychographics Skills availability Technology Education Legislation and regulation Globalization Mergers and acquisitions It must be agile and connected to business outcomes To truly manage risk and mitigate talent gaps, strategic workforce planning must be agile and connected to the outcomes of the business: a balance between management, art and science. Too often, the current best practice models mean that workforce planning efforts become tactical and static, rather than strategic. If workforce planning is to be genuinely strategic, it must adapt and evolve with the business it serves, but also be an active influencer of long-term decisionmaking. How effective organizations are at attracting, mobilizing, forecasting and managing talent to mitigate business risks will largely be determined by how agile (and how well-informed about the business objectives) the organization s workforce planning approach really is. Of course, a great deal of that responsibility falls at the feet of HR leaders. 7

8 why swp matters to risk & operational performance Boosting organizationwide performance Dr Mary Young, Senior Researcher at the The Conference Board, Inc, predicted an upsurge in SWP interest and use back in Her contention then was that economic challenges, among others, would see businesses connecting the dots between talent data and other strategic outcomes. Dr Young predicted that: HRIS data will be integrated with financial, operations, supply chain, marketing, sales, and other kinds of data to produce business intelligence and enhance company performance. 3 Although we are still some way from practically connecting these dots inside many organizations, both academic and practitioner research shows that strategic workforce planning ranks within the top three priorities for businesses today. When business leaders are equipped with the knowledge, data and tools to implement and scale their SWP efforts, it naturally becomes a key part of the broader strategic planning cycle and boosts the performance of the entire organization. Successful SWP enables organizations to achieve these outcomes: Competitive advantage in hiring or developing the right skills as needed Better preparedness for business contingencies Improved ability to adapt to a volatile economy and shorter product cycles The ability to define future workforce gaps and present solutions for those gaps Measurable action plans that can be incorporated into a human capital operating plan Understanding of how labor trends and issues will impact organizational performance more broadly

9 When should SWP be applied? Instead of applying workforce planning at a particular point in the planning process, strategic workforce planning must be seen as a continuous practice that influences strategic direction and tactical responses on an on-going basis. Translating business strategy into organizational capabilities requires more than data; it requires insight. Positioning your team to deliver this is a key challenge for leadership now and into the future. The time to begin is NOW. So, when should Strategic Workforce Planning practices be applied? Continuously: proactively to inform the future strategic direction, and reactively to respond to changing business conditions. When the right people drive it: only when HR and strategy leaders work closely with their business counterparts and have embedded SWP processes and frameworks in their work can it be applied across the entire organization. More and more pressure is being placed on business leaders to start strategic workforce planning, yet it is a competency few leaders have. The fact that SWP has failed to become a routine practice in business planning cycles is often a direct result of two factors: 1. Appropriate training for business leaders in SWP has historically been difficult to find. 2. Other business leaders involved in strategic business planning do not always fully understand the complexity and value of SWP as a discipline. If business leaders are to implement workforce management practices that are aligned to business strategy, they must know how to do more than simply gather data and identify gaps in the organization s access to skills. This means that SWP must be 9

10 when should swp be applied? seen as continuous process, and one that is integrated into the decisionmaking of the business. An insight-driven approach is needed Simple supply and demand analysis is no longer enough. HR teams are increasingly challenged to deliver the following capabilities within their organizations: Understand talent supply chain management principles Use practical methodological tools to gather and interpret both quantitative and qualitative information Understand the competitive landscape, particularly as it relates to access to talent and skills Segment and classify roles in terms of their importance to business strategy Gather workforce data that takes in all the factors affecting internal and external supply of talent, including succession planning, mobility etc. Deliver succinct and meaningful scenario plans and matrices Complete gap analysis that prioritizes those gaps in their ability to affect strategic outcomes Create a clear plan for retention, on-going reporting and progress tracking The challenge facing business leaders is to continually interpret the impact that any identified gaps will have on business strategy, and to pose credible, properly modelled solutions. 10

11 How to build an swp roadmap Agile SWP is now an integral skill-set for HR, strategy and organizational effectiveness practitioners. If they are to futureproof their business s talent strategy, however, they will need more than knowledge. A SWP solution for your business The business imperative of moving to a fact-based decision-making system, rather than following a homogenous approach to talent management requires practitioners to apply their knowledge in both strategic and tactical ways. Yet, it is only through hands-on experience that practitioners can begin to apply their expertise effectively across an entire organization. This is why the Human Capital Institute (HCI) and KellyOCG have joined forces to provide a proven model for SWP. If your organization is serious about improving its strategic outcomes and is ready to clearly see and measure the impact talent has on this, the following steps need to be carefully considered to create a workable SWP roadmap: 1. Knowledge transfer: how will your organization develop the required knowledge of SWP practices? More importantly, how will you determine the best approach for disseminating and building on that knowledge across multiple functional areas? 2. Tools and frameworks: Which tools and practices are right for your organization? Various methodologies, from Six Sigma through to McKinsey s 7s model and Balanced Scorecards provide various tools and frameworks to assist with some SWP processes and thinking. HCI has developed the concept of a 6B Talent plan to assist with the development of organizational effectiveness. (see figure 3). Determining the right blend of practices for you, and seeing how they work in practice is a major piece of work. Do you need the advice of an expert to show you what your options are 11

12 How to build an swp roadmap and identify the most appropriate and cost-effective solution? 3. Managing change: Moving to a strategic model of workforce management requires significant change leadership within all organizations. SWP tools and processes need to be applied both within and outside of the HR team. How will your organization manage this change process and are there case studies, practitioner networks, or best practice materials to guide you? 4. Investment/executive sponsorship: ensuring that you obtain specific investment for the SWP project, as well as sponsorship from an appropriately skilled and senior leader is key. Making SWP part of existing HR budgets and capabilities is unlikely to enable the organization to make the required changes, nor gather the right inputs, to make the initiative successful. Figure 3: organizational effectiveness Business operations 6B talent plan build buy borrow bind balance bounce hr/business strategic levers Source: Adapted from HCI by S DeFazio talent acquisition So, how do you build an SWP roadmap? human capital practices talent management KellyOCG and HCI offer a shortcut for building and transferring knowledge, as well as choosing the right frameworks and managing the associated change. To access this shortcut, see our SWP Accreditation course here: 12

13 conclusion When will your organization make the explicit link between talent and the future success of the organization? More importantly, how will it measure the strength of that link and its ability to optimize it? Moving to a strategic model of workforce management requires significant change leadership within most organizations. Even those organizations that embrace the concept and understand its importance are often hampered by the lack of robust, proven tools and practices to implement it, as well as the difficulty in finding appropriately trained professionals to make it happen. To translate business strategy into organizational capabilities, organizations need accredited professionals to implement a truly strategic approach to workforce planning. These professionals must be empowered to go beyond data analysis to develop genuine insight about the current and future states of their organization s capabilities. Then, and only then, can organizations make quality judgments that do not erode future value, but support it. This is SWP, and ensuring your HR team and business leaders are accredited to deliver it is already a major step toward greater competitiveness and lower risk. We believe passionately that there is a need to enable clients to look at all of the talent inputs more broadly so that they may execute their business strategies in and ever increasing world of complexities. John Healy, VP & Managing Director, Global Talent Supply Chain, KellyOCG References

14 For more thought leadership go to talentproject.com About the author Susan is a Principal and Supervising Consultant within the Global Centres of Excellence. Based in London, Susan s specialist topics include strategic workforce planning, human capital strategies and advising on stakeholder engagement practices. Susan has extensive experience in the human capital sector, which includes leadership positions in staffing operations, strategic account management, thought leadership and has developed a CRM model with practices designed to support understanding, mutuality, trust and longevity. The institutions where Susan has studied include Henley University of Reading, INSEAD Business School, Cranfield University, Human Capital Institute and London Business School. She is HCI certified as a human capital strategist and in strategic workforce planning. Susan is also a certified to deliver SWP Accreditation Courses developed by The Human Capital Institute. About KellyOCG KellyOCG is the Outsourcing and Consulting Group of workforce solutions provider, Kelly Services, Inc. KellyOCG is a global leader in innovative talent management solutions in the areas of Recruitment Process Outsourcing (RPO), Business Process Outsourcing (BPO), Contingent Workforce Outsourcing (CWO); including Statement of Work (SOW) Management, Independent Contractor Solutions; Human Resources Consulting, Career Transition and Executive Coaching & Development, and Executive Search. KellyOCG was named to the International Association of Outsourcing Professionals 2014 Global Outsourcing 100 list, an annual ranking of the world s best outsourcing service providers and advisors. Further information about KellyOCG may be found at kellyocg.com.

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