Tomorrow s. workforce. Delivering strategy through people
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- Sandra Norman
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1 Tomorrow s workforce Deliverig strategy through people Strategic workforce plaig helps orgaisatios uderstad the talet required to deliver their strategy without it, the costs are sigificat.
2 A taleted ad aliged workforce is crucial for brigig strategy to life ad esurig a orgaisatio delivers o its objectives
3 Strategic workforce plaig Direct people costs make up a average of 40 per cet of orgaisatioal costs. Alogside this, almost half of the workforce are i complex, kowledge-itesive roles that are fudametal to the success ad profitability of their orgaisatios. The cost therefore of gettig workforce plaig wrog ca be sigificat. Itegratig workforce supply ad demad aalysis ito the strategic plaig cycle esures orgaisatios have the five rights the right umber of people, with the right skills, i the right place, at the right level ad at the right cost. This is what we mea by strategic workforce plaig (SWP). Hay Group has helped may orgaisatios i both the public ad private sectors to clarify ad defie their future workforce eeds ad implemet the ecessary chages to shape their workforce to maximise productivity, effectiveess ad profitability. Backed by almost 70 years of prove research ad practice, we uderstad how to aalyse ad structure orgaisatios to shape a workforce that respods to the demads of curret ad future work, ad esures delivery of your strategy. May idustries face critical shortages of essetial talet, while others struggle to defie the shape of the workforce they eed i the midst of major ad rapid chage.
4 4 Tomorrow s workforce Are you prepared? All orgaisatios uderstad that success comes from havig the right people with the right skills aliged to the work that eeds to be doe. However, may idustries are i the midst of a major chage, as outlied i the table below, where havig the correct workforce i place is the critical gap betwee success ad failure. Idustry leaders eed to be able to address these exteral challeges ad deliver their strategic pla. Workforce treds As work requiremets evolve, the demads o the workforce chage too. A umber of treds are havig a impact o the shape ad expectatios of the workforce. Ageig Accordig to the US Cesus Bureau, Europe s loss of baby boomers from the workforce ad the low birth rate mea that the active workforce will declie by 29 per cet by Skills ad qualificatios gap despite ivestmet i higher educatio, there are sigificat gaps i skills i scietific, techical, egieerig ad maths disciplies. Some 80 per cet of the talet gap i orgaisatios stem from a lack of appropriately qualified cadidates. Higher costs for scarce skills liked to the skills gap, critical skills attract a market premium for those orgaisatios that fail to develop ad retai key skills. Chagig career patters ad expectatios the traditioal career with retiremet i a perso s early sixties has bee replaced with expectatios of greater job fulfilmet, flexible employmet patters ad a smoother trasitio ito retiremet. Sector Strategic workforce challege Oil ad gas There is a growig shortage of geotechical ad petrochemical egieerig skills. This is exacerbated by a ageig workforce ad a highly competitive recruitmet market. Fiace A wave of regulatory reform ad reorgaisatio is drivig demad for skills i areas such as risk maagemet ad fiacial aalysis. Eergy New forms of eergy productio ad ew regulatory frameworks (such as RIIO i UK) are drivig the eed for joit vetures ad ew skills i areas associated with smart grids, carbo capture ad reewables. Telecommuicatios The rapid shift from 3G to 4G techologies is drivig demad for expertise i areas such as etwork ad radio frequecy egieerig. Egieerig-based idustries Healthcare ad life scieces Idustries such as rail ad aerospace have see a shift higher up the value chai, demadig greater systems egieerig ad desig capability as lower value work is outsourced ad off-shored. A ageig populatio ad the pace of research ad techological chage is drivig a shift i the required cliical ad scietific skills. Cosumer goods There is a shift from mature to emergig markets to geerate growth ad margi. A critical success factor is whether compaies ca mobilise or recruit the right skills i these parts of the world Hay Group. All rights reserved
5 Gettig it right Workforce plaig is ot keepig up with fast-movig workforce treds. The cost of this failure is high both withi orgaisatios ad across the whole ecoomy. For example, a 2008 UK Departmet of Health report estimated that hudreds of millios of pouds have bee misspet i developig the wrog types of medical staff for the UK s future healthcare eeds. Gettig the right workforce i place meas addressig the five rights (see figure 1). Deliverig strog beefits Gettig your workforce plaig right delivers sigificat improvemets ad competitive advatages: value improvemet ad cost reductio through right sizig the workforce assurace that busiess strategy ca be delivered A compay s employees are its greatest asset ad your people are your product Sir Richard Braso, chief executive ad fouder, Virgi Group better productivity through workforce aligmet to operatig model competitive advatage through a more skilled ad iovative workforce higher quality ad timeliess of customer delivery greater staff egagemet ad retetio ad lower levels of stress. The five rights Strategic workforce plaig provides the basis for the talet required to deliver your strategy. To esure that you have the right umber of people, with the right skills, i the right place, at the right level ad at the right cost, you eed to itegrate workforce supply ad demad aalysis ito the strategic plaig cycle. Right size: esure you have the right umber of people i the right roles spedig the right amout of time achievig give outcomes. Right shape: idetify duplicatio ad iefficiecy to establish the right balace of admi to professioals, juiors to seiors, experieced staff to ew hires. Right cost: bechmark pay ad reward to pay the right price for required skills. Right place: esure the required staff resources are available i the right locatio to meet the curret ad future workload. Right skills: assess the gaps i the competecies ad skills that will be eeded to meet future goals. Figure 1: key dimesios of strategic workforce plaig
6 6 Tomorrow s workforce How Hay Group ca help There are five key ways i which we ca parter with orgaisatios i strategic workforce plaig, each supported by a rage of prove ad robust aalytical tools ad methodologies. We work together with our cliets to desig a customised solutio combiig a rage of services depedig o what is required to make their strategies become a reality. We have a uderstadig of the lik betwee jobs, people ad performace that is secod to oe. Workforce sceario plaig Workforce strategy maps Workforce desig to alig with ew busiess operatig model Mappig strategy to future workforce capability Defiitio of ITrequiremets Mappig of SWP plaig processes SWP system specificatio ad implemetatio parter Deliverig tomorrow s workforce Curret workforce aalytics ad market bechmarkig Age ad demographic aalytics Orgaisatioal ad job size / shape aalytics Actuarial ad exteral reward bechmarks Prototypig of workforce demad ad supply models Developmet of SWP aalysis tools to itegrate with people data SWP model prototypig ad build Buildig strategic workforce methodology ad iteral capability Desig ad tailorig of SWP frameworks ad methodology Traiig of HRBPs ad OD specialists i workforce plaig Desig SWP toolkit support for busiess Figure 2: five ways i which Hay Group helps cliets with strategic workforce plaig 2012 Hay Group. All rights reserved
7 Our uique framework Hay Group s prove ad uique framework for strategic workforce plaig helps orgaisatios to aalyse how effectively their curret workforce is brigig their strategy to life. We examie curret structures ad bechmark orgaisatios agaist their peers ad successful compaies to help them to uderstad the gaps or overcapacity i the required workforce. We aalyse the orgaisatio s eeds i order to idetify the ideal size, shape, locatio, skills ad cost of their workforce ad advise compaies o how to make the ecessary chages, implemet the ew structures ad secure the required capability. Strategic itet Bechmarkig Workforce aalysis Recommedatios ad solutios Implemetatio Missio Visio Values Strategic pla Objectives ad KPIs Strategic capabilities Operatig model Iteratioal best practices Orgaisatio best fit Spas of cotrol Iteral productivity idices Right size Right shape Right skills Right place Right cost Re-deploy Develop Recruit Reduce Outsource Workforce plas Itervetios Developmet plas Resourcig Leadership programmes Successio plas Career developmet Figure 3: Hay Group s strategic workforce plaig framework Case study: streamliig headquarters workforce at a major Europea airlie With the rise of low-cost airlies ad Middle East loghaul carriers, all established Europea airlies face huge pressure o margis. Becomig leaer i the cetral fuctios is oe optio for lowerig the overall cost base. Our cliet embarked o a substatial cost-cuttig project ecompassig all areas of the airlie group, icludig staffig levels. Hay Group aalysed the curret structures, maagerial positios ad accoutabilities i the corporate headquarters. We bechmarked HQ staffig levels agaist other major compaies ad airlies. We challeged the curret operatig model ad defied orgaisatioal desig priciples. Based o these priciples, we developed ew orgaisatioal structures for the corporate headquarters, calculated the optimum umber of maagers at each level i the ew structure ad coducted high-level job evaluatios. We defied structures that clarified accoutabilities, improved leadership ad decisio makig, ad idetified a restructurig potetial of about oe third of all maagerial positios i the group HQ, brigig a sigificat reductio i payroll costs.
8 8 Tomorrow s workforce Hay Group s workforce tools Hay Group has a wide rage of tools that we use to aalyse the workforce of iteratioal ad atioal private ad public sector orgaisatios. These give orgaisatios a mix of qualitative ad quatitative isights ito their workforce ad its aligmet to future busiess directio: Workforce strategy maps mappig busiess strategy themes to the operatig model ad the capability required to deliver them. Workforce future scearios a iteractive workshop approach to lookig at the future workforce uder differet exteral busiess coditios ad iteral compay growth strategies. Poits ivetory scorig aalysig the overall levels of work i differet departmets. Spa ad gap aalysis evaluatig the levels of orgaisatioal work to esure that jobs are doable ad there are levels of maagemet with appropriate resposibility for strategy ad operatios. Orgaisatioal bechmarkig providig bechmarks of umbers ad types of jobs at seior levels i the orgaisatio agaist idustry sectors. Actuarial reward modellig providig whole workforce remueratio modellig ad idustry bechmarkig. Role fit eablig systematic assessmet of the capability, kowledge ad skills of the whole workforce. Bespoke workforce modellig developig bespoke workforce models to address specific plaig issues for a orgaisatio. Case study: log term workforce plaig at Uited States Postal Service With the declie i volume of mail, Uited States Postal Service s (USPS) curret workforce far exceeded the level eeded to meet delivery volume ad stadards, which are predicted to fall further over the ext five to te years. Hay Group provided reward ad workforce plaig services to USPS, icludig modellig ad projectios of pesio ad retiree healthcare obligatios ad fudig costs. Usig active cesus data, we projected that uder ormal attritio oly 30,000 employees would leave active service aually over the ext few years. USPS cocluded that it eeded to reduce the workforce by 180,000 over the ext four years. We developed assumptios to model expected retiremet ad withdrawal behaviour if employees were offered volutary retiremet icetives ad showed how this would help USPS alig its workforce to future eeds. 50,000 Normal attritio Retiremets 50,000 Accelerated attritio Retiremets 40,000 30,000 20,000 Disabled Withdrawls Deaths 40,000 30,000 20,000 Disabled Withdrawls Deaths 10,000 10, Hay Group. All rights reserved
9 Brigig together the right iformatio with the right people will dramatically improve a compay s ability to develop ad act o strategic busiess opportuities Bill Gates, former chief executive ad curret chairma of Microsoft
10 Case study: creatig a flexible workforce at a egieerig services compay This egieerig services compay employs aroud 2,000 people performig a variety of egieerig ad maiteace tasks. The workforce was siloed ad uable to cope with variable ad icreasig demad. There was low productivity ad egagemet amogst the workforce, icludig parts of the maagemet. Hay Group worked with the cliet over a umber of moths to help trasform the workforce ad the orgaisatio. We supported strategic workforce plaig i two major ways: New cotract desig based aroud aualised ad miimum hour cotracts ad ew ways of workig (e.g. resource pools ad multi-skillig) aliged to the workload Future workforce model we idetified areas ad times of over- ad uder-capacity ad recommeded ways to alig the workforce to future patters of work to brig substatial cost savigs. Overall, we idetified savigs of more tha 10 per cet of workforce costs (amoutig to several millio pouds) ad eabled the orgaisatio to free up capacity to take o ew cotracts over the ext five to te years. Why Hay Group? Hay Group has more tha 70 years experiece i brigig together the orgaisatioal, cultural ad huma dimesios of busiess performace. From global fiacial services ad oil ad gas orgaisatios, to Europea-wide retail compaies, ad UK egieerig maufacturig firms we help cliets from a rage of sectors ad sizes to trasform their strategy ito reality. You ca be cofidet you are parterig with the best. World-class workforce aalysis tools based o decades of job ad workforce research. Idustry workforce kowledge we have aalysed ad assessed workforces i every major idustry sector. Wholly idepedet we are privately owed ad ot liked to particular system providers or recruitmet agecies. Truly global we have more tha 10,000 customers ad 2,600 staff i 48 coutries.
11 For more iformatio If you would like to uderstad more about how Hay Group ca help you with strategic workforce plaig, please cotact: Paul Lambert Associate director, Hay Group t +44 (0) e paul.lambert@haygroup.com m +44 (0)
12 Africa Cape Tow Johaesburg Pretoria Asia Bagkok Beijig Ho Chi Mih City Hog Kog Jakarta Kuala Lumpur Mumbai New Delhi Seoul Shaghai Shezhe Sigapore Tokyo Europe Amsterdam Athes Barceloa Berli Bilbao Birmigham Bratislava Brussels Bucharest Budapest Dubli Eschede Frakfurt Glasgow Helsiki Istabul Kiev Lille Lisbo Lodo Madrid Machester Mila Moscow Oslo Paris Prague Rome Stockholm Strasbourg Viea Vilius Warsaw Zeist Zurich Lati America Bogotá Bueos Aires Caracas Lima Mexico City Sa José Satiago São Paulo Middle East Dubai Riyadh North America Atlata Bosto Calgary Chicago Dallas Edmoto Halifax Kasas City Los Ageles Motreal New York Metro Ottawa Philadelphia Regia Sa Fracisco Toroto Vacouver Washigto DC Metro Pacific Aucklad Brisbae Melboure Perth Sydey Welligto Hay Group is a global maagemet cosultig firm that works with leaders to trasform strategy ito reality. We develop talet, orgaise people to be more effective ad motivate them to perform at their best. Our focus is o makig chage happe ad helpig people ad orgaisatios realise their potetial. We have over 2,600 employees workig i 85 offices i 48 coutries. Our isight is supported by robust data from over 125 coutries. For more iformatio please cotact your local office through
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