The pace of change, the ever intensifying ‘war for talent’ and rapid innovation and disruption of established organisation models have all affected how we design and structure our organisations and has altered how we think about our workforce. According to Deloitte, 92 percent of companies believe that redesigning the organisation is important. Companies are decentralising authority, moving toward product and customer centric organisations, and forming dynamic networks of highly empowered teams that communicate and coordinate activities in unique and powerful ways. As a result, companies must plan differently for the future. To paraphrase a passage in Lewis Carroll’s Alice’s Adventures in Wonderland: “If you don’t know where you are going, any road might get you there.” Creating a plan for the future will keep you moving in the right direction, focussing you on the most appropriate HR interventions thus allowing you to have confidence in the decisions that you’re making. But what is the best way to plan and how can you make it effective?
Getting the basics right
According to a Harvard Business Review study on how CEOs and CHROs can connect people to business strategy, two-thirds of CEOs report receiving a basic set of human capital analytics from HR, but they receive no relevant information linking people metrics to business metrics. CEOs want to see the connection that links the people and workforce information to business strategy, outcome and cost. In the same study, CEOs reported that workforce planning was extremely important but only 41% receive information related to workforce planning from HR. Without effective workforce analytics and measurement, organisations will find it difficult to retain talent, positively impact their workforce and struggle to deliver the right business outcome.
Not only should HR plan for the future, other areas of the business should adjust their plans to allow the overall business strategy to align. Organisations must focus on collaboration and knowledge-sharing, sustaining a continuous dialogue within the HR department and across other departments. Finance and HR, for example, collaborate on annual headcount planning. Finance then has an important task filtering through the headcount numbers and relies heavily on HR for reliable data. However, workforce planning should be more than just a budgeting exercise – it could be a data driven strategic initiative. Finance and HR could work together to leverage data analytics to evaluate the cost and value of different actions and scenarios, allowing the business leaders to make more informed decisions.
Operational vs strategic workforce planning
Many companies use either operational or strategic workforce planning or both. Operational planning focuses on the short-term goals that you need to execute quickly and efficiently, most of the time using internal and historical data to determine what will happen in the following year. The planning horizon is roughly six months to two years and does not leave you with a lot of variables. As a result, operational workforce planning is tactical in nature.
Strategic workforce planning, on the other hand, focuses on the future and plans over a number of years, usually three to five. When you plan strategically, you can use both internal factors - such as organisational talent profile, succession planning outcomes, flexible working initiatives, job design changes, and many more - and external factors: what’s happened in the global economy, political changes, and the labour market all factor in your planning. The realities of the world today drive the need for companies to have contingency based strategic workforce planning. Global unrest is driving up uncertainty and ambiguity, driving down employee engagement, companies are struggling to hire candidates due to skills gaps, and jobs are becoming more automated. A long-term blueprint will optimise the talent dynamics and maximise the effectiveness of both the current and future workforce, while delivering the desired outcomes in line with the strategic business goals.
If HR can structure a workforce plan with the future, strategic imperatives in mind, it can establish itself as a trusted advisor for the business as a whole. Workforce planning is the strategic alignment of an organisation’s human capital with its business direction and should be driven by business strategy. It will then contribute to overall business success. A strategic workforce plan isn’t just your plan it’s your business leaders plan.