Future-proof your workplace
Strategic workplace planning is the way to manage your talent flow, Susan DeFazio explains
The best laid plans are nothing without the right people to implement them. This is why future-proofing your talent supply chain is essential to better strategic planning in every organisation.
This is more important than ever when we take a look at the challenges businesses of all shapes and sizes are faced with when it comes to talent management and protecting their human capital.
There are a number of factors which are affecting human capital continuity and which directly correlate to business performance risk. These factors include demographics, generational trends, skills availability, lifestyle choices, technology, education, regulation, globalisation mergers and acquisitions.
All of these have a signification effect on an organisation’s ability to be competitive and their need to contain the implied human capital risks. Indeed research from The Conference Board, McKinsey, Henley Business School and the Human Capital Institute shows that strategic workforce planning (SWP) ranks within the top three strategic priorities now and in the future.
With all these challenges, and these are just a few, businesses are being forced to look more holistically at the way they approach workforce management.
Mitigating human capital risk is a high priority for all businesses and individuals, whether working in HR, organisational design or senior leadership roles. However few examples of success exist. Even when the concept of ‘strategic workforce planning’ is raised inside organisations, often the efforts to implement it are hampered by a number of factors, such as lack of skills and experience; a lack of insightful, available workforce data and a lack of an available, proven model to follow.
Nick Kemsley, co-director of the Henley Centre for HR Excellence, outlines the importance of HR practitioners in mitigating risk in his paper, “Organisational Risk and Capability – HR’s Biggest Untapped Opportunity”. He states that, “HR activity has a strategic relevance which it may have lacked before”1. The implementation of SWP helps to address risk and ensure that businesses are prepared for the future, no matter how uncertain it may seem.
The good news is that each of these issues can be successfully resolved. By connecting strategy planning cycles to financial and talent management cycles, a genuine model for successful SWP can be developed in any organisation.
Whatever your business, human capital is, and will be for the foreseeable future, the deciding factor in the success of business strategy.
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 organisations do the work to determine what kind of talent is required to deliver on their strategic plan, let alone understand how well-placed they are to find and keep that talent.
Too often, business plans are missing the specific alignment and measures to mitigate human capital risk. 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 organisational capabilities
- Correlate internal and external supply and demand factors
- Generate insight for talent gap analysis for current and future states
- Identify actions and investments required to close current and future states
- Enable judgments about actions now that do not erode future value.
Strategic workforce planning helps organisations to understand the talent that is needed to achieve their business outcomes. It helps manage risk and drives planning. It enables organisations to optimise results and is arguably one of the most sought after skills in business today. What other business process or intervention has the ability to span these levels of impact and enable business strategy?
Why does SWP matter to risk and operational performance?
The implementation of SWP helps to address risk and ensure that businesses are prepared for the future, no matter how uncertain it may seem. There are a number of factors affecting human capital continuity, and which directly correlate to business performance risk. We’ve already touched on these but they include:
- Demographics and the ageing population
- Generational trends and psychographics
- Skills availability
- Legislation and Regulation
- Mergers and acquisitions.
It must be agile and connected to business outcomes
As a result of these risks, businesses are increasingly looking more holistically at the way they approach workforce management. They are looking for practices and solutions to help mitigate the impact of future skills shortages on their businesses, to improve the effectiveness of hiring practices and to control costs.
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 decision-making. How effectively talent is attracted, mobilised, forecast and managed to mitigate business risks will largely be determined by how agile, and how informed of the businesses objectives, an organisation’s workforce planning approach really is.
Boosting organisation-wide performance
Both academic and practitioner research shows that strategic workforce planning ranks within the top three priorities for businesses today, yet there must be a significant paradigm shift in the way companies understand and design talent management practices. To compete effectively there must be a fundamental change to how they design their organisations.
Dr Mary Young, senior researcher at the Conference Board predicted an upsurge in SWP interest and use back in 2009. Her contention then was that economic challenges, among others, would see businesses connecting the dots between talent data and other strategic outcomes. In explaining how SWP could improve overall 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.”
Although we are still some way from practically connecting these dots inside many organisations, the will to do so is growing. 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 for any organisation2.
Why does SWP matter?
Successful SWP enables organisations 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 labour trends and issues will impact organisational performance more broadly.
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 ongoing basis. Market complexities are driving the need for organisations to develop a different kind of strategic response. For too long, leaders have been repeating the same action and expecting different outcomes.
Translating business strategy into organisational 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.
When should SWP 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 organisation.
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:
- Appropriate training and knowledge for business leaders in SWP has historically been difficult to find
- 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 organisation’s access to skills. This means that SWP must be seen as continuous process, and one that is integrated into the decision-making of your 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 organisations:
- 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 prioritises those gaps in their ability to affect strategic outcomes
- Create a clear plan for retention, ongoing 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.
How to build an SWP roadmap
Agile SWP is now an integral skill-set for HR, strategy and organisational effectiveness practitioners. If they are to future-proof 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 handson experience that practitioners can begin to apply their expertise effectively across an entire organisation. This is why the Human Capital Institute (HCI) and KellyOCG have joined forces to provide a proven model for SWP.
If your organisation 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:
- Knowledge transfer: how will your organisation 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?
- Tools and frameworks: Which tools and practices are right for your organisation? Various methodologies, from Six Sigma through to 7s and Balanced Scorecards provide various tools and frameworks to assist with some SWP processes and thinking. Figure 1 below shows the concept of a 6B Talent plan to assist with the development of organisational effectiveness.
- Determining the right blend of practices for you and seeing how they work in practice is a major piece of work.
- Managing change: Moving to a strategic model of workforce management requires significant change leadership within all organisations. SWP tools and processes need to be applied both within and outside of the HR team. How will your organisation manage this change process and are there case studies, practitioner networks, or best practice manuals to guide you?
- 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 organisation to make the required changes, nor gather the right inputs, to make the initiative successful.
When will your organisation make the explicit link between talent and the future success of the organisation? More importantly, how will it measure the strength of that link and its ability to optimise it?
Moving to a strategic model of workforce management requires significant change leadership within most organisations. Even those that embrace the concept and understand its importance are often hampered by the lack of robust, proven tools and practices to implement it, let alone appropriately trained professionals to make it happen.
We know that businesses are reviewing the way they approach workforce management. In part, they are doing this to mitigate the impact of future skills shortages on their businesses, control costs and optimise business performance. But they are also doing it in response to shifts in competitive influences that are now global.
To translate business strategy into organisational capabilities, organisations 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 organisation’s capabilities. Then, and only then, can organisations make quality judgments that do not erode future value, but support it. This is strategic workforce planning, and ensuring your HR team and your business is accredited to deliver it is already a major step toward greater competitiveness and lower risk.
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