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Losing Sight of the Long Term
Is the recession causing many companies to downsize in a way that will harm their future competitiveness? Jamie Hale thinks so. Hale, Watson Wyatt's national practice leader of workforce planning, says too many organizations are taking a "headcount reduction" approach to reducing expenses rather than taking a more strategic view that incorporates a long-term business plan. "They're losing sight of the long-term view because of current economic conditions," says Hale, who is based in Dallas. "They're not looking at production levels or future business projections, they're just looking at the 'here and now' to find ways to cut expenses immediately." In short, she says, too many HR leaders don't engage in strategic workforce planning. But, some have definitely seen the light, she says. Hale oversaw a Watson Wyatt survey conducted in October that found that 40 percent of 129 large North American companies said workforce planning has become more important to their organization's success since the economic downturn began and almost one-third have begun to increase activity around it. Meanwhile, despite the recession, 77 percent of respondents said attracting critical-skill employees continued to be a challenge and 60 percent said attracting top performers was a challenge. "Companies have learned from the past that, when they don't downsize strategically, they end up cutting talent where they shouldn't and when business conditions improve, they find that not only do they not have the talent they need, but that talent is harder than ever [to find]," she says. Hale defines workforce planning as "aligning the workforce strategies to business strategies using business analytics to understand the volatility and risk associated with the workforce and [getting] ... the right people in the right places at the right cost." She makes a point of distinguishing it from time-and-attendance solutions, some of which are also described by vendors as "workforce planning" tools. Despite the slow economy, she says, there continues to be critical skills shortages -- for present and future needs -- among today's workforce. "Some companies may not have that problem today, but because of looming retirements, they're beginning to plan for this with the understanding that there will be smaller numbers of skilled workers to replace those retirees." Mary Young, a senior research associate at New York-based The Conference Board, describes workforce planning as "the best tool in the HR executive's toolkit." Young, who is in the process of finishing a report that will profile several large companies that use strategic workforce planning, says it can provide companies with a rigorous fact-based process for ensuring that an organization is investing in its talent in a way that will pay the biggest dividends. Young's report on SWP, which will be published this March under the title Implementing Strategic Workforce Planning, will profile Starbucks, IBM, Canada Post (Canada's postal service) and the Australian mining industry. "SWP lets you model different scenarios to determine what the workforce implications of a change in strategy might be," she says. At Canada Post, for example, strategic workforce planning is being used to help the organization model a variety of different approaches as it plans for the anticipated retirement of nearly half its workforce within the next 10 years, she says. SWP can also help companies determine the long-term effects of a change in HR tactics, she says. For example, companies that employ strategic workforce planning often determine that the short-term benefits of encouraging early retirements can be outweighed by the damage incurred to their long-term competitiveness. Thanks to enterprise resource planning software, from vendors such as Oracle and SAP, companies can better access workforce data and data-mining tools that let them model the long-term effects of business strategies, she says. Some vendors, such as Australia-based Aruspex and New York-based Vemo, provide specialized SWP software, while firms such as Deloitte Consulting and Sibson provide services to help companies master the art of SWP. However, Young urges HR leaders not to think of SWP as a tool to assist in downsizing. "Last summer I got a call from a global financial company that wanted to talk to me about strategic workforce planning because they were thinking about downsizing, and I told them that's not why you do SWP," she says. "If you implement SWP as a euphemism for downsizing, you're going to taint it -- it will always be synonymous with downsizing and you'll have hobbled this incredibly useful tool."
December 18, 2008 Copyright 2008© LRP Publications |
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