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Be Spontaneous -- Plan Ahead
While most organizations agree that workforce planning is important, most companies don't think they're doing a good enough job at it -- especially with the changes brought on by the economy. And for it to be truly effective, it should be a joint effort, including HR, finance, strategic planning and senior leadership.
Just a few years ago, when companies were banking on baby boomers retiring in droves, HR executives developed workforce-management models to figure out who would take over leadership roles in the future. Then the bottom dropped out of the economy. Boomers began staying on longer and entry-level workers stopped hopping from job to job -- throwing a wrench into those models. So, it may come as no surprise that companies aren't happy with their current workforce-planning models. In a study by the Institute for Corporate Productivity (i4cp), more than half (53 percent) described their workforce-planning efforts as just "moderately effective," while one-quarter (23 percent) described them as "slightly effective." Only two in 10 (19 percent) called their firms' plans "highly" or "very highly effective." And the majority (71 percent) agreed that their companies would benefit from a solid workforce-planning program. The survey polled 558 adults, primarily HR professionals. "Although companies see workforce planning as a supportive effort to organizational strategy, they aren't doing workforce planning on a strategic level nearly as much ... ," says Carol Morrison, senior research analyst at Seattle-based i4cp. "Companies don't appear to be implementing the tools they could be using to help them prepare for the next" economic downturn. Seymour Adler, senior vice president in the human capital practice at Aon Consulting in New York, says it was misguided assumptions about the economy (such as assuming predictions of an en-masse retirement of boomers would come true) that made company models ineffective. One company he consults with had a 25-percent annual attrition rate among its entry-level staff --until recently. Based on that traditional churn, workforce-planning models were set up to aggressively recruit younger workers as well as retain existing staff by offering higher compensation. Then came the recession. The company's attrition rate among entry-level workers dropped to 10 percent, throwing the workforce planning model out of whack, Adler says. "The workforce planning was just so far off," he says. While the significant slowing in retirement and turnover rates has been a burden on some businesses, it's been a blessing for others, says Jason Jeffay, principal in New York-based Mercer's human capital consulting business. "In some industries, where skills and knowledge are difficult to replace because there's a real shortage of people in the marketplace, delays in retirement and delays in turnover are a benefit," says Jeffay. "In other industries, where you're looking to move your high potentials up in the organization quickly and you're trying to re-skill the workforce, that lack of natural turnover is a problem." Other setbacks occur because businesses just aren't clear on what they plan to do with the data they collect through a workforce-planning model, he says. "They are not tying the modeling exercise to the business planning and strategy," says Jeffay. "A lot of people just do workforce planning as an exercise to see what it's going to tell them, as opposed to structuring it to say, 'Here is our [business] strategy, now let's model out [its] impact.' " Four in 10 (43 percent) of those surveyed by i4cp did say their workforce-planning models are focused on business-strategy reviews. That's something Adler calls "absolutely critical," and it drew the largest number of responses in the survey. Thirty percent said demand forecasting was the focus of their organizations' models, 27 percent said gap analysis and 26 percent said environmental-scanning techniques. With so many companies unhappy with their models, Adler says, now is a good time to take a step back and examine the underlying assumptions -- and adjust them for today's economy. HR leaders should also keep it simple. A model should consist of a basic dashboard that clearly outlines the economic assumptions the company has made to support its model, and make sure it can be easily changed if the economic atmosphere changes in the future. Jeffay says that being dynamic is an important part of any forecasting program. "The easiest way to be spontaneous is to plan ahead," he says. "By doing scenario-based planning, you've already anticipated the likely outcomes and when things start to develop along those lines, you're prepared." And be sure, Adler says, not to forget to include human subjectivity by allowing senior leaders to include their own judgments about employees and who should lead the organization into the future. "One of the failures and frustrations [of workforce planning] is that people rely too much on statistics," he says. While in some organizations, workforce planning is strictly an HR function, it should optimally be a partnership between HR, finance and strategic-planning departments, says Jeffay. Strategic planning can help identify likely scenarios that the organization should be planning for; finance understands the labor costs and financial requirements for each likely economic scenario; and HR, of course, knows the labor market and the skill levels of the organization's people. "It's all three working together that makes it a business-planning exercise and not just an HR exercise," says Jeffay. "We find that workforce planning is most effective when it's not solely done within HR but it's done as a cross-organizational imperative."
December 14, 2009 Copyright 2009© LRP Publications |
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