How do you Build an Effective Workforce Planning Capability?
Strategic workforce planning presents a huge opportunity for HR as a function to deliver real value and insight to the business – by providing them with a holistic view of their workforce including the skills present within the organisation and an understanding of how the talent strategy aligns to the business strategy. When done well, strategic workforce planning has the power to drive greater innovation, talent generation and process improvement within an organisation, allowing more informed, data-driven talent decisions to be made, that are aligned to strategic priorities and underpinned by advanced and predictive analytics.
A research study conducted by OrgVue and CEBR, found that workforce planning is a key measure for improving productivity. In the US, better people planning could contribute a whopping $92.2 billion in additional GDP, while in the UK it could help generate an extra £10.4 billion in GDP.
Which all sounds great in theory, however as we’re all too familiar with building a ‘successful’ workforce planning capability within an organisation is a lot more difficult than it sounds and this is primarily due to the complexities that surround strategic workforce planning. As companies try to create more agile organisations with a mix of full-time, part-time, permanent, contractor and freelance talent, the ability to plan effectively, forecast skill gaps, and understand the supply and demand of talent has never been more important.
So why do so many organisations fall at the first hurdle when attempting to build a successful workforce planning strategy?
Many HR functions struggle to create a direct connection between business strategy and actions that can be taken in the people space.
HR often fails to gain buy-in from the business to own the workforce planning process
HR teams often lack the capability to leverage internal and external market data to inform and evaluate their talent decisions
1. Many HR functions struggle to create a direct connection between business strategy and actions that can be taken in the people space.
Successful workforce planning requires HR leaders to truly understand the current state and future strategy of the business. However, as a function we often struggle to gauge an accurate view of business strategies due to the rate of change. While the business has embraced agility, HR is still playing catch up. Research published by Gartner highlights that few CEOs think their organisation’s business models (14%) and operating models (13%) will be the same in three years. With such rapid rates of change successful partnership between HR and the business is imperative, if we are to ensure our workforce planning efforts not be rendered ineffective. In a recent article published by Robert Kruzel looking at how we begin connecting the business strategy and HR, he shares:
“90% of the time leaders are thinking of business strategy A or market B and the remaining 10% of the time we as HR come in talking about overall attrition, engagement etc. It can seem completely decoupled.”
As a function we often fall into the trap of pushing a new data set or tool without actually connecting this to the business needs or challenges they’re facing. While it might seem like one giant, impossible leap for HR to effectively connect workforce planning to business strategy, it’s actually a lot simpler than we think, to paraphrase Dawn Klinghoffer:
“You must start with the outcomes you’re trying to affect in the business”
Understanding how to identify the business challenge and frame the right questions is imperative. We must start by understanding the key strategies of the business, which business KPIs are used to measure success and then ask leaders what the biggest business opportunities and obstacles they see.
When we take this approach and begin by really understanding the business challenge, partnering with the business to determine the biggest opportunities, and leveraging our people analytics function to take a data-driven approach — we can begin shaping a workforce strategy that supports the business to achieve these goals. This creates an opportunity to really move the needle and start driving business value with a business strategy that is underpinned by an effective workforce plan. It’s at this point HR begins speaking the same language as the business.
2. HR often fails to gain buy-in from the business to own the workforce planning process
It’s well known that as a function we often fail to successfully gain buy-in from the business when it comes to owning the workforce planning process. More often than not the business feels that workforce planning is a HR process. More often than not, business leaders see workforce planning as an additional process they have to learn, it requires constant monitoring and updating to account for changes in the business strategy, and never leads to real action. For this reason, it is often deprioritised. In order for HR to gain real traction and drive the workforce planning agenda we must take the time to speak with business leaders – understanding what they’re trying to achieve and making connections back to the people strategy will enable HR to begin building more credibility with the business.
In this short interview with RJ Milnor at Insight222’s Global Executive Retreat, he shares how he went about building these connections between the business and HR at McKesson:
“One is spending time with the business. So, understanding, speaking with business leaders and those in the business, understanding what they're doing and making the connections back to people strategy and thinking about, well, what type of analysis might be helpful to either improve the work for our employees or drive business outcomes.
And that's a bit of scoping, but it's also demand generation. So, there's a significant marketing aspect in my role, and that's not to kind of beat the drum for people analytics at McKesson it is really to help facilitate the business. And that's a large part of the role and it develops a much stronger partnership and relationship with HR and with all the different functions and business units. So that's a really important part of what this role does. The second is developing connections across the team. So, we have team members with different levels of specialty and in different locations, connecting them and connecting them with different parts of the business to get things done.”
In order to be successful, HR must focus on gaining credibility and building connections with the business and finance. It is no easy task to get business leaders involved in workforce planning let alone take responsibility and ownership for it. If HR can come to the table with insights business leaders aren’t aware of themselves, HR can build credibility. By sparking excitement with business leaders about what HR can contribute to strategic conversations, making it far easier to get business leaders to participate in workforce planning conversations. Ultimately HR needs to insert itself earlier in strategic business conversations and drive joint ownership of the SWP process to break down the planning silos that are all too often prevalent in many organisations. We need to foster more collaboration and knowledge-sharing in which a continuous dialogue between HR and the business is maintained.
Interested in learning more about Strategic Workforce Planning? Take a look at our online HR training courses on myHRfuture
3. HR teams often lack the capability to leverage internal and external market data to inform and evaluate their talent decisions
Business leaders are known to comment that the workforce plans put together by HR are often too internally focused and lack input on external labour market changes. Because of this lack of understanding, SWP plans can fail to account for shifts in the market that are critical to the organisation’s strategic success. This includes recognising how key roles are evolving in the industry, or how talent is flowing in and out of key competitors, where in demand skills are located, or even what skills reside within the organisation. As we know skill data provides a globally universal currency for organisational decision making. HR teams often struggle to determine the best way to close a talent gap, which is unsurprising. As outlined in research by Gartner only 12% of organisations effectively use talent data to inform business decisions. One organisation that has been leading the way in this area is McKesson, and as RJ shares in his podcast interview on the Digital HR Leaders podcast:
“One of the things that we're working on right now is skills matching or job matching. So, understanding what is our inventory of talent and how can we deploy that best against not only the current jobs that we have, but the current challenges that we face. One of the challenges that comes out of that is how do we deploy talent against the challenges that we don't know that we have yet. So if we think about growth strategies or future business opportunities, we might not know the talent that we need against that and that's one of the areas where Workforce Planning frankly becomes really challenging.
One of the areas that we're starting to venture into, and honestly I don't have a solution for it yet, is if we're looking at a business opportunity where we typically haven't had that talent yet, where can we go? And so there might be skill adjacencies or skills that look like a skill we've had in the past, can we grab on to that? Can we build from that? Or do we need to go externally and find entirely different skills, what does that look like? There's some really good labour market analytics around that can help us find that.”
By maintaining a continuous overview of the capabilities that lie within an organisation, HR and the workforce plans they build (alongside the likes of their finance and business stakeholders) will be robust enough to meet the future needs of the business head-on—no matter what challenges they may face.
In order for HR functions to really build an effective workforce planning capability they must first begin by harnessing their business acumen skills and deepening the core analytical capabilities within the function to be able to effectively and efficiently leverage the information and data available to them. However, despite People Analytics being the fastest growing area of HR, in an interview with Tomas Rasmussen on the Digital HR Leaders podcast David Green shares that he still regularly gets asked questions like:
‘What is People Analytics?’ and ‘Why should we care?’
Well, we should care because without insights grounded in data and clear recommendations, business leaders aren’t compelled to take the advice of HR. And if we can’t convince them to take our advice, they’re never going to act on any workforce plans we share with them. While the thought of upskilling your team or even department might be a daunting one, fear not – David Green shares some excellent resources to support HR professionals grow their analytics capability.
As we see companies begin to start building their analytics functions and upskill in business acumen, we will start to see HR develop the skills and consulting ability required to successfully lead and deliver strategic workforce planning. RJ shares that in order to achieve true success we must redesign and rethink both our workforce plan and talent acquisition, ensuring they’re grounded in data-driven decisions underpinned by a solid foundation in analytics.
So what we're finding through this workforce planning journey is it's not enough to have a workforce plan, that we're building a workforce planning capability and with that comes some design thinking on the talent acquisition side and those two things move together.
I think that was a big “AHA” moment for us, that we needed to look at Workforce Planning and providing a hiring forecast, a stable consistent accurate hiring forecast to Talent Acquisition, and at the same time kind of concurrent with that, we may need to actually rethink the way that we go about talent acquisition to achieve that workforce plan, and those two things really go hand in hand.
Ultimately in order to build a successful workforce planning capability HR needs build the necessary relationships with the business, truly understand the business and how the workforce plan connects and supports the business strategy and finally focus on building the necessary skills and capabilities within their team to be able to effectively build and support the business in executing on a workforce plan.
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ABOUT THE AUTHOR
Manpreet Randhawa is the Head of Digital Content for myHRfuture.com. In her previous role as the Change Management Lead for People Planning, Design & Analytics at Cisco Systems, she was responsible for defining and executing on the change management strategy to successfully implement and sustain the digital and cultural transformation across the enterprise. Manpreet is very passionate about change management and technology and how to use both to transform the employee experience and prepare companies for the Future of Work.