Dr John Sullivan Talent Management Thought Leadership
It's an unforgiving world for those that don't plan.
Times have changed. In the fast changing world of business and technology that we live in today, a failure to plan effectively can mean disaster. Why? Because we no longer live in the world of isolated companies and markets. In a global economy, when a major player stumbles, there is always another ready to move in and seize the opportunity. In past decades, companies could make errors, and were afforded a period of time where they could catch up without realizing some lasting impacts. In the 21st century there isn't time to catch-up. If you study business trends, you only need to look at Arthur Andersen, Enron, Global Crossing, WorldCom and a dozen or so other leading firms to see how unforgiving the business world has become.
What kind of events should to be forecasted or anticipated?
You may be saying at this point, “okay, okay, I get what you are saying. So, how do I start planning and forecasting change before it happens if I have never done so before?” Well, some of the events that HR needs to prepare for appear in newspaper headlines almost every day. They include:
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Terrorism and other physical disasters
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Stock market downturns
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Accounting irregularities
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A significant decrease or increase in product demand
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Mergers and acquisitions
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The bankruptcy of a major competitor
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Wars and civil disruptions
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Labor shortages and surpluses
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Failed government approvals (namely pharmaceuticals and medical devices)
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Class action lawsuits
As individual and somewhat disconnected events, the issues above are difficult to forecast. Few business professionals would argue however about the inevitability of these types of events increasing in frequency — as the eyes of the global economy closely scrutinize the efforts of American corporations to rebuild their positions.
HR strategies (just like business strategies) and plans must be flexible and vary with the economy.
Most HR strategies are static. Most workforce plans, when they do exist in companies, merely project straight-line growth based on the company’s historical growth patterns. Unfortunately the business world all too often fails to follow simple "historical patterns."
In addition, HR strategies that work well in high-growth, low unemployment times, will more than likely be ineffective during a recession or periods of high unemployment. Sadly enough, most HR plans and strategies are developed without considering the constantly changing environmental factors that impact business. If HR leaders expect to be "corporate heroes" they need to move beyond this "static" or historical model towards a more flexible, or agile model that:
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Is aligned with the future product development, growth and business initiatives for your company.
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Forecasts trends in your respective industry and those industries which impact your industry.
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Quickly adapts and adjusts to the ever-changing business and economic events that take place every day.
Why aren’t most HR plans more effective at forecasting the future?
Up until the 1980's most large HR departments included a workforce planning practice. However, most workforce planning efforts were eliminated during tough economic times because they could not prove their economic value. As a result, today most HR departments don't even attempt to forecast the impact of external events (like unemployment rates, changes in the economy, competitor actions etc.) that directly impact their operations. A planned strategy that includes data and information gathering could provide HR and managers with sufficient "lead time" so that they can successfully avoid/ minimize any problems that result from the changing business environment.
So why don't they plan or forecast effectively? The primary reason HR is not effective at planning is because their skills and interests are mostly operational and tactical in nature. In addition, they were not given the opportunity (nor did they create the opportunity) to understand the products and services their company offers, or the direction their organization was moving towards in order to align the current and future workforce to meet the future product and service demands. Furthering the issue, most who work in HR don't have a degree in business or P&L experience, which would provide them with the insight they need to identify and take advantage of business patterns.
Less than 1 percent of the firms that I've worked with have developed a formalized program to forecast the impact of external environmental fluctuations. Some organizations however do stand out in this area of strategic planning including Intel (human roadmap), Shell Oil (scenario planning), the U.S. military (rapid redeployment) and NASA (long-term mission needs).
A new era of workforce planning is upon us!
Fortunately times have changed for HR planners. There are now additional tools and technologies that make forecasting and workforce planning more practical. Some of them include:
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Increased access to computers and the Internet within HR
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Access to enterprise wide software packages, which allow them to easily make use of previously collected data. Some of these programs already contain analytics and metrics components that could help HR and managers track trends as well as make more educated decisions
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Access to a wealth of global information and data from government agencies is available on the Internet
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Existence of new and easy to use software for analyzing data
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Many more HR professionals who are trained in business, statistics, metrics and the use of software
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Access to numerous investment banking firms, stock analysts and professional associations who are now making their forecasts available to the public
As a result of these changes and the wealth of new data it is now possible to dramatically increase the effectiveness of forecasting and workforce planning efforts.
Yes, forecasting and planning can be complicated but the ROI is high
Of course anticipating events, rather than reacting to them is difficult for even the best business professionals to achieve. But being a strategic player, by definition, is more difficult than being a tactical player. However, while planning and forecasting tends to be complicated this does not give you a sufficient reason to avoid following through on them — the rewards related to anticipating events are significantly higher than just reacting to them. Remember, accurately predicting who and why a team will win (or lose) the Super Bowl or the World Cup will get you more attention than congratulating the winner the day after the game. In addition, because most individuals in management tend to be optimists, more people will anticipate (and want to see) an upturn. Incidentally, because downturns tend to come on more quickly than upturns, identifying and being prepared for them generally has a higher return on investment than anticipating an upturn. You need to be prepared for both but if you can only do one… prepare for the downturns.
Conclusion
After over 30 years of studying and developing workforce plans I've come to the conclusion that we are currently entering the "golden age" of workforce planning and forecasting. Because of the emergence of technology and the Internet which gives any HR professional widespread access to a wealth of data and information on economic and industry trends, dramatic improvement in HR forecasting and workforce planning is now possible. In addition, as all business processes begin to improve through the use of metrics, HR is being forced to follow suit. As more and more HR functions begin to rely on databases and metrics it will become even easier to share information, to identify patterns, and to accurately forecast upcoming events.
The time to act is now. VP's of HR need to begin developing forecasting and planning functions and to identify workforce planning leaders. In a fast changing world, the only other option… is being outsourced!
"Telling managers about "yesterday" is like rehashing bad news. It has no value. Nothing will WOW's managers more than putting a stake in the sand and predicting a future event. If you accurately forecast what will happen… your status as an "expert" in people management will forever be etched in their mind."
