Last week, we took an overview of the eight catastrophic failures that have occurred in workforce planning in the past, looking at the areas where workforce planners had gotten into trouble. This week we’ll take a more detailed look at some very specific reasons why workforce plans fail. I have sorted these reasons into categories below for your convenience:
Weak Business Case and Performance Metrics
- ROI. HR managers are notoriously bad at making good business cases to support their program, and workforce planners were some of the worst in developing business cases among all HR managers. Initially, workforce planners did make some good arguments. But those arguments were only good enough during times of economic growth. When the growth ended and a recession began, their “weak” business cases fell apart, because they failed to demonstrate a ROI high enough to maintain workforce planning during layoffs and tough economic times.
- Metrics. Many workforce planning (WP) programs were approved and maintained based on the “personal credibility” of a single HR planning manager. Most WP program assessments were subjective in nature, and almost all were supported by emotional arguments alone. When tight budget times came, there were no quantifiable metrics showing the positive business impact of forecasting and workforce planning.
- critical success factor. HR never demonstrated to senior managers that workforce planning was a “critical success factor” within their industry. HR never proved that the very best firms utilized effective workforce planning and that the poor performing firms didn’t use it.
The Role of Management
- Top-down planning. Most “top-down” directives don’t work, and most workforce plans come out of a centralized corporate planning office or process. Effective planning cannot be something that is “handed down” as a directive from top management or corporate headquarters. If low- and mid-level managers are not involved in the workforce planning process ó if they don’t feel that they “own it,” have any input, or maintain some degree of control over the process ó they won’t use it. Line managers must be involved, because most of the basic information that is needed to refine workforce plans comes from them. Either involve the bottom and middle of the organization early on or your plan will fail.
- Operational focus. Many managers are focused on operations, tactical issues, and short-term results. Existing business metrics and rewards drive that short-term behavior. Unless managers are educated to the benefits of long-term thinking they will almost automatically maintain their focus on immediate returns. Plans fail when managers are not first educated, and then trained, on how to forecast, plan, and use workforce plans to increase both immediate and longer-term business results.
Workforce Planning Was Independent
- Lack of coordination with other resource allocation processes.Workforce planning and its relative, workforce forecasting, was owned by HR. Unfortunately, it was also operated independently from most other established business planning and forecasting functions. Other resource allocation processes like budgeting, production planning, competitive analysis and sales forecasting operated independently (in a silo) of workforce planning. WP forecasts were also done independently, utilizing different databases that were never interconnected. Because workforce plans operated independently, it was not unusual for managers to receive numerous different “forecasts” and mixed signals that contradicted each other. Budgets, sales, and production forecasting at the minimum, must be coordinated with WP.
- Coordinated with business unit plans. Many business units prepare their own functional and business unit plans. It’s important that these “local” plans and forecasts are integrated into the “master” workforce plan.
- Uncoordinated HR. Even within HR, WP was an independent unit. Workforce plans were not coordinated with or supported by other HR functional units. Often HR units like compensation, recruiting, and training failed to reinforce ó and in some cases, directly contradicted ó the workforce plan.
Narrow Targets and Long Timeframes
- Fixed plans and targets. Most workforce plans were applied uniformly in every business unit throughout the corporation. Unfortunately, unless plans allow for some modification to fit individual differences in regions or business units, they are bound to have a diminished impact.
- Few options. Instead of giving managers a range of options in their plans and forecasts, they were told specifically what their target should be. Managers love options and hate being told by “overhead functions” and corporate headquarters what is best for them. Good plans include flexibility.
- Long planning timeframes. Some workforce plans covered a period as long as 10 years. Even worse, most of the long-term forecasts proved to be inaccurate. In a rapidly changing world some firms have shifted workforce planning to encompass periods no longer than 18 months in order to increase their accuracy.
- Plans must fit the culture. Workforce plans must take into account the changing culture of the company. Many workforce plans failed to include the impact of major business traumas like mergers and downsizing on the company and its culture. Plans designed without considering the changing culture are bound to fail. In a similar light, those “copied” or benchmarked from other firms (where the culture is different) can not succeed. Effective WP is customized to the industry and the company.
HR Credibility Was Low
- Business credibility. Back in the early 1980s, HR didn’t have the credibility it often has now. As an overhead function, many managers viewed HR as soft. The people in it were thought to lack an understanding of business issues. But the people running WP programs should have profit and loss experience and a degree of credibility with line managers if they expect managers to listen to them.
- Plans had no “face validity.” Many of the forecasts and the conclusions included in workforce plans seemed at first glance to be unrealistic. Unless forecasts and targets are initially “run by managers” in order to refine them and make them believable, most workforce plans will fail, because after the initial feeling of disbelief no one will actually take them seriously in their business decision-making.
It’s Not a Document, It’s a Way of Thinking
- A document, not a way of thinking. Many workforce plans were rather thick paper documents that were hard to scan and certainly no fun to read. In order to be effective, workforce planning must be integrated into every major business decision and every other business plan. If each of your managers is not constantly thinking about the future (and whether there will be an upturn or downturn) you cannot succeed. No document can replace anticipation.
- Statistical complexity. Many early workforce plans were highly statistical in nature. Statistics and data are important to managers ó but only to a point. Effective plans use language and statistics that managers can easily utilize and understand. Plans that require a Ph.D. in Mathematics to understand cannot succeed.
- A decision filter. The ideal use for a workforce plan is that it is used as an idea and program filter. It becomes a filter, or funnel, that all major business decisions should “pass through” to ensure that the talent needed to carry out the ideas will be available. Just as financial resources must be available for a program to be viable, so must human resources necessary for be available for workforce plans to succeed. Effective workforce plans are decision tools. They tell you what to do “more of, or less of.” Unfortunately, many workforce plans were so vague that individuals could interpret them to mean anything they wanted. Effective workforce plans tell you what to stop doing.
- Workforce plans’ availability. WPs were thick paper documents and they certainly weren’t available online. They were written in an “academic” format, and as a result, they were often hard to scan or even understand. To make matters worse, workforce plan distribution channels were often purposely restricted. Limited access means limited use.
Data Quality and Availability
- Bad data means bad planning. In the 1980s the amount and the quality of workforce-planning-related information that was available to HR was minuscule by today’s standards. Without the ability to connect databases and analyze complex trends, HR planning was forced to “guess” ó or, all to commonly, to utilize “straight line” forecasts (for example, assume a 5 percent increase per year). Without great data or data analysis capabilities, workforce planning cannot succeed. It is the accuracy of the forecasts that drive the rest of workforce planning. If they are incorrect you lose all credibility.
- Data sharing. The rapid sharing of information is essential in workforce planning. The primary reason sharing is so essential is because all forecasts rapidly becoming inaccurate as assumptions about the business environment change over time (as they always do). Not only is a lack of data sharing between business units and mid-level managers a problem when creating forecasts but sharing is also essential for refining forecasts after a plan becomes operational. No one forecasts accurately every time. The very best continually refine their forecasts and view the process of rapid refinement as a critical success factor.
- Internal only data. Many workforce plans were developed utilizing no external data or environmental sensing element. They consistently excluded potential actions by competitors and potential environmental changes. Not only is an internal-only process naive, but it also makes forecasts unreliable in a fast-changing world. To further compound the problem, the basic assumptions that were made in the plan were not continually revisited or monitored to ensure that these assumptions didn’t change over time.
Workforce Plan Elements
- Periodic review. Because the initial process of developing workforce plans took so much management time, many managers refused to review or revisit the plan more than once a year. Unfortunately, in order to be effective, workforce plans must be integrated into the standard business review process. This means they must be reviewed biannually at the minimum, and as often as quarterly.
- Guesstimates. HR made many broad assumptions about the business, which were painfully naive. Plans that are based on subjective judgments rather than “painful logic” and data will fail. In addition, unless the plans are pre-tested on line managers, many completely out-of-range estimates are likely to occur.
- Practicing scenarios. One of the most effective elements of workforce plans is when managers are periodically encouraged (or forced) to continually do scenario planning. Without the continual use of best/worst case and if-then scenarios, most workforce plans become little more than academic exercises.
Managing the Workforce Planning Unit Within HR
- Learning on the job. Unfortunately you cannot get a degree in workforce planning. Most universities don’t even offer a semester-long course in workforce planning. The consequence is that most HR planners are forced to learn on the job. Most are also career HR professionals with limited strategic business experience, no forecasting skills, and limited access to confidential strategic business plans or strategic data. Without a great deal of consulting help, the learning curve for “ad hoc” workforce planning teams can stretch into years. Planning and forecasting should not be volunteer assignments or learn-on-the-job skills.
- Resources. Most HR planning functions were understaffed and some even had no independent budget of their own. Planning without resources cannot succeed.
- Involving unions. Where unions existed, quite often they were completely omitted from the workforce planning process. As a result, they were not prepared for tough times and fought the workforce reduction actions recommended by management.
- Quality, not quantity. Many workforce plans omitted diversity, while others failed to define the needed “quality” (skill level) of the workforce. Instead, these forecasts focused exclusively on the “number” of employees that would be available or the number of employees that would be needed. Without looking at the quality of the available talent, workforce plans can only have mediocre impacts.
Those that fail to study and understand history are bound to repeat it. This famous thought can be applied directly to workforce planning. If you don’t understand precisely why workforce plans fail, you are likely to repeat the catastrophic errors made by others. But you won’t be alone, because workforce planning failures are as common as the fleas on a dog. Fortunately, when workforce planning avoids the above “pain points” it has a high ROI. So don’t hesitate. Use this failure list as a learning tool to aid you in developing a simple, focused, and effective workforce plan.
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