What Separates Great Workforce Planning From an Average Effort? Part 1 of 2

Few would argue that workforce planning is not a hot topic these days. Just five short years ago, it was nearly impossible to find a titled role for workforce planning in corporate America. Yet today, more than 54% of the Fortune 100 have dedicated FTEs to the activity.


Even more impressive is the fact that the growth in the application of workforce planning is not just a U.S. phenomenon. Around the world, it is becoming a highly visible strategic activity.

The rise in popularity for workforce planning is no surprise given the highly visible issue surrounding the impending retirement of the baby boom generation, the globalization of work, increasing turnover rates, changing workforce ideals, and increased competition for recruiting top talent capable of delivering innovation. While the mandate for workforce planning is strong and supported by senior leadership, execution has, in most cases, been weak.

Like many analysis and planning activities in HR, most of the work being executed isn’t translating into actions that demonstrate a significant business impact. Based on previous observations, I’ve noticed 13 key factors that differentiate great workforce planning efforts from mediocre workforce planning efforts. I’ll give you the first six today and the next seven tomorrow.

Factor #1

Communicate the probability of specific business objectives not being met as a result of workforce issues.

Both senior executives and operating managers are results-oriented people. Each year they are given specific business objectives and targets. Managers think about these business objectives constantly, because their bonus and career growth depend upon them meeting their objectives.

Failing to tie workforce-planning efforts to specific objectives and initiatives limits the visibility managers will give them on a day-to-day basis, which is required to drive action. Successful workforce planners abandon the HR speak and the use of generalities, and draw a line in the sand indicating what specific objectives will likely be impacted and the workforce drivers behind the issue that must be addressed within a specific time frame.

Instead, focus on product time to market, market share, customer service, product innovation, sales, revenue, and profit. If you don’t know your organization’s major business objectives by unit, work with leadership to identify them.

If you can’t do that, work with compensation to identify each of the senior managers’ bonus criteria, because they almost always directly reflect most of the firm’s major business goals and objectives.

Factor #2

Quantify the dollar consequences of workforce issues that affect organizational productivity or innovation capability.

Most who develop workforce plans report upcoming problems using HR terminology to describe “HR problems,” including headcount needed, skill shortages, or leadership shortages. Unfortunately, these HR problems, although perceived as being important, rarely drive senior management or line managers to take action.

The primary reason why these HR problems don’t generate concern or action is that the impact of them is rarely enumerated in terms that senior leaders and managers understand: money! Everyone in senior management would agree that the “language of business” is money, so grab managers’ attention by translating whatever dire consequences or opportunities you forecast into dollar impacts.

For example, convert predicted gaps between workforce supply and demand into business-objective oriented impacts, such as a delay in time to market of 35 days. Be sure to translate this into a negative dollar impact if no action, or the wrong action, is taken.

In another example, let’s say an analysis reveals that a shortage of product-development professionals will delay the initial development of a new product by 90 days. Working with the marketing and sales functions, it is determined that the delay will have real business impact of $21.9 million and an opportunity cost of $54 million. Working with line management, it is identified that the problem can be 95% mitigated through a combination of contingent staffing ($892,800); outsource components ($1,348,600); and overtime ($223,200). In this example, the proposed solution mitigates 95% of a $79.5 million dollar business problem at a cost of $2,464,600.

Companies such as Valero Energy, AIMCO, and HealthEast have all excelled in demonstrating the dollar consequences of acting in response to workforce planning data.

Factor #3

Assign a “probability of occurrence” to forecasted talent-management problems and opportunities.

Telling executives that something “might” occur generally does little to spur action, because executives who live in a competitive world are inundated with threats on a routine basis. It’s much like forecasting a hurricane. If you say that a hurricane might hit, you’ll generate some minor interest. However, if you change your forecast to say there is a 99% chance that a hurricane will hit, literally everyone will pay attention because the probability is so high.

Assign a “probability of occurrence” to each forecasted impact. Rather than saying, “There will be a shortage of nurses to cover the third shift,” forecast that there is a “97% probability that the hospital will be unable to maintain a nurse-to-patient ratio required by current state law, thereby reducing the number of beds that can be occupied by 21%. This reduction in the maximum patient load will result in a decrease in revenues of approximately $1.033 million per day as long as the staffing issue persists.”

Factor #4

Forecast a specific time element for when problems and opportunities will likely occur.

Unfortunately, even forecasting the probability of a problem occurring will not guarantee that managers will take action. Using the hurricane example, if you forecast a 100% chance that a hurricane will hit but do not provide a timeline, you fail to establish the immediacy of the issue, thereby reducing the likelihood of action.

Forecasting what quarter an issue is likely to occur is ok in some organizations, but if you really want to be world class, forecast the occurrence of the issue down to a month. For example, if you forecast that there is a 99% chance that your head of marketing and sales will retire during the first quarter of 2008, I guarantee you senior managers will pay attention to your workforce plan’s solution to the impending retirement.

Factor #5

Specify where within the business the problem or opportunity will likely occur.

If you fail to establish the specific location of an issue, managers might assume the problem does not apply to them. If you want to guarantee that key individual managers pay attention to the problems you forecast, specify which regions, business units, functions, managers, and jobs that your forecasted issue will directly impact.

Factor #6

List specific action plans for each high-probability or high-consequence issue forecasted.

One of the key failure factors for most workforce planning efforts is that while they identify probable workforce issues, no one is held accountable or empowered for developing solutions. Because workforce-planning professionals are rarely empowered to develop recruiting solutions, development solutions, or outsourcing activities, most efforts present data but no action plan to mitigate an identified issue. Great workforce planning efforts must present solutions in tandem with the problems and have established authority to coordinate or procure solutions in conjunction with business leaders impacted by the issue.

In tomorrow’s conclusion to this article, look for the remaining seven factors that differentiate great efforts from mediocre efforts.

About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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