Why Workforce Planning Is Hot

Workforce planning is currently one of the hottest topics on the planet?? and with few exceptions, recruiting isn’t. Unfortunately, most recruiters see workforce planning as something that occurs beyond their scope, when in fact it could be their ticket to job security during these tough economic times. Why Is Workforce Planning Hot? Don’t take my word for it. Look at any survey of senior managers or VPs of HR and you’ll find workforce planning (or one of it’s many variation like succession planning, HR planning, or building bench strength) consistently listed among their top five issues. There are a variety of reasons why workforce planning is becoming the next key competency in HR and why it is among the hottest business issues. Economic and Business Factors

  1. Being ready for the economic upturn. Accurate economic forecasts are even more necessary during a downturn because senior managers want to “explode out-of-the-box” with the right talent as soon as the economic recovery begins.
  2. Anticipating and dealing with rapid change. The ever-increasing rate of change in the business cycle (“instant bankruptcies” and industry consolidation) requires more accurate forecasting of both the economy and what competitors are doing. Companies must develop alerts, or “smoke detectors,” which give managers advanced warning before minor workforce issues become major ones.
  3. Redeploying resources. As internal business priorities change in response to rapid external change, it is essential that a business be able to rapidly redeploy or redistribute skills and people to business units and jobs with a higher ROI to the firm. Even if you usually forecast well, there will still be cases when you will need to quickly react and adjust by shifting resources within the firm.
  4. Globalization. As business becomes increasingly global and physically separated, it is no longer possible to know the labor needs in dispersed business units and in distant geographic regions by simply “walking around.”
  5. Company size. In a similar light, as companies get larger in size relatively fast (often due to mergers), identifying future leaders and workforce needs becomes almost impossible because you can’t “know” everyone and see them in action. Instead, a formalized workforce planning process that uses technology to connect all and metrics to assess performance is required.
  6. Integration after mergers. As industry consolidation increases (as a result of mergers) the need to have plans to rapidly integrate two workforces and cultures will continue.
  7. Flat organizations. As tight economic times force organizations to cut costs, organizational charts get flatter as mid-level management positions get eliminated. Fewer management positions generally also mean fewer promotions, and consequently the need increases for plans and strategies to motivate, challenge, and develop workers in other ways.
  8. Immigration restrictions. Increased homeland security issues now makes it more difficult to bring in “international workers” in order to fill short-term needs. As a result, better local recruitment plans and remote work options are needed.

Headcount and Retention Forces

  1. Smoothing out the fluctuations in the hire/layoff cycle. There is a desire from managers and employees alike to smooth out the sudden “peaks” in employee headcount growth and shrinkage. The boom and bust cycle needs to end. It’s expensive, it dampens morale, and it hurts a company’s external image as an employer of choice. Effective plans can identify workforce “fat” buildup long before it gets out of control (and thus requires layoffs).
  2. The retirement bubble. The coming “bubble” of baby boomer retirements (as high as 40% of managers at some firms) will mean a dramatic shortage of senior experienced leadership in most companies. Workforce plans are needed to fill the gap through alternative development and staffing strategies.
  3. Predicting retirement accurately. Longer life spans, coupled with the instability in the economy and the stock market, means predicting when workers will choose to retire becomes much more difficult. But more accurate projections are necessary in order to avoid surpluses or shortages of senior talent.
  4. The war for talent. As competition increases for valuable top talent, firms must develop more sophisticated plans and tools to fight off talent poaching. Firms must also simultaneously develop recruiting plans to identify and poach away the very best from other firms.
  5. Increased turnover and its impact on succession. Employee loyalty has been declining over the last few years across the board, due to changing worker values, recent layoffs, and the prominence of the Internet (which makes job searches so much easier). These factors mean higher overall turnover rates and more difficulty in predicting employee tenure. Shorter and less predictable employee tenures means an increased need for both succession planning (because the targeted employees may be gone before they can be promoted) as well as effective “just in time” recruiting to respond to sudden vacancies.
  6. Shifting worker expectations. Changing worker interests (with increased demand for work/life balance) must be forecast in order to provide sufficient lead time to respond to the changing worker needs and interests.

Skill Issues

  1. Candidates’ skill levels. The decrease in the number of technically trained candidates graduating from college (especially in engineering) means recruiting will be more difficult. The quality and skill level of candidates entering the workforce (in many cases) is also on a steady decline.
  2. Employee skill obsolescence and learning speed. In a rapidly changing world, worker skills rapidly become outdated. As a result, it’s important to track the current skills that employees have through automated skills inventories, which would improve the utilization of these skills. Rapid learning plans and strategies are also needed to increase the firm’s overall learning speed and “what works” sharing.
  3. Predicting succession. As the skills needed to do most jobs change more rapidly (or become obsolete), it becomes more difficult to plan “worker succession” because the current skills may be irrelevant for future jobs.

Other Factors

  1. Diversity. As the workforce becomes more diverse it’s essential that both companies and managers prepare for the different and unique needs of diverse workers. Also, as the economic value of a diverse workforce becomes more apparent, the desire to attract and retain diverse workers will also increase.
  2. Weak managers. As endless scandals about senior managers get more publicity and “Dilbertization” drives quality people away from management positions, the overall quality of management will decrease. These lower skilled managers will need more advanced?? but simpler and easier to use?? workforce plans. Firms must also develop processes and plans to identify “bad managers” rapidly.

It’s Now Easier To Do Workforce Planning

  1. Data availability. The increased availability of economic and business data on the Internet makes forecasting much easier and cheaper for even small firms.
  2. Software. Access to enterprise-wide software packages now allows managers to easily collect data for forecasts and to prepare viable workforce plans. Some of these programs already contain analytics (warning alerts) and metrics components that help HR and managers track trends and make more educated workforce decisions.
  3. Scenario planning. The development of “if-then” and “what if” scenarios (scenario planning) and management simulations can help anticipate and improve your responses to events.

Next week, in Part 2, I’ll talk about why recruiting should “own” workforce planning and what steps you can take to start making it happen.

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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