Friday, 11 April 2008

Strategic Workforce Planning

One of the questions I was asked in Singapore but didn’t get time to respond to in the workshop itself was how to do strategic work force planning.

This is a core component of human capital management, helping to set the strategic direction for investment in human capital. It also concerns a key form of talent management (see variety 3 in my previous post). And it provides the basis for effective, future-proofed succession strategy.

Most importantly, it provides the basis for sustainable business strategy – increasingly (especially in China / Asia), talent is the key constraint in developing business strategy. Once this was financial capital – if companies could get monetary investment they could use it to trade and grow. Now, and despite the credit crunch, the key requirement for growth is people / talent and the human capital they provide (which is why people rather than finance, and the HR department rather than the Finance department should be seen as an organisation’s most important resource). Effective work force planning helps ensure an organisation understands and has planned to buy / build the talent it requires to grow (or at least stay in business).

Strategic as opposed to operational / tactical workforce planning focuses on talent groups rather than the whole workforce (if talent has been defined appropriately, this will include the people who will have the greatest net long-term impact on the organisation, and will therefore also be the people that the organisation needs to ensure it can provide enough of in the future).

The key stages in strategic work force planning are:

  1. Forecasting business / talent scenarios. Looking at external macro trends (including PEST – political, economic, social and technological – factors), reviewing the business strategy and the consequences this may have for talent. Note this analysis should include a view to what business advantage can be provided by talent (creating value) as well as how talent can support more obvious business requirements (adding value). Note also that given the pace of change in the business environment, this analysis is best conducted by focussing on the future state rather than looking at incremental improvements from the current position.
  2. Validating talent groups. Checking on what the previous analysis means for how talent and talent management should be defined.
  3. Forecasting talent changes. Predicting how the defined groups of talent are likely to be impacted by the different business / talent scenarios and more micro-level changes, for example demographic changes in these groups, recruitment, retention and promotion rates and the way these are likely to be affected by changes in the business, etc.
  4. Identifying the gap between supply and demand. Looking at where there are likely to be major challenges in providing the talent that is required.
  5. Developing appropriate strategies and measures. Identifying and tracking activities to close the gap.

My normal perspective on technology, despite the development of integrated talent management / HCM systems is that organisations are best of developing sound processes for talent management before they look at automating these. However, work force planning is one talent process that is very difficult to do well without using appropriate technological support.

Organisations that want to develop sound capability in strategic work force planning may want to talk to some of the key vendors in this area, for example Aruspex and InfoHRM. Neither firm follow quite the process I have outlined above, but they do have fairly sophisticated and strategic approaches, and good system support.

However, regardless of the sophistication of the process or the capability of the technology, as always, it is still the people factor that is key in effective implementation of a strategic work force planning approach.

To make it successful, HR also needs to:

  • Engage the business in debate around the importance of talent and proactive planning within talent management
  • Define how HR and Finance will work closely together to provide the required information
  • Gain visible senior level sponsorship and support for the process
  • Clarify ownership and accountability for work force planning (HR and the line)
  • Design an organisation structure that allows you to ‘partner’ with the business.