Another People Analytics Lounge community gathering, another hot topic! This time we got together to learn all about Strategic Workforce Planning from two world class experts: Alicia Roach and Adam Gibson. The discussion included nuanced perspectives in the context of the current economic climate, as well as actionable steps.
Read on to find out more about:
- The value of strategic workforce planning
- Can strategic workforce planning prevent layoffs?
- How to segment the workforce, for strategic workforce planning
- Workforce planning for your company’s critical skills
- How to embed it into your company for the first time
- How will AI influence strategic workforce planning?
Alicia’s and Adam’s perspectives on Strategic Workforce Planning
Alicia Roach is the founder and CEO of eQ8 – a dedicated strategic workforce planning platform. She has extensive experience in strategic workforce planning and fell in love with it because of its integrated approach of finance, HR and business strategy.
To her, strategic workforce planning helps answer the most fundamental question of any organization: what is it going to take to reach its goals? This will directly impact what the agenda is.
To ask yourself this question as a company is to recognize that the workforce is the execution vehicle for all strategic, operational and digitization efforts. Without strategic workforce planning, a company will inevitably be left behind.
Adam Gibson is a Strategic Workforce Planning Leader at EY. He had his first taste of the topic about ten years ago, in the army, when the term wasn’t even well established. Throughout his career, he has helped multiple top organizations and, fast forward to 2021, he authored the book ‘Agile Workforce Planning’.
In the past two and a half years, he has led EY’s strategic workforce planning practice. To him, it all comes down to connecting what the company aims to become with the way that work is done. He hopes to create a better working world by enabling companies to focus more and more on strategic workforce planning.
The value of strategic workforce planning (SWP)
The drastic changes in the global economic climate in the past years have placed talent related issues at the forefront of organizations. They’ve also brought strategic workforce planning into the spotlight, illuminating its value in the current economic dynamics.
For Alicia, this climate has made talent-related issues to “visible to all business leaders, not just to the HR leaders”.
“I believe that now is the prime time for HR functions to step up and use the momentum to enable systematic changes. SWP enables organizations to move from reactivity to responsiveness, to think beyond observations of short-term trends and to be more coherent when it comes to looking towards the future.”
In Alicia’s view, this reactive state has been so damaging for so many years for businesses and it takes up a great cost base for organizations.
“As soon as there’s any amount of economic pressure, the workforce is at risk of being impacted and we see so many poor decisions being made.
“Think of the blanket workforce reductions which followed multiple recruitment freezes in the market, seemingly carried out without a deep understanding of how different workforce segments would drive activity further, or of what the companies’ new transformation and digitization agendas would look like”, says Alicia.
Adam weighed in on the ways SWP allows companies to adapt and survive the tumult.
“When you develop a coherent strategic workforce plan, you are able to answer deeper questions about the future state of the company, ways to continue to survive and progress, what different segments of the workforce are facing and what roles will be critical to achieve the strategic objectives.”
“For example, a specific workforce segment might be under short-term pressure to perform activities that are at risk to become redundant with a potential workforce reduction, but these employees might actually already have most of the skills needed for when the company changes its strategy.
“Overall, this way of responsive planning presents companies with the opportunity to successfully shift from one strategy to the other, as well as to support their employees to adapt and grow”, he says.
Can strategic workforce planning prevent layoffs?
While layoffs cannot altogether be avoided with strategic workforce planning, Alicia and Adam agree that it can definitely help organizations define a more exhaustive set of options for fulfilling their strategic needs, while trying to do right by their people too.
Adam says: “Through the process of planning, you could then come up with the most effective and balanced way forward.”
“Access to resources is the most overlooked issue when deciding on a layoff round without SWP. The less time an organization has to prepare for the layoff round, the fewer options they actually have to access the necessary resources and the more it costs. Numerous layoffs happen because organizations don’t have sufficient time to be able to think of what the alternatives are”, he says.
Talking about dynamic scenario planning, Alicia remarked that SWP allows you to establish a baseline for how an organization heads towards its goals.
“Even in case of a major unforeseen events such as the Covid-19 pandemic, you can revisit the existing baseline and adjust your scenario models dynamically, then understand how different initiatives, projects, workforce segments and rebound rates are likely to be affected. The result is a realistic picture of where the organization is heading.”
The solution for unexpected financial burdens may also lie in the talent itself: the same employees might be able to add value in a different way than initially planned.
“You can reskill workers. The holding cost of these workers might make more economic sense than laying them off, especially when culture preservation is important. Market disruptions, such as technological ones, are to be expected and accounted for, when planning ahead and understanding what skills are needed to change directions”, says Alicia.
“A clear example of this is the travel industry in the United States: research shows that the talent shortage they are currently experiencing because of the layoffs resulted in a more negative revenue impact than expected, as well as reputation damage in the eyes of the customers.
“Even when there is no opportunity to prepare employees for major changes in the business, we can still have that conversation in advance. If you help people prepare for a potential transition of the company, they can be more flexible and adaptable in the future.”
How to segment the workforce, for strategic workforce planning
The quality and accuracy of your workforce plan depends on how you define the workforce segments in advance.
For Adam, there are two main reasons for segmenting the workforce for workforce planning.
“Firstly, it helps you understand the workforce in depth and how you can best define it. An organization built around cost centers is different from one with core teams, or one that is split by capabilities.
“Secondly, segmentation gives you insights into the kind of roles you are dealing with – especially when it comes to the critical ones. You might also focus on only a part of the critical roles.
“For example, if a team’s retention and attrition are high, you might want to zoom in on them. If one out of these two reasons stands out in an organization, you can adopt specific methodologies and not others.”
Alicia believes that you can also view segmentation as a sign of a company’s maturity.
“In the early stages, a lot of them will have a traditional vertical structure.
“Therefore, their hierarchies are mostly based on the organizational structure and they have typical departments and job titles.
“Starting building your workforce segments and evolving your approach over time is more valuable than getting it right the first time. You can start by aligning on the job titles in your company.
“What is important is to know what question you are trying to answer about your segments and what problems you are trying to solve.”
Workforce planning for your company’s critical skills
Taking about workforce planning for critical skills, both panelists agreed that as the company’s structures evolve over time, the segmentation options become more nuanced, taking into account critical skills for the business.
For them, a critical skill or even role might be necessary for the development of your business strategy, or for its execution, or part of your future competitive advantage. Moreover, they might need to be prioritized if they are too many.
“Most organizations are missing this longitudinal, long-term view of the skills they absolutely need to succeed and the time it takes to develop them or bring them into their teams. You need a long line of sight, often of several years, sometimes decades, to have the level of competency in-house. SWP enables you to identify opportunities for organizational growth and maturity from a skill perspective, for the long term”, says Alicia.
Often, hiring managers expect the talent acquisition function to help build big teams urgently. With SWP, we try to prevent this overwhelm and achieve coherence in the entire employee life cycle, from the go-to-market strategy to the talent attraction strategies, to re-skilling your current workforce.
“SWP helps you distill the most impactful actions across the critical workforce segments and throughout the whole employee lifecycle, which enable the business to achieve its objectives”, says Adam.
As a takeaway, you should define what specific actions the company needs employees to take, as well as the level of skill required.
As Alicia and Adam said, ask yourself this: What is the value chain of your company’s competitive advantage? What is the skill that manifests through this value chain?
How to embed strategic workforce planning into your company for the first time
Another hot topic when it comes to strategic workforce planning is how to introduce it into your company, as there is no cookie cutter approach to building an effective SWP.
“As different companies aim to achieve different outcomes with SWP and work with different models. The general recommendation is to define clearly what your business needs and what you are trying to achieve with SWP, and then work backwards”, says Alicia.
Looking at obstacles to introducing SWP into an organization for the first time, Adam reflected on understanding the financial side of the business as a typical pain point of HR professionals.
“The typical HR language is anchored in a completely different set of concepts. Understanding and then speaking the right language can get you the credibility you need to have a seat at the table, when organization-wide decisions are made. This is how you also engage in conversations about the heart of the company’s financial issues and start to ask the important questions proactively”, he says.
In Alicia’s view, there are three elements that need to be in place for a SWP initiative to gain traction and to be successful:
“Firstly, you need a sponsor: a supportive partner that is aligned with the intended outcome of this SWP project and with our philosophy.”
“Secondly, you need a process that is integrated with the business planning cycles, and especially with the financial cycles, so it can be well embedded within the business priorities.”
“Thirdly, you need a platform that is scalable and sustainable throughout different iterations.”
As for demonstrating value of SWP for different clients, Adam shared his experience on different scenarios for introducing SWP.
“If you are not sure how to put your best foot forward as an in-house HR business partner into business decisions, you can look at how the business relies on the finance business partners for its decisions and adapt your routine interaction with the board members similarly.
“If you work with clients instead, choose to work with organizations that are ready for transformation, recognize their need for SWP and understand the value your work will bring.
“If, instead, the ask for help comes from the HR team directly and they don’t have a clear budget, there is a high chance that they don’t have the buy-in of the business yet, or that they don’t understand why this would be useful.
Other difficult cases involve the HR person wanting to introduce SWP all at once, or wanting to introduce parts of it to the whole organization at the same time.
“In this case, an intermediary step is to segment the workforce and start implementing the parts of SWP that make the most sense for the business, that matter the most for the stakeholders. If this incipient project turns out to be successful, then the business is likely to ask for more help next, when they recognize their need”, says Adam.
“Bring it back to a specific challenge that can be solved and then aim to shape your approach around it, with clear first steps, while assessing the value and impact of your actions throughout the process. Building a predictive model for attrition with 90% accuracy is useless if attrition is not a problem for the company, says Adam.
How will AI influence strategic workforce planning?
ChatGPT and AI in general are hot topics when it comes to replacing people’s jobs, but the frenzy is not fully justified.
According to Alicia, AI is likely to augment more and more what we are doing in organizations, helping us increase efficiency and effectiveness.
“We do need to ramp up our skills and understand deeply how to interact with technology, in order to make the most of it and understand its complexity. On the other hand, AI can make SWP more accessible, for more than a select group of people in an SWP function.”
“However, it is clear that the human factor will always be needed to understand two fundamental areas in SWP: what the business problem is and what the unique solution is, that solves the business problem.“
Takeaways
In an increasingly complex and competitive working world, companies must identify, utilize and develop the skills of their employees internally, as well as identify new opportunities for the long term. SWP can only be achieved through active involvement of the business and a thorough understanding of the talent and financial landscapes. SWP is a highly tailored process, with a deep understanding of the desired business outcomes at its core.
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