How to get strategic workforce planning right

Nick Kemsley of Henley Business School continues our series on using data and statistics more effectively in HR.

Planning the future needs of the workforce is not about producing a big spreadsheet full of numbers. By the time this data becomes clear, it may be too late to do anything about the gaps in capability, as the first part of this article explained. What is really needed is to be able to predict organisational risks to the business strategy in time to mitigate them. In order to do this, you need to generate data.

The person skilled in strategic workforce planning takes “it depends” and works with it. Depends on what? What are the options on the table? Do they imply different resource approaches? Do you broadly see the need as about the same, less or more? How much more – a lot, a bit? It is a game of deduction, trying to understand, in the absence of hard facts, where we think the key needs are and how they might change with the differing strategic options under consideration. What are the critical needs? Which needs appear common to all scenarios? How sensitive do we think the needs are to various factors?

Business strategy

Once we think we have an adequate sketch of the landscape, we need to apply ourselves to what this might mean in terms of risk. What is the scale of the need, how hard is it to address and how critical is it to the business strategy?

When this is done, we don’t have exact answers, but we have enough to do a number of things:

1. Use the analysis to inform the strategy – your business may change its view around an element of the strategy if it appears that the organisational implications of following it outweigh the benefits or raise unacceptable risks. For example, you might see the impact of local employment legislation in certain markets creating far higher employment costs in practice than are assumed by the strategy.

2. Put in place mitigation strategies – for those areas where there is a view that not acting to start addressing a gap would result in a risk to the strategy. Examples are when managers have a view that significant numbers of a particular hard-to-source skill set are likely to be needed, and that this will require the creation of partnerships with universities that will take time to establish. Another might be where the development of a different employer brand is key to attracting a new kind of person to the organisation.

3. Begin to align operational capability to supply against what are seen as the key planks of the strategic workforce plan, for example, shifting the emphasis of development activity to supply more of an existing skill set, or creating commercial relationships with different third-party resourcing suppliers.

Specific data skills

Henley Business School’s Centre for HR Excellence has identified some specific data skills required to maximise effectiveness at working with macro-data. These are different to some established data skills in that they relate to the ability to work with unformed data, rather than ways of manipulating established data.

1. Scenario planning – ask: “What if?” Understand the key drivers for the resource requirement.

2. Limiting – ask: “What is the best/worse case scenario in terms of resource requirements?” Understand the “left and the right” of the need so that you can understand the playing field.

3. Scaling – is the need broadly the same, less than or more than now? By how much – twice as much, 10 times as much, or more? Get a feel for the size of the need.

4. Risk assessing – how sensitive is the organisation to mismatches in the resource supply versus the need? Which are the showstoppers?

5. Mitigating – what implications are common to all/most scenarios? Which bases need covering until we know different? Which needs feel most difficult to address?

Strategic workforce planning

Henley has now discussed this idea widely in the HR community and found a lot of agreement among HR leaders that working in this way is key to unlocking the potential of strategic workforce planning. When they look at their HR functions, however, they do not see as many people with these macro-data skills as they would like.

This is hardly surprising, in a way, because we find it easier to develop people whose relationship with data is far more transactional, built around a model that assumes that the data we have is sufficiently well formed to be able to kick off our operational processes, and that it is the job of our business clients to provide us with it. This is flawed because the business is usually in the position where it has exactly the same issue – things are still up in the air and clients need help to move from the plurality of possibilities to a sensible assessment of the risk, and therefore strategies to address.

Translating strategy into organisational plans

This is a business reason but it is only reasonable that HR should step up and take responsibility for helping to bridge the gap that we have in translating strategy into organisational plans. Why HR? Because HR owns the operational processes that this data eventually feeds, and the means of delivery of people capability into our business.

If you take this need, and then overlay the fact that we may lack some of the breakthrough skills in HR, it raises the question – why should this only involve HR people? In fact, HR may well be the driver of the process, but some more progressive organisations are recognising that it doesn’t really matter where you find these skills in your business, so long as they are harnessed in service of the creation of strategic workforce plans that make a difference. As such, strategic workforce planning becomes a cross-functional affair, involving recruiters, business planners, financial controllers, project and business clients, etc.

Strategy process

Furthermore, the outputs of strategic workforce planning must not be limited to an HR application. Yes, they must be used to create resourcing and development strategies, but they must also be fed into the strategy process itself, budgeting and financial planning processes, and the promises that the business is making to the market around the timing and cost/benefit of various elements of the business plan.

So, in summary, there is a critical and powerful connection that can be made for HR and the businesses it serves through well-worked strategic workforce planning. The biggest success factor here is not the implementation of a swanky new system, or the creation of spreadsheets that are visible from space, but the ability to change the conversation from a numbers-in-boxes mentality to a scenario-based judgment and risk assessment. There needs to be more recognition that strategic workforce planning is much more about individual capability and the way in which HR harnesses particular skills within the organisation.

Note: For the Henley research, a total of 86 senior HR leaders (mainly HR directors) across 26 industry sectors took part in the survey, more than 60% of whom were from multinationals. Eighteen in-depth face-to-face interviews took place with HR directors in well-known global organisations.

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Nick Kemsley is co-director of the Centre for HR Excellence at Henley Business School