At the start of this year, the Chartered Institute of Personnel and Development said that last year’s “jobs enigma” has made it difficult to predict the labour outlook for 2013. During 2012, unemployment fell despite predictions to the contrary, yet there were staff cuts in the public sector, people working more hours in order to keep their jobs and a rise in part-time work – all disparate trends that together made the jobs market a tough one to call.
So when it comes to workforce planning for this year and beyond, HR professionals could be forgiven for exercising some caution. If external factors prove so unpredictable, what value can be drawn from producing long-term forecasts of the organisation’s recruitment and resourcing needs?
According to Richard Haycock, HCM sales director at software company Oracle, strategic planning has never been more vital: “Ironically, the volatile economic environment we’re in has been a catalyst for taking organisations back to basics. Looking into workforce planning can help companies to realise the things they need to do to make solid decisions.”
The idea here is that the more proactive HR departments can be, based on the data they have to hand, the more prepared they are to react to uncertain developments.
In the past, however, workforce planning has often been associated with compiling basic metrics, such as salary details, and confined to one department such as finance or recruitment.
Arvinder Dhesi, UK head of talent management at Towers Watson, explains: “There is a need for much more thorough workforce analytics to examine current and historic trends. This provides the foundation for a variety of scenarios to be modelled to examine a range of possible ‘what ifs’.
“This approach, coupled with a scan of the external labour market, means companies can get significantly better at understanding how their workforce will change over time based on expected workforce experience, and also reflect future business plans.”
With this in mind, savvy organisations are bringing many more strands of information into the analysis they do in order to plan, and involving more parties in the discussion.
Nick Kemsley, co-director of the Centre for HR Excellence at Henley Business School, describes the ideal approach to workforce planning as a balanced handling of risk: “You need to have long-term planning skills, but also make sure you’re effective and profitable right now. It’s a case of balancing short- and long-term planning. The trick is to bring these disparate dilemmas together by talking about risk – and this is where your CEO’s ears will prick up.”
Making good use of available data to define that risk could mean HR gets a greater say in the wider business strategy, adds Kemsley. So rather than announce ambitious plans to open new facilities in an emerging market by a particular deadline only to discover that the labour laws there will make that almost impossible, this knowledge will help departments to weigh up the risks and ensure the company follows a realistic path.
“Proper, strategic workforce planning should inform the business strategy itself,” he concludes.
Good workforce planning is also much more than drafting up a succession plan for your executive board, according to Gary Miles, director of international operations and associate relations at Roffey Park Institute: “It’s difficult to do that level of planning in such a volatile environment. What organisations should be looking at is a ‘crash’ successor should something happen to one of their key people. It’s about balancing the need to plan for years ahead with external influences such as emerging markets or technology developments.”
What practical steps should organisations take to strike that balance? Most HR systems will accumulate lots of structured data around employees’ length of service, absence and areas where recruitment is a problem, among other things – and applying analytics across many different threads of information can provide real value.
“Simply reporting [the data] doesn’t always help you understand what’s going to happen in the future,” explains Haycock. “Use analytics on different areas of the organisation, correlate them, and also do this against external benchmarks. This is where you get your scenarios, your ‘what-ifs?'”
Strategic workforce planning
A good workforce planning exercise may show up that if a project is delayed by a certain number of months, it will be easier or more difficult to recruit, for example. But while HR should certainly be involved and facilitate the discussion around strategic workforce planning, it’s not vital that they “own” it, explains Kemsley.
He says: “It’s about who can bring the right skills to the table. The organisations who tend to do this well bring together a cross-functional team. You need people with skills for a scenario-based, ambiguous discussion around your strategic options, whether they’re from recruitment, OD, finance or business planning. HR can own the conscience and facilitate the process, but the notion that they can do it on their own is outmoded.”
It’s also important to ensure that the plan evolves with the organisation and any factors influencing it. In its guide to workforce planning, the Chartered Institute of Personnel and Development advises: “To be useful, workforce plans should be a ‘living’ document. They need to be constantly refreshed and reviewed rather than sit on a shelf.”
Review it regularly
Kemsley adds that any organisation anticipating a major strategic change should also come up with a workforce plan and review it regularly – much will depend on the type of employer and the challenges it faces.
Real strategic workforce planning will not help you predict how the economy will behave, or make it any easier to recruit talent in areas of skills shortage. But by having good analytical data to hand, organisations can hopefully prepare for both short-term shocks and long-term needs.
The role of technology in workforce planning
Although experts often describe workforce planning as more of an art than a science, the role of software in helping to gather and analyse workforce data cannot be ignored. Analytics tools that can be installed to interact with the information in HR systems are becoming increasingly sophisticated – and many are available as cloud-based software so that they are quick to install and integrate with your existing systems.
Phil Wood, European head of pre-sales for HCM for software company SAP, explains: “There’s a continuum between strategic workforce planning, where you’re looking at your business plan and the resources you need to fulfil it, and the tactical, where perhaps you need to re-do your staff roster because someone is ill. Technology can help you to drive much more efficiency so HR can focus on the strategic.”
“Big data” will also be a key trend in HR and recruitment through 2013 and beyond. This describes the way in which organisations use multiple strands of data to come up with trends and predict future behaviours. Increasingly, organisations will also use technology to analyse unstructured data such as discussions on networking forums, to help predict workplace scenarios and act upon them.