Strategic Workforce Planning

Strategic workforce planning is the process of matching workforce demand and supply over a foreseeable time period. Organisations conduct workforce planning that builds upon quantitative activities such as headcount planning and workforce analytics, and use these data as part of qualitative decisions to support and implement organisational strategies.

Workforce planning allows organisations to better meet the challenges of a rapidly changing economy. By using business strategy to align shifts in demand with the existing and future supply of human capital, organisations optimise the workforce to meet business goals, increase market share, and improve employee engagement.

When formulating a strategic workforce plan, one needs to take into consideration the external and internal operating environment, i.e. business or market-level and corporate-level strategies. This will ensure a good balance of strategy-based demand forecast – Strategic Priorities, with intelligent supply channels – Workforce Priorities. Besides considering Strategic and Workforce priorities, we need to look at the resource and process capabilities, i.e. Process Priorities as an input to fulfil the workforce or resourcing plan.

Recently, we sat in a meeting with senior staff responsible for large-scale strategic workforce planning in Singapore. After explaining our perspectives, one replied: “But how do you plan if the nature of work is not a process?”

Following our experience, there is always a process. A sequence of tasks needed to be performed is a process that determines the type of competencies and profile of workforce needed. If these tasks cannot be listed, workforce planning is an illusion. We cannot plan something that we do not understand.

No plan is totally accurate, the workforce plan needs to be reviewed and updated regularly to ensure that approach and tactics deployed for fulfilment of the plan are valid and cater for changes in demand and in supply.

Workforce planning is not a one-way street that starts with strategy and ends with workforce supply. It is rather an iteration of strategic, process and workforce priorities. Strategies may change because of the availability of new ways of running processes, seen at many service providers who shifted their focus online. Processes may be varied due to the availability of enhanced workforce competencies, seen in many organisations who build upon the drastically enhanced communication channels of their staff to the benefit of employees and customers likewise.

If you don’t know the tasks you want to plan workforce for, your workforce planning is at the mercy of chance!

The following sections show some strategic workforce planning practices that could help tackle some major issues:

Strategic Priorities

Expecting the Unexpected

Workforce planning for a stable business that produces the same kind of product or service year over year with a certain annual increase in volume is a no-brainer. In this kind of company, customer and employee satisfaction is constantly measured in order to detect needs for potential adjustments in the workforce, antennas are out to see what the competition does and market research knows exactly what comes next. Unfortunately, this kind of organisation does not exist very often.

More often than not, internal or external factors disturb the ideal world. Can we be prepared for everything? No, we cannot. However, we can try to be prepared for the more likely scenarios. A series of “What if… ” questions and the respective answers would help to make the workforce plan more robust.

“What if we have the usual percentage of staff leaving this year after bonus pay-out?” is a rather simple example. Some organisations start on recruitment and selection even before they receive the resignation letters. They need to do this because the notice period is usually shorter than recruitment cycle time plus settling-in period.

“What if we win this rather large project for which we need a large number of additional engineers?” is a common question in construction companies. How do they handle the often large variation in workforce? This seems to be a mix of proper planning and gambling.

In most situations, having proper HR metrics in place and running respective analytics frequently helps avoiding surprises. If you would do this, you would find out, for example, that a large percentage of your staff with similar age profile and similar skills has joined at the same time when the unit was formed and you would not be surprised that all of them will leave at about the same time.

Frequently measuring customer and employee satisfaction may give additional information for future workforce planning considerations.

Focussing on Core Competency

Workforce planning should focus on what business activities are about. Transactional support activities like finance, IT or HR processes might be candidates for outsourcing in many organisations. By doing so, the planning for those activities is left to the specialists who might have more volume, better IT support and more competent workforce to keep this kind of processes efficient and productive.

However, hasty moves to outsourcing may result in broken processes, employee and even customer complaints and higher costs. Outsourcing is a major change and needs to be prepared carefully. Therefore, proper workforce planning for these rather transactional activities is easier than embarking on outsourcing.

Process Priorities

Planning Workforce for Transactional Activities

If the tasks are laid out in well-structured and stable processes, the quality of prediction is quite high. Industrial processes in manufacturing workshops or at assembly lines show this kind of characteristics. Similarly, service processes like loan approval at a bank or claims processing at any HR department are often well-structured and transactional, too. Quality of prediction is rather high if there are no drastic changes in the processes.

Predicting the workforce needed for this kind of processes seems to be easy. If the demand increases and the process stays more or less the same, accuracy of prediction following the cross-multiplication will be high. However, this is allowing the increase in workforce proportionally to the demand, i.e. never getting more productive, never becoming smarter.

Bending the straight line of correlation between demand (Takt Time) and workforce (FTEneeded) is only possible by reducing the processing time, i.e. by changing the way the work gets done. Methods like Business Process Reengineering as well as Lean and Six Sigma are frequently deployed to do exactly this – with remarkable success.

Planning Workforce for Non-Transactional Activities

“But every day we handle different applications; no two applications are the same” is a common response when employees from less transactional environments are asked to describe what they do. It seems that planning the workforce for environments where a range of different tasks with apparently little repeatability is impossible.

But is it? A good portion of obviously non-transactional processes with no repeatability show a certain degree of pattern, i.e. structure – just on a larger scale. For example, customer applications for approval of import of certain devices are totally different from Monday to Friday. Even from January to February there is little evidence that the cycle repeats. However, the percentage of simple, medium complex and complex applications turns out to be repeatable and with it the amount of time needed to do the job.

It has to be taken into account that the demand variation in this sort of environment is much higher and it has to be planned for it. At the same time, studies have shown that the working pattern on this kind of task is different to the pure transactional tasks driven partially by the environment and type of staff doing this non-transactional types of job.

Predicting the workforce for a less transactional activity such as policy writing, processing of complex applications or managing employee engagement, etc. seems to be harder since the activities have much more variability in processing time needed. However, it pays off to collect information on the big picture, i.e. the demand variation over time, and on the sequence of work in order to understand what people actually do during their office hours.

And, wouldn’t it be better if we had more structure in the so-called unstructured processes anyway? Go to Gemba and study how the work gets done. You will certainly learn something new, that usually leads to better planning and forecasting.

Benchmarking

Benchmarking is a way of gathering data about best practices in workforce allocation. Even here, there is a need to support numbers with Gemba visits. Numbers can be grossly misleading if the underlying details are very different. This may result in wrong assumptions about workforce utilisation, allocation and competency.

Workforce Priorities

Workforce Planning and Resourcing

Workforce planning needs to ensure that workforce with a certain set of competencies is available when needed. Resourcing strategies include Build, Buy, Borrow.

An outstanding example for innovative resourcing strategies integrating very different ways of sourcing for workforce had been the Singapore Youth Olympic Games (YOG) in 2010. Workforce planning for YOG was broken down in five phases with the first one being the preparation and the last one being the dissolution. The five phases required remarkably different numbers and skills of workforce. In order to keep costs low and still deliver extraordinary results, workforce had to be recruited, trained and deployed in a very flexible and yet reliable manner.

This, for Singapore largest event, had been prepared by an organising committee who consisted of more than 500 term-contract employees (Buy Strategy) who knew that they will be out of job in September 2010 (Bounce Strategy). Additionally, the games were delivered by about 1,300 short-term assigned regular staff (Borrow Strategy: STARS were borrowed from ministries, agencies and companies in Singapore), a large number of interns (Build Strategy) who came in as fresh graduates and received all relevant development at YOG as well as more than 20,000 volunteers from all over the world who received some basic training.

After all, YOG was a true example of One Government.

Resourcing Strategy: Build

Nowadays more than ever before, talent management systems are important to help catering for future workforce needs. Retaining own staff and developing them is usually much cheaper than losing staff and re-buying from the market and providing them with the inevitable development. Career planning systems add to the attraction for workforce and help predict future movements. And, systematic career planning including regular career dialogues between supervisor or mentor and staff with the objective of developing individualised career pathways increases retention of staff and eases workforce planning considerations.

Resourcing Strategy: Borrow

In some business environments as well as some public agencies or ministries, resources are needed on a project basis – like for YOG – for a limited time. Taking the government for example, large engineering projects do not start all at the same time but have rather different patterns in their timeline. Peak period for workforce needs in project A at agency One is not the same as peak period B at agency Two. However, the profile of engineers needed is quite similar. Hence, using some of these engineers first for project A and then for project B seems to be a good idea.

Smart workforce planning for a large conglomerate of companies or the said government would include synchronising projects so that the workforce need is somehow spread out nicely and balanced. This would reflect a macro perspective on a very powerful Lean approach: flexible workforce.

The younger workforce may even like this approach of being deployed on a project basis with very different projects and environments to work in.

Resourcing Strategy: Buy

Workforce planning needs to ensure that new hires are available when you need them. This means workforce planning needs to cater for the recruitment process and all its variables as well. If your business needs a certain number of new employees with special skills, the recruitment can be quite complex.

A flexible recruitment strategy helps meeting varying workforce needs.

Workforce planning needs to include a proper recruitment strategy to cater for fulfilment of job requests. Knowing the capability of your recruitment process is key. Therefore, a powerful set of metrics should be in place that enables short-term and long-term HR analytics.

Workforce planning does not necessarily lead to the recruitment of full-time employees. Today’s young workforce may wish to enjoy more flexibility due to career anchors around “Lifestyle” or “Independency/Autonomy”. They may agree with term-contract employments which serve many organisations well.

Being flexible in your recruitment strategies helps meeting varying workforce needs, keeping the costs acceptable and may even better suit the career aspiration of especially the younger workforce.

Flexible Workforce

Many organisations are structured in a hierarchical way from top to bottom with staff who is very specialised in certain tasks only. Some work units deploy only one, two or three people who are equipped with a very narrow competency set enabling them to focus on one job which they fulfil in high quality.

A very basic Lean principle says, the smaller the units that are to complete certain tasks, the less flexibility the “system” has. Ergo if we were able to build competency and mind-set for flexible workforce, we would be able to make a major step in process efficiency and would have less headache in workforce planning.

Job Redesign

Planning Workforce for dusty, outdated processes is not very wise. Workforce Planning offers an opportunity and the duty to ask questions like

“How will we be doing this job in some years’ time?”

“What kind of workforce would we need by then to complete this job with best results?”

“What kind of competencies would we need by then to accomplish this?”

Since nearly all organisations – even and especially government ministries and agencies – are driven by cost benefit considerations, the answer “We will be doing the same thing” will not get many supporters. Therefore, take the opportunity and rethink the way the work gets done. After that, redesign the jobs to the benefit of process and staff. The output of this will give you a better foundation for your workforce planning.

As a side effect, your staff retention may increase and your recruitment may benefit as well. Today’s graduates do not wish to work in yesterday’s process environments. And they are right.

Conclusion

Strategic Workforce Planning is a multi-faceted approach designed to prepare for future workforce needs. It goes far beyond understanding strategy and allocating workforce numbers to it. Since no-one is able to predict the future, the best workforce planning approach is the one that caters for many different scenarios and establishes a robust system to deal with them.

This robust system will help to tackle even tasks and processes that are less structured, less transactional. Efforts should be made to increase understanding of these tasks and to put some structure in place. This usually pays in terms of workforce allocation and process efficiency likewise.

Undertaking Workforce Planning should always be supported by job redesign and process excellence activities to ensure planning workforce for an updated process, rather than an outdated one.