Is your company prepared to secure the talent it will need to maintain a competitive advantage in the coming years? If the answer is yes, you're ahead of the majority. New research from the Institute for Corporate Productivity (i4cp) shows that fewer than half of companies engage in strategic workforce planning to a high extent, and that there are significant differences that distinguish high- versus low-performing organizations.
Carol Morrison, Senior Human Capital Analyst at i4cp, is the author of a new report titled, Winning at Workforce Planning: Turning High-Performance Strategies into Action. The report was originally written for i4cp’s working group, the Strategic Workforce Planning Exchange. Interviews with Exchange members augmented research for the paper. i4cp has done research on workforce planning for a number of years, and the survey on which this report is based is the third iteration since 2009.
As noted, the research shows that fewer than half of companies do strategic workforce planning to a great extent, and that there are significant differences that distinguish high-performing organizations from others. i4cp defines high-performing organizations on the basis of revenue growth, customer satisfaction, profitability, and market share over time.
“We found that high-performing organizations are more effective at workforce planning,” says Morrison. “Business leaders are interested in workforce planning, and companies are actively working on it. However, it still remains a fairly new initiative for many organizations. Higher-performing companies tend to be much more advanced in their workforce planning initiatives and have done planning for a longer period of time. They also tend to be doing strategic workforce planning, which looks out from three-to-five years and focuses on the strategic considerations that can give a company competitive advantage.”
“In the various iterations of this survey,” says Morrison, “we included eight different categories of activities that typically are seen in organizations’ approaches to workforce planning. That’s not to say that every organization is doing all eight of these, or that all eight are absolutely necessary in order to have successful workforce planning outcomes. However, these are commonly included areas of activity in workforce planning.”
Approaches to workforce planning
The report addressed eight categories of activity. They are:
- Building the business strategy
- Reviewing the business strategy
- Demand forecasting, which is a quantitative look at the skills, jobs, and people needed to help the organization achieve its current and future business goals and strategies.
- Supply forecasting, which assesses the talent supplies available to meet the demand forecast.
- Gap analysis, which compares supply and demand forecasts to identify any potential gaps the organization needs to address.
- Action planning, which is the process workforce planning teams use to determine how organizations will address any identified human capital issues.
- Environmental scanning, which identifies and examines both internal and external factors that have the potential to affect an organization and its human capital decision-making.
- Scenario construction, which involves educated projections about conditions that could occur in the future and how they might affect the organization and its ability to execute its business strategy.
Morrison continues, “When we compared high- versus low-performing organizations, we found that the high performers are doing all of these eight activities at least to some degree.” (Findings in the report represent high and very high extent responses.) “Naturally, the percentages vary from one activity to the next. For instance, 73 percent of high performers told us they are doing strategy review to a high extent. However, only 40 percent told us they were doing scenario construction to that degree.
“Clearly, there is variation among the different activities, but high-performers were doing all of them. In contrast, low performers were only doing four of the eight. That was a huge difference—that lower performers were engaging in fewer kinds of activities, and they weren’t achieving the same level of efficacy as high performers.”
Morrison adds, “Learning leaders who want to support better outcomes for workforce planning teams can provide them regular training on workforce planning tactics and techniques. We found that one of the top ten challenges for lower-performing organizations was a lack of workforce planning know-how. Learning professionals can make a difference by delivering training that keeps planners up-to-date and helps them develop more comprehensive workforce planning skills.”
Another area that is a challenge for both high- and low-performing organizations concerns data issues related to workforce planning. “Here, learning leaders can help teams cultivate and hone skills they need to work more effectively with data. Such learning might center on building statistical, analytical, or critical-thinking capabilities,” she says. “Some workforce planning teams struggle because their members don’t have those advanced skills needed to ferret out the story their data is telling. Teams must go beyond collecting and reporting the data. They make real contributions by understanding, communicating, and acting on the insights that data provides.”
Helping teams address lack of participation and support by other business units offers another opportunity for learning leaders to lend a hand. “There tends to be a misconception that workforce planning is an HR-exclusive function, and that other business units might not necessarily benefit from it,” Morrison explains. “In fact, that is not the case. But workforce planning teams may be challenged to communicate effectively about the benefits business units can derive from planning outcomes. So learning leaders who can help facilitate communication organization-wide and help span functional silos will do planning teams a service.”
“Finally, learning professionals can provide additional value by designing a general workforce planning module that could be included in on-boarding or other training. That could provide everyone in the organization with an overview of what workforce planning is, how it relates to the company overall, and how it benefits or supports each business function. It would facilitate general awareness of workforce planning, and help promote that ownership organization-wide.”
“I think it’s important to understand what a vital role workforce planning plays in organizations,” Morrison concludes. “Research confirms that organizations often have difficulty executing strategies. I look at workforce planning as the bridge between strategic planning and execution. One planning leader I spoke with commented that company executives may think about the money strategic plans require and whether the technology needed to execute is in place, but they are apt to overlook the people needed to carry out the strategy. Workforce planning addresses that human capital aspect of strategic execution. It isn’t about enabling organizations to predict the future. It’s about defining the actions they need to take now to ensure they are able to realize the future plans they’ve made. That’s a key component to executing strategy successfully.”
Side Bar: How to Identify Your Organization’s Crucial Roles
- Think about job roles only, not the people in those roles. These are roles your company needs in order to meet short- and long-term business objectives to become a high-performing organization.
List the job roles that exist in your organization now. For each role listed, answer these questions:
- Does this job role conduct the core business of the organization?
- Is it likely to conduct core business under the future scenarios you’ve devised?
- Has this role experienced a high number of vacancies over the last 12 months?
- Has this job role been difficult to fill?
- Is lengthy training required to develop the skills for success in this role?
- Does this role have the largest number of staff?