By Ammara Naeem, Senior HR Auditor, Top Employers Institute
By Ammara Naeem, Senior HR Auditor, Top Employers Institute

Q&A: The merit of strategic workforce planning

Strategic workforce planning has transformed over the years into a core business process that aligns the ever-changing needs of the organisation with its people strategy. The concept elicits differing responses from HR industry experts, but one thing is certain: the COVID-19 pandemic created an urgent need for workforce planning in organisations of all sizes.

While workforce planning was once seen as a rigid and ineffective activity that failed to accommodate unexpected economic changes, but done right, it can be instrumental in enabling HR leaders to take the lead in adequately preparing for the flexibility and agility needed as we face the future. Let's take a look at common questions on this topic.

Q: Why is strategic workforce planning back in the spotlight?

A: One common thread gaining prominence in HR articles, webinars and presentations is how strategic workforce planning is becoming more relevant in achieving an organisation’s business goals. Indeed, research at Top Employers Institute shows that 93% of the Top Employers surveyed in 2020 set out clear objectives for their organisation’s workforce planning.

This is because, while leading organisations may not know what the future holds, they also recognise that a roadmap with some sense of direction is essential for sustainable success. Strategic workforce planning constitutes an integral component of this road map. Why? An organisation can only achieve its ambitions with the right people, at the right time, in the right place, and at the right cost.

Workforce planning has thus transformed from a rigid approach of the 80s to a more flexible and agile one that aims to have these elements in place as and when needed. Think about all the technological advancements around us that enable us to predict and forecast better; think about gig economy and constantly changing business environment. Today, if an organisation does not take the proactive perspective to its workforce, it is likely to lag. 

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Q: It is often said that understanding the organisational strategy is the first step for strategic workforce planning. Are there other factors to consider?

A: Often, the organisational strategy does not spell out the impact on current and future workforce needs. Thus, the first step in devising an effective workforce plan includes understanding these needs. Businesses, industries, product lifecycles, and even product changes vary greatly. Therefore, a successful formula can only be created by understanding the context of your organisation.

This is not limited to the organisational strategy but extends to other internal and external factors. We see that 79% of Top Employers take their employees’ career aspirations into account when devising their future workforce. An internal analysis can already add a wealth of useful information: current skills and capabilities, employee demographics, , kinds of job clusters in the current organiation, employees’ career aspirations, internal movements, as well as exiting employee aspirations. These factors contribute to your journey towards creating an apt strategic workforce plan

An entity belonging to the same organization, the same brand, might face different workforce related challenges in different regions and geographies. That is why it is crucial to understand the labor market around you. Public information pieces like, government census, often give you an overarching view and insights into the trends and movements. Pay heed to number of graduates in your region, popular university majors, competitor’s employment characteristics, etc. Often, analyses like PESTLE have proven to be useful tools in this aspect.

Q: The world around us changes fast. How can we ensure workforce planning keeps up with this?

A: This is where scenario-planning comes in. Historically, workforce planning has been a budget dependent headcount planning exercise. These days it has a longer horizon and is much wider in scope. Scenario-planning equips the organisation to face different situations impacted by, for instance, external factors that are beyond the control of the organisation. These factors might be related to political or environmental situations in the country or region, global crises, or the future business strategy elements.

Such planning calls for identification of critical drivers, priorities, as well as uncertainties. For example, say Company A plans to transform its business and move in a different direction, and growth is the main driver. It plans out three different scenarios: 

Scenario 1: Its customers welcome the change in product develpoment with open arms. The question is, are the current capabilities and expertise enough?

Scenario 2: If the acceptance rate is not as expected, and customer demand asks for additional changes: should the organisation consider acquisition?

Scenario 3: Competitors come out with a better product. What would be the impact on workforce and the course of action?

Scenario planning helps answer these questions. Our data shows that 72% of Top Employers devise multiple possible future scenarios to plan for the impact on workforce and competency needs. This is one of the ways organisations prepare in the best possible way for any unexpected changes that may come their way.

Q: What does an effective strategic workforce planning function look like?

A: During his keynote speech at HCI in March 2018, Ross Sparkman, a thought leader in Strategic Workforce Planning, talked about how to set up an effective strategic workforce planning function. He talked about four pillars that are important to building up a strategic workforce planning function: (1) vision, (2) people, (3) processes, and (4)technology and data.

First and foremost, the organisation needs to think about what they want to achieve through this team and constitute a vision. The relevance and scalability of a workforce planning function is dependent on the organisation’s maturity level, resources, and investment decisions. This vision would also dictate the kind of people and capabilities that should be included in the team. Processes supporting this workforce planning function would also be directed by the vision and expectations. Questions that could arise include: who will be the consumers and users of the process? How will they access the relevant data? How will you ensure it is a cross-functional exercise?

The final pillar is technology and data. Before you begin analysing the data, you need to ensure its quality and accuracy. Ultimately, the more mature your strategic workforce function is, the more support it can derive from technology. However, the introduction of this supporting technology needs to tie in with the vision of the function. Is it going to be user-friendly? How relevant and scalable? Cost vs benefits analysis, etc.

Q: Does strategic workforce planning have a place in the Top Employers Institute HR Best Practices survey?

A: Yes, strategic workforce planning sits under People Strategy in our HR Best Practices Survey. This is because it is inherently linked to people strategy that is ultimately driven forward by the business strategy. Over the course of last few years, certified Top Employers have evolved their workforce planning to make it far more strategic. Compared to data obtain from our survey in 2015, 15% more Top Employers conduct a regular GAP analysis of the current and future skills and competencies.

One Top Employer conducted a gap analysis to support a major transformation in their industry (technology). They started off analysing supply and demand of critical skills needed in the industry on a quarterly basis. They mapped out an inventory of current 2 500 skills within its world-wide organisation. These included 338 skills that have been classified as ‘niche’ (meaning they are currently in high demand) and 25 skills of the future. Out of the 338 niche skills, there is now a dedicated training programme for more than half of them to help upskill employees. This example really speaks to the value that strategic workforce planning brings to an organisation and prepares them for the future.