I drafted recently a white paper to several dutch HR forums which triggered some hectic discussions.
I would like to share this topic with the UK experts and to learn how they view this. From my recent research I concluded that USA and UK are far ahead with the socalled HR transition to HR Business Partner and Strategic Workforce Planning. It seems that quite a few independent surveys confirm my views. I thought that with the present economic and financial crisis all companies would embrace Strategic Workforce planning but the opposite is true. (at least in the Netherlands)
Workforce Management seems to be a hot topic these days. IT companies, Service Providers, Consultants, HR forums are publishing at a steep rate white papers, new acquisitions, software tools etc etc. The magic term ‘Workforce Management’ is even high on the C-suite list and not without reason.
The present financial crisis is forcing many companies to take a close look at all different cost levels and employee cost is an easy target for cost savings. At the same time many organizations feel the need to reinvent themselves which is mostly the case in the Financial Sector. Downsizing, new business models require different people with different skills. Who is leading this transformation?
In most cases the Workforce Management (as a term) is forwarded to the Human Resource department who is required to fill in the blank sheet. The HR director or manager is of course very pleased with this ‘strategic’ new role which finally enables the HR department to transition from their traditional role (employee administration, recruitment, on boarding etc) to the new role of HR ‘strategic Business Partner’ which they have been fighting for since many years.
In reality the results were very disappointing which was caused by many different reasons.
Let’s first take a closer look to the term ‘Workforce Management’
In Wikipedia Workforce Management is defined as follows:
‘Workforce management (WFM) encompasses all the activities needed to maintain a productive workforce. Under the umbrella of human resource management, WFM is sometimes referred to as HRMS systems, or even part of ERP systems. Recently, the concept of workforce management has begun to evolve into workforce optimization’
Specifically, workforce management includes:
- payroll and benefits
- HR administration
- Employee self-services
- Time and attendance
- Career and succession planning / talent acquisition
- Talent management and/or applicant tracking
- Learning management and/or training management
- Performance management
- Forecasting and scheduling
- Workforce tracking and emergency assist
- Absence management
Here starts the problem already. The traditional role of HR is suddenly redefined as Workforce Management (WFM) and even worse referred to as HRMS/ERP system. How many HR organizations have claimed to have implemented Workforce Management by implementing a new integrated (global) HRMS system or expanded their SAP or Oracle system with fancy (and very complicated) HRM modules? In reality it is a technical upgrade of the traditional HR activities against high cost often replacing existing. There is little or no dimension added to the meaning of Workforce management.
Another definition can also be found in Wikipedia:
‘In many markets and industries, workforce management is all about assigning the right employees with the right skills to the right job at the right time. The term is differentiated from traditional staff scheduling because staff scheduling is rooted to time management and simply manages the administration of past and future working times’
This traditional approach has since evolved into the more integrated, demand-oriented workforce management, which includes changes in personnel requirements and objectives when optimizing the scheduling of staff. Besides the two core aspects of demand-orientation and optimization, workforce management may also incorporate:
- forecasting of workload and required staff
- integration of employees into the scheduling process
- management of working times and accounts
- analysis and monitoring of the entire process.
This definition is a more accurate description of the meaning Workforce management and is proactive opposed to the first reactive definition.
The increasing pressure, as a result of the economy crisis, from the organizational boards forced the HR management to reconsider their role again to meet the new challenges. The questions were now more specific:
How much is the external staff expenditure?
What is the productivity of internal staff?
Is our organization fit for the new business model we envisage?
Do the skills of our staff match with the today’s business requirements?
Do the skills of our staff match with our future business requirements?
Which staff are we going to ‘redeploy’ and in which way?
How can we create a flexible Workforce which adapts to business performance?
How can we create a rolling resource capacity forecast?
How can we stimulate or enforce resource sharing?
Can we have a dashboard with the these critical parameters as per above?
All these questions are translated (again) into the term Workforce Management which is causing a structural miscommunication between the HR departments and the Board/Business. It leads to serious discussions on who should own Workforce Management. The recent article Workforce planning pitfalls [PDF] by SuccessFactors clearly indicates an apparent frustration on both sides.
There are other papers and studies which give a more scientific and theoretical insight in Strategic Human Resource Management and particularly Changing Face of Human Resource Management: A Strategic Partner in Business
So, confusion all over the place. HR is caught in the middle and yet expectations are high in the present turmoil of challenges and change.
First and almost the term ‘Workforce Management’ should be understood clearly. In fact todays views are are shifting from Workforce Management to Strategic Management.
‘Strategic management analyzes the major initiatives taken by a company's top management on behalf of owners, involving resources and performance in external environments. It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs’
This definition is finally covering the whole Workforce Management and Planning process. Should this be ‘owned’ by Human Resources? No! Everybody will agree that Strategic Management is to be owned by the CEO and they should take leadership to articulate the Workforce Management requirements in which HR will need to participate. HR does not have or is required to have the competence to define corporate strategies or to make judgments on the performance of the company.
But the fact remains: the activities of HR appear to be – and often are – disconnected from the real work of the organization. In fact, the primary responsibility for transforming the role of HR belongs to the CEO and to every line manager who must achieve business goals.
The reason? Senior Executives have the ultimate responsibility for both the processes and the outcomes of the company. It follows that they should lead the way in fully integrating HR into the company's real work. Indeed, to do so, they must become HR champions themselves.
We may conclude that many organizations are facing the following issues:
- The C-suite have not been able to take leadership in the articulating precisely Workforce Management/Efficiency.
- The HR management is attempting to develop their transition to Strategic HR business partnership with little or no success.
- It is an illusion to assume that the HR department can adapt by themselves to the Workforce Efficiency model which requires total different skills and competencies.
The real scope of today’s Workforce management.
The Workforce management model is complex. It spans literally all processes and systems of the organization.
The simplified definition of the WFM model is to arrive at a flexible and efficient workforce which is adaptable to changes in the outside market.
- Understanding of the Strategy, mission and objectives as set by the senior Executives
- An insight in the present Workforce capabilities and skills
- An detailed insight in the desired Workforce capabilities and skills
- A detailed gap analysis of the present and desired capabilities and skills
- A continuous proactive capacity planning process to match business requirements (Demand & Supply) with a horizon of at least 12 months
- A resource planning process to match business requirements.
- A resource management deployment organization close to business management
- A HR system with discriminating job roles of all employees (owned by HR)
It is strongly suggested that the WFM model is ‘owned’ by a dedicated (strategic) Resource management discipline closely interlocked with HR. Although the two disciplines are different by nature they are bound to interlock with respect to Job role definition, resource planning, recruitment planning and skill development. Both HR and Resource management should be recognized as SME Board members to secure the continuous interlock with the senior executives on corporate strategy effects on the Workforce efficiency progress.
The execution should be very close to the business and on this level at least Resource Deployment specialist should be positioned.
Where to start?
The present economic environment urge many companies to act now to create short term cost or efficiency savings. We hear almost on a daily basis the buzzwords like re-inventing, sustainable, mobility, workforce planning and we see an overwhelming development of systems and tools thrown into the market. HR departments are tempted to apply those to discover, after spending a lot of investments, that it did not meet the expectations (whatever they are) of the organisations. Disappointment and cynical business management as a result.
It is more advisable to start with positioning a senior Strategic Resource
Management executive on the same level as the HR manager or executive. It should also be recognized that the required skills and capabilities cannot be easily found internally and this should not be compromised by taking the second best or a ‘volunteer’. Today, Strategic Resource Management skills are rapidly developed but in general only found within the professional specialized Consultancy firms.
To implement Strategic Workforce Management following the WFM model first and foremost all employees have to be reviewed with respect to their individual job role. We came across companies with 20.000 plus employees all having the job role of Consultant. On this basis any Workforce management/efficiency process has no meaning and any initiative or investment is a waste of time and money.There are many institutes and professional International Charters who can provide and advise on job role descriptions for almost every sector.Communication is critical. Workforce management should not only be limited to board level but also broadcasted to almost every level of the organization.What is Workforce Management, Why are we doing this. Who are the stakeholders and what are the benefits but also what are the pains we have to go through.
Search for and allocate WFM champions. They are adaptable to change and while they may not have the required expertise (yet) their contribution should not be underestimated.
Quick wins are coming at a price.
In many organizations we came across so called Workforce Management initiatives and when we took a closer look it appeared to be a downsizing exercise in disguise.If an organization, by its board directive, decides to cut employee costs as their primary objective to resolve a short term performance issue, then do not make any attempt to introduce WFM. It will fail. Just concentrate on external labor cost and low/average performers. Be aware: Experience shows that this approach can easily trigger the next restructuring and the next and the next because the root cause is not sufficiently addressed.It is the primary responsibility of HR to take a position (with external support) to articulate different approaches for the future which are far more sustainable and adding more value to the organization.
Start with the smallest suitable department with 20-50 staff.
Set a time line of maximum 3 months to deliver results.
Hire an external consultant to lead this process.
You do not need (yet) state of the art HR systems and tools. Better to start with intelligent spreadsheets. This will help you in later phases to articulate WFM requirements for systems and tools procurement (if needed)