The constant changing nature of today’s workforce presents many challenges for HR. Paul Lambert explains why effective workforce planning can give organisations a strategic advantage in a knowledge-based economy.
The changing workforce – a business challenge for HR
A skilled workforce is the key ingredient in delivering high quality services and great products for both commercial and government organisations. Yet the shifting nature of today’s workforce makes this more and more difficult.
First, the workforce is aging – by 2010, in the US alone, 40% of the workforce will be poised for retirement. Second, work is increasingly ‘going global’, driving major service outsourcing and employment trends in India, China and Eastern Europe.
Yet, the cost of poor workforce planning is significant. For example, a 2008 UK Department of Health report estimates that hundreds of millions of pounds have been misspent in the development of the wrong types of medical staff for the UK’s future healthcare needs.
This all adds up to a significant challenge for HR because organisations look to the HR team to ensure that the right people, with the right skills, are available in the right roles. However, it also points to an opportunity for HR to act as a true strategic partner to the organisation.
The answer: A living workforce strategy
"A skilled workforce is the key ingredient in delivering high quality services."
The output from a typical workforce review is a report, which represents a static ‘point in time’ view of the organisation’s workforce requirements. In contrast, we have seen the value of creating a ‘living workforce strategy’ – a shared view of the future business plans and workforce, developed in collaboration between HR and the business. In order to be successful, this strategy should be underpinned by data models, adaptable around different business scenarios, built through engagement of key business managers and turned into practical recommendations that will work ‘on the ground’.
The benefits of getting workforce planning right are significant
Workforce planning, when done right, can deliver significant competitive advantage to an organisation through:
- cost reduction
- assurance that business plans can be delivered
- customer retention through improved service quality
- staff recruitment, retention and engagement
So what does this look like in practice?
How this works in practice – Rail Engineering Firm
: Equipping a firm with specialist engineering and leadership skills for the future
This international supplier of rail control and signalling systems’ business success depends on having the right specialist engineering and leadership skills in place – to meet the challenges of an industry that is increasingly global as well as technologically complex.
PA helped the firm link their medium and long term business plans to a workforce assessment and workforce plan. Key to this was a comprehensive people capability framework including building and delivering a business-wide engineering capability assessment and accompanying strategy. The resulting insights were endorsed by the board and formed the basis for the company’s 10-15 year workforce planning and development, including enabling their move into the Chinese and Indian markets.
Figure 2. Current and future workforce skills groups were modelled.
The three keys to building this living workforce strategy for the firm were:
- robust data and business plan modelling
- engaging experts and key stakeholders
- systematic execution of a practical workforce plan
1. Robust data and business plan modelling
Models of the future workforce need three sets of information: a measurable view of the historical and current workforce; a model of the known changes (such as changes in workforce demographics); and different possible ‘scenarios’ of the future (for instance, emerging markets needing transport solutions). In this case, the forward plan of major projects and opportunities were represented as project types (e.g. major overground, major underground, maintenance) and translated into workforce requirement profiles to give a cumulative view of workforce demand.
2. Engaging experts and key stakeholders
Three types of stakeholders are essential in the development and delivery of a living workforce strategy:
- sector experts – in this case, skilled rail engineers who really understood the business, working with external consultants who understood how to translate the internal team’s skills and knowledge into workforce plans
- critical influencers/change leaders, such as senior managers
- key staff groups affected by the change.
3. Systematic execution of a practical workforce plan
To develop a ‘living workforce strategy’ that will succeed in practice, strategy development needs to be grounded in ‘day-to-day reality’. This dialogue between strategy and reality has 2 parts. First, the strategy is built from a detailed insight into the current situation – both from good practice examples in other geographies and from consultation with expert stakeholders.
"Workforce planning becomes a critical ingredient to the successful delivery of business strategy."
In this case, we drew on insights from workforce plans built in similar sectors, such as IT. Second, the strategy needs to be designed for implementation through modelling. This involves taking a hands-on approach with local managers to make the plan work in practice.
Workforce planning for strategic success
A skilled workforce is a vital ingredient in the delivery of high quality services and great products for both commercial and government organisations. As organisations increasingly become reliant on skilled “knowledge workers”, workforce planning becomes a critical ingredient to the successful delivery of business strategy. As the case study demonstrates, a successful workforce plan must remain live and responsive and this relies on 3 key factors – robust data and business plan modelling, the on-going engagement of key stakeholders and systematic execution.
Paul Lambert leads PA Consulting Group’s work in workforce planning, talent management and resource management. His experience includes major workforce planning projects for clients in engineering, IT, higher education and government departments