Peter Howes identifies the five areas that must be considered to successfully cope with an increasingly unpredictable business environment.

Making the difference – tools for perfect planning

1. Measure the health of your current workforce
   This requires going further than the initial snapshot of organisational health. Consider the risk of vacancies of certain positions and how they may impact the organisation. What would be the ramp-up time to bring a new hire up to speed? Look at the age distribution of critical job families and the effects of current reductions on typical succession paths. Analyse the voluntary turnover in critical job families by segment, and the career path and experience profiles of your workforce. 
    
2. Evaluate the current workforce to identify potential risks
   Focus on roles – not people – and identify the pivotal roles; those that conduct the core business; the positions that may become part of the core business under future scenarios; roles that have been difficult to fill or require a long training time; and those that have the largest number of staff. This is your list of critical job roles for workforce planning regardless of the economic conditions. Use it to institutionalise a framework for categorising, analysing and reporting trends, and develop segment analyses and strategies for each segment. The end result of this framework is a map of your organisation’s human capital.
    
3. Use scenarios to work with uncertainty
   Scenarios are the articulation of what we predict will significantly impact the business during the forecast period. They typically take into account projected economic conditions in three, five and ten years time, although given the speed of change right now, some industries need to work on shorter time-scales.

   The scenario builds a picture of how the external environment (and economy) will affect the business, and how the business will operate to most effectively respond to these impacts. The key characteristics of scenarios include focus on a range of plausible outcomes for GDP growth, market share, commodity prices, exchange rates, technology and innovation. To be of any use scenarios should concentrate on the most relevant issues to the business, bridging the gap between intuition, educated guess and fact. The importance of scenarios is that they ensure a workforce plan is a true planning document and not just a budgeting process.
    

4. Identify potential shortfalls in external labour supply
   While you can’t control the external environment, it is essential to account for it during planning. This is where HR looks outside the organisation to consider societal and demographic trends that might impact the supply of talent for critical jobs. If the right number of qualified trainees is not coming through the education or trade system, it could be time to develop alternative strategies. In the past this has included partnerships with universities and trade schools; pre-active retraining of existing staff and the development of new career paths; and redefining job roles and responsibilities. Resources may need to be reallocated to attract key talent.
    
5. Estimate the financial impact of workforce strategies
   This last step is potentially of most interest to other senior management. This is where questions such as the estimated savings of targeted reductions in voluntary turnover for critical job role and/or tenure groups are quantified. Other figures that should be derived include the extra costs incurred by filling gaps in critical job roles by using contractors and temporary staff; the impact of exporting labour to cheaper labour markets now and into the future; the savings of recruiting at lower levels and developing employees internally; and the estimated cost of filling critical job roles when the economy recovers.

When integrated with other planning processes, these tools provide real value to the organisation. Planning will help to reduce labour costs by ensuring the correct skill mix and by not having surplus staff with inappropriate skills. It will support the creation of more cost-effective learning and development opportunities that come from productive, on-the-job experience. It will minimise the impact of skills shortages and is instrumental in being able to offer better career management that benefits both the employee and the company.

Making the difference – delivering real business benefits