Why it’s time for HR to improve workforce planning
Imagine you survey business leaders across your organization, and nearly three quarters of them agree that one particular issue is causing the organization to miss its business goals. A business sponsor would be selected, a project team would be assigned, and regular reviews would take place to ensure this issue was addressed.So why aren’t organizations mobilizing their efforts into workforce planning?
Harvard Business Review Analytics Services (HBR-AS) surveyed over 300 corporate executives, and their key finding was, “Poor workforce planning has caused talent shortfalls, which in turn, led to the inability to meet business goals, according to nearly three out of four respondents.”
The report, Tackling Talent Strategically: Winning with Workforce Planning, highlighted this disconnect where the C-Suite “constantly adjust the markets where they compete, the products they offer, and the customer they serve, [but] decisions about hiring and developing the talent needed to carry out these plans are frequently unconnected.”
When it comes to decisions about people, business leaders often resort to using intuition. While it is easy to say that making data-centric decisions about people is harder than making other business decisions, the reality is that the state of data science in the workforce has progressed to a point where predictive techniques can highlight the best hires and pinpoint who is likely to resign.
As leading analyst firm Gartner called out in their brief, Human Resources Technology Options for Workforce Planning, “workforce planning is a strong differentiator and a key enabler of workforce optimization.” It is time for HR to lead the charge in taking workforce planning from a critical shortfall to a competitive advantage.
How to Achieve Workforce Planning Success
If workforce planning represents a unique opportunity for HR and the business to create improved outcomes, then why are organizations falling short? Where do they need to focus?
Here’s a look at how businesses can improve their workforce planning:
1. Collaborate broadly with business leaders
Most companies treat workforce planning as an annual event at which the plan is created in a spreadsheet and reviewed by a small handful of senior leaders. Planners must manually enter data into complex spreadsheets because no one else understands how these tools work. This requires them to obtain information by speaking to an ever-diminishing audience of stakeholders because time and complexity limit how many inputs can be managed.
When the time comes to turn plans into actions, HR is left with leaders who lack buy-in because they were not involved in planning, or worse, plans that fail to improve business outcomes because critical insight from leaders was missing.
Fortunately, new cloud-based approaches are breaking the spreadsheet dependency, and allowing for high-level direction from senior leaders to be aligned with bottom-up input from frontline managers.
2. Partner with Finance
The fundamental question that workforce planning addresses is: how can we ensure our workforce is aligned with our business goals and at the right cost?
Most HR professionals only focus on the first half of that question and think only about how to obtain the right talent. However, meeting business goals remains the key outcome of a successful workforce plan – or any business plan – so understanding the costs is mandatory.
Conversely, most finance professionals only focus on the cost aspect of any workforce plan and have no insight or input into the complexity of determining the right talent or the consequences of obtaining the wrong talent.
In short, HR thinks about people, and finance thinks about money. They are both right. The real answer lies in bridging these worlds so that workforce plans are led by HR, but incorporate financial goals and the real costs associated with the workforce. HR needs to be prepared to speak, for example, about the trade-offs in skills, culture, engagement and costs associated with investments in contingent workers. HR must lead this change and become financially numerate, as almost half (44 percent) of respondents to the HBR-AS survey consider their workforce plans to be driven by finance and do not take talent considerations into account.
3. Creating a plan is just the starting point
One of the main consequences of the annual, spreadsheet-based planning is that the plans do not adjust to the changing business realities. No organization can build a business plan of any form that will remain unchanged for a year. Given that the workforce is inherently dynamic and constantly in flux, why do we expect the workforce plan to remain constant?
All plans describe the decisions and actions we need to undertake to achieve our goals. The first question to ask after aligning on a plan is: are we on track? This means answering whether you are hiring, paying, relocating, developing, promoting, and retaining inline with your plan. By measuring frequently – quarterly, and ideally monthly – you provide an early warning that allows for small course-corrections to get the plan back on track.
Remembering that all plans are imperfect, the second question is: why are we off track? This provides insight into what you need to change. For example, does a business leader need to double down their efforts, or does the plan need to change as a key business goal is in jeopardy due to a changing environment or flawed planning assumptions? The more time the business has to adjust, the greater the chance it has of achieving the business goal.
Changing the Business – and Culture – of Workforce Planning
Executive leaders have consistently asked human resources to help them make the connection between workforce decisions and business outcomes. Unfortunately, those same executives report there is a lot more work still needed to achieve that goal. In the study, The Changing Role of the CHRO, by HBRAS, 78 percent of respondents said they want their CHRO to talk about human capital in business terms, but only 33 percent agreed their CHRO was doing so successfully.
Workforce planning presents a unique opportunity for HR to collaborate directly with business leaders to align decisions about the workforce directly to business goals. While the opportunity may be great, the challenges are also significant:
• Across HR roles and functions, the trend to more data-centric decisions must accelerate, and in order to connect workforce decisions to business outcomes HR must gain a much deeper understanding of the costs associated with investments in human capital.
• Investments in technology are required to break free from the shackles of spreadsheet-based planning. New cloud-based approaches allow for faster, more collaborative, and inclusive planning.
• Most critically, HR must take ownership for the process of planning the workforce. For most organizations, this requires change management to align the business first on how the workforce will be planned.
This is an exciting time for HR. Business leaders have never been more eager for HR’s help to meet their business goals. Technology advances have freed HR from IT dependencies on project deliveries and enabled them with ever more powerful solutions. Increased data has given HR unprecedented insight to inform their decisions on the workforce. Simply put, there has never been a better time to transform to a workforce planning culture that is centered on achieving business outcomes.
A seasoned software executive, Dave Weisbeck’s experience ranges from building development teams to growing multi-billion dollar businesses as a General Manager. With twenty years in the information management and analytics industry, Dave’s prior roles include developing Crystal Decisions and Business Objects products and product stategy. Most recently Dave was the Senior Vice President and General Manager responsible for Business Intelligence, Enterprise Information Management, and Data Warehousing at SAP. Dave holds a position on the HR.com Advisory Board.