Acknowledging that your future needs are largely unknown makes planning all the more important.
By Mark Melfi and Ron Walters
We’re all familiar with the frustrations of forecasting, and we’re not even talking about human resources yet. Have you ever been planning a big outdoor event? As soon as the day of the event appears on a 10-day weather forecast, you anxiously watch the weather people struggle to make projections.
When it’s the tenth day of the forecast, they call for sun. Awesome. Then it’s seven days out, and suddenly a 60 percent chance of rain. Uh-oh. “Do we have a tent big enough?” Now it’s three days out, and the chance of precipitation is down to 20 percent. “Can’t someone tell me what’s going to happen?!”
As we know, the problem isn’t necessarily the skill of the meteorologist, it’s the complexity and dynamics of what they’re trying to predict. Sound familiar?
Global economies. Industry dynamics. Competitive influences. Not to mention your internal battles with allocating appropriate resources to HR. And proper succession planning. And turnover rates. And operational idiosyncrasies. All of these conspire to create an almost infinite set of variables that change on a monthly, even daily, basis. Yet the degree of difficulty obviously can’t eclipse the need to keep trying, to look at your organization with realistic-colored glasses and assess what the demand will be for personnel. But not just any personnel: the right personnel.
Because why do you bother watching the weather forecast in the first place? It’s not merely to decide whether you need a tent; it’s about preparing yourself to have a successful event. Demand planning is about making successful, high-quality hires—the right people in the right positions at the right time. In other words, it’s about putting people in positions to succeed. In the long term, that’s how companies make money.
Herein lies the first key in successful demand planning: an understanding that this is not a quick-fix, cross-that-bridge-when-we-get-to-it proposition. This is a long-term commitment focused on the goal of consistent, sustainable bottom line results. This is not about reducing cost per hire. This is about making a company better—more innovative, more productive, more profitable—by staffing it with better hires.
This requires discipline. It can mean standing up to management philosophies that may have become entrenched in “the way we’ve always done it.” This is quite ironic, as many publicly held companies use a common investment disclaimer that goes something like, “past performance does not guarantee future results.” So why does any company think they can use the same old forecasting approaches, like investing solely in promoting from within, and expect to find better talent?
Given perpetually changing circumstances and scenarios, you need to be in a perpetual state of discovery. You need continuously updated data on industry trends, sales trends, and turnover rates. You need to be in constant contact with your hiring managers. You need data from every department, and you need those departments to keep the information flowing.
If you get the idea that forecasting takes more than an annual or even semi-annual snapshot to generate a demand plan, you get the idea. And the more you do it, the better you’ll get at it. Yes, it can be a lot of work that may require outsourced help. Yet it is an investment that pays big dividends in improving the quality of hires and their subsequent impact on productivity and revenue generation.
You can see how this takes a disciplined, organizational commitment to keep gathering information, to keep looking for the patterns that will inform your demand plan. Just know these are the keys that unlock greater accuracy in your projections. Ask meteorologists about the “butterfly effect”—how subtle fluctuations can ripple into major events. How often are you identifying the internal and external “butterflies” influencing your talent needs? How well can you anticipate their potential impact on your talent pool? The more you’re learning the lessons that your data is teaching you, the more you’re mastering the discipline of demand planning.
Anyone who’s ever taken a class in journalism knows the questions a good reporter must ask to get the story straight: who, what, when, where, why, and how. It’s the same due diligence that you need for effective demand planning.
Who will you need?
As much as we all know that anybody can be replaced, the truth is all talent is not the same. Anytime a new position is created or an existing position must be filled, a budget figure and skill set are attached to it. True demand planning shifts the HR paradigm from justifying the expense of a new hire to identifying the productivity/profitability potential of that hire. A high-quality hire isn’t one who is merely cost effective to acquire today, but one who can positively impact the bottom line over time.
What skills should they have?
To some, crafting a comprehensive job description covers the bases of attracting the right skill set. Yet demand planning delves much deeper. Remember, this is human resources, and humans are a wonderful symphony of personality, experience, and yes, skills. That goes for the hiring managers as much as the hirees. Demand planning must take into account the interpersonal and interdepartmental dynamics at play. In a word, chemistry matters. One-on-one. Department to department. Learn the preferences of your hiring managers, and know the kind of people they like, not just the skill set required.
Where can you find them?
Maybe they’re in house. Maybe you need to go outside. How do you know? That’s where the live reporting from hiring managers is so vital. A demand plan is about filling the pipeline with the best possible candidates. They may be in the home office. They may be in another office. They may be at a competitor.
The HR team is the department uniquely positioned to see the whole spectrum of talent available within the organization and outside it. They are responsible for stocking the pool, so it is imperative they have ongoing discussions with all key hiring managers to know where the talent is. Now.
When will you need them?
There is nothing worse than opening a new office, expanding a department, or having an unexpected departure create a need and not having the confidence that the candidate pool is deep enough. The simple answer to projecting when the need will hit is asking the right questions—and asking them often. This is where HR managers must command the big picture. Not just see it, but live it. How are sales? When are new products hitting the market? When are we upgrading IT? Who’s retiring? Are new government regulations coming?
This is the essence of demand planning. Ask the right questions, and they’ll lead to the right people at the right time.
How much will it cost?
This question is often thought of in terms of pure expense—of cost per hire. Truthfully, when you come to embrace the strategic role of demand planning as a business builder, the question becomes “How much will it cost if we fail to demand plan?”
Even a cursory look at how professional sports teams build through their amateur drafts reveals the importance of getting the right people, and the impact they have on the bottom line. When a team “misses” in the draft, the impact is often felt not just in how many games they win, but in how many tickets they sell and how much merchandise they move. Good people are good for business. Great people are great for business.
We left just one question that hopefully we’ve already begun to answer: Why demand plan? The short answer is that demand planning is about making money. Yet to do it right can require a seismic shift in how many HR professionals see themselves and in how the HR role is perceived in many organizations.
No longer relegated to the back office to make sure new hires get their insurance paperwork filled out or that job openings are posted on Monster.com, HR professionals need to be viewed as vitally important strategists who can have tremendous impact on their companies’ successes. They directly influence the single most important asset of every company: its people.
High-quality hires turn average divisions into higher producers. They drive the innovations that generate market leadership. They boost morale. They make companies money.
The road to quality is paved with preparation. Just like you watch the weather forecast to be prepared to make your big event a success, you need to monitor your talent forecasts continuously to develop the demand plan your company needs for quality hires.
Mark Melfi and Ron Walters are senior managing partners of endevis, a talent acquisition company that offers solutions to meet on-demand and long-term hiring needs. See www.endevis.com.