From Strategic Vision to Implementation and Action: A road map and practical approach to Strategic Workforce Planning

Ross Sparkman, Head of Strategic Workforce Planning: Facebook

Why Use Data and Analytics for People Related Decisions?

People Planning Vs. People Analytics

How I think about People Planning (workforce planning) & People Analytics:

Enterprise Wide Strategic Decision Making

People/HR Decisions

Finance Decisions

Operational Decisions

Product/Service Decisions

Market Decisions

People Analytics

People/Workforce related decisions that optimize future people planning

Output:

People analytics is the glue that holds workforce planning together

What is Workforce Planning?

Business Strategy: Prioritizes where WFP can drive business value and support organizational objectives 1. Demand Planning

2. Supply Planning:

3. Workforce Analysis

4. Workforce Investment Strategy:

5. Operations Planning:

Demand Planning

Supply Planning

Workforce Analysis

Workforce Investment Strategy

Operations Planning

2.

4.

5.

3.

1.

Business Strategy

Workforce Planning is a strategic process for effective business operations

Workforce Planning drives Human Capital Management & Strategy

WFP is a discipline that spans all areas of HC management from recruitment and sourcing to performance management, to career and succession planning

Talent Acquisition Global Mobility Performance Management Training and Development Leadership Development Rewards and Recognition Succession Management Organization Design Workforce Deployment

Strategic Drivers Strategic Goals/Objectives Business Requirements Budget/Financial Parameters

Workforce Issues and

Needs

Workforce Planning

Effective Organizationa

l and Operational Execution

Workforce Trends

Workforce Planning Scope

Revenue Growth

Price Volume Direct Costs (COGS)

Indirect Costs

(COGS)

Income Tax

Property, Plant,

& Equipment Inventory

Receivables and

Payables

Company Strength

External Factor

SHAREHOLDER VALUE

Operating Margin

Asset Efficiency Expectations

Decrease direct and indirect labor spend by identifying and addressing key drivers for attrition and maximizing ROI on recruiting investments

SWP Direct costs: -Salary and benefits -Recruitment -Onboarding -Global Mobility -Training and development -Leadership Development -Retention -Related legal costs

Indirect costs: -Loss of staff -Absenteeism -Productivity -Morale -Institutional memory -Innovation

Why is it important for organizations to make informed workforce decisions?

Workforce Planning is a broad set of activities that support the broader organizational strategy

Key Workforce Planning Components

Critical Workforce Segments

Workforce Structure & Composition

Workforce Skills and Capabilities

Workforce Plan Workforce Performance

Capacity Management Workforce MGT & Deployment

Org Strategy

Workforce Data

Workforce Analytics

Where to Start?

Step 1 ID critical workforce segments and competencies

– “Which roles are most critical to business outcomes and what will be expected of these roles in the future?”

Activities Interview Business and HR leaders to understand the workforce actions and

corresponding roles that are most important to the achievement of the business strategy Identify the current and future competencies required of these roles

Case study – Global highly engineered product manufacturer

Business conditions – Growing market for planned and existing

products – Dynamic market for talent – Concern the availability of talent will inhibit

future growth

Expectations of workforce planning – HR and the business understand and

support the process and the results – Reliable, global planning horizon of three to

five years – Results that directly contribute to the

execution of talent management programs

Step 1.

The Business Case for Investing in CWS What is a Critical Workforce Segment? Critical workforce segments (CWS) are groups within an organization that:

• drive a disproportionate share of key business outcomes; • influence an organization’s value chain significantly; and • are in short supply from the respective labor market

Critical workforce segments include roles central to strategy execution (strategic roles, critical support roles, core support roles)

Investing in critical workforce segments maximizes the value of investments in the workforce and ensures an organization has the resources it needs to achieve its business strategy

A small percentage of the workforce make a disproportionate contribution to the bottom line

If I have one unit of resource (or $1 to spend) where should I allocate it to obtain the highest return for the business?

Effective Talent Strategy focusing on the things that matter Ineffective or no Talent Strategy

CWS

Resource Expenditures

Opportunity costs

realized / forgone

Non-CWS

Org

aniz

atio

nal

Val

ue

Maximization of Resources

Step 2 Determine data requirements, availability, and quality

– “What data is available and how accurate is it?”

Activities Review enterprise data architecture Document the data sources for each data element Cleanse data Determine how far back historical data can be captured Review variables and determine which are potentially useful for modeling

Step 2.

Step 3.

Step 3

Activities Set initial assumptions for how each talent supply channel will impact the talent pool

(based on historic data) Analyze leading indicators to determine any adjustments required

Establish baseline and project future talent supply trends – “How should we expect the inflow/outflow of talent to change each

year?”

Baseline Workforce Supply ForecastCurrent Y1 Y2 Y3 Y4 Y5

1,495 1,521 1,632 1,695 1,683 1,738 26 111 63 (12) 55

176 179 192 200 198 202 290 255 187 253

Y1 Y2 Y3 Y4 Y5Rate FTE FTE FTE FTE FTE

Promotion Out of CWS 1.46% 22 22 24 25 25 Transfer Out of CWS 1.60% 24 24 26 27 27 Retirement 0.20% 3 3 3 3 3

Voluntary Termination 8.05% 120 122 131 136 135

Involuntary Termation 0.46% 7 7 8 8 8 Retain Subtotal 11.77% 176 179 192 200 198 Promotion into CWS 1.30% 19 20 21 22 22 Transfer into CWS 2.50% 37 38 41 42 42 Develop Subtotal 3.80% 57 58 62 64 64 Hire 12.20% 182 186 199 207 205 Rehire 3.00% 45 46 49 51 50 Hire Subtotal 15.20% 227 231 248 258 256

82 (1) 55 135 66

Retain

Develop

Hire

Baseline Workforce Gap Forecast

Incremental Demand

DriverBaseline Workforce Supply

Baseline Workforce DemandTotal FTEs for Business PlanBusiness Driven DemandAttrition-Driven Demand

1. Baseline rates of attrition, internal talent development and external hiring

2. How historic rates compare to future business demand

3. Areas of focus for further analysis (Examples) Retirement:

– A smaller than industry average contribution may reflect strong hiring and early buyouts

– Use current employee demographics to forecast future retirement rates

Voluntary termination: – Can voluntary attrition be decreased through focused action?

Hire – What does the external market say about the ability to

continue the historic reliance on new hires?

Step 4.

Step 4 Establish and project incremental supply & demand

– “How should we expect the inflow/outflow of talent to change each year? How will external issues, such as the economy, impact my business?”

Activities Utilize operational measures and benchmarks to build demand model Utilize internal drivers (i.e., supply chain, sales, pipeline) to forecast “long tail” of demand Leverage third party data (e.g. labor statistics, employment rates, industry metrics)

150

160

170

180

190

200

210

220

230

240

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Ho

urs (

00

0)

FY 09

Actual Model Forecast Original Plan

150

160

170

180

190

200

210

220

230

240

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Ho

urs (

00

0)

FY 08

Actual Model Forecast Original Plan

140

150

160

170

180

190

200

210

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr MayH

ou

rs (

00

0)

FY 07

Actual Model Forecast Original Plan

FY 13 FY 14 FY 15

The Business Case for Investing in CWS Capacity Management – Supply and Demand Workforce models are based on two fundamentals components: supply and demand

Supply: how many people do I have? Demand: how many people do I need?

Once you have reviewed Supply and Demand we can identify any gaps in resourcing – managing this supply and demand and associated gap is what we call capacity management

Capacity management should consider not only the number of resources that an organisation currently has or needs, but how many will they need given future demand and strategic objectives

Step 5.

Step 5

Activities Combine headcount requirements and attrition data to determine the number of positions

that will need to be filled/reduced during each year in the plan period Evaluate the range of possible changes to the contribution of each talent supply channel

to meeting incremental talent demand Develop a set of recommended changes to the mix of talent supply channels contributing

to meeting incremental talent demand

Determine the optimal mix of changes based on gap analysis – “What is the most efficient and effective combination of actions we can

take to meet future needs?”

Sample research Sample recommendations Internal Information

– Voluntary attrition is twice as high as the organization’s average for all employees

– Of voluntary terminations in the most recent year: • 60% were to take other employment in the

industry • 20% were for personal reasons (stay at home,

closer to family, etc.), • 18% were to take employment in other industries • 2% could not be determined based on the data

– Conclusion – Need to emphasize development opportunities and career customization

Retain – Decrease Voluntary Exits by 20%

in 2009 – 2010 Develop

– Increase Promotions In by 10% – Increase Transfers In by 5%

Hire – Increase to 15% in 2010

Step 6

Activities Identify short- and long-term actions required to modify the identified HR programs in

support of the recommended changes Formalize these actions in a workforce plan

Develop workforce plan – “How and when will we modify our existing portfolio of HR programs to

support and reinforce the recommended changes?”

Driver Workforce plan opportunities

Short term Long term

Retain

Identify “at risk” employees and develop retention packages Root cause analysis for voluntary attrition. Develop specific retention programs

Identify “at risk” employees who are moving into non CWS roles and develop retention packages

Develop succession planning for CWS Create “in role” career paths and experiences. E.g.,

create senior level opportunities and job assignment rotations

Develop

Determine minimum bar for CWS role – source internal candidates and encourage applications

Develop a clear internal career path into the CWS role. Includes competency development and training curriculum Establish a more structured mechanism to enroll

employees into the career path

Hire

Establish relationship with CWS schools nationally Recruit nationally. Leverage contingency search firms Develop an ‘attract’ program for the first of employment to

differentiate offers

Invest in more CWS schools – especially locally Establish an ‘employer of choice’ brand to attract

experienced hires

Step 6.

Example

What does a Workforce Plan look like? • A comprehensive workforce plan should

provide clarity as to how the strategic business objectives will be fulfilled through its workforce.

• The workforce plan should make reference to the various levers and interventions required to close or minimise identified gaps as a result of the supply/demand analyses.

• Where possible, impact on not closing identified gaps should be defined to help organisations understand the residual effects of the wrong people, wrong place, wrong time

• In addition to FTE requirements, the plan should also highlight key capability areas or jobs that require specific focus

• Finally, a workforce plan should include a roadmap which outlines when each intervention needs to be applied, but more importantly the order of priority

1.

2.

Tips and Traps

CWS • Focus on your critical workforce segments rather than attempting

to forecast for the entire organization

Leading Indicators

• Do not be satisfied relying on historical information alone to make future decisions

• Do not try to arrive at a ‘perfect forecast’ – instead focus your energy on becoming smarter about responding to talent drivers and trends

Talent Drivers

Scenarios • Scenario planning is critical to creating a useful and accurate

workforce plan

Risk Metrics

While ROI proves the financial value of Analytics, numerous other key performance indicators (KPIs) exist, and can be monitored to measure the success of investing in Analytics

Sample Measures of Success

Operational

Technology

Human

Soft-resource KPIs. E.g., Resource availability, turn-around and attrition, etc.

Productivity metrics. E.g., Utilization metrics, cost per head, etc.

Asset efficiency metrics E.g., System usage, asset downtime and availability, etc.

Development KPIs. E.g., New products built, new ideas generated, time to procure, time to prototype, etc.

Project management KPIs. E.g., # issues open, # risks open, etc.

Process efficiency metrics. E.g., Time to close, time to report, etc.

Financial metrics. E.g., BU Revenue, BU Gross Margin, etc.

Fiscal Risk

Reputation Risk

Operational Risk

Technology Risk

Key Questions

Does it support our strategic goals?

Does it improve efficiency and reduce cost?

Does it reduce risk?

Does it enhance decision-making?

Does it improve the likelihood of the organization’s success?

Measuring success

Questions??