A Bridge to Tomorrow

75th Annual NHRMA

Conference & Tradeshow

Presented by

Workforce Planning Building & Sustaining

Workforce Effectiveness

Robert J. Greene, PhD, SPHR, GPHR

Reward Systems, Inc.

2013 NHRMA Annual Conference

Is This What Your Future Looks Like?

Or Like This?

I Prefer The Roller Coaster

• You can see what is coming next; the track layout is fixed

• The vehicle will not go upside down unless it is supposed to

• You probably won’t be thrown out; safety belt/bar provided

The 20th Century So Far

• 1990s… Sustained prosperity

• 2000-2… Dot com crash

• 2002-7… Economic prosperity

• 2007-?... Economic crisis

• 2012- … If you know let’s talk

Impact On Organizations

• Fight talent war

• Downsize

• Fight talent war

• Downsize

• Seek treatment for manic depression

Deriving Your HR Strategy From The Realities You Face

VISION/MISSION

CULTURE

EXTERNAL REALITIES

INTERNAL REALITIES STRATEGY

HR STRATEGY Staffing

Development Performance. Mgmt.

Rewards Mgmt.

Impact Of Turbulence On Which HR Strategies Will Be Effective

• Need to align workforce costs with revenues

• Need for scenario-based workforce planning

• Need to value intangible assets (i.e., HRD as an investment, rather than a short-term cost)

• Need to manage critical knowledge

• Need to link HR strategy to changing environment and build in adaptability

A Workforce Should Be Managed Like A Portfolio Of Assets

• Treating your workforce as an asset acknowledges its criticality

• Asset portfolios are built over time by adding and subtracting specific types

• The portfolio performs well when it fits the environment, both in mix and in flexibility

Human Capital Portfolio Strategy

• If scenarios indicate wide variation in possible futures you should consider a diversified human capital portfolio

• If future is relatively predictable the more efficient strategy is to have a human capital pool focused on the ideal knowledge/ skill/ ability mix for that future

• Focus must be more on the future than what worked in the past

Workforce Planning Process

• Identify critical roles/occupations

• Define critical competencies

• Assess incumbent competence

• Assess future requirements

• Determine sources of potential loss/gain of human capital

• Decide how future requirements will be met to sustain the viability of the workforce

Planning: Multiple Perspectives

• “Chance favors the prepared mind” (Pasteur)

• “The best method of achieving an accidental result” (Devil’s Dictionary)

• “If you run short on time your best options are no longer available” (Cassel)

• “Rain dancing has no impact on the rainfall but it makes the dancers feel better” (Greene)

Types Of Planning

• Replacement Planning: specifying qualified/ most likely replacements for specific individuals

• Succession Planning: developing an adequate supply of candidates needed in the foreseeable future

• Workforce Planning: developing strategies for maintaining the type of workforce that will sustain organizational viability in the long run

Assessing Workforce Viability: Today & In The Future

Today’s

Workforce

Future

Workforce

Future

Needs

Recruiting

Developing

People

Career

Management

Performance

Management

Retirement Turnover Contracting/

Outsourcing

Org./

Role Design

Utilization Of

Technology

Identify sources of supply and losses, calculate net

gain or loss and determine if human capital will be

adequate in the future

Legal

Environ.

Current

Needs

Identifying Critical Skills

NATURE OF WORK

SKILL/KNOWLEDGE

REQUIRED

INTERDEPENDENT

WORK; LARGE

PAYBACK FROM

CONTINUED

EMPLOYMENT

WORK DEFINED IN

DISCRETE TASKS;

LITTLE PAYBACK

FROM CONTINUED

EMPLOYMENT

EXTENSIVE

EDUCATION AND

EXPERIENCE;

SPECIALIZED

SKILLS

CAREER PROFESSIONAL

PROJECT PROFESSIONAL

LIMITED SKILLS:

GENRAL IN NATURE CAREER SUPPORT WORKER

PROJECT WORKER

Assessment Model

Critical Skill Supply

Today

Demand

Today

Demand in

1 yr; 2 yrs;

5 yrs

How long

to

develop?

Gaps:

Supply/De

mand

Strategy For

Closing Gaps

1yr:

2yrs:

5yrs:

< 1 yr

1-2 yrs

2-5 yrs

1yr:

2yrs:

5yrs:

1yr:

2yrs:

5yrs:

< 1 yr

1-2 yrs

2-5 yrs

1yr:

2yrs:

5yrs:

1yr:

2yrs:

5yrs:

< 1 yr

1-2 yrs

2-5 yrs

1yr:

2yrs:

5yrs:

1yr:

2yrs:

5yrs:

< 1 yr

1-2 yrs

2-5 yrs

1yr:

2yrs:

5yrs:

Workforce Flow Analysis Control Room Operators

Entry Level Journey Level Senior/Lead

Current Staff 4 6 10

Current Demand 2 12 6

Current Gaps -2 6 -4

Demand: 1 year out 3 (+1) 12 (-) 6 (-)

Losses projected: next year 1 -1 4

Gaps: 1 year out 0 7 0

Demand: 3 years out 3 (-) 14 (+2) 8 (+2)

Losses projected: next 3 years 4 5 10

Gaps: 3 years out 4 14 12

Progression through levels must be projected as well to determine staffing needs

First Step In Workforce Planning: Evaluate Workforce Adequacy

• Develop competency models for critical roles

• Assess current staff against competency models

• Identify gaps

• Develop plans to close gaps in short term

– Skill specific training

– Internal movements

– Outside hires

Next: Determine Future Workforce Requirements

• Where work must be/can be located

• Skill mix (type and level) needed

• Technology that will be/can be utilized

• Supply/demand conditions in markets

• Assess cost of workforce required, given requirements and market conditions

• Size of workforce needed

Environmental Scanning

• Political, Economic, Technological and Cultural Forces/Trends Impacting Workforce Effectiveness

• Workforce Supply

– Local/regional/national demographics

– Global demographics

– Capabilities (knowledge & skill)

– Competitive demands for people

– Expectations/priorities of available people

Scenario-based Planning

• Develop multiple assumptions about what the future will look like (optimistic; most likely; pessimistic)

• Determine what the implications of each would be on workforce requirements

• Develop workforce management strategies that are robust; that will work reasonably well in a variety of possible futures

Example: Poor Workforce Planning

• D.O.E. had reactor operators sitting on their hands while production was shut down, in case it started up again

• When decision to decommission reactors was made a frantic search began for people with environmental remediation skills

• Q: Why weren’t the reactor operators trained in remediation skills, increasing the probability that they would be able to do whatever needed to be done

SWOT Analysis: HR Strategies

• Competence of current workforce; today and relative to future needs (Strength or Weakness?)

• Relative desirability as an employer (Strength or Weakness) – Mission/Nature of work/Culture – Economic &Technological resources

• Commitment to HR development (Strength or Weakness)

• Competitor human resource strategies and future supply/demand conditions for critical skills (Opportunity or Threat)?

Reward $ystems, Inc.

An HR SWOT Analysis

STRENGTHS WEAKNESSES

OPPORTUNITIES Capitalize Increase

Capabilities Or

Minimize

Impact

THREATS Deal With

Vulnerability

Deal With

Problems

Developing A Strategy For Effectively Performing The Work

Nature Of

The Work

How Can

It Best

Be Done?

Don’t

Do It

Any More

Redesign

It

Outsource

It To A

Provider

Automate

It

Do It

Somewhere

Else

Outsource

It To

Contractors

Staffing Alternatives

• Select for (internal or external)… find “job ready” person

• Develop for… select people who are capable of being developed and qualify them

• Design for… re-define the role to fit the available talent

• Outsource/contract out

Align Workforce Mix With The Work Mix

• Staffing/development strategies should be guided by a requirements model

– Determine mix of work (complexity and level of skill required)

– Develop requirements model that reflects optimal/ideal mix of knowledge/skills

– Manage selection and development to work towards ideal mix

Staffing an H R Function

SPECIALIST

GENERALIST

INTEGRATOR

Staffing An Engineering Function Scenario 1

Current Staff Mix

Consultant 20%

Senior 45%

Intermediate 30%

Developing 5%

Work Mix Required

Consultant 10%

Senior 25%

Intermediate 45%

Developing 20%

What should the staffing plan be ? What are the obstacles to achieving it?

Staffing An Engineering Function Scenario 2

Current Staff Mix

Consultant 10%

Senior 25%

Intermediate 45%

Developing 20%

Work Mix Required

Consultant 20%

Senior 45%

Intermediate 30%

Developing 5%

What should the staffing plan be ? What are the obstacles to achieving it?

Hire For The Job Or For The Organization?

• Jobs come and go… hiring for the job raises issues when job changes/disappears

• Do an organizational analysis as a supplement to job analysis

• Assess the “whole person” not just KSAs – Evaluate cultural fit (personality; behaviors) – Focus on adaptability and conscientiousness – Find out what person wants/needs to be satisfied

• Invest heavily in “onboarding” • Offer a “realistic employment preview”

Develop Your “Brand”

• Realistic employment preview: tell the whole truth and nothing but the truth… about the job and the organization

– This gets the right people in the door

– Avoids selling the wrong people a bill of goods… and having them exit within 18 mos

• Starts the relationship honestly and inoculates candidates against the negatives

Reward $ystems, Inc.

Employer Brand: Example: City Utility

• THE GOOD STUFF • Important work

• Job security

• Career opportunity

• Cooperative workforce

• Good benefits

• Equal opportunity

• Fair practices

• THE NOT SO GOOD • Limited upside $$$

• Limited opportunity to be a “gunslinger”

• Must be concerned about how work is done – impact on others (issue for Lone Ranger types)

• Civil service constraints

• Not a sexy industry

Reward $ystems, Inc.

Measure The Effectiveness Of Your HR Strategy

• Attract the right people

– Brand the organization correctly (the absence of a clear brand makes you a commodity… thereby competing on price)

– Develop competency models and then use them to select candidates (type and skill level)

– Ensure candidates receive realistic job preview (including culture)

– Develop/use effective on-boarding process

You Need The Right People

• The book “Moneyball” conveys a great concept that can be used to select people

– Start with objective (win games)

– Define key performance indicators (runs)

– Develop a competency model that describes the right mix of K, S, A & B of ideal fit people (on base percentage)

• It can go very wrong it selection criteria do not include all that is important

– Disney shareholders paying millions for a bad hire by Eisner… personality conflict was the killer, not KSABs

Ensure Effectiveness Of Sourcing Strategy

• Maximize the external supply – Create own supply channels (website; open houses; job fairs; referrals; create schools) – Create alliances with educational institutions – Aggressively reach out to non-traditional sources – Educate the public about career opportunities and the

organization – Outsource activities or use joint ventures/alliances – Utilize alumni networks and have leavers exit on

favorable terms so they consider re-entry

Reward $ystems, Inc.

Ensure The Effectiveness Of The HRD Strategy

• Develop the right people in the right way to do the right things in the right way – Create career management structures with clear

paths/ plans – Consider both vertical and horizontal moves – Make developmental opportunities broadly

available – Celebrate/reward those who develop the critical

skills/knowledge needed by the organization

How About Teaching Your

Employees Your Business?

If they know what produces success,

how to measure performance and what

they can do to have an impact:

They will trust your diagnosis

of current conditions more

They will be more likely to do

what it will take to do better

They just might sign up for

sacrificing more easily

Manage Workforce Effectiveness

• Maximize individual productivity and performance of all units and all individuals – Make objectives clear and relevant to all parties

– Provide necessary resources; make everyone capable of succeeding

– Recognize and reward contribution

– Create work/process improvement programs

– Ensure performance management system is sound

Workforce Satisfaction & Effectiveness (Gallup)

1. Knowing what is expected 2. Having resources to do it right 3. Having opportunity to do what I do best 4. Receiving recognition for good work 5. Having supervisor who cares about me 6. Having someone encourage my development 7. Having opinions count 8. Having work that is important to the mission 9. Having co-workers committed to quality 10. Having a best friend at work 11. Having someone talk to me about my progress 12. Having opportunities to learn and grow

If “Knowing What Is Expected” Is The # 1 Factor

• Then performance management is the critical determinant of satisfaction/effectiveness

• So why is it typically recognized as the least effective HR initiative?

• What are the costs of not doing it well?

• We have the technology… what is missing is the commitment to do it well

Performance Management: Global Principles

• Performance defined at individual, group and organization-wide levels

• Model developed that integrates objectives vertically and horizontally

• Criteria and standards for measuring performance defined up front and understood

• Continuous measurement and feedback

• Consequences appropriate and fair

Str

ate

gic

Va

lue

Performance

Acceptable

Mickey Mouse

Acceptable

Sweeper

There is more value in

improving Sweepers

than Mickey Mouse.

Best

Mickey Mouse

Best

Sweeper

Source: “Beyond HR” by John Boudreau

Determine The ROI

Of Performance

Clearly Define “Performance”

• Ensure the performance criteria and standards reflect the importance of:

– Contributing to the effectiveness of others

– Contributing to the effectiveness of the unit

– Codifying critical knowledge

– Making critical knowledge accessible to those who need in now/in the future

A Critical Challenge: Equity

• It is likely your employees think standards vary across the organization

• Managerial training and HR scrutiny can help but cannot do it all

• The process of aligning rating distributions is the key – Establishing equivalent standards

– Implementing calibration sessions at each level… bottom to top

– Communicating results openly

Rewards: The Big Ticket Item

• Compensation and benefits typically consume a significant portion of costs

– 70-90% in people intensive firms

– Less in capital intensive firms

• These costs can be managed… competitive posture is discretionary

• Problem is that base pay and benefits tend to be fixed costs in the short term

PERFORMANCE

REWARDS

What you measure and reward…

You most surely will get more of

How Much Should Rewards Vary?

Str

ate

gic

Va

lue

Performance

Acceptable

Mickey Mouse

Acceptable

Sweeper

There is more value in

improving Sweepers

than Mickey Mouse.

Best

Mickey

Mouse

Best

Sweeper

Source: “Beyond HR” by John Boudreau

Hire/Promote For Competence: Reward For Performance

• “Competency-based pay” was a hot fad… for about a year

• This is wrong headed – Competence is potential

– Contribution is realized results/contribution

• Example – Classify technical people into levels within career

ladders… and progress them based on competence

– Administer pay within the ranges established for levels, in a way reflecting actual contribution

Select “Good Fit” Rewards Strategies

• Base pay

• Variable compensation

• Benefits

• Work environment

• Career opportunity

Reward Differently?

• Base pay can be tied to skill/knowledge acquisition rather than job value

• Variable pay can be tied to:

– Organizational performance

– Group/unit/team performance

– Individual performance

Define, Measure & Reward Performance In The Same Way For All?

• There is a need to acknowledge diversity across occupations/roles

– Executives; Sales Personnel; Professionals; Support Personnel; Global Workforces

• They do not do the same type of work and contribute in the same way…

– “Rewarding Performance: Guiding Principles; Custom Strategies” for strategies to reflect this

Change Indirect Compensation Strategy?

• Reduce costs of benefits programs

– Increase employee share of health care

– Implement consumer directed health care

– Reduce level of benefits provided

– Provide flexible benefits

– Rethink paid time philosophy • Vacation carryover

• Specified number of sick days

• Separating different types of time off

Preserving Your Intellectual Capital

• Organizations often do not know what they know

• They often do not know what they need to know

• They are not aware of the costs of losing critical knowledge

• They don’t know who has critical knowledge

• They don’t develop strategies for preserving critical knowledge and disseminating it

Evaluate Criticality Of Knowledge

• Questions to ask

– What is its relative importance?

– What is its relative immediacy?

– What is the cost of recovering if it is lost?

– What is the feasibility of recovering it if lost?

– How difficult is it to transfer?

– What are the consequences of loss?

– How critical will it be in the future?

Ensure The Effectiveness Of The Career Management Strategy

• Develop career management systems

– Create career management structures and paths

– Move people to encourage development

– Move people to broaden skills/knowledge (developmental assignments)

– Create “skunk works” when processes need to be rethought and insulate from cultural constraints

– Co-locate people when it produces better results (avoid dark side of “virtual”)

Career Management Structure: Engineering

ASSOCIATE ENGINEER

ENGINEER

SENIOR ENGINEER

PROJECT LEADER

SUPER- VISOR

PRINCIPAL ENGINEER

MANAGER PROJECT

MANAGER

PROJECT ADMIN-

ISTRATOR

Ensure The Effectiveness Of The Retention Strategy

• Manage losses through retirement – Ensure retirement plans do not motivate

wrong behavior relative to exiting organization

– Consider layered incentives for those with critical skills and/or individuals who are the top contributors to stay as long as needed

– Design post-retirement roles that enable those with critical skills to transmit them/supplement workforce (e.g., contractor status)

Retention Strategy (cont.)

• Manage losses through turnover – Know what the attitudes of critical people are at

all times and why negatives exist

– Take initiative to ensure critical people know they are valued

– Insulate organization against loss of tacit knowledge through turnover (e.g., cross-train)

– Measure and manage employee engagement

Total Turnover

Voluntary Involuntary

Functional Dysfunctional

Unavoidable Avoidable

(Dystfunctional)

Internal Functional Dysfunctional

Evaluate Turnover: Is It Too High? What Are The Implications?

12% 8% 4%

29%

3% 14%

External 17%

4% 10%

2% 8%

Planning For Sustained Viability…

• Differentiate jobs by criticality to

mission and objectives

• Profile workforce by key demographics

• Identify critical needs

• Develop strategies for meeting needs

The Bottom Line

• Skill shortages will be the greatest in those organizations who do not plan early and effectively

• Effective planning will point the way to effective and appropriate HR initiatives

• The job is never done… at best it is presently going well

Reward $ystems, Inc.

Summary

• Do what fits your context

• Create a compelling value proposition

• Plan 5 years out and update plans continuously

• Look for ways to be an employer of choice

• Continually evaluate competence and flow in the workforce

• Monitor what competitors are doing

• Show the organization HR does count

If nothing seems to work, call in the cavalry!

If even that fails, call a consultant!

Robert J. Greene

• Reward Systems, Inc. • 1917 Henley, Glenview, IL 60025-4242

• 847-477-3124

• RewardSystems@sbcglobal.net

• RobertJGreene.com

• Mission: “Helping Organizations

Succeed Through People”