What’s hot in talent management changes quite often. Right now, there’s no hotter topic within the talent management community than workforce planning.
The reasons are simple: with the current economy driving revenues down dramatically, many senior executives are examining how to plan ahead in order to increase their firms’ capabilities, reduce costs, and survive the economic chaos likely to continue for some time.
Organizations need an effective talent management plan that will allow them to “explode out of the box” at the first sight of economic recovery, yet one that doesn’t threaten economic sustainability in the short term.
While most in talent management are continuing to react with stale cost containment approaches developed decades ago, strategic talent managers are stepping forward with robust workforce planning solutions and new work models that account for the significant changes in both how people work and live that have occurred in the last 20 years.
If you are interested in doing more than talking about being strategic, here are some recommended action steps to help improve your organization’s workforce planning.
What the Heck is Workforce Planning?
It might seem like a simple question, but there is little to no agreement among HR and talent management professionals as to what constitutes workforce planning. To some, it’s mostly an administrative activity that reports on historical changes to headcount and forecasts likely changes based on historical trends (i.e., headcount planning).
To others, it is a more strategic effort designed to forecast talent needs, talent supply, and the ability of existing HR programs and activities to align the two.
The more strategic variant looks at both internal and external trends and predicts what will be needed to recruit, develop and redeploy “just the right amount” of talent to meet specified business needs. The definition of workforce planning I prefer is:
“Workforce planning is an integrated and forward looking process that is designed to predict (what, when, how much) will likely happen in talent management and then to provide action plans that will cause managers to act in the prescribed way. As a result of the planning process, managers will be able to avoid or mitigate people problems, take advantage of talent opportunities and to improve the “talent pipeline,” so that your organization will have the needed “people capabilities” required to meet your business goals and to build a competitive advantage over other firms.”
Goals of Workforce Planning
Once again, not everyone agrees on what workforce planning is, but generally speaking, there are eight major goals for workforce planning that everyone should agree make sense. These goals relate to an organizational capability to:
- Reduce labor costs rapidly without negatively impacting productivity.
- Identify and prepare leaders and managers for future openings.
- Fill “sudden vacancies” in key roles immediately with capable talent.
- Maintain a flexible contingent workforce.
- Proactively move talent internally to maximize the return on talent.
- Target retention activities on key talent.
- Identify mechanisms to rapidly hire needed talent.
- Increase the overall productivity of the workforce.
Key Programs within Workforce Planning
There is no standard array of programs that define every organizations’ workforce planning effort. No matter what you end up doing, your programs will largely fall into one of two areas.
The first area focuses on increasing organizational capability through talent, and common programs in each area include:
- Forecasting the future needs, talent availability, and potential talent problems.
- Succession planning and leadership development.
- Forecasted recruiting plans.
- Workforce innovation management.
- Retention planning.
- Immediate “backfill” planning (To fill sudden openings in key positions).
- Internal re-deployment and “right job” placement planning.
- Merger and acquisition integration plans.
The second area focuses on decreasing labor costs, and common programs in each area include:
- Contingency/contract labor workforce planning.
- Workforce outsource planning.
- Reduction in force planning.
In my experience, these are the firms to study:
- KLA Tencor
- U.S. Marines
- Eli Lilly
- Booz Allen
Workforce Actions That ‘Fit’ the Current Environment
The most effective workforce plans are not developed over a long period and then implemented all at once. Instead, while some plans are being developed, talent management leaders simultaneously take action to resolve immediate needs.
If your company is struggling in the current economic environment, five of the key action steps that you should consider immediately are listed below.
Action Step I – Labor cost containment/headcount reduction
I am not alone in forecasting the fact that the decrease in revenues that businesses are facing will continue for at least another year. Whether that actually happens or not, it’s always a good idea to prepare for the “worst-case scenario” and hope that your plan is not needed.
Start with position prioritization, a process that identifies which key positions, key individuals, and key skill sets will have the most business impact during the next two years. Once you prioritize, you can then focus on retention, redeployment, and development efforts on the most impactful positions.
A related step is to develop a process to effectively identify and “control” all forms of labor costs throughout the organization (that includes full-time employees, part-timers, contractors, consultants, strategic partner labor, and outsourced labor).
The next step involves developing the capability of reducing “labor costs” and headcount in the lower priority positions. That might include “mock layoffs” and designating lower priority positions as “contingent labor” positions. Other options to consider include labor wage arbitrage (moving labor to lower-cost areas) or outsourcing with contracts that allow you to rapidly reduce outsourcing costs as your needs decrease.
Action Step II – Increase the internal movement of key employees
As business needs change, it’s important to develop processes that don’t leave the internal movement of talent into the “right job” to chance (as most internal job posting system’s do). I recommend that you develop a proactive redeployment process and plan to move your top performers and highly skilled individuals out of less essential business units and into units and jobs where they can have a greater impact.
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The goal is to make sure that you don’t have a “Michael Jordan” playing “baseball” within your organization, when his impact would be significantly greater if he was proactively moved into “basketball.”
The right job can be defined as having your top performers and highly skilled individuals:
- Doing what they do best;
- With the right skill set for the job and business unit;
- With the right tools, resources, and motivators;
- With the right manager; and
- With the right teammates.
Action Step III – Increase the retention of key employees
Most organizations literally “forget” about retention during tough economic times because they assume that their employees will put security over external opportunity.
Unfortunately, that would be a mistake because the seeds for foundation of top performer turnover begin long before they decide to leave the firm. “How you treat your current employees now,” will directly impact their willingness to stay later on when the economy turns around. If your firm has been using hiring freezes, pay cuts, furloughs and layoffs recently, your key employees are likely to be frustrated and overworked. It’s also true that some firms have learned to continue hiring while simultaneously releasing employees.
This “churn” means that recruiters in some industries, firms and regions are still targeting your very best.
The best retention plans first identify the things that excite and frustrate your key workers and then provide a plan for increasing their level of excitement, challenge, learning, and opportunity within the firm.
The last but most important action step is to develop a “bad manager identification program” because bad managers are the number one cause of employee turnover. [For more information on setting up a Bad Manager Identification Program, click here.]
Action Step IV – Reinvigorate your succession plan
If your firm has undergone layoffs, hiring freezes, and reductions in college hiring, you are likely setting up your organization for a future “talent pool gap.” What this means is that by failing to hire and develop talent over a period of even a few years, there simply won’t be enough available talent to fill future management leadership positions when growth begins. This will slow promotions because there just isn’t anyone internally to replace them. This will make the predicted “leadership gap” even worse.
The best course of action is adopt your own “churn” approach to maintain some minimal level of hiring and development to minimize the possibility of any future internal talent pool gap. A related option is to implement a talent SWAP approach, where you continually “troll” for top talent and then replace bottom and average performers only when you find an exceptional replacement.
Action Step V – Prepare to “explode out of the box”
The final action step is to develop a plan that enables your firm to have sufficient talent to enable it to “explode out of the box” the minute that your firm’s revenues begin to turn around. That means retaining your very best recruiters on staff and having them focus on developing Web 2.0 recruiting tools. It’s equally important to maintain the two most-impactful recruiting programs, employee referrals, and employment branding.
Develop a “boomerang” program that tracks and maintains a relationship with the very best employees you must release. The goal is to be able to almost immediately rehire some of the proven talent that you lost.
The basic premise of workforce planning is that it’s better to be prepared than surprised. It might seem counter-intuitive to try to plan during times where uncertainty is so high, but that would be a mistake.
During times of turmoil, almost any forecasting and planning will produce higher business impacts than reacting to unforeseen events without a plan. Fortunately, if you’re personally interested in workforce planning, you’re likely to find that no one actually has the formal authority to “own it” at the present time, so you can seize the opportunity and become known as the person who can see around corners. During turbulent times, you will find that no one will be considered more valuable than someone who is not “surprised” by the future!
Free Workforce Planning Handbook: If you are interested in reading in-depth about workforce planning, I have compiled a number of articles into “The Workforce Planning Handbook,” a 240+ page electronic book which is available at no cost for evaluation purposes at www.drjohnssullivan.com. Once registered and logged in, click on “Publications,” then click on “Draft Books.” It’s free to download.