Shift Happens

Mar 31, 2008
This article is part of a series called News & Trends.

A new acquisition, the slowing economy, increased competitive pressures, or plummeting sock prices. There’s a good chance your business felt the impact from one of these major events in the past year. But did your company have a workforce plan in place that anticipated the event’s impact on human capital?

The most likely answer to that question is no, because nearly 90 percent of the attendees at the “Workforce Planning” workshop at today’s ERE Expo in San Diego said their companies only had basic workforce planning models in place, and those traditional models don’t forecast human capital needs based upon possible future business scenarios.

“Too often the first step in the workforce planning process happens when the requisition is received, and that’s too late,” said Ed Newman, president of the Newman Group, who facilitated the workshop. Newman says that intermediate-level workforce planning combines workforce analytics with scenario modeling to look at how future business circumstances may impact retention and future hiring needs.

An example of the “what if” modeling strategy cited by Newman was the golden handcuffs scenario, which contemplates the impact of future stock prices on the company’s executive compensation plan. The model projects scenarios where the company’s executives might be vulnerable to poaching based upon future stock option vesting dates at a range of stock prices.

The most advanced level of workforce planning dovetails talent plans with business and financial planning, thus enabling organizations to achieve a comprehensive workforce plan that’s aligned with the business strategy. This high level planning facilitates business decisions. Only two attendees said their companies were currently planning at an advanced level.

An example of when advanced planning capabilities are required is when companies upgrade talent and employee skillsets to meet competitive pressures. A workforce segmentation plan defines the positions that are critical to driving the new strategy and those that are not. From there, the gaps in the workforce are uncovered and employees can be sourced, developed or redirected to meet the new business model.

“It’s important to understand the business strategy at the most finite level, so you can align the workforce plan, identify the gaps, and then build action plans to close them,” says Newman.

All talent gaps are closed in one of four ways according to Newman:

• Build:develop internal talent to fill openings

• Buy: acquire talent externally

• Borrow: augment headcount with contract or temporary labor

• Bounce: planned attrition

In the afternoon, the workshop attendees participated in hands-on exercises led by Mitzi Adwell, talent management practice leader for the Newman Group. Participants forecasted hiring needs, prioritized talent acquisition schedules, authored plans to close workforce gaps, and aligned workforce analytic fundamentals with business plans.

Practical application of the skills seemed to be just what the attendees wanted, because Newman says that all workforce plans must be updated at least quarterly to maintain efficacy, so having a strong comfort with the required skills is vital. Newman further commented that no matter how detailed the analytics, the plans are largely based on estimates, so if it takes HR one year or longer to complete the plan, it will be outdated before it’s implemented. Given the fact that the majority of today’s hot jobs didn’t even exist in 2004, HR professionals need to hone their workforce planning skills, because the only constant in business is that shift happens.

This article is part of a series called News & Trends.