02 November, 2017

Strategic Workforce Planning

Imagine knowing that your right hand person, is at a high risk of leaving. Imagine if you could predict who was at a high risk of leaving your organization, 12 months before the resignation arrives, regardless of location, department, level, gender, ethnicity and person. Imagine if you could easily find your 10 leading performers who are at risk of leaving. What if you could know not only who is at risk of leaving but also why? And how much it is expected to cost you? What if you could know that one more hour in the day or one more vacation a year could keep your employees engaged and improve your bottom-line? Strategic Workforce Planning takes you to the future by helping you find this information. Let us begin by understanding the concept of Strategic Workforce Planning through a small Case.

Plan App├ętit is a newly opened 100 seat restaurant in the financial district of Vancouver. Based on a market study, the restaurant anticipates reaching full capacity at the end of its first year. All full capacity, the restaurant would serve about 900 patrons per day, or 6,300 patrons per week, or 25,200 patrons per month. As per the planned marketing effort, the restaurant anticipates a 10% increase in clientele each month. With these marketing insights, the restaurant manager creates a staff augmentation plan. The restaurant manager now knows how many staff members will need to be added each month. This means the restaurant can conserve funds by not hiring all the staff all at once. It can instead divert those funds into other activities to grow the business.

Strategic Workforce Planning is understood as a core process of human resource management that is shaped by the organizational strategy and ensures the right number of people with the right skills, in the right place at the right time to deliver short-and long-term organization objectives. Sibson Consulting uses this definition to construct a framework to implement Strategic Workforce Planning as shown in Exhibit 1.

It typically starts with the organization’s business strategy, operations plans, and people management strategies. This implies that organizations engage in rational planning activities – or at least are in a position to articulate some elements of these strategies in structured coherent ways. Qualitative and quantitative workforce information is then gathered which should assist in providing an understanding of the current situation and what needs to be change to meet these strategic requirements in the future. Such information includes the number of staff that the organization estimates will be required, their location, and their skill requirements.

The next stage involves data analysis and clarification of the picture. This typically sees HRM and business managers contributing their observations and predictions around resourcing requirements. These discussions should result in agreement about what the plan is trying to achieve, which is then reviewed against available resources. To do this, planners will need to review the supply of labor, internally and externally, assess the potential capability of the workforce to develop any requisite skills, and then identify areas where recruitment will be needed. An example of this process in action at Siemens, along with the role played by the HR function, is outlined below.

Siemens is a global engineering and technology services company employing over 400k employees worldwide with revenues of nearly €73.52 bn in 2010-11. Business environment analysts identify the markets that are attractive to Siemens and as the company develops its strategies to take advantage of market opportunities, people implications are identified on either a business unit or geographic basis. The workforce plan is used to identify not only people resources to deliver business objectives, but also the HR resources needed to support this. The HR business partner engages business unit management teams on workforce planning implications of their business strategy, examining the type of competence that will be required in the next year and making an assessment of their availability in the marketplace. The HR specialists establish the process for workforce planning, the consistent application of tools and systems across business units, and performance/progress reports over the period of the plan.

Whilst the literature concerning workforce planning is dominated by strategic concerns, the success of the process is underpinned by good relationships between business and workforce planners at the strategy level and between HR business partners and an organization, which drives the process, and securing line manager input, i.e. those who know locally and operationally whether plans are realistic, can be challenging, especially for geographically diversified organizations. Given that line managers are usually tasked with the delivery of the workforce plan, they will need to be clear as to the future direction of the organization and how it will impact their team/department. Consequently this will require them to have a vehicle for creating dialogue with managers concerning these micro-needs.

Finally workforce planning increasingly has to account for wider demographic issues that are beyond the control of the organization. Different stages pose complex work-life challenges for employees which have implications for workforce planning. Where older workers are concerned, they possess a range of attitudes towards retirement and planning for it and that a “one size fits all” approach is not possible. This highlights the tensions organizations face in meeting work-life requirements and operational requirements within existing resource capabilities.

1. CIPD (Chartered Institute of Personnel Development) 2010, Approaches to change: building capability and confidence. CIPD, London.
2. CIPD (Chartered Institute of Personnel Development) 2010, Workforce Planning: Right People, Right Time, Right Skills. CIPD, London.
3. Sibson Consulting 2009, Strategic Workforce Planning. The Segal Group Inc., New York.
4. Gilmore, S & Williams, S 2009, Human Resource Management, 2nd edn. Oxford University Press, Oxford.
5. Acas 2014, Age and the workplace. Acas, London.
6. Malik F, McKie, L, Beattie, R & Hogg, G, 2010, A toolkit to support human resource practice. Personnel Review, 39/3: 287-307, Bingley.
7. Flynn, M, 2010, The United Kingdom government’s “business case” approach to the regulation of retirement. Ageing and Society, 30/3: 421-43, Champaign.