Using Workforce Planning to Deliver Competitive Advantage

In today’s tight labor market where matching talent and outcomes has become critical for achieving high levels of performance, an organization’s workforce is arguably its most important asset. Indeed, organizations routinely exclaim that their people are their most important asset. However, very few businesses carefully plan, measure, or optimize this all-important resource.

Too many organizations don’t know of the current workforce gaps that will limit their ability to execute against their business strategy. The main cause of this disconnect between the recognition of the value of the workforce and the management of this resource is a lack of agreed objectives regarding what the output of workforce planning should be and a lack of a workforce planning process that includes predictive workforce modeling.

The main goal of workforce planning is to ensure that talent supply is equal to or greater than talent demand. If you want to execute your strategic plan, you need to have the right people in the right seats to deliver. So what outputs from workforce planning activities should the business expect?

Some benefits we want to achieve include:

  1. Knowing what headcount is required to execute the strategic plan, and specifically what talent will be required.
  2. Knowing what talent demand and supply issues currently exist in different areas of the organization (line of business, location, function, etc.).
  3. Knowing what impact management decisions and priorities will have on future workforce investments.
  4. Understanding what issues impact employee productivity.
  5. Determining the best metrics for understanding the risks concerning talent across the business.
  6. Providing accurate, real-time reports on workforce planning results.
  7. Creating a plan to be proactive, instead of reactive, when it comes to talent management.

Deploying a Workforce Analytics (people analytics) solution will enable you to gather and analyze data from across your organization to provide information for your workforce planning process. Using this information, you’ll be able to determine the real demand required by your strategic plan, understand what workforce supply already exists inside your organization, and design a forward-looking plan for bridging any gaps that might exist.

Understanding Talent Demand

Typically, organizations task an individual or small “center of expertise” to look at the business’s plan and draw up workforce requirements for the different areas of the organization. The problem with working this way is that the future is uncertain. No matter what plan an organization has in place, the rate and extent of success or failure in different areas of the organization are somewhat unpredictable.

For example, according to Peter Cappelli in his research on workforce planning, “The error rate in the U.S. on a one-year forecast of demand at the stock-keeping unit (SKU) code or individual product level, for example, is over 30 percent.”

There are two key components to avoiding this approach and the reactive stance it generates. The first step is to understand that workforce planning is a process, not a project with a “plan” as the outcome. Workforce planning is an ongoing process that takes the ever-changing state of the reality of the business into account and compares it to the strategic plan and expectations.

The second step is to implement technologies like People Analytics (such as the PredictiveHR platform) that provide users real-time and accurate information on the current state of the organization and provides predictive capabilities. Not only can analysis take place as part of a regular process, but ad hoc analysis can also provide critical information every time the state of the business changes due to internal or external circumstances.

Understanding Workforce Supply

In addition to understanding and predicting changing needs to your workforce requirements, you’ll need to keep abreast of your current workforce supply to meet those needs. Much like with planning, most organizations approach their future workforce supply stance by carrying forward historic trends when it comes to turnover, retirement, and internal job movement – and possibly take into account industry benchmarks.

Not only is this method inaccurate when it comes to total workforce supply, but it also doesn’t take the performance of individuals in the organization at all. That is, even if you’re lucky enough to have an internal workforce supply to fill all of your seats, you may not have the right people to fill the jobs in terms of competencies and performance.

As with predicting demand, People Analytics tools should be used to bring predictability to both the number and makeup of your organization’s workforce supply. Good People Analytics tools take into account a wide variety of data and apply Artificial Intelligence to that data to conduct complex analysis incorporating demographics, organizational actions, workplace conditions, and much more to predict how groups, and individuals, may be impacted and the effect it will have on your internal workforce supply.

Action Planning

Once you know where there are likely to be gaps between your workforce demand and supply, you can create a framework for and ongoing workforce planning process. Since using People Analytics tools provide detailed and individualize intelligence, you can create a more detailed and targeted approach than the typical business.

Most organizations focus on general hiring, retention, and develop programs to bridge any perceived challenge they may face in the future. Organizations that enjoy the predictive analytics available in People Analytics tools can proactively target recruitment based on accurate career transition information, target development programs to specific areas or individuals who would most benefit, and fine tune pay strategy and bonus programs to enhance retention. Even promotions, transfers, and reorgs can be planned in advance to take advantage of your current supply – putting talented, capable, and engaged employees in roles that leverage their highest value.

Using the right tools, businesses can achieve an advantage over their competition by better managing the most important resource in every organization – the workforce.