Some common statements heard when the subject turns to workforce planning: “HR wants us to do something else that will take time away from running the business.” “Workforce planning? What does that even mean? Isn’t it HR’s job to hire people when we need them?” “Our business strategy is constantly changing. We don’t know what we’ll need next month, much less next year.” The concept of workforce planning has been around for years, but continues to be an area that is misunderstood and rarely implemented well. Not doing workforce planning well can negatively affect an organization’s ability to compete effectively and execute on business strategy; however, because of other projects and resource drains, many organizations ignore workforce planning and don’t realize its importance until it is too late. With a little planning and guidance, organizations that are exploring workforce planning can get off to the right start. Organizations that have tried before, unsuccessfully, can restart the process and continue the journey up the maturity curve. In this article, I provide some tips for organizations that don’t have workforce planning in place can use to get them started on the right track, and offer up some suggestions to think about while building it, including:

1. Defining workforce planning for your organization
2. Proving its value to the organization
3. Defining critical roles
4. Other data segmentation
5. Gaining key business leader and executive support
6. Building the right governance model and organizational structure to deliver
7. Teaming workforce planning with finance and business planning
8. Integrating workforce analytics into the process
9. Choosing and using the right SAP/SuccessFactors tools to support the planning process

I discuss each of these in detail in the following sections.

Defining Workforce Planning for Your Organization

Ask 10 HR leaders what workforce planning is and you will likely get 10 different answers. Some see workforce planning as operationally based, focusing on immediate staffing needs. Others have a specific organizational pain point, such as an upcoming retirement cliff, high turnover in a specific role, or a diversity initiative that they use workforce planning to address. And still others take a strategic, future-focused perspective that looks out at the workforce needs in three, five, or even 10 years, and use workforce planning to lay down the talent foundation to meet these needs. For an organization to fully adopt workforce planning, business leaders and HR need to coalesce around a definition of workforce planning, what it should be, and the expected outcome. A good way to start defining the unique definition for your organization is to ask stakeholders what problem is being solved by workforce planning. At opposite extremes of the spectrum are answers that are very strategic (“We need to ensure we buy or build the skills that align with our 10-year strategic plan, so we should be hiring or training employees on those skills now”) to those that are very operational (“We need three nurses to cover shifts in the next two weeks. How can we get them?”). What problem do you want and need workforce planning to solve in your organization? Is the time frame less than a year (operational) or more than a year (strategic)? Do you want to look out three years? Five years? More than five years? How is your industry changing and how are skills evolving? Is your business strategy changing? Do you have current gaps or pain points in the organization that need to be addressed? Are you downsizing or streamlining and need to protect key employees and critical skills? Understanding what problems workforce planning will be addressing, and communicating the intent of the process to leaders helps build consensus and makes any time commitment by business leaders worth the investment. Most of the guidance in this article focuses on tips for implementing strategic workforce planning with a planning horizon of three or more years; however, some tips will resonate even for those who need operational plans or those addressing specific pain points. A formal definition and a chartering document can provide additional clout to the HR team in those organizations who have more formalized processes and structures. A typical chartering document for an initial workforce planning roll-out includes sections on:

• Organizational definition
• Project scope and deliverables
• Current talent pain points
• Project team roles and responsibilities
• Project assumptions and dependencies
• Project risks
• Project plan

At the conclusion of the initial workforce planning roll-out, the chartering document can be adapted and embedded as part of the annual planning process.

Proving Value to the Organization

Too often HR is seen by managers and business leaders as the enforcer of processes rather than a strategic partner that helps leaders to do their jobs. Strategic workforce planning gives HR the opportunity to change the dynamic: It affords HR the chance to show it understands the talent pain points in ongoing operations and has a solution to mitigate the pain. Regardless of what the specific pain points are, HR can finally work with the business to show that it understands the business talent struggles and needs. But, more importantly, HR also has the opportunity to show that it is targeting its hiring, development, and retention programs to ensure the right talent is being brought on board and developed to have the right people in the right place at the right time. A best practice workforce planning process includes the input of business leaders, but it is in partnership with HR to avoid the overreliance on business leaders that can cause burdensome time commitments. Most business leaders are already facing time constraints just with running the business. Having HR facilitate the process and only contact business leaders at key touchpoints retains the value, but helps to alleviate the time commitment from the leaders. Through this methodology, leaders appreciate the great value being provided by HR through analytics and planning without feeling that their own time investment is onerous. From an empirical perspective, the value of workforce planning is easily proven. Many studies have shown a positive return on investment, higher shareholder value, and other metrics that are positive to the organization.

Defining Critical Roles

Defining which roles within your organization are critical can help with the focus of workforce planning. This type of segmentation can better quantify risks and guide resources towards the areas of greatest criticality. Most organizations define critical roles as those that are strategic and key to future organizational success; however, some use other factors such as scarcity of the skill in the market or its difficulty to fill. While scarcity of skill and difficult to fill often correlate for organizations, depending on talent programs (for example, some companies that pay over market rates for certain roles) or brand (highly sought after employers), they may differ significantly. Some things to keep in mind when defining critical roles:

1. Use a methodology to help define what the critical roles are.
2. Although it may cause some angst to have to classify, not every role within an organization is critical. Typically, only between 15 percent to 20 percent of all roles should be classified as critical.
3. Be careful to delineate succession planning and knowledge management from workforce planning. A critical role should be based on a role (the skills required and role performed), not a specific person and his or her abilities and acquired knowledge.

When doing workforce gap analyses, it is important to segment and analyze by critical roles, as not having these skills and competencies in the future will result in organizational failure.

Segmenting and Analyzing Data

Besides looking at critical roles, being able to segment the data in other ways can provide key insights into your organization’s risk areas and pain points. SuccessFactors Workforce Analytics tool provides the ability to drill down by many different dimensions to provide the segmentation. Some examples of segmentation are:

• Looking at the age of the workforce in different areas to assess retirement risk.
• Examining turnover by tenure to assess whether there are key points in time that might be driving turnover. Often this is new-hire turnover, but there may be other triggers, such as a retirement plan vesting date that employees are waiting for before leaving.
• Analyzing geographies, business units, and skills/competencies to see if there is disproportionate turnover or risk in certain areas.

One critical point to remember is that workforce analytics does not provide answers itself, but rather points to areas when additional analysis (like root-cause analysis) should be done to determine the underlying risk or problem so it can be remedied.

Gaining Support

In many organizations, the VP of HR or CEO understands the strategic nature of workforce planning and is the impetus for implementing it. In others, there is a key business leader who is willing to lead a pilot and be a champion within the organization. This leader has either felt talent pain or knows that the future needs will be different from the current needs. The way an organization begins thinking about workforce planning does not matter, but the key to success is the same: You must have executive support and business leader support or the initiative will die on the vine. Having a respected and outspoken leader who understands and will tout the value of the workforce planning process can be the difference-maker in success and failure. Even in organizations that may be more conservative and slower to adopt new ideas, typically one or two leaders are willing to champion something this strategic.

Building Governance Model and Organizational Structure

Although business leaders can be skeptical about workforce planning adoption, often it is employees within HR itself who put up the most resistance. Much of this resistance is due to misunderstanding the process, lack of business acumen, or a reluctance to work with the business at the strategic level. As earlier noted, a common understanding of the process, value, and expected outcomes are important; however, many HR business professionals still find it difficult to deliver what is expected to fulfill the process. Delivering workforce planning requires a unique combination of skills. It entails an analytical mindset to be able to understand and interpret the quantitative outputs, but also requires a consultative ability to bridge the gap between the information and the so-what questions that business leaders will have. Understanding the business and being able to consult with business leaders on talent strategies helps to drive the right recommendations to close talent gaps. Because many HR business professionals do not have the desire or skillset to deliver the workforce planning analysis and consultative approach required by workforce planning, many organizations set up a Center of Excellence (CoE) either to run the entire process or to work closely with the HR business professionals in the roll-out of the process. While not entirely necessary for success, having a CoE ensures consistency in analytics, interpretation, and delivery of the process. It also makes the organizational roll-up of workforce planning results much easier to compile. For more information on how to set up a CoE, SuccessFactors has produced a comprehensive white paper. Click here to read it: How to Build an HR Analytics CoE.

Combining Workforce Planning with Finance and Business Planning

Most organizations agree that their most valuable asset is their employees. So why are so many ignoring this when they do strategic planning? Planning should be a triad:

• Finance, with input into budgeting, investments, and expected return
• Business leaders, with planned strategy and organizational direction
• HR, with talent strategy and determining whether it can deliver on the business strategy while staying within the financial budgets

Too often the first two bullet points (budgets and strategy) are foisted onto HR without giving HR the opportunity to give input around the feasibility of having the right talent at the right cost to be able to deliver. Workforce planning provides the ability for HR to understand the dynamics and push back on unrealistic expectations before they happen. Ultimately, it should give HR the seat at the table during the strategic planning process to help to shape the strategy and budget.

Integrating Workforce Analytics

Workforce analytics is a wrapper around workforce planning. Analytics provides critical input into the workforce planning process by helping to understand:

• Where the organization has been
• What the risk areas/pain points are
• Based on past trends, where the organization will be in the future
• Different scenarios and what will happen given different sets of assumptions

On the back end, workforce analytics provides the measurement tool to ensure that the expected outcomes from the process are actually happening. The chart in Figure 1 shows workforce analytics/measurement as both an input and an output.

How to Choose the Right Tools to Support Planning

If done right, workforce planning is one of the most strategic and valuable processes that HR can implement; however, it needs to be done with some forethought and planning rather than just winging it. Ultimately the goal of having a repeatable and sustainable process can be achieved through the right combination of process, people, and technology for your organization. As with any other HR system, a key consideration when choosing a technology to support workforce planning is ensuring that it can support the defined process, create outputs needed to provide required analytics/measures, and help with adoption of a repeatable and sustainable process. When thinking about workforce planning, make sure to choose a tool that provides not just the analytics—current and past data—but also projects into the future to show gaps that need to be addressed. Many tools are good at compiling current and past data to show where an organization has been; very few are good at looking to the future and providing actionable insight into what the current gaps are and future gaps will be. The best tools also help with program planning in the future by providing recommended actions that can close the gaps and ensure successful execution of the business strategy. Many organizations rely on HR/IT teams to build custom analytics and planning tools that can support the specific current and future planning needs. SuccessFactors, for example, has offerings in its Workforce Analytics and Planning and Reporting modules that cover the technical requirements that many organizations require. The platform’s reporting and analytics options are outlined well in this HR Expert article, “A Guide to SuccessFactors HCM Reporting Options (Part 1).” Additional functionality in the Workforce Planning module provides future workforce projections that can support strategic planning needs.