Approaches to Strategic Workforce Planning & its Critical Success Factors
Posted in Human Resources Articles, Total Reads: 3195
, Published on 06 September 2014
On 8th August we saw the headline ‘Infosys CEO Vishal Sikka okays 5,000 promotions to improve employee morale’. Infosys has promoted 10000 employee over the last couple of quarters. The bottom line remains it faces one of the highest attrition rates among its peers which stands at close to 20%. For example during the first quarter ended June 30, Infosys reported an attrition rate of 19.5%. The move is said to be made to improve employee morale and decrease employee turnover.
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Now this forms a very interesting case study. In human resource management we see terms such as workforce planning, succession planning and skill gap identification etc. So did Infosys factor in all the critical success factors of strategic workforce planning? It is very hard to answer this question. At the end of the day the strategy of Infosys is to become bellwether stock of the Indian IT industry and it seems to be taking baby steps in those direction. Only the time will tell if the decision to promote so many people contradicted the fundamentals of successful strategic planning. Also the unpredictability of the markets has resulted in layoffs. For example Microsoft recently laid off 5000 of its employees. So in a way tech giant such as Microsoft failed to predict the future demand perfectly. Therefore small firms might wonder is strategic planning a kind of abstruse science which no one can decipher. The answer to it is HR needs to become more predictive of such events. So how to you introduce the predictability. Immediately next question which comes to mind is what are this fundamentals and critical success factors one needs to take into account while embarking on the task of workforce planning. In this article we will be discussing the basic approaches to workforce planning and its critical success factors among other things.
First and foremost the golden rule of workforce planning is to ‘Develop a system integrated with the business.’
Three Types of Planning
The literature is ripe with different approaches to workforce planning which we will briefly see towards the end of the article but the crux of the matter remains that in abbreviated form, these workforce-planning steps consist of four steps which are: 1) Demand Analysis, 2) Supply Analysis, 3) Gap Analysis And 4) Solution Analysis.
Another somewhat elaborate approach to workforce planning:
• Organisation needs to gain a thorough understanding of your current workforce
• Predicting the future operating environment
• Identify the competencies which will be required in the future and
• Developing strategies & implementing tactics for building this workforce.
Critical Success Factors of Strategic Workforce Planning
Incorporating the Four Steps and Critical Success Factors
1. Check the efficiency of current program activities: current activities must be analysed to check if they are meeting strategic goals and objectives of the organisation.
2. Identify the current workforce capabilities and future labour demand: most of the firms are able to identify the current workforce capabilities but falter when it comes to predicting the future requirements. It is a difficult step as we have already seen the strategic planning can be abstract some times. HR analytics can be explored to come up with predictive modelling for predicting the future demand. But again the predictive modelling needs to take into account number of factors. It can also fail on the account of drastic technology changes as seen in the case of Nokia and Kodak. So whenever feasible, the organisations need to conduct data driven analysis to establish the exact nature of relationship between staffing and future requirements. As mentioned above we needs to assess current workforce skills and come up with skills inventory. Skills inventory will categorise the roles into strategic, operational, or support. This data will help us identify the gaps which HR can plug using methods such as succession planning, training and development, leadership development, multiskilling of the employee which are internal to the organisation or recruiting and selecting talent from the labour market. Employee involvement is important for this step. Another classification of roles is as follows:
• Strategic: roles critical to desired top line growth. Difficult for competitors to copy and hence result in competitive advantage.
• Core: roles essential to delivering high-quality services and products on a sustained basis. Losing such talent can be costly and is very difficult to recruit as well.
• Requisite: roles that support business performance but that could be staffed differently to reduce costs while maintaining quality and consistency.
• Noncore: roles that are not aligned with the strategic direction of the business and could be eliminated or redirected.
3. Assess the available supply of required skills: HR needs to assess the supply keeping in mind the short, medium and long term requirements. This assessment will include reviewing current trends within the workforce for turnover, retirement eligibility etc. It will also involve identifying external sources for candidates. It also needs to consider the time required to achieve full competency levels for new recruits.
4. Gap Identification: Are there gaps in KSA of current workforce and future required KSAs. This analysis will include the number of people required for optimum staffing along with KSA analysis. We also needs to identify the impact of losing the key talent. This information will then be used to establish priorities and quality for developing workforce plan. It is important to have JDs for all the support and operational jobs.
5. Solutions Analysis: How can we close these gaps? We need to develop a plan which will include internal measures such as capability building, targeted retention programs in the form of leadership development and succession planning. It will also be addressed using external measures such as recruiting initiatives and effecting inducting of new hires along with their skill building. This will include the implementation strategy of the workforce planning keeping in mind the strategy of the firm. The success of all these measures will depend upon the top management buy in and employees’ involvement.
6. Measure & Report to correct the diversions: How is human resource planning success measured? We need to continuously monitor the implementation and check its effectiveness for any mid course correction.
Journey of Workforce Planning From Basic Skill Gap Analysis to Segmentation Approach:
In the segmentation approach the focus is on segmenting the current workforce as seen from the matrix below and focusing on key roles within the organisation. It will help us in coming up with alternative workforce strategies such as outsourcing, offshoring & shared services.
Talent Matrix for Segmentation Approach:
Segmentation approach basically focus upon the distinguishing employees in terms of strategic contribution/ mission criticality. One might wonder if it is new. I would say segmentation is observed in number of situations that is in the case of compensation and benefits, allocation of work, selecting people for training etc. Many companies nowadays seems to focus upon who (employees) rather than the what (strategy of the business) when it comes to workforce planning.
It will include flexible roles for employees with the focus on multiskilling. By introducing the concept of multiskilling an organisation can create more redundancy and overlap among employees so that everyone has a backup job in the case of slowdown. Tata Motors follows this approach to create more redundancy in case of its temporary workforce. This will include cross functional training, exposure to different departments etc.
As we have seen already planning can be of three type. Tactical planning can also be one of the ways of workforce planning. Tactical or response planning is the kind of planning that can be undertaken to support overall strategy. Karl Weick once said that an organisation should be seen as a continually unfolding process. The problem is the strategy of the organisation keeps on changing and people at the bottom are not aware of it most of the time. To avoid this companies need tactical planning. Tactical planning guides the adjustment of all stakeholders of the organization to environmental pressures/ strategic changes.
This article has been authored by Margesh Wavhal & Shruti Joshi from XLRI Jamshedpur
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