The ability to develop, implement and adapt new business strategies in a fast-paced, agile way has become essential to business survival. In practice, business strategies often fail, not because they are wrong, but because they are not implemented effectively. Adopting a more strategic approach to workforce planning could help you navigate through uncertainty and volatility; ensuring you have the skills and capabilities you need (now and in the future) to execute your strategy successfully.
Over the past 2 years, businesses of all sizes have faced into many, many challenges, and the stark reality is, working in an uncertain environment is now the new normal. In our Organisation Design blog we introduced the term VUCA, to describe the ever-growing volatility, uncertainty, complexity, and ambiguity of our macro environment. Whilst some challenges may be reflective of the industry that you’re operating within, it’s likely you are grappling with some or all of the following factors:
For example, whilst the shift to changing consumer behaviour – towards online retail, was already underway, as a result of the pandemic growth, this has increased with internet sales now equating to 30.1% of total retail sales with predictions this will grow further. Technology will also continue to challenge existing business strategies and models and may change how your organisation needs to operate as consumers demand more frictionless processes.
From a people perspective there are growing concerns about skills shortages and increased competition to attract talent to organisations, so creating an engaged workforce where you are able to retain the skills and people you need now, and in the future will be key.
Implications for your business
These macro factors could have significant implications for your business, for example you may be finding:
If this sounds familiar, a more strategic approach to your people planning could help ensure you have the appropriate people and organisation contingency plans to align with whatever direction you need to take in the future.
In the face of ever-changing challenges, you may feel being reactive is the only option. After all, no one has a crystal ball! While this may be true, the need to have the capabilities, skills and flexibility within your organisation has never been more important. And the good news is, there are tools and techniques which can be used to help mitigate and help navigate through any uncertainty and volatility.
So what is Strategic Workforce Planning and why should your business introduce it? Read on to find out more…
What is Strategic Workforce Planning (SWP)?
‘Strategic Workforce Planning is about getting the right number of people with the right skills employed in the right place at the right time, at the right cost and on the right contract to deliver an organisation’s short and long-term objectives’. (CIPD)
SWP planning is different to resource planning, which tends to focus on in-year resource targets for all roles based on budgets built around anticipated demand at the start of the year. SWP will typically seek to identify plans to build and create the capabilities an organisation needs in a 1-3 year cycle.
SWP is a critical element of any business strategy feasibility study, helping to inform where people investment should be focused. This could include developing and retaining critical roles, potentially where readily available resource is scarce (and possibly only just emerging) in the marketplace, as well as attracting external talent.
Whilst SWP can support your long-term resource planning for critical roles, we believe it should also play a more pivotal role in the business planning cycle, to inform your people response to the business strategy.
In our experience, a collaborative approach to SWP is most effective and those organisations who devolve the activity solely to HR are missing a trick. By engaging a wider group such as HR, Operations, Finance and Strategic Planning, you’ll ensure your thinking and discussions are well rounded. Considering a more diverse range of insights and perspectives, enhances the robustness of your assumptions and scenario planning.
How does Strategic Workforce Planning work?
SWP is not an exact science. Instead, it aims to capture and forecast likely outcomes for different scenarios, effectively serving as a playbook you can revisit, re-baseline and adjust as your understanding of the future evolves. It should not be a separate activity, nor one that sits solely within the HR team.
SWP is a key strategic tool that can help you as a business better understand how your workforce needs to evolve. Good practice advocates it is incorporated within your business planning cycle. The methodology need not be complex and generally includes the following steps:
Why wouldn’t you adopt a more strategic approach?
During our (many!) years of work we have watched new HR and management techniques come and go. Strategic workforce planning has been around for a while, but the adoption of the approach is not yet widespread. But, why is this given the potential value it can deliver? Here are some of the misgivings and excuses we have heard, so it’s time to do some myth busting!
‘We already do it’ – More often than not it is short term resource planning that’s undertaken. A key difference between resource planning and SWP is the timescales they focus on, the former being 0-12 months and the latter 1-3 years. Also, SWP focuses on the roles that are most critical to your business, both now and in the future, rather than the whole workforce. Therefore, by its very nature, SWP need not be onerous and time consuming but should be a core activity that informs your talent development and succession planning, as well as your talent acquisition strategy for the future.
‘It’s just too complicated and time consuming’ – SWP should be incorporated into your normal planning process and not be seen as a stand-alone activity. At its heart SWP is just a series of simple steps. It doesn’t have to be complicated and time consuming – remember you are focusing on the most critical roles that will add most value to your organisation in the future, not the whole workforce.
‘It’s a one and done activity’ – SWP should be a dynamic process and when integrated as part of your strategy planning activity, enables you to revisit any previous assumptions and predictions and adjust these to reflect current insight.
‘It’s not relevant – my business is too small’ – You may think because your business is small SWP isn’t relevant to you, however, the events of the past 2 years have taught us the difficulty of managing people against a challenging backdrop. SWP as an approach can be adapted, so you can pick the elements most appropriate to you as an organisation and build them into your existing processes and mechanisms.
‘You can’t predict the future – no one has a crystal ball’ – SWP is not an exact science, it enables you to work through scenarios, mitigate risks and stay agile, adjusting your workforce plan as needed. It helps to evaluate the feasibility of different options. It’s judgement based rather than scientific but with a robust decision-making trail that can be revisited and updated. Workforce planning gives broad brush outcomes rather than detailed forecasts, it explores uncertainty to drive out alternative scenarios and decisions.
‘It’s just something that HR does – it’s a separate people activity’ – SWP needs to be integral to the business planning process. In the same way business design needs to enable your strategy, so does your people plan. We recommend you develop your business strategy and use SWP as the bridge between the business plan and the people response. It’s the foundation of the partnership between the business strategy and HR.
Need more convincing?
‘Workforce planning can enable sustainable organisation performance through better decision making about the future people needs of the business’. (CIPD)
In our experience, the benefits of Strategic Workforce Planning can be far reaching.
At its heart, SWP is not just an approach – it’s a way of working. The methodology can be used to help facilitate a more robust dialogue and challenge your organisation’s strategy. By doing so, it not only helps to ensure clarity about the direction of travel and desired outcomes, but also provides a thorough evidence-base from which to design the people response.
In the current environment, speed is of the essence. The rapidly changing environment requires insight to be readily available to enable agile decision making.
The right workforce planning process continuously monitors key variables for your business, such as market conditions and sales and demand patterns. Used in the right way, SWP can effectively manage costs in a way that reduces or eliminates the need for cost-cutting exercises. Regularly reviewing your workforce planning assumptions will inform where you need to reduce or grow your workforce in an iterative way enabling you to be more dynamic.
A more strategic approach could also enable your business to make strategic choices about where to invest in people to retain and attract key talent. SWP plays a critical part in informing other HR practices such as succession planning, recruitment, retention planning, talent management, job design, career planning, development, reward and recognition.
The ability to develop, implement and adapt new business strategies in a fast-paced, agile way has become essential to business survival. In practice, business strategies often fail, not because they are wrong, but because they are not implemented effectively.
And whilst it can feel daunting to make a start on adopting any new approach, our advice would be start small with a discrete team, experiment, generate some early wins and build out as you go.
Irrespective of whether you have already started your strategic workforce planning journey but it’s just not landed and needs reviewing or if, like us, you’ve decided that 2022 is THE YEAR to do something to get on the front foot; we can help.
If you’d like to know more or need some help in defining and implementing an approach, get in touch or download our free step-by-step approach.