10 Myths About Strategic Workforce Planning Debunked
Editor’s Note: This article was originally published on June 5th, 2019 but has been revised and updated with the latest information surrounding strategic workforce planning.
Friends, I have a confession to make—I vehemently despise the term Strategic Workforce Planning. And this is a problem, given the fact that it’s one of the most broadly used terms in the HR industry. But therein lies the issue—the phrase strategic workforce planning is facing an identity crisis. Below is a small sample of the roles the terminology takes on:
●?????rostering
●?????workforce management
●?????project management
●?????budget planning
●?????future of work projections
See my point? The thing about strategic workforce planning (or SWP for short) is that yes, it is about the workforce – but that doesn’t mean it is another item in the “best-practice toolkit” or laundry list for HR. Let’s take a look at the definition for the term:
Strategic Workforce Planning (n): An ongoing assessment of current and future workforce needs—including changes to business goals, market trends, and evolution of roles— to ensure your labor demands match organizational direction.
As you can see, SWP spans far beyond a few HR operational terms and is an essential part of any organization’s long-term vision. The problem? Many companies aren’t implementing this crucial tool.
Below, I debunk 10 common myths about strategic-workforce planning to prove why you need to reconsider SWP.
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10 Myths About Strategic Workforce Planning Debunked
Myth #1: “The financial and time commitment of SWP outweigh the benefits”
?This is just wrong. The impact of SWP across your entire organization is substantial. Many initiatives around the workforce can deliver cost optimization, however SWP does this while also delivering top-line impact – think revenue growth and ROE.
According to Sierra-Cedar, companies who do SWP have an average of 10% higher business outcomes such as revenue per employee, profit per employee, or return on equity and 12% higher talent outcomes such as engagement, succession, and retention.
SWP helps you optimize your workforce so that you can meet or exceed business goals, milestones, and customer demands. Surely everyone has time for that?!?
Myth #2: Strategic Workforce Planning is not as important as my other stuff
HR Professionals have a problem. For too long, we’ve been asking for the “seat at the table” but upon sitting in that seat, too many of us allow others to dictate orders for us to implement.
It’s essential that we bring our own, commercially driven, business focused viewpoint to shape strategy and direction. Did you know that SWP is now firmly on the board agenda? AICD tells Directors to ask their leadership teams:
●?????“What skills does our business need to meet its current objectives and how might this change over time?”
●?????“Are we satisfied that we have the skills available to meet resource needs and is there a plan in place to ensure that these skills are developed or acquired to satisfy future demand?”
McKinsey cites lack of requisite skills and leadership alignment as massive blocks in achieving successful transformation. Both of these hurdles can be overcome through SWP.
Myth #3: A lightweight version of SWP will suffice
This is a hard no. Strategic Workforce planning is complex. In fact, according to Sierra Cedar, it is “the most complex analysis efforts undertaken by HR functions.” This is because there are so many moving factors that need to be brought together and integrated properly to deliver on SWP. Below are just a few examples:
●?????Internal Business Context – business strategy, competitive advantage, value chain, segmentation, activity drivers, transformation, digitization, consolidation, acquisition, and growth.
●?????Internal Workforce Context – workforce size and shape, capability mix, employment mix, demographics, mobility, turnover, performance, engagement, productivity, efficiency, learning and development.
●?????External Environment Context – Future of Work and 4th IR, technology and automation, globalization, regulation, geo-politics, social responsibility, economic factors.
●?????External Workforce Context – demographics, changing worker values, gig economy, labor supply chain, education changes, entrepreneurship.
How on earth do you bring all of the above together? SWP. Bringing together all of these elements needs to be done quantitatively. SWP is the only way I have seen companies effectively and proactively navigate the vast and accelerating change we are all facing.
Myth # 4: Finance has it covered
If you have looked at my LinkedIn profile, you will see I am a Chartered Accountant who started my career in Finance. I am the first to admit that partnering with Finance is essential. However, I’ve also seen firsthand that finance teams who own workforce planning tend to only focus on getting a financial view of said workforce. Insights into capabilities, skills, job neighborhoods and the whole employee lifecycle is usually entirely absent.
Myth # 5: “Strategy has it covered”
Similar to above, the lens with which other functions view the workforce can be limited. This is not an uncommon dynamic. I have been in rooms with Fortune 500 companies where the scenario planning of SWP has uncovered serious misalignment in business direction between CEO, COO and CFO. The scenario planning process of SWP is critical in creating alignment amongst leadership and driving superior decisioning for business success.
Myth #6: “I have it covered another way”
There are some great datasets out there about the future of work, automation, AI, etc. These range from online tools where you can enter your job and see if you need to chuck it all in and become a Maxillofacial Surgeon (apparently low robot risk, go figure) - right up to super pretty, complex and comprehensive big data visuals. The problem with this data? It’s missing your unique business context so it’s an incomplete picture.
Where most skills gaps in other products are inferred from the broader labor market and missing context from an organization’s unique strategic and operational needs,?eQ8’s Future Skills Forecasting integrates market data with an organization’s own strategy.?The eQ8 forecast provides insight into the skills required to meet the specific needs of each organization, whether it is about growth, transformation, digitization, change – or all of the above!
Ultimately, we have to be able to answer the question, “Do you know what workforce is needed in three years?”. If we have not lifted leadership’s gaze to forecast purpose in this way, we are making bad decisions on which people and programs to prioritize. SWP drives the strategy forecast conversation to understand OUR specific capacity and capability requirements.
Myth #7: “I can get by with organizational redesigns/restructures”
Strategic Workforce Planning is about being proactive. Organizational restructuring that companies have been doing for decades isn’t enough because these are inherently reactive, usually top-down and often short-term fixes. How many of us have lived through restructures to see the following:
●?????Rehire the Fire – Knee Jerk reaction to lower the cost base. You end up getting rid of roles that are critical and then, oops, realize we actually need them and hire them back (or bring them back as consultants/contractors and pay them heaps more)
●?????“It will be cheaper, trust me” - You cut the workforce too far and make up for it meet through things that actually increase costs - overtime, contingent labor at premiums, or increased workload that causes employee burn-out/absenteeism [aka build, buy, borrow gone wrong]
●?????Death by 1,000 cuts – Let’s restructure, then again, then one more time. How many times have we seen years of building an organization's culture and engagement wiped out through poorly planned, reactive programs like this?
●?????Same, Same . . . but different – Let’s just reshuffle the same resources around but not really impact much at all, then wonder why nothing's changed
For more insight into how SWP solves your restructuring woes, check out this video.
Myth #8: “I haven’t been asked to do this”
We hear this all the time. Just because you haven’t been asked to do it, doesn’t mean it’s not important. In fact, SWP is the key recommendation by the World Economic Forum to deal with Future of Work and the “re-skilling revolution”. Plus, McKinsey found that companies who use scenario modelling are 2.4x more likely to have successful digital transformation. SWP delivers this which is why we increasingly find it being taken over by COO, CIO or whole new functions dedicated to transformation.
Myth #9: “We will do it later”
It’s easy to get caught up in the urgency of what is front of us but what if later is too late? Putting SWP on hold puts you at risk of having an outdated business model. Sadly, we all know what happens when companies are unable to innovate and adapt fast enough?(think Kodak, Blockbuster, Toys R Us, Borders, etc.) You may think that is not the role of HR, or can be written off due to external forces. But think again. Who drives innovation? Who drives and executes change? Who transforms and adapts? People.
Myth #10: “I can’t because I don’t have the right… [insert reason]”
Data. People. System. Planetary alignment. Whatever the reason, it’s just an excuse. The reality is, there is never perfect data; you will be waiting forever. You don’t have to wait for that perfect data and team, as we have just released an amazing SWP platform—eQ8— that solves all the excuses and problems. Well, maybe not planetary alignment – if mercury is in retrograde, you’re on your own!
So for now, my dear SWP, I will continue to call you by your name – I just don’t think they could handle another business jargon term right now. But I sure do hope they see that you are the critical enabler of transformation and organizational effectiveness before it is too late . . .