Why workforce planning matters now more than ever

In my role, I’m lucky that I get to speak to many industry-leading organisations about their challenges in workforce planning. The most common theme in these conversations is, beyond a doubt, the need for these organisations to up their game and move beyond the headcount planning processes of the past.

I think it’s safe to say that not since the Industrial Revolution has the nature of work gone through such a dramatic sea change. And the magnitude of change isn’t slowing down anytime soon. Consider this: 85% of the jobs that will exist in 2030 haven’t been invented yet, according to a 2017 survey by the Institute for the Future.

But massive change isn’t the only issue. Aligning workforce planning with finance and executive initiatives is complicated by some thorny HR issues:

• Difficulty estimating an accurate target hire rate
• Persistent challenges hiring (and retaining) key personnel
• Delivering candidates with the right skills who grow well with your organisation
• Making use of the explosion of data being generated by your personnel systems, and the need for an HR team that can deliver robust analytics

Sound familiar? It should—these challenges affect almost all of our customers, and robust, scalable solutions have largely been out of reach.

We’ve all faced these challenges over the years, and with increasing intensity. Like you, I strive to bring in the right people at the right time at the right cost. No one wants to be caught flat-footed, explaining to their leadership team why hiring is slower and more expensive than originally budgeted.

The bottom line is this: The old way of focusing primarily on headcount planning, separate from finance, is insufficient to the task. Ideally, those engaged in workforce planning partner with finance to incorporate market realities into their planning process, which makes it easier to allocate the right people resources at the right time.

Companies that leverage workforce planning to anticipate present and future needs will have a competitive advantage over those stuck in a static, siloed, legacy approach to planning the workforce. They will evolve from tactical headcount planning to more comprehensive workforce planning, empowering more informed strategic decision-making.

Say goodbye to outdated technologies

Relying on traditional methods to create static scenarios that address anticipated changes in your workforce limits your ability to adapt to the dynamic realities of your business and the modern information landscape. Quite frankly, you will not be able to keep pace with your business decision-makers, which means that HR risks failure in its chartered service to the rest of the business.

To avoid becoming a burden on the business, HR must be able to ride this new wave of modern information systems and technologies to gain a deep understanding of the business.

This goes beyond headcount to include skills distribution by location, compensation strategies, attrition rates, training return on investment, and succession planning. Add to this the need to be mindful of global trends in compensation and skills availability, and you can see why many HR professionals are struggling to keep up with industry standards using only Excel.

HR and finance: Two sides of the same coin

Collaboration with finance and other business units creates dynamic and flexible plans that support corporate goals:

• HR and hiring managers can immediately understand the full operational and financial impact of staffing up
• Finance, HR, and hiring managers can work together to plan for new hires, promotions, and merit increases
• Stakeholders can anticipate generational and skills-based changes in their workforce and their operational and financial impact on key performance metrics underpinned by accurate and robust data

Finance can also gain an enriched perspective of workforce metrics for top- and bottom-line impact:

• Metrics such as salary, attrition, retention, turnover, cost of benefits, and time to hire, but now augmented with metrics on those key skills needed to grow the business
• A more informed ability to partner with the business and HR, asking questions that traditional metrics aren’t set up to answer:
  • What kinds of people do we want to attract?
  • What skills will we need in the future that we don’t have today?
  • How do we build a culture that engages workers fully and identify areas in the business where attrition is especially high?
  • Do we have the optimal mix of experienced and entry-level staff to support current operations, as well as succession plans?
  • What kinds of learning and development opportunities should we provide to our workers?

Finance and HR look at workforce issues with different lenses, but both groups understand how they impact your company’s financial performance. Turnover is costly. So are skills gaps that can impact your revenue capacity in all the wrong ways.

By collaborating closely with finance, HR professionals can help model these inevitabilities to prevent unexpected costs and reduce risk—strategic goals for both organisations.

A unified plan for a shared workforce vision

Let’s take a look at a manufacturing company that decides to automate large parts of the production line for its biggest-selling product. Retraining its workforce and securing a reliable talent pipeline for robotics and mechanical maintenance skills is likely to be a multiyear project.

Without both direct visibility on business decisions well before they are implemented, as well as the shape of the external talent marketplace, HR is unlikely to be able to keep pace. Finance, meanwhile, is unaware of the bottom-line impact of learning and development initiatives and continues to use stale workforce assumptions.

Even though introducing robotics to the production line is projected to save significant costs over the long term, short-term costs have the potential to derail existing budgets and forecasts. In cases such as these, HR and finance have to get on the same page while discussing options to close skills gaps with either buy, build or borrow initiatives. This can only be achieved in a modern system with access to both people and finance data.

Without the ability to access up-to-date financial data, HR risks reformulating a workforce plan that no longer squares with the company’s budget. On the flip side, when finance lacks confidence in HR’s workforce planning assumptions, it risks the success of business expansion as teams struggle to align on the bottom-line financial impact.

Planning for and addressing skills gaps requires a holistic approach to budgeting and forecasting that unifies HR and finance in their efforts to deliver on corporate goals. At the junction of innovation and related skills requirements lies the ability for a business to quickly adapt workforce planning to the realities of the market or find itself constantly playing catch-up.

Sync on common goals

It’s not difficult to sync HR with finance. Focus on clarifying the priorities on both sides and understanding how both teams can provide the information the other needs to perform its job function at the highest level.

That means establishing KPIs from a company-wide perspective—not just the usual HR and finance metrics. At the highest level, both functions are working toward the ultimate goal of improved performance and profitability.

With Adaptive Insights, I’ve found a tool to bring finance and HR together in ways that have never been available before:

• Skills: Target the skills that are critical to achieve your strategic initiatives and track how far you are from acquiring them
• Resource Management: Identify your key personnel, and prospects, and learn how to cultivate them
• Talent Landscape: Get a sense of the external market for talent, so you can approach the marketplace with realistic expectations and anticipate where your team needs to start thinking about finding new talent pools
• Career Mapping: Identify successful career paths and skills development within the organisation to optimize retention—your people want a future; show them how they can grow with you
• Resource Costing: We still need to consider our friends in finance. Workforce planning, with compensation ranges calibrated against realistic market conditions and balanced against your demand for those key skills that support business objectives, can help get your leadership team to a total compensation and total cost view of your personnel

What’s next?

Strategic workforce planning keeps you from becoming obsolete. Resource allocation, identifying talent gaps, and closing those gaps through new hires and skills building will help you model your best workforce mix — so you can plan, optimise, and adjust current and future workforce resources to reflect shifts in the labor market, as well as reflect finance and corporate goals.

The world is moving quickly. Your competitors aren’t standing still. The longer you hold onto rigid, siloed, and headcount-focused workforce planning, the further you’ll be left behind.

Employees are your greatest asset and your greatest strategic opportunity. Planning for, training, and retaining your workforce using holistic, dynamic, data-driven processes create a powerful engine that fuels innovation and collaboration, and prevents you from being caught unprepared in the face of market changes.

Almost everything HR delivers will be reinvented over the next five to 10 years, and probably amid successive waves of abrupt change. If you handle these transitions correctly, you will find yourself at the very center of your business. If not, many HR teams are likely to struggle to justify their continued relevance to their companies.

Learn how QMetrix can help your business leverage Adaptive Insights for Workforce Planning. 

This blog was originally published by Adaptive Insights.