In the human resources world, it’s hard to find a term more nebulous, more misunderstood, and more hated than strategic workforce planning (though onboarding might run a close second). Fortunately, strategic workforce planning is started to shed some of its negative connotations, as more and more companies recognize the important role it plays in improving hiring and retention results.
In any effort, the absence of a concrete goal makes it impossible to achieve desired results. Nonetheless, talent acquisition (TA) teams frequently work without clear goals (for example, recruiters often say that their priorities are “to fill jobs fast” and “to keep hiring managers happy”). This ambiguity is complicated by the fact that hiring priorities are difficult to identify.
As it relates to talent acquisition, strategic workforce planning (SWP) identifies future hiring needs and priorities aligned to business strategy. But achieving that goal is easier said than done, because the different parties involved often have different agendas and preferences. In many organizations senior leaders vie for top priority for their own needs, for example, or they have different opinions about which roles are most urgent to fill (with some prioritizing the most frequently hired roles and others placing the highest value on those roles closest to the customers).
Because these debates often lie outside the purview of the talent acquisition team, the absence of strategic TA representation means that conversations—and decisions—about hiring priorities and workforce strategy can lose steam and fall off the HR planning agenda. But unless different groups in the organization can agree on TA priorities and decisions, no TA strategy can be completely successful.
How Talent Drives Business Value
Markets set a company’s business value based on reasonable projections of future cash flow driven by asset performance. There are two types of assets to consider. The first type comprises tangible assets (equipment, buildings, trucks, etc.), all of which companies report in their financial documents. The second type includes intangible assets (brands, customer relationships, IP, proprietary technology, etc.), none of which companies report (unless they sell or acquire another company). Nearly 90 percent of the value of the average company is attributable to intangible assets created solely by its people. An organization’s human capital creates intellectual capital, intangible assets that can be thought of as the valuable accumulations of employees’ intellectual output over time.
To measure the value of SWP and talent acquisition investments in an organization, one must first understand how value is created (and will be created) within that specific business. For public companies, a review of public documents (such as investor presentations and 10-Ks) provides a solid baseline understanding. For example, it is easy to determine that in a company such as Raytheon, a relatively small team of engineers creates the greatest amount of the organization’s business value. Brand managers and product innovation professionals lead the way at Coca-Cola and Proctor & Gamble. And at a pharmaceutical firm such as Merck, the R&D department creates value by developing patentable new drugs.
Great hires in a business’s key asset-creation areas will result in huge gains in business value. Poor hires, on the other hand, will create great risk. For this reason alone, strategic workforce planning is essential to determining the most critical roles in the organization. Only through SWP can organizations identify talent acquisition priorities, establish goals, and effectively deploy resources.
How to Develop a Strategic & Targeted Workforce Planning Process
Efforts to build workforce plans across entire swaths of the business (by level, by geography, etc.) are typically too unwieldy to enable concrete, actionable priorities and next steps. Given the importance of critical roles in an organization, starting with a very narrow targeted role or functional vertical (for example, research, data analytics, merchandising, or brand management) and creating a strategy from there is the key to successful planning:
- Using the methodology described above, build a case for identifying the roles and skills that are most essential to creating future business value for the organization. Meet with several key business, talent management, and HR leaders to get their understanding and buy in. Discussions should cover both the need for prioritizing workforce planning efforts and the reasons why this particular group of jobs and skills was identified as key.
- For this group of roles or functional area, collect the following information:
- One or two years of hiring, attrition, and internal movement data, sorted by role or by employee
- Organizational charts
- Business plans (both short term and long term) for the function
- Analyze the data and prepare materials for a half-day workshop with the senior leader and his or her direct reports.
- Conduct the half-day workshop with the leadership team:
- Present an overview of the session’s goals (specifically, workforce planning and strategic priorities and plans for talent acquisition)
- Review the team’s hiring and attrition trends for the previous one or two years
- Get the team’s input on specific replacement and new hiring needs and plans for the next six to twelve months
- Taking into consideration business goals and scenario planning, discuss and capture known high-level hiring needs beyond one year
- Facilitate a discussion about the criticality of the roles (or groups of roles) and the availability of talent in the marketplace for the skills required
- After the workshop, summarize and present the group’s results and identify talent priorities, estimated numbers, timing, and provisional approaches.
- Develop the talent acquisition strategy required to find, attract, and win people to fill the identified roles, beginning with the roles deemed most critical and requiring the scarcest skills available in the marketplace.
- Set talent acquisition goals (e.g., speed, cost, quality, diversity) and targets by sourcing channel, then align resources to execute plans to secure the future workforce.
By prioritizing the most essential skills, workforce planning efforts deliver the most important information and action steps to key business areas first. From this starting point, one can methodically move on to other functional areas.
This method of targeted and strategic workforce planning will yield numerous, concrete results:
- Alignment among senior leaders and key stakeholders regarding workforce planning and talent acquisition priorities
- Lists of specific hiring plans and priorities to revisit and update on a quarterly basis following the working session
- Assessment, by business leaders, of the criticality and availability of skills for their predicted openings
- Prioritized, data-driven, TA forecasts and plans for the specific functional area
- Goals, tactics, and measures of success for the TA team for these targeted roles
Success in hiring cannot be achieved without clearly articulated aims. Organizations that want to improve their hiring need to define goals that are business-based, accurate, measurable, and value-added. The only way to accomplish that is through targeted and strategic workforce planning.