Strategic Workforce Planning is to ensure an organization’s workforce is aligned with its business objectives - change will always be constant, hence adaptability and agility in the development are crucial. True Strategic Workforce Planning is the conduit between the organization’s business plan and results. Across the Strategic Workforce Planning framework, there are many areas on which to focus, including three key hard, metrics-driven areas: 1) Data source for workforce planning, 2) Impact matrix for uncontrolled workforce planning, and 3) Target operating model – formula for managing headcount. The ability and capacity for an organization to collate, manage, analyze and forecast with high accuracy their workforce capability creates a significant advantage over competitors, mainly because many organizations do not focus enough within this area of workforce planning and strategy.
There are always three core data sources across organizations where all employee information intersects – Finance, Payroll and Human Recourses (HR). To ensure the most accurate data reliance is in place, there can only be one ‘true’ source utilized and this should sit within HR. HR is the best option as it collects, collates and manages extensive and detailed bio and performance data – unlike Finance and Payroll. In addition, only HR should have the overriding management of access and release of employee information through the whole employee life cycle. However, HR must ensure all employee data-source information is regularly tested and audited to maintain accuracy.
This primary data should cover (though is not limited to):
Data cleansing, reconciliation, and regular audit are paramount to ensuring that accurate information is provided to the ‘Workforce & People Analytics’. A process must be agreed upon and one source and only one source of information to be used.
Below (Figure 1) indicates the value (Low to High) when working with people metrics and workforce analytics. If the very basics of ‘Headcount Planning’ is not supported by accurate and fully cleansed (pure) data, then the value success of the organization cannot be realized at the ‘Enterprise Strategic Workforce Planning’ level – which is the level an organization needs to be positioned at for a highly competitive and winning platform.
The impact to poorly or misguided workforce planning, whether from inaccurate analysis, inefficient management of process, leadership resistance or managing ‘right’ organizational structures, is outlined in the following matrix (Figure 2). In essence, if an organization expands too rapidly in perceived Market Growth and then consolidates in times of Market Contraction - the many impacts such as financial, organizational and reputational can be recovered; however, it is rare for the impact to company culture to recover.
How does this translate into real hard revenue which can be managed?
As an example, if Revenue is set at 10% YoY increase and Profit is aligned at 4% YoY increase, then the cost of new addition Headcount needs to ensure neither the revenue % or Profit % drops post the (total - all related fixed and variable) new employee cost for the first 12 months.
Once the above formula is applied, understood and managed, there are also a set three core data points to monitor and map. These should be hard-wired into both workforce management and business KPIs as these are critical in controlling spend and the organizational structure within expansion.
All should be drawn into table (spreadsheet/ online portal access) which addresses:
This can be mapped as a running report from weekly to monthly, though would not exceed bimonthly.
Careful utilization and deployment for current and future growth through Enterprise Strategic Workforce Planning are critical. It is about: Having the Right People (skills, experience, attributes) at the Right Place (geographically/business unit) at the Right Time (full-time, part-time, casual, secondment, contractors) performing the Right Job (specifics need for the organization) and at the Right Investment (pay, benefits reflective for their performance).
As the organization performs, there is a tendency to believe that employing more talent will deliver more results. This works in very short-term, basic (low complex products/services) models, which are operating within or leading fast pace or new industry markets. This formula, i.e. increasing headcount (reactionary) to accommodate growth, does not work in mid-to long-term, traditional, markets.
A formula (or test) which is used in identifying Target Operating Models within organizations is outlined below:
In summary, expansion on headcount should only be engaged when the forecasted operating profit is secured, and the new hire will not reduce the operating profit year one (for the year they are onboarded). A targeted formulated approach can be developed, monitored and measured to ensure headcount and associated costs are kept in line with revenue and profit increase.
Businesses are built by people, measured by data, sustained through profit, succeed through leadership and remain true through values...easier said than done!
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