Analyst Perspectives

Workforce planning is a business process that done right ensures an organization of suitable access to talent to ensure future business success. At a Mercer analyst summit I attended recently, which I wrote about in “Mercer Promotes Possibility of the New Empowered Workforce,” one of the sponsor execs kept challenging the HR industry analyst community to do more research on workforce planning, since her company and its customers are spending more time and money on just that. 

Workforce planning has been an HR trend for more than a decade. The most comprehensive and compelling definition of it I’ve come across is by Dr. John Sullivan, a thought leader in the field: 

Workforce planning is an integrated and forward-looking process that is designed to predict (what, when, how much) will likely happen in talent management and then to provide action plans that will cause managers to act in the prescribed way. As a result of the planning process, managers will be able to avoid or mitigate people problems, take advantage of talent opportunities and to improve the “talent pipeline,” so that your organization will have the needed “people capabilities” required to meet your business goals and to build a competitive advantage over other firms. 

Companies big and small must ensure they have past, present and future “crystal ball” views of their entire workforce, as well as access to all potential talent sources internal and external for future business needs. As Sullivan writes, an organization’s “people capabilities” must align with its business goals if the organization is to gain competitive advantage. To date there have been a handful of documented workforce planning success stories with 3M, UBS, IBM, Toyota, Google and others documented on www.workforce.com, but for the most part workforce planning remains an elusive HR management best practice. 

That’s because before you can practice workforce planning, you must have sound workforce metrics and analytics, and that’s not an easy task for many organizations. Our workforce analytics benchmark research found that organizations are only slowly gaining the ability to apply analytics to the workforce and in the human resources arena. The Ventana Research Maturity Model™ is a research-based evaluation of the maturity of organizations in a given market or with respect to a business or IT process. In the case of workforce analytics, our research shows that only 12 percent of companies are truly innovative in how they aggregate, track and manage analytics to improve their workforce and business performance – despite the fact that for 77 percent of executives and managers who participated in our research, the performance of the workforce is the most important metric. Our research also shows that companies tend to rely on traditional cost- and budget-related metrics and use spreadsheets heavily (universally or regularly for 96%). 

I prefer to think of workforce planning as part of the next generation of human capital management. It must encompass the entire enterprise workforce of today – full-time and part-time employees, salaried and hourly employees, contractors, consultants, strategic partner labor and outsourced labor. It requires benchmarked data from companies around the world on workforce best practices. And lastly, the sheer complexity of HR administration for a worldwide, in-country and virtual workforce requires organizations to account for the diversity of each country’s workplace cultures, time and attendance processes, payroll and benefits, compliance and regulatory ideologies. 

All of this needs help from technology tools. In addition to historical and predictive workforce analytics, next-generation workforce planning must take into account technologies that change the way we acquire, develop and retain our talent, four of them in particular. A critical one is true business collaboration – the bringing together of people and technology to increase productivity and performance for competitive advantage. There’s social media, which encompasses not only external networking but also internal social networking and social learning that inspire collaboration and knowledge sharing, training that sticks, talent mentoring, and employee satisfaction and engagement. As well, mobile computing gives employees and managers extended real-time communication and collaboration via smartphones, tablet computers and netbooks. And then there’s the impact of more companies moving to software as a service (SaaS) and cloud deployments of their workforce software. Optimal next-generation workforce planning products must take into account all of these factors while at the same time considering past, present and predictive workforce analytics, global benchmarking data and the HR complexity of global compliance and multiple employee types. 

How might this benefit an organization? Consider the following scenario: One of Company X’s primary HR initiatives are to get more women into leadership development programs worldwide. HR doesn’t realize that while more woman are moving internally, more men are getting promoted, particularly in countries A, B and C, that the attrition rate among the women is much higher than for the men, and that it’s off the charts when compared to other organizations’ benchmarked data globally. With workforce planning solution in place, HR would be able to spot these kinds of negative talent trends and implement corrective measures before the bleeding gets too bad. Such a solution could compare several factors: internal talent mobility across global divisions, the number of promotions within each of those divisions and the attrition rates, broken down by position, gender, ethnicity and time with the company (as well as a myriad of other data points, all from a single data mart). It could also spot positive, high-growth talent trends that would validate HR’s acquisition, development and retention programs. 

We’ll embark on research soon will reveal how organizations are conducting workforce planning and the systems they’re using to do so. We will also evaluate vendors that provide workforce planning solutions in the human capital management marketplace. Some talent management vendors currently integrate workforce analytics and workforce planning functionality within their suites, but many stand-alone vendors still supply quality analytics and planning capabilities. Our research indicates that human capital management buyers prefer a single-vendor solution, but currently they cobble together internal HR systems and spreadsheets inside whatever HCM product they’re using. 

Operational effectiveness and high-growth business performance are still the ultimate end games for global companies searching for integrated next-generation human capital management solutions. We aim to illuminate their search. 

Regards,

Kevin W. Grossman – VP & Research Director