Getting Started with Strategic Work Force Planning: Developing the Tools and Techniques

By: Paige Leavitt, Lauren Trees, and Rachele Williams, APQC

Work force planning is a vital process to help organizations ensure that they have the right "buy, build, or borrow" strategy for talent. In the first two articles in the Getting Started with Strategic Work Force Planning series, we discussed how to begin a work force planning effort by organizing and supporting the team, and how to establish and embed the process. In this final article, we will discuss best practices for developing the tools and techniques that enable effective strategic work force planning. The findings and examples are derived from APQC’s 2009 Collaborative Research study, "Strategic Work Force Planning: Anticipating and Filling Talent Gaps."

As so many organizations have found, no matter how well-designed the process, insufficient inputs will always produce insufficient results. Creating a strategic work force plan involves the coordination of data from multiple sources, but what kind of measures produce useful data? How can the data help create strategic work force plans?

The following best practices relate to developing the tools and techniques required to collect, analyze, and use the right data to create strategic work force plans:

1. To optimize their work force planning efforts, organizations must ensure alignment of financial and HR data and establish standard, enterprise-wide data definitions;
2. Work force planning and analytics software enables the work force planning process;
3. An important focus for the work force planning function is to identify critical roles and skills that are required to execute the organization’s overall business strategy;
4. For accurate talent demand forecasting, organizations should combine a range of techniques, such as structured interviews, staffing ratios, and regression analysis;
5. To effectively analyze and forecast the existing supply of talent, organizations should combine data on internal factors, such as retirement and attrition rates, with external labor trends and demographics.

Data Alignment for Work Force Planning

Key finding: To optimize their work force planning efforts, organizations must ensure alignment of financial and HR data and establish standard, enterprise-wide data definitions.

Strategic work force planning is about organizational success. Arriving there requires a focus on people, costs, and execution. Both financial and HR data come into play, and alignment between the two is critical—especially in today’s economy.

Aligning these two types of data is easier when the functions that generate the data are also aligned. A close relationship between strategic work force planning and finance facilitates the use of work force planning measures, which are based on a combination of HR and financial data.

However, such measures are only as good as the data that feeds into them, so it is vital that organizations adopt and enforce standard definitions for data. This helps ensure that everyone involved—the people who work with the data during collection and analysis, the people who make decisions based on the results, and the people whose jobs include actions driven by the data—is using a common language.

When functions collect and submit data based on shared definitions, data integrity increases, and it becomes easier to make "apples to apples" comparisons. The credibility of the data and the work force planning team is enhanced, and guesswork is removed from the decision-making process.

Aligning Strategic Work Force Planning and Finance

Hewlett-Packard’s work force planning group considers its partnership with finance to be a key reason behind its success. The partnership was facilitated by the work force planning group’s willingness to adapt its process to align with the timeline that finance was already using for strategic and operational planning. Because the business was accustomed to finance’s timeframe, this eliminated rework and was easier than imposing a different, HR-dictated timeframe.

Similarly, work force management at IBM Global Business Services collaborates with finance to produce the organization’s long-term resource model, which is an essential part of the strategic work force planning process. This five-year model connects the financial requirements of revenue and profit with labor capacity and source assumptions.

Establishing Standard Definitions for Data

Hewlett-Packard’s work force planning group emphasizes the importance of creating core definitions for data and ensuring that those definitions are used enterprise-wide. HP calls these standards its GAAP rules, which stands for "generally accepted analytic principles," rather than the usual "generally accepted accounting principles."

By establishing common definitions for metrics, the vice president of work force planning and strategy has been able to ensure that he is looking at the same information as the business executives. This standardization helps work force planning maintain data integrity and protect its credibility, especially when presenting to senior management.

Qantas has also established clear definitions for its data and metrics and has posted the definitions on its intranet. Consistent, visible definitions enable the organization to ensure that people are on the same page and using a common language.

Such steps not only encourage confidence in the accuracy of work force planning data, but also help stakeholders understand the data and become more comfortable using it.

Work Force Planning Software

Key finding: Work force planning and analytics software enables the work force planning process.

Technology is a critical part of the work force planning process at best-practice organizations. Almost all of the models that Hewlett-Packard uses for work force planning run on technology that has been developed in-house. Developing these technologies has involved combining expertise from HR, finance, and IT with that of HP Labs, which is basically a Ph.D. think tank. Although HP’s work force planning group does use the company’s standard HR and finance data systems, it has also built a third system that pulls data from numerous sources—including HR, finance, real estate, and employee surveys—and enables the group to run a variety of queries specific to its needs.

IBM Global Business Services uses several technology-based tools to supplement its work force–related models. One of the most valuable is the IBM Professional Marketplace. Engineered approximately three years ago, the IBM Professional Marketplace is a large, global business solution containing information about approximately 270,000 professionals, the projects on which they are working, and when the professionals will become available to start other projects. A lot of the data is pulled from existing business management systems where employees record their time each week and forecast their activities for the next 13 weeks. In addition, skills-based data is pulled from the existing HR skills system, and demographic information is pulled from IBM’s organizational systems. All the information is compiled into the database on which the Marketplace runs.

The Marketplace is based on 100 percent transparency. Both "buyers" of the resources—the partners and project managers setting up the teams—and "practitioners"—the resources themselves—have access to the system. Staff members can log in and promote themselves as available for a particular project. They also can see which skills are in demand and use this information to guide their career choices.

IBM GBS depends on another technology tool, the Resource Analytics Hub, to monitor whether the Marketplace is working—whether assignments are being filled properly and the labor trends are what IBM expected. The Hub pulls in information from HR, financial management, business management, HR skills, and the Siebel sales systems so that GBS can evaluate all aspects of its labor model, including current consumption and demand for the future, and take appropriate actions. The Hub provides a multifaceted view of the information landscape and can show performance results ranging from the aggregate work force level to the level of individual employees.

Boeing depends on several technological tools of its own to support its work force planning efforts. Its in-house-built skills planning tool supports the forecasted skill demand element of the strategic work force planning framework by identifying all skills required within the company for up to 60 months. The tool provides:

• support to the planning needs of businesses, programs, managers, and others;
• reduction of systems and operation costs by replacing existing, non-integrated planning tools currently in use or development;
• support for redeployment requirements;
• the ability to potentially improve staffing plans and thus shorten the hiring cycle;
• leadership visibility into skill plans, including critical skills needs, across the company;
• the ability to do scenario, or "what if," planning; and
• the ability to plan skills at the employee or skill group level.

Boeing’s demographic dashboard, another internally developed tool, supports the skill availability element of the strategic work force planning framework. The dashboard enables HR generalists to develop on-demand charts, graphs, and query-based reports on the health of the organization’s work force. Both the dashboard and the reports help the HR generalists facilitate dialog necessary to support their business partners.

Determining Critical Roles and Skills for Work Force Planning

Key finding: An important focus for the work force planning function is to identify critical roles and skills that are required to execute the organization’s overall business strategy.

It is obvious that, within an organization, some roles and skills are more essential than others. One of the work force planning function’s responsibilities is to classify certain roles and skills as "critical" and then focus special attention on ensuring that those roles and skills are retained. At the leading organizations, critical roles and skills are determined through strategy discussions with business leaders.

For example, Boeing addresses the availability of and need for critical skills as part of its work force planning framework. The strategic work force planning team’s objective in this area is to define the skills needed to effectively support current and projected business requirements, including quantity required, geographic location, and timeline. Once it knows what skills the business needs now—and will need in the future—it can engage in discussions to determine skills availability.

Starbucks’ strategic work force planning team is in the process of helping groups and functions across the enterprise identify "pivotal roles," which are roles that differentiate the organization in the marketplace. To determine what roles are "pivotal," the team must understand business strategies and integrate talent management activities with them. Once the roles are identified, Starbucks plans to concentrate its investment on them.

Accurate Talent Demand Forecasting

Key finding: For accurate talent demand forecasting, organizations should combine a range of techniques, such as structured interviews, staffing ratios, and regression analysis.

Work force planning is not just about skills and capabilities. It is also about how many people you have in critical jobs and roles and how many you will need in the future.

No single method of forecasting demand is better than another. Participants in the APQC work force planning study use an even balance of qualitative and quantitative techniques for demand forecasting, and none relies exclusively on either qualitative or quantitative methods.

Among these organizations, structured interviews are the most popular qualitative technique used for demand forecasting, whereas staffing ratios and regression analysis are the most popular quantitative techniques.

Note that it is important to understand whether an organization is basing demand on headcount or FTEs; this should be determined before any forecasts or plans are put into place.

For example, Boeing forecasts skill demand as part of its strategic work force planning framework. The questions that have been developed to support this dialog are:

• "What quantity of critical skills is required short-term? Long-term?"
• "What is the geographic location of skill needs?"
• "How many security clearances are required?"

To support this element of its work force planning framework, Boeing has developed a tool designed to capture skill needs up to five years in the future.

Similarly, a critical step in Qantas’ work force planning process involves demand forecasting based on strategy requirements. The organization calculates the number of employees it needs by multiplying forecasted business activity by productivity ratios.

The forecast demand is comprised of inputs and outputs. The inputs include factors such as the business strategy; various business driver activities, such as how many and what types of airplanes will be in use; and required productivity ratios. Work force productivity ratios are overlaid onto forecast business activity to produce a labor demand schedule. By changing either the productivity ratio or the forecast activity, multiple scenarios can be produced. The outputs of this process are the demand schedule and scenario planning based on different strategies.

Qantas forecasts the number of employees it requires based on productivity ratios, which are developed from historical figures and trends. The organization relies on historical data from the previous three to four years to calculate the best productivity ratio possible and then uses that figure to forecast future needs.

According to IBM Global Business Services, forecasting demand in a service business isn’t as simple as in a product-based business. Project teams can be staffed using many alternative supply options, and individuals can have many skills experiences that cannot be easily categorized. Therefore, it is critical that demand be captured at the detailed skill level so that service providers are aware of shifts in the marketplace: which skills are in high demand, which projects are selling well, and how clients’ needs are changing.

To ensure that it is informed about marketplace trends and able to staff to current needs at any given time, GBS’ work force management team engages in a process it calls "demand capture." This process enables the group to view opportunities that are moving through the sales channel and then convert the total contract value into a project staffing plan that defines the skills needed to complete each project.

While a deal is still in the "sell" phase and the client has not yet made a final commitment, the work force management team coordinates with the partner and project manager to convert the project into a demand statement specifying the skills that the project will require. This staffing plan provides sufficient lead time for GBS to grow any skills needed to close potential gaps, reposition skills for current projects, and/or examine alternatives that may offer a better delivery option for the client. When the deal ultimately closes, GBS will have put the proper skills in place so that work can commence immediately.

IBM GBS’ demand capture system is extremely effective at alerting work force management to real-time shifts in the marketplace. This enables the company to fine-tune its plans so that it is always prepared to meet clients’ needs.

Internal Data Required for Talent Forecasts

Key finding: To effectively analyze and forecast the existing supply of talent, organizations should combine data on internal factors, such as retirement and attrition rates, with external labor trends and demographics.

Forecasting talent supply involves determining how much and what kind of talent already exists both inside the enterprise and in the external labor market.

The processes most commonly used by leading organizations to analyze the existing supply of internal talent are the performance management process and the succession planning process. Some organizations choose to include skills assessments and talent review processes.

A variety of indicators can feed into the forecasts of internal talent supply, including:

• career paths,
• mobility,
• talent plans,
• transfer and promotion rates,
• attrition rates,
• age profile,
• retirement rates, and
• retirement trends.

When analyzing and forecasting the talent supply outside the organization, external labor trends and demographics are the best indicators. Government statistics, industry organizations/associations, and functional groups/professional associations can all serve as sources of supply data.

Although leading organizations review various types of internal and external data in order to formulate their talent supply forecasts, analysis of retirement rates and retention/turnover analysis are the most popular methods.

At Qantas, talent supply forecasts are composed of inputs and outputs. The inputs include the current number of employees in various labor groups, current attrition rates of labor groups by age and tenure, planned recruitment, internal transfer modeling, and external labor market data obtained from the Australian Bureau of Statistics. The company also looks at the forecasted number of retirees and analyzes the training lead times needed to get new or promoted employees up to speed. The primary output from the forecast supply is the supply schedule, which is based on the attrition rate.

IBM Global Business Services uses its job role skill set (JRSS) taxonomy as a simple way to understand how many of its existing employees possess a certain skill. A job role can be thought of as a primary career dimension, such as "consultant" or "project manager." A practitioner can then have many skill sets that are directly related to the job role. The available job role and skill set combinations are part of the formal JRSS taxonomy, which is managed across IBM.

The foundation of IBM’s JRSS taxonomy is the IBM PD Framework (PDF). This framework addresses the career path for each job role, including the progression of levels and experience. A PDF level is basically an experience tag that is created when an employee joins the company and then updated throughout his or her career. GBS leaders use the PDF along with the JRSS tags to review existing talent and identify the organization’s next leaders.

NEXT STEPS

Now that you know how organizations like IBM, Hewlett-Packard, and Starbucks handle work force planning, the next step is to start implementing or enhancing the work force planning capabilities within your own company. We hope that the best practices outlined in this Getting Started with Strategic Work Force Planning series help you on your journey toward a mature strategic work force planning program.

About APQC and Open StandardS Research
Observations for this article series were sourced from APQC’s Collaborative Research study "Strategic Work Force Planning: Anticipating and Filling Talent Gaps," which concluded in March 2009, and from APQC’s Open Standards Research, which is an ongoing metrics research initiative. The Open Standards Research "Recruit, Source, and Select Employees" survey database, a joint benchmarking initiative of APQC, IBM, and Kennedy Information, is comprised of more than 400 participants. Survey participants represent a variety of industries. There is no cost to participate in the "Recruit, Source, and Select" benchmarking survey at this time, and all participants receive customized benchmarking reports outlining how their organizations compare to the benchmarking database and relevant peer groups. All data submitted is protected by APQC’s Benchmarking Code of Conduct. For more information or to participate in the benchmarking survey online, please visit www.apqc.org/hcm/srs. Questions about the Open Standards Research can be directed to Rachele Williams, human capital management program manager, at rwilliams@apqc.org or 800-776-9676.

About Infohrm
Infohrm, which provided subject matter expertise for APQC’s "Strategic Work Force Planning" study, is the global leader in work force planning, reporting, and human capital analysis. The organization helps business leaders improve the quality of their data-driven human capital decisions via enablement technology, human capital dashboards, strategic consulting, HR professional development, thought leadership, and human capital benchmarking. More information can be found online at www.infohrm.com.

Posted by Rachele Williams on January 20, 2010. Filed under Hospitality, Human Resources, Recruiting, Retention, Thought Leadership, Tools. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry