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Focusing on Workforce Planning

More HR leaders are devising workforce-planning initiatives, but too many plans focus on short-term priorities instead of strategic scenario planning. HR executives also need to couch such plans in the language of business, focusing on risk, opportunity and capacity versus demand, for example, experts say.

While more HR leaders are creating workforce-planning initiatives that are catching the attention of their senior leaders, most plans are still being shelved.

That’s according to the Institute for Corporate Productivity (i4cp)’s 2011 Strategic Workforce Planning Survey, which finds that only 21 percent of respondents say their companies are using workforce planning in business decision-making even though about three-quarters of leaders responding to the survey say HR creates such plans.

About one-third of the respondents say their CEOs review such plans, according to the survey of 268 HR professionals, senior-level and business-unit leaders, and board directors.

The problem?

Most workforce planning is still “operational” — focusing on short-term priorities such as headcount forecasting and staffing requisitions — instead of “strategic” — focusing on human capital needs for a variety of scenarios of the company’s direction over the next three to five years, says Carol Morrison, a St. Petersburg, Fla.-based i4cp senior research analyst.

“Workforce planning is still in its infancy, and so it’s not a mature function in a lot of companies at this point,” Morrison says. “Many workforce-planning teams aren’t turning out the kinds of information that senior leaders need to decide where the company wants to be business-wise and what are the kinds of people they’re going to need in order to achieve those kinds of strategies.”

Before creating any such initiative, HR leaders must first communicate with senior-level and business-unit leaders to determine the company’s possible future strategies — and then focus on the kinds of positions that will need to be filled or created to achieve those objectives, she says.

Mary Young, a Boston-based principal researcher in human capital at The Conference Board, says that strategic workforce planning doesn’t focus on headcount-specific numbers, but rather on “directional” numbers — such as a workforce change in a particular market.

“If you think you’re going to double your workforce, then you’ve got to have an HR organization capable of finding those people,” Young says. “You’ve got to know whether there is talent support and how much talent is going to cost because there might be wage inflation in these new markets.

“You’ve also got to find ways to pressure test your strategy: Is this really feasible? And, what would it take for us to execute?”

Young stresses that strategic workforce planning needs to incorporate a wide range of possibilities: “You don’t know what’s going to happen in the future, but you better be prepared to execute because you’ve had this conversation and thought through what it would take to get there.”

Brenda Kowske, senior analyst for human resources at Bersin & Associates in Minneapolis, says “high-impact” HR leaders conduct workforce planning each quarter.

While plans are strategic and have long-term goals, she says, reassessing potential needs each quarter helps better gauge the changing “rhythms” of the company’s operations and enables HR leaders to better match workforce-planning needs.

“Business leaders can have a three- to five-year plan but when the rubber hits the road, they need people to do the work and they need HR to supply real-time accurate data to help them make smarter decisions,” Kowske says.

Dan Rubin, Chicago-based Aon Hewitt’s co-leader of U.S. employee research practice, says HR executives should avail themselves of sophisticated workforce-planning software that develops strategies based on the focus of senior-level and business unit leaders, such as competitive advantages, risks, opportunities, and capacity versus demand.

Such software analyzes workforce “stocks” and “flows” of varying business scenarios, Rubin says. For example, a company expanding in new markets could use the software to analyze stocks and flows if it entered the China market before entering Russia and India, or the stocks and flows if it entered China after establishing a presence in those other countries first.

“HR leaders really need to ensure the analytics measures they are using are very much in alignment with strategy,” Rubin says. To accomplish this, “they need communicate with other executives in same language … .”

By Katie Kuehner-Hebert