Creating The Workforce Plan

The workforce plan is a formula to change the future, or a number of possible futures, and create the right workforce. Once we have established the best combination of workforce levers and the most appropriate initiatives to execute those levers, we need to combine these together to create a workforce plan.

There are four key steps to create an effective workforce plan: establishing the right risk, remodelling, ensuring strategic alignment and providing options.

Establishing the Right Risk

Finding any solution to the gap between the supply and demand of the workforce is much easier than finding one that is palatable. The key is to design a
solution that both bridges the gap and creates a suitable balance between cost and risk.

In a business with low maturity in workforce planning, the cost to bridge the gap between supply and demand is often greatest. There is no workforce that we cannot create to bridge the gap between supply and demand; however, the less time we have, then the greater the cost will be. In this vein, a first workforce plan could layout a perfect approach to bridge the gap between supply and demand across all planning horizons, however the costs are likely to be prohibitive. The right risk for the organisation is likely to become one of balancing: profitability versus growth, short term versus long term and the whole organisation versus the parts. These are business choices where I recommend the option that leads an organisation closest to its ‘why’.

Remodelling

Each workforce lever (buy, build, borrow, bind, bounce, bot and balance) generates effects that have additional effects. Some effective meso and micro level initiatives may get lost in a larger macro level initiative. Moreover, when we pull multiple workforce levers, either simultaneously or in sequence, we compound the effects we are generating.

Imagine that a business wishes to reduce the size of the workforce by around thirty percent. Their modelling of workforce supply has highlighted annual turnover of 16.335%. This prompts them to shut an existing buy lever (recruitment) and allow turnover to reduce the workforce over a two-year period to thirty percent of the current size. Our insight would be that such a plan at a macro level could be disastrous as the business may lose the capabilities it needs, so it may achieve the right size but it would be the wrong shape.

Putting that liability to one side, this plan is unlikely to deliver the right size of workforce as it has failed to account for the second order effects of these
initiatives. The average turnover rate masks variable rates from different workforce segments, particularly new starters. A study of nearly a quarter of a million workers found that nearly thirty eight percent of all turnover was attributable to those leaving within their first year, and over seventeen percent to those leaving in their second year. Assuming a similar trend to the marketplace, then the lack of recruitment in the two years of the plan would deny the business of this high turnover workforce. This gives an adjusted turnover figure of around ten percent in year one and just over seven percent in year two. This would result in them shedding just less that seventeen percent of the workforce, rather than the target of thirty percent.

It is critical, therefore, that we remodel our supply and demand to account for the compounding effects of the initiatives within our action plan.

Ensuring Strategic Alignment

Our plans form part of the execution level within the framework; the business as usual (BAU) activities and ad-hoc initiatives that will create the right workforce to achieve the desired business outcomes. Whilst the formulation of the strategic framework begins with a ‘why’ and cascades down to execution, we ensure alignment of plans by starting at the execution level and reaching back up towards the why. The first step, therefore, is to ensure alignment at the execution level. Not only must the plans fit within the operating model of the organization, but they also need to complement the way that work is done. Though this can be shaped through the balance lever, initiatives are unlikely to be successful if they jar against wider execution.

The next step is alignment with strategy, the first of these being the workforce strategy, the blueprint or design for our people to accomplish our organisational strategy. Utilisation of the balance lever will provide the assurance that the workforce strategy is aligned to the organisational strategy. Once that alignment exists, our check is twofold. Firstly, that nothing within the plan sits contrary to the strategy and, second, that all facets of the strategy are achieved through the workforce plan. The second element of the strategic check is alignment with the appropriate meso level strategies and the organisation’s macro level strategy. The workforce plans need to both complement at the meso level and deliver at the macro level.

The third step is a check against the goals, the broad aims to be achieved, and the objectives, those goals framed in specific metrics to measure achievement within a timeline. The workforce plan must contribute to the achievement of the goals and objectives that are within the planning horizon. This element is key in gaining support and funding to implement our workforce levers as we are creating a workforce to achieve the organizational strategic objectives.

In the picture above we can see an example of this in practice with a business strategy of reduced costs and the delivery of better services, that are aligned to the business goal to improve customer outcomes. Better services will create a better experience for customers and reduced costs, if passed through, will improve the outcome for the customer.

Workforce Strategy

The workforce strategy is aligned to the business strategy:

• Increasing retention can lead to a direct reduction in the turnover costs we discussed in the last chapter.
• Reducing contractor use would be expected to lead to a direct reduction in costs as contingent labour typically incurs a higher rate of operating expense than a permanent workforce.
• Improving diversity can provide two improvements to customer outcomes. For many services, a customer-facing team that better reflects the diversity of the consumer base will not only improve the brand of the organization but is more likely to create a stronger connection with the customers. Secondly, services are more likely to provide the best value to a diverse customer base if there is diversity of thought during the design.

Workforce Plans

If we look at the level of the workforce plans, we see how each of these contributes to the workforce strategy, in turn contributing to the business strategy and the achievement of business goals.

• A balance initiative of process improvement not only increases retention as fewer people leave through frustration with poor processes, but this same improvement enables automation.
• Through reducing demand, automation allows an organization to reduce its workforce supply, potentially in its use of contractors; similarly, a reduction in repetitive and lower value work within a role, resulting from automation, can increase retention. Finally, automation changes the environment of the workplace and can augment roles in a way that allows a different mix of capabilities to be utilised, which can be provided by a more diverse workforce.
• We see that by starting with a balance approach that aligns the organisational estate to the available workforce, we can build critical capability, and both buy and subsequently build specialist capability.
• By building criticals we can not only make the vital step of reducing contractor usage in our critical roles, but we can also increase retention within this segment of the workforce.
• If we start to buy and build our own specialists, we can tap into a more diverse talent pool rather than relying on the existing talent pools. This not only increases retention in this workforce segment, it also means we can reduce contractor usage in that segment as well.

Just five workforce planning initiatives align into the workforce and business strategies to contribute directly to the CEO’s priority to improve customer outcomes.

Providing Options

In organisations of high maturity in workforce planning, the plan may stand clearly as the approach to be taken. As we grow towards this maturity, there is a likelihood that stakeholders will want options, mainly to help manage risk and budgets. Arguably the most obvious challenge to implementing workforce plans is that they make the costs of the workforce clear. Therefore, it can be helpful to present an option that falls within the budgetary constraints and articulates the shortfall that will create in the gap between supply and demand.