Strategic Workforce Planning (SWP) is the most misused and least understood business phrases out there. Ask five different people what SWP is to them and you will end up with seven different answers. Responses may range from rostering, project management, and recruitment pipelining to financial headcount forecasting.
SWP does provide input into each of those elements, but it is so much more. At the heart of SWP is the translation of business strategy into workforce implications, in a quantitative way. This means working out what your business is trying to achieve and making sure it has the workforce it needs to do it.
SWP identifies gaps and overlaps, providing the HR function with a clear mandate. SWP has many positive applications for a business, and if used correctly can transform workforce for the future.
Translating business strategy
Translating business strategy into workforce implications, is building a future view of workforce demand. And this, in my opinion, is where most efforts fall short. I am yet to see many who do this well.
SWP is powerful when it interprets business strategy through the lens of critical success factors, business drivers, activities and variables that impact on future workforce demand for each workforce segment. These factors are unique for each and every business, and each and every labour segment This demand element is what then provides context for everything else; the internal workforce supply, the external workforce demand and supply.
Without understanding what your business actually requires through articulating demand, other factors are just pieces of information with little business relevance.
Planning for the future
I recently had a very senior executive of a large ASX listed company say to me “well what’s the point of creating models, things are going to change anyway and then it will be wrong”.
As one of the great statistical minds of the 20th century, George Box, said “all models are wrong, some are useful”.
Using scenario modelling in planning for the future, as things invariably change, you have a baseline from which to understand that change and you are not flying blind. And this is absolutely the greatest power of SWP. The power of decision scenarios as a critical strategic business tool.
Take the case of Royal Dutch Shell Group of companies. Their system of scenario planning is acknowledged to be one of the best strategic planning systems used today and has been credited for turning around its business performance. At Shell, planning for the future is done through scenarios, which not only enables superior decision making, but also facilitates alignment between management teams who are all perceiving things through their own lens.
As in Synchronicity by Joseph Jaworski, “a managers’ inner model never mirrors reality . . . it is always a construct. The scenario process is aimed at these perceptions inside the mind of a decision maker. By presenting other ways of seeing the world, decision scenarios give managers something very precious: the ability to re-perceive reality, leading to strategic insights beyond the minds reach”.
SWP takes organisations out of the past and present and gets them looking to the future, shifting them from being reactive to proactive. This brings insight, focus and alignment to management teams who are usually perceiving issues differently.
SWP brings together an informed view of business strategy versus the workforce, integrating all elements in a dynamic and predictive construct to centre the conversation on strategy, planning and ACTION. SWP creates the alignment of the business with HR and with Finance. It provides a quantitative basis for understanding the workforce and facilitates great discussions. Particularly in the face of the 4th Industrial Revolution, Future of Work and Constant Change that organisations must now contextualise and get ahead of.
I have been in rooms of large listed companies where the dialogue from SWP has uncovered misalignment in business direction between a CEO, COO and CFO, and then brought them back together, with clarity on the achievability of the strategy. And HR is the function that has executed an initiative centralising conversations, influencing the business strategy and creating the business case for workforce action.
Alicia Roach, Director and Co-Founder of Quantitative HR (QHR) is leading the market in applying the latest strategic workforce planning and HR analytics approaches, enabling clients to unlock the value of their human capital. QHR translates client business strategies into workforce implications to form commercially-grounded, targeted action plans. QHR has worked with clients such as Telstra, Optus, Transport for NSW, ING, Ausgrid to name only a few.