|creative moves bpo||
B Y A D R I E N N E H E D G E R
A look at what’s ahead for 2013, and why leading organizations are turning toward configurable HR technology to deliver greater value.
Most HR functions reach a point where automated technology isn’t just a “nice to have,” it’s a must. But choosing the right technology can be difficult. Do you select a basic solution that can automate some, but not all, of your processes? Do you go with a highly customized solution? Or do you select a solution that’s configurable? For a host of reasons, option three is rapidly emerging as the best, most “future-proof” choice.
The trends driving this philosophy include:
Indeed, during the first three quarters of 2012, WorkForce Software experienced a 97 percent increase in year-overyear growth for its cloud-based, configurable workforce management platform.
What’s attracting companies to this approach? In a word: flexibility.
A Closer Look: What Does “Configurable” Mean? “Customized” and “configurable”
may seem like the same concept, but there are key differences. A customized solution typically requires changes to the application’s core code. This can be problematic and expensive; when business needs change, the system needs to be updated. With a configurable solution, a rules
engine is used to meet unique organizational and workforce management needs.
It can address geographies, policies, regulations, collective bargaining agreements and more. In addition, companies gain access to best-practice approaches. “Naturally we address our clients’
unique pay conditions,” says Moschetto. “But we also work with them to meet their business objectives. Then we can develop a workforce management strategy that addresses both their financial and strategic needs.”
Another plus: a configurable approach completely eliminates the need for manual work-arounds. It allows an organization to operate a single workforce management platform across the entire
business, while still addressing the unique needs of each site.
Then, as the business needs or regulatory demands change, companies can simply tweak the configurations; there is no expensive re-coding. This flexibility positions companies to
take advantage of emerging trends. For example:
By Ed Frauenheim - Workforce
For years companies have looked to outsource jobs to cut costs, but now more U.S. employers are looking to beef up operations domestically. It's a trend known as 're-shoring.'
Employers and labor-market experts say the pendulum is swinging away from offshore labor strategies and toward a more home-grown approach. That is, U.S. employers are recognizing the limits of shipping work abroad and looking to beef up operations domestically. The reasons include skill sets largely specific to the U.S., increased costs of overseas operations and a desire by U.S. employers for a more stable workforce, even when using contingent labor.
Among the signs of "re-shoring" was Apple Inc.'s recent announcement that it would manufacture some of its computers in the United States—a break from the iconic company's longstanding practice of making products in China.
The results of the trend include a U.S. labor market that is heating up for some skills. And there's a renewed push to bring foreign labor here.
Microsoft Corp., for example, recently proposed raising the annual cap on H-1B visas, which let skilled foreign workers enter the country. That effort has drawn fire from critics who say the visas are mostly used to undercut U.S. wages and fuel age discrimination.
Virtually all observers agree, though, that a shift is under way to locate more work in America.
Ravin Jesuthasan, global practice leader for talent management at consulting firm Towers Watson & Co., says organizations in some cases rushed to send work overseas and didn't recognize the downsides. Offshoring human resources processes could lead to a lower-quality employee experience and potentially reduce productivity as U.S. workers and managers seeking HR support are not served well by foreign call centers, he says. Now there's growing interest in bringing some operations back to America's shores.
We're "reaching a point of balance with offshoring," Jesuthasan says.
For several decades, U.S. employers have looked to send work abroad. The trend began in the 1970s and '80s with manufacturing moving to lower-wage nations. In the past decade or so, a growing number of services have been shipped to China, India and the Philippines.
To be sure, the practice continues. A 2012 study by research firm Oxford Economics and co-sponsored by Towers Watson & Co. projects that during the next five to 10 years in developing Asian countries, demand for industrial talent will rise 37.7 percent and demand for business services workers will grow 40 percent.
More companies are global in their scope, and they increasingly scour the planet when seeking to fulfill leadership positions. What's more, teleconferencing technologies along with collaboration software enable geographically distributed teams to be productive.
The nascent shift of work back to U.S. shores does not spell the end of offshoring, says Gad Levanon, an economist with The Conference Board research firm. "It's going to be a gradual thing," he says. "It will be more rare to see companies actually shut down existing, functioning operations in emerging countries."
At the same time, there's an emerging consensus that the virtual workplace has its weaknesses, global collaboration has its limits and offshoring may have gone too far. In 2011, for example, The Boston Consulting Group published a report titled Made in America, Again: Why Manufacturing Will Return to the U.S. It concluded that China's manufacturing cost advantage over the U.S. is shrinking fast and that within five years the gap will virtually close for many goods consumed in North America because of factors including rising Chinese wages, higher U.S. productivity and shipping costs.
"Wage and benefit increases of 15 to 20 percent per year at the average Chinese factory will slash China's labor-cost advantage over low-cost states in the U.S., from 55 percent today to 39 percent in 2015, when adjusted for the higher productivity of U.S. workers," the consulting firm wrote. "Because labor accounts for a small portion of a product's manufacturing costs, the savings gained from outsourcing to China will drop to single digits for many products."
Apple made a splash last December when it announced it would shift the manufacturing of one of its Macintosh computer products from China to the United States. Apple CEO Tim Cook said his company would invest $100 million to bring the manufacturing back to the U.S. this year.
Concern about its reputation may have played some role in Apple's decision. The company has come under fire in recent years amid reports that its outsourced labor force in China works under harsh, unsafe conditions in making hot-selling products such as the iPad. In addition, Apple's runaway success amid a still-tepid U.S. economic recovery has led observers including President Barack Obama to question whether it could locate operations in America.
"I don't think we have a responsibility to create a certain kind of job," Cook told Bloomberg Businessweek in announcing the manufacturing shift. "But I think we do have a responsibility to create jobs."
A sense of responsibility to U.S. communities also helps explain why India-based technology services company HCL Technologies is hiring in America. HCL Technologies is among the India-based firms that have touted the benefits of offshoring work over the past decade or so. But HCL, whose U.S. operations are based in Sunnyvale, California, is now highlighting its efforts to beef up its U.S. workforce.
"We are committed to expanding local talent pools in the communities where we operate to ensure we staff the right skills, in the right place, at the right time, for the right cost," says Prithvi Shergill, HCL's chief human resources officer, in an email. "By investing in education and training, and collaborating with universities, governmental and nongovernmental organizations, we've created a more sustainable and socially responsible business model for fulfilling talent needs."
HCL has about 8,600 employees in the United States, 40 percent of whom are local hires. Last year, HCL said it planned to hire 10,000 local employees in the U.S. and Europe.
More than just labor savings and social responsibility are behind the re-shoring trend. Companies are recognizing the value of physical proximity when it comes to their teams. InterContinental Hotels Group requires key people on its Web development team to work out of its regional headquarters in Atlanta, says Keith Credendino, vice president for global e-commerce technology. The hotel chain still sends some technology work, such as software testing, overseas to countries including India and Russia. But for strategic tasks such as rebuilding the InterContinental website, it is important for developers to be co-located with company business partners, Credendino says.
RUGBY ANYONE?What's more, Credendino's team uses a highly interactive software delivery method called "Scrum." That's not an acronym, but rather a reference to actual rugby scrums where players bind together as they square off against an opponent. Software development as scrum does not work nearly as well if team members are scattered across the globe. "Think about rugby," Credendino says. "You move together. You work together as one team."
Then there are skills particular to the United States. Credendino says that the talent needed to develop mobile device applications tends to be American. That is, U.S. coders rather than their overseas counterparts are more likely to be familiar with writing apps for the iOS or Android platforms. "It's very hard to find people outside the U.S. who have experience in 'native mobile apps' development," he says.
Greater interest in workforce stability also is spurring more work to be done in America, says Wade Hughes, managing partner at consulting and staffing firm The Intersect Group. He says clients are requiring their staffing providers to complete assignments with workers who are "W-2" employees rather than contractors or employees at a subcontracting firm. Clients seem to be imposing the W-2 requirement to ensure that their technology projects and other assignments are staffed with a reliable set of workers, Hughes says. "They want continuity."
The made-in-America shift is contributing to labor market tightness in a number of fields. The nation's overall unemployment rate for 2012 was 8.1 percent, according to the U.S.
Bureau of Labor Statistics. But the unemployment rate for computer and mathematical occupations in 2012 was 3.6 percent for 2012—below the 4 percent threshold that some observers consider the rate corresponding to "full employment" in the overall economy. Another job area in relatively high demand is for accountants and auditors, who experienced an unemployment rate of 4.2 percent in 2012.
And marketing and sales managers enjoyed an unemployment rate of just 1.4 percent.
Food and facilities services provider Sodexo USA is among the employers wrestling with a tighter talent market. Information technology and sales professionals can be hard to find, says Arie Ball, vice president of talent acquisition for Sodexo. And Sodexo's hiring needs are picking up. Over a recent six-week period, the number of open positions was up 25 percent compared with the same period a year ago, Ball says.
One of the running debates about the labor market is whether employers have been too picky in their hiring. It's a conversation playing out at Sodexo, as well. "For some of our jobs, do we need a four-year degree or is a two-year degree acceptable? Those are the questions we need to be asking," Ball says. "It's not always necessary."
With respect to jobs in science, technology, engineering and mathematics—the STEM skills—some U.S. employers say they can't get the talent they need in the United States. That complaint has refocused attention on the H-1B visa program, which allows skilled foreign professionals to work in the United States for a limited period. The number of visas that can be given out in a given year currently is capped at 65,000, subject to some exceptions.
In September, Microsoft suggested adding 20,000 H-1B visas annually for STEM skills that are in short supply. The recommendation came as part of a broader Microsoft proposal to improve the talent pool in science and technology, including broader access to computer science in high school and 20,000 new permanent residency cards—or green cards—for workers with STEM skills.
Brad Smith, Microsoft's general counsel and executive vice president for legal and corporate affairs, said his company had more than 6,000 open jobs in the country, an increase of 15 percent over the past year.
"Our nation faces the paradox of a crisis in unemployment at the same time that many companies cannot fill the jobs they have to offer," Smith said in a blog post. "In addition to the short-term consequences for businesses and individuals, we risk these jobs migrating from the U.S., creating even bigger challenges for our long-term competitiveness and economic growth."
More recently, 20 organizations backed Microsoft's proposal, including the National Science Teachers Association.
But Norm Matloff, a professor of computer science at the University of California at Davis and longtime critic of the H-1B visa program, says Microsoft's proposal amounts to a quest for cheap labor and an attempt to avoid hiring older workers. He cites a study by the Economic Policy Institute think tank finding that, from 2000 to 2011, the average hourly wage for workers possessing at least a bachelor's degree in computer and math occupations rose less than half a percent per year—not the kind of increase you'd expect to see from a severe dearth of talent.
"The data just don't indicate a shortage," Matloff says. "The age issue is still very much with us."
Despite the warning from Smith that U.S. jobs will move overseas in the absence of more H-1B visas, the purpose of the visas is to fill jobs in the United States. In other words, the push to expand the visa program is another indication that—at least for now—re-shoring is under way.
The HR/OD dilemma
Mergers are already happening between the two fields as we see from the many dual roles advertised, and organisations such as CIPD are starting to provide some OD development for HR practitioners. Some strategic activities such as talent management and employee engagement also now straddle disciplines.
Meanwhile, while not having OD in their titles, some HR Directors in practice have a unique OD focus and mindset. Ruona and Gibson (2004) argue for the emergence of 21st century HR as a ‘metaprofession
that can accommodate multiple fields under its umbrella’ and suggest that the current focus on people, systems, strategic alignment and capacity for change require an integrated approach from HRM, HRD and OD.
Our own research (Garrow, Varney and Lloyd, in press) found some close working relationships between HR, internal OD and external consultants although there can be confusion over roles and responsibilities. It also suggests a tendency for people with an OD mindset to come from commercial and operational areas of the business, rather than an HR background. There are several reasons why a full merger of OD and HR is likely to be difficult or unsuccessful.
Firstly OD arguably works best at the boundaries of organisations rather than as part of the establishment. Early findings from our own research (Garrow et al) suggest that OD does not necessarily sit well as a functional discipline but is more of a field of practice. OD’s systemic nature and organisation‐wide remit mean that it rarely sits neatly in the organisational hierarchy.
It is likely that merger with a formal function such as HR would inevitably lead to ‘collusion’ with the system in the sense of becoming part of the establishment, which could compromise OD’s ability to challenge. There are warning signs that this may already be the case. Peck (2005) for example suggests that ‘since 1997, OD in healthcare has to some extent become a servant in support of local implementation of national policy’ leading to ‘uncomfortable tensions’ (p23). Edmonstone and Havergal (1995) also warn that in the NHS, OD had become ‘sanitised’ and ‘a supporter of the
status quo’ criticising the ‘recipe books’ that ‘portray OD as the application of problem‐solving tools and techniques’. They suggest OD had become the ‘custodian of the softer organisational values’ and the terrain of the ‘agony aunt’.
Secondly OD practitioners have varied backgrounds and a very different skill set. Our interviewees (Garrow et al., op. cit.) had held roles in Marketing, Learning and Development, Purchasing, Project management, Operations and Comp & Benefits but none had been in an HR generalist role. While they did see some overlaps with strategic HR they felt on ‘different planets’ from operational HR. The difficulties many organisations have experienced in implementing Ulrich’s business partner roleseem in part to stem from the lack of strategic capability in the individuals whose roles have been ‘re‐badged’ (Bentley, 2008). One business partner in her report suggested that in some organisations HR has been expected to make this transition without adequate support and argues, that ‘if you re‐badge people without giving them training and awareness, you are setting them up for failure’.
Finally OD may do better to be more ambitious and aim for Burke’s strategy model reporting directly to the CEO. Several of the CE’s in our own research (Garrow et al., op. cit.) had a clear OD vision linked to strategy and personally led the OD agenda starting with the Board and Executive team suggesting that an OD mindset is starting to become an important part of the leadership repertoire.
Some final thoughts
OD has a long tradition and a strong legacy which remain as relevant today in tackling worker alienation as it did in the post war years. Both the social and the technical sides of organisational systems would seem very different to pioneers of classical OD but there is still a need for both a whole system approach and one that is underpinned by values whether these are the original human relations values or more general organisational values that inspire employees.
While the physical space of ‘systems’ gradually becomes less relevant, the art of managing and co‐ordinating global, virtual and alliance teams has become a constant leadership challenge. Behavioural sciences and an understanding of social systems still have much to offer here particularly in the use of ‘pull’ techniques or ‘attractors’ that tap into intrinsic motivation and lead to employee engagement.
Meanwhile organisational design for a post global recession age is likely to be high on the agenda. Hock (1995) may well have been prophetic in his belief that our institutions must become ‘chaordic’. His key question then was ‘whether we will get there through massive institutional collapse, enormous social carnage, and painful reconstruction, with the distinct possibility to that ultimate manifestation of Newtonian concepts of control – dictatorship’. There are already calls for regulation,
centralisation and more control.
OD practitioners, however, remain upbeat about the future (Garrow et al., op. cit.) and believe they make an important contribution in tough times through ensuring organisations use the energy in the system efficiently, encouraging learning and innovation, retaining a focus on the future and upholding values when they come under pressure. There are challenges, however, to become more short term and bottom line focussed, provide ready made solutions and deliver changed rather than
change ready organisations.
OD will only remain relevant if it can continue to demonstrate value. The tendency for it to be defined currently in terms of tools and techniques paves the way for it to become quickly dated and there is constant pressure to find new ways to deliver value and support change.
OD in the UK has not yet become embroiled in the sort of self‐doubting debate that has dogged HR for so long around whether it has a seat on the board, how strategic it is and how it can best measure value. Practitioners are quick to say that if a CEO has to ask for measures of how effective an OD intervention is then it isn’t working. This may not be a view that is universally popular although senior executives also felt that they would know effective OD when they saw it (Garrow et al. op. cit.).
Wherever OD sits in the organisation it will find allies and forge partnerships with like minded individuals who have an instinctive understanding of how systems work and this is particularly effective when the leadership also has an OD mindset.
Where HR and OD are sufficiently compatible they will naturally form a partnership rather than be structurally driven to an uneasy merger. OD inevitably retains an aura of mystique because it takes so many forms, draws on multiple disciplines and operates in the moment according to context and culture.
Genuine OD is non formulaic and is difficult to define but taking multiple perspectives helps to create a contemporary picture of OD practice. While the debate around definitions and structures is interesting it should not be allowed to undermine what is done and how it is done, nor limit OD activity to those with a title or a designated function.
Ongoing development for OD practitioners remains a real priority, however, as the nature of the work they do relies heavily on their individual ability to ‘read’ organisations and make effective interventions which are relevant and sensitive to the organisational context. Where HR practitioners are ‘re‐badged’ into an OD role it is particularly important that they are not set up to fail.
Finally, OD has survived and evolved through embracing new challenges, new disciplines and new paradigms and there is some evidence that practitioners are becoming more business focused (Garrow et al. op. cit.). While the quest for organisational effectiveness and high performance, agile structures and processes, effective leadership and the challenge of change remain top priorities for senior managers the requirement for OD is surely set to grow.
The Boston Consulting Group, led by James Andrew, exhaustively studies the topic of innovation globally. In the BCG Innovation 2010 report, the group writes, “After a pause in 2009 that reflected companies’ growing concerns about the economy, innovation is once again a top priority for most companies.
• A large majority of companies consider innovation a top strategic priority for 2010. Seventy-two percent of respondents said that their company considers it a top-three priority, versus sixty-four percent in 2009. This percentage matches the highest reading seen in the seven years we have been conducting the
• Fully 84 percent of respondents said their company considers innovation an important or
extremely important lever in its ability to reap the benefits of an economic recovery.” The statistics reveal that, for the majority, achieving innovation is an imperative. And, at the moment, thebest way to innovate is through people. One could surmise that the chance of achieving breakthrough
and on-going innovation rises exponentially when companies can avail themselves of the brightest and best top talent. And, if so, does having a culture of innovation result in attracting, hiring and retaining top talent?
A STUDY IN INNOVATION AND TOP TALENT
To study the question further, let’s go back to the opening scenario. You may recognize the story of
John Lasseter, who today is chief creative officer at Pixar and Walt Disney Animation Studios. Early in his career, Lasseter was fired by Disney following his team’s development of an animated film where the background was computer animated. John was immediately hired by Ed Catmull, a Ph.D.
and computer scientist, at Lucasfilm Computer Graphics Group, itself acquired by Steve Jobs in
1986 and the company became Pixar.
Fast forward to John Lasseter and Pixar today and you find highly talented people, arguably the brightest and the best, working in an innovative environment and achieving repeated success on a grand scale. Disney may regret its early decision to fire John Lasseter after paying $7.4 billion in 2006 to buy Pixar, and the creative talent behind the company.
High-tech companies, such as Pixar, Google and Apple, who are top innovators today, have the
advantage of launching their new organizations around current trends and capabilities. But do
larger, established companies, those fighting years of ingrained business practices, have the same
opportunity to achieve innovation? A case in point is Proctor & Gamble, a large, successful conglomerate that began in 1837 by selling soap and candles. In 2000, A.G. Lafley became CEO and set out to instill innovation into the culture. According to the book, “The Game- Changer,” by Mr. Lafley and Ram Charan, consider the results since 2000:
• “Sales more than doubled, from $39 billion to $80 billion
• Billion dollar brands increased from 10 to 24
• Brands with sales between $500 million and $1 billion grew from 4 to 18” Mr. Lafley attributed the growth directly to the decision to make innovation the core focus of the company.
Shining a light on Pixar, Proctor & Gamble and leading innovators such as Google, provides insights
into building a 21st century culture of innovation and how to attract and retain the brightest and best talent. From research, pictures emerge of the unique talent and ideas found in innovation leader
companies that have direct applicability to any and every type of company. Consider the following
values and practices from Pixar, as reported in “Pixar Animations Studios, Part I and II,” and “Can John Lasseter Save Disney,” and other innovation leaders:
1. A CORE VALUE OF COMMITMENT TO THE CUSTOMER.
Is the core value computer animation for Pixar? No, the core value is the story – a story that people
everywhere will enjoy. According to Lasseter, “the story must connect to the real world, it must be
believable to the audience. The story must have character, detail and design,” explains Lasseter.
Pixar’s audience is global as is the consumer for P&G. Mr. Lafley points out “the days of achieving
automatic growth by entering new markets are essentially over.” He describes the process of
involving people, inside the company and out, who know the values and preferences of consumers in
different parts of the world. He even went so far as to visit a housewife in her small apartment in
Venezuela to see what she had developed in the form of creams, lotions and shampoos. Lafley’s message from his personal visit to a typical homemaker was that “these creams and lotions are what she says they are, not what we would create for her”. His powerful conclusion from this experience is “it’s not about us, it’s about her”.
In a similar vein, Marissa Mayer, Vice President of Search Product and User Experience at Google, says one of their top nine strategies around innovation includes “think users not money.” If the main core value is building great products or services for customers/users and you put them and their needs first, the money will come. That’s true whether the company builds high- or no-tech products. At P&G, commitment to “the consumer is boss,” was led by managers – innovation leaders – but permeated the organization through the social networks. One can’t imagine that a more important core value exists, yet, in practice, many of the employees in the majority of companies aren’t thinking about the customer at all.
In surveying over 200 business people regarding the strategy and innovation goals of their company,
the majority of whom were C-level executives, the author found that the number of times that the
customer appears in stated goals is less than 2%. Focus on the customer is most often relegated to
Marketing and Sales. Building a new DNA with the customer at its heart is essential in the current social media dominated market and era.
2. KNOWING THAT A COMMITMENT TO THE CUSTOMER NECESSITATES COMMITMENT TO
It’s the people that make the difference. “What makes Pixar so special is not the building; it’s the people that make Pixar. If you are having fun making the movie, it’s going to appear on the screen,” says Lasseter. Is it possible to create a culture of innovation and have fun at work when you are making medical products, servicing mortgage loans or making widgets?
Absolutely! A Bloomberg Business Week post on “What Employees Want: Six Essentials,” by Mallary Tytel, writes about decision making, learning, variety, support and respect, meaningfulness and a desirable future. Great Attributes! You cannot embrace these essentials without laughter and fun. Yet, Lasseter goes on to say, “We really have a lot of fun at Pixar, but our main passion is our work.” What an “essential” combination – fun and work. One of the best top executives that the author worked for adopted the mantra that if you treat people well, they will work their heart out for you. What was his definition of treating people well? A few examples include collaboratively setting priorities and making decisions, identifying opportunities for greatest impact and reward, creating R&D projects and empowering everyone with opportunities to lead.
The disciplines generated respect and values as we hired new people and built new capabilities. That
approach is certainly supported by the culture at top innovator companies.
3. THE RIGHT TEAM.
Ed Catmull, the computer scientist and co-founder of Pixar with Lasseter was asked how Pixar is able to attract and retain such creative talent and in turn institutionalize creativity in the company. A
summary of his response is as follows:
• Have the best people. The best people will attract the best people.
• “The way we work is that we trust the artist to do the right thing,” says Catmull. Lasseter
expands and says that the artists are in charge
– “it’s why they are here.” “It creates a culture where everyone believes decisions are made for the good of the film.” “The art drives technology and technology inspires the art,”
• Empowerment. It is not uncommon in highly creative, or other, firms to see one or two
executives doing the best and most rewarding work, perhaps due to insecurity or a desire for
Often, they are surrounded with very frustrated, talented people that have no outlet
for their skills. In recent years, Pixar brought on several new animators and empowered
them to make their own movies. Pete Doctor, Andrew Stanton and Brad Bird made the
movies “Monsters, Inc.”, “Finding Nemo” and “The Incredibles” respectively. Empower your
employees to explore, analyze, try something new and refine it and then implement the
• Dynamic Teams. In the movie “The Pixar Story,” by Leslie Iwerks, Ed Catmull and Steve
Jobs talk about the chemistry between the people on the creative teams. “They build off
one another. It’s always a core group that keeps each other in check. They finish each other’s
sentences and heighten ideas. It’s not the idea but the people, how they work together, and
the good of the film.”
Having worked on many dynamic teams in launching new technology or creating a new entity following a large-scale corporate acquisition, it is amazing what dynamic teams can accomplish in a relatively short amount of time. They are energized by working together, show immediate signs of results and progress and they are not easily dismayed by problems and setbacks. Oftentimes, dynamic teams are built for one-time projects, but the real power for companies lies in the ability to
continuously develop dynamic teams to achieve extraordinary results.
by Success Factors
Executing talent management activities before they’re needed is an
earmark of a successful business. With aging workforces and a shortage of critical talent being among the biggest challenges facing today’s businesses, strategic workforce planning – the discipline of forecasting future gaps between demand and supply of critical talent, to ensure that you have the appropriate workforce mix three, five or ten years from now – has become one of HR’s most important responsibilities.
HR executives new to this process should be aware of a number of pitfalls to avoid when engaging in
strategic workforce planning.
PITFALL NO.1: EXPECTING HR TO “OWN” WORKFORCE PLANNING
Yes, you read that correctly: workforce planning should not be owned by HR. After all, the goal of workforce planning is to reduce the risk to business strategy execution associated with workforce capacity, capability and flexibility. The foundation for workforce planning is the business strategy; therefore workforce planning should be owned by the business units. The business units are responsible for the success or failure of their strategic plans, and the human capital requirements of the strategy are no less a part of their responsibility than the financial, technical, operational or other requirements.
HR does play a critical role, and that is one of stewardship. HR Managers need to be the content experts and consultants in the workforce planning process, articulating the value, providing the necessary tools and processes, and driving accountability. HR must ask challenging questions that compel managers to think about what drives workforce demand, and help the business translate its strategies into human capital needs.HR must also ensure that the required workforce is delivered. Success requires the expertise of both business leaders and workforce planners – which may mean that new competencies should be developed within the team (see Pitfall No. 6).
PITFALL NO.2: FAILING TO SEE THE BIGGER PICTURE
Workforce planning is a strategic exercise, not a short-term budgeting endeavor. Ergo, the goal is not to slot employees onto project teams or into schedules, but to ensure talent managers prepare a future workforce to execute company objectives. As a rule of thumb, the time frame of the forecast should be equal to the time required to source and fully train an employee. This is usually somewhere between two and five years. Of course, there are exceptions – energy sector companies often need to plan ten years or more into the future.
It is also critical for the workforce plan to estimate the impact of business changes that are expected to occur beyond the forecast time frame. For example, a technology organization recently conducted a workforce planning exercise with a four-year planning horizon. But the company was planning to implement a new technology that would change its entire operations after five years
Workforce plans that did not take the technology change into consideration would have been obsolete in the long term, and were therefore considered invalid.
PITFALL NO.3: TRYING TO RUN BEFORE YOU CAN WALK
Attempting workforce planning for an entire organization in the first iteration will almost certainly become overwhelming and limit program success. Starting small - with five to ten critical job roles, for example - is recommended, allowing time to refine the process before expanding company-wide. It typically takes three workforce planning cycles to understand how to make the process work effectively within a company’s culture and planning cycles.
Additionally, starting small will help build internal credibility and solidify support. And, as organizations expand workforce planning to include more job roles, workforce planning software can help make the overall process easier and more transparent for a wide set of users, resulting in a better partnership and the ability to deliver on the desired outcomes.
A few years ago, a major financial services firm wanted to implement workforce planning but had to seek out business units and convince them of the value. Once workforce planning had run successfully for a few managers, others began to approach HR requesting the process. Today, that HR team has constant demand for workforce planning from across the company, with universal acceptance of the process and the value it delivers.
PITFALL NO.4: TALKING IN A DIFFERENT LANGUAGE TO THE BOARD
HR Managers must be able to translate the impact of the workforce plans into financial value and business success. This enables business leaders to make workforce decisions based on the same criteria used in other areas of strategic planning. It also demonstrates the value of the workforce planning function, building credibility and support for the process going forward.
One major technology company built its workforce planning department around these metrics, augmenting business decisions with workforce profitability predictions. The head of workforce planning now holds a monthly meeting with the CFO to discuss the implications of corporate strategies on workforce costs and how risks can be mitigated. However, the majority of organizations struggle to quantify this impact, making it impossible for senior management to understand the value of workforce planning to the business. HR Managers should be able to answer questions about the plan’s return on investment (ROI):
PITFALL NO. 5: FALLING AT THE LAST HURDLE: IMPLEMENTATION
The most important element of workforce planning is putting in place the processes to bridge the gap between current workforce (supply) and future needs (demand). Too often, the workforce plan becomes an academic exercise, another HR activity or a document that grows dusty on a shelf and never get actioned.
Organizations that start too big exhaust themselves (see Pitfall No. 3) and often do not even get as far as developing the right strategies. Some develop strategies, but do not move to the next step to create and implement an action plan. In other instances, HR develops strategies without input from the business (see Pitfall No.1), and the necessary managerial buy-in does not exist.
To avoid this pitfall, each business unit should have an owner accountable for seeing the plan implemented. This facilitator will manage the outline of specific tactics, time frames, budget, check-in dates and, most importantly, a set of metrics for monitoring progress. The original workforce planning team should be briefed periodically to evaluate the success of the strategies and to make adjustments where necessary.
PITFALL NO.6: PLANNING WITHOUT THE RIGHT SKILLS
Workforce planning is a business process that requires a unique blend of skills and capabilities. At the core of workforce planning is the business strategy, so the core capability of a successful workforce planner must be business acumen. Finding people with these attributes can be difficult, and finding people who have these skills and previous workforce planning experience can be even harder. This is the primary reason why companies get started with outside consultants, who train HR and the business in workforce planning, provide technology and support the first few planning iterations. Once the process is in motion, the expertise will develop internally, and companies usually find they can successfully manage the process independently.
Workforce planning will continue to grow as a critical element of business success. It will be important for workforce planners to understand how the process works, how to demonstrate the impact and how to avoid the common pitfalls.
Doing so will enable organizations to focus on what really matters: having the right people, in the right place, at the right time, at the right price to execute business strategy