STRATEGIC WORKFORCE PLANNING

Transcription

1 STRATEGIC WORKFORCE PLANNING 28 MAY 2015 SWP & TALENT ANALYTICS SEMINAR Julia Howes, Principal,

2 TABLE OF CONTENTS WHY WHAT HOW EXAMPLES TOP TIPS 1

3 Team Biographies Julia Howes, Principal Julia Howes is a Principal in Mercer s United Kingdom Talent Business. Julia has worked in professional services organisations for over 12 years, and specialises in strategic workforce planning, workforce analytics and workforce metrics. She has worked across a variety of services in this field including: Formulating the business case and ROI for investment Delivering education and learning workshops Creating technology roadmap and implementation strategies, including change management, stakeholder engagement and data requirements Workforce Analytics and Planning centres of excellence structure and support Workforce analytics projects Strategic workforce planning projects Julia has conducted workforce planning consulting engagements for client in a variety of industries including telecommunications, airservices, mining, manufacturing, banking and finance, health and IT, in a number of countries and regions including Australia, Asia, Europe, the Americas and Africa. Julia Howes Tower Place, London, EC3R 5BU, UK julia.howes@mercer.com Julia has previously worked at SuccessFactors (Infohrm) where she managed the North American Strategic Membership Services team the EMEA Professional Services team. Both of these teams focused on providing consulting services in workforce planning and analytics. Julia also practised as a lawyer in Australia and Vietnam. Julia has a bachelor's degree in Law, and a bachelor's degree in Business from QUT in Brisbane, Australia. 2

4 WHY 3

5 A Workforce Tsunami Is Approaching 4

6 A new approach to managing talent is needed Role Changes Skill Changes Worker Preferences Build versus Buy versus Borrow Growth Roles Stay the Same Roles Decline Roles Move Roles Volatile Roles New Roles Changes to Existing Roles Retire Early Retire Late Experience Turnover Flexible Working Internal development External hires Contingent labour OVERVIEW 5

7 WHAT 6

8 Strategic workforce planning is about determining actions we need to take today to provide the workforce we need for tomorrow. The future depends on what you do today - Mahatma Gandhi The best way to predict your future is to create it. - Abraham Lincoln 7

9 Strategic Workforce Planning is about managing risks It directs talent actions that ensure the right talent is in the right place and at the right time to drive the right results. What jobs and skills are critical to BUSINESS SUCCESS? Where, and how many? CAPACITY RISK What is the RIGHT COST structure? OPERATIONS RISK What are the TALENT PLANS required to buy and build the right capacity? TALENT RISK Growth concerns or a weak pipeline for the future Lost revenue from having to slow operations or put them on hold Investments in the wrong people Overspending that can result from unpreparedness 8

10 Our View on Strategic Workforce Planning What it is and isn t Strategic Workforce Planning is not replacing any of the existing workforce processes on an individual level, such as performance management, development and succession planning. KEY ELEMENTS Function level Resource Allocation Strategic Workforce Planning It is a pro-actively managed process It is future-oriented It goes beyond the one-year horizon Individual level Performance & Development Process Career / Succession Planning It is focused on critical workforce segments It is integrated in business process and planning. It is based on facts and figures Operational Strategic 9

11 Maturity of Workforce Planning There are different levels of maturity in workforce planning Integrated in strategy process Company-wide governance Level 4 Human capital planning Identify key segments Predictive models and scenarios STRATEGIC OPERATIONAL Level 2 Internal / external labour analysis Benchmarking (e.g. attrition) Level 3 Strategic workforce planning & analytics Workforce dashboards Headcount data and positions Retrospective, static reporting Level 1 Budget driven headcount planning 10

12 HOW 11

13 Mercer s Workforce Planning Methodology Gain strategic Measure the Model talent Take action insights gap risks management options Quantity Quality Location Organisation Imperatives Talent Implications Talent Demand Workforce Gaps & Risks Talent Development (build strategy) Talent Acquisition (buy strategy) Contingent Workforce (borrow strategy) Attraction Retention Engagement Career Development Performance Talent Supply Talent Deployment (transform strategy) Talent Retention (bind strategy) Rewards Leadership Mobility Regroup (change business strategy) Demand Scenarios for Critical Segments Risk Risk Assessment Assessment Workforce Workforce Plan Plan Talent Solutions & Talent Solutions Ownership Model Ownership Model 12

14 Gain strategic insights Understand the organisation s imperatives: Examples of Outputs What is the strategic intent? What are the main external drivers of change and growth? Identify the talent implications: What critical workforce segments and capabilities will be needed to execute the strategic intent? Outputs: Demand scenarios that will drive workforce demand forecasts Identification of the critical roles that will be the focus of the SWP process 13

15 Output 1 Demand Scenarios Why do we use scenarios in strategic workforce planning? Consider this conversation: How many Engineers will we need in 5 years time? It is not possible for me to predict this. It depends. HRBP, Operations Division VP, Operations Division For demand scenario development, we need to understand what it depends on. 14

16 Output 1 Demand Scenarios Scenario Development Step 1: Identify factors that could impact the business in the future forecast period Step 2: Understand and group the factors to consider the top 3 to 5 factors that will have the biggest impact on the workforce needed (numbers and skills) Step 3: For each major factor, define a set of outcomes Step 4: Identify and record any assumptions that underpin all of the scenarios Step 5: Validate results from workshop with key managers and ensure that factors are grouped together in a logical manner 15

17 Output 1 Demand Scenarios Scenario Development Example Professional Services Organisation Scenario 1: Low Change Scenario 2: High Change Revenue Growth 1% annual revenue growth 6% annual revenue growth Client Type 90% corporate/ 10% individual 50% corporate/ 50% individuals Products and solution mix 85% annuity revenue/ 15% project revenue 50% annuity revenue/ 50% project revenue Automation and technology No adoption of new technologies Adoption of new technologies allowing for automation of administration tasks Assumptions No major regulatory changes will occur that will change the types of products and services that can be offered No major mergers and acquisitions will occur by the organisation 16

18 Output 2 - Critical Segments Deciding on the right level at which to do workforce planning Informs the people strategy including longer term build:buy, strategy, talent development strategy; current operational planning and talent management processes. Informs the annual operations plan; yearly and quarterly recruitment and training plans. EXECUTING THE STRATEGIC WORKFORCE PLANNING PROCESS 17

19 Output 2 - Critical Segments Selecting the critical roles Poor Design Engineer Systems Manager Illustrative High concern Medium concern Low concern Availability of skillset (internally and/or externally) Manufacturing Engineer Project Manager Research Manager Brand Manager Process Engineer Headcount Expected change Quality Engineer Sales Support Good Important Critical to strategic intent/business success Critical 18

20 Measure the gap risks Workforce Demand Examples of Outputs Conduct initial productivity analyses on the critical roles. Determine how many workers are needed under each business scenario (demand forecast) for the critical roles, based on productivity analysis and business leaders input into how productivity and the nature of work may change. Analysis of type of skills and competencies needed in the future and how they differ from today. Workforce Supply Analysis of the current and historical workforce structure; flows of talent (hires, promotions, terminations); and demographics trends by critical roles. Determine future expected headcount of the current workforce (supply forecast) by critical role. Gap Analysis Calculate the gap under each business scenario, which may be either a surplus or a shortage Conduct a risk assessment of the gap calculated to determine which gaps require active management. 19

21 Output 1: Talent Demand Demand Workshops Generally with line managers and/or subject matter experts Before the workshop Compile and understand relevant supporting information, summary of environmental scanning and scenario information. Have a good grasp of current productivity, staffing levels, and employee competencies. Arrange a demand forecasting workshop Outline the strategic workforce planning process and structure of the interview/workshop so managers have time to prepare. Duration will vary depending upon size/complexity of the business unit, number of managers involved, and participants familiarity with strategic workforce planning. During the workshop Be prepared to challenge assumptions and points of view to ensure they are validated ask the question what if? Record key outcomes discussed and any additional professional judgements, perceptions and opinions. Be prepared to discuss how current staffing levels and productivity will vary over time. 20

22 Output 1: Talent Demand Pre-work - Productivity Drivers Framework INPUTS WORKFORCE STRUCTURE ORGANISATION Organisation design Organisation design Span of control Spans/Layers Job design Job Design Roles, responsibilities, Roles and responsibilities accountability CAPABILITIES & SOURCING Skills Build/ buy Competencies Hire rate Behaviours Age/ tenure/ Training turnover Experience COST & CAPACITY Headcount Workforce Labour costs profile Reward & Available time recognition LEADERSHIP Vision / Mission Strategy / Objectives Communication & connection Style PROCESSES PROCESS EFFICIENCY Processes, activities/ tasks Time required Performance standards Agility, reliability & rework Standardisation UTILISATION Productive time Total time, lost time Workflow Knowledge sharing SYSTEMS Data availability Self-service interface / support Systems / data integration Business intelligence ENGAGEMENT & CULTURE Motivation Ownership Challenge OUTPUTS PRODUCTION Output / unit Loss / unit e.g. shrinkage, leakage Delivered In Full On Time (DIFOT) SALES Sales Volume / unit Sales Revenue / unit Market share Cost of sales SERVICE & QUALITY Quality / unit Satisfaction / unit Customer satisfaction Customer retention rate Customer turnover rate PROFIT Margin / unit Profitability by customer ROI NPAT Cost to income ratio Source: Mercer Workforce Productivity Drivers Framework. 21

23 Output 1: Talent Demand Different productivity situations and profiles CAPACITY More +4% Do less or the same with more +3% +2% Do more with more Less +1% -6% -5% -4% -3% -2% -1% +1% +2% +3% +4% +5% +6% -1% - Do more with the same - Do more with the same, but differently More OUTPUT (revenue, services, margin, etc.) Do less or the same with less -2% -3% Do more with less -4% Less 22

24 Output 1: Demand Forecasting Demand Numbers Example 45 Demand Forecast: Design Engineers Year 0 Headcount To Year 1 To Year 2 To Year 3 Design Engineers High Growth Design Engineers Marginal Growth

25 Output 1: Demand Forecasting Capabilities Example Competency Future Importance Current Proficiency Desired Proficiency GAP Change Magnitude Product Commercialisation Influences and Communicates / Collaborates with Other Groups People Management and Development Client Focus Operational Management Sales Skills Drives Results Innovation / Creativity Business and Financial Acumen Technical Skills / Depth of Expertise within Field Inclusive Orientation Learning Agility Strategic Consulting Sets Strategy and Transforms into Results Local Market Awareness and Presence Knows the Competition

26 Output 2: Supply Current Workforce Analysis Attraction Development Retention Who comes into the organisation? How successful is the organisation at drawing in the kinds of people it needs to achieve its goals? How do people move through the organisation, through different assignments, jobs and levels of responsibility? How successful is the organisation at growing and nurturing the talent it needs to execute its business strategy? Who is staying and who is leaving? How successful is the organisation at retaining people who have the right capabilities and produce the highest value? Many organisations report on these three areas in silos and struggle to see how they interact Workforce maps clearly shows the relationship between these three flows 25

27 Output 2: Supply Current Workforce Analysis The Workforce Map is a picture that describes key dynamics related to the flow of people into, through and out of an organisation over time, to help answer key questions. External hires made in the last 12 month period % of employees that had an internal transfer within the career level during a 12 month period % of terminations from career level with a 12 month period Career Levels Average headcount at career level during a 12 month period % of employees promoted into next career level during a 12 month period 26

28 Output 2: Supply Projected Workforce Supply Example 27

29 Output 3: Gaps and Risks Example Role 1 Role 2 Role 3 Role 4 Supply Demand (1) Demand (2) 28

30 Model talent management options Prioritised Solutions Workshop with HR domain experts to identify potential solutions to close gaps and mitigate risks. This workshop would use the forecasts as well as the external and internal labour information. Examples of Outputs Senior Service Engineers Service Engineers Service Technicians Consider: 1. Feasibility: Is the solution feasible? 2. Strategy: Which strategy will give us the optimal outcomes? 3. Logistics: What is the best approach to achieve the solution? Model the cost impact of prioritised strategies. Create workforce plan to meet the business strategies/plans, and/or highlight risks with the business plans. 29

31 Identify Talent Management Options Is the talent/timeframe available for developing needed capabilities? What is the external availability of required talent in select markets? How can changes in talent flows/ velocity impact future supply? Are there benefits of buying rather than building key talent? How can geographic and other mobility moves impact future supply? Build Buy Which recruitment channels are most effective? Are there work processes that should be reengineered to minimize critical gaps? Could key roles be redesigned to better fit available talent? Transform Borrow Bind Can gaps be addressed through retention strategies? Over what timeframe and where is it most critical to retain specific experience or knowledge? What is the most effective method to gain commitment from key talent? Is there contract/ external agency/consulting expertise that could be utilised? Where can we build in flexibility through a borrow strategy? 30

32 Strategy Development Strategies / Measures Impact on Gap Cost / Benefits 1 Increase retention Improving the current turnover rate of 18% has been addressed as top priority. This will be achieved by a variety of measures, mainly by putting much more focus on a comprehensive onboarding programme with defined mentors for new joiners to reduce quick-quits. Lower turnover improves the talent supply and reduces identified gaps. Senior Service Engineers Service Engineers Service Technicians Senior Service Engineers Service Engineers Service Technicians Based on an average cost per headcount of in the Service Professional population, a 1% decrease of turnover will result in the following savings (in million): Total 2,01 2,39 2,81 3,28 3,88 14,4 2 Increase productivity A more comprehensive programme for service engineers and technicians will be designed and delivered within the corporate academy framework. In addition, administrative tasks will be taken away from the role of service engineers and technicians, which will lead to a higher output (in the form of units under maintenance). * Disguised illustration Senior Service Engineers Service Engineers Service Technicians Senior Service Engineers Service Engineers Service Technicians Based on an average cost per headcount of in the Service Professional population, a 1% increase of productivity will result in lower hiring needs and related cost, leading to the following savings (in million): Total 2,01 3,09 4,59 6,41 8,56 24,7 Shortfall Surplus >5% - >80% 60-80% 40-60% 20-40% 5-20% 5-20% 20-40% 40-60% 60-80% >80% <5% 31

33 Take action Step 9: Action Plan Examples of Outputs Action plan of which solutions will be pursued with indications of timing and associated responsibilities: What are the requirements for specific talent management solutions? Who is accountable for making the solutions happen? Provide recommendations on what metrics should be used to monitor the actions based the workforce plan. 32

34 EXAMPLES 33

35 Buy Foresight allows for the development of a talent brand and the recognition of that brand in the labour market. Foresight also enables the development of a recruitment strategy to find and communicate effectively with the specific recruitment targets. CLIENT EXAMPLE To maintain the speed of expansion as fast growing 5-star airline, this company needed to hire approximately 25,000 new hires over a 5 year period. Analysis of key labour markets in reference to flight destinations provided a clear picture of the passive candidate pool per region. In many regions, less than ¼ of the supply were actually available to meet the demands in critical jobs/locations, when assessed by availability, quality and cost. The understanding of the labour markets led to new target markets, that were not the traditional labour markets. 34

36 Build Foresight allows for the development of training programs and new career paths (including developmental assignments) that bring individuals up to speed for filling critical jobs. Remaining Gap, after graduate scheme CLIENT EXAMPLE Given the known age profile of a critical engineering role, this organisation had already put in place a new graduate programme in collaboration with a local university. Consequently they felt that the risk was appropriately managed and under control. Demand Supply, after graduate scheme Supply, before graduate scheme Strategic workforce planning showed that the graduate programme would only replace some retiring employees, and did not fill the full gap created by increased demand and voluntary terminations. Consequently, the client looked at its internal career paths to determine if the average time in particular pathways could be decreased with job rotations and development opportunities. 35

37 Borrow Foresight enables strategic decision making for the most effective use of expensive rented labour. It also helps to identify the most effective providers as well as the establishment of relationships that will over time improve quality and reduce costs. CLIENT EXAMPLE This utilities company had traditionally used contractors to gain access to strategic skills and to allow for flexibility around roles that were perceived to be volatile. Strategic Workforce Planning forecasts established that in both high change and low change future states, that the needs for the volatile roles where more stable and certain that currently contemplated. Modelling showed that reducing the proportion of contractors in this critical role, would amount to savings in the overall cost of labour. 36

38 Bind Foresight enables the identification of the best retention strategy for critical employment segments. Foresight also improves the effectiveness of retention strategies over time through enhanced consistency and believability in support of a recognised employment brand. CLIENT EXAMPLE For this client, when analysing a key role (Service Professional) a high turnover rate of 18% was identified. Improving the turnover rate of 18% was addressed as top priority. Further analysis showed that this was particularly high in mid-career levels. Given the high recruitment and onboarding costs for this role, the client found that a 1% decrease in turnover would have high savings. Detailed predictive analytics showed the drivers of turnover was impacted by supervisor stability and variety of experiences and jobs. A holistic retention programme was put in place by focusing on the supervisor training and mentoring and career moves. Based on an average cost per headcount of RMB in the Service Professional population, a 1% decrease of turnover will result in the following savings (in million RMBs): Total 2,01 2,39 2,81 3,28 3,88 14,4 37

39 Transform Investments in technology take time to research and implement as do efforts to reengineer work processes (including training). Foresight allows for the informed design of targeted people practices to increase productivity such as scheduling, training, and incentive design. CLIENT EXAMPLE For this client, analysing the productivity drivers of key engineering and technician roles identified inefficiencies. As a consequence a more comprehensive programme for service engineers and technicians was designed and delivered within the corporate academy framework. Administrative tasks were taken away from the role of service engineers and technicians, which lead to a higher output (in the form of units under maintenance). A 6% increase of productivity resulted in lower hiring needs and related cost savings were able to be calculated. 38

40 TOP TIPS 39

41 Despite investments in Workforce Planning organisations are struggling to realise the promise SPEND HAVE A WORKFORCE PLAN EFFECTIVENESS 62% 60% Plan to increase spend Yes No 77% 23% 24% 14% 14% High Somewhat Not at All Source: Mercer Talent Barometer Survey 40

42 Mercer s Lessons Learned Top tips for a successful strategic workforce planning program Have a clear but flexible methodology The workforce plan is owned by the business, but the process is driven by HR Focus on your critical workforce segments Plan for more than one outcome Find the right people (and skills) to support the process Your workforce plan should tell a story Workforce planning is not an event TOP 10 TIPS FOR STRATEGIC WORKFORCE PLANNING 41

43 Take a moment to discuss some of the things you ve learned from this section. How will you apply this in your organisation? EXECUTING THE STRATEGIC WORKFORCE PLANNING PROCESS 42

44 Mercer Limited is authorised and regulated by the Financial Conduct Authority Registered in England No Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU 43