It’s Not Just Data: Workforce Planning and Change Management

Robert D. Motion

INTRODUCTION

“If you don’t know where you are going, any road will get you there.”

—Lewis Carroll

THE CONVENTIONAL WISDOM is that workforce planning is all about numbers. If you can create the right models and analytics, then all things come into place. What follows is the story of implementing workforce planning successfully in a Fortune 100 defense contractor and how we learned that numbers are only part of the answer. The fundamentals of change management are even more crucial for success than the numbers themselves. An analyst can create the prettiest charts in the world, but they don’t do any good if the decision makers aren’t willing to buy into the premise and then act on their findings.

THE BURNING PLATFORM

In June 2008, our company was bidding on an unprecedented amount of international work. As our leaders looked at the business forecast, there was a lack of confidence that we had a clear understanding of the resource requirements and preparedness to meet those requirements. I was asked to lead a small team to figure out if we were prepared. We were given a deadline of thirty days to develop an international workforce plan for the company. We went right to work, initiating the usual call for data from each of our six businesses to understand our needs. As we began to analyze the data, it became eminently clear that we had our work cut out for us: There was no real consistency in the data, how it was collected, what it was saying, or even in the baseline terminology being used. Even more puzzling was the fact that many of our contacts simply couldn’t figure out how to predict or even forecast their requirements: “too complicated,” “too many variables,” and “everything always changes anyway” were common responses to our queries. Simply put, we were facing “garbage in—garbage out”; we had an answer, but we did not trust it. After reporting these findings, our SVP of HR gave us a new directive: “Now that you know what you don’t know, go figure this out.” And so began my introduction to workforce planning and what would become the next three years of my life.

GETTING STARTED

Before starting our journey, it was critical to have alignment with our sponsors on where to focus to make sure that the solution we designed appropriately met the needs of our customer. We recognized that workforce planning can mean different things to different people, so common language was critical for gaining traction and scoping a solution. When we started in late 2008, the understanding of workforce planning varied greatly across the organization. In fact, if you had gathered thirty people in a conference room and asked them to define workforce planning, you would have gotten thirty different answers. As such, we spent about six months benchmarking both inside the company and externally to baseline our understanding of current practices and definitions in this space.

There are two basic definitions of workforce planning: Strategic Workforce Planning and Operational Workforce Planning. Similar to the strategic and financial planning processes in a company, the two worlds of Strategic Workforce Planning and Operational Workforce Planning are distinct activities that ultimately tie together, but their focus, methodologies, use, and timing may differ:

Strategic Workforce Planning aligns with the strategic planning process and identifies the critical skills and talent needed to meet the business’s five-year strategic plan. SWP aligns talent decisions with business strategy, financial forecasts, technology roadmaps, and trend analyses of internal and external talent.

Operational Workforce Planning aligns with the AOP (annual operating plan) and facilitates day-to-day operations by identifying headcount and staffing requirements to meet program needs based on forecast business activity and required number of employees. Plans identify talent shortages that will impact the business within the next eighteen months. (Note: Some organizations would also add a third definition, Workforce Management, that involves immediate staffing needs. We consider this part of Operational Workforce Planning for our purposes.)

Our company historically focused on Operational Workforce Planning, and the process largely rested in the ownership of engineering. We had current practices in pockets that ensured the identification and fulfillment of our workforce needs. In contrast, our HR and senior leadership teams were more concerned about the long-term talent needs of the company, and there were currently no processes in place to understand what we needed to look like from a talent perspective in the long-term future or where to focus to get there.

External HR circles were also beginning to pay attention to SWP. Publications such as Beyond HR by John W. Boudreau and Peter M. Ramstad helped promote workforce planning by introducing concepts such as pivotal roles and supply chain frameworks for talent. Conferences started to focus on workforce planning, and a number of boutique consultancies emerged to address the area. In short, the confluence of industry trends and internal needs helped focus our direction.

We also learned through our benchmarking from other companies that had successfully implemented workforce planning that there were a number of common critical success factors:

Executive sponsorship to help drive endorsement and participation

Relevance to the business: tying workforce planning to significant business issues and existing planning processes

Strategic investments in resources, education, and tools

Establishing a workforce planning center of excellence with dedicated resources in the business

Recognition of workforce planning as the path to building strategic HR capabilities

Common tools, metrics, and reporting

A structure whereby HR owns the process and the business owns the plan—just like financial planning and analysis

We proposed a solution that adhered to these tenets. We also purposely focused on developing a robust process instead of identifying and implementing an IT solution. Our rationale for this was threefold:

1. Without a process to scope the problem and provide for consistent inputs, we would be left with “garbage in—garbage out.”

2. Previous attempts at workforce planning had failed when the conversation revolved around technology.

3. A proof of concept would be needed to convince leadership that this was feasible (especially workforce modeling) and worthy of investment.

Our research also revealed four capabilities critical for success in workforce planning. These were:

Business (data) analysis. Understands how to use and interpret qualitative and quantitative information

Business acumen. Understands the business context and strategy

Partnering skills. Understands how to advise management

Change management. Enables the organization to implement change effectively

While HR business partners traditionally excel at partnering and change management, business acumen and data analysis skills vary across the organization. Because of its emphasis on using data to align talent with the business strategy, workforce planning requires excellence in these areas. As a result, we would place a substantial amount of effort in developing a solid foundation based on immersion learning to ensure sufficient capability in the organization.

WHY SHOULD WE DO THIS? IDENTIFYING THE BUSINESS CASE

In partnership with HR leadership, we developed a vision and business case for what we wanted to accomplish. We wanted workforce planning to:

Be proactive and predictive, aligning talent resources with business strategy

Focus on the critical talent needed to meet our business strategy

Help us foresee our workforce needs ahead of demand

Identify strategic talent vulnerabilities and create plans to mitigate risk

Utilize knowledge of internal and external talent markets

Direct talent investment decisions in an integrated manner

Help us manage our talent resources across the enterprise

Allow us to make smart decisions about when to fill talent gaps via acquisition versus development

The benefit to us was tangible: To help us grow in the direction of our business strategy, we needed a workforce planning process. Without it, we would inhibit our readiness to grow by not having the talent needed at the right time.

WORKFORCE PLANNING FOUNDATION

Before implementing a workforce planning process, it was important to prepare the organization through stakeholder engagement, organizational readiness assessment, team selection, analytics, and training. This would ensure the foundational understanding and support necessary to successfully execute the process.

Change Management

We employed a multipronged approach based on our internal change management model to do this:

Executive sponsorship. Our sponsor would be the SVP of human resources.

Scoping for success. We intentionally scoped workforce planning utilizing an incremental change approach. Rather than try to do everything at once, we would focus on one area of the workforce that would allow us to execute successfully while having an immediate impact. For us, this was focusing on a portion of the workforce—the critical talent needed to execute our business strategy. We also chose to pilot the process in two businesses before launching at an enterprise level. As such, we were able to test the process as designed and bring tangible results back to our stakeholders.

Stakeholder mapping. This was concerned with understanding the various stakeholders involved in workforce planning, their relative degree of support or resistance, and strategies to address concerns and enlist support.

Socialization. Meeting individually with leaders involved in the process prior to launch allowed all to review the concept and address concerns.

Risk assessment. Here, we carefully outlined risks associated with the initiative and developed actions to mitigate risk.

Team Selection and Governance

Over the course of two years, we established a cross-business team responsible for executing workforce planning:

Workforce planning center of excellence. We had already established a center of excellence (COE) within corporate HR that had historically conducted workforce analytics. This team was rechartered as our Enterprise Workforce Planning Team in 2009, and it became the hub for designing the infrastructure (models, analytics, templates, tools) and processes for the workforce planning process.

External partnership. We worked closely with an external partner throughout this process. We found that a third party helped establish credibility for our approach and that we could use an “outside voice” as a change agent when needed. We were then able to leverage this external experience in the development of our process and training. Perhaps most important, an external perspective helped provide balanced feedback to enhance our methods.

Pilot team. During the pilot, the COE worked with a small, agile team of HR partners in our two pilot businesses. We were then each responsible for the relationships necessary to execute the process.

Enterprise Workforce Planning Team. After presenting the results of the pilot to the HR leadership team, we asked for part-time resources from each of our businesses: a lead and an analyst. The lead would be responsible for change leadership and execution of the process in the business, while the analyst would assist with execution and work with the COE to provide the supporting data and analysis necessary for workforce planning. We also enlisted partners from our peer functions in HR to ensure that we aligned with and complemented current processes.

Our governance model was consistent with our research findings. The business would own the plan, while HR would facilitate the process. In similar fashion, the corporate entity would facilitate the process for the enterprise, while each business would be responsible for its execution. At the business level, the Workforce Planning Team facilitates the process with support from HR, with ownership ultimately residing in the business.

Learning

We developed and implemented learning for HR practitioners and team members to ensure a common understanding of the objectives, terminology, tools, methodology, analytics, and outputs of workforce planning. This included two and a half days of immersion learning for our workforce planning leads and analysts, as well as a half day of learning for HR business partners and other stakeholders involved in helping execute the process. The core team then continued to hold regular teleconferences to ensure continued alignment throughout the year.

THE WORKFORCE PLANNING PROCESS

Workforce planning is fundamentally a gap analysis process. In its essence, it involves understanding what the workforce needs to look like in the future to meet the business’s needs, understanding the dynamics of the workforce today, and then assessing the gap between the desired “to be” state and the current state. As such, the workforce planning process at a high level looks like this:

1. Understand the business strategy.

2. Assess current workforce capability.

3. Model the future workforce.

4. Analyze and validate the talent gap.

5. Build the strategic workforce plan.

6. Monitor and adjust.

Understand the Business Strategy

Workforce planning starts with understanding the business strategy and the underlying talent implications to paint a picture of a desired future state of the business. This is the basic background that the workforce planning team needs to then diagnose the next steps. It requires a thoughtful and proactive partnership with the strategy and finance groups to ensure a clear understanding of the business drivers that will ultimately direct selection of talent needs. One must identify where the business is headed in terms of markets, products, geographies, and the high-level talent implications of the strategy. It is helpful to understand any related quantifiable data—such as growth rates, sales, and margins expectations—as these will be helpful for modeling.

Assess Current Workforce Capability

The next step of the process involves developing an understanding of the current workforce and its alignment with the business strategy. To do this, we conducted a series of facilitated discussions with business leadership to segment roles in the workforce according to their criticality to business objectives. Specifically, we wanted to understand the roles that are absolutely critical to achieving the long-term strategy. We chose to use an interview approach because it helped assess the current state and generate alignment within the organization. The interview was designed with a specific protocol of ten questions to ensure that the conversation achieved its intended outcome.

While the interview results themselves were powerful, it was important to add a quantitative element to these discussions. One lesson learned in our process was that this was much easier said than done, as the roles identified by business leaders did not match the job titles in our HRIS (human resources information system). To address this challenge, we mapped each role, identifying current incumbents via algorithms and roster validation, so we could create a robust current state depiction of the workforce. This included total headcount, historical attrition rates, retirement vulnerability, diversity, and other demographics.

The Unit for Planning: Roles. Planning in our company is done at the role level. This was also an important context to set as it helps establish a consistent context for conversation, analytics, and action. Here is how we explain it:

Role is a defined set of tasks, dependencies, and responsibilities that can be assigned to an individual. It is a job, or “what you do,” (e.g., systems engineer).

Competency is the knowledge, skills, attitudes, and behaviors (KSABs) most critical to performance excellence in a specific role.

Skill is a trainable ability that an individual performs in order to accomplish work.

Capability is the ability to perform or execute a specific course of action, and it is the sum of expertise and capacity.

Here’s a simple analogy: An astronaut is at essence an individual who explores space. That role may require certain competencies, such as leadership. It may also require certain skills and capabilities—repair and diagnostics, moon walking, space operations, information synthesis, and flexibility/adaptability. Customers won’t need to know “How many people with moon walking do we need?” Instead, they need to know “How many astronauts do we need? Can we fulfill the mission?” You plan for the role, and then fulfill/drill down to the capability as needed.

This distinction is critical for making analysis feasible, as an individual usually performs one role (primarily) and on occasion a handful of roles on a part-time or collateral basis. In contrast, each individual can have hundreds of competencies and capabilities, creating an exponential combination of possibilities that ultimately become unmanageable for planning purposes. For example, I remember when one organization of about 8,000 employees was proud when it reduced its inventory of skills to a mere 3,400 skills. The logic plays that each position and employee becomes a “unicorn”: Everyone is unique and there is nothing in common across the company. In contrast, we learned that the same organization had a couple hundred roles, which allows for the application of predictive modeling tools and analytics while providing sufficient detail to generate action.

Prioritization Through Workforce Segmentation. Workforce segmentation is a tool that can be used to help prioritize talent investments. Segmentation has long been used in marketing circles and other disciplines to identify the most impactful customers, products, or investments. In a similar fashion, different roles of the workforce impact the business in different manners. By evaluating them with a lens of criticality to the business, one can identify opportunities where the need for investment and the potential returns are proportionately greater. The segments we chose were as follows:

Strategic roles are critical to creating long-term advantage. They are the game changers that the organization by definition needs to achieve its future state; it cannot get there without them. They are generally critical to overall business strategies related to entering new markets, new products, or new services. They provide market differentiation, foster innovation, and support next-generation products.

Key roles are critical to delivering results within the current fiscal year. They are critical to immediate business priorities, driving existing products, programs, services, and markets. Current business results are at risk if we don’t have these roles. They directly impact revenue and/or execution of work/programs. They are the “hair on fire” positions that keep hiring managers and recruiters up at night if they are not filled immediately.

Core roles are foundational to running the business. This may be a skilled workforce, but it can cross industries, doesn’t drive new value, and often serves as a support function to the organization. Companies may choose to have it as employee versus outsourcing.

Transitional roles are not critical to business strategies and may be opportunities for reinvestment. They may be attached to end-of-lifecycle products or old generation technology, or they may not be critical to business differentiation.

Model the Future Workforce

“All models are wrong. Some are useful.”—George Box

Perhaps the greatest power in workforce planning is its ability to lend a quantitative element to understanding a potential future state of the workforce. Merging quantitative intelligence with qualitative feedback drives alignment and ultimately action. This involves the creation of supply models, demand models, and scenarios that will be used to create overall talent investment strategies and action plans. The qualitative lens allows for focus on a general area, and quantitative data then adds specifics. Instead of saying that we “need more capture experts,” models allow leaders to see precisely how many capture experts would be needed given a series of assumptions.

That being said, the intent of modeling is often misunderstood. We often create the expectation that modeling can predict the future; rather, it creates a view of a possible future given a series of assumptions. A good analogy can be found in weather forecasting. We tend to complain that “the weatherman didn’t know what he was doing because the high today was 95° instead of 92°.” In reality, the weather forecast was generally accurate that it would be hot and sunny, and the guidance was sufficient for us to know whether or not to wear shorts today and if we needed an umbrella. When you look at it in this context, the weatherman actually did pretty well.

There will always be outliers, but modeling can provide sufficient direction that is instrumental for making decisions. Why is modeling such a powerful tool for workforce planning? Especially in volatile environments, a robust model can help us bound uncertainty. By the simple virtue of going from an overwhelming sense of the unknown to a range of possibilities, the conversation with leaders can change from “I don’t know what we need” to “we have a potential gap of fifty-five to seventy-five engineers.”

When developing our workforce planning model, it was critical that it addressed the needs of our customers. Based on the scope of our initiative, we had to:

Assess supply, demand, and gap over a three-year horizon

Focus on a particular role based on our segmentation results

Allow for multiple scenarios, or “what-if” analysis

To enhance credibility, we developed our workforce models by leveraging a number of tried-and-true methods that have been applied in other disciplines:

Financial modeling. Applying revenue forecasting methods to people, both in terms of headcount and cost

Regression analysis. Analyzing multiple factors to determine those that best explained movement in talent, especially voluntary attrition and retirements

Monte Carlo simulation. Running mathematical scenarios of business demand to determine and visualize the probability of talent needs for a particular role

Systems theory. Understanding the unique variables in the talent system and how they connect together to impact supply and demand

Segmentation. Prioritizing needs and follow-up analysis based on impact to the business

While the development of this model involved complex analysis, algorithms, and computations, we strove to balance precision with simplicity. We needed an end product that could be used by HR business partners with their leaders. It also had to be easy to navigate and simple to understand. We ultimately developed a simple Excel-based front end that showed a forecast gap for a particular role. It visualized the current headcount, showed potential demand for the next three years, supply for the same period, and the resulting gap. The model had three slides that could be adjusted to produce different scenarios based on business demand, retirement vulnerability, and voluntary attrition drivers.

Finally, we partnered with internal subject matter experts in engineering and finance in the creation and review of our models. This was not just important for honing the model, but the endorsement of these experts provided credibility of these models with customers.

Analyze and Validate the Talent Gap

Given that we employed a bottom-up process, it was important to combine and analyze our current state data and predictive models to determine a potential course of action. This involves understanding what the data is telling us and then getting alignment from leadership and subject matter experts on talent gaps and areas of focus. To help with this analysis, we developed a comprehensive decision support guide for our HR business partners and workforce planning practitioners. This provided a list of probing questions and potential solutions for driving to a final solution:

What do we know about the current workforce?

Is there a gap, do we believe it, and are we willing to invest to close the gap?

What is driving the gap: replacements or growth?

What does the incumbent workforce tell us about risks (retirement, attrition, knowledge management, etc.)?

What do we know about the internal and external talent markets to close the gap?

Is the talent available externally? Is it specific to location/geography? Is it specific to an industry or competitor? What is the time and cost to acquire?

What does the internal talent market look like? Do we have this capability today? Do we have internal development programs in place to fill the gap? What are the cost and time frame for development?

Build the Strategic Workforce Plan

Once the gaps have been analyzed and validated, the team then rolls up the results to create a robust action plan to close the gaps and design talent investment strategies for the next thirty-six months. This often involves multiple stakeholders, especially in large, complex organizations. It needs to involve the owner of the role in the business, the HR business partners, and experts/input from other HR specialties such as talent acquisition, talent development, learning, and compensation. From there, the team can come up with a balanced recommendation that if implemented will ensure mitigation of talent risks, alignment of the talent base with the strategy, and closing of any workforce gaps.

The Power of Synergy. Because our company consists of businesses with separate P&Ls, we deployed this process independently within each business. After completion of these discussions, the business workforce planning teams affinitized the results to see which roles were most critical to their business. We then came together as an enterprise team and identified five roles that were critical to the company. By providing real data that we had roles that were common priorities across multiple businesses, we provided a strong business case for enterprise investments. To date, our talent development and learning organization has used these results to focus its efforts on developing enterprise-level talent pools to support these roles, and our talent acquisition organization is looking at opportunities for joint sourcing efforts.

Monitor and Adjust

Workforce planning is a continual, cyclical process. As such, it is important to monitor the action plan to ensure accountability within the organization and allow for adjustment wherever necessary to align to changing business needs. This includes creating a scorecard to measure progress and then designing regular check-in points to assess whether or not adjustments to the plan need to be made. Scorecards will vary by company depending on the scope of their workforce planning efforts. They should, however, be straightforward, be easy to interpret, and include useful metrics that drive the intended behaviors of the plan.

KEY LEARNINGS

Throughout this experience, the team came away with a number of key learnings:

The workforce planning process (especially business leader interviews) created “buzz.” Leaders are now more actively thinking about workforce issues linked to business strategy.

The HR community embraced the value of workforce planning and the concept of segmentation.

There was widespread enthusiasm and support for HR to lead this process.

Structured qualitative data gathering and sophisticated modeling add business value and compel action.

HR business partners need to have strong capabilities in business acumen, business analysis, partnering, and change management.

Training the HR community is a “must have” for establishing a strong foundation and building speed.

CONCLUSION

We are now in our third workforce planning cycle as an enterprise. When we started our workforce planning initiative in 2009, I was told that it would take at least five years to reach full maturity. Although I was skeptical at the time, this advice could not have been truer. We have progressed by leaps and bounds since we started, but there is still a world of opportunity in the realm of workforce planning. Workforce planning is a growing and evolving discipline, and there will always be new business challenges to address, models to explore, and opportunities to partner and influence action. The journey was not easy, but it has been worth every second.

Bob Motion became Director of Enterprise Workforce Planning at Raytheon Company. in September 2011. He joined the company in 2003 and held positions in talent acquisition, where he developed strategies, workforce analytics, and competitive intelligence to support talent acquisition objectives. Raytheon is a Waltham, MA-based technology and innovation leader specializing in defense, homeland security, and other government markets throughout the world. It employs 72,000 people worldwide.

In his current position, Motion is responsible for all activities related to workforce planning and positioning the workforce to align with the company’s business strategy. He is responsible for the annual strategic workforce planning process across Raytheon’s six businesses, which enables the segmentation, identification, prioritization, and planning for talent needs. This includes leadership of a cross-business team; thought leadership of workforce planning practices; championship and integration of workforce planning across the business; and overseeing the development of supporting infrastructure,. In addition, his team provides strategic analysis of workforce composition, talent needs, growth strategy/contract wins, and the talent market to create strategies for developing and retaining the our talent base.

Prior to joining Raytheon, Bob was a management consultant specializing in data analytics and information technology for PricewaterhouseCoopers and Armeta Solutions.

Motion holds a bachelor’s degree from the University of Texas at Austin, where he graduated with special honors and majors in Plan II, government, and history. He also holds an MBA from the Cox School of Business at Southern Methodist University. He resides in Allen, Texas, with his wife and two sons.