When Workforce Planning Worlds Collide
Jeff Buchmiller
THE SURPRISING SCOPE AND COMPLEXITY OF WORKFORCE PLANNING
WORKFORCE PLANNING means so many different things to different organizations and professionals, because it spans a broad framework having a large degree of complexity. An organization’s workforce planning function is the result of implementing some suite of components according to the needs and style—and stage of process maturity—of the organization (see Figure 1).
An appropriate response to the large degree of complexity is to utilize the “divide and conquer” approach. When the interfaces among components are defined and established, the overall process can be managed, even when the components vary widely in their implementations and have distinct participants who are not well integrated otherwise.
A workforce planning champion therefore needs to act as an architect.
FIGURE 1. COMPONENTS OF THE WORKFORCE PLANNING FRAMEWORK.
An architect’s primary job is to draw solutions on the back of a napkin or on a whiteboard for the stakeholders and participants, in order to achieve a level of coordination among their efforts that would not otherwise occur. Doing so aligns efforts to create something together that none of them could create alone.
When the stakeholders and participants see how their efforts can contribute to the bigger picture, new and more significant solutions are enabled. The synergistic power of the total solution is in harnessing several different competencies and types of information, bringing the multiple points of view to bear.
How the components of the workforce planning framework serve their purposes and interact with each other may be explored in the rich available literature, starting with this book.1
What we have experienced in our own organizations and what we have learned from other professionals is that the workforce planning function is typically grounded in a small number of the component areas. The purpose, style, and approach are related to that grounding. It is important for the architect to understand the particular site, the building materials and methods, and the client’s requirements in order to fashion solutions that will function properly as well as delight.
THE PEOPLE-ORIENTED WORKFORCE PLANNING MANTRA
The workforce planning mantra at many organizations goes something like this:2
Provide the RIGHT skills
At the RIGHT time
At the RIGHT place
For the RIGHT cost
This approach was taken at Electronic Data Systems (EDS) from 1998 to 2008, motivated by the urgent need to coordinate across multiple account teams, which historically had had a large degree of independence. The sheer scale of the organization demanded increased efficiency in cost planning and management, and the majority of its costs were in the workforce.
Ross Perot built EDS in the 1960s through the 1980s as a loose-knit collection of account teams. Each practically owned its own P&L. Each would share client knowledge, technology investments, and other overhead with other accounts in its industry and in its geography, but each would fight fiercely for its key talent, since it was a people business even more than a technology business.
Ross and his team founded the IT services industry and constructed a business model well suited to the resulting market,3 as evidenced by great corporate success lasting into the mid-1990s. However, it was not an environment in which workforce planning processes were formalized and widespread.
Each account manager created and executed his or her own workforce plans specific to his or her own needs to generate a profit margin, to satisfy the client’s needs, and to keep the technical and social momentum strong enough to carry the account into future deal extensions. As the month-by-month account needs evolved, so did the account manager’s workforce-related efforts. These focused the account manager’s attention on acquiring and retaining key team members with the most talent to be highly productive, to satisfy the client, to master utilization of the technologies, and to lead colleagues.
With the headcount-oriented mantra above, workforce planning efforts focus on capturing projections for the organization’s headcounts and total compensation amounts. Use the best available data field for skills, which might be job family, and repeat the spreadsheet for each. Run the same exercise for each location, building out a multidimensional matrix. The smaller-count locations and skills are consolidated until the size of the data set is comfortable for users.
Attrition trends can be used to produce the net supply component, and open positions can be added as “to be hired” employees.
Then a demand side is often developed, where the revenue growth rate forecast is used to scale up the current month’s numbers. Do the subtractions to see how many additional employees “need to be hired” and how many are “not needed” by location and skill. (Psst! Don’t forget to compound the attrition, as some of those new hires will leave, too.)
This approach is usually taken when workforce planning is championed by HR, and it is a great way to get started when the employees and contingent workers are integral to the business model, so that business managers already are thinking through the ways that business strategy needs to be implemented in terms of the workforce. For EDS, keeping up with offshoring trends while continuing to deliver on commitments to clients was a key driving force (Figure 2).
FIGURE 2. COMPONENTS IN WHICH THE EDS APPROACH WAS GROUNDED.
A DISCIPLINE OF WORKFORCE PLANNING DRIVEN BY FINANCE
EDS struggled mightily through the 2000s and eventually succumbed to acquisition by HP, to tens of thousands of layoffs, and to integration into the HP services business unit.
Over the course of the two years of integration, we workforce professionals from EDS got pulled closer and closer toward a new understanding of what may be the critical point of failure for the formerly mighty organization—workforce planning—ironically, since we had made great strides in that very area.
Looking back, we could see that the critical point of failure seemed to align nearly perfectly along the axis of the organization’s success in its first 35 years. What we failed to do was to transform the practices serving success into their next stage of evolution. This would have involved scaling, translating, and layering them to fit the complex global corporation that EDS had become. There were too many people not understanding their share of the problem or their share of the solution, and there wasn’t an architect present with vision and enough influence to arrange it in time.
Prior to the EDS acquisition, HP had developed a robust, respected workforce planning discipline oriented on planning and managing the allowable cost of labor. Each business unit was allowed a TCOW (total cost of workforce) proportionate to its revenues.4
HP applied its workforce planning discipline to EDS in 2008 through 2010, realizing the synergies of the acquisition. We lived through that set of gut-wrenching experiences, seeing the many ways we didn’t understand workforce planning after all, and learning many new purposes for and forms of it.
The financials approach to workforce planning is a great way to get “in the flow” of the business. Opportunities to generate and sustain profit margins that involve the workforce—improvements and expansions, too, not just reductions—become clear and actionable, as suggested in Figure 3.
FIGURE 3. COMPONENTS IN WHICH THE HP APPROACH WAS GROUNDED.
WHERE SMALL ORGANIZATIONS OFTEN START WITH WORKFORCE PLANNING
Small organizations lacking the need to implement robust workforce planning functions usually begin the workforce planning journey by extending their existing talent management practices in ways that are more strategic (Figure 4). Often, imminent growth or other change is the catalyst for these efforts. This is a response geared to mitigate these emerging risks to the business.
FIGURE 4. TYPICAL INITIAL COMPONENTS IMPLEMENTED BY A SMALL ORGANIZATION.
The workforce planning effort at a small organization is sometimes conducted by one person as part of his or her job, at least initially. It is especially important for such a person to act as an architect, guiding others toward the big-picture understanding of the value workforce planning provides, because there is no existing process to support the development of these value-adding organizational capabilities.
THE ANALYTICAL APPROACH TO WORKFORCE PLANNING
It is becoming more and more common, in this era of “big data” and “competing on the basis of analytics,” for organizations to adopt a highly analytical approach to workforce planning. Figure 5 illustrates this. The stated goal is often to make data-based or evidence-based decisions regarding the workforce.
Organizations that are already strong in workforce data and analytics will often set off down this path because it is usually easier to expand on existing capabilities than to start fresh on others. What’s important is to do the components you choose to do well, at each stage, and keep moving forward at the pace the business needs you to.
FIGURE 5. EMPHASIZED COMPONENTS WITH THE ANALYTICAL APPROACH.
The focus in this approach is around the impact workers have on financials, given what they currently do, and around the flows of workers through the organization, into it, and out of it with the resulting changes in impact. Often, these efforts rally around the notion of engagement and its value to the organization.
STATE OF THE ART IN WORKFORCE PLANNING
The most robust implementation of the workforce planning framework we have seen so far is IBM’s Workforce Management Initiative.5
As the largest, most mature, and most global IT services business, IBM is perhaps uniquely situated to lead in workforce planning. There is tremendous value in it for the company, and the sheer scale of its client base means significant benefits are passed along to global economies in the form of improved services and lower costs. IBM’s Smarter Planet brand capitalizes on this tremendous impact (see Figure 6).
The investment required for IBM to achieve this level of workforce planning robustness has been $230 million in its first five years,6 with additional significant amounts since. Clearly, this level of investment is not appropriate for many organizations, even though IBM has experienced several times that amount in benefits from it.
IBM is approaching total integration of all workforce planning components. An organization that develops such a large capability advantage will eventually develop ways to leverage it, and there is every reason to expect IBM to do so with this capability. That will most likely occur in the form of workforce planning information and processing services, which are likely to be integrated into and bundled with other similar business management services and technologies. Watch for the whole next stage in the evolution of workforce planning, and be ready to embrace it for its speed, high quality, and low cost.
FIGURE 6. COMPONENTS INCLUDED IN IBM’S ROBUST APPROACH.
CHECKPOINT: WHAT’S YOUR WORKFORCE PLANNING ARCHITECTURE?
The next step for workforce planning champions to do for our organizations—including when we are already partway through the journey—is to reconsider which of the many alternative approaches to the various framework components serve the particular needs we have, without including unnecessary scope that complicates the effort, bogs it down, and increases the risk of failure.
The goal should not be to implement the entire workforce planning framework at once, building an academically complete program. We are learning that it normally takes several years to make the journey, even with the best people involved, sufficient budgets, and a great context for change.
An old saying goes, “What got you this far is often different from what it will take to get you to the next level.” Don’t let previous success lull you into a false sense of confidence that you already know what needs to be done to take your workforce planning function forward.
There are several proven management techniques from the disciplines of talent management, financial analysis, operations research, and marketing that are useful to apply to the workforce.7 The architect’s objectives are to balance the possibilities with the realities; to balance the academics with the economics; and to select among multiple approaches, materials, and tools according to the specifics of the current situation in order to coordinate the various efforts toward a shared vision.
Completing the vision involves selecting which teams and individuals will be involved at which stages for each component, selecting the tools and technologies to utilize, and designing the coordination processes to ensure that the needed outcomes are achieved. It is wise to start each stage of evolution of each component with a small footprint, then to scale it up after any issues are resolved and as it is proven to work.
Having a well-thought-out, evolving architecture enables each opportunity to improve to be built into the total solution. Winning organizations outperform others by an order of magnitude, not just by 5 percent or 10 percent incrementally. It is by analyzing the situation and the possibilities in this way, and by choosing the most valuable opportunities for improvement, that your organization can stick to its success formula while figuring out how to scale up at each stage.8
When you are faced with the challenge of reconciling and integrating two workforce planning functions—because of a merger or acquisition or an internal clash among competing approaches, or at a new point of integration between teams or organizations—realize that it is an opportunity to evolve to a higher-value model by combining the best of both. It does not have to be that one side or the other wins, because it is very likely both sides have great reasons to be doing what they are doing.
REDISCOVERING THE WORKFORCE PLANNING MANTRA
A workforce planning mantra that results from having our own sights raised to the bigger picture would be:
Get the RIGHT minds at the table
Asking the RIGHT questions
To trigger the RIGHT conversations
That guide the RIGHT workforce actions
Success with workforce planning is achieved when business leaders are able to say:
1. There are sufficient leaders and other workers with the right skills in my organization to achieve our goals, and we have a plan in place to ensure that this remains true over the next few years.
2. The costs of labor for my organization are within planned limits that make sense for our particular business strategies, revenues, and goals.
3. I understand the opportunities to stay ahead of competitors and to get ahead of market trends through our talent, and we are prepared to act on them.
However, success is temporary. As soon as the business model, environment, or workforce changes, it is possible that additional efforts are required to achieve the next increment of success. We’re never done analyzing and planning around financials, so why would we expect anything different when analyzing and planning around the workforce?
When we implement a multifaceted solution that coordinates and guides multiple disparate components in a way that adds value, then we can say that our workforce planning function has matured.
And when cross-organizational standards are developed similar to those in accounting, finance, operations research, and marketing, then we can say the whole discipline of workforce planning has matured.
Maybe then, with compatible and coordinated workforce planning solutions, mergers, acquisitions, and other organizational transformations might not be so painful. Collisions of different workforce planning worlds might instead be opportunities to quickly piece together a healthier and more complete solution.
Notes
1. Thomas P. Bechet, Strategic Staffing: A Comprehensive System for Effective Workforce Planning, 2nd ed. (New York: AMACOM, 2008); J. Boudreau and H. Friedman, “Worldwide Workforce Planning: Facing the Challenge from Definition to Deployment,” Human Capital Institute webinar. Retrieved March 2, 2012, from http://bit.ly/HCIwebcasts; M. Collins and P. Howes, “Building a Data-Driven Framework for Workforce Planning,” IHRIM.link (August 2009), pp. 5–7; J. Jamrog et al., “Strategic Workforce Planning Knowledge Center,” Institute for Corporate Productivity (i4cp) website. Retrieved March 2, 2012, from http://www.i4cp.com/strategy/strategic-workforce-planning; Strategic Workforce Planning Human Capital Topic, The Conference Board website. Retrieved March 2, 2012, from http://www.conference-board.org/topics/subtopics.cfm?subtopicid=150; U.S. Department of Health & Human Services, Office of Human Resources, Building Successful Organizations: Workforce Planning in HHS (November 1999). Retrieved March 2, 2012, from http://www.hhs.gov/ohr/workforce/wfpguide.html; U.S. Department of the Interior, Office of Personnel Policy, Workforce Planning Instruction Manual (August 2001). Retrieved March 2, 2012, from http://www.sciencebuddies.org/science-fair-projects/project_apa_format_examples.shtml; Workforce Planning Workgroup, Human Capital Institute website. Retrieved March 2, 2012, from http://www.hci.org/node/146723.
2. Bechet, Strategic Staffing; John W. Boudreau, Retooling HR: Using Proven Business Tools to Make Better Decisions About Talent (Boston: Harvard Business Press, 2010); John W. Boudreau, “IBM’s Global Talent Management Strategy,” SHRM Academic Initiatives. Retrieved March 2, 2012, from http://www.shrm.org/Education/hreducation/Documents/Boudreau_IBM%20Case%20Study%20with%20Teaching%20Notes_FINAL.pdf; Boudreau and Friedman, “Worldwide Workforce Planning.”
3. Jim Collins and Morten T. Hansen, Great by Choice (New York: HarperCollins, 2011).
4. Collins and Howes, “Building a Data-Driven Framework.”
5. S. Couch, “HP Workforce Planning,” Strategic e-HR Conference (February 2008). Jason Averbook’s Knowledge Infuser blog. Knowledge Infusion. Retrieved March 2, 2012, from http://www.knowledgeinfusion.com/ondemand/blogs
/infuser/2008/02/06/strategic-ehr-conference-hp-workforce-planning-session/; “Hewlett-Packard’s Profitability Driven Workforce Optimization Model,” Corporate Executive Board (2008); “IBM Tunes Workforce Planning to Supply Chain Precepts,” Manufacturing Business Technology (2007).
6. Couch, “HP Workforce Planning”; “Hewlett-Packard’s Profitability Driven Workforce Optimization Model”; P. Leavitt, L. Trees, and R. Williams, “Getting Started with Strategic Workforce Planning: Developing the Tools and Techniques,” Recruiting Trends website (2012). Retrieved March 2, 2012, from http://www.recruitingtrends.com/getting-started-with-strategic-work-force-planning-developing-the-tools-and-techniques; C. Santos, A. Zhang, M. Gonzalez, and S. Jain, Workforce Planning and Scheduling for the HP IT Services Business (Palo Alto, CA: HP Laboratories, 2009); Deborah Waddill and Michael Marquardt, “HP and the HR Optimization Model: Case Study,” in The E-HR Advantage: The Complete Handbook for Technology-Enabled Human Resources (Boston: Nicholas Brealey Publishing, 2011); S. Williams, “Integrating Workforce Planning with the Annual Budgeting Cycle,” Infohrm Workforce Planning Summit (May 2009). Retrieved from http://www.prweb.com/releases/2009/03/prweb2230074.htm.
7. Boudreau, “IBM’s Global Talent Management Strategy”; “IBM Tunes Workforce Planning to Supply Chain Precepts”; Leavitt et al., “Getting Started with Strategic Workforce Planning”; B. Power, “IBM Focuses HR on Change,” Harvard Business Review (2012), hosted by Bloomberg BusinessWeek. Retrieved March 2, 2012, from http://www.businessweek.com/management/ibm-focuses-hr-on-change-01102012.htm; T. Starner, “Passion at the Helm,” Human Resource Executive Online (2008). Retrieved March 2, 2012, from http://www.hreonline.com/HRE/story.jsp?storyId=136568343; M. Voelker, “Optimizing the Human Supply Chain,” Intelligent Enterprise (January 2006). Retrieved March 2, 2012, from http://www.informationweek.com/news/software/
enterprise_apps/175002433.
8. Boudreau, “IBM’s Global Talent Management Strategy.”
9. Boudreau, Retooling HR.
10. Collins and Hansen, Great by Choice.
Jeff Buchmiller leads Workforce Analytics at Alliance Data. The businesses of Alliance Data—Retail Services, Epsilon, and LoyaltyOne—offer an unmatched breadth of data driven loyalty and marketing solutions. These are all designed to help grow Alliance’s clients’ businesses through the application of analytics.
Previously, Jeff worked with EDS for eighteen years, then with HP Enterprise Services for three years through the period of EDS integration. As a data scientist and business intelligence expert, he has played a wide range of R&D, IT services consulting, corporate innovation, data architect, business intelligence, and workforce planning roles.
Jeff graduated from Yale University with a B.S. in applied mathematics and later earned an Executive M.B.A. from Southern Methodist University. His friends accuse him of being a “closet professor” living in the business world.