Everyone’s Doing SWP
Strategic Workforce Planning –
Everyone’s Doing It . . . Or Are They???
Strategic Workforce
Planning (SWP) – it has to be amongst the most misused, least understood
business phrases out there. Ask five different people what SWP is to them and
you will end up with seven different answers. Responses may range from
rostering, project management, and recruitment pipelining to financial headcount
forecasting. They have Sarah from Operations, Joanne from Finance and Tom from
Sourcing “doing SWP” – they have it covered.
Whilst in truth SWP
provides input into each of those elements, it is much more than the sum of
those parts. At the heart of SWP is the translation of business strategy into
workforce implications – in a quantitative way. What does this mean? Working
out what your business is trying to achieve and making sure it has the
workforce it needs to do it. Identifying the gaps and overlaps provides your HR
function with a clear mandate and the imperative to make this happen!
At
the core of SWP, in translating the business strategy into workforce
implications, is building a future view of workforce DEMAND. And this, in my
opinion, is where pretty much most efforts fall short. I am yet to see many who
do this well. Books, literature and even standards in SWP are relatively vague
and conceptual, or at best linear, assuming some static ratio to revenue growth
or decline. Beyond oversimplification, this wrongly assumes companies have the
right workforce in place to start with. In other cases, determining demand is
conceptual, based on discussions with various parties around the organisation
then rolled into a single view (which usually is WAY over the Finance numbers,
and has little rigour in how the numbers were arrived at – finger in the air
anyone???)
SWP is powerful only
when it interprets business strategy through the lens of critical success
factors, business drivers, activities and variables that impact on future
workforce demand for each workforce segment.
These factors are unique for each and every business, and each and every
labour segment (and hence why it is extremely difficult to get the right
off-the-shelf software to do this for you!). This demand element is what then
provides context for everything else – the internal workforce supply, the
external workforce demand and supply. Yes, we may be turning over 40% of
workforce XYZ per annum, but we do not need to focus on that because our
business is demand for that skill is declining anyway. Yes, there may be a
shortage of skilled engineers in Adelaide, but we are looking to shut down our
Adelaide site in 2 years anyway. However, we are increasing our digital presence
so what shape and size workforce do we need there, and from where do we source
that capability? Without understanding what your business actually requires
through articulating demand, other factors are just pieces of information with
little business relevance.
I recently had a very
senior executive of a large ASX listed company say to me “well what’s the point
of creating models, things are going to change anyway and then it will be
wrong”. As one of the great statistical minds of the 20th century, George Box,
said “all models are wrong, some are useful”.
My response would be to say that at least by planning for the future, as
things invariably change, you have a baseline from which to understand that
change and you are not flying blind. And this is absolutely the greatest power
of SWP. The power of decision scenarios as a critical strategic business tool.
Take the case of Royal Dutch Shell Group of companies. Their system of scenario
planning is acknowledged to be one of the best strategic planning systems used
today and has been credited for turning around its business performance. At
Shell, planning for the future is done through scenarios, which not only
enables superior decision making, but also facilitates alignment between
management teams who are all perceiving things through their own lens. As in
Synchronicity by Joseph Jaworski, “a managers’ inner model never mirrors
reality . . . it is always a construct.
The scenario process is aimed at these perceptions inside the mind of a
decision maker. By presenting other ways of seeing the world, decision
scenarios give managers something very precious: the ability to re-perceive
reality, leading to strategic insights beyond the minds reach”.
Scenario planning,
such as what SWP delivers, takes organisations out of the past and present and
gets them looking to the future – really shifts them from being reactive to proactive. This brings insight, focus and alignment to
management teams, who are usually perceiving issues differently; Operations
needs resources to deliver, Finance with its cost focus and HR with its drive
to increase capability and development. SWP brings together an informed view of
business strategy versus the workforce, integrating all elements in a dynamic
and predictive construct to centre the conversation on strategy, planning and
ACTION. SWP creates the alignment of the business with HR and with Finance. It
provides a quantitative basis for understanding the workforce and facilitates
great discussions. I have been in rooms of large listed companies where the
dialogue from SWP has uncovered misalignment in business direction between a
CEO, COO and CFO – and then brought them back together, with clarity on the
achievability of the strategy. And HR is the function that has executed an
initiative centralising conversations, influencing the business strategy and
creating the business case for workforce action – now that is mighty stuff!
Regards!
Librarian
Rizvi
Institute of Management
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