CORPORATE LEADERSHIP COUNCIL

August 2006
www.clc.executiveboard.com

Fact Brief

Processes for Conducting Workforce Planning

Profiled Institution A B C* D E F Industry High-Tech Financial Services Financial Services Retail Financial Services Financial Services Employees 10,000 50,000 50,000 100,000 More than 100,000 More than 100,000 More than 100,000 50,000 100,000 Revenues $5 billion $10 billion More than $10 billion More than $10 billion More than $10 billion More than $10 billion More than $10 billion Key Questions: What is the process for conducting workforce planning? What groups are recipients of the workforce planning output, and how do they use this information? What are the benefits of workforce planning?

*The interviewed individual represents the practices of one business operation of Company C. However, the revenue and employee information represents the entire organization.

Table of Contents Executive Summary Administering Workforce Planning Conducting Workforce Planning Improving Workforce Planning Appendix: Workforce Planning Processes Research Methodology 2 3 4 9

Workforce Planning Strategically Aligns Human Capital with Business Direction An aging population and tighter talent markets demand new human capital planning strategies An uncertain labor market coupled with a rapidly changing marketplace creates the need for organizations to proactively plan for expected and unexpected shifts in business demand and talent supply. Furthermore, the business implications of the aging workforce position human capital planning as an essential element of comprehensive business planning. However, many organizations are only beginning to see the value of such planning and may be at a disadvantage in the coming years without building a planning process that ties human capital strategies to business goals.1,2 and encourage companies to identify key workforce strategies through well-developed workforce planning. Workforce planning allows organizations to better meet the challenges of a rapidly changing economy. By using business strategy to align shifts in demand with the existing and future supply of human capital, organizations optimize the workforce to meet business goals, increase market share, and improve employee engagement. This brief describes the workforce planning processes of six organizations and illustrates the strategic alignment of workforce planning, detailed in the figure below: Figure 1: Workforce Planning Strategic Alignment
Business Strategy Workforce Planning Human Resources Strategy Human Resources Operations 2006 Corporate Executive Board. All Rights Reserved. Catalog No.: CLC1609955

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EXECUTIVE SUMMARY
To create an efficient and effective workforce planning process, organizations typically follow a three-phase process, as detailed in the executive summary below:

I. ADMINISTERING WORKFORCE PLANNING

Oversight and Frequency of Workforce Planning Workforce Planning OversightIn five of the six profiled companies HR oversees the workforce planning process. However, the finance group at Company A takes a leading role. Research and profiled companies agree that effective workforce planning is an output of a joint effort between HR and finance. Workforce Planning Staff Members Interviews with profiled companies and research reveal that there are often between 1 and 10 full-time employees who are dedicated to workforce planning. However, workforce planning is a large operation that involves various functions including finance, business planning, and strategic staffing. Frequency of Workforce Planning Workforce planning takes place on an annual basis for all companies except Company F, which conducts the planning on an as needed basis. Workforce planning typically occurs in conjunction with the annual strategic planning process. Duration of Workforce Planning The workforce planning process typically takes between several weeks and several months to complete.

II. CONDUCTING WORKFORCE

PLANNING
Workforce Planning Processes* Step 1: Define Business Goals and Conduct Demand Analysis Business goals help define the demand for human capital. Profiled companies measure demand through the use of templates that project the need for talent and skills based on business goals. These templates also take into account factors such as retirement, turnover, and new roles being created. Step 2: Utilize Supply Analysis Profiled organizations examine current and future supply by collecting data from their HR systems on metrics such as turnover and acceptance rates. Data on contingent labor is typically drawn from a vendorprovided staffing update or a linked contingent labor management system. To determine future supply, profiled companies develop forecasting models based on interviews, focus groups, and historical trends. Step 3: Conduct Gap Analysis Profiled companies use spreadsheets to examine the gaps between the demand and supply. Companies may examine this gap annually or on a more regular basis and may segment their gap analysis by job family or geography. Step 4: Create Workforce Planning Output and Define Workforce StrategiesAll profiled companies, with the exception of Company F, create an annual workforce plan. From these annual plans, profiled organizations are able to define HR and other functional strategies. Step 5: Monitor Workforce Plans Profiled companies take the following actions to incorporate business changes into their workforce plans: Develop close relationship with business planning group (Company D) Monitor plan on a quarterly basis (Company E) Conduct workforce planning on an as needed basis (Company F)

III. IMPROVING WORKFORCE PLANNING

Identifying Key Challenges and Potential Solutions Challenge #1: Aligning with Company Mission Solution #1: Tie Workforce Planning to Existing Business Processes Challenge #2: Lacking Workforce Planning Skills Solution #2: Use a Simple Workforce Planning Model and Provide Tools Challenge #3: Obtaining Senior Leadership Buy-In Solution #3: Conduct Background Research Challenge #4: Using Inadequate Technology Solution #4: Adopt New Technology and Keep Process Simple Benefits of Workforce Planning Benefit #1: Enables Organizations to be ProactiveWorkforce planning helps organizations quickly recognize problems, which allow companies to incur fewer costs. Benefit #2: Improves the Effectiveness of the HR FunctionWorkforce planning allows the HR function to allocate time and resources to the most valuable activities. Benefit #3: Increases Customer and Employee SatisfactionWorkforce planning improves customer service and employee satisfaction by ensuring that the organization has the appropriate number of employees to meet demand. Benefit #4: Improves Market Share Workforce planning enables organizations to capitalize on the market by developing a comprehensive understanding of their internal talent and how to deploy it.

*For an overview of each profiled companys workforce planning process, please see pages 11-13 of this document.

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Oversight and Frequency of Workforce Planning Effort

The human resources function is the driver of workforce planning development and implementation at five of the six profiled companies, whereas finance leads the process at Company A. However, interviews and research reveal that effective workforce planning processes are a combined effort of business unit leaders, HR, finance, and business planning groups.3 From this combined effort, organizations typically have one to ten employees dedicated to workforce planning. For example, Home Depot has ten full-time HR employees who dedicate themselves to workforce planning for five months of the year.4 In addition to these dedicated employees, profiled companies cite that it is difficult to estimate how many employees are involved in workforce planning. The interviewee at Company D estimated that approximately forty people have some input into the process. That said, the figure below illustrates the key players in the workforce planning process and the number of dedicated staff members at some of the profiled organizations: Figure 2: Key Players in the Workforce Planning Process HR
Finance Number of Dedicated Staff Members Three HR Full-Time Employees and Two Finance Full-Time Employees are dedicated to the workforce planning effort at Company B. Two Employees in Corporate HR and One to Two Employees in Every Country or Function in the Home Country contribute to the workforce planning effort at Company D. Three to Four Full-Time Employees work on workforce planning at Company F.

Strategic Staffing or Business Strategy Representative

The main responsibility of the dedicated staff members is to complete the annual workforce plan. All profiled companies, with the exception of Company F, conduct workforce planning annually. Company F currently conducts workforce planning on a more ad hoc basis. The interviewed individuals note that workforce planning occurs annually because it is incorporated into the annual planning or budgeting process. However, profiled companies reveal that in the future they hope to conduct the process more frequently to react to business changes such as mergers and acquisitions, changes in the internal and external labor markets, and changes in business strategy. The table below illustrates the frequency and duration of the workforce planning effort at the six profiled organizations: Table 1: Frequency and Duration of Workforce Planning Company Frequency Duration Annually, will be moving to a Currently most of the work is A rolling six quarter process* done in last quarter of the year B Annually July to September C Annually August to February D Annually September to October E Annually, monitored quarterly 2 to 3 months F As needed N/A
*This new planning process means that each quarter the company will project six quarters ahead. The organization will move to this planning cycle to mirror the financial planning process.

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Step 1: Define Business Goals and Conduct Demand Analysis

The first step of the workforce planning process is defining business goals and conducting a demand analysis. This step is typically broken down into the following two-phase process:5 Phase I: Set Business Goals and Identify Workforce ImplicationsProfiled companies workforce planning efforts begin with the corporations business goals to identify the major business drivers with workforce implications. In addition to determining the demand for labor, business goals help organizations determine demand for other functions such as real estate and technology. Home Depot identifies the workforce implications of business strategies through a simple template completed by each business and illustrated below:6 Figure 3: Sample Workforce Implications Template* Workforce Strategy Exponentially grow market share in China over the next three years. Workforce Implications Where to locate the sales force? How to build sales force in China? How to develop key skills?

*The information in this template is hypothetical.

Phase II: Analyze Historical Trends and Business Estimates to Develop Demand ForecastForecasting workforce demand is a process that allows management to predict upcoming changes to their need for talent. Profiled organizations take the workload approach, which evaluates the amount and type of work the organization anticipates handling to project the number of resources needed to perform that work. Profiled organizations predict future demand by considering internal factors such as turnover and external influences like business strategies, economic conditions, and market competition. The figure below illustrates a hypothetical demand analysis that evolves business goals into workforce reality:7,8,9 Figure 4: Hypothetical Demand Analysis Based on Business Goals
Key Business Questions What are the estimated increases or decreases in company growth, output, or revenue? What are the estimated corresponding changes in talent (and other functions) that result from company growth? Hypothetical Forecast To reach the business goal, the organization will need to take the following actions: Buy 5 buildings Hire 500 new employees Train for language skills Buy new technology system Workforce Reality Organizations take into account historical trends in turnover and other factors, to determine the specific need for talent. For example, as detailed in the equation below to have 500 new employees, the organization must hire 1,500 new employees: Forecast (500 employees) Factors (e.g., turnover) Actual Number (1,500 employees)

+/-

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Step 2: Utilize Supply Analysis

After organizations understand the business goals and their workforce implications, organizations should examine current and future supply by examining the following types of workforce data, listed below:
Acceptance Rates Diversity (gender and race) Employees by Role or Job Family Family Composition and Marital Status Headcount Promotions and Demotions Retirement Turnover (voluntary and involuntary)

Organizations collect this data to analyze the current and future supply both internally and externally. Profiled companies primarily use their HRIS to track this data but also use a variety of other collection methods, which are detailed in the two tables below: Table 2: Tools to Determine Current Supply Tool Description
HRIS All profiled organizations use their HRIS to pull relevant workforce information on their full-time and part-time employees. Profiled companies give templates to line or functional managers to complete about the current supply of their workforces. For example, Company C asks line managers about involuntary and voluntary turnover and projected retirements of their employees. To determine the external supply of talent, Company E and Company F utilize data from the BLS on demographic trends. Company E pulls this information for the ten most important business locations. Profiled organizations cite that the most effective way to track contract labor is to build a contractual supplier relationship. Then the supplier can provide accurate and updated temporary labor headcount on a regular basis.

Table 3: Tools to Forecast Future Supply Tool Description

Interviews Company Cs HR team is interviewing senior leaders to gauge what they think the future roles and skill sets will be in the next 5 and 10 years. HR at Company E interviews business leaders to determine how their vision for future business strategy will effect future staffing needs. Profiled companies learn about future workforce trends by BLS projections. These statistics are particularly important when examining future trends in diversity.

Line or Functional Managers

Focus Groups

Bureau of Labor Statistics (BLS)

Bureau of Labor Statistics (BLS)

Vendor Relationships

Forecast Models

Profiled organizations build forecast models based on current supply and projected future supply. A sample forecast model is detailed in Figure 5 below.

As mentioned above, profiled organizations develop a forecast model used to project the supply of labor for the coming year or for the next several years. The figure below illustrates a commonly used supply analysis model that first determines internal labor supply and then factors in external labor supply (typically drawn from BLS data) to create the supply forecast: Figure 5: Supply Analysis Model

Current Staffing Levels Projected Outflow

Promotions Terminations Demotions Retirements Layoffs

Projected Inflow
Transfers Promotions New Hires

Internal Labor Supply

External Labor Supply

Supply Forecast

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Step 3: Conduct Gap Analysis

Once demand and supply are determined, profiled companies conduct gap analysis to examine how they can proactively fill any current or future gaps. Profiled companies may break down this gap by role, executives and non-executives, or by geography. In addition, gap analysis may also determine the extent and impact of the gap, as detailed in this sample gap analysis from Exxon Mobil below:10 Figure 6: Sample Gap Analysis from Exxon Mobil Area: Training Description of Future State: Employees are given the training necessary to execute business objectives in advance of need. People Requirements Sales force trained in selling to different customer bases Knowledge of Mexican culture and market Technical staff trained to install and maintain technology Business Objective Alignment Technology launch Mexican market penetration Technology launch Gap Medium High High Impact High High High
Gap Rating Scale High: No initiatives in place to address gap Medium: Some initiatives in place, but not sufficient to close gap Low: Significant formalized process exists in the business to address the gap

All profiled companies use spreadsheets to conduct gap analysis and note that this process can be tiresome as spreadsheets are difficult to update. As a result of this difficulty, all profiled organizations hope that in the future their organizations will implement new systems such as Web-based dashboards to conduct gap analysis. The interviewee from Company C notes that the organization considered purchasing a consultant workforce planning system but it was deemed too expensive. As workforce planning becomes more valuable to organizations, there is a greater likelihood that organizations may begin to use more sophisticated technology such as dashboards, data warehouses, or other vendor workforce management products. Research and interviews reveal that using this type of technology provides the following benefits:11 Figure 7: Benefits of Workforce Planning Technology Reduce Time and Effort
Profiled organizations note that spreadsheets can be time consuming and are difficult to update. Other technology can reduce this time and effort of data compilation.

Identify Trends Quickly

Workforce technology providers present workforce information in a fashion that trends can be easily identified by HR and senior leaders.

Enable Real-Time Monitoring

Many profiled companies note that the ability to create a Web-based automated dashboard would enable realtime monitoring.

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Step 4: Create Workforce Plan and Define Workforce Strategies

Organizations create their workforce plans by examining the gap analysis results. From this analysis, all profiled companies except Company F create an annual workforce plan. Several groups receive versions of the workforce plan, as detailed in the table below:12 Recipient HR Table 4: Recipients of Workforce Planning Output Version of the Workforce Planning Output HR leadership is typically the primary recipient of the workforce planning output, as it is responsible for most of the plans execution. HR leadership receives a complete analysis of how the organization is progressing across all workforce indicators and identifies current and anticipated talent and skill gaps. HR leadership builds goals for recruiting and training around the details of the workforce plan. Other support functions receive information about the gaps revealed by workforce planning that influence their operations. For example, each line of business at Company B meets with different support functions (HR, IT, Legal) to build out key goals to close the current or anticipated gaps in their functions. The Board of Directors receives portions of the workforce planning output. The information included is typically a high-level pictorial representation of how the organization is faring on several key workforce indicators. These indicators are often tied to specific business goals and strategies.
Presenting Workforce Information to the Board Nationwide designs a comprehensive set of HR dashboards, known as the HR Board Pack, which is presented quarterly to the Board and consists of three main sections: The HR Key Performance Indicator Dashboard: The dashboard documents the organizations performance against nine HR metrics and illustrates performance over time compared to the organizations targets for each of the metrics. The External Benchmarking Dashboard: The dashboard compares HR performance against external benchmarks. Seven Subject-Specific Dashboards: Each dashboard addresses a specific HR topic such as retention, training, or diversity. These dashboards highlight specific HR risks and demonstrate how HR is addressing challenges.

Other Support Functions

Board of Directors and Senior Executives

The workforce planning output allows functions, especially HR, to create targeted strategies to fix current and impending skill and talent gaps. The interviewed individual at Company C notes that the organization has taken significant action as a result of the workforce planning process, as detailed below: Figure 8: Company Cs Defined Workforce Strategies Recruiting Training and Development Retirement Policy

An external labor analysis exposed a shrinking external labor pool. To successfully recruit from this shrinking talent pool, Company C began to create innovative recruiting strategies and implement an employment branding initiative.

To ensure that the organization would have a full talent pipeline, Company C established a development program for high-potential employees. By developing these employees for key positions, Company C hopes to avoid gaps in critical positions in the future as the baby boomer generation retires.

Company Cs workforce study revealed that a large portion of the workforce would be eligible for retirement in the next five to ten years. To keep employees working longer, Company C implemented flexible benefits, flexible work arrangements, and part-time work opportunities.

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Step 5: Monitor Workforce Plans

Companies generally track the organizations actual performance and compare it to predictions made in the forecast. Organizations specifically should revisit forecasts when major organizational changes occur. Due to expected and unexpected shifts in business needs, organizations need to ensure that they monitor their workforce plans over time. Profiled companies provide the following strategies for responding to change: Figure 9: Reaction to Change and Workforce Planning Radical Shift in Business Needs
Disruptive technology World events New competitors

Planned Changes to Business

Entry into new markets Entry into new product lines Mergers and acquisitions

Tactic #1: Develop Close Relationship with Business Planning Group

As Company D grows by expansion and acquisitions, the workforce planning group is given the long-term business plans by the business planning group and can make estimates based on these business projections. Once the change occurs, these estimates are revisited by incorporating the actual data. To make this process more effective, it is important for HR to be in regular communication with the finance and business planning team.

Tactic #2: Monitor Workforce Plan on a Quarterly Basis

The HR leadership team at Company E monitors the plan on a quarterly basis. The team builds new strategies every quarter based on the progress the organization is making against the gaps. In addition, if any significant internal or external changes have occurred, the HR leadership team can take these into account and make new projections as needed.

Tactic #3: Conduct Workforce Planning on an As Needed Basis

Company F conducts workforce planning on an as needed basis, which allows the organization to begin a workforce planning initiative when needed. For example, if the organization is set to acquire a new organization, the workforce planning team can make a more educated guess on the workforce demographics to better avoid workforce duplication.

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Overcoming Challenges and Identifying Success Factors of Workforce Planning

Profiled companies identified four key challenges and some potential solutions to conducting more effective workforce planning, as detailed in the table below: Figure 10: Key Challenges and Potential Solutions

Challenge #1 Aligning Workforce Planning with Company Mission

Challenge #2: Lacking Workforce Planning Skills

Challenge #3: Obtaining Senior Leadership Buy-In

Challenge #4: Working with Inadequate Technology

Tie workforce planning to existing business processes Research and interviews reveal that workforce planning is often more effective when it is tied into an existing business process. Therefore, most profiled companies draw a direct link between the workforce plan and the companys strategic mission.

Develop a simple workforce planning model and provide tools Profiled companies note that developing a simple planning model and providing tools engages HR and managers in the process and avoids arriving at incorrect conclusions.

Conduct background research Before Company C began workforce planning, the HR department conducted research on the state of the internal and external workforce. The research revealed that half of its workforce was projected to retire in the next five to ten years. This future talent and skill gap illustrated the importance of workforce planning and ensured buy-in.

Adopt new technology and keep process simple Profiled companies hope to move towards using data warehouses or consultant tools in the future. However, in the interim, profiled companies try to keep the use of spreadsheets as simple as possible.

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Benefits of Workforce Planning

Research indicates that if effectively executed, workforce planning can increase productivity, reduce labor costs, and dramatically shorten time-to-market as the organization will have the precise number of employees with the appropriate skills in the right place at the right time. Profiled companies cite these and the following additional benefits of workforce planning:13 Figure 11: Benefits of Workforce Planning

Benefit #1: Enables Organizations to Be Proactive Workforce planning enables profiled companies to recognize emerging challenges and proactively respond. For example, organizations that fail to prepare for the implications of the aging workforce will suffer from a lack of talent and potentially severe skill gaps. In addition, proactive planning prevents massive hiring and layoffs due to business swings. Profiled companies note that proactive action is often less costly because the problem has not yet fully developed.

Benefit #2: Improves the Effectiveness of the HR Function Workforce planning allows the HR function to create targeted strategies and improve the effectiveness of the function. By prioritizing resources and time on the workforce implications of business strategy, HR is able to become a more strategic partner to the organization. Profiled companies cite that since beginning workforce planning, the HR function is seen as a more valuable contributor to business strategy, and executives are more interested in human capital issues.

Benefit #3: Increases Customer and Employee Satisfaction Workforce planning enables companies to improve customer service by ensuring that the organization has the appropriate number of employees in the right locations. In addition, profiled companies note that they have experienced increased employee engagement because companies are able to deploy an appropriate number of employees to meet demand. In addition, by having a better understanding of future demand for talent, employees are groomed for new opportunities that fit their capabilities and interests.

Benefit #4: Improves Market Share Workforce planning improves the overall business by proactively addressing human capital. The interviewees at Company E note that by understanding the workforce they have been able to move employees around to meet demand and thus increase the companys market share. In addition, if the organization enters a new market segment or product area, they are able to save recruiting and training resources by knowing if there are internal or external sources of talent for particular positions.

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APPENDIX: PROFILED WORKFORCE PLANNING PROCESSES

Company As Workforce Planning Process Company A conducts workforce planning on an annual basis tied into the annual business planning cycle, as detailed in the process map below:

Step 1: Set Revenue Targets

Step 2: Create Function Plans

Step 3: Combine Business Unit HR Plans

Step 4: Provide Information to HR

Key Players:

Finance As part of the annual business planning process, the finance team sets annual revenue targets for the organization.

Business Unit Function Leaders Each business unit function puts together an annual plan to meet the revenue goals. The information primarily comes from the companys HRIS and through a linked tool for contingent labor that managers can update as needed.

Human Resources The HR plan for each business unit is combined into a corporate workforce plan. This information is tracked via spreadsheet. The workforce plan is rolled up into the enterprise-wide annual plan.

Human Resources The workforce plan is given to the business unit HR leaders to develop a hiring plan for the following year. This information is especially relevant to recruiting, whose goals are tied to meeting the targets laid out by the workforce plan.

Key Elements:

Company Bs Workforce Planning Process Company B conducts an annual workforce planning event from July to September that consists of the following steps:

Step 1: Conduct Workplace Study

Step 2: Provide Template

Step 3: Business Units Create Plan

Step 4: Compile Plans into Corporate Plan

Step 5: Build Action Plans

Key Players:

Human Resources HR does a workplace study of each line of business as well as at the enterprise level. The study is given to HR generalists from each business on a monthly basis and examines factors such as turnover, vacancies, and retirement eligibility.

Human Resources HR provides each business with a tool that contains current headcount, current and projected vacancies, and other staffing projections. This information is tracked through the companys HRIS and through vendorprovided monthly temporary staffing updates.

Business Unit HR Business unit HR creates a workforce plan based on the information from the workplace study and the template.

HR, Finance, Strategic Staffing The various business unit plans are compiled into a corporate workforce plan.

Business Unit and Functional Leaders From this corporate plan, action plans are built out for each business. The leaders of each business meet with the support functions to do a prioritization exercise to build out a set of key goals.

Key Elements:

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APPENDIX: PROFILED WORKFORCE PLANNING PROCESSES (CONTINUED)

Company Cs Workforce Planning Process Company Cs workforce planning process is led by the line managers, who then roll their information up into a business-wide forecast, as illustrated in the process map below:
Step 1: Line Managers Complete Templates Step 3: Distribute Workforce Planning Information

Step 2: Roll Up Plans

Key Players:

Line Managers Line managers are given workforce planning templates to fill out that examine anticipated turnover, retirement, training need, and possibility for internal and external recruiting. The company currently uses spreadsheets to track workforce planning information.

HR and Business Leaders These workforce plans are rolled up to the Senior Vice Presidents or business leaders who use this information to create a business-wide forecast.

Human Resources The workforce planning output goes to inform HR decisions and strategies. For example, company leaders realized that due to the aging workforce, they had to attempt to keep workers longer and thus developed new part-time work options for older employees.

Key Elements:

Company Ds Workforce Planning Process Company Ds workforce planning process is broken down into the senior and non-senior population. The organization spends more time and resources on the senior population to ensure a continuity of critical talent. The organization conducts an annual planning process with a 3- or 5-year forecast, as detailed below:
Step 1a: Complete Template for Senior Positions Personnel Managers and HR Directors The Personnel Manager of each function and the HR Director of each country complete a supply and demand template, as detailed below: Supply: The annual talent nominations provide each employee a talent nomination that allows the organization to have a better understanding of the talent pipeline. Demand: The template examines the business goals and factors such as retirement, turnover, and the number of new roles being created to determine demand. Step 1b: Complete Template for Non-Senior Positions Step 2: Approve and Compile Plans Step 3: Create Workforce Strategies

Key Players:

Human Resources Company D bases supply and demand projections off long-term business plans. For example, if the business plan calls for a certain number of new stores, the template has a formula that takes into account history of turnover to project the number of employees that will be needed in the coming years.

Senior Leadership and HR The workforce plans for each function are approved by the functional leader and personnel manager for each function, and the HR director and CEO approve the workforce plan from each country. Once approved these plans are given to corporate HR, which compiles this information into a global forecast.

Human Resources The workforce planning information is given to the HR function to determine the strategic implications on training, development, and recruiting.

Key Elements:

The global forecast is presented to the Board on annual basis and illustrates how the workforce plan is helping to achieve business goals. 2006 Corporate Executive Board. All Rights Reserved.

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APPENDIX: PROFILED WORKFORCE PLANNING PROCESSES (CONTINUED)

Company Es Workforce Planning Process Company E creates an annual workforce plan, and the HR leadership team monitors progress on the plan quarterly. The workforce planning process is based upon business strategy, as business volume dictates staffing levels. The workforce plan is continually updated as business needs change over time. That said, the annual workforce planning process takes approximately two months to complete and consists of four steps, which are detailed below:

Step 1: Supply Analysis

Step 2: Demand Analysis

Step 3: Gap Analysis

Step 4: Build Strategies

Key Players:

Human Resources The organization pulls data about the internal workforce from the HRIS. The company determines external supply by pulling information from the Bureau of Labor Statistics about its top ten business locations.

Human Resources The organization analyzes demand by business geography by surveying the business partners, examining business goals and trends, and making educated assumptions based on this data.

Human Resources HR reviews the supply and demand analysis to determine the current and future gaps in the workforce. HR monitors the gap on a quarterly basis by examining the gaps by geography and by role.

HR Leadership The HR leadership team builds a workforce plan to fill the gaps discovered during the gap analysis phase. Groups are held accountable for closing these gaps when the HR leadership team meets on a quarterly basis to adjust the workforce plan.

Key Elements:

Company Fs Workforce Planning Process Company F has a two-pronged approach to workforce planning. The first prong examines the call center population, and the second prong examines the exempt employee population, as detailed in the process map below:
Step 1: Demand Analysis Step 2: Supply Analysis Step 3: Conduct Process As Needed Step 4: Implement Strategies to Address Gaps

Key Players:

Finance and Human Resources The finance team determines the demand for the call centers on an ongoing basis based on business goals and plans.

Human Resources HR drives the supply analysis by examining data such as the demographics of internal and external labor pools, and the number of college graduates, education levels, etc.

Human Resources The workforce planning process is conducted on an as needed basis and provides just in time analysis. For example, in the case of a largescale organizational change, a workforce planning initiative would be launched.

Human Resources If the workforce planning process reveals specific training or talent gaps, the organization is able to resolve these gaps quickly by initiating hiring or training programs.

Key Elements:

Demand for the exempt employees is also based on business goals but is relatively stable over time.

This information is gathered from sources such as the Bureau of Labor Statistics and through external consultant-led focus groups. 2006 Corporate Executive Board. All Rights Reserved.

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THE RESEARCH PROCESS IN BRIEF

Research Methodology
The Corporate Leadership Council conducted a comprehensive search of published materials regarding the subject of workforce planning, drawn from previous Corporate Executive Board research, trade press journals, other research organizations, and the Internet. Council staff then interviewed human resources professionals at six organizations. This report represents the findings from secondary and primary sources. 1. 2. Who maintains oversight of the workforce planning effort? How many staff members are dedicated to the workforce planning effort? What is the duration and frequency of conducting a workforce planning evaluation? What is the process for conducting workforce planning? What data are collected in the workforce planning process, and what tools are used to compile information on the current and future workforce? What information comprises the output of the workforce planning effort, and how is it presented? What groups are recipients of the workforce planning effort, and how do they use this information as an input to their decisions? How does the organization address workforce planning during a change event? What are the key success factors and challenges of workforce planning? What benefits has the organization realized through its workforce planning effort? Frequency and Duration of Workforce Planning Tools to Determine Current Supply Tools to Forecast Future Supply Recipients of Workforce Planning Output Page 3 Page 5 Page 5 Page 7 Page 1 Page 3 Page 4 Page 4 Page 5 Page 6 Page 6 Page 7 Page 8 Page 9 Page 10

Project Aims

3. 4. 5. 6.

7. 8. 9.

Guide to Tables and Figures

Table 1: Table 2: Table 3: Table 4:

Figure 1: Figure 2: Figure 3: Figure 4: Figure 5: Figure 6: Figure 7: Figure 8: Figure 9: Figure 10:

Workforce Planning Strategic Alignment Key Players in the Workforce Planning Process Sample Workforce Implications Template Hypothetical Demand Anlaysis Based on Business Goals Supply Analysis Model Sample Gap Analysis from Exxon Mobil Benefits of Workforce Planning Technology Company Cs Defined Workforce Strategies Reaction to Change and Workforce Planning Key Challenges and Solutions for Successful Workforce Planning Figure 11: Benefits of Workforce Planning

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PROFESSIONAL SERVICES NOTE

The Corporate Leadership Council (CLC) has worked to ensure the accuracy of the information it provides to its members. This project relies upon data obtained from many sources, however, and the CLC cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the CLC is not engaged in rendering legal, accounting, or other professional services. Its projects should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from any errors or omissions in their reports, whether caused by Corporate Executive Board or its sources.

Author Unknown, "Watson Wyatt Establishes Workforce Planning Consulting Practice," HR.com (6 January 2003). (Obtained through http://www.hr.com/hrcom/index.cfm/262/B3586A78-295E-4C2C-9D1CF860F5179579). [Accessed 29 June 2006]. 2 Bindl, Jim, "Align Plans with Data," Personnel Journal (Date Unknown). (Obtained through ProQuest). 3 Author Unknown, "Workforce Planning: Who Does What?" Workforce Management (October 2002). (Obtained through http://www.workforce.com). [Accessed 6 July 2006]. 4 Creelman, David, "Six Easy Pieces," Workforce Management (May 2005). (Obtained through http://www.workforce.com). [Accessed 22 June 2006]. 5 Author Unknown, "How to Tie Workforce Planning to Revenue," Workforce Management (June 2006). (Obtained through www.workforce.com/archive/article/24/42/55.php). [Accessed 5 July 2006]. 6 Creelman, David, "Six Easy Pieces." 7 Sullivan, John, "Why You Need Workforce Planning," Workforce Management (November 2002). (Obtained through http://www.workforce.com/section/06/feature/23/35/44/index_printer.html). [Accessed 23 June 2006]. 8 Corporate Leadership Council, Workforce Planning Processes, Washington: Corporate Executive Board (June 2003). 9 Ward, Dan, "Workforce Demand Forecasting Techniques," Human Resources Planning (1996). (Obtained through ProQuest). 10 Corporate Leadership Council, A Higher Calling: Redefining HR's Priorities and Role in the New Economy, Washington: Corporate Executive Board (2000). 11 Barkley, Marcia, "Dear Workforce: What Can Analytics Software Do for HR?" Workforce Management (17 June 2003). (Obtained through http://www.workforce.com/archive/article/23/72/90_printer.php). [Accessed 28 June 2006]. 12 Corporate Leadership Council, Communications Tools for the Chief Human Resources Officer, Washington: Corporate Executive Board (2005). 13 Sullivan, John, "Workforce Planning: Why Start Now?" Workforce Management (November 2002). (Obtained through http://www.workforce.com). [Accessed 6 July 2006].

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