DECEMBER 2011/JANUARY 2012

Review
Workforce Solutions

Powered by Bright Ideas

IHRIM.ORG

The Official Journal of the International Association for Human Resource Information Management

HRs Key Role in Strategic Workforce Planning:

Aligning the Workforce with Long-Term Business Objectives

Annual Buyers Guide on Page 25

Feature
force based on an organizations vision, strategic plan, budgetary resources, and a set of desired workforce competencies to be best prepared for the future. Workforce planning involves: Identifying future workforce needs and capabilities (including skills, knowledge and expertise) as derived from the strategic plans; Developing priorities and cross-linkages between the strategic plans and the operational plans; An analysis of current staff numbers and capabilities; An analysis of available and projected funding levels; Identifying the gap between current and future workforce needs; and, Developing workforce plans outlining the strategies that will be implemented in order to progress from the current situation to the future forecasted situation. Workforce planning provides managers with the means of identifying the competencies needed in the workforce, not only in the present but also in the future, and then selecting and developing that workforce. The purpose of workforce planning is not to decide what you will do in the future; it is about determining what you can do.

An Approach to Workforce Planning by the 21st Century HR Business Partner

By North Highland Consultants ost successful organizations say they do workforce planning in some shape or fashion. What they usually mean is they hire people, promote some, fire, or retire the rest all routine employee life cycle activities. Heres how you can tell workforce planning is more of an aspiration than a strategic process that helps run the organization. You ask questions like these and hear silence: 1) What role do your HR business partners play in managing and developing your talent pipeline? 2) Whats the calculated risk to operations if we dont manage turnover and expected retirements? 3) Which positions drive top and bottom-line impact and are critical to our operations? A fully enabled workforce planning process helps answer these questions when you deploy HR practitioners to work closely with the business; use workforce planning analytical tools to create decision-making data; and leverage other strategic partners to help make your business case for workforce planning outcomes. Workforce planning is an integral part of the strategic management process. It primarily covers the end-to-end process that better enables an organization to identify its human capital demands and supply of suitably skilled human resources to help meet its operational objectives. It is intended to be a continuous process that gives managers the tools necessary to create plans to develop the work-

Developing a Mature HR Business Partner Model (HR in the 21st Century)

Human Resources functions are being looked at in a new light in the 21st century. Many companies employ human resources business partners, but is this just a new phrase for a senior level generalist supporting a dedicated client group within an organization? What, exactly, is a mature 21st century human resources business partner (HRBP) model and why is it important in executing workforce planning? In an HR business partner model, HR professionals participate in strategic planning to help the business meet present and future goals rather than concentrating solely on transactional duties such as benefits, payroll and employee relations. As more organizations migrate to a shared services organizational structure for benefits, payroll and employee relations, this new organizational structure allows the HRBP model to place more dedicated time towards workforce planning. The HRBP model, in a mature state, drives the corporate strategic

Human Resources functions are being looked at in a new light in the 21st century.

www.ihrim.org Workforce Solutions Review DECEMBER 2011/JANUARY 2012

31

planning process through data and analysis that serves to inform the business on the feasibility of business requirements. Human resources business partners have the unique opportunity to see the business in a multi-faceted capacity. Human resources business partners are equipped to support and deploy HR initiatives, but also have the opportunity to participate in the daily activities of the business unit (BU) or division in which they support. This deep dive into the operation requires HR professionals to think as business owners. We have found that an optimally performing HRBP has a strong relationship with the Finance organization, as well as with its traditional alignment within HR operations. In addition, fully functioning HRBPs proactively review data and use it in a transformational fashion. The core of our approach to workforce planning is its emphasis on its execution by a mature 21st century HRBP model that utilizes various tools, including predictive analytics, and various internal strategic cross-functional partnerships, including those with Finance, to optimize the delivery and value to be realized through these efforts. The true power of mature workforce planning is achieved primarily by three major elements: structural/functional HRBP model, workforce planning tools (including predictive analytics), and strategic partnerships (including those with Finance). Within this context, the 21st century HRBP practitioner would participate in: Future strategy planning, Annual business planning, Financial planning, Understanding the current workforce, and Setting the workforce direction and plan for the next three to five years. A successful HRBP leverages powerful tools and partnerships within and across the organization.

mean the need for a flexible workforce (remote, job sharing, compressed workweeks, full- or part-time status, using on/offshore resourcing, using contingent workers). Managing dynamic staffing models requires tools that can analyze and process these various needs. Useful tools include a robust head-count management reporting tool reviewed by management weekly, as well as a head-count procurement engagement form. The historical trends of the company It is important to understand the historical talent needs of an organization by analyzing trend data such as company hiring patterns, employee turnover, average years of service, transfers, promotions, the quality of new hires employee demographics, and span of control. Additional information on the skill-sets of the employee base is also important. Tools like a development investment assessment can be very helpful in reviewing historical trends. Benefits of Using Workforce Planning Tools: Structured, analytical ways to balance organization needs versus the supply of the labor force, Optimal scenario analysis performance based on a wide array of factors, and A way to forecast staffing needs based on business needs. Most companies evaluate needs based on a short-term perspective; however, leading companies will also look long-term (three to five years) to assess their labor pool and plan to meet future business needs.

Emphasis on Predictive Analytics by HRBP

Tools to Aid in Workforce Planning

Workforce planning tools enable organizations to analyze and forecast the people needs for their organization. These tools help organizations focus on hiring and retaining the right employees for their workforce and offer an analytical approach to hiring/staffing and retention goals. Points of Consideration: Complexity of your people/staffing needs This can

One such opportunity is in the area of predictive analytics to assist in workforce planning. What does the term predictive analytics mean? Predictive analytics can be defined as collecting traditional attrition, hiring, and training data in real-time; not a month or months in arrears. Data can be utilized to forecast trends/themes to be shared with BU leadership, Finance, and recruiting teams to set future planned activities on a routine basis. In addition, it requires reporting to be significantly more robust than simple metrics, such as when attrition is running at 10 percent. Predictive analytics are an extremely important set of tools to help shape an organization for future successes. It is common for Human Resources Operations staff to extract high-level data such as summary attrition, hiring and training hours. The data is then shared at the BU or division level in a monthly or quarterly operations review with management. More often than not, these reports are yesterdays news long before they are shared with business management. In addition, reporting is not widely embraced and analyzed in detail by an HRBP. Very important questions about the greatest expenditure and asset of your organization, its people, go unasked. Unfortunately, a

The Importance of Real-Time Data

Workforce planning tools enable organizations to analyze and forecast the people needs for their organization.
32
DECEMBER 2011/JANUARY 2012 Workforce Solutions Review www.ihrim.org

companys human capital is often just assumed to be a resource to perform a role within the organization. Todays business environment requires an organization to be nimble and flexible based on external pressures unique to its industry and organization. Predictive analytics is an area that can be vital to a business maintaining its competitive edge on competition. Predictive analytics plays a vital role in not just maintaining a business but growing the unit and increasing company profits. Using attrition data and drilling down to a granular level (role, location, tenure, reporting manager, department, level, regrettable/non-regrettable, management/staff, high potential, high promotable, etc.) provides a more telling story to help an organization understand root cause.

It is important to emphasize that predictive analytics is a recipe that involves using all available HR data as described above, but is in no way intended to be the exhaustive list of data.
ness. Data-driven decisions are a powerful tool when speaking with business leaders and the use of predictive analytics can be the conduit for fiscal prudence and retention of your intellectual capital. It is important to emphasize that predictive analytics is a recipe that involves using all available HR data as described above, but is in no way intended to be the exhaustive list of data. The HRBP has the opportunity to blend many pieces of data that, when used together, identify trends/themes that may not be visible when viewed individually. Our experience with this approach has been very positive and we have seen how powerful it can be in driving towards a lean business operation.

Staying Ahead of the Hiring Curve

The same scenario can be used for hiring and training data. We have found that by having the HRBP own and manage the hiring plans in real-time allows for dynamic prioritization. In addition, using specific, defined categories for looking at staffing needs such as type of project, funding sources, etc., can be a strong rationale to discuss planning weekly. In order to be prepared for staffing ondemand, there is a need for a pipeline of talent ready to onboard or deploy at a given moment. The use of predictive analytics is crucial in identifying those pockets in the most cost-effective manner. It is common to hear a manager say, I need this role yesterday, and the role has just made its way to HR today. Human Resources business partners can anticipate this event by using predictive analytics and having a plan developed to share with the hiring manager. While it is not possible to predict how long it will take to find the ideal candidate or place that candidate in the role, it is possible to have the pre-work completed quickly and recommend solutions so the main event can focus on the candidate selection effort. Training analytics are vast and typically do not connect with hiring and attrition. We have found that by using training reports and blending with attrition and hiring data, the results can be very powerful. The use of succession management data (pipeline charts, emerging talent, high potential, high promotable, critical to keep) along with reporting on targeted training opportunities for these groups emphasizes the importance on human capital retention. Workforce analysis has been taboo for many HR professionals due to the firefighting approach HR has played in supporting business operations. The concept and development of predictive analytics allows HR professionals to drive business decisions and positions the HR professional as having a vested interest in operations. This partnership is solidified by hiring HR professionals that are skilled in analysis, financial operations and strategy design/deployment. Practitioners highly skilled with using Excel can provide a great value-added benefit to support the busi-

Data-driven Decision-making

The average organization dedicates more than a third of its operating expenses to workforce labor costs. However, most organizations struggle to quantify the return on this significant investment. Many organizations rely heavily on the instincts of their management team to manage their workforce. In contrast, the most successful organizations manage their human capital as a strategic asset by aligning their workforce with organizational strategies and using metrics and measurements to drive decisions, monitor performance and improve results. In todays economy, successful business leaders are eager to better understand how each human capital driver impacts the business strategy. These leaders recognize that changes in business strategy typically place new demands on the existing workforce and may require the need for new talent. They are always looking for a better set of analytics to explain the drivers and benchmarks that drive the organizational decisions they need to make. These decisions often impact changes to supply chain, delivery models, and investments in technology and talent management, which ultimately drive business execution. Leaders also need a mechanism for measuring and monitoring progress. A sound workforce planning model supported with financial information provides business leaders with the insight they need to truly understand where to spend their time, effort and budget. Workforce planning provides business leaders with the full business transparency needed to balance organizational efficiency with customer and employee satisfaction.
www.ihrim.org Workforce Solutions Review DECEMBER 2011/JANUARY 2012

Partnering with Finance to Underpin Your Workforce Planning and Model

33

Finance supports the workforce plan by providing HR with key decision support data to help: Meet long-term workforce demand in the most costefficient manner, Reduce capital investment in additional workforce capacity and improve profitability, and Better understand the impact of changing demand and other business changes via robust scenario analysis capability. In order for workforce planning concepts to become routine, data-driven, decision-making business practices in an organization, HR practitioners need to collaborate with their Finance counterparts to ensure that business leaders associate the benefits (in real money) of a wellplanned workforce model to top- and bottom-line business performance. Workforce planning done without Finances participation is usually heavily scrutinized and rejected by executives or considered dead-on-arrival if the following questions cant be answered: Whats the impact to our bottom line? What risks are we mitigating? How much should we invest? When do we see a return on our investment? It is important that HR practitioners are well-informed on the financial impacts of decisions that affect the workforce and are able to talk about the opportunities and risks in real numbers. An effective workforce planning model with input from Finance always takes into account the financial impact workforce planning has on the business providing justification for resources. The data generated and analyzed by an HRBP becomes the input to the annual planning process for human capital needs, as well as monthly forecasting exercises. The strong partnership with Finance can allow the business to be more prepared for planning projects and staffing ondemand, a trend occurring today. Leveraging Finance as a stakeholder helps HR tie employee variables to the organizations financial outcomes both historically and for predictive purposes. For example, Finance can assist HR in calculating such measures as revenue per employee, overtime costs, predicted overtime cost in the next rolling 12 months and beyond, surplus payroll measures, earnings per employee, and revenue by human capital spend. When workforce planning and analytics are tied to the business, these types of analytics and trends are brought to the forefront so that management can take action and often provide a number of low-hanging fruit opportunities to make business improvements. In summary, we believe the use of robust reporting tools, which blend and analyze multiple data sources, provides great opportunity to your organization to keep ahead of the competition. The 21st century HRBP model and its practitioners use of predictive analytics and strong partnership with Finance is a proven recipe to successful management of human capital with organizations.

North Highland is a global consulting firm that has changed the model of how a consultancy serves its clients by hiring only experienced consultants who live and work where its clients live and work, leveraging its global network of service area expertise. North Highland helps business, government and non-profit clients define strategies, streamline operations, empower people, integrate suppliers, leverage technology and maximize customer interaction thus sustaining successful, long-term relationships by helping clients achieve their business objectives again and again. Terrence R. Andrews, SPHR, LSS GB, senior manager, has 18 years of experience in both in-house and in professional services capacities within the financial services, technology, entertainment and professional services industries. He has a B.S. in Human Resources Management from Syracuse University-Whitman School of Management. He can be reached at Terry.andrews@north highland.com. Nicole M DeNunzio, manager, has seven years of expertise in forecasting and planning, process design, financial/management reporting, and full life cycleenabling technologies. She has a Bachelor of Arts in Marketing from Kent State University and a Master of Business Administration in Finance and Management from Crummer Graduate School of Business at Rollins College. She can be reached at Nicole.DeNunzio@ northhighland.com. Jesse Fellerman, manager, has over eight years of experience in executing workforce transformation consulting services in both commercial and federal sector organizations, and has a Bachelor of Arts in Economics and Political Science from Colgate. He can be reached at jesse.fellerman@northhighland.com. Cynthia Jones, principal, has more than 20 years of client service experience in HR function and process improvement, organizational design, change management, large scale transformation, SAP implementation experience. She has a Bachelor of Science in Management from Miami University and can be reached at Cynthia.Jones@northhighland.com. Scott Cranford, SPHR, CCP, senior consultant, has 30 years of HR experience in construction, manufacturing, retail, engineering and corporate environments. He has a Bachelor of Arts in Mathematics from Baylor University and is a member of SHRM and WorldatWork. He can be reached at scott.cranford@northhighland.com. Marcus Walker, senior manager, has a Bachelor of Arts Cum Laude from Howard University, and a Master of Public Accounting in Public Financial Management from Syracuse University-Maxwell School of Citizenship and Public Affairs. He can be reached at Marcus.Walker@ northhighland.com.

About the Company and Authors

34

DECEMBER 2011/JANUARY 2012 Workforce Solutions Review www.ihrim.org