Strategic Workforce Planning Finally Gets Strategic

Strategic workforce planningfinally gets strategicRouven Fuchs and Yaarit Silverstone

Strategic workforce planning today is static,sporadic and spreadsheet intensive—if ithappens at all. Yet failure to plan invitesdisruption by the next digital darlingor corporate titan that has reinventedworkforce structures to shape theworkforce of the future.Before the constant change of the digital era, companies couldget by with underestimating the importance of planning aspart of their workforce strategy. Not anymore. Lower barriersto entry and the rise of ecosystems and integrated value chainsare quickly eroding organizational boundaries and spurringindustry convergence. Automation, demographic shifts andglobalization are upending labor supply and demand. The futureis in flux. Executives estimate that in three years, 44 percent ofthe workforce will be comprised of contractors and/or temporaryinternal positions. And 79 percent of this liquid workforce will bealigned to dynamic projects, rather than static job functions.¹ Thecase for strategic workforce planning could not be more clear.2 Strategic workforce planning finally gets strategic

Welcome to the digital playgroundWorkforce planning is catching up and finally becomingas dynamic as the business environment. What is differenttoday is the availability of prescriptive analytics tools to helporganizations go beyond describing “what is happening now”or “what might happen in the future” to control “what shouldhappen.” Scenario-based strategic workforce planning doesmore than predict the future of work based on historical trends.It is a digital playground for the business to constantly optimizeworkforce choices—testing, learning and tweaking acrossmultiple dimensions and futures—to deliver the business strategy.This next-level planning is a business imperative. Businessstrategy is wishful thinking without it. Only strategic workforceplanning validates that the organization has capability andcapacity to deliver the business strategy. Without the rightpeople at the right time, place and cost, companies risk erodingtheir competitiveness. Because people—not technologies—are thedifferentiators in the digital era. Yet 55 percent of executives saytheir organization does scenario planning at best annually.²3 Strategic workforce planning finally gets strategic55% of executivessay their organizationdoes scenario planningat best annually

The big picture beats tunnel visionNot only are too few organizations engaged in scenarioplanning, those that do “plan” rely on insufficient methods.Planning is isolated in functional silos, reflects ad-hoc needsand uses delayed workforce data. It also has a narrow focus oninternal employees only, excluding other dimensions such as theexternal workforce, material capacity or client interactions.This is essentially tactical workforce planning. Organicrather than systematic, it is far from the predictive planningnecessary to build a sustainably employable workforce tosupport business priorities. This planning gap may be why 61percent of executives say that they are not well prepared tochange the skill and job mix of the workforce to transition to adigital business.³Strategic workforce planning as a business capability requiresenterprise vision. It continuously integrates planning acrossdomains (process, workforce and supply chain), planning layers(physical, data and behavior) and time horizons (operational,tactical and strategic).Only multi-domain planning provides an eyes-wide-open, realtime view of all the variables that impact workforce planningand talent strategy—and the interdependencies among them.Consider the workforce challenges that retail banks facedduring the financial crisis. There was a significant reductionin demand for front-office staff just as demand for regulatorystaff exploded. Banks could not efficiently or effectivelyaddress competency requirements, redeployment and transferswithout cutting through functional silos.A silo-busting approach underpins the simulation capabilitiesthat drive modern strategic workforce planning. Simulationmodels depend on a large amount of organizational informationfrom across the business to generate a precise, on-demandpicture of expected future supply and demand. The wholetruly is greater than the sum of the parts.4 Strategic workforce planning finally gets strategic61% of executivessay they are not wellprepared to change theworkforce skill and jobmix to transition intoa digital business

Scenarios, not surprisesA major technology firm reduces overtime and improvesworkforce use globally with a prescriptive simulation modelof end-to-end field workforce planning and scheduling.3Mpieces of equipment7product families58%reduction potentialin overtime4,500field service engineers16%12,240improvement potentialin response timedemand probabilitydistributions20-25%improvement potentialin utilization5 Strategic workforce planning finally gets strategic

Humans and machines work in unisonBoth humans and machines have their own role in the successof prescriptive analytics simulation models. Together theybring the strength and the sophistication that elevate strategicworkforce planning.Advanced customizable, flexible and scalable analytics platformscan help the business visualize future demand and supply acrossan increasingly liquid workforce of humans and machines. Theybring limitless computational power that humans cannot match.Case in point: China recently launched a supercomputer that canmake 93 quadrillion calculations—or 12.5 million calculations forevery human on the planet—per second.⁴At the same time, humans have nuanced judgment that machineslack. That is why people identify input variables, configuresoftware, define algorithms, evaluate simulation outcomes,determine alternate scenarios, and implement organizationalchanges to align future supply with projected demand. AccentureStrategy data suggests that managers value such skills. Digitaland technology know-how (42 percent), creative thinking andexperimentation (33 percent), and data analysis and interpretation(31 percent) are the top new skills that managers say are neededto succeed in their roles in five years.⁵Strategic workforce planning simulations utilize this humanmachine dynamic. Machines conduct prescriptive simulations,while humans analyze the results to understand how personnelshifts impact the talent pool for the most critical positionsacross the organization. Humans then use these insights todevelop succession and recruiting plans, redefine nominationcriteria for critical talent, and identify the appropriate talentinterventions to ensure future talent needs are met.6 Strategic workforce planning finally gets strategicMachineshave limitlesscomputationalpower, whereashumans bringnuanced judgmentthat machines lack

The future is built on sandChange is constant and fast. And it is difficult to predict somany variables—particularly with the workforce. Executivescite availability, sourcing and cost of labor along with changinglevel of demand as among the top ways volatility is impactingtheir business.⁶Strategic workforce planning offers a pragmatic approachto managing volatility inherent in the future. It is not aboutpredicting a single, “perfect” future—one that does not evenexist in such a dynamic business environment. Prescriptiveanalytics capabilities empower organizations to dive deep intothe impacts of possible future scenarios, including: What will happen if policies change? What is the impact of future demand scenarios or differentsupply options? What are the outcomes of different courses of action? Which areas are priorities for intervention? What specific actions will optimize the workforce?Strategic workforce planning is an adaptive approach usingmachine learning algorithms and human judgment. The focusis to identify optimal solutions to prepare the workforce—and the business—to respond to the inherent uncertainty ofevery possible future. After all, 30 percent of executives seeuncertainty as an opportunity to create competitive advantage.⁷7 Strategic workforce planning finally gets strategic

Change the workforce planning gameToday’s strategic workforce planning isactually neither strategic nor planning.However, the availability of data and rapiddigitalization of analytics means that itcan be. Success with next-generationstrategic workforce planning starts withthe fundamentals, including:Abandon the idea of perfect dataWith data at the heart of prescriptive modeling, organizationsoften get paralyzed waiting for perfect data. But it does notexist. Simulations depend more on the right data for the task athand, than on this elusive perfect data. Organizations typicallyhave access to more data than they realize, and increasedautomation of data cleansing continues to improve the qualityof available data to build scenarios.Focus less on ownership, more on actionThe choice where to embed the strategic workforce planningcapability is unique to every organization, and it is easy to getcaught in turf battles. What is non-negotiable is that boththe business and human resources are involved and aligned,and that predictive analysis integrates enterprise and humanresources data.Master both art and scienceScenario-based strategic workforce planning takes acombination of skills and roles. Data scientists are criticalto develop and run the algorithms. Business leaders whomake decisions based on the results must be immersed inthe broader business context. Both must be highly adaptive,willing to question their own assumptions and able to pivotin a new direction.8 Strategic workforce planning finally gets strategic

Plan the work, work the planThere is no finish line to strategic workforce planning. It mustbe a continuous, iterative and closed-loop process involvingthe parts of the organization that do the workforce forecastingas well as those responsible for demand fulfillment—fromdevelopment to recruiting and procurement. This ensures thatno one works from an old plan and that approaches supportongoing renewal of skills.Trade business cases for trial and errorIt is a waste of precious time and energy for organizations towait and develop a business case before pursuing strategicworkforce planning. The better, faster way to results is throughpilots. Organizations can choose a priority area, trial it andextrapolate results to pinpoint the broader potential.Strategic workforce planning finallyempowers companies to operationalizepredictions of changing workforce supplyto shape the future of work. There’s nodelivering the business strategy withoutit—and definitely no competing as a digitalbusiness without it.9 Strategic workforce planning finally gets strategic