Planning for the future

In the face of a growing skills shortage, ageing population and changing of the generational guard at work, workforce planning is key to ensuring the long-term success of many organisations. Melissa Yen reports

How many fully qualified people will you need in the future? What strategies can you implement to attract, retain and motivate your people so that your organisation can fulfil its longer-term strategic growth plan? Such questions are central to workforce planning. However, getting these questions addressed at the executive level is still a challenge for some HR professionals.

Despite such challenges, the current economic environment has pressed many companies to consider workforce planning as a key strategic component of business. A long period of economic growth has presented a range of issues for HR professionals, according to Peter Murphy, principal of Noetic Solutions. The impact of the Federal Government’s new industrial relations laws, the rising cost of key commodities such as oil and a less favourable interest rate environment are all taken into account when it comes to the strategic end of workforce planning, he says.

Underlying all this is an increasing awareness of the looming skills shortages and the threat of a rapidly depleting workforce. “The ageing population has raised the appetite for workforce planning in Australian boardrooms, as directors and C-level executives realise that they have a significant problem looming in the short term. Some organisations are actually actively conducting the process, others considering how to go about it,” according to Lyle Potgieter, CEO of IXP3 Human Capital.

The challenges of implementation

Rolling out an integrated and strategic workforce planning initiative is no easy task. “Achieving alignment with key business needs and issues remains a perennial challenge for HR professionals and organisations trying to get workforce planning initiatives going,” says Murphy. “Being able to get people to think about more than just today’s HR problems and think strategically is a challenge.”

One of the greatest challenges HR professionals also face is securing senior management support and ensuring executives understand the need for workforce planning. Detailed analysis of the current workforce status along with a solid understanding of the organisation’s strategic plan is critical. Working on solutions before the real problem is properly defined and understood is a mistake that occurs too often, according to Tess Walton and Stacy Chapman, directors of Aruspex. Not doing one’s homework in this area leads to problems when it comes to linking business strategy needs and workforce requirements.

Overcoming challenges

It is critical that HR professionals demonstrate a solid knowledge of the business and gain an understanding from the executive level as to how workforce planning strategies will achieve desired business outcomes. “As with any business problem, you’ve got to be able to demonstrate the value of what you are doing and how it is going to make the organisation’s life better,” Murphy says.

A business may find itself floundering and unable to execute its strategy, according to Potgieter, unless the senior executive team understand that workforce planning strategies are needed for dealing with the looming talent exit. He also urges HR professionals and senior managers alike to realise that workforce planning takes a significant time, even years.

“Put in place the infrastructure and tools you will need to implement your strategy. Many of these tools take time to gather the information you require and will also take time to implement. Without these tools, your capability to identify top talent – high potential, high performance individuals – for grooming will be significantly impaired,” says Potgieter.

“HR professionals need to note that the ageing workforce issue will affect many roles in the organisation and the capability to implement your strategy without these tools will be seriously diminished.” The Board and senior management should be advised that HR requires access to the strategic plan in order to conduct meaningful workforce planning, he adds.

Establishing ROI

Building a business case for workforce planning has become easier due to looming workforce challenges. It is often more useful to talk to businesses about the risks they face as a result of failing to plan for a critical resource, in the form of workforce skills and competencies, according to Murphy. “Management find it easier to understand issues when it is presented in terms of risk to the organisation. Organisations plan long term for key inputs – why not people?” he asks.

Walton and Chapman claim they have yet to find a case where ROI cannot be proved. “Sometimes we’ve built the case on the basis of a history of retrenchments and rehires; sometimes it’s the pain of skill shortages; sometimes it’s the cost of being over- or understaffed.”

As long as one can prove that the cost of running a workforce planning initiative will be significantly less than the revenue gain, ROI should be significant, says Potgieter. If this can be backed up by facts and figures, management will appreciate this more.

“For example, let us assume you work for an organisation that employs chartered accountants. Your brief examination of the issue concludes that you will be faced with chronic and sustained shortages of chartered accountants commencing in 2008. You conclude that you expect to be short of 300 employees each year and the shortage in the worst case will be 900 people a year. This translates to a shortage of revenue of between $75 million and $225 million. If HR can put in place strategies to reduce these shortages by 30 per cent, the net gain in revenue is between $22.5 million and $67.5 million,” he explains.

“Delaying commencement on this project will be detrimental to your organisation as well as your professional standing in the organisation, as executives will expect you to have the answers when this issue is discussed in the boardroom.”