The convergence of several factors has likely led to the steady rise in the number of articles, conferences, and consulting calls focused on workforce or talent planning.
There have been more venture-funded start-ups this year than any time since 2001, initial public offering activity is up, and the demand for new college graduates increased by 13% this year (according to U.S. News.com) while these graduates’ interest in corporate jobs declined.
Compounding this, a recent Deloitte Consulting survey shows one-third of U.S. companies expect to lose 11% or more of their current workforce to retirements by 2008.
And growth is rarely predictable or linear. There may be a sudden need to add dozens or hundreds of employees in new business areas or in different parts of the world. There may be a sudden shift in products that makes many employees redundant and raises the demand for people no has recruited before.
New positions and functions are invented and no one in the job market really has those skills. Recruiters are asked to perform at requisition levels that are heavy and demanding at the same time the supply is constrained and more difficult to recruit.
Traditional workforce planning has assumed that there were enough workers available at the salary they were willing to pay. It has been short term and has primarily focused on recruiting externally for traditional positions.
Often, internal mobility or career advancement is not even part of a recruiter’s area. A few large organizations invest in succession planning but it is designed to supply key managers when and if the current ones retire or move on. It is largely focused on replacement and on growing managers for predictable growth in known areas.
The shortage of talent and the growth of organizations globally have forced many organizations to look at workforce planning in a more serious way. They are realizing that it is not enough to just calculate turnover and projected growth and then go recruit the people. The people they need may not exist or they may be very hard to find. Sometimes they are available but in far corners of the globe and sometimes the time needed to find and recruit becomes too long.
The whole process of acquiring talent requires more sophisticated thinking and tools than have previously been characteristic of the human resources function. There are fewer traditional jobs and fewer traditional sources of talent that are still reliable. The challenge of supplying talent to businesses will grow and has already created a new emphasis on workforce planning.
An effective workforce planning process will focus on the following three areas:
- Market awareness and scanning in order to better see what trends are coming
- Workforce planning to a systems level where focus is placed on identifying and filling key positions by integrating employee development, internal mobility, as well as recruiting
- Scenario planning and dynamic modeling to help focus activity and justify investments in a variety of approaches
Step 1: Market Awareness and Scanning
Workforce planners need to be aware of business, economic, political, demographic and social changes, and trends. They also need to keep up-to-date on emerging skills needs within their organizations as well as the industry.
For example, many years ago Cisco Systems identified the need for Web programmers very early. They realized that there were very few who had those skills, so they started hiring new college grads with backgrounds in music and math and trained them in HTML programming. This gave them a decisive advantage over the competition leaving them to scramble to catch up.
Keeping tabs on who has critical skills and where they are located will be a differentiator in how successful your sourcing will be. It will also provide the inputs you need to calculate whether a development program would be more cost-effective than a recruiting approach or what combination would be most economical and effective for your organization.
Talent supply data is the most difficult information for a recruiter to get today. It is almost impossible to know how many people with a particular skill are in the market.
However, by data mining the job boards, looking at college graduation figures, and using data from the organization’s own recruiting website, it may be possible to estimate the supply.
Over the next few years more tools will come online that will provide this data or help talent planners estimate more accurately the supply of various key skill sets.
Step 2: Systems Integration Approach
In a market where certain skills may not exist at all or where they are very scarce, recruiting cannot do its job alone. In many cases, it may be possible to find the skills needed internally or it may make more sense economically to develop internal or external people to meet those needs.
By making workforce planning the highest-level activity and integrating employee development, internal mobility, recruiting, retention activities, and succession planning with it, organizations can begin to acquire above-average talent.
Removing talent supply from being the sole responsibility of recruiting to broader set of functions allows more comprehensive thinking about people. For example, consider the case of when a need for another position or for a new skill-set arises. Rather than immediately opening a requisition, a hiring manager, along with a talent manager, would go through a process of looking at internal talent, modeling the costs and time involved in training someone for the position, predicting the available supply and time to recruit someone, and the time it would take to train the person.
Step 3: Scenario Planning and Dynamic Modeling
Although scenario planning is no longer new, having been around since the 1960s, HR has just recently adopted it to look at various potential talent-demand situations.
Scenario planning, sometimes simplistically referred to as what-if planning, looks at a variety of economic and business trends, as well as other factors that have been identified as possibly impacting the supply of talent. Using different sets of factors, scenario planners develop recommended responses to meet the supply challenge.
By including in this process some of the mathematical modeling tools that are available, a talent manager could project, for example, the benefits of training over hiring or of the value of one source of candidates over another based on turnover and time to productivity. Over the next few years, analysis, modeling, and integrated planning will become common in human resources.
Talent planning will become a critical function within the human resources area and will greatly enhance the ability of the organization to have the talent it needs available when and where it is needed.