New York, August 7, 2006--An aging workforce and an emerging "baby boom" retirement wave are driving more companies toward "strategic workforce planning," The Conference Board reports today in a new study.
"Strategic workforce planning" involves analyzing and forecasting the talent that companies need to execute their business strategy.
This relatively new management process is being used increasingly to help control labor costs, assess talent needs, make informed business decisions such as where to open new facilities or whether it's more cost effective to add full-time employees or contractors, and to assess human-capital needs and risks as part of overall enterprise risk management. Strategic workforce planning is aimed at helping companies make sure they have the right people in the right place at the right time and at the right price.
The new study from The Conference Board, Strategic Workforce Planning: Forecasting Human Capital Needs to Execute Business Strategy, also reports that these other forces are driving strategic workforce planning: current movement and projected labor shortages; globalization; the growing use of contingent, flexible workers; the need to leverage human capital to enhance return; mergers and acquisitions; and the evolution of workplace technology and tools. The study includes detailed case studies of nine organizations. It was conducted on behalf of The Conference Board Strategic Workforce Planning Research Working Group-senior executives in 23 companies.
"In many companies, traditional workforce planning was an onerous process that HR imposed on management," says Mary B. Young, senior research associate, The Conference Board and author of the report. "Too often, the net result was a humongous report, blinding spreadsheets, and a dizzying amount of data that provided very little value to the business."
Methodology is rapidly advancing in response to changing business needs and new tools and technology. The Conference Board study finds that some organizations have enhanced the simple gap analysis (workforce demand vs. supply) that constitutes traditional workforce planning by adopting the logic and analytical tools of other corporate functions, such as finance, strategic planning, risk management, and marketing.
But the crux of strategic workforce planning is conversation and an inquiry process, rather than relying on spreadsheets crammed with tiny numbers. To engage senior executives in workforce planning, the process must focus on understanding the strategic business plan and its broad implications for the company's workforce. Establishing consistent, organization-wide data is a prerequisite to winning executives' confidence in strategic workforce planning's results. Companies interviewed for the study cite other challenges as well: making the process and tools simple and efficient; developing HR's capabilities and comfort level; establishing a common language to describe jobs and required competencies; integrating workforce planning with business and budget planning; and driving the plan deep into the organization.
Most companies are still in the process of fully implementing strategic workforce planning or realizing its ultimate potential. Yet even organizations that say they're "not there yet," report that strategic workforce planning is already delivering value by:
Generating insights and knowledge executives can use to make business decisions.
Providing a deeper and more nuanced understanding of workforce dynamics than was previously available.
Enabling organizations to manage human capital more efficiently-for example, by evaluating the long-term impacts of various staffing options and creating a stronger internal job market.
Enabling HR to realize its long-held desire to become a player and a valued contributor to high-level business strategy decisions.
