Strategic Workforce Planning
Strategic workforce planning is not just a concept that is unique to the business world. On the contrary, it is an expression frequently mentioned in the regulations of governmental organizations. The first thing that comes to mind when it comes to strategic workforce planning is a reduction in the number of employees. But this definition falls short of defining it. To briefly define strategic workforce planning, it is the process of planning a department or a company in terms of staff. When doing so, companies should take into account the number of employees and the competencies of them.
Strategic workforce planning is an analytical model that looks for answers to questions like "How many employees should a department or a company have?" and "What should the competence levels of these people be?" It's a part of the importance of Human Resources Management.
A Brief History of Strategic Workforce Planning
Scientifically, the basis of strategic workforce planning studies is very old. This term was first addressed in the 1880s by Frederick Winslow Taylor, an American mechanical engineer, and industrial management specialist. When we look historically, strategic workforce planning has started to be shaped primarily in governmental organizations. The widespread use of this concept in the private sector took place much later.
Today, with the Internet becoming a huge part of our lives, the concept has also moved to online. This called HR Transformation. Today, with online performance ratings and performance tracking, HR managers are spending less time evaluating employees. As a result, they can easily optimize their workforce.
Benefits of Strategic Workforce Planning
Strategic workforce planning is the process of finding answers to questions like "How many employees should work within a team?" and "What should the competencies of those employees be?" Therefore, the first thing that comes to mind here is efficiency. Efficiency is the first and most important benefit of strategic workforce planning to companies.
At this point, process efficiency, naturally, comes first among the benefits. It's directly related to budget management. In companies, there may sometimes be situations where the same job is done by two people. In other words, a job that can only be done by one person is done by two personnel at the same time. Due to “company blindness”, companies are prone to miss such inefficient practices. In a company where blindness prevails, errors in the methods and practices take place and possible future opportunities and risks cannot be perceived by employees. Employees find it difficult to see the problems, risks, and opportunities as they get used to the incorrect practices and ways of doing business in the company over time. Therefore, jobs that are repeated, have no or little positive value or should be destroyed. On the contrary, the importance given to valuable works should be increased. A strategic workforce planning made in this way also provides process efficiency.
Another benefit of strategic workforce planning is the ability to make an end-to-end analysis of the company. Therefore, any improvement suggestions or findings emerge on the basis of organizational, process, and technological issues. A few of these can be quick gains, gains that we can be implemented immediately. Awareness is raised on these achievements.
For companies, strategic workforce planning especially improves analytical thinking muscles and provides scalability. Thus, the company executives have more concrete and modelable data to figure out normally difficult problems. Examples of such problems are the number of employees required for a certain task, future growth targets, and organization of staff to reach those targets.
The most important input of a company is its human resources. So, strategic targets are achieved with the right human resources management. In this extent, department managers and employees become better able to plan their own work. This helps companies to better use their human resources and reach their goals faster.
Cost optimization is very important in today's world.
In today’s competitive marketplace, such studies provide an advantage in terms of cost. The elimination of repetitive jobs, reduction in the level of uncertainties in responsibilities, and the elimination of non-value-added or low-value-added activities make job descriptions of employees clearer. It also allows employees to focus on high-value-added jobs. In addition to these, there is an increase in the time saved and thus an increase in employee satisfaction. We can say that these repetitive jobs, task-role responsibility transitions, elimination of low value-added or low value-added jobs also provide a positive customer experience that will make a difference in the competition.
Who Is In Charge Of Workforce Planning?
The Human resources department is one of the main actors when it comes to strategic workforce planning. This kind of study is not done only once, on the contrary, it is done at least once a year. Moreover, it should not be forgotten that it will be updated in accordance with budgetary strategies. This is because strategic workforce planning is mostly about people in a given company. Therefore, one of the main actors is human resources.
In addition to the HR department, as strategic workforce planning is an important issue that concerns the entire company, other stakeholders from inside and outside the company are also involved. For example, organizational development and operational excellence teams may be an example of this. However, a single team's work may not be enough to decide on such an important issue. Therefore, even the top management from time to time should actually be involved in these studies.
When making strategic workforce planning, companies should take into account not only today’s requirements but also future goals and plans. To exemplify, companies should consider; its growth targets, growth forecasts, countries of operation, locations of operation, the current number of employees, future targets, the turnover rate per current number of employees, the future targets of this turnover rate.
How is Optimum Workforce Determined?
Strategic workforce planning is a study that should be done by paying attention to the segmentation of the employees. For example, office workers (white-collar) and field workers (blue-collar) have different dynamics. To be more concrete, blue-collar employees in the production area get up and work with machines and products while office workers are dealing with works that fit into a hard disk that nobody actually sees at the computer. Therefore, their planning dynamics need to be handled very differently.
Strategic workforce planning is a subject that is open to misunderstanding and therefore needs to be handled sensitively. This misunderstanding is often manifested as staff reduction or layoffs. In fact, on the contrary, in strategic workforce planning, staff deficiencies should also be taken into account. For example, it is noticed that X company does not spend much time on marketing processes. In such a case, the importance of marketing processes to achieve the goals should be determined and maybe new employees should be hired. Therefore, not only the decrease in the number of staff but also the increase may come to the agenda for some functions.
Activities such as keeping time are not carried out to measure the efficiency of white-collar employees. These activities should not be done anyway, because the work done by the white-collar is usually not the kind of work that can be measured with a stopwatch. In white-collar, it is necessary to pay attention to the meetings held during the process hours, on-site observations, difficult issues, technological, organizational, and process difficulties. In order to support the arguments spoken in the meetings, some data need to be extracted and analyzed from the software used by information technology teams. When you want to speed up the process or run it more efficiently, survey studies can be put into use.
Some jobs on the blue-collar side are more standardized than on the white-collar side. Therefore, time measurements and on-site observations can be considered. Meetings on processes related to blue-collar managers can be held, and if desired, work can be done on balancing rights, calculating and improving the standard time there.
In fact, the essence of strategic workforce planning studies lies in the calculation and improvement of the standard time for the activities performed. Related to this, there are some parameters such as official holidays, days off, weekly working periods. These parameters need to be determined in advance. The usable time of a person is subtracted from the year, which brings out the capacity. Then, the activities carried out by the person or department (especially on the white-collar side), the place they spend their time, the length of the time they spend, is determined by using job descriptions and meetings held.
Then, workforce triggers, which is a very important issue, are determined. For example, if the task of an employee working on financial affairs or accounting is invoice entry, this person is triggered by the incoming invoice or the number of invoices entered into the system. On the sales-marketing side, a person is probably talking about the number of customers or growth rates. Supplier numbers, purchasing, and order numbers are among the workforce triggers of a person working in a purchasing position. In order to calculate the standard duration of a transaction, it is necessary to understand which person spends how much time per year for which activity, through surveys, meetings, and on-site observations taken from ERP. Then, the standard duration is calculated by dividing this data by the number of labor triggers. In essence, efforts are being made to improve operations here, too.
A Framework of Strategic Workforce Planning
While the strategic workforce planning project is being prepared, detailed and careful planning must also be prepared. Since this is a project that can touch very different dynamics, process owners need to understand the work done very well. In this direction, both company structures and processes are analyzed from end to end, the problems of people are listened to, technological development areas are revealed, the long-term stability of the company is discussed together with the management, and model data is made. Therefore, you end up having a lot to consider. Therefore, it is important to be sensitive and pay proper attention to managing change.
Imagine a corporation with multiple locations. Thanks to the strategic workforce planning study, internal comparisons are made and the performance levels in similar operations or processes within this company are compared. In other words, similar departments, responsibilities, and units in different locations are compared with each other. Some gains are obtained from this process. For example; Let's compare the office in New York with the factory in Boston. The questions such as "Why is it different in NY than in Boston?", "Why does a job take half an hour in NY, while it takes almost 3 hours in Boston?" As soon as these questions are answered, improvement work begins.
If the analysis made is satisfactory, the work can be left this way. The other party does not have different business dynamics, the same operating model is maintained within the same group and the same systems are used. While the same competencies are required, it can be proved by the analyzes that have been done or to be done that why these people take longer in one job and can be filled, it becomes clear that the job that takes 3 days can actually do it in a shorter time. However, this does not mean that 3 days are wasted. Full-time employees are recruited in this section. If a person can work an average of x hours a year, he/she becomes a full-time employee. A 3-hour gain can be obtained here. This person (especially white-collar workers) is not doing some value-added jobs that he is not already doing.
Let's give an example: One human resources department does not carry out individual performance processes. This department is doing another low value-added business. They dedicate the time they earn to the individual performance process, which can be of higher added value. If time cannot be devoted to talent management and backup-style issues, these processes can also be dealt with. In short, it is also very important for companies to channel the full-time employees earned for office or in other words white-collar employees, that is, their time to the right place. The time gained from there should not turn into direct layoffs. These times can be used in more value-added businesses with a correct organization and process design to serve the company strategy.
At first, it gives the optimum staff that forms the basis of the strategic workforce planning. In other words, it reveals how many people should be worked within the current situation. In such projects, many findings are identified, including improvement suggestions, process, organizational, software technological improvements. When these are accomplished, it can be concluded that your current optimum squad, your norm squad is x, and you can reach the target y. This is called potential staff. In other words, these longer-term proposals become the staff at the time of the roadmap. These measures can be presented in terms of good practices.
In local companies, the situation may be different from multinational ones. Since there are no internal comparisons in single companies, it can be moved more slowly. If we think through a single company, there are certain departments such as sales, marketing, supply chain, IT, human resources, financial affairs, R&D, and so on. There is a no different company to compare these departments with each other. The job gets a little more difficult because the biggest benchmarks come from internal comparisons in strategic workforce planning projects. Internal comparisons cannot be made at this point.
In these cases, experience comes into play. If there is a no different company that can be compared, it is necessary to open up to the outside. In other words, different companies and different good practices should be investigated. Of course, it is necessary to do these analyzes well. For example, an accounting employee or invoice entry person enters an invoice in thirty minutes. In the same industry, the accountant of company X enters an invoice in 10 minutes, who uses Oracle instead of SAP. Such differences should also be taken into account. Therefore, processes need to be mastered and considered in a more analytical manner.
Strategic Workforce Planning Do’s and Don'ts
Strategic workforce planning projects are an issue that needs to be handled sensitively. What we mean by sensitivity here is that strategic workforce planning is generally perceived as a process that can lead to the reduction of the number of employees and dismissals. As a matter of fact, if the number of employees is not adequate, strategic workforce planning practices can also lead to staff increases. That is why change management is vital in such projects, and it needs to be handled sensitively.
While conducting strategic workforce planning applications, your attitude to people should not to bother them, reduce their satisfaction, or demotivate them. It is necessary to give the message that these works are done for them. It is absolutely necessary to give the message that these studies are there to make the lives of the employees easier and the company to reach certain strategies. In its foundation, workforce planning is there to help both the company and the employees.
The second important point is that while making strategic workforce planning, it is necessary not to get stuck in the current situation of the company. It is definitely necessary to talk about their long-term strategies of a minimum of 1 year, optimally 5 or 10 years. Growth plans need to be considered. For example, the following questions should be answered;
- Will we operate abroad?
- What will our export rate be?
- How many locations will we operate?
- Do we have a plan to open a new factory, warehouse, or a different location?
- How many stores should be there?
- How many stores are we planning to be in the future?
So, the judgment must be made on strategies. This will affect both staff planning and mainly geographic spread. Since it is an end-to-end analysis, it also enables different synergies. As an example of these synergies, common service centers, which have been trending for years, have already started to be implemented in large companies or medium-sized companies. To illustrate with questions;
- Do central human resources have to be responsible in factories?
- Will the branches or headquarters make the payroll?
- Which processes will be carried to the headquarter?
- Which processes will be carried out by branches in different locations?
Even the commissioning of these common services mechanisms is actually an organizational design, but it is an issue that should be considered in strategic workforce planning projects, and at least it should be presented as a suggestion. It should be presented as a suggestion and action plan to the potential staff, that is, not the short-term strategic workforce planning, but the future situation strategic workforce planning.
Another important issue is that there are some companies who want to make a strategic workforce plan but wonder whether they are working with the right number of people. On the one hand, large projects such as those that will affect the strategic workforce planning, i.e. staff planning, are tried to be carried out. Here, too, an analytical model such as an ERP transition or an organization design is recommended. Therefore, when any parameter of the model is changed, it is not available in the current situation. With the ERP transition, the time people spend or the processes they will carry out is also changing.
Everything changes from top to bottom with the organizational design. It is necessary to evaluate correctly which projects will not go together with the strategic workforce planning project or which projects can be carried out in parallel. With workforce planning, more time can be devoted to high value-added jobs. In particular, the company needs to find out in which processes white-collar employees can be used.
Sometimes companies experience business blindness. Because we live in a rapidly developing world, these companies cannot follow the good practices in the world as well as they would like to. At this point, they can get information from consulting companies about good practices and what different companies are doing. Thus, they can better design their processes and organizations.
As in every strategic improvement initiative, the implementation of strategic workforce planning is a process that should not be done only once. Companies should carefully decide the frequency of this process. In the worst case, the number of people working in the annual budget processes should be verified with such metrics, how many people are needed at least annually, if possible longer and those responsible should be determined.