Does your workforce’s composition match your organisation’s needs and plans? People are likely to be the biggest single cost for your company and your biggest investment. They can be your greatest competitive advantage. But the right people are hard to find. Strategic workforce planning (SWP) is about identifying the right people with the right skills at the right cost. It’s vital to have a working knowledge of SWP.
This has two levels: Optimising the workforce – boosting productivity and identifying the workforce you need. Scenario planning for the future – how to achieve the right workforce to turn your strategy into reality. These help you appreciate SWP’s power but to understand it on a practical level, you must look at the ‘Five Rights’.
Size is all about numbers. Some businesses need more, others need less. Many experience both situations at the same time in different divisions. How do you know how many people you need? Methodologies must be applied to make the process more robust. Ask some key questions:
- Is the workload increasing or decreasing? And why?
- Are there environment disruptions that will impact staffing requirements?
- Are there people shortages in any critical areas?
- Is there any room to reduce your workforce in any areas without compromising on service quality and revenue?
- Does it make sense to outsource non-core business processes?
- Is technology leading to more changes or causing issues with productivity?
It’s easy to think about shape in terms of the layers of your organisational chart and the percentage of workforce at different levels. This is important as it impacts on workforce cost, but there is a key question that must be answered first: does the composition of your workforce match your business’s needs and plans?
To get the right shape, it’s important to think through the issues of what is core and non-core, what needs to be fostered internally, and what should be outsourced. And once you know the answers, you determine the right mix of leaders, senior managers, experts and professionals.
Steve Jobs used to remark that Apple was focused on innovation, technology and design – and he therefore didn’t want manufacturing within the firm. Why maintain hordes of manufacturing staff when it won’t gain you competitive advantage?
Strategic capabilities are the skills you need to successfully implement your strategy. By nature, they vary between sectors. As banking regulation rises in the GCC, compliance experts become vital. In the oil industry, on the other hand, sound project management skills can be the difference between success and failure.
In these changing times, it can be hard to determine which skills matter. Leaders and managers often know the ones that will be required in future but this information can get lost amid daily business pressures.
HR can help by maintaining that long-term view and considering how an evolving business model impacts strategic capabilities, whether you have the skills to deliver key processes in the years ahead and which skills will be critical to success this year, but in the future too.
Middle East companies are on the move. More are expanding outside the region, or developing a more integrated model. As they grow, there often seems a disconnect between where people are located and where they are needed. Over time, organisations’ business units create approaches that respond to local needs but aren’t necessarily what’s needed at a corporate level.
In addition, there is an organisation’s operating model and the approach chosen to serve the market, labour costs of different geographies to consider, and the skill set available in those markets. Helping your business determine which people are needed in which location can seem overwhelming, so answer these questions:
- Do strategic shifts mean a different distribution of staff across regions/locations?
- Where is the workload coming from, today and in future?
- Do we have critical mass in the critical locations?
- Can we create hubs of experts to serve multiple sites?
- Are we in a high-cost area? Should we relocate?
By concentrating on getting the right size, skills, shape and site, you’ll get the spend right. If you’re like many organisations for whom cost optimisation is the most pressing goal of SWP, this may be the starting point. Consider benchmarking your people costs against similar organisations, using past figures to project the rising staff costs to see if they’re likely to grow in line with your forecast revenues.
A result of focusing on the ‘Five Rights’ is a more effective workforce closely tied to your business strategy. Lastly, SWP sometimes falls under the mandate of HR, and sometimes under a separate unit such as strategic planning. What’s important is that it is hosted by a unit that understands the strategy and is able to translate it into workforce requirements.