Why You Need Workforce Planning Workforce planning lets HR manage talent shortages and surpluses. By understanding business cycles and tending to “talent pipelines” and current talent inventories, HR can act, instead of just react. By John Sullivan Workforce planning is one of the most important issues that human resources professionals are talking about today. Still, many have not gone beyond the talking stage. The task of actually implementing workforce planning is daunting because it is so difficult to define.
The following suggestions are designed to demystify what workforce planning is and to discuss the reasons why every HR department should implement such an effort. Being prepared is better than being surprised Workforce planning is a systematic, fully integrated organizational process that involves proactively planning ahead to avoid talent surpluses or shortages. It is based on the premise that a company can be staffed more efficiently if it forecasts its talent needs as well as the actual supply of talent that is or will be available.
If a company is more efficient, it can avoid the need for layoffs or panic hiring. By planning ahead, HR can provide managers with the right number of people, with the right skills, in the right place, and at the right time. Workforce planning might be more accurately called talent planning because it integrates the forecasting elements of each of the HR functions that relate to talent–recruiting, retention, redeployment, and leadership and employee development.
Businesspeople who just wait and then attempt to react to current events will not thrive for very long. The new standard is to provide managers with warnings and action plans to combat full-blown problems before they become more than a blip on their radar. The HR world is no different. The rate of change in the talent market is dramatic. We now know how important talent is to the success of a business. It’s time to make the talent pipeline (a defined recruiting channel where a company can find qualified talent to meet its specific needs) more efficient.
It’s also time to manage your talent inventory (a company’s current employee base) so that there isn’t a shortage or a surplus. Many of the other overhead functions–like procurement, manufacturing, and even the mailroom–have developed effective “pipelines. ” If HR cannot develop effective pipelines, then the alternative option is to have its entire function outsourced to an external vendor. HR should be aware of the business cycle HR professionals constantly complain about the painful boom-and-bust cycle of budget cuts, rapid growth, and more budget cuts.
What they want is stability. Unfortunately, the way that HR people act or fail to act compounds the pain of the boom or bust phases. Everyone knows that the business cycle has ups and downs. There are periods of growth and periods of recession; each seems to happen every few years. The surprising thing is that HR people, rather than prepare customized approaches for the different phases of the business cycle, tend to do things the same way no matter what the economic climate. HR departments have fallen into the naive trap of operating independently of the business cycle.
The main reason that HR “suffers through” these phases is that it has no strategy or plan to participate in its company’s business cycle. Even though HR managers have been through business cycles many times, they seem routinely surprised when the next phase hits them. Other functions are puzzled over HR’s inability to prepare accordingly. This impression of being unprepared for the changing business cycle certainly does nothing to help HR’s image and “brand. ” It could be argued that, even if HR managers saw the pattern coming, they wouldn’t do anything about it.
Many HR professionals are short-term oriented; they react to events. Even though they call themselves strategic business partners, they tend to lack a long-term, big-picture view of HR and the business. As a result, more than 90 percent of HR departments have no independent planning and forecasting function. To further aggravate the problem, many HR departments have no formal strategy of any kind. When you stop HR people in the same department and independently ask them to name their department’s strategy, more often than not you get a blank look.
Rather than seeing the big picture, HR departments tend to develop programs only when a “crisis” occurs. It is infrequent that you find a systematic strategy, a forecast, and a plan to integrate HR. HR has two distinct reasons for planning ahead. The first reason is to lessen the impact of the boom-and-bust cycle on the management and operation of the HR department itself. The second–and perhaps more important–reason for planning ahead is that HR manages the talent pipeline for the organization. It’s crucial to maintain both that pipeline and the talent “inventory” at the right levels.
Unfortunately, HR is notorious for first “over hiring” and then not having the capacity to reduce the workforce to necessary levels without inflicting major damage on employee morale. | Unfortunately, HR is notorious for first “over hiring” and then not having the capacity to reduce the workforce to necessary levels without inflicting major damage on employee morale. In contrast, during the boom phases, HR processes, which were designed for the average load, can’t handle the overload requirements of high-volume hiring and retention issues.