The Workforce Expert

Welcome to the Workforce Expert

Welcome to the Workforce Expert! This blog is dedicated to the practice of workforce planning in organizations. One can't really open an HR magazine or web site these days without some reference to workforce planning, and the number of conferences, workshops, articles, etc. dedicated to the topic has grown immensely. In this blog, I will attempt to separate some of the hype (which there is a lot of) from the reality and give a relatively balanced view of what is and isn't working out there.

This blog is targeted towards practitioners, but consultants are certainly welcome to join the conversation. Being one myself, I know the valuable contribution they make to the field. That said, I want the tone of this blog to be civil and professional, and I reserve the right to strike from the record any posts that don't adhere to that.

Over the next several weeks, I will attempt to put forward some of the foundations of what I have learned about doing workforce planning over the past 15 years or so (yes, it has been around that long). These are meant to be conversation starters, but certainly if there are other topics that readers would like to see addressed, please feel free to suggest!

Enjoy!

Brian

Workforce Planning for New Positions

*** Please Note: Over the next few months we will be migrating The Workforce Expert Blog over to our main web site. During that time, new posts will be mirrored in both places. The link to our blog is http://www.revolution-advisors.com/how-we-help/blog/ . Please visit us to see all of our thought leadership. 

One of the most challenging tasks in workforce planning is trying to determine the demand for new positions or new functions. This is particularly true when they are not only new to the organization, but also new to the field or the industry. Lately we have seen an increase in these types of positions driven by everything from new products and technologies to new regulations such as the Affordable Care Act. In some cases we have seen them be created out of reorganizations or restructuring of work, or even changes in the mix between onshore and offshore functions. But how do you effectively project demand when there is no history to work from? Certainly it is challenging, but just like companies who face the task of projecting demand for new products, there are ways that organizations can tackle this challenge.

One of the time-tested techniques is to try to find similar positions or roles and look at what the demand for them has been. This may not be possible within the bounds of the organization, but can potentially be done based on data from the industry or other companies. While the simplest approach, increasingly it is not possible due to the lack of anything comparable in the market.

A technique that can be applied in the absence of historical data is reverse engineering the position demand from the expected outputs. In this case the organizations looks at the key accountabilities (or at least activities) for the position and tries to determine how much of that output / activity will be required and then how much effort and skill will be required to produce it. This could be a task, a process, a report, a transaction - anything that drives volume. This approach requires a very granular analysis of the job and what it is expected to actually do, and certainly there will still be unknowns. But it can create a baseline for the position that can set initial staffing, while the organization builds the historical demand necessary to refine projections and increase accuracy.

But in some cases there is not enough data to even project the outputs. Take a new product for example, there may be no real idea in terms of what it will take to support, how many questions users will have, what kind of demand there will be, etc. Consequently, there is no output that can be projected with any confidence. This is often the case in totally new fields, emergency situations, and other scenarios. In these cases, organizations need to use techniques like triangle distributions (best case / worst case / likely case) and create associated staffing scenarios. These scenarios must include appropriate guide posts to give the organization early warning of which scenario is closest to reality. It must also include contingency plans for how scarcity or surplus will be addressed rapidly based on actual demand.

And as I have said many times before, one of the most important components of your projections needs to be your confidence in them. Decision makers need to know the level of risk associated with their staffing decisions. Just as important, confidence levels will help ensure that the right contingency plans are in place. In the end, the accuracy of these predictions would still be expected to be lower than the organization's typical workforce plans, but certainly we can do better than the dart board by employing

Strategy Analysis Using Workforce Planning

*** Please Note: Over the next few months we will be migrating The Workforce Expert Blog over to our main web site. During that time, new posts will be mirrored in both places. The link to our blog is http://www.revolution-advisors.com/how-we-help/blog/ . Please visit us to see all of our thought leadership.  

In this post, I wanted to return the focus a bit to the concept of how workforce planning can link directly to the strategy. In previous posts I discussed how workforce planning analytics can be used to develop competitive strategy by identifying threats and opportunities in the marketplace. Here I wanted to talk a little bit about how workforce planning can be used to analyze your own strategy.

There are a number of techniques in workforce planning that are useful for analyzing your company’s strategy. Once the strategy has been defined, workforce planning can be used to test the assumptions behind it and to look at sensitivities to key assumptions. This analysis leverages the existing structure for workforce planning that should already exist. Specifically, it should leverage your process analysis, productivity analysis, external factors data, and any key business ratio or metric data.

The first technique is Feasibility Analysis from a people perspective. This involves stress testing the people assumptions behind the strategy and seeing if they are realistic. Testing is done by analyzing key assumptions related to turnover, productivity, mobility, and performance and changing the assumptions associated with these variables to determine the impact on the overall strategy. For example, if turnover goes up will the strategies fail? Or more likely, can the productivity assumptions be achieved? How much risk is associated? Workforce planners should be able to put confidence intervals around these and provide leaders with an understanding of the level of risk involved with the strategy.

Another technique is the analysis of external factors to determine how sensitive the strategy is to changes in these factors. You should already have much of this data and the associated analytics in-house. Examples would be sensitivities in turnover and productivity to changes in macro factors such as unemployment, the overall economy, etc. In many cases, you will also have the relationships to industry-specific factors such as commodity prices already mapped out as well. But you may need to gather some additional data or look at additional factors. For example, if you are moving into a new product area that is reliant on different commodities or changes in consumer trends, you may have to model these areas as well. Similar to the analysis above, you can test the results of the plan when various macro factor assumptions are changed and determine potential risks and feasibility.

Finally, a number of techniques that I have discussed previously such as Location Analysis, Outsource Modeling, etc. can be used to test the strategy and look for improvements. Business Model Analysis can also be particularly useful. These techniques can all be used to examine alternatives to the strategy and determine how they perform in terms of results, feasibility, risk, etc.

This is not a comprehensive list of course, but this gives you the foundations. This type of testing can help organizations avoid typical strategy pitfalls.

Managing Costs through Workforce Planning

*** Please Note: Over the next few months we will be migrating The Workforce Expert Blog over to our main web site. During that time, new posts will be mirrored in both places. The link to our blog is http://www.revolution-advisors.com/how-we-help/blog/ . Please visit us to see all of our thought leadership.  

Cost-cutting is a periodic reality of organization life. Whether caused by the overall economy, industry dynamics, or company actions it is something that almost all organizations face at some point. But too often, cost-cutting decisions are still made in very qualitative or across-the-board ways that have a long-term detrimental impact on the organization. With the evolution of workforce planning this is both unnecessary and unwise. Workforce planning provides a platform by which cost-cutting can be done as a quantitative precision exercise where outcomes are more certain and the ability of the organization to remain effective can be preserved.

It is important to start any process of cost-cutting with a look at the key success metrics of the business and a determination of what is most important to the organization. What metrics are most critical to the success of the organization? What should not be compromised in the cost-cutting process? How do we ensure we can still achieve our mission?

When an organization faces cost pressure, it must first re-prioritize its activities and determine what is most important. Is it maintaining customer service? Is it emphasizing certain product lines over others? Is it retaining staff with critical knowledge? Obviously the organization isn’t going to be able to do exactly what it has done exactly the way it has done it. This step is critical, but too many organizations choose to employ approaches like “we will cut 10% across the board” underpinned by an idea that somehow that is “more fair”. But it is not a good strategy. To assume that the entire organization has an equal level of efficiency, productivity, and importance is almost never a reality. So across the board cuts tend to have negative outcomes for the organization and disproportionately impact its ability to function effectively.

Instead, once priorities are determined, workforce planning can be used to make surgical and appropriate cuts as required. In our experience, most organizations have some ability (and in many cases a need) to critically look at their cost structure and drive efficiency. Especially in large organizations, things often evolve over time and some amount of inefficiency or ineffectiveness is introduced into the system. Cost-cutting exercises can help drive that out. But it is important that the organization first identify these pockets and focus on them, rather than across-the-board strategies. This is also a time when organizations can weed out poor performance that may have been tolerated in an organization.

But these focus areas are very straightforward and while workforce planning helps, it is not necessarily required to find pockets of inefficiency and poor performance. Where workforce planning can be very powerful is when those more obvious cuts have been exhausted and the organization must dig deeper. Here workforce planning can help target the right cuts. Going back to the priorities that the organization has established, workforce planning can help the organization align cuts to priorities and ensure that critical functions are not cut. There is a multi-step process that organizations should follow:

1)      Identify and Protect Critical Talent: this data should be readily available to workforce planners. Organizations must protect their critical talent and if by chance that talent sits in an area that is eventually targeted for cuts, then the organization should look at where that critical talent could be better used.

2)      Look at Overstaffed and Understaffed Functions: again this is data that good workforce planning should be able to rather quickly identify. By correlating staffing to outputs over time, workforce planners can develop efficiency / effectiveness ratios that will identify where functions are overstaffed and understaffed.

3)      Determine Changes to Outputs: companies must identify where they are willing to scale back, whether that be producing less of a certain product, serving less of a particular customer, slowing down processes / response, or whatever it determines are its priorities. Workforce planners can then identify the impact to staffing that comes from those changes.

4)      Determine Changes to Service Levels: similar to changes in outputs, the organization must determine where internal or external service levels must be cut back. This could be responsiveness to internal requests, turnaround on accounts payable, or any number of impacts. Workforce planners can then again identify the associated impacts to staffing. 

5)      Look at Productivity: workforce planners should also be able to identify productivity issues in the organization and pinpoint opportunities to improve productivity. For example, if there is an area where there are significant differences in productivity among staff members, the company can decide to trim some of the less productive workforce and bring the remainder up to a more consistent level of productivity.

6)      Determine Cuts: through the previous 4 steps, organizations should be able to identify a series of cuts that meet their goals and don’t compromise their ability to perform. This package of cuts should be identified and quantified.

7)      Model Impacts: once cuts are determined, workforce planners should model the overall impacts to the organization in terms of true cost, capability impacts, long-term talent pool, outputs, and service levels. This check ensures that the organization does not experience any unintended consequences for the cuts.

Following this process, organizations can determine where cuts make the most sense, and just as important what their specific impacts are going to be. This can help the organization make the most of what is never an easy process and minimize the long-term detrimental impacts to its performance. All of this is of course premised on having the right workforce planning foundations in place and is yet another argument for robust ongoing workforce planning analysis.

Linking the Business and HR- Making the Numbers

In past blogs, I have talked about the predictive power of workforce planning and how it can be transformative to organizations – all the way to helping identify the need to create new business models. From a day-to-day perspective, effective workforce planning can be a critical component in linking HR to the Business Strategy, specifically in helping organizations understand how to "make their numbers". Whatever metrics your organization uses to determine its success, workforce planning can provide critical guidance on what the organization needs to do from a people perspective in order to achieve those measures of success.

At one level, this type of analysis seems straightforward. Most workforce planners already look at ratios between business performance metrics and staffing levels. You need this many workers with this type of skill for this many hours in order to produce this much product or serve this many customers. Isn’t it as simple as extrapolating those ratios? So if I need 100 salespeople to sell $1B then can’t I add another 100 and sell $2B? If I need 500 inspectors to regularly oversee and audit 2000 production plants, can’t I just add another 250 to cover another 1000? The consulting answer is “maybe”…

Ratio-based workforce planning does have a place. But that place is typically to get directional guidance on trends or to do "quick and dirty" analysis on an issue. I do not recommend making "big" decisions based on ratios for a simple reason - sooner or later, ratios break. Whether it is in the scaling up or scaling down, the ratios will inevitably reach a point where they no longer hold. Taking the sales example, will doubling the salesforce oversaturate the market? Will it reach the practical limits of market share? Are there enough new customers to support that type of sales growth? And can the company keep up with demand? Or take something like inspectors; there are a number of similar considerations such as the geographic dispersion of the new plants, requirements of the inspections, frequency requirements and a number of factors. You can move above or below critical mass, you can tap out potential markets, you can see transformational increases in productivity or any number of other conditions. But how do you know when you are at that break point? There is no simple answer to that question. One way that I start my exploration is to look at my confidence intervals and start taking a hard look at changing my ratios when I am making predictions beyond the confidence intervals. I also tend to look at the strategies that are planned associated with the changes and make a judgment call on how different it is from the past. There are other ways of course. But once you are concerned that you might need to change your ratios, additional analysis needs to be done to find the right math. More robust forecasting techniques of course help you avoid this issue altogether.

Another important consideration is the dependencies among your functions. For example, can the factory produce all the goods I want to sell? Can our product development team create the products we need to overcome market saturation? Can our administration team catalog all of our inspection results? It is critical to look closely at the dependencies across functions when examining this type of analysis.

There is also a fair amount of trial and error in this type of analysis, at least until you have done a few. But there are a number of common levers that you should look at when trying to conduct this type of analysis. These include:

• Productivity
• Automation
• Adding Staff
• Reducing Staff
• Changing Structure
• Improving Processes
• Outsourcing
• Onshoring / Offshoring

It is also critical for planners to look closely at external / macro factors when conducting this type of analysis. Often, the significance of an external factor can increase as scale increases. For a simple example, you can look at materials or commodities. Price and availability of commodities can dramatically change as operations scale and can be a limiter to growth or expansion. Again planners should already be watching these relationships and should be sure to check for these kinds of dependencies as scale changes.

As I have also talked about in previous blogs, this type of analysis also requires close collaboration with business leaders and decision-makers. Their input is critical to helping examine when ratios / relationships might change and what the new relationships might be. But it is also critical to ensure the believability of the results and the buy-in to the solutions. This is critical to make your recommendations a reality.    

Keeping up with the Business

As more organizations have established their workforce planning functions, some seem to be struggling to keep their plans in sync with the pace of business change. In recent conversations, there have been a number of questions about how dynamic workforce planning should be. Among some organizations who have an established workforce planning function, there has been some concern expressed by line managers that the function is not "keeping up". Many of the clients where this issue has come up have a workforce planning team that has fallen into what I would almost call an "HRIS" mode of operating. They publish a monthly update to their standard set of reports and forecasts and they respond to ad-hoc requests for analysis. Many of those requests require some sort of custom analysis and the response time in the organizations I talked to ranged from 3 days to 2 weeks, depending on the request. When I spoke with the business leaders, I heard some of the same complaints that I often hear in regards to HRIS - too slow to respond, numbers with no insight, and a lack of relevance to the problems they are facing. Workforce planning has become like many other aspects of HR for them - a one size fits all approach that doesn't have day-to-relevance to their world.

I will say without reservation that these companies are doing it wrong...

Workforce planning has to be as dynamic as the business planning function. Analysis must be proactive and constantly revised as conditions change and new data becomes available. Planning should not just look at one forecast, but at a number of scenarios and the potential impacts and likelihoods of those scenarios. And the forecasts must be what I call "Relevant and Rapid" - which means that the planning function has to be able to partner closely with the business leaders to understand their world and their needs. Workforce planning should be a frequent activity that moves as the business moves, not just a monthly report.

But to make this happen, organizations need the right structure, the right capabilities, and the right tools. You may remember in a previous post that I talked about having a hybrid centralized / decentralized workforce planning function, where the generalists were enabled to deliver information and analysis to the business units they support. Assuming that they are partnering effectively, they should be the ones who best understand what the business is facing and how that should be analyzed from a workforce perspective. They should be able to go to the center of excellence for assistance with complex analysis, data, and tools. On the capabilities front, it is important that the organization have the right level of skills and the right numbers of people in workforce planning to respond to the dynamic nature of the business.

Finally from a tools perspective, this is where the right software becomes essential. Companies need a flexible tool that can run multiple types of analysis quickly and analyze multiple scenarios effectively. It must be able to respond rapidly to urgent requests and the tool should have broad data access and powerful analytics. In short, workforce planning should look a lot more like a Situation Room than a traditional IT report desk. It should be dynamic and have urgency, moving when the business moves. Processes and capabilities within the workforce planning function have to be aligned accordingly, otherwise they risk the business looking for workarounds, or worse yet, becoming obsolete...

Keeping up with the Job Market

There have been many things going on here at Revolution Advisors, and those have kept me away from the blog for a while. I am excited to say that we will be launching a new service line related to Workforce Planning in the next few weeks and we believe that this service will help organizations dramatically accelerate their ability to get robust workforce planning up and running. Near that same time, I will be transitioning this blog to our main blog on our newly launched website. I will certainly provide more details when we are ready to launch.

Today I wanted to focus on the changing job market and its implications for workforce planning. We have all watched largely positive job reports and continued decreases in the unemployment rate overall, with even faster jobs growth in some states. But the overall unemployment market data doesn't necessarily tell the full story of the changing job market. We have all heard the shifts that have been happening in the market and the increases in jobs in sectors such as service and retail, as well as uneven growth in other areas. Behind the numbers, a number of companies are starting to see a tightening of the market for critical talent. Key technical talent, scientific talent, sales talent, etc. has once again started to become scarce and many organizations are working proactively to try to address this scarcity.

For workforce planners, it is important that our models become better segmented to reflect these changing market dynamics. Certainly we need to adjust our overall models for the impact of lower unemployment (based on your own organization's dynamics). We must also adjust our projections to reflect these changes. But we must also look at the level of resolution on our models to determine if there are changes that need to be made to individual workforce segments, up to and including developing separate models for key talent segments. Yes, I said separate models. At times, certain talent segments begin to diverse so significantly from the rest of the organization that they will need to be projected separately and monitored more closely. This has happened a number of times over the past 2 decades as certain talent has become scarce and economic / job market recoveries have been uneven.

How do you know if you need a separate model? There aren't a set of hard and fast rules, but when statistics such as turnover rates, offer to accept ratios, recruiting funnel metrics, Time to Replace, and others begin to diverge significantly from overall corporate averages, further exploration should be undertaken. Even significant increases in required salaries for candidates in a short period of time can be a leading indicator of the need to examine your models. It is also important to note that these models can re-converge as the talent market dynamics change, so planners must keep a keen eye on the dynamics.

 

Re-Thinking Workforce Planning and Human Capital Planning - Total Workforce Strategy

Last year I wrote a post on the linkage between Workforce Planning and Human Capital Planning overall with the question of are they the same thing? I wanted to revisit that topic here.

World-class organizations are continuously executing workforce planning. The purpose of workforce planning is to enable the organization to meet its strategic objectives within the horizon of the strategic planning process. It lays the groundwork for the prudent use of assets, not a seemingly random, reactive utilization of people, time and money. As such, it is not a static process that takes place once per year, but rather a dynamic activity that responds to changes in the business and the environment. Workforce planning is made up of intentional activities and practical tasks that facilitate the anticipation of future personnel states. It is not a theoretical exercise! The process cycle repeats, and it is usually concurrent with strategic and financial planning. Workforce planning is most productive when linked with an organization’s annual business planning cycle. Workforce planning is ongoing – the implementation of the plan and interpretation of results are an integrated part of business operations. It is not effective if it is something that managers do when time permits. The scope of an organization’s workforce planning process depends on its business needs, but at a minimum, workforce planning should be done at a corporate level, with unit-level plans created as appropriate.

But wait…that sounds pretty broad. Couldn’t that also be called Human Capital Planning? And what about Talent Management? How does that fit in? In my view, probably too much time is spent arguing this types of semantics, but let me put my spin on it. When taken holistically, there is very little difference between full cycle workforce planning and human capital planning. So little in fact that I would say they are functionally synonymous. But when I say that, I really mean full cycle workforce planning. Many organizations consider workforce planning to stop when they have identified potential future gaps or when they have developed hiring or training plans to address projected gaps. My perspective on workforce planning is that it includes much more than that including (as I have discussed in previous posts) interventions such as organization design, productivity improvements, offshoring / onshoring, looking at locations, outsourcing, and the list goes on. Given that broad definition, there is really no difference between human capital planning and workforce planning.

Talent Management is related, but not the same. Orchestration of all the talent management elements drives the effectiveness of HR programs and determines HR’s ability to support the business’ strategic objectives. Workforce planning influences all the other talent management processes and these processes influence the plan itself and the results it achieves. An organization needs to understand the impact of their workforce planning process and plan components on processes such as recruiting, performance management, succession planning, scheduling/assignment, learning and development, and career development.

As I have thought about the future evolutions of workforce planning, I still see more convergence assuming that Human Capital Planning is being done correctly - that is that it includes an in-depth quantitative analysis of workforce factors and optimizes key business metrics like productivity. That echoes some of the themes that I have talked about in the past, but I also want to introduce a concept that we have been using for a while - Total Workforce Strategy (TWS). Below I talk about how when done correctly the two forms of planning can be synonymous, Total Workforce Strategy adds another layer. TWS includes workforce planning across the following domains:

• Employees
• Contractors
• Partners
• Suppliers
• External Labor Market

Workforce Planning across all of these domains is challenging, but I would argue increasingly essential for enterprises. If I look at the fundamentals, both Human Capital Planning and Workforce Planning are about making sure you have the resources to achieve your mission and goals. But few enterprises today rely solely on their employees and contractors only to get things done. Organizations are becoming more seamless integrations of internal and external capabilities - call it the "extended enterprise" call it a "business ecosystem" or whatever term you like - our enterprises are more interdependent than they ever have been. If we limit workforce planning to the first 2 layers, we put our enterprise at risk.

The challenges associated with planning across these domains are obvious - you don't own much of the data, uncertainty is much higher, etc. But in terms of the fundamentals of identifying risks, strategies, options, etc. it can be done. It does require more seamless partnership with both the business leaders in your enterprise and your partners outside your enterprise, but the business case for all parties is obvious. More to come in future posts.

For the full post on Workforce Planning vs. Human Capital Planning:

http://workforceexpert.typepad.com/the-workforce-expert/2014/06/is-it-all-just-human-capital-planning-.html

Preview of 2016 Research Agenda

This will be the final post of 2015 for this blog. We have a number of projects that will be rolling out over the next several weeks, including some new forums for communication and thought leadership for the future. More to come on those, but I wanted to provide a preview of some of our research focus areas for next year. We would be happy to hear any feedback that you might have on this research agenda, and we are actively seeking companies who would like to collaborate in any of these research areas.

Our research topics for 2016 will include-

• The On-Demand Workforce: How can organizations make the On-Demand workforce a reality, and what are its implications for management, HR, employees and other aspects of Human Capital Management?
• Organization Agility: How can organizations become truly nimble in their staffing and management practices? How can they respond more quickly and effectively to both opportunities and threats and become "self-evolving"?
• Enhancing Resilience: How can organizations and communities build resilience and prepare themselves to respond to and capitalize on the "shocks" that continuously impact our organizations? These shocks could be related to the economy, security, the environment, and any number of factors...

All of these topics have been focus areas for us for some time, and we are excited about the insights that we will be able to deliver next year.

If you are interested in potentially collaborating on any of these research projects, please don't hesitate to contact me at bwilkerson@revolution-advisors.com. Hope that everyone has a great holiday season and a successful 2016! Thanks for your support of this blog in 2015.

Workforce Planning and the On-Demand Workforce - an Introduction

Over the next few months, I will be doing a series of posts related to the On-Demand Workforce. Our firm has been working in this area for some time, and as the concept continues to emerge, we will be putting forward more and more emerging practices and lessons learned from our research and client work. 

Like many things that become popular in HR, the concept of the On-Demand Workforce is not entirely new (just like "the cloud" but that is for another day). For at least a decade and a half, we have talking about changing workforce dynamics. Concepts such as "Free Agent Nation", changing global sourcing dynamics, and even generational differences coupled with dramatically changing corporate expectations, talent needs that evolve rapidly, and a host of other factors have pushed us to a stronger and stronger need for "On Demand". 

Like many things some organizations are looking at the more superficial aspects of On-Demand Workforce and focusing their energy there. But like any transformational concept, there is a lot to implementing this approach for real. It requires a re-think of talent management philosophies and processes. It requires a different level of capability in our HR teams and our managers. I'll discuss all those aspects in future posts. 

But one of the key foundations to On-Demand Workforce is Workforce Planning. In fact, the many posts over the years about more advanced elements of workforce planning techniques become critical foundations in this kind of approach. Examples of critical techniques would include:

- Time to Replace
- Location Analysis
- Outsource Modeling
- Demand Modeling (and Derived Demand)
- Robust Skills Modeling

Some of these techniques are very difficult still for a lot of organizations to implement because of limitations ranging from data access to skills. But it is difficult to implement On-Demand Workforce without these skills because without them, you can actually put the achievement of organization goals at risk. Like any attempt at "just in time" supply, good forecasting is essential to ensuring there are no mishaps in matching supply and demand. 

In future posts, I will go into more detail on both the workforce planning and other talent management aspects on On-Demand Workforce. If any of you have any experiences in this area that you would like to share, please feel free to post comments.

Brian Wilkerson
Revolution Advisors LLC‎
bwilkerson@revolution-advisors.com

Employee Sensing and Workforce Planning: Building Synergies

Effective workforce planning relies on robust data across a wide range of factors. We need to look at skills, costs, locations, employment brand, inputs, outputs, labor markets, and a host of others. Much of the data that we need can be directly measured or obtained from some sort of discrete internal or external source. The exception to that would be Employee Engagement. Not only is this hard to truly measure, but it is even harder to determine how it really impacts workforce planning and the metrics we care about. But getting an understanding of the relationship between engagement and factors such as productivity is critical to gaining the kind of precision we would like to have in workforce planning.

First I want to talk briefly about the link between employee engagement and productivity, which is the critical factor for workforce planning analysis. Productivity helps us understand what we can expect from our labor supply and also influences factors such as Time to Proficiency and therefore Time to Replace. Changes in productivity expectations can have significant impacts on our end numbers and projected gaps, so it is critical to "get it right". But when looking at productivity, there are a number of factors that can influence it including skill levels, automation, process design, available equipment and tools, work environment, supervision, and many more. Employee engagement can wrap up a number of those factors including work environment, supervision, training, and others. So how can a planner determine the link between engagement and productivity?

One of the most efficient methods is to examine productivity vs. engagement scores across similar business units or similar worker types, while trying to isolate for any other productivity factor differences. This is largely a data mining and analysis exercise, but could also include the need to go out and really understand the differences in workers and work environments across groups. There are more advanced ways to try to directly measure the link between engagement and productivity, but these would be beyond the scope of most workforce planning functions and in many cases, cost prohibitive. The disadvantage of this comparative method is that it gives planners a relative comparison of engagement and productivity, but not an absolute factor that can be used in a wide variety of situations. Depending on how your organization measures engagement, however, this may still be the best option.

Another method of analyzing the relationship between engagement and productivity is looking changes in both over time and extrapolating the relationship from that data. This again requires strong analysis and data mining, as well as appropriate segmentation of the employee population to ensure comparability. In this approach, planners may want to use data eras (described in previous blog posts) to identify major changes in the workforce environment such as major systems implementations or other major productivity changes. Either of these approaches can provide the data needed to help link engagement and productivity for workforce planning.

Once that relationship has been established, it can be used to analyze various workforce planning scenarios, including how efforts aimed at enhancing employee engagement will impact overall workforce demand and supply. This creates a whole new layer of precision for workforce planning and helps the organization target its people dollars most effectively.

Using employee engagement data for workforce planning requires rethinking how employee sensing is done. The traditional approach of broad-based employee engagement surveys conducted every 1-2 years (or sometimes less frequently) do not generally give the resolution or detail required to drive workforce analytics, nor do they generally catch changing trends when it is required to make a difference for workforce planning. Many organizations are already shifting their approach to more frequent and more compact surveys that would provide the frequency and resolution needed to calibrate workforce planning models on an ongoing basis. In one client, for example, we moved to an approach that put 3-4 questions in front of employees every 90 days. These questions were organized around a common theme (e.g. career development or work environment) and were accessible through multiple means ranging from desktop computers to touch screens near where hourly employees clocked out. The data was analyzed quickly and translated into communication and action plans within the next 90 days, and a new cycle of sensing began. This type of frequency and approach provides the required data for workforce planning, and incidentally also creates much more actionable data for enhancing employee engagement.

Employee engagement adds another critical dimension to workforce planning and can help organizations enhance productivity, target people investments, and better prepare for their future workforce needs. It requires the baseline analysis of the relationship between engagement and productivity in the organization and often times re-thinking employee sensing approaches, but it pays significant dividends.