The Time to Plan Is Now

Why is it so hard to be proactive - to actually plan for those workforce needs?

Maybe companies are so busy trying to survive the moment, they just don't have time. Research conducted by i4cp (2008a) found that only about a quarter of responding firms said they had formal plans for their future hiring needs, although the figure was 50% for large organizations.

Or perhaps planning just isn't the forte of a lot of U.S.-based companies. When Watson Wyatt polled organizations in 37 countries in late 2008, the results showed that more than eight out of 10 UK firms had workforce plans in place to help them deal with staffing issues resulting from economic fallout. In Ireland, the percentage was 85%. Even in Italy, which often doesn't fare well in employment issues, 82% of firms had contingency plans.

Meanwhile, businesses in the world's Asia-Pacific region - where India and China seem to have the globe's only thriving employment outlook anyway - are prepared for workforce issues, too. Eighty-four percent of firms in the region are active planners (Paton, 2008; Watson Wyatt, 2008a, 2008b).

U.S. organizations are less likely to be prepared. The same study found that only about 67% had a contingency plan for what to do if the economy continues to fail.

The Impact on Performance

"You don't just stumble onto a high-performing organization," says i4cp SVP of Research Jay Jamrog. "It takes planning, and this is an area where many organizations stink."

Jamrog argues that such planning can have a large impact on performance and success, and other sources agree. Hewitt Associates (2008) notes, "The costs of inaction - or inadequate action - can be detrimental." Delays in new product development, interference with market expansion, inability to leverage talent well, higher costs for contract employees and adverse effects on learning and development are just a few of the poor-planning pitfalls that can sabotage organizational productivity and growth.

Research from Aberdeen Group (2008) suggests that leaders in best-in-class companies are more likely than leaders in other companies to support workforce planning.

A Dearth of Integrated Data - and Other Barriers

A major stumbling block for workforce planning may well be the same monkey wrench that gets thrown in the works of talent management and other strategic initiatives: The data needed to do the job well is not available. Or, it might be available, but collecting and comparing it is time-, labor-, and cost-prohibitive. After all, siloed organizational and functional structures interfere with the meaningful flow of data. HR may have one piece of the puzzle, accounting another piece, and sales still another. Bits of the big picture emerge from these various functions, but there's no magic blender available to whip them into a meaningful whole.

There are, however, various applications that organizations can use for workforce planning. A 2008 study by i4cp found that, among firms using workforce planning technology, most of them (58%) use a vendor solution of some sort, a percentage that is even higher (73%) for companies with 10,000 or more employees. The i4cp study also indicates that it is enterprise resource planning (ERP) systems that are most widely used for workforce planning. That makes sense given the fact that workforce planning requires a great deal of cross-functional information to be effective. The study indicates that the most widely used vendors in this area are Oracle/PeopleSoft, SAP, Oracle, ADP, and Kronos.

But just having access to integrated data is not enough. There are other workforce planning pitfalls. Right now, for instance, the poor economy (which makes planning more important than ever) makes it much harder to afford new or greater investments in the proper technologies. Aberdeen's (2008) Strategies in Workforce Planning names additional barriers, such as lack of staff to manage the planning function, limited knowledge of the skills employees possess, and a lack of vision around the organization's future.

A Job with No End in Sight

The other aspect of workforce planning that can make it hard for organizations to enthusiastically embrace is that it's never done. "Successful workforce planning is an active and continuous process," notes the state government of North Carolina through its Office of State Personnel (2008). "On-going evaluation and plan adjustments are the keys to continuous improvement and to achieving your targeted goals. You must continue to monitor and refine approaches." Some organizations are just not prepared to invest in that kind of open-ended endeavor, one that must look to some executives like a project or expense that never ends.

The Down Economy: Time to Plan

Now may actually be one of the best times to engage in workforce planning. Planning consultant Pat Chadbourne says that slow times enable firms "to build up bench strength and identify the 'sleepers' out there," referring to employees with potential for development or with skills that might contribute to the organization's survival and success (Wells, 2008).

Moreover, Watson Wyatt's Laura Sejen, global director of strategic rewards, says that the weakening of the economy would likely compel companies to "begin to evaluate their staffing levels, pay programs and overall organizational structures to implement some of their contingency plans," adding that "companies that have contingency plans in place will be in a much better position to weather the storm and bounce back when the economy improves" (Watson Wyatt, 2008a).

So, for many organizations, the downturn may well represent an opportune time to invest in better workforce planning.

Documents used in the preparation of this TrendWatcher include the following:
  • Aberdeen Group. (2008, August). Strategies in workforce planning. Retrieved from www.aberdeen.com
  • Hewitt Associates. (2008). Spotlight on strategic workforce planning: Taking action today to meet tomorrow's needs. Retrieved from www.hewittassociates.com
  • Institute for Corporate Productivity. (2008a, July). Taking the pulse: Succession planning. Retrieved from www.i4cp.com
  • Institute for Corporate Productivity. (2008b). Human capital management technology survey overview. Retrieved from www.i4cp.com
  • North Carolina Office of State Personnel. (2008). Workforce planning guide. Retrieved from www.performancesolutions.nc.gov
  • Paton, N. (2008, October 20). A year of warnings, but heads are still in the sand. Retrieved from www.management-issues.com
  • Society for Human Resource Management. (2008, December). Key priorities for the HR profession through 2015: Are you ready?
  • Watson Wyatt. (2008a, September 1). Asian employers better prepared for downturn compared to the United States. Retrieved from www.watsonwyatt.com
  • Watson Wyatt. (2008b). Workforce planning in an economic downturn.
  • Wells, S. (2008, May). Managing a downturn. HR Magazine, 49-53.
  • What does a recession mean for human capital planning? (2008, March). HRfocus, 85(3), 1, 13-15.
Carol Morrison
Carol Morrison is a Senior Research Analyst and Associate Editor with the Institute for Corporate Productivity (i4cp), specializing in workforce well-being research.