Let’s Make a Workforce Plan

Workforce planning, once a tool for only the most mature human resources organizations, is going mainstream — though not at the clip many say is needed to keep up with market forces.

Businesses of all sizes, from lean tech startups to massive global companies, are implementing workforce planning — the continual process of aligning workforce and organizational needs so a firm can meet its regulatory, service and production requirements — as a critical business process.

The aim, workforce planning and human resources experts say, is that the practice will help firms minimize human capital risk while driving long-term business strategies.

But broad progress on workforce planning remains tepid, although some companies have made notable strides.

“Workforce planning is emerging as a business trend, but it’s moving more slowly than we would like,” said Josh Bersin, principal and founder of human resources advisory and research firm Bersin by Deloitte. “The data shows there is a lot of excitement about workforce planning and a lot of tools to support it, but maturity is still quite low.”


Indeed, Deloitte’s 2015 “Global Human Capital Trends” report shows only 5 percent of HR professionals say their workforce planning process is “excellent,” while one-third say it’s “adequate” and nearly 60 percent call it “weak.”

Interest is workforce planning, meanwhile, has never been higher, said Matt Stevenson, principal of workforce analytics and planning for HR research firm Mercer. “We are starting to see more companies interested in doing strategic workforce planning than in the past,” Stevenson said.

Data Dump

The growing interest in workforce planning is being driven by a number of factors, including talent shortages, impending retirement of senior staff and growth goals that require new skills and larger workforces.

“People are the most important part of these plans, and workforce planning is helping them understand their workforce needs,” said Dave Weisbeck, chief strategy officer at Visier Inc., a Vancouver, British Columbia,-based workforce analytics firm.

Another key driver of this trend is access to easy-to-use analytics tools, Weisbeck said. Companies now have access to tools that can automate much of the analytics so they can make better decisions with special expertise in the technology.

Companies today can choose from stand-alone analytics tools from companies like Kronos Inc., Visier and Vestrics, or take advantage of the analytics capabilities offered in their human capital management system.

“Vendors are moving toward more strategic tools that help companies identify where they will find the right talent, at the right time, in the right place, at the right cost,” said Brian Kelly, president of Vestrics, a provider of cloud-based predictive analytics software.

Nevertheless, companies appear slow to take advantage of these features.

Most companies rank themselves low in terms of workforce analytics maturity, according to Visier’s 2014 “State of Workforce Analytics and Planning” survey, though 91 percent of them said their plan is to increase their capability in the next two years.

This lack of maturity is further reflected in their current choice of tools. Visier’s report shows 62 percent of the companies that do workforce planning said they still use spreadsheets.

Building Capability

Some companies are beginning to adopt — or build for themselves — workforce analytics tools.

For example, California energy utility Pacific Gas & Electric Co., or PG&E, created a team two years ago with the mission to develop a workforce-planning platform that would help the firm get ahead of trends that could disrupt the energy industry.

 “A lot of people can’t get their arms around workforce planning because there are so many variables,” said David Schutt, workforce planning and analytics practice leader at PG&E. Rather than start with an off-the-shelf tool when he was hired in 2013, Schutt and his team built their own custom platform.


‘Workforce planning is emerging as a business trend, but it’s moving more slowly than we would like.’

Josh Bersin, principal and founder of human resources advisory and research firm Bersin by Deloitte

They first designed the workforce planning process using the Human Capital Institute’s strategic workforce planning certification program as a model; then, they developed software around it.

The software features eight modules designed to walk business-unit leaders through a workforce forecasting process. They begin by segmenting all of the roles on their teams based on how critical they are to the unit. It also includes questions to help them estimate workforce demand over the next five years and to identify the internal and external factors that will affect that prediction.

Once the business leaders answer these questions, Schutt’s team uploads current workforce data and analyzes its attrition rates to forecast future workforce gaps. They then ask them to create a plan to close that gap.

“It may include a combination of recruiting, training and/or outsourcing,” Schutt said.

Creating a step-by-step platform has helped PG&E get over the complexity hurdle that prevents so many companies from moving forward with these initiatives.

“A lot of people understand the concepts behind workforce planning, but they struggle with implementation,” Schutt said. “Our goal was to build a model that could get it done.”

The next step is gathering enough data to start tracking metrics and analyzing how effectively the workforce predictions align with actual results. “It’s hard to track results until you have a few years of data under your belt,” Schutt said.

One of the toughest aspects of PG&E’s workforce planning project wasn’t building the software but getting people to use it.

“You’ll never get workforce planning done without developing key partnerships in the organization,” Schutt said.

PG&E has a corporate strategic planning group, which helped the analytics team integrate the discipline into the company’s strategy. “That was really helpful,” Schutt said, “because it made workforce planning part and parcel of the strategic planning process.”

Such companywide partnerships are vital to any successful workforce planning process, experts say, because HR needs to gather insight from across the organization to make valid decisions.

Start With Finance

The finance team is usually the best place to start, as most early workforce planning efforts are focused on financial goals.

The need to balance the annual budget against hiring and training goals is often the trigger for early workforce planning initiatives, Deloitte’s Bersin said. It can be an easy place to start because the metrics are relatively straightforward: What are our talent gaps? And what will it cost to fill them?

But to be effective, HR has to view the financial planning group as its partner. “The workforce planning process should be the sister to financial planning,” Bersin said. “HR should own the process, but they should work with the CFO — otherwise the finance team will take it over.”

For a long time, workforce planning was thought to be only useful for large enterprises with stable workforces and predictable growth strategies. The idea is that smaller companies are too fast-moving to benefit from a workforce planning process.

But according to Anne Bisagno, president of Xantrion Inc., a 50-employee IT services provider, that notion isn’t entirely accurate. “If you think you are too small for workforce planning, you just haven’t been burned yet,” she said.

Bisagno implemented a workforce planning process 10 years ago after a few bad hires resulted in a series of troubled projects that led to missed revenue goals, causing the company to cancel planned raises.

To avoid such problems, Bisagno’s team implemented a workforce planning process through which they review the business forecast for the year before creating a plan for hiring or developing the talent to fulfill it.

The plan doesn’t just include the number of people needed. It forecasts the required skills and experience to meet customers’ needs, the time and cost to hire people with those skills and risks related to filling those roles.

Bisagno uses a variety of tools in her workforce planning process, including a personality assessment and a workforce analytics program from Caliper Corp. and spreadsheets to map projected hiring demands.

While this planning process hasn’t helped Bisagno’s team completely avoid the current tech talent crisis, she said it has helped them identify the biggest risks months in advance.

For example, this year the workforce plan showed that the rising time and cost of recruiting tech talent, coupled with increased growth projections, meant her recruiting budget would be much higher than previous years.

To rein in costs, Bisagno hired and trained an in-house recruiter to do active candidate sourcing instead of paying an outsource provider for that service. She plans to hire another recruiter to further offset the time needed to meet hiring demands.

Continual Event

Along with partnerships, the most mature HR organizations have figured out that annual talent forecasting is not an exact science, as it’s rare that a company can predict with certainty the precise workforce needs of the business months in advance.

“That’s why workforce planning shouldn’t just happen once a year,” said Mercer’s Stevenson. “Workforce planning is built on the assumption of change and growth, and there are always going to be changes.”

Companies should therefore view their workforce plan as a moving target. That’s the approach Tim Sasek, manager of talent analytics, is taking at packaged foods company ConAgra Foods Inc.


For years, ConAgra approached workforce planning as a static endeavor. Once a year, HR would be asked to report hiring expectations for the next fiscal year — four months before that year began. “Trying to plan that far in advance was really difficult, because things in this industry change so rapidly,” Sasek said.

Two years ago, the company decided the redefine the process to include monthly reports on head count and labor costs, and variances from the forecast and the long-term implications of making adjustments.

“We realized going in that being an analytics-driven HR organization would be difficult for us,” Sasek said. To ease the transition, his team adopted a talent analytics tool, which automated much of the analytics process and generates metrics from the data.

“We don’t have to turn the data into insights anymore,” Sasek said. “Now it’s all about what questions to ask and what actions to take.”

As with most companies, the process began with simple financial forecasts. “Focus on a cost-based plan for the short term enabled us to use the same hierarchy that the finance team uses and to cross pollinate the data using a single system,” Sasek said. “This way we don’t have to argue over whose data is right.”

Sasek’s team will review past data, including attrition rates and cost-to-hire to forecast future costs. The process includes the opportunity cost of variances. If a department is likely to lose four people to attrition, it will create resources from those salaries not being paid that can be applied to the cost of recruiting theirreplacements.

Additionally, Sasek’s team revisits the plan monthly to identify whether forecasts have been accurate, where there are variances and how the plan should be adapted.

Getting Started

Companies like ConAgra, Xantrion and PG&E may be ahead of the workforce-planning curve, but industry trends suggest they won’t be alone for long.

The combination of better analytics tools with the increased understanding of how and why workforce planning benefits the business will drive rapid adoption of workforce planning in the near future.

In the meantime, experts offer this advice on how to get started:

  1. Set baseline measures. The first step is to get insight from all of the unit leaders about their current workforce and future needs to understand gaps, Visier’s Weisbeck said. “You have to know where you are before you can figure out how to get where you want to go.”
  2. Don’t think of it as an annual event. Workforce planning should be a monthly activity, similar to financial planning. “It’s a way to engage stakeholders and have discussions about what’s changing in the business,” Weisbeck said, “and what decisions need to be made in response.”
  3. Take baby steps. “You don’t have to do workforce planning for the whole company on day one,” Xantrion’s Bisagno said. Instead, start with a single critical role or business unit. That way you can get comfortable with the process and demonstrate the benefits to the business before rolling it out.
  4. Offer a scenario planning option. Workforce planning isn’t an exact science, PG&E’s Schutt said. To accommodate the uncertainty in his system, Schutt’s team gives managers a “pessimistic” and “optimistic” planning option. “As you get closer to the end of the year you can see whether you hit plan A, plan B or somewhere in between.”
  5. Take advantage of analytics tools. One of the biggest challenges with workforce planning is wrestling with the data. “If you automate the data part, you can spend 90 percent of your time making decisions and driving actions,” Mercer’s Stevenson said.  “That’s a huge efficiency gain.”
  6. Consider internal and external data. Is your turnover rate high compared to industry averages? Are you overpaying for labor? “Understanding what’s going on in your organization is only the first step,” Stevenson said. Looking at market data will help identify where you rank against competitors and what you need to do to improve.