Why Strategic Workforce Planning Matters to the Small Business Owner

Here is what the numbers are telling us as to why strategic workforce planning is so important to you and your business:

  • Although 92% of companies have some level of strategic workforce planning, only 21% of companies take a strategic, long-term approach.
  • 75% of all hiring is to replace someone who quits.
  • According to the Harvard business Review, 93% of business leaders say the “wrong” people are holding them back.
  • Using a traditional resume and interview approach only has a 25% success rate to hire the right person

A time bomb awaits those who ignore factors of success versus failure.This is important to you because it is the difference between Success and Failure, it is the difference between working on your business and growing it or working in it and being a slave to it. It is your choice. If you choose to ignore it just be aware that this is in fact a time bomb that will have a devastating impact on your company.

Strategic Workforce Planning is a process that ensures that your business has the right people in the right jobs at the right time and doing the right things over the assets to achieve your expected and desirable results. This discipline helps organizations understand their current state, forecast talent gaps and take the necessary steps to close those gaps. It is a core business process that is often handled by the Human Resources Department, but it is important to the success of a business that business leaders need to approach it proactively and take ownership of it.

We have all heard the saying that “failing to plan is planning to fail.” The traditional strategic planning process often focuses heavily on large capital expenditures, technology, and marketing investments. But the traditional process focuses too little on the organization and the human resources necessary for sound execution.

It is almost as if the business takes for granted that it already has people with the necessary capabilities. The truth is that it can take several months, if not years, to get the right people in the right jobs, and this can seriously hinder the execution of even the most well thought out strategy. Our team got together to define a simple, straightforward strategic workforce management process for you to use as a starting point.

The steps in the strategic workforce planning process are:

  1. Establish where your business is going.
  2. Understand where the labor market is going.
  3. Understand your future talent demands.
  4. Assess your current talent inventory.
  5. Identify your talent gaps and strategies to close them.
  6. Implement and measure your strategies.

This article elaborates on these six steps and offers some advice for undertaking this important process.

1 – Establish where your business is going – Business strategy drives the organizational structure

The first step in the strategic workforce planning process is to have a clear understanding of your business strategy.

At the end of the day, your workforce is there to implement the strategy and achieve the expected business results.
Elements of your business strategy that will have the greatest impact on your talent strategy include:

1. 1.   Areas of your business that you want to grow
2. 2.   Areas of your business that you want to maintain but make more profitable
3. 3.   Areas of your business that you want to divest or exit

What does this changing strategy mean for the business?
This is a crucial question that must be understood at the executive level, the business unit level and the front-line operational level. Strategic change fails when the people implementing the change don’t know what they need to do differently in order to support the new strategy. These disconnects create confusion, conflict, and stress, and put even the best people in a position to fail. Make sure that you have thought through the operational details of your strategy, and that you have sufficient facts and the support necessary to make a good decision.

How far, how fast?

Know how far and how fast you can reasonably move. It takes time, money and thought to design and build technology infrastructure, production facilities and distribution capability. Similarly, it takes time to source, deploy and train talent. This is even more true when your workforce requires special skills or credentials, or when your jobs are located in a talent-poor or highly competitive region.
The bottom line is that you need to know your business strategy, and the impact of that strategy, before you can create a meaningful workforce plan.

2 – Understand where the labor market is going

Scanning the market helps you identify talent supply and limitations

Understanding the labor market for the jobs necessary to drive your strategy will help you better understand the length of time it will take to fill a job, the salary you should expect to pay for the job and potential challenges to filling the job. For example, maybe there is a need for a new school in a growing suburb, but the area is expensive and it is difficult to attract teachers. You need to take these factors into account as you build your STRATEGIC WORKFORCE PLANNING.

Common factors to consider include:

  1. Macroeconomic forecasts – A vibrant, growing economy usually increases demand for talent and raises the cost of employment. Conversely, a challenging economy often increases the supply and affordability of even the very best talent.
  2. Demographic trends – The age of the available workforce can be an indicator of the capability and availability of workers in an area. Therefore it may be desirable to locate a technology business near a college town as opposed to a retirement community.
  3. Regulatory changes – Consider the regulatory changes that have accompanied the implementation of the Affordable Care Act. People who work for larger organizations because of the health benefits may choose to enter business independently, and this changes the employment mix.
  4. Talent movement trends within your industry – Who’s moving, where are they moving and why? This can be driven by many external factors such as better job security, better pay or the opportunity to do the most interesting work.

3 – Identify your future talent demands

Business strategy drives organizational and job design

Once you have translated your business strategy into operational requirements, you must design the organization and the jobs necessary to implement the strategy. If you contrast this with your organization and jobs as they stand right now, you can identify jobs you will need to create, jobs you will need to phase out, and the optimal timing of your transition.

Focus on what really matters to avoid “paralysis by analysis”

As with most forecasting efforts, identifying talent demands can be part art and part science. We need to make certain assumptions when we develop our business strategies, and the further ahead we plan, the more uncertain those assumptions become. Rather than getting bogged down in the minutiae, we recommend focusing first on critical roles and critical employee segments.

Critical roles are those jobs that are mission critical to your future business strategy. If you don’t have a solid plan for filling these roles with capable people, the business strategy simply won’t come to life. For example, a new cardiac ward in a hospital needs cardiologists and acute care nurses in order to function.

Critical employee segments can include mature workers, visible minorities, members of Gen Y, ethnic groups, veterans, aboriginals, and others. They can be strategically important to certain organizations that need to fulfill requirements for certain types of government contracts or grants, or that want to meet the needs of key customer groups. For example, a retail organization wants to position itself in areas with a growing Latino population. Having Latino employees is necessary to accomplish this aspect of the strategy.

In our next post we will look at the issues of:

  1. Assessing your current talent inventory
  2. How to identify your talent gaps and close them, and
  3. Implementing and measuring the process to ensure success.

Cavalry Management Consultants is here to help you with your strategic workforce planning process.

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Call Strategic Workforce Planning Expert Don Kolojek today at 440-420-2583

Don is an experienced human resource consultants who has a proven track record of helping businesses hire the right people, and get them doing the right thing. Don's passion lies in helping organizations increase productivity and decrease defects and costs.

You can reach Don directly at 440-240-2583.

2 Comments

  • Kevin Keeney says:

    “This is even more true when your workforce requires special skills or credentials, or when your jobs are located in a talent-poor or highly competitive region.
    The bottom line is that you need to know your business strategy, and the impact of that strategy, before you can create a meaningful workforce plan.”

    I can identify to this statement very well considering my own industry is very specialized, and very hard to find qualified talent with the skills and credentials necessary to perform what my cloud services business does. I’m going to check out the scorecard to see what that is about, but thank you, Don, for the great article!

  • Liz Hersh says:

    Great article, Don. I hadn’t thought to consider trends in the labor market. So much to plan for!!

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