Thirty years ago there were more skilled people than there were available jobs. Employee turnover was approximately 4%, most of which was involuntary or business economics driven.
Today the employment landscape is much different. Educated and skilled workers are in short supply and average turnover is more than 10%, with the best and brightest being the most mobile. Offshore outsourcing and contracting is now the business norm for all but the most proprietary and differentiated business processes.
Yet while the shortage of talent is a top concern for C-suite leaders, a recently released study by Harvard Business Review Analytic Services (HBR-AS) – Tackling Talent Strategically: Winning with Workforce Planning – has found that few have adapted their workforce planning practices to match the pace at which they must execute their business strategy.
According to the report, nearly three out of four respondents claim that poor workforce planning has caused talent shortfalls, which in turn led to the inability to meet business goals. One reason for this is because workforce planning has become a finance-driven process focused primarily on managing headcount within the cost budget. But these budgets created by finance have little to do with the actual talent needed to execute the business objectives.
In most organizations, workforce planning is an annual process run by finance and focused on budgeting. Often talent considerations are not taken into account and HR plays a limited role.
Yet workforce dynamics – such as what is going on with talent acquisition and turnover, succession planning, and the use of contingent labor; and how costs related to benefits, relocation and recruitment, and variable pay are changing – are critical to ensuring a company is well positioned to meet its business objectives.
HR, with its understanding of workforce dynamics, is uniquely positioned in the organization to ensure the workforce is aligned with the needs of the business – and at the optimal cost. Aided by the right workforce intelligence technology, HR will be able to shed light on:
- What is happening with talent acquisition and attrition and why
- How the workforce plan contributes to the success of the business plan
- How changes in the workforce will cause variance from the plan
- What positions/talent are required to meet business objectives
There is a tremendous opportunity for HR to play a leading, strategic role in workforce planning that goes beyond dollars and cents and focuses on getting real business done. It starts with HR becoming more data-driven – founded on a solid workforce intelligence solution – and increasing workforce planning collaboration between HR, finance and other business units. As the landscape continues to evolve, HR can use data to not only provide their company with a competitive edge and enable a new level of cost optimization, but also improve workforce engagement.