Ageing workforce changing the way managers plan their strategy

Aug 10 2006 by Nic Paton Print This Article

The ageing workforce and approaching retirement of the "baby boom" generation is changing how companies plan and execute their business strategies, with a greater emphasis on workforce planning as a way of improving competitiveness and boosting productivity.

A study by U.S researcher The Conference Board has found more companies are spending more time and effort analysing and forecasting the talent they have or need to acquire in order to execute their business strategy.

This relatively new management process is being used increasingly to help control labour costs, assess talent needs and make informed business decisions such as where to open new facilities, it said.

It is also being used to assess whether it is more cost effective to add full-time employees or contractors and to assess human-capital needs and risks as part of overall enterprise risk management.

Strategic workforce planning, in essence, is aimed at helping companies make sure they have the right people in the right place at the right time and at the right price, said The Conference Board.

On top of this, companies are taking much more notice in their planning of current movement and projected labour shortages; globalisation, the growing use of contingent, flexible workers, the need to leverage human capital to enhance return, mergers and acquisitions and the evolution of workplace technology and tools.

"In many companies, traditional workforce planning was an onerous process that HR imposed on management," said Mary B Young, senior research associate at The Conference Board.

"Too often, the net result was a humongous report, blinding spreadsheets, and a dizzying amount of data that provided very little value to the business," she added.

But now companies were demanding more relevant and user friendly analysis, she argued.

The methodology of strategic workforce planning was therefore changing to become more responsive to business needs.

Some organisations were using a simple gap analysis (workforce demand versus supply) and adopting the logic and analytical tools of other corporate functions, such as finance, strategic planning, risk management, and marketing.

The crux of strategic workforce planning needed to be a conversation and inquiry process, rather than relying on spreadsheets crammed with tiny numbers, The Conference Board stressed.

To engage senior executives in workforce planning, the process needed to focus on understanding the strategic business plan and its broad implications for the company's workforce, it added.

Establishing consistent, organisation-wide data was a prerequisite to winning executives' confidence.

Other challenges cited by companies surveyed included making the process and tools simple and efficient, developing HR's capabilities and comfort level, establishing a common language to describe jobs and required competencies, integrating workforce planning with business and budget planning and driving the plan deep into the organisation.

"Strategic workforce planning enables the organisation to slice-and-dice its workforce data to discover critical issues, compare different groups, understand patterns and trends, home in on critical segments of the workforce such as mature workers and top performers, and customise its approach to managing different segments of its workforce," said Young.

"By enabling leaders to see across lines of business, workforce planning can leverage talent within a company.

"Ultimately, the same workforce planning database tools will enable employees to shop for new jobs, assess their own developmental needs, and prepare for career moves inside the organization," she added.