Workforce Planning in the 21st Century

Until the 1980s workforce planning was a common activity. But with the layoffs starting in 1989 planning disappeared for nearly a decade. Just as it would have restarted the dotcom mania struck. It wasn’t until about 2005 that management realized how important planning is, regardless of market fluctuations. Today, market volatility is so rampant that planning is a very high risk occupation. To make it even more complex human resource planning has to shift up to another level that we might call human capital or strategic workforce planning.

Strategic workforce planning is more than annual staffing planning and budget building. It must include all variables, inside and outside the organization, which may bear on future human capital capabilities.

Capability planning starts with skills segmentation. All people are important but all skills are not of equal importance. Treating the workforce as a monolith is both absurd and costly. Instead, divide it into four categories in terms of valued capabilities.

1. Mission Critical. A few capabilities are absolutely essential to ongoing success. What are they and do you currently have them in place? Do you have backups being developed?
2. Differentiating. Looking ahead, which capabilities separate your organization from the competition? These can be unique technical, financial, sales, service or other skills or knowledge that you have or must acquire as soon as possible.
3. Operational. Certain skills are necessary to keep the operation going. These are often administrative, maintenance or technical. Their absence would negatively impact efficiency, response time and increase operating costs.
4. Movable. As markets, customers and products change some skill become less important or even obsolete. American business ignored this in the 1980s and by the end of the decade found their companies bloated to the point of being noncompetitive. Three million people were put out on the street between 1989 and 1993.

This brings up succession planning. Historically, less than 25 of America’s large companies had effective succession plans. In recent years this has not dramatically improved. Yet, consider the consequence of an unplanned loss of mission critical or differentiating personnel. On the positive side, a survey of 1200 companies showed that when approximately 70 percent of key positions have a backup in place average revenue per employee rises significantly. People do make a difference.