Workforce Planning that Really is Strategic

Alec Levenson

Alexis Fink

Most workforce planning efforts are fairly short sighted and narrow, and could more accurately be called 12 month hiring plans. Strategic workforce planning promises to deliver greater value by using a longer time horizon and a talent supply chain approach. The problem, however, is that even then it’s still too narrowly focused on the low hanging fruit of butts in seats. In order for HR to really raise its game, workforce planning has to be much more focused on addressing holistically the systemic talent issues that impede business performance.

Workforce planning traditionally has meant annual forecasts for how many people are needed in a role, with the forecasts happening less than six months before the end of the fiscal year as part of the budget-setting process. Strategic workforce planning focuses farther out on how the business’ needs will evolve over two or more years, to anticipate and solve talent gaps that are too hard to address in six months or less. For example, strategic workforce planning often includes identifying roles staffed with a large number of older people who are on the verge of retirement, and making plans in advance to ensure a stable talent pipeline of people to succeed them. Another common example is identifying key areas where the business plans to grow and calculating how to meet the talent demands and avoid shortages.

That type of analytics is essential to avoid big gaps in the number of people needed to do the work. But that only focuses on who does the work, not how it gets done. Most of the people-related issues that arise from the work design cannot be easily addressed through adjusting headcount. The “how” is essential for truly strategic workforce planning because it opens the door to reconsidering the barriers to strategy execution that are rooted in how roles and responsibilities are designed, and the competency and recruiting profiles used to evaluate how talent contributes to organizational success.

There is a great opportunity for heads of talent analytics and their teams to play an important role positioning their organizations for success through this work. But it requires a different orientation than thinking about the problem as workforce planning, one which looks beyond the job to the system of work in which the job is embedded. This includes taking into consideration business objectives such as capacity utilization, cost minimization and more. For people working in talent analytics, the issue is not much different from the business coming to you and asking for help on how to optimize productivity and employee engagement. The challenge is learning how to do so by looking at the bigger picture of the system of work, and incorporating perspectives such as job design and organization design which go beyond the data typically available for talent analytics.

“Strategic” workforce planning today. Strategic workforce planning focuses on existing or new roles, matching up labor forecasts with analysis of the supply of people to fill those roles. For example, consider account managers at a bank. Strategic workforce planning would look at where the banks’ services are growing the most, taking into account which lines of business and geographies are expected to have the greatest increase in demand. It would then plan on hiring more account managers where the forecasted gap is highest.

Yet forecasting the number of account managers and where they need to grow the fastest does not address any root causes of performance that come from how the work is designed. The ultimate goal is not necessarily avoiding vacancies in the account manager role. Instead, the bigger picture is how the bank delivers its products and services in a cost effective way. When talent analytics leaders take as given the way roles are currently defined, they perpetuate inefficiencies in the work design that can lead to hiring people who are over- or underqualified for the work, and overpaying for skills which aren’t needed or underpaying for ones that are.  Any future looking strategy must take into account things like redesigning the work to increase efficiency and increasing opportunity for automation as a disrupter of work processes.

In the bank’s case, the ultimate objectives are customer service, selling more high-margin products and services, and getting customers to use the bank for a greater proportion of their banking needs. Customer service is important because it keeps people from leaving, lowering the acquisition cost of the bank’s assets. Higher-margin products and services increase the bank’s profitability. Getting customers to use the bank for a greater share of their banking needs increases retention and lowers acquisition costs.

Hiring more and better account managers may help the bank improve its performance along those dimensions. Account managers definitely contribute to customer service, higher-margin sales, and cross-selling. Yet they are only one contributor to improved business performance. Improving those business metrics often requires other changes in the work system that complement what account managers do.

Take customer service, for example. Account managers are important contributors to the customer experience, but they alone do not define it. The phone system the customer first encounters when calling in, the employees who interact with the customer both in person and over the phone, and other employees in the branch aside from the account managers also contribute to customer service. Just focusing on the account managers alone through traditional workforce planning almost always won’t be enough to meet the bank’s objectives for customer service. You have to consider the broader ways the organizational system creates the customer experience.

Apply job analysis for better workforce planning. The fundamental problem for talent analytics leaders is that “strategic” workforce planning focuses only on the number of people needed to fill anticipated vacancies. Taking a longer horizon look and considering the talent supply chain are useful innovations over traditional workforce planning, and those significant advances in the field have increased its relevance and contribution in recent years. Yet they are still too narrowly focused on the job as it currently exists. A much better approach diagnoses the job design to find the bottlenecks to performance, and uses that analysis to design more holistic solutions.

Consider the example of health care. Doctors are the most expensive, highest-skilled labor in healthcare delivery and the main bottlenecks to improved, cost-effective performance. Having doctors spend more time on patient care is key to improving health outcomes in many settings, yet typically it is too expensive to just add more doctors. That’s why the health care system centuries ago created the role of nurse, a less expensive counterpart to doctors. For the longest time, nurses were the main workforce planning solution used to solve the problem of increasing the number of patients treated per hour each doctor works.

However, in more recent decades nursing shortages have pushed the health care industry to innovate further, increasing the use of roles such as physician assistant to free up both doctors and nurses to treat more patients per hour. The insight of creating the role of physician assistant never came from a traditional workforce planning approach. It also never would have emerged from what passes for the current state of the art in “strategic” workforce planning, which focuses on existing roles. Instead, the analysis that led to creating the physician assistant role required a holistic diagnosis of the health care delivery system and the constraints on both doctors’ and nurses’ time.

The key is expanding the analysis from focusing on vacancies and hours worked in one job (role) to the set of roles that make up a complete work process. So rather than focus solely on the physicians and how many hours they work, the diagnosis hones in on the number of patients served per hour the physician works. The key question is how to optimize the number of patients treated per hour by the entire system of roles, not just the single role of physician. If the total labor cost per patient served can be lowered, then the total number of patients treated per hour can be expanded more cost effectively than by simply adding additional physician hours.

The larger point here is that the focus needs to start with the business objectives. In a healthcare system, for example, the strategic objectives are treating patients effectively and efficiently to minimize costs and optimize health outcomes. Workforce planning focuses only on jobs, not the other parts of the system that need to be optimized. In a hospital, capacity utilization (keeping the beds full) is a critical objective so that the fixed costs of running the building can be spread over as many patients per day as possible. In a medical practice, the same principle applies: keep the exam rooms full and minimize the amount of time needed to treat each patient by the doctors.

The key for talent analytics leaders who want to improve the strategic relevance of workforce planning is to take the perspective of a forward thinking business partner. This means going beyond looking at the existing jobs and engaging in the “what if” questions around how best to optimize the work design. In the medical practice case, taking this approach broadens the scope of the analysis to include questions such as “how can we free up doctors to spend more time on effective patient care per hour?” Viewed this way, the solutions can come from many different approaches, not all of which involve traditional health care jobs. For example, electronic medical records cut down on the amount of time doctors have to spend reading paper records on patient care, while increasing the amount of information doctors can access while treating each patient; this happens through aggregation of medical records that previously were located in each doctor’s office and not instantaneously accessible by other physicians treating the same patient. Advocating for electronic medical records would never emerge from today’s strategic workforce planning approaches, and yet any conversations about implementing electronic medical records should include talent analytics representatives because of the new jobs needed to make it happen.

Take a holistic view of the team, not just one job. The main message is that workforce planning has to go beyond the traditional focus on jobs and instead focus on teams. And rather than think about the work one role at a time, talent analytics leaders need to consider specific tasks and bottlenecks to performance that are rooted in parts of the job.

Going back to our health care example, even today with the team approach of doctor, nurse and physician assistant, physician time is still the bottleneck to improved performance in many cases. If we could just free up doctors to spend more time with patients, efficiencies and patient outcomes could be improved further. The roles of nurse and physician assistant evolved as ways to take parts of the health care delivery system out of doctors’ hands and give them to others with different skillsets but who nonetheless can perform a lot of skilled tasks without needing a doctor in the room at the same time. The question is what additional changes or innovations can free up doctors further.

The most recent answer is medical scribes. These are people who accompany doctors as they do their patient visits, transcribing the details of the patient’s condition and the doctor’s instructions for care. Using scribes frees up doctors from the very time consuming task of writing up the notes from the patient visit.

The job of medical scribe would never have been identified by today’s strategic workforce planning approaches. Instead, a systems diagnostic of the work and the challenge of doctors’ time being very expensive led health care organizations to realize there was another way to cheaply solve the bottleneck of physician time. The solution lay in adding lower-priced skilled labor that frees up the doctor to spend more time on what only they can uniquely do: diagnose and treat patients. The job of physician assistant, like nurse, is a traditional extender role which requires medical training and decision making. The scribe role, in contrast, broadens the focus to include non-clinical roles. Medical scribes need to be skilled enough to write down accurately what they hear, but they do not have to be trained and certified as medical providers to add value. Medical scribe roles are a lot like court reporter roles: court reporters have to know enough about the legal process to record everything accurately, yet they are not as highly skilled on legal issues as lawyers or even law associates.

The team-based diagnostic approach takes into account how the work is performed, and considers reconfiguring tasks across jobs to make more robust talent systems.  These more robust systems can increase flexibility and efficiency by identifying the optimal way for the organization as a whole to function.  Take for example the different tasks that have to be performed in supply chain operations. Optimizing the supply chain includes determining which tasks and roles can be outsourced when there are suppliers that have expertise that complements or even exceeds what the organization can do on its own. Yet the decision on outsourcing is not a simple one of the cost of services and availability of people to provide them. Even more critical is how those services fit into the creation and preservation of the company’s competitive advantage.

Evolution in organizational size, complexity, product offerings, competitive threats, and technology combine to create a dynamic reality for organizations.  The perfect solution two years ago may be suboptimal today.  Something impractical two years ago may offer significant competitive advantage today.  For example, in the near future, the role of scribe may further evolve to be completed by a virtual digital assistant, as voice recognition capability improves.  Workforce needs are not static. To succeed, organizations must continually adapt and adjust their workforce planning.