Agile Workforce Planning: a Guide for HR

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Agile Workforce Planning: a Guide for HR

Agile workforce planning is a continuous process that allows organizations to be ready for the disruptive future. In this article, we take a look at agile workforce planning. What is it, what type of organization is it suitable for, what is the agile workforce planning methodology, and how to get started? Let’s dive in!

What is agile workforce planning
What type of organization is agile workforce planning best suited for?
The agile workforce planning methodology
Who should drive an agile workforce planning initiative?
What to measure
How to get started

This article is a round-up of a great conversation on agile workforce planning I had with Adam Gibson, Strategic Workforce Planning Leader at EY, during a recent episode of AIHR Live. If you’d rather watch the video, you can find the entire video here:

What is agile workforce planning?

Agile workforce planning is an ongoing approach to creating the right capability within your workforce to align with and meet the business objectives. It helps organizations react to disruptions. Let’s break this definition down.

Adam: Let’s start with what workforce planning is first. Workforce planning simply is a way of aligning people to your business outcomes, the desired outcomes for your organization.

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If we assume that around 60-70 plus percent of your total operating cost is going to be related to people, then why wouldn’t you align it? That’s why this is an important point around what workforce planning is as a concept.

The ‘right workforce’

The idea of ‘the right workforce’ for an organization is central to workforce planning. What is that exactly, the right workforce? To explain this, you can take a look at the image below. I like to call it ‘the seven rights of workforce planning.’

When I talk about creating the right workforce, it’s actually all of these seven right together. Right at the center of that is this idea of the right capability. More traditional thinkers have talked about this in terms of ‘the right people at the right place’. I talk about this as an idea of capability which is a term that we’ve almost forgotten.

I’ll get back to the capability concept in a bit.

Zooming in on ‘the right workforce’

How do these elements connect to each other and create the concept of the right capability?

  • The right size – How many people do we need, what are the numbers that we need?
  • The right location – Are they in the right place geographically, are they in the right place structurally? Because if you know that, you might be able to do something. But you’re in the wrong part of the organization, you can’t do these things and then it’s not a capability.
  • The right time – Are you there at the point of time that you’re needed and for the duration you needed?
  • The right cost – Financial costs but also the right opportunity cost and the right total cost. This comes into play as we start to think more around the purpose of organizations and organizations being more than the value simply brought to stakeholders.
    We also start to think about the external costs of the choices that we make. If we close a factory that might be the lifeblood of a local community, what’s the cost of that? These are all things that we need to be considering.
  • The right risk – What are the choices that you’re making and how do those balance over time? Organizations so often forget this.
  • The right shape – When we start talking about spans and layers, and ratios and managers to staff, this is where we start thinking about the diverse nature of organizations. What level of gender parity are we trying to achieve, for example? What’s the target we’re going for, what’s our ambition? How do we want to increase the representation of groups who’ve been traditionally underrepresented in the workforce? All of those elements are really key components of that right shape.

So when we use the term ‘right workforce’, all of these elements are the things that come together to construct it.

Six components of capability

Now let’s go back to this idea of the right capability that is in the center of ‘the right workforce’.

What is the right capability?

The right capability holds the six aspects you see in the image below. Some of them will be familiar to people and for others, this might just be a new way of thinking about capability.

Six Components of Capability

Let’s address each of these capability components.

  • Skills are the things that we can do, they are things that we have practiced over time. They allow us to create an outcome, an effect.
  • Knowledge, on the other hand, is the things that we have immediately accessible in our heads. They are the things that we know.
  • Accreditation is often an aspect of both of these because in order for us to be able to do things in certain organizations we need to be accredited. Most organizations will have some sort of base checking of references; if you’re in safety-critical professions you will need to be accredited. If you are an accountant, you had to pass examinations, and so on. That’s the idea of accreditation.
  • Mindset is the way that we think and feel about circumstances.
  • Physiology is both our ability to think but also our physical aspect. If you think about sports, for example, physiology is a really important part of having a capability.
  • Environment. Both mindset and physiology can be heavily impacted by the environment.

Within HR, we’ve often forgotten about the impact of the environment and placed almost everything on the individual. We think about capability and so we look at an HR system and what that might tell us about the components of the individual. Those are the bits that we consider to be a capability but actually, so much of this is based on your environment.

What we are currently seeing as a trend is knowledge becoming increasingly less important as there’s greater democratization of information.

Let me share an example of this. I like to think that I’m okay at using Excel but I Google my Excel formulas. 20 years back, people using Excel would need to know the actual formulas. Now, the environment that I’m in allows me to Google it which means I don’t need the knowledge.

We’re seeing that across a number of areas, the ability to access it through the environment, through data, reduces the necessity of knowledge.

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But the environment you’re in equally impacts so many other things. It can both enhance and damage your ability to put anything to bed. If you’ve got a bad boss, for example, this might really impact your mindset. It means that you’re not able to be successful even though you should be able to do certain things on paper.

The opposite is true too. In a great environment with a great boss and great co-workers, people can achieve far more than they ever imagined was possible.

All of these elements come together to create this idea of capability, which is the core element of the right workforce.

What type of organization is agile workforce planning best suited for?

Adam: I designed the concept deliberately to be applicable across all organizations. One of the things that I found from existing literature and guides was that they tended to be formed around particular industries, particular types of organizations that wouldn’t necessarily be upfront. You’d see, however, that by the way that they guided you through the process, it would very much be a ‘fill in this spreadsheet, fill in this document, collect this data, look at it this way and now do this with it’ kind of method. It meant that certain organizations that didn’t do those things were lacking relevance there.

Instead, I wanted something that could be applied not only across all organizations but equally across all the different planning horizons, the different timelines that you would use to think about the workforce.

So, I’ve deliberately created something where the principles and the foundations and the way we think about the work and workforce is more important than something that is a tight process that is probably only fit for a couple of different organizations.

Public sector/private sector, big/small, no matter what industry, this is something that is designed for you.

The Agile Workforce Planning Methodology

Adam: Traditionally, organizations have largely seen workforce planning as almost a linear process. The clue was in the title ‘workforce planning’, so the end result was often viewed to be the plan.

What I found from my experience is that what’s important is creating the workforce. I wanted to think differently about what this was. So the end state wasn’t a plan, the plan was simply a stepping stone to create the workforce.

Within organizations, workforce planning challenges that organizations were having were often driven by the fact that this was often being done as a single, one-off event.

What would happen was that the activity would take place, a relatively sound workforce plan would be created, the organization would be disrupted. As soon as the organization was disrupted, that plan was useless, it was no longer fit for purpose.

I deliberately created a methodology with a six-stage approach that is designed as a continuous activity. Rather than this being a one-off HR activity, it is an ongoing approach that not only drives HR but can also drive the entire organization.

Agile workforce planning approach

  1. We start by baselining the organization and understanding which stakeholders need to be involved with this. We need to understand the strategy, what the organization is trying to do and why.
    There is no need to start with the entire organization. Start with something small, like the area of the organization which is going to generate the greatest value if you can get this right. Look for the critical elements of the workforce. This is why we start with baselining the organization.
  2. Then we’re looking at the supply side, we are looking at the supply of the workforce. What do we expect the workforce to look like over time, how is it going to change, what’s the turnover, what’s the internal movement like? We look at that over our planning horizon.
  3. Then we do the same in terms of demand. I’m talking about the derived demand for people. We look at what the organization is trying to do and how that translates into a different need for people.
    Is it going to increase, is it going to decrease, and within that, to what extent is it going to change? Are we looking for a different shape, for example, or are we looking for different capabilities? What is going to be the impact of changing customer requirements, new trends, increased regulation, different levels of innovation, etc. 
  4. With all that, we’ve now got a forecast of supply over time and that’s where we do the gap analysis. When we do this, we’ve often thought about it as almost linear – what’s the gap between what we need now and what we have now or what’s the gap between what we have now or what we’ll need in the future? What we need to recognize though is that it’s almost like a cone of uncertainty over time.
  5. Up next is the action plan. This is about which stakeholder we need to engage and how, optimizing demand, addressing supply gaps, and building flexibility.
  6. The last stage is when we deliver. The workforce plan is executed, delivery is monitored, and assumptions are revisited.
Agile Workforce Planning Approach
(You can find the process steps at 16:04 in the video.)

Who should drive an agile workforce planning initiative?

Adam: I’ve seen it done in different ways in different organizations. What matters here is who is able to drive the outcome.

If you go back to the cycle we shared in the image in the previous section of this article, you’ll see that in the action planning stage have several elements. The first thing that we always do is optimize demand.

For far too long, what’s happened is that this business decision was made, and then people would look to HR to say ‘find me the people, talent manage our way out of this problem.’ This isn’t always the right thing to do.

Where I always start is let’s first look at how we optimize the demand. By that, I’m looking at things like organizational design – which may sit within HR – but I’m also looking at things like process improvement, transformation activities, the operating model, etc.

I’m looking at a far greater degree at the systems that drive the need for people. If we can optimize those, then when we find a talent management solution, we can ensure that we are really putting them against the highest value.

So we look at optimizing demand and we look at where we can automate. It’s only at that point that we start looking at talent management.

If you think about those two things together and HR is in a place to do those things, then HR can own it. But that isn’t the case for all organizations. Often, the best place for this to be owned is at a senior leader level. They are going to be the only people who are really able to make those decisions about first optimizing demand before we start looking at talent management.

I’d love to say HR is the place for this to be owned but it’s going to depend on the organization and that’s what makes it agile.

Measuring the results of agile workforce planning 

Adam: Measurement is important. We can only do things based on what we’re able to measure but the measurement is going to be relative. That’s why it’s important that we’re measuring in terms of what we are trying to achieve.

Fundamentally, we are trying to build the right workforce to achieve the business outcomes. Your first line of measuring this is going to be: “Are we achieving the outcomes that we expected from this?”

One way to do this is by measuring the variance from the plan. If we create a plan that we are certain is going to deliver the right outcomes, then what we’re trying to do in terms of measuring the success of workforce planning is understanding the deviation from that.

Now, the future is uncertain, that’s why I use terms like forecast rather than ‘predict’. This is very much around what we might expect is going to be a future state; things are going to change and not only are we measuring the variance to understand the issues within our plan and the way that we’re delivering – which means we’re not achieving the outcomes – but what does that connect to? Because it’s going to connect into the assumptions that we’ve made in the plan.

We make a number of assumptions when we do things, that’s the nature of what we do. There are risks associated with those assumptions.

However, as long as we are recognizing the risks of those assumptions, and being mindful of the things that will indicate whether those assumptions are right or wrong, we’re able to keep recalibrating the plan. That’s what we’re trying to do in this agile way.

We continue to iterate the plan based on the things that change around us. That’s why measurement of what we do is so important. It allows us to know what we are doing, what impact we’re making, but more importantly, it allows us to recalibrate the plan to ensure that we are continuing to go in the right direction.

Agile workforce planning: How to get started

Adam: The most important part of any of this is to start with why. Why does the organization exist, why is it trying to do the things that it is trying to do? Unless we understand that, we are unable to support the business; this is about how we create the right workforce to achieve those desired business outcomes.

The second one is really about how we use people. That’s the people who we’re going to be engaging with and who will be supporting us. Doing this stakeholder engagement is critical. Firstly, that’s why we have to understand the why of the organization and what we’re trying to do, but it’s important then that we engage with stakeholders throughout this process. This isn’t just your senior stakeholders, it’s your wider and closer-knit group.

Taking an agile mindset means thinking about this as a team of teams. It’s not about HR doing this in a darkened room and coming up with the answer at all stages. It’s important that we engage the right people to get to the right answers. We need to draw in as many people as we can who are able to give input and really do that when it comes to action planning.

The great thing about action planning is that you will get answers from people who not only live and breathe this so it can probably give you better solutions than you might have by yourself but equally, you’ve now got people who’ve got skin in the game who want to execute the plan on your behalf which is so vital.

The final one is almost just to build on that: start small with that key area of the workforce that you want to begin with and then just go through the activity at your own pace. Once you go through the cycle and you start to do the thinking you need to do, gaining momentum on that cycle becomes easier. You can start to iterate faster because you’ve already done thinking about that group.

Once you’ve done the thinking about one area, you can incrementally add other elements of the workforce on and so you’ve got something that continues to move at a fast pace, almost exponentially increasing the level of value that it creates.

A final word

When implementing agile workforce planning, don’t be afraid to start small. Don’t think that just because you’re starting small and this is taking a while that it’s always going to be that that long. The process will become quicker and it will gain its own momentum: a snowball effect but in a positive way.

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