How HR Can Drive Scenario Planning: 3 Opportunities
Scenario planning is often used as part of the strategic planning process. Traditionally, it falls within the ambit of business strategy and finance. Yet, with the changing nature of work, we believe HR needs to become more of an active player in the process, with a particular focus on skills-based workforce planning.
There is an opportunity for HR to use scenario planning to inform the redesign of HR models and practices, work with business leaders to create more robust people-inclusive scenarios, and design skills-based workforce talent strategies.
First of all, HR professionals need to have a solid understanding of scenario planning to play a key role in the process. That way, you’ll be able to contribute to the scenario planning process within the organization, as well as within the HR function itself.
The role of HR in scenario planning
– Opportunity 1: Including skills-based workforce planning in the process
– Opportunity 2: Identifying and implementing HR interventions
– Opportunity 3: Introducing scenario-based planning within HR itself
The role of HR in scenario planning
From an HR perspective, there has been limited involvement in the scenario planning process. At best, the HR team has contributed to creating scenarios and determining the appropriate impact on people-related matters.
This contribution is valuable, but we believe there are three opportunities for HR to further contribute towards scenario planning or use the principles of this process to enhance their value to the organization.
Opportunity 1: Including skills-based workforce planning in the process
Often, HR is relegated to an implementation partner once scenarios are already in place. However, we believe that Human Resources can bring significant value by contributing organizational design and workforce planning expertise to the initial scenario creation process.
Including these perspectives early on in the process allows for creating more realistic and robust scenarios. It also brings a more representative perspective across multiple divisions to the table.
Specifically, the focus should be on:
- Developing capability maps for each scenario
- Defining the skill requirements using a skills-based taxonomy, and
- Exploring potential talent and development strategies to mitigate skills gaps.
To demonstrate how HR can apply these principles in practice, we will use the example of a Grocery Retailer, as discussed in our previous article on what HR needs to know about scenario planning. This hypothetical Grocery Retailer with a large national footprint used scenario planning to understand how digital platforms and online shopping could impact their business.
Here is what HR could do:
1. Developing capability maps for each scenario
Capability maps depict the resources, skills, systems, and processes the organization would require to deliver. Capability maps divide the required capabilities into four categories as part of the scenario planning process:
|Create||New capabilities that will need to be created to respond to the scenario|
|Evolve||Current capabilities that the organization already has access to but will need to be evolved to meet the requirements of the scenario|
|Maintain||Current capabilities that will remain unaffected in the scenario|
|Redundant||Current capabilities that will no longer be relevant in the scenario|
For the Grocery Retailer example, we can create capability maps that highlight the key requirements to make each of the different scenarios viable. These capability maps will have to consider the various strategic choices and the current organizational capabilities already in place. It could look like this:
|Current Organizational Capabilities||Best Case Scenario Strategic Choices||Capability Map|
• Client Care
|• Reduction in new real estate investment and freeze current expansion projects, yet maintenance of current footprint remains a priority. Do not renew current leases and consolidate real estate assets
• Expand logistics capability and invest in additional skills and technologies. Also, invest in creating viable partnerships to complement the core delivery value chain
• Reframe pricing to make eCommerce options viable and balance revenue streams between in-store and delivery business
• Expand in-store products beyond current product categories to enhance in-store attraction
• Build and invest in consumer platforms for online delivery business to create a consistent customer experience between virtual and physical processes
|Create||Platform and UX
Customer delivery network
|Evolve||Buying and Procurement
Client Care and Satisfaction
Facilities and Real Estate
Research and Development
Once we’ve developed the capability maps, the next step is understanding the skill requirements associated with the capability map.
2. Defining the skill requirements using a skills-based taxonomy
Identifying the required skills aligned to the capability map is a valuable exercise for the organization to better understand their skill readiness level to implement this scenario.
Skills, in this context, refer to the knowledge and abilities required to execute the designed capabilities successfully. During this step, there is value in drawing upon skills-based taxonomies to inform workforce plans. A skills-based taxonomy, or skills taxonomy, refers to the naming and describing skills as part of a structured inventory related to a function, profession, or industry. Skills taxonomies enable a consistent understanding of skill requirements while also creating a shared understanding of how skills could be developed.
There are several types of skills taxonomies. It is good practice to ensure that the skills taxonomies you’re using:
- are relevant to your own business context,
- are frequently updated using a data-driven approach to align with the industry,
- and can sufficiently be measured within the organization as part of people development.
A skills taxonomy comprises various components that help clearly articulate the behaviors, activities, and actions related to the skill.
In our Grocery Retailer example, we use the best-case scenario capability map to identify the skill requirements for each capability and the level of skill proficiency (Beginner, Intermediate, Advanced) from our skills taxonomy.
For the Platform and UX capability, the following skills need to be in place:
|Skill Cluster: Platform and UX Capability|
|Skill identifier||Definition from taxonomy||Desired level|
|Web Design||Creation of engaging front user interfaces and visuals||Intermediate|
|Java||Designated programming language skills to build multiple applications||Advanced|
|Angular||Platform for building applications associated with HTML and TypeScript||Advanced|
Once we’ve identified and evaluated the skills, we can compare the desired skills with the current skills in the organization. A practical way of doing this is to conduct a skills gap analysis.
The skills gap analysis output should be utilized to inform the current level of proficiency within the organization and create a skills map highlighting the most significant discrepancies between desired and existing skills. Again, to ensure consistency, we need to utilize the same definitions of skills as obtained from the skills taxonomy as the basis of the measurement.
Simon Carvi, the founder of an upskilling platform Huneety, discussed using skills taxonomies in workforce and scenario planning with AIHR’s Dieter Veldsman. Check out the video interview below:
3. Identifying potential talent strategies to bridge these gaps
The last step entails identifying the relevant talent strategy to address these skills gaps as part of a broader workforce planning exercise.
The relevant talent strategy should be based on external data insights and a robust talent segmentation exercise that helps identify each talent strategy’s relevance. In practical terms, for each skills gap, there should be a decision on whether we believe the skills should be built, bought, or borrowed to bridge the gap.
For example, given the scarcity of Java skills in the market, our hypothetical Grocery Retailer could decide that for this talent segment, they will acquire these skills via graduate programs where they sponsor student studies to build a sustainable pipeline. In the shorter term, they will contract these skills via fixed-term contracts until the internal skills are sufficiently available.
Opportunity 2: Identifying and implementing HR interventions
The second opportunity we believe HR can capitalize on is to use the scenario planning process identified in this article to rethink current HR practices. HR can use this process to introduce new thinking to make the service offering more relevant and valuable. The same principles would apply, and HR must utilize data and evidence to create specific scenarios.
A practical example includes an HR team that redefined its benefit offering to employees to prepare for remote and hybrid work models. By creating various scenarios, they had already done the groundwork to pivot. Once remote and hybrid working scenarios became a reality, implemented a new offering. Other applications could include employer branding, performance, total rewards, and learning and development, to name a few.
Opportunity 3: Introducing scenario-based planning within HR itself
The last opportunity we see is for HR to apply the same principles utilized in scenario planning to identify what the HR function could look like based on the designated scenarios.
Using the strategic choices defined as part of the broader business process, HR has the opportunity to create their response aligned to each of the specified scenarios. This exercise at a high level could highlight, in a similar fashion, the capabilities that HR needs to build to adequately respond to each scenario as well as the relevant approach.
For example, suppose the Grocery Retailer enters the eCommerce market. In that case, the HR team will need to respond by establishing new digitally-focused recruitment areas, aligning with the reduction in store footprint, and building on-demand services for delivery employees.
If these business requirements change, it could call for HR to reconsider its model. If HR had engaged in their own scenario process, they would already have a thorough understanding of what is required to adapt and move to this future.
Over to you
HR can significantly contribute to scenario planning and add a much-needed OD and workforce perspective to build plausible scenario responses.
By leveraging these principles, HR can elevate its impact on the organization while also introducing scenario-based thinking into its own model and practices. By doing so, HR is helping the organization be ready for multiple futures and, at the same time, future-proofing their function.