Strategic Workforce Planning 101
Strategic workforce planning—or the analytic, forecasting and planning process that connects and directs talent management activities to ensure that an organization has the right people in the right places at the right time and at the right price to execute its business strategy1—is often associated with larger corporations, but does have a place in the small to mid-size mold manufacturing facility.
One of the industry’s biggest challenges is attracting new talent and sustaining a workforce as many veteran moldmakers prepare to retire. Thus, this is the perfect time to implement a plan to make sure the shop has the proper employees in place to sustain the business. According to Dr. Mary Young, senior researcher at The Conference Board—a nonprofit business membership and research organization—the process of workforce planning can be applied to smaller companies. “In a large corporation, the CEO and/or CFO doesn’t have a personal relationship with every employee, so they have to use workforce data to project employee turnover, retire-ment, internal career moves, and other changes over time,” Young explains. “In a moldmaking shop, the person in charge of planning can look around the shop floor and decide how soon someone may retire, what this person’s circumstances are, etc., because there is most likely a personal relationship with the employees.”
According to Young, strategic work force planning is becoming increasingly important to organizations in response to a variety of factors:
- The aging workforce and approaching retirement wave
- Current and projected labor shortages
- Growing use of a contingent, flexible workforce
- The need to leverage human capital to enhance return
- Mergers and acquisitions
- Evolution of technology and tools
It may be a relief to the mold manufacturer to know that it is not necessary to hire anyone new or bring in an outside firm to help with strategic workforce planning—especially as shops begin to get busier. To begin, Young recommends companies look at some critical areas in the workplace (see Assessing Business Culture/Practices Sidebar). She then breaks the process down into four basic steps.
1. Project Future Workforce Demand
When it comes to assessing future workforce demands, there are a number of areas to examine. Factors like new technology and equipment can come into play. As machines work smarter, perhaps fewer employees can run more equipment. Are there any plans to build new facilities? If so, it will be necessary to staff these shops.
Another aspect to consider is not all jobs are equally critical to a company’s future. “For example, instead of just a
having a knee-jerk reaction that an employee is retiring and needs to be replaced immediately, step back and evaluate his job,” Young emphasizes. “Do you have to automatically replace someone when a job becomes vacant or do you look at how important is that vacancy relative to other vacancies. Do you need someone to do what that person did, or does that job need to be redefined?”
It also is important to look at what kinds of changes may occur in the business environment. According to Young, this could be changes in customer need, competitors—even the business strategy. “All of these factors will drive the demand for people,” she notes. “Once you have identified the changes in environment you can expect, then you can look at what the workforce implications of those changes are. Perhaps changes may need to be implemented in the workers’ skills or competencies, new jobs may have to be created, or jobs may need to be eliminated.”
2. Assess Future Supply
Once the future workforce demand is determined, future supply needs to be assessed. Walk the shop floor and assess the current talent. Perhaps an older employee has started a second family and has several children to put through college. Maybe someone else has been saving money his entire career and speaks of retiring to a lake house with dreams of fishing every day. This is all information that can help project when someone may be ready for retirement. “Business owners know more than they think about strategic workforce planning,” Young comments. “A lot of it is intuitive. It’s all about looking at your business strategy and the implications of that strategy on your workforce. Look five years ahead; and if that doesn’t seem feasible, scale it down. This is exactly what IBM does, except with a lot more bells and whistles. When a company is smaller, more informed projections can be made because one has better data.”
3. Define the Gap
Once this snapshot of future workforce demand and supply has been established, a gap analysis can be conducted. According to Young, this is simply looking at areas of the shop’s vulnerability when you look at the projected need versus projected supply, as detailed above. Often, there can be an oversupply in some areas and a deficit in others.
4. Develop a Plan
Finally, the last step—called talent strategy or human resource strategy—can be implemented to close the gap between demand and supply so the company’s business strategy can be executed. Examples of this are hiring, training, leadership development, rotational assignments, coaching, knowledge management, etc.
According to Young, strategic workforce planning should be done in conjunction with the annual business planning process (see Business Plan Sidebar). “It’s an important next step for either the owner, human resources or the people involved in finance,” she says. “The exercise is to map out the business plan for the next year, then look at two, three or five years down the road. Next, look at the workforce implications in terms of how many people are needed where they are needed, what they are needed for, and then go to that gap analysis—looking even further ahead and aligning it with the long-term business strategy.”
No matter the size of the mold shop, Young notes that strategic workforce planning is a must in today’s market. “Whether it’s a simple back-of-an-envelope calculation or a more elaborate spreadsheet analysis, basic workforce planning entails an analysis of supply and demand,” she affirms. “Whether conducted for the organization as a whole, individual businesses or smaller units, the
focus is typically on headcount. The end product is a short-term staffing plan to ensure an adequate supply of talent.”
1Mary Young, Strategic Workforce Planning: Forecasting Human Capital Needs to Execute Business Strategy, The Conference Board, Research Report R-1391-06-WG, 2006.
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