Human Resources: "Right" Sizing

Nov. 10, 2006
Strategic workforce planning promises better cost control and better business decisions.

With its world headquarters close to the Finger Lakes, high-tech manufacturer Corning Inc. seems pointed in the right direction.

Based in the upstate New York town of the same name, Corning is among a growing number of companies turning to strategic workforce planning, a relatively new management process that analyzes and forecasts the talent companies need to execute their business strategies. The process aims at helping companies put the right people in the right places at the right time at the right prices, according to the Conference Board, a New York-based business research group. The process can help companies control labor costs, assess talent needs and make better business decisions, from locating new facilities to calculating the cost effectiveness of adding to full-time payrolls, notes the Conference Board.

In addition to Corning, manufacturers employing strategic workforce planning include Dow Chemical Co., IBM Corp. and Hewlett Packard Co.

At Corning the process in its current form has been in place for three years, is dubbed human capital planning and, among other things, figured prominently in a decision to source locally in China.

"We use human capital planning to look at our workforce as a portfolio," relates Matthew Brush, director of human capital planning at Corning. In practice, "if you do [the] portfolio process right," it means investing less in employees in one segment of the business while freeing up resources to add workers or deepen their skills in a part of the business that promises to produce greater strategic impact, explains Brush. "There are not infinite resources, [and] that's very hard for companies to acknowledge, especially when it comes to people."

Strategic workforce planning is not a new name for some old practice, emphasizes Mary B. Young, a senior researcher at the Conference Board. Strategic workforce planning, for example, assumes the business environment is constantly changing. It includes, she notes, asking such questions as, "What if the price of oil drops?" or "What if the Democrats win the election?" What's more, "you can look at the differences between different operating businesses, or different locations or even under different managers," she says.

In contrast, workforce planning of the past has often focused simply on headcount and produced a static projection of the number of people likely to be needed sometime in the future, Young says. "Too often, the net result was a humongous report, blinding spreadsheets and a dizzying amount of data that provided very little value to the business."

Strategic workforce planning is new enough that Young doesn't have a reliable count of companies using it. Clearly, however, maintaining consistency of data is one of the biggest challenges companies face in implementing strategic workforce planning. Everyone has to be counting the same thing in the same way, whether that's employee demographics, costs, revenues or customer satisfaction. "The numbers need to be consistent to be credible and reliable," she says. "As soon as business leaders discover [a number is] not right, they dismiss the whole [exercise]."

How To Implement Strategic Workforce Planning

  1. Build on previous successes, such as succession planning, or try a pilot program in a specific business unit.
  2. Seek functional partners within the company, for example, HR collaborating with finance or IT.
  3. Establish definitive and consistent data.
  4. Create a common language to describe competencies, jobs and other workforce data.
  5. Regularly update skills and competency data.
  6. Adapt workforce planning to different needs and dynamics.
  7. Make the process and tools simple and user-friendly.
  8. Develop HR's capabilities to make it an effective partner.
  9. Focus on the most critical, high-impact jobs and talent.
  10. Use strategic workforce planning to leverage internal talent.
  11. Integrate strategic workforce planning with business planning.
  12. Hold business units accountable.

Source: The Conference Board.

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