The Human Capital Perfect Storm-The Necessity for Comprehensive Workforce Planning

The concept of workforce planning has been a core human resources capability for quite some time.  For the most part it is a mathematical or formulamatic exercise focused on predicted labor growth minus anticipated departures equals hiring needs.  Oftentimes there are bells and whistles in the process: but if we are being candid, the above for the most part constitutes a workforce plan.

 

This calculation was easier to do over the last four years during the recession, but as you will see the ability to create a meaningful workforce plan is becoming a very difficult challenge for human resource practitioners.

 

The complexity is derived from the reality that as we move further into the millennium we are encountering the human capital Perfect Storm for the following reasons:

  • The shifting demographics of both the domestic and global workforce;
  • The post-recession increase in enterprise growth opportunity;
  • The diminished and diminishing levels of employee commitment;
  • The intensified emphasis on globalization; and
  • The demand that the human resources function be “innovative” while controlling cost remains unabated.

 

Test Your Workforce Planning

 

Below are a set of numbers, all of which are relevant to human resources and workforce planning.

 

For those of you who like to read the last page of a book before the first page, I appreciate your forbearance, as I would encourage all of you to think about the number rather than skipping to the answer.

1)  5.0%

2)  55-65 years of age

3)  35-45 years of age

4)  -39%

5)  1,000 émigré’s

6)  600,000 vs. 75,000

7)  1 worker for every 3 retiree’s

8)  2 for the family and one for the country

 

A Commercial Break

 

As human resources practitioners are loath to take direction and in the hopes that no one skipped ahead, I thought it useful to insert a framework that helps reinforce the workforce planning concept.

 

 

The research, management consulting, and education firm,  NGenera, through its Research Driven Advisory services, has conducted extensive research on the phenomenon of shifting demographics and the implications for the emerging labor market.  This research led to the granting of the McKinsey Award for the Harvard Business Review article It Is Time to Retire Retirement and the recently published book Workforce Crisis.  

 

Based on this research,  NGenera holds the point of view (as illustrated in the above model) that workforce planning needs to be elevated from an activity or at best a sub-process to a core human resources process to insure enterprise competitive advantage.

 

Finally the Answers!

 

To reinforce the hypothesis that the workforce planning process is now essential, I would ask you to think about how many of the numbers, all of which have been in the HR or business press since April 2006, you actually knew.

 

1)  5.0% was the domestic unemployment rate in April.  To reinforce the emerging labor shortage as a concern, during the recession in the early 90’s the unemployment rate peaked at 9.7% vs. this recession at 6.4%.

2)  55-65 years of age is the fastest growing segment of the workforce.  This is at a time when most organizations perceive an incumbent at age 50 to be on the “back 9” of their career.  It is becoming commonplace for professionals to take early retirement to work full time at a different company or to start a business.

3)  35-45 years of age is the element of the workforce that is shrinking.  This presents challenges for retention, career progression, retirement benefits, and development to say nothing about hiring.

4)  -39% is the drop in computer science graduates since 2000.  This obviously has been influenced by the burst of the “tech bubble” but is still of concern.

5)  1,000 émigrés per month is the number of skilled workers who are leaving the United States, most to return to their home of origin.

6)  600,000 vs. 75,000 is the difference in near term engineering and computer science graduates between China/India and the US.

7)  1 worker for every 3 retirees is the prediction for Western Europe, which has a generous social benefit posture.

8)  2 for the family and 1 for the country is an advertisement on Australian TV that encourages larger families.   It is a manifestation that as a society there is concern about the shifting demographics.

 

These numbers should act as a not so gentle prod that it is now necessary to have a more generous interpretation of workforce planning and a plan!

 

 

The Elements of the “New” Workforce Plan

 

The core elements of the new workforce plan are focused on having the right person in the right job at the right time.

 

To do so it is necessary to expand the dimensions of the input to workforce plan creation to encompass at least the following elements.

  • A comprehensive enterprise demographic plan….develop scenarios based upon growth and penetration factors….complicate the current state exercise!
  • A breakdown of the population based on organization affiliation drivers vs. employee satisfaction – i.e., the same person who rates health care as good to excellent may not perceive it as a priority in terms of determinants of employee engagement.
  • Creation of as much flexibility in terms of employment arrangements-phase down, part-time, virtual, etc., without penalty in terms of career progression, benefits, etc.,.
  • Re-thought leadership development and career progression systems.  In China, 60 is young to be on the fast track.  In the US, with the fastest growing segment of the workforce being 55-65 and the second fastest being 65+, it is time to challenge the existing concepts of age.
  • Development of an employee brand that can be taken seriously and does not prompt comments about lack of sincerity.

 

The need for workforce planning is self-evident in the abstract.  The sense of urgency to expand the definition for planning and to actually create the approach should be equally self-evident.

 

 

Tom Casey is a Vice President and leader of the Human Capital practice with.  He can be contacted at tcasey@nGenera.com.

 

 

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