Workforce planning during bleak times

A public sector view

Dilys Robinson

Institute for Employment Studies

IESisanindependent,apolitical,internationalcentreofresearchandconsultancy inHRissues.Itworkscloselywithemployersinallsectors,government departments,agencies,professionalbodiesandassociations.IESisafocusof knowledgeandpracticalexperienceinemploymentandtrainingpolicy,the operationoflabourmarkets,andHRplanninganddevelopment.IESisanotfor profitorganisation.

InstituteforEmploymentStudies SovereignHouse ChurchStreet BrightonBN11UJ UK Telephone:+44(0)1273763400 Email:askies@employmentstudies.co.uk Website:www.employmentstudies.co.uk Copyright2010InstituteforEmploymentStudies

Workforce Planning during bleak times

Deepbudgetcutsarenowhittingthepublicsector,andwillhaveabigimpacton centralandlocalgovernmentandontheNHSinthecomingyears.Withinthe privatesectorthereissomeevidenceofeconomicrecovery,butexperiencefrom previousrecessionssuggeststhatprivatesectoremployerswillbeunlikelyto recruittopreviouslevelsuntilthereismuchgreatercertaintyabouttheeconomy. Theprivatesectorisunlikely,therefore,topickupthosewhoarebeingshedby publicsectororganisations.Itwillbealongtimebeforethelabourmarketreturnsto buoyancy.Thechallengeforthepublicsectorovertheshortandmediumtermwill betoplanworkforcereductionstogetnotonlythebestpossibleoutcomeforservice delivery,butalsoasustainableworkforcetocarrytheorganisationintothefuture. Fromoneperspective,arecessionmightsuggestthatthereisnolongeraneedfor workforceplanning.Suddenly,thereisnowarfortalent.Goodpeoplewith scarceskillsareinplentifulsupply,thepublicsectorisnolongerseeingits traineesdeparttobetterpaidjobsoncequalified,andanyorganisationthathas retaineditsgraduateprogrammehasseenapplicationsskyrocket;theycantake theirpickfromthemostable.However,therecessionalsobringsproblemsthat requirethoughtfulworkforceplanningattention.Labourturnover,alreadylowin muchofthepublicsectorbeforethecurrentroundofbudgetpressures,islikelyto cometoanearstandstill;fewpeoplewillriskajobmoveunlessabsolutely necessaryorextremelysafe.Inaddition,olderworkersmaychoosetostayput ratherthanretireat60or65.Peoplestayingputalwayspresentsdifficulties:no injectionoffreshblood,promotionblockagesleadingtofrustrationand disenchantment,andlessscopeforrestructuring. Anotherissueisthatfinancialandheadcountconstraintswillimpactontheability torecruit;essentiallythismeansthatmorewillhavetobedonewithfewerpeople. MaximisingtheuseoftheexistingworkforcehasallsortsofimplicationsforHR training,performancemanagement,relocations,selectiveretentioninitiativesin someareasandselectiveredundanciesinothers.andoneofthemostimportant istoensurethatworkforceplansareinplacefordifferentemployeegroups, functions,andareasofwork.Thisisparticularlyessentialforemployeesworking inessentialpriorityservices.

What is workforce planning, why do it, and when is it needed?

Conceptually,workforceplanningissimple.Itisallaboutarrivingatexistingand futuredemandfordifferenttypesofemployee,matchingthistothecurrent

Institute for Employment Studies

workforceandtolikelyfuturesupply,puttingthetwotogetherandassessingthe impactontraining,recruitmentandretentionplans.Asimple,oftenquoted definition,isthatworkforceplanninginvolvesensuringthattherearetheright numberofpeople,withtherightskills,intherightplace,attherighttime.In practice,itinvolvesalotofdifferentactivities:understandingthestrategicdirection oftheorganisation,findingoutwhatisgoingonintheorganisation,talkingto people,understandingtheexistingworkforceandthelabourmarket,manipulating data,presentinganalysesandtheirimplicationsclearlytotheorganisation,and helpingtotranslateworkforceplansandforecastsintoactionplans. Howeverbecauseworkforceplanningisallaboutpeople,andbecauseittakesa longertermlook(insomeorganisations,sixmonthsislongterm,whilstinothersit mightbetenyearsormore),actuallydoingworkforceplanninginpracticeismuch harderthanitsounds.Prioritiesshift,managersgetdistractedbyshorttermcrises, politicianschangedirection,andtheeconomydoesunexpectedthings.Atarecent IESevent,participantsquotedallsortsofobstaclesthatgetinthewayofeffective workforceplanning:lackofstrategicdirection,poorqualitydata,ordatanotin therightformat,gettingworkforceplanningontheseniormanagementagenda, choosingwheretoputworkforceplanningenergies,gettingtheorganisationto thinklongterm,andextractingsensibledemandforecastsfrommanagers.

A practical approach to workforce planning

Tomakeanimpact,itisbestnottodissipateworkforceplanningenergiestoo widely.Insteadoftryingtoproduceacomprehensiveplanforthewhole organisation,focusonkeyactivitiesandkeyemployeegroups.Thisdoesnot meanignoringtherest,asitisessentialthatworkforceplannershaveagood understandingoftheworkforceasawhole,inordertoidentifyhotspotsand futuresourcesofsupply.However,helpingtheorganisationtostaffeffectivelyits areasofhighestrisk(orgreatestpain)isprobablythemostefficientwayofusing workforceplanningresources. IESseightstepapproachtoworkforceplanning,takenfromour2008publication1 isdescribedinoutlineintheboxbelow.

RobinsonD,HirshW(2008),WorkforcePlanningGuide,IESReport451

Institute for Employment Studies

Eight steps to workforce planning

1. Understanding the business and its direction: particularly strategic plans, priority areas, restructuring, and any planned major changes such as closures, new services, changed delivery models etc. 2. Analysing the workforce: planning for the future is difficult without a thorough understanding of the existing workforce, including entry points, career progression routes, employee turnover rates, and exit points. 3. Identifying skills gaps: assessing skills and capabilities of the existing workforce, especially in key areas, and how these might change in the future. 4. Assessing future workforce demand: which means understanding any existing shortfalls/surpluses, and any planned changes for the future. This is where the co-operation of managers will often be needed. 5. Recruitment and retention: the translation of demand forecasts into recruitment, training and development, and retention plans. 6. Understanding labour markets and planning for succession: this involves getting a really good grip on workforce supply, both now and in the future. 7. Training and development plans: the workforce plan needs to inform these, especially in areas where organisations grow their own and training is lengthy and expensive. 8. Developing workforce plans: putting everything together and then revisiting plans at intervals.

Understanding demand
Understandingworkforcedemandisnotoriouslydifficult.Commonproblems includeassumingthefuturewillbethesameasthepast;failingtothinkthrough theimplicationsofchange,bothinternalandintheexternalenvironment;andnot factoringinproductivityimprovement.Theendresultisthatworkforceforecasts oftenlookremarkablysimilartotheexistingpictureeventhoughmanagers,if pressed,oftenadmitthattheirexistingworkforceprofileisfarfromideal. Demandsetting,ifdoneatall,tendstouseavarietyofmethods:financiallyderived (whatthebudgetcanafford,orlabourunitcosts),ratios(offulltimeequivalents requiredforacertainlevelofactivity),trendanalysis(followthedirectionofthe trend),benchmarking(seewhatothersaredoing),andprofessionaljudgementare probablythemostcommon.Sophisticatedorganisationsmaytakesthingsfurther andusebusinessprocessmodelling,orevenscenarioplanning.

Institute for Employment Studies

Inpractice,demandsettingwillneedtoinvolvemanagers,whohaveabetter understandingoftheirworkforceandareaofactivitythanacentrallybased workforceplanner.However,involvingmanagershasitsownchallenges.There areallsortsofreasonswhymanagersmaybereluctanttocommitthemselvesto workforceforecastsincludingfearoflosingpartofthebudget,difficultiesin thinkinglongerterm,beingtoobusywithdaytodayactivities,andreluctanceto admitthattheyneedhelpwithadifficulttask.ItisoftenusefultoinvolveHR businesspartnersindiscussionswithmanagers,andtotrysomemindloosening exercises,suchasaSWOTanalysis,beforegettingintothenittygrittyofworkforce numbers.Inpractice,twoorthreemeetingswithamanger,andperhapshis/her directreports,maybenecessarybeforeaworkforceforecastisarrivedat.Thesort ofquestionstoaskare: Doworkforceproblemsinhibitourabilitytomeetorganisationalgoals? WhatitemscomeuprepeatedlyinappraisalsorPDPsasweaknessesor developmentneeds? Arethereroleswecantdo,orjobswecantfill?Whatdointernalcandidates lack? Aretherebetterwaysofworking?Whatmightbeinhibitingthese? Whatarethepressuresforchangethatweareexperiencing?Whatimpactdo thesehave? Wherewilltheorganisationbechanginginnature?Whataretheworkforce implications? Arethereexternalchanges(eglegislation)whichwillaffecttheworkwedoand howwedoit?Whichemployeegroupswillbeaffected?

Understanding supply
Beforespendingtoomuchtimeconsideringexternalsourcesofsupply,itisworth rememberingtheobvious,butoftenneglectedpoint:yourfuturesupply(atleastfor thenextfewyears)is,forthemostpart,alreadywithyou.Asignificantproportion ofyourcurrentworkforcewillstillbewithyouinfiveyearsmaybeeveninten yearsifyourworkforceisverystable.Thismeansthatestablishingareallygood understandingoftheexistingworkforceiscrucial.Inparticular,lookat: ageandlengthofserviceprofiles employeeturnoverrates(oftencalledwastagerates) resourcingpatterns,suchaskeypointsofentryandexit,careerstructures,and thebalancebetweenexternalhiresandinternalpromotion.

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Thiscanquicklyidentifyareaswhereaproblemisbuilding(perhapsanageing cohortofexpertsthatmightbevulnerabletomassdeparture)andalsopossible opportunities(suchasnewformsofservicedeliverythatmightoffercareer developmentopportunities).Whenthinkingaboutnewentrants(egtoreplace leavers),itisimportanttoconsiderwhetherthelabourmarketislocal,regional, nationaloreveninternational,andwhetherthereareskillsshortagesorsurpluses inthelabourmarket.Thisinformationcaninformexternalrecruitmentversus growyourowndecisions. Manysourcesofinformationaboutthelabourmarketarereadilyavailable.The OfficeforNationalStatistics(www.statistics.gov.uk)hasinformationabout employment/unemploymentratesandtheUKsdemography,whilethe DepartmentforEducation(www.education.gov.uk/researchandstatistics)has informationabouteducationalattainmentandeducationproviders.Council websitesoftencontainawealthofinformationaboutthelocalpopulationand businesses,andJobcentrePluscanhelpwithlocalvacanciesandemployment/ unemploymentrates.SectorSkillsCouncilsarehelpfulforparticularemployee groups.

Institute for Employment Studies