Workforce Planning and Segmentation

What Is Workforce Planning?

Workforce planning is a critical activity for any business. It involves making sure that the business has the right people in the right place at the right time and with the right skills. If your organization is undertaking workforce planning for the first time, then start with the question, "What is the best way to segment my organization's workforce?" Segmentation is a fundamental concept in business. For example, a marketer segments their organization's products and services or clients. Most organizations segment their workforce on a job level or hierarchical basis, but this approach is flawed.

Not All Roles Are Equal

When applying the concept of segmentation to the workforce, not every role (and hence the people occupying those roles) is equal! Not all employees possess knowledge and skills of equal strategic importance. The importance of various roles differs in their potential to add value. Therefore, a "one size fits all" approach to people management is a recipe for mediocrity. Such a lack of insight is likely to result in muddled, inconsistent and poor people-decisions. The consequences of this confused approach could include:

• a waste of resources (e.g., could include paying the wrong people too much and the right people too little)
• locking in low performers by over-delivering and pushing out high performers by under-delivering on expectations
• operational inefficiencies and poorer performance through having inexperienced people in important roles
• lack of labor flexibility
• increased turnover

Why the Traditional Hierarchical Segmentation Approach Is Flawed

Most organizations adopt a hierarchical model of segmenting their workforce (i.e., based on salary or job level or job evaluation considerations). This model serves as a basis for accountability/responsibility, decision-making and limits of authority, but it is not an appropriate model for developing tailored attraction, engagement and retention workforce strategies.

Furthermore, salary levels are more a reflection of market forces and internal equity. They may not necessarily reflect the true value of the importance of the role in terms of value creation, competitive advantage and their impact on business outcomes. A more effective model is based around skill value and uniqueness. Such a skills' based approach is explored in depth in our Workforce Segmentation and Reporting Pack.

One Size Doesn't Fit All

Employees now come in all shapes and sizes! The workforce has also become more diverse and mobile. Many organizations now use a variety of employment modes to allocate work, including the simultaneous use of internalized (e.g., permanents, casuals) and externalized employment (e.g., contractors, labor hire) modes. Having a workforce that is accessible, skilled, motivated and efficiently deployed will increasingly be a key differentiator of business performance and financial success.

Dealing with this workforce management challenge and complexity calls for a more sophisticated and differentiated approach to the management of people. There is a need to rethink workforce strategies and transform Human Resources policies accordingly. These are not simply Human Resources issues and challenges, but vital business strategic issues that executives must be involved in. The most critical function of Human Resources now is to focus sharply on the interface and alignment between workforce and business strategies.

Having Cake and Eating It Too?

A key challenge for organizations today is whether they can "have their cake and eat it". To put it more specifically, the question is how they can best:

• maximize the flexibility of their workforce (i.e., minimize risk), given the uncertainties of the current economic and business environment
• maximize the commitment and performance of all employees, and
• develop and retain valuable skills (particularly those in more critical roles and key talent areas)

How is your organization meeting this challenge? Do you have the tools and expertise you need to gain a strategic advantage over your competitors?