According to a recent PwC global survey, finding and securing the workforce of tomorrow is one of the biggest concerns facing CEOs today. It seems that rapidly shifting demographics, different population growth rates around the world, rampant urbanisation, and rising labour costs are contributing to unprecedented challenges in workforce planning. The stark reality is that half of CEOs surveyed wanted to hire more people in 2014, but nearly two-thirds were worried about finding the right skills.
Workforce planning can no longer be left to chance and, smart CFOs know that they need to gain visibility into HR policies and their effectiveness in driving strategic alignment (right skills in the right place, at the right time) as well as growth and profitability. Yet aligning the workforce to corporate goals has proved surprisingly elusive, hindered by in part by outdated metrics, fractured HR systems, ineffective technology and processes. So how can CFOs overcome the workforce planning ‘blind spot’ and ensure that there is an explicit link between HR policy and business performance?
Workforce planning is becoming exceedingly complicated, especially on an international basis. In the European Union, for example, different national systems of professional certification, as well as language and cultural barriers, make skills hard to measure, even within national borders. HR professionals complain that relevant data is very difficult to access because it is housed in multiple systems or not captured at all. In addition, HR functions often focus on ‘lagging’ indicators, such as revenue per FTE (full time equivalent), new hires and leavers, or attrition rate, rather than forward looking metrics such as staff satisfaction, members of staff exceeding performance expectations, and linking these to retention rates.
The strategic importance of human capital management is causing businesses to rethink the way that they do workforce planning. In a nutshell, responsibility for talent management can no longer be hived off to the HR function and this has profound implications for the way that businesses approach workforce planning. It will come as no surprise to CFOs that a more holistic approach such as this requires investment in suitable analytical tools and technology to enable the appropriate level of cross-functional collaboration and performance reporting. After all, the principles are similar to other areas of business planning requiring high levels of user participation from across the business.
Forward thinking companies are discovering that they need a technical approach which combines adaptable modelling capabilities so that businesses can react to change and that workforce plans can be recalculated from the ground up in seconds. One such company I worked with were experiencing enquiries from within the business along the lines of ‘at what grade levels are the employees in Switzerland?’ or ‘do we have the right employee pyramid so people can move up in the organisation?’, alongside requests to analyse complex scenarios related to different business units or regions.
They found that they couldn’t answer any of these types of questions within a day – and it could, in fact, become a weeklong exercise. Now that they’ve implemented a technology solution, the customer can run these types of enquiries within the space of an hour – a huge saving in time.
Workforce planning will become one of the key battlegrounds in organisational effectiveness and competitiveness. With skilled labour and interactive labour in short supply in most geographies around the world, CEOs recognise that inappropriate HR policies and performance could seriously dent an organisation’s long-term prospects for success. It’s an issue that weighs heavily on the minds of the entire ‘C’ suite, including the CFO.