A Practical Approach to Workforce Planning

Copyright © 2008. Korn/Ferry International and Korn/Ferry

International Futurestep, Inc. All Rights Reserved.

A Practical Approach to Workforce PlanningERE Webinar July 30, 2008

Copyright © 2008. Korn/Ferry International and Korn/Ferry International

Futurestep, Inc. All Rights Reserved.

2

ERE 2008What is Workforce Planning ?

Workforce Planning is the process that Workforce Planning is the process that provides strategic direction to talent provides strategic direction to talent management activities to ensure an management activities to ensure an

organization has the right people in the organization has the right people in the right place at the right time and at the right place at the right time and at the

right price to execute its business right price to execute its business strategystrategy



3

ERE 2008A Methodology for WFP

Define Objective

Project Future Workforce

Demand

EvaluateSupply

Define theGaps

Gap Management

Quantitative analysis of

critical employee data

elements

Headcount data

Financial dataOverhead

LaborTraining

Marketing dataCritical roles for the go

to market strategy

Risk Mgmt/BudgetingScenario modeling

Qualitative analysis to

determine key needs

Headcount needs

Financial needsOverhead

LaborTraining

Marketing needsCritical roles for the go

to market strategy

Risk Mgmt/Budgeting needs

Scenario modeling

Gather the data from the

business plan or business strategy to

determine the direction of the workforce plan

Define and prioritize the

gaps between the qualitative demand and

the quantitative supply

Develop an action plan to close the gap

BuildDevelopment for

internal talent movement

BuyAcquire talent

externally

BorrowAugment headcount

with contract or temporary labor

BouncePlanned attrition



4

ERE 2008Types of WFP

Business PlanBusiness Plan& Headcount& Headcount

DataData

Traditional WFPTraditional WFP

Situational WFPSituational WFP


DataData

DataDataRelationshipsRelationships


DataData


Business Business StrategyStrategy

Workforce AnalyticsWorkforce Analytics

Scenario ModelingScenario Modeling

Strategic Strategic Workforce PlanningWorkforce Planning

Incr

ease

d le

vels

of W

FP

com

plex

ityIn

crea

sed

leve

ls o

f WF

P c

ompl

exity

Wor

kfor

ce S

egm

enta

tion

Wor

kfor

ce S

egm

enta

tion

Increased data points for analysisIncreased data points for analysis

BasicBasic

IntermediateIntermediate

AdvancedAdvanced



5

ERE 2008Basic: Traditional WFP


DataData

Traditional WFPTraditional WFP

The most commonly used workforce planning process i s a traditionThe most commonly used workforce planning process i s a tradition al al approach focused primarily on headcount trending. Through the aapproach focused primarily on headcount trending. Through the a nalysis of nalysis of current vs. forecasted headcount, a company is able to determinecurrent vs. forecasted headcount, a company is able to determine itit ’’s talent s talent

gaps against the budgeted headcount in the business plangaps against the budgeted headcount in the business plan

BasicBasic



6

ERE 2008Traditional Case Study – A Large Bank

• Situation– In 2005 A large bank shifted it’s organizational structure from a centralized to a decentralized

organization. During this transition, the focus was two fold:» Separation of the key bank divisions (Home Loans, Retail, Commercial, Credit Card, etc. and it’s support

functions (HR, Finance, Legal, etc.)» Create a stronger synergy among the business functions and HR.

– These synergies included correlating goals, strategic partnerships (seat at the table) and establishing a method to track and measure the Organizations workforce.

• Approach– The HR team focused on creating a workforce plan that would provide the business executives

a “snap” shot of data which included:» Performance on business goals, headcount data, critical positions, Business and Recruiting/HR workforce

strategies, Recruiting/HR initiatives, a recruiting current state action plan and the overall recruiting annual plan.

– The result was a high level annual strategic workforce plan which would be reviewed with each business executive to ensure alignment with subsequent monthly workforce planning meetings to discuss current state, current initiatives and gaps.

• Outcomes– Workforce planning was quickly adopted and seen by the division executives as a critical tool

for identifying workforce gaps and driving the business to partner with HR/Recruiting. – The division executives felt the monthly meetings were a necessity and utilized the time to

discuss strategies on eliminating gaps and future initiatives.– The division executives not only utilized this tool for reporting up, but also to drive business in

the areas of workforce management.



7

ERE 2008Traditional WFP - Dashboard

2718%28597%269262259Total

-62%65100%717171Credit Manager

188%125100%108108105Market Risk Analyst

-23%2088%252225Trader

155%7594%656158Portfolio Manager

Gross hires to meet

annual plan

Forecasted annual attrition

%

End of year forecasted headcount

% of current month forecast

End of Current month forecasted headcount plan

1-2008 Headcount as of

1/1/2008

Head count as of

12/31/2007Business Unit A

A Large Bank - WFP

• Headcount as of 12/31/07 indicates the actual headc ount at the end of the prior year.

• Headcount as of 1/1/08 indicates actual headcount a t a specific point in time.

• End of current month forecasted headcount plan 1-20 08 indicates the demand headcount at month end.

• Percent of current month forecast is the actual vs. demand %. Calculation = (actual point in time hea dcount) / (end of current month forecasted headcount plan)

• End of year forecasted headcount indicates the dema nd headcount at year end.

• Forecasted attrition is determined by evaluating pr ior year (s) attrition trends.

• Gross number of hires to meet plan = (end of year f orecast) – (current headcount at point in time) = va riance. Next, multiply the variance by the attrition % and add that number to the variance



8

ERE 2008A Large Bank WFP - Action Plan

•Review plan with the business owners to receive validation of data and establish a timeline of deliverables and spend approval.•Contact the ERP team to initiate the Employee Referral Program•Initiate discussions with Korn/Ferry and HMG for vendor and contract placement.•Obtain data for cold calling from Hoovers, Linked-In, etc.

�Offer $500.00 Employee Referral bonus to employee’s who refer Portfolio Manager and Market Risk Analyst and are hired.�Review associations affiliated with the two position, e.g. NAMB (National Assoc of Mortgage Bankers), NAMRM (National Assoc of Market Risk Mgrs).

NEXT STEPS POTENTIAL TALENT SOURCES

Action Plan:Build:•Credit Manager function possess competencies similar to the Market Risk Analyst. •Review past 6mos to 1 year evaluations to determine potential readiness of existing employee mobility into open positions.•Trader function possess competencies similar to the Portfolio Manager.•Review past 6mos to 1 year evaluations to determine potential readiness of existing employee mobility into open positions.

Buy: •Target competitors by cold calling for Portfolio Manager candidate generation.•Initiate search agreement with Korn/Ferry for Portfolio Manager position•Advertise on Bloomberg and efinancialcareers.com for Market Risk Analyst candidates.

Borrow:•Engage HMG group for contract Market Risk Analysts

Bounce:•Develop planned attrition action for Credit Managers and Traders if internal mobility and unplanned attrition is not actionable.

Results and ForecastOVERVIEW

21231921

Monthly Headcount

Trend**

29272931Gross Hires to meet plan

Monthly Gap

TrendJan. 08Dec. 07Nov. 07A Large

Bank WFP

**Year End Headcount (-) actual point in time



9

ERE 2008Basic: Situational WFP


DataData

Situational WFPSituational WFP

Situational workforce planning is a basic model tha t is similar Situational workforce planning is a basic model tha t is similar to the to the Traditional workforce planning in that it analyzes the variancesTraditional workforce planning in that it analyzes the variances between between actual vs. needed headcount. However, this model i s used as a oactual vs. needed headcount. However, this model i s used as a o nene--time time

approach to address a specific business challenge ( e.g. merging approach to address a specific business challenge ( e.g. merging companies, relocating an office)companies, relocating an office)

BasicBasic



10

ERE 2008Situational Case Study – An Automotive Company

• Situation– An automotive company made the decision to relocate their U.S. Corporate

Headquarters based on a new strategy which puts a premium on connecting more with customers, and fostering a culture of fresh ideas and bold thinking

– The new CEO of the U.S. Operations built a new, leaner organization structure of 400 FTE’s which was a 30% reduction from the prior corporate headquarters in the old location. 150 employees considered the ‘best and the brightest’ from the old location were invited to relocate to the new location. 250 positions needed to be hired externally to complete the new organization structure

• Approach– Conducted a comprehensive workforce analysis to determine how and when to hire

the new talent that would foster the new culture– Conducted Leader Insight meetings with each department head to:

» Determine the talent mix (how many internals invited to go, how many externals needed)» Identify & prioritize the critical talent to determine the priority of the hiring plan» Determine separation dates for exiting employees so training overlaps could be in place

• Outcome– A prioritization schedule was built based on the findings from the Leader Insight

meetings. This in turn became the hiring plan to acquire the 250 position needed to open the new Corporate Headquarters six months later



11

ERE 2008Situational - Prioritization Schedule

1/1 1/7 1/14 1/21 1/28 2/4 2/11 2/18 2/25 3/3 3/10 3/17 3/24 3/31 4/7 4/14 1/4 4/28PR Product Communications ManagerYes 2 mo 2 1 1Media & Degital Operations Manager No 1 mo 1 1Public Relations SpecialistYes 1 mo 10 5 5Media Relations SpecialistYes 1 mo 7 3 4Manager, Sales IT & Process ManagerYes 1 mo 1 1Forecast & Order ManagerYes 2 mo 1 1 5Technical Curriculum Designer Yes 4 mo 15Curriculum Designer TBD 2 mo 10 5 5Manager, Corporate Sales Yes 2 mo 1 1Vehicle Order SpecialistYes 3 mo 30 10 5Dealer Operations AnalystYes 1 mo 15 5 5 5A/B Product SpecialistYes 1 mo 13Project M IT SpecialistYes 1 mo 12 12Technical Strategy ManagerYes 1 mo 1 1Electronics Specialist Yes 1 mo 14 7 7GM, Product Platform C/D/SUV/MPVYes 3 mo 12 6GM, Product Strategy & ProcessYes 1 mo 16 4 4 4Pricing Manager TBD 1 mo 3 3IT Process Specialist (MBV)Yes 3 mo 5 5Administative AssistantTBD none 3 3Distance Learning Yes 1 mo 17 5 5 5 2Sales Instructional Designer Yes 2 mo 5After Sales Instructional DesignerYes 2 mo 22 10Academy Admin LMCYes 1 mo 13 10 3Administration/CoordinationYes none 1

Total 230 0 0 1 2 5 9 3 30 5 27 5 25 5 9 16 5 14 3

JD ready?Trg

w/exiting EE

# neededVWGoAJanuary February March April

Network Mgmt

Product Marketing

Marketing

Operations



12

ERE 2008Intermediate: Workforce Analytics


DataData

Data Data RelationshipsRelationships

Workforce AnalyticsWorkforce Analytics

Workforce Analytics moves the Workforce Planning mo del to an Workforce Analytics moves the Workforce Planning mo del to an intermediate level by engaging in heavier quantitat ive data analintermediate level by engaging in heavier quantitat ive data anal ysis. This ysis. This

approach goes beyond headcount analysis to example relationshipsapproach goes beyond headcount analysis to example relationshipsbetween key data variables such as; employee demog raphics, costbetween key data variables such as; employee demog raphics, cost , ,

turnover, performance, etc.turnover, performance, etc.




13

ERE 2008Ordinary Metrics & Measures with WFP Lens

• Turnover– Typically we look at Voluntary vs. Involuntary

– Focus is on reducing voluntary

• Performance Ranking– Typically 5 point rating scale

– Often a forced distribution

• By looking at turnover data by performance category, you can create a Retention Index– Comparing the average turnover rate to the rate of turnover within a

specific category



14

ERE 2008Retention Index

-50%5%8%-10%0%Retention Index

75%20%17%35%25%25%Turnover %

300200600450751625Total Turnover

4001000350013003006500# Employees

Does not

meetNeeds to ImproveMeetsExceeds

Far ExceedsAllPerformance Rank

Performance Category

Talent Leak

Formula: Ave Turnover % – Ave Turnover % in Demographic = Retention Index



15

ERE 2008Retention Index

-13%-30%5%10%17%Retention Index

38%55%20%15%8%25%Turnover %

150550700200251625Total Turnover

4001000350013003006500# Employees

Less than 1 year

1-4 years

5-10 years

11-15 years

More than 15AllTenure

Employee Tenure

Talent Leak

Formula: Ave Turnover % – Ave Turnover % in Demographic = Retention Index



16

ERE 2008Intermediate: Scenario Modeling


DataData


Scenario ModelingScenario Modeling

Scenario Modeling also utilizes a heavier quantitat ive approach Scenario Modeling also utilizes a heavier quantitat ive approach found in found in Workforce analytics. However, the difference here is in layerinWorkforce analytics. However, the difference here is in layerin g in g in qualitative qualitative ‘‘what ifwhat if ’’ situations that test data relationships and make situations that test data relationships and make

projections that are more accurate and fineprojections that are more accurate and fine --tuned.tuned.




17

ERE 2008Scenario Modeling Example

CurrentWorkforce Plan

Industry Trends

Political Developments

Labor Changes

New Business Strategies

FutureWorkforce Plan Impact


DataData


DataData

‘‘What ifWhat if ’’situations that situations that

could impact the could impact the workforce plan workforce plan



18

ERE 2008

What if?What if?

ACME Tire and Rubber Plant implemented a VERP (Voluntary Early Retirement Program) which enabled all employees age 55 to retire early.

Retirement Scenario



19

ERE 2008

What if?What if?

Chime North Phone company divested it’s Home Phone and Mobile Phone Call Center Departments.

Company Divestiture Scenario



20

ERE 2008Advanced: Strategic Workforce Planning


DataData


Business Business StrategyStrategy

Strategic Strategic Workforce PlanningWorkforce Planning

Strategic Workforce Planning is the most advanced a pproach becauStrategic Workforce Planning is the most advanced a pproach becau se it is se it is more integrated into the organizationmore integrated into the organization ’’s business and financial planning s business and financial planning

processes. This enables organizations to have a ta lent plan thaprocesses. This enables organizations to have a ta lent plan tha t is aligned t is aligned with the business strategy, thus guiding more infor med business with the business strategy, thus guiding more infor med business decisions.decisions.

AdvancedAdvanced



21

ERE 2008Strategic WFP Case Study – A Large Petroleum Company• Situation

– The Procurement Supply Chain division of a large petroleum company is going through a transformation to upgrade it’s talent. They are looking to increase the skill-sets within their talent such as: negotiating, influencing, team management and ability to better analyze contracts

– Through an upgrade in talent, the division hopes to achieve a 1 billion dollar savings in procurement contracts annually

• Approach– Engage in resource planning efforts and build immediate action plans to transform their workforce.

Additionally, leverage technology to enable sophisticated mapping & modeling to analyze, and sustain the workforce over the long-term

» Conducting Leader Insight meetings with each strategic performance unit (SPU) to determine their talent demand & supply issues

» Defining & Stabilizing their data structures in a centralized database given the disparate systems throughout the SPU’s

» Analyzing talent data elements (supply) against SPU talent needs (demand) to build action plans to close the gaps

• Outcome (thus far)– Division efforts were stream-lined into one Resource Planning approach to gather information

timely and methodically in order to produce talent action plans to transform the business unit by the end of 2008.



22

ERE 2008Leader Insight Meeting example

SPU Leader Insight MeetingWhat are your greatest workforce risks/concerns?

What are your expectations from a workforce plan?

How would you define the success of a workforce pla n?

What talent information do you need to make strateg ic decisions?

Who are the key stakeholders in your area we need t o speak with?

What financial information do you need to make stra tegic decisions?

Is the information you need readily available to yo u?

Validation of talent data

What is the average spend (by discipline) in your w orkforce?

Do you feel the average spend by discipline is a st rength/concern?

Do you have the right talent mix? (FTE, Contract, E xPats, Nationals)?

Is this role difficult to source in the marketplace ?

What roles are essential to managing the contract s pend for your area?

What roles are essential to managing the contract s pend for your area?

What are your training needs talent effectiveness? (internal, external)

Individual action plans for each SPU to close

the gap

BuildDevelopment for internal talent

movement

BuyAcquire talent externally

BorrowAugment headcount with contract

or temporary labor

BouncePlanned attrition



23

ERE 2008Workforce SegmentationW

orkf

orce

Seg

men

tatio

nW

orkf

orce

Seg

men

tatio

n

Workforce Segmentation is taking the larger Workfor ce Plan and bWorkforce Segmentation is taking the larger Workfor ce Plan and b reaking it reaking it down into components (segments, job families) that have more strdown into components (segments, job families) that have more str ategic ategic

importance. This allows organizations to analyze t he dynamics, importance. This allows organizations to analyze t he dynamics, needs and needs and motivations of the critical roles, thus investing t heir resourcemotivations of the critical roles, thus investing t heir resource s more s more

strategically. strategically.



24

ERE 2008Workforce Segmentation Example

Source: The Conference Board “Strategice Workforce Planning, Forecasting Human Capital Needs to Execute Business Strategy”; via Corning In corporated

BuildBuild

ProtectProtect

Streamline/ Streamline/ OutsourceOutsource

RedirectRedirect

Roles that affect the strategy

Roles affected by the strategy

Strategic

Critical to driving long-term competitive advantage, with specialized skills or knowledge

Core

The “Engine of the Enterprise,” unique to the company and core to delivering on its products

and/or services

Requisite

Cannot do without, but whose value could be delivered through alternative staffing strategies (e.g.

off-shoring, outsourcing, replace w/technology)

Non-Core

Talent whose skill sets no longer align with the company’s strategic direction

Incr

ease

d in

vest

men

tIn

crea

sed

inve

stm

ent

Potential Strategic ActionTalent Segment and Value



25

ERE 2008Solutions Market

• Workforce Analytics– Doublestar– InfoHRM

• Workforce Planning– Aruspex (CAPTure)– VEMO



26

ERE 2008Tips for getting started

Identify the Identify the Business case Business case & Sponsors for & Sponsors for

WFPWFP

Identify Identify Core Core

Planning Planning TeamTeam

Define Define Success Success

MeasuresMeasures

Engage Engage Stakeholders Stakeholders

for for Qualitative Qualitative

and and Quantitative Quantitative

inputsinputs

Pilot thePilot theWFP WFP

efforts in efforts in smaller smaller

divisions divisions to tweak to tweak

as neededas needed

Workforce Planning WorkshopWorkforce Planning Workshop

Copyright © 2008. Korn/Ferry International and Korn/Ferry

International Futurestep, Inc. All Rights Reserved.

Contact Information:Ed Newman

PresidentThe Newman Group

[email protected]?