Strategic Workforce PlanningAligning Talent and Strategy

Presented by:Jill Lackey

Allegacy Consulting Group

Carolina Credit Union LeagueHR and Professional Development Conference

October 23, 2014

What is Strategic Workforce Planning?

• Strategic workforce planning (SWP) is the analytic, forecasting, and planning process that connects and directs talent management activities to ensure an organization has the right people in the right places at the right time and at the right price to execute its business strategy

• Strategic workforce planning (SWP) is a critical business initiative and not a human resources activity

Strategic (or long-range) planning = long-range planning for the business

Strategic workforce planning = long-range planning for talent

Organizational Development:Strategic Workforce Planning

OrganizationalDevelopment

ChangeManagement

Strategic Workforce Planning

(SWP)

OrganizationalDesign

andStructure

PerformanceManagement

High PotentialEmployees

(HIPO)

SuccessionPlanning

Leadership & Career

Development

Cultural Initiatives

Two Types of Workforce Planning

• Operational workforce planning – focuses on skills and capabilities needed within the next 6 to 18 months.

• Strategic workforce planning – looks 3 – 5 years in the future and anticipates new skills, roles and situations that might not exist today. Deals with variables that cannot be predicted but can be prepared for.

The Business Case for Strategic Workforce Planning

Each year, The Conference Board conducts a survey of CEOs, presidents, and chairmen from more than 1,000 companies around the world. The executives are asked to identify and rank the most pressing challenges they face. For the second year in a row, Human Capital — how best to develop, engage, manage, and retain talent — was named the leading challenge among ten choices.

The Business Case for Strategic Workforce Planning

The strategies these CEOs plan to implement to address their concerns include:

– Provide employee training and development.– Raise employee engagement.– Improve performance management processes and accountability.– Increase efforts to retain critical talent.– Improve leadership development programs.– Focus on internally developed talent to fill key roles.– Enhance effectiveness of the senior management team.– Improve effectiveness of front-line supervisors and managers.– Improve corporate brand and employee value propositions to attract

talent.– Improve succession planning for current and future need

The Business Case for Strategic Workforce Planning

• A 2014 survey conducted by pwc states “As US companies return to growth mode, anxiety over skills needs intensifies: 70% of US business leaders are concerned about the availability of key skills, a sharp increase over 54% that said so in 2013. Demand for highly valued skills is strong; the “war for talent” is as fierce as ever. Thus addressing the skills shortage is about much more than hiring fresh talent. It means taking a fresh look at the talent within. Businesses that have been able to build up intellectual capital by continuously cultivating the next generation can experience a distinct advantage”.

The Business Case for Strategic Workforce Planning

• Aging workforce and approaching retirement wave– By 2020, 25% of the labor force will be age 55+, up from 12% in 1990.– In 2014, the annual growth rate of the overall labor force will shift

• 55-and-older = 4.1 % (4 times the rate of growth of the overall labor force)• 25-to-54-year = 0.3 percent• 16-to-24-year-olds - essentially flat

• Projected labor shortages– By 2018, with no change in current labor force participation rate or

immigration rates and an expected return to healthy economic growth, we will have more jobs than people to fill them.• Anywhere from 5.0 million to 5.7 million potential jobs vacant

– If the full employment gap is not filled, using Congressional Budget Office data, estimate the loss in total output as high as $3 trillion across a 5-year period beginning in 2018

The Business Case for Strategic Workforce Planning

Projected Leadership Shortage

In numerous surveys, senior executives are expressing concerns that stiffening competition for exceptional individuals is curtailing plans for progress. – The Corporate Executive Board reports that 60% of organizations

feel constrained by the leadership shortage– The Bersin Deloitte Advisory Board cites the need to develop

organizational leadership capacity as one of the three biggest business challenges companies face today.

– Bloomberg also rated leadership development among the top issues confronting HR professionals

– Industry Week Magazine called the lack of potential leaders the most pressing human capital problem of our time

Strategic Workforce Planning Model

Business Strategy

Segment Roles

Environmental Scan

Future State Analysis

Current State Analysis

Gap Analysis

Action Planning

Monitor and Reporting

Align to Business Strategy

• Analyze the long-range plan to identify impact to talent – What new core competencies emerge? – What organizational structure will best meet your

future needs?– What systems and tools will be needed?– What are the cultural implications?– How will staffing needs change?

Align to Business Strategy

Strategic Imperative: Implement business intelligence tools that drive performance to ensure long-term stability – Do you have the right technology people to

identify, implement, maximize and continually evolve the use of these tools?

– What impact will this have on the need for skills or competencies for users of this new data?– (how to analyze, systemic thinking, flexibility, change readiness)

Align to Business Strategy

Strategic Imperative: Become an employer of choice

Criteria for top 100 workplaces is based on trust and culture

• How will this impact what you look for in leaders? • How will you shift the mindset of current leadership?• What training is needed? • How does this impact your succession planning criteria for

promotable potential? • How will you measure and evaluate this?

Role SegmentationImpact Talent Segment Investments Over Time

Roles that drive the strategyStrategic

Critical to driving long-term competitive advantage, with

specialized skills or knowledge

Strengthen, retain and ensure succession plans are in place.

10 – 15%

Roles that support the strategy

CoreThe “Engine of the Enterprise,”

unique to the company and core to delivering on its products

and/or services

Protect and Develop20 – 30%

Requisite Cannot do without, but whose

value could be delivered through alternative staffing strategies

(other than full-time headcount)

Streamline, Outsource and Maintain60 – 70%

Roles impacted by the strategyMisaligned

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

strategic direction

Redeploy or retrainAs few as possible

Environmental Scan• External – Economic and regulatory• External – Labor market supply (external supply of candidates,

employment brand, competition, recruiting sources like colleges, trade associations, etc.)

• Internal – Organizational factors (long-range strategy, business plans, resource allocation, budgetary constraints, culture).

Environmental Scan

External Economic and

regulatory

1. What regulatory changes are anticipated between now and 2018? Do we have the right skills and competencies to respond?

2. How will the economic forecast impact our staffing needs in terms of skills, numbers and timing (e.g. improving housing market = > need for mortgage lenders, increase in capital spending = > commercial lending)

3. What are the impacts to talent from the “disrupters” in technology?

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entEconomic Forecast

June 2014

Dec 2014

June 2015

Dec 2015

June 2016

Dec 2016

3.24 3.52 3.77 4.01 4.19 4.4110 Year Note Forecast

June 2014

Dec 2014

June 2015

Dec 2015

June 2016

Dec 2016

0.0

0.5

1.0

1.5

2.0

2.5Federal Funds Rate Forecast

Dec 2013

June 2014

Dec 2014

June 2015

Dec 2015

June 2016

Dec 2016

1.351.68

1.902.08 2.17 2.30 2.32

CPI Forecast

June 2014

Dec 2014

June 2015

Dec 2015

June 2016

Dec 2016

4.8

5.2

5.6

6.0

6.4

6.8

Unemployment Forecast

2013 2014

0.921.11

Forecasted Housing Starts (Mil-lions)

Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 20142.22.32.42.52.62.72.82.93.03.1

GDP Forecast (QTR)

YR 2013 YR 2014 YR 2015 YR 20162.32.42.52.62.72.82.93.0

GDP Forecast (YR)

Source: WSJ January Consensus Forecast

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● Taxation● Risk-Based Capital● Secondary Capital● Business Lending● Data Breaches/”Target”

Incident● Mortgage Regulations

(QM)● CFPB● Definition of ERM

Key Regulatory Agenda Items for Credit Unions

Environmental Scan

External Labor market supply (external supply of

candidates, employment brand, Competition,

recruiting sources like colleges, trade

associations, etc.)

1. What is projected employment rate within footprint? How does this impact growth plans?

2. What colleges offer the skills you will need in the future and how can you start building relationships now?

3. What “employment brand” will attract millennials? How do you need to change to support that brand?

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Unemployment Trends

County Unemployment Rate

Mecklenburg, NC 6.7%

Forsyth, NC 6.1%

Source: BLS.gov; Data reported for December 2013

Environmental ScanInternal

Organizational factors (long-range strategy,

business plans, resource allocation,

budgetary constraints, culture).

1. What is projected membership growth ? how many employees will be needed? Where? How many Branches? What percentage of members will use FCs, mobile, CC, web?

2. What new technical skills are needed to support LRP?

3. What products or services will be used to drive projected growth each year and do we have the talent to support them? (e.g. lending growth – mortgage? Retail? Equal?)

4. What delivery channels anticipate the greatest growth, when and how? Do we have the talent to support?

5. What is the impact to organizational structure, and staffing gaps, and/or surplus?

6. What training will need to be provided, when and for whom in order to prepare staff?

Future State AnalysisFuture State Analysis – a framework for having a strategic discussion about future possibilities in order to identify future talent needs.

Strong economy – adequate talent supply vs. inadequate talent supply

Impact – compensation pressures, buy vs grow, college recruitment, alternative sources

Member demographics and expectations

Impact – technology skills, behavioral competencies

Employee demographics and expectations

Impact – attraction, retention, development and engagement

Impact of technology Impact – Resources, skills, alternative sources, organizational structure – centralized or decentralized?

Current State Analysis

Current State Analysis – Detailed analysis of current capability and capacity.

Gather employee data by function: Employment status Location Demographics Competencies and skills Diversity criteria Compensation data Tenure Retirement eligibility Performance ratings Potential Engagement scores Status of successors

Analyze employee reports for gaps, vulnerabilities, opportunities and engagement level. What is the impact?

Gap Analysis

• Compare current state to future state for EACH role – Role segmentation– Headcount needs– Skills and competencies– Experience and education– Behavioral characteristics– Level of engagement

Gap AnalysisPosition:

Gap Dimension Current State Future State Gap

Role segmentation

Headcount requirements

Vulnerable positions (retirements, transfers, resignations, performance issues)

Engagement level

Retention risk (qualitative not quantitative)

Bench strength or availability

Technical/business skills

Behavioral characteristics/other competencies

Experience and education

Action Planning

• Organizational structure design• Job redesign• Attraction and acquisition plan (recruitment strategies)• Outsourcing options• Redeployment needs or retooling plan• Performance management• Succession planning• Learning and development plans• Total rewards strategy• Retention and engagement strategy

Position: Branch ManagerGap Dimension Current State Future State Gap

Role segmentation

Supporting Core Need to be more strategic; increase impact to operating

excellence and revenueHeadcount requirements

15 23 8

Vulnerable positions (retirements, transfers, resignations, performance issues)

3 Mgrs & 1 Asst. Mgr – 60 yrs. +; 2 open positions

6 Mgrs & 2 Asst Mgr – 60 yrs. Be prepared for departure of up to 8 managers by 2018

Engagement level(Based on Denison Organizational Culture Survey)

Empowerment = 68%Vision = 88th

Cap Development = 37th

Empowerment > 75%Vision > 75th Cap Development > 50th

Increase scores by:Empowerment: 7 %ileCapability Development: 13%

Retention risk (qualitative not quantitative)

Competitive field for recruitment; average days to fill = 80

Need to define a clear career path for Branch Managers

Create formal Mgr. training Program for Asst Managers; Career Development coaching

Bench strength or availability

0 AM ready for promotion wi next 12 mths

2 or > AM ready for promotion within next 6 months

Hire Asst Mgrs with skills and potential for advancement

Technical/business skills

Two plus years consumer lending exp.

Data AnalyticsTechnologically savvy

Change recruiting criteriaCreate technical training

Behavioral characteristics/other competencies

Sales focus, stronginterpersonal, leadership, oral and written communication skills

Inspirational leaderSystems thinkingIntellectual curiosityRisk-taker

Change recruiting criteriaCreate training modules on these topics;Provide mentorsIdentify developmental assignments

Experience and education

Three or more years related experience in financial institution branch

Bachelor’s degree and/or equivalent experience in financial institution; customer service mgmt. experience

Change recruiting criteriaPromote education reimbursement program

Monitor and Report

• Establish metrics• Create quarterly reporting and accountability

procedures• Schedule quarterly SWP review meetings

Keys to Making Strategic Workforce Planning… Strategic

• Driven by business strategy and objectives • Executive team’s commitment to making SWP a

priority so it is proactive vs. reactive• Accurate and objective segmenting of the workforce • Consistent and sustained process and approach • Readily accessible analytics • Executive team’s capability to lead change

Supporting Infrastructure

• Superior communication strategy• Enterprise-wide project management• Technology• Teamwork and collaboration