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Issue 4 Workforce planning June 2011

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Page 1: Proposed Digest of Journal Articles for Public Web viewEditor’s note to readers. Welcome to the fourth edition of Human Capital Matters: a digest for time poor leaders and practitioners

Issue 4

Workforce planningJune 2011

Page 2: Proposed Digest of Journal Articles for Public Web viewEditor’s note to readers. Welcome to the fourth edition of Human Capital Matters: a digest for time poor leaders and practitioners

APS Human Capital Matters: Workforce PlanningJune 2011, Issue 4

Editor’s note to readersWelcome to the fourth edition of Human Capital Matters: a digest for time poor leaders and practitioners with an interest in human capital and organisational capability. This edition focuses on workforce planning.

Ahead of the Game: Blueprint for the Reform of Australian Government Administration (the Blueprint) noted that persistent capability gaps across the Australian Public Service (APS) were exacerbated by sporadic workforce planning and a lack of clarity about capability requirements. The Blueprint recommended that the Australian Public Service Commission (APSC) establish an APS-wide workforce planning framework that provides both a consistent approach to workforce planning and identifies the systemic workforce challenges facing the APS.

The 2009–10 State of the Service Report found that 21% of agencies reported that they had a workforce plan. However, the development of the Whole-of-Government ICT Workforce Plan 2010/2013 (the ICT Workforce Plan) shows what can be done to improve workforce planning in the APS.

The purpose of the ICT Workforce Plan is to assist agencies to identify the ICT capacity and capability required to effectively deliver government priorities and a strategic understanding of the APS-wide ICT workforce issues. The effort and focus of the APS ICT community has led to the position where approximately 97% of the ICT workforce is now covered by an agency ICT workforce plan. Agencies now have clearer understanding of the capacity and capability of the current ICT workforce and the APSC has been able to look across all the agency workforce plans in order to identify APS-wide critical skills areas and shared planning challenges. An additional benefit of this activity is that there has been considerable collaboration and knowledge sharing across the APS around the tools, techniques and process of workforce planning.

Several successful workforce planning models are presently in use across the APS, and a recently-established APS Workforce Planning Working Group (the Working Group) will identify existing best practice to inform ongoing work. An expected outcome of this group will be developing a flexible approach to workforce planning that assists all agencies without the infrastructure and capacity to build ‘fit for purpose’ approaches that meet their specific needs while allowing existing workforce planning practices to continue in those agencies with existing capability. By leveraging existing practice and pooling their own resources, agencies without solutions today will be able to achieve better outcomes tomorrow.

In May 2011, the APSC held an agency symposium on ‘Progressing Workforce Planning’ that showcased best practice in ICT workforce planning but also sought to build on the APSC’s observation that the knowledge and skills to develop the ICT workforce plans were beginning to provide the momentum for wider agency workforce planning. The event attracted 100 delegates from 45 agencies. At the symposium the delegates were also asked what they would like to see the APSC do to improve workforce planning across the APS. They concluded that the APSC should:

develop a consistent framework for describing workforce segments and capability requirements;

develop a consistent workforce planning framework to guide agencies without workforce plans in pursuing such planning;

develop workforce planning capability across the APS (skills and knowledge);

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support agencies to develop a business case for workforce planning for senior executives where gaps currently exist; and

provide forums for agencies to share information and best practice.

In due course, the workforce planning outcomes will feed into an APS-wide Human Capital Strategy, Priority Plan and Roadmap, but the immediate priority is to provide assistance to practitioners in terms of network facilitation, and advice and tools for those presently without established practices.

The research highlighted in this issue of Human Capital Matters will inform a broader APSC research and evaluation program that is designed to identify systemic workforce challenges, test critical hypotheses about the future APS workforce, and set up benchmarks and other metrics to track progress over time.

If you would like to know more about the APSC’s progress on workforce planning please contact us at: [email protected].

The articles summarised in this issue of Human Capital Matters provide a variety of perspectives on dealing with the challenges involved in workforce planning. Indeed, many of the points made in this collection were reflected in the conversation at the APS workforce planning symposium.

A research report by Accenture highlights the impact of the GFC on the willingness to exploit the opportunities for recovery. The authors argue that basic workforce management and planning functions have atrophied in numerous organisations. They argue that the way forward should involve a focus on developing a human capital strategy that links workforce planning more closely to business objectives.

Peter Cappelli surveys the history of workforce planning and argues that a supply-chain approach is likely to produce a more informed workforce plan that is of greater value to the business. He also highlights the recurring challenge of APS workforce planning—reliable approaches to forecasting workforce demand.

Benoit Pierre Freyens reviews the workforce planning literature in the Australian and global public sectors, as well as progress made by Australian public sector agencies against benchmarks set by government recommendations and public audits. He notes that although agencies generally know their workforce well, they often have insufficient knowledge of external sources of skills.

An IBM research study argues that although organisations have traditionally managed their workforces with a keen eye to operational efficiency, their capacity to shape their workforces to enable them to respond creatively and flexibly to the dynamic global marketplace is not as well developed as it should be.

Andrew Mayo focuses on the key steps organisations might follow to implement effective workforce planning plans and processes.

Finally, there are two reports from the United States: the first looks at the ‘2010 Hiring Reform Action Plan’ at the Office of Personnel Management; and the second highlights a succession planning primer which found that few Federal Government Human Resources areas focus on ensuring that they have skilled staff available to fill HR office vacancies when they occur.

About Human Capital MattersHuman Capital Matters seeks to provide APS leaders and practitioners with easy access to the issues of contemporary importance in public and private sector human capital and organisational capability. It has been designed to provide interested readers with a monthly guide to the national and international ideas that are shaping human capital thinking and practice.

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Comments and suggestions welcomeThank you to those who took the time to provide feedback on earlier editions of Human Capital Matters. Comments, suggestions or questions regarding this publication are always welcome and should be addressed to: [email protected].

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Accenture, ‘The Talent to Grow’ (Report, originally published as an article in the Accenture publication, ‘Outlook: The Journal of High-Performance Business’, No. 1, 2011), 9pp.The authors analyse new Accenture research drawn from the company’s 2010 High-Performance Workforce Study. It suggests that, although many economies are growing, the searing experiences of the Global Financial Crisis (GFC) have left the majority of executives and employees unprepared or unwilling to take the risks needed to exploit today’s economic recovery.

Opportunities to create talented teams to drive growth are often absent largely due to unsystematic approaches to downsizing during the GFC (e.g. more than one-third of companies surveyed based their workforce cuts not on individual performance or careful workforce planning but rather on who responded to early buyout and retirement offers). As a result, basic workforce management and planning functions have atrophied in numerous organisations.

To address the negative effects of this lack of confidence and resilience the authors argue that organisations must develop a human capital strategy that links workforce planning more closely to business objectives—one that remains cognisant of the strategy’s implications for the organisation’s leadership and culture. They also stress the need to devise new approaches to employee development as a means of countering the capability weaknesses produced by the post-GFC skills drain. Key requirements will be HR sections with strengths in campus recruiting, talent sourcing from other areas, employee development and performance management.

The study recognises what are perhaps the main obstacles to workforce rejuvenation: economic challenges and the speed of marketplace change have outstripped the ability of traditional workforce planning to meet today’s business needs. As a result, many existing workforce plans are neither robust nor comprehensive enough. The report sets out three means of resolving this dilemma: more holistic approaches to workforce planning within the context of a human capital strategy; innovative initiatives for upskilling employees faster (e.g. the ‘academy’ approach exemplified in the PepsiCo Finance University); and creating a more strategic HR organisation. Although the study is focused on private sector organisations, its findings have relevance in developing post-GFC capability within public sector ones.

Accenture is a management consulting, technology services and outsourcing company with more than 215,000 employees serving clients in over 120 countries. This report was written by the four heads of its Talent and Organisation Performance service lines which encompass all regions of the globe—David Smith, Catherine S. Farley, Diego Sanchez de Leon and Stephanie Gault.

Peter Cappelli, ‘A Supply Chain Approach to Workforce Planning’, ‘Organisational Dynamics’, Vol. 38, No. 1, 2009, pp. 8–15 (available at: http://hrperformancesites.wordpress.com/2009/03/09/a-supply-chain-approach-to-workforce-planning/; purchasable at <http://www.sciencedirect.com/>)

This article has a dual purpose. It briefly surveys the development of workforce planning from the ‘manpower planning’ days of the 1940s, 50s and 60s, decades of economic growth and stability which began to fragment with the onset of the oil shocks and stagflation of the 1970s. These events made it increasingly difficult to forecast overall levels of demand for human capital (along with other inputs). The situation was compounded by recession in the early 1980s which led many private sector organisations to dispense with talented staff—as they saw it merely to

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remain in business. The key building blocks for accessing talent when good times returned were thus abandoned with dire results for workforce planning capability and overall company performance.

The article’s main purpose is to set out ways of addressing such challenges should severe economic circumstances arise again. The author argues that the key to doing so lies in a ‘supply chain’ approach to workforce planning based on two types of forecasting. The first is internal. What will our future workforce look like if we do nothing new? How many current employees will we have with the requisite competencies in each area of the company in future? This involves managers thinking through where the value is truly coming from in their operations.

The second and more difficult forecast in the planning process is to predict the likely demand for talent—what will the organisation need in order to meet its business objectives? Tackling this challenge involves borrowing techniques from supply chain management, in which the overall task is similar to workforce planning. How do we ensure that we have just the right supply of parts or components to meet demand when that demand is uncertain?

Cappelli’s supply approach offers a means of better managing the uncertainty in workforce planning. Securing more accurate estimates on the supply side—especially of competencies at individual worker level—would give managers a better sense of the company’s talent base. Similarly, simulations of demand would enable managers to identify more clearly the challenges associated with business plans and adjust business strategies to them accordingly.

The author sums up the main strength of the supply chain approach as follows: ‘Rather than assuming that we have certainty about the future, which is how most forecasting models are used, this approach recognises and then comes to grips with the uncertainty that is inherent in business forecasts’ (p. 14). As a result, the supply chain approach—if used effectively—produces a more informed workforce planning method of greater efficacy. ‘Supply chain’ is an approach with some resonance for the public sector as well.

The article contains valuable examples of how companies (Corning, Dow Chemical Co, Capital One) have benefited from adopting supply chain elements in their workforce planning.

Peter Cappelli is the George W. Taylor Professor of Management and Director of the Centre for Human Resources at The Wharton School, Philadelphia, PA, USA.

Benoit Pierre Freyens, ‘Managing Skill Shortages in the Australian Public Sector: Issues and Perspectives’, ‘Asia Pacific Journal of Human Resources’, Vol. 48, No. 3, December 2010, pp. 262–286(purchasable at <http://apj.sagepub.com/content/48/3/262.full.pdf+html>)

Freyens reviews the workforce planning literature in the Australian and global public sectors, as well as progress made by Australian public sector agencies against benchmarks set by government recommendations and public audits. The article also includes an analysis of the main public sector recruitment challenges, particularly in retention (e.g. ageing among older generations, mobility among younger generations). Freyens notes the sense of urgency about APS agency workforce planning emanating from bodies such as the Management Advisory Committee and the Australian Public Service Commission, as well as the mixed responses of agencies to these concerns.

The author observes that, although agencies generally know their workforce well, they often have insufficient knowledge of external sources of skills. In many instances, they fail completely to grasp the organisational constraints and objectives that shape workforce demand.

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Nevertheless, the case studies included in this paper suggest that some ‘strategically exposed’ agencies have made significant progress in workforce planning implementation. Strategic risk continues to represent an important driver of such implementation.

Freyens argues that innovative approaches to preparing for imminent workforce capacity shortfalls are urgently required, but he concludes that this remains a low priority for most agencies. Accordingly, he recommends that agencies develop cost-effective models of workforce planning that are both simple to use and tailored to their specific needs. Yet, he insists that such modelling must go beyond the baseline workforce analysis generally conducted today. It must, for example, take account of strategic directions and objectives together with resource, demographic and macroeconomic constraints. The author cautions that these approaches have to acknowledge the limits to what workforce planning can deliver—long-term social demands, policy objectives and political factors, for example, are beyond the limits of most planning models.

The author’s findings suggest a need for more policy research designed to solve the practical difficulties posed by inadequate workforce planning and unexpected skill shortages. Such research, he argues, should be structured so as to:

better advise how to integrate the HR function and the workforce planning process into strategic planning;

determine the appropriate mix of incentives and resources needed to promote workforce planning implementation;

develop simple and effective ways to capture external labour market information and assimilate its dynamics; and

establish the exact relationship between leadership commitment, organisational culture and planning outcomes, and the factors determining leadership commitment.

Benoit Freyens is a Senior Lecturer in the School of Economics, Faculty of Business and Government, University of Canberra.

IBM Global Business Services, ‘Working Beyond Borders: Insights from the Global Chief Human Resource Officer Study’ (Report), 65pp, IBM Global Business Services, Somers, NY, USA, 2010. (An 8pp ‘Executive Summary’ is also available.)

This study was produced by the IBM Institute for Business Value, a division of IBM Global Business Services. It explores the challenges for Chief Human Resource Officers (CHROs) arising from the Global Financial Crisis (GFC). The report reflects insights and opinion from more than 700 organisations across 61 countries; 707 senior global HR leaders were surveyed for the project, almost 600 of whom were interviewed face-to-face. Overall, the study concluded that, despite some major post-GFC problems, global HR leaders are optimistic—though highly pragmatic—about future developments.

The study found that, while organisations continue to develop and deploy talent in diverse areas around the globe at a faster rate than they were doing when the last such study was conducted two years ago, the rationale behind workforce investment is changing. Unlike the traditional pattern of movement, whereby companies in mature markets seek to move into expanding economies, increasingly, workforce investment is moving both ways (e.g. not only to China and India but also from these nations into North America, Western Europe and other markets).

Although organisations have traditionally managed their workforces with a keen eye to operational efficiency, their capacity to shape their workforces to enable them to respond

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creatively and flexibly to the dynamic global marketplace is not as well developed as it should be. Accordingly, the report recommends that CHROs will need to focus on three areas of workplace planning: developing present and future leaders; strengthening workforce skills and capabilities; and fostering greater knowledge sharing and collaboration.

In none of these three areas did CHROs think they were performing well. In the realm of leadership, the study recommended that organisations should move beyond long-established leadership development methods and find ways to foster in their leaders (and leadership feeder groups) not only the empirical skills necessary for effective management, but also the cognitive skills necessary to drive creative solutions.

Two significant problems identified in the area of skills and capabilities are: assessing how talented people have performed in their positions; and the effectiveness of the process for deploying individuals with the requisite knowledge and skill sets. As to collaboration and knowledge sharing, it is clear that many organisations lack the structure and resources to facilitate the cooperation needed for sustained organisational capability-building.

Courses of action recommended by IBM for addressing these problems include: increasing workforce flexibility by employing more temporary staff and contractors; greater outsourcing and offshoring of tasks; and ensuring that investment in the workforce no longer reflects the immediate post-GFC environment, but rather matches the current forward-looking and strategic business climate.

IBM Global Business Services is a strategy and transformation organisation which helps its clients develop, align and implement their vision and business strategies in order to drive growth and innovation.

Andrew Mayo, ‘Workforce Planning—A Vital Business Activity’, ‘Finance & Management’, January 2010, pp. 24–27.The author argues that well-thought out workforce planning is essential to organisational success—having the right people at the right time with the requisite skills is of paramount importance. He questions the practice of using ‘headcount’ as the principal people measure for business planning on the grounds that it can result in the organisation overlooking critical talent, often unknowingly. Another disadvantage of this approach is that budgetary considerations dominate—assessments of how many people the organisation can afford to employ obscure key thinking about what skills or people strategy the organisation needs in order to realise its business outcomes.

Mayo also focuses on the key steps organisations might follow to implement effective workforce planning plans and processes. He argues that deciding on how far into the future to plan is a sound beginning; an option here is to use the same timeframe employed in the organisation’s strategic plan—an approach which will make it easier to align the workforce plan with the strategic plan. The author also advocates an early decision about the plan’s scope—should it apply to the whole organisation or only to a section of it? There are advantages and disadvantages to each approach, and these should be considered carefully before the process begins. The other steps here involve how to segment the workforce in the interests of better planning and organisational performance—what is the optimal mix of permanent employees and contractors (or between full- and part-time staff) for the organisation.

The author then examines the next stage of planning: the identification of ‘job families’, for example, the number of jobs required to manufacture a product and the number needed to market and/or sell it. In the case of the public sector, the most readily identifiable division is between

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back-office and front-office functions, for instance, between policy formulation and research, and service delivery.

A key ongoing element of planning is identification of the organisation’s present and future workforce needs (e.g. numbers and skill sets) as well as likely future requirements in these areas. Such approaches would be both internal and external. An example of the former is identifying opportunities to redeploy present employees from areas of lower to those of higher projected demand. The latter might include examining external sources of talent such as local secondary schools and existing training programs for adults.

Andrew Mayo is Associate Professor of Human Capital Management at the Middlesex Business School and President of the UK HR Society.

United States Office of Personnel Management, ‘2010 Hiring Reform Action Plan at the U.S. Office of Personnel Management’ (Report), 11pp, OPM, Washington, DC, 2010. In July 2009, an OPM Hiring Reform SWAT Team comprising representatives of OPM Divisions and Offices as well as HR staff was established. It assessed the organisation’s internal hiring process against the framework of the Government-wide End-to-End Hiring Roadmap; identified barriers OPM faced in meeting Roadmap requirements; analysed the origins of these barriers; and identified ways of overcoming such obstacles in a Hiring Reform Action Plan.

The report sets out how OPM managers and HR staff worked to address these challenges between mid-2009 and the end of 2010 along with the concrete results of their initiatives. Most of this activity was focused on the objective of more efficient recruitment and better retention outcomes. The OPM Hiring Reform Action Plan has enabled the organisation to measure its performance in these areas more effectively, improve on current practice, and develop guidance for future policies and initiatives in this area.

Achievements as of the final quarter (FY) 2010 include more simplified hiring procedures, which have contributed to an 11% increase in applicant satisfaction with the job application process over FY 2009 levels, reductions in recruitment times (seven days less in FY 2010 than in FY 2009), and improved management satisfaction with recruitment processes and outcomes. The latter derives in large part from better communications between HR staff and managers—a 6% increase in overall satisfaction over FY 2009 levels, and a 7% increase in managers’ satisfaction with having information needed for decision-making.

An example of projected outcomes already achieved is the production of targeted manager fact sheets on key subjects such as workforce planning, and their incorporation into existing supervisory training courses. Initiatives underway include ‘Move from “replacement hiring” to a more strategic approach in each Division (Key Measure: 100% of Divisions have documented staffing plans in place by the end of FY 2011). HR areas are responsible for coordinating workforce planning efforts across OPM but in closer collaboration with managers than in the past. The 2010 Hiring Reform Action Plan is set out on pp. 3–11 of the document.

The Office of Personnel Management is the independent US Government agency with responsibility for managing the federal public service, that is, for ‘recruiting, retaining and honouring a world-class workforce to serve the American people’ (OPM Mission Statement).

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US Public Service: Succession planning

A new report by the Partnership for Public Service (PPS) and Booz Allen Hamilton, ‘Preparing the People Pipeline: A Federal Succession Planning Primer’ (14pp), has found that few Federal Government Human Resources areas focus on ensuring that they have skilled staff available to fill HR office vacancies when they occur. HR managers spend more time developing succession plans for their agencies than they do for their own offices. Eighty-six per cent of HR professionals surveyed reported doing some succession planning for their department or agency, but just 57% reported succession planning for their own areas. HR was chosen for the survey on the assumption that if any areas of the organisation were engaging in succession planning, it would be the HR office. Respondents cited four major barriers to their own succession planning: lack of time, inadequate funding, limited ability to assess and select candidates, and challenges with workforce forecasting.

The authors found that another contributor to this was the high mobility rate among HR employees compared to that elsewhere in the public sector. Of Federal Government occupations with the most employees, HR had the highest percentage (44.9%) of employee transfers between 2008 and 2010. Rather than leaving the public sector, most HR employees who moved transferred within the public service to take up fresh opportunities. To address this issue, the report’s authors recommended that the federal HR community develop a government-wide model for succession planning within their offices.

The report cited the acquisition and ICT groups of federal workers as useful ones to emulate, and urged the Chief Human Capital Officers (CHCO) Council to take the lead in coordinating efforts to resolve other succession management problems across the public sector, particularly in view of the fact that by 2015, for example, more than 50% of today’s SES staff are expected to have left government service. The report authors provide five steps for HR managers to follow in devising an effective succession plan: 1) list critical jobs and project vacancy risk; 2) discuss future needs; 3) analyse gaps in the existing talent pool; 4) develop strategies to close those gaps; and 5) evaluate progress and update succession plans every six to 12 months.

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