Most organizations, small and large, have a defined vision, mission, and strategy. It communicates what an organization of people believes in (vision), its goal (mission), and how they want to achieve this goal in the coming years (strategy). In order to execute this strategy successfully, the organization needs the right number of people with the right skills, background, profiles, and experience. This is where strategic workforce planning, or development, comes in. This is a structured business process designed to proactively anticipate, and plan for, future personnel needs. In this article, we will explore the key metrics that you need to prepare your organization for the future.
Strategic workforce development: what’s in the name
Let’s first look at our definitions. Personally, I rather speak of Strategic Workforce Development than strategic workforce planning (SWP). The word planning has a very top-down approach to the process, while I think getting your people ready for the future needs of the organization is as much an ongoing conversation with your people as it is a conversation about your people.
Strategic Workforce Development is an important process for any business. Its goal should always be to prepare the organization for future business continuity, business growth, and business agility. The risk involved in being unprepared for future market shifts and/or rapidly changing customer needs becomes increasingly bigger in a VUCA world. So, what are the key ingredients to prepare the organization for the future in terms of people and work?
Ingredients for success
In order to gain insights into the Strategic Workforce Development your organization needs for the coming years, you need a number of basic ingredients. As you will recognize, these are essential ingredients required to form a people strategy and engage in strategic human resource management.
- A clear business strategy for the coming 2 to 5 years
- Specific, concrete information about this business strategy
- A set of specific target groups that are important for the successful execution of the business strategy
- A set of external and internal developments that might impact the needed quantity and quality of these target groups
- A team of senior leaders to work with on translating strategy and developments to an HR strategy and people needs
- HR experts to help facilitate this translation to people needs and turn these people needs into HR actions and policy
- Data from the people in the organization, data from HR processes and preferably also data from the labor market
- An HR expert to translate these data into meaningful metrics and models
For this article, I want to zoom in on the data and metrics that are useful to create in the Strategic Workforce Development process and why.
Getting to know the target groups
Once you have established the target groups important for strategy execution you will need to know the composition and needs of these target groups. The following metrics are crucial in creating a relevant overview for each target group.
These are metrics you will need to have if you’ll want to say anything useful about the target groups:
|The must-haves||Description||Why relevant for SWD?|
|FTE and headcount||The number of Full-Time Employees and the number of individuals in the target group||The core number related to the staffing of the organizational formation is key to describe trends in workforce needs|
|Age distribution||The average age of the people within the target group||This is an indicator of the level of seniority within the target group|
|Average employee turnover %||The percentage of people that leaves the organization (either voluntary or involuntary)||Important number which directly contributes to the recruiting challenges that need to be met for business continuity, without the added effort from any business growth ambitions.|
|Gender distribution||The number of males, females and other intersex variations||From the standpoint of diversity, this could be an important factor for some target groups|
|Contract type distribution||The number of people in the target groups with a certain contract type||These numbers can provide you with information on the flexibility you might have in target groups with upscaling or downscaling FTEs|
|Tenure distribution||The number of years in service within the target group||This number can provide information on the level of seniority and organization-specific knowledge within the target group|
|Average absenteeism %||The average percentage of people with unplanned absence at any given moment||This number is related to the level of employability within the target group|
Once you have these bundled, you will have a story to tell about each of the target groups and this will help you and your project team get a sense of the people in the target groups.
These are metrics that will give you more detail about the groups and will help a great deal in determining HR actions tailored to these groups:
|The nice-to-haves||Description||Why relevant for SWD?|
|Age category FTE distribution||The average age of the people in predefined age categories within the target group||This gives a detailed distribution of age within the target group and might indicate a lack or surplus of senior people. The latter could indicate a risk of a large chunk reaching retirement age and capacity and knowledge leaving the organization|
|Age category employee turnover distribution||The percentage of people that leaves the organization in specific age groups (either voluntary or involuntary)||Might provide insight into age groups with abnormally high or low turnover|
|Voluntary vs involuntary turnover ratio||The percentage of people who leave the organization voluntarily and involuntary||Target groups with high voluntary turnover might risk endangering business continuity and develop chronic employer branding issues|
|Internal mobility rate (in and out)||The number of people that move in and out of the target group from or to the organization||This metric might provide valuable insights into the possibilities and flexibility of downscaling or upscaling FTEs|
|Tenure categories||The number of people in predefined categories of years in service within the target group||This number can provide more detailed information on the level of seniority and organization-specific knowledge within the target group|
|Time-to-hire||The time elapsed between engaging a candidate for a vacancy and the acceptance of an offer||This number is an indication of the effort it requires to attract new talent to the target group|
|Yearly count of failed hires||The number of new recruits who leave the organization within a year||This provides insights into the success the organization has in keeping new recruits engaged within the target group|
|Employee engagement scores||The level of satisfaction and engagement people within the target group experience divided into specific scales||This metric is linked to many other key metrics, such as turnover rate, employability and absenteeism and could provide important information to increase employee retention and general team productivity|
|Salary scale distribution||The number of people in specific salary scales within the target group||This might provide additional information on the level of seniority within a target group|
|9-box grid potential/performance distribution||The distribution of talents within the target group rated following the 9-grid methodology||These results could indicate how much potential the population within the target group has to fulfill future business needs and successfully reach strategic objectives|
|Competency scores||Average or distribution of scores on competencies relevant for the role s within the target group||Competency scores indicate how well the target group is developed in the knowledge and skills necessary to make the organization thrive and develop|
These are metrics that give very detailed information about the population and will help you in making customized HR policies tailored to future workforce demands.
|The great-to-haves||Description||Why relevant for SWD?|
|Assessment scores||Scores and profiles from personality questionnaires, capability tests, competency tests, motivation questionnaires and roleplays||These scores can provide detailed information on the diversity within the target group, development potential and a deep understanding of the match of the target group with future capabilities and profiles needed to make the organization future-proof|
|Reasons for leaving the organization||The reasons employees who leave the organization provide once they leave||Often the issue with key target groups is that they leave the organization voluntarily too often. These data might help prevent voluntary turnover|
|Risk of loss distribution||A rating provided by managers or a score given by a predictive analytics model scaled to the target group or teams within the target group||This score might help predict a trend in turnover for the target group and trigger management to act on preventing or planning for turnover|
There are many more metrics that might be interesting for Strategic Workforce Development but the collection mentioned above provides the more common metrics which have proven their worth for this specific process.
Now, if you already have these metrics in a dashboard, great! But don’t just pop some screenshots in a PowerPoint to let the graphs speak for themselves. Instead, provide guidance in the graphs by pinpointing results that should catch the viewer’s attention. For example, if a large proportion of a target group is nearing their retirement age, or if engagement scores for key employees are very low, make them pop out! Effective use of data visualization will be a great conversation starter with senior leaders.
Depending on relevant internal and external developments you might want to include specific metrics that are not mentioned above. For example, if it is important for the organization that a target group (e.g., IT specialists) acquire new knowledge and skills (e.g., agile UX software development), you might want to include information form Learning & Development on how many IT specialists have already followed this training. You might also want to include labor market data in order to provide more information on the efforts in may take to keep hiring talent for the target groups.
At a later stage, when you want to know how these target groups will most likely develop in the coming years with the knowledge of now, you’ll need to extrapolate some of the data used for these metrics.
This is the start of building scenario’s in a model for Strategic Workforce Development and this is where people data meets business drivers. For now, this is out of scope but I will provide more information on how to do proper scenario planning with data in another article.