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CHAPTER 4
Workforce Planning Analytics

Knowing is not enough; we must apply. Willing is not enough; we must do.

—Johann Wolfgang von Goethe

Your organization is only as good as its talent, so finding, hiring, and retaining the right people, with the right skills, at the right time is critical for any company’s success.

Operating in a globally connected arena, today’s talent marketplace is extremely competitive and challenging. The race to hire the best people is heating up, and companies are facing new workforce demographic challenges: The majority of baby boomers who are poised for retirement will be leaving an unprecedented amount of talent gaps in nearly every organization. Millennials, who by 2020 will account for more than 50 percent of the labor force, are not necessarily equipped with the knowledge, education, and expertise to take over in the succession plan. And the skills gap in science, technology, engineering, and mathematics (STEM) fields is becoming more acute and represents a serious hurdle for talent management leaders.

To achieve success in this recovering global economy and challenging workforce ecosystem, companies can’t afford to fly blind with their human resources. They must have a comprehensive understanding of their workforce segments and a clear vision of what they will need to achieve their business goals and objectives both now and in the future.

Leading companies are increasingly leveraging sophisticated methods to analyze employee and business data to enhance their competitive edge. They are properly getting a comprehensive understanding of the structure, strengths, and weaknesses of their employee base in order to anticipate their workforce needs. Getting that full-fledged knowledge requires all the building blocks of workforce planning, which also includes addressing some talent management questions, such as:

How many people will your organization need in the next two to five years?
How much it will cost to hire those resources?
Where will those resources be coming from (internal or external full-time employees versus part-time employees, school, industry, location, and region)?
What will be the expected revenue per employee?
How much growth will those resources be expected to generate?
Who are the critical segments of the workforce that will be required to achieve the business goals?
Which segments of the workforce might not be business critical?
What technology and processes are needed to achieve new business goals?

Addressing these strategic workforce planning business questions will be the topic covered in this chapter. Workforce Planning Analytics is one of the most important pillars in human capital management as it is defined along with your company’s strategic business plan for success. We will explore how companies such as Bullhorn, Dow Chemical, Black Hills, and Societe de Transport de Montreal (STM) have been leveraging analytics to optimize their talent requirements so that they can achieve maximum return.

WHAT IS WORKFORCE PLANNING?

We define workforce planning as the process that enables organizations to identify what talent they will need to achieve their business goals and objectives, from current needs to future demand and succession planning.

Workforce planning should always start with a clear definition of your company mission and your most pressing business challenges and priorities. It should guide your organization into what is required to address its mission-critical challenges. This is a collaborative process that requires all stakeholders such as Finance, Human Resources (HR), Marketing, and Sales to ensure that the acquisition of talent and the retention of top performers are tied to the company’s bottom line and represent everyone’s business objectives. It also demonstrates the value that proactive assessment and planning of the workforce will have on the bottom line. Getting a comprehensive view of the talent supply-and-demand equation to drive business performance in the future requires the power of analytics to distill actionable insights from the complex workforce data ecosystem.

WORKFORCE PLANNING ANALYTICS

Economic cycles have always been the major drivers of workforce changes throughout the history of employment. During the global recession of 2008, we witnessed with little exception the sharpest downsizing of the workforce in the job market since the 1929 stock market crash and the Great Depression. The majority of companies went from hiring freezes and employment furloughs to massive workforce downsizing, restructuring efforts, and layoffs. Finance and HR teams were at the epicenter of it all, with Finance responsible for communicating budget cuts as well as the underlying workforce reduction that was required, while HR’s major focus was about executing the plan and handling the legal purpose of those massive terminations: severance packages.

At some point, most of us probably witnessed a conversation between the Finance and HR departments that sounded something like this:

Finance:: We need to cut 30 percent of the workforce.

HR:: What levels should we cut? And when should we start?

Finance:: Cut 50 percent from level 1, 20 percent from level 2, 20 percent from level 3, and 10 percent from level 4, and start immediately.

In most cases, Finance would hand over the requisition list on which HR was required to execute; however, depending on their size, some organizations did hire consulting firms specialized in reorganization to lead the downsizing efforts. Generally, these companies had little or no knowledge of the organization’s day-to-day operations, and the outcome of their intervention was sometime questionable.

After multiple exercises in downsizing, some companies have simply realized they can maintain their minimal operations and service levels by hiring terminated resources as contractors (which can be problematic), and some have even tried to hire these employees back when the economy started to recover. Many had trouble hiring for some hard-to-fill skilled positions of employees who had been laid off, with most wondering why they were let go in the first place.

When talking with talent acquisition and HR leaders, one of their most important requirements for workforce planning was the ability to have a predictive custom model that would help to anticipate the workforce they would need in the future, and a customer model that could factor in internal and external changes, such as economic downturns and political change. They want to know how HR can become a more strategic partner in building acquisition plans during the up cycle of the economy or reduction plans during the down cycle of the economy.

To achieve this level of prediction, traditional workforce planning that only leverages a single set of metrics is not sufficient. Organizations need to effectively utilize advanced analytics and Big Data to build and drive the optimal workforce they need to achieve current and future business goals with the opportunity to dynamically adjust based on internal or external economic or political changes. That means constantly exploring, analyzing, and reviewing all the data available along with the supply-and-demand equation of your organization.

We define workforce planning analytics as the process of injecting advanced analytics into workforce planning in order to optimize outcomes and ensure human capital planning success. It is about leveraging advanced business analytics to address workforce planning challenges and business questions. It helps your company understand the past and the present and to anticipate your future workforce needs. When you leverage analytics, you should start with harnessing the data—Big or little, and from internal and external sources—to create economic value for the business and address human capital business questions.

The Workforce Planning Analytics pillar is strongly connected with other pillars, as well. For instance, a bad candidate triage could lead to an increase in turnover and a decrease in productivity; a lack of a strategic succession planning could affect productivity and retention of top performers, while the lack of well-being, health, and safety policies could undermine engagement, performance, and productivity of the workforce and increase operating costs. Workforce planning analytics offers organizations both short-term and medium-term solutions by identifying current skills challenges, future shortages, or surpluses of critical talent.

WHY SHOULD YOU CARE ABOUT WORKFORCE PLANNING ANALYTICS?

If you don’t know how many resources you will need in the future to drive business performance and win against your competition, you are flying blindly and more likely building your path to fail. Workforce planning analytics helps to anticipate what resources your organization would need 6, 12, 36, 60, or 120 months from now to achieve its business goals. It also helps to identify the skill sets and profiles, such as job category, job level, title, education, location, and status, which will be required or no longer needed.

It provides actionable insights in terms of skills gaps with breakdowns by demographics, helping organizations to forecast skills shortage and excesses long before they happen, and enabling them to anticipate acquisitions, retention costs, talent needs, and productivity levels, as well as addressing the following questions:

How best to leverage and work with millennials who have grown up in a digital and social media world?
What talent will be required for succession planning?
Whom to prepare to take over according to succession plans?
What staff segment will be successful at various and disparate roles?
Which talent will deliver a high return to warrant the greatest investment?
What segment and profile of the workforce are essential to achieving business goals?
What resources would you need if 60 percent of your employee population will retire in four years?
What staffing needs has your organization had in the past, what needs does it currently have, and what needs will it have in the future to be successful?

Financial Benefits of Workforce Analytics

As per any business analytics main goal, workforce planning analytics enables organizations to create economic value from their business and human capital data, including tangible benefits such as:

Reduction of workforce costs related to acquisition development and retention of talent.
Best identification of revenue stream through optimization of the staff needed at the right place, at the right time, and at the right cost.
Successful execution of the organization’s business strategy and design.
Optimization of learning and development as well as compensation and benefits.
Anticipation and planning for change to improve business operations and decisions.
Allocation of talent investment and alignment of HR with the overall corporate strategy.
Enabling organizations to get the best balance of supply and demand by hiring the needed skill sets and reducing vacant positions and excesses capabilities.
Decreasing hiring cost and the time to fill while improving the quality of hire.

Interview with Art Papas, CEO, Bullhorn

Bullhorn, Inc., is a global company headquartered in Boston that provides cloud-based software for the staffing and recruiting industry. JP Isson had the opportunity to interview Art Papas, who was named a 2014 EY Entrepreneur of the Year in New England by Ernst & Young.

Isson: How are you leveraging Big Data analytics when it comes to workforce planning such as planning resources for hard-to-fill roles?

Papas: There is a talent shortage already for some skill sets. By 2030, there will be a labor shortage across the board in almost every skilled labor category. I think about the talent pipeline not from the sourcing perspective, but rather how can I develop processes where we can bring in somebody with no education or experience in that particular field and make them successful. If you want to hire a good software developer, for instance, you will have to wait up to two years, in some cases, to find the right person with the right experience to fill that position. Or, you can hire someone and train them over the course of two years. We choose to do the latter: We hire good and talented people and then train them, optimizing our workforce planning so that we can fill a variety of current and future positions.

In order to successfully execute this strategy, you need to hire someone with the right raw intelligence and personality to fit the job. That’s where psychometrics and Big Data analytics come into play. We can give high school students an aptitude test that measures their intelligence, their speed to learn, and personality traits, and map that against other employees’ psychometrics that were successful at the same job. We combine our management instinct and experience with advanced analytics models that leverage the Big Data and psychometric factors to help us better optimize our workforce planning; it is not what you know, but what you can learn from it. Companies will increasingly have to take the role of educators in this new challenging labor marketplace in order to remain competitive and optimize their supply and demand equation.

We call the process of training our new employees without traditional education and experience high-potential entry-level (HPEL) hiring. This has dramatically changed our ability to attract and develop our talent. It will definitely play a big role in the future, and has already provided us with strategic insights for our succession planning as well as overall workforce planning.

Isson: Do you apply HPEL for a specific group of your employee population?

Papas: We do it across the board, from sales and finance to customer services—and it is really paying off.

Isson: What is the impact of analytics on the talent management process?

Papas: There’s still so much inefficiency in hiring, especially for some roles like customer services reps or sales, where turnover can be as high as 40 percent. There are some companies that hire people and nine months later they are gone.

But you can use analytics to remediate some of this turnover. For instance, if you look at your employees who have been with you long term, you can analyze the profile of the successful and loyal employees, and, from there, identify loyalty and job performance drivers, and create some velocity. Advanced analytics helps to proactively address potential challenges and issues, and helps you keep and protect your most valuable asset: your employees. If you put all those triggers in a database, you can build a model that will help you to anticipate who will be loyal and perform well at the job.

JP Isson: You were named Entrepreneur of the Year in 2014. What would be your advice for employers who are looking to make their company a Best Place to Work?

Papas: I have been very fortunate to work with intelligent and great people. I am passionate about many things when it comes to building a successful company, but I will underscore two major things:

I am passionate about delivering the best product to our customers and passionate about delivering a great experience to our customers. I want everyone working with our customers to really care about them, so much so that our customers can feel the passion and energy we have for what we do. I want them to know that we believe in what we offer and we are genuinely here to help them.
I care a lot about our employees. I want them to be successful. I love seeing them develop their careers, and I strive to create an environment where people like to succeed, where they want to do a great job, where they work harder because they believe in what they do. This is what gets you ahead of the competition, and this will definitely lead to the overall recognition for your company as a great place to work.

KEY COMPONENTS OF WORKFORCE PLANNING ANALYTICS

Being able to successfully anticipate the talent gap in supply and demand of your organization requires a comprehensive assessment of the talent planning matrix and a laserlike focus on its major components that include, but are not limited to, people, data, technology, and processes.

People

People refers to resources you need to build and implement your workforce planning strategy. These resources must have the skill sets to build workforce planning models to help your organization transform its data into actionable insights. These insights will help you address your key business questions, optimize your talent requirement analysis, and provide you with a comprehensive picture of your talent supply/demand equation.

Data

Data is the foundation of analytics and represents the backbone of workforce planning analytics. By this we mean taking care of all the data available and building statistical models that will help to assess the current and future human capital needs in order to achieve business goals. There are six major categories of data critical for workforce planning analytics:

Talent data: Includes data from HR enterprise resource planning (ERP), recruitment data, turnover and retention data, engagement data, training data, performance data, preferences and attitudes data, employee satisfaction data, and succession planning and retirement data.
Market data: Refers to information such as social media data, competitive intelligence data (getting an understanding of what your competition is doing as far as managing their talent is concerned), and voice-of-candidate data (what candidates are saying about your organization).
Business data: Includes companies’ key performance indicator metrics such as sales, revenue, customers, revenue per employee, average order size, retention rate, new business, win-back count and rate, payroll data, budget compensation and benefits data, and finance ERP data.
Economic and industry data: Refers to industry benchmark data and macroeconomic data such as gross domestic product and consumer price index.
Labor statistics data: Includes labor force data, employment data, job openings, unemployment rates, payroll wages, jobless rate, quits and layoffs, population growth, and forecast.
University graduation data: Refers to graduation by discipline with a focus on hard-to-fill positions such as those in STEM fields.

Technologies and Tools

Technology plays a critical role in enabling organizations to capture, store, manage, integrate, and analyze data to determine talent shortages and excesses; it is also integral to creating an action plan to balance the right supply-and-demand equation. Analyzing the data described in the previous section requires a statistical or data science skill set that HR and business leaders championing a workforce planning project typically do not possess. Consequently, the companies we spoke with rely on technology solutions, as they provide a great return on investment (ROI) when analyzing massive business and talent data to distill actionable and predictive insights.

There are countless companies that provide workforce planning tools, and it is easy for businesspeople to get lost in all the noise. A common question we hear from talent leaders who are looking to embrace analytics is: “Where do I start?”

In the next main section, we will explore how the IMPACT Cycle introduced in the previous chapters can be used to address these important questions, but first, here is a list compiled by Newman¹ that describes eight groups of technologies to consider in workforce planning:

Pure plays for scenarios planning and predictive models
Enterprise resource planning for the management of employee data
Application tracking system for the management of candidate data
Learning management system for the management of the learning process
Performance management for the management of the performance process
Analytics for the data warehouse
Emerging players include entrants into the workforce planning processes
In-house solutions for the development of systems to facilitate individual workforce planning needs

Processes

Based on our expertise with building workforce planning models, enriched with input from the industry leaders we spoke with, the process for a scalable and efficient successful workforce planning analytics should include resources planning predictive models and leverage the business analytics IMPACT Cycle discussed in Chapter 2.

Resources Planning Predictive Models

Resources planning predictive models will leverage all the data sets discussed in the previous section and help you to anticipate your workforce behavior and changes and provide actionable insights to your workforce planning questions such as:

What resources will your organization need in the next 2, 5, or 10 years to succeed and remain competitive?
How many resources will be leaving your organization in the next 6, 12, 24, or 60 months?
Who are the top performers who will be leaving for retirement?
Who are the top performers who will be leaving to the competition?
How many resources should you prepare for succession plans?
How many resources will you need during the different upside and downside cycles of the economy?
Which resources are high potentials who you should promote?
What resources should you ready for late retirement departure?
What skills sets should your workforce acquire to compete and win?

Predictive models already discussed in this book help to address some workforce planning questions; however, a comprehensive process for workforce planning analytics implementation is covered throughout the IMPACT Cycle redefined next.

MAKING AN IMPACT WITH WORKFORCE PLANNING ANALYTICS

To put workforce planning analytics to work, we will leverage our IMPACT Cycle. As you may recall from Chapter 2, this framework is made up of six analytics maturity stages:

Identify the business challenges to meet goals and objectives of the desired state.
Master the data to define your workforce, and conduct supply/demand and gap analyses.
Provide the meaning of supply/demand and gap analyses.
Act on the findings and recommendations.
Communicate the action plan.
Track the outcome constantly.

Identify the Business Challenge

By identifying the business challenge, we mean understanding the most pressing business goals your organization aims to achieve in the future. Focusing on these mission-critical priorities will guide the assessment of your workforce needs.

Business goals are usually defined and revisited every year and should be tied to the company’s mission, vision, and strategy. For instance, a company’s most pressing goals could include:

Increase market share by 33 percent.
Increase customer retention by 10 percent.
Increase average order size by 27 percent.
Increase profitability of customers by 15 percent.
Reduce operating costs by 25 percent.
Become the leader in your industry.

Those goals are obtained from business plan meetings with executives throughout the organization, and these meetings can also help to capture the information needed to build the competency plan, and to socialize the target objectives and desired state.

Outlining major workforce questions and assumptions that must be addressed in order to get to the desired state of human capital and the future changes is a key element to this step. These questions could include:

What is the target time line for implementing the change?
Would the desired state require a management change?
Would the desired state require a new skill set from an external source or simply an internal transfer of resources between groups, locations, or functions?
Would the desired state require a rationalization and centralization of services? For instance, analytics groups currently existing in silos but focusing on a common goal could lead to the centralization of such groups.
What are the current employee workload productivity and employee value?
Would the desired state require an increase or a decrease in full-time employees (FTE) or contractors?
Would the desired state require changes in head count, qualification, diversity, or work status?
Would the desired change create a systematic skills shortage?
Would the desired state require hiring a new specific talent and skill set?
Would the desired state require terminating or transferring a target function and skill set?

Being able to address these questions by leveraging the power of data analytics will provide insights into your organization’s past, present, and future workforce needs. Once armed with this knowledge, you can begin to socialize your plan with the executives across your organization who will be affected by any changes.

Master the Data to Define Your Current Workforce and Perform Supply/Demand and Gap Analyses

Once you have identified the business challenges to address and major underlying business questions to answer, the next step is to gather the available data to accurately describe your current workforce situation and conduct supply/demand and gap analyses.

Pulling together workforce and business data from internal and external sources, human resources information systems (HRIS), legacy systems, and any informal data storage and market data will help you develop a more robust image of your organization’s current workforce milieu. Once you have gathered this information, it is important to standardize the data coming from multiple sources in terms of format and definition, with the ultimate goal of gaining a better understanding of the current state of the workforce and establish the needs for the future state.

Describing Your Current Workforce and Building a Competency Plan

Leveraging your existing data, identify and define your current workforce by skills, positions, and functions, and then build up descriptive statistics from your data, including the creation of talent dashboards. An effective competency plan should include workforce characteristics such as:

Job title
Job category
Job level
Job status (full-time, part-time, or contractor)
Quantity required
Quality of hire
Diversity
Financial implication, cost per hire, compensation, and benefits

Performing a Supply Analysis

It is important to create a profile of your workforce to assess its state. Statistical models and tools can and should be used to create a profile to ensure you are capturing a comprehensive overview of your current workforce. This profile should include the current workload of your employees as well as the scope of work being performed. A robust profile will enable you to estimate which capabilities are needed for the current state, which is called an as-is state. This refers to the estimation of the current workforce supply and future need, and represents the supply side of the supply/demand equation.

To create a target profile (a profile based on job function) of your current workforce, consider each of the following six layers of analytics:

Put together a dashboard of each job function, including job category, job level, grade, head count, gender, and job status (FTE versus non-FTE).
Profile each job function based on variables such as job title, job level, job category, education, grades, performance rating, qualification, certification, tenure, age, race, gender, job status (FTE versus non-FTE, internal, transition, external hire), benefits and compensation, turnover, top performers, low performers, median, and length of service (LOS).
Build up a comprehensive analysis of sick leave, absence, and family leave by job function and then profile by demographic and performance rating data, LOS, job grade, location, and occupation.
Factor in environmental considerations such as lateness correlating with lengthy commute times or work by job function.
Analyze historical workforce acquisition, turnover, and retention data. Acquisition data should be profiled by the same aforementioned variables and should also include sources of talent acquisition: online and offline social media, headhunting, referral, career fair, or university.
Determine strengths and weaknesses, risks, and gaps based on your supply analysis.

Turnover Analysis

There are two types of turnover—voluntary and involuntary.

Voluntary Turnover

The three main types of voluntary employee turnover are retirement turnover, promotion turnover, and employer change turnover. To gain insights into voluntary turnover, data should be profiled based on these categories:

Understanding the reason for leaving
Destination
Correlation between turnover and acquisition channel
Turnover by grade and performance
Turnover by demographics for each job function

Based on statistical models, identify your existing employees who are at risk of leaving as well as the likely reason for leaving and the potential date.

Involuntary Turnover

Involuntary turnover should also be analyzed by demographics, company performance, and external factors such as economic upturn and downturn, performance issues, and acquisition channel and cost.

Hard-to-Fill Position Analysis

In this competitive talent market and skills shortage, special attention should be given to understanding hard-to-fill positions and vacancies. This requires a profile for each employee segment that includes demographics, performance rating data, length of service, grade, location, and occupation. An overview of attrition risks is also important to include in the profile. Once you have pulled together this information, set up meetings to validate your estimates and findings with key stakeholders across the organization.

Perform Your Supply/Demand and Gap Analyses and Forecast the Future Supply of Talent

At this stage advanced analytics are used to identify your future workforce demand by building a target profile based on the same variables you used to define your current profile. You can then apply statistical models to analyze historical data and current profiles, and determine future needs and trends. Forecasting the future supply is about calculating the difference between your existing supply (internal workforce) and your estimated demand, which will also help you assess capabilities by job function and determine where there will be a shortage (deficit) or excess (surplus).

Key information to look at for this assessment includes:

Current workforce profile by head count.
Turnovers (voluntary, involuntary, retirement, sick leave, family leave, and other).
Differential (supply and demand).
Assessment of the as-is state and the to-be state to evaluate the supply/demand balance.

It is important to conduct a gap analysis on the current and future supply/demand workforce needs.

Provide Meaning

Once you have conducted supply/demand and gap analyses leveraging advanced analytics, it is important to provide context, meaning, and business recommendations based on the findings. This includes:

A clear definition of the workforce scenario for specific key roles that uses statistical models and tools to paint a clear picture for stakeholders.
Running scenarios against required head counts.
Building statistical models to analyze and understand workload by target workforce and gain insight into work performed.
Building supply/demand analysis of workload and current and future states to ascertain demand and supply.
Identification of strengths, weaknesses, risks, and gaps.
Determination of whether the analyses result in surpluses or shortages of critical staff who are required to meet business goals and objectives.
Identification of what skills are needed to accomplish the workload.

Action Plan

After gathering the data and performing the supply/demand and gap analyses, it is important to put together an action plan that enables you to:

Develop a gap plan from the gap analysis of current and future supply and demand.
Identify future demand from workload.
Identify workforce objectives and development strategies leveraging historical trends and data.

This stage is about putting an action plan together to proactively address the outcomes of the supply and demand analysis. The final outcome is that the analysis can flag any potential staffing shortages or redundancies that might require an organization to take action in order to meet its business goals and objectives and maintain a balanced workforce. The ultimate goal of an action plan is to ensure a sustainable supply-and-demand balance that is critical for success.

Staffing Shortages

If your gap analysis reveals insufficient staffing, new acquisitions have to take place. It is important to keep in mind the profile variable for each job function where new talent acquisition is required. That profile will provide ownership and guiding principles to help ensure that the right talent is hired for the right role. These considerations include job category, location, occupation, and grade, and will steer you toward the proper recruitment channels for attracting ideal external candidates.

Excesses

The action plan for a surplus of staff is typically a reduction of the workforce or an organizational restructuring exercise to meet the new demand level for each job function. These actions will ultimately help your company achieve excellence in delivering on mission-critical business goals with optimal resources.

Before proceeding to a workforce reduction, it’s important to evaluate alternatives and revisit the following:

Could surplus employees be redeployed or transferred to other functions or groups?
Can you leverage early retirements and avoid reducing workforce from an age segment that could deliver long-term growth?
What is the best timing for the reorganization process to take place—before a holiday, after a holiday, or in the new year to ensure you limit the negative impact on employee morale? The time line should be clear and short to limit uncertainty.
What promotions or demotions will be taking place?
What would be the transition plan of the terminated employees?
With regard to compensation and benefits severances, consider long-term analysis versus short- and medium-term goals.
How can you ensure continuing optimal service and delivery after workforce reduction?

Communicate the Strategy

When it comes to important decisions about workforce strategy, transparency is best. Good communication from executive leadership teams to employees will map back to the insights derived from planning analytics and will focus on a detailed time line and phased approach that includes:

Readiness of the organization to implement the change
Change champions or leaders (for instance, who will champion the process?)
Training of people
Change management
Change experts
User experience
Tool and technologies that will be used
Metrics to track success
Channels to gather ongoing feedback

Track the Outcome

Measuring the success and monitoring areas of future opportunity in workforce planning require the continual evaluation of the process and profiles and how any changes impact assumptions and results. It is also important that you ensure that any projected changes that will affect the workforce planning assumptions are in line with the top business goals and are fed into the supply/demand findings and recommendations. Without a periodic check-in, the equation could become unbalanced and the data insights inaccurate.

Additionally, any changes made to the action plan should be reflected in the supply/demand plan. It requires constantly capturing feedback and measuring before and after states, as well as the overall ROI in terms of savings in talent acquisition, retention, and development costs. Your tracking should also consist of evaluating the contributions of new staff against the target goal, assessing how far away or close supply/demand action is to impacting the bottom line.

Companies that successfully implement workforce analytics have clear owners to monitor change and keep the larger team apprised with regular meetings to track projections against actuals, ensure they are on track for achieving expected results, and alert stakeholders of any dramatic changes or red flags. Analytics is a dynamic process, and it needs to be monitored consistently in order to detect and track changes that could derail the action plan from the target trajectory.

Many leading companies are using workforce planning analytics to drive positive business outcomes. The following are brief examples of how an organization can leverage data to achieve great results.

DOW CHEMICAL

Dow Chemical is a great example of workforce planning analytics in action. In Strategy+Business,² Vinay Couto, Frank Ribeiro, and Andrew Tipping wrote an article titled “It Makes Sense to Adjust.” The authors describe how Dow Chemical has evolved its workforce over the past decade, mining historical data on its 40,000 employees to anticipate workforce needs throughout the chemical industry’s recurrent seven–year cycle of volatility. To account for that volatility with minimal stress on its employee base, Dow needed a workforce planning strategy that was more rigorously quantitative and long-term. The company mined three years of historical data to forecast promotion rates, internal transfers, and overall workforce supply, and then designed a custom modeling tool called the Dow Strategic Staffing Simulator to project workforce needs versus resource availability three years in advance. The tool produces a snapshot of the current workforce segmented by 5 age groups and 10 job levels and then forecasts what the workforce will look like based on historical trends. Based on each business’s plan and productivity target, Dow was able to project the head count needed for each business unit.

These detailed predictions were aggregated to yield workforce projections for the entire company. Dow was able to engage in “what if?” scenario planning, altering assumptions based on internal variables such as staff promotions and external variables such as political and legal considerations. As a result, Dow’s HR department was better able to plan for various eventualities, including changing head count targets, facility closures, and anticipated volatility in the chemical industry’s fortunes.

BLACK HILLS CORPORATION

According to the Harvard Business Review,³ Black Hills Corporation is one of those companies. A 130-year-old energy conglomerate, Black Hills doubled its workforce to about 2,000 employees after an acquisition. Like many energy companies, a combination of challenges—an aging workforce, the need for specialized skills, and a lengthy time line for getting employees to full competence—created a significant talent risk. In fact, forecasts showed that within five years, the firm stood to lose 8,063 years of experience from attrition and a retiring workforce.

To prevent a massive turnover catastrophe, the company used workforce analytics to calculate how many employees would retire per year, the types of talent needed to replace them, and where those new hires were most likely to come from. The result was a workforce planning summit that categorized and prioritized 89 action plans designed to address the organization’s potential talent shortage.

Interview with Christophe Paris, Human Resources Business Intelligence Manager, Société de Transport de Montréal

Société de Transport de Montréal (STM), or the Montreal Transit Corporation, is a public transport agency that operates transit bus and rapid transit services in Montreal, Canada. STM has more than 9,500 employees with an average daily ridership of 2.5 million passengers.

JP Isson had the opportunity to interview Christophe Paris and his team members Josée Gauvreau and Cedric Lepine to discuss how they have been leveraging data analytics in human resources management, such as workforce planning at STM.

Isson: Why did STM decide to invest in workforce planning analytics?

Paris and team: It all started a few years ago when our CEO came to us with a specific set of business questions, including:

What is the business value of the human resources department?
Are we making the right business decisions?
How many employees we will need in the future to deliver optimal service to our customers?
What critical roles will we need in the future?
Can we predict our employees’ turnover?

We then realized that we didn’t have enough insights to answer his questions. And this was really the overarching point from which our People Analytics journey started. We knew that we absolutely had to look into our databases to find out what talent data or information we had available, and we started analyzing and interpreting our employee data. That was the starting point of our People Analytics.

Isson: What type of analytics did you use, and what were the benefits for your company?

Paris and team: We started to build HR dashboards, HR key performance indicators (KPIs), and HR scorecards. We also started doing some deep-dive analyses of our employees by occupational category, by experience, by profile, and by skill set. The analysis by critical roles was important because there are some critical roles that pertain to really hard-to-fill positions and some that do not. So having that segmentation approach helped us to prioritize based on our company’s business goals and the market conditions.

We were able to provide a diagnosis of our employee population and start addressing questions such as:

Where is our talent mix?
At what stage is our talent in the overall talent life cycle?
When will our employees leave for retirement?
How will our talent behave in the future? (Will they leave? Change jobs? Continue working despite retirement?)
When will they formally leave?
How many will leave at the retirement time? How many will formally retire in the next 3, 5, or 10 years?

To answer the aforementioned questions, we were lucky enough to have a lot of employee data and information from the get-go. It was information that we collected and used to report on and communicate for legal purposes and transparency.

We started by looking at some correlations analyses. We were wondering if there was a significant correlation relationship between some of our employee data and our key business challenges. We then explored hundreds of variables and found out that the number of kilometers traveled was highly correlated with the number of resources. And the correlation was pretty high, about 96 percent.

We explored the relationship between the variation in the amount of employee overtime and the number of kilometers traveled by a bus or subway driver, and found that there was a strong correlation. Based on the correlation, we then built a predictive model. This helped us to determine how many people we needed to deliver service and keep our level of productivity and customer satisfaction high. The model helped us to determine how many resources we would need by occupational category, skill set, and experience.

The findings also provided our senior management team with actionable insights for their strategic planning, and were of tremendous value for our overall workforce planning. They also helped us with our recruitment strategies, as we were able to identify how many new employees we needed in the future for each functional group, as well as:

How many employees we would need to replace due to retirement.
How many employees we would need to add due to our service expansion (when servicing more territory and more people).
How many resources we would need due to macroeconomic conditions and company business plan.

The overall correlations and predictive model were driven by the exploration of 10 major factors, such as overall spend, the number of drivers, the number of resources, the number of customers who commute, the overall traffic patterns, and so forth.

We then created a second predictive model called the “retirement predictive model,” which we built to help us to anticipate when our employees will leave for retirement. This model helped us to identify which of our employees were candidates for retirement and who exactly will leave on their retirement date. It also helped us identify employees who are more likely to continue working for an additional three to six years.

In the upcoming year, we will have nearly 2,000 people qualifying for retirement, so as an operational business, it is paramount for us to anticipate which employees will leave and when. With this in mind, we built a model for each category of occupation, from managers and support and maintenance staffs to bus and subway drivers and auto mechanics. The key learning from these models was that there is no single, one-size-fits-all People Analytics model. We needed to go local—by category of occupation, critical roles, and experience.

Additionally, there is about a 20 to 30 percent group of employees who, even if they qualify for retirement, can and will still continue to work three to five years later. To understand this employee segment, we were able to build retirement curves and models to anticipate what is coming and get ready by putting proactive strategies in place to mitigate the risk.

Isson: Did you use any specific tools to build your models?

Paris and team: The beauty of this project was that everything we leveraged was from our internal HRIS [human resources information system] and Microsoft Excel spreadsheet data. So, for a company like STM that is very operational and business driven, having a fast turnaround and leveraging low-cost software was very well received. It also helped us to quickly showcase the value; for instance, our employee retirement predictive model immediately helped us to anticipate and plan for the future.

The power of the models we developed was based on the fact that we could analyze data at a category level, as well as an employee level. This enabled us to develop macro and micro strategies when approaching our employees, and talent acquisition and retention strategies. It also enables us to understand our workforce planning from employee segments to the individual level.

Isson: Were you able to provide employee retirement breakdowns by vertical?

Paris and team: We are now able to provide future employee retirement figures by occupation, by location, and by skill set. We can predict and indicate which employees might leave in the next three, four, or five years. This helps the business to figure out how to best bridge the resource gap and continue delivering high-quality service without impacting operations.

We were able to deliver solid, easy-to-understand data, and we challenged the old adage about HR not being data driven. We are gradually changing that every day with the work we do. We were able to wow our customers, which is great, and we did this by building up our data intelligence and sharing it with senior management, as well as with all our hiring managers to ensure they have all the insights they need to proactively take action. This helped us to anticipate what trends are coming, how many resources we will need to hire, train, and onboard, and, more importantly, to become true strategic business partners within the company.

Isson: What would be your advice to someone new to workforce planning analytics?

Paris and team: It’s paramount to understand the top business questions the company aims to address. For our company, it was retirement planning and workforce planning. It is imperative to keep your business question in mind when you build HR scorecards or dashboards so the business value can be easily connected to the data.

From the data perspective, you have to look at what you already have available; for instance, what data is easily accessible, available, and good? Data integrity, data visualization, and storytelling using this information should be front and center, as it will be the way you communicate the findings and success criteria for your analysis. You have to wow your customers, both internal and external. And it’s important to remember that you don’t have to share all pieces of data you’ve found. You have to keep it simple, make it easy to understand, and just keep to the most relevant data that helps you to convey the message and key findings. And, most of all, keep in mind that workforce planning analytics is a journey; it takes baby steps and is a matter of testing, learning, and sharing. Your input and insights will provide the business with valuable foresight, helping the organization anticipate talent behavior and help your HR team to become real strategic business partners.

WORKFORCE PLANNING ANALYTICS BEST PRACTICES: DOS AND DON’TS

Based on conversations with leading companies that have successfully put workforce planning analytics into action, the following are key best practices:

Start small with a focus on a target segment of the workforce to address; the target workforce could be a group of key positions and roles.
Tie your actions to your business plan with cost-benefit data at the forefront for your discussions with business leaders.
Link workforce planning and your financial metrics, and align HR strategies with business goals.
Get buy-in from senior management because their support is paramount to ensure successful building and implementation of the planning across the organization.
Create a culture of excellence and continually monitor and reevaluate the impact of workforce changes.
Start by putting together a profile of the target workforce to focus on.
Keep your focus on critical roles and priorities. Don’t get lost in the sea of data and analytics.
Leverage your findings to create career paths and development plans that will fill future workforce needs organically (internal transition training).
Be inclusive and collaborative by including all executives across the organization to socialize your plan and avoid missteps. HR should be the key partner to drive this change.
Be consistent with metrics definition. Standardize metrics definitions used in business planning and workforce planning.
Put together the right balance of time and resources between planning and implementation to ensure you will have enough resources to implement successfully.
Start with the low-hanging fruit when hiring. Don’t get stalled with hard-to-fill positions.
Validate every assumption and finding with business partners across the organization as you learn and build up the plan.
Leverage the IMPACT Cycle to understand the composition of your organization’s past, present, and future needs.

KEY TAKEAWAYS

Workforce planning analytics helps organizations to identify the target segment of employees required to achieve business goals and business objectives.
To be successful, workforce analytics should be tied to your business plan and strategy, and include all executives of the organization in its buildup phases in order to successfully align the workforce planning cycle with the strategic planning cycle.
It is critical to interview senior executives and business leaders to gain their buy-in and ensure that they understand the importance and value of the workforce planning exercise.
Strategic workforce planning helps organizations reduce human capital costs from talent acquisition, talent development, and talent retention expenses.
Workforce planning is critical for a company’s long-term success as it helps to plan for succession and optimize the staff’s capabilities by maintaining the best talent balances between excesses and shortages.
Workforce analytics drives the allocation of talent investment and aligns HR with the overall corporate strategy.
It enables organizations to get the best balance of supply and demand by hiring the needed skill sets while reducing vacant positions and excess capabilities.

NOTES

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