An organization is often said to be only as good as its
people, but most business leaders don’t know the real impact of their workforce
investments on business results. Key questions that frequently go unanswered
are:
1.
What is our workforce productivity and return on
people investments? How do we rank?
2.
Can we model the workforce to optimize cost,
profit and productivity?
3.
Where does our best “A” and “B” role talent come
from? Is it better to build, buy or rent talent?
4.
What is our cost of turnover? How does turnover
impact business results?
5.
Can we get talent that costs less and/or is more
productive and engaged?
To answer these questions, we developed the "6 Cs"
framework of Strategic Workforce Planning: Capability,
Capacity, Cost, Composition, Culture and Change. I’ll address Capability
and Capacity in this post.
Capability
Capability refers to the depth and breadth of skills and abilities
the business needs from its workforce to execute its near term business strategy.
While all businesses share common sets of needs, each business is unique in the
complexity and priority of its needs at a given point in time. For example, a low
cost producer of a commodity product will have very different workforce capability
needs than a robotics firm with an emerging technology that is launching a first-to-market
product.
An important component of the capability assessment is determining
which roles are critical business contributors (“A”), significant business contributors
(“B”) or non-essential business contributors (“C”). This role allocation will
help prioritize workforce investment decisions.
Capacity
Capacity refers to the volume of workforce output needed to meet
changing external and internal customer demands. Over capacity will result in excess costs while
under capacity can lead to lost revenue and the reputational risk that comes
with missed deadlines or unmet orders. Unplanned turnover in competitive job markets
is a frequent cause of capacity concerns in high growth industries.
Project-based work, cyclical demand and rapid ramp ups are
excellent candidates for alternative staffing options to improve agility, align
costs with expected revenue and provide immediate access to skills. In
addition, non-essential “C” level business contributor roles are good targets
for outsourcing to 3rd party providers who can provide these skills
at lower per unit costs.
Next up: Cost and Composition
With workforce capability and capacity plans in place, the
next areas to tackle are workforce cost and composition. I’ll address these in
my next post.
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