Workforce Planning and Succession Management

Truth & Myth Presented by Andrew Marty

Managing Director SACS Consulting

Objectives

• To consider why the boom in workforce planning and succession management has happened

• To review current approaches • To review the evidence of what works • To consider an optimum approach based on

this.

A Brief History

• Myth no 1 – “It’s new” • Forms of WFP have been used by the military

as far back as the Napoleonic era • Henry Ford and turnover of 150% • In the US in excess of 80% of fortune 500

companies had WFP in the ’50s. Now it is less than 40%. Why?

Why the decline in WFP?

• Different careers – less predictable • Different world – more changeable • The WFPs did not work – “spurious accuracy” • Also, talent became more freely available as

traditional career structures weakened.

Why is it rising again?

0

20000

40000

60000

80000

100000

120000

140000

160000

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

NET ANNUAL GROWTH IN WORKFORCE POPULATION AUSTRALIA 2005 TO 2060 – Courtesy Hadley Sides,

Stonnington City Council

The Rise of WFP

• Necessity is once more the mother of invention • Newer approaches are more flexible and less

mechanistic • Better results.

Current Approaches to WFP

• Huge diversity in approaches and models • Strategic to a greater or lesser degree • Complicated WFP models, often circular • Long term planning – up to 10 years • Very specific succession planning design.

Some workforce planning models

A DSTO Model

WA Government Model

GAP ANALYSIS

EVAL

UATIO

N

ASSUMPTIONS

FEEDBACK

FORECASTING

PLANNING

IMPLEMENTING

• Social• Technical• Economic• Public Sector

employment

Demographic Data• Occupation• Salary, etcTrend Data• Staff Movement• Leave Usage• Salary Profile, etc

• Replacement Staff

• Contingent Workforce

ORGANISATION DIRECTION ENVIRONMENTAL FACTORS INTERNAL LABOUR EXTERNAL LABOUR

SUPPLYSCENARIO BUILDING

• Internal staff movements

• Recruitment & selection

• Working conditions• Leave mgt

• Training & development

• Promotion / transfer• Succession

planning• Career planning

• Budgets• Remuneration• Workplace/Ent

Agreements• Incentives &

allowances

• Technology upgrades

• Accommodation • Fleet vehicles

HUMAN RESOURCES STAFF DEVELOPMENT FINANCE/BUDGETS LOGISTICAL

ANALYSING• Strategic planning• Budget forecasts• New equipment• Inflows and outflows• Working practices• Workforce culture• Reward system

STRATEGIC, PROCESS & OPERATIONAL CHANGES

DEMAND

EVAL

UATIO

N

ASSUMPTIONS

FEEDBACK

FORECASTING

PLANNING

IMPLEMENTING

• Social• Technical• Economic• Public Sector

employment

Demographic Data• Occupation• Salary, etcTrend Data• Staff Movement• Leave Usage• Salary Profile, etc

• Replacement Staff

• Contingent Workforce

ORGANISATION DIRECTION ENVIRONMENTAL FACTORS INTERNAL LABOUR EXTERNAL LABOUR

SUPPLYSCENARIO BUILDING

• Internal staff movements

• Recruitment & selection

• Working conditions• Leave mgt

• Training & development

• Promotion / transfer• Succession

planning• Career planning

• Budgets• Remuneration• Workplace/Ent

Agreements• Incentives &

allowances

• Technology upgrades

• Accommodation • Fleet vehicles

HUMAN RESOURCES STAFF DEVELOPMENT FINANCE/BUDGETS LOGISTICAL

ANALYSING• Strategic planning• Budget forecasts• New equipment• Inflows and outflows• Working practices• Workforce culture• Reward system

STRATEGIC, PROCESS & OPERATIONAL CHANGES

DEMAND

ASSUMPTIONS

FEEDBACK

FORECASTINGFORECASTING

PLANNINGPLANNING

IMPLEMENTINGIMPLEMENTING

• Social• Technical• Economic• Public Sector

employment

Demographic Data• Occupation• Salary, etcTrend Data• Staff Movement• Leave Usage• Salary Profile, etc

• Replacement Staff

• Contingent Workforce

ORGANISATION DIRECTION ENVIRONMENTAL FACTORS INTERNAL LABOUR EXTERNAL LABOUR

SUPPLYSCENARIO BUILDING

• Internal staff movements

• Recruitment & selection

• Working conditions• Leave mgt

• Training & development

• Promotion / transfer• Succession

planning• Career planning

• Budgets• Remuneration• Workplace/Ent

Agreements• Incentives &

allowances

• Technology upgrades

• Accommodation • Fleet vehicles

HUMAN RESOURCES STAFF DEVELOPMENT FINANCE/BUDGETS LOGISTICAL

ANALYSINGANALYSING• Strategic planning• Budget forecasts• New equipment• Inflows and outflows• Working practices• Workforce culture• Reward system

STRATEGIC, PROCESS & OPERATIONAL CHANGES

DEMAND

Federal Government Model

Government of California

What Should a Workforce Planning Model be?

• As simple as possible – WFP is a big project, and clarity for all stakeholders is critical

• Should make it clear what the components are and what needs to be done at all stages

• Should guide action • Should be a storehouse for an organisation’s

intellectual capital on workforce matters.

Strategy

• The value you get out of WFP will be determined by the clarity of your strategy

• Many organisations think they have a strategy, but what they have is a vision, or tactics

• True strategy says “In 3 years we are going to be in the following businesses so we will need to be the following size and shape”

• WFP puts the acid on strategy!

Here is our contribution

SACS Model

NB: default state is flatline, in absence of confident forecasts

The Environment The Environment

Time Horizon – eg 2 years

ENABLERS – Process and Culture (including Leadership)

Current State

Future State People

Plan 1 People Plan 2

SACS Model

The Environment

Current State

Current State and Environment

• Where are you now? – Demographics – ageing, gender, diversity, etc – Modelling staff retention and turnover – Location issues – Talent gaps and hard to resource areas

• Benchmarking on all of the above and consideration of environmental factors – competition, numbers of graduates, etc

• A fascinating exercise and one which yields immediate value.

SACS Model

The Environment The Environment

ENABLERS – Process and Culture (including Leadership)

Current State

Enablers

• These are the levers we use to develop our talent – Leadership – Recruitment – Talent management – training, coaching,

induction, etc – Succession management

• The “build or buy” question in developing the workforce of the future.

Myth No. 2

• “It’s the processes that matter.” • Many organisations act that way, but processes

in the end simply enable good leadership. Positive, supportive, engaging leadership is universally being demonstrated by research to be the driver of workplace health

• Good leadership with bad process is way better than bad leadership with even perfect process

• Get your leadership culture right first.

The foundations of cultural vitality.

Esteem – valuing, recognising, supporting

Alignment – outcomes focus, cascading of strategic intent, clarity about acceptable behaviours, performance development Belonging – team inclusion and cohesion, collaborative decision making, justice

Growth – job satisfaction, learning by doing, coaching

“New Brain” emotional tone Optimism, positivity, future focus

SACS Model

The Environment The Environment

Time Horizon – eg 2 years

ENABLERS – Process and Culture (including Leadership)

Current State

Determine a Time Horizon

• Naturally, coincide with the corporate plan • Myth no 3 – “Go Long!” • Recent research shows that the organisational

forecasts are wrong by 30% on average (Cappelli, 2008)

• If we invest effort in planning beyond 3, or a maximum of 4 years, we are kidding ourselves

• Incidentally, the same goes for much general strategy development

• We suggest two years with a rolling reforecast.

SACS Model

The Environment The Environment

Time Horizon – eg 2 years

ENABLERS – Process and Culture (including Leadership)

Current State

Future State

Define the Future State

• Realistic projections based on current state and forecasts of future needs. What businesses are we going to be in, and how will we deliver them?

• The shorter the time frame the greater the confidence

• Consider projections about the environment – demographic forecasts, competitor activity, regulatory frameworks, government policy, projected numbers of graduates, etc.

SACS Model

NB: default state is flatline, in absence of confident forecasts

The Environment The Environment

Time Horizon – eg 2 years

ENABLERS – Process and Culture (including Leadership)

Current State

Future State People

Plan 1 People Plan 2

Annual People Plans

• Each year of the life of the WFP will be enacted through tactical people plans

• Clear activities and objectives, as well as measures to assess their success – Specific – Measurable – Achievable – Realistic – Trackable

Flatline Forecasting

• Where strategy is deficient in a particular area, we make the forecast a flatline, based on previous trends

• Not as valuable, but can still be worthwhile. Shows how difficult it can be just to stand still!

Finally,

• Doesn’t need to be circular – base it on a rolling reforecast, annually. The model is therefore constantly correcting and moving forward

• Can be reset from any point in time – say a major change in strategy

• It suggests what needs to be done.

SACS Model

NB: default state is flatline, in absence of confident forecasts

The Environment The Environment

Time Horizon – eg 2 years

ENABLERS – Process and Culture (including Leadership)

Current State

Future State People

Plan 1 People Plan 2

The Succession Challenge

• What about positions which need more than, say, two years to be resourced?

• What about unique, hard to fill positions? • Myth no. 4 – “Good businesses must have

targetted succession plans”

Traditional Succession Planning

Anointed Anointed

Partly anointed

Somewhat anointed Ignored

Big Boss

Doesn’t Work!

• The leadership “pipeline” is actually a sieve • Like WFP, succession planning which is position

based is doomed to fail • In both, you need to identify competency

“families” which allow you to achieve your KRAs • For unique, one-off roles, you will need to

headhunt. The succession effort rarely pays off for such roles.

Competency Families

Business Development

Key Result Areas

Financial Analytical

Ability

Policy Development Procurement

Bench Strength Underpinned by characteristics of high performers and

future leaders

The Competency Myth

• Many organisations develop competency matrices based on constructs: – Professionalism – Customer service orientation – Collaborative Leadership, etc

• There is increasing evidence that these, whilst giving a good feeling, achieve little in terms of improvement in organisational performance

• Constructs are incredibly hard to get right • Behaviours work much better.

Multiple Performance Dimensions: Performance in context (Griffin et al., 2007)

Individual Work Role Behaviours

Proficiency Fulfils the prescribed or predictable requirements of the role

Adaptiveness and flexibility Copes with, responds to, and supports change

Proactiveness Initiates change, is self-starting and future-directed

Individual Task Behaviours Behaviour contributes to individual effectiveness

Individual Task Proficiency e.g. ensures core tasks are completed properly

Individual Task Adaptiveness e.g. adjusts to new equipment, processes, or procedures in core tasks

Individual Task Proactiveness e.g. initiates better way of doing tasks

Team Member Behaviours Behaviour contributes to team effectiveness rather than individual effectiveness

Team Member Proficiency e.g. coordinates work with team members

Team Member Adaptiveness e.g. responds constructively to team changes (e.g. new members)

Team Member Proactiveness e.g. develops new methods to help the team perform better

Organisation Member Behaviours Behaviour contributes to organisation effectiveness rather than individual and team effectiveness

Organisation Member Proficiency e.g. talks about the organisation in positive ways

Organisation Member Adaptiveness e.g. copes with changes in the way the organisation operates

Organisation Member Proactiveness e.g. makes suggestions to improve the overall efficiency of the organisation

Characteristics of High Performers & Future Leaders

• Intelligence – Verbal reasoning – Numerical reasoning – Abstract reasoning

• Integrity

– EG Reid Report

Characteristics of High Performers & Future Leaders • Personality – the HEXACO model is the most

recent and most powerful predictor – particularly of negative behaviours – Honesty/Humility - high for all hires – Emotionality – low for all hires – eXtraversion – depends on job – Agreeableness – depends on job – Conscientiousness – high for all hires – Openness – depends on job.

IDENTIFICATION

OF HIGH PERFORMERS -“EXEMPLARS”

AND THEIR KRAs

HIGH PERFORMANCE MODEL

Use the psychological tests and their scale scores which pick out the high performers.

List the competencies which all your high performers have

in common. Write behavioural interview

questions and a simple scoring system for each.

Behavioural Interviews What skills, knowledge, values and attitudes do they have in common?

Psychological testing What psychological characteristics do

they have in common?

High Performance Modelling

Conclusion

• Get your strategy right. You will get greater benefit from your workforce plan if you can predict specifically where you are going

• Make it short term, with competency families identified for the longer term

• Base succession planning on competency families

• Be very careful about developing competency constructs – consider using Griffin’s framework – behaviour based.