STRATEGIC WORKFORCE PLANNING...strategic workforce planning, workforce analytics and workforce...

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STRATEGIC WORKFORCE PLANNING 28 MAY 2015 | SWP & TALENT ANALYTICS SEMINAR Julia Howes, Principal, London [email protected], @juliahowes1

Transcript of STRATEGIC WORKFORCE PLANNING...strategic workforce planning, workforce analytics and workforce...

Page 1: STRATEGIC WORKFORCE PLANNING...strategic workforce planning, workforce analytics and workforce metrics. She has worked across a variety of services in this field including: – Formulating

STRATEGIC WORKFORCE PLANNING 28 MAY 2015 | SWP & TALENT ANALYTICS SEMINAR

Julia Howes, Principal, London [email protected], @juliahowes1

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TABLE OF CONTENTS

1

WHAT

02 HOW

03

EXAMPLES

04

WHY

01

TOP TIPS

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Team Biographies Julia Howes, Principal

Julia Howes is a Principal in Mercer‘s United Kingdom Talent Business.

Julia has worked in professional services organisations for over 12 years, and specialises in strategic workforce planning, workforce analytics and workforce metrics. She has worked across a variety of services in this field including:

– Formulating the business case and ROI for investment – Delivering education and learning workshops – Creating technology roadmap and implementation strategies, including change

management, stakeholder engagement and data requirements – Workforce Analytics and Planning centres of excellence structure and support – Workforce analytics projects – Strategic workforce planning projects

Julia has conducted workforce planning consulting engagements for client in a variety of industries including telecommunications, airservices, mining, manufacturing, banking and finance, health and IT, in a number of countries and regions including Australia, Asia, Europe, the Americas and Africa. Julia has previously worked at SuccessFactors (Infohrm) where she managed the North American Strategic Membership Services team the EMEA Professional Services team. Both of these teams focused on providing consulting services in workforce planning and analytics. Julia also practised as a lawyer in Australia and Vietnam.

Julia has a bachelor's degree in Law, and a bachelor's degree in Business from QUT in Brisbane, Australia.

Julia Howes Tower Place, London, EC3R 5BU, UK +44 207 178 6998 [email protected]

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WHY

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A Workforce Tsunami Is Approaching

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A new approach to managing talent is needed

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Role Changes

• Growth Roles

• Stay the Same Roles

• Decline Roles

• Move Roles

• Volatile Roles

Skill Changes

• New Roles

• Changes to Existing Roles

Worker Preferences

• Retire Early

• Retire Late

• Experience Turnover

• Flexible Working

Build versus Buy versus

Borrow

• Internal development

• External hires

• Contingent labour

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WHAT

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Strategic workforce planning is about determining actions we need to take today to provide the workforce

we need for tomorrow.

“The future depends on what

you do today” - Mahatma Gandhi

“The best way to predict your future is to create it.”

- Abraham Lincoln

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Strategic Workforce Planning is about managing risks

It directs talent actions that ensure the right talent is in the right place and at the right time to drive the right results.

What are the TALENT PLANS required to buy and build the right capacity?

What is the RIGHT COST structure?

What jobs and skills are critical to BUSINESS SUCCESS? Where, and how many?

CA

PAC

ITY RISK

Growth concerns or a weak pipeline for the future

OPER

ATION

S RISK

Lost revenue from having to slow operations or put them on hold

TALEN

T RISK

Investments in the wrong people Overspending that can result

from unpreparedness

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Our View on Strategic Workforce Planning What it is and isn’t

Resource Allocation

Performance & Development

Process

Career / Succession

Planning

Strategic Workforce Planning

Operational Strategic

Function level

Individual level

• It is a pro-actively managed process

• It is future-oriented

• It goes beyond the one-year horizon

• It is focused on critical workforce segments

• It is integrated in business process and planning.

• It is based on facts and figures

Strategic Workforce Planning is not replacing any of the existing workforce processes on an individual level, such as performance management, development and succession planning.

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KEY ELEMENTS

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Level 1

Level 2

Level 3

Level 4

Budget driven headcount planning

Workforce dashboards

Strategic workforce

planning & analytics

Human capital

planning

• Headcount data and positions • Retrospective, static reporting

• Internal / external labour analysis • Benchmarking (e.g. attrition)

• Identify key segments • Predictive models and scenarios

• Integrated in strategy process • Company-wide governance

Maturity of Workforce Planning There are different levels of maturity in workforce planning

OPERATIONAL STRATEGIC

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HOW

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Mercer’s Workforce Planning Methodology

Organisation Imperatives

Talent Implications

Talent Demand

Workforce Gaps & Risks

Talent Supply

Talent Development (build strategy)

Talent Acquisition (buy strategy)

Contingent Workforce (borrow strategy)

• Attraction • Retention • Engagement • Career Development

• Performance • Rewards • Leadership • Mobility

Quantity Quality Location

Gain strategic insights 1 Measure the

gap risks 2 Model talent management options 3 Take action 4

Demand Scenarios for Critical Segments Risk

Assessment Workforce

Plan Talent Solutions & Ownership Model

Risk Assessment

Workforce Plan

Talent Solutions & Ownership Model

Talent Deployment (transform strategy)

Talent Retention (bind strategy)

Regroup (change business strategy)

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Examples of Outputs

Gain strategic insights

Understand the organisation’s imperatives: • What is the strategic intent? • What are the main external drivers of change

and growth?

Identify the talent implications: • What critical workforce segments and

capabilities will be needed to execute the strategic intent?

Outputs: • Demand scenarios that will drive workforce

demand forecasts • Identification of the critical roles that will be the

focus of the SWP process

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Output 1 – Demand Scenarios Why do we use scenarios in strategic workforce planning?

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Consider this conversation:

HRBP, Operations Division

“How many

Engineers will we need in 5 years

time?”

“It is not possible for me to predict this. It depends.”

VP, Operations Division

For demand scenario development, we need to understand what it depends on.

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Step 1: Identify factors that could impact the business in the future forecast period

Step 2: Understand and group the factors to consider the top 3 to 5 factors that will have the biggest impact on the workforce needed (numbers and skills)

Step 3: For each major factor, define a set of outcomes

Step 5: Validate results from workshop with key managers and ensure that factors are grouped together in a logical manner

Output 1 – Demand Scenarios Scenario Development

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Step 4: Identify and record any assumptions that underpin all of the scenarios

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Scenario 1: Low Change Scenario 2: High Change

Revenue Growth

1% annual revenue growth 6% annual revenue growth

Client Type 90% corporate/ 10% individual 50% corporate/ 50% individuals

Products and solution mix 85% annuity revenue/ 15% project revenue

50% annuity revenue/ 50% project revenue

Automation and technology No adoption of new technologies Adoption of new technologies allowing for automation of administration tasks

Assumptions • No major regulatory changes will occur that will change the types of products and services that can be offered

• No major mergers and acquisitions will occur by the organisation

Output 1 – Demand Scenarios Scenario Development Example – Professional Services Organisation

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Output 2 - Critical Segments Deciding on the right level at which to do workforce planning

EXECUTING THE STRATEGIC WORKFORCE PLANNING PROCESS 17

Informs the people strategy including longer term build:buy, strategy, talent development strategy; current operational planning and talent management processes.

Informs the annual operations plan; yearly and quarterly recruitment and training plans.

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Output 2 - Critical Segments Selecting the critical roles

Poor

Good Important Critical

Low concern

Medium concern

High concern Systems Manager

Design Engineer

Research Manager

Project Manager

Ava

ilabi

lity

of s

kills

et

(inte

rnal

ly a

nd/o

r ext

erna

lly)

Critical to strategic intent/business success

Process Engineer

Manufacturing Engineer

Sales Support Quality Engineer

Brand Manager

Illustrative

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Headcount

Expected change

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Measure the gap risks

Workforce Demand • Conduct initial productivity analyses on the critical roles.

• Determine how many workers are needed under each

business scenario (demand forecast) for the critical roles, based on productivity analysis and business leaders input into how productivity and the nature of work may change.

• Analysis of type of skills and competencies needed in the future and how they differ from today.

Workforce Supply • Analysis of the current and historical workforce structure;

flows of talent (hires, promotions, terminations); and demographics trends by critical roles.

• Determine future expected headcount of the current workforce (supply forecast) by critical role.

Gap Analysis • Calculate the gap under each business scenario, which may

be either a surplus or a shortage

• Conduct a risk assessment of the gap calculated to determine which gaps require active management.

Examples of Outputs

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Output 1: Talent Demand Demand Workshops

• Generally with line managers and/or subject matter experts

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• Compile and understand relevant supporting information, summary of environmental scanning and scenario information.

• Have a good grasp of current productivity, staffing levels, and employee competencies.

Before the workshop

• Outline the strategic workforce planning process and structure of the interview/workshop so managers have time to prepare.

• Duration will vary depending upon size/complexity of the business unit, number of managers involved, and participants familiarity with strategic workforce planning.

Arrange a demand forecasting workshop

• Be prepared to challenge assumptions and points of view to ensure they are validated – ask the question ‘what if?’

• Record key outcomes discussed and any additional professional judgements, perceptions and opinions.

• Be prepared to discuss how current staffing levels and productivity will vary over time.

During the workshop

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Source: Mercer Workforce Productivity Drivers Framework.

PROCESSES

PROCESS EFFICIENCY • Processes, activities/ tasks • Time required • Performance standards • Agility, reliability & rework • Standardisation

UTILISATION • Productive time • Total time, lost time • Workflow • Knowledge sharing

SYSTEMS • Data availability • Self-service interface / support • Systems / data integration • Business intelligence

ENGAGEMENT & CULTURE • Motivation • Ownership • Challenge

INPUTS

ORGANISATION • Organisation design

• Spans/Layers • Job Design

• Roles and responsibilities

COST & CAPACITY • Headcount • Labour costs • Reward &

recognition

LEADERSHIP • Vision / Mission • Strategy / Objectives • Communication & connection • Style

• Workforce profile

• Available time

WORKFORCE STRUCTURE • Organisation design • Span of control • Job design • Roles, responsibilities,

accountability

CAPABILITIES & SOURCING • Skills • Competencies • Behaviours • Training • Experience

• Build/ buy • Hire rate • Age/ tenure/

turnover

OUTPUTS

PRODUCTION • Output / unit • Loss / unit e.g. shrinkage,

leakage • Delivered In Full On Time

(DIFOT)

SALES • Sales Volume / unit • Sales Revenue / unit • Market share • Cost of sales

SERVICE & QUALITY • Quality / unit • Satisfaction / unit • Customer satisfaction • Customer retention rate • Customer turnover rate

PROFIT • Margin / unit • Profitability by customer • ROI • NPAT • Cost to income ratio

Output 1: Talent Demand Pre-work - Productivity Drivers Framework

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Do less or the same with more

CAPACITY

OUTPUT (revenue, services,

margin, etc.)

Do less or the same with less

Do more with less

Do more with more

More

Less

Less

More

Output 1: Talent Demand Different productivity situations and profiles

-1% -2% -3% -4% -5% -6% +6% +5% +4% +3% +2% +1%

-1%

-2%

-3%

-4%

+1%

+2%

+3%

+4%

- Do more with the same…

- Do more with the same, but differently…

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Output 1: Demand Forecasting Demand Numbers Example

Year 0 Headcount To Year 1 To Year 2 To Year 3 Design Engineers High Growth 15 32 40 25 Design Engineers Marginal Growth 15 15 16 16

0

5

10

15

20

25

30

35

40

45

Demand Forecast: Design Engineers

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Output 1: Demand Forecasting Capabilities Example

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Competency Future Importance

Current Proficiency

Desired Proficiency GAP Change

Magnitude

Product Commercialisation 5 2 5 3 15

Influences and Communicates / Collaborates with Other Groups 5 2 5 3 15

People Management and Development 5 2 5 3 15

Client Focus 5 2 5 3 15

Operational Management 5 3 5 2 10

Sales Skills 4 2 4 2 8

Drives Results 4 2 4 2 8

Innovation / Creativity 3 1 3 2 6

Business and Financial Acumen 3 1 3 2 6

Technical Skills / Depth of Expertise within Field 5 4 5 1 5

Inclusive Orientation 3 3 3 0 0

Learning Agility 2 3 2 -1 -2

Strategic Consulting - - - - -

Sets Strategy and Transforms into Results - - - - -

Local Market Awareness and Presence - - - - -

Knows the Competition - - - - -

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Output 2: Supply Current Workforce Analysis

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Who comes into the organisation?

How successful is the

organisation at drawing in the kinds of people it needs

to achieve its goals?

How do people move through the organisation, through different

assignments, jobs and levels of responsibility?

How successful is the

organisation at growing and nurturing the talent it needs to execute its business strategy?

Who is staying and who is leaving?

How successful is the

organisation at retaining people who have the right

capabilities and produce the highest value?

Attraction Development Retention

• Many organisations report on these three areas in silos and struggle to see how they interact • Workforce maps clearly shows the relationship between these three flows

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Output 2: Supply Current Workforce Analysis

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External hires made in the last 12 month period

Average headcount at career level during a

12 month period

Career Levels

% of employees promoted into next career level during a

12 month period

% of terminations from career level with a 12 month

period

The Workforce Map is a picture that describes key dynamics related to the flow of people into, through and out of an organisation over time, to help answer key questions.

% of employees that had an

internal transfer within the career level during a 12

month period

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Output 2: Supply Projected Workforce Supply Example

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Role 1 Role 2

Role 3 Role 4

Output 3: Gaps and Risks Example

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Supply Demand (1) Demand (2)

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Examples of Outputs

Model talent management options

Prioritised Solutions • Workshop with HR domain experts to identify

potential solutions to close gaps and mitigate risks. This workshop would use the forecasts as well as the external and internal labour information.

• Consider: 1. Feasibility: Is the solution feasible? 2. Strategy: Which strategy will give us the

optimal outcomes? 3. Logistics: What is the best approach to

achieve the solution?

• Model the cost impact of prioritised strategies.

• Create workforce plan to meet the business strategies/plans, and/or highlight risks with the business plans.

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Senior Service Engineers 15 21 28 24 15 8 -18

Service Engineers -49 -53 -64 -73 -81 -92 -94

Service Technicians -102 -98 -111 -122 -143 -151 -160

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Identify Talent Management Options

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Buy

Bind

Borrow

Transform

Build

• What is the external availability of required talent in select markets?

• Are there benefits of buying rather than building key talent?

• Which recruitment channels are most effective?

• Is the talent/timeframe available for developing needed capabilities?

• How can changes in talent flows/ velocity impact future supply?

• How can geographic and other mobility moves impact future supply?

• Is there contract/ external agency/consulting expertise that could be utilised?

• Where can we build in flexibility through a borrow strategy?

• Are there work processes that should be re-engineered to minimize critical gaps?

• Could key roles be redesigned to better fit available talent?

• Can gaps be addressed through retention strategies?

• Over what timeframe and where is it most critical to retain specific experience or knowledge?

• What is the most effective method to gain commitment from key talent?

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Senior Service Engineers 13 19 26 22 13 -11 -21

Service Engineers -56 -64 -73 -82 -93 -95 -101

Service Technicians -118 -112 -122 -144 -158 -163 -178

Strategies / Measures Impact on Gap Cost / Benefits

Based on an average cost per headcount of 46.790 in the Service

Professional population, a 1% decrease of turnover will result in the

following savings (in million):

Increase retention 1

Improving the current turnover rate of 18% has been addressed as top priority. This will be achieved by a variety of measures, mainly by putting much more focus on a comprehensive onboarding programme with defined mentors for new joiners to reduce quick-quits. Lower turnover improves the talent supply and reduces identified gaps.

Increase productivity 2

A more comprehensive programme for service engineers and technicians will be designed and delivered within the corporate academy framework. In addition, administrative tasks will be taken away from the role of service engineers and technicians, which will lead to a higher output (in the form of units under maintenance).

Strategy Development

Senior Service Engineers 15 21 28 24 15 8 -18

Service Engineers -49 -53 -64 -73 -81 -92 -94

Service Technicians -102 -98 -111 -122 -143 -151 -160

Senior Service Engineers 15 21 28 24 15 8 -18

Service Engineers -49 -53 -64 -73 -81 -92 -94

Service Technicians -102 -98 -111 -122 -143 -151 -160

Senior Service Engineers 13 17 21 19 11 7 -9

Service Engineers -49 -53 -49 -53 -64 -73 -81

Service Technicians -102 -98 -111 -98 -111 -73 -81

2011 2012 2013 2014 2015 Total 2,01 2,39 2,81 3,28 3,88 14,4

Based on an average cost per headcount of 46.790 in the Service

Professional population, a 1% increase of productivity will result in lower hiring needs and related cost,

leading to the following savings (in million):

2011 2012 2013 2014 2015 Total 2,01 3,09 4,59 6,41 8,56 24,7

>80% 60-80% 40-60% 20-40% 5-20% >5% - <5% 5-20% 20-40% 40-60% 60-80% >80% Shortfall Surplus

2012 2013 2014 2015 2016 2017 2018

* Disguised illustration

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Take action

Step 9: Action Plan • Action plan of which solutions will be pursued with

indications of timing and associated responsibilities: • What are the requirements for specific talent

management solutions? • Who is accountable for making the solutions

happen?

• Provide recommendations on what metrics should be used to monitor the actions based the workforce plan.

Examples of Outputs

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EXAMPLES

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Buy

• To maintain the speed of expansion as fast growing 5-star airline, this company needed to hire approximately 25,000 new hires over a 5 year period.

• Analysis of key labour markets in reference to flight destinations provided a clear picture of the passive candidate pool per region. In many regions, less than ¼ of the supply were actually available to meet the demands in critical jobs/locations, when assessed by availability, quality and cost.

• The understanding of the labour markets led to new target markets, that were not the traditional labour markets.

C L I E N T E X A M P L E

• Foresight allows for the development of a talent brand and the recognition of that brand in the labour market.

• Foresight also enables the development of a recruitment strategy to find and communicate effectively with the specific recruitment targets.

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Build

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• Given the known age profile of a critical engineering role, this organisation had already put in place a new graduate programme in collaboration with a local university. Consequently they felt that the risk was appropriately managed and under control.

• Strategic workforce planning showed that the graduate programme would only replace some retiring employees, and did not fill the full gap created by increased demand and voluntary terminations.

• Consequently, the client looked at its internal career paths to determine if the average time in particular pathways could be decreased with job rotations and development opportunities.

C L I E N T E X A M P L E

Foresight allows for the development of training programs and new career paths (including developmental assignments) that bring individuals “up to speed” for filling critical jobs.

Demand

Supply, after graduate scheme

Supply, before graduate scheme

Remaining Gap, after graduate scheme

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Borrow

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• This utilities company had traditionally used contractors to gain access to strategic skills and to allow for flexibility around roles that were perceived to be volatile.

• Strategic Workforce Planning forecasts established that in both high change and low change future states, that the needs for the volatile roles where more stable and certain that currently contemplated.

• Modelling showed that reducing the proportion of contractors in this critical role, would amount to savings in the overall cost of labour.

C L I E N T E X A M P L E

Foresight enables strategic decision making for the most effective use of expensive rented labour. It also helps to identify the most effective providers as well as the establishment of relationships that will over time improve quality and reduce costs.

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Bind

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• For this client, when analysing a

key role (Service Professional) a high turnover rate of 18% was identified.

• Improving the turnover rate of 18% was addressed as top priority. Further analysis showed that this was particularly high in mid-career levels.

• Given the high recruitment and onboarding costs for this role, the client found that a 1% decrease in turnover would have high savings.

• Detailed predictive analytics showed the drivers of turnover was impacted by supervisor stability and variety of experiences and jobs.

• A holistic retention programme was put in place by focusing on the supervisor training and mentoring and career moves.

C L I E N T E X A M P L E

Foresight enables the identification of the best retention strategy for critical employment segments. Foresight also improves the effectiveness of retention strategies over time through enhanced consistency and believability in support of a recognised employment brand.

Based on an average cost per headcount of 46.790 RMB in the

Service Professional population, a 1% decrease of turnover will result in

the following savings (in million RMBs):

2011 2012 2013 2014 2015 Total 2,01 2,39 2,81 3,28 3,88 14,4

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Transform

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• For this client, analysing the productivity drivers of key engineering and technician roles identified inefficiencies.

• As a consequence a more comprehensive programme for service engineers and technicians was designed and delivered within the corporate academy framework.

• Administrative tasks were taken away from the role of service engineers and technicians, which lead to a higher output (in the form of units under maintenance).

• A 6% increase of productivity resulted in lower hiring needs and related cost savings were able to be calculated.

C L I E N T E X A M P L E

Investments in technology take time to research and implement – as do efforts to reengineer work processes (including training). Foresight allows for the informed design of targeted people practices to increase productivity such as scheduling, training, and incentive design.

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TOP TIPS

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77% 23%Yes No

24%

62%

14%

High Somewhat Not at All

Despite investments in Workforce Planning organisations are struggling to realise the promise

Source: Mercer Talent Barometer Survey

SPEND

60% Plan to

increase spend

14%

HAVE A WORKFORCE PLAN EFFECTIVENESS

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Mercer’s Lessons Learned Top tips for a successful strategic workforce planning program

TOP 10 TIPS FOR STRATEGIC WORKFORCE PLANNING 41

Have a clear but flexible methodology

The workforce plan is owned by the business, but the process is driven by HR

Focus on your critical workforce segments

Plan for more than one outcome

Find the right people (and skills) to support the process

Your workforce plan should tell a story

Workforce planning is not an “event”

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MERCER © MERCER WORKSHOPS © MERCER WORKSHOPS EXECUTING THE STRATEGIC WORKFORCE PLANNING PROCESS 42

Take a moment to discuss some of the things you’ve learned from this

section.

How will you apply this in your organisation?

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