McKinsey recently posted some interesting research on “flaws in strategic decision making”, which reports some findings that those guiding strategic workforce decisions should be thinking about.

It’s evident from the results that satisfactory outcomes are associated with less bias, thanks to robust debate, an objective assessment of facts, and a realistic assessment of corporate capabilities. A few clear paths to making successful decisions also are apparent. But even when a decision had a satisfactory outcome, executives note several areas where their companies aren’t all that effective, such as aligning incentives with strategic objectives and forecasting competitors’ reactions.

Reaching good outcomes had three themes – assessment, process and targets. So I thought I would post some thoughts on how these relate to good workforce planning (which, of course, IS strategic workforce decision making!), starting with ASSESSMENT. The McKinsey paper describes the assessment theme as “forecasting demand and competitor reaction, assessing their own capabilities, and tailoring the evaluation approach to the specific decision.” Here’s how that works in workforce planning:

  1. Forecasting demand: I think workforce planning already focuses hard on forecasting demand well. Of course, there is variation in the accuracy of those forecasts, but the attention is being paid to improving them. Using some of these tips for better decision making will in itself help to improve them
  2. Forecasting competitor reaction: Hmmm, not so much. In fact, external factors such as competitor behavior are all too often left out of the workforce planning process, and forecasts based purely on internal historical trends, with a few more internal assumptions thrown in. Take it from McKinsey – if you are sticking to the internal, you are missing one of the key behaviors to make good decisions!
  3. Assessing their own capabilities: Most workforce decisions depend on effectively executing management and/or HR programs for their success. McKinsey points out that the most successful decision making companies were very accurate at this assessment – they planned for what would happen in terms of their own execution…not what SHOULD happen. At Aruspex, we call that being “rooted in reality”. Are your organizational self assessments real?
  4. Tailoring the evaluation approach to the specific decision: Oh, here’s a bad one for many workforce planning initiatives. Many organizations continue to use one set of HR metrics built from a cube rather than tailoring the measures (evaluation) they use to the changes they are seeking to achieve…so they aren’t necessarily measuring or monitoring what they should be. Take a look at the metrics your organization has on the dashboard and see if they vary group to group, according to what the group is trying to achieve. If they don’t…that’s a problem for the quality of your decision making, and are reducing your chances of getting those “good outcomes”.

Next…how to leverage better PROCESS when making good workforce decisions.