Strategic planning: Three tips for 2009

McKinsey have recently published a brief paper offering tips for strategic planning in the current environment.  The three key tips are:

1. Be realistic about scenario planning – “In a highly uncertain environment, the advantages of scenario planning are clear: since no one base case can be regarded as probable, it’s necessary to develop plans on the assumption that several different futures are possible and to focus attention on the underlying drivers of uncertainty”
2. Intensify monitoring – “The company’s strategy, in short, must account for many more contingencies than it has until recently. Since the effectiveness of such a strategy depends on an organization’s ability to adjust rapidly as the fog starts to lift, managers must identify and intensively monitor key indicators suggesting which scenario might unfold”
3. Look beyond the crisis - “devastating as the current downturn may be, it cannot roll back fundamental market
   trends—such as the aging of consumers in Europe and North America or the continued economic development of Brazil, China, India, and Russia—which will continue to create strategic opportunities and threats”

Unfortunately, these are three things that most workforce planning approaches don’t do.  All too often we see organizations looking at only one possible future scenario; building a headcount plan they don’t monitor at all; and worst of all, saying that “there’s to much change to look into the future”.  As McKinsey points out, these are critical mistakes for people planning right now.  And they are avoidable – including these three tips in your strategic workforce planning process is not difficult – and gives you better results.  Are you following McKinsey’s strategic planning advice?

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Flaws in workforce decisions part 3 - TARGETS

The final part of my thoughts on McKinsey’s recent “flaws in strategic decision making”, which reports some findings that those guiding strategic workforce decisions should be thinking about.

Reaching good outcomes had three themes – assessment, process and targets.  I already posted on assessment and process, this one is on decision making TARGETS.  McKinsey described this theme as “aligning incentives and basing the decision on a mix of financial and strategic targets as well as on a mix of short- and long-term targets.”

1. Individuals’ incentives were aligned with strategic objectives defined by this decision.  Here’s one that’s a big deal for management – aligning goals.  What’s critical in the workforce planning process, though, is ensuring that you are clear about what your strategic objectives are.  These objectives are not “hire X headcount”, they are a rich picture that define how you will achieve the right workforce for future success.
2. Based on balanced mix of financial, strategic targets.  Wow, that’s one we are seeing more and more – making sure that your decisions AREN’T just based on your workforce budget for the next year, or on short term pressures to save money.  Rather, mix these financial targets with analysis and discussion on how those decisions will impact the overall ability to deliver on your strategy
3. Based on long- and short-term considerations.  As with point 2, considering both is vital.  We often hear people saying, “Oh, three years is too long, we can’t look that far into the future”, or “there’s too much change happening now”, but the reality is by making the decisions that you are making about what you’re doing today in the context of how you need to be successful in the long term, you simply make better decisions today – the two should not be separated, and planning for the future is vital…even if those plans change

it’s a great paper that can give you some really good insights into what qualities will mean you are helping your organization make better workforce planning decisions.  As with all opportunities to be better at workforce planning, the idea with these is to think about which are the most important for improving your process, and tackle improving in one or more of them…taking steps in the journey!  Which steps are most important to you?

Flaws in workforce decisions part 2 - PROCESS

Part two of my thoughts on McKinsey’s recent “flaws in strategic decision making”, which reports some findings that those guiding strategic workforce decisions should be thinking about.

Reaching good outcomes had three themes – assessment, process and targets.  The last post was on assessment, this one is on decision making PROCESS.   The McKinsey paper describes this as seeking contrary evidence, ensuring that
decision makers had all the critical information, giving dissenting voices the floor, reviewing the business case thoroughly even though senior executives were strongly in favor, and ensuring that truly innovative ideas reached senior managers.  How are workforce decisions doing on that front? 

1. Seeking contrary evidence.  If you get the right people in the project this will happen – and if you charter yourself with structured environment scanning, playing the devil’s advocate, and of course using that famed workforce planner tool “why”, you can find contrary evidence.  But it may not come naturally – strong voices can overcome dissent AND contrary evidence….unless carefully managed.  Our workforce planning workshops can help you with those skills.
2. Ensuring that decision makers had all the critical information.  This one sounds easy, and sounds like reports from our workforce dashboards are all we need – but take care!  If you only use internal data, and only use numbers/metrics…you aren’t giving ALL the information – in fact you aren’t giving information at all, you’re giving data.  To provide all the information you need to include interpretation, external data and opinion, and also qualitative views on the “story behind the data”.  Ask us for our “hierarchy of information” if you want more tips on how to improve in this area
3. Giving dissenting voices the floor.  Another one that’s about facilitation and project management, a lot like point 1!
4. Reviewing the business case thoroughly even though senior executives were strongly in favor.  As well as facilitation and project management skills, think about the level of the organization at which you are working.  Are the people you are talking to and working with on workforce decisions senior enough that questioning a case for which a senior executive is in favor?  You need to be!
5. Ensuring that truly innovative ideas reached senior managers.  Seems like an obvious one you can help by making sure that your project team has the best mix of resources…but it’s also a wider cultural question.  How does your organization fit on this one?

That wasn’t too hard – a good workforce planning process that mixes the quantitative and qualitative, and that is led by someone focused on being a great workforce planner will solve those!  Next….how to leverage better TARGETS when making good workforce decisions.

Flaws in the Strategic Workforce Decision Process – Part 1, Assessment

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.

Workforce Planning Fatal Flaws?

John Wheeler has a great post where he shares some hard earned experience over at Fast Fission, describing three fatal flaws for workforce planning…which we mostly agree with….

1. First Fatal Flaw: Reliance on Zealots.  Yes, it certainly can be fatal to be point sensitive on such a critical project…do NOT rely on just a few individuals who make things happen.  BUT, when I’ve seen this, often it’s because either the process is too analytical and locked behind closed doors…or because it’s just not a very good project.  Typically a good workforce planning process takes on a life of it’s own (our clients are beating the business off with a stick)…and remember that a good dose of passion (such as you might get from the occasional zealot) never goes astray!
   
2. Second Fatal Flaw: Lack of Line Experience.  Yes, you gotta know the business – or at least learn the business, because that’s what it’s all about.  If you do not have line experience, focus hard on learning it, and on being able to speak the language.  We’ve seen people without direct line experience be fantastically successful, because they learned and focused on the business
   
3. Third Fata Flaw: Lack of Skill in Data Analysis.  John says “Every workforce planning team must have core competencies in data analysis and statistics, understanding what information decision makers need, and how to effectively communicate to them” – but of course you can also have good access to these competencies if they aren’t in your team directly.  Certainly this one featured highly on our study on what makes a great workforce planner – but so too did the ability to leverage skills in others…which will also help you overcome that first flaw!

There is wisdom in John’s warnings, and learning from practitioners is unbelievably helpful in the journey to being a great workforce planner – we actively encourage you to get over and comment on John’s post sharing your own thoughts on what “fatal flaws” there are out there for up and coming workforce planners!

BUT, what you also learn from John’s advice, since you know he is still practicing, is that in workforce planning, you can survive and outgrow a “fatal” flaw if you have to.  But of course if you get the right advice on workforce planning in the first place, you won’t have to.

What flaws have you managed to overcome?

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Seeing Past the Economic Downturn

I was reading some papers from the ‘must read one day’ pile (Yes, I finally got a chance to do that, because after all, that is what long flights are for.) and I came across the inattentional blindness study (I didn’t make that up!). It was a great reminder to keep your eyes open and not just focus on the downturn news.

Here’s a quick background of Simons and Chabris' study of inattentional blindness known as “Gorillas in our midst”. The researchers asked participants to watch a video in which two groups of players pass basketballs. One group wears white shirts; the other group wears dark shirts. When the research participants are told to count basketball passes among people wearing only white shirts, they subconsciously block out the black shirted individuals. Because of this narrow focus, most participants fail to notice when a man wearing a black gorilla suit saunters into the middle of the screen, pounds his chest, and walks off screen. Intense concentration on the counting task causes people to overlook a striking element of their visual world.

The inattentive blindness study shows that goals focus attention, which unfortunately leads to people overlooking other important features of a task. So what is the relevance of this to Workforce Planning and the economic downturn?

Well, when companies are constantly bombarded with news of the downturn, the temptation is to set drastic goals to reduce expenditure, often within a very short timeframe. Think about the study. A strong goal means a narrow focus. You are so focused on cutting costs or other short-term goals that you miss a golden opportunity that would enable your organization to succeed in the long run.

So how can we avoid disaster?

Most of the time, attention is “grabbed” by events (like the bad news from the economic downturn) rather than deliberately directed. As Workforce Planners we need to ensure we don’t zoom in on some things to the detriment of others. We need to stop and take a good look around. Get a fresh perspective. See the big picture. Or as we like to call it, do an Environment Scan.

Yes, there’s some gloom out there, but there are also plenty of opportunities right now, particularly in the loosening labor market. C-Net’s “spreadsheet of sunshine”, which I discussed in a previous blog, tells us that a number of high-profile companies have recognized this, with big names such as Apple, Intel, Cisco, Facebook and Salesforce.com already targeting skilled staff who are likely to be in high demand in coming years. Yes, they’ve got their eyes on the ball like the rest of us, but they’ve seen the Gorilla too! Find our more about workforce planning in a downturn by reading our whitepaper, Making the Right Business Decisions in an Economic Downturn.