External forces can render specific employee skills obsolete. Indeed, many organizations have applied considerable effort and resources to build a workforce only to discover, after some form of disruptive change, that many of the skills and mindsets of the employees were incompatible with the demands of evolving markets. Enter workforce strategy.
The new UNC Executive Development white paper Who’s Afraid of Workforce Strategy? explains that the focus of workforce strategy is on “developing the capability and culture required to quickly adapt the workforce.” This adaptability includes the workforce size, cost, skills, and qualities needed to execute the strategy—often under multiple future scenarios. In essence, it boils down to addressing one central question: “What do we need to do with our workforce to ensure successful execution of the business strategy, now and in the future?”
Strategy is not to be confused with workforce planning, though, which focuses on more short-term labor forecasting. In other words, planning “does not take into account the various scenarios that could disrupt the workforce’s ability to execute the long-term business strategy,” says white paper author Horace McCormick, a program director at UNC Executive Development.
Who’s Afraid of Workforce Strategy? presents a five-step framework that organizations can follow to help prepare for the launch and rollout of an effective workforce strategy. As with any approach or framework, McCormick reminds talent leaders that this framework “should be customized for your business needs and organizational culture.”
Step 1: Understand the Business Strategy and Value of the Workforce
This step answers the question: “What is the value of our workforce based on strategy, cost, and capability?” According to McCormick, HR and business partners should meet with unit and department leaders to review their current situation and capture implications, such as:
- current philosophy for developing and positioning the workforce as a competitive advantage
- performance quality of the workforce
- capabilities and skills necessary today and in the future to achieve targets based on today’s situation and strategy
- total cost of workforce (temporary labor, contract labor, part-time labor, full-time labor)
- biggest labor cost drivers.
Step 2: Determine the Disruptive Scenarios
Step 2 looks closely at which future scenarios have the potential to disrupt the value or cost of an organization’s workforce. The business unit team (HR, finance, business unit leader, and direct reports) need to collect data that will help uncover any scenarios in the external environment that could disrupt the business strategy. Next, these folks must determine which scenarios present the greatest risk. Finally, McCormick says that leaders can explore how these scenarios affect the organization’s ability to attract and retain the workforce it needs.
Step 3: Determine the Strategic Workforce Gaps
In this step, business unit leaders and their teams will answer the following guiding questions as they sort through the implications of the scenarios developed in Step 2:
- What specific—and most critical—skill, knowledge, and capability gaps need to be closed, based on what we have learned through this process?
- How will these gaps impact our ability to manage performance and grow the business?
- Do we have this talent? Can we build it or buy it? How fast do we need it?
Step 4: Integrate the Workforce Strategy
Step 3 is all about uncovering gaps in the workforce; Step 4 focuses on what to do about those gaps. At this time, leaders need to find answers to such questions as: “What specific actions do we take to close the most critical workforce gaps?” and “Where can we redeploy or rebalance people and work?” The white paper concludes that a firm, ultimately, will need to look at what changes it may need to make in its people systems and culture to address future scenarios.
Step 5: Execute and Build Momentum
In this final stage, “it is important to measure progress against the action plans and metrics, but equally important to monitor the warning signals that tell us specific scenarios are actually developing,” advises McCormick. As organizations move forward, they will want to address two key questions:
- How is the value of our workforce increasing as a result of current strategic efforts?
- How are we leveraging this new value with customers, shareholders, and stakeholders?
No doubt, workforce strategy is a challenging undertaking, and few organizations evolve beyond workforce planning to workforce strategy. Research in Who’s Afraid of Workforce Strategy? finds that organizations that do this well, “systematically transform the workforce into an agile, differentiated source of company value.” What’s more, these organizations “know that this level of workforce agility and change requires a strong ‘human capital’ mindset from business units, human resources, finance, and other functional leadership,” says McCormick.