Scenario planning and talent forecasting can help talent development professionals brace—and prepare—for future disruption.
Learning and talent development budgets have grown rapidly during the robust bull market of the past 11 years. As a result, some talent development professionals haven't needed to pay attention to deep profit and loss analysis for our units.
While the TD function has often been viewed as a cost center, the 2010s saw it emerge as a critical driver of recruiting, employee engagement, brand building, and growth. Yet, the COVID-19 pandemic—and the economic aftermath—has turned our field on its head. The same leaders now face a different reality amid unprecedented market volatility, consumer uncertainty, supply chain disruption, staff dispersion, and threats to community health.
During an economic downturn, driving business outcomes takes a different kind of talent planning and support, because the possibilities are both less certain and less predictable. Military and emergency preparedness planners have widely used scenario planning—a strategic future planning process that dates back to the 1940s with the Cold War—to anticipate potential conflicts and disasters and plan response strategies. But with a few exceptions, it's gone largely unheralded in the world of corporate strategy—after all, who gets credit for planning around events that never happen?
As HR and talent development leaders diagnose the business impact of today's crisis, scenario planning offers them a powerful tool not just for now but for the future of our economy and public health and for the long-term timeline for recovery, which remains uncertain.
An early success story involves the Texas grocery chain HEB. HEB has long developed an active emergency preparedness department to anticipate potential problems with its global supply chain. As reports of a deadly new virus escaped from Wuhan, China, the grocery chain rediscovered the tabletop exercises it had conducted for H1N1 and used them in today’s crisis. As a result, it was able to quickly institute new customer and worker protections, sick leave policies, and social distancing protections in stores because it saw that the world was trending toward pandemic—not containment.
It's not that forward-looking talent forecasting became important overnight because of the COVID-19 outbreak. The challenges of the future of work and digital transformation require tool-like scenario planning for evaluating possible futures such as the impact of automation, artificial intelligence (AI), and other technologies on talent planning. The global turn of events from COVID-19 has created a new urgency for refining talent planning, both in the immediate term and for the turbulent economy ahead.
A way forward
In life, practice makes perfect. Attempting a task once, evaluating results, and correcting errors can improve the outcome. Unfortunately, TD is an arena in which there isn't the luxury of time for dress rehearsals—and perhaps with good reason, because companies have finite resources to prepare for counterfactual or future events that may never come to pass.
As a result, when a crisis does arrive—whether it is a disease, a market shock, technology disruption, or geopolitical tension—talent strategists are reacting in the moment rather than adapting pre-existing playbooks to emerging threats.
The level of disruption the world is experiencing in 2020 will lead to new products, policies, and processes that may be difficult to predict. But endless spinning and worry is the enemy of decisive action. Instead, companies need a method for evaluating potential future states and landing on a clear strategy.
Scenario planning, in which an organization develops a set of possible future realities and then plans out how it would react if those potential futures became reality, is a technique to practice for the unknown while taking concrete steps today to update the firm's budget and priorities to respond to immediate needs.
First and foremost, scenario planning forces a company to identify critical decision makers and get them into one room (virtual or in-person) to think together about future options for talent alignment. Doing so is a forcing mechanism for both setting out the important roles in a crisis and ensuring everyone is on the same page about the threats.
Second, scenario planning prompts decision makers to decide on the dimensions of analysis. In the context of the current COVID-19 crisis, for instance, leaders can evaluate how much of a direct hit the business will take and define the new normal of market demand and revenue during the turnaround phase. They can also identify mid- to long-term talent needs. Determining this up front can help reveal whether a company is aligned on a vision and help leaders address gaps.
Finally, scenario design itself can be framed positively or negatively—anticipating both the downturn and long-term recovery. Looking at best-case scenarios can inspire visionary ideas, open up creative thinking, and foster cross-departmental collaboration. Negative scenarios force leaders to anticipate potential threats and plan out the responses. Either way, the immediate task at hand is to get critical decision makers to evaluate whether they have the same perceived threats and hopes for the company—and to practice their response options.
Conventional scenario planning looks a lot like the military wargaming. The military model of scenario planning revolves around planning for a specific threat in advance. The variables are the way that threat presents and the potential response to each scenario.
For example, let's assume a country is threatening the US. That threat could take one of three forms: state-sponsored cyberterrorism, a satellite attack from space, or an air or naval attack using conventional forces. A successful response looks different for each context. As such, participants learn and unlearn potential preparations to plan for each threat. This type of exercise is most often used when a scenario is a low probability but would have a severe impact.
Future state design
Scenario planning can also be more open-ended. Often called future state design, this version centers on participants constructing stories and planning for multiple future possibilities. It starts with only basic assumptions and enables the participants to build a creative narrative around both positive and negative externalities. The exercise begins with a few fixed assumptions and builds several future scenarios around those assumptions, then plans out reaction to those possible futures.
For example, the Shift Commission's Report of Findings examines the impact of automation on the labor force and work. The dimensions of analysis were built around two yes-or-no questions: Are there more or fewer jobs in the future? Is work traditional (working for an organization 9–5) or nontraditional (freelance)?
Constructing competing narratives against those assumptions enabled participants to explore optimistic futures (AI matches everyone to a job they love) and dystopian ones (robots replace most jobs and mass unemployed populations revolt). This kind of scenario planning is most often used when an organization needs to analyze many different change pressures.
The current crisis is already forcing companies to re-evaluate their talent strategies and budgets, and new restrictions emerge every day. Those could spiral to endless what-ifs, so keep the assumptions clear and the constraints tight. No one is an expert in all of these areas.
However, if you can anticipate possible outcomes or work with a trusted partner to forecast several potential scenarios, you can set yourself up for success in many different futures. That leads to numerous clear assumptions about your responsibilities for talent decisions and forecasting. It will also help you identify how your operational model should begin to change in coming weeks.
Below are some key factors to address in the near term as your organization completes its damage assessment from the current crisis—and its impact on consumers and the economy, healthcare, talent pipelines, and products and services.
Get control of the budget now. As the TD profession—and the world—reverts to recession footing, the boon of the past decade is coming to a screeching halt. The expectations of businesses will as well. Now is the time to work with the finance team to quickly get a handle on spending—everything from staffing, systems, and programs to membership programs and employee perks. Set a goal for cost savings, perhaps 10–25 percent, and start working on options for reduction. Ideally, the company will be able to focus on providers and perks and can draw on the existing talent pool to help pivot as things continue to change daily.
Understand your own assets and content. Chances are you're spending a large amount on content and training contracts right now that are yielding few engagements from your learners and even less value in terms of TD.
To pivot, quickly audit the content that employees are consuming. Narrow down to 15–20 courses that have the most impact and relevance. How many existing programs is that content currently integrated into and will affect?
Finally, look to free or low-cost open-source approaches that leverage content. Can you replicate paid content through free online resources and activities via YouTube, LinkedIn Learning, Coursera, and other open learning resources? Can you renegotiate with partners that charge for this content?
Thrift is going to become an essential new value for TD.
Evaluate your technology stack. While consolidating duplicate systems is almost always a good idea, eliminating platforms that enable digital delivery is a bad idea when an economic downturn is tied to quarantines and remote work. In fact, it may be time to invest in platforms that enable new approaches to delivery, such as video role play or using a learning experience platform to better enable curation.
Additionally, as you make any platform decisions right now, take into account a lack of dependence on internal IT capacity. IT budgets will tighten and the priority will be customer-facing technology.
That will make it harder to get access to single-sign-on and writing integrations. Focus on cloud-based platforms that can support TD and recruitment.
The advantage goes to planners
As you're making decisions in the near future, keep in mind that this is likely to be a temporary recession but with many variables along the way. So, take action today on what you know but assemble the team you need to conduct scenario planning as soon as possible.
After this is over, the advantage will go to those who considered a range of possible futures and have established the infrastructure to ramp up quickly, whatever the circumstances.
No one knows how long this will last or what the full impact of the COVID-19 crisis will be on the economy and individual businesses. Given the bull market that came out of the last recession, we must recognize that, while cuts may be necessary in the short term, a better economy could only be a few months away. At that point, companies will need the infrastructure and talent to ramp up quickly as businesses bounce back.
As the economy reverts to a new normal (whatever that may be), companies that have used this downturn as the impetus to re-evaluate and forward plan will emerge as the leaders of the new economy.
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