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Why you need an effective workforce strategy
If there’s one lesson companies can take from the past few years, it’s this: It’s essential to have an agile and flexible workforce that can respond quickly as circumstances change.
Many organizations, however, lack the data and capabilities they need to quickly assess and deploy talent, let alone the ability to forecast, scenario plan or analyze how their workforce needs to evolve in order to grow the business.
One solution: Build an analytics-driven workforce strategy capability within your business.
What is workforce strategy?
Gone are the days when workforce strategy was solely focused on headcount or cost efficiency planning, mainly taking place during the regular budget and forecast process.
Today, workforce needs are incredibly complex. What was once a war for talent is increasingly becoming a war for skills, which is translating into more targeted workforce strategies and a pay for skills philosophy. Hybrid work has become the norm and the gig economy is here to stay.
A static, yearly or quarterly process isn’t enough to keep up anymore. Today, leaders need the ability to make analytics-driven decisions, plan for what-if scenarios and analyze how their workforce needs to evolve as technology and the market changes. And yet the majority of organizations do not consistently take a strategic, scenario-based approach to workforce plans.
In short, workforce strategy has to evolve. What’s more, it should happen throughout the year as needed, not just as part of the annual or quarterly budgeting processes. And it needs to be collaborative. Workforce strategy spans every department across the business, including technology, finance and tax. It requires a firmwide commitment and directive, from the C-suite to people managers.
Many organizations lack an integrated workforce strategy capability. Instead, planning is fragmented and reactionary across the organization with, for instance, HR tackling talent while real estate scouts locations.
And sometimes, when it’s least expected, business performance drives cost cutting measures and headcount reductions or, on the other side of the spectrum, rapid hiring to hit headcount and growth goals. When these “reactions” hit headlines, executives will find themselves in the hot seat, faced with questions around their workforce strategy. How aligned are these actions to prior forecasts and scenarios, as well as organization values and messaging? How was the trust of your customers, stakeholders, and workforce incorporated into decision making? What tactics beyond headcount reductions were considered to control costs? It’s time for firms to take a hard look at where they are today and put forth an integrated and coherent workforce strategy—one rooted in analytics, scenario planning and short-, medium- and long-term forecasting.
Gaining an edge with a successful workforce strategy
The advantages of strategic workforce planning are significant, not just for the business but also for your employees. They include:
- A stronger foundation to grow your business
- Financial benefits
- A better employee experience
A stronger foundation to grow your business
- Improve your ability to execute on your business strategy by predicting needs and hiring people with the appropriate skills to achieve your vision.
Develop agility and flexibility so you can more easily shift and redeploy talent — striking a balance between employee desires for hybrid working models and employer preferences for on-site work — and better respond to situations like supply chain disruptions, changes in immigration policy and, yes, global pandemics.
Financial benefits
Improve budgeting through clearer insight into the headcount you need now and in the future.
Create efficiencies so you can more easily identify where you may have people in duplicate functions. This is especially important in mergers or acquisitions.
Gain insight into trends by developing key metric benchmarks that can help you identify workforce issues and talent risks before they impact the business. Consider such factors as labor costs, employee retirement plans, attrition, and other talent-related risks.
A better employee experience
Create better development opportunities for your existing workforce, including helping employees build skills that align with their personal career aspirations. Employees are especially hungry for development opportunities in digital and technology areas, but a 2022 PwC study found that 39% are concerned about not getting sufficient training in these areas from their employers.
Develop retention strategies by using predictive analytics to help identify top performers or people in key roles so you can implement retention tactics and balance those tactics with an ever changing and increasingly tight labor market. Consider customizing your HR strategy by the employee types that you need to grow; 59% of executives either have a plan to do this or have implemented one.
Improve recruiting by identifying the skills and attributes of top performers and targeting your recruiting efforts toward candidates with those qualities.
Get started: No-regrets moves
There are many ways to begin. Here are some steps you can take to get started on building a workforce capability within your organization:
1. Start at the top. Commitment to workforce strategy begins with the C-suite. Although HR may eventually own the process, a successful approach is created by leadership, has strong buy-in from the business and includes involvement from all stakeholders.
2. Define and clarify roles. Collaborative ownership is key. Make sure that HR, finance teams and other leaders involved in workforce strategy know what their roles and responsibilities are and how they’ll work with other areas of the business on workforce strategy decisions.
3. Invest in people and build the skills you need for workforce strategy. Data analysis and digital skills are critical to successful workforce strategy and workers want more skills and opportunities to develop them - yet only 40% report that their company is upskilling. Create upskilling and development opportunities to help teams that are involved in the process develop these skills. When recruiting, make sure job descriptions reflect the data analysis and digital skills required to handle a robust workforce planning process.
4. Develop more efficient data systems. Data is fundamental to using predictive analytics to establish future workforce needs and timeframes. Yet companies often have to spend a significant amount of time structuring, cleaning or filling in holes in data. Better data systems can lead to more productive, real-time analysis.
5. Invest in technology. Leading-edge tools—whether software, cloud-based or outsourced—allow for predictive analytics and real-time scenario planning. They can also help you track and analyze the potential impacts of forces outside your company on your workforce such as social trends, technology advancements, tax strategies and regulatory requirements. Human resources leaders across the board have this top of mind but their top challenge—data analytics—suggests less-than-perfect shifts to technology modernization.
Reimagine your business through workforce planning
Your employees are the key to your ability to grow and evolve your business. With workforce trends becoming more complex and the pace of change accelerating, it’s imperative to evolve the way you plan for your talent needs.
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Principal, Workforce Transformation Leader, New York, PwC US
Alexandra Hom
Director, Workforce Transformation, PwC US
Principal, New York, Strategy& US
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