Few companies look at workforce planning the same way they do financial investments or information technology. Yet how often do we hear company leaders talk about people being their company’s most important asset?
If you’re going to use a word like “asset” to describe people, then the least you can do is take a precise approach. No such luck, says Wharton School professor Peter Capelli. In his 2012 book, Why Good People Can't Get Jobs, Capelli observes, "For some reason [companies] have great difficulty seeing the supply of talent to their organization as the kind of business problem they routinely address in sophisticated, analytical ways."
And yet the numbers show that talent is every bit as critical to company performance as a healthy balance sheet. Companies with a high percentage of engaged employees – those who are involved in, enthusiastic about and committed to their work –outperformed their competitors in profitability, productivity and customer ratings, according to a study by Gallup. Meanwhile, "actively disengaged" employees – the 18 percent who are so unhappy that they undermine their colleagues' work – cost U.S. businesses up to $550 billion annually, says Gallop.
We need to get past the idea that HR is touchy-feely, squishy stuff. This is about company performance. Remaining competitive requires companies to rethink how they acquire, manage, and develop talent. Here are three ways to get started:
Don’t leave your workforce planning to chance. Just as you have short, medium and long-term needs for cash and capital, you have shifting needs for talent over time. Capelli suggests taking a portfolio management approach to talent that coordinates the hiring and training of workers across corporate divisions. That way, you can hedge your bets about how many people, with which skills, you should have on board, and gain flexibility to shift employees among teams as needed – while giving employees the variety that they increasingly crave.
Use data to understand and manage employees. Once-a-year performance reviews aren’t enough anymore to assess an employee's contributions and set new goals. A more comprehensive view of the workforce is essential to making even basic decisions. It's not enough to know the average age of the workforce; you also need to know whether most people in a particular job category are likely to retire around the same time. HR people must ramp up their analytical skills in response to the increased need for data.
Give HR a seat at the table – but not before they’ve earned it. Many HR professionals don't know much about how their business operates and how market trends are affecting their companies. The Chief Human Resource Officer has to understand macroeconomic trends and how they are going to affect the new skills that are going to be needed. For example, economic projections will affect how the company plans for college hiring in the coming years. Knowing the economic status of potential employees in developing countries is critical to knowing whether it makes business sense to buy companies or start subsidiaries there. According to the Society for Human Resources Management, business acumen – including knowledge of metrics and data, as well as operations, logistics, and business strategy – will be the most important competencies for HR professionals 10 years from now.
What steps has your company taken to make HR strategic?
