Aligning Workforce and Corporate Strategies

Workforce Strategy

A combination of both short and long-term visions, goals and decisions that an organization makes with
regards to its employees. Workforce strategy is concerned with everything starting from acquiring a
workforce to ensuring that the workforce sustains.

A good workforce strategy

Is able to effectively communicate what the end goal of the workforce strategy is, the purpose for which
this end goal has been set, and a detailed plan that outlines exactly how the that end goal can be
achieved. Without an end goal, a workforce strategy is inadequate. An end goal usually relates to a
broader organizational strategy.

Corporate Strategy

A corporate strategy consists of activities policies and decisions that an organization takes to increase its
shareholder value. The context of the corporate strategy is taken into account while developing the
workforce strategy.

5 Pillars of Corporate Strategy

1. Long-term vision – With a strong understanding of the organization’s industry, core

competencies and its competitors, the long-term visions sets out to assess where the company
is today and determines where the company wants to be tomorrow, considering all the micro
and macro-economic trends that have the potential to impact the organization’s business
environment.

2. Scope of Activities – This is where the company figures out exactly what kinds of products and
services the organization can offer and in what geographical locations it can operate in.

3. Competitive positioning – This pillar considers the risks vs rewards that can come out of
different positioning in the market and decides which competitive position to take – Cost?
Quality? Exclusivity?

4. Resources – This pillar figures out how to best utilize the resources available to the organization
to support the rest of the corporate strategy.

5. Organizational culture – The organizational culture defines an organization internally and

represents the collective values, beliefs and principles of organizational members.

Factors with the potential of affecting workforce strategy

Labor Market
  Starting point for the supply of talent required to build a workforce.
 One of the biggest dependencies in building workforce strategies.
 Important for organizations to figure out what kind of skill profiles are needed for the
organizations and what kind of talent is available in the labor market.

Current and future technology

 Two technological components that can affect workforce strategy are –

1. Tech that employees use for work. Needs monitoring as to whether the advances in
tech is reciprocated with the kills necessary to operate advanced tech. Ex: Use of comupters
from typewriters.
2. Technology that the organization uses to impart services and products. Needs
monitoring as to whether the organizations operations are still viable in light of the overall
technological advancements that are taking over the world. Ex: Changing workforce dynamics
due to AI and ML.

Organization’s corporate strategy

It’s important to modify workforce strategy to fit changing corporate strategy.

Headcount increase coupled with revenue increase may serve as a quantifiable KPI to help SWP
practitioners understand the effect of SWP changes.
Aligning workforce strategy with corporate strategy creates significantly more value for the
organization.

Merging corporate and workforce strategies together

1. Focusing on the current state of the workforce

Assessing the current structure of the workforce.
Assessing the size, roles, demographic trends and locations involved with the
workforce.
Understand how the current workforce is supporting the company in achieving
its strategic goals.
2. Focusing on the future state of the workforce
This is where cross functional partnership becomes important.
Focuses on how future changes in corporate strategy may change workfare
compositions.
Discusses the implications of future corporate strategies on SWP.
3. Focusing on business drivers
Deals with understanding the relationship between key business drivers and
their impact on the distribution of workforce.
Needs more statistically driven and quantifiable analyses.
Discusses the cause and effect relationship between workforce strategy and
strategic goal achievement.
Understanding Talent Supply
Workforce supply or talent supply is the skills, education and experiences available to a company at any
given time. The availability of talent inside the organization is the internal talent supply and the talent
available in the labor market is the external talent supply.

Internal Talent Supply

It is important for an organization to understand its current and future supply of talent because it
provides insights as to where the company should be investing in talent. To have such an understanding
of internal talent supply, there are 4 activities that SWP needs to perform:

1. Segmenting the workforce into critical and non-critical areas.

This segments the workforce into different categories such as critical workforce segments or location
based workforce segments or skills-based workforce segments. Segmentation applies the Pareto
principal (80/20 principal) to an organizations workforce i.e. there seems to be 20% of the workforce
driving 80% of the value. Segmentation is where SWP focuses its efforts on in ordered to identify skill
deficits.

2. Conducting a comprehensive skills/headcount inventory.

Conducting a skills inventory allows an organization to gain insight into how qualified, skillful and
experienced its workforce is. This requires significant cross functional collaboration. Due to this being a
very comprehensive process, it’s better to start out conducting skills inventory on critical workforce
segments or by conducting pilot projects.

3. Developing an attrition model/forecast.

Replacing employees that an organization loses due to attrition is referred to as ‘backfill’. This is done so
that companies do not lose the productivity that the lost employees had brought to the organization in
terms of skills, education and experiences.

While building attrition forecasts, the different categories of attrition need to be considered i.e.
regrettable and non-regrettable attrition. The employees to take away productivity and effect the
organizational performance negatively on leaving are regrettable attrition. Employees who create room
for more productive individuals for the same payroll by leaving are non-regrettable attrition.

Next comes aggregate vs individual-level attrition. Aggregate attrition refers to overall loss of company
headcount or workforce segment headcount. Individual- level attrition focuses on creating a risk profile
for individuals in the organization that are more likely to leave. Individual level attrition forecasts tend to
combat attrition by finding ways to retain these employees showing risk of attrition. This may even be
considered a violation of employee privacy.

Time series regression is the purest form of trend analysis.

A time series regression is identical to a linear regression model.

4. Identifying future skills requirements.

Some key points to consider from the labor market during assessment of future skills requirements
include.

New entrants: New skills available in the labor market.

Currently employed: Current skills pool available in the labor market.

Exits: Employees leaving the workforce sue to retirement or change in career.

These things are to be considered when listing potential future skills. Referring to this list, forecasts for
actual skills requirement is to be made by SWP practitioners.

External Talent supply

External talent supply refers to the summation of skills, experience and education that exists in the labor
market both today and in the future. Assessing external talent supply is important to affirm that the
talent required by an org is indeed available in the labor market.

GE9 Matrix

High potential high performing individual are star performers. Potential future leaders. Should reward,
retain, train, and develop them.

High performers with medium potential are high performers. They may not have future potential but
they can develop in their current roles. Should be looked after, rewarded, developed, recognized.

High performers with low potential are solid performers. Likely to stay in the same role and are experts
at what they do, performing at a high level. Acts as mentors for others. Should retain them and keep
them up to date.
High potential medium performers are called high potential employees. Likely to become star
performers in the future. You need to let them master their current roles and map out a career path for
them. Their skills should be developed and they should be retained.

Medium performers with medium potential are called steady performers. They are solid talent. They
should be developed but also their performance needs to be monitored as they can move to any of the
other 8 boxes.

Low potential and medium performance employees are Inconsistent performers. They have reached
their maximum potential and the aim of this group is to develop them and motivate them to improve
their performance.

High potential low performers are called potential gems. May lack skills they need to perform their
jobs? Training for them should be figured out to harness their potential and improve performance.

Low performance and medium potential employees are called Average performers. We need to figure
out if full potential for these employees have been reached.

Low performing low potential employees are risks. They block roles and offer little in the way of
performance. They need to be performance managed into other boxes or let go of.

Blue boxes are ‘retain at all costs employees’.

Brown boxes are ‘try and retain and develop’ groups.
Red boxes are ‘good’.
Pink box has employees who are to let go of.

Futuristic HR
Organizational frameworks are changing dynamics and increasing in complexity as well.

Finance has two broad sections

1. Financial control (75%): The bookkeeping, treasury, etc. Without this you run out of money.
2. Financial planning and analysis (FPNA) (25%): They do the budgeting, planning. They pull the
leaves and analysis so you can execute the strategy from a financial perspective. This is forward
looking planning that drives the business forward.

Most HR functions are about 98% operational HR. 2% is OPNA (Operational planning and analysis). So
managers are not really looking at operational analytics in making HR decisions. This is because
managers view HR as a backward looking function, when in actuality HR is a forward looking function.
Succession Planning