xP&A in Action: The Benefits of Workforce Planning

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This blog was written in collaboration with Ron Montreiro

What is an organization’s most vital asset? Talent, otherwise known as people running the show. To retain top talent and to plan for the future of an organization, effective workforce planning is paramount. An integrated financial and workforce planning approach is becoming one of the most vital aspects of staying competitive in business.

xP&A (Extended Planning and Analysis) is a complete transformation of the FP&A function to move beyond the finance function to challenge the status quo, educate, shape continually, and influence management decisions. Workforce planning is a key aspect of xP&A: it goes beyond just finance and extends into HR, sales, supply chain, and marketing. Moreover, in many leading organizations it is enhanced by analytics.

This article highlights the immense benefits of one of the important aspects of xP&A – an integrated workforce planning approach. Let’s examine some of the challenges this approach seeks to address.

The challenges of a manual workforce planning

For most companies, headcount costs represent one of the most significant expense lines. However, FP&A professionals often dread the possibility of questions concerning headcount assumptions and costs. And with good reason! When it comes to providing information to managers, workforce or headcount planning is one of the trickiest areas.

Why is it so hard to get quality information for this critical part of a business? 

1. Disconnected financial and human resource Systems.
   For FP&A professionals, this means going back and forth with HR to understand assumptions. Data is often traced back to outdated standalone Excel sheets. Moreover, headcount in organizations is constantly in flux, and a manual process makes it virtually impossible to stay on top of.


2. Communication challenges and delays between functions.
   FP&A and human resources have different financial comprehension levels, which makes seamless communication challenging. This gap results in delays in obtaining quality information.


3. Lack of insight from data.
   It is very hard to create accurate forecasts if you do not have financial and workforce data in one place. But even if you do have it together, making sense of all the data is just as difficult without advanced analytics to turn the data into consumable information

The top three benefits of integrated workforce planning

In light of the above challenges, it’s no wonder that FP&A professionals would find the thought of an integrated workforce planning model appealing. Imagine the ability to answer the CEO or CFO’s questions on the fly using dynamic reporting, including the financial implications! 

The benefits of integrated workforce planning include:

1. Allowing an organization to understand current headcount challenges and opportunities such as talent gaps, diversity, retention, and make HR decisions in real-time.


2. Helping management to understand regional issues and specificities, rather than being trapped in only understanding the high-level organizational statistics.


3. When modeling scenarios, integrated workforce planning can help organizations proactively develop HR strategies and understand the financial implications of those. Extending this to the strategic plan reaps even more benefits. Organizations can proactively assess skill gaps, ensure they have plans to address them and hire the optimal talent level. 

Implementing integrated HR planning

Now knowing the huge benefits of integrated HR planning, you’re probably wondering: how can we implement it? Critical factors determining implementation success include:

1. Investment in cultural transformation, including change management. This must start with senior management and extend to all organizational team members.


2. A proper collaborative approach. FP&A and HR professionals must collaborate effectively and build trust with cross-functional partners. Joint accountability is particularly important.


3. Rethinking the annual budgeting process. FP&A should think of this approach as extending well beyond the annual budget cycle. This involves a regular cycle of interactions and meetings with all stakeholders involved in integrated HR planning.

In summary

As talent competition continues to intensify, organizations that invest in integrated workforce planning will have a significant advantage. With this crucial aspect of xP&A, organizations can proactively develop strategies to ensure their workforce is staffed appropriately, with the talent that will deliver the highest ROI for their company.

Learn more about workforce planning & analytics

Try SAP's flagship workforce planning & analytics solution: SAP Analytics Cloud