Demystifying Strategic Workforce Planning
By Stefan Haenisch, head of Strategic Workforce Planning at SAP.
How important is a future-ready workforce for your future business success? At SAP, we believe proactively shaping the #FutureofWork is more important than ever, as we are navigating a world of constant and unpredictable change, jeopardized by pandemic, war, and climate crisis, while next generations with changed values and expectations enter the workplace1. And one of the most critical ingredients of shaping the Future of Work, is shaping the future of your workforce. We therefore established a dedicated function for Strategic Workforce Planning (SWP) since the beginning of this year as part of SAP´s global Future of Work organization.
What is Strategic Workforce Planning?
So, what is Strategic Workforce Planning all about? I have talked to a lot of professionals from many different companies, and it sure means many things to many people, and different companies may focus on completely different factettes of SWP. There are clear common denominators, though, so let me give it a try on a definition:
💡 In the simplest terms, SWP is about your planning to ensure you have the right people in the right set-up to be successful in your future business.
💡 This includes factors like right roles, skills and capabilities, right composition, as well as right time, place, productivity, and cost.
The “Glue” that connects Business Strategy and People Considerations
Core to SWP is translating your business strategy to people requirements and initiating respective actions.
As such it is the “glue” connecting different elements that historically may not have been connected. For example:
- venturing into new product areas will bring implications for skill demand
- transforming business processes will likely bring changes to role demand
Likewise, SWP serves as the “glue” between different planning perspectives:
- financial planning (providing guardrails on financial and headcount budget) and people strategy (what and where to use this)
- central planning – and acting decentral on unit level
- long-term vision and implications to short-term operational plan
The planning horizon of SWP is more forward-looking compared to operational planning processes, typically 3-5 years ⌛. Yet, many questions do need to consider immediate short-term planning needs as well. Ideally you translate longer-term targets into your short-term operational plan: say based on your strategy you may have set a 3-year target that you need 100 people more in a specific role that will become more important in the future. This may translate into a target on the operational plan for the next period (e.g., 30 more next year as a first step in the target direction, considering what is possible within financial planning guardrails).
Understanding the Gap based on a Data-Driven Approach
To understand how your workforce is developing compared to the desired future state that your business strategy requires, a lot of aspects can be underpinned by data, leveraging smart people analytics 👨💻. In addition to insight on the current state, analytical models can also help predict how important factors are likely to develop in the future. The gap between desired and predicted future state shows you where taking actions may be required. To assess which potential actions may lead to which impact, scenario modeling techniques may come in handy, as described in the recent blog Using Scenario Modeling to Build the Future Workforce by @Stefanie Becker.
Enabling Business Transformation
So, in conclusion, does your business really need Strategic Workforce Planning? Well, if your business should really be very constant and never changes – rare enough – save yourself the time and effort. However, the more business transformation you are experiencing, the more critical SWP becomes for your business success! And as today’s world sees more dynamics and transformation in the business than ever before, more and more companies realize the importance of implementing Strategic Workforce Planning in a pro-active way: preparing for changing role demand, new skills, the right demographics and location strategy, and the right mix of internal versus external workers. In Automotive the drivers for SWP may be the switch to electric and new consumption models. In Banks it may be digitalization. In Manufacturing, massive changes to global supply chains. At SAP it is our large-scale transformation to the Cloud that brings significant changes to our future workforce needs. Whatever the driver may be in your real business life: Strategic Workforce Planning is the way to ensure you identify and take the right steps towards getting your workforce ready for the future!