Every industry experiences trends. Times are good and companies can’t grow fast enough. Times are bad and companies can’t shed cost fast enough. It’s important to be able to react quickly, particularly when it comes to managing the size of a workforce.
The most competitive companies in the world take an extremely strategic, hands-on approach to this. They know exactly how many employees they need to maximize profitability without overstaffing. How do they know this magic number? The key is to deeply understand your current capabilities and how well they match current and future needs.
Step One: Identify your “keystone” roles. At most large companies, work is distributed across hundreds or thousands of jobs and every single one is important for the company’s success, but there’s typically a smaller subset of roles—about 20% of them—that really drive the company’s strategy and serve to differentiate it. For example, if your company’s strategy is to compete on price, a keystone role might be an automation expert. If your business model is more based on a growth strategy, the keystone roles might be those charged with bringing new products to market. Identifying which roles most directly drive the company’s strategy is important for maintaining competitiveness because it tells you where to put your strongest players and dedicate resources for hiring. Note: identifying keystone roles is a very different exercise than identifying who the strongest team members are. It’s more about focusing on positions and surprisingly, these positions aren’t necessarily the ones that already have the most responsibility or compensation at the company. Harvard Business Review, in fact, argues that “there are no inherently strategic positions.”
Step Two: Do a deep dive on competencies. Now that you’ve identified the keystone roles, the next step is to establish a competency framework and get a baseline understanding of how well your current workforce aligns to that framework. If you were starting from scratch, what skills, experience, and personality traits would define the keystone roles? What’s your five year strategic vision for the company and how well can your current team deliver on that? Establishing a competency framework is one of the biggest levers you can pull for boosting your company’s performance because it ratchets up skills at a meta level and helps you understand where hiring can drive future profits.
Step Three: Get out your crystal ball (Just kidding. You don’t actually need a crystal ball.) This is where the seriously competitive companies are separated from mere dabblers. If workforce planning is the art of aligning organizational goals with your workforce, workforce modeling is the art of understanding how future trends could impact your business and which parts should be scaled up or down in response. This is an especially crucial step for companies that are growing quickly as well as already large ones, particularly in sectors with higher volatility like energy, finance, commodities, and industrials. When these sectors are short on capable people, top line revenue may take a hit due to lack of capacity. Quality and safety can suffer. If a workforce is overly staffed in some areas, it means the company may be carrying more overhead than it can handle which can rapidly destroy an organization’s bottom line. Investing in workforce modeling tends to pay for itself many times over because knowing what that magic number of team members is for a range of scenarios helps to ensure that your organization will stay profitable through inevitable cycles of expansion and contraction. Companies with longer sales cycles can benefit hugely from workforce modeling as well. For instance, if your company is submitting itself for a government contract and there’s a 60% chance of closing the deal two years from now, it’s important to understand how your workforce would need to change based on all possible outcomes. Maybe you take the interim step of training up internal staff now but also develop a robust, rapid response hiring plan that kicks in if the deal closes. If you don’t have anyone with workforce modeling expertise, hire consultants who can help with best practices and helpful platforms.
Step Four: Know where the big levers are. After you get to a point where you understand how future scenarios will affect your needs, it’s important to understand what exactly your company will do if it needs to hire a large number of people quickly or — conversely — if it needs to shed a number of jobs quickly in order to reduce overhead and stay profitable. If you need a big influx of a specific kind of worker quickly, where will you get them? Could internal staff be trained? Which external industries have a surplus of workers (like retail, for example) and could they be trained? Is acquiring a smaller competitor a potential option? If your talent pipeline gets lackluster and you need to attract higher caliber candidates, could opening a new office near a tech hub help? (The research says yes, usually.) If your company needs to shed roles in order to adapt, which are the most likely candidates? Where is the muscle versus the bone in your company? Getting super strategic on your talent pipeline and overall company structure is how the world’s most competitive companies do it.
Step Five: Take a bird’s eye approach to hiring. If your company is still stuck with a rather long manual process of screening résumés, shortlisting candidates, and conducting multiple rounds of interviews to fill one vacant position, it’s time to flip the entire process on its head and start over. The world’s most competitive companies tend to let data play a bigger role in the hiring process. They know precisely which the most strategic skill sets are for their business. They know where the biggest, richest pools of talent or potential trainees are and have a proactive strategy for tapping them, on-boarding them, and getting them up to speed. They use strategies and platforms that streamline the hiring process and allow them to turn their talent pipeline from a faucet to a firehose, then back again. They have frameworks in place for defining roles and the skills required to succeed in them. They develop promotion roadmaps and communicate those roadmaps clearly to applicants and workers alike. They invest in training and the tech that lets the workforce tap the training as easily as possible.
All of this can seem like a lot and it’s true that it can take time to implement depending on the size of the company, but it’s so worthwhile. It takes your company to the next level and imbues it with the single most critical characteristic for staying competitive: adaptability.
To learn more about Kahuna Workforce Planning, please visit www.kahunaworkforce.com/#workforceplanning
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