In today's constantly changing talent-based economy, your workforce can either be your most important asset or your biggest liability. Despite its importance, this asset is often not adequately planned, optimised and measured. This creates a dangerous situation where organisations are oblivious of their current or future workforce requirements and gaps. This gap represents one of the most considerable constraints to their ability to effectively execute their business strategy – now and in the future.
The prominent cause is the lack of a proven and tested workforce planning framework to guide HR in providing a steady supply of talent. An effective workforce plan must address "Seven Rs" that ensures your strategic workforce plan can deliver 'the right people, with the right skills, in the right roles, with the right shape, in the right place, at the right time and the right cost'. It guides HR in providing a steady supply of talent by assessing a firm's workforce needs and quantifying its employees' competencies to identify current and future talent gaps.
Key dimensions of the 'right' principle
- Right people:
The right people are arguably the most important tangible asset of any organisation. They are responsible for how the organisation operates, creates products or services, interacts with customers, and ultimately how successful it is. HR must ensure they have committed people with the right values and work ethics.
Questions to consider when planning for the right people:
- What is the context of our organisation?
- At what phase is our business on the organisational maturity curve?
- How well does our current company culture support the desired level of performance?
- What behaviours must our people display consistently to drive the successful execution of our business strategy?
- What level of ownership, accountability and growth mindset exists within our organisation?
- How aligned are our people's behaviour with our brand positioning and customers expectations?
- What level of exposure do our people need to build empathy and truly understand our customers?
- Are our people creative and receptive to new innovation?
- What is our general attitude to learning and our agility to learn and unlearn?
2. Right Skills:
Skills refer to the capabilities required to execute the business strategy, achieve organisational goals and bridge current gaps. Translating corporate strategy into skills is arguably the most crucial part of workforce planning, but it's also the most difficult. It's as essential to acquire critical skills as it is to retain them. If changing the business model means that new strategic capabilities are required, then HRs job is to bring in people with the right skills.
Questions to consider when planning for the right skills:
- What are the human capital implications of our organisational strategy?
- What capabilities and competencies are critical to executing business strategies?
- How does our evolving business model affect the required strategic capabilities?
- What skills and capabilities would we require to execute our future strategy?
- In which set of job roles will the needed skill profiles change significantly?
- Can we align the required skills and capabilities with a degree of certainty to job families and critical roles?
- Can our currently available internal skillset support expected innovations?
- Are the required skill sets available externally? Should we outsource some specialised functions to external hands? Do we bring in expatriates?
- Do we have leaders with the required skills and capabilities to execute organisational strategy and drive growth?
3. Right shape:
This refers to having the proper workforce configuration in terms of structure, purpose, the ratio of managers and team leads to professional and administrative staff, and the right demographic mix.
As day follows night, the workforce structure must be aligned with organisational strategy; hence organisations must translate their business strategy into the workforce shape or structure that will aid execution. The workforce's shape determines what work the company can do in-house, what it will outsource, what types of jobs it needs, and the required balance of managers to employees.
Questions to consider when planning for the right shape:
- What is our organisation's business model? What disruption puts our business model at risk, e.g. Could digitisation disrupt our current staff structure?
- What skills and capabilities do we require to gain and maintain a competitive advantage?
- Does our current staffing structure have the right balance in clinical to non-clinical roles and managers to front line workers?
- Are job grades effectively distributed to align with the business requirements?
- Are talents placed in the right roles?
- Do we have the ideal workforce demographic structure and diversity?
- Is there a suitable balance of operations, support and managerial positions?
- Are individual business units structured appropriately?
4. Right size:
This refers to the number of people needed to achieve organisational goals and objectives. It provides a clear picture of what headcount the organisation needs to support its strategy. The rapidly changing business environment now means companies need to adjust their size faster than ever—and keep doing it—in response to market changes. Failing to make this adjustment, they risk falling behind their competitors or failing altogether. This makes having the right workforce size to execute business strategy and having a process for continually adapting it critical.
Questions to consider when planning for the right size:
- Is organisational workload considerably increasing or decreasing?
- Are there business disruptions that could impact our workforce and staffing needs?
- What non-core business processes should we outsource?
- Is workforce reduction possible in any area within the organisation?
- Are there any challenges in filling roles that are critical to achieving organisational objectives?
5. Right Time:
The right time is simply about being able to make key HR changes exactly when they are needed. The business environment has become more dynamic, and as a result, the people and skills required to impact businesses are rapidly changing. HRs ability to assess the company, forecast future needs, anticipate the right time to make critical people changes within the organisation, deliver training initiatives, or hire people has become a critical requirement of the function.
Questions to consider when planning for the right time:
- What would change about how we do business, both in the short and long term?
- What new capabilities will be required in the future?
- What new technologies or automation could impact operations within our industry? When are these changes expected?
- What do we need to change about our current HR model or structure to adapt to these expected changes?
- When do we need to start making key HR changes to help our business adapt to expected changes ?
6. Right Place:
Even in this technology-driven era where people can buy and sell virtually, and project teams can collaborate from various states and countries, the place where an organisation operates still plays a significant role in the company's success or failure. Natural resources and markets can be geographically restricted. Therefore, businesses often still need people to serve customers face to face or carry out critical value chain activities that are location dependent.
Questions to consider when planning for the right location:
- Are the required human resources available at the intended location?
- Can we relocate to cheaper areas without it negatively impacting our business?
- If we intend to relocate, will current employees be open to relocating? Are there sufficient people in the intended area to fill any gaps?
- Do strategic shifts (e.g. globalisation) require the distribution of our workforce across various regions or locations?
- Are their educational institutions or other sources of skilled workers in our target markets to support our talent demand?
- Are there specific socio-cultural or religious beliefs that are more prevalent in certain locations that may impact our culture or mode of operations?
7. Right cost:
Right cost is about ensuring that staff is fairly compensated for their work, competitively and within budget. It is also about measuring and managing the human resource cost and its impact, including recruiting, training, developing and maintaining the workforce.
Adopting a more data-driven and strategic approach to HR spending increases HR's ability to measure and accurately demonstrate where and how investment in the workforce impacts the business results.
Questions to consider when planning for the right cost:
- Are we benchmarking our people's costs appropriately?
- Do we have the right staff-to-cost ratio? How will our evolving business model impact the staff-to-cost ratio?
- Will the expected increase in our workforce costs be in line with our expected revenues and profit?
- Can we move to a better location in terms of cost-effectiveness?
- What are our hiring, training and development costs?
- Can we get better, cost-effective alternatives for executing core HR processes?
In an increasingly volatile business environment, the 7 Rs framework offers HR practitioners a proven approach to plan for the inevitable changes to anticipate and deliver the workforce the organisation will need.
