Bringing in new staff can be part of the solution, but there are other factors to take into account.
Scenario One: A global information technology company was having difficulty achieving annual revenue targets in its services business. To address this issue, regional managers brought in hundreds of new sales people - each with a track record of success in the industry and knowledgeable about the company's products. Much to management's surprise, there was little movement in incremental revenue and the targets were missed.
Scenario Two: A major healthcare insurance company was experiencing increased administrative costs as a result of a growing number of claims being handled inaccurately. To address this, the head of operations increased staff in customer service and claims by 25%. In three months, claims processing accuracy increased slightly, but not enough to offset the costs of the new staff.
To get workforce planning right, you must understand the strategic direction of the organisation and identify how to align that across goals, projects, processes and HR programs. Get to the core of the issue by asking probing questions using our framework.
The Real Story
What is going on here? Both companies took immediate action to hire the best talent they could find and focused the deployment of these people on the areas most in need. But, as each learned, throwing more people at the problem is not always the right answer.
The information technology company's revenue was flat because many of its formerly unique products were now commodities. The company's "premium pricing" strategy had rendered its offerings uncompetitive in the marketplace. Compounding this, prices could not be reduced because of the risk of diluting the value of the company's brand and thereby hurting future earnings. Management's only course of action was to rationalise the product portfolio and re-assess its channel strategy.
The healthcare insurance company's claims processing problems were the result of the reduction in claims processing systems from five to two. While the systems integration had gone relatively smoothly, merging the disparate customer service organisations was problematic. Each had their own way of adjudicating claims and nothing was documented. The solution lay in instituting one end-to-end claims process for all to follow.
The Real Issue
The challenge in getting workforce planning right is to understand the direction that the organisation needs to take strategically and identifying the essential points of alignment/linkage across goals, projects, processes and HR programs. Having an appreciation of this - and knowing the right questions to ask - enables companies to optimise investments in human capital and develop an effective workforce plan.
A framework we have found particularly helpful in our work with clients is illustrated below. Using the healthcare insurance company example above, the "framework" might look like this:
Vision/Mission
- Members will move through our provider networks, receiving evidence-based care and services, with simplified grace. Much of the care will be self-directed, based upon data regarding care, service, quality and efficiency, that is readily available through multiple channels.
Strategic Intent
- National leader in the delivery and management of chronic diseases
Product/Market Focus
- Case, disease management and pharmacy benefit management services for large global companies and the federal government
- PPO/PPS/Indemnity
Critical Required Capabilities
- Retention of most profitable customers and target marketing at underserved customer segments
- Claims flawlessly adjudicated at point-of-care using Smart Cards or the Internet
- Real-time availability of billing information to members and providers
- Claim payments rendered at point of service
- Customer intelligence and ability to tailor products based upon customer lifestyle and geographic presence
Measures/metrics
- Medicare Advantage market share greater than 70%
- Total membership growth of 20%
- Administrative cost ratio of 15%
Core Processes
- Product development
- Provider network management
- Enrollment, maintenance & billing
- Claims administration
- Compliance
Key programs/projects
- Claims system migration
- Smart Card pilot
- Provider network rationalisation
- Customer value analysis
The intent of the framework is to align all organisational work efforts explicitly with the organisation's vision, mission and values. Each successive level of framework is shaped by the content of the level above it. In many organisations, workforce planning is focused on the "capabilities" section of the model only. Without an understanding of how these capabilities align with the longer term vision, goals, target markets and desired value propositions, there is a good chance the wrong investments in people will be made. The questions below should be used by the senior management team to enable optimum investments in human capital and effective workforce planning:
- What is the growth plan?
- What is required to achieve the business plan?
- What actions are critical to long-term success?
- From the customers' perspective, what differentiates the company from competitors?
- What are the critical few programs/projects that will drive results/goal achievement?
- What changes in people, processes, organisational design or technology are planned by division/department/team next year?
- Does the organisation have the talent needed for the future? If not, what's needed?
- What are the most critical jobs/positions/roles needed to achieve the goals? Does that capability exist now?
- How does the organisation plan to get the needed talent?
- What outsourcing/offshore/vendor management opportunities are planned? What is the impact on the workforce?
- What does the team need to know, or be able to do now, that it cannot do already? (Provide leadership, gain new technical skills, for example)
- What can HR do to ensure that the organisation gets the right talent at the right time in the right place?
Too often, the HR function is brought in at the latter stages of this planning process. As "people advisors", HR's role should be to help the management team understand the implications of bringing on more staff by challenging their assumptions about what they are trying to solve. This can be done by continually asking the "what-if" questions when confronted with a directive (e.g. "what if we brought on more sales people... will this solve the revenue problem?"). It is far better to ask these questions before making investments in new staff and by questioning the process upfront, rather than after the fact.