PwC Alert Challenges of today’s businesses: Strategic people planning

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PwC Alert
Challenges of today’s
businesses: Strategic people
planning
Issue 96
June 2012
PP 9741/10/2012
(031262)
A CEO’s headache
2 Challenges of today’s businesses: Strategic people planning
PwC Alert Issue 96, June 2012
It is budget time again when the business plan will
define the basis for operational budgets, targets,
procedures and management controls. The CEO
tells investors to expect significant growth over
the next three years.
Your job is to ensure those goals are
realisable. How many people and
what skills will be needed? From
where? At what cost? How much topline growth will they drive? Which
pivotal talent should we deploy in
new businesses? Who will no longer
be needed? These questions form
the foundation of any basic people
planning programme – the process
of identifying and filling predicted
gaps in supply and demand for an
organisation’s key talent.
PwC’s 15th Annual Global CEO
Survey highlighted that people issues
continued to be at the top of CEOs’
minds for the second year running.
Some 83% of the 1,258 CEOs
surveyed globally planned to make
changes to their talent strategy. It is
said that management is, above all, a
practice where art, science and craft
meet. These words are truer when
people planning is involved.
PwC Alert Issue 96, June 2012
People planning is the very foundation
of effective talent management in
large (complex) organisations. It
requires an understanding of exactly
what kind of support the business
needs, and when. This involves a
complex mix of hiring, retraining,
relocation, retaining and a culture
change for thousands of employees.
Current standard modelling tools (for
example, annual workforce planning),
although still a relevant part of the
budgeting process, are ill-suited to
ensure a company’s strategic talent
needs are met in today’s increasingly
dynamic business environment.
Today, we’re implementing a
similar concept for large complex
workforces. The moment business
strategy changes, all aspects that
make up the human capital of a
company change immediately and
transparently to deliver the strategy.
Such rapid expansion needs a
platform to link workforce structure
and capability to company strategies we call this strategic people planning
(SPP). Having the right people can
be viewed as the engine driving the
creation of all value, which means
that identifying and bringing in the
right people is where the whole HR
process starts.
Frustrated by the lack of integration
of the human resource (HR) function,
a new approach to HR planning is
being driven by CEOs and their direct
reports globally. With supply chain
integration, the moment customer
demand changes, each link in the
supply chain tightens. This integration
has enhanced visibility and efficiency
across the entire supply chain.
Challenges of today’s businesses: Strategic people planning 3
How SPP works
4 Challenges of today’s businesses: Strategic people planning
At the most basic level, SPP manages
how organisations plan and ensure
delivery of their long term people
needs (capacity and capabilities). We
do this by projecting their HR needs on
a monthly basis over a five-year time
frame. For example, an airline’s fiveyear business plan may look like this:
reducing flights to the US, increasing
flights to Asia; moving selected
back-office functions to low-cost
environments; and phasing in new
aircraft technologies. On top of these,
management has to plan for scenarios
like regulatory changes, fluctuations in
national demand and new taxes.
SPP modelling caters for not just the
traditional physical requirements,
for example, full or part-time
employment, but also to the modern
needs of “cloud resourcing”. Here,
it taps a wide range of services
from contractors and consultants to
outsourced services or relationships
with suppliers and distributors. SPP
produces a visual representation
of workforce needs over time. It
identifies gaps in terms of additional
activities needed to guarantee that
the right people, with the right skills,
will be available at the right time for
the right cost.
Contingency plans to address the
scenarios are developed within the
baseline SPP model to assess how they
impact future demand for/supply of
human capacity and capabilities. At
different points in time, this airline
will need different types of people, like
engineers with different skill sets in
Asia compared with the US.
Then, SPP helps you narrow these
gaps by hiring, firing, outsourcing,
retraining, reassigning or – if
necessary – changing the strategy to
take into account real constraints.
An SPP approach also helps
organisations monitor the efficiency
and effectiveness of full people
integration.
PwC Alert Issue 96, June 2012
The six unique features of SPP
The SPP model showcases:
resourcing.
11. Cloud
Here, the definition of people
event controls.
44. Key
Built-in controls help highlight
is broadened to include fulltime/contract/temporary staff,
consultants, contractors and so
on. This shows you where and
what your resource pools are.
profiles.
22. Activity
Key events or projects are taken
into consideration because
they impact resource levels. It’s
important to define these upfront
so that it’s on your radar screen.
delivery.
33. Driving
Monthly and quarterly reports
are used to monitor against
actual performances. Gaps are
addressed and realigned to
ensure the integrity of the overall
manpower plan.
workforce drivers, which may
significantly impact the numbers
and skills mix of the workforce.
Examples of workforce drivers
are technology, marketplace skills
scarcity, job or organisation design.
planning.
55. Scenario
Planning various scenarios helps
organisations identify current
job roles and staffing levels and
estimate the demand for employees
for each scenario.
mining.
66. Data
Data can be sliced by level or
project, which provides analytics
to drive efficiencies. Organisations
can develop strategies to balance
demand and supply and to bridge
any forecast gaps to maximise the
efficiency and effectiveness of their
human capital resources.
People
Actions
Control
Timing and Control
Alternate Scenarios
These six unique features manage the interlink between people, actions and
control. Along with the timing of key events, needed controls in place and
alternative scenarios identified, they give management insight into and control
over their workforce.
PwC Alert Issue 96, June 2012
Challenges of today’s businesses: Strategic people planning 5
The six unique features of SPP
Effective people planning may be one
of the most challenging but valueadded areas in HR management
today. But it’s currently among the
least advanced and least understood
areas. In many companies, people
planning is just an extension of the
budgeting process and describes
little more than the cost of the
workforce. It often deals only with
headcount and misses the linkage of
people to strategy and business value
drivers. So long as people planning
is set up primarily as a control
mechanism – that is to control costs
and headcount – it will rarely enable
strategy. Instead, it will continue as a
damage control function.
Taking an SPP approach helps
align business strategy and the
delivery of people and capabilities.
It can also align people needs to
other business changes, including
relocation, efficiency drivers,
merger integration and so on.
SPP supports the integration of the
HR function by hardwiring people
issues into corporate planning and
processes by having the right people
with the right skills in the right
positions and/or locations at the
right time and/or cost with the right
flexibility.
This article was first published in The
Edge Malaysia (May 28 - June 3, 2012)
Kartina Abdul Latif is an executive director
in PwC's People & Change team. This is
the second of six fortnightly articles by
PwC Malaysia's Advisory practice. The
series seeks to challenge businesses to push
back the boundaries and evolve their core
strategic processes to stay relevant.
6 Challenges of today’s businesses: Strategic people planning
PwC Alert Issue 96, June 2012
Aligning people planning and
delivery to corporate process
PwC Alert Issue 96, June 2012
Challenges of today’s businesses: Strategic people planning 7
Here's a taste of some of the work on SPP
across our PwC global network.
How PwC helped?
The client did not know its own headcount. For the first time in their
organisation's history, PwC provided a single point of truth. We helped:
• Consolidate a workforce baseline - data was taken from many disconnected
databases and all discrepancies were addressed.
• Analyse current workforce, competencies and productivity, measured against
external and internal benchmarks leading to opportunities for improvement.
• Assess gaps, and employed a more strategic and long term approach to build
in high levels of efficiency into HR processes; for example, by strategically
maintaining vacancies.
• Leverage the SPP Scenario Planning Tool to define future workforce needs,
including cost, headcount, competency and productivity.
• Formalise HR processes to ensure transparency, accountability and efficiency
from all parties.
• Design knowledge management planning to systematise and retain
undocumented processes before retiring key resources.
• Institute monthly reviews of programme delivery to better equip the client to
prepare and take preventive actions against any emergence of further gaps.
Benefits to the client
These included:
• Substantial cost savings due to work rationalisation and a restructured
workforce that was more closely aligned to a strategic direction that more
realistically addressed the major organisational issues.
• Increased transparency, and a firmer grasp on future workforce needs and
costs.
• The ability to appropriately anticipate, prepare and plan for future workforce
needs via increased flexibility, new shift arrangements and better cross
department communication.
8 Challenges of today’s businesses: Strategic people planning
Labour optimisation - cost
cutting and knowledge
retention
PwC was engaged by
a government-owned
corporation in the energy
sector to identify labour
optimisation opportunities and
ways to increase productivity,
rationalise the current
workforce and capabilities,
and create reliable monitoring
and implementation
mechanisms to successfully
deliver all identified benefits.
The objective was to reduce
costs and set a path to align
the needs of the business to
people planning and capability
strategies.
The client was facing expected
market growth and increasing
pressure from the government
to reduce costs. At the same
time, retaining the knowledge
of its aging workforce became
an increasing priority. It was
clear that they would be
challenged to address future
workforce demands/needs.
PwC Alert Issue 96, June 2012
How PwC helped?
• Client-specific ManPowerPlanTM (MPPTM) - We developed this to facilitate
effective project management for the hiring exercise throughout the plant's
development. This included all employment events covering identification,
assessment and placement to ensure that each individual is fully inducted,
trained and productive from Day 1.
• Community relations - The client wished to maintain good relationships
with the local community and many of the employees who would be sourced
locally. This aspect was incorporated in the MPPTM including ongoing training
at local educational institutions. Rare skills and other specialised recruitment
needs were also identified.
• Knowledge transfer - It was important that as much knowledge as possible
was shared with the client during the project. This allowed the client to
develop a “cookie-cutter” methodology, allowing subsequent start-ups to rely
less on consultant support, reducing costs simultaneously.
Benefits to the client
During the 16-week project, PwC conceived a detailed and workable project
plan that allowed the client to successfully implement the rollout in the desired
timeframe and to reasonably sustain similar activities independently going
forward.
PwC Alert Issue 96, June 2012
Planning for workforce
needs at a new site
A publicly listed resources
company was looking to open
a greenfield operations site in
Malaysia. PwC was engaged
to deliver a complete HR
rollout plan for up to 400
people, over a 3-year period.
The rollout was to be planned
and delivered using a complex
and detailed ManPowerPlanTM
(MPPTM) developed by PwC.
We were able to plan and map
out all employment events and
provide the detailed costing for
the client's feasibility study.
Challenges of today’s businesses: Strategic people planning 9
Here's a taste of some of the work on SPP across our
PwC global network. (cont'd)
How PwC helped?
We:
• Developed a detailed workforce plan to relocate and ramp up their factory
with deliverables, timing and responsibilities based on input from internal
stakeholders.
• Grouped workstreams to create coordinated projects that can be managed in
an effective manner by all stakeholders and to avoid silo thinking.
• Adjusted the relocation programme to fit the fundamental business and
strategic milestones, with measurable sub-milestones; this helped to cascade
monthly and weekly action plans more efficiently to business partners and
operations managers with clear measurable milestones and responsibilities.
• Facilitated the transfer and hiring of all employees throughout the different
stages of the relocation and the ramp up.
• Planned all activities and mapped out the costs incurred for the identification,
assessment, development and placement of all required staff.
• Trained the HR teams and business partners on the consolidation processes
of the monthly and weekly action plans, including methodologies for crossanalysis and identification of areas of concern.
Transitioning to a new site,
with growth expectations
Over a 3-year timeframe, the
client, a tire manufacturer,
was planning to ramp up the
production of a new facility,
staffing up to 2,000 people,
while maintaining operations
at an existing facility before
transferring or making
their current 800 personnel
redundant. PwC was engaged
to review and recommend
processes to coordinate and
control the relocation, ramp
up activities and support their
business growth.
Benefits to the client
These included:
• A flexible and detailed workforce plan that addressed all aspects of each
employment event over the client's 3-year timeframe, covering the full
relocation and ramp up; with allocated tasks, responsibilities, timing and
measurement owned, and understood by the leadership.
• A project action plan that reported process with the support of local
implementation project management teams to ensure effective
implementation of the workforce plan.
10 Challenges of today’s businesses: Strategic people planning
PwC Alert Issue 96, June 2012
PwC Alert Issue 96, June 2012
Challenges of today’s businesses: Strategic people planning 11
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Contacts
Contact us to explore your people planning strategy:
Kartina Abdul Latif
Executive Director
PwC Advisory Services Sdn Bhd
Tel: +60(3) 2173 0763 / +60(19) 3303 169
[email protected]
Ramon A. Chelva
Executive Director
PwC Advisory Services Sdn Bhd
Tel: +60(3) 2173 0665 / +60(12) 2977 779
[email protected]
Shafenaz Farouk
Associate Director
PwC Advisory Services Sdn Bhd
Tel: +60(3) 2173 1358 / +60(12) 6984 699
[email protected]
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