Industrial-era organizations were often designed to emulate machines that served a specific purpose—manufacture machine tools, merchandise clothing or provide services to a community, for example.
Once the purpose was defined, the organization was designed to fit the mission. When asking a potential client to describe their organization, the material generally provided was organization charts and job descriptions. Once the nature of the work to be performed, how it would be done and who would do it was known, a strategy for managing the workforce could be formulated. Though there was volatility in the economy and markets, it was not uncommon for an organization to do the same things in the same way for decades.
Information-era organizations increasingly must be social systems capable of fulfilling a mission and meeting objectives, often in a “whitewater rapids” environment. Traditional planning methods became less effective as environmental turbulence increased and the ability to forecast the future declined.
When navigating the wilderness area of the Rogue River in Oregon I employed a conventional approach to planning. I consulted river maps, and when approaching rapids, I additionally observed the water flow from high ground and formulated a strategy suited to current conditions. What I overlooked was that by the time I got back to my vessel, the flow had changed and my strategy was obsolete. A similar dilemma faces many organizations today, as economic crises and pandemics so modify the environment that responses must become agile, rather than well-defined.
Workforce planning will be used as an example of one type of planning to illustrate how models can be developed that are better-suited to the contextual realities that all organizations face.
Traditional Planning Models
The model below is suited to creating the right workforce and sustaining its viability in an environment when many factors influencing workforce effectiveness are predictable and relatively stable.
This approach begins by assessing the adequacy of the current workforce relative to current requirements and then projecting one to three years into the future. Sources of talent loss such as turnover can be estimated based on past experience, as can retirements. Other changes, such as growth projections can also be factored in. An organization that will be changing the goods and services it offers can project talent needs. Continuous assessment of all factors that influence workforce needs can enable the projections to be revised to fit what occurs.
An even more specific planning approach can focus on specific occupations. The model below could be used by a public utility to project the requirements associated with staffing its treatment plants.
Because current realities are continuously updated, the accuracy of projections should be adequate to define the required investment in recruitment, training and career management. This example projects not only how many treatment plant operators will be required, but also the competence levels necessary in the staffing mix. This level of planning requires considerable effort, but in this case, there is a legal requirement that a lead operator be on duty at all times in order for a plant to be operated. This makes planning even more critical.
Planning Models for Turbulent Environments
The future is uncertain, and planning for it must account for this reality. Although the example of how SEAL teams plan seems to be an extreme one, it can illustrate the characteristics of a fluid strategy. Even though specific outcomes may be defined, there may be uncertainties about what will change during the time the objectives are pursued.
Scenario-based planning is an approach that can enable an organization to develop strategies that will be reasonably successful in a variety of futures. A common practice is to develop three or more scenarios. One is the most likely, while the others range from pessimistic (everything that can go wrong will) to optimistic. The strategy being considered is then tested against each of them, to determine how it is likely to work.
A strategy that will work acceptably well under any of the futures that may manifest is the objective. Yet since “whitewater” turbulence may exist, that will change the outcome continuous environmental scanning is required. The model below illustrates this approach. The key to effective use is for every action to be immediately assessed by comparing the result to the expected result and to adapt if it is necessary to stay on course.
Workforce Management Strategies That Fit
Once an appropriate and effective workforce planning model is established, there is a need to ensure the organization’s talent management strategies are aligned with environmental realities. A widely accepted principle is that a great strategy/plan is 5% and the quality of execution determines the other 95%.
An organization may know what type of workforce it needs. Yet, building it and sustaining its viability is a daunting challenge. The decimating impact of the pandemic on workforce stability was not anticipated, and some would argue that no planning model would have fully prepared organizations to deal with it. It is fruitless to debate whether organizations should have been better prepared, given that pandemics have occurred before and other events like Y2K, the economic crisis of 2007-2010 were of the “Black Swan” breed.
One of the issues with resorting how work is done and who does it in this environment is that the workforce was built in a manner that did not consider agility. Employees were selected by matching their qualifications to the competency model for the job being filled. Training and development were focused on providing them with the knowledge, skills and abilities required to perform the job well. People moved through career paths that were largely ladders. Managers coveted their talent to ensure they could meet their objectives.
Some organizations attempt to hire for the organization as well as for a specific role. This suggests they look further into the future and consider how people might progress. Career ladders may be replaced by career lattices that allow for horizontal and diagonal movement. Roles may be designed that provide more variety and latitude in the way the work is done. Some work is performed by self-directed teams.
These approaches make it easier to move work around using the existing workforce, so that workload peaks and projects can be handled by internal gig workers.
Yet adopting these workforce strategies require an enabling culture. If mistakes are punished, rather than being viewed as learning what does not work, and if initiative is likely to be viewed as insubordination, telling employees to use their judgement rings hollow. Managers who must control everything can extinguish any willingness on the part of employees to step in to deal with an issue, even it that does not appear in their job description.
The financial perspective labels training a certain short-term expense with no certain future benefits that can be objectively measured. That has contributed to the underinvestment in development in many organizations. During the pandemic, suggesting additional investment in employee training might lead one to be viewed as mad. But that may have been the best alternative to terminating talent that will be needed when conditions improve.
Training can broaden in addition to deepening knowledge and skills and existing employees may be able to better cope with reduced staffing levels if they are given support. Some of the taxpayer money spent on unemployment supplementation during the pandemic could have been better spent on keeping people employed. But without a culture that stretches employees to learn how to do all they are capable of, organizations were not well-equipped to stretch their people and to utilize them more flexibly.
Surveys indicate some of the resignations going on today are due not only to the trauma caused by the conditions over the last two years, but people being bored with what they are doing. That is a formula for turnover when there are talent shortages like those that exist now.
Facing the Future
The capabilities and the potential of current employees should be carefully assessed, and consideration should be given to investing in helping them become capable of contributing more. Even then, more work may be outsourced to contractors in the future, because they represent an expense only when they are used. An all-employee workforce is a fixed cost, since pay rates and benefits are so difficult to cut.
Currently faced with high inflation, some employers will overact to a short-term condition and grant pay increases that are too high to be sustained. Employees have come to expect that each year their pay adjustment will be the higher of the inflation rate or cost of labor increase.
This is due to organizations failing to explain that pay is managed based on the cost of labor, not the cost of living. That failure is costly and needs to be remedied. If there is a desperate need to retain people and the organization believes it must respond to short-term inflation, a one time “inflation offset” cash award should be considered, in lieu of further increasing fixed cost payroll. This can demonstrate the concern the organization has about the impact of external forces on its employees without obligating it to deal with an inflated fixed cost payroll.
Organizations must learn to plan for uncertain futures. Adopting scenario-based workforce planning supported by continuous environmental scanning can help quiet the anxiety associated with not knowing what is going to happen over the next one-to-two years. Even though plans are unlikely to turn out in exactly the way the best possible predictions suggest, resigning workforce management to reacting rather than planning will fail.