Category: Archive

F rom its perch at the very top of Fortune’s “Best Companies to Work For” rankings, Google dispatches a select group of employees to predict the company’s demand for skills and the future availability of talent to meet that demand. Google’s workforce planning process covers all 16,805 employees worldwide. The finance function owns workforce planning at Google, but the inputs come from Prasad Setty, director of people analytics, and a group of analysts pulled together to support the business units and functions that require workforce data.

    “Workforce planning is one product that our group supplies,” Setty says. “Our charter is to make sure that every people decision made at Google is made on the basis of data, not emotions. We also help the organization think broadly about talent management.”

    The members of the people analytics group include industrial engineers, organizational psychologists and traditional MBAs. “We look for a specific analytics background, not a human resources background, because the human resources element can be more easily supplied through training,” Setty says.

    The analytics group provides the finance function with specific data. Finance builds the models, submits them to human resources and business leaders for review, and then disseminates the models out to the wide range of people who need them. “You have to reach across difficult silos,” Setty says. “But forming relationships with business leaders is one of the easiest parts of my job. They recognize the importance of workforce planning and they are looking for sophisticated numbers.”

    On the basis of the people analytics Setty’s group provides and discussions with business leaders, the finance function generates forecasts for one year ahead on a roll­ing basis, and revisits its projections monthly. “For a very fast-growing, dynamic organization like Google, it’s not possible to go out further than one year,” Setty notes.

    Setty’s group also likes to innovate and experiment with analytics. One experiment now under way is part of an attempt to establish data-driven recruiting. Google asked all employees to complete a 400-question survey to document elements in their past and then looked for correlations with their performance at Google.

    “We want to identify the variables that can predict high performance,” Setty says. “We have isolated variables that are predictive—some that we might have expected and others that are surprising. We are now testing these variables by using them in recruiting and then tracking the performance of the new hires. We are trying to find the right recipe for the workforce.”

    With more than 1 million job applications pouring into Google every year, the potential value of that recipe is enormous. The predictive variables—the essential ingredients for a high-performing Googler— are now part of the company’s cache of closely held secrets.

    Setty believes that workforce planning should be an ongoing process conducted with the same frequency and rigor as financial planning. “Especially in organizations like Google with substantial people-based assets, human resources and finance need to partner and look at the same numbers in the same language. New technology allows us to create real transparency around the numbers.”

    Most important, every organization needs internal consistency in the data used for planning. “The global business environment is full of uncertainties,” Setty says. “You can’t predict the future. But you can make sure that your numbers are internally consistent.”

Workforce Management, April 21, 2008, p. 19 — Subscribe Now!

Now in its second century of manufacturing legendary motorcycles, Harley-Davidson Inc. pulled in $5.7 billion a year in 2007 from sales in 60 global markets and a workforce of 9,700. But it also found itself facing the same labor shortages in critical fields, such as materials and marketing, that now plague all manufacturers.

    “It was taking more effort to fill our pipelines,” says Lisa Coury, director of talent management.

    Current openings at the company include engineers, material planners and supply chain analysts. Production workers, represented by two unions, make up two-thirds of the Harley workforce. Although U.S. sales slowed in 2007, international sales increased 13.7 percent, and the company’s plants must keep pace with growing global demand for the unique brand.

    Harold Scott, Harley’s vice president of human resources, noted changes in market conditions, the company’s heavy retirement rate and the growing complexity of managing a multi-generational workforce, and tapped Coury to create a workforce planning capability within the human resources function in 2007. “We needed to develop work­force planning as a set of defined processes,” Coury says.

    Coury began by conducting substantial research, benchmarking and discussing workforce planning with organizations that already had planning processes in place.

    “We knew from talking to other organizations that we needed to walk before we could run,” she says. “So we started small, using pilot groups and feedback from those groups to enhance our methodology and pro­cesses. It’s a journey. The key is to work with business leaders who understand the value of workforce planning.” The first pilot group was the materials group, which was experiencing high levels of employee movement.

    Coury uses key quarterly metrics segmented by business unit to spur interest in workforce planning. A 40-page deep-dive report on the salaried workforce includes measures in 30 different areas and the potential business impact of developments in those areas. The report shows trends over a three-year period. “These key metrics whet the appetites of the executives and create the initial pull for workforce planning,” Coury says. “Then we work with these executives to begin the process.”

    The workforce planning process involves a number of key members in each business group. “We begin with one-on-one meetings with leadership to obtain qualitative workforce information, and then we marry this to our detailed quantitative analysis to project hiring needs over a three-year horizon,” Coury says. “Then we develop an action plan for the steps we need to take within an agreed-upon time frame.”

    The planning process at Harley-Davidson now incorporates three areas: forecasting, workforce segmentation and strategic skills identification. To help build the process, Coury brought over an analyst from HR planning. “You need someone with strong analytical skills,” she says.

    “It’s one thing to collect a lot of data and create a workforce planning process, but the point is to achieve results,” Coury says. “The objective is to increase HR’s ability to service the business. That means turning data into information that can help the business leaders make more informed decisions. We pursue workforce planning for the value and the power it brings to the organization.”

Workforce Management, April 21, 2008, p. 18 — Subscribe Now!

When the financial services industry tumbled into crisis in June 2007, Capital One chairman and CEO Richard Fairbank issued a mandate to strip $700 million out of the company’s operating costs by 2009. Given total operating expenses of $6.6 billion for 2007, the mandate posed a significant challenge. The cost reduction plan includes consolidating and stream­lining functions, reducing layers of management and eliminating approximately 2,000 jobs.

    The mandate did not set off a mad scramble in workforce planning, however. Instead, the planning staff simply added new defined variables to their simulations and modified their projections for the company’s talent needs.

    “The key to workforce planning is to start with the long-term vision of the organization and its future business goals, and work back from there,” says Matthew Schuyler, chief human resources officer for Capital One and its 27,000 employees. “We anticipate the strategic needs of the business and make sure that we have the workforce required to meet those needs. The $700 million mandate gives us goals and boundaries that we didn’t have before. We made the adjustments.”

    Capital One and other leading companies are now developing a set of best practices for workforce planning that reach into the future for each business unit and evolve with corporate strategic planning. In an increasingly unstable global business environment, the value of a long-term vision is clear, but effective workforce planning requires dedicated resources, heavy analytics and, perhaps most important, the full engagement of business unit leaders and line managers.

    Few human resources executives share Schuyler’s ability to harness the value and power of workforce planning, however. At most companies, human resources is lagging other business functions in its ability to plan.

“The beauty of workforce planning is that it allows the flexibility to be right on target. We don’t have to wait for the next budget cycle to get it right.” —Matthew Schuyler, Capitol One

    “We bring this up with executive groups,” says Jamie Hale, practice leader for workforce planning at Watson Wyatt Worldwide. “We ask why there is rigor in analyses in other functions but not in workforce planning. Companies make huge capital expenditures without available staffing,” Hale says.

    Most companies do their planning for staffing going out a few months, she notes, but not workforce planning with analyses and forecasts for talent demand and supply as the organization moves forward with its business strategy.

    Fifty-nine percent of HR executives report that their organizations are not adequately staffed for the future, but only 46 percent have any kind of workforce planning framework in place, according to a 2007 survey by Aruspex. In a 2007 survey by Infohrm, only 14 percent of firms reported that they are largely prepared for the potential loss of skills, corporate knowledge and leadership that is likely to occur over the next five years.

    Forty-three percent report that they have some kind of formal workforce planning process in place, but only 20 percent report that their pro­cess is to a large extent integrated into the firm’s strategic business plan. The Infohrm survey also found that companies with workforce planning in place still struggle with forecasting skills availability.

    All this will have to change. CEOs, CFOs and COOs are increasingly demanding that human resources push past short-term projections and provide detailed forecasts for workforce needs and the associated costs over a two- to three-year horizon.

    “The fact is that CEOs now recognize sustainable talent supply as crucial to the success of the organization,” says Cathy Farley, global leader of Accenture’s talent and organizational performance practice. “It takes the workforce planning agenda to a whole new level.” Both Hale and Farley report that they have seen a significant surge in the C-suite’s demand for workforce planning over the past year  

Working backward
    The workforce planning simulations at Capital One stem from a process executed by a metrics and analytics group of 20 people, plus hundreds of executives, managers and analysts pulled from all the business lines and corporate functions. Leaders and analysts from the business lines work in blended teams with human resources generalists and members of the metrics group to build models for each line and the entire workforce. The models flow to Schuyler, who reports directly to the CEO.

    Schuyler, who holds an MBA from University of Michi­gan, was a partner at PricewaterhouseCoopers and then Cisco’s vice president for human resources before he joined Capital One in 2002. He now sits on Capital One’s executive committee.

    “You have to garner your long-term vision of the organization from your seat at the table and from the time you spend with business leaders and immersed in places where you can get data,” Schuyler says. “You have to probe the business leaders and know what their endgame looks like.”

    Workforce planning is in place with customized metrics for business units within Capital One and for corporate staff groups, including IT, finance and legal. “Workforce planning should be similar to and integrated with strategy planning and budget planning,” Schuyler says.

    Planning varies by business line depending on the line’s stage in its lifecycle. Some lines are stable, while others are restructuring or moving through rapid growth. “We triage depending on business needs,” Schuyler reports. “Planning differs based on the unit’s goals for the year.”

    Part of Schuyler’s job is to ensure that senior business line leaders are engaged in the process. “Their door is open,” he notes. “Your ticket through the door is to show business leaders the bundles of money they can save if their workforce is the right size with the right mix and the right skills. Once you’re inside, you have to act on the promise.”

    The potential cost savings come from minimizing the inherent costs associated with the size of the workforce, plus savings from lower recruiting and severance costs and avoiding the costs of a disengaged workforce. “The cost of disengagement is difficult to quantify, but business leaders intuitively understand the cost,” Schuyler says. “There is a toll paid when a workforce is disempowered, disengaged and not sufficiently busy.”

    Schuyler breaks out costs this way: the cost to bring people in, the cost to move people around the organization and the cost to move people out. “If HR can talk about workforce planning and cost savings in sensible business terms and in the pragmatic language of business, it will be music to business leaders’ ears,” he says.

    Workforce planning at Capital One forecasts not only the headcount required to meet future business needs but the staffing mix—the ratio of internal to external resources—and the skills mix, including any changes in that mix that is required as the business moves forward. Schuyler also looks at any changes in spans of control, which determine the number of organizational layers, optimal methods for staffing managerial positions and the related costs. The planners also document both rational and emotional employee engagement, which affect current and future productivity and recruiting, training and turnover costs.

    The responsibility for workforce planning at Capital One resides in human resources, but the hard work takes place inside the business units, where the blended teams operate. This grounding in the business units keeps workforce planning focused on corporate goals.

    “Workforce planning really gets traction when it is linked to the line managers who understand business needs and can project their business growth and productivity changes,” Hale notes.

    The time frames for workforce planning at Capital One vary by unit and function. The legal function, for example, is very stable and can easily plan out two to four years. The credit card division, however, is rapidly evolving, so its forecasts stretch out two to four years but are reviewed every quarter. “It’s really an evergreen process,” Schuyler notes.

“You have to probe the business leaders and know what their endgame looks like.” —Matthew Schuyler

    The demand for some jobs follows the business cycle. Collections and recoveries work at Capital One was stable and predictable several years ago, for example. “But because of the current economic conditions, this work is now more important, and we had to ramp up very quickly,” Schuyler explains.

    Schuyler believes that simulations are part of best practices in workforce planning because they allow the company to modulate its plans, but simulations may not be practical if too many unknowns remain. “Push simulations as far as you can,” he recommends. “But you may have to blend them with static data models. Practically speaking, you don’t know all of the variables, so you have to fall back on static data.”

Managing demand, supply
    Schuyler refuses to choose between overshooting and undershooting staffing. “The beauty of workforce planning is that it allows the flexibility to be right on target,” he says. “We don’t have to wait for the next budget cycle to get it right.”

    That flexibility derives from a more sophisticated approach to planning that looks at a range of possible scenarios about business conditions and then calculates the labor needed to match them. Capital One’s workforce planning models allow business leaders to anticipate the talent requirements for each business option and the human resources and labor cost consequences of the choices they make.

    Capital One’s analyses of labor demand and supply do not adopt an explicit supply chain lexicon to describe various scenarios, but the overall approach and the calculations of costs and business impact are similar to supply chain management techniques honed over the past decade. Experts generally agree that in the supply chain arena, these techniques typically reduce costs by 10 percent to 15 percent.

    The supply chain approach is gaining traction in workforce planning practices, with good results. “The supply chain concept makes the point come to life about the activity between HR and the business,” Farley says. “The greatest need is to understand demand and source against that demand.”

    In managing the workforce inventory, Farley notes that the risk of overshooting is greater than the risk of undershooting. “Too much of a product or an aging product is a greater risk because the carrying costs are high and there are more opportunities to buy, borrow or rent than ever before,” she says. “The best way to deal with excess inventory is through tougher performance management.”

    Applying supply chain concepts also allows workforce planning to make modifications that reflect changes in the talent pool. “The new generation of talent that is coming up now will cycle through jobs much more quickly than the boomers,” Farley notes. “HR must be prepared for this. Just shuffling people around the organization is very expensive.”

    Hale also believes that the supply chain approach has validity. “If you can align procurement with business volume over time, you can align people to business volume as well,” she notes. “When you are dealing with people, there is less predictability, but with a level of rigor in the analytics, predictability improves.” She notes, however, that analytics are missing at most companies. “HR could leverage people in the organization with supply chain management skills, but there’s not much of that going on,” she says.

    Especially for companies that are just beginning to implement a workforce planning process, the best approach is to focus first on the critical roles in the organization and then expand out to cover more positions in greater detail.

    “You don’t want to drown in data, but you do need to break the data down on a critical-jobs basis,” Hale says. “Look at how the business breaks itself down so you can align staffing with business volume.”

    Many companies can benefit from lifting techniques from procurement and finance to improve workforce planning processes.

    “There’s a huge appreciation for workforce planning as a discipline that needs to be established, but it is an emerging discipline,” Farley says. “The tools, processes and systems are not well developed.” Although workforce planning now resides within human resources at most companies, Farley notes that it may be moved out to other functions or outsourced if human resources does not step up to the plate with meaningful forecasts and simulations tied to future performance among the business units.

    At Capital One, the workforce planning process reaches down through the entire executive structure for each business unit—five or six levels of leadership plus groups of managers. Business leaders see the talent management costs and consequences of the business options at hand. Each option carries its own implications for internal and external staffing levels, recruiting, training, promotions, engagement, attrition and total compensation costs over time.

    More important, workforce planning allows business leaders and line managers to see how different approaches to talent management can actually expand their business options and boost performance. “If workforce planning is done right, human resources can help business leaders think about what their endgame can be,” Schuyler says.

Workforce Management, April 21, 2008, p. 1, 14-19 — Subscribe Now!

Broad business trends in India are shaping the growth of Southeast Asia as a magnet for multinational corporations.

    Western multinationals are selling off their “captives,” or wholly owned back-office operations, in India to Indian firms, and these firms are offshoring pieces of their growing workload to locations in Southeast Asia.

    The call center industry in India employs more than 300,000 agents, with 130,000 of these based in captive operations. Companies are now finding they can’t scale their captives to gain advantage. Also, many companies now want to move from the fixed cost of a captive to the variable cost of outsourcing. According to a 2007 Forrester study, 40 percent to 60 percent of current captives will initiate exit strategies during the next three years.

    In 2007, Intelenet Global Services, a global BPO provider based in Mumbai, acquired Travelport ISO, a captive business of Travelport Group, with 1,100 employees across two locations in India.

    “With the Travelport acquisition, we expanded our travel vertical,” says Manuel D’Souza, chief HR officer at Intelenet. “Companies launched captives to maintain control over intellectual property and cut costs. But third-party providers like Intelenet have grown in experience over the years and suffered through the hardships and now know how to achieve the best costs and fastest times.”

    Intelenet has morphed from a regional BPO firm with 25 employees in 2000 to a major global BPO player with more than 25,000 employees in 25 facilities. In 2007, Intelenet opened a new site in the Philippines with 300 employees. “The Philippines was a quick fix for us,” D’Souza says.

    “In the Philippines, recruitment is easy. Clients want proposals that offer standout choices, and the Philippines has strong availability of labor and strong English-language skills,” he says. “The Philippines stands close to India in the quality of candidates and the scalability of labor. In India, we have to do training for culture alignment and accent adjustment, and in the Philippines we have to do slightly less. There are no extra costs or time involved.”

    India-based Wipro Technologies also opened a new BPO center in the Philippines in January, adding 9,000 workers near Manila to its global BPO workforce of 20,000.

    In addition to substantial investments in the Philippines, Indian multinationals are now the third largest group of investors in Vietnam.

    Indian acquisitions and investments in Southeast Asia are part of a broader cross-border M&A binge now under way among Indian multinationals. In 2007, Indian cross-border M&As hit $33 billion, up 85 percent from 2006.

    Intelenet is part of the trend. In addition to buying the Travelport captive in 2007, Intelenet acquired a U.S.-based BPO firm with facilities in the United States, Guatemala and Panama and a delivery center with 700 seats in Mauritius. The acquisition immediately added Spanish and French to Intelenet’s language portfolio and expanded its reach to two new continents.

    Despite wage inflation averaging 15 percent across India, labor costs are a secondary factor in Intelenet’s expansion abroad.

    “Costs are not a primary concern in India,” D’Souza says. “We contain our wage cost increases through our employer-of-choice status.”

    Instead, the primary reason is developing global solutions with onshore and near-shore capabilities for clients worldwide.

    “We are constantly looking at other locations for building our global footprint and our language capabilities,” D’Souza says. “Customers want to spread risk.”

Workforce Management, April 21, 2008, p. 23 — Subscribe Now!