Building Strategic Workforce Capability

BUILDING STRATEGIC WORKFORCE CAPABILITYHOW TO ALIGN RESOURCES WITH STRATEGY FOR BETTER BUSINESS OUTCOMES

SUSAN DEFAZIO

TABLE OF CONTENTS

/04 Creating opportunities with strategic workforce planning

/08 Building knowledge and capability

/12 Aligning strategy with capability

/18 People implications

/22 Evidence-based human resources

/24 Conclusion

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Increasingly, competitive advantage comes not from your traditional products or services, but the skills, knowledge and experience of your employees.

THEY’RE THE ONES WHO WILL IDENTIFY AND DEVELOP THE BEST SOLUTIONS AND OUTCOMES FOR YOUR CUSTOMERS.– Dr. Anne Dibley, associate professor of marketing at Henley Business School

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CREATING OPPORTUNITIES WITH STRATEGIC WORKFORCE PLANNING

The ability to attract and retain people with valuable skills is vital for companies seeking to reduce risk and stay competitive.

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Organisations often invest great time, effort,

and money in developing products and services,

but few take the same care with their workforce

resources. Although human capital accounts for the

majority of all operating expenses in most enterprises,

too many still apply the same demographic and

psychographic HR processes to every role and

worker, without differentiation.

This one-size-fits-all approach is no longer enough

to maintain a competitive advantage. To succeed,

organisations must now segment the workforce to

elevate critical roles and better align people’s personal

motivations with core business values.

This is where strategic workforce planning (SWP)

comes into play. SWP is the practice of aligning

workforce resources with strategic priorities. It involves

segmenting strategically important roles from standard

roles, allowing businesses to better meet demand for

key skills to support business objectives.

CEOs and executives are coming to understand the

strategic importance of human capital and many now

view workforce strategy as a priority. But taking a more

strategic approach to workforce planning is complex

and requires HR leaders to:

• match demand for workforce resources with

supply dynamics

• account for the changing motivations among sought-

after people with strategically valuable skill sets

• segment and prioritise strategic roles across

the business without distancing other members

of the workforce

• align job roles with strategic execution, finding

the right balance between strategic and

non-strategic roles.


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Without the necessary experience and skills, the right

workforce data or a proven model to follow, these

outcomes can seem unattainable for HR leaders. But

those who fail to focus on SWP risk losing responsibility

for workforce planning as executives turn to marketing,

operational design and strategy functions to fulfil their

business’s need for critical skills.

SWP represents a major undertaking for any business,

but HR leaders should be able to demonstrate its value

to the business with adequate planning. The key is

to start small and structure pilot projects around four

central processes:

1. Taking stock. Gain a clear understanding of the

organisation’s current workforce planning maturity

level and how this needs to change.

2. Setting goals. Consider how to align strategic plans

with worker capabilities and psychographics in key

focus areas that might be receptive to SWP.

3. Making a plan. Create a new organisational

framework that supports the flow of strategic

and nonstrategic workforce resources through

the business.

4. Measuring the results. Apply evidence-based

human resources (EBHR) practices to measure

and demonstrate successes, and use the resulting

metrics to support a business case.

This paper explores each of these practices in detail. If

you are ready to demonstrate the value of SWP

to leaders in your organisation, then read on.


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STEP 1Strategic priorities

SWPWorkforce Analytics

Selected Business Initiatives

Increase Organizational Capability

Change Management

I believe real success comes from right brain thinking and tacit knowledge that deals with aesthetics, creativity, emotion – how a company makes you feel.

CAPTURING THAT IN AN HR CHECKLIST IS REALLY DIFFICULT. BUT IF IT WERE TANGIBLE, EVERYBODY WOULD BE DOING IT.– Dr. Moira Clark, professor of strategic marketing at Henley Business School.

FIGURE 1: SWP IN PRACTICE

STEP 2

STEP 3

STEP 4Measure, improve, and close gaps

BUILDING KNOWLEDGE AND CAPABILITY

Rather than trying to ‘boil the ocean’ with an enterprise-wide project, it’s better to focus on small pilots in receptive business areas, using existing capabilities and workforce resources.

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When choosing a pilot, it’s essential to find a part

of the business that stands to gain from SWP.

Think carefully about the strategic and core roles within

the business, and then look for ways a SWP framework

could help improve business performance.

Discovery and design

The first step in any SWP intervention is to embark

on a discovery phase. It’s important to understand your

enterprise’s current workforce planning capabilities and

how these must change to support a strategic focus.

There are five central steps when assessing an

organisation’s readiness for SWP:

1. Determine your workforce planning capabilities

and maturity. It is essential to have a clear

understanding of what your business is capable

of and how this will evolve under a strategic

workforce model.

2. Outline realistic goals for your project. Build

on quantitative and qualitative activities such

as headcount planning and workforce analytics.

Research external workforce planning models to

develop a decision framework that will inform and

support the shift to SWP.

3. Consider the level of investment required. Do you

already have financial capacity in your headcount

budget, or will you need additional funding to

support your pilot? Will you need to build, buy or

borrow the expertise required to develop a

strategic capability?

4. Create a roadmap. Outline your ambitions for

change and plot key milestones along the way.

It’s important to account for tolerance within the

business; if your organisation is overloaded with

change initiatives, you will need to consider how

best to position SWP to avoid ‘change fatigue’

among key stakeholders.


5. Establish clear roles for ownership and

accountability. Ensure your key stakeholders

understand the importance and complexities of

meeting performance expectations. Some may be

blissfully ignorant and need education.

Engaging the business

Strong leadership can help secure support from

stakeholders and ensure the success of your SWP pilot.

In the absence of a big-budget organisational buy-in or

a dedicated SWP team, it’s ideal to position your chief

human resources officer (CHRO) as a champion for the

initiative—someone who drives ownership among key

employees and has a clear vision for the organisation’s

strategic workforce capability.

Gaining stakeholders’ support is an important step.

For SWP to work, it needs to be embraced by people

throughout the business, from the boardroom through

to leaders in divisions such as finance, marketing,

operations and strategy.

If the organisation uses HR business partners to

align workforce practices with business strategy, it is

essential to gain the support of these partners from

the outset. It’s also worth involving key contacts from

customer groups, and other influencers. Consider which

people might be valuable allies. Who could help you

gain traction and carry out your plans for a strategic

workforce capability?

Gaining the buy-in of these advocates early on is an

important step toward the success of your initiative.

However, balancing ‘business as usual’ with future-

proof change is a delicate process. Traditional metrics

are not always the best indicators of future success, and

you will need to show stakeholders why and how this is.


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Prioritising customer outcomes

According to Anne Dibley, associate professor in

Marketing at Henley Business School, the key to

gaining support within the business is to discuss

ideal outcomes for customers, rather than products

or best practices.

This concept—that the provision of services rather

than goods is fundamental to exchange—is known as

‘service-dominant logic’ and will require stakeholders to

carefully consider whether their current processes best

serve customers’ interests.1

Ask: “Are we solving the right problems and creating

the right solutions for our customers?” Encouraging

stakeholders to consider such points will help them

shift their focus from legacy processes and products,

and help them think strategically about future value

and business priorities.

Rather than imposing your roadmap on the business,

offer a transparent view of your design and goals for

SWP. Share headcount and workforce analytics data

with key stakeholders, and show how these metrics

support their strategic goals.

Identifying strategic priorities and gaining the support

of the business are only the initial steps; the real

challenge lies in aligning your capabilities with your

workforce ambitions.

1 Vargo, Stephen L. & Lusch, Robert F. (January, 2004). Evolving to a new dominant logic for marketing. Journal of Marketing, vol.68, pp.1-17. /11

ALIGNING STRATEGY AND CAPABILITY

Resist the temptation to create a lofty vision statement for strategic workforce capability, which can make it harder for key stakeholders to recognise specific and attainable project goals.

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Creating a simple, concise statement that

outlines your goals will help translate your

ambitions into tangible strategic workforce

competencies and capabilities.

Directional alignment

Directional alignment is a valuable consideration when

creating a strategic statement for your project, allowing

you to synchronise strategic workforce objectives with

the business’s internal and external priorities.

Aligning current capabilities with internal objectives

is key, but it is also important to account for external

stakeholders. Take care to consider how a shift to

SWP will serve the processes and practices of your

strategic partners and customer groups. This will help

you better understand the capabilities you need—

from both workers and partners—to support a

strategic workforce capability.

Your strategic statement should also account for

the organisation’s responsibilities to its shareholders

and analysts. Consider what the executive team

needs to address with these stakeholders to ensure

the business will remain an appealing and viable

investment for them.

Additionally, it’s essential for a strategic statement

to align internal and external priorities with workers’

psychographics. A candidate or employee might have

the correct qualifications for a role, but their personal

values and motivations will need to fit with those of

the business and its customers for their work to be

meaningful and valuable.

Once you have outlined your strategic goals, test

them out within the organisation, considering internal

processes and whether existing practices can support

your ambitions for SWP. Concepts such as the

McKinsey 7S Framework are useful for gauging the

strength of a strategic statement in this context.


Role segmentation

Separating critical and strategic roles from non-

strategic roles is the core process in building a strategic

workforce capability. Understanding which roles are

critical to the future of the business will help you

source workers with skills that can best support the

organisation’s strategic priorities.

Role segmentation is a useful exercise in this process

and involves clustering necessary skills and existing

roles into different groups, based on differing needs.

This allows you to think about the future in terms of

strategy rather than resources by considering where

there are unmet or under-served market requirements

and how the business might need to change to

maintain competitive advantage.

Once you have determined what you need to achieve

strategically, review all the roles within your pilot focus

area, identify competencies that are strategically

important, and develop a plan to support these roles

into the future.

Consider both contingent and full-time employees

when conducting this segmentation exercise, as

workers required for strategic roles may fall into

either category. Take care when distinguishing

between talent and workforce resources—all jobs

are important to the business but not all are equal,

and the most strategically significant roles might not

be the ones you expect.

Throughout this process, it can help to view your pool

of workforce resources as a portfolio of assets, with

workforce analytics and SWP forming bridges to the

operations, resourcing and procurement methods that

support your strategic plan (see Figure 2).

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FIGURE 2: A HOLISTIC VIEW OF WORKFORCE

RESOURCES

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Understanding workers’ needs

Segmentation helps marketers understand who their

customers are, and group them together according to

needs, priorities and the benefits they associate with

satisfactory outcomes.

In a similar way, segmentation can help you

understand what matters to strategically valuable

candidates. The more you know about their

capabilities, skills, motivations and personal values, the

easier it is for you to attract key people and place them

in roles that match your organisational priorities and

strategic needs.

Professor Moira Clark, head of strategic marketing at

Henley Business School, stresses that psychographic

and demographic segmentation is essential. She

believes that HR managers too often focus on

a candidate’s skills and competencies without

considering their attitudes and motivations, and how

these align with company values. Similarly, she notes

it’s important to strike a balance between people with

logical, rational skills and those with strong creative and

interpersonal skills.

“HR needs to be passionate about getting the people

with the right personal values and attitudes,” says Prof.

Clark. “We become obsessed with checklists, but I

think real competitive advantage comes from looking

at the attitudes, motivations and personal values of

workers. Anyone can recruit a candidate with the right

skills—but the intangible, tacit, right brain knowledge

that relates to creativity and relationships is what will

differentiate the business from its competitors.”

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Segmenting employees according to psychographics

and demographics can help you understand how

workforce implications such as style of working,

benefits and organisational design might affect their

experience within the business. This process will help

you understand workers’ priorities and align them with

those of your organisation, which helps to create more

meaningful engagement practices.

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Most companies these days are weakly differentiated. One bank is like another, one airline is like another, and each can copy the other’s customer service and IT strategies, products and services.

THE THING THEY CANNOT COPY – THAT GIVES THEM REAL COMPETITIVE ADVANTAGE – IS THE QUALITY AND HISTORY OF THEIR RELATIONSHIPS.It follows, then, that if you recruit the right people, segment them in the right way and make sure you cluster employees with particular skills, competencies, attitudes and motivations, you’re going to be much more successful at reaching your target market.

– Dr. Moira Clark, professor of strategic marketing at Henley Business School.

PEOPLE IMPLICATIONS

Which tools and practices will best support your strategic workforce objectives?

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With an SWP model in place, you will need to

devise a new framework to manage the flow of

resources through the organisation in a way that people

understand and accept.

The method you use to design and orchestrate SWP

in your business must support the business’s strategic

goals. In many cases, you will need to supplant

best practices with frameworks that better suit the

organisation’s strategic workforce priorities.

It’s also essential that your organisational design

and people practices allow for changing worker

psychographics, and support the practice of matching

right-brained and left-brained workers or resources

with roles that suit their capabilities. In other words,

you need to let workers engage with you on their own

terms, while placing them in roles that make best use of

their psychographic strengths.

Human Capital Institute’s (HCI’s) 6B talent framework is

useful when applied to organisational effectiveness (see

Figure 3). Buying external resources or workers through

traditional hiring practices and borrowing necessary

skills in the form of consulting, outsourcing, and

contingent labour can help meet your organisation’s

strategic need to acquire talent.

The framework then breaks talent management into

four categories:

• Building or developing talent within

your organisation

• Binding or retaining workers critical to your

strategic goals

• Balancing contingent and permanent, strategic

and non-strategic roles

• Bouncing low-performing or unproductive roles

and re-skilling workers who have ‘old’ skill sets.

PEOPLE IMPLICATIONS

Frameworks such as this can help you gain a holistic

view of existing workforce resources within the

organisation, while accounting for strategic priorities

in talent acquisition and management, and

psychographic variations among employees.

Communication for continuity

Frequent and regular communication with specific

business leaders is critical to ensuring your strategic

workforce initiative is not treated as a one-off project.

Your pilot needs to characterise the way your

organisation will conduct business moving forward.

Communicating with key stakeholders about your

successes and project milestones helps convey the

message that SWP is a powerful, active initiative

capable of driving change and delivering positive

outcomes. HR leaders will also benefit from

translating strategic priorities into activities that

resonate with leaders.

Aligning process with practice and publicising the

results is an effective way to gain internal traction

with SWP. But how do you demonstrate the return

on investment (ROI) to shareholders, analysts and

the board?

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PEOPLE IMPLICATIONS

BUSINESS OPERATIONS

6B TALENT PLAN BUILDBUY BORROW BIND BALANCE BOUNCE

HR/BUSINESS STRATEGIC

LEVERS

HUMAN CAPITAL PRACTICES

TALENT ACQUISITION TALENT MANAGEMENT

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FIGURE 3: HCI’S 6B TALENT

FRAMEWORK

EVIDENCE-BASED HUMANRESOURCES Return on investment

is an essential piece of the strategic workforce puzzle. So how do you measure the effect SWP has on your business?

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Evidence of your pilot’s success will be important

in promoting uptake of SWP in other parts of the

business. Using workforce analytics to create a platform

for EBHR is an essential step in gaining buy-in from

stakeholders inside and outside the organisation.

As you roll out your project, use workforce analytics

to track changes in key metrics such as fulfilled

strategic objectives, worker satisfaction, and

retention. You should also take care to measure key

organisational health metrics so you can demonstrate

the organisational effectiveness of your SWP pilot.

These should be both qualitative and quantitative, and

comprise an effective blend of leading, lagging and

public performance indicators.

Implemented well, SWP will help to fill key roles with

suitable candidates who will likely perform more

effectively than before. To determine whether your SWP

plans are on track, you will need to ask a few questions:

Are workers in key roles performing more effectively

following the pilot? Have you seen better rates of

retention in roles previously plagued by high turnover?

Building a business case

The ability to create a business case for strategic

workforce capability—both for internal departments,

and for external shareholders and analysts—is critical

when scaling your SWP initiative beyond the initial

pilots. There are three key considerations at the core of

any strong business case:

1. How is your initiative relevant to the overall

business strategy?

2. What impact will it create?

3. How will you secure the support of stakeholders

throughout the business?

With a successful pilot behind you, creating a business

case will help guide the development of strategic

workforce capability throughout your business.

When will your organisation turn speculation about the benefits of SWP into actions and tangible outcomes?

CONCLUSION

Adopting a model for strategic workforce

management is a major undertaking for any

organisation. It requires careful planning and intricately

aligning business objectives with stakeholder

priorities—within and outside the organisation.

Yet SWP holds great rewards for businesses intent

on securing key workforce resources to support their

strategic priorities, reduce risk and grow competitive

advantage in future.

If you’re intent on establishing SWP in your business,

we recommend you follow these four core steps:

1. Start small – the secret to successfully creating

a strategic workforce capability in your business

is to focus on the functions likely to yield

promising results.

2. Articulate your goals – gauging current capabilities,

considering future goals, and engaging leaders

and partners with a compelling strategic statement

will help you garner core support for a strategic

workforce pilot.

3. Segment roles and resources – by segmenting

roles and resources according to strategic priorities,

worker capabilities and psychographics, and

integrating internal and external priorities with HR

processes, you can begin to align existing workforce

capabilities with strategic priorities.

4. Measure the results – apply workforce analytics

to build a platform for EBHR, and use key success

metrics to support a business case for SWP in other

parts of the organisation.

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Carefully targeted communication is key throughout

this process—whether you’re clarifying strategic

goals and aligning them with business priorities, or

implementing new people-management frameworks

and demonstrating ROI. By communicating and

sharing key details throughout the project, you can

establish a groundswell for SWP that will ultimately

support the business’s competitiveness and help

mitigate risk in future.

FIGURE 4: A BIRDS-EYE VIEW OF SUCCESSFUL SWP

PREPARING FOR SWP & BUSINESS STRATEGY

ALIGNMENTCAPABILITY/

ROLE SEGMENTATION

MONITORING & REPORTING

> TALENT MANAGEMENT

> ORGANIZATIONAL DESIGN

> WORKFORCE SOLUTIONS

ENVIRONMENTAL SCANNING

ACTION PLANNING

CURRENT-STATE

ANALYSIS

GAP ANALYSIS

SCENARIO PLANNING/FUTURING

STRATEGIC WORKFORCE

PLANNING MODEL

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REGARDLESS OF THE SWP MODEL, YOU MUST EMBRACE THE INSIGHTS AND COMPETENCIES OF YOUR PEOPLE. If you lack the internal expertise for change management, data analysis and interpretation, and other required competencies, you must accept the need to bring in those resources or external consultants as required.

– Nina Ramsey, CHRO, Kelly Services

ABOUT THE AUTHOR

Susan is a Principal and Supervising Consultant within the Global Centres of Excellence. Based in London,

Susan’s specialist topics include strategic workforce planning, human capital strategies and advising on

stakeholder engagement practices. Susan has extensive experience in the human capital sector, which

includes leadership positions in staffing operations, strategic account management, thought leadership

and has developed a CRM model with practices designed to support understanding, mutuality, trust and

longevity. The institutions where Susan has studied include Henley University of Reading, INSEAD Business School,

Cranfield University, Human Capital Institute and London Business School. She is HCI certified as a human capital

strategist and in strategic workforce planning. Susan is also a certified to deliver SWP Accreditation Courses developed

by The Human Capital Institute.

ABOUT KELLYOCG

KellyOCG® is the Outsourcing and Consulting Group of workforce solutions provider Kelly Services, Inc. KellyOCG is a

global leader in innovative talent management solutions in the areas of Recruitment Process Outsourcing (RPO), Business

Process Outsourcing (BPO), Contingent Workforce Outsourcing (CWO), including Independent Contractor Solutions,

Human Resources Consulting, Career Transition and Executive Coaching, and Executive Search.

KellyOCG was named in the International Association of Outsourcing Professionals® 2015 Global

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Further information about KellyOCG may be found at kellyocg.com.

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