Workforce planning is all about ensuring that an organization always has the right resources with the right skills in the right job at the right moment in the right quantity in the right place at the right price. That’s a lot of “right” to be responsible for…right?! Workforce planning takes many shapes, from the long-term strategic to short-term operational, and the near term executional planning and shift/roster scheduling.
With that mouthful, let’s jump in.
Strategic workforce planning refers to a long-term horizon, and aims to construct a broad workforce strategy and specify categories of competencies. Strategic workforce planning addresses needs such as "to increase APAC sales, we need new strategies to hire up to 500 staff with local language fluency over the next 3 years", in the words of one customer. Operational planning on the other hand is more concerned with short-term headcount and budget. As another customer put it "Finance sends us a spreadsheet and asks for next period’s staff numbers".
In addressing the near-term, Roster and shift schedulingis about making sure that various departments in the organization have the right people in the right numbers on the "floor" at any given time. Similarly project resource staffing assures that project-based organizations have the right people with the right skills available and assigned to do an appropriate piece of work.
This blog will address key facets that can be used to demarcate the different planning processes, timeline, population segmentation, and skills, competencies and capabilities, and will conclude with an overview of which SAP solutions best suit each planning process.
Let’s begin by getting more specific about the time frames we just discussed for each of the three planning horizons. The time frame for strategic workforce planning is typically 2 to 5 years and beyond. The precise length varies depending on the industry and organization. For example, in mining industry planning can go as long as 30 years because of their heavy emphasis on infrastructure and mobility. On the other hand, for high tech Industry, 2-3 years is quite common because of the ever-changing nature of technology. For manufacturing it is typically 3-5 year planning horizon.
Earlier we described the operational planningtimeline as short-term, which usually translates into a time frame of 6-24 months. Because it can readily coincides the budgeting process, annual planning is the most common time frame.
Near-term planning covers the immediate need for next days, weeks and months, and is understandably very tactical in nature. This could include shift and roster scheduling in a retail store, restaurant, healthcare, field service, warehouse, security guards, or on a cruise ship. Project resource scheduling tends to be for the upcoming weeks and months, be it for a construction project, a professional service engagement, a development or an IT project.
Figure 1 - Timeline denoting the time scope of workforce planning solutions
Strategic workforce planning enables a macro view of talent, and is founded on anticipating the future workforce mix based on top-down strategic objectives of an organization. Strategic workforce planning is more abstract in that it focuses on critical workforce segments, jobs and roles driving and supporting the organization strategy in terms of full time equivalent (FTE), and not individual persons.
Operational planning offers a micro-view of talent, aligns and balances top-down organization directives for headcount and budget with bottom-up needs of line management, and is focused on the individual. Rather than focusing on selected groups of workers and FTE’s, it encompasses the entire workforce and is based on actual headcount needs to fill vacancies over the planning horizon.
Shift and roster scheduling take into account employee preferences, working directives, and regulations, seeking the optimal roster that balances organizational goals and individual preferences based on demand for a certain time period. Project scheduling is focused on utilizable resources - those that are eligible for assignment to projects. For example, in a professional services organization, a consultant is considered utilizable whereas the finance department is excluded.
Skills, competencies and capabilities
Resource gap analysis constitutes a major part of workforce planning. As one goes from strategic to tactical, the gap analysis becomes more granular, down to detailed skills and competencies. Simultaneously, the precision becomes greater.
Strategic workforce planning provides directional guidance, taking into account environmental scans and scenario planning - for example, developers are considered critical and approximately 500 are needed over the next 3 years, 100 in the first year, 150 in the second, and 250 in the third year. Plans can and should be re-evaluated and adjusted according to changes in the organization and in the market.
Operational planning is more precise and has financial budgets associated with it. During operational planning the organization determines and refines exactly what type of resources and how many are required, how much budget is available to acquire these resources, which departments will they will be allocated to, and when during the year these resources are expected to be fully on board. Both strategic and operational plans are primary sources for HR managers in crafting recruitment plans.
For project based staffing, the resource requirements are more clearly defined in terms of the nature and level of expertise as well as the seniority and logistics of the resource that will be assigned. The same is true for scheduling shifts, where exact numbers of specific types of resources are defined. For example, in a grocery store, scheduling for the produce department is separate from the meat or bakery departments, and each has its own pool of resources to draw from based on customer needs for the time of day and day of the week.
SAP solutions for workforce planning
SAP offers end-to-end workforce planning solutions that cover strategic, operational, and day-to-day planning activities available on-premise or in the cloud.
Strategic workforce planning
SuccessFactors Workforce Planning, offered on the cloud, is SAP's solution to address the strategic workforce planning needs of our customers. SuccessFactors Workforce Planning (formerly Infohrm) is a mature and leading solution, and is complemented well with SuccessFactors Workforce Analytics. It enables forecasting of skills gaps, what-if scenario simulations and financial impact modeling. This solution delivers an extensive library of HR strategies that you can draw on to mitigate execution risk associated with your workforce to deliver on your business objectives and corporate initiatives.
Figure 2 – SuccessFactors Workforce Planning - What-if scenarios
Figure 3 - SuccessFactors Workforce Planning - Risk assessment and HR strategies
SAP Operational Headcount Planning is a planned solution for delivery on-premise that takes advantage of the scalable platform offered through SAP BusinessObjects Business Planning and Consolidation (BPC) to provide alignment across financial budgets, headcount and salary plans, and organization objectives. This solution enables the standardization of salary budget and headcount planning with common definitions of terms across the organization. HR and controlling can take defined budgets and headcount at a corporate level and cascade them along the cost center hierarchy to ensure alignment. BPC allows cost center managers to model and simulate the impact of changes in their organization such as promotion rate, turnover rate, etc. Using a single tool makes it possible for controlling to consolidate and manage planning and budgeting across the organization, and eliminates the need for disparate spreadsheets. Overall, this process helps to reduce time for budget and headcount planning and improves the accuracy of the budget.
Figure 4 - SAP Operational Headcount Planning - Establish guidelines and cascade down
Figure 5 - SAP Operational Headcount Planning - Aggregate report
For an even more granular perspective, SAP Personnel Cost Planning and Simulation (PCP) available on-premise allows HR to execute detailed operational personnel cost planning along the organization structure. HR can plan the development of various components of workforce-related costs, such as wages and salaries, employee benefit costs, employer contributions to social insurance, and education and training. With PCP HR can execute cost planning for individual organizational units, parts of an organizational structure, or for the entire organizational structure. HR can also decentralize parts of planning so that line managers can view, change, and enhance planning for their area of responsibility.
SAP Multiresource Scheduling (MRS) (and also SAP Multiresource Scheduling rapid-deployment solution) is an on-premise solution for resource management in the service, plant maintenance and project-based businesses. It offers flexible resource planning scenarios from manual planning up to automated and optimized planning. The work demands to be scheduled in the Multiresource Scheduling application can come from various sources, including:
- SAP CRM Service and SAP ERP Customer Service (CS) for Field Service
- SAP ERP Plant Maintenance (EAM) and SAP ERP Project Systems (PS) for Plant Maintenance
- SAP ERP Project Systems (PS) or Collaboration Projects (cProjects) for Project Staffing
- SAP ERP Plant Maintenance / Customer Service (PM/CS) for Workshop Planning/In-house Repair
Figure 6 - SAP Multiresource Scheduling – Utilization
Figure 7 - SAP Multiresource Scheduling – Scheduling
SAP Workforce Scheduling and Optimization by ClickSoftware allows users to define work demand for a certain time period and identify the optimal roster that balances organizational goals and individual preferences. Shift patterns are generated automatically from given demands and rules. Automated rule checks help determine long- and short-term shift planning, as well as exceptions.
SAP Workforce Management for Retail (see also, http://www54.sap.com/industries/retail.html) is an on-premise solution that covers employee planning and scheduling for today's retail environment. SAP Workforce Management enables the complex process of creating optimum employee schedules utilizing business variables entered during implementation and actual business and volume data captured throughout the day.
Figure 8 - SAP Workforce Management for Retail - Store Manager Dashboard
Figure 9 - SAP Workforce Management for Retail – Schedules
Whether the objective is tactical or strategic, proper workforce planning can reduce risks and costs, while increasing potential to generate revenue and profitability. Benefits to the business include advance insight into workforce needs and skills gaps, which gives companies more lead time to source talent or build internal talent, employ a diverse workforce in line with the business strategy, and meet demands of changing markets. Furthermore, workforce planning helps to increase retention levels, reduce turnover and hiring and overtime costs, and avoid situations where revenue opportunities cannot be exploited or customer service cannot provided because the right talent is not available. Regardless of time frame, there is no bad time to do workforce planning.