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Finance & HR: Allies in company-wide (xP&A) planning

For organizations looking to operate with agility, a mix of virtual and on-site working prompts critical questions when it comes to workforce planning. What do these changes mean for traditional office space? What effect will they have on workforce efficiency and productivity? What impact will a work-anywhere world have on talent acquisition, development, and retention?

At the start of the global pandemic, organizations worldwide either mandated or encouraged working from home. As organizations look to the post-Covid future, many are planning a hybrid virtual model that combines remote work with time in the office.

For organizations looking to operate with agility, a mix of virtual and on-site working prompts critical questions when it comes to workforce planning. What do these changes mean for traditional office space? What effect will they have on workforce efficiency and productivity? What impact will a work-anywhere world have on talent acquisition, development, and retention?

Amid all this uncertainty, one thing is for certain: Decades-old workforce planning processes will be of little help. As such, decision-makers must start thinking about how they can prepare for what’s next.

Is Workforce Planning Be Your Organization’s Weakest Link

Corporate executives have historically viewed the practice of hiring in terms of headcount and cost per hire. This limited perspective is pervasive in part because it has been perpetuated by traditional planning processes, which are mired in manual, laborious tasks, stale and often incomplete data, and fragmented communication and decision-making across departments. While traditional planning processes are often familiar and relied upon to establish a plan for the year or quarter, the pandemic has shattered any notion that this static environment is still sufficient for workforce planning in a modern world.

This is true especially now that the role of human resources (HR) is experiencing a transformation. Even before the pandemic became a daily challenge for HR executives, Deloitte coined the term “exponential HR” to describe a broader and more comprehensive scope of influence for HR that extends to a company’s complete ecosystem. This term also describes a shift in HR’s perspective, widening its focus on employees and the organization to workforce planning and even the nature of work itself. In this more dynamic and strategic scenario, HR ingests analytics and market trends, and assesses its skill set and technology needs, as the company scales and plans for the future.

Yet many organizations find their workforce planning environment to be disconnected. In these enterprises, finance takes a headcount-focused view (along with its attendant cost considerations) while HR focuses more on building the ideal workforce (which incorporates skills and capacity planning, succession plans, talent sourcing plans, and more). Disconnected workforce planning is characterized by siloed decision-making, misaligned goals and priorities, and ultimately bad hires that don’t suit the needs of the company’s growth and future plans. Relying on traditional planning limits HR’s ability to adapt to the dynamic realities of the business. And that’s a big problem.

Finance and HR: Allies in Planning

Why? No business can afford to keep its finance and HR functions siloed. Finance must move beyond viewing headcount merely as a cost center and explore ways in which salary, benefits, and other motivational HR levers can be pulled to meet operational and boost profitability. HR, meanwhile, must take a disciplined look at the cost and benefits of hiring new workers and implementing benefits programs, as well as current and future workforce gaps that threaten to limit a company’s success.

By joining together as allies to plan, measure, and optimize talent, finance and HR can elevate workforce planning from a static exercise that attempts to guess future needs to an active process that’s able to adjust to constantly changing operational realities.

The truth is, if you’re not operating with agility, you’re ultimately failing the business. This is likely why a growing number of finance and HR leaders have adopted an integrated workforce planning approach.

Rather than saddling HR leaders with a siloed and misaligned environment, integrated workforce planning equips them with the ability to plan their workforce in sync with all other business plans—corporate strategy, financials, operations, departmental budgets, and forecasts. This company-wide planning approach creates a comprehensive and dynamic workforce plan in sync with strategic corporate goals. And ultimately, it helps HR teams transition from tactical headcount planning to more strategic workforce planning that puts the right people in the right place at the right time.

Company-wide Planning

Finance and HR teams who’ve embraced integrated, company-wide (or xP&A, extended planning and analysis) planning can assess the current situation more accurately, anticipate changes, pivot quickly, and increase business agility. That’s because company-wide planning encompasses all aspects of planning in the enterprise, including:

  • Workforce planning, which goes well beyond simple headcount planning to enable finance and HR to work together to build a workforce dynamically aligned to meet changing business conditions and needs.
  • Operational planning, which combines financial and operational data so daily decision makers gain visibility into how change happens within an organization.
  • Sales and demand planning, which are subsets of operational planning, and which arm sales organizations and supply chain organizations with insight into business interdependencies that can impact their own success. This allows an organization to align sales resources in ways that drive revenues, and creates efficiencies in the supply chain that protects customer satisfaction and maximizes profitability.

With company-wide planning, all individual plans are connected, and they all roll up to the corporate plan. This eliminates surprises and provides the kind of holistic view of the business that has been denied decision makers for decades.

Harnessing the Power of Scenario Planning

As the workplace evolves, there’s hardly a more useful component of integrated planning than scenario planning. Scenario planning allows HR leaders to model various what-if scenarios based on an array of potential outcomes. Now more than ever, the ability to quickly and easily iterate and develop multiple contingency plans is emerging as a competitive advantage for businesses wanting to maximize the potential of their workforces.

The types of workforce planning scenarios can range from modeling immediate needs to understanding the long-term implications of hiring, outsourcing, development, remote workers, and more. With a modern workforce planning environment, you can continously plan and develop scenarios for:

  • Reskilling and upskilling costs. As digital transformation and market conditions change the roles of existing workers, decision-makers will need to model the full implications of reskilling or upskilling to address skill gaps.
  • Remote workforce productivity. Measuring how productivity may be impacted by remote work may lead to new metrics and benchmarks.
  • Build-buy-borrow skill sets. Organizations must map the cost-benefit analysis of either building, buying, or borrowing (or, most likely, a combination thereof) the skills needed to meet current and future work challenges.
  • Employee retention. Determining the financial and operational pros and cons of various retention and development efforts will become increasingly critical as the rise of remote work gives employees more options than ever.

While most HR leaders will model the best, worst, and most likely case scenarios, the beauty of a modern, integrated planning approach is the ability to quickly and easily course-correct and recalibrate a model to see the resulting cost and timing impacts as a measure of plan effectiveness. Scenario planning empowers HR to work with the actuals from HCM, CRM, and other enterprise applications, along with external contextual data, to make the most informed, strategic decision possible—and to implement new scenarios rapidly as conditions change.

Planning for Disruption

Although capabilities like scenario planning may seem far away from where your particular workforce planning processes may be today, the reality is that once you deploy a modern, cloud-based planning solution, you’re already well on your way toward becoming a more agile and strategic HR function. And with change and disruption now the rule rather than the exception, there is little time to waste.

Read our new eBook, The path to modern planning: Achieving business agility with continuous, company-wide planning

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