Vol. 4, No. 2
Scenario planning helps employers map out their future workforce needs.
No hardware, software or crystal ball exists that can show you exactly what your workforce will need to look like five years down the road. But some companies are able to map their future options effectively by using a modeling technique known as scenario planning.
Many companies don’t even attempt to predict the size and quality of the workforce they’ll need because “they believe there’s no point,” says Stacy Chapman, a co-founder of Aruspex, a global consulting company. “Or they’ve tried the wrong approach and failed.”
The wrong approach, she says, is for employers to ask “ ‘What if I hired 10 more people?’ That’s not value-added. You need to holistically explore the future” in a way that goes beyond vague conjecture, beyond forecasting six months ahead, beyond “Band-Aid” solutions.
“We encourage people to look the same distance out as their business plan looks.” Employers should be able to describe and then design a workforce that meets the goals associated with their business plan, Chapman says.
Scenario planning uses interviews with key stakeholders, client feedback analysis, a review of the organization’s strategic plan and workshops with key managers to create several plausible “what-if” possibilities. The company can then devise strategic workforce options for each possibility.
Global Business Network (GBN), a consultancy based in San Francisco, helps corporate, nonprofit and governmental organizations use scenario planning “to break loose of current thinking, to think creatively but also analytically,” says CEO Eamonn Kelly. It looks years, not months ahead, “extrapolating factors that currently affect the company to find those which may grow in importance.”
GBN and its client then develop a number of scenarios with “plausible futures around each,” Kelly says.
John Karren, people and change practice director for PricewaterhouseCoopers (PwC), says scenario planning asks companies “to look at things they may not directly see in data—the demographics within the organization which extend beyond the business cycle, at globalization, at the environment, at government.”
PwC developed three possible “worlds” in its report Managing Tomorrow’s People: The Future of Work to 2020:
- In the “blue world,” business is king, and big-company capitalism rules as organizations continue to grow bigger and individual preferences trump beliefs about social responsibility.
- In the “green world,” social responsibility dominates the corporate agenda, with concerns about demographic changes, climate and sustainability becoming the key drivers of business.
- In the “orange world,” companies begin to break down into collaborative networks of smaller organizations, and specializations dominate the world economy.
To develop these three worlds, PwC looked at the talent crisis, the aging workforce in the Western world, the increase in global worker mobility, and the organizational and cultural issues emerging from the dramatic pace of business change in the past decade. The role of people management and human resources is examined in detail in each of these worlds.
“We wanted to put it into a framework, to be able to plan for what will motivate future recruits and for what will provide them experience to be leaders in the future,” Karren says.
There’s been a significant increase in companies using scenario planning, says Brian Wilkerson, national practice director, talent management, for WisdomNet, part of Watson Wyatt, because companies “want more discipline. People are creating models of what their growth—or contraction—might look like. Businesspeople see this is more and more a critical component in achieving business plans. People are seeing more and more scarcity in the marketplace and have a desire for a more-empirical way of looking at the business.”
Aetna, the health care benefits giant based in Hartford, Conn., has just begun the scenario planning process. Before, “Aetna was very current state focused when it came to staffing,” says Melissa Cummings, who joined the company as head of workforce planning in July 2007. “They were not used to saying ‘what do we want to have in the future, and how do we get there?’ ”
But the company faces a shortage of nurses and actuaries that isn’t about to lessen, she notes, and the question that the company needs to answer is: “What can we do within a three-year period to get us on the right path?”
In a search for answers, Cummings is working to come up with two to four possible scenarios. “More than that, it gets muddy. We do want to stay focused on the ones that will likely have the most impact.”
he timeline is “a one-day workshop that gets us off to a good start,” followed by 60 to 90 days of vetting, she says. There needs to be “a comprehensive process that allows the participants to feel all the possibilities are being explored. That way there’s more buy-in.
“There’s a natural skepticism about anything new, so we need to prove to the group why we need to do this. We need to make the problem as real to people as we can, using both data and experiences. We have to make it quantifiable in some way,” Cummings says. “Using people’s pain—[stemming from situations in which] they haven’t had enough people or it has taken too long to fill a job—that can crystallize the issue.”
Scenario planning is “a great opportunity for business managers and staffing people to come together. It’s a great consensus-building exercise,” says Paige H. Menge, a manager of consulting services for The Infohrm Group Inc., which is based in Washington, D.C. “It bridges the gap between intuition, educated guess and fact.”
Menge views developing two workforce scenarios as “ideal to capture the range of possibilities.” Choosing three scenarios often leads to one “best case,” one “worst case” and one “most likely,” she says. This is akin to having one scenario, because only the “most likely” option is seriously considered.
At GBN, Kelly says, “we typically do four scenarios, then we start to prioritize.” One version is close to the most-expected outcome. “Then we do another two or three that are equally compelling.”
GBN offers a one-day, “fast-forward” planning exercise “that is useful as a shock to the system. It jump-starts the way people are thinking. It stretches the canvas of possibility, but it doesn’t have the research or the time [to serve as] a full-blown exercise,” he says.
Full-blown scenario planning is much more detailed, he adds, taking several months, including a month of data gathering, workshops and a one-day implication exercise.
Sometimes GBN works directly for HR leadership, “where they initiate [the process], imagining the future of talent retention and talent attraction or looking at the changing nature of competencies,” Kelly says. At other times, future staffing requirements are considered a “subset” of the scenario planning exercise, with senior HR professionals participating, but not commissioning or leading the work.
Either way, it’s “a wonderful way for HR to become more involved in the forward-looking side” of the business, he says.
Recruitment specialists play a key role at the very beginning of the scenario planning process, says Tess Walton, a co-founder of Aruspex. “They have a lot of knowledge in terms of the market. They know where they are already experiencing difficulties. They have a lot of information at hand that is underutilized. What are the insights they can give? When they speak to candidates, what is the reaction to [the corporate] brand? What common themes come up when people do not take positions?”
Recruitment specialists are also “key players in terms of execution,” Walton says. “What are the actions that need to be taken? You can ask: ‘This is what we’re targeting—is this realistic?’ They can bring their market knowledge to the table and their ability to deliver. You can start drilling down.”
Finally comes the testing of the scenarios, says Karren of PwC. “Does this make sense? Is this how you see the world potentially going? We work on recommendations and then we come back after a year or two or three and ask, ‘How well did it match up? What did we map well? What seemed far-fetched?’ ”
Building on the Foundation
The scenarios lay the foundation for workforce planning recommendations. The greater the variation between the different forecasts, the greater the importance to initiate two activities to meet the possible outcomes, Menge says.
For each scenario, “we look at how many and what kind of people we need,” she says. “You understand exactly who you need because you’ve forecasted in two different scenarios.”
When looking at the various scenarios, Walton says, companies usually have a number of workforce planning questions: “How can we get more supply? How can we do a better job of attracting? How should we source applicants? Should we change what we’re looking for?”
That last question can be especially important, she says. Instead of recruitment criteria that list 20 skills for a position, “maybe they find they should look at 10 core capabilities and say, ‘The other 10 we’re willing to train on.’ By changing [the way you think], you increase your potential supply. That’s one of the most powerful tools.”
Menge says that scenario planning helps companies realize what pipelines they need to build—and gives them time to build them.
“They can look at the entry-level jobs that are good feeders into hard-to-fill jobs and see where they can get them in early, train them. They can find opportunities like that,” she says.
But, “if one of your strategies is to recruit at the lower level and train for higher-level jobs, you’ll need lead time. Most companies look one year out. We’re talking beyond that” with scenario planning.
At Aetna, Cummings hopes scenario planning will lead her to more creative solutions.
“On the demand side, maybe we can think about using people differently. And what can we do on the supply side? It could be using different critical segments of population, maybe retired nurses. Could we make that easy for the organization? Can people in different geographic locations telework?”
The value of scenario planning, she says, is that “we get to see possible outcomes, good and bad.”
Stephenie Overman is editor of STAFFING MANAGEMENT.