In this article we will share the strategic workforce planning (SWP) approach we used to help MyoKardia, a high-growth biotechnology company preparing to launch its first product. The organization was anticipating significant year-over-year growth (approximately 30 percent per year) leading up to FDA approval and launch of their first therapy. However, how we got to the headcount growth was not formulaic, and the organization was not modeling the practices of other companies that followed this same path.
For many organizations SWP has been a spreadsheet forecasting exercise that felt like a necessary evil but was rarely engaging. Planning was usually approached in a linear fashion that presupposed growth would follow the same trajectory as it has in the past, or it was simply too conservative in its anticipation of changes to the status quo. Given the frequently changing business dynamics being experienced by most organizations today, we believe we need to adopt new approaches to SWP that are more agile and help organizations to quickly shift strategies and tactics based on emerging business dynamics. The approach outlined in this article provides one example of an emerging trend of building agility into traditional HR processes. Any SWP process must begin with a strong understanding of the business strategy as well as the capabilities needed to execute on that strategy. By integrating scenario planning into the process, organizations can create alternative views of the future and understand the organization’s capacity to maximize their opportunities and minimize their risks.
Scenario planning is a strategic planning methodology that helps an organization plan for the future with flexibility built in to hedge one’s bets by considering other possible outcomes. In scenario planning an organization begins with a deep understanding of their business strategy and then considers trends and uncertainties the organization is facing in order to help refine their plans for a specific issue. One of the first well documented uses of scenario planning was conducted by Royal Dutch/Shell in the 1970s to predict oil production levels. Often in scenario planning, organizations consider known facts about the future—such as demographics—along with key unknowns that could impact the company’s future (e.g., social, technical, economic, environmental, and political [STEEP] trends). Sometimes organizations also consider other issues that are important within that industry (e.g., regulatory policy). The idea is to get people to consider extreme scenarios that could alter the course of the business.
Scenario planning imagines how various elements might interact to create different conditions. For example in Figure 1, four different scenarios emerge if we were to consider a future where talent was either scarce or abundant, and where companies are organized through hierarchy or through networks of self-directed teams. By putting this into a two-by-two matrix, we come up with four potential scenarios for the future that we could further define. This helps people to imagine the complexity of multiple events unfolding at the same time.
The simple act of considering a range of possible future outcomes helps to not only plan for the future, but also forces leaders to consider alternative scenarios that could unfold. This process helps overcome the natural tendency to plan for what we hope will happen and not give enough thought to alternative futures. Executives who consider a wide range of possible outcomes and their impact on the business will be in a better position to take advantage of unexpected opportunities and will be able to pivot more quickly when adjustments in strategy need to be made based on unexpected events. Because scenario planning considers the extremes of a situation (scarcity vs. abundance of talent), it helps begin a conversation about a range of possibilities and considering outcomes that may not have previously anticipated.
Finding Sources of Uncertainty
At MyoKardia we took a scenario planning approach to SWP because we knew that the organization had to anticipate several different possible future outcomes. We began the process by ensuring that all members of the executive team had a clear understanding of the current business strategy (known internally as Vision 2020). With this as our foundation, we began discussing the potential forces of change that could impact the company’s future. (Note: Because this work was being done in 2018, they were already considering how Vision 2020 would become Vision 2025.)
While we originally pushed the executive team to consider extreme scenarios (e.g., major changes in regulatory policy or technological breakthroughs) and more typical STEEP issues, they ultimately chose to focus on a few critical areas of uncertainty that would have dramatic effects on the company. For example, the success or failure of current clinical trials could determine the trajectory of the company.
Prior to our first scenario planning meeting we asked the executive team questions that were designed to help them to think about areas of uncertainty for the future of the organization. Some of the questions we asked included:
What are the most important forces impacting MyoKardia going forward in the next three to five years (e.g., trial outcomes, regulatory changes, innovations in drug discovery, partnerships, etc.)?
If you could see into a crystal ball, what would you most like to know now regarding the state of MyoKardia in three to five years?
What is the most optimistic picture of the future of this organization? What are the major factors driving that point of view?
What is the most pessimistic scenario for the organization in the next three to five years? What are the factors driving this outcome?
What are some important upcoming decisions you need to face or make as an organization? Over what period will these decisions, and their consequences, play out?
With these questions answered, we were able to identify the biggest sources of uncertainty for the organization and then define the range of likely outcomes. Other organizations might ask other questions using either STEEP issues or a model such as Porter’s Five Forces as a starting place for this type of exercise. Although initially we identified six critical uncertainties facing the organization, one (changes in regulatory policy) was eliminated as being highly unlikely to change within the next five years, two were a subset of other forces of change, and one did not have enough assumed variation to be meaningful in this exercise. With the two remaining forces of change on the organization factors in mind—clinical trial outcomes and alliance partnerships—we were able to identify four potential scenarios for the future.
Next, the executive team identified key indicators that could be tracked to understand which scenario was emerging as events unfolded (e.g., business partner relationships, drug trial results, etc.). The executive team agreed on the most likely scenario for which we would plan, but then agreed on a process to track key indicators to understand if or when adjustments needed to be made.
With a common understanding of the different possible future outcomes for the organization established, and a methodology for tracking which scenario was emerging in the future, it was now time to agree on what they believed to be the most likely scenario for which they would plan against. Going forward they would plan for the most likely scenario but keep a constant eye on the performance indicators that would tell them if the situation was changing and a different scenario would play out for the future.
Defining Capabilities for the Future
With the different scenarios identified, the executive team then discussed which capabilities would be needed to achieve the best possible outcome depending for each scenario. For each scenario we asked, if this scenario were to emerge in the next three to five years:
What capabilities will you need to acquire or build to help you execute? By when will you need to have these capabilities?
Are there strategic partnerships you would need to form to be able to execute on this scenario? If yes, by when?
What additional resources will you need to be effective under this scenario?
What capabilities do you have that will become less important?
It was through this process that we were able to understand the pivot points the organization would need to manage if their target scenario did not turn out to be the future reality. That is, while they might not need certain capabilities because of strategic partnerships they had, should anything change, what new capabilities would they need to acquire and how were they likely to accomplish this?
These questions enabled the team to conduct a capability gap analysis to understand what type of investments needed to be made to achieve their desired outcomes under different scenarios. One year prior, MyoKardia had conducted an extensive organization capability analysis (OCA) to understand their strategic positioning around 51 critical capabilities for the organization. To conduct the SWP capability gap analysis, we began with those items previously identified as gaps from the OCA, setting aside the capabilities that had already been identified as a strength in the OCA. We built on the previously defined gaps to identify new, emerging capabilities that would be important for the company’s success in the future. Thus, this SWP capability gap analysis was focused on known or foreseeable gaps. We listed the capabilities and then identified where the company stood in terms of having the capabilities they needed. Figure 2 provides an example of this assessment.
In this example, each capability was rated as either: no current gap (green), capability needed in the next two to three years (yellow), current capability gap that is urgent (red). As indicated previously this assessment started with capability gaps we knew the organization already had. Thus, we were not surprised that only a few areas were rated “No current gap.” Our focus was to identify what were the critical capability gaps that had to be filled immediately and what gaps we needed to have an eye on for the future.
Once we had this high-level information, for every gap identified we had a further discussion of the specific type of skills and capabilities needed within that broad capability, how quickly that capability would be needed, and how many resources would be needed to fill the current gap. For example, at the start of this exercise the organization had no capabilities in terms of commercialization. As they looked forward to launching their first drug, they would need to build this capability internally. It was determined that they needed this talent within two to three years. Specifically, they identified the need for a Chief Commercial Officer and additional roles to build out a commercial team. Thus, in these discussions we began to get granular in terms of what type of talent was needed (both skill set and level; executives, managers, individual contributors), how many, and by when.
Given that our goal was to be agile and anticipate potential future changes that would impact the business, we also had a lot of conversation about what new emerging technologies could impact the business and how the organization could best plan for this undefined future (e.g., digital health and health monitoring technologies). These items were identified as capabilities that would be needed in the next two to three years, but this process forced a dialogue to consider the importance of beginning now to build this capability for the future.
Analyzing the Current Workforce
Now that the leadership team had a clear picture of the future they were planning for and the current capability gaps, we conducted deep conversations with functional leaders to better understand:
What were the capability gaps within their specific teams to achieve Vision 2020?
Did their current staff have the right skills and competencies to meet their current and future needs (beyond hiring for new, additional roles)?
What challenges did they foresee in obtaining these capabilities?
Were there any training/development needed for current staff?
Any other concerns they had regarding current staff and future workforce needs (e.g., ability to attract the right talent, ability to retain the talent you have, hired people too inexperienced and you have grown beyond their capabilities)?
We had one scenario option that was uncertain for MyoKardia, so leaders were also asked if this condition changed, what additional capabilities would they need and in what time frame? With this information in hand, we were able to analyze all the responses we got from department heads and began to analyze the current gaps in talent.
While this was a relatively young, high-growth company, in other organizations it would also be appropriate to assess if there are surpluses of talent where the skills they have are of declining importance to the organization. Then the discussion would be on what to do with this talent. This is going to be of growing importance to companies, as all industries are going through massive business model and technology-based disruptions. Few organizations have had aggressive plans to reskill their workforce to ensure they are ready for the future of work. However, with the talent supply shrinking in many fields, more and more organizations will need to turn to reskilling rather than simply laying off people with outdated skills. Not only is this the right thing to do, but organizations will increasingly not be able to find the talent they need to hire because they are of limited supply in the labor market.
As part of our SWP process we did scan the external market to identify where the organization was going to have its greatest challenges in terms of attracting the talent they needed to execute on their strategy. Roles in clinical, biostatistics, medical affairs, and regulatory affairs are in high demand by all competitors and they are in short supply in the marketplace. This requires a much longer hiring cycle for which the company had to prepare. Because MyoKardia is located in South San Francisco, a hub of biotechnology companies, they are generally fortunate with a large pool of talent from which to draw. However, increasingly there is not enough qualified talent to fill all available roles, the cost of living and commute times pose a challenge for hiring in the Bay Area, and technology giants have become recent competitors with attractive offerings for prospective candidates. All of this had to be taken into account for when they would begin the search to fill critical capability gaps as the organization moves forward toward the launch of their first product. While we did discuss the possibility of creating either a satellite location or if it was possible to have remote talent, it was determined that the strategy could be included in subsequent SWP plans depending on different business scenarios.
Presenting the Staffing Forecast
With all the information above, we were able to create an initial staffing forecast for the next five years based on input from individual functional heads and in collaboration with the executive team. Questions naturally emerged about where certain organizational capabilities would sit in the future and the influence a given function’s growth would have on other parts of the business. Thus, we brought the executive team together for an initial review of the staffing plan, so that they could see the projected growth of the organization in its entirety.
By sharing the big picture with the entire executive team, we were able to bring to light assumptions that certain leaders had made that impacted other teams. For example, if biology is producing two molecules per year, the clinical development team needed to be staffed appropriately to support the new studies that would aid the advancement of these potential future drugs. This also helped to facilitate a dialogue about where new capabilities should reside and ensured that multiple executives were not building overlapping capabilities in their individual functions.
Once the executive team had agreed that the initial staffing plan was directionally correct, we further vetted the initial plans with the finance organization to ensure the growth plans were feasible based on current and projected funding. This also had implications for office space planning, and we wanted to ensure we brought the finance organization into the conversation early.
Strategies for Building the Organization of the Future
As competition for top talent intensifies and skills shortages persist, determining the best mix of employed and contingent talent is key. Time and resources are the two biggest factors in making the decision whether to buy, build, rent, or borrow (see Figure 3). The optimum mix allows the company the flexibility to expand and contract their workforce with changing market and business needs. When we examined the talent shortages the organization had to address to achieve their target scenario, we considered the following options.
| Figure 3: Options to Bring in Talent: Buy, Build, Rent, or Borrow?
Hire someone as an employee
Bring in new capabilities or increase current capacity
Best when talent needs are urgent and ongoing
Training an employee to assume new responsibilities (e.g., leadership)
Good for developing capabilities that are in limited supply
Best for companies that have a history of developing talent from within
Requires time, discipline, and investment
Freelancer or consultant
Provides flexibility and speed
Best when need to boost capacity temporarily or when capability is not readily available in market
The market for contingent workers continues to increase
A relatively new concept being employed within a supplier ecosystem
Strategic business partners loan talent either at no cost or in trade
While in this instance MyoKardia was largely considering buying new talent as the organization is increasing both ongoing capability and capacity, currently 20 percent of their workforce was contingent (rent). Because of the large use of contractors, we recommended the organization track the capabilities being acquired through this strategy, the number of hours committed to the organization, and their hourly rate. We suggested that the organization continuously review their long-term strategy to determine when to bring capabilities in-house instead of leveraging the incorrect strategy for the growth phase of the organization.
Next, given that we were planning for significant growth in the organization, we worked with each leader to reconsider the structure of their organization to support their plans for the future. It was clear that organization structures that existed would need to change to support the anticipated growth. While they would not all necessarily be making immediate changes, the growth of the organization also had implications for broader leadership development, and we wanted to understand if the raw talent existed within the organization today, if high-potential talent needed to be developed, or if leadership talent needed to be part of the strategic workforce plan to fill a capability gap that had not been previously recognized.
Learning to Pivot
To learn more about scenario planning, the following resources may be helpful as a way to get started:
Chermack, T.J. (2011). Scenario Planning in Organizations: How to Create, Use and Assess Scenarios. Berrett-Koehler Publishers, Oakland, CA.
Bryan, L. & Farrell, D. (2008). Leading through Uncertainty. McKinsey & Company.
Young, M. (May, 2014) Scenario Planning for Human Resources and Strategic Workforce Planning, Conference Executive Board Research Report.
It has been nine months since this scenario planning process and the consequent SWP process was completed. While the organization was planning for a single most-likely scenario, a different scenario has emerged. Specifically, a partnership the organization initially had that contributed many critical capabilities to the organization concluded four months after the SWP work was completed. Because the executive team was tracking their indicators, and they had previously discussed which capabilities would be needed under different scenarios—including this one—the organization was prepared to pivot. They knew exactly which capabilities they needed to plan for under this scenario and were able to quickly take into account adjustments required to their workforce needs.
At many companies, workforce planning is a financial modeling exercise which does not take into account the specific capabilities that an organization will need. In order to build the appropriate talent pipeline(s), it is important to know and understand the types of roles that will need to be hired. Likewise, knowing the types of roles and levels that will be hired is important for IT and facilities planning (i.e., number of offices, conference rooms, cubicles).
At MyoKardia, the SWP provided a roadmap of long-term headcount projections and was not an approval for hiring all positions. It did, however, inform the annual planning cycle and budget, and the 2019 headcount is aligned with the headcount projections of the SWP. In addition to periodic review(s) going forward, executives plan to conduct the SWP exercise annually to ensure that it reflects any changes in the business. Within the next few months, executives will update the scenario(s) and assumptions and will enlist functional leaders to determine if headcount projections need to be revised. They see the strategic workforce plan as a continuous living document that will help inform their growth, capability, and talent investments.
Edie Goldberg, Ph.D., is the President of E.L. Goldberg & Associates in Menlo Park, California. She is the past Chairperson for HR People + Strategy and currently serves on the Board of the SHRM Foundation. She can be reached at firstname.lastname@example.org.
Ingrid Boyes is the Senior Vice President of Human Resources for MyoKardia. She can be reached at email@example.com.