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Improve your workforce planning efforts by studying labor market data.
Leaders trying to predict their organizations’ future workforce needs must focus not only on business requirements but also on what talent is likely to be available in the relevant labor markets, experts say.
“You can better identify critical skills and analyze the supply and demand for those skills by tracking and modeling data on your company and the economy at large,” says Rosemary Haefner, chief human resources officer for
CareerBuilder, a human capital management firm based in Chicago. “In the long term, this helps your company minimize turnover.”
The traditional workforce planning approach is hampered by rapidly evolving skills and roles, hypercompetition for talent, and the lack of detailed and reliable external labor market data, according to Dion Love, a principal executive advisor at
CEB, a business management consultancy based in Arlington, Va.
“Without good data, organizations overlook labor market demand and underestimate market saturation of particular skills,” he says. “Forty percent of the S&P 100 job postings in 2015 were for just 21 roles. In this environment, it’s common to overfocus on talent supply while underestimating market saturation and the intense competition for scarce skills.”
In addition, he says, “employers are telling us they are seeing a higher time-to-fill, which leads to higher talent acquisition costs.”
You’re Doing It Wrong
Typically, workforce planning begins with the business strategy and its implications for future talent needs. Leaders locate internal pipeline gaps and then determine how to fill them, Love says.
But that process can get bogged down quickly in the 21st century work world. Organizations and roles are changing so rapidly that it’s a struggle to accurately forecast skills requirements.
“The average organization has undergone five enterprise changes in the last three years, and 70 percent of key people say their jobs change substantially every two to three years,” says Love, citing CEB research.
Embedding labor market context at every stage of the strategic workforce planning process will help HR better understand trends related to the creation of new roles and the evolving nature of existing ones. It also will help HR assess the sustainability of the talent supply by location and provide critical market intelligence on competitiveness and wages.
“I often hear from employers that they get labor market intelligence when it’s already too late,” Love says. Being able to forecast trends gives businesses a heads-up when emerging skills are on the horizon or alternative talent pools become available. Talent market analytics also aid companies in developing realistic attraction and hiring plans, when exploring expansion to another location, or when considering an acquisition.
[SHRM members-only toolkit:
Practicing Workforce Planning]
Identify New Skills
New roles emerge as technology evolves. HR professionals need to know if different skills are becoming critical for existing positions, how jobs are changing and which entirely new professions are emerging. With a combination of current, historical and predictive data, employers can see which abilities are in high demand and how that may shift over time. (Note: Looking for new skills doesn’t necessarily mean looking for new people.)
If a critical talent segment is in short supply or is more costly in certain locations, that information can help shape your planning, along with the company’s existing business strategy, operational plans and real estate inventory.
The key to minimizing talent gaps is to be prepared—and not to just react to unanticipated shortages, Love says.
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