Every year, there is discussion on how to improve the performance management process — simplifying how ratings are determined, using more measurable criteria, giving more weight to teamwork and collaboration, enhancing technology, going "ratingless" and the like. Sound familiar?

There is no argument that better performance on the job is valuable to organizations.

But, we can debate the relative impact of the performance management process on driving better performance.

If you were to estimate the time, resources and financial commitment made to this process, would we expect a higher guaranteed rate of return? Rather than focusing on the efficacy of a process intended to — but not often successful at — working around manager skill gaps (in regularly and constructively developing the capabilities of and motivating their teams), we wanted to concentrate here on another process that has been proven to generate a high return that is less frequently implemented and has historically had lower investments made in terms of people, financial commitment and technology.

What is this process? Workforce planning. While we are not going to discuss the trade-offs of various naming conventions (e.g., strategic workforce planning, manpower planning, talent planning … choose what resonates within your organization), we are going to focus on the fundamental elements of this process that deliver substantive return on investment (ROI) and why this process is at least as valuable as performance management, if not more so.

First, here are the five core elements that need to be addressed

M agnitude

E xpertise

R eal Estate

I nvestment

T iming

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In essence, workforce planning plays out scenarios to assess how many resources you need with what skills, where, at what cost and when?

The mechanics of "how" you create this plan (or really alternative scenario plans), while no small task, has a huge payoff for both the business and HR:

For the Business: Better anticipating how many resources you need with what skills, where, at what cost and when both increases ROI and better manages current and future talent risks.

For HR: Having a workforce plan in place both gives HR better line of sight to what's critical to the business from a talent perspective and allows HR to focus its efforts based on prioritized and business-driven talent impacts.

With such tremendous value stemming from workforce planning, why don't all companies focus on this process? There are several reasons, and we'll highlight a few of the more common ones here:

Lack of or evolving business strategy: While we might want to highlight the broader concerns that leaders should have about this situation, we will limit our focus to the implications for workforce planning. The general premise here is: We need to wait for a strategy to be in place before we do workforce planning.
The reality is that business strategies are always in flux at some level, and workforce planning can be an effective tool in thinking through how to operationalize that strategy or at least define and deliver on "big bets" from a talent perspective.

Proliferation of roles: In many organizations, the number of job titles that have been created to capture "unique" roles makes workforce planning quite daunting — e.g., if 50% or more employees have unique job titles, how can you plan effectively?
Here too, we don't need to implement job architecture on a large scale before creating a workforce plan. There are a number of ways to collapse job titles into broader categories to support effective planning — from functional and level designations to "hot skill" views.

Challenges in defining talent demand: Organizations can determine needed human resources to support some roles — e.g., manufacturing headcount in production, call center headcount based on volume and complexity of calls, professional services headcount based on utilization levels. That said, organizations do not have readily-available mechanisms for establishing talent demand systemically. And, some groups actively challenge any such attempt, as it potentially puts parameters in place that may limit their autonomy.
While it is harder to establish parameters for defining how many resources are needed to support some roles, there typically are at least a few broader factors that could provide, at minimum, boundaries for anticipated needs. Some predictive power is still better than no prediction at all.

Changing market conditions: Many leaders, especially in industries with more rapid change, may theorize that planning isn't effective because there are too many unknowns in the future. The argument here is that longer-term planning isn't useful overall — not just for talent.
Given the advancements being made in technology and elsewhere, predictions may be more complex and varied, but these conditions generally make planning efforts more valuable vs. less so. There actually is greater potential competitive advantage gained, if we better anticipate and respond to scenarios that others haven't considered.

An effective workforce planning process includes steps to help leaders think through their challenges rather than succumbing to them.

While, ultimately, both performance management and workforce planning processes can have strong and positive effects on an organization, there is currently disproportionate weight given to performance management vs. workforce planning. This bias is not just true within organizations; it is also true when reviewing the relative emphasis in academic research and HR consulting services. One could argue that there should be at least equal attention given to each of these processes, given that they are both designed to deliver higher performance, while managing overall risk.

Ask yourself: How much effort does your organization spend supporting workforce planning vs. performance management? If you need to rebalance the scales or want to learn more about the MERIT principles for effective workforce planning, please contact us at info@meritanalyticsgroup.com .