Management
August 18, 2014

How to beat the talent crunch

Originally published in October 2009

 

There’s a cloud looming over public sector employers in Canada. Baby boomers are set to leave the workforce en masse in coming years, creating a talent vacuum unlike anything we’ve seen before. And since the federal government is one of the largest employers in Canada, with more than 255,000 employees in the core public administration (CPA), it casts a long shadow over the entire Canadian workforce. 

For starters, the CPA workforce is more mature than those in other industries. On average, CPA employees are five years older than workers in the general labour force and tend to retire three years earlier. And in recent years, the number of older workers has grown – in 1983 only 42 percent of public service employees were 40 or older. By the 1990s, those aged 40 and older made up more than half of the CPA workforce. Today, more than two thirds of the CPA is over 40. And as of last spring, almost 10 percent of the CPA was eligible to retire. Within the next five years, that number increases to more than a quarter of the workforce.

The pending exodus of baby boomers from the workforce is a demographic trend that is expected to hit the public sector with significant impact. And when the boomers retire, not only will they leave a tidal wave of open positions in their wake, they will also take an enormous chunk of knowledge and experience with them.

This is a challenge that will require a considerable amount of planning and foresight for public sector employers to be successful. Many have already sounded the alarm, calling for more effective talent attraction strategies at every level. The question is not whether to take steps to address the problem now, but how.

In the past, organizations have used a range of different approaches to solve workforce challenges – human resources planning, strategic staffing, workforce analytics, and human capital planning, to name a few. But those were really about answering short-term budgeting requirements and filling vacancies. Today we face a challenge of a different magnitude altogether. It will require a different type of approach.

Strategic workforce planning – the process of analyzing and forecasting the talent an organization will need to achieve its strategic objectives – is the most promising approach we’ve seen when it comes to addressing the considerable “people and knowledge” challenges facing the public sector. It goes far beyond simply filling openings, pushing public sector leaders to identify the areas of their operations that are most critical – the ones that create real value, and without which the organization would find itself facing significant strategic and operational risk. It’s about making sure you have the right skills in the right places, at the right time, at the right price.

Converting your HR strategy into strategic planning doesn’t happen overnight. First and foremost, it needs to become a “management” priority, and it starts by determining where the organization is today and where it needs to be, using a process built around strategic scenarios, critical workforce segments, and predictive modeling.

Step 1:  Know who’s most important

The real power of workforce planning comes from focusing on critical workforce segments that have the greatest impact on the organization’s effectiveness. These are the people and positions that deliver a disproportionate amount of value – the ones who can make or break strategy, have the most valuable skills, and are typically the hardest to replace.

While your workforce plan will ultimately address all segments, the first and most important step is to identify those critical segments. This will help the organization maximize the return on HR investment, focusing the lion’s share of its efforts on securing its indispensable resources.

Step 2:  Establish one version of the truth
A workforce plan is only as good as the data upon which it is built. But most organizations only have a limited view of their skills and capabilities. That makes it even more important to establish a common language for describing jobs, skills and experience to make the best use of talent across the organization. From there, you can develop enterprise-wide sources of workforce data that are reliable and readily accessible.

But it won’t be easy. Solving data quality problems requires significant cross-enterprise collaboration on top of a lot of technology muscle. For organizations that have recently merged or consolidated with other public sector organizations, the challenge is even steeper. Although the effort may be huge, the payoff will be worth it for any organization looking to take workforce planning to the next level.

Step 3:  Determine what’s really driving supply and demand

At its core, workforce planning is about identifying and addressing gaps in the supply and demand for talent. It takes a strong workforce profile and enabling database to do that. Several types of data are required to conduct this type of analysis. They typically fit into these three broad categories:

  • Internal supply: current workforce makeup and future projections
  • Internal demand: project demand for specific types of labour
  • External supply and demand: market data that provides insights into the future availability of specialized labour pools.

Developing such internal and external supply/demand data sources will take time. It’s best to start by focusing on internal elements. HR should expect the depth of information contained in its supply/demand database to grow incrementally as the degree of sophistication of the workforce planning process grows.

Step 4:  Mind the (labour) gap
Now it’s time to develop a realistic plan for making the organization more attractive to top talent candidates and to address future talent gaps. This is where things get interesting. By better understanding the supply and demand of talent, you are in a better position to determine where to make investments. For instance, organizations that recognize the fact that younger generations tend to be committed to their careers, while previous generations were married to their employers, are forced to think about their talent investments and programs in new ways.

As labour availability changes, HR can help drive investment decisions that reduce the dependence on a critical workforce segment. An organization may consider automating some jobs, or geographically shifting work to larger labour pools. Other possibilities include in-sourcing, outsourcing, or changing the nature of the skills required through job design. Ultimately, where skills shortages are chronic, HR’s advice may be critical to limiting expectations about what can – and can’t – be accomplished in current timeframes.

Step 5:  Make workforce planning part of organizational planning

For workforce planning to stick, it has to be embedded into the annual planning process and must become a core management practice. Just as important, business leaders need to be responsible for their workforce plans. When HR works directly with senior managers within the organization, workforce planning becomes more effective. That’s when you’re able to drive workforce planning deeper into the organization.

Here are a few ways to successfully inject workforce planning into the annual planning process:

  • Establish a workforce planning unit within HR to work with operational leaders to consider the people implications of business strategies, keep managers current on workforce issues, and systematically monitor external supply and demand trends and gaps.
  • Assist operation units and departments to help maintain a rolling, detailed 12-to-18 month staffing plan.
  • Maintain a rolling three- to five-year workforce plan to be used as the central driver of HR investment decisions.

Without being integrated into organizational planning and related management practices, workforce planning doesn’t have a chance to succeed. Make sure it gets the attention it deserves.

You can do it
Nobody said this was going to be easy. Just like any major business challenge, this one will require the sustained attention of the executive leadership team for some time to come, driving action at the front lines of your organization.

This presents a curious dilemma at a moment when public sector employers in Canada have the upper hand, as the current economy presents one of the deepest hiring pools seen in years. In this environment, it can be tempting to delay action on larger demographic challenges in favor of focusing on snatching up talent in the near term – with so much talent available now, what’s the rush?

This is shortsighted. While the shift from a sellers’ market to a buyers’ market has relieved the pressure on many employers, it’s only temporary. Having a long-term human resource strategy is becoming more important every day. If you haven’t built workforce planning into your core HR strategy, it’s time to get started.

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