10 STRATEGIC WORKFORCE PLANNINGWayne F. Cascio, Herman Aguinis

10 STRATEGIC WORKFORCE PLANNING
Wayne F. Cascio, Herman Aguinis
Learning Goals
By the end of this chapter, you will be able to do the following:
· 10.1 Describe the four components of the strategic workforce
planning process and explain how they work together
· 10.2 Explain the relationship between strategic business plans
and strategic workforce plans
· 10.3 Compare and contrast traditional and values-based
approaches to developing strategy
· 10.4 Identify key talent management issues that arise at
various business-planning horizons
· 10.5 Describe the multiple uncertainties that characterize
supply and demand forecasts
· 10.6 Know the steps to take to avoid a crisis in leadership
succession
· 10.7 Identify when it makes more sense to “buy” rather than
“make” talent
· 10.8 Explain the kinds of information to collect when
evaluating newly established versus well-established strategic
workforce planning systems
The judicious use of human resources is a perpetual problem in
society. Specific examples of talent management problems that
are also top management problems include the following:
· Finding the specialized technical talent needed to staff
specific programs of planned business expansion (e.g., Cappelli,
2008; Ostrower, 2017)
· Finding seasoned talent to manage new and expanding
operations, including people with the capability eventually to
assume senior management positions
· Developing competent, equitable talent management practices
that will ensure compliance with EEO requirements and thus
avoid the potentially large settlement costs of discrimination
suits

· Devising alternatives to layoffs or, if layoffs become
necessary, implementing fair and workable layoff policies that
acknowledge the needs of all parties
· Improving productivity, especially among managerial and
technical employees
· Managing career development opportunities so that an
effective pool of talented people can be attracted, motivated,
and retained over long periods of time
To a considerable extent, emphasis on improved talent
management practices has arisen as a result of recognition by
many senior leaders of the crucial role that talent plays in
gaining and sustaining a competitive advantage in a global
marketplace. It is the source of innovation and renewal. Despite
these encouraging signs, it appears that, although most
companies engage in some form of strategic business planning
to assess periodically their basic missions and objectives, very
few are practicing strategic HR management today.
Organizations will not have succeeded in fully using their
human resources until they can answer the following questions
(Cappelli, 2008; Maurer, 2017c):
· What talents, abilities, and skills are available within the
organization today?
· Is there a talent pool that we can dependably draw from for
tomorrow?
· What are the qualitative as well as quantitative talent demands
of our growth plan?
· How can we embed the labor market context into every stage
of the strategic workforce planning process?
In this chapter, we first describe the strategic workforce
planning process, emphasizing its linkage to strategic business
planning, and then take a closer look at each element in the
process, including the talent inventory, workforce forecasts,
action plans, and control and evaluation procedures.
What Is Strategic Workforce Planning?
The purpose of strategic workforce planning (SWP) is to
anticipate and respond to needs emerging within and outside the

organization, to determine priorities, and to allocate resources
where they can do the most good. These “buy-build-borrow-or-
rent” decisions have become more important in firms as a result
of globalization, outsourcing, employee leasing, new
technologies, organizational restructuring, and diversity in the
workforce. These factors produce uncertainty—and because it’s
difficult to be efficient in an uncertain environment, firms
develop strategic business and workforce plans to manage risks
and to reduce the impact of uncertainty (Cappelli & Keller,
2017; Lublin & Francis, 2016).
Although SWP means different things to different people,
general agreement exists on its ultimate objective—namely, the
wisest, most effective use of scarce or abundant talent in the
interest of the individual and the organization. Thus, we may
define SWP broadly as an effort to anticipate future business
and environmental demands on an organization and to meet the
talent requirements dictated by these conditions. This general
view of SWP suggests several specific, interrelated activities
that together comprise a SWP system:
· Talent inventory: to assess current resources (skills, abilities,
and potential) and analyze current use of employees
· Workforce forecast: to predict future HR requirements
(numbers, skills mix, internal versus external labor supply)
· Action plans: to enlarge the pool of qualified individuals by
recruitment, selection, training, placement, transfer, promotion,
development, and compensation.
· Control and evaluation: to provide closed-loop feedback to the
rest of the system and to monitor the degree of attainment of
HR goals and objectives
Figure 10.1 illustrates such an integrated SWP system. Notice
how strategic and tactical business plans serve as the basis for
HR objectives and how HR objectives interact with the talent
inventory and forecasts of workforce supply and demand to
produce net workforce requirements. Note how labor markets
also affect the supply of and demand for labor. A labor
market is a geographic area within which the forces of supply

(people looking for work) interact with the forces of demand
(employers looking for people) and thereby determine the price
of labor (Cahuc, Carcillo, & Zilberberg, 2014; Ehrenberg &
Smith, 2016).
When labor markets are “loose,” the supply of available workers
exceeds the demand for them, and unemployment is high. Under
these circumstances, turnover tends to decrease, as does
employee mobility. Conversely, when labor markets are “tight,”
demand for workers exceeds supply, and unemployment is low.
Under these circumstances, jobs are plentiful, and employee
mobility tends to increase.
With a clear understanding of the surpluses or deficits of
employees in terms of their numbers, their skills, and their
experience that are projected at some future point in time—that
is, a statement of net workforce requirements—it is possible to
initiate action plans to rectify projected problems. Finally,
control and evaluation procedures provide feedback that affects
every aspect of the SWP process. We will have more to say
about each of these processes once we see how they flow from
strategic business and workforce plans.
Strategic Business and Workforce Plans
Strategies are the means that organizations use to compete, for
example, through innovation, quality, speed, or cost leadership.
How firms compete with each other and how they attain and
sustain competitive advantage are the essence of what is known
as strategic management (Dess, Lumpkin, & Eisner, 2016). To
develop strategies, however, organizations need to plan.
Planning is the very heart of management, for it helps managers
reduce the uncertainty of the future and thereby do a better job
of coping with the future. Hence, a fundamental reason for
planning is that planning leads to success—not all the time, but
studies show consistently that planners outperform nonplanners
(MacMillan & Selden, 2008; Miller & Cardinal, 1994; Mitchell,
Harman, Lee, & Lee, 2009). A second reason for planning is
that it gives managers and organizations a sense of being in
control of their fate rather than leaving their fate to chance.

Hence, planning helps organizations do a better job of coping
with change—technological, social, regulatory, and
environmental.
Figure 10.1 An Integrated, Strategic Workforce-Planning
System
Source: Reprinted from Cascio, W. F. (2016). Managing human
resources: Productivity, quality of work life, profits (10th ed.),
p. 170. New York, NY: McGraw-Hill.
A third reason for planning is that it requires managers to
define an organization’s objectives and thus provides context,
meaning, and direction for employees’ work. By defining and
ensuring that all employees are aware of overall goals—
why they are doing what they are doing—employers can tie
more effectively what employees are doing to the organization’s
overall objectives (Gamble, Thompson, & Peteraf, 2017). A
great deal of research indicates that the process of defining
objectives leads to better employee performance and
satisfaction.
A final reason for planning is that without objectives effective
control is impossible. “If you don’t know where you are going,
any road will get you there.” Planning may occur, however,
over different levels or time frames.Levels of Planning
Planning may take place at strategic, operational, or tactical
levels. The horizon for strategic planning is typically three to
five years, and it differs from shorter-range operational or
tactical planning. Strategic planning decisions involve
substantial commitments of resources, resulting either in a
fundamental change in the direction of a business or in a change
in the speed of its development along the path it is traveling.
Each step in the process may involve considerable data
collection, analysis, and iterative management reviews. Thus, a
company making components for wind turbines may, after
reviewing its product line or subsidiary businesses, decide to
divest its chemical-products subsidiary, since it no longer fits
the company’s overall objectives and long-range business plans.

Strategic planning decisions may result in new business
acquisitions, new capital investments, or new management
approaches. Let’s consider the strategic planning process in
more detail.The Strategic Planning Process
Strategic planning is the process of setting organizational
objectives and deciding on comprehensive action plans to
achieve these objectives (Kourdi, 2015; Porter, 2011). The
process begins with a thorough analysis of the multiple
environments in which organizations operate, for example,
SWOT (strengths, weaknesses, opportunities, and threats)
analysis or PESTLE (political, economic, social, technological,
legal, and environmental) analysis (Cascio, 2015). The
objective is to identify opportunities to offer something
different to potential customers. Strategic planning typically
includes the following processes:
· Defining company philosophy by looking at—why it exists,
the unique contributions it makes, and what business it should
be in
· Formulating company and subunit statements of identity,
purpose, and objectives
· Evaluating the company’s strengths, weaknesses,
opportunities, and threats—in order to identify the factors that
may enhance or limit the choice of any future courses of action
· Determining the organization design—(structure, processes,
interrelationships) appropriate for managing the company’s
chosen business
· Developing appropriate strategies for achieving objectives—
(e.g., time-based points of measurement), including qualitative
and quantitative subgoals
· Devising programs to implement the strategies
Figure 10.2 A Values-Based View of Strategy
Source: O’Reilly, C. A., & Pfeiffer, J. (2000). Hidden value:
How great companies achieve extraordinary results with
ordinary people (p. 15). Boston, MA: Harvard Business School
Press.

An Alternative Approach
The methodology described above is a conventional view of the
strategy-development process, and it answers two fundamental
questions that are critical for managers: What business are we
in? and How shall we compete? Although this approach is an
exciting intellectual exercise for those crafting the strategy,
O’Reilly and Pfeffer (2000) pointed out that it is not
particularly engaging to those charged with implementing the
strategy. It takes the competitive landscape as a given and
devises maneuvers against a given set of competitors, presumed
markets, customer tastes, and organizational capabilities. In
contrast, firms such as Southwest Airlines, Synovus Financial,
and AES (which generates electrical power) took a different
tack—namely, they turned the strategy development process on
its head. Figure 10.2 illustrates this alternative approach.
In the alternative, or values-based, approach to developing
strategy, organizations begin with a set of fundamental values
that are energizing and capable of unlocking the human
potential of their people—values such as fun, fairness,
challenge, trust, respect, community, and family. They then use
these values to develop, or at least to evaluate, management
policies and practices that express organizational values in
pragmatic ways on a day-to-day basis. For any management
practice, from hiring to compensation, the key question is “To
what extent is this practice consistent with our core beliefs
about people and organizations?”
The management practices that are implemented have effects on
people. Consequently, the management practices come to
produce core competencies and capabilities at these companies,
whether it is teamwork, learning, and speed at AES; People
First at FedEx Freight; or productivity and quality at Southwest
Airlines. In turn, these capabilities and competencies can
change the competitive dynamics of the industry. The Men’s
Wearhouse competes on service, not just on price. Southwest
Airlines has productive employees who permit it to save on

capital investment and labor costs, while delivering outstanding
service at the same time (Blanchard & Barrett, 2010; Lorenzetti,
2014). Cisco is able to change technology platforms and to
acquire and retain intellectual capital as the industry shifts
around it. What these companies can do better than anyone else
permits them to develop innovative strategies and approaches
that outflank the competition (Hess & Cameron, 2006; O’Reilly
& Pfeffer, 2000). In his research, Collins (interviewed in
Reingold, 2009) found that the most enduring and successful
corporations distinguish their timeless core values and enduring
core purpose (which should never change) from their operating
practices and business strategies (which should be changing
continually in response to a changing world). In this approach
to management, strategy comes last, after the values and
practices are aligned and after the company develops
capabilities that set it apart.
This is not to imply that strategy is unimportant. Each of the
firms described here has a well-developed competitive strategy
that helps it make decisions about how and where to compete.
Such strategic decisions are secondary, however, to living a set
of values and creating the alignment between values and people.
Payoffs From Strategic Planning
The biggest benefit of strategic planning is its emphasis on
growth, for it encourages managers to look for new
opportunities rather than simply cutting workers to reduce
expenses. But the danger of strategic planning—particularly the
conventional approach to strategic planning—is that it may lock
companies into a particular vision of the future—one that may
not come to pass. This poses a dilemma: how to plan for the
future when the future changes so quickly. The answer is to
make the planning process more democratic. Instead of
relegating strategic planning to a separate staff—as in the
past—it needs to include a wide range of people, from line
managers to customers to suppliers. Top managers must listen
and be prepared to shift plans in midstream if conditions

demand it. This is exactly the approach that Cisco Systems
takes. It is not wedded to any particular technology, for it
recognizes that customers are the arbiters of choice. It listens
carefully to its customers and then offers solutions that
customers want. Sometimes this means acquiring other
companies to provide the technology that will satisfy customer
demands. Indeed, Cisco acquired 50 companies from 2012
through August 2017 (Cisco Corporation, 2017). This mindset
enables Cisco to move in whatever directions that markets and
customers dictate. Now let’s consider the relationship of HR
strategy to the broader strategy of the business.
Relationship of HR Strategy to Business Strategy
Human resource strategy parallels and facilitates the
implementation of the strategic business plan. HR strategy is
the processes, decisions, and choices an organization makes
regarding its human resources (Cascio & Boudreau, 2012). HR
strategies are often formulated to align with the organization’s
strategy, by creating the necessary capacity in the workforce
and how it is organized to achieve the organization’s strategic
objectives. It requires a focus on planned major changes in the
organization and on critical issues such as the following:
· What are the HR implications of the proposed organizational
strategies?
· What are the possible external constraints and requi rements?
· What are the implications for management practices,
management development, and management succession?
· What can be done in the short term to prepare for longer term
needs?
Note that in this approach to the strategic management of human
resources, a firm’s business strategy and its HR strategy are
interdependent (Becker, Huselid, & Ulrich, 2001; Boudreau &
Ramstad, 2007; Huselid, Becker, & Beatty, 2005).
Figure 10.3 illustrates a model of the relationship of HR
strategy to the broader business strategy (based on Boudreau,
1998; Boudreau & Ramstad, 2003). Briefly, planning proceeds

top–down, whereas execution proceeds bottom–up. There are
four links in the model, beginning with the fundamental
question “How do we compete?” As we noted earlier, firms may
compete on a number of nonindependent dimensions, such as
innovation, quality, cost leadership, or speed. From that, it
becomes possible to identify business or organizational
processes that the firm must execute well in order to compete
(e.g., speedy order fulfillment). When processes are executed
well, the organization delights its internal and external
customers through high performance. This may occur, for
example, when an employee presents a timely,
cost-effective solution to a customer’s problem. To manage and
motivate employees to strive for high performance, the right
competencies, incentives, and work practices must be in place.
Execution proceeds bottom–up, as appropriate competencies,
challenging incentives, and work practices inspire high
performance, which delights internal and external customers.
This, in turn, means that business processes are being executed
efficiently, enabling the organization to compete successfully
for business in the marketplace.
Figure 10.3 Relationship of HR Strategy to the Broader
Business Strategy
Source: Society for Human Resource Management Foundation.
(2004). HR in alignment (DVD). Alexandria, VA: Author.
At a general level, high-performance work practices include
such workplace features as the following (Brannick, Pearlman,
& Sanchez, 2017):
· Worker empowerment, participation, and autonomy
· The use of self-managed and cross-functional teams
· Commitment to superior product and service quality
· Flat organizational structures
· The use of contingent workers
· Flexible or enriched design of work that is defined by roles,
processes, output requirements, and distal criteria (e.g.,
customer satisfaction), rather than (or in addition to) rigidly

prescribed job-specific requirements
· Rigorous staffing and performance management practices
· Various worker- and family-friendly HR policies that reward
employee development and continuous learning as well as
support work–life fit
HR metrics serve as a kind of overlay to the model itself. HR
metrics should reflect the key drivers of individual, team, and
organizational performance. When they do, the organization is
measuring what really matters.
Strategic workforce plans must flow from, and be consistent
with, the overall business and HR strategies. Figure 10.4 shows
the relationship between business planning—long range, middle
range, and annual—and parallel processes that occur in SWP.
As Figure 10.4 shows, SWP focuses on firm-level responses to
people-related business issues over multiple time horizons.
With respect to each of these planning horizons—long range,
middle range, and annual—there are two key questions to
address (Cascio, Boudreau, & Church, 2017):
· Which factors are likely to have the greatest impact on our
organization’s ability to achieve its short- and long-range
objectives?
· How might these effects change over the short, mid-range, and
long terms?
In this framework, changes in the business environment drive
issues, issues drive actions, and actions include programs and
processes to address the business issues identified.
In the remainder of this chapter, we examine the components of
the SWP system, as shown in Figure 10.1. As the figure shows,
forecasts and action plans are two key elements of SWP. A
forecast of net workforce needs is the result of an analysis of
the future availability of labor (supply) and future labor
requirements (demand), tempered by an analysis of external
conditions (e.g., technologies, labor markets, competition).
With respect to the future availability of people with the right
skills, an inventory of current talent is essential. We consider
that topic next.

Figure 10.4 Impact of Three Levels of Business Planning on
Strategic Workforce Planning
Source: Reprinted from Cascio, W. F. (2016). Managing human
resources (10th ed.), p. 157. Burr Ridge, IL: McGraw-
Hill/Irwin.
Talent Inventory
A talent inventory is a fundamental requirement of an effective
SWP system. It is an organized database of the existing skills,
abilities, career interests, and experience of the current
workforce. Prior to data collection, however, certain
fundamental questions must be addressed:
· Who should be included in the inventory?
· What specific information must be included for each
individual?
· How can this information best be obtained?
· What is the most effective way to record such information?
· How can inventory results be reported to top management?
· How often must this information be updated?
· How can the security of this information be protected?
Answers to these kinds of questions will provide both direction
and scope to subsequent efforts. For example, IBM uses a
technology-powered staff-deployment tool called Workforce
Management Initiative (Boudreau, 2010; Byrnes, 2005). It’s a
sort of in-house version of Monster.com, the online job site.
Built on a database of 400,000 résumés, it lets managers search
for employees with the precise skills they’ll need for particular
projects. The initiative cost IBM $100 million to build over
three years, but it has already saved more than $500 million,
and it has also improved productivity. Its greatest impact,
however, may be its ability to help managers analyze what skills
staffers possess and how those talents match up to the business
outlook. It’s part of a broader SWP effort that helps managers
decide whether to “buy,” “make,” or “rent” employees (e.g.,
through an online talent platform that matches buyers and
sellers). When a talent inventory is linked to other databases,

that is, in a relational database, the set of such information can
be used to form a complete human resource information system
(HRIS) that is useful in a variety of situations (Johnson &
Geutal, 2014; Zielinski, 2016b).
Information Type
Specific information to be stored in the inventory varies across
organizations. At a general level, however, information such as
the following is typically included in a profile developed for
each individual:
· Current position information
· Previous positions in the company
· Other significant work experience (e.g., other companies,
military)
· Education (including degrees, licenses, certifications)
· Language skills and relevant international experience
· Training and development programs attended
· Community or industry leadership responsibilities
· Current and past performance appraisal data
· Disciplinary actions
· Awards received
Information provided by individuals may also be included. At
Schlumberger (an oil field services company), for example,
employees add their career goals, information about their
families, past assignments, professional affiliations,
publications, patents granted, and hobbies. IBM includes the
individual’s expressed preference for future assignments and
locations, including interest in staff or line positions in other
IBM locations and divisions (Boudreau, 2010; Byrnes, 2005).
Uses
Although secondary uses of the talent inventory data may
emerge, it is important to specify the primary uses at the
concept-development stage. Doing so provides direction and
scope regarding who and what kinds of data should be included.
Some common uses of a talent inventory include identification
of candidates for promotion, succession planning, assignments
to special projects, transfer, training, workforce-diversity

planning and reporting, compensation planning, career planning,
and organizational analysis. Be sure to include a clear statement
about employee privacy safeguards and the potential impact on
employee privacy of all such in-house systems.
Forecasts of Workforce Supply and Demand
Talent inventories and workforce forecasts must complement
each other; an inventory of present talent is not particularly
useful for planning purposes unless it can be analyzed in terms
of future workforce requirements. At the same time, a forecast
of workforce requirements is useless unless it can be evaluated
relative to the current and projected future supply of workers
available internally. Only when we have a clear understanding
of the projected surpluses or deficits of employees, in terms of
their numbers, their skills, and their experience, does it make
sense to initiate action plans to rectify projected problems.
Workforce forecasts are attempts to estimate future labor
requirements. There are two component processes in this task:
(1) anticipating the supply of human resources, both inside and
outside the organization, at some future time period; and (2)
anticipating organizational demand for various types of
employees. Forecasts of labor supply should be considered
separately from forecasts of demand because each depends on a
different set of variables and assumptions (Cappelli, 2008).
Internal supply forecasts tend to relate much more closely to
conditions insidethe organization, such as the age distribution
within the workforce and average rates of turnover, retirement,
transfer, and new hires within job classes. Demand forecasts
depend primarily on the behavior of some business factor (e.g.,
projected number of retail outlets, sales, and product volume) to
which workforce needs can be related. In contrast to forecasts
of labor supply, demand forecasts are beset with multiple
uncertainties—in consumer behavior, in technology, in the
general economic environment, and so forth.
Consider two paradoxes in workforce forecasts: (1) The
techniques are basically simple and easy to describe, but

applying them successfully may be enormously complex and
difficult; and (2) after the forecast has been made, it may prove
to be most useful when it proves to be least accurate as a vision
of the future.
Here is what the latter paradox implies. Assume that a particular
forecast points toward a future HR problem—for example, a
surplus of middle managers with comparable skills who were
hired at the same time to meet a sudden expansion. The forecast
may be most useful if it stimulates action (e.g., appropriate
training, transfer, promotion) so that the surplus never
develops. It is useless only if the surplus develops on schedule
as projected. Therein lies the value of workforce forecasts: In
themselves, they are little more than academic exercises, but,
when integrated into a total planning process, they take on
special value because they enable an organization to extend the
range of other phases of SWP and of planning for other
functions.
External Workforce Supply
When an organization plans to expand, recruitment and hiring of
new employees may be anticipated. Even when an organization
is not growing, the aging of the present workforce, coupled with
normal attrition, makes some recruitment and selection a virtual
certainty for most firms. It is wise, therefore, to examine
forecasts of the external labor market for the kinds of
employees that an organization will need.
Several agencies regularly make projections of external labor -
market conditions and future occupational supply (by
occupation), including the Bureau of Labor Statistics of the
U.S. Department of Labor, the National Science Foundation, the
Department of Education, and the Public Health Service of the
Department of Health and Human Services.
For new college and university graduates, the National
Association of Colleges and Employers conducts a quarterly
salary survey of starting salary offers to new college graduates
at the bachelor’s-degree level (www.naceweb.org), and salary

offers reflect supply-and-demand conditions in the external
labor market. Organizations in industries as varied as oil and
gas, nuclear power, digital-media advertising, construction, and
heavy-equipment service are finding such projections of the
external labor market to be helpful in preventing surpluses or
deficits of employees (Coy & Ewing, 2007; Economic Modeling
Specialists, 2017; Vranica & Steel, 2006).
It is important to gauge both the future supply of workers in a
particular field and the future demand for these workers.
Focusing only on the supply side could be seriously misleading.
For example, the number of chemical engineering majors
scheduled to graduate from college during the next year may
appear large, and certainly adequate to meet next year’s hiring
needs for chemical engineers for a particular company—until
the aggregate demand of all companies for chemical engineering
graduates is compared with the available supply. That
comparison may reveal an impending shortage and signal the
need for more widespread and sophisticated recruiting efforts.
Organizations are finding that they require projections of the
external labor market as a starting point for planning, for
preventing potential employee shortages from arising, and for
dealing effectively with shortages that are to some extent
unavoidable.
Internal Workforce Supply
An organization’s current workforce provides a base from which
to project the future supply of workers. It is a form of risk
management. Thus, when CNA Financial Corporation analyzed
the demographics of the incumbents of various mission-critical
jobs, it learned that 85% of its risk-control safety engineers,
who inspect boilers and other machinery in buildings, were
eligible for retirement. The company wanted to hold on to their
specialized skills, because they were so important to retaining
current business. The forecast prompted the company to take
action to ensure that projected deficits did not materialize
(Hirschman, 2007). This is just one of many examples (see

Ostrower, 2017). Perhaps the most common type of internal
supply forecast is the leadership-succession plan, but before we
discuss that, let’s consider some important changes that have
occurred in the workforce and in careers.From Predictable to
Unpredictable Supplies of Labor
In the era of lifetime employment, popular until the mid-1980s,
vacancies were easy to predict because employees did not quit
and were rarely fired. Vacancies tended to come with
retirements at mandatory retirement ages. A key assumption was
that the supply of talent was entirely within a company’s
control. Candidates, who were essentially raw material, were
brought in to a limited number of entry-level jobs, and then
developed to fit the specialized needs of the company.
Adjustments were made to the supply pipeline, principally by
adjusting the rate at which candidates progressed from one job
to another, to ensure that it matched demand in the future
(Cappelli, 2011).
This approach to succession planning began to unravel after the
recession of 1981‒1982. Business and talent forecasts in the
1970s proved to be extremely inaccurate, as low economi c
growth combined with inflation to produce “stagflation.” Talent
pipelines continued to supply managers based on those
inaccurate forecasts, leading to substantial surpluses of talent.
The surpluses occurred during the worst recession at that point
(1981‒1982) since the Great Depression, and led to a decade of
layoffs. As if those developments were not enough, uncertainty
in the business environment increased dramatically with the
advent of deregulation (e.g., in airlines, trucking, and
telecommunications) and the growth of
international competition, which increased the number and
sophistication of competitors around the world. In a nutshell,
uncertainty became the new normal (Cappelli & Keller, 2017).
A singular focus on one future scenario extrapolates today’s
workforce into the future using past patterns of movement,
attrition, and so on. Talent management and succession planning
simply no longer have the luxury of pretending that assumptions

made years in advance will hold long enough to enact
traditional multiyear plans. Instead, success will be determined
not so much by the validity and execution quality of succession
systems, but rather by nurturing a sufficient variety of options
aligned against multiple future scenarios. The key question in
today’s organizations is, “Are we optimizing all possible types
and sources of talent, to be properly hedged against the multiple
futures and risks that our talent (and business) will face?” This
newer approach is called “talent readiness” and its hallmark is
the development of a pool of high-potential, high-performing
employees who are capable of assuming critical jobs or roles
(those where a change in the quality or quantity of individuals
will have the biggest impact on key business outcomes) (Cascio
et al., 2017). Leadership roles are critical in virtually all
organizations.Leadership-Succession Planning
Succession planning is the one activity that is pervasive, well
accepted, and integrated with strategic business planning among
firms that do SWP (Nyberg, Schepker, Cragun, & Wright,
2017). In fact, succession planning is considered by many firms
to be the sum and substance of SWP. The mechanics for
developing such a plan includes steps such as the following: (a)
setting a planning horizon, (b) assessing current performance
and readiness for promotion, (c) identifying replacement
candidates for each key position, (d) identifying career -
development needs, and (e) integrating the career goals of
individuals with company goals. The overall objective, of
course, is to ensure the availability of competent executive
talent in the future or, in some cases, immediately (Bower,
2008; Holstein, 2008; Nyberg et al., 2017).
Leadership-succession processes are particularly well developed
at 3M. With 2017 worldwide sales of $31.7 billion, 60% of
which comes from outside the United States, 3M sells more than
55,000 products in more than 200 countries, and it employs
approximately 91,500 people worldwide (3M, 2017). At 3M, a
common set of leadership behaviors links all management
practices with respect to assessment, development, and

succession (Paul, 2017):
· Play to win
· Prioritize and execute
· Foster collaboration and teamwork
· Develop others and self
· Innovate
· Act with integrity and transparency
These leadership behaviors describe what leaders need to know,
what they need to do, and the personal qualities that they need
to display. With respect to assessment, managers assess
potential as part of the performance-appraisal process. All
managers also receive 360-degree feedback as part of leadership
classes. Executive hires at the leadership level all go through an
extensive psychometric assessment. With respect
to development, 3M’s Global Academy of Innovative
Development focuses on developing global leaders that add
value to 3M, its customers, and the world we all live in. An
important aspect of leadership development is “Development
Through Corporate Social Responsibility,” delivered as a key
strategy in the formation of a global leadership pipeline. 3M
also uses experiential and real-time projects that are focused on
developing innovative solutions to future-focused, business-
critical problems and/or critical social challenges that achieve
impact in the real world—as a way to learn by doing. Executive
coaching and individual-development plans are also part of the
journey for each leader. Finally, leaders are assessed in terms of
the impact of their growth on the organization strategically.
Succession planning focuses on a few key objectives: to identify
top talent, that is, high-potential individuals, both within
functions and corporatewide; to develop pools of talent for
critical positions; and to identify development plans for key
leaders. 3M’s Executive Resources Committee assures
consistency both in policy and in practice in global succession
planning for key management and executive positions—
including the process for identifying, developing, and tracking
the progress of high-potential individuals (Society for Human

Resource Management Foundation, 2008).Chief Executive
Officer (CEO) Succession
There are five primary causes of CEO succession: poor
performance; scapegoating; strategic shift; planned succession,
such as retirement; and unexpected succession, such as death
(Nyberg et al., 2017). Unfortunately, fewer than half of public
and private corporate boards have CEO-succession plans in
place, even though CEO turnover around the globe was almost
15% in 2016 (Plank, 2014; PwC Strategy, 2017). Depending on
the circumstances, that can be a costly mistake. An analysis of
4,498 CEO successions from 2000 to 2014 found that companies
forced to fire their leader lost an average of $1.8 billion in
shareholder value compared with companies that orchestrated a
replacement (Pierson & Kitroeff, 2016).
Botched CEO successions are not unusual, and even high-
profile firms like Disney, Viacom, Morgan Stanley, Coca-Cola,
Home Depot, AIG, and Hewlett-Packard are not immune (Fritz
& Lublin, 2017). These companies stand in stark contrast to
such firms as General Electric, ExxonMobil, Cisco Systems,
Johnson & Johnson, Kellogg, United Parcel Service, and
PepsiCo, which benefited enormously from building strong
teams of internal leaders, which, in turn, resulted in seamless
transitions in executive leadership. For more details on the
process used at Cisco Systems, see Groysberg, Cheng, and Lobb
(2016). In fact, people development is becoming an important
part of the assessment of executive performance. PepsiCo is a
good example. Historically it allocated one third of incentive
compensation to the development of people, with the remainder
allocated to results. Currently it uses an equal allocation of
incentive compensation for people development and results. To
measure the people–results component, it uses an upward
feedback instrument called the Manager Quality Performance
Index (Bracken & Church, 2013; Church, 2017).
Ideally, careful succession planning grooms people internally.
Doing so maintains the intellectual capital of an organization
and also motivates senior-level executives to stay and to excel

because they might get to lead the company someday. So why
weren’t the first set of boards grooming internal candidates for
the leadership jobs? Among other reasons, at the heart of
succession lie personality, ego, power, and, most important,
mortality (George, 2007).
At the same time, there are sound reasons why a company might
look to an outside successor. Boards that hire outsiders to be
CEOs feel that change is more important than continuity,
particularly when things have not been going well or if there
has been a scandal. They expect the outsider to bring about
change in a variety of organizational dimensions (Finkelstein &
Hambrick, 1996; Goldstein, 2017). In the case of founders,
many simply cannot bring themselves to name successors during
their lifetimes. This leads to profound disruption after
the founder dies (McBride, 2003; Nyberg et al., 2017). To avoid
a future crisis in leadership succession, here are some key steps
to take (Bower, 2007; Holstein, 2008; Plank, 2014):
· Don’t wait for a vacancy to start looking.
· Ensure that the sitting CEO understands the importance of this
task and makes it a priority.
· Focus on an organization’s future needs, not past
accomplishments.
· Look for candidates with mental agility, empathy, and the
ability to work with a variety of people.
· Provide broad exposure to a variety of jobs, changing
responsibilities every three to five years.
· Provide access to the board, so that managers get a sense of
what matters to directors, and directors get to see the talent i n
the pipeline.
What about small firms, such as family-owned businesses?
Unfortunately, only about 30% of small family businesses
survive into the second generation, only 12% into the third
generation, and only 3% into the fourth (Schumpeter, 2015a).
Here are some of the ways families are trying to solve the
problem (Keyt, 2016; Schumpeter 2015a, 2015b):
· Devote as much thought to getting the former boss to move on

as to training his or her successor. For example, give the
retiring boss something to fill his or her days, such as running a
family charity.
· To ensure that heirs are ready for the jobs they inherit, make
them prove themselves outside the family firm.
· Require both family and nonfamily executives to go through a
“future leaders program,” which uses tests, inventories, and
assessment exercises to assess their abilities.
Sometimes family-owned firms look to outsiders, especially for
new ideas and technology for the firm. Experts advise firms in
that situation to start early, for it may take three to five years
for the successor to become fully capable of assuming
leadership for the company. Finally, the best successions are
those that end with a clean and certain break. In other words,
once the firm has a new leader in the driver’s seat, the old
leader should get off the bus.
Workforce Demand
Demand forecasts are largely subjective, principally because of
multiple uncertainties regarding trends such as changes in
technology; consumer attitudes and patterns of buying behavior;
local, national, and international economies; number, size, and
types of contracts won or lost; and government regulations that
might open new markets or close off old ones. Consequently,
forecasts of workforce demand are often more subjective than
quantitative, although in practice a combination of the two is
often used. Begin by identifying pivotal jobs.Pivotal Jobs
Pivotal jobs are defined in two ways: (1) by their centrality to
an organization’s strategy and the potential for significant
variation in performance between an average and a top
performer in those roles (quality pivotal); or (2) for their
potentially significant impact on strategic objectives when the
quantity of people who occupy those roles increases (quantity
pivotal) (Boudreau & Ramstad, 2007; Cascio & Boudreau,
2011a; Collings, Mellahi, & Cascio, in press). For example,
Valero Energy, a 23,000-employee oil refiner and gas retailer,

identified 300 to 500 high-impact positions, and 3,000 to 4,000
mission-critical ones, including engineers and welders
employed at the company’s 18 oil refineries. The company then
linked those specific positions directly to quantifiable revenues,
business objectives, and business operations. Corning, Inc., a
New York–based technology company that employs 26,000
people worldwide, segmented jobs into four categories—
strategic, core, requisite, and noncore. The objective is to
deconstruct the business strategy to understand its implications
for talent.Assessing Future Workforce Demand
To develop a reasonable estimate of the numbers and skills mix
of people needed over some future time period, for example,
two to three years, it is important to tap in to the collective
wisdom of managers who are close to the scene of operations.
Consider asking them questions such as the following
(Hirschman, 2007):
· What are our key business goals and objectives for the next
two years?
· What are the top three priorities we must execute well in order
to reach our goals over that time period?
· What are the most critical workforce issues we currently face?
· What are the three to five core capabilities we need to win in
our markets?
· What are the required knowledge, skills, and abilities needed
to execute the strategy?
· What types of positions will be required? What types will no
longer be needed?
· Which types of skills should we have internally versus buy
versus rent?
· What actions are necessary to align our resources with
priorities?
· How will we know if we are effectively executing our
strategic workforce plan and staying on track?How Accurate
Must Demand Forecasts Be?
Accuracy in forecasting the demand for labor varies
considerably by firm and by industry type (e.g., utilities versus

women’s fashions): roughly from a 5% to 35% error factor.
Factors such as the duration of the planning period, the quality
of the data on which forecasts are based, and the degree of
integration of SWP with strategic business planning all affect
accuracy. The degree of accuracy in labor-demand forecasting
depends on the degree of flexibility in staffing the workforce.
That is, to the extent that people are geographically mobile,
multiskilled, and easily hired, there is less need for precise
forecasts. In the engineering and technology sectors, for
example, the focus is primarily on workforce readiness—making
substantial investments to ensure that there will be a sufficient
pool of talent with the skills likely to be needed in the future,
by investing either in current employees or in potential future
employees (Cappelli & Keller, 2017).
At the same time, SWP is not a static process. Evidence
indicates that as SWP matures, four things happen: (1)
Organizational boundaries disappear or become less important,
so talent and skills can be utilized as a shared resource and
managed more efficiently; (2) SWP gains broader support and
ownership; (3) it incorporates tools from other functions and
managed more efficiently; (2) SWP gains broader support and
ownership; (3) it incorporates tools from other functions
and frameworks (e.g., finance, marketing, supply-chain
management); and (4) it becomes increasingly data driven—for
example, modeling the feasibility and cost of executing
alternative business scenarios (OptTek Systems, 2017).
Integrating Supply and Demand Forecasts
If forecasts are to prove genuinely useful to managers, they
must result in an end product that is understandable and
meaningful. What senior leaders need in order to make informed
decisions regarding future talent management initiatives is a
concise presentation of projected staffing requirements that
integrates supply and demand forecasts (see Figure 10.5). In
this figure, net workforce demand at the end of each year of a
five-year forecast is compared with net workforce supply for the
same year. This yields a “bottom-line” number that shows an

increasing deficit each year during the five-year period.
Progressive firms are using technology to improve their
forecasts. For example, digitized inventories of talent permit
geographically distributed teams to pool their knowledge to
develop integrated supply-and-demand forecasts. The forecasts,
in turn, support “what-if” scenario planning (Montealegre &
Cascio, 2017).
Figure 10.5 Integrated Workforce Supply and Demand Forecast
Matching Forecast Results to Action Plans
Integrated supply and demand forecasts affect a firm’s programs
in many different areas, including recruitment, staffing,
performance management, training, transfer, and many other
types of talent management activities. These activities all
comprise action plans, which help organizations adapt to
changes in their environments.
Assuming a firm has a choice, however, is it better
to select workers who already have developed the skills
necessary to perform competently or to select those who do not
have the skills immediately, but who can be trained to perform
competently? This is the same type of “make-or-buy” decision
that managers often face in so many other areas of business. As
a general principle, to avoid mismatch costs, balance “make”
and “buy.” Here are some guidelines for determining when
“buying” is more effective than “making” (Cappelli, 2008):
· How accurate is your forecast of demand?
If not accurate, do more buying.
· Do you have the “scale” to develop?
If not, do more buying.
· Is there a job ladder to pull talent through?
If not long, do more buying.
· How long will the talent be needed?
If not long, do more buying.
· Do you want to change culture or direction?
If yes, do more buying.
Managers have found that it is often more cost effective to buy

than to make. This is also true in the context of staffing versus
training (Schmidt, Hunter, & Pearlman, 1982). Put money and
resources into staffing. Always strive first to develop the most
accurate, most valid staffing process possible, for it will yield
higher ability workers. Thenapply those action plans that are
most appropriate to increase the performance of employees
further. With high-ability employees, the time required for
training and the productivity gain from a training program in,
say, financial analysis, might be greater than the gain from the
same program with lower ability employees. Thus, training
costs will be reduced, and the net effectiveness of training will
be greater when combined with a highly valid staffing process.
This point becomes even more relevant if one views training as
a strategy for building sustained competitive advantage. Firms
that select high-caliber employees and then continually commit
resources to develop them gain a competitive advantage that no
other organization can match: a deep reservoir of firm-specific
human capital.
Control and Evaluation
Control and evaluation are necessary features of any planning
system, but organizationwide success in implementing HR
strategy will not occur through disjointed efforts. SWP
activities override functional boundaries, so broader system
controls are necessary to monitor performance. Change is to be
expected. The function of control and evaluation is to guide the
SWP activities through time, identifying deviations from the
plan and their causes.
Goals and objectives are fundamental to this process to serve as
yardsticks in measuring performance. Qualitative as well as
quantitative standards may be necessary in SWP, although
quantitative standards are preferable, since numbers make the
control and evaluation process more objective and deviations
from desired performance may be measured more precisely.
Such would be the case if a particular HR objective was to
reduce the attrition rate of truck drivers in the first year after

hire from the present 50% to 20% within three years. At the end
of the third year, the evaluation process is simplified
considerably because the initial objective was stated clearly
with respect to the time period of evaluation (three years) and
the expected percentage improvement (30%).
On the other hand, certain objectives, such as the quality of a
diversity-management program or the quality of women and
minorities in management, may be harder to quantify. One
strategy is to specify subobjectives. For example, a subobjective
of a plan to improve the quality of supervision may include
participation by each supervisor in a two-week training
program. Evaluation at time 2 may include a comparison of the
number of employee grievances, requests for transfer, or
productivity measures at time 1 with the number at time 2.
Although other factors also may account for observed
differences, appropriate experimental designs (see Chapter 16)
usually can control them. Difficulty in establishing adequate
and accurate criteria does not eliminate the responsibility to
evaluate programs.
Sampling and Measuring Performance
Effective control systems include periodic sampling and
measurement of performance. In a space vehicle, for example,
computer guidance systems continually track the flight path of
the vehicle and provide feedback in order to maintain the
desired flight path. This is necessary in order to achieve the
ultimate objective of the mission. An analogous tracking system
should be part of any SWP system. In long-range planning
efforts, shorter run, intermediate objectives must be established
and monitored in order to serve as benchmarks on the path to
more remote goals. The shorter run objectives allow managers
to sample and measure performance through time and to take
corrective action before the ultimate success of longer range
goals is jeopardized.
Numerous sampling and measurement procedures are commonly
in use: examination of the costs of current practices (e.g.,
turnover costs, breakeven/payback for new hires); employee and

management perceptions of results (e.g., by pulse surveys,
audits of organizational culture); and analysis of costs and
variations in costs under alternative decisions (e.g., analysis of
costs of recruiting versus internal development of current
employees).
In the area of performance management, plots of salary and
performance progress of individual managers may be compared
against organizational norms by age, experience, and job levels.
Doing so makes it possible to identify and praise superior
performers and to counsel ineffective performers to reverse the
trend.
Identifying an Appropriate Strategy for Evaluation
We noted earlier that qualitative and quantitative objectives can
both play useful roles in SWP. However, the nature of
evaluation and control should always match the degree of
development of the rest of the SWP process. In newly instituted
SWP systems, for example, evaluation is likely to be more
qualitative than quantitative, with little emphasis placed on
control. This is because supply-and-demand forecasts are likely
to be based more on “hunches” and subjective opinions than on
hard data. Under these circumstances, attempt to assess the
following (Walker, 1980):
· The extent to which those responsible for SWP are tuned in to
workforce problems and opportunities, and the extent to which
their priorities are sound.
· The quality of their working relationships with line managers
who supply data and use SWP results. How closely do they
work with these managers on a day-to-day basis?
· The extent to which decision makers, from line managers who
hire employees to top managers who develop business strategy,
are making use of workforce forecasts, action plans, and
recommendations.
· The perceived value of SWP among decision makers. Do they
view the information provided as useful to them in their own
jobs?
In more established SWP systems, in which objectives and

action plans are both underpinned by measured performance
standards, key comparisons might include the following:
· Actual staffing levels against forecast staffing requirements.
· Actual levels of labor productivity against anticipated levels
of labor productivity.
· Action plans implemented against action plans planned. (Were
there more or fewer? Why?)
· The results of the action plans implemented against the
expected results (e.g., improved applicant flows, lower quit
rates).
· Labor and action-plan costs against budgets.
· Ratios of action-plan benefits to action-plan costs.
Assessment of these issues may highlight potential problem
areas and can provide the basis for constructive discussions.
Responsibility for Workforce Planning
SWP is a basic responsibility of every line manager in the
organization. The line manager ultimately is responsible for
integrating talent management functions, which include
planning, supervision, performance appraisal, and job
assignment. The role of support staff, such as I/O psychologists
or HR professionals, is to help line managers manage
effectively by providing tools, information, training, and
support. Basic planning assumptions (e.g., sales or volume
assumptions for some future time period) may be given to all
operating units periodically, but the individual manager must
formulate his or her own strategic workforce plans that are
consistent with these assumptions. The plans of individual
managers then may be reviewed by successively higher
organizational units and finally aggregated into an overall
workforce plan (Society for Human Resource Management
Foundation, 2008).
In summary, we plan in order to reduce the uncertainty of the
future. We do not have an infinite supply of any resource
(people, capital, information, or materials), and it is important
not only that we anticipate the future but also that we actively
try to influence it. As Peter Drucker said, “the best way to

predict the future is to create it.” Ultimate success in SWP rests
on the quality of the action plans established to achieve HR
objectives and on the organization’s ability to implement these
plans. Managing talent according to plan can be difficult, but it
is a lot easier than trying to manage talent with no plan at all.
Systems thinking and applied measurement concepts, together
with work analysis and SWP, provide the necessary foundation
for sound employment decisions. In the remainder of the book,
we examine how these concepts are applied in practice. We
begin in Chapter 11 by considering the important process of
recruitment.
Unit I
Introduction to
Comparative Criminal
Justice
Move your cursor
over the audio
symbol, and then
click the play arrow
for the audio.
Unit I

Why is there a need to compare criminal justice systems?
Comparative criminal justice research can
point to ways to bring about positive
change. When required, question,
condemn, and denounce those criminal
justice practices that are ill-conceived,
ineffective, cruel, or even lethal (Pakes,
2019).
Unit I
How do we make comparisons of criminal justice systems?
Comparisons of any kind, including
criminal justice systems, can utilize
case studies, focused comparisons,
and statistics to achieve them (Pakes,
2019).
Unit I

Types of Comparisons
Case Studies
• Representative
cases
• Prototypical
cases
• Deviant cases
• Archetypical
cases
Focused
Comparisons
• Most-similar
designs
• Most-different
designs
Statistical
Analysis
• Crime statistics
(robberies,
thefts, murder)
• Prison
populations
• Recidivism

Unit I
Types of Case Studies
Case Studies
Representative
Cases
Prototypical
Cases
Deviant
Cases
Archetypical
Cases
(Pakes, 2019)
Unit I
Representative Cases
A representative case is a typical example
of a wider category of comparative
research. A comparative study example
would involve comparing a specific aspect

of one country’s criminal justice system
with that of another country. These could
include incarceration rates, crime statistics,
etc. (Pakes, 2019).
Unit I
Prototypical Cases
A prototypical case may become a
representative case at some future point
because of developments or changes in
laws or policy. An example may include
movements that are currently underway,
such as the movement here in the United
States to legalize and decriminalize
marijuana. Prototypical cases may provide
data for policy makers in other countries
seeking to follow the same legal path
(Pakes, 2019).

Unit I
Deviant Cases
A deviant case is utilized to illustrate
the unusual or unconventional and to
explain the contributing factors of
variables and why they act how they
do (Pakes, 2019).
Unit I
Archetypical Cases
An archetypical case is one that is influential or
seminal. Consider the example below.
When studying inquisitorial modes of justice,
the French one would be an appropriate
choice, as it can be said to be the
quintessential inquisitorial system. Similarly,
England and Wales could be said to be the

archetypical adversarial system of justice.
(Pakes, 2019, p. 18)
Unit I
Focused Comparisons
Focused comparisons are case studies
with more than one case to be studied.
Generally, the comparisons being made
involve two or three cases. Focused
comparisons are carried out using two
different research techniques: most-similar
and most-different designs (Pakes, 2019).
Unit I
Focused Comparisons (Continued)
Most-similar designs involve the
comparison of subjects with like
variables. In the criminal justice

system, this could be court systems,
the rights of the accused, and
sentencing (Pakes, 2019).
Unit I
Focused Comparisons (Continued)
Most-different designs are just the opposite
of most-similar case study designs. With the
most-different technique, the researcher is
not familiar with the various aspects of the
jurisdiction that is being researched. These
aspects include a lack of cultural awareness,
actual access to the jurisdiction, the
language, and biases (Pakes, 2019).
Unit I
Statistical Analysis
Statistical analysis may be a part of any of

the research designs previously discussed.
Statistics allow for the comparison of
different variables in a study, such as crime
statistics (robberies, thefts, murder), prison
populations, and recidivism rates (Pakes,
2019).
Unit I
Above is an example of a statistical comparison of Percent
Change in Crime Rates for Consecutive Years 2014–2018.
Years
Violent
crime Murder Rape1 Robbery
Aggravated
assault
Property
crime Burglary
Larceny-
theft
Motor
vehicle

theft Arson
2015/2014 +1.7 +6.2 +1.1 +0.3 +2.3 -4.2 -9.8 -3.2 +1.0 -5.4
2016/2015 +5.3 +5.2 +3.5 +3.2 +6.5 -0.6 -3.4 -0.8 +6.6 -1.1
2017/2016 -0.8 +1.5 -2.4 -2.2 -0.1 -2.9 -6.1 -3.0 +4.1 -3.5
2018/2017 -4.3 -6.7 +0.6 -12.5 -2.0 -7.2 -12.7 -6.3 -3.3 -9.4
(Federal Bureau of Investigation [FBI], n.d.)
Unit I
Watch the video Crime Statistics to gain a better understanding
on the
background involving crime statistics.
The transcript for this video can be found by clicking on
“Transcript” in the gray
bar to the right of the video in the Films on Demand database.
https://libraryresources.columbiasouthern.edu/login?auth=CAS
&url=https://fod.infobase.com/PortalPlaylists.aspx?wID=27386
6&xtid=55962&loid=244772
Unit I
References
Cineflix (Producer). (2009). Crime statistics (Segment 6 of 17)

[Video file]. Retrieved from
https://libraryresources.columbiasouthern.edu/login?auth=C AS
&url=https://fod.infobase.com/Port
alPlaylists.aspx?wID=273866&xtid=55962&loid=244772
Federal Bureau of Investigation. (2018). 2018 January-June:
Preliminary semiannual
crime report: Crime in the United States [Image]. Retrieved
from
https://ucr.fbi.gov/crime-in-the-u.s/2018/preliminary-
report/tables/table-3
Pakes, F. (2019). Comparative criminal justice (4th ed.). New
York, NY: Routledge.
Strategic workforce planning - a vital business activity
Mayo, Andrew. Strategic HR Review;
Bingley Vol. 14, Iss. 5, (2015): 174-181. DOI:10.1108/SHR-
08-2015-0063
PDFCite
1. Full text
2. Full text - PDF
3. Abstract/Details
Abstract
Translate
Top of Form
The purpose of this paper is to make the case for strategic work
force planning and to outline the key steps involved. The paper
begins with a discussion of the cost of redundancies to the

economy and argues that much of this could have been reduced
with better planning. It goes on to describe the key steps in
workforce planning. It looks at practical ways to assess demand
and replacement needs and utilise productivity ratios to convert
delivery units into human resource requirements. It concludes
with a discussion on the supply of resource and examples of
actions that can be taken proactively to close foreseen gaps.
Full Text
Translate
Top of Form
Headnote
Abstract
Purpose - The purpose of this paper is to make the case for
strategic workforce planning and to outline the key steps
involved.
Design/methodology/approach - The paper begins with a
discussion of the cost of redundancies to the economy and
argues that much of this could have been reduced with better
planning. It goes on to describe the key steps in workforce
planning. It looks at practical ways to assess demand and
replacement needs and utilise productivity ratios to convert
delivery units into human resource requirements. It concludes
with a discussion on the supply of resource and examples of
actions that can be taken proactively to close foreseen gaps.
Originality/value - This paper is based on methodologies
developed by the author and applied in practice.
Keywords Recruitment, Strategy, Productivity, Restructuring,
Analytics, Human capital
Paper type Conceptual paper
Background and Introduction
Some years ago, I had a chief executive in the informatio n
technology (IT) industry who became horrified at the sums that
the company was spending on redundancies and how easily
human resource (HR) and line managers conspired together to
hand out the company's money. For him, every penny spent this
way was a wasted penny that could have been used for other

things. He knew, of course, that sometimes a redundancy was
inevitable but by insisting that every payment had to be signed
off by himself and that questions would be asked as to why this
had not been avoided, the number rapidly decreased. Managers
started to do much more planning ahead; HR created a
retraining pool and the whole company became more disciplined
on performance management. Artificially created redundancies
to allow longer service people to resign with a package were
ended.
The UK has developed a redundancy culture that costs the
economy billions. The Chartered Institute of Personnel and
Development reported in 2012 that in the four years since 2008,
2.7 million people had been made redundant and EMW, a law
firm, estimated the payouts alone to be £18.6 billion over this
period. This situation has continued particularly in the public
sector since 2012 and added up to £2 billion of public money in
2012/2013. Average payment in the private sector was £8000
and in the public sector was £29000. In one year alone -
2010/2011 - the National Health Service (NHS) paid out £170
million in such payments - an organisation that is chronically
short of funds.
It is the nature of economic cycles that downsizing is followed
by skill shortages. For the year 2014/2015, the Daily Telegraph
reported that £3.3 billion had been spent on hiring agency
doctors and nurses in the NHS, many of the former having
retired early or taken "redundancy" earlier. The problem of
hiring back people caused HM Treasury to issue a paper in
January 2015 entitled Recovery of Public Sector Exit Payments.
To what extent could better planning have avoided some at least
of this expenditure? Of course many job losses are due to the
genuine cessation of particular roles, although nobody knows
how much is merely due to "restructuring". How many people
could have been retrained or redeployed? "Strategic Workforce
Planning" is a discipline that looks ahead and has the potential
to see what is coming, or is likely to come, and to take
proactive action. No responsible person In the public sector in

2008 could say they did not see cuts coming in public
expenditure - but how far were they looking ahead?
Workforce planning was originally called manpower planni ng.
This was reflected in the titles of the leading organisations in
the field. For instance, the Manpower Society was founded in
1970 to specifically focus on this discipline. It was renamed the
HR Society in 2000. The Institute of Manpower Studies
(established 1969) was a founder member (along with the then
Institute of Personnel Management) and this itself was renamed
the Institute of Employment Studies.
Workforce planning in the 1970s and 1980s had a strong
orientation towards large, stable jobs-for-life organisations,
with many young entrants of different kinds, who moved up a
clearly defined hierarchy. This enabled some fairly scientific
forecasting. The seminal book of this era was The Manpower
Planning Handbook, (Bennison and Casson, 1984) and - of its
genre - it has hardly been bettered since. It showed how to map
career paths, analyse attrition and calculate future replacements
by grade This discipline however later went out of fashion, as
the world became more turbulent, as finance functions began to
dominate organisations and careers became more flexible. The
world moved to being much more reactive. By the early 2000s
there were not a lot of opportunities for workforce planners.
At the same time, Dave Ulrich of the University of Michigan
galvanised HR into thinking of themselves as "strategic
partners". Many still struggle with what this means in practice,
but little could be more strategic than ensuring the organisation
has "the right people in the right place at the right time with the
right skills and the right contract" i.e. has the HRs necessary
(whether full time employees or not) to ensure the business
plans and objectives can be achieved. This is not a one year
"headcount plan", dictated by the budget available. It is an
exercise that starts off bypassing financial considerations and
seeks to interpret business plans in terms of the numbers and
skills, by role, that will be needed to deliver the products and
services in the plan. In due course, this will have to be matched

with the financial resources available and choices and
judgements made, but this is a second stage.
A definition
The main drawback of the description of strategic workforce
planning given above is that it implies that workforce planning
is an exact science that can produce right answers. This may
discourage managers from participating in it because they are
conscious of the many uncertainties ahead and are very focused
on the current year. However, it is better to be approximately
right than exactly wrong - and to understand trends and
directions that will require actions in advance. A better
definition is:
Workforce planning is the strategic alignment of an
organisation's human capital with its business direction. It is a
methodical process of analysing the current workforce,
determining future workforce needs, identifying the gap
between the present and the future, and implementing solutions
so the organisation can accomplish its mission, goals, and
objectives. (Minnesota Management and Budget)
Workforce planning needs to be a fully integrated part of the
business planning process. It needs to be owned both at
divisional level and organisation-wide - only at that level can
redundancies be avoided by the overview of skill deficits and
surpluses and therefore redeployment or retraining.
The steps involved in the process
Essentially there are four key steps:
1. Workforce demand planning - the goal of this stage is to
estimate the demand for different job roles, and specific
strategic skills, over chosen time periods of the business plan. It
will take account of both internal and external factors.
2. This will give us a gap (which may be positive or negative)
between what is needed and what we have now. To this, we
must add a calculation of the "replacement need" based on
workforce flows.
3. The next stage is to look at the supply available. This may
come Internally through transfers, trainees or promotions. The

balance will be sought externally and we need to assess
availability in the market place.
4. As we analyse demand vs supply, this may lead us to take
some strategic decisions to ensure the gaps will be closed in the
future - or, in the case where the gap is negative, what steps we
can take to avoid redundancy.
Organisations will vary in the way they apply these steps. Those
with long-term capital planning such as the oil, chemicals and
transport industries will have long-term plans. At the other
extreme are project-based organisations where the HR needs
vary enormously according to projects obtained. In shipbuilding
or construction, a project may last as much as five years; in IT
or consultancy, it may be as little as two months. The
International Olympic Committee provides an excellent guide to
the complex workforce planning needs for staging the Games,
normally a five-year project. Such organisations need to plan by
project, and each group of employees has an expected
employment period.
In between are those with typically three to five years strategic
plans (the majority), seeking "business as usual" and subject to
the winds of the market. Whole industries have shrunk almost
beyond trace over the years and new ones have emerged. In
contrast to this, most of the public sector often argue that they
are subject to the vagaries of political policy and the Treasury
and can rarely plan ahead for long. In practice, the bulk of what
most of them do continues to stay in place over the years.
Demand and scenario planning
Just as the Finance Director breaks down the financial planning
process into budget holders so we need to decide how to break
down the workforce. This would normally be done by dividing
it into "job families". A job family is defined as a group of staff
who share similar characteristics, such as:
* Common professional qualifications or training;
* A specialist or scarce skill;
* A similar labour market (this may be dictated by geography);
and

* A broadly similar level in the organisation hierarchy.
Unlike budgeting, this does not necessarily follow the current
organisational structure - as some job families will span several
departments. So a first stage in implementing this process is to
set up these job families.
Some experts argue that strategic workforce planning should
concentrate only on job families and skills that are mission
critical or require long training periods. Certainly, this would
be a place to start. But the advantage of taking the complete
picture is that it enables potential rebalancing of deficits and
surpluses.
A second decision concerns the "unit of human resource". This
would normally be defined as "a full time equivalent" - i.e. an
employee working for 35 or 37 hours a week, with holiday
allowances and perhaps an average sickness/training allowance
built in also. The number of full-time equivalent (FTE) that our
analysis comes up with will then be converted into different
kinds of resource contracts - either as employees or as
contractors.
We would expect a full analysis of external factors to be
undertaken by the strategic planners in preparing the business
plans. This would include looking at sector development and
competition, the impact of technology, political and regulatory
factors and stakeholder expectations. The future is uncertain,
however, and so the techniques of scenario planning need to be
deployed. Thus, in the public sector, we could look at different
levels of imposed cuts or digital investment. In the private
sector, we might look at different growth scenarios or new
product success. Each scenario can be given a probability and
will have both financial and workforce implications.
A strategic plan is not much help to the workforce planner if all
it contains is a set of qualitative aspirations, with no numbers.
Ideally it will specify, preferably under different scenarios, the
number of products and services to be delivered year by year. It
is often the second level plans - at divisional or department
level - that will provide the necessary detail. At this level, plans

will take account of new systems, organisational structure
change, productivity improvements, role changes and so on. The
challenge then is how to translate all this into units of HR.
We start with "front line" people directly related to delivery -
such as manufacturing operators, service workers, installation
engineers, salespeople and so on - and their typical resourcing
ratios - usually referred to as productivity ratios, as they
compare output with input. We have historical data available on
these ratios but may also want to do some benchmarking,
especially on standard industry wide comparators. We may
therefore set new targets on productivity as a result or
progressive improvement from period to period.
Some examples of these ratios would be:
* Nurses per ten occupied hospital beds;
* Policemen per 1,000 population;
* Sales people per £100 K target;
* Operators per shift per assembly line;
* Labour hours to produce a car;
* Call centre operators per 100 customers or 100 sales calls;
* Sales assistants per square metre of retail store; and
* Lecturers per 100 students.
In some cases, a composite crew is defined per item of
operational equipment e.g:
* Per aircraft, train or ship;
* Per drilling rig;
* Per public library; and
* Per chain style restaurant.
Front-line employees then require direct support. They need
supervision and management, technical and quality support,
planners and monitors. For example, for every ten front-line
people, what kind of support is needed and how much? These
become job family: job family ratios and form part of our
planning data. Here are some examples:
* Workers per supervisor;
* Technical support engineers per salesperson;
* Technicians per ten lecturers; and

* Schedulers per 100 operators.
Finally, we have "second line support" people - overheads such
as finance, IT, HR, public relation, legal and senior
management. As small groups, they may be evaluated and
planned for individually. Many will be determined as a ratio to
all employees (this is common in HR). Others such as IT will
have a base level of support related to the number of systems or
desk users, plus separately evaluated projects.
The ratios used above are very likely to be derived from history
or current practice. It is the job of the workforce planner to
bring in benchmark data, conduct workshops on process
redesign or discussions around "in a greenfield organisation
what would you do?". These discussions or workshops may
result in two plans - the "practical" and the "ideal". Over a five-
year period, with setting the "ideal" as a target our workforce
plan may take on a different shape.
Adding in replacement needs
The above analysis helps us to understand the different needs
for job families at various points in the future. Life is however
dynamic and meanwhile individuals join and leave the job
family. We need to predict the replacement requirements, and to
do this, we need some good data and some judgement about the
extent to which the past predicts the future. We may take some
deliberate actions to change these flows depending on the result
of the analysis. Figure 1 shows the different types of flow in
and out and can be used to calculate "R" - the recruitment or
"redeployment" need for a specified period.
In this example, although we are reducing the establishment by
100 over the period, the calculation shows a need only for ten to
be redeployed, and we may decide to allow a slightly higher end
of year figure so that time will take care of this number.
Supply analysis
Before we examine the sources of supply, we need to translate
our demand for FTE's into ''real" people. That will depend on
our chosen mix of contracts. Figure 2 shows an example of how
a total demand figure may be broken down.

Our recruitment plan will be based on actual employees. First,
we see what can be sourced Internally. This requires us to
assess the potential of people - to be promoted or to retrain -
and this is often not done well. So-called "high potentials" may
be identified, but there are different kinds of potential. Internal
sources will therefore include:
* Transfers from another job family, with or without retraining;
* Promotions from lower grades; and
* Maturing trainees.
We will have taken account of these when doing the manpower
flow model. External sourcing depends on availability, and it is
an increasing problem in the UK to find a number of scarce
skills in the labour market, both currently and as we look ahead
to the future. We may find we are left with gaps.
Proactive actions to close predicted gaps
This systematic planning process enables organisations to take
proactive action to fill these gaps ahead of time. Here are just a
few examples of such actions:
* Sourcing from abroad: According to the Guardian, one in four
nurses is recruited expensively from abroad due to a shortage in
the UK.
* Increasing the number of trainees: Too often, the number of
trainees is dictated by current financial constraints, yet they are
not being hired for today's needs but those of tomorrow.
According to Dr Peter Carter, chief executive of the Nursing
College, 30,000 people in the UK who wanted to train as nurses
had been turned away from courses last year, because too few
places were funded.
* Working with universities and colleges to create special skills
courses: Back in 2008 - National Grid forecast a shortage of
power system engineers (amongst other roles) due partly to a
peak in retirements. They worked with the University of
Warwick to train future employees they had selected from
schools directly - a four-year process.
* Changing career and training paths: Deutsche Bahn forecast a
need for new types of signalmen and had a bottleneck in their

traditional career structure. They needed to source these from
within or risk industrial strife. By creating an alternative
structure, they were able to accelerate training for sufficient
individuals to meet the need.
* Changing HR policies and practices: To enhance
attractiveness as an employer, retain more staff, provide more
employee-centred flexibility such as progressive retirement -
the National Grid reviewed all of these.
* Adjusting the mix of employees vs contractors: This is not
necessarily desirable and would be a short-term action. It is,
currently, causing considerable additional cost in the NHS, but
also in the oil exploration industry, there is a global shortage of
petrotechnical professionals and it is to the advantage of
individuals to go freelance. Maersk Oil of Denmark is working
hard to provide more attractive benefits and career options to
encourage employees to join and stay.
Summary
All these initiatives result from the discipline of workforce
planning. Turbulence and uncertainty are not an excuse for not
doing it. Without it, organisations will find themselves
firefighting and merely reactive. They will also waste money
unnecessarily as we have seen. A strategic workforce planning
process is not expensive to run in systems and resources, but
there is a people investment in the initial design of the process.
This may take a year to do with a lot of dialogue with managers
and planners. Once in place, it can be revised periodically. The
dream goal would be no redundancies and no vacancies or
shortages of needed skills at any time. It is a goal worth aiming
for, even though it is unlikely to be achieved in full, as every
stakeholder in an organisation will benefit.
Sidebar
Workforce planning in the 1970s and 1980s had a strong
orientation towards large, stable jobs-for-life organisations,
with many young entrants of different kinds, who moved up a
clearly defined hierarchy.
Sidebar

Workforce planning needs to be a fully integrated part of the
business planning process. It needs to be owned both at
divisional level and organisation-wide - only at that level can
redundancies be avoided by the overview of skill deficits and
surpluses and therefore redeployment or retraining.
Just as the Finance Director breaks down the financial planning
process into budget holders so we need to decide how to break
down the workforce.
References
Further reading
Boffey, D. (2015), The Guardian, April 4 2015.
CIPD (2010), Workforce Planning Guide, Spring 2010.
Dennison, M. and Cannon, J. (1983), The Manpower Planning
Handbook, McGraw Hill 1983.
Donnelly, L. (2015), The Daily Telegraph, 22 May 2015.
HM Treasury (2015), Recovery of Public Sector Exit Payments.
Lambert A (2009), Strategie People Planning in an Age of
Uncertainty, Corporate Research Forum, November 2009.
Mayo, A., Human Resources or Human Capital - a Guide to
Managing People as Assets, Gower, 2012.
Robinson, D. and Hirsh, W. (2008), Workforce Planning Guide,
Institute of Employment Studies Report No. 451, 2008.
www.hrsociety.co.uk
AuthorAffiliation
Andrew Mayo is Director at Mayo Learning, Welwyn, Herts,
UK.
AuthorAffiliation
About the author
Andrew Mayo spent nearly 30 years in large corporations in
both line and HR positions. Since 1995, he has run a
consultancy company specialising in developing individual and
organisational capability and is Professor of Human Capital
Management at Middlesex University. He has authored a
number of books, specialising in strategy and metrics and was
President of the HR Society for six years. He is a member of the
editorial board of Strategic HR Review. Andrew Mayo can be

contacted at: andrew.mayo® mayolearning.com
Word count: 3424
Copyright Emerald Group Publishing Limited 2015
Bottom of Form
Bottom of Form

10 STRATEGIC WORKFORCE PLANNINGWayne F. Cascio, Herman Aguinis

Recommended

Recommended

More Related Content

Similar to 10 STRATEGIC WORKFORCE PLANNINGWayne F. Cascio, Herman Aguinis

Similar to 10 STRATEGIC WORKFORCE PLANNINGWayne F. Cascio, Herman Aguinis (20)

More from SantosConleyha

More from SantosConleyha (20)

Recently uploaded

Recently uploaded (20)

10 STRATEGIC WORKFORCE PLANNINGWayne F. Cascio, Herman Aguinis