Lean But Agile: Rethink Workforce Planning and Gain a True Competitive Edge

CHAPTER 1

AN INTRODUCTION TO LEAN BUT AGILE WORK AND WORKFORCE PLANNING

What is your organization doing to hold down employment expenses

while simultaneously ensuring that work results meet or exceed customer

requirements? How is your organization experimenting with new

ways of staffing the work to be done while also achieving the best results?

How well is your organization planning systematically for the quantity and

quality of people needed to achieve work results in line with customer

needs? Read the following vignettes and describe how your organization

would meet the challenges you find in each. If your organization has ways to

solve all of these problems, then perhaps it already has a way to plan com-

prehensively and systematically for work results and ways for workers to

achieve those results. But if your organization cannot solve most of the

problems presented here, then your leaders may want to consider a Lean

but Agile approach to planning for the work and workforce.

* * *

Traditional Views of Work Planning and Workforce Planning

As the preceding vignettes illustrate, employers globally are struggling with

how to achieve the best work results. Driven by a need to lower costs while

increasing productivity, they are not always following traditional ways of

planning the work and the workforce. But what are these traditional ap-

proaches? What is traditional work planning? What is traditional workforce

planning?

Traditional Work Planning

Traditional ways of thinking about planning for work have their roots in the

industrial age. An organizational structure (organization chart) is estab-

lished to allocate responsibilities for various work activities. These activities,

in turn, are then broken down further into departments, work groups, jobs,

and tasks.

Traditional thinking about work planning emphasizes the work process,

that is, how the work is done. Little or no attention is devoted to clarifying in

detail the measurable work outcomes desired by customers or other stake-

holders who care about the work. In some circles, work planning is actually

confused with project planning, which is just one way to organize the work

to be accomplished. The important point to understand, however, is that the

workforce needed to achieve desired work results depends on how the work

is done and the desired outcomes. Employers are already experimenting

with new ways to get work done. Those experiments affect the workforce

needed to achieve work results.

Traditional Workforce Planning

Much has been written about workforce planning in recent years. Indeed,

workforce planning has garnered far more attention than has work planning.

One reason is that many employers are keenly aware that labor costs

are a major expense in doing business. Modern accounting methods treat

labor as a cost of doing business while ignoring the critical importance of

human creative talent as the only active ingredient that can serve as a cat-

alyst to add value to land, finances, technology, or other assets.

Traditional workforce planning follows the logic of economics. As demand

for products or services increases, it creates a demand for labor to make

the products or deliver the services. Labor demand refers to the quantity

and quality of people needed to meet production or service delivery re-

quirements. Labor supply refers to the quantity and quality of people cur-

rently employed by the organization. As labor demand increases as a func-

tion of production or service demand, more people are needed to meet the

demand. In short, a larger supply of people is needed.

But this relationship is not precise. Sometimes the number of workers

affects productivity directly. In other cases, such as managerial work, man-

agers can oversee increasing employees until a tipping point is reached.

To complicate matters, sometimes the quality of workers affects productivity.

A few talented people may outperform an army.

The traditional approach to workforce planning, based in economics,

has some distinct disadvantages. The first disadvantage is that future labor

demand is forecasted based on past experience. In short, economists tend

to assume that the same quantity and quality of people will be needed to

achieve future results as were needed to achieve past results. Unfortunate-

ly, technology and other productivity breakthroughs can actually

change the quantity and quality of people needed in the future. The second

disadvantage is that economists struggle with the notion of differences

in individual talent. Not all people are equally productive, or even

equally productive in the same ways. Some people are simply more produc-

tive than others, and talents—understood to mean personal strengths

in this context—differ on an individual basis. Some research suggests that

the difference between the average and the most productive worker can be

as high as eleven times.

Many methods are available to conduct workforce planning. They are

drawn from quantitatively focused approaches from statistics, econometrics,

or operations research and from qualitatively focused approaches to

problem solving. Few organizations undertake any form of systematic,

comprehensive workforce planning. In fact, one study found that as many

as two-thirds of U.S. employers do no comprehensive workforce planning.1

Instead, jobs are typically approved in many organizations on a case-bycase

basis as vacancies become available or as work demand increases. The

result: The collective competencies and talents of the entire organization’s

workforce is never assessed against the requirements needed to achieve the

organization’s strategic goals. The result is that the labor force of many

organizations can drift away over time from the best fit to achieve desired

work results.

A New Approach to Workforce Planning

A review of changing conditions in business over the past sixty years provides

an important backdrop for understanding the need for change in

many business practices. The years from 1950 to 1970 were a golden age of

business stability for industrialized nations. Human resources practices

were designed to be responsive to those conditions. Building a stable work-

force was the priority. As detailed by Peter Cappelli,2 the following conditions

prevailed:

* Business demand and the talent needed to deliver it could be

accurately predicted into the future.

* Government regulations restricted competition, which helped

companies confidently make long-term investments. Foreign

competition was often almost nonexistent or held very low

market share.

* Competitors operated in unison. When GM announced its

price increases, Chrysler and Ford were sure to follow.

* Union contracts across industries resulted in similar labor

expenses and in large part removed the variable of price

advantages.

* Talent was in short supply and could not be easily found or

lured away from the competition.

* The economy grew steadily, at 5 to 6 percent per year.