Strategic planning: don’t fire staff you need — plan ahead

By David Donaldson

Monday February 8, 2016

Budgetary challenges and an ageing labour force mean strategic workforce planning will have to play a significant role in the public sector in coming years, notes a recent report from Boston Consulting Group.

Strategic planning is especially important during times of workforce contraction to ensure government does not pursue short-term savings that will result in longer-term costs:

“[Strategic workforce planning] becomes even more crucial in an era of budgetary pressure, when both public and private organisations often respond with short-term measures such as across-the-board headcount reductions to hit cost-cutting targets. Such moves, however, fail to take into account the skills and roles that will be needed in the future, raising the risk that strategic knowledge or expertise (in managing complex military bases and equipment, for example) will be lost.”

The better your agency understands what its future skills requirements will be, the less likely it is you’ll get rid of someone you need. Making cuts without an idea of what will be required in future “can result in higher costs down the road if positions need to be restaffed,” warns BCG in its Creating people advantage in the public sector report.

As a large portion of the workforce nears retirement, it will also be important to identify where skills may be lost and where opportunities might lie for pursuing certain skills in new recruits, such as technology experience. As with much of Australia, the ageing workforce is a significant issue for the Australian Public Service — the largest age segment among APS employees is 50-54 years.

For some agencies this problem is more acute. Of the agencies with at least 1000 employees at June 2015, the Australian Electoral Commission and Veterans’ Affairs had the oldest age profiles, with 70% and 60% aged 45 years and over, respectively. In contrast, the Attorney-General’s Department and Treasury had the lowest proportion of employees 45 years of age and over, with 26% and 30%, respectively.

Filling the roles of lost staff is especially difficult in certain jobs, particularly those with highly specialised skills. One way of keeping people on board is increased retention payments, which Defence is implementing for submarine crew members. Under the new system, staff will have their salaries topped up by up to $50,000 per year just for staying in the job.

Identifying the gaps

Strategic workforce planning begins with a segmentation of the workforce by by job category, which is then tested against projections of future and supply and demand of skills and employees in different categories. Changes including digitisation and predicted retirements will have a significant impact.

The gaps identified mean HR can determine the right mix of actions to address the most critical shortfalls.

The consultancy firm suggests organisations can do more to train up existing staff over hiring external candidates. It recommends they “should be ambitious about developing internal talent.” Retraining staff and moving them to new positions within the organisation is a “powerful — and sometimes overlooked — way to fill critical positions,” it says.

Planning ahead can also mean evaluating an organisation’s geographical location, which may mean relocating to where desired skills are concentrated.

BCG offers a case study of an organisation facing widespread retirements as a successful way to implement strategic workforce planning:

“In Germany, the Federal Employment Agency (Bundesagentur für Arbeit) was concerned about the large number of employees approaching retirement age. In one division alone, half the employees were expected to retire in the next decade. To address this challenge, the agency kicked off two SWP pilots in February 2015, covering about 15% of the workforce.

“The team leading the effort created a model forecast of worker supply and demand based on parameters such as job type, geographic location, and age group. Combining the supply and demand projections into a single model, the team built an array of heat maps that showed the areas where shortages were likely to be critical and came up with concrete plans for filling the worker pipeline. The pilots have proven so successful that the approach is being rolled out throughout the entire organisation.”

The report notes that greater internal mobility assists in retention — and it doesn’t necessarily have to all be upwards. In response to employee frustration with the traditional vertical track, which may have been limited, public sector bosses in Germany have worked to create more opportunities for horizontal movement. This gives employees the change to try a new job at the same management level, either in the same or a similar agency.

The imperative to remake public sector human resources “is impossible to ignore”, argues the report’s authors — but governments need to make sure they’re properly resourcing that transformation.

“First, they must dedicate adequate resources and talent to the effort. This means resisting the ever-present temptation to pare the HR budget and staff as overall government budgets tighten. Second, leaders should ensure that the right governance structures are in place, including a project management office to oversee and manage key HR initiatives. Third, governments must be willing to experiment through pilot projects that test new initiatives in specific ministries or regions before they are deployed nationally. And fourth, the effort must include collaboration among HR leaders in different ministries, agencies, and geographies in order to rapidly identify and share best practices.”

With these key mechanisms in place, the report states, “leaders can accelerate the transformation of the HR function and boost the overall efficiency and effectiveness of the entire government organisation.”

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