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Lasting business
performance through
strategic workforce
planning

Our study of where

organisations currently stand
in terms of implementing
strategic workforce planning
shows how linking HR
management and corporate
strategy will help you master
the challenges of the future.
 Lasting business
performance through
strategic workforce
planning

Our study of where

organisations currently stand
in terms of implementing
strategic workforce planning
shows how linking HR
management and corporate
strategy will help you master
the challenges of the future.
Lasting business performance through strategic workforce planning

Published by PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft

By Charles Donkor, Till Lohmann and Dr Ursula Knorr

With the collaboration of Dr Silke Hellwig, Dr Stefan Keck and Dr Silvan Winkler

May 2012, 44 pages, 24 figures, soft cover

All rights reserved. It is prohibited to reproduce, microfilm, store and process this publication in
electronic media without the consent of the publisher.

The findings of the study are intended as information for our clients. They are accurate to the best of
the authors’ knowledge at the time of publication. To resolve problems in relation to the matters dealt
with in this study, please refer to the sources or contacts mentioned in the publication. All opinions
are those of the authors.

© 2012 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” and “PwC” refer

to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a
separate and independent legal entity.
 Foreword

Foreword

Dear Reader,

These days the world of employment is dominated by volatile business cycles,

demographic change and the war for talent. Because they’re a way of minimising
the productivity and capacity risks posed by an aging workforce, qualified
employees have become a key competitive advantage. Far-sighted organisations
are investing systematically in planning their human capital. Strategic workforce
planning (SWP) – indicates the increasingly long-term and strategic nature of the
process.

Companies can use SWP as a management tool to help tackle the challenge of
a shortage of skilled labour. It’s a good way of working out where and when
you’re going to need specific talent with specific skills and abilities on the path to
achieving your strategic objectives. To do this, you have to do far-sighted planning
and define targeted measures on the basis of a range of development scenarios.

This report has been produced by PwC in collaboration with the Institute for
Leadership and Human Resource Management at the University of St. Gallen. A
written survey was used to find out how well established SWP is in organisations,
and how far it contributes to the performance of these businesses. Personal
interviews were conducted with various heads of HR to find out in more depth about
their experience with SWP and the practical challenges they face.

The publication shows how organisations integrate SWP with their structures
on a functional basis, the areas that are actually covered by SWP, and what
methodologies companies use to implement it. We also give you some concrete
recommendations on how to best establish SWP and harness its full potential
within your organisation. Without giving away the whole story, we can say that
organisations that make comprehensive use of SWP say it helped them gain a
clear competitive edge on their industry peers.

We wish you stimulating reading!

Charles Donkor Till Lohmann Dr Ursula Knorr

PwC PwC University of St. Gallen

Lasting business performance through strategic workforce planning 5

Contents

Contents

Foreword................................................................................................................. 5

List of figures........................................................................................................... 7

A Management summary.................................................................................... 8

B Rationale for SWP.......................................................................................... 10

1 Definition of SWP.......................................................................................... 10
2 Talent shortage driving SWP.......................................................................... 13

C Practical scope of SWP and technical implementation................................... 16

1 Where and how companies are using SWP..................................................... 16
2 Planning horizon and frequency of review..................................................... 17
3 Scope and content.......................................................................................... 19
4 Data and KPIs................................................................................................. 22
5 Software and tools......................................................................................... 24

D Organisational integration............................................................................. 25
1 Harnessing SWP as a powerful management tool .......................................... 25
2 Change of mindset in HR ............................................................................... 26

E Using SWP to plan more systematically.......................................................... 28

F Case study: Allianz Group implements SWP................................................... 32

G Practical recommendations............................................................................ 34

H Support with implementing SWP................................................................... 37

I Design of study: methodological approach .................................................... 40

Your contacts......................................................................................................... 42

6 Lasting business performance through strategic workforce planning

 List of figures

List of figures

Fig. 1: Operational planning versus SWP............................................................ 11

Fig. 2: SWP model............................................................................................... 12

Fig. 3: Factors driving the introduction of SWP................................................... 13

Fig. 4: Shortage of talent by hierarchical level.................................................... 14

Fig. 5: Confidence on the availability of talent.................................................... 15

Fig. 6: Importance of SWP in future.................................................................... 15

Fig. 7: Where and how companies are using SWP............................................... 16

Fig. 8: Difficulties in implementing SWP............................................................ 17

Fig. 9: Timeframe for SWP.................................................................................. 18

Fig. 10: Frequency of review of SWP..................................................................... 18

Fig. 11: Content of SWP........................................................................................ 19

Fig. 12: SWP maturity pyramid............................................................................ 20

Fig. 13: SWP model assumptions.......................................................................... 21

Fig. 14: Statistical methods for SWP..................................................................... 22

Fig. 15: Use of IT systems...................................................................................... 24

Fig. 16: Embedding SWP in the business strategy process .................................... 25

Fig. 17: Influence of SWP on business decision-making........................................ 26

Fig. 18: Using SWP to forecast impact of talent gap.............................................. 28

Fig. 19: Potential of SWP for closing talent gap..................................................... 29

Fig. 20: Productivity, profitability and agility of organisations............................. 31

Fig. 21: PwC’s broad range of services around SWP ............................................. 38

Fig. 22: Number of employees at companies surveyed.......................................... 40

Fig. 23: International orientation of companies surveyed..................................... 40

Fig. 24: Sales at companies surveyed.................................................................... 41

Lasting business performance through strategic workforce planning 7

Management summary
A Management summary
Strategic workforce planning is a
management tool that links business
strategy with HR management to
tackle the challenge of potential
shortages of talent.
While companies recognise the huge
significance of SWP, few have succeeded
in harnessing its full potential.
8 Lasting business performance through strategic workforce planning
In future Western industrialised countries, particularly Germany, Austria and
Switzerland, will see the number of young people decline while the number of
older people increases. This change will also be reflected in the workforce. These
two trends will amplify each other, resulting in a long-term shift in the workforce
towards the 50-plus generation and creating significant capacity and productivity
risks. At the same time, despite the volatile economic situation, we’ll see the
struggle to attract and retain urgently needed specialists and managers intensify.
Against this backdrop, we look at how today’s organisations are preparing for these
challenges in their strategic planning, how they’re putting theory into practice, and
how their efforts are contributing to the performance of their business. Our study is
based on the methodological principles of strategic workforce planning (SWP).
SWP is a management tool that helps organisations incorporate targeted workforce
management into the execution of their business strategy. SWP shouldn’t be
confused with operational workforce planning. It’s not about generating precise
figures on headcount and short-term adjustments in personnel. SWP is much
more about the dialogue between management and the HR function about future
corporate strategy and its implications for workforce planning. For SWP to work,
it has to be regularly synchronised with all the relevant overarching strategic and
management processes. It can then serve as the basis for planning your workforce,
making predictions on personnel requirements and the availability of the relevant
human resources, and defining an HR strategy that will facilitate execution of your
business strategy. SWP helps organisations identify critical roles and skills and show
precisely what areas of the business and geographical locations are likely to face
particular challenges.
The companies polled for this study confirm the importance of SWP: two thirds see
SWP as one of the three key HR priorities for organisation. Eighty per cent already
do SWP on at least an annual basis, and three quarters define their SWP for a time
horizon of at least three years.
But so far only a small number of organisations have actually managed to harness
the full potential of SWP. To date only around 25% of the organisations surveyed
are making use of available options such as analyses showing the interrelations
between workforce data and business performance, and modelling a range of
development strategies with predefined response strategies. So far, most have
limited themselves to simple gap analysis and linear extrapolations of the available
HR data. In terms of the technology used to implement SWP, 70% of those polled
rely on programmes such as Microsoft Excel. Around 30% incorporate their SWP
analysis into existing ERP systems such as SAP and Oracle.
 Management summary

Organisations already using SWP are evidently finding that it helps them effectively Companies using SWP see themselves
address the challenges resulting from the shortage of talent. One third of those as more profitable, productive and agile
polled say that SWP will help them fill at least 50% of the anticipated talent gap in than the average industry peer.
the next five years. Not only this, but the overwhelming majority of these companies
see themselves as more productive, profitable and agile when it comes to dealing
with changes in the market than the average industry peer.

Even if many organisations don’t yet have all the necessary analysis tools, data It’s advisable to implement SWP as
and key performance indicators of the desired quality in place, this is no reason to quickly as possible and then gradually
fundamentally do without SWP. It is an iterative process. If necessary, companies develop the process and increase the
can start out working on the basis of assumptions and external benchmark data. As scope of analysis.
their SWP becomes more mature, they can then go on to systematically create their
own sources of data and use more complex statistical methods and development
scenario modelling. The key to successful SWP is to make sure it takes account
of strategic business objectives and their impact on workforce planning from the
outset.

Taking a strategic approach to workforce planning also requires a change of mindset

in HR. People in HR will find themselves increasingly taking part in overarching
strategic discussions and expected to bring fact-based analysis to the table. This
transforms HR’s role so that it becomes a strategic planning business partner to all
areas of the business. In many cases, these new, value-adding roles will mean that
a new personnel and organisational framework has to be set up to enable HR to
deliver this strategic contribution.

It makes sense to launch SWP as a pilot project in an area of the business where
a potential lack of available talent poses a particular risk. This way you can show
what, in the worst case, the effects will be if your organisation continues with its
existing strategy, and what alternatives an approach based on fact-based analysis
and scenarios opens up. Positive experience from this pilot project can then be used
as a basis for rolling out SWP across the entire enterprise.

Lasting business performance through strategic workforce planning 9

Rationale for SWP

B Rationale for SWP

SWP is a management tool that
optimally links business strategy
with HR management.
1 Definition of SWP
SWP can help tackle a wide range of challenges related to the way HR strategy
and the HR organisation are aligned. At the moment, many organisations find
themselves having to compose themselves for a collapse in profitability resulting
from the economic situation, prepare for the impact of demographic change, and
choose the right HR strategy and implement it at the operational HR level. Basically
the aim of SWP is to create transparency with regard to the structure of the
workforce. This helps the HR organisation and management choose the courses of
action that will be effective in the most probable future scenario.

The short, medium and long-term implications of the various courses of action
have to be assessed (for example the short-term cost-savings of reducing
headcount versus the long-term effects of an aging workforce). This means that
SWP is a management tool that creates a link between business strategy and HR
management. The ‘strategic’ component clearly differentiates SWP from operational
workforce planning (see Fig. 1). SWP is forward-looking, makes reference to
business strategy, and creates the basis for developing HR measures to help achieve
business objectives over a timeframe of three to five years. Operational workforce
planning, by contrast, entails more short-term, concrete planning, with measures
designed for immediate implementation.

10 Lasting business performance through strategic workforce planning

 Rationale for SWP

Fig. 1: Operational planning versus SWP

Design

3 Look ahead

Gather insights
2
Manage

1 Create transparency

Operational Strategic

1 Create transparency
• Main activity: preparing and consolidating data
• Outcome: access to accurate, consolidated HR data
• IT requirements: Excel, HR BI

2 Gather insights
• Main activity: analysing HR data, creating KPIs
• Output: key HR indicators, taxonomy, evaluations
• IT requirements: Excel, HR BI, reporting tool

3 Look ahead
• Main activity: developing HR initiatives, formulating strategy, analysing trends
• Output: consistent planning, HR strategy
• IT requirements: sophisticated modelling tool

SWP and the resulting HR measures start with a comprehensive gap analysis (see Using SWP, an organisation can
Fig. 2). This analysis compares medium and long-term personnel requirements ensure that it deploys its people correctly
arising from various business strategy scenarios with the supply of talent inside and to implement its business strategy.
outside the organisation. The output can be used as the basis for simulating and
evaluating different future scenarios. As part of its integrated workforce planning
approach, an organisation then essentially has three basic courses of action
available to initiate appropriate measures and plan for the future.

There are a number of ways of recruiting the necessary talent (for example via
different talent pools, systematic training, and measures to make the organisation
a more attractive place to work). But there is also potential for optimising
and retaining your existing workforce, for example by designing attractive
compensation schemes or career programmes, granting non-financial benefits, or
offering unsalaried voluntary work. Both approaches call for individually tailored
HR programmes that create a framework for positive leadership relationships,
flexible working hours, true diversity management or functioning performance
management.

Lasting business performance through strategic workforce planning 11

Rationale for SWP

Fig. 2: SWP model

Strategy (determines the thrust of workforce planning)

How will requirements develop in Influencing factors Are sufficient qualified employees
future? available?
• Budget
Forecast demand for talent • Diversity goals Forecast supply of talent
• Organisational performance • Globalisation Internal External
• Job content • Employment market • Existing talent • Pipeline
• Competencies/skills • Legal framework pool • Analyse
• Critical profiles • Competition • Changing jobs employment
• Employee segments • Economic factors • Skills market
assessment • Macro
projections

Gap analysis

Scenarios/simulation

Where should talent be hired,  ow do we go about motivating

H How should HR go about
and from where? our talent? implementing these programmes?

Search for talent Optimising workforce and HR programmes/approaches

• Talent pools encouraging loyalty • Management/leadership
• Branding/value proposition • Compensation • Processes/productivity
• Recruitment • Non-financial benefits • Performance management
• Training • Engagement • Retirement arrangements
• Alternative sourcing • Career paths • Diversity management
• Job design • Training/developments • Flexible working
• Knowledge transfer

Analysis and planning Actions

Using SWP an organisation can ensure that it deploys its people effectively to
implement its business strategy, in other words:
• in the right numbers
• with the right skills
• in the right place (both in functional and geographical terms)
• at the right time
• at the right cost.

12 Lasting business performance through strategic workforce planning

 Rationale for SWP

2 Talent shortage driving SWP

Why will SWP be increasingly important in the future? Western industrialised
countries will see the number of young people decline while the number of older
people increases. The same trend will occur analogously within organisations.
These two trends will amplify each other, resulting in a long-term shift in the
workforce towards the 50-plus generation, and creating significant capacity and
productivity risks. At the same time we will see the emergence of new sales markets
in countries such as the BRIC nations (Brazil, Russia, India and China), and intense
competition for valuable talent on the global market. Companies in our climes have
to prepare for these challenges now and lay the foundation to successfully respond
with changes to their strategy. SWP comes into play as part of a systematic approach
to demographic management, serving as the basis for planning targeted measures
to promote employee health, attract personnel, manage knowledge and ensure an
age-appropriate workplace and working hours.1

The reality of these trends against the backdrop of the current volatile economic
environment is confirmed by the present study. Alongside changes in business
strategy and the need for new skill profiles (see Fig. 3), the companies surveyed cite
demographic changes and the resulting changes in the employment market as the
most important force driving the introduction of SWP in their organisation. The
growing struggle to attract, develop and retain the required talent has triggered a
concrete need for long-term workforce planning at the companies polled.

Fig. 3: Factors driving the introduction of SWP

What are the most important factors driving SWP?

Demographic change 54%

Employment market 48%

Change in
45%
business strategy
New qualifications/
39%
skills

Advances in technology 28%

Change of location/
27%
geographic expansion

Business diversification 25%

Mergers and acquisitions 15%

Change in
9%
management
Workforce
8%
diversification

Other 11%

Multiple responses were possible

1
For a detailed discussion, see PwC’s 2011 study “Demografiemanagement (demographic management)”.

Lasting business performance through strategic workforce planning 13

Rationale for SWP

There is a shortage of talent among
specialists especially in IT, research
and development, and sales.
At 83% of the companies polled this shortage of talent is already acute, posing a
severe risk to the further development of the business. The main shortages are in
technology and IT, research and development, and sales. This group of specialists is
the backbone of many workforces, and requires a constant influx of highly qualified
new talent to maintain its operational core functions. Since middle and senior
management positions are fewer in number, those polled rated the shortage of
talent in these areas as less serious (46% and 30% respectively; see Fig. 4).2

Fig. 4: Shortage of talent by hierarchical level

At what levels do you see the most serious shortage of talent?

12%
30% 27%
29%
44%
31%

27% 39%
56%
29% 35%

39% 24%
25% 7%
17%
8%

Board of directors/ Executive Senior Middle Technical

supervisory board management management management specialists/
subject matter
No shortage experts
Minor shortage
Neutral
Considerable shortage
Serious shortage

Two thirds of companies see SWP as
crucial for the future.
Around 65% of the companies surveyed believe that they will have sufficient talent
over the next year to be able to execute their business strategy (see Fig. 5). But
once you extend this planning horizon to three to five years, respondents are a lot
less confident, and the score goes down to 45%. In other words, fewer than half
the companies polled see no problems in covering their personnel requirements,
in quantitative and qualitative terms, in the next three to five years. There are
a number of possible explanations for this. On the one hand the prevailing
economic environment makes it difficult to plan anything for the longer term. On
the other hand, organisations will increasingly feel the effects of demographic
change in future. With the Baby Boomers due to go into retirement, and birth
rates increasingly low in subsequent years, the supply of candidates, particularly
for highly qualified specialist and management positions, will get scarcer and
scarcer. Not only this, but people in the younger generation, so-called Millennials,
have different expectations of their job and employer than previous generations.3
Companies therefore have to expect higher turnover and changes in the conditions.

2
S
 ee also our studies “15th Annual Global CEO Survey 2012” and “Demografiemanagement”.
3
S
 ee the 2011 study from PwC entitled “Millennials at work − perspectives from a new generation”.

14 Lasting business performance through strategic workforce planning

 Rationale for SWP

under which people are employed (for example new management and performance
systems, and greater effort required to motivate and bind staff), all of which makes
it much harder to plan for the longer term.

Abb. 5: Confidence on the availability of talent The further ahead they look, the less
confident companies are that they will be
How confident are you that sufficient talent with the right skills will be available to you to able to deal with the shortage of talent.
be able to execute your company’s strategy?

11% 8%
22%
31%
37%
43%
42%
38%
28%

35%
15% 23%
26%
15% 12% 10%

Next 6 6–12 months 1–2 years 3–5 years

months

Not confident at all

Not very confident
Neutral
Somewhat confident
Very confident

These days specialist knowledge and highly qualified staff are key factors in a
company’s ability to compete. This means that a pronounced long-term shortage
of talent will become one of the dominant challenges, calling for comprehensive
strategic planning. The organisations participating in our research have recognised
this challenge: two thirds see SWP as one of the three core future priorities for their
business (see Fig. 6).

Fig. 6: Importance of SWP in future

How important do you think SWP (planning with a horizon of three to five years or longer)
will be in the next two to four years?

Not a special priority Number one priority

2.8% 2.7%

Among the top ten priorities

31.5%

Among the top three priorities

63.0%

Lasting business performance through strategic workforce planning 15

Practical scope of SWP and technical implementation

C Practical scope of SWP and technical

implementation
1 Where and how companies are using SWP
Around 80% of the companies surveyed use SWP (see Fig. 7). In global studies
this figure is much lower, around 50%. SWP is apparently relatively widespread in
German-speaking countries. On the other hand it should be noted that most of the
companies participating in the study had already engaged with SWP. Looking more
closely at when companies adopted SWP, two main points become apparent. On the
one hand you see how SWP has become a key strategic priority, with almost half of
those polled having implemented it in some form in the last two years alone. But
on the other hand it also becomes evident that most organisations are still at a very
early stage in terms of implementing SWP, and almost a fifth haven’t even started.

Most organisations are still at a very Fig. 7: Where and how companies are using SWP
early stage in terms of implementing
SWP. For how many years have you been doing SWP in your organisation?

> 5 years No SWP

18.9% 20.7%

3–4 years
16.0% < 1 year
20.8%
1–2 years
23.6%

How can it be, despite the high priority given to SWP and the fact that the shortage
of talent is already a reality, that companies have started so late and are still doing
SWP in such a rudimentary form? The main reason seems to be the major effort
and investment companies assume will be initially involved (see Fig. 8). Even
though the data necessary for SWP is usually available, two thirds of organisations
polled believe that the quality of this information does not yet come up to scratch.
Apart from this, the most common reasons cited, by a clear margin, were a lack of
technical know-how, SWP methodology and management support. But these factors
shouldn’t be seen as a fundamental obstacle to SWP. On the contrary, companies
should be using SWP as a way of progressively improving the quality of their data
and building the necessary expertise within their HR function. But gradually setting
up and expanding SWP capabilities requires the full support of management right
from the start. The urgent need to respond to the shortage of talent and reduce
future planning risks is a compelling argument in favour of this approach.

16 Lasting business performance through strategic workforce planning

 Practical scope of SWP and technical implementation

Fig. 8: Difficulties in implementing SWP

What difficulties have you encountered in connection with SWP?

Insufficient quality of data 66%

Lack of clear methodology

36%
and business process

Insufficient expertise 36%

Lack of support from

30%
management

Unclear responsibilities 27%

Lack of a clear
26%
business case (payoff)
Lack of tools and
26%
technology

Lack of clear benefits 24%

Lack of financial
23%
resources
Lack of results in the
20%
short term

No data available 19%

Lack of business
17%
strategy

Relevance of scenarios 13%

Lack of support from

10%
the business
Other
7%
(please specify)

Multiple responses were possible

2 Planning horizon and frequency of review

At a clear majority – two thirds – of the companies surveyed, SWP covers a planning
horizon of three to five years (see Fig. 9). This timeframe gives the organisation
the chance to sound out major trends and changes in the environment and their
impact more thoroughly, and to do more in-depth planning in the form of a multi-
year business strategy. A shorter horizon would be more appropriate for operational
planning, where you already have concrete objectives and detailed implementation
plans to work with. In this context it would be inappropriate to use SWP, which is
a component of the strategy development and management process. Basically the
planning horizon for SWP should be exactly the same as for existing strategy and
management processes.

Lasting business performance through strategic workforce planning 17

Practical scope of SWP and technical implementation

“SWP has meant significant changes for HR in our organisation, mainly

because it has led to integrated collaboration among the operational units,
people in strategic business development, and controllers in finance and HR. In
implementing SWP we deliberately sought the support of an external consultant
to guide the process and give our people the relevant technical and process
training.”

Christian Freiherr von Loë, Head of Strategic Workforce Controlling, RWE AG

Fig. 9: Timeframe for SWP

What is the timeframe for SWP in your organisation?

≥ 9 years
9.8%

6–8 years 1–2 years

3.3% 23.9%

3–5 years
63.0%

Given that SWP is part of a strategic planning process that is geared to the current
situation and therefore, like most corporate processes, takes place on an annual
basis, it makes sense to also review SWP at least once a year. This happens at 80%
of the organisations surveyed, which review SWP on a continuous annual or semi-
annual basis (see Fig. 10). The response given by almost a quarter of participating
companies, that they review SWP ‘when the situation requires’, indicates an
unsystematic approach. Here planning is probably done on an ad hoc basis rather
than within the framework of a structured strategy development process.

80% of respondents review their SWP Fig. 10: Frequency of review of SWP
at least once a year.
How often does your organisation review its SWP?

Every two years, or less frequently

When the situation requires 4.4%
23.3%

On an ongoing basis
6.7%
Annually
Every 6 months 57.8%
7.8%

18 Lasting business performance through strategic workforce planning

 Practical scope of SWP and technical implementation

3 Scope and content

At around half of the companies polled, SWP encompasses the entire workforce.
The other half limits SWP to more highly qualified talent. Here cultural differences
also come into play. In the German-speaking world the term ‘talent’ tends to be
defined much more narrowly than in English-speaking countries, where it usually
refers to any value-adding member of staff.

When asked what type of analysis is done under the umbrella of SWP, responses fell
into three main categories (see Fig. 11):
• Workforce segmentation (identifying and analysing specific groups of employees,
such as high potentials)
• Headcount gap analysis (identifying discrepancies between requirements and
availability of staff)
• Skill gap analysis (identifying discrepancies between demand for and availability
of specific skills)

Fig. 11: Content of SWP

What type of analysis does your SWP approach involve?

Workforce segmentation (identifying

and analysing specific groups of 80%
employees, such as high potentials)
Headcount gap analysis (identifying
discrepancies between headcount 72%
requirements and availability of headcount)
Skills gap analysis (identifying
discrepancies between demand for and 61%
supply of specific skills)

Personnel costs 38%

Analysis of interplay between

workforce and business data 28%
(e.g. sales revenues or units sold)

Modelling on the basis of different

28%
‘what-if’ scenarios

Benchmarking 20%

Other
4%
(please specify)

Multiple responses were possible

“SWP should be closely linked to all strategic planning done throughout the
entire organisation. SWP is a form of business intelligence decision-making,
providing information and insights that can facilitate strategic decision-making.”

Mary Young, Principal Researcher, The Conference Board

Lasting business performance through strategic workforce planning 19

Practical scope of SWP and technical implementation

So most respondents are primarily interested in the classic comparisons between

supply and demand for people and skills. The distribution of these responses for
SWP translates into a typical maturity pyramid (see Fig. 12). At the base of the
pyramid is classic gap analysis. In the middle are cost implications or analyse
showing correlations between HR management and business performance. At
the top of the pyramid is modelling different scenarios and benchmarking with
other companies or industries – the most fruitful uses of SWP, but also the least
widespread. Only by doing really in-depth, detailed modelling of various scenarios
can you get a firm idea of future developments and come up with effective strategies
to tackle them. Broad analyses helps you define the different factors that influence
business performance and develop parameters to match. This enables you to
summarise a bundle of scenarios, decision points and predefined strategies in a
model. Depending on actual developments and probability distributions, you can
then identify the best strategies in terms of the future performance of the business.

Fig. 12: SWP maturity pyramid

Expert Key
competitive
Scenario advantage
modelling

Benchmarking to
causal framework
Degree of maturity

Causal framework showing

interrelations between workforce data

Utility
and business performance
Cost implications

Skills gap analysis

Headcount gap analysis

Workforce segmentation
Beginner Necessity

“Ours is no ‘one solution fits all’ philosophy. Just like Allianz’s

products, we want our SWP to address regional differences and
provide tailor-made solutions.”

Christian Werner, Head of SWP,

Allianz Group

20 Lasting business performance through strategic workforce planning

 Practical scope of SWP and technical implementation

Responses to the question about other HR issues connected with SWP reveal a
typical picture, with respondents primarily naming topics such as recruitment and
developing talent, or succession planning. Diversity and knowledge management
or compensation are rarely mentioned in the context of SWP. Two thirds of the
companies polled view SWP as a component of HR risk management, although how
broadly this is established remains open.

When asked about the depth of their SWP analysis, around 80% say it goes down
to the level of individual employees. Only 20% limit themselves to an aggregated
analysis of groups or job profiles.

Technological developments, increases in productivity and work reorganisation are The main parameters covered by a
the most frequent parameters fed into the SWP model (see Fig. 13). Technological company’s SWP are technological
developments, for example, can lead to rationalisation and personnel cuts. developments, increases in productivity
Increased productivity in a specific area of the business can mean that the company and work reorganisations
has to build additional human resources in this area. Reorganisation such as
outsourcing businesses or concentrating on core competencies also has an influence
on HR strategy.

Fig. 13: SWP model assumptions

What factors or assumptions does your SWP model take into account?

Technological developments 59%

Increases in productivity 57%

Work reorganisations 54%

Span of control 41%

Asset strategy 22%

Other 9%

Multiple responses were possible

Lasting business performance through strategic workforce planning 21

Practical scope of SWP and technical implementation

4 Data and KPIs

Most companies use linear extrapolation of historical data to model simple trends
for the future (see Fig. 14). Around a fifth of respondents use decision trees to model
different developments. Other statistical methods are rarely used.

This limited use of statistical analysis reinforces the impression described in the last
chapter that many companies use SWP but fall a long way short of harnessing its full
potential.

The companies polled input the following data into their SWP model (in descending
order of frequency):
• Demographic data (e.g. age and gender)
• Voluntary attrition
• Involuntary attrition
• Skills
• Performance data
• Talent data (e.g. ratings)
• Length of employment
• Career development

The bulk of this data comes from the organisation’s own data pool. Two thirds of
companies say they also use external sources of data such as employment market
trends and demographic data in their SWP.

When assessing their workforce needs, Fig. 14: Statistical methods for SWP
most companies limit themselves to linear
extrapolations of historical data. What statistical methods do you use for SWP?

Linear extrapolations
56%
and trends
Combination of different
31%
methods

Decision trees 18%

Complex algorithms
10%
and models

Path modelling 10%

Linear regression
7%
analysis
Integral methods (e.g.
5%
Runge-Kutta or Euler)
Multiple hierarchical
0%
regression analysis

Other 7%

Multiple responses were possible

22 Lasting business performance through strategic workforce planning

 Practical scope of SWP and technical implementation

“SWP isn’t financial accounting, where one plus one has to be

exactly two. SWP is about recognising trends and risks ahead
of time. This can’t be done – and it doesn’t have to be done –
with absolute precision.”

Peter Luginbühl, Head of HR Controlling, SBB

When communicating results of SWP analyses, specialists need to focus on core

messages and a few key indicators. The core messages emerge from the strategic
corporate issues that come from the analysis as being connected with the hiring of
staff. SWP and downstream HR strategies should answer questions such as:
• What critical role profiles do we have in our organisation, and how will internal
demand and external labour market supply develop?
• At what locations do we want to grow? What skills and role profiles do we need to
do this? What are we going to do to cover these requirements?
• What are the HR policy challenges we face given the different generations within
our workforce?

The core messages should be backed up by indicators that facilitate dialogue and
enable comparison with other companies. In the interests of dialogue across the
organisation, it’s important to limit these to a small number of meaningful figures.
The choice of indicators will depend on the specific strategic corporate issues that
emerge. In general, however, it’s possible to distinguish between five groups of
indicators that should be covered:
• General workforce data (e.g. full-time equivalents [FTE], turnover, length of
employment and termination rates)
• Financial workforce data (e.g. profit per FTE, cost per FTE, HC-related ROI
[return on investment])
• Productivity and performance (e.g. financial productivity, costs of absence per
FTE, performance management, degree of coverage)
• Talent development and succession planning (e.g. vacancy rates, hours of training
per FTE, size of group of identified talent, data on new joiners and management
stability)
• HR risks (e.g. number of internal successors for each key role, internal fill rates for
key roles, severity of employment market shortage for each key role).

“You have to make sure that you have a management information

system (MIS) rather than system information management (SIM).
A software tool should support your business rather than limiting it.”

James Gallman, Head of Workforce Planning, Holcim

Lasting business performance through strategic workforce planning 23

Practical scope of SWP and technical implementation

5 Software and tools

Most companies run their SWP on The large majority of the companies surveyed use Microsoft Excel or similar
the basis of Microsoft Excel or similar applications for their SWP (see Fig. 15). Only 28% have integrated SWP into an
software. existing ERP system. Another 14% don’t use any IT system at all for SWP; they plan
on the basis of their managers’ intuition.

The limited use of special software is again connected with companies’ failure
to exploit the full potential of SWP. If you only use static gap analyses and linear
extrapolations you can easily get by with Microsoft Excel or comparable software.

But integrating SWP into existing ERP systems would seem to make sense. After
all, integration with a central database makes things much more efficient. Despite
this, few companies have actually done such an integration, suggesting that many
organisations don’t yet capture and prepare their data in an ERP system.

Fig. 15: Use of IT systems

What IT systems (applications) do you use, or are you considering using, for SWP?

Excel (or similar) 70%

ERP (e.g. Oracle or SAP) 28%

None (e.g. SWP done on the

basis of managers’ 14%
assessments)
Completely client-
specific tool (designed 11%
from scratch)

Precisely fitting tools 9%

Analytical/statistical tools
8%
(e.g. SPSS, SAS or Dynaplan)

Pure play providers (e.g.

Aruspex, Vemo, InfoHRM/ 6%
SuccessFactors or Orca)

Other 4%

Multiple responses were possible

24 Lasting business performance through strategic workforce planning

 Organisational integration

D Organisational integration

1 Harnessing SWP as a powerful management tool

What we have found out so far about the drivers and concrete set-up of SWP
strongly suggests that it isn’t just a tool for operational analysis and controlling
that can be used to optimise the current deployment of human resources. SWP
should rather be seen as a strategic management tool that is directly embedded in
the overarching strategy development process for the entire organisation (see Fig.
16). Within the framework of an analysis of the internal and external operating
environment, in-depth analysis of the human resources situation and the way it’s
developing can provide crucial information that can be used in the formulation
of overall business strategy. This can serve as a strategic basis for fundamental
business and personnel decisions that will have a major impact on the entire future
organisation and the way it’s staffed.

This means that SWP, alongside business planning and HR, also has to involve
all the other areas and corporate functions in analysis and forecasting, including
finance, sales, production and supply chain management. To ensure that SWP
can actually perform this demanding role, it’s vital that top management – who
along with HR management were the strongest proponents of SWP in the survey –
support SWP in this interface function. At the companies polled, responsibility for
the concrete SWP set-up usually lies with the head of HR, who has to have the right
position and status within the organisation to be able to play an effective role as an
equal peer in decisions on business strategy.

Fig 16: Embedding SWP in the business strategy process

gy g A na
ate in l ys
s tr m e n t en
is
o
HR p le tegy vir f op
tr a on
r i m
ss
s m er
fo i n e en
at

s
in
t
g
bu
Forecasting person-
n e l re quire m e nt s
a nd supply

B u s in e s s
strategy

Im al
wo

kf p on
o r ac t t i
r

ce on sa y
a ni it
p la
nn O rg pac
in g ca

Lasting business performance through strategic workforce planning 25

 Organisational integration

“No one would formulate a business strategy without

taking account of financial planning. Workforce planning
should be just as much a part of any corporate strategy.”

James Gallman, Head of Workforce Planning, Holcim

Only 44% of companies believe that SWP In this context it’s a matter of concern that SWP has an influence on strategic
is relevant to their strategic decision- decision-making in only 44% of the organisations surveyed (see Fig. 17). SWP has
making. no or only a small impact at 29% of those polled.

This shows that SWP often doesn’t receive the support and attention internally
that its strategic impact on business performance would merit. One possible reason
for this is that SWP has only been introduced recently in many organisations. As
already mentioned, SWP is probably still only in its infancy at many companies, and
still has to prove its worth. One of the main challenges here is the dialogue across
different functions. For workforce planning to become established as a broadly
accepted component of business strategy, it makes sense to promote a common
understanding of strategy across the entire organisation and equal treatment of all
areas.

Fig. 17: Influence of SWP on business decisionmaking

To what extent do the results of your SWP analyses (e.g. shortage of critical talent)
influence strategic decisions in your organisation (e.g. on geographic expansion)?

Significant influence No influence

9.4% 12.5%

Neutral
Limited influence 27.1%
34.4%
Little influence
16.6%

2 Change of mindset in HR

The HR department has to evolve into
a competent business partner for all
areas of the business.
As expected, at most of the companies surveyed SWP is located in both
organisational and functional terms in the HR department. The strategic focus of
this form of workforce planning has a significant impact on how HR perceives itself
and how it is perceived by others; the HR function now needs a new self-image
and a new external image. On the one hand it needs specialists who can do the
sophisticated analyses required. On the other the HR department can no longer
restrict itself to a purely administrative role, but has to evolve into a convincing
business partner able to offer strategic and business-driven advice. This requires a
holistic view of the business and dialogue across the enterprise.

26 Lasting business performance through strategic workforce planning

 Organisational integration

The difficulty of achieving this is underscored by various PwC studies focussing

on the HR business partner model.4 In our research, many CEOs and managers
repeatedly complain that their expectations of a strategic, business-oriented
contribution from HR, which they view as a decisive factor in business performance,
are not sufficiently met by their HR organisation. Ways of achieving sustained
improvements in this area might include creating the optimum structural and
personnel framework to enable and facilitate strategic HR work in the first place.

SWP creates a basis for designing sustainable HR and workforce management

processes in areas such as talent management, succession planning, compensation,
bonuses, etc., and provides a framework for operational planning.

An HR department that thanks to all-encompassing, business-driven personnel

work succeeds in firmly establishing SWP as an integral component of business
strategy processes will see its external image improve considerably. As its profile
becomes more analytical, HR will also be able to quantify and communicate the
benefits of its initiatives more effectively. This way HR will be better able to perform
its role as a fully-fledged partner in business strategy development, and will see the
old image of HR primarily as an administrative function give way to much more
differentiated perceptions.

“In the course of implementing a new HR business model we launched a

training initiative for HR consultants to strengthen their role as a strategic
partner, boost their affinity with figures, and improve their knowledge of
finances. Our people really enjoyed their extended role, and gained a lot of
interesting insights.”

Peter Luginbühl, Head of HR Controlling, SBB

4
 or more background information and detailed approaches, see PwC studies on “Personalmanagement im Wandel (Personnel management in flux)”
F
and “Baustelle HR-Businesspartner-Organisation (Under construction: the HR business partner organisation)”, published in 2011 and 2012 respectively.

Lasting business performance through strategic workforce planning 27

Using SWP to plan more systematically

E Using SWP to plan more systematically

The companies polled were unanimously
positive about the impact of SWP in terms
of forecasting the effects of the anticipated
shortage of talent.
If SWP is to become more widespread, more accepted within organisations,
and involved more fully in strategic management, there has to be measurable
evidence of its efficacy. Only if SWP really helps improve business performance
will companies be able to justify the financial, organisational and human capital
investment required to implement and sustain SWP.

To find out how far this is the case, participants in the study were asked in what
areas and to what extent SWP helps take their business forward. More than 60% say
that SWP has resulted in better or even substantially better results when it comes to
predicting the size of the gap between supply and demand of their workforce. The
same applies when it comes to identifying areas in which a gap is likely to emerge
(see Fig. 18). After this, by a clear margin, they named the value added through
forecasting the size of the gap in terms of skills, the efficacy of talent management
initiatives, and predicting the cost implications of the gap in supply and demand.

Fig. 18: Using SWP to forecast impact of talent gap

Please indicate the degree to which SWP helps your organisation predict the following –
versus no planning at all.

Forecasting the scale of the gap

10 29% 47% 14%
in supply and demand

Forecasting the area in which a gap

will arise (e.g. business unit or 14% 20% 50% 16%
geographic region)

Forecasting the gap in terms of skills 22% 29% 41% 8

Forecasting the efficacy of talent

management initiatives in terms of 25% 38% 34% 3
closing the gap in supply and demand

Forecasting the costs associated with the

54% 29% 12% 5
gap in supply and demand

Worse results
No difference
Somewhat better results
Better results
Much better results

28 Lasting business performance through strategic workforce planning

 Using SWP to plan more systematically

Seen overall, SWP at the companies surveyed has a tangibly positive impact in 36% of respondents say that SWP will
terms of providing urgently needed forecasts of the impact of the anticipated enable them to reduce a talent shortage by
shortage of talent. However, there are fairly large differences when it comes at least 50% by 2015.
to the forecasts for different areas. These differences probably have to do with
methodology. It’s fairly easy to calculate future gaps in capacity quantitatively for
various areas of the business using simple tools such as Excel and the corresponding
data from the HR system. The companies surveyed rate the chances of being able
to use SWP to identify and close talent gaps emerging by 2015 as very positive (see
Fig. 19). One third believe that they will be able to use SWP to implement timely
measures and reduce the talent shortage by more than 50%.

But you need more complex SWP analysis tools to do more sophisticated forecasts of
the future need for qualifications or the efficacy of talent management initiatives,
and to link them to the costs that will potentially arise. For example only 12% of the
companies surveyed calculate ROI for their SWP activities. Nevertheless, more than
two thirds claim to have achieved or even surpassed the planned ROI.

Once again we see that companies are still at a relatively early stage when it comes
to SWP, and that there’s still room for improvement in terms of methodologies that
allow comprehensive insights into the relevant effects of the talent shortage. But
what the findings do show is that SWP is definitely an investment that also pays off
financially.

Fig. 19: Potential of SWP for closing talent gap

If you see a talent gap opening up between FY 2011 and FY 2015, to what extent will SWP
enable you to take timely measures to effectively close this gap? SWP will help me close
the talent gap by …

around 5%
4.3%
Don’t know
around 10%
18.5%
12.9%

around 75% around 20%

12.9% 17.1%

around 50% around 30%

18.6% 11.4%

around 40%
4.3%

Lasting business performance through strategic workforce planning 29

Using SWP to plan more systematically

“Twenty years ago everyone started talking about total

quality management. These days nobody mentions it any
more because TCM is implemented in all processes and is
business as usual. SWP will be the same in ten years. It will
have permeated business routine.”

Mary Young, Principal Researcher, The Conference Board

After this positive assessment of the efficacy of SWP in terms of predicting the talent
gap and coming up with measures to tackle it, it remains to be seen whether SWP
really has a positive impact on the competitiveness of the companies polled. Survey
participants rated their future competitiveness in a changing market environment
in terms of three criteria:
• Productivity
• Profitability
• Agility.

In each case around half of the respondents believed they were better placed
than the average industry peer in terms of productivity and profitability, and this
improved the more established and professional their SWP is. These improvements
in productivity and profitability are due to the fact that SWP creates greater
transparency on supply and demand for human resources and enables concrete
measures to be taken to close gaps in skills to anticipate and counter long-term
shortages of talent.

Only agility, the ability to adapt to changes in the market, appears less positive
at first glance. Detailed analysis shows that in the first year following the
implementation of SWP, companies really do lose some of their agility, but in
subsequent years it gets significantly better and soon shows no negative effects at
all. This development makes sense when you consider the far-reaching changes
in management and HR roles that are involved in gradually introducing and
expanding the scope of SWP within the strategy process. Besides making sure that
analysis and forecasting tools are increasingly established, those responsible often
need time to grow into their cross-enterprise, strategic role as an interface between
HR and the business. So it makes sense to plan and prepare the run-up phase
systematically to keep it as short as possible. As the findings of this study show, this
effort is a worthwhile step along the way to long-term business success.

30 Lasting business performance through strategic workforce planning

 Using SWP to plan more systematically

Fig. 20: Productivity, profitability and agility of organisations

Compared with other players in the market, how would you rate the productivity,
profitability and agility of your organisation in terms of responding to changes in the
market?

12% 12%

49% 29%
42%

39%
45% 37%

20%
9%
Productivity Profitability Agility

Well below the industry average

Below the industry average
Average
Above the industry average
Well above the industry average

Lasting business performance through strategic workforce planning 31

Case study: Allianz Group implements SWP

F Case study: Allianz Group implements SWP

The following account is based on an interview with Christian Werner, Head of SWP
at Allianz Group.

Allianz Group
The Allianz Group is one of the world’s leading integrated providers of financial
services. In insurance it is the market leader in Germany. The company serves more
than 76 million customers in around 70 countries worldwide, and employs some
151,000 people.

Reasons for implementing SWP

At Allianz Group the implementation of SWP was initiated by the CEO, Michael
Diekmann. The move was prompted on the one hand by external factors such as
the 2008 financial crisis and the ensuing regulatory changes, which ultimately
triggered a debate on raising the retirement age. But also the company’s own values
were a crucial factor. The Allianz Group’s business revolves around people, and
human capital therefore is of crucial importance. At the time SWP was introduced
the group was acting from a position of strength, but given the nature of its product
range Allianz is well acquainted with the issue of demographic change and the
challenges it entails. The need for long-term workforce planning had become
apparent early on.

Implemented in stages
The idea was to implement SWP for the entire Allianz Group from the outset to
cover all the relevant cultural and organisational requirements. This meant the
dialogue was not restricted to specific parts of the business, but was conducted
across divisions and involved experts from different areas. Technical guidelines
were drawn up, and the Allianz executive board was informed about the progress
and set-up of the initiative at regular meetings.

In the first phase in 2009, those responsible set down what SWP should achieve in
general within the organisation, and how it was to be integrated. Allianz Group
wanted a single global system that at the same time was highly adaptable. This was
no ‘one solution fits all’ philosophy. Just like the group’s products, the SWP system
would have to reflect regional differences as well, and be able to offer customised
solutions where necessary.

In the second phase of the project the team worked on the technical design in more
detail. Rather than seeing SWP as a controlling tool, Allianz Group wanted to use it
as a means of simulating various future scenarios. Then, in 2010, a pilot project was
launched to gather initial practical experience. After positive results from the pilot
project, SWP was established across the group. At first not all the desired workforce
data was globally available. To avoid implementation being held up by a long
drawn-out process of data gathering and preparation, those responsible decided to
first introduce SWP with reduced functionality and then expand it in stages.

32 Lasting business performance through strategic workforce planning

 Case study: Allianz Group implements SWP

Use of SWP today

Allianz Group’s SWP is based on a broad analysis of the operating environment. The
simulations done as part of SWP are determined by twelve parameters reflecting
the twelve main global challenges defined by Allianz Group, and are then set down
in line with regional or functional peculiarities.

Embedded in strategic management processes

At Allianz Group SWP is already an integral part of the business strategy process,
adding insights and new points of discussion that enrich the dialogue. The longer
Allianz Group works with SWP and the more expertise it gathers, the better it can
incorporate the initiative into strategy development via standardised processes.

Challenges in implementation
The first challenge emerged from the methodology itself. It taught the people
responsible how to deal with a high degree of complexity. The challenge was to
grasp that SWP is not a form of retrospective controlling or an operational model,
but a parameter-driven simulation of future scenarios. The second challenge was
for the HR department to develop a new understanding of workforce planning. SWP
requires a fundamentally different mindset than operational workforce planning.
The profile of the ideal strategic workforce planner lies somewhere between
HR controlling (analytical and good with data) and HR business partner (close
relationship with other areas of the business).

Practical experience and recommendations

There is no standard procedure for implementing SWP. Every organisation has to
find its own way and take account of its own cultural peculiarities. The people at
Allianz Group responsible for SWP sum up by recommending that you simply get
started, even though not everything’s going to be perfect from the beginning. What
is key is constant dialogue and the awareness that with the adoption of SWP, the HR
function takes on a new role.

Lasting business performance through strategic workforce planning 33

Practical recommendations

G Practical recommendations

Here you will find a summary of practical recommendations on the basis of key
experience with implementing and using SWP.

1. Take the initiative and actively tackle the demographic challenges of

the future
The talent gap is growing – even in areas not affected by the peculiarities of specific
industries and swings in the economic cycle. In the wake of demographic change,
these shortages will get even more serious in the next few years, particularly in
Germany, Switzerland and Austria. Leading organisations are using SWP to
systematically address this issue.

You should be doing long-term analysis to see how the changing environment and
your business strategy will impact workforce management. This is the only way of
making the right decisions in the war for much-needed talent.

2. Start implementing SWP as soon as possible within your

organisation. You shouldn’t view a lack in the availability
or quality of your current data as a major obstacle.
In most cases the basic data in the quality available is sufficient to launch SWP. SWP
is an iterative process. If you need to, you can start out by working on the basis of
assumptions and external benchmark figures. Then you can systematically build
your own sources of data as the basis for more refined analysis. The key to
successful SWP is to make sure it takes account of strategic business objectives and
their impact on workforce planning from the outset.

It makes most sense to launch SWP as a pilot project in an area of your business
where a potential lack of available talent poses a particular risk. This way you can
show what, in the worst case, the effects could be if your organisation continues
with its existing strategy, and what alternatives an approach based on fact-based
analysis and scenarios opens up. You can then use the positive experience gained
from this pilot project as a basis for rolling out SWP across the entire enterprise.

“SWP enabled us to take demographic management to a new

level. The fact that we can now present top management with
facts and concrete recommendations has given a whole new
quality to the dialogue on strategy within our organisation.
SWP has already given rise to a number of projects related to
demographics (e.g. age-appropriate working and recruiting
older people).”

Dr Stefan Kotkamp, SWP Project Manager,

Deutsche Bahn AG

34 Lasting business performance through strategic workforce planning

 Practical recommendations

3. T reat SWP as a process and align it regularly with your corporate

strategy.
The timeframe and review frequency of SWP processes should be based on the
frequency with which you define your business strategy and plan the corresponding
measures. Make sure your SWP is synchronised with your strategic planning. To
enable a timely response to changes in strategy, circumstances and future scenarios,
align these processes at least once a year.

SWP also serves as a basis for planning other HR processes such as succession
planning, performance and talent management, and personnel development.

4. Make full use of SWP to get the most out of its potential.
Many organisations only use SWP for static gap analysis (comparing supply and
demand) in relation to people and skills. Link workforce data with business
performance. This is the only serious way to do SWP and add real value. You should
also model a variety of different scenarios to be able to build potential changes in
your operating environment into your long-term planning.

5. Communicate the findings of SWP through a small number of

meaningful core messages and key performance indicators.
SWP starts and finishes with cross-enterprise dialogue on business strategy. This
dialogue will give rise to a number of key future-related questions on HR strategy.
Draw on your expertise to choose and formulate these questions. Use SWP
systematically to answer these questions. Do broad analysis, but communicate the
findings concisely.

Limit yourself to feeding the insights you have gained back into the cross-enterprise
dialogue in the form of a small number of core messages. To back up these
messages, provide a small number of easy-to-understand figures illustrating key
trends and risks.

6. Develop a central information system that different areas of the

business can access when doing their analysis.
More important than using special software is making sure that data are integrated
across all areas of the business. A central information system which the different
areas of the business can access facilitates SWP and efficient analysis across the
enterprise.

You should accept the initial effort involved in gathering and preparing data as a
necessary part of comprehensive planning. With the environment changing rapidly
and competitive pressure mounting, you need planning on the basis of analysis
rather than just intuition.

Lasting business performance through strategic workforce planning 35

Practical recommendations

7. SWP is an integral component of your overall business planning

so it must have the support of your management.
Treat SWP as a long-term, cross-enterprise management tool rather than an isolated
HR matter. Key factors in successful SWP are broad dialogue between all areas of
the business and sustained top management support.

Make sure that SWP is understood throughout the organisation from the outset.
Communicate the value added by SWP, and involve different areas of the business in
the project from the very start. Be credible and consistent in the way you implement
SWP – that way it will really bring your business forward.

8. G
 ive your HR department a broader remit, and harness your
HR people as partners in strategy development.
The role of HR is changing. In addition to their operational function, they’re
increasingly taking on a cross-enterprise, strategic role. At the same time they have
new analytical tools to work with, and are increasingly acting as an advisor to the
business. Launch an initiative to create an appropriate structural and personnel
framework to establish these interesting issues and tools within your HR
department.

This will enable your HR people to act as expert partners influencing strategy and
all areas of the business.

9. S
 WP is a key driver of competitiveness. Use it: the competition
never sleeps.
Given the growing shortage of qualified people, companies nowadays find
themselves in a real war for talent. Instead of just focusing on sales figures and
market share, many are paying growing attention to employer attractiveness and
recruitment success.

SWP is a holistic tool that can help your organisation position itself intelligently and
far-sightedly. Invest in SWP today to be sure of success tomorrow.

Analyse trends to show the impact of the talent gap on your business. Make people
within your organisation aware of the potential problems in good time. Persuade
your management of the benefits of SWP by formulating a business case comparing
the cost of investing in SWP with the costs resulting from the anticipated talent gap.
Two thirds of respondents in the survey that had examined the costs of SWP were
able to achieve or even surpass the targeted ROI.

36 Lasting business performance through strategic workforce planning

 Support with implementing SWP

H Support with implementing SWP

For many years we have been advising on the implementation and use of SWP,
providing comprehensive services to organisations interested in this topic. We
view SWP as a component of an overarching model that is influenced by the
organisation’s level of maturity and the timeframe of the various analyses
(see Fig. 21).

In terms of the timeframe of our analysis, we basically distinguish between three

components:
• Past: what has the company done so far?
• Present: how is your organisation set up at this moment?
• Future: how will your organisation achieve success in the future?

Generally the further into the future our analysis goes, the higher the level of
maturity of the analytical process. Basically we split it up into tactical analysis,
strategic planning, and a predictive causal framework.

Lasting business performance through strategic workforce planning 37

Support with implementing SWP

Fig. 21: PwC’s broad range of services around SWP

Predictive
3
• Predictive analytics
• Path analysis
• Link with business data
Level of maturity

2
Strategic • Scenario planning
• Regression analysis
• Extrapolation

1
• HC ROI
• Talent segmentation
• Benchmarking
Tactical
Past Present Future
What have we done? How are we set up at present? What will the impact be on
business performance?
Analysis time horizon
1 Benchmarking with PwC’s Saratoga
• World’s largest database of human capital KPIs
• Company and industry comparisons
• Best practices
• Assessment of efficacy of HR function and individual HR initiatives
• Impact of HR on business performance
• Alignment of HR function with business strategy

2 SWP with PwC’s Strategic People Planning tool

• Most comprehensive SWP tool on the market
• Permanent link between business strategy and workforce planning
• Far-reaching scenario modelling
• Four different technical configurations possible: from a standalone Excel version to integration with existing ERP
or a fully customised version

3 Talent analytics
• Analysis of present and historical HR data to identify key causal relationships
• Statistical evaluation of data to validate causal relationships and trends
• Optimum, robust strategic planning
• Dashboards for monitoring implementation

Retrospective analysis to assess the current situation places the emphasis on

benchmarking. By capturing KPIs and comparing with other companies we assess
where an organisation stands at present. If there is sufficient data, we can also
identify key success factors and develop an optimisation strategy. Here we can draw
on the world’s most comprehensive database for HR data, Saratoga, and our
extensive practical experience, to provide targeted advice.

38 Lasting business performance through strategic workforce planning

 Support with implementing SWP

Besides in-depth advice on SWP, as part of our services for analysing the future
development of an organisation we also offer a tool developed by PwC called SPP
(Strategic People Planning). This tool has very broad functionality, maintains a
permanent link between a company’s business and HR data, and enables far-
reaching scenario modelling. SPP can be used flexibly in line with requirements,
either as an Excel-based standalone application or as an integrated ERP solution.

Lasting business performance through strategic workforce planning 39

Design of study: methodological approach

I Design of study: methodological approach

This report on SWP has been produced by PwC in collaboration with the Institute
for Leadership and Human Resource Management at the University of St. Gallen.
The findings are based on a survey of HR and line managers in Germany,
Switzerland and Austria. A total of 113 representatives of organisations of varying
sizes and international orientations operating in different sectors took part in the
survey (see Figs. 22 to 24). The survey was conducted in November 2011 in the form
of an online questionnaire in German, English and French.

In addition to the online survey, we conducted personal interviews with several

heads of HR in organisations of various sizes operating in different industries.
We discussed the findings of the questionnaire, their practical experience, and
recommendations.

Fig. 22: Number of employees at companies surveyed

How many people do you employ worldwide?

≤ 1,000
> 50,000 10.0%
24.1%
1,001–5,000
24.1%
25,001–50,000
10.1%
10,001–25,000 5,001–10,000
16.5% 15.2%

Fig. 23: International orientation of companies surveyed

In how many countries (apart from the country where you are headquartered) do you have
subsidiaries?

Don’t know
1.3%

> 50
22.8% ≤ 10
40.4%

21–50
22.8%
11–20
12.7%

40 Lasting business performance through strategic workforce planning

 Design of study: methodological approach

Fig. 24: Sales at companies surveyed

What were your total sales last financial year?

< EUR 100 million (m)

7.2%
> EUR 20 billion (bn)
17.1% EUR 100–500 m
17.1%
EUR 10–20 bn
8.6%
EUR 500 m–1 bn
EUR 5–10 bn 11.4%
14.3%
EUR 1–5 bn
24.3%

Lasting business performance through strategic workforce planning 41

Your contacts

Your contacts

Charles Donkor Till Lohmann Dr Ursula Knorr

Partner Partner Institute for Leadership and
PwC Switzerland PwC Germany Human Resource Management
Tel.: +41 58 792 45 54 Tel.: +49 40 6378 8835 University of St. Gallen
charles.donkor@ch.pwc.com till.lohmann@de.pwc.com Tel.: +41 71 224 25 02
ursula.knorr@unisg.ch
Dr Silke Hellwig Dr Silvan Winkler
Manager Manager
PwC Germany PwC Switzerland
Tel.: +49 89 5790 5432 Tel.: +41 58 792 45 61
silke.hellwig@de.pwc.com silvan.winkler@ch.pwc.com

We would like to thank the following people and organisations for their help in producing this report: Esin Cengiz, PwC
Switzerland; James Gallman, Holcim (now at GE); Andrei Golgojan, E.ON AG; Dr Stefan Keck, PwC Germany; Dr Stefan
Kotkamp, Deutsche Bahn AG; Christian Freiherr von Loë, RWE AG; Peter Luginbühl, SBB; Daniel Meyer, PwC Switzerland;
Dr Günter Pfeifer, Demographie Forum Schweiz; Christian Werner, Allianz Group; Friederike Wolter, University of St. Gallen;
Mary Young, Principal Researcher, The Conference Board

PwC Germany
Our clients face complex challenges on a daily basis. They want to put new ideas into practice, and come to us for advice. They
expect us to give them comprehensive service and come up with practical solutions that maximise the benefits. So whether
we’re working for global players, family firms or public sector organisations, we make sure we activate our entire potential on
their behalf: the experience, industry knowledge, technical expertise, dedication to quality, innovation and resources of a
network of experts in 158 countries. We realise that the better we know and understand our clients, the more effectively and
intelligently we can help them achieve their goals. That’s why fostering open, trusting collaboration with the people we work
for is at the very foundation of what we do.

PwC: 8,900 dedicated people working at 28 offices, EUR 1.45 billion in fee revenues, and Germany’s leading professional
services firm.

PwC Switzerland
PwC Switzerland (www.pwc.ch) provides industry-focused assurance, tax, legal and advisory services to build public trust and
enhance value for its clients and their stakeholders. 169,000 people in 158 countries across the global network of PwC firms
share their thinking, experience and solutions to develop fresh perspectives and practical advice.

With more than 6,000 HR specialists worldwide, PwC is also a leading player in human capital consulting (see the October 2010
Kennedy Report).

42 Lasting business performance through strategic workforce planning

www.pwc.de
www.pwc.ch