From Business Plan to Business

Performance: Creating the Right

Workforce Strategy

HCI White Paper

By HCI Analyst
February 8, 2008
WHAT IS A WORKFORCE STRATEGY?
Workforce strategy translates business needs into
strategic people priorities. Its essential elements
include a foundation built on pivotal insights
about the business and workforce; a set of clear,
long-term business and people-related goals; and
explicit direction for change.
In a February 8 Human Capital Institute Webcast,
Judy Nygard, a Towers Perrin Principal, and
Samira Kaderali, a senior consultant, discussed the
importance of a workforce strategy and key steps
for developing one.
EXECUTIVE SUMMARY
WHY A WORKFORCE STRATEGY?
A workforce strategy aligns an organization's
people - and their actions and behaviors - with its
EXHIBIT 1 - A Workforce Strategy Helps Translate the Business Plan Into Action
overarching business goals. An effective workforce
strategy provides the structure necessary to design
workforce programs and processes that increase
employee engagement and ensure that employees
understand what they need to do, in what areas, to
maximize their contributions to business results.
Employee engagement defined as employees'
willingness to expend sustained discretionary
effort on the job coupled with clear line of sight
from individual actions to business goals, drive
better financial and operational results.
WHAT IS A WORKFORCE STRATEGY?
In brief, a workforce strategy translates a business
strategy into organizational capabilities. It estab-
lishes an understanding of how the workforce
creates value and differentiates the business from
competitors, at both an enterprise and a business-
unit level. It becomes the organization's road map
for sourcing, deploying, engaging, rewarding and
2
developing employees to meet the specific needs
of the business. Think of it as a three- to five-year
people agenda focused on meeting business
objectives that is jointly owned by HR and
business leaders.
With a clear workforce strategy, management has a
solid foundation from which to make decisions
and trade-offs about the magnitude and focus of
workforce investments both monetary and non-
monetary. These decisions include:
o how much to invest in the workforce
o where the investment should be directed;
in other words, which programs and
processes
o how the investment should be deployed;
that is, across which segments of the
workforce
o when the investment should be made.
HOW IS A WORKFORCE STRATEGY
CREATED?
The multi-step process begins by setting workforce
strategy objectives based on current business,
workforce, and cultural drivers. Then, the strategy
team (generally made up of representatives from
HR and the organization's business or division
leaders) reviews the organization's current organi-
zational capabilities, strengths and weaknesses in
five areas:
o Sourcing: How does the organization find
and bring in employees?
o Deployment: How does the organization
staff and move people across the organiza-
tion - whether in business units or
geographies?
o Development: What developmental
processes and procedures are in place,
with what impact?
o Engagement: How does the organization
measure and manage employee engage
ment?
o Rewards: What reward programs, both
monetary and non-monetary, are in place,
and are they appropriately segmented and
aligned with business needs?
Through this assessment, the team can quickly
see gaps between current state and end state so it
can begin to develop transformational goals. At
the same time, the team should consider future
organizational capabilities that may be needed,
develop implementation plans and priorities, and
identify success measures.
Translating the business strategy into a workforce
strategy requires a deep understanding of both
customer and employee behaviors. In our work
with clients, we use Towers Perrin's linkage frame-
work (Exhibit 2) to help translate the business plan
into specific strategies and employee behaviors,
which help lay the foundation for identifying
specific actions and investments for the workforce.
3
EXHIBIT 2
Towers Perrin Linkage Framework

Business Plan Workforce Strategy Employee Behavior Business Performance

„ Attraction „ Measurable outcomes
„ Retention „ Efficiency
„ Financial commitments and key „ Engagement „ Quality
value drivers „ Required organization „ Innovation
„ Strategic priorities capabilities „ Customer
„ Efficiency „ Critical positions and value service
„ Quality relationships Customer Behavior „ Brand/image
„ Innovation „ Strategic objectives „ Financial performance
„ Alignment: Source, deploy, „ Attraction
„ Revenue
„ Customer service engage, reward, develop „ Retention
„ COGS
„ Brand/image „
„ Prioritization and change Engagement
„ Operating
„ Business transformation plan
„ Acquisitions/alliances margin
„ Human capital metrics
„ TSR
„ Business model change Business Strategy
„ Divestitures/downsizing

Another way to look at the linkage framework is
from right to left, beginning with a focus on the
business outcomes that are most important and
the factors that will define success. For instance:
What customer behaviors are required to achieve
the key business outcomes? And what employee
actions, in turn, will lead to those customer
behaviors? To drive those specific employee
behaviors, what workforce strategy is necessary?
And how does that strategy support the business
plan and business priorities?
Exhibit 3 shows the workforce strategy considera-
tions that typically underpin specific business
priorities and outcomes.

EXHIBIT 3 - Strategic Priorities

Strategic Priorities

Efficiency Quality Innovation Customer Company Image

Service

Organizational capabilities* by strategy in financially high-performing companies

„ Create structure/ „ Facilitate teamwork „ Support diversity of „ Develop long-term „ Create a shared
process efficiency „ Create best practice thought career focus understanding of
through clarity of sharing/knowledge „ Create good „ Create line of sight company direction/
roles and management supervisor relations through performance brand
responsibilities
„ Commit to quality „ Create environment management „ Ensure shared
„ Focus on continuous improvement that stimulates „ Provide local values/pride
learning and skill
„ Focus on delivering innovation flexibility „ Create a focus on
improvement
quality through „ Share information „ Enable a supportive integrity
„ Facilitate teamwork process openly service orientation/ „ Develop leaders that
„ Focus on data to „ Empower decision „ Facilitate environment to focus create open, honest,
drive decision making and change collaboration and on customer transparent culture
making teamwork „ Understand „ Create a strong
„ Ongoing customer needs employee belief in
performance products and
management cycle services

4
Consider, for example, a company with a strong
customer service orientation that depends on
customer loyalty for its success. Its workforce
strategy must, among other considerations,
enable a supportive service orientation and give
employees the ability and flexibility to focus on
customers and address their needs quickly and
effectively. From a practical perspective, this might
mean freeing salespeople from spending too much
time restocking merchandise so they could,
instead, devote more time to helping customers.
Or it might include expanding the breadth of
customer-oriented decisions that individual sales-
people are allowed to make without supervisor
approval (such as providing a discount coupon to
a customer who has had to wait for help).
PUTTING IT ALL TOGETHER
Designing a clear and effective workforce strategy
demands input from multiple sources and allows
consolidation of the resulting pivotal insights -
EXHIBIT 4
Developing Pivotal Insights to Build a Workforce Strategy
about business issues, new opportunities and
directions - to frame the strategic philosophy,
principles and objectives that lead to transforma-
tional change (Exhibit 4).
Developing these pivotal insights requires compre-
hensive research and analysis from both HR and
business leadership to answer questions like these:
o How well does current performance match
up to the organization's priorities and
business plan?
o How do current and desired levels of
workforce engagement and performance
differ?
o How do current programs and processes
stack up against industry trends and best
practices?
o What are the most pressing workforce/
performance issues?
o What are leadership's culture and perform-
ance goals?
5
Clearly, each organization's workforce strategy is
heavily dependent on such factors as its unique set
of business goals, its competitive position and
business model, its culture and structure, its
geographical footprint and so on. For example,
a company may aspire to expanding its reputation
as an industry leader in its home country to a
more global position. What are the workforce
implications of that goal? What initiatives may
be required in terms of sourcing, deployment,
development, engagement and rewards? And what
workforce solutions make the most sense?
The strategy, for example, may include finding
and exploiting new geographic markets through
a combination of organic growth and targeted
acquisitions. From a workforce perspective, this
would require rapid and effective identification
and deployment of talent in these new areas, and
optimal retention and assimilation of employees
added through acquisition.
Designing an integrated three-year implementa-
tion plan might include the following initiatives:
o Implementing an external labor scan to
gauge labor availability in emerging or
critical markets
o Establishing HR capabilities to help
efficiently and consistently assess acquisi-
tion targets, integrate new operations,
compare cultures and assimilate acquired
employees
o Evaluating fluctuations in capacity needs
and cost of contract/outsourced labor to
develop an approach to contingent workers
o Implementing training and coaching
programs
o Aligning rewards.
Transformational goals: Drawing the road map
In executing these kinds of transformational goals,
the five stages of the workforce life cycle are
paving stones that show the way. For example, the
journey often begins with sourcing: assessing,
buying or building the talent to meet projected
growth in a new market. Or talent may be shifted
- redeployed - on a global or enterprise-wide basis
to meet a goal. In a change environment, work-
force engagement usually requires more individu-
alized performance management along with
changes in manager responsibilities. Rewards
help secure positive change by significantly
differentiating between high and low employee
performance. In this environment, skill and
professional development, as well as succession
planning, take on new importance.
APPLYING CHANGE MANAGEMENT
A systematic approach to change management
(Exhibit 5), calls upon six fundamental elements:
o Leadership is key - Inspiration and vision
are essential to creating and maintaining a
culture of high engagement and perform-
ance.
o Involvement is about making employees
part of transformational change initiatives,
helping them get engaged, rather than
feeling overwhelmed by new processes
and programs.
6
o Communication informs people of the
"what" and the "why" of change.
o Learning can feel forced unless communi-
cated as part of systematic change and
becomes an engaging opportunity for
people to build new (required) skills and
competencies.
o Measurement is what people focus on and
value - a sure indication of their progress,
performance and success.
o Reinforcement sustains the momentum of
behavior change over time.
THE RIGHT WORKFORCE STRATEGY
There are many permutations and combinations,
but the "right" workforce strategy emerges from
your business plan as a new set of organizational
capabilities and details plans for achieving
success. Your strategy document should set out
EXHIBIT 5
Building Change Readiness
Launch the Analyze
Project Team Change
Needs
Build
Change
Readiness
Sustain the
Momentum
Execute the
Game Plan
the purpose and objectives of insights related to
your current business, workforce and cultural
drivers.
It also comprises an overview of current-state
capabilities and lists the company's strengths and
weaknesses as well as priorities to be addressed.
The right workforce strategy is aligned with your
business vision, mission and guiding principles. It
clearly defines program components that support
your strategy (e.g., sourcing and acquisition, work-
force deployment, talent development, workforce
engagement), as well as requirements that support
future business needs, such as organizational capa-
bilities, mission-critical roles and HR programs
and processes.
Short- and long-term implementation priorities
are outlined in a compelling workforce strategy
document, including an implementation strategy
Leadership
Involvement
Communication
Design the
Learning
Game Plan
Measurement
Reinforcement
7
and road map that address the business case for
change, HR and implementation activities, and a
change management plan. Finally, the document
incorporates success measures by which the work-
force strategy and programs can, and will be,
assessed.

A winning workforce strategy for your company

translates your business needs into a set of actions
and behaviors that aim people's talents, strengths
and competencies toward supporting high
performance in the directions dictated by your
company's vision for the future.

8
Based on the Human Capital Institute webcast,
From Business Plan to Business Performance:
Creating the Right Workforce Strategy, presented on
February 8, 2008
PRESENTERS
Samira Kaderali
Senior Consultant
Towers Perrin
Samira has been with Towers Perrin since 1998
and has spent time in both the Chicago and
Toronto offices. She currently provides a variety of
strategic and technical consulting, as well as proj-
ect management services, to her clients. Samira
has experience with clients in a variety of indus-
tries in Canada and the U.S. focusing on work-
force effectiveness. Over the past few years, she
has focused in the area of rewards optimization,
strategic workforce planning, and people strategy
development. Samira works with clients to guide
them through the process of taking a holistic view
of their current people and reward program per-
formance and its impact on employee attraction,
retention and engagement.
Samira provides clients with comprehensive
assessments of their current talent strategies and
programs by identifying the factors that drive
costs, risks and employee engagement; evaluating
the organizational climate for change by assessing
employee attitudes and behaviors; and making rec-
ommendations around specific program strengths
and actions/opportunities for improvement.
Samira has worked with several national and glob-
al organizations including American Express,
PepsiCo, The Royal Bank of Canada, MasterCard,
Eli Lilly, Lancaster General, Astrazeneca, IKON
Office Solutions, Bruce Power, LVMH Fashion
Groups, George Weston Loblaws, and Sears
Roebuck.
Samira earned a masters in public health from
Yale University and a bachelor of science degree in
biology and psychology from McMaster
University.
Judy Nygard, C.P.A.
Global Practice Leader
Global Consulting Group
Judy is a leader in the Workforce Effectiveness
Practice with a focus on helping clients define
their workforce needs, deliver better financial
results and ensure the optimal performance of
leaders, managers and employees. Judy has a
wealth of experience working with large, complex
global organizations. She assists clients with HR
strategy, practices and design and implementation
of Total Rewards programs. With nearly 20 years
of consulting experience, Judy is a recognized
expert in workforce strategy and planning, and
managing human capital issues across geographic
and organizational boundaries. She works with
clients on all aspects of global HR, including strat-
egy, structure, program design, implementation,
legal, valuation, equity and competitive market
alignment. The premier global companies Judy
has worked with span various industries, including
Pharmaceutical, Biotech, Consumer Goods,
Technology and Financial Services. She is an
author and frequent speaker on global HR prac-
tices. Her recent speaking engagements include
global HR conferences in Europe and Asia, the
Conference Board Conferences and leading global
industry forums. Prior to joining Towers Perrin,
Judy was a principal and practice leader for an
9
international consulting firm where she managed
the global consulting business and advised major
multinational organizations on global HR strate-
gies, practices and programs. This followed her
tenure as Vice President of a financial services
firm. Judy is a Certified Public Accountant (CPA).
She has a B.S. in accounting from the University of
Illinois and a certificate in arts and sciences from
Northwestern University.
MODERATOR
Joy Kosta
Senior Director of Talent Communities
Human Capital Institute
As Director of the Talent Development
Community at The Human Capital Institute, Joy
brings twenty-five years of experience in multiple
facets of organizational development, human
resources and business management with an
emphasis in customer satisfaction, service quality,
process improvement, and applying the Malcolm
Baldrige Criteria for Performance Excellence. As
founder and President of Performance Partners in
Health Care, a company dedicated to building bet-
ter patient experiences, she has authored several
curriculums in leadership and staff development,
and co-authored with Harold Bursztajn, MD
Senior Clinical Faculty member, Harvard Medical
School, Building a Treatment Alliance with Patients
and Families.
ACKNOWLEDGEMENTS
This White Paper is made possible by Towers
Perrin, sponsor of HCI's Workforce Effectvnessg
Track.
ABOUT TOWERS PERRIN
Towers Perrin is a global professional services firm
that helps organizations around the world opti-
mize performance through effective people, risk
and financial management. The firm provides
innovative solutions to client issues in the areas of
human resource strategy, design and management;
actuarial and management consulting to the finan-
cial services industry; and reinsurance intermedi-
ary services. The firm has served large organiza-
tions in both the private and public sectors for
over 70 years. Our clients include three-quarters of
the world's 500 largest companies and three-quar-
ters of the Fortune 1000 U.S. companies.
ABOUT THE HUMAN CAPITAL INSTITUTE
The Human Capital Institute is a catalyst for inno-
vative new thinking in talent acquisition, develop-
ment and deployment. Through research and col-
laboration, our programs collect original, creative
ideas from a field of top executives and the bright-
est thought leaders in strategic HR and talent
management. Those ideas are then transformed
into measurable, real-world strategies that help
our members attract and retain the best talent,
build a diverse, inclusive workplace, and leverage
individual and team performance throughout the
enterprise.
10