Workforce Optimization Versus Workforce Planning

For decades, the talk in HR and talent management was all about workforce planning. With the arrival of Big Data and analytics in the 21st century, however, that talk has shifted to workforce optimization. They sound similar, but in reality they’re substantially different, serve different purposes, and result in different outcomes. Both are needed, but most organizations are still stuck in the rut of workforce planning when they should be focused on workforce optimization.


A white paper from Vestrics, a human capital analytics insight and technology firm, notes that “The goal of workforce planning is to ensure that the organization has the right talent in the right place at the right time with right budget to execute the business plan. Good Workforce Planning enables you to stay on target, meeting business needs, and keeping the organization humming along. It is a critical discipline for organizations of almost any size” (source). In essence, workforce planning is largely about talent allocation.

But what happens when HR is called upon to show a continually improving return on training investments? How do you track continuous improvement in employee performance? These are questions with a strategic element that goes beyond workforce planning but falls squarely in the realm of workforce optimization. The way the Vestrics white paper mentioned above puts it, “When it comes to understanding the drivers of business metrics and making predictive improvements to investments, you need Workforce Optimization. In this context, optimization is a prescriptive analysis that examines results already achieved to identify where future investments are most needed.”

Gene Pease, the president and CEO of vestrics, lays out the difference between workforce planning and workforce optimization this way (source):

Workforce Planning

Plan –> Gap Analysis –> Forecasting Scenarios –> Facilitating risk Analysis……..

Workforce Optimization

Complex Question –> Statistical Insights –> Predictive Action –> Optimized Decision-Making

You can see how Big Data and predictive analytics come into play with workforce optimization. This approach allows you to formulate causal links based on data between business interventions and strategic goals, all while using scientifically accepted statistical significance to get the facts right. However, the analytics in and of themselves don’t solve any problems. Big Data is a tool that can be used to gain insights that inform decision-making and change processes.

It’s a shift, really, from the “art” of HR to the “science” of HR in terms of using fact-based decision-making. It’s time to get away from the politics, opinions, and gut feel approach and start relying on real data. And make no mistake, that “art” of HR approach is deeply entrenched in most organizations, so don’t be surprised if you run into active resistance to analytics.

HR is probably 10 years behind marketing’s adoption and use of analytics, and of course marketing was dragging behind finance and operations in using analytics, so HR has a ton of catching up to do. In fact, research has revealed that only 14% of companies have done any kind of statistical analysis of employee data, and a mere 4% have the capability to use predictive analytics about their workforce (source).

Interestingly enough, HR often gives the excuse that it doesn’t have or can’t get the data it needs for these kinds of strategic efforts. If you’re going to wait for perfect data, you’ll never make any progress at all. Start small, pick a project that you can get good data for, and start getting used to the whole idea of finding, gathering, and analyzing data. As your skillset grows, you’ll then be able to tackle bigger projects and ideas.

November 20, 2014   Updated :June 11, 2015   analytics, big data, talent management, workforce optimization, workforce planning   

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