Companies Step Up Workforce Planning Activity in Response to Economic Slowdown

As companies begin to feel the effects of the economic downturn, they are ramping up their workforcen planning activities, according to a survey by Watson Wyatt Worldwide, a leading global consulting firm.

Survey findings show that four out of 10 companies (40 percent) believe workforce planning has become more important to their organization's business success since the economic slowdown, and almost a third (31 percent) have already begun to increase activity around it. Watson Wyatt's Workforce Planning Survey, conducted in October 2008, includes responses from 129 North America-based employers across a variety of industries. Workforce planning is the process by which an organization aligns its workforce requirements to the business strategy using business analytics.

The most prevalent concern among employers is the scarcity of critical talent. Nearly three-quarters (71 percent) of those surveyed are taking action to address this concern. Other workforce planning challenges that employers are taking action around include those arising from restructuring (42 percent) and layoffs or hiring freezes (20 percent).

The current environment is bringing several workforce planning challenges to the surface, said Jamie Hale, national practice leader of workforce planning at Watson Wyatt. While companies are under enormous pressure to cut short-term costs, it's important to consider the implications their actions will have on a firm's future workforce needs as well.

Although the scarcity of critical talent is seen as a major challenge, 50 percent of employers surveyed said they will respond by maintaining their status quo in terms of replacing talent, while one in three (33 percent) is scaling back replacing talent across the organization.

Current workforce planning actions that employers are taking Action

(%) Employers

Staying the course in replacing talent in all roles 50%
Scaling back on replacing talent across the organization 33%
Replacing talent only for critical jobs 21%
Not replacing talent 3%

Replacing talent is further hindered by the difficulty of attracting the required employees: 77 percent of respondents said attracting critical-skill employees is currently a challenge, and 60 percent said attracting top performers is a challenge. Retaining workers is less of a problem: 49 percent and 34 percent of employers said they were experiencing challenges retaining critical-skill employees and top performers, respectively.

A large majority of companies also report that their chief executive officer (85 percent) and senior managers (74 percent) are concerned about workforce planning issues.

Workforce planning activities will clearly get more attention as employers look for ways to perform during this weakened economy. Having the right numbers of people performing in the right roles will be crucial for companies to position themselves strongly for when the economy recovers, said Hale.