Human capital emphasizes the strategic importance of an organization’s workforce. In the knowledge economy, the collective set of knowledge, skills, abilities, and competencies—the human capital— residing in an organization’s workforce is arguably the most important determinant of an organization’s ability to sustain long-term success.

The U.S. public sector is facing human capital challenges much like the private sector:

• Large numbers of skilled employees are nearing retirement.
• Competition for the remaining skilled employees is growing.
• Diversity in the workforce is increasing both ethnically and generationally, making management more challenging.
• Expectations among Generation-X and Generation-Y workers regarding responsibility and work/life balance are dramatically different from their predecessors.

These common challenges are exacerbated in the public sector by an insufficient supply of talent in the leadership pipeline; downsizing; hiring restrictions; and HR systems and policies that are not able to respond quickly to changes in the labor force and the internal and external environments.

While public agencies at the local, state, and federal levels have embraced outcome-oriented management and performance measurement, a much smaller proportion has taken the next step of embracing strategic human capital management. A strategic human capital focus calls for the public sector to view employees, as well as consultants, temporary staff, and third-party partners, as a pool of talent to be configured and developed strategically to create the most public benefit in the most efficient manner.

By taking a more strategic and longer view of the organization’s goals and staffing needs, the organization can put into place a plan to build its desired workforce one position at a time.

Workforce planning, a key component of strategic human capital management, is about aligning an organization’s human capital—its people—with its business plan to achieve its mission; in other words, ensuring that an organization currently has and will continue to have the right people with the right skills in the right job at the right time performing their assignments efficiently and effectively. This report introduces the Seven-Step Model of Workforce Planning; applies the model to two case studies— one federal and one state; and offers agency leaders and human resource managers guidance on implementing workforce planning in their organization.

The Seven Steps of Effective Workforce Planning are:

1. Define the organization’s strategic direction
2. Scan the internal and external environments
3. Model the current workforce
4. Assess future workforce needs and project future workforce supply
5. Identify gaps and develop gap-closing strategies
6. Implement gap-closing strategies
7. Evaluate the effectiveness of gap-closing strategies and revise strategies as needed

Download Seven Steps of Effective Workforce Planning

PDF edition, 674KB, 75 Pages.

Ann Cotten
Director
Schaefer Center for Public Policy
University of Baltimore

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Forward:

On behalf of the IBM Center for The Business of Government, we are pleased to present this report, “Seven Steps of Effective Workforce Planning,” by Ann Cotten, director of the Schaefer Center for Public Policy at the University of Baltimore.

Successful private and public sector organizations must have robust human capital strategies that enable organizations to meet current and future business needs. Human capital strategies typically focus on workforce planning, talent management, succession planning, leadership, knowledge management, performance management, and accountability.

Perhaps the most critical of these strategies is workforce planning. Workforce planning tells an organization what types of skills are needed to get the job done. In doing so, workforce planning should drive all human capital strategies. Workforce planning is about aligning an organization’s human capital—its people—with its business plan to achieve its mission. It helps ensure that the organization has the right people with the right skills in the right job at the right time.

This report introduces the Seven-Step Workforce Planning Model, which provides a sound framework for understanding the basic elements of workforce planning. The model incorporates workforce planning concepts from two organizations: the International Public Management Association for Human Resources and the Office of Personnel Management. The report walks the reader through the steps involved in workforce planning, including defining the organization’s strategic direction; identifying current and future workforce needs; determining gaps; implementing strategies to close these gaps; and monitoring, evaluating, and revising the gap-closing strategies.

Using the Seven-Step Workforce Planning Model as an analytical framework, Dr. Cotten presents two case studies of workforce planning efforts in public sector organizations: the U.S. Department of Transportation and the Maryland State Highway Administration. She describes the challenges, success factors, and lessons learned from these two case studies.

The report also provides agency leaders and human resources directors with recommendations for successful workforce planning. Finally, the report identifies suggested strategic workforce planning performance measures—related to recruitment, employee retention, training and development, and management of employee performance.

We hope this report will be a useful tool to guide agency leaders and human resources directors through the workforce planning process.

Albert Morales
Managing Partner
IBM Center for The Business of Government

Solly Thomas
Associate Partner, Human Capital Practice
IBM Global Business Services

About the IBM Center for The Business of Government:

Through research stipends and events, the IBM Center for The Business of Government stimulates research and facilitates discussion of new approaches to improving the effectiveness of government at the federal, state, local, and international levels. The Center is one of the ways that IBM seeks to advance knowledge on how to improve public sector effectiveness.

The IBM Center focuses on the future of the operation and management of the public sector.

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