There is a cyclical pattern when it comes to interest in strategic personnel planning. From 2010 to 2013 there was a hype and it evolved into a benchmark for HR organizations seeking to become strategic HR departments with close links to the business units. After a temporary drop in interest, the current challenges for HR management emphasize the need for effective strategic planning.
hkp.com looks at the role and importance of SPP in previous situations of crisis for energy suppliers and financial service providers, identify patterns and discuss possible conclusions for other industries. In the first interview Isabel Jahn and Holger Jungk, hkp/// group consultants with wide experience in financial services and industry specific issues, answer the questions. Both previously worked in HR management positions and have dealt extensively with designing and implementing strategic personnel planning in corporate and consulting functions.
Mr. Jungk, the hkp// group assists companies in planning and implementing strategic personnel planning. What exactly is implied by the term?
Holger Jungk: Strategic personnel planning addresses issues of future quantitative and qualitative employee requirements. This comprises the analysis of the current workforce and in particular the planning of personnel structures based on the corporate strategy.
Isabel Jahn: … and that is not a scenario set in stone. The analysis of various scenarios will increase the capacity to act and react, especially in situations of crisis.
Are costs the main focus in times of crisis?
Holger Jungk: Not necessarily, even though companies are of course under increased pressure to manage their costs strategically. But costs are not necessarily part of strategic personnel planning. This is especially about specific needs in terms of quality and quantity of personnel. But yes, cost components are often included in strategic HR planning at present in order to permit better control and management.
Why, then, are companies increasingly focusing on strategic personnel planning during times of crisis?
Isabel Jahn: Many companies face major challenges during the present crisis. Previous planning based on assumptions of a normal operating cycle is in most cases no longer valid. As a result, the planning of tomorrow and the implications for the respective business model, running costs, the number of employees and the skills needed has become enormously important.
Holger Jungk: Management is currently striving to find answers to many questions. How do we need to position the company in terms of HR in order to master the crisis? Which employee groups must be retained or even reinforced? Where is a need for cutback? These questions can be addressed with properly developed strategic personnel planning based on different scenarios.
But the present crisis is affecting companies to very different degrees.
Holger Jungk: That is right. The automotive, catering and travel industries are suffering heavily under the crisis, while the pharmaceutical and IT sectors are benefiting to a certain degree from the current situation. No matter how you look at the market, strategic personnel planning is beneficial in the long run. Only by knowing the true state of the current workforce and making specific plans for the future, it is possible to identify and discuss discrepancies and implement the appropriate measures, whether in times of growth or recession.
What, for example, can be learned from the experience of the financial crisis? What specific aspects of strategic personnel planning did financial service providers have to deal with during the crisis?
Isabel Jahn: During the financial crisis, I was responsible in a bank for key HR issues, compensation and HR controlling. This crisis presented two major challenges for us in terms of HR. On the one hand, there was a need to make staff reductions due to fundamental structural changes. Yet at the same time, it was necessary to recruit employees with new skills to meet the changed structure and growing regulatory requirements.
The reputation of the industry has been extremely tarnished...
Isabel Jahn: Indeed, the industry's reputation was severely affected by the crisis. In many cases, employees almost began to apologize for working at a bank. This meant that it became even more difficult to recruit qualified employees or to encourage them to change jobs.
How has strategic personnel planning helped you to cope with this task?
Isabel Jahn: It was a major challenge, both regarding staff reduction and recruitment, to ensure that a database was created aligning HR and Finance. Despite an existing HR system, it was first necessary to reach an agreement on qualitative and quantitative reporting and forecasting criteria. It was also necessary to obtain further information that was not yet in the system at the time, in particular demographic data and performance indicators. Based on this, standardized reporting structures were established in order to provide management with coherent and target-oriented information regarding the progress of HR management measures and as a basis for strategic control.
Holger Jungk: This pattern is not unusual during the present crisis, even for non-financial sectors. Often companies have no choice but to establish a common database between HR, Finance and Controlling without proper guidelines. This is often the first step towards future-oriented crisis management.
And only then is it possible to carry out real strategic personnel planning...
Isabel Jahn: Exactly! Speaking for banks and financial service providers, I can say that these shortcomings have been widely recognized and subsequently investments have been made to develop HR systems. Even if it is not possible to prepare for every crisis, it is better not having to deal with these fundamental issues when in the middle of a crisis.
Holger Jungk: I would also agree with this from a cross-industry perspective. The current crisis has put companies in a much better position in terms of their data than during the last financial and economic crisis. Often it is also the case that there is a closer alignment between line managers and HR business partners as well as with the controlling department, which in turn is a prerequisite for good governance processes.
What else can you recommend to companies when it comes to strategic personnel planning during the current crisis?
Isabel Jahn: Apart from the exchange between HR, Finance and Business as well as a coordinated database for the qualified headcount forecast, it would also be useful to have skill profiles and assessments of scenarios available at all times. This way it would be possible to obtain more detailed information, beyond the pure headcount analysis, for example about which areas will be more in demand in the future, will require more staff, and which skills are necessary, need to be developed or sourced to what extent.
Holger Jungk: As mentioned at the beginning, on the other hand, a link to remuneration data and HR costs can also be useful. Especially during crises and required staff reductions, compensation structures should be taken into account. Because the decisive question is always, how much can be saved, in which areas and at which levels, taking into account the skills required in the future. Compensation is a key factor in this respect.
Thank you for taking part in this interview.
Part 2 of this interview series examines strategic personnel planning for the energy utility industry, and in particular the industry-specific patterns of action during the crisis as well as the lessons learned.