Reference no: EM132882966

When the financial services industry tumbled into crises in June 2007, Capital One chairman and CEO Richard Fairbank issued a mandate to strip $700 million out of the company's operating costs by 2009. The cost reduction plan includes consolidating and streamlining functions, reducing layers of management, and eliminating approximately 2,000 jobs. The mandate did not set off a mad scramble in workforce planning, however. Instead, the planning staff simply added new defined variables to their simulations and modified their projections for the company's talent needs.

"The key to workforce planning is to start with the long-term vision of the organization and its future business goals and work back from there," says Matthew Schuyler, chief human resources officer for Capital One and its 27,000 employees. " We anticipate the strategic needs of the business and make sure that we have the workforce required to meet those needs. The $700 million mandate gives us goals and boundaries that we didn't have before. We made the adjustments."

Capital One and other leading companies are now developing a set of best practices for workforce planning that reach into the future for each business unit and evolve with corporate strategic planning. In an increasingly unstable global business environment, the value of a long-term vision is clear, but effective workforce planning required dedicated resources, heavy analytics, and, perhaps most important, the full engagement of business unit leaders and line managers.

The workforce planning at Capital One stems from a process executed by a metrics and analytics group of 20 people, plus hundreds of executives, managers, and analysts pulled from the business lines and corporate functions. Leaders and analysts from the business lines work in blended teams with human resources generalists and members of the metrics group to build models for each line and the entire world force. The models flow to Schuyler, who reports directly to the CEO." You have to garner your speed with the business leaders, immersed in places where you can get data," Schuyler says." You have to probe the business leaders and know the business leaders and know what their endgame looks like." Planning varies by business line. Some lines are stable, while others are restructuring or moving through rapid growth.

Part of Schuyler's job is to ensure that senior business line leaders are engaged in the process. "Their door is open," he notes. "Your ticket through the door is to show business leaders the bundles of money they can save if their workforce is the right size with the right mix and the right skills. Once you're inside, you have to act on the promise." The potential cost saving come from minimizing the inherent costs associated with the size of the workforce, plus saving from lower recruiting and severance costs and avoiding the costs of a disengaged workforce. "The cost of disengagement is difficult to quantify, but business leaders intuitively understand the cost," Schuyler says. "There is a toll paid when a workforce is disempowered, disengaged, and not sufficiently busy."

Workforce planning at Capital One forecasts not only the head count required to meet future business needs, but also the staffing mix - the ratio of internal to external resources - and the skills mix, including any changes in that mix that are required as the business moves forward. Schuyler also looks at any changes in "spans of control," which determine the number of organizational layers, optimal methods for staffing managerial positions, and the related costs. The lanners also document both rational and emotional employee engagement, which affect current and future productivity and recruiting, training, and turnover costs.

The responsibility for workforce planning at Capital One resides in human resources, but the hard work takes place inside the business units, where the blended teams operate. This grounding in the business units keeps workforce planning focused on corporate goals. Workforce planning really gets traction when it is linked to the line managers who understand business needs and can project their business growth and productivity changes. The time frames for workforce planning at Capital One was stable and predictable several years ago, for example. "But because of the current economic conditions, this work is now more important, and we had to ramp up very quickly," Schuyler explains.

Schuyler refuses to choose between overshooting and undershooting staffing. "The beauty of workforce planning is that it allows the flexibility to be right on target," he says. "We don't have to wait for the next budget cycle to get it right."

That flexibility derives from a more sophisticated approach to planning that looks at a range of possible scenarios about business conditions and then calculates the labour needed to match them. Capital One's workforce planning models allow business leaders to anticipate the talent requirements for each business option and the human resources and labour cost consequences of the choices they make. Especially for companies that are just beginning to implement a workforce planning process, the best approach is to focus first on the critical roles in the organization then expand out to cover more positions in greater detail. Avoid the tendency to drown managers in data, by breaking the data down on a critical job basis. At Capital One, the workforce planning process reaches down through the entire executive structure for each business unit - five or six levels of leadership plus groups of managers. Business leaders see that talent management costs and consequences of the business options at hand. Each option carries its own implications for internal and external staffing levels, recruiting, training, promotions, engagement attrition, and total compensation costs over time. More important, workforce planning allows business leaders and line managers to see how different approaches to talent management can actually expand their business options and boost performance. "If workforce planning is done right, human resources can help business leaders think about what their endgame can be," Schuyler says.

Question 1 Assess the importance of Capital One in calculating the employee disengagement factor when comes to workforce planning.

Question 2 In your opinion, what merits do you see to breaking down the planning process by business units through multiple layers of leaders. Be specific and justify your answer.

Source: Excerpted from Fay Hansen, "The Long View," Workforce Management 87, no. 7 (April 21, 2008):1, 19.