Tuesday, 19 March 2013

Is there a business case for underpinning strategic human capital planning with advanced numerical analytics?

Too many managers hasten to respond negatively to the question I posed in the title before really understanding fully the terminology. Evidence based decision making will never replace the good old intuition, gut feeling or back of a fag-packet decisions. To get these right you have to be brilliant and lucky. Even if you are, you have taken care of the high level but not of the details. An experienced architect will be able to immediately tell you during a site visit that there are several ways to build a bridge and propose an off the cuff strategy (say a metal hanging bridge). Even if we do not explore other options for building the bridge we cannot (and should not) proceed without detailed plans and costings. But that is exactly what is happening again and again when companies make decision about their most important resource – their people.

Most managers associate strategic human capital planning with figuring out how many people are required to perform a task. For instance how many level 2 engineers are required to handle expected peak demand for boiler repairs call-outs. This could be refined by engagement types and cost. Although this could address the immediate term need and ensure a good service level, the long term effects are not considered. For instance the future burden on the pension pot, the expected strain on the training centre due to a high employee churn and career funnel bottle necks should be evaluated and quantified. And here lays the business case – putting your finger on the long term (usually hidden) costs that could be avoided. 

A good strategic plann needs a representative sandbox. Analytical tools such as predictive modelling (what would be the demand?), simulation (this is how it works today) and optimisation (what options should I consider?) should be used in highly complex situations where the impact of a decision is multifaceted. For example, it is straightforward to expect that restricting an aeroplane mechanic to one hanger will result in lower utilisation rates. However , the impact on the number of pilots required due to filling in for colleagues waiting for planes to be serviced is not linear and is co-dependant with several other leavers that could be set at different levels. 

Taking timeout from the whirlwind of fire -fighting to look at the bigger picture is imperative for the business’ long term health.