Wildcard situations in recent years — from public health threats to political upheaval — remind us of the need to prepare business scenario plans for a range of contingencies. Scenario planning for HR and the business allows us to envision potential future outcomes (however unlikely they may seem now) and proactively develop strategies to address them.
“We've seen what COVID can do to a workplace and how important HR is in those conversations and planning,” says Carla Patton, PHR, Director of People at RAPP. “HR should leverage this opportunity with the business to show that these things are important.”
Human resource professionals have stepped up to lead the business in ways they never anticipated. Now, as we prepare to enter year No. 3 of the COVID-19 pandemic, HR teams need to maintain their momentum and influence to lead the company’s business strategy and scenario planning.
Here’s how HR teams can add their unique perspective to scenario planning exercises and facilitate successful scenario plans.
Each plan for each anticipated business scenario hinges on an effective and prepared future workforce. HR must take the lead on proactively developing a workforce strategy that can withstand any possible scenario. But that can’t happen in a silo: HR needs to be present and active in business and scenario planning meetings to understand the challenges the business faces and how strategic talent management can help solve those problems.
Business scenarios outline the potential future climates your company may need to operate in, including long-term economic, political, public health and labor market possibilities. The business must anticipate multiple scenarios ranging from ideal circumstances to worst-case scenarios. Along that spectrum, incorporate the scenario you believe is most likely to occur and a few wildcard possibilities. If you can prepare your company to survive the worst-possible scenario, then you have a better chance of thriving in the more likely scenarios.
"It's important for HR to think out of the box, study trends and analyze what's going on in the world that could affect the workplace and its employees," Patton says. There is plenty of open-source government data to help you evaluate and anticipate external forces (such as technology or policies) that could affect the business. And there are software offerings and other tools available that can offer better predictive capabilities, especially regarding external trends in your industry and in the larger global economy.
Because people connect every aspect of the business, HR is in an excellent position to bring together key stakeholders and facilitate scenario planning meetings. HR needs to work with colleagues in leadership to develop people plans for each contingency. For each scenario, anticipate the strengths, weaknesses, opportunities and threats (SWOT) of your current business model and labor force to understand where external forces might hit your company the hardest. By identifying your weaknesses and threats, you can develop a road map for overcoming each of them.
For example, since the widespread shift to remote work, many of our most valuable assets are contained within digital files. How would your company fare if a malicious actor were to attack our digital infrastructure? How robust are your current cybersecurity programs? Do you already have the talent you need to build out these programs, or would you need to upskill existing employees or hire new talent to build an attack-proof cybersecurity protocol?
With all of your critical leaders at the table, you can pose these questions and begin to map out a comprehensive business plan to prepare your company to meet the future of work.
We can’t predict what will happen in the next three to five years, but we can look to the past for information that can prepare us for the future. As you collaborate with other business leaders to develop scenario plans, look at internal and external data to draft concrete objectives.
If your organization worked through the 2008 recession, for example, review the actions taken in response to that crisis. What can you learn about your most essential roles during an economic crisis?
"As HR professionals, it is critical to do this brainstorming to ensure we are staffed appropriately, have the right skills and even the right training and resources to help us with what is likely ahead," says Robin Throckmorton, SPHR, Founder and President of Strategic HR Inc. "How do you need to adapt your workplace to manage that situation?"
Day-to-day operating data can provide a wealth of information about your ability to meet each of your potential scenarios. And since HR touches every level of business operations, HR leaders have access to data across the company. Pull some of that historical data from your HR processes to set a baseline and evaluate the success of past plans. Performance evaluations and pre-hire assessment data, for example, can help you identify gaps in your current workforce that could affect future scenarios.
Using a SWOT analysis and other tools, HR professionals can work with other business leaders to identify skills gaps and establish flexible job programs (like cross-training) to nimbly support business needs. In most cases, building organizational capabilities is the best solution for facing external threats with confidence. Outline some overarching capabilities you want to grow as part of your business plan. To build those capabilities, implement new learning, reskilling and upskilling programs, and test their effectiveness over time. Regularly assess the workforce to keep their skills data up to date so they can support your workforce and scenario planning processes.
Create a workforce action plan for each scenario your business may face over the next three to five years, and strengthen your plan through practice. Organizations can prepare for some contingencies by training ahead of time. "Test reenactments of the scenarios for reactions to customize a plan that works best for your specific work environment," Patton says.
For example, in a scenario of extreme economic volatility and instability, companies may hesitate to commit to large full-time workforces and might prefer to leverage contingent workers. You can begin preparing that infrastructure now by implementing more gig workers, contractors or temporary workers in a single team or department. Start putting channels into place to supply contract talent as needed. Build partnerships with high-quality, reliable talent firms, and develop relationships with professional groups and universities.
Most scenarios also predict the increased use of automation and artificial intelligence-driven technology. Because AI and automation will be even more important for operating in the future, begin developing the infrastructure for them now. Try incorporating automation in different teams and roles across the company to identify the skills your workforce will need to work alongside that technology, thus allowing you to scale automation and AI smoothly.
As you tactically think through each of your scenario plans and even begin implementing them, you’ll gain a better understanding of the resources you’ll need for each business pivot.
Scenario plans usually last three to five years, but your leadership team should revisit them each year. At this point last year, many of us probably expected to have “returned to normal” by now. But many companies remain in limbo, unable to commit fully to remote or hybrid work for the long term.
This moment of heightened uncertainty highlights the need for regular scenario planning, but the process is just as critical when things are going well. The pandemic has taught us how quickly fortunes can turn. "It takes some trigger to get people thinking about it," Throckmorton says. "But when you're in the middle of it, it's harder to be methodical about creating the plan."
Planning for business continuity in any scenario allows you to act quickly and decisively when the time comes. Regularly evaluate what's happening globally and revise your scenario plans accordingly, even when things are looking up. Incorporate scenario planning into your business's strategic planning process and include key stakeholders, especially workforce representatives, Patton says.
Stress-test your plans through quarterly drills that evaluate a specific possible scenario, and assess whether previously made plans are still the best option for your workforce. Rerun your SWOT analysis regularly to measure your progress toward the plan’s objectives.
Integrating business scenario planning with HR helps HR leaders be more aware of external forces affecting the business. Drafting and implementing your scenario plans can help you better understand the business strategy and priorities.
As we move forward, don’t lose your voice in business planning or allow the business to become complacent. Build scenario planning into your executive team’s regular meetings.
Over the next few years, HR professionals will redefine what “normal” means for our companies, but we can only do that by anticipating what the future holds. Scenario planning is essential to your business and for HR’s ability to steer our organizations toward a brighter future.