Workforce Planning: Data Analysis to Solutions

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Workforce PlanningData Analysis to Solutions

• Presenter
• Henry E. Noey, Jr.
• Senior Consultant and Account Manager

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Session Objectives

• About Watson Wyatt
• A framework for workforce planning
• 10 questions a workforce plan should answer
• Keys to success
• Workforce planning in practice 2 case studies
• Gap analysis
• Keys to success
• QA

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About Watson Wyatt
6,000 associates
88 offices
30 countries
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Were Everywhere You Do Business

• Consult to 70 of Fortune 100
• Advisors to half of the top 100 corporate pension
  funds in the United Kingdom
• Dominant presence in many markets in Europe and
  Latin America
• First firm in our industry to open an office in
  China and the first approved to serve pension
  funds in Japan

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Were Everywhere You Do Business

• Provide actuarial services for more than twice
  as many of the worlds 300 largest pension
  funds than our nearest competitor
• Comprehensive research for multinational clients
• Global 50 Remuneration Planning Report
  preferred reference work for international HR
  practitioners
• Human Capital Index includes results from more
  than 2,000 companies around the globe

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We Turn Research Into Results

• Our advice is grounded in the most extensive and
  respected research in the business
• First to investigate the management impact of
  changing demographics, the shift from traditional
  pensions to hybrid plans and emerging trends in
  phased retirement

1994 U.S. Retirement Policy The Sleeping
Giant Awakens
1996 From Baby Boom to Elder Boom Providing
Health Care for an Aging Population
1999 Phased Retirement Reshaping the End of
Work
1999 Global Aging - The Challenge of the New
Millennium
2000 The Unfolding of a Predictable Surprise
An Analysis of the Shift from Traditional
Pensions to Hybrid Plans
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Workforce Planning in Oil Gas

• Workforce Planning Roundtable
• Platform for networking
• Open forum re common issues solutions
• Workforce analysis
• Sources of talent
• Availability of global data

Apache BP
Baker Hughes ChevronPhillips
ConocoPhillips Cooper Cameron
Devon Energy Duke Energy
Exxon Mobil Halliburton
Marathon Oil Kerr-McGee
Key Energy Noble Energy
Schlumberger Shell
Transocean UNOCAL
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Workforce Planning Defined

• Translate business strategy into human capital
  needs
• Analyze
• Current demographics
• Current and projected staffing levels
• Current and projected skill mix
• Turnover trends
• Retirement risk
• Assumed growth
• Available external workforce supply and demand
• Assess current people practices relative to
  internal and external workforce situation
• Identify short- and long-term risks in attracting
  and retaining critical talent
• Recommend recruiting and retention programs to
  close the risk gap and protect intellectual
  capital
• Prioritize programs/solutions by ROI

• Finding The Right Answers
• Ensuring an available pool of talent
• Internal labor supply
• External labor market
• Optimizing human capital investments
• Reducing the cost of turnover
• Targeting investments in recruitment and
  retention
• Protecting intellectual capital
• Addressing the impact of an aging workforce
• Facilitating the transfer of knowledge

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Key Workforce Planning Components

• Labor Pool
• Lifestyle Shifts
• Economic and Regulatory Environment

Outcomes
Workforce Levers
Invest Well
Recruiting
Supply
Business Strategy
Optimal Workforce Model
High Customer Satisfaction
Leadership
Workforce
Talent Management
The right number right mix of workers at the
right time
Reduce Costs
Total Rewards
Employee Labor Relations
Increase Shareholder Value
Training Development
Demand

• Business Requirements
• Internal Demographics
• Employment Deal

Execute Business Strategy
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10 Questions A Workforce Plan Should Answer

• Demand
• What does my current and projected overall
  workforce profile look like?
• What is the demographic profile of my top 5 to 10
  critical positions?
• Where are we at risk due to unnecessary turnover
  and/or impending retirements?
• Root Causes of Behavior
• What are the root causes and/or correlations to
  undesirable turnover?
• What are the characteristics of employees who
  stay and succeed?
• What motivates and retains our top performers
  and/or critical talent?
• What HR practices are getting in the way of or
  helping with attraction and retention of desired
  talent?
• Supply
• What and where is the supply of talent for our
  most critical positions, short and long term?
• What is the external market perception of us as
  an employer?
• Outcomes
• What are the characteristics of workforce models
  that produce the best outcomes (e.g.,
  productivity, financial outcomes, customer
  satisfaction)?

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Workforce Planning Keys to Success

• Dont assume you know your workforce There are
  typically hidden behavior patterns not readily
  apparent
• Take a focused approach Zero in on critical jobs
  and segmentation for actionable findings
• Apply quantitative methods Establishes ability
  to model behaviors and determine cost and ROI
  drivers
• Be open minded and flexible A one-size-fits-all
  strategy of the past may not work for the future
• Develop an integrated strategy Rewards and
  benefits are total package

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Case Study 1 Aging Workforce

• Problem
• Significantly aging workforce in key field
  supervisory jobs
• Limited documentation of processes
• Recruiting has been primarily from college
  graduates and then OJT
• Hypothesis
• Hiring needs driven from both aging and internal
  movement
• Recruiting net will need to be broadened
• Knowledge transfer processes will be critical to
  meet business demand for talent
• Problem more/less severe from location to
  location
• Actions
• Multi-faceted
• Focused on employee life cycle

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Executive Summary
New Entrant New Entrant
Average Age (Promotion) 32.0
Average Age (Internal Move) 36.8
Current Population Current Population
Employee Count 814
Average Age 43.9
Average Service 17.9
over 50 36
Retirement Eligible 15
Retirements/Turnover Retirements/Turnover
Average Age (Ret) 59.1
Average Age (Int/Ext) 43.4 / 37.9
Turnover (Int/Ext) 4 / 3
Hiring Needs Hiring Needs Hiring Needs
2007 143 18
2010 369 45
2012 527 65
Average age of turnover Column 3
represents the of cumulative hires as a
percentage of current employees
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Projected Hiring Needs

• Over the next 7 years
• - 527 need to be hired to maintain current
  population (cumulative)
• - 20 of the current population will be gone
  due to retirements

Internal Attrition includes employees moving
from Exempt to Union as well as to other
non-operations positions
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Objectives

• 1 Objective
• Optimize costs associated with acquiring
  employees subject to appropriate mix of job
  skills/ competencies required to meet the
  projected demand for XYZs services
• 2 Objective
• Reinforce and solidify relations with current
  employees to ensure effective future workforce
  staffing required to meet projected demand for
  XYZs services

Employee Retirement Distribution
Years to Retirement
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Outcomes
Sources to Fill the Gap
10-15 Years to Retirement Group
Internal Labor Market

1. Maximize retention of current high-performing
   employees
2. Transition employees from other parts of the
   organization
3. Implement phased retirement program

Job Group A
Job Group B
Job Group C
External Labor Market

1. Acquire new hires at entry level and
   professionally develop employees
2. Acquire mid-career professionals seeking a change
   in employment

Job Group D
Job Group E
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Workforce Planning Resulted in Data-Driven
Investments
Business Strategy Human Capital Implications

• Demand Analysis
• Projected Key Talent Needs
• Geography
• Turnover
• Workforce Aging
• Retirement Rates

• Supply Analysis
• Labor Forecasts
• New Graduates
• Competitor sources
• Industry Influences

• Gap Analysis
• Programs Practices
• Employee Satisfaction
• Employee Demographics
• Talent Sourcing

Retire
Attract
Recruit
Invest
Retain
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Employee Life Cycle Immediate Solutions
Recruit

• Targeted Recruiting
• Applicant Tracking
• Selection Process
• Compensation
• Benefits

• Attract How can we become an employer of choice
  to the desired talent to support the business?
• Robust and compelling employer brand
• Recruit How do we ensure that our recruiting
  approach and tools are as efficient and effective
  as possible to get the talent we need when we
  need it?
• Enhanced mid-career hiring program
• Measurement processes for sources of talent and
  success rate

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Employee Life Cycle Immediate Solutions
Recruit

• Targeted Recruiting
• Applicant Tracking
• Selection Process
• Compensation
• Benefits

• Invest What are the optimal investments in
  developing and managing talent?
• Training and development processes and programs
  revised to decrease the time to proficiency
• Recognition for knowledge transfer
• Retain How do we ensure that we are retaining
  the right people?
• Employee development integrated into leader
  performance evaluation
• Robust communications for understanding and
  appreciation of total rewards and opportunities

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Employee Life Cycle Solutions
Recruit

• Targeted Recruiting
• Applicant Tracking
• Selection Process
• Compensation
• Benefits

• Retire How can we best manage the exit of our
  workforce and intellectual capital?
• Revised retirement and retiree medical plans to
  drive the desired retirement behaviors

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Longer-Term Solutions

• Program to identify current feeder pool employees
  earlier in their career to develop into these
  positions
• Alternative work arrangements for work/life
  balance
• Phased retirement alternatives for selected
  individuals
• Processes, tools and mentoring program for
  knowledge transfer

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Case Study 2 Recruitment Retention

• Problem
• Significant retention issues at key career points
• Very competitive recruiting/talent market
• Diversity does not match customer base
• Hypothesis
• Employees need different deals at different
  stages of life
• Employer of choice brand will make a difference
  in recruiting the necessary talent
• Reward dollars can be allocated more effectively
  to reduce turnover and recruiting ramp up costs
• Actions
• Restructure of rewards to align with life stages

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A first step is to improve the employment deal
with customized recruiting and retention tools
Lifecycle Rewards
The challenge is to keep rewards efficient for
the Company and relevant for every employee
EXECUTIVES
Experienced hires
SR. MANAGER 10-12 years

EXPERT/MANAGER 7-9 years
On campus recruiting

SR. ASSOC. 4-6 years

ASSOC. 1-3 years

A more responsive reward program can begin to
improve the overall work experience
Annual Turnover
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Lifecycle Rewards lets employees make choices
that influence their decision to stay and remain
motivated
Lifecycle Rewards
Picture of young professional woman
Picture of minority with family
Life Stage

• Julio, age 22, Engineer
• 23,500 in college loans
• Low to modest medical coverage needs
• Going to work for the first time
• Work hard, play hard

• Corinne, age 38, Sr. Engineer
• Recently married
• Purchasing first home
• Evaluating career and family options

• Paul, age 45, Engineering Manager
• Married, two children
• Considering larger home
• Planning for college and retirement

Profile
Pauls Lifecycle Rewards
Corinnes Lifecycle Rewards
Julios Lifecycle Rewards
Lifecycle Rewards

• Opts out of medical in favor of spouses plan
• Purchases additional life and other security
  coverage
• Takes balance of flex credits in cash
• Milestone Award payment goes to down payment on
  home
• Modest 401(k) participation

• Family PPO, dental, and vision
• Pending Milestone Award earmarked to fund a 529
  plan
• Maximum security elections
• No additional PTO days purchased
• Maximum participation in 401(k)

• Catastrophic healthcare coverage only
• Lowest dental coverage
• No vision coverage
• Purchase 4 additional PTO days
• No 401(k) participation

Customized Benefits

• Base salary
• Bonus
• Base healthcare and security benefits
• Eligibility for retirement plan

• Base salary
• Bonus
• Base healthcare and security benefits
• Eligibility for retirement plan

• Base salary
• Bonus
• Base healthcare and security benefits
• Eligibility for retirement plan

Base Program
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and helps manage compensation and benefits for
employees throughout their career
Lifecycle Rewards
Year 11 Promoted to Engineering Manager. Third
Milestone Award is paid into Retirement Account
This is not just about choice its also about
being responsive and understanding your employees
Year 8 Second Milestone Award is paid, family
purchases new home
Year 5 Pays down her remaining college debt with
her first Milestone Award
Year 9 Uses three weeks from Leave Bank to be
with ailing parent
Year 6 Little Kelly is born, 7 pounds, 6 ounces.
Cathy is promoted to Senior Engineer
Year 1 Cathy is hired as an Associate Engineer
The core objective is to make it compelling for
individuals to join and stay
Year 3 Cathy is married and adds her husband as
part of her healthcare coverage
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Estimated savings associated with increased
retention
560 Million in cost savings over the next ten
years possible productivity gains among
existing employees
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Direct rewards will not solve all the issues
Other Areas of Focus
Current Focus
Sourcing Recruiting
Work/Life Career Management
Lifecycle Rewards

• Job Sharing
• Job Rotations
• Reduced Hours
• Job Posting Technology
• Interest-based
• Competency-based
• Management Training
• Formal Mentor Program

• Capacity Planning
• Diversity
• Sourcing Strategies
• Screening Profiling
• Offer Management

• Near-Term (1/1/06)
• Milestone Account
• Enhanced Match
• Medium-Term (1/1/07)
• Flexible Benefits
• Leave Bank

Lifecycle Rewards is not the silver bullet,
there are other critical issues to address
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Workforce Planning Keys to Success

• Dont assume you know your workforce There are
  typically hidden behavior patterns not readily
  apparent
• Take a focused approach Zero in on critical jobs
  and segmentation for actionable findings
• Apply quantitative methods Establishes ability
  to model behaviors and determine cost and ROI
  drivers
• Be open minded and flexible A one-size-fits-all
  strategy of the past may not work for the future
• Develop an integrated strategy Rewards and
  benefits are total package

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Where are the gaps?

• Lack of employee data, global systems and
  analytical tools
• Majority focus on period costs limited
  longer-term thinking
• Limited connection between business strategy and
  future employee needs
• Silo approach to rewards

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Closer than most..

• The major EP companies
• Larger Oilfield service firms

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Questions
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Workforce PlanningData Analysis to Solutions