Workforce Planning:
Data Analysis to
Solutions
Presenter:
Henry E. Noey, Jr.
Senior Consultant and
Account Manager
WWW.WATSONWYATT.COM
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

Q&A
About Watson Wyatt
6,000 associates
88 offices
30 countries
We’re 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
We’re Everywhere You Do
Business
 Provide
actuarial services for more than twice
as many of the world’s 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
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
1996
1999
1999
2000
“U.S. Retirement
Policy: The Sleeping
Giant Awakens”
“From Baby Boom
to Elder Boom:
Providing Health
Care for an Aging
Population”
“Phased
Retirement:
Reshaping the
End of Work”
“Global Aging The Challenge of
the New
Millennium”
“The Unfolding of a
Predictable Surprise:
An Analysis of the Shift
from Traditional
Pensions to Hybrid
Plans”
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
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
Outcomes
• Labor Pool
• Lifestyle Shifts
• Economic and Regulatory
Environment
Workforce
Levers
Supply
Recruiting
The right number
& right mix of
workers at the
right time
Demand
• Business Requirements
• Internal Demographics
• “Employment Deal”
Optimal
Workforce Model
Business Strategy
Key Workforce Planning Components
Leadership
Talent
Management
Total
Rewards
Employee &
Labor Relations
Training &
Development
Invest
Well
High
Customer
Satisfaction
Reduce
Costs
Increase
Shareholder
Value
Execute
Business
Strategy
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)?
Workforce Planning: Keys to
Success

Don’t 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
Case Study #1: Aging Workforce

Problem:
–
–
–

Hypothesis:
–
–
–
–

Significantly aging workforce in key field supervisory jobs
Limited documentation of processes
Recruiting has been primarily from college graduates and then OJT
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
Executive Summary
New Entrant
Current Population
Employee
Count
814
Average Age
43.9
Average
Service
17.9
% over 50
36%
% Retirement
Eligible
15%
Average Age
(Promotion)
32.0
Average Age
(Internal Move)
36.8
Retirements/Turnover
Average Age (Ret)
59.1
Average Age (Int/Ext)*
43.4 / 37.9
Turnover (Int/Ext)
4% / 3%
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
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
1,000
900
800
Number of Employees

30
20
21
700
2
61
39
41
7
92
55
14
23
34
124
156
189
68
64
600
81
86
92
45
223
102
109
500
New Hire
Turnover
Internal
Attrition*
Withdrawals
133
157
400
814
743
300
677
Retirements
614
557
200
502
449
401
100
0
2005
2006
2007
2008
Year
2009
2010
2011
2012
* Internal Attrition includes employees moving from Exempt to Union as well as to
other non-operations positions
Current EEs
Objectives
#1 Objective
Employee Retirement
Distribution
60%
– Optimize
costs associated with
acquiring employees subject to
appropriate mix of job skills/
competencies required to meet the
projected demand for XYZ’s services
50%
40%
30%
#2 Objective
20%
– Reinforce
10%
0%
0-5 yrs
5-10
yrs
10-15
yrs
15-20
yrs
20-25
yrs
Years to Retirement
25-30
yrs
30+
yrs
and solidify relations with
current employees to ensure effective
future workforce staffing required to
meet projected demand for XYZ’s
services
Outcomes
10-15 Years to Retirement Group
Sources to Fill the Gap
Job Group #A
Job Group #B
Internal
Labor
Market
A.
Maximize retention of
current high-performing
employees
B.
Transition employees
from other parts of the
organization
C.
Implement phased
retirement program
D.
Acquire new hires at
entry level and
professionally develop
employees
E.
Acquire mid-career
professionals seeking a
change in employment
Job Group #C
Job Group #D
Job Group #E
External
Labor
Market
Workforce Planning Resulted in
Data-Driven Investments…
Business Strategy & Human Capital
Implications
Demand Analysis





Supply Analysis
Projected Key Talent Needs
Geography
Turnover
Workforce Aging
Retirement Rates
Labor Forecasts
– New Graduates
– Competitor sources
Industry Influences


Gap Analysis




Attract
Programs& Practices
Employee Satisfaction
Employee Demographics
Talent Sourcing
Recruit
 Branding
 Preferred
 Targeted
Employer
 Sourcing Strategy
 Career Web Site
 Alternate Work
Arrangements
 Applicant
Recruiting
Tracking
 Selection Process
 Compensation
 Benefits
Invest
 New Hire




Orientation
Training &
Development
Mentor Programs
Talent Management
Performance
Evaluation
Retain
 Employee




Satisfaction
Work/Life Balance
Compensation and
Benefits
Work Environment
Leadership
Retire





Phased Retirement
Retirement Benefits
Retiree Medical
Mentoring
Knowledge Transfer

Employee Life Cycle
Immediate Solutions


Branding
Preferred
Employer
Sourcing
Strategy
Career Web
Site
Alternate
Work
Arrangements
Invest
Recruit
Attract







Targeted
Recruiting
Applicant
Tracking
Selection
Process
Compensation
Benefits





New Hire
Orientation
Training &
Development
Mentor
Programs
Talent
Management
Performance
Evaluation
Retire
Retain





Employee
Satisfaction
Work/Life
Balance
Compensation
and Benefits
Work
Environment
Leadership





Phased
Retirement
Retirement
Benefits
Retiree
Medical
Mentoring
Knowledge
Transfer
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


Employee Life Cycle
Immediate Solutions



Branding
Preferred
Employer
Sourcing
Strategy
Career Web
Site
Alternate
Work
Arrangements
Invest
Recruit
Attract





Targeted
Recruiting
Applicant
Tracking
Selection
Process
Compensation
Benefits





New Hire
Orientation
Training &
Development
Mentor
Programs
Talent
Management
Performance
Evaluation





Employee
Satisfaction
Work/Life
Balance
Compensation
and Benefits
Work
Environment
Leadership
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?
–
–
Retire
Retain
Employee development integrated into leader performance
evaluation
Robust communications for understanding and appreciation of
total rewards and opportunities





Phased
Retirement
Retirement
Benefits
Retiree
Medical
Mentoring
Knowledge
Transfer


Employee Life
Cycle Solutions



Branding
Preferred
Employer
Sourcing
Strategy
Career Web
Site
Alternate
Work
Arrangements
Invest
Recruit
Attract





Targeted
Recruiting
Applicant
Tracking
Selection
Process
Compensation
Benefits





New Hire
Orientation
Training &
Development
Mentor
Programs
Talent
Management
Performance
Evaluation
Retire
Retain





Employee
Satisfaction
Work/Life
Balance
Compensation
and Benefits
Work
Environment
Leadership





Phased
Retirement
Retirement
Benefits
Retiree
Medical
Mentoring
Knowledge
Transfer
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
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
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
Lifecycle Rewards
A first step is to improve the employment
deal with customized recruiting and
retention tools
The challenge is to
keep rewards
efficient for the
Company and
relevant for every
employee
EXECUTIVES
SR. MANAGER
10-12 years
EXPERT/MANAGER
7-9 years
SR. ASSOC.
4-6 years
ASSOC.
1-3 years
$
$
$
$
A more responsive reward program can begin
to improve the overall work experience
Annual Turnover
Lifecycle Rewards
Lifecycle Rewards lets employees make
choices that influence their decision to
stay and remain motivated…
Picture of
young
professional
woman
Life
Stage
Profile





Lifecycle
Rewards
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”
Julio’s Lifecycle Rewards





Catastrophic healthcare
coverage only
Lowest dental coverage
No vision coverage
Purchase 4 additional PTO days
No 401(k) participation







Base salary
Bonus
Base healthcare and security
benefits
Eligibility for retirement plan












Paul, age 45, Engineering
Manager
Married, two children
Considering larger home
Planning for college and
retirement
Paul’s Lifecycle Rewards
Corinne’s Lifecycle Rewards


Corinne, age 38, Sr. Engineer
Recently married
Purchasing first home
Evaluating career and family
options
Picture of
minority with
family
Opts out of medical in favor of
spouse’s 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

Base salary
Bonus
Base healthcare and security
benefits
Eligibility for retirement plan








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)
Base salary
Bonus
Base healthcare and security
benefits
Eligibility for retirement plan
Customized
Benefits
Base
Program
Lifecycle Rewards
…and helps manage compensation and
benefits for employees throughout their
career
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 11: Promoted to
Engineering Manager.
Third Milestone Award
is paid into Retirement
Account
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
Year 3: Cathy is
married and adds her
husband as part of
her healthcare
coverage
for individuals to join and stay
Estimated savings associated with
increased retention
~$560 Million in cost
savings over the
next ten years +
possible productivity
gains among
existing employees
Direct rewards will not solve all the
issues…
Other Areas of Focus
Current Focus
Lifecycle Rewards
Work/Life &
Career Management
Sourcing & Recruiting
 Near-Term (1/1/06)
– Milestone Account
– Enhanced Match
 Job Sharing
 Capacity Planning
 Job Rotations
 Diversity
 Reduced Hours
 Sourcing Strategies
 Medium-Term (1/1/07)
– Flexible Benefits
– Leave Bank
 Job Posting Technology
 Screening & Profiling
 Interest-based
 Offer Management
 Competency-based
 Management Training
 Formal Mentor Program
Lifecycle Rewards is not the “silver bullet”, there
are other critical issues to address
Workforce Planning: Keys to
Success

Don’t 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
Where are the gaps?

Lack of employee data, global systems and
analytical tools

Majority focus on period costs – limited longerterm thinking

Limited connection between business strategy
and future employee needs

‘Silo’ approach to rewards
Closer than most…..

The major E&P companies

Larger Oilfield service firms
Questions:
Workforce Planning:
Data Analysis to
Solutions
WWW.WATSONWYATT.COM