Workforce Planning:

Data Analysis to
Solutions
WWW.WATSONWYATT.COM
Presenter:
Henry E. Noey, Jr.
Senior Consultant and
Account Manager
 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

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work for international HR practitioners
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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 1996 1999 1999 2000

“From Baby Boom “Phased “Global Aging - “The Unfolding of a

“U.S. Retirement
Policy: The Sleeping to Elder Boom: Retirement: The Challenge of Predictable Surprise:
Giant Awakens” Providing Health Reshaping the the New An Analysis of the Shift
Care for an Aging End of Work” Millennium” from Traditional
Population” Pensions to Hybrid
Plans”
 Workforce Planning in Oil & Gas
 Workforce Planning Apache BP

Roundtable Baker Hughes ChevronPhillips

– Platform for networking ConocoPhillips Cooper Cameron
– Open forum re: common
Devon Energy Duke Energy
issues & solutions
 Workforce analysis Exxon Mobil Halliburton

 Sources of talent Marathon Oil Kerr-McGee

 Availability of global
Key Energy Noble Energy
data
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
 Key Workforce Planning Components
Outcomes
• Labor Pool
• Lifestyle Shifts Workforce
• Economic and Regulatory Levers Invest
Invest
Environment Well
Well
Supply Recruiting
Business Strategy

High

Workforce Model
High
Leadership Customer
Customer
Satisfaction
Satisfaction

Optimal
Talent
The right number Management
The right number Reduce
&&right
rightmix
mixofof Total Reduce
workers Costs
workersatatthethe Rewards Costs
right
righttime
time
Employee &
Labor Relations Increase
Increase
Shareholder
Shareholder
Training &
Demand Development
Value
Value
• Business Requirements Execute
Execute
• Internal Demographics Business
Business
• “Employment Deal” Strategy
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:
– 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
 Executive Summary
New Entrant
Current Population Average Age
32.0
(Promotion)
Employee Average Age
814 36.8
Count (Internal Move)

Average Age 43.9 Retirements/Turnover

Average Age (Ret) 59.1

Average Age (Int/Ext)* 43.4 / 37.9

Average Service 17.9
Turnover (Int/Ext) 4% / 3%

% over 50 36% Hiring Needs

2007** 143 18%
% Retirement
15% 2010** 369 45%
Eligible
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

* Internal Attrition includes employees moving from Exempt to Union as well as to

other non-operations positions
Objectives

Employee Retirement #1 Objective

Distribution
– Optimize costs associated with
acquiring employees subject to
appropriate mix of job skills/
competencies required to meet the
projected demand for XYZ’s services

#2 Objective
– Reinforceand solidify relations with
current employees to ensure effective
future workforce staffing required to
meet projected demand for XYZ’s
services

Years to Retirement
 Outcomes
10-15 Years to Retirement Group
Sources to Fill the Gap
A. Maximize retention of
Job Group #A
current high-performing
employees
Internal B. Transition employees
Job Group #B Labor from other parts of the
Market organization
C. Implement phased
retirement program
Job Group #C

D. Acquire new hires at

Job Group #D entry level and
External professionally develop
Labor employees
Market E. Acquire mid-career
Job Group #E
professionals seeking a
change in employment
 Workforce Planning Resulted in
Data-Driven Investments…
Business Strategy & Human Capital
Implications

Demand Analysis Supply Analysis

 Projected Key Talent Needs  Labor Forecasts
 Geography – New Graduates
 Turnover – Competitor sources
 Workforce Aging  Industry Influences
 Retirement Rates

Gap Analysis
 Programs& Practices
 Employee Satisfaction
 Employee Demographics
 Talent Sourcing

Attract Recruit Invest Retain Retire

 New Hire Orientation
 Branding  Targeted Recruiting  Employee Satisfaction  Phased Retirement
 Training & Development
 Preferred Employer  Work/Life Balance 
 Applicant Tracking  Mentor Programs Retirement Benefits
 Sourcing Strategy  Compensation and
 Selection Process  Talent Management  Retiree Medical
 Career Web Site  Performance Evaluation Benefits
 Alternate Work  Compensation  Work Environment  Mentoring
Arrangements  Benefits  Leadership  Knowledge Transfer
 Attract Recruit Invest Retain Retire
 New Hire
 Branding  Targeted  Employee  Phased
 Preferred Recruiting Orientation Satisfaction Retirement
 Training &   Retirement
Employer  Applicant Work/Life Balance
Development  Compensation Benefits
 Sourcing Tracking  Mentor Programs  Retiree Medical
Strategy  Selection and Benefits
 Talent Management  Mentoring
 Work

Employee Life Cycle

 Career Web Site Process  Performance  Knowledge
 Alternate Work  Compensation Environment
Evaluation Transfer
Arrangements  Leadership
 Benefits

Immediate Solutions

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
 Attract Recruit Invest Retain Retire
  Targeted  New Hire  Employee
Branding  Phased
 Preferred Recruiting Orientation Satisfaction Retirement
 Training &   Retirement
Employer  Applicant Work/Life Balance
Development  Compensation Benefits
 Sourcing Tracking

Employee Life Cycle

 Mentor Programs  Retiree Medical
Strategy  Selection 
and Benefits
Talent Management  Mentoring
 Career Web Site Process 
 Work
Performance  Knowledge
 Alternate Work  Compensation Environment
Evaluation Transfer
Arrangements  Benefits  Leadership

Immediate Solutions

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
 Attract Recruit Invest Retain Retire
  Targeted  New Hire  Employee
Branding  Phased
 Preferred Recruiting Orientation Satisfaction Retirement
 Training &  Retirement
Employer  Applicant  Work/Life Balance
Development  Compensation Benefits

Employee Life
 Sourcing Tracking  Mentor Programs  Retiree Medical
Strategy  Selection 
and Benefits
Talent Management   Mentoring
 Career Web Site Process 
Work
Performance  Knowledge
 Alternate Work  Compensation Environment
Evaluation Transfer
Arrangements  Benefits  Leadership

Cycle Solutions

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
hi re s
d EXECUTIVES
keep rewards
r i e nce
efficient for the e
Company and Exp
relevant for every
SR. MANAGER
employee
10-12 years
g
tin
r ui

$
e c EXPERT/MANAGER
r
us 7-9 years
ca mp
On
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…
Life
Stage
Profile  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”
Lifecycle Julio’s Lifecycle Rewards
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
Picture of
young
professional
woman
 Corinne, age 38, Sr. Engineer
 Recently married
 Purchasing first home
 Evaluating career and family
options
Corinne’s Lifecycle Rewards
 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
Picture of
minority with
family
 Paul, age 45, Engineering
Manager
 Married, two children
 Considering larger home
 Planning for college and
retirement
Paul’s Lifecycle Rewards
 Family PPO, dental, and vision
 Pending Milestone Award
earmarked to fund a 529 plan
 Maximum security elections Customized
 No additional PTO days Benefits
purchased
 Maximum participation in 401(k)
 Base salary
 Bonus Base
 Base healthcare and security Program
benefits
 Eligibility for retirement plan
 Lifecycle Rewards

…and helps manage compensation and

benefits for employees throughout their
career
Year 11: Promoted to
Engineering Manager.
This is not just about Third Milestone Award
“choice” – its also about is paid into Retirement
Year 8: Second Account
being responsive and Milestone Award is
understanding your paid, family purchases
employees 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
Year 1: Cathy is ounces. Cathy is
hired as an promoted to Senior
Associate Engineer Engineer

The core objective is to make it compelling

Year 3: Cathy is
married and adds her for individuals to join and stay
husband as part of
her healthcare
coverage
 Estimated savings associated with
increased retention
Program Savings Opportunity
(Dollars in Millions)

$1,600 ~$560 Million in cost

Cost Savings
$1,443 $1,456 savings over the
$1,414
$1,351
next ten years +
$1,400
possible productivity
$1,246
gains among
$1,200 existing employees
$1,085

$1,000
$895 $868 $890
$789
$800
$698
$670

$600 $566
$454 $477

$400 $341
$261
$226
$200 $133
$63

$0
1 2 3 4 5 6 7 8 9 10
Year of Program
 Direct rewards will not solve all the
issues…
Current Focus Other Areas of Focus

Work/Life
Work/Life&& Sourcing
Lifecycle
LifecycleRewards
Rewards Career Sourcing&&Recruiting
Recruiting
CareerManagement
Management
 Near-Term (1/1/06)  Job Sharing  Capacity Planning
– Milestone Account  Job Rotations  Diversity
– Enhanced Match  Reduced Hours  Sourcing Strategies
 Medium-Term (1/1/07)  Job Posting Technology  Screening & Profiling
– Flexible Benefits  Interest-based  Offer Management
– Leave Bank  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 longer-
term 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