Personnel Planning to Impact Profits

Personnel Planning to Impact
Profits
September 27, 2017
Sponsored by:
Kenneth Fick
Erik Lima

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Copyright © 2017 IMA® (Institute of Management Accountants). All rights reserved.
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Webinar Features and CPE Credit
Asking Questions
Help
CPE Credit Requirements

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Join the Conversation
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@IMA_News

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Moderator
Adam Larson, DES
Senior Manager of
Educational Technology Enablement
IMA
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Featured Presenter
Kenneth Fick
President & CEO
Pierce The Fog

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Featured Presenter
Erik Lima
Manager of Business Analytics
Manatt, Phelps, Phillips, LLP

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Upon completing this webinar, you will be able to:
1. Discuss ways to forecast attrition and workforce demand
planning.
2. Describe how to leverage workforce planning scenarios.
3. Develop a workforce plan to gain a productive advantage.
4. Give examples of how to reduce the impact of workforce
fluctuations on strategic, operating, and financial plans.
Learning Objectives

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8 Ways
Workforce Planning Can
Increase Your Profits

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How Can
Workforce
Planning
Help Your
Company?
Anticipate talent deficits in
key areas of your
organization;
Avoid over- and
understaffing;
Enhance customer
satisfaction;
Improve efficiency; and
Reduce the impact of
workforce fluctuations on
your strategic, operating
and financial plans.
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8 WAYS WORKFORCE PLANNING CAN INCREASE YOUR PROFITS

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The REAL Cost of Your Workforce
Employee costs of a
company’s operating
expenses
Annual salary increase
Target bonus percentage for nonexecutives
Target bonus percentage for executives
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Source: https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/2016-Human-Capital-Report.pdf

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The REAL Cost of Your Workforce
Average cost per hire
Cost of employee benefits
Source: https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/2016-Human-Capital-Report.pdf
Tuition reimbursement averaging $4,000
Retirement benefit
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Polling Question 1
How much does your company spend on employee
benefits as a % of total salaries?
a) Less than 5%
b) Between 6% - 10%
c) Between 11% - 15%
d) More than 15%
e) I don’t know

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Polling Question 1 Results (Placeholder)

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How to Use
Workforce
Planning
to Increase
Your Profits

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DETERMINE YOUR HEADCOUNT
Calculating the size of your workforce is not as
easy as it sounds – especially if you hire
temporary workers and independent
contractors. Most of your company’s current
headcount data can be garnered from your
payroll and/or HRIS but that still leaves out
contractors and contingent workers. This only
provides a small snapshot in time that might not
be entirely accurate. High-performing
organizations integrate their headcount data
sources into a single tool that pulls human
resource data together in real time. This
provides the most current picture of a
company’s workforce as possible.
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FORECAST ATTRITION
The goal here is to identify patterns in employee
turnover. Your attrition forecast should be based
largely on historical data. Key variables to
consider include turnover by period, job
category and type of termination (voluntary or
involuntary). High-performing organizations are
using data analytics to determine the risk of
turnover, retirement and workforce mobility.
Combining your organization’s current
headcount with forecasted attrition will
produce your company’s true internal
workforce supply and will give your company
the intelligence it needs to offer strategic
promotions, introduce knowledge transfer
initiatives and develop succession plans.
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3FORECAST WORKFORCE DEMAND
A driver-based process is ideal for
forecasting workforce demand because it
allows for:
• The greatest alignment of strategic,
operating and financial plans;
• Quicker root-cause analysis to explain
staffing variances;
• Less sandbagging by stakeholders in
their requests for resources; and
• Higher productivity with more focus on
business operations and less on empire
building.
The goal here is to identify
quality drivers that link
w o r k f o r c e t o b u s i n e s s
performance. To accomplish
this, business managers should
coordinate with finance teams
to decide the optimal workforce
drivers for their areas and to
understand how changes in one
m e t r i c w i l l a f f e c t t h e i r
headcount.
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A GAP analysis allows your company to
minimize risk, set expectations and ensure
the workforce is sufficient to meet all
business objectives. The goal is to get the right
people in the right positions at the right time.
Quite often, that means transferring, retraining,
downsizing and outsourcing. Additional
considerations such as organizational change
management initiatives, cultural implications,
efficiency and customer/client impact must also
be considered. As business conditions change,
their effects should ripple through the Workforce
GAP analysis, which will need to be updated with
the current makeup of the workforce.
4 PERFORM A WORKFORCE GAP
ANALYSIS
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RUN WORKFORCE PLANNING
SCENARIOS
Your Workforce Planning scenario analyses
should account for the following variables:
• Ratio of contractor and outsourced workers
to in-house employees;
• Ratio of full-time to part-time workers;
• Relocation, openings and closing of
operations;
• Pay strategy and merit increases;
• Reorganizations, promotions and lateral
transfers; and
• Changes in productivity, ramp-up time and
driver ratio.
The goal here is to understand
what levers you can pull when
certain situations arise, and to
create a playbook of actions
based on a well-structured
model. These analyses will make
y o u r c o m p a n y m u c h m o r e
adaptable and allow it to take
advantage of new opportunities
and mitigate losses.
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Polling Question 2
Does your company currently integrate workforce
planning into its budgeting and planning process?
a) Yes
b) No
c) I don’t know

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DEVELOP A HIRING PLAN AND
SET EXPECTATIONS
A driver-based hiring plan will give
managers the intelligence they need to
negotiate service level agreements (SLAs)
with other departments to retain their talent,
or to transfer, relocate or alter their staffing
ratios (part-time vs. full-time) as needed. Your
hiring plan can be enhanced using data
analytics. Tracking applicants by job category
or position, location and recruiting method will
help you identify trends and determine where
to advertise each position and how many
applications are needed per hire. This gives
further credibility to those departments charged
with delivering on a recruiting SLA.
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Instead of developing a Workforce Planning model
based on the number of new partners or span of
control, base it on the number and type of
proposals being sent out. This will ensure a better
alignment of resources. For example, let’s assume
that over the past three months, a professional
service firm received a 50% increase in proposals
for implementing a new technical accounting
pronouncement. In such a scenario, the Workforce
Plan should adjust to seek new hires with that
specific skillset. This would increase the potential
productivity of new employees and reduce their
downtime. Businesses of all types and sizes
should look for ways to leverage their
Workforce Plan to gain a productive advantage.
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USE WORKFORCE PLANNING TO
EFFECTUATE TACTICAL STRATEGY
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8 WAYS WORKFORCE PLANNING CAN INCREASE YOUR PROFITS8 WAYS WORKFORCE PLANNING CAN INCREASE YOUR PROFITS

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REMEMBER THE HUMAN FACTOR
IN WORKPLACE PLANNING
Companies must consider qualitative
factors when creating their Workforce
Plan. Some employees are attracted to
great benefits or the ability to work from
home. Others want flexible work hours or
a fun office environment. These
qualitative factors should play a key
role when forecasting attrition or
workforce demand, performing a GAP
analysis or developing a hiring plan.
And don’t forget training. Investing in an
employee’s future skills is just as
important as investing in fixed assets or
new software.
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Who Should Implement
Workforce Planning?

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Smaller organizations can focus their
Workforce Planning process on
individual employees. They can start by
adding a Workforce Planning worksheet to
their financial planning and analysis Excel
workbook.
For larger organizations, it is more
efficient to analyze employee classes
or departments. They should start by
breaking down business silos, enhancing
collaboration and integrating data sources
into a Workforce Planning solution as a
component of their corporate performance
management system.
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Company Background
Operating since 1965
Website: www.manatt.com
Head office location: Los Angeles, California
Annual revenue: $324 million
Number of employees: 800
ERP: Aderant
Description:
Manatt, Phelps & Phillips, LLP is a Los Angeles-based law firm of more than 400
attorneys and other professionals founded in 1965.
Manatt, Phelps & Phillips, LLP

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Business Challenges
Symptom #1:
Creating the revenue budget
was a lengthy process that
involved manually updating
several tabs with the same
information
Symptom #2:
Updating a revised budget for
changes in division, office title
required the use of complicated
workarounds and several
dummy timekeepers
Underlying Problem:
The budget was based in Excel. Budgeting at an employee level
required several tabs and many calculations were necessary across
these tabs to derive the revenue budget. Additionally, it did not allow for
flexibility when the attributes of a timekeeper changed mid-year

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Business Challenges
Symptom #3:
The process to generate an updated revenue
forecast throughout the year was too time-
consuming
Underlying problem:
Updating the Excel documents took too much
time to justify spending the resources

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Polling Question 3
What is your biggest concern when implementing
a new solution?
a) Will the software fit with the existing infrastructure?
b) What is the effort for maintenance, installation, back-up,
and upgrades?
c) What is the assurance of data security?
d) What is the underlying technology?
e) All of the above

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Desired features of a potential solution
• Flexible system that would update easily
• Would allow timekeepers to maintain a history after changes were
made
• Ability to compare information across different years
Weighing Potential Solutions
First 100 Days
• Setting up the Revenue Model with employee information and
attributes
• Creating the logic and calculations necessary to generate revenue
budgets
• Creating templates for budget and monthly reports

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Budgets are created starting at a timekeeper level and rolled up into
operating units, divisions, and the entire firm
Calculations are flexible and allow us to apply different assumptions
to different units within the firm
Automating Finance Processes
Budgeting
Forecasting
Reporting

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The calculations allow us to apply different assumptions to the
different units of the firm
• Enables us to re-estimate revenues based on changes in
headcount
• Enables us to easily bring in actual information by timekeeper and
use actual performance to adjust estimates of future performance
Budgeting
Forecasting
Reporting

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The calculations allow us to apply different assumptions to the
different units of the firm
• Enables us to re-estimate revenues based on changes in
headcount because the model flows from production through to
revenue
• Enables us to load actual receivables by timekeeper, which is
also a major driver in the recalculation of revenues
• Monthly variance reports are quickly generated and can be
adjusted for changes
• Budget versus actuals, forecast versus actuals
• Can easily create division specific reports
Budgeting
Forecasting
Reporting

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Improved Analysis
Revenue Forecast
• Allows the firm to have a better
understanding of future revenues and the
impact that changes in personnel have on
revenue
Data-Driven Decision Making
• Expense controls
• Deciding on appropriate headcounts for
various areas

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Keys to Getting the Most out of CPM Software
Break big
projects
into small
pieces
Think
ahead
Use a
common
data source
for reporting

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a) Yes, in the next 1-2 months
b) Yes, in the next 3-6 months
c) Yes, in the next 6-12 months
d) Yes, in 1+ years
e) Yes, but unsure of the timing
f) We are just researching budgeting, reporting, forecasting and
planning solutions
g) No, we do not plan to replace our budgeting, reporting,
forecasting and planning system in the foreseeable future
Polling Question 4
Are you currently looking to replace your budgeting,
reporting, forecasting and planning system?

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Questions & Answers
Use the Q & A Panel to send your questions to our panelists.
Kenneth Fick
President & CEO
Pierce the Fog
Adam Larson, DES
Senior Manager of Educational
Technology Enablement
IMA
Erik Lima

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Thank You to Our Featured Presenters!
Kenneth Fick
President & CEO
Pierce the Fog
Erik Lima

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Final Reminders

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Thank You to Our Sponsor!
www.Prophix.com

About IMA® and the CMA® Program
IMA® (Institute of Management Accountants) is one of the largest and most respected
associations focused exclusively on advancing the management accounting
profession. Globally, IMA supports the profession through the CMA® (Certified
Management Accountant) program, continuing education, research, networking, and
advocacy of the highest ethical business practices.
The CMA is a globally recognized certification program for management accounting
and finance professionals. The two-part CMA exam covers 11 critical business areas,
including financial planning, analysis, control, and decision support.
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