scenario planning

A Guide to Using, Understanding and Documenting Best Practice Scenario Planning [2021]

Mental models, schema, mindset—however you choose to frame workforce planning, one thing is for certain: there is a lot to compartmentalise. This includes (but isn’t limited to, either) elements such as people capabilities and development, aligning with the business, being future focused, understanding and challenging demand assumptions, mitigating risk, ensuring it is evidence based, and delivering scenario planning.

In this article, we’ll take a deep dive into scenario planning in the context of workforce planning, how to effectively use scenario planning, the scenario team to have in place, the process to follow, and best practice modelling and KPIs.

Contents

What is scenario planning?

In its simplest form, and in the context of human resources, scenario planning is a method used whilst conducting workforce planning. Scenarios are considered in many forms that affect the workforce, from both an internal and external driver perspective. Scenario planning encourages workforce planners to conceptualise future scenarios and events that will have an impact on the organisation.

The top 4 benefits of effectively using scenario planning

“One thing that makes it possible to be an optimist is if you have a contingency plan for when all hell breaks loose.”

Randy Pausch

 

The working world is becoming more and more ROI driven and efficiency-focused. Scenario planning sidesteps the “what ifs?” of these initiatives with some helpful foresight. The benefits include:

  1. Expanding your mindset when planning
  2. Establishing imminent future states
  3. Avoiding worst case scenarios
  4. Freedom to challenge the status quo.

Scenarios expand your mind

The saying goes that the best predictor of future behaviour is past behaviour. That is,  humans have become attuned to expecting things to be how they were before. (You know the maxim, “Blank has never let me down.”) But over time, psychologists have slowly dispelled this myth. In scenario planning, once we accept the reality that the past is not a great predictor of the future, we give ourselves permission to more fully explore the potential of future scenarios, and how these scenarios can happen with the sequence of steps.

Think back to the work you were doing in human resources and workforce planning in January and February 2020. You were likely looking at things in the context of a steady economy (with potential impacts of tension with China or cyber threats), but in the main, the ramifications of a global pandemic weren’t on many people’s scenario bingo cards. This is where the benefit of experience comes in; if you’ve worked and thrived during a recession, as an example, you would more likely approach scenario planning with a mindset expanded to consider economic impacts.

Robust scenario planning establishes imminent future states

Unlike a surprise birthday party, there shouldn’t be many shocks in scenario planning. There’s plenty of talk about critical uncertainties, but when you actually dig into them, you’ll likely find there were indicators all along. 

Let’s take the Covid-19 global pandemic. If you go back 5–10 years, there were concerns raised by leading scientists and epidemiologists that the world had the potential to face a pandemic, and that each nation was under-prepared. It’s the same with a lot of future scenarios when planning; we can look for those indicators which highlight patterns to begin building a possible likelihood of imminent scenarios that will impact workforce planning.

As the analysis underlying each scenario proceeds, you often identify some particularly powerful drivers of change. These drivers result in outcomes that are the inevitable consequence of events that have already happened, or of trends that are already well developed. 

Shell describes these as “predetermined outcomes” and captured the essence of this idea with the saying, “It has rained in the mountains, so it will flood in the plains.” In developing scenarios, companies should search for predetermined outcomes—particularly unexpected ones, which are often the most powerful source of new insight uncovered in the scenario-development process. The key in all of this is timing, and this is where margin of error should be considered.

What you should consider

Historically, interest rates have been low, but at what point will they rise and by how much? The global pandemic won’t last forever, but at what rate can we vaccinate, and when can the global economy open up? A shortage of healthcare workers entering tertiary education does not match the volume of new healthcare workers we will need to support our ageing populations, but at what point does it become a problem and when will it be addressed with an influx of talent? This is why you build a robust and broad scenario plan: so you cover all bases, see what’s in front of you with indicators and understand timing is not fully in your control.

Scenarios help avoid worst case scenarios 

They say if you fail to plan, you plan to fail. Consider New Coke. Even though market research on 200,000 people considered the new version of Coca-Cola superior to the old long-standing one, it was still a terrible planning decision. Instead of a record-breaking sales scenario, customer habits and loyalty won out. Coke lost $4 million in development and $30 million worth of product it couldn’t sell, all because Coke didn’t account for customer motivation. A similar thing happened with Crystal Pepsi. (No, we hadn’t heard of it either.) Two critical uncertainties that could have been accounted for. 

This is where groupthink and bias can creep in and be eliminated. Detailed scenario planning as part of the workforce planning process means you put all the facts down on paper as clear as day and night, so that internal power struggles can be fully tackled with the scenario planning reference points. It also makes it safe to discuss everything put on the table.

Freedom to challenge the status quo

Unlearning the mental models we have of the world is a hard thing to do.   This means that challenging the status quo can be difficult. Scenario planning enables you to lay out potential scenarios in a way that is easily understood. It can be easily incorporated into your workforce plan and give you a great platform to raise concerns as a possible outcome. Because after all, critical uncertainties are just that: Uncertain.

Scenario planning process: 4 steps to success

There are four simple steps that you can distil it down to make a success of your scenario planning process:

  1. Brainstorm future scenarios and possible outcomes
  2. Identify trends and driving forces
  3. Complete a scenario planning template
  4. Scenario development

Let’s dig deeper into each step.

Step 1: Brainstorm future scenarios and possible outcomes

Once you have identified the team to be involved in creating the scenario planning, it’s time to start brainstorming. There’s no way around, but a vast range of possibilities exist for you to consider in your decision making. In group sessions, you can begin to work through all scenarios that you all foresee could impact workforce planning in the short, medium and long term. This is popular in post-it note think sessions or whiteboard brainstorms; either way you go about it, the key is to do a brain dump, get it all down and refine later.

Step 2: Identify trends and driving forces

Next, we blend these topics together under headers. Ensure you look at the organisation’s strategy and understand the primary goals that will be impacted by workforce decision making.

Headers will help you start to identify, categorise and refine trends. We recommend the following headers to start sorting scenarios:

Step 3: Complete a scenario planning template

There are a plethora of scenario planning templates available in the market today. We’ve found some great editable templates that you can check out here. Our top three picks are table-, flow- and tree-based layouts.

 

Table based scenario planning template for workforce planning

Table based scenario planning template for workforce planning

Flow-based scenario planning template for workforce planning

Flow-based scenario planning template for workforce planning

Tree-layout based scenario planning template for workforce planning

Tree-layout based scenario planning template for workforce plannin

Step 4: Scenario development

Now you have your desired template, let’s look into how to develop an individual scenario. This will depend on the template that you have identified works best for you, but we can still broadly explore the best practices for developing a scenario.

Prioritise scenarios

As a group, you first want to order the scenarios you have researched so that you can methodically work through them one at a time. Consider the time frame for each (short, medium or long-term). 

Remember you want to actually use these scenarios. One scenario may not subscribe to one time frame (say, being something that has short- and long-term impacts). This is okay, just factor this in when planning.

Identify strategies, programs, and policy changes

One by one, identify strategies that would address the given scenario. You can come up with a number of solutions to the scenario at this point, including doing nothing at all. Just be sure that all parties involved understand the impact of doing nothing and have this documented.

Create of leading indicators

Leading indicators are signals that show a scenario may be coming into play. There will be a wide range of indicators to consider when future scenario planning—but don’t be daunted. In essence, you are simply creating your very own early warning system, such as those used in cyclone and tsunami prone regions.

As an aside, this is a great group exercise that ensures maximum brain power is harnessed and documented to give your business the best chance of success in workforce planning.

Some pitfalls to avoid

As the leading provider of workforce planning software, we’ve seen our fair share of scenario planning pitfalls that can impact your ability make informed decisions. Our top three easily avoidable missteps for future scenario planning are:

  1. Focusing on one strategy. Don’t fall foul of the belief that you need one primary scenario to anchor on. You need to ensure that you establish, understand and document all the likely scenarios that can impact your workforce planning.
  2. Short-termism. A trap to easily fall into is only looking at the short-term. This can be down to ease and confidence in understanding, but the medium and long-term are of equal importance. Getting a grip on these early on can make your annual or bi-annual scenario planning session a lot more productive (and rewarding!).
  3. Paralysis. Yes, we hear you—there is a lot of information to take in, process and document. You do need to avoid the rabbit-hole and get an understanding on when enough detail is right for a given scenario, but it needn’t be a paralysing process. Take your time and the end result will be much more accurate, cohesive and applicable.

Conclusion

Ultimately scenario planning is just that: Detailing, hypothesising and documenting based on what “could” happen. While thinking “what if?” seems counterproductive to what we’ve always been told (raise a hand if you’ve ever been told “don’t sweat the small stuff”), the secret sauce to this is taking a structured and data-driven approach to deliver scenario plans that will inform your workforce planning process. Scenario planning as part of the workforce planning process is all about walking that fine line, ensuring that you undertake detailed brainstorming and don’t overlook certain scenarios, and building out the right scenarios that ensure you do not fall prey to the endless scenarios that can happen.

Book a call today with the team at Panorama and let’s discuss how to drive efficiencies in your workforce planning through digital transformation of WFP processes.