The future of employment is open-ended and unclear, above everything else. It is impossible to plan for just one conceivable future in the modern world. More flexibility in terms of where, when, and how employees work is becoming a requirement for workers. On the other hand, businesses themselves are being forced to develop greater levels of flexibility, agility, and resilience. HR is no different. Companies can establish strategies that are more adaptable by utilising a data-driven workforce and scenario planning, among other things, to develop as the business environment changes. This cannot occur until HR transforms into a flexible and agile organisation.

Consider an example of a major hotel chain in the hospitality industry that mostly serves business travellers. The chain had to consider a challenging question when the external environment altered because of COVID-19: Will business travel volumes resume after the pandemic, allowing the company to continue on its current course? Alternatively, should it prepare for a different future scenario and assume that the firm will not recover?  The first possibility might seem more probable. However, the leadership and HR took immediate action just because the second situation was a possibility. They created a similar tactical reaction to make sure the team was prepared to handle this situation.

Examples of interventions included getting ready to freeze all job openings, realigning the skills of the current workforce with a new business strategy, designing an organisational structure that relied less on business travellers, and investigating alternative business models like gaming and conference facilities. In other words, due to external factors, some previously held truths and assumptions about managing businesses and personnel become obsolete. As a result, many businesses will need to reinvent themselves, frequently quickly and without much notice.

That is exactly what happened with Shopify, the Canadian multi-national e-commerce platform. The company laid off 10% of its global workforce last month, about 1000 people. The company bet everything on the idea that the post-pandemic situation would be that of an increased e-commerce usage permanently, according to CEO and founder Tobi Lütke, however as it was with streaming, home fitness, and countless other areas, consumer behaviours have generally reverted to pre-pandemic norms.

We are being reminded that the future is not a set and constant destination more than ever before. Our economy, labour markets, and the workplace are all changing right before our eyes. As a result, businesses must learn to account for a wide range of probable scenarios and plan for various futures rather than just one. Moreover, this process needs to be led by HR. In a broader sense, HR has a crucial part to play in assisting with the process of establishing these various future possibilities for the company. To solve issues like the Great Resignation and talent shortages, HR has a responsibility to make sure that its policies and operations are scenario-based and dynamic.

Scenario-based Planning and how it helped the Retail Sector

First off, there are two types of planning involved here. Scenario-based planning is identifying multiple potential future scenarios and planning accordingly. The other one is dynamic planning, which is the ability to plan as the situation evolves. Companies that use scenario-based and dynamic planning have a higher likelihood of exceeding their financial and other goals than their counterparts.

Take the example of the retail industry.  Those that foresaw the eventuality that lockdowns would last longer than a few weeks or months and prepared for this scenario were quick to develop new or expand their existing online shops. This is because they embraced scenario-based planning and benefited from it. All that changed with COVID-19 and the numerous lockdowns that followed.

Four Elements of Scenario-based Planning

• Determine all plausible future directions for the market.
• Based on how the situation develops on the ground, identify all external signs that can lead the organisation to favour one scenario over another.
• The leadership must describe practical solutions for each of the possibilities. The organisation can utilise this exercise to determine what specific internal policies need to be changed to implement each scenario (if and when that scenario proved most accurate).
• The business must evaluate every situation in terms of how likely or unlikely it is. Additionally, the business must constantly monitor and evaluate the likelihood of new prospective situations arising from the changing reality.

The Role of HR in the Scenario-based Planning

The HR department has three major responsibilities when it comes to scenario-based planning.

Facilitating the Process at the Organisational Level

The problems that businesses must anticipate and find solutions for are becoming more complicated. Because of this, a cross-organisational team led by HR will need to come up with probable scenarios, together, during the planning process.  For example, HR’s qualitative input on the state of the labour market will be very helpful in identifying both the scenarios as well as potential external flags indicating where the market is moving because it has a good overview of not only the organisation’s workforce but also the trends in the broader economy.

Identifying and Implementing HR Interventions

To assist the organisation’s overall response, putting each scenario into action would necessitate a variety of HR initiatives. The HR would therefore be responsible for outlining each case in detail and developing specific action steps. These interventions can be more high-level or specific. For example, updating strategy or suggesting a modification to the organisational design.

Introducing Scenario-based planning to HR itself

While HR may help facilitate and contribute to scenario-based planning at the organisational level, its sub-teams can also gain from the practice. Organisations encounter a variety of problems, and HR frequently plays a crucial and determining part in finding the best solution. The current talent scarcity or the evolving nature of the working relationship that results in high attrition rates are both solid examples of this. By using scenario-based planning, an HR department can respond swiftly to any changes in the labour market.

Conclusion

For decades, governments, non-profits, and commercial organisations all across the world have relied on hierarchical organisational structures. However, this practice seems to be shifting. Organisations are attempting to reorganise their workforces in response to the changing nature of work brought on by technology, talent shortages, and globalisation. The desire to reimagine the conventional organisation is almost universal, even while concepts like “holacracy” might be novel and rather uncommon in practice. Holacracy is a management style that rejects a top-down structure in favour of a team structure. According to a recent Deloitte survey, 92% of CEOs believe that organisational design is one of their top priorities for this year.

The intention of this article was not to propagate the idea that one type of planning is better than the other. If you do so much as care to dig deep enough, you will find features and other examples of dynamic planning that change and adapts to the evolving conditions of the market and economy. The point of this article was to say that no business can afford to have a tunnel vision when it comes to an increasingly unpredictable future in today’s unstable economy. HR departments will need to stand up and take leadership in assisting firms in becoming more scenario-based and dynamic in their planning. They must not only facilitate and contribute to the process but also use the method themselves. This strategy is advantageous for both HR staff and their companies, particularly in the uncertain environment of today.