Adjusting for the Downturn

The downturn has not triggered a radical change in the workforce planning process at Spherion, which sits at the center of the highly cyclical staffing industry, but it may. “We are re-evaluating the frequency of the cycle,” says John Heins, senior vice president and chief human resources officer. “We are not looking at a total resetting of the economy, but that may be a discussion for a later date.”

The downturn has altered labor market demographics, however, and that requires modifications in workforce planning. “The focus for years has been on the talent gap created by retiring baby boomers, but now that has changed and the workforce is bunching up,” Heins notes. “The mechanics of supply and demand have shifted on the supply side because the boomers are not exiting. Our workforce planning will be recalibrating all workforce models to accommodate these changes.”

Based in Fort Lauderdale, Florida, with $2.2 billion in 2008 revenue and 300,000 employees, Spherion performed well until the final quarter of 2008, when the staffing industry took a sharp hit. In past downturns, client companies in more recession-proof industries helped balance out demand.

“The main difference now is that all industries are in a downturn, so we can’t level off the impact in terms of our client mix,” Heins notes. “The point is to be able to respond to client needs and then size our company appropriately, and to ensure that we retain the most talented people and exit the low performers.”

Strategic workforce planning at Spherion identifies best- and worst-case scenarios and creates plans for the workforce that match those scenarios. “We look at historical trends in the staffing industry, which has a five- to seven-year cycle,” Heins says. “We know that unemployment sits in the valley for a few months and our demand arrives back six months before demand recovers in other industries. We look at what a recovery model may look like and what the jobs will look like.”

The workforce planning process at Spherion sits in the company’s four business divisions, with 10 employees in each division dedicated to forecasting and planning over a three-year horizon, and then rolls up to the COO. “This is where it should be because it is a business-driven process,” Heins says. “HR manages the process of resizing the organization.”

At the other end of the cyclicality spectrum sits Entergy Corp., the fourth-largest utility and the second-largest nuclear power operator in the U.S., with 14,300 employees and $13 billion in 2008 revenue. The company is based in New Orleans. Entergy’s workforce planners are still looking at the same relatively tight labor markets that have preoccupied the utility industry for years.

Entergy has not adjusted its workforce planning program since the financial crisis. “We are watching retirements now and getting feedback from the units and line managers,” says Mark Antoine, strategic workforce planning manager. “They are finding little impact.” With a pension plan, a 401(k) plan and a phased retirement program in place, employees at Entergy are less likely than many employees to modify their retirement plans because of the downturn.