The Flaws in Traditional Headcount Planning
In this episode of 'The Human Capitalist,' host Trent Cotton explores the limitations of traditional headcount planning in human resources and introduces a new framework focused on skills. Cotton begins by highlighting a significant shift made by IBM in 2021, where they "eliminated degree requirements for half of their job openings." > They eliminated degree requirements for half of their job openings. — Trent Cotton This move underscores the growing importance of skills over traditional metrics like degrees and experience.
Breaking Down the New Framework
Cotton explains that the traditional model of full-time equivalent (FTE) planning relies on outdated assumptions, such as the stability of roles and the equivalence of experience to skills. However, "skill-based hiring breaks all three of these assumptions," according to Cotton. > Skill-based hiring breaks all three of these assumptions. — Trent Cotton He offers several real-world examples, including IBM's creation of a new job category and Accenture's skill-based talent marketplace, which prioritizes skill match over titles.
The Cracks in the Headcount Model
The episode identifies three major cracks in the current headcount model. First is the issue of skill reuse across functions, where a "skill-based employee isn't owned by one function; they can be deployed where skills are needed." > A skill-based employee isn't owned by one function; they can be deployed where skills are needed. — Trent Cotton The second crack is the comparability between contractors and FTEs, as skill-based hiring makes the traditional preference for FTEs less relevant. Finally, AI augmentation is altering the productivity baseline, with Cotton noting that "an employee augmented by an AI agent carries anywhere between 1.2 to 1.5 times that capacity." > An employee augmented by an AI agent carries anywhere between 1.2 to 1.5 times that capacity. — Trent Cotton
A New Approach to Workforce Planning
Cotton concludes by presenting a new planning framework that modern CHROs can adopt. He emphasizes starting with work and mapping the necessary skills before recruiting. The framework includes calculating capacity by considering both human and AI-augmented work. Cotton suggests that organizations should "use FTE for high judgment, relationship intensive, and institutional knowledge heavy roles," while using contractors and AI for other tasks. > Use FTE for high judgment, relationship intensive, and institutional knowledge heavy roles. — Trent Cotton
This episode challenges HR leaders to rethink their approach to workforce planning, moving away from outdated headcount models to more dynamic, skill-based strategies.
