Skill and Luck in Workforce Planning – Inseparable?

Earlier this year, I read Michael Mauboussin’s book “The Success Equation: Untangling Skill and Luck in Business, Sports, and Business”. His key message is that skill and luck are closely intertwined in most human endeavours, and it can be difficult to separate the impact or influence of each.

If skill and luck are prevalent in business, then it is reasonable to extend this concept to workforce planning. In evaluating the success of the workforce plan, the focus is often on the relative merits of the strategies that were designed, developed and implemented. The evaluation is heavily weighted on our skill. We believe in our own talents.

What if we just got lucky?

Understanding the differences between skill and luck is a good starting point in evaluating our success. If we don’t, then the chances that we might be fooled increase.

Skill and Luck – Understand THE Difference

Skill is defined as the ability to use one’s knowledge effectively and readily in execution or performance to do something well. People are able to acquire new skills, improve existing skills and unlearn skills.

Luck is a little harder to define. It is unpredictable, out of our control and can have either good or bad outcomes.

There is a simple test that can be applied to a given event: ask if you can lose on purpose. If so, skill is involved. However, life is not this simple.

Activities involve both skill and luck, and Mauboussin’s Luck-Skill Continuum postulates that activities lie on a spectrum between all skill and all luck.

Potential to be Fooled – Minimise THE Chance

If the luck-skill continuum is ignored, then it is likely that we may overemphasise the contribution of our individual and collective skills over the role of luck. This can have a significant impact on the evaluation of our decision making and workforce plans.

This problem can be acute in workforce planning, notably in initial efforts if data sets are small in the attributes used and the period covered. Patterns and trends may be evident; however, establishing cause and effect with a degree of confidence can be difficult.

Skill and confirmation bias can be a dangerous combination in the analysis of limited data sets.

Skill in Workforce Planning – Why IT Matters

Workforce planning skills cover disciplines from strategy, forecasting, simulation to human resource management. Improving skills in the following four areas is important:

• Strategic Intent. Understanding the organisation’s strategy and translating this into the future workforce requirements, such as capabilities and structure are key foundations. Skills in strategic analysis, organisational design and development are critical.
• Demand and Supply Forecasts. For many, this is the core science of workforce planning. Forecasts often focus on the size of the workforce, and should be extended to cover employee type (permanent and contingent), and changing skill and experience levels. While dedicated software helps to automate the forecasting process, skills in statistics, simulation and other mathematical techniques are useful.
• Risk Assessment. The analysis of the difference between the current and future workforce helps planners to understand the associated risk. Skills in analysis and risk assessment are crucial. Failure to ignore this aspect will lead to a limited range of strategies being developed.
• Strategy Development and Implementation. Crafting, testing and developing good policy and strategy requires skills in policy analysis, critical thinking and evaluation. Implementing new policies and workforce development strategies requires effective communication and change management skills.

Improving your skills in these areas should lead to better workforce plans.

Luck in Workforce Planning – Why IT Also Matters

Luck can have positive and negative impacts on workforce planning outcomes. Luck could be present in the following four elements:

• Exogenous Factors. These factors are external to the organisation’s system, are out of its control, and will shape or influence its operating environment. Changes in government policy or market sentiment could fall into this category, which could have potential direct and indirect effects.
• Unintended Consequences. From the actions and initiatives that are implemented, it is likely that there will be unintended consequences. These were not foreseen during the design and development of the initiatives, and it is difficult to avoid them.
• Irrational Behaviour. An underlying assumption is that people will behave rationally as workforce strategies are implemented – they will act in a manner consistent with the intent of the strategy. People can behave differently to what was expected.
• Random Events. Taleb’s Black Swan Theory explains the nature of random or unexpected events (extreme outliers) occur. Such events typically impact on a system level and this can affect the outcomes of the workforce plan.

In conclusion, skill and luck play important roles in our professional and private lives. Workforce planning is influenced by the luck-skill continuum. Understanding that both skill and luck shape the outcomes of our decisions is important for leaders and planners to acknowledge. It simply may be a case of the harder I work, the luckier I get.

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