Marc Holliday | Sr. Product Marketing Manager
Because talent is such a crucial asset for any business, workforce planning is one of the most important factor in organizational growth. Unfortunately, many organizations still don’t fully understand their current and future workforce needs. This can severely limit a company’s ability to reach key goals, stunting growth.
With well-executed, strategic workforce planning, companies can more accurately predict needs to better ensure resources are used in the right place at the right time.
Workforce planning, also referred to as strategic workforce planning, is a process that helps to ensure the right person is in the right position at any given time. It requires an organization to analyze, forecast and plan out its future staffing needs while factoring in whether existing employees or outside talent can fill those needs. This focus on planning typically requires talent management solutions which can help make those determinations and help fulfill its business objectives.
Talent management is a persistent challenge for any organization, but workforce planning helps to minimize — and where possible, eliminate — current and future staffing issues. For example, an aging workforce can create talent shortages for certain roles due to mass retirement and a lack of appropriate skills. Considering skilled workers can give an organization a competitive edge, hiring and keeping employees who are both ambitious and skilled creates a pipeline to replace departing staff, ensuring long-term success.
Businesses today must innovate faster than ever before, and they need talented employees who can handle those demands. This forces organizations to work more efficiently, finding ways to keep costs down (including the expenses that are a product of an aging workforce) and maximize their budget without compromising quality.
Effective workforce planning ensures that a company is not simply reacting to risks like a talent drain due to retirements or employee attrition. Most business already plan for these potential events. It is a constant strategic evaluation of how talent risk can impact an organization’s finances, product development and customer relationships.
Benefits of workforce planning include:
Workforce planning can be considered one piece of HR analytics, which are what an organization uses to shape its people management strategy. However, strategic workforce planning focuses on the more long-term initiatives behind hiring and retaining employees. People or talent analytics, while also a data-driven approach to employee management, concentrates on evaluating relationships between talent and business outcomes.
To effectively implement workforce planning, HR leaders need to be inquisitive and strategic and collaborate with executives from across the organization. A plan should be tied to your company’s overarching objectives and include all relevant factors that can impact your hiring and employee management.
Here are six steps you need to take to create an effective plan:
The workforce planning process starts with building basic guiding principles and then following an ordered list of steps. This not only gives your team a roadmap to follow and keeps you organized, but has proven to increase the effectiveness of this initiative.
There are three general guiding principles for strategic workforce planning:
Since the workforce plays a central role in an organization’s future, here are steps you can take to ensure your workforce planning strategy aligns with your broader vision for the company.
Let’s say a company has two different product lines and is debating whether to add a third. Sales for the first product line are slowly declining, whereas the second one is taking off, with forecasts predicting continued growth.
Using data such as current revenue, expected annual growth and the number of sales and support staff, leaders can settle on a goal for revenue in the upcoming year. This is a simplified way to assess how staff should grow based on these goals and current data.
Assuming staffing costs are equal for both product lines, it’s safe to think the first product line isn’t as profitable. Therefore, there probably isn't a need to increase staff. If there are "excess" workers, then they work on the second product line, assuming their skills remain relevant there (if not, the business could consider retraining them). Leaders can also plan and retrain employees anyway, anticipating future needs for the second product line, reducing hiring costs.
Based on the numbers, leaders also predict the second product line will remain more profitable. The organization can then look at the growth percentage to estimate the number of additional staff required to support that rise. These hires can happen immediately or over time, depending on how these projections play out.
Keep in mind that this is a simple example that only takes into account a few basic factors. More information will make your plan more useful and relevant, but also more complex.
Succession planning can offer insight when it comes to workforce planning. It provides reports to identify employee skills, leadership qualities, potential for growth and any gaps in key roles. Armed with data, current leaders can take steps to reduce gaps. It may also help you reduce costs if you notice that you may not have to hire new talent to replace employees in current positions.
HCM systems can automate much of the data gathering process and increase data accuracy. These solutions can offer valuable insights, such as productivity analytics and employee progress against individual goals. This information can make the workforce planning process much more feasible and less daunting.
When choosing an HCM system, finding the right fit means looking at the type of data you need to ensure a more thorough and effective planning process. While most HCM systems store basic data such as the number of employees and payroll information, businesses should look for solutions that are more robust with a goal of taking advantage of additional functionality as they grow. Look for a system that can run user-defined reports and map out multiple workforce scenarios so you're more prepared.
Ultimately, workforce planning aims to help businesses put the right people in the right jobs at that particular time. It means leaders need to understand their current workforce, plan multiple future scenarios and determine their business objectives.
While it’s a complex process that requires a lot of time and thought, workforce planning is well worth the effort. It gives your organization a competitive advantage because you’re better prepared for the future, so you’re not left scrambling when needs arise. Workforce planning helps an organization plan for the future. Managers can make data-driven decisions based on a role’s importance and individual performance, and the business can evaluate the impact of different work. Meanwhile, business leaders will benefit from workforce planning because they will be able to plan ahead.
The goal of workforce planning is to ensure the right amount of people are in the right position at the right time. This allows an organization to work more efficiently and effectively and is especially beneficial for larger companies.
Workforce planning involves finding gaps between future organizational needs and your current workforce. The remainder of the process is centered on finding and executing on ways to minimize these gaps.
Workforce planning enables businesses to respond more strategically and nimbly as leaders see needs develop, whether due to changes in their industry, organization or the working population at large. It also ensures workers have the relevant skills and knowledge needed to be a good fit for and excel in their position.