Strategic Workforce Planning: Everything You Need to Know
Writer and editor
A company’s workforce is forever shifting and changing. Talent is hired, senior employees announce their retirement and new positions are developed to keep up with advancing business needs.
Throughout all of this, an organisation must ensure they are neither under nor overstaffed, that each employee is equipped with the skills they need to effectively carry out their role, and that the company is prepared for whatever the future may hold.
This duty falls mainly on HR leaders, who are already responsible for managing the entirety of the employee lifecycle. Fortunately, there are tools in place to ease the burden and ensure the smooth running of an organisation today and beyond. The most notable of these is workforce planning.
But what is the definition of workforce planning? Who does it benefit? And how can you implement it within your company? Read on to find out more.
What is workforce planning?
Workforce planning is one of the most important tools for any successful HR department. In a nutshell, the process involves an analysis of both business goals and workforce, enabling HR leaders to plan for the future with confidence. This kind of forward-looking management ensures you have the right people in the right roles at the right time, and that they have the proper skills to succeed and support your organisation today and beyond.
Typically, strategic workforce planning predicts scenarios 3-5 years in the future, assembling a framework within which vital information can be assessed. It can be a complex process, requiring barrels of vision, strategy and empathy, but it is also a hugely effective business activity.
The workforce planning model encompasses several key steps:
- Considering current and future company goals
- Analysing existing talent
- Predicting the capabilities of the future workforce
- Identifying the gaps and using these to drive strategy
If this process is carried out correctly, it will ensure that your people strategy is aligned with the changing needs and objectives of the organisation. However, preparing a plan for future scenarios requires time and a deep understanding of talent and business objectives. HR must be operating smoothly so that leaders can shift their focus from administrative duties to implementing crucial forward-thinking strategies.
Why should you implement workforce planning?
The benefits of introducing workforce planning tools to a business strategy are considerable and stretch far across an organisation. Despite this, only 34 per cent of companies have made good or significant progress towards goals of building a workforce to meet future business objectives.
Not having the right talent in place can cause huge strain on an organisation and on its workers. If employees are not being developed correctly, or their skills are mismatched to their role, this will have an impact on their wellbeing. It could also lead to problems with talent retention. Workforce planning solves these issues by recognising and filling the gaps within an organisation, enabling teams to make the best use of their existing talent.
Strategic workforce planning can also help to ease the process of hiring new employees or promoting internally. By highlighting which skills and attributes are needed to fill the gaps within a team, the process ensures that the ideal person is hired for a role. Through assessing the demographic of the current workforce, organisations can become more competitive, setting up talent to replace senior leaders who may be retiring in the near future.
What’s more, companies that follow the principles of workforce planning are also forced to be smarter and become more time and cost effective. For example, an aging workforce can be more expensive and cause re-skilling challenges, while also posing the risk of mass retirement. Technology and automation are advancing at a rapid pace, and organisations need to establish flexible work design to keep ahead of the curve. Workforce planning helps companies to prepare for these projected scenarios, as well as those that are unexpected.
Workforce planning processes
There are five key steps that form the workforce planning process.
1. Consider the current and future company goals
The first stage of the workforce planning process takes a look at where the company is headed, both in the short and the long term. By mapping out what the business is currently trying to achieve and what its goals will be for the future, you can highlight what skills and competencies are integral for success.
It’s also important to ensure that the stakeholders are on board with any workforce planning strategies during this initial stage. This means earning support not just from the HR department but also from finance, operations, line managers and the C-suite.
2. Analyse your existing talent
The second stage of workforce planning involves analysing the quality and quantity of existing talent within the organisation. By considering the strengths and weaknesses of your team, you can evaluate whether they are able to meet the current and future goals that are set in place.
Through recognising the top performers and those with the highest potential, you can project future promotions and encourage filling senior roles internally. You should also consider whether the current team is made up of predominantly older talent, who may retire soon and leave gaps within the workforce.
All of this can be done with a people analytics tool such as the Humaans Insight function. This provides a comprehensive overview of people information within an organisation, enabling HR execs to monitor and analyse key data with ease.
3. Predict the capabilities of future workforce
The third stage of workforce planning considers not only the future needs of the company, but also the external changes that may impact its workforce. For example, economic shifts can lead to redundancies, while advances in automation may leave some team members unequipped to use the latest technologies. These scenarios can be difficult to predict, but preparing for them using workforce planning tools can help to ensure a company continues running smoothly.
Looking internally, this third stage also requires an understanding of what your team will need to accomplish future work goals. By recognising the necessary skills and competencies for this, you can ensure that your talent will be working effectively and successfully going forward.
4. Identify the gaps and use these to drive strategy
The fourth stage of workforce planning looks at the difference between the supply and demand of existing talent and their skills. By identifying which skills are in surplus and which are deficient, you can begin to strategize plans for the future workforce. In some cases, specific roles will need filling, whereas in others entirely new skills sets may be required for the team to function successfully. This could lead to hiring externally to fill the gaps, or instead training and developing the skills and competencies of existing talent.
The digital skills gap will be of particular importance to many organisations moving forward. For example, the demand for IT and programming skills in the workplace with grow by as much as 15 per cent during the next 15 years. This means that digitally upskilling staff is crucial and will provide solutions to future technological needs.
5. Review and assess the workforce planning process
The final stage of the workforce planning process is simply to review and assess the success of the strategy you have put in place. If the management forecast has been successful, the gaps that were identified during the process will have been filled. What’s more, the team will have the necessary skills and competencies to fulfil not only the current needs of the organisation, but also those of the future.
Workforce Planning Tools
A workforce planning tool helps you to follow the five steps listed above, facilitating effective workforce planning and development from start to finish. There are a number of tools to choose from, but here are five of the most commonly used today:
1. Strategic workforce planning map
Strategy mapping aligns people strategy with business strategy in order to achieve a united goal. This enables various departments within the company to support one another, ensuring improved communication and reduced friction.
With this tool, an organisation strategy is set up based on factors such as demand and supply and the market competition. Before using this tool, HR execs need to understand company objectives and recognise how they can support them. Once this is in place, the workforce planning map builds a graphical representation that aligns each employee as an integral contributor to the organisation and its goals.
HR can then use this information to feed into its functions such as performance management, recruiting, promotions and more, strategizing effective teams for today and beyond.
2. 9-box model
Also known as the 9-box grid or the performance and potential matrix, this simple but effective visual tool is used to assess a company’s talent. To use the grid, each team member is rated and mapped within one of nine boxes along an X and Y axis. The X axis assesses the talent’s past performance, while the Y axis assesses their potential performance.
By looking at each team member’s position on the grid, management can easily plan their development and progression. The map can also be used to identify high performers and potential leaders, and improve the running of the organisation as a whole.
3. HR Dashboarding
An HR dashboard is a piece of software that serves as an analytics tool, displaying and tracking important people data and metrics. It can be used in the workforce planning process to highlight the current talent capabilities within an organisation and prepare for its future needs.
For example, the Humaans Insights function offers a vital overview of the employee lifecycle. By providing information on current and past performances, it enables HR leaders to project existing talent potential. The data can be used to analyse key issues such as monitoring staff turnover and attrition, matching team members’ skills with the needs of the business and promoting diversity within an organisation.
4. Compensation and job analysis benefits
A company-wide analysis of compensation – including wages, health benefits, paid time off and more – can provide an improved understanding of how employees should be compensated. It means workers are receiving competitive wages, while also ensuring the company attracts and retains the right employees.
The analysis is made up of two core elements:
- Creating an internal pay benchmark and grouping employees according to whether they are ‘overpaid’ or ‘underpaid’
- Using performance data to assign employees into ‘overperforming’ or ‘underperforming’ categories
Through this method, overperforming employees can be correctly compensated and those who are underperforming can be paid accordingly. This is important, as discrepancies could lead to top talent leaving for being underpaid, or an excess of overpaid poor performers.
5. Scenario Planning
While the previous methods rely on data and metrics, scenario planning is a more creative workforce planning tool. It works by anticipating potential future scenarios that may affect the business – such as technological advances, a pandemic or an economic crash. By considering these events, HR can predict the impact they would have on the company and work to develop strategies to cope with them.
Scenario planning can ensure HR makes the right decisions, such as when allocating resources and developing staff. As a workforce planning tool it can help businesses develop contingency plans, close skill-gaps, assess budgeting requirements and more.
Ultimately, workforce planning can help companies look ahead to plan the roles, skills and people they will need to meet their business objectives. The model ensures the right talent is in the right place, with staff equipped to successfully carry out their roles. It also eases the hiring process - whether looking externally or internally - and means a company is prepared for both projected and unexpected future scenarios.
Implementing the five key stages of workforce planning is made easier thanks to the strategic workforce planning tools that are available. Following one of these methods, HR leaders can be certain that they are aligning their people strategy with the changing needs of an organisation, supporting business goals today and in the long term.
Have thoughts you'd like to share? Drop a note on Twitter @HumaansHQ. 👋
The fastest way to onboard and manage your staff. Simplify your people operations with Humaans. Try it free today – create an account in minutes.