As each new year begins, any successful human resources department should have workforce planning at the top of its list.
By planning your workforce, you know exactly:
- The number of new employees you need to hire in the next 12 months.
- The current employees hired for each role, department, vertical, and more.
- How you will retain your current talent.
- Your business goals and the workforce required to meet them.
By understanding these core workforce metrics, you can create an actionable plan for hiring and retention that meets your business budget and growth goals.
Do you know you need a workforce plan but are not sure where to start? Or perhaps, you're new to the concept and what to find out more? This article will explain what workforce planning is, why you need it and, most importantly, how to implement it.
Let's get started.
What is Workforce Planning?
Workforce planning is a continual process of analysing business goals and strategically growing the team to meet them. It enables an effective human resource planning process to put the right staff with the right qualifications into the perfect job where they are motivated, driven, and valued.
Workforce planning is about creating an inventory of the workforce, scrutinising where you are now, where you want to get, and the steps you need to take to get there. Let's look at this example:
If your 12-month goal is to generate $1 million in revenue, but you only have one sales rep that generates $100,000 per year in sales, you've got a problem. Without additional representatives, you will not hit your top-line goal.
In other words, to meet your business goals, you need to put the right people in place. A workforce plan helps you prepare this in advance to create repeatable steps to meet your business goals.
By evaluating the current status of your business and looking at the set of skills that you have in the company, HR can better assess their pool of talent to find and plug gaps. Workforce planning must look to the next two years, acknowledge workforce gaps, and implement those fixes.
Once HR has an insight into where the company is today and where it wants to be, it can address the gaps and put plans in place regarding how HR can fill these gaps and find the missing pieces. The last step is to develop strategies to implement these plans.
Strategic Workforce Planning
A strategic workforce plan aligns business and organisational strategies with people strategy. Factors like seasonal peaks and troughs in the business, new products, budget requirements and constraints, software and hardware assets, financial goals and auditing skills are all important variables to consider in a strategic workforce plan.
Strategic workforce planning looks at the skills in the company and how they should be secured and nurtured. It addresses the gaps in teams and looks at how HR can fill them either with internal changes or by looking at skilled people outside of the organisation. The strategy also looks at what motivates employees, and by understanding their needs, HR can address organisational issues and devise strategic plans to fix them.
The Importance of Workforce Planning
Most modern businesses have one thing in common — they rely on talent. It's the often underrated asset driving a business forward to success.
Despite its importance, it's not always planned or measured like other key assets. Many people wait till they get too busy, then rush to make a hire. Oftentimes hiring badly and costing the company money and losing valuable time in the process.
Workforce planning eliminates this risk. Instead of waiting till the tenth hour (sales piling up with no one to deliver — sound familiar?), effective HR teams create long term plans to ensure the right people are hired at the right time.
If you've ever been short-staffed, you will be acutely aware of the strain on the business. It's not only bad for your team, but it's also likely to spill over into a poor customer experience.
By looking ahead at where you want to go and analysing your current situation, you can find and fix gaps in your current provision and prepare to put in place strategic hires when the time is right.
Workforce planning also improves employee happiness and retention. When companies develop and accommodate staff to live a better life and perform better in the workplace, companies retain staff, and teams are happier and more productive.
Obtaining total staff loyalty and commitment from hundreds of employees in one company and managing to drive energies towards company goals is an enormously complicated thing to achieve. Investing in employees' wellbeing and job satisfaction is a vital part of workforce planning.
To create value, HR personnel need to secure successful employees, offer them new opportunities, nurture and build up the underperformers, and target and secure potential employees to drive the company forward.
The Workforce Planning Process
It's clear that workforce planning is highly important for a business to meet its goals, but it's easier said than done. It requires your HR department to be forward-thinking, proactive, and strategic. Let's find out how to create a workforce plan.
Step One: Understand the Current Status of the Business
The first step in workforce planning is to evaluate the current status of the business. It involves exploring staff skills and knowing what their intention is career-wise.
It is about knowing each staff member's position according to their qualifications, personality profile, age profile, which top performers are eligible for promotion, which underperformers require training, headcount changes and leave trends.
An analysis of the current status answers these questions:
- Who do we have in the workplace right now?
- What is our workforce capable of doing?
- What is each person doing, their skills, where are they, and their plan?
- What are the current trends in HR, and are we moving with those trends?
To analyse your current position, you need to understand compensation, leave, benefits, skills and resources, and barriers to meeting goals. Here's how:
Compensation, leave and benefits: To get a complete picture of your current situation, you need to understand the composition of your workforce's compensation, leave and benefits. A complete data analysis of compensation, leave, and benefits allow HR to know whether the company's salaries are competitive. It also ensures exceptional staff are retained and adequately paid.
Performance data can categorise employees into ambitious, amiable, highly functional, backroom-staff or born leaders. Human resources can channel all forms of leave and benefits into the planning process.
Skills and resources: Another core area to analyse from the status quo is the skills and resources currently in each department. It is invaluable to know the personal details of employees in each department, their required skills, whether those skills are represented and whether the department is overstaffed or understaffed.
Understanding each team member's position makes it easier to plan employees' development and progression and monitor high performers or potential leaders. As we'll find out below, automated software like the Humaans Insights function makes this process easier.
Barriers: Finally, when assessing the current status of your workforce, don't forget to uncover any blockers to the company's success. For example, incorrect staff placing may result in an oversupply of talent in one specific area or a lack of skills in another of the company's divisions.
A further barrier may be identifying staff resistant to change, particularly new technology. In this instance, HR planning can help to understand employees' insecurities around technology and offer training to reduce the friction.
The current status analysis also identifies underperforming divisions and people who get bogged down with too many details and are slowing down progress. Once HR has identified these areas, they can be rectified further down the line in the execute and adjust stage.
Analyse Your Current Situation
Step one is concerned with analysing the current workforce from wages and benefits to skills and blockers. While it sounds straightforward, how do you actually do it? Spreadsheet? Pen and paper? A web of apps connecting your HRIS, CRM, Zaps, and more?
Alternatively, you can use Humaans Insights function, an integrated analytics tool that can analyse a company's current status. It records all personnel information regarding staff logistics, overstaffed divisions, understaffed divisions, retirements and resignations, underperforming personnel and divisions, and successful staff and departments. Using an automated tool to provide a comprehensive overview of the company saves time and effort.
Step Two: Choose Your Business Goals
This stage of the workforce planning process analyses the company's future goals: what the business is trying to achieve and what skills and competencies are required to reach those goals. These predictions are vital for any company because it gives strategic direction, allowing the company to grow. Hence, strategic planning is paramount to succeed.
An analysis of the future status answers these questions:
- What is our 12-month business goal?
- Which products will we sell to hit the 12-month goal?
- What is our net profit goal?
Let's use a real-world example. As a SaaS company, you may have a 12-month top-line revenue goal of $1 million. You generated $500,000 last year, so you're ready to push towards the seven-figure dream.
You know that you've tested five monthly packages in the past 12 months, three of which were unsuccessful, while the other two made 80% of the profit for the company. You can add this knowledge to your business goals like this:
$1 million revenue in the next 12 months. Packages one and two are the only contracts available for sale, with an estimated average net profit of 50%.
Once you set your goal, you need to make all divisions in the company aware of these forecasts and visions and get total buy-in from all senior and line managers.
Step Three: Gap Analysis
The next step is to find the gaps in your current workforce. This stage of the process aims to identify surplus and deficient skills in the workplace, which specific roles need to fill, and which are redundant. Everything in this stage should be considered against the context of 1) your current provision and 2) your business goals.
Ask yourself the following questions:
- What do we need in the workplace to meet the business goals?
- Do we need more people in specific positions?
- How many sales reps/account managers/etc. do we need to hit the 12-month goal?
- Are we missing any skills to sell packages one and two?
You know your current workforce provision and where you are trying to get to. You now need to create the stepping stones to meet it.
Let's go back to our $1 million example: in the last 12 months, you hit $500,000. You know you achieved that with three sales reps that can generate $165,000 each per year. You also know you've got five account managers that each handle 100 customers or $100,000 annual recurring revenue.
In other words, you've got the manpower to deal with $500,000 annual revenue. Your workforce plan now tells you who you need to hire and when, e.g.:
- You need another three sales reps to make an additional $500,000 in sales.
- To service the additional customers, you need five more account managers.
Of course, this is overly simplistic, but it gives you the idea. Inside your workforce plan, you need to consider ramp time, development time, additional sales and marketing efforts, and so on.
Step Four: Execute and Implement
Once the workforce planning has been done and gaps recognised, the last step is to execute these plans and develop processes to implement them. This may involve developing new recruiting strategies, new training directives, development plans and more. Broadly, you can fill the gaps internally, externally or with tech, like this:
Internal gaps and internal development: When workforce planning has reached this stage, HR knows the current employees and what they give to the organisation. With this information, HR can develop succession plans, discover where some people skills are underutilised and identify employees who require training. The gap left by people retiring or resigning is also now known.
HR can add value to the workforce by uplifting employees and caring for their loyalty. They can target the existing employees' potential and harness it towards business success. Internal development defines the needs and priorities of the organisation and matches these with employee skills and the company's core business strategy.
External gaps and new recruitments: The importance of HR planning is indisputable. If HR leaders cannot find talent inside the organisation, they must find the best-fit candidate outside the company. Looking outside the business means that HR relies on a CV, a psychometric assessment tool, and first impressions to recruit. Psychometric assessment tools indicate how potential candidates work with goal setting, stress, change, creativity, risk and competition. These tools match company culture with the candidate and increase the chances of hiring the right external people.
Digital skills gap: Another strategic objective is the digital skills gap. The digital skills gap is important to many organisations moving forward. Technological advancement in the workplace is growing exponentially, and staff must keep up with technology. Once HR knows who these people are, they can implement training and upskilling to acknowledge future trends and technological needs.
Workforce Planning With HR Software
Workforce planning tools help human resource planners manage, organise and analyse data, facilitating an effective workforce. A good workforce management plan includes automated software to alleviate the administration of shifting and changing workforce and company strategy. HR software can help you in the following areas:
Employee directories: Advanced software and technology follow the entire employee lifecycle on an employee database. It records each staff member in a public profile to help integrate staff and know where they work. It also describes who joins, leaves, retires, and the people who have a special occasion approaching. The employee details are also stored for HR, delineating all compensation and role details of each employer.
Managing documents: All company documents, employment agreements, and personal documents such as passports and ID documents can be stored in one place using advanced software.
Viewing company trends: Workforce planning tools can give you details of headcount changes, average salaries, average tenures, historical data, and time off trends without doing any manual work.
Companies benefit from tracking salary spending over the entire company and within various departments, especially when it becomes easy to compare these figures with past figures.
Monitoring time-off trends ensures mental health in the company. Workforce planning software tools can also monitor and compare time off periods over months or years.
Access to payroll data: Software tools access all payroll data, linking compensation to employee roles, and it is possible to check for consistency. You can access all historical payroll records.
New trends or tools are dominating the workforce planning landscape. These trends involve using data to drive decisions and using technology and automation tools to collect and integrate the data in new, innovative and meaningful ways. Human resource managers understand that collecting data helps managers make informed decisions and reduces company risk.
Humaans is a Human Resource Information System that manages workflows automatically and gives HR personnel fast and efficient access to data. You can can collect employee data, store company documents, and track your team data. Humaans can be integrated with Slack, calendars, and dozens of other tools, keeping human resources staff informed of personnel movements in and out of the company. Humaans features allow you to track company growth, headcount changes, monitor work from home trends, and more.
Simplify your people operations today. Book a free demo to learn how to achieve greatness in human resources management.
Simplify your people operations today. Book a free demo to learn how.