Regardless of the size or type of company, taking the time to plan and make decisions as part of a broader strategy improves every aspect of your business, including your workforce.
Strategic workforce planning is one of the most powerful tools companies can use to achieve globalization objectives in an increasingly competitive market.
Planning is the driving force and the primary connection point between the workforce and talent management. A comprehensive workforce plan is at the heart of a great human capital management team. When used well, strategic workforce planning enables HR to plan for the capabilities they need in the future.
While many organizations realize the need for better planning, most still lack the tools and capabilities to effectively manage and execute the strategic steps necessary to drive significant business results.
Next, we will answer your questions and provide an actionable guide to strategic workforce planning success.
TABLE OF CONTENTS
Workforce planning is a process that allows businesses to anticipate workforce needs, develop plans to optimize their staff and resources, and create a framework for managing future staffing needs. Workforce planning includes forecasting labor supply and demand, assessing labor gaps and making decisions about recruiting, redeploying and eliminating employees.
Workforce planning, also called strategic workforce planning, is about making sure that the right person is in the right job at the right moment. By planning your workforce, you ensure there are not too many people available (overstaffing) nor too few (understaffing).
Workforce planning solves staffing problems for today and the future. Strategic workforce planning is becoming increasingly important for several reasons.
Demographic changes: An aging workforce poses different problems, including a deficit of valuable skills, reskilling challenges, and mass retirement.
Cost reduction: Increasing global competition forces companies to work smarter. At the same time, the aging workforce is a more expensive one – but not necessarily a more productive one.
Talent management: Talented employees form a competitive advantage for the company. It is essential to have people with the right drive and line up a talent pipeline to replace the aging employees.
Flexibility: Current competitive landscape requires faster and more disruptive innovation. The tactics that got us here will not take us where we need to go next.
While many see workforce planning as purely a staffing tool for anticipating employment needs, it can also be a critical tool for staff training and development and succession planning.
In the current talent-based economy, people are the key that keeps successful companies running.
When you act with purpose, you build your future. Agile workforce planning shapes the employee experience in significant ways. It also helps companies form teams that work well together for impactful, long-term results and enhances talent management capabilities.
Anyone who has ever experienced staff shortages will know not having the right talent in place can cause enormous strain on a business. Many organizations are not sufficiently aware of the current or future workforce gaps that will limit the execution of business strategy.
However, if organizations can look ahead and plan what roles, skills, and people they will need to meet their business goals now and in the future, they are more likely to thrive.
Workforce planning helps companies to:
i. Reach financial objectives
Finance and HR are excellent partners in business planning. This partnership enhances collaboration by people, processes, and technology.
The finance department should analyze HR data to determine how the workforce contributes to the organization. With those insights, HR can strategically allocate resources, hire the right people at the right time, initiate programs that nurture talent, and create an optimal workforce mix that aligns with financial goals.
ii. Improve overall employee experience
People are at the center of effective workforce planning. When a company plans with its people top of mind, it prioritizes their well-being, work-life balance and improves the employee experience.
Workforce planning can help your organization gain business agility through engaged employees and their unique, individual talents. That starts with having flexible workforce plans tailored to their experiences and needs.
Analyzing your workforce helps you determine how to move toward higher productivity and profitability. This staff review ensures that your hiring strategies meet business requirements and that your workforce plans coincide with your corporate program.
iii. Promote collaboration
Workforce planning encourages member participation throughout the organization. Identifying interdepartmental connections and understanding how an area affects another requires a series of cross-functional insights gained through collaboration. Moreover, knowledge and teamwork broaden horizons.
When it comes to workforce planning, there are four criteria.
A. Right people
Some companies rely heavily on new team members to achieve their goals. In these instances, it would be necessary to expand their workforce to process their workloads.
In the new remote business world, global barriers have dissipated. Now it is possible to find the best talent, regardless of where they live. Expand your talent acquisition strategy beyond your local area to find the right people for your team.
Things to consider:
B. Right skills
Knowing exactly which competencies your company requires from its talent is critical to meeting future challenges and most effectively filling skills gaps. Identifying the experience levels that support strategic competencies is vital for translating hiring into strategy and turning business models into long-term results.
Things to consider:
C. Right cost
The goal of cost revolves around reaching an optimum labor cost. Too much will bankrupt the company, but too little will result in work not getting done.
Plan for direct and indirect costs you can expect to incur while hiring, including job ads, hours spent on applicant interviewing, new employee salaries, benefits, insurance, etc.
Understanding what these costs look like will keep your team within budget. It will also ensure you optimize costs by securing the right talent only when those specific skills are needed.
Things to consider:
D. Right place and time
Continuous growth requires placing the right people in the correct positions at the right time. Companies must establish clear business goals to ensure they hire team members equipped to help meet current and future company objectives.
Things to consider:
Workforce planning should not be confused with HR analytics. People analytics primarily focuses on analyzing relationships between people drivers and business outcomes. Strategic workforce planning has a long-term focus and is mostly about employee formation. The goal is the main difference between HR analytics and workforce planning.
So how does workforce planning work? There are multiple approaches to workforce planning, but the process is usually similar.
Use the following steps as the building blocks to a successful, engaged, and productive team.
One of the objectives of strategic workforce planning is achieving your business goals. You should assess them during the first stage of the strategic workforce planning process.
Including the right people during this stage is crucial. Besides HR professionals, you must involve line managers, financial services representatives, and business executives, to name some of the right people to include during strategic workforce planning initiatives.
The second step in the planning process is to analyze the current workforce. Business leaders must assess both the quantity and quality of the personnel during this step.
Good workforce planning follows the 80/20 Pareto principle: you can get 80% of the effect by only 20% of the work. Focus on the primary functions of the organization when you engage in strategic workforce planning. These are the ones that contribute most to the organizational results.
Conducting a skills gap analysis will provide valuable future workforce data. For example, a skills gap analysis would indicate when an employee plans to retire. Instead of scrambling to replace the retiring employee, the skills gap analysis would have provided sufficient time for HR to prepare.
Adequate preparation for the future provides companies with a competitive advantage within their industry.
Business leaders must be sure to develop a workforce plan that anticipates future business issues and provide actionable steps to address them.
After assessing objectives, analyzing the workforce, identifying skills gaps, and anticipating future issues, the next step is to develop an action plan. The plan should include strategies for recruiting, and retaining talent, restructuring the organization, and enhancing technologies.
Implementing the action plan means ensuring that the necessary resources are in place, roles are clear, and needs are met to execute the plan and achieve business goals. To achieve this, you must work with leadership and hiring managers to gauge the impact.
As business needs change, workforce planning strategy does as well. Regularly testing and monitoring your plan allows you to identify progress, areas for improvement, and any necessary adjustments to address potential workforce issues.
Acquiring great talent is challenging, but retaining them can be even more difficult.
If you do not support the talent strategy and culture through methodical workforce planning, it will cost you resources due to the inability to hire, maintain, and empower top talent.
Successful strategic workforce planning can have significant positive effects on your business. Here are six of the top benefits.
# Plan for change
With Strategic Workforce Planning, you can establish metric benchmarks that will inform executives about workforce issues and equip them with tools to identify talent risk before impacting business objectives.
This information will help you improve business planning and financial forecasts by quantifying talent requirements to meet short and long-term organizational goals.
# Decrease hiring costs
Make the most of your talent by making your decisions based on a detailed overview of the future headcount and productivity levels for the business to grow.
The recruitment costs will decrease, and business operations will run more effectively. These positive effects will impact all levels of the business (employee morale, motivation, revenue).
# Improve recruitment processes
Strategic workforce planning can help you outline the characteristics and traits of the high performers in each department and inform your hiring criteria to find candidates that suit the business goals and culture.
This process will improve your employee retention rate, save time in your onboarding process and decrease recruitment costs.
# Align HR with business strategy
Align your HR programs and policies with the business strategy for workforce planning, such as data protection, employee assistance and benefits, learning and career development programs.
This alignment will ensure that those goals are supported in the best way possible and strengthen the company culture.
# Drive allocation of talent investments
Strategic workforce planning will help you determine which groups of employees deliver the highest ROI for the business and warrant investment in their training and development. Workforce planning will outline what areas need extra resources to reach their full potential and contribute more to the business.
Furthermore, this will inform what roles are crucial for the growth of the business, so you can implement steps to protect that and minimize risk.
# Implement informed retention tactics
Without proper tools, HR and managers can misuse raises, bonuses, and promotions to prevent turnover. Strategic workforce planning will help you leverage predictive analytics to correctly identify top performers and people in critical roles who are at risk of leaving. From here, you can implement a retention strategy to minimize risk and move forward.
Strategic workforce planning prepares companies to respond to continuous fluctuations in the workplace. It also ensures business agility in times of crisis, such as the Covid-19 pandemic.
Many organizations started encouraging remote work to ensure the safety and wellbeing of employees during the crisis, but remote work is now the new normal.
Companies must adapt their business strategies to the remote work model to enable employees to be more productive and meet their goals.
Here are some strategies for successful remote workforce planning.
Establish remote work policies with clear rules and outlines. These should detail job responsibilities, organizational and departmental goals and objectives, and employee job performance.
Select the right people for the job. It is necessary to define who will perform best in a virtual setting. Not all employees are best suited to work from home. Allow employees to be able to select the dates they will work from home using a WFH calendar.
Anticipate issues and prepare to respond. It is crucial to prevent and solve any problems that could arise. When it comes to vacation planning, and tracking, consider online HR solutions like LeaveBoard.
Keep objectives and expectations clear and continue to monitor and test the company’s action plan.
With the ever-changing marketplace, it is even more crucial to differentiate your business in a way that resonates with talent and customers.
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