Strategic workforce planning is one of the most potent tools that businesses may employ to achieve their internationalization goals in an increasingly competitive market.
The driving force and fundamental link between workforce and talent management is planning. A solid human capital management team is built around a thorough workforce plan.
While many organizations recognize the importance of better planning, the majority lack the tools and capabilities to successfully manage and execute the strategic initiatives required to create meaningful commercial results.
Let us begin by defining workforce planning and why it is vital.
What is Workforce Planning?
Workforce planning is defined by the Society for Human Resource Management (SHRM) as the process by which an organization analyzes its workforce and determines the procedures necessary to satisfy current and future staffing demands. It also entails determining the most effective and cost-effective strategies for attracting and retaining talent.
What is the Importance of Workforce Planning?
When you behave with intention, you are constructing your future. The employee experience is significantly influenced by agile workforce planning. It also assists businesses in forming cohesive teams that provide long-term results, improve investor relations, and strengthen talent management capabilities.
Workforce planning enables businesses to:
#1. Meet financial targets
Finance and human resources are ideal company planning partners. The productive collaboration of these two teams improves collaboration by connecting people, processes, and technology.
Finance and human resources, like any effective collaboration, rely on one another, because the workforce is a primary source of revenue and cost.
To assess how the workforce contributes to the firm, the finance department should examine people’s data. With these data, HR can strategically manage resources, employ the appropriate people at the right time, launch talent development initiatives, and establish an ideal workforce mix that matches with financial goals.
#2. Enhance the employee experience
People are at the heart of good workforce planning. When a firm plans with its employees at the forefront of its mind, it prioritizes and caters to their well-being, thereby improving the employee experience.
Workforce planning can help your company obtain business agility by leveraging the efforts of engaged people and their distinct, individual capabilities. This begins with having flexible workforce strategies tailored to their experiences and requirements.
Analyzing your workforce allows you to identify ways to increase productivity and profitability. This guarantees that your hiring methods are in line with company needs and that your workforce plans align with your corporate strategy.
#3. Encourage collaboration.
Workforce planning is a collaborative process that fosters organization-wide member participation. Understanding the effects of specific activities on other parts of the organization requires a series of cross-functional insights that can only be acquired through collaboration. Furthermore, information and collaboration enlarge perspectives.
A concentrated strategy is required to get the most out of your staff. But where do you begin? There are four main factors to consider while developing your workforce planning model.
4 Basic Workforce Planning Principles
#1. Appropriate individuals
Some businesses rely largely on the acquisition of new team members to fulfill their objectives. In these cases, they would need to increase their workforce in order to process their workloads.
Global borders have melted in the new remote business environment, making it feasible to find the best person regardless of where they live. To locate the best people for your company, broaden your talent acquisition plan beyond your local area.
Consider the following:
- A global hunt for Talent
- Factors influencing staffing requirements
- Increased Productivity
#2. Appropriate skills
Knowing the abilities your organization demands from its employees is crucial for meeting future problems and efficiently filling skill gaps. It is critical to identify the experience levels that support strategic skills when translating hiring into strategy and turning business models into long-term results.
Consider the following:
- Critical abilities required throughout the company
- How skills affect your strategy and company model
#3. Right spot and the right moment
Continued expansion necessitates putting the right people in the right places at the right time, as well as having the proper roles to put them in. To accomplish this, staff must be optimally distributed throughout the organization.
It also implies that businesses must develop clear business goals in order to hire team members who are capable of assisting the organization in meeting current and future objectives.
Consider the following:
- Talent distribution and company demands must be in sync.
- Changing the hiring approach to match corporate objectives
#4. Correct price
Plan for the direct and indirect expenditures you can expect to incur while hiring, such as job ad costs, hours spent on applicant interviews, new employee salary, benefits, insurance, and so on.
Understanding these expenditures will help your team stay within budget. It will also ensure that you are optimizing expenses by hiring the proper people just when they are needed.
Consider the following:
- Concentrate on talent-related cost-cutting strategies.
- Budgeting for direct and indirect recruiting costs
- Budgeting just for the talent and skill sets required by your company
These concepts should serve as the guiding principles for your strategic workforce planning.
What Does Strategic Workforce Planning Entail?
Strategic workforce planning is produced within your firm by establishing a process that anticipates current and future employment needs. This will ensure that your corporation has the resources it needs to achieve its business objectives.
You will be able to design a strategic workforce plan that fulfills your intended long-term goals and preserves your company’s long-term profitability by utilizing business analytics, finance, and input from HR and procurement team data.
Strategic workforce planning will assist you in developing an organization with stable employment levels across all departments, the necessary skills in the right positions, and a higher return on investment (ROI).
Strategic Workforce Planning Questions and Actions
As a result, strategic workforce planning raises the following issues:
- What new work is required for future success, and how will our existing job change?
- What competencies are required to carry out the business strategy?
- What internal resources do we have?
- How does the external labor market appear?
- What is the chasm?
- How do we fill in the blanks?
- Where do the critical risks exist?
- How will we assess the plan’s effectiveness?
Similarly, actions resulting from strategic workforce planning will include:
- Purchasing new talents or developing internal talent pipelines and learning roadmaps
- Creating avenues for people to reskill and redeploy themselves in areas where demand is decreasing
- Improved retention and engagement.
When these circumstances are met, your workforce will be better positioned to deliver on your long-term company goals.
Given the importance of strategic workforce planning to an organization’s long-term health, let us look at the measures you may take to establish your workforce planning process.
Strategic Workforce Planning Steps – A Do-It-Yourself Template
In this section, we will go over a workforce planning template and the many phases involved.
Workforce planning revolves around three major steps. The first step is to do a workforce study. The second is a projection of the future. The third component is a future workforce analysis. Let us go over them one by one.
#1. An examination of the present workforce composition
Workforce planning begins with the current employee base. It provides a response to the question of what people and capabilities an organization currently has.
When assessing the existing workforce composition, there are two aspects to consider. These are the workforce quality and workforce quantity.
1. The Workforce’s Quality
The workforce’s quality is determined by both current performance and future potential. We have all heard the terms “high performer” and “high potential.” These are persons who either do very well today or are expected to perform exceptionally well in the (near) future.
Assessing workforce quality creates the framework for effective talent management. The goal of talent management is to maximize employees’ full potential. Companies devote time and money to enable their employees to perform well.
The quality of the workforce is analyzed in the first step of the analysis of current workforce formation. Employees are evaluated based on their current performance as well as their future potential.
The 9-box grid framework is a nice illustration of this. It aids in workforce mapping. This map is useful since it allows HR to manage personnel more effectively.
Part of the strategic workforce planner’s responsibility is to envision the future, which involves taking into account market trends and growing skills. If a corporation wishes to enhance its machine learning capabilities, for example, current performance and potential may not equate to future performance and potential. It is far more difficult to map employee potential against a divergent path.
Different people require different talent management policies.
- Coaching and training are required for high potential.
- High-potential managers require management training.
- High achievers with little potential should not be given increases or promotions because they cannot grow much further. This would result in a top-heavy organization. Furthermore, if workers stop working effectively, there is little motivation for them to leave because they are well-paid. These kinds of issues are common in the banking industry.
- Low-potential workers should not be given raises or promotions. These are the people you should let go of because they will be happier in a different job.
Based on this simple 9-box grid quality map, we could write a book about various talent management tactics. The goal of this example is to demonstrate how effective a basic workforce planning exercise can be in structuring a complicated process such as talent management.
2. The workforce’s size
The next stage is to assess the workforce’s size using a personnel flow matrix. This matrix takes new hiring, staff churn, and internal promotions into account.
This matrix divides personnel into four categories:
- top management
- middle management
- production staff
- support staff.
The matrix depicts the number of employees in each category on January 1, 2018. For example, high management (category A) has 45 employees. 28 of them stayed until January 1, 2019, 15 departed, and two were relegated to middle management.
This model depicts the organization’s risk factors. In this instance, top management turnover is alarmingly high. It also depicts internal and external mobility, as well as an overview of the most significant developments in the organization.
This model is fairly straightforward. Additional information (such as the total number of internal replacements) can be added, categories can be moved to different departments, and data can be filtered based on individuals with certain traits or skill sets. If you compare this summary for both sexes, it would provide an excellent overview in terms of diversity in internal mobility.
The data can also be filtered based on the function type. Not every employee in the company is mission-critical. It would make sense, for example, to concentrate on important functions. This is the 20% of the organization that is responsible for 80% of its results.!
#2. Predict the future: Use scenario analysis to create potential futures.
It is useful to know where you are right now. To be prepared for the future, you must first understand what might happen.
The future is impossible to foresee, however, scenarios of probable future outcomes can be created. These might assist you in creating action plans ahead of time.
#3. An Examination of the future workforce formation
The final phase is to examine the workforce’s future composition. There is a distinction between the expected and intended formations.
1. Expected future formation
The projected formation is the formation in 3-5 years if the company continues to do what it is doing now. The personnel flow matrix we presented before is useful in this case since it allows us to extrapolate these statistics over a longer time period.
The question is whether the future expected formation corresponds to the desired formation.
2. Desired future formation
The transportation industry is one example. According to a recent International Transport Forum assessment, the demand for drivers in the United States and Europe will be decreased by 50-70% by 2030.
In a recent talk with a friend who works in a railway technology consultancy, he mentioned that trains can drive themselves and that the function of the train operator has been reduced to someone who needs to be present in case of an emergency. Within two to three years, the operator will no longer be required.
These kinds of changes are difficult for the workforce. The anticipated formation indicates that your train operator workforce will remain significant for 2-3 years. However, at that time, their job will have been automated, thus your intended formation would be substantially different.
Knowing about this gap will aid you in closing it. It will take a long time to eliminate these jobs, particularly in unionized countries. Smart workforce planning will help you foresee these challenges and take necessary action at the appropriate moment.
What are the Benefits of Strategic Workforce Planning?
Once you have implemented a strategic workforce plan and effectively identified all present and required workers, you will be able to hire the best individuals in your field and always be one step ahead of your competition.
Developing and implementing a strategic workforce plan can provide numerous benefits to your company. Some of the most important are given below:
- Addressing current workforce gaps – Analyzing your present employees’ competencies might provide insights into the skill or resource gaps that your company currently has. You will be able to determine the gaps between your existing workers’ competencies and what you will require in the future to achieve your goals through this review. Using that data, you can ensure that you hire top employees with the necessary capabilities for your company’s success.
- Improving Key Performance Indicators (KPIs) – Business is all about consistently developing and improving those key performance indicators (KPIs). You can use the data from your strategic workforce strategy to propel your company forward and ensure that performance indicators are always improved and new goals are accomplished.
- Prepare for the unexpected – By developing a strategic plan that considers both present and future business needs, your organization will prevent potential and unforeseen problems down the road. Preparing for these challenges will save your firm a lot of time and money in the long run.
How Workforce Planning Affects Human Resource Procedures
#1. Employee development and recruitment
Workforce planning lays out your company’s recruitment and personnel development strategy.
With a thorough understanding of your current workforce and future objectives, you can profile the skills, experience, and knowledge needed to meet your needs and build hiring and training processes to match.
Companies are always battling for the same top-tier talent. With proper workforce planning, you can better identify prospective top employees for your firm and build talent acquisition tactics to attract them.
Furthermore, workforce planning research can assist businesses in developing suitable training and staff development to bridge talent gaps while also identifying individuals capable of excelling with the proper professional development in place.
#2. Transition planning
This brings us to succession planning and ensuring that you maintain successful leadership throughout your organization.
Companies can begin appraising existing employees for promotion or targeting outside hires with the proper balance of talent and experience by recognizing the leadership positions that are currently open or will be available shortly.
Workforce planning, in conjunction with succession planning, ensures a smooth transition for important roles in your organization, allowing you to provide an uninterrupted, seamless service or product to your consumers.
#3. Performance management
Managing your employees’ performance to boost productivity and efficiency is a crucial effect of workforce planning.
You may comprehend and build workforce planning methods to get the most out of your personnel in order to boost productivity and receive a higher return on investment from your staffing expenditure.
Conclusion
The purpose of workforce planning is to have the appropriate people in the appropriate jobs at the appropriate time. This is accomplished through understanding present workforce capabilities, planning future scenarios, identifying the desired workforce, and taking efforts to align the future workforce with the desired workforce.
Workforce planning is not something you can accomplish in your office on a rainy afternoon. It is a difficult task that necessitates thorough data collection and planning. However, when done correctly, workforce planning is a terrific and highly valuable tool that may help your firm develop a competitive advantage.
The future is unknown. As a result, strategic workforce planning in practice is very iterative. More importantly, once conversations about strategic workforce planning begin, the organizational perspective will shift.
These discussions set the stage for managers to think carefully and methodically about the workforce and what it takes to bring the organization ahead.
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