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Hannah Taylor

4 Workforce Planning Models Explained

If you want to lead data-driven, strategic workforce growth and development, study up on workforce planning models. We'll give you the lowdown in this article.

Workforce planning is a complex process, spanning everything from skills development to optimizing businesses’ organizational designs.

But to get the most out of your workforce planning strategy, you can’t just take a shot in the dark. Creating an effective strategic plan requires a measured approach, using data to inform decisions and models to guide you along the way.

So, what are workforce planning models? In this guide, we’ll explore some of the most effective models, their benefits, and how to choose the right one for your business.

What are workforce planning models?

A workforce planning model provides a structured framework for tackling the process of workforce planning. Effective workforce planning covers a huge number of activities aimed at aligning a business’s human resources with its strategic goals and forecasted demand, including looking for skill gaps, understanding causes of turnover, devising training and development plans, and generally optimizing the workforce for long-term business growth.

There are many different workforce planning models, which can be sorted into four main approaches — but more on those later. Each model has its own benefits and drawbacks but generally aims to provide a systematic approach to the workforce planning process using a range of tools such as gap analysis.

Why are workforce planning models helpful?

When it comes to developing the future workforce, HR leaders often know that something needs to be done. The problems begin when they lack the necessary capabilities to do it properly. In fact, just a third (33%) of workforce planning leaders consider their organization to be effective at using data to inform human resource planning

This is where workforce planning models come into play. These models provide teams with the tools and frameworks needed to successfully navigate the complexities of building a strong and flexible workforce.

But there are many more reasons to implement a workforce planning model than gaining simple guidance. Here are some of the key benefits of using a model to inform your workforce planning process.

Improved consistency

Models provide a standardized approach for businesses to follow. Businesses may need to apply the workforce planning process across several locations and subsidiaries or review their strategic plan regularly; using a model ensures they maintain a consistent approach. Plus, a well-structured model supports communication between departments and stakeholders, ensuring everyone sings from the same hymn sheet.

Data-driven decision-making

Taking a data-driven approach is critical to effective workforce planning. Many models prioritize statistical analysis, supporting HR teams in making data-informed decisions. Using accurate data to predict everything from future staffing requirements to anticipating turnover helps inform future planning.

Greater adaptability

Market and business needs change over time. Thankfully, flexible models can help organizations meet their shifting future workforce needs. Plus, by providing teams with a glance into the future, they can identify and mitigate potential risks. In dynamic markets, this provides a competitive advantage.

4 strategic workforce planning models you should know

OK, now we’re getting into the good stuff! Next, we’re going to talk you through four common workforce planning models, looking at what they involve, their benefits, and their drawbacks.

Optimization models

Optimization models aim to help businesses meet their strategic objectives — such as reducing staffing costs or increasing output — by making the most efficient use of their current employees. This involves using data models to reveal potential constraints and help businesses analyze the implications of different scenarios. Teams can then use this information to optimize resource allocation and stay several steps ahead — kind of like a game of chess.

Common techniques used in optimization models include linear programming, cost minimization, and productivity maximization, which all focus on supporting resource allocation and cost management. These models are best suited to industries like manufacturing, professional services, retail, and healthcare, where efficient allocation of resources and budget management are critical.

Advantages of optimization models:

  • Supports effective resource allocation, driving efficiency
  • Aids businesses in reducing labor costs while maximizing productivity
  • Can account for a range of scenarios
  • Ensures precise decision-making with robust mathematical techniques

Disadvantages of optimization models:

  • Require extensive, accurate data for maximum impact
  • Impact may be limited in volatile environments
  • Can be complicated for beginners to understand and implement, though modern tools can help here

Flow models

Flow models concentrate on how employees move through a company, with a focus on understanding career trajectories and supporting employee development. Workforce planning is used to drive successful employee development initiatives and succession planning. This supports the creation of staffing plans that guide the strategic movement of talent through the business. By mapping out how the workforce is anticipated to grow and shift, HR teams can identify what training individuals will need to make a smooth transition into new roles.

Common techniques used in flow models include Markov analysis, career path planning, and succession management. These models are best suited to large corporations and government bodies that benefit from the close management of employees' career paths.

Advantages of flow models:

  • Supports career path and succession planning
  • Helps teams understand what factors influence employee turnover and promotions
  • Aids long-term strategic workforce planning

Disadvantages of flow models:

  • Can be complex to manage in businesses with lots of departments and large headcounts
  • Require constant monitoring as career development is dynamic
  • May be challenging to implement in an agile business without defined career paths

Deterministic models

Deterministic models are all about finding patterns in historical data and using these to predict future needs. Teams use workforce planning analysis techniques to predict future staffing requirements, informing hiring and training processes. In turn, this helps organizations make resourcing decisions and understand training requirements.

Common techniques used in deterministic models include trend analysis, fixed ratio, and regression analysis. As these models focus on producing accurate resource forecasts, they are most effective in stable environments that are unlikely to experience unpredictable changes, such as utilities and financial services. 

Advantages of deterministic models:

  • As deterministic models use fixed inputs, their forecasts provide clear and specific outcomes
  • Aid straightforward planning in predictable environments
  • Are simple to implement (when compared to models that attempt to adapt to variation, at least)

Disadvantages of deterministic models:

  • Are less flexible than other models, as they don’t account for uncertainty
  • Aren’t suitable for sectors that experience frequent, unpredictable change
  • Assumes past patterns will continue, which may not be true in highly dynamic businesses

Equilibrium models

Equilibrium models work to ensure an organization has the right talent in place to meet anticipated levels of workforce demand. Making sure the workforce has the right skills and levels of expertise can involve upskilling existing employees and hiring the right people to fill talent gaps while maintaining productivity and optimizing the recruitment process.

Common techniques used in equilibrium models include supply and demand analysis, labor market analysis, and skill gap analysis, helping organizations balance supply with labor needs. These models work best in sectors such as healthcare and education, where demand will fluctuate, but a stable workforce is critical to maintaining operational efficiency.

Advantages of equilibrium models:

  • Effectively balancing talent supply with demand supports productivity and cost management
  • Creates a stable workforce
  • Supports long-term business objectives and builds a motivated workforce

Disadvantages of equilibrium models:

  • Working to achieve equilibrium requires constant monitoring, especially in dynamic industries
  • Has to be constantly monitored to factor in changes
  • Additional effort needs to be put in to support employee engagement

So, what is the best workforce planning model?

Drum roll, please! The best workforce planning model is… whichever is best suited to your organizational goals, structure, and staffing needs. As there is no one singular best model, you need to evaluate each in the context of your business’s needs.

Here are three questions we recommend you ask yourselves when determining which operational workforce planning model best suits your organization’s needs.

1. Which model aligns with your long-term business goals?

First, you need to understand what you want to achieve with workforce planning. Every business has different goals, and each model is suited to different needs. By identifying your business’s priorities, you can select the model that best aligns with these. For example, if your business wants to respond to change faster, choose a framework aligned with the equilibrium model, which offers greater flexibility due to its focus on continuous assessment and adjustment.

2. How big is your workforce?

Running workforce planning for a boutique agency with twenty employees is one thing. Optimizing a global enterprise’s workforce is an altogether different beast. Larger businesses with many different departments and locations will benefit from selecting a model designed to handle complex data sets and variables. For example, optimization models are great for solving complex staffing problems as they can account for a range of scenarios.

3. What data is available?

Data is incredibly important to strategic workforce planning, but not every business will have access to extensive data sets. If your organization lacks relevant data or your HR team has limited analytics capabilities, you will be better off using a model that is less reliant on data. For example, flow models can still be effective when using qualitative insights rather than quantitative data.

Support strategic workforce planning with Runn

To succeed in strategic workforce planning, you need access to lots of accurate (and relevant) data. From uncovering skill gaps to identifying the most valuable players, there are many ways data can inform decision-making. Whether you’re looking to build your HR team’s analytics capability or want to simplify the process of data collection, there are many workforce planning tools that can help.

With automated timesheets, handy skills inventory, extensive reporting features, dynamic charts, and more to explore, Runn makes gathering and analyzing workforce data a breeze. Try Runn for free today to get the actionable insights you need to create an effective strategic workforce planning process.

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