Back to all posts
Iryna Viter

What Makes an Effective Workforce Planning Process in 2023

Workforce planning helps you find and hire the right people now and in the future. If a business is only as good as its people, workforce planning is the key to success.

The success of any organization relies first and foremost on its people. The ability of a company to attract and retain the best talent has a huge influence on its ability to deliver on its goals.

However, workforce planning is not straightforward, and there is a range of reasons why. A business may need a very specific skill set that can be hard to hire for. It may have a high turnover rate in key positions over a short period of time. Or it may be paying well above the market rate for the skills it has on staff.

Alternatively, there may be a global shortage of skills within certain industries. This issue has affected education, construction and healthcare sectors particularly in recent years.

These are all common issues that impact an organization's ability to develop its ideal workforce.

Rather than leaving staffing to chance, it's always best to be proactive. That means carrying out strategic workforce planning to ensure a business has the right skills and talent to deliver on business objectives both now and into the future. Learn what goes into workforce planning in our ultimate guide.

What is workforce planning?

A commonly used workforce planning definition is the way an organization analyzes its workforce and determines the steps it must take to prepare for future talent needs.

It's arguably one of the most impactful aspects of human resources and people management. By understanding both current and future business needs, HR leaders can enable business objectives to be achieved efficiently and affordably.

However, workforce planning is about more than just a staffing strategy. It also includes working closely with your current workforce to foster skills development, as well as recognizing opportunities to improve the organizational design of the business.

what is workforce planning

Workforce planning in HRM

In the context of human resource management, a workforce planning strategy involves actively managing issues such as:

  • Recognizing the workforce makeup that will be required to enable the organization to deliver on its future business objectives. This includes critical areas of growth within teams, and the creation of new specialist business areas.
  • Identifying skills gaps or staffing needs that will take the organization from its present form to its optimal future form.
  • Establishing recruiting, talent management and training strategies that enable internal staff to develop and grow to fill skills gaps.
  • Identifying opportunities to outsource business functions externally, in particular where it's more cost-effective than hiring or upskilling.

Workforce planning example

Talent management is perhaps one of the most cost-effective workforce planning strategies. By helping current employees to develop and upskill, an organization can future proof itself from the disruption that can occur when staff leave. No organization maintains the same workforce forever, so staff turnover is an inevitability that it pays to prepare for.

There are many workforce planning examples that illustrate just how significant this preparation can be.

Consider that onboarding an external hire can take a long time. Even a competent hire will lack business context and historical knowledge, and it can take months, or even years, to develop all of the productive relationships that enable them to do their best work.

However, being able to promote an internal employee is much smoother. They understand the organization's goals already, they have existing relationships, and they are likely to be well invested in the organization's success.

That person is also likely to be cheaper than an external hire. What's more, this enables the organization to afford to offer financial incentives that encourage them to be productive and successful in their new role.

Workforce planning can be instrumental in this process by identifying future leaders and fostering their skills development to ensure they're satisfied, suitably challenged, and able to take on extra responsibility if required.

Who is in charge of workforce planning?

Organizational development firm McKinsey & Co describes workforce planning as primarily the responsibility of HR managers and business leaders.

It says, "To usher in the organization of the future, Chief Human Resources Officers and other leaders should do nothing less than reimagine the basic tenets of organization."

That requires HR leaders and business managers to plan ahead for the success of the business and ensure their staffing plan supports the business to perform the way it should.

In light of the effect of the Covid pandemic, the Harvard Business Review has identified different ways business leaders are considering their workforce planning model:

  • Stay the same, with traditional 9-5 office hours.
  • Clubhouse, with remote employees that visit the office when they need to collaborate.
  • Activity-based, where employees don't have an assigned desk, but move around the workplace based on task needs.
  • Hub and spoke, with satellite offices closer to where people live rather than one centralized office.
  • Fully virtual. A 100 percent remote workforce.

All of these models affect the strategic workforce planning of the organization. Flexible, remote work is increasingly being sought after by employees, and businesses that cater for this are likely to be able to attract the best people. Workforce planning is important to enable a new-look workforce to deliver on existing business objectives.

At the same time, business objectives may have changed since the onset of the pandemic. In this instance, workforce planning remains critical as it provides a roadmap to hiring the right people for these new goals.

Why is workforce planning important?

A workforce planning template is part of an organization's plan for how it will realize its long term objectives. By planning the makeup of their future workforce, businesses get a clear picture for how they will achieve their growth and other goals.

What are the steps in workforce planning?

Step 1: Assess current talent supply

One of the core functions of human resource management is matching talent supply with demand. In workforce planning, this involves analyzing both internal and external talent to understand the supply of skills, and more importantly, skill gaps.

Issues include identifying current staff members who are at risk of leaving or retiring, current team strengths, the cost of acquiring new talent, and the availability of talent in your resource pool.

Step 2: Recognize future needs

Review the organization's plans and goals for the future. This helps to inform the demand for talent. Understand critical skills that will support key objectives, expansion goals, as well as possible changes to staffing requirements and how projects will be staffed.

Step 3: Identify the gaps

Understand the difference between where the organization is currently and where it's looking to be from a staffing perspective. As well as skill gaps, this can also include skills surpluses too.

Step 4: Find the solution

How will those gaps be filled? There is a range of questions that need to be answered in the workforce planning process.

For workforce gaps that can be filled internally, what sort of training needs to occur for current teams to be able to meet the future demand? What does the organization need to do to retain high performers?

For those that require external hires, how will the organization attract satisfactory new talent? When will you make key hires? How will you afford to pay them?

Benefits of strategic workforce planning

Workforce planning has a range of benefits for organizations that do it. The greatest benefit is in enabling it to achieve its goals and objectives. Other benefits include:

  • Anticipating and planning for change. Doing this in advance means putting time and effort into decision-making and being able to mitigate any negative impacts of change.
  • Decreasing hiring costs. Minimize down periods where positions are unfilled, reduce the impact of onboarding and prevent expensive external hires.
  • Improving recruitment processes. Identify critical skills and traits needed in the future and current workforce to enable smoother hiring that best supports business objectives.
  • Reducing churn. Organizations get all the benefits of a good retention rate, capitalizing on relationships and skill development within their own specific context.
  • Incentivizing performance. If team members see their colleagues being promoted and rewarded for their good work, that incentivizes them to perform as well.

How does workforce planning benefit employees?

Not only does workforce planning benefit businesses, but it's also significant for individual employees.

  • Skill development. Staff get the benefit of building their capabilities and furthering their careers without having to go elsewhere.
  • A good level of challenge. Employees generally want to be appropriately challenged by their jobs. Having a workload that supports their development without being too overwhelming encourages learning and strong performance.
  • Career planning. Employees can see their own future within the organization, which is motivating.
  • Productivity. The more an employee is invested in their own future in an organization, the more they're likely to be motivated to achieve.

Consider also that each benefit to an employee is also a benefit to the organization as a whole, which is able to get the most out of its people.

7 tips to improve the workforce planning process

There are a range of techniques organizations can use in strategic workforce planning. It helps to be data driven as much as possible, being informed by genuine business insights to deliver the biggest impact possible.

  1. Make workforce planning the responsibility of a specific HR or business leader
  2. Get support for the workforce plan from a senior manager or executive
  3. Ensure key stakeholders are involved and invested in executing the workforce planning template
  4. Align the workforce plan with the organization's overall business strategy
  5. Conduct scenario planning to prepare for alternative future situations
  6. Utilize the workforce plan to develop succession planning and career development initiatives
  7. Check back in with the workforce plan. Strategic workforce planning should be ongoing, which means regularly evaluating the plan against business objectives, labor supply and skills shortages

How to use workforce planning to increase project margins

Strategic workforce planning also supports project work to be more cost effective, and this happens in a range of ways:

  • Reduced labor costs. Project work is an ideal opportunity for staff to learn new skills and capabilities. By allocating resources with a workforce planning lens, project managers are able to identify the most affordable staff member that can perform a certain task. This is cheaper than having senior, more expensive team members do such work. What's more, it reduces the need for expensive contractors that work on hourly rates.
  • Minimizing disruptions. If a manager leaves before a project is completed, that can be highly disruptive. However, if strategic planning has helped to prepare another team member for managerial responsibilities, that reduces the impact of the manager's departure and allows for a smoother transition.
  • Limiting long term project costs. If a project requires staff with certain skills, one option is to look to hire in areas where there are currently skills gaps. However, after the project is finished, those hires represent additional costs that may not be well utilized. A workforce planning strategy can help to focus on upskilling the current workforce to perform these tasks, which doesn't result in excess capacity at the end of the project.
  • Redeploying resources. Project staff can reduce periods of under-utilization with proactive training. By identifying down periods throughout a project and re-allocating staff to training modules in these times, project managers further reduce their labor costs.
  • Growing the global resource pool. Upskilling team members is more than just a one-off cost saving exercise. Different projects often require similar skills, and by developing your human capital on one project, you create considerable future benefit for any subsequent project that requires that same skill set.

Workforce planning software

There are a range of workforce planning tools available, and many of them are specialized pieces of software for exactly this purpose. Runn is a leading example of workforce planning software that makes it easy and engaging to carry out strategic workforce planning.

Features include:

  • Resource utilization reports. Ensure team members are challenged and productive, both in using the skills they currently have and taking opportunities to grow their capabilities.
  • Capacity reports. Identify opportunities where team members are available for further training that allows them to grow your future workforce.
  • Simplified team messaging. By making it easier to communicate across teams and departments, organizations can build a culture that encourages and rewards skill development and strong performance.
  • Insightful people reports. Gain in depth, customized understanding on employee skills and capabilities.
  • Profitability analytics. Identify how profitable individuals are to the organization. This is a data driven way of recognizing high performing staff with greater future potential that's worth nurturing.
  • Real-time data. Understand what team members are working on right now to seize on opportunities and reallocate labor resources to better deliver on workforce planning goals.

Runn is extremely user-friendly, with a simple, intuitive interface and engaging, visible reports that make valuable insights prominent and shareable.

Talk to Runn today about booking a demo, or sign up to try Runn for free.

Enjoy the post? Sign up for the latest strategies, stories and product updates.

You might also like

Try Runn today for free!

Join over 5,000 users worldwide.
Start scheduling in less than 10 minutes.
No credit card needed