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Iryna Viter

What Makes an Effective Workforce Planning Process

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.

At this stage, you need to conduct a thorough assessment of the current talent pool within the organization. 

This involves analyzing your existing workforce including:

  • The skills, qualifications, and experience of current employees
  • The distribution of skills across different departments or locations
  • The demographic makeup of your workforce

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.

If you have resource management software, you should have great data available - including employees’ skills and capabilities, and utilization rates for different job titles - to help determine any shortages quickly and empirically.

You can also use data from performance evaluations and skills assessments to understand the strengths and weaknesses of the current workforce. 

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.

Compare your current supply of skills and talent to your anticipated future needs. This helps you identify gaps in skills, knowledge, or staffing levels. As well as skill gaps, you might uncover skills surpluses too.

Identify both quantitative gaps - such as shortages in specific skill sets or job roles - and qualitative gaps, such as leadership or critical thinking skills. Understanding these gaps is crucial for developing targeted strategies to overcome them.

Step 4: Find the solution

Once you have identified the gaps between your current workforce and future needs, you can develop and implement strategies to address them. How will those gaps be filled through the workforce planning process? 

Common approaches include:

  • Recruiting new staff to fill specific roles
  • Training, upskilling, and mentoring existing staff
  • Reskilling staff whose skills will become surplus or redundant
  • Succession planning to replace people who are retiring
  • Partnerships with external contractors or service providers

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.

12 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.

Have a designated workforce planning lead

Make workforce planning the responsibility of a specific HR or business leader. This will ensure that the process is approached in a strategic and holistic way, rather than being approached in different ways by disparate teams.

The workforce planning lead will be responsible for developing and implementing the planning process - including determining the methodology used - and liaising with key stakeholders.

They need a deep understanding of the organization's strategic goals and workforce needs, as well as the ability to collaborate with different departments.

Get senior buy-in for workforce planning 

Get support for the workforce plan from a senior manager or executive - a workforce planning champion. As with most initiatives, having friends in high places can help things progress! 

Having leadership buy-in helps secure resources, budget, and commitment to execute the plan. After all, planning is the easy part. Once the plan is written, it needs putting into action. 

Workforce planning can be potentially unsettling - with people naturally cautious about job security and potential restructuring. The champion can reassure people, encourage them to engage productively with the process, and keep different team leaders accountable for progress.

Ensure stakeholder investment in workforce planning

Workforce planning involves stakeholders from various business functions. It’s typically a collaboration between the strategic leadership team, HR, operations, resource management, and finance. It’s important everyone has a seat at the table to ensure a more comprehensive and accurate workforce plan.

  • HR are experts in talent management, training, and recruitment
  • Resource managers understand your people, skills, and how they’re utilized 
  • Operations and business leaders contribute strategic objectives
  • Finance provides budgetary insights and signs off on expenditure  

Christine Robinson - former Managing Director of Resource Management for Baker Tilly now turned consultant - speaking on our Resourcing for Sucess: Best Practices Every Manager Should Know webinar - says it is essential for resource managers to ‘have a seat at the table’ for workforce planning. 

There are so many strategic ways that resource managers can partner with the business. Say the business wants to grow the practice by doubling down on a particular skill set. The resource manager can support that. Finding out what they are expecting the next wave of work to look like and how they can match the current population of people to either be upskilled, or reskilled to now be able to meet that demand.

Align workforce plan with overall business strategy

Workforce planning has a purpose - to align your human capital to your business objectives - and equip you with the people and skills you need for future success. So you obviously need to connect your workforce plan directly to the organization's overarching business strategy.

Look outside as well as inside

It isn’t just internal factors that influence your workforce planning. External factors can have a significant impact on your resourcing needs and your ability to fulfill them. There are too many external influences on workforce planning to list here. But some major ones include:

  • Economic conditions - like unemployment rates, inflation rates, economic stability
  • Industry trends - anything that could impact talent availability - like layoffs from a large competitor or a new competitor firm entering the market
  • Tech advances - tech can be hugely disruptive, making some roles obsolete, creating skills shortages in others, and even facilitating new ways of working (like remote work)
  • Globalization - such as the impact of global events on talent availability, or the growth in remote work making geographic locations less relevant
  • Regulatory changes - new compliance requirements and laws can affect workforce planning
  • Demographic changes - such as an ageing population, or different generations having different expectations of work and employers
  • The labor market - this can impact people’s expectations of salary, working conditions

You should regularly assess the external environment to understand how these factors could impact workforce planning, demand for your business, and talent availability. 

Plan for succession and internal mobility

Succession planning is when you prepare internal talent for forthcoming roles. You might know that a team leader will retire in five years. Succession planning helps you identify and train their successor, often with the incumbent postholder training them up to ensure their institutional knowledge isn’t lost. 

Succession planning isn’t just about knowing which posts you’ll need to fill. It’s also about knowing which staff are destined for greatness. Identifying your rising stars - and understanding their ambitions and motivations - can help you align them to key roles in the organization. 

Use scenario planning to inform the workforce plan

OK. You might be thinking ‘Now we’ve gathered all this external info, what do we do with it?’ This is where scenario planning comes into play. Internal and external factors create a lot of uncertainty. Scenario planning is how you prepare for it. It is planning for the ‘what ifs’. 

It involves mapping out different scenarios and understanding the impact on your business, workforce, capacity, and resource utilization. This helps you be ready for dynamic changes - giving you a plan A, B, C and beyond - as the world moves around you. 

Create a talent pipeline

When the time comes to recruit, it helps to have a talent pipeline ready to go. Talent pipelining is the process of proactively identifying and engaging candidates for future job openings. 

One way to ensure a pipeline of strong candidates for roles is to partner with educational institutions to raise awareness of your employer brand with students. You could also implement an apprenticeship program to shape entry-level employees to your exact needs. 

Cultivating and maintaining a positive employer brand is also key, as it helps attract high-calibre candidates, and makes recruitment easier. Talent pipelining can reduce open vacancies and the time to fill them.

Understand role design

In our Putting the Human in Resource Management webinar, Edwin Jansen, CEO of Fuse Cooperative, discussed role design. He said it was the most influential factor in business performance that he’d never heard of. That is, until he read Primed to Perform by Neel Doshi and Lindsay McGregor, which discusses how role design can inspire ToMo - or ‘total motivation’. 

Role design is an integral part of workforce planning. It is concerned with defining and structuring the specific responsibilities associated with particular jobs within an organization. Not just what people are going to do, but how and why, and whether it’s manageable. It’s a deep-dive into the heart of every job - to ensure it contributes to business success and provides employees with meaningful work that motivates and engages them. Pretty huge, right? 

Workforce planning is a great opportunity to revisit and redesign roles to ensure they’re forward-looking and fit for purpose.

Make data-based decisions

You’ve probably got more data at your disposal than you realize. Leveraging workforce analytics will help you make better decisions about your future workforce needs. 

Helpful data can include:

  • Recruitment data such as time-to-fill and turnover rates
  • Demographic and diversity information
  • Skills and competency information
  • Resource utilization data 
  • Performance metrics 
  • Compensation data
  • Employee profiles 

The problem you might face is accessing it - especially if it is locked away in impenetrable spreadsheets or siloed systems. Workforce planning software or a resource management platform can provide centralized data to support decision-making, and improve visibility between the key stakeholders we outlined above.

Look beyond simply skills 

When planning workforce needs, it can be easy to think in terms of job titles and skill sets. But savvy organizations - particularly people-first businesses - are looking beyond simply skills. They recognize the value of employee engagement and intrinsic motivation in business performance. They seek to understand employees’ interests, passions, and ambitions as well - and match these to business needs.

Resource managers can be highly influential here, getting to know people beyond their current skill set, to identify development opportunities that benefit the individual and the business.

Speaking as part of our Putting the Human in Resource Management webinar, Ed Frauenheim - former content director at Great Place to Work US - says he’s witnessed an evolution in workforce management. From ‘resources’ being allocated in a very ‘dehumanizing’ way, to the more ‘human era’ currently being ushered in.

He says that human skills - ‘like creativity, passion, character, and collaborative spirit’ - will be the biggest source of competitive advantage for organizations in the future. 

A new way of organizing, and allocating work is emerging, where companies are called to tap the creativity and the passions of the people and to share the decision-making power. And to thrive in this new era, organizations truly must put the human into resource management.

Acknowledging this is a potentially daunting process for enterprises, fellow panelist Edwin Jansen says collecting the data is a good first step.

Revisit the workforce plan regularly

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. Treat workforce planning as an iterative and ongoing process. Adjust the plan as needed to address changes in the external environment or internal organizational priorities.

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.

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