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The right approach to workforce planning can mean the difference between being a market leader and a market follower.
Workforce planning is a critical people function that is often overlooked – impactful workforce planning can mitigate downstream people risks that often get in the way of business goals being achieved.
Workforce planning can take workplace microtrends, interpret global HR datasets and studies, industry opportunities, consider technology changes and feed all this information into your business goals and decision-making processes.
Strategic workforce planning is best designed and driven by top leadership, with the support of organisational design and development experts. It is a specialist area that will be communicated and shared at the decision-making, business partner level.
Let’s take a look at what it involves and how your business and team could benefit.
What is Workforce Planning?
Workforce planning is an iterative human resources responsibility that helps to ensure that the right number of employees are in the right roles at the right time.
Sounds simple, right?
Workforce planning involves proactively planning to bridge the gap between an organisation's current workforce and business direction to avoid present or future talent shortages or overstaffing. By carefully mapping out a company’s existing talent and forecasting skills that will be required in the future, workforce planning can provide a strategic insight and advantage, informing business operations. Workforce planning impacts recruitment strategies, job descriptions and organisational design.
There’s a lot more involved in the workforce planning process than you might have initially thought. As you read through this list, you’ll start to understand how these steps can align with your other HR activities and feed into your overall business goals.
Forecasting and Assessment
Think of forecasting as the GPS for your workforce journey. Through analysing data, understanding market trends and anticipating the needs of your business’s future, you can create a foolproof plan to sail into future ventures. HumanX excels in translating your long-term business objectives into a dynamic workforce blueprint.
Recruitment of Talent
Recruitment isn’t simply about filling vacancies. Instead, it’s a quest for potential. Here at HumanX, we pick up on areas where you might find gaps in skills — like a sudden need for a data privacy expert to allow you to venture into new markets — and fill them not just with any employee but with leaders in the field who can help lead your company to new heights.
Career Growth Opportunities
Career progression at your company shouldn't be a mystery. You want to keep your employees’ attention and discourage them from looking for other opportunities by providing clearly defined progression routes that align to their motivation. For example, you may consider implementing a leadership development program that helps to spotlight and nurture emerging talent.
We can help you identify emerging leaders and equip them with the skills and experiences to navigate tomorrow's challenges, fostering a culture of innovation from within. Cultivating and training budding leaders within the organisation to steer future growth and development is a cost-effective and morale-boosting strategy.
You shouldn’t have to go in blind when it comes to tracking employees' performance. We can help you fine-tune your workforce, making sure you are tracking, evaluating and managing employee performance to align with business objectives.
For example, a sales team member's performance may be monitored in a twofold manner, including not only sales targets but also customer satisfaction scores and the successful introduction of new products into their sales mix — reflecting wider company objectives around customer retention and product innovation.
Identifying Skill Gaps
When it comes to skill gaps, it’s essential not only to spot them but to bridge them. We can help you with recognising, hiring or training for the specific roles and skills necessary for your business’ success. For example, suppose your business is looking to expand into the AI space. In that case, we can assist in identifying the precise skills missing within the current business structure and implement strategies, such as upskilling, strategic hiring and knowledge integration, to get your team up to scratch.
Transitioning to Retirement
Preparing for the departure of retiring employees can be an emotional time. HumanX can help to ensure the passing of the torch is handled in a professional and seamless manner. For example, a mentorship program may need to be implemented in preparation for an employee's departure, allowing adequate time to pass along the required skills to fulfil the role.
Retention Strategy Implementation
We can help you implement strategies to retain top talent. By understanding what makes your best people tick, we help build a workplace that’s as enticing as it is rewarding. By improving company culture, providing growth opportunities and helping employees find meaning in their work, your employee retention will skyrocket.
In a shifting business world, HumanX helps you pivot with purpose. By transitioning employees to different roles or areas based on ever-shifting organisational needs, we can ensure your workforce adapts as swiftly as market trends.
Let’s take the example of a brick-and-mortar retail store shifting predominantly to e-commerce. HumanX would conduct a skills audit to identify which employees in the brick-and-mortar stores have the potential to be retrained and transferred to roles that support the new online business.
Vacancies can be vulnerabilities. We can provide strategies to assist in promptly backfilling roles left vacant due to unforeseen circumstances so business continuity is never compromised.
Operational and Strategic Workforce Planning
There are two complementary core facets of workforce planning: operational and strategic.
Strategic Workforce Planning
Strategic workforce planning focuses on the long-term vision, bridging the organisation's workforce strategy with its upcoming business goals. Strategic workforce planning involves predicting future skill gaps and planning for the business's future.
Operational Workforce Planning
Operational workforce planning focuses on the short-term by addressing immediate workforce needs, such as ensuring the right number of staff are employed with the necessary skills to meet job demands. Operational workforce planning also handles reacting to unforeseen changes, such as sudden vacancies or project-based short-term hiring.
Which Companies Need Strategic Workforce Planning?
Companies of all sizes and scales can benefit from strategic workforce planning. From budding startups to multinational corporations, strategic workforce planning aligns talent with objectives – whether that talent already exists internally and just needs to be nurtured or if new talent needs to be brought in.
Strategic workforce planning can also identify opportunities. Therefore, the workforce planning process shouldn’t be considered a luxury reserved for gigantic companies. Instead, it is a sustainable strategy for ensuring growth and competitiveness at any scope.
How Workforce Planning Aligns With Business Strategy
Imagine navigating vast open waters with a rudimentary map.
That's the scenario for many HR experts today when navigating the ever-changing and complex labour market. Recent Gartner data highlights this phenomenon, stating that fewer than half of all HR leaders consider their organisations effective at analysing labour markets. This statistic uncovers a critical vulnerability in the strategic planning of many organisations and explains the growing convergence between the workforce planning process and business strategy.
Traditional workforce planning can get mired in sending spreadsheets back and forth between poorly informed departmental managers and their respective HR counterparts, achieving little beyond a tally of existing staff. Strategic workforce planning for a modern economy requires a more directed approach to analysing the internal skill gaps in a business and comparing them to a high-level and long-term business plan while assessing how technology and other macroeconomic factors can impact an organisation. This is even more applicable in the current, post-pandemic labour market.
A Rapidly Changing Labour Landscape
Consider how many jobs are in demand today but did not exist even 10 years ago. Cloud architects, data scientists and chief AI officers are all titles we wouldn’t have thought would exist, but today, they are becoming commonplace for large organisations.
There is no denying that the demand for talent with future-oriented skills has intensified, and the emerging demands from these talent pools are changing, too. Companies are at a crossroads, with a limited pool of candidates able to provide these skills and an increasing list of requirements from prospective employers.
According to the insight that 14% of current jobs may be automated within three years, strategic agility becomes the key to success for a business. Furthermore, 64% of recruitment leaders are struggling with sustaining current business needs, and 71% are facing challenges securing talent for strategic shifts. Moreover, recruitment has seen an increase of 38% in time invested in filling unfamiliar roles.
There is no question that workforce planning needs to be carefully considered to align with this changing landscape for the ongoing stability and growth of a company. Otherwise, companies risk falling on the wrong side of a competitive moat as industry peers accrue an increasingly large market share of emerging talent. This has always been a danger for businesses, but it has never been more true as the majority of emerging talent is heavily geared towards replacing staff with technology and automation, meaning companies that strategically plan for the future of work, will have leaner and more efficient workforces, driving down costs, while less savvy businesses struggle to keep pace.
Future Proofing With Workforce Planning
Aligning workforce planning with business strategy is a precise process that risks pitfalls when not carefully implemented. Miscalculating the growing importance of emerging skills can leave an organisation with critical skill gaps. It is recommended to work with HR experts who understand how to perform internal and external talent gap analysis and develop a plan to robustly plan for the future of work and the future of your organisation’s goals.
Modern Workforce Planning
The post-COVID-19 job landscape is witnessing unprecedented shifts in workforce dynamics. 48% of employees anticipated working remotely at least part-time post-pandemic, which has increased from 30% prior.
This change (we are no longer calling it a “trend”) doesn’t just offer flexibility for employees; it instead opens up businesses to the global talent pool. Now, organisations are able to engage employees everywhere, offering greater work-life integration and finding efficiencies in streamlined operations and asynchronous work. Strategic workforce planning will inform organisations through this process, ensuring they make intelligent decisions and consider all risks and rewards. In this example, the reward is continuity in service or support through asynchronous work, but a risk could be the cost of managing geographically dispersed teams.
This is just one example of how strategic workforce planning can add quick and immediate value to your company whilst creating opportunities.
Another example could be the dramatic changes in the digital arena. Due to the fast-moving nature of digital adoption, we have advanced leaps and bounds in just months due to AI. 80% of the workforce and 93% of managers report feeling unprepared for these shifts, lacking skills and leadership in this specialism.
Strategic workforce planning with HumanX can help you predict these kinds of developments. We can also guide you through the decisions required during team and skill shortages. For example, do you need to recruit externally when the job is highly in demand and could be a significant expenditure? What is the value-add to your business? Does it make financial sense to have a dedicated person or team in this space? Is it better to invest internally to train and nurture teams? Is this a huge opportunity in your industry, and could strategic workforce planning in this space help your business establish a competitive edge or unique value proposition?
The Impact of Workforce Planning
The term 'workforce planning' might evoke images of spreadsheets and strategy sessions, but its influence extends far beyond the confines of boardrooms and data analytics. In reality, workforce planning is a business's roadmap for navigating market changes and aligning internal talent management. Large businesses and small start-ups alike can implement a workforce planning process that offers your business multifaceted benefits, impacting both the company's bottom line and the welfare and morale of employees. Let’s address two important aspects of any business: people and profits.
Maximising ROI with Strategic Workforce Insights
The workforce planning process is a fine-tuned strategy that exists to amplify financial returns. Hiring and firing decisions that aren’t carefully thought out can quickly turn sour. It costs roughly $7,000 to replace a salaried employee, $10,000 to replace a mid-level employee and $40,000 to replace a senior executive. Harvard Business Review also highlights that up to 80% of employee turnover stems from bad hiring decisions. Workforce planning mitigates this risk by aligning hiring decisions not only with the current needs of the business but also with the strategic direction of the business, ensuring every dollar spent on recruitment returns its value in productivity and innovation.
Avoiding bad hires isn’t the only area where data is transformed into dollars for a business utilising strategic workforce insights — businesses can also save substantially by identifying overstaffing before it inflates budgets and addressing understaffing that can otherwise lead to costly overtime or burnout-related turnover.
The ROI can be quantified not just in avoiding wasted dollars but also in the added value of increased employee morale and retention by having the right people in the right place at the right time.
Elevating Employee Experience and Engagement
It is no surprise that HR managers and business executives will share some of our excitement about the next benefit of strategic workforce planning – nurtured and engaged employees. An effective workforce planning framework helps create a culture where talent feels valued, seen and engaged by aligning their skills and career trajectory to the real, day-to-day needs of the business, now and into the future.
By identifying growth opportunities, workforce planning becomes a catalyst for employees to connect their personal aspirations with the business’s goals. Employees are able to live out their career goals within your company rather than seeking growth opportunities elsewhere.
As part of any comprehensive workforce plan, businesses perform internal and external supply assessments, which help to quantify, in real terms, any skill gaps that may exist in the business, now and as the business grows. With this data, businesses can make concrete decisions about upskilling talent and providing definitive pathways for skill acquisition within the business. This alignment is crucial, especially for career-motivated employees — according to LinkedIn's 2021 Workplace Learning Report, employees who see opportunities to learn and grow are 3.5 times more likely to be happy and engaged in the workplace.
Beyond individual retention, a strategic workforce plan also fosters a shared sense of direction and unifies the workforce’s vision with the company's trajectory. This shared sense of direction, in fact, improves individual retention — employees who believe their work matters are 2.8 times more likely to stay in their position.
Ultimately, workforce planning transcends the administrative act of filling positions. Instead, it helps HR managers and business executives create a thriving environment where both the financial stability of the company and the well-being of the employees are prioritised.
Without the workforce planning process, companies may see voids in leadership roles, directionless teams, skill gaps and unneeded stress on individuals and teams. The workforce planning framework is a critical strategy that, when implemented correctly, can positively impact the trajectory of a company.
Strategic Workforce Planning Framework
Effective workforce planning is more than hiring and firing; it's about aligning your most valuable asset – your people – with your company's long-term strategic goals. The workforce planning framework is about ensuring the business is equipped with the right talent at the right time and doing so in a way that nurtures existing staff within the business.
Strategic workforce planning is a long-term project that can be broken into three major phases. These phases include assessing your current workforce capacity, finding and identifying skills gaps, and executing a workforce plan. Traditionally, workforce planning focused heavily on succession planning and headcount management. A modern workforce planning framework considers skill gaps across all levels of the business and considers a range of factors, including technological changes and business model pivots.
However, before you can effectively begin crafting an effective workforce planning framework, you must ensure HR is aligned with a greater vision of the business’ goals and long-term plans.
There are six major steps to bringing about a successful workforce plan:
- Determine Your Business Strategy: Before anything else, ensure your team understands the strategic plan for the business. This strategy might outline the company's vision for the next three to five years, focusing on goals, budgets, and the necessary steps to realise this vision. In some sectors, the time frame might be far shorter, but workforce planning is just as critical. Understanding how the business will evolve in the coming quarters or years can provide a framework for future skill sets not currently present.
- Internal and External Supply Assessment: Quantify and analyse your existing internal talent profile. This data will help to address existing talent gaps and identify potential pathways to invest in upskilling internal talent. Secondly, analyse the labour market for the availability of needed talent and skills. This can give your team an understanding of the resources required to successfully find enough candidates.
- Supply/Demand Gap Analysis: Now you have a complete and comprehensive understanding of your internal supply of talent and the current state of the labour market, you can make an accurate assessment of your organisation’s skill gap. By identifying these gaps, your business can be aware of potential bottlenecks in efficiency due to a lack of resources.
- Create your Workforce Plan: With the insights from the above steps, you can discern gaps between your workforce supply and demand. Now comes the most important part: addressing those gaps and finding ways to address your future needs.
One framework for effectively covering all the pathways for managing and growing internal talent is the 6Bs of talent management:
- Build: Invest in the professional growth of your internal talent.
- Buy: Sometimes, the skills you need aren't present internally. That's when you may need to hire externally.
- Borrow: Consider contracting, outsourcing, or even merging with other units temporarily to fix urgent skill gaps rapidly.
- Bind: Ensure you retain your star players and critical talents.
- Boost: Speed up planned promotions or skill developments.
- Bounce: It's tough but necessary. At times, the strategy might require removing employees, whether through performance management or redundancy.
5. Putting Your Workforce Plan Into Action: This is where theory meets action. Depending on your analysis, you might look at a spectrum of actions, from hiring new staff, working with contractors, and integrating technological solutions to more drastic measures like restructuring departments. This exercise can help to improve costs or expand the workforce, depending on your goals.
6. Monitor Progress: Lastly, as with any strategy, constant vigilance is key. Regularly assess the results of your actions and ask yourself: Are they yielding the desired outcomes? Do adjustments need to be made?
It's important to remember that while the intricacies of workforce planning are extensive, the core principle remains the same: aligning talent with strategy.
Can You Use a Tool for Workforce Planning?
The short answer is yes: workforce planning tools can offer businesses a streamlined approach to collecting data and predictive analytics. However, relying entirely on these tools is not the wisest idea as they cannot fully grasp the nuanced understanding and strategic insight provided by professionals in the HR industry.
Specialised software can provide data-driven insights, but it often overlooks situational aspects vital for rolling out effective strategic workforce plans. For a holistic approach that considers the unique position of your business, it’s advisable to combine the capabilities of technological tools with the expertise and experience of workforce planning consultants like the team at HumanX.
Workforce Planning Examples
Workforce planning has been instrumental in various companies and industries, driving transformative changes. For instance, Unilever has introduced a program called U-Work, allowing employees to operate somewhat like independent agents, giving them a choice in which projects they wish to work on and combining the stability of a permanent position with the flexibility of freelance work.
From a workforce planning perspective, this program offers several benefits. It provides managers with access to a pool of skilled talent already familiar with the company’s processes, which reduces the time and resources spent on onboarding. The flexibility offered by U-Work also helps in retaining highly skilled employees who might otherwise seek more adaptable roles outside of the company.
By leveraging this workforce planning, Unilever is better positioned to attract, retain and deploy talent across its global operations — in turn, meeting the highest priority for workforce planning: having the right people in the right roles at the right time.
Allowing staff to choose the projects they want to participate in provides more opportunities for skill development and acquisition, as talent becomes involved in a more lateral and diverse set of responsibilities. Meanwhile, management can plan work according to business needs via projects rather than creating work to fit existing roles.
Workforce planning is not a one-size-fits-all approach. Workforce planning examples will differ based on different industries and their unique needs. While the healthcare sector may need to focus on our ageing population, the tech industry, on the other hand, might strategise around the rapid evolution of technology.
Every industry can harness the benefits of a well-executed workplace planning framework. If you're looking for a trusted partner, HumanX has a team of professional workforce planning consultants at your service. We can help you restructure your organisational design, secure your future workforce and outshine your competitors with a well-thought-out and executed workforce plan.