The word in the industry is that companies need to implement strategic workforce planning for better productivity and profit. As uncertainty and rapid changes in the industry are becoming more prevalent, HRs feel the pressure to ensure adequate talent that aligns with the fluctuating market position, business priorities, and future goals.
A well-oiled strategic workforce planning sets the stage for the company to transform or fine-tune the workings according to the present situation. It may be used for hiring international employees or to ensure the presence of the right talent in the company. However to ensure a smooth transition on either side of the spectrum, companies need to have the right mix of talent, technologies, and employment models.
This guide will define strategic workforce planning, talk about the bottlenecks and the process to build a workforce plan.
What is Workforce Planning?
Workforce planning or strategic workforce planning ensures that the right person is working in the organization at the right time and designation. In other words, it helps optimize the workforce and creates balance.
Under its purview, the designated professionals analyze the existing workforce and identify the steps to fulfill the workforce demands in the future. HRs and other professionals connected to the workforce planning process leverages data and conduct a systematic assessment of the current workforce to find gaps, issues, strengths, weaknesses, and opportunities.
They work together to plan out the actions that must be taken while considering the internal and external influences on the plan. While some organizations have been practicing it since the ’60s, we are in the golden era of workforce planning.
Under the ambit of workforce planning, the recruiters and HR team ensure that people with the right competencies are employed. Furthermore, it also helps estimate the demand for people and determine the budget and resources to meet the demand.
Tracing its history, we can denote workforce planning by different names, including;
- Succession planning
- Building bench strength
- Human resource planning
- Manpower planning
While the names are different, the activities undertaken under these strategies were similar. And today, we call it strategic workforce planning.
Why is Workforce Planning Essential?
Only 33% of HR leaders feel that their organizations are using strategic workforce planning effectively. To ensure better business dynamics in the future, the HR departments need to prepare and execute a strategic workforce plan that helps businesses identify and address talent issues proactively.
- Cost optimization: Without workforce planning, companies may be overpaying some employees while underpaying others. Aging and less skilled workforce is more expensive to maintain and maybe less productive. So, workforce planning helps bring a balance and optimize the cost.
- Talent management: A skilled workforce gives a competitive edge to the organization. Strategic workforce planning is a way to build a talented employee base and gain a competitive edge over the competition.
- Disruption and innovation: Companies need to produce services and products that are better, more efficient, and innovative. Working with a workforce planning scheme provides the flexibility to make the required changes to achieve the desired outcome.
- Prepare for different scenarios: Having a strategic workforce plan in place helps combat unpredictable future scenarios. For example, the leaders and HRs will know about the decreasing number of people working in a position. Or it will help find out how many people need to be trained to fulfill the future industry demands.
- Addressing gaps in the workforce: Strategic workforce planning helps hire new employees, re-skill the existing ones, and fire the unproductive people from the organization. The purpose is to find the gaps and address them with a suitable solution. With an effective workforce planning strategy we can leverage data related to the employees and their performance for forming the solution.
Further, the experts instruct to measure the employee performance in correspondence to the company goals and objectives. Using all this information, the hiring and recruitment team can ensure that people with the required skills are working in the organization at all times.
- Prepare for the Future: A strategic workforce plan caters to the current and future organizational needs. Being prepared well for the present and future can help avoid the upcoming problems and build contingency plans while saving costs and time.
A strategic workforce plan can help understand when and where to hire the new employees. Whether hiring international employees or sourcing talent from within the country, workforce planning helps move forward with the best solution.
Understanding the Workforce Planning Process
We will be using a four-pronged approach to understand the workforce planning process. The four elements are;
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Supply Analysis
Supply analysis is the study of the organization in its current state. It helps identify the skills and talent within the organization while understanding the importance of the same.
Besides the skills, supply analysis also demands identifying;
- Demography mix
- Representation of protected classes
- Composition of the workforce (age)
Furthermore, supply analysis makes projects about the future in terms of retirements, transfers, promotions, and terminations.
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Demand Analysis
Demand analysis includes predicting the future talent and skill demand within the workforce. While considering the upcoming market issues like new products, competition, regulatory changes, etc. you can prepare ahead of time by planning to hire the required workforce.
The purpose of demand analysis is to ensure that the organization can anticipate the future workforce needs. While working on the demand analysis, it would be great to consider the internal and external factors. For instance;
- Can the existing workforce be retrained to ensure their readiness for the future?
- Can the existing workforce be trusted to not resist and remain loyal to the organization as the changes take place?
- Is it possible to gain access to the required workforce within the stipulated time now or in the future?
Towards the end of demand analysis, the leaders will be able to understand a few things clearly. These are;
- Number of employees required to achieve the future goals and objectives.
- Requirement of new skills, talent, and knowledge to run the business in the future.
- Steps leaders and HRs need to take for attracting, hiring and retaining employees.
With the demand analysis complete the strategic workforce plan is halfway complete. It is here that HRs and the teams tasked with this exercise can use data to their advantage.
As the company leader’s awareness about the impact of talent and skill changes in the company is limited, HRs can use data to the magnitude of these aspects on the company’s progress.
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Gap Analysis
With the Supply and Demand analysis complete, the third stage is completing the gap analysis. This is where the HRs and their teams will compare supply with demand to identify the gaps in the workforce.
The purpose of conducting this gap analysis is to create contingency plans, hire the right people, terminate some people, and identify the opportunities. Employees with requisite skills can be highlighted and the ones with a lack of the same can be flagged for further examination.
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Solution Analysis
Solution analysis involves the processes and strategies to close the gaps and build a future-ready workforce. According to the studies conducted before, the organization may need to;
- Train
- Hire
- Reskill
- Upskill
- Restructure
- Terminate
- Contract
- Outsource
- Expand
The final exercise will depend on the results, but the aim is to ensure the holistic development of the company.
Barriers to Implementing Strategic Workforce Planning
Even though strategic workforce planning is pivotal to a productive organization, some barriers affect its implementation.
The barriers include;
- Time Consuming: At its core, strategic workforce planning is a time-intensive task. As the company managers are focused on improving the results for the current year, they may face issues to address the long-term goals and objectives.
- Lack of Data: 26% of HR leaders are confident about their company’s ability to interpret data for assessing talent gaps and risks. Organizations without the required solutions to gather data find it difficult to build and implement a workforce planning strategy. The resistance to preparing the plan stems from working on unsolicited advice or interpreting trends without substantial proof to authenticate them.
- Lack of Understanding: Managers and the people responsible for creating a strategic workforce plan may lack the details required to work on the same. This makes it difficult to distinguish between job roles and their taxonomy. Due to this, the managers cannot decide the right level at which they need to plan.
Success Factors for Strategic Workforce Planning
These factors will build the strategic workforce plan and help improve the chances of success.
- Loop in your Long-term Goals: Every strategic plan for any organization must begin by understanding the long-term goals of creating one first. By forming a clear picture of the goals companies are better off for achieving the intended outcome.
- Make an Account of the Current Workforce: Before planning, check your current workforce. Note down the strengths and weaknesses of the same along with critically analyzing every aspect.
Using workforce analytics can decipher the workforce demographics, seniority, contractual obligations, and employee performances.
In addition to this, focus on two things;
- Workforce quantity
- Workforce quality
- Look for Gaps in Skills: After analyzing your current workforce, you’ll certainly have an idea of their strengths and weaknesses. Use this analysis to find the gaps in their skills related to the future.
Plus, it will help in knowing when the employees will retire, which ones need upskilling and reskilling. All this information is essential to prepare and build an excellent workforce.
Here are some of the questions to keep in mind while working on this analysis;
- Do we need more gig workers, remote employees, or in-house people?
- Can we go for project-based employment?
- Is there a need to train the employees, or hiring skilled workers is better?
- Can we stream ahead in the future with the existing workforce?
- Is there a digital skills gap in the workforce that needs to be addressed?
- Include Company Culture in the Plan: Technology, technique, and skills are crucial in strategic workforce planning. But do not forget about the company culture, which is also a critical factor in determining the plan’s success.
Just like the workings and technologies evolve, the company culture must also evolve. So, in strategic workforce planning, it is imperative to identify the company values and ensure its effective implementation.
Don’t hesitate to drop, add, and add values according to your requirements in this pursuit.
One of the purposes of strategic workforce planning is to build a responsive workforce. This will happen in building an adaptable strategic workforce plan. Adaptability depends on the plan creation, structure, and monitoring.
Conclusion
A strategic workforce plan is something that has the potential to change your organization’s bottom line.
It’s not only about hiring suitable people. A workforce plan is pivotal in optimizing the costs, preparing for the future, and fulfilling the long-term mission. In the beginning, we read about the goal of strategic workforce planning, which is to have the right people working in the company at the right time and position.
Yes, it’s all about having the right people, but the process and procedure to reach that point require careful planning, implementation, and observation. When done right, strategic workforce planning is highly beneficial to any organization wanting to stream ahead in the industry ahead of the competition.