Meeting long-term company goals requires efficient workforce management and the right talent under your employ, which takes a lot of planning. So when it comes to creating a workforce planning strategy, how can you best prepare for your future hiring needs?
Read on to find out!
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What This Article Covers
- What Is Strategic Workforce Planning?
- Principles
- Primary Benefits
- Goals
- Tools
- Workforce Management Solutions
- Steps
- Best Practices
- Next Steps
What Is Strategic Workforce Planning?
Strategic workforce planning is an organization’s approach to evaluating its current and future workforce needs, and making plans to ensure that the right talent is in the right place.
The burden on HR executives to make sure the company has the necessary personnel to meet shifting business priorities is increased by a serious skills shortage.
Organizations require comprehensive strategic workforce planning to identify the talent requirements connected to the company’s future goals and develop a plan to guarantee the business has the ideal combination of talent, tools and employment models to achieve these goals.
Designing a procedure inside your firm that proactively foresees present and future hiring needs is the basis of workforce planning. Doing this will ensure your company has the resources it needs to accomplish its objectives.
You will be able to develop a workforce plan and strategy that satisfies your intended long-term goals and upholds the long-term profitability of your organization by evaluating business intelligence, finances and feedback from HR and procurement team information.
Building an organization with stable staffing levels throughout all departments and the correct abilities in the right places can help you achieve more positive outcomes and a higher return on investment (ROI).
Principles
The interplay between what you currently have and what you will require tomorrow is what workforce planning entails. Therefore, considerations about tomorrow’s ideal formation should take into account your present employee formation.
Here are the three fundamental tenets of strategic workforce planning:
Syncing Organizational Strategies
Your strategic workforce planning should be in line with your organization’s overall business strategy. Outline your long-term workforce planning and goals for the upcoming five to ten years based on what your company’s trying to accomplish. This formula is an excellent tool for organizing your workforce.
Following the Pareto Principle
The Pareto principle of 80/20 governs effective workforce planning. It states that 80% of results come from 20% of your output. Plan your strategic workforce with an emphasis on the employees with core duties of the organization (also called critical roles). These are the individuals that have the most significant impact on the outcomes of the organization. Management and overhead are only incidental concerns.
Driving Long-Term Focus
A workforce planning strategy has a long-term focus since it emphasizes tactical and strategic choices. However, the long-term success of any workforce strategy depends on your company’s current resources, staff capabilities and the larger labor market.
Primary Benefits
You will be able to employ the top people in your specific area and always be one step ahead of your rivals after establishing a workforce planning strategy and successfully identifying all existing and required personnel.
Your company can achieve many advantages by developing and implementing an efficient workforce plan and strategy. Here are a few of the most significant:
Address Present Workforce Gaps
An understanding of the expertise or resource shortages you now have in your company can be gained from analyzing your employee’s skills. Using that knowledge, you can ensure you hire top personnel with the required qualifications to address workforce skills gaps for your business’ success.
A workforce plan helps you compare existing workforce capabilities with the skills required to meet current operational needs and strategic objectives. By conducting a thorough analysis of the present workforce, you can proactively address these gaps through targeted recruitment, training or reskilling programs.
This ensures that you have the necessary talent in place to maintain productivity and meet business demands, reducing the risk of workforce deficiencies.
Align Strategies and Goals
Strategic workforce planning acts as a bridge between your business strategy and its human capital, ensuring that your employees are aligned and equipped to achieve organizational goals.
A strategic plan enables you to identify and develop key talent and leadership pipelines. By nurturing and retaining critical talent, workforce planning ensures continuity and sustainability in pursuing business objectives.
It helps prioritize and allocate resources to support your strategic initiatives. By understanding the talent implications of different strategic scenarios, you can make informed decisions about hiring and training, and ensure that the workforce is capable of delivering ideal results.
Improve KPIs
Key performance indicators (KPIs) are constantly being developed and improved in business. You can use the information from your workforce planning strategy to advance your company, continuously improve your performance metrics and ensure you consistently achieve new goals.
You can identify and address talent gaps to improve KPIs related to productivity, quality and customer satisfaction. It helps you establish relevant performance metrics for talent management, succession planning and employee development, ultimately contributing to improved overall performance.
Aid Cost Reduction
Global competition is forcing businesses to become more innovative. Workplace planning aids the company’s cost reduction by optimizing the allocation of human resources.
Accurately forecasting workforce needs helps avoid overstaffing or underutilization of talent, leading to more efficient labor deployment and reduced labor costs. You can easily identify opportunities to streamline processes, improve productivity and reduce employee turnover, all of which contribute to cost savings.
Prepare for the Unexpected
Your organization can avoid potential and unforeseen future problems once you have developed a strategic plan that considers your current and future business needs. It enables you to prepare for the unexpected by building agility and resilience into your talent strategies.
By conducting scenario planning and risk assessments, you can anticipate and prepare for potential disruptions, such as economic downturns, technological changes or unforeseen talent shortages.
Scenario planning helps prevent future risks. Source
This proactive approach helps you quickly adapt to unexpected events, reducing operational disruptions and ensuring continuity of critical business activities.
Enhance Talent Management
Talented people provide a business with a competitive edge. Planning helps you prepare to bring in new talent as employees retire.
Strategic workforce planning helps with talent management by recognizing and recruiting the right talent by analyzing, predicting and strategizing employee supply and demand, identifying gaps, and deciding on target talent acquisition measures.
Create Flexibility
Faster and more disruptive innovation is necessary for today’s competitive environment. Innovative workforce strategies can help get us where we need to go. Thoughtful planning enables you to prepare to hire new employees with in-demand skills as existing ones begin to leave.
By understanding the skills and competencies required for different scenarios, you can flexibly deploy your workforce to respond to changing demands, market fluctuations and new opportunities.
It also helps explore alternative work arrangements, such as remote work, flexible scheduling and contingent labor to adapt to evolving employee preferences and market dynamics.
Mitigate Risks
Amid fluctuating markets and technological advancements, being prepared for the future is non-negotiable for organizations.
Strategic workforce planning empowers you to mitigate risks associated with talent shortages, turnover, compliance and changing business needs, ultimately contributing to their long-term success and sustainability. It helps identify and develop key talent, reducing the risk of losing critical skills and knowledge due to turnover or retirement.
In a 2023 LinkedIn report, 94% of recruiting pros agree that understanding the skills employees do and don’t have is necessary to make informed talent decisions. You can forecast workforce demands and identify skill gaps, and proactively address potential talent shortages or surpluses, reducing the risk of being unprepared for future changes.
Skills analysis helps you predict talent shortages and surpluses. Source
Analyzing workforce demographics and trends helps anticipate potential compliance and diversity risks, and take proactive measures to address them. This enhances resilience to regulatory changes and promotes a more inclusive workplace culture.
Goals
An agile workforce that is the proper size, shape and cost is the aim of workforce planning strategy.
Size
An unproductive workforce is too enormous (i.e., a workforce with too many employees compared to duties) and results in overspending on labor. An underproductive workforce (i.e., a workforce that has too few employees to perform all duties) prevents the business from producing as much as possible.
Striking a proper balance in terms of employee numbers is important to minimizing labor costs while meeting your production needs.
Shape
Being in good shape focuses on having the necessary skills you require now and in the future — in the form of succession planning.
Cost
Achieving an ideal labor cost is the main focus of cost. Too much could offset income or even force the business into bankruptcy, while too little will prevent work from getting done.
Cost goes hand-in-hand with maintaining a proper workforce size.
Agility
A streamlined, flexible workforce that can adjust to shifting market demands is the aim of agility.
Therefore, a key focus of workforce planning strategy is ensuring that the business’s workforce is the ideal size, shape and cost while remaining agile for the future.
Tools
You can use many types of tools to implement your workforce planning strategy. They help you view and monitor employee performance using dashboards, matrixes, maps and similar visualizations, and use this information to discover your skill development needs.
Strategic Workforce Planning Map
It’s a visual representation that outlines the strategic alignment of workforce planning initiatives with your overall business strategy.
The map typically includes key components such as talent acquisition, skills development, succession planning and workforce analytics, demonstrating how these elements support the organization’s strategic priorities.
You can get a holistic view of the workforce planning process, illustrating the integration of talent management with your organization’s long-term goals and objectives.
9-Box Grid
The nine-box grid model, also known as the nine-box matrix, provides a visual framework for evaluating and identifying talent within an organization based on two key dimensions: performance and potential.
The grid typically consists of a 3×3 matrix, with one axis representing an individual’s current performance level (e.g., low, moderate, high), and the other axis representing their potential for future growth and advancement (e.g., low, moderate, high).
Example of a 9-Box Grid. Source
By plotting employees’ performance and potential on the nine-box grid, you can categorize individuals into different segments, such as high performers with high potential (top right quadrant), solid performers with development potential (middle right quadrant), low performers with high potential (top middle quadrant), and so on.
Visually mapping employees’ performance and potential enables you to make informed decisions about talent development, succession planning and leadership development initiatives.
HR Dashboarding
HR Dashboarding involves the use of visual dashboards and analytics to monitor and track key workforce metrics and performance indicators. This tool provides real-time visibility into critical HR data, such as turnover rates, workforce demographics, recruitment metrics and employee engagement scores.
HR dashboards provide an overview of key metrics. Source
By leveraging HR dashboards, you can gain insights into workforce trends, identify areas for improvement and make data-driven decisions to optimize talent strategies.
Compensation & Benefit Analysis
In a Korn Ferry report, 58% of employees said they’d leave their job for one they were less interested in if it offered a higher salary. Conducting a comprehensive analysis of compensation and benefits ensures that your salary structure aligns with employee’s expectations of fair pay.
By evaluating market competitiveness, internal equity and the cost-effectiveness of compensation and benefits packages, you can design and adjust your total rewards strategies to attract, motivate and retain top talent.
This analysis enables you to make informed decisions about compensation structures, incentive programs and employee benefits, contributing to a competitive and compelling employee value proposition.
Scenario Planning
Scenario planning involves the development of alternative future scenarios and the assessment of their potential impact on the workforce. By considering various business and talent scenarios, you can anticipate workforce needs, talent risks and skill requirements under different conditions.
It enables you to proactively plan for contingencies, such as rapid growth, economic downturns or technological disruptions, by developing agile talent strategies that can adapt to a range of future scenarios.
Workforce Management Solutions
The market is replete with advanced solutions that can help you create a strategic workforce plan. Some of the popular WFM solutions include Workday, Xero and SAP SuccessFactors.
WFM software offers features for talent identification, performance management and employee development. By tracking and evaluating employee performance, potential and skills, you can identify high-potential individuals, critical skill sets and development needs.
View employee performance on a single dashboard. Source
It provides powerful data analytics and forecasting capabilities, allowing you to analyze historical workforce data, identify trends and forecast future talent needs. Leveraging these insights can help you anticipate skill gaps, succession risks and workforce demands.
Reporting and visualization tools help you track key performance indicators, workforce metrics and talent insights. These capabilities offer clear, actionable insights into workforce trends, challenges and opportunities, and facilitate data-driven decision-making.
Many solutions provide features for regulatory compliance, risk assessment and workforce diversity management. By ensuring compliance with labor laws, industry regulations and diversity initiatives, they help you mitigate compliance risks and promote a more inclusive workforce.
Some more capabilities of WFM software include:
- Employee Scheduling
- Labor Planning and Management
- Leave and Absence Management
- Mobile Access
- Pay Management
- Platform and Compliance
- Reports and Analytics
- Time and Attendance
Steps To Draft a Workforce Plan
Find out how to draft and sustain a workforce plan tailored to your company’s future success in eight steps.
Understand Your Business Goals
Understanding your business goals is the foundational step in creating a workforce planning strategy so it aligns with the long-term vision and strategic objectives of your organization.
Build a thorough understanding of where the business is headed and the key initiatives driving its growth and success.
Questions Decision-Makers Can Consider
- What specific business objectives are we aiming to achieve through a workforce planning strategy?
- How do the current workforce capabilities align with the long-term business goals and vision?
- What are the key performance metrics that will align the workforce with business goals?
- How will changes in the industry or market impact our business goals, and how should the workforce strategy adapt to these changes?
- What steps can we take to ensure that the workforce planning strategy remains aligned with business goals over time?
Analyze Your Workforce
Workforce analysis requires a comprehensive assessment of current employees’ skill sets, competencies, experience levels and performance. This helps identify strengths, weaknesses, and areas for improvement within current employees, providing valuable insights for future planning.
Questions Decision-Makers Can Consider
- What are the current skill sets, competencies and experience levels present within our workforce?
- How have the strengths and weaknesses of the current workforce historically impacted our ability to meet business objectives?
- What are the emerging trends or shifts in employee performance that may require attention in the workforce planning strategy?
- Are there any specific demographic or generational considerations that should be factored into the analysis?
Determine Current and Future Needs
Anticipate changing workloads, new projects and potential attrition to map out future staffing levels and skill sets.
A needs analysis helps you determine future requirements. Source
Evaluate factors such as changes in market demand, technological advancements, expansion plans and strategic initiatives that will impact the talent and skills required to achieve business goals.
Questions Decision-Makers Can Consider
- How do our current workforce capabilities align with the projected staffing needs?
- What new skills or competencies are likely to become essential for the organization’s success in the future?
- How can we ensure that the workforce remains adaptable to evolving needs?
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Find Gaps
Identify gaps between the existing workforce capabilities and the future needs of your organization. This step involves pinpointing imbalances like disparities in skills, knowledge and competencies, excess manpower or misalignment in positions.
Questions Decision-Makers Can Consider
- Which areas of our organization are currently experiencing the most significant skill or knowledge gaps?
- How are these gaps affecting the organization’s ability to achieve strategic objectives, and what are the potential risks associated with not addressing them?
- What strategies or initiatives have been successful in addressing similar workforce gaps in the past, and how can we apply these learnings to the current situation?
- What are the potential short-term and long-term implications of not addressing the identified workforce gaps?
Create a Strategy
Formulate a detailed plan to address the identified gaps and align the workforce with the future needs of the business. This may include recruitment, training, talent development, succession planning and other initiatives aimed at optimizing the workforce.
Questions Decision-Makers Can Consider
- What specific initiatives or actions can be implemented to address the identified workforce gaps?
- Who are the key stakeholders and decision-makers that need to be involved in the development of our workforce planning strategy?
- What are the potential barriers or challenges that may arise during the implementation of the strategy, and how can we proactively address them?
Implement the Solution
This may involve hiring new talent, upskilling existing employees, restructuring teams or deploying WFM solutions to bridge the identified gaps and enhance the overall capabilities of your workforce.
Questions Decision-Makers Can Consider
- What are the practical steps and timelines for executing the solutions identified in our workforce planning strategy?
- What resources, including financial, technological and human resources, will be required to successfully implement the workforce planning solutions?
- How will the impact of the implemented solutions be measured and evaluated, and what are the key performance indicators for success?
Monitor Progress
Track your journey. Monitor KPIs, evaluate the impact of implemented solutions and make adjustments as needed to keep your workforce aligned with the evolving needs of the organization.
Questions Decision-Makers Can Consider
- How frequently are progress updates being collected and analyzed, and who is responsible for this process?
- What mechanisms are in place to gather feedback from employees, managers and other stakeholders regarding the impact of the workforce planning initiatives?
- In what ways are the findings from progress monitoring being used to make informed decisions and adjustments to the workforce planning strategy?
Revisit and Revise
Regularly review your workforce planning strategy to adapt to changing business dynamics. Refine the strategy based on new developments, market trends, organizational shifts and feedback from ongoing workforce planning efforts, ensuring that it remains agile and responsive to the business environment.
Questions Decision-Makers Can Consider
- What triggers or milestones should prompt a review of the current workforce planning strategy?
- Who is responsible for initiating the revision process, and what is the expected timeline for this review?
- How will feedback and insights from ongoing workforce planning efforts be incorporated into the revision process?
- What are the mechanisms in place to communicate and implement the revised workforce planning strategy across the organization?
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Best Practices
Here are some best practices you can use while developing your workforce planning strategy:
- Engage HR, finance, operations and other relevant stakeholders to foster a holistic understanding of talent needs and challenges, and the integration of diverse perspectives and expertise in planning.
- Utilize data analytics and forecasting techniques for informed decision-making. You can gather and analyze relevant workforce data, including demographics, turnover rates, performance metrics and market trends to anticipate talent gaps, succession risks and skill shortages.
WFM software offers analytical insights into planning strategies. Source
- Align workforce planning with the broader organizational strategy to ensure that talent initiatives directly support business objectives. It helps identify the talent implications of strategic goals and develop targeted workforce strategies to support their achievement.
- Regularly review and update your plan in light of new information, market shifts and internal changes. By maintaining agility and flexibility in workforce planning, you can adapt your talent strategies to evolving needs and ensure that they remain relevant and effective over time.
- Identify key roles and critical skills, and build targeted strategies to nurture and develop talent for future leadership positions. By addressing succession risks and investing in employee development, you can mitigate the impact of talent shortages.
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Next Steps
Strategic workforce planning aims to have the appropriate employees in the proper positions at the correct times. This is accomplished by understanding the current workforce’s skills, creating future scenarios, identifying the ideal workforce and acting to match your future workforce as closely as possible with the perfect workforce.
Planning your workforce isn’t something you can accomplish at your desk on a rainy day with ease. It’s a challenging exercise that calls for meticulous preparation and data collection. However, workforce planning is an excellent and precious tool that may help your business gain a competitive edge when done correctly.
Looking for a WFM system to implement your workforce planning strategy? Kickstart your search with our free software comparison report to evaluate top market solutions across key features and capabilities.
What measures does your company take to promote strategic workforce planning? How do you measure its impact? Tell us in the comments section below!