The 6 Strategic Stages Of Workforce Planning Explained

Workforce planning (WFP) is just one aspect of strategy that can help an organisation prepare itself for future needs. When HR is able to better understand the capabilities that the workforce will need to cover in advance, it helps to hire right today. We’ll cover what workforce planning entails and the benefits.

Importantly, we will also touch on how automation and AI are affecting strategic workforce planning, as about 50% of all jobs will be impacted by automation in the coming 15-20 years.

Coming Up

1. What Is Workforce Planning And What Is The Purpose Of It?

2. What are the Phases of Workforce Planning?

3. What Are The Benefits Of Workforce Planning?

4. Where Does Workforce Planning Fit In and Why Undertake It At All?

5. Types Of Workforce Plans

6. Workforce Planning is not Just About HR Analytics

7. Wrap Up

What Is Workforce Planning And What Is The Purpose Of It?

Workforce planning, also known as strategic workforce planning, refers to ensuring that the right people are working in the right job at the right time. It’s striking the perfect balance of employees or staff members at any given time as to avoid overstaffing or understaffing.

Strategic workforce planning is important for a variety of reasons. It can help to manage the following characteristics that affect the workforce of any given organisation:

• Flexibility: With the speed of technological innovation and changing cultures, the competitive landscape for business requires more flexibility and adaptability. As such, to move forward, it’ll require innovation and forward-thinking teams and technology to address changes.
  

• Cost: Organisations have to plan and work smart to stay relevant. Aging populations can signal higher costs and less productivity, but when met with the right tools, the risk of increasing costs can be adequately managed.
  

• Demography: Addressing aging populations, as well as the need for diversity on teams, is all part of recruiting in the 21st century.

• Talent: The team you put together will make or break your business and its processes. You want to hire right, hire smart and hire with business goals in mind.
  

The workforce planning model is made up of four main criteria, namely:

• Right size: The goal is to remain neither understaffed nor overstaffed

• Right shape: Hiring for the necessary competencies and having a hold on succession management

• Right cost: Adhering to budgets and maintaining cost efficiency by reaching an optimum labor cost

• ‍Right agility: Having talent that is agile, flexible and resilient to changing market demands and trends

What are the Phases of Workforce Planning?

While it’s possible to apply people analytics and use data to manage people within a workforce, strategic workforce planning takes a broader approach. It’s geared towards managing employee formation in an effort to achieve long-term goals. It consists of:

1. Strategic Direction: Defining and understanding future goals that the organisational leadership has set forth and aligning the workforce strategically to meet said goals.

2. Supply Analysis: Remain aware of the current workforce and what trends and changes are taking place over time that can affect your hiring today and in the future.

3. Demand Analysis: Address your organisation’s needs and goals to gauge the current and future workforce requirements (in terms of skills, cost, size, etc.)

4. Gap Analysis: Perform analysis to assess how and where the workforce demand and supply may fall short of one another. Focus on what will have the greatest impact on organisational performance.

5. Solution Implementation: How can you approach closing the gaps so that you can enable the organisation to meet its goals?

6. Monitoring Progress: Once you’ve hired, implemented solutions and deployed technology, monitor to see that the implemented solutions are resolving the identified gaps.

‍What Are The Benefits Of Workforce Planning?

An organisation that operates without workforce planning is inherently reactionary. This could translate into lacking the ability to meet long-term goals because the team is not well-equipped to handle the changing needs.

By utilising workforce planning, your human resources team is guided by a framework that aligns staffing decisions with operational goals. The added value of this creates a workforce that is more likely to be retained because it’s been recruited in alignment to the organisation’s culture and goals in the first place.

Benefits of WFP include:

• Assigning tasks and delegating responsibilities to individuals on the team as efficiently as possible
• Enabling proactive management rather than reactionary management when crisis strikes
• Effectively planning the demographics and diversity of the team in advance
• Developing better managers
• Planning for skills development and employee growth
• Understanding why turnover is occurring
• Creating a pathway to boost retention
• Developing a streamlined recruitment strategy  
• Properly balancing the workforce costs and potentially reducing costs

Workforce planning is made possible through the aid of data, analytics and automation. It requires careful monitoring of teams and processes to make sure that everyone who is doing a specific job is capable and equipped to do so. Some needs that come into play during WFP are:

• Reports and information on workforce data
• Guidance related to employee relations and requirements
• Skills audits and needs analysis
• Guidance related to change management

Where Does Workforce Planning Fit In and Why Undertake It At All?

Workforce planning doesn’t just exist within the human resources department. It’s a strategic approach to hiring that must be incorporated into your business processes and financial planning. This means that it takes place on an organisational level.

Once it’s ingrained, HR can take over to make sure that their actions are responding to current and future workforce issues. One of the major and common downfalls of many HR departments is that they are aware there is a business cycle, but they aren’t factoring it into their decision-making. With WFP, the business’ boom and bust cycle can be taken into account, which will help ramp up and down talent as needed. Not only does this help to manage the business’ finances better, but it also allows space for the HR team to take advantage of opportunities instead of being bogged down by crises.

Workforce risks occur in many shapes and sizes. They are directly related to where business takes place, internal demographics, and business goals. To prepare to mitigate risks and achieve business outcomes, HR should focus on WFP to:

• Reduce skills shortages
• Remain cost effective
• Increase capabilities
• Aid in decision-making

Types Of Workforce Plans

Organisations expand and contract in terms of inputs, outputs and people. There are different workforce plans based on timeframes to be able to align people with purpose.

Workforce plans can be summarised under the following three categories:

• Workforce management plan: As the most immediate category, workforce management plans address specific and timely workforce issues. This may include events like restructuring or adding a new business line. Depending on how many locations in which your organisation operates and the complexity of the business, you may have various workforce management plans.
  

• Operational workforce plan: Generally designed with a 12-18 month outlook, operational workforce plans align with a business’ planning cycle. It exists to address workforce gaps in the short and medium term, as well as to define the type of workforce capability and capacity required to meet your business’ objectives.

• Strategic workforce plan: The most future-proof type of WFP, a strategic workforce plan will typically cover a three to five year outlook. The goal is to cover high-level trends and be prepared to make decisions based on strategy in the future. It could include defining how many employees you’ll need to cover each job role in order to achieve a set goal. It also is likely to include the current workforce capability, the future needs and how the gap will be filled to move from the current state to the future state.

Workforce Planning is not Just About HR Analytics

Since WFP is all about people, it’s easy to imagine it being left up entirely to HR. But, as briefly touched on before, this type of planning must be embedded into organisational strategy. It will bring business managers, financial specialists, senior executives, line managers and HR together to create and implement successfully.

This brings in the need for accurate data collection, qualitatively and quantitatively. By addressing process efficiency, capabilities, workforce data and the like, you can create an informed and up-to-date picture that’ll help to address business needs.

Wrap Up

In the era of automation tools, organisations have been able to achieve productivity and efficiency. It’s also ushered in shifting trends like finance transformation, for example. As such, organisations can also leverage automation tools and data to better forecast future needs and manage tasks for the future before it becomes the present moment.

Strategic workforce planning will help you to blend humans and technological tools in the optimal balance to achieve organisational objectives.