Strategic workforce planning or how companies can achieve their objectives

HR professionals often mention the concept of workforce planning but rarely explain it. Used properly, workforce planning strategy allows HR managers to plan for the opportunities they will utilize in the future. However, what is strategic workforce planning, and why it’s so important? In this article, we’ll share the workforce planning process, provide some examples, and end with a set of tools you can use to start planning your workforce.

Applying outdated HR techniques such as downsizing, you can’t build sustainable business processes, focus on employee development, and create a robust corporate culture. Instead, workforce planning strategy helps organizations build an effective business plan and upskill their employees.

Strategic workforce planning (SWP) helps organizations achieve a single goal: to have enough high-quality employees for the future. In other words, it’s about having the right person for the right job at the right time.

In addition, strategic workforce planning has the following advantages:

Demographic change

The aging workforce poses several challenges, including skills shortages, retraining problems, and mass retirement. Thanks to strategic workforce planning, younger talents gain the necessary experience to be ready for a new position.

Costs reduction

Increased global competition motivates companies to work smarter. There is no need to spend time and money to find a new specialist when you can prepare an internal one. Moreover, a high workforce turnover costs businesses thousands of dollars. Having a strategy that determines whom you need to hire, how you plan to hire them, and how to attract new recruits will increase employee retention, productivity, and return on investment (ROI).

Let’s talk about the numbers. Average labor costs in the United States are growing; for example, in 2021, they increased by 1.1% over the last year. Thus, it’s a challenge for growing organizations. However, workforce planning can be an effective solution. For example, after applying strategic workforce planning, Deloitte, as an example of a large company, could save about $6 million for every 100 employees reassigned under the scheme.

Flexibility

Strategic workforce planning helps companies identify their business needs, skills, and talents to help them meet those needs and propel the workers to perform successfully.

Talent management

Talented employees create a competitive advantage for the company. Strategic workforce planning helps train the right people to be worthy replacements for retiring employees.

Improving KPIs

Workforce planning strategy helps you determine the desired outcomes, align human resources with business goals, and boost employee motivation and commitment.

Strategic workforce planning isn’t a silver bullet for all HR tasks. For this reason, be aware of the potential risks that come along:

Complacency

A workforce plan can create the assumption that everything is under control, forcing HR managers to lose sight of the plan or stop looking for changes to consider. However, strategic workforce planning isn’t a one-time process; it requires long-term learning and analytics.

Unpredictability

Sure, strategic workforce planning gives your business excellent stability by developing your workforce skills. However, there is no guarantee that the employees you train will stay with your company long enough to benefit from your investment.

Similarly, a strategic workforce planning approach can potentially reduce initiatives beyond the current workforce planning parameters, affecting creativity and flexibility.

The basis of strategic workforce planning is to bring the right skills at the right time to the right place. Thanks to SWP and sound personnel management, companies can feel safe and confidently navigate talent challenges in the future.

To help you implement the best strategic workforce planning, we’ve put together four helpful tips to keep in mind.

Use data to plan labor demand and supply

Your company is a living organism. It changes and expands its scope, workforce, culture, and all the aspects that affect the process of strategic workforce planning. Therefore, it’s essential to collect and constantly monitor the changes taking place in your company and assess how these changes impact the quality of your workforce. These changes include skills, motivation, and productivity.

This data will help you identify emerging patterns in your business and predict the talent market requirements.

Prepare a few scenarios to solve future challenges

Whether your goal is to close skills gaps and set up a company for future restructuring or digital transformation, strategic workforce planning will help you prepare.

You can simulate workforce scenarios, make the data-driven planning scenarios reasonable, identify skills gaps, and develop talent management interventions to transform the workforce.

The developed modeling determines future labor demand based on business development and identified operational models in the next stage.

Continue tracking the labor market situation

Our world is changing fast, and it’s vital to keep track of changes — here and now. Therefore, when choosing tools for strategic workforce planning, make sure you can obtain information regarding the labor market:

• What are the upcoming trajectories in your industry?
• How do the trends affect job demand and skills?
• What skills and professions of the future are emerging in your field?
• What models of work appear in other organizations?

Labor market data reveals the best vacancies for your competitors (in different industries) and gives you info about the skills and positions your competitors are looking for.

Eliminate SWP misconceptions to retain support from your colleagues

When implementing strategic workforce planning in your organization, a team of dedicated people is ready to work with you to carry out changes in the workforce. You should be ready to fight misconceptions to support your colleagues, managers, and supervisors.

Ensure that you know or can anticipate the objections executives or top managers have in mind (something like strategic workforce planning is the sole responsibility of the HR department). Outline the benefits of strategic workforce planning in the language of business and profits for your C-suite. Explain to managers why HR planning cannot be the responsibility of HR and why it is crucial to work together.

According to the CIPD, workforce planning processes can reduce labor costs, respond to changing customer needs, and improve employee retention and work-life balance. Strategic workforce planning includes steps to analyze the current workforce. It identifies future needs, gaps between status quo and destination, implement solutions to achieve goals, and implements a strategic plan through the proper use of talent.

Analyze the current state of the company along with external factors such as the market and economic condition to see how the business environment functions.

Internal factors determine how the workforce is structured regarding gender, age, specialization, and location. Another internal factor is labor costs and other expenditures. Internal factors include information on how the recruitment process works.

Given the strengths and weaknesses of your team, you can assess whether it can achieve current and future goals set on the ground.

By recognizing the best performers and those with the highest potential, you can design future promotions and encourage leadership positions. You can also consider whether the current team comprises primarily aging talents who may soon retire and leave gaps in the workforce.

In this step, you analyze the competencies needed by the business and what skills you have on hand. A recent report, the future of job report, states that in 2022, almost 54% of all workers will need significant retraining. Pay attention to these gaps:

• Skills gaps. Knowledge of new skills and training will help employees perform better and ensure that all skills are visible.
• Opportunity gaps. Provides internal mobility of talents, opens new opportunities for your employees, and motivates them to learn.
• Distribution gap. See how you distribute talent in the company and where there may be a gap.
• Time. Hiring a hard-to-find specialist can take up to nine months or more. You may consider covering the need for certain specialists through training and retraining.
• Diversity gap. This analysis helps combine your good intentions towards diversity with real cultural change. It’s one way to make your organization a reliable place where people work towards their professional goals.

Strategic workforce planning isn’t just about recruiting. It may apply not only to employees’ potential and the coherence of business units. In addition, strategic workforce planning should also recognize the potential and inclusion of employees and be intertwined with the technological map of the company:

• Time and money you need to work with identified shortcomings
• Method of organizing and conducting training
• Resources you engage
• Recruitment strategy (hire experts or entry-level workers and train them; hire internally or externally).

Strategic workforce planning tools help you complete the four steps listed above to help you effectively plan and develop your workers from start to finish.

However, how to choose software and tools that will help you eliminate routine work, achieve your goals, and quickly customize your team? When choosing a smart workforce planning software, there are five factors to pay attention to:

• Step 1: Start with a top-level organizational strategy
• Step 2: Evaluate your current workforce
• Step 3: Create data around the workforce
• Step 4: Identify ways to improve or optimize it
• Step 5: Plan for a diverse future.