What Is Workforce Planning?
In the world of business, everyone is always seeking a competitive advantage. In today’s economy and competitive business climate, workforce planning is growing in popularity. Workforce planning refers to the process of ensuring that an organization has access to talent and the necessary tools for success. It’s an integrated and forward-looking process that predicts ways in which the workforce will and should change and provides a plan for facilitating the transition. Workforce planning is a vital part of business management. Without a solid workforce possessing the skills and capabilities needed to meet the objectives and goals of an organization, the entity would fail. One tool that facilitates workforce planning and organizational design is the org chart.
Workforce planning is the process of placing the right number of people with the right skills, experiences, and competencies in the right jobs at the right time. It involves asking such questions as: What is the correct org structure? Is the organization aligned with business goals? How do we weather the storm and exit prepared for growth? How do we reorganize to meet new financial objectives? Companies typically engage in annual planning, quarterly planning and ongoing planning. Workforce planning consists of four consecutive phases:
- Strategy – Determine the goals and objectives of the organization and what it will take to accomplish them.
- Workforce analysis – How is the organization set up right now? Are there gaps or problem areas?
- Implementation of plan – This could entail anything from a large re-organization or workforce reduction to promotion of a few key employees.
- Revision – Assess what is working and not working. Adjust accordingly.
Primary workforce planning activities include Organizational Design, Reorganization, Mergers and Acquisitions and Succession Planning. These disciplines assist HR and Executive teams in determining the correct structure, shifting resources accordingly and backfilling positions when key employees leave or move.
Strategic vs. Operational Workforce Planning
Operational workforce planning used to be as simple as filling open headcounts and managing budgetary requirements. As businesses and organizations have become increasingly complex and longterm-focused, the need has increased for specialized tools to develop reporting structures and systems for decision making, information, metrics and rewards. Operational workforce planning solutions do this by helping organizations achieve strategic alignment. They are focused on solving short-term problems, for example, restructuring teams to meet budgetary departmental goals.
Strategic workforce planning entails thinking ahead – way ahead - and analyzing the talent needed to execute a particular business strategy. In strategic workforce planning activities, HR engages with senior executives to consider the business strategy and its workforce implications – with the goal of helping the organization accurately identify, develop, and sustain the workforce skills it needs to successfully accomplish its strategic intent. Strategic workforce planning usually looks ahead a year or several years.
Best Practices in Workforce Planning
In a challenging economy, many organizations look for ways to cut costs. The workforce is often first to the chopping block. Since drastic workforce cuts have adverse long term effects, organizations must think strategically about their workforce plan today to guarantee future workforce success. Remember, workforce planning means having the right people in the right place to help the organization achieve its mission and objectives. Below are some best practices in workforce planning.
- Take an organized, systematic approach
Incorporate your organization’s mission, vision, goals and objectives.
- Collaborate with other stakeholders
In addition to HR, you will need to incorporate senior leadership, strategy and finance.
- Focus on the future
Develop solutions to acquire, nurture and retain a productive and committed workforce.
- Align with your company
Observe market trends, identify your critical positions and potential gaps, then identify solutions for closing the gaps. Keep workforce planning aligned with the company’s strategic plan.
Be quantitative in your approach. Set realistic expectations, and measure the impact of changes in strategy to your organization.
Don’t just undertake the workforce plan and follow it to its end. Analyze its success on the way and revisit decisions if necessary. Make tweaks as you go.
How to Develop a Workforce Plan
A workforce plan is an integral part of the business planning process, involving strategic planning, budget planning, and human resources planning. Below are the basic steps to developing a workforce plan:
- Gather accurate data on your workforce
Workforce data is necessary to analyze the workforce to determine turnover rates, anticipate critical workforce segments, plan for future retirements and determine recruitment practices. You will need to know the characteristics of your current workforce – job titles, responsibilities, skills, experience as well as demographic data, retirement plan, etc.
- Analyze and forecast your talent supply and demand
Look at which areas of the business are growing and which skills and competencies are needed to achieve goals. What workforce capabilities will be required in the future? What options are there to address gaps in your workforce size, or skills and expertise requirements? Also, is there data on future demographic trends which will impact your workforce? You will need to make assumptions and predictions about your company’s growth, so make sure you have the right expertise on hand to help.
- Develop a strategy to mitigate gaps
You will need to recruit, retain and reward employees to close the talent gap. Identify the positions and individuals which are most critical to your business, predict your turnover and develop a succession plan.
6 Common Workforce Planning Mistakes
- 1. Underestimating the plan.
A workforce plan is more than a budget. It incorporates thoughtful analysis and insights as well as numbers.
- 2. Not including the right people when making the plan.
A strong workforce plan needs people with strong analytical background and a solid understanding of the business. It also entails back-and-forth discussion and collaboration between HR and senior executives.
- 3. Not including the right data.
The workforce planning process must keep an eye to the bottom line impact by focusing on financial data and financial implications.
- 4. Too many numbers and not enough insight.
Good workforce planning includes discussion of what the data means and what your organization plans to do with it.
- 5. Not enough market intelligence or external data.
What’s going on in the marketplace? How are other organizations adapting to change?
- 6. Not using workforce planning and analytics software.
Modern technology is designed to help streamline the process for businesses.
- Organizational Management
- Workforce Analytics
- Corporate Directory
- HR Data Visualization
- Reduction in Force