We’ve all witnessed the turbulence of recent times and its effect on the world of HR. Workforce planning is the closest thing to a “crystal ball” any of us can get, to help us forecast human resource needs. Workforce planning isn’t really optional anymore–it’s crucial for survival, for being prepared for future challenges, and for ultimately reaching those long-term business goals.
What Is Workforce Planning?
Strategic workforce planning is a process where organizations look at the human resources that they will need to achieve their goals. Workforce planning is a major part of strategy in general, which also includes projections that cover product development, marketing and sales, competition, and economic issues.
A popular definition of workforce planning goes something like this: Planning to make sure that the right people are in the right roles at the right moment. The goal of workforce planning is to recruit just enough employees with the proper skills to fill job positions exactly when they are needed. Too many people will waste resources, while too few people will mean shortages across the board.
For those of us who are fans of terminology, workforce planning can be considered part of both the “positions” and “processes” phase of a skills gap analysis. But in this case, expanding and filling out the organizational chart requires the input of every department.
The Importance of Strategic Workforce Planning
When you think about it, the current employment market is a bit crazy. Mass resignations, a multi-generational workforce, new concepts like hybrid – in a way, we are living in an historic HR moment. Is that too dramatic? Hope so, because if the hype is real, then workforce planning is about to get a lot more challenging.
- Baby boomers are leaving the workforce in droves. They often represent the most experienced people at an organization, while their replacements have different expectations of how they see work and its rewards. Workforce planning must account for a lot of succession and a revised work environment.
- Companies are still adjusting to the globalized nature of competition. Organizations need to match or exceed foreign competitors both in terms of personnel cost efficiency and up-to-date skills. This is particularly true when thinking about the agile nature of many product strategies and the threats of disruptive innovation to traditional companies.
- The high technology focus of many companies and the increasing importance of soft skills show that it’s a seller’s market when it comes to hiring. This might change, but for now, workforce planning must include methods to source highly skilled workers and keep them on board through talent development programs.
All of this boils down to the importance of integrating workforce planning with overall strategy. You might have the technology to design a widget, and the people to sell the widget, but if you don’t have the right skills to make the widget, then you’ve got a problem.
The Workforce Planning Model
There are a number of workforce planning models, and they all serve the same purpose: to translate the grand strategy of a company into the positions that HR will need to fill. The final result of these models is to provide a “shopping list” of how many people are needed, and what they will be doing. Here are a few examples of popular workforce planning models:
Cascade. This model is built on the concept that organizations start off with many general requirements, which can be boiled down in stages to specific hiring needs. The first level is based on strategic elements that are most likely to influence product demand and supply, namely, market, products, and competition. From that point, the model determines organizational strategy; workforce numbers and role requirements; and HR strategy in terms of hiring, management, L&D, and rewards/promotions.
Six Step. You guessed it, the model looks at HR demands in six phases. However it’s also a circular model, showing the need to constantly update workforce plans owing to data gathered during the final “analysis” phase. The usual configuration of this model is as follows:
- Strategic planning
- Current workforce analysis
- Future requirements analysis
- Gap analysis
- Workforce action planning
- Initiation and analysis
Cross-Functional. Building a workforce plan, as mentioned, relies on a lot of people outside of HR. The cross-functional model illustrates how the four activities of business planning, workforce development, metrics, and analytics all fulfill different responsibilities in creating a workforce strategy.
How to Create a Strategic Workforce Plan
No matter which model is chosen, you will need to “fill in the blanks” according to a flow of information from your strategic planning department. Here, HR plays a leading role in two respects.
As executives plan strategy, they instruct HR on how many employees will be needed, and in what positions. It’s up to HR to build role definitions, initiate recruiting efforts, conduct interviews, and so on.
But it’s not all about taking orders. It is also the responsibility of HR to advise planners about how realistic their plans are. Strategists can be unaware of how long it takes to find quality employees and how much that costs. But, maybe most importantly, HR is the address for understanding what skills will be needed for strategic plans. If significant upskilling and reskilling is necessary, HR must be upfront about the L&D programs and training resources that will be needed.
The Workforce Planning Process
Let’s use the middle four steps of the six step model (because the first and last steps don’t relate directly to hiring) to illustrate building a comprehensive list of positions and skills.
Current Workforce Analysis
Whaddaya got? This part is all about looking at present staffing levels and skills. The trick here is to understand if even the current workforce is sufficient. Has there been a lot of turnover recently, and do you constantly hear about overtime and the need to cover for absent employees? Now is the time to figure out how many more employees you could use today. This is also your chance to assess current skill levels, perhaps through performance reports and discussions with managers.
Future Requirements Analysis
The numbers handed down by strategic planners now come into play. Take special care to understand what these new employees will be doing, and what skills they will depend on. Plus, don’t forget to account for succession, regular turnover, and growth/contractions expected due to existing operations.
Put the two together to come up with both the number of employees to be recruited, and what skills they will need. As the name of this step suggests, you might use a good ‘ole skills gap analysis here. In this respect, four different types of skills will be identified:
- Current – skills that are present and meet requirements
- Absent – skills that are completely missing; they will require external hiring and L&D programs (if you want to use internal recruitment – please do!)
- For Development / Urgent – skill areas where your people are weak
- For Development / Not Urgent – still a weakness, but not a priority to solve
Workforce Action Planning
For open positions, hiring functions come into play, while for skill gaps, L&D is the name of the game. Depending on how your organization works, you will either implement actions to close the gaps that you have identified, or pass on your recommendations to go through budgeting and similar processes.
Workforce Planning Examples
There are various use cases that leverage workforce planning as a starting point. Obviously, activities related to hiring and L&D depend greatly on the results of a workforce plan. But there are many more applications.
For example, any forecasting function will have headcount and HR costs as a major component. It’s true that the figures which result from overall strategy start the ball rolling, but a more definitive financial projection can happen only after HR has had its turn.
Similarly, companies that are involved in DEIB will get their cue from a workforce plan. Once general staffing requirements are decided, HR can reframe hiring and internal recruiting goals to reflect DEIB objectives.
Workforce Planning Tools
The chore of workforce planning is made a bit easier with some helpful tools. Here are a few that can make the process more smooth and efficient:
Workforce Planning Templates
Because workforce planning is a complex and lengthy task, there are a variety of templates that can be applied. Some apply to a part of the process, while others provide a format to capture many of the elements of the whole initiative. For example:
A skills gap analysis template can help organize which people in your organization need to take L&D courses. A basic one will show the name of the employee, the course they are taking, and associated dates.
A revenue matrix calculates the number of employees according to revenue. Let’s say that generating $1 million in revenue requires 3 salespeople. The matrix will calculate how many are needed to generate $5 million.
A workforce plan template takes you step by step through all stages of the process. It might list stakeholders, goals, current and future workforce requirements, and a list of follow-up actions.
Workforce Planning Software
Many vendors offer workforce planning components as part of a larger package.
SAP is a major name in enterprise software. SuccessFactors is their SaaS solution for applications including payroll, talent management, onboarding, and workforce planning.
Planful offers cloud-based financial planning solutions. For HR departments that need close cooperation with finance, Planful software coordinates hiring requirements with budgetary limits.
Workday delivers people management software that includes modules for financial management, human capital management, and strategic sourcing. Their workforce planning tool is directly targeted for enterprise use.
Workforce Planning and HR Analytics
A subset of the workforce planning software field is a niche that combines with HR analytics. As such, and with skilled handling, software becomes a predictive tool. Some of the vendors in this area include:
Visier. As a dedicated people analytics platform, Visier is a niche market leader. Its Visier People Planning module helps with retention, headcount forecasting, and competitor analysis.
Anaplan. Anaplan specializes in complex scenario planning. It is great at connecting general strategy to various headcount estimations, while its analytics engine can forecast workforce demands, set headcount targets, and identify skill gaps.
Plan for GrowthSpace, Plan for Success
There’s a lot to know about workforce planning. To make it all simpler, start by discovering what GrowthSpace can do for your talent development initiatives. With the market’s leading platform, GrowthSpace ensures that even large companies can equip current and future employees with the precise skills that they need to compete and thrive.