what is workforce planning

What is
Workforce Planning?

Workforce planning involves identifying the skills and resources your team needs and developing a plan to address them. 

Since the workforce is changing quickly, workforce planning is more critical than ever. However, in a report from 2022, 49% of HR leaders said they don’t have a clear plan for their future workforce.

Workforce planning helps organizations prepare for the future. Companies can be affected by sudden, unforeseen situations like economic shifts, technological improvements, and demographic changes.

But even with a great plan, you still may encounter unanticipated changes to your team’s future needs. In this guide, we'll explain the benefits of workforce planning and how to adapt when your goals do. 

What is the goal of workforce planning?

The main goal of workforce planning is to develop proactive ways to meet current staffing needs and forecast future needs.

Workforce planning ensures businesses have the proper staffing to implement their business plans. More specifically, workforce planning helps teams achieve business goals like:

  • Improving recruiting and talent management

  • Increasing employee retention

  • Strengthening employee morale

A workforce plan prepares organizations for the inevitable changes in staffing needs or business objectives.

For example, just-in-time hiring is a way to ensure that the right people can work when needed. Seasonal or abrupt staffing needs can arise when a big client needs more help. Employers may look to just-in-time team members in these situations.

Just-in-time hiring helps not only employees' work-life balance but also businesses. Businesses save money on human capital costs by filling roles only when needed.

What are the benefits of strategic workforce planning?

Organizations adopting strategic workforce planning can gain several key benefits that significantly contribute to their success and sustainability. 

Here are the notable benefits:

  • Improved talent management: Strategic workforce planning allows organizations to anticipate future talent needs and develop strategies for attracting, retaining, and developing the necessary talent. This proactive approach helps close skill gaps, enhance employee career paths, and reduce the risk of talent shortages.

  • Enhanced organizational agility: With a strategic workforce plan in place, businesses can quickly adapt to changes in the market, technology, and regulatory environments. This agility enables them to seize new opportunities, respond to threats more effectively, and maintain a competitive edge.

  • Optimized resource allocation: By understanding future workforce requirements, organizations can allocate resources more efficiently, ensuring that investment in recruitment, training, and development is directed where it will deliver the most value. This leads to cost savings and better financial management.

  • Increased operational efficiency: Strategic workforce planning helps organizations ensure that employees are well-matched to their roles, leading to higher productivity, job satisfaction, and performance. This alignment between employee skills and job requirements maximizes operational efficiency and effectiveness.

  • Risk mitigation: By forecasting future workforce trends and challenges, organizations can put contingency plans in place to mitigate risks such as skill shortages, compliance issues, and labor market changes. This preparation helps to avoid disruptions to business operations.

Strategic workforce planning is not just a human resources function; it's a critical business strategy that supports long-term organizational goals. 

What factors affect workforce planning?

Of course, there are plenty of common workforce planning challenges, too. They include:

  • Talent acquisition for workforce gaps

  • Anticipating future skill shortages

  • Implementing performance management

  • Creating a succession plan   

  • Workforce supply vs. workforce demand

No one can see the future and plan for every possible scenario. The best thing managers can do is develop a growth-based workforce planning strategy.

Like any strategizing session, you may encounter a few challenges along the way. Four of the most common challenges with planning a workforce are listed below.

1. Finding good people

It's hard to find good team members — especially in a competitive job market. Effective workforce planning should prioritize ways to attract the best talent.

Of course, a lot of recruiting boils down to simply making the best offer available. Unfortunately, smaller companies may find it hard to compete with the salaries of larger companies.

Still, there are a few other ways to get good candidates:

  • Address your current employee benefits and work culture. Find out what other companies of a similar size are doing to attract and retain employees.

  • Host exit interviews. Why are employees moving on? It could be a pay raise, better work-life balance, or new career development opportunities. The exit interview is a way to answer this question and improve retention.

Use the company's network to discover good hires. Referral bonuses have contributed to solid staff retention rates.

76% of team members state they would be more loyal to their company if they offered flexible work options.

2. Forecasting what skills the future workforce needs

Many organizations find it hard to forecast what skills they’ll need in the future.

To build your future workforce, the day-to-day tasks of current employees will need to evolve. You can look to changing demographics, technology, and cultural shifts to drive that transformation.

For example, experts expect automation will change workforce planning considerably. According to research from the Harvard Business Review, 65% of managerial positions could be automated by 2025.

Managers can stay one step ahead by keeping up with trends and paying attention to what their employees need. Forecasting helps employers ensure that they have the right skills for tomorrow's business needs.

3. Implementing strategies for performance management

Implementing an action plan to improve employee performance can be challenging. Performance management should take a whole-person approach that considers all factors that affect productivity.

Some prominent factors to consider include:

  • Work environment

  • Company culture

  • Employee workload

  • Workflow processes

It's crucial to address specific issues immediately. Poor performance management might lead to more significant issues. Workforce management software can detect changes in workloads and staff productivity. This helps companies detect and fix problems early.

4. Developing a succession plan

Companies are often too focused on day-to-day operations for succession planning. To be fair, it's not every day that the founders of a company decide to retire or move on.

Whether you’re a manager or a small business owner planning your own exit, a lot can go wrong without a succession plan. When you fail to create a clear path forward, both employees and management will struggle to understand their role and continue to handle their job responsibilities.

If you’re not sure where to start, talent intelligence experts suggest a seven-step plan.

What is the difference between workforce planning and human resources management?

The goal of workforce planning and human resources management is to find out what a business needs to be ready for future growth.

Human resource management determines what new talent is needed and provides guidelines for training new hires. It also ensures the business meets labor laws and handles employee discipline and corrective measures.

Workforce planning is a part of managing human resources as a whole. It involves making plans for future staffing needs. That said, an HR leader is generally responsible for planning the company's current workforce.

Workforce planning instead helps an HR department create strategies that ensure the company is ready for its future workforce needs. Through strategic workforce planning, companies can strive for low turnover, high employee engagement, and a better overall culture.

What are the five steps to workforce planning?

Two team members engage in workforce planning and human resource management

Developing a strategic plan for the workforce saves money, prepares employees for workforce changes, and ultimately affects the growth of an organization. Because of these benefits, consistent strategic planning should be a key goal for every organization.

Now that you have a clear understanding of the benefits of workforce planning, here are five steps to help you get started:

1. Assess your organization's plan

Start by evaluating your organization's current strategy. This way, you can develop initiatives and goals for the future.

Scenario planning is a great exercise that helps organizations address potential problems before they happen.

In this process, you might find that your current staffing decisions don't fit your long-term business strategy. Here are a few questions to consider as you develop your new growth strategy:

  • Where are we right now, and where do we want to go?

  • Do we want to go in this direction?

  • How can we get where we want to go?

Next, you’ll need to identify what skills you’ll need to meet these goals.

2. Identify skill gaps

The 2020 World Economic Forum Future of Jobs report states that by the end of 2022, 54% of employees will need more training to do their jobs well.

Now more than ever, it's crucial to explore employee competencies. If you identify any gaps, you can fix them with a proactive strategic workforce plan.

A skills gap analysis can help you determine:

  • What skills employees need to be trained on

  • Which departments need staffing help

  • What teams will be affected most by upcoming retirements

HR analytics tools can also help you identify skills gaps and staffing issues.

3. Find out about future growth and staffing needs.

Once you’ve identified skill gaps, it’s time to address staffing needs and plan for future growth. You should be asking yourself questions like:

  • Can I address skill gaps by promoting employees internally?

  • Can I automate work to reduce workforce costs?

  • Is burnout a sign of understaffed teams or grueling hours?

Preparing for growth in the future starts today. HR leaders and management need to work together and actively seek answers to these questions.

Teams that can predict staffing needs are more likely to stay ahead of their competitors. In fact, 70% of companies are already using people analytics. There’s no time to lose.

4. Come up with solutions and implement them

A good workforce plan will show how employee responsibilities will change, how teams can be restructured, and how training can address these changes.

A good workforce plan helps employees know what they should do to reach business objectives.

For accurate workforce planning, businesses need to keep correct records of what employees do. Software that keeps track of employees makes getting proof of work metrics easier.

5. Observe, analyze, and improve your workforce planning

After implementing a strategic workforce planning process, businesses must find a way to track and analyze performance data. That’s why many businesses are turning to employee performance management tools to adapt to the ever-changing workforce.

These tools provide workforce metrics that give you a tangible way to assess your employees' performance. Whether it's website and app usage or keyboard and mouse activity, you'll have statistics available to help you make future staffing decisions.

Hubstaff a workforce planning and workforce analytics tracking interface

Get started on workforce planning

By identifying future workforce needs, you can take the necessary steps toward a more efficient and profitable organization. Of course, you'll need the right tools to get started.

Hubstaff's workforce management apps can help your business prepare for the future. With scheduling, cost management, and employee activity features, you can take your business to new heights.

Hubstaff has a 14-day free trial that gives you access to all of its workforce management features so you can start workforce planning right away.

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