Have you ever wondered why most companies are not able to retain their best employees and often have a shortage of skilled employees? Why are they not able to achieve their business goals even though they hire the best employees possible?
Bad workforce planning!
In a Boston Consulting Group survey of 6,893 people leaders, talent shortages and people difficulties were identified by 72% of participants as the primary obstacles to future success.
Investing time in strategic workforce planning and decision-making enhances every aspect of your company, including your employees. Workforce planning is a crucial HR procedure that guarantees that you have the personnel to carry out your business plan, regardless of the size or nature of your organization.
In this guide, we will dive into strategic workforce planning for organizations, the benefits of workforce planning, frameworks for efficient workforce planning, tools to use, and best practices for strategic workforce planning.
What is Strategic Workforce Planning?
Workforce planning's primary goal is to evaluate current employees and the goals and objectives of the business. It makes skill shortages easier to tackle, proactive workforce management, and helps in making more informed hiring decisions.
This is not simply about figuring out where there are skill gaps but about aligning employee's interests with those of the company, which enhances hiring, talent development, and retention.
According to the Gartner survey of 42 workforce planning leaders, only 33% agreed that their HR function effectively uses data in workforce planning.
As an HR professional, you must deeply understand your organization’s current talent skills, business goals, and objectives, as well as its future requirements for human capital to implement efficient workforce planning in your organization.
Benefits of Strategic Workforce Planning
Workforce planning is critical to your organization's ability to make tough business decisions and stay one step ahead of competitors in the fast-paced industry. Let's look at the benefits that your company can get from implementing a successful workforce planning strategy.
1. Alignment with Business Goals
Ensuring that employee's needs align with business needs is the main goal of workforce planning. You can better plan your workforce strategy to support future business goals by knowing your organization's objectives.
Hiring the talents just to get the stock of the best talents out there won’t work if it’s not aligned with your business needs. However, hiring according to business needs, and keeping resources and budget in mind will serve your organization well in the long term.
Read More: How to Identify Hiring Needs in Your Company?
2. Effective Talent Management
Organizations can have a skilled workforce when they practice effective talent management. This includes finding outstanding talents, doing regular talent reviews, offering promotions to potential employees, preparing for succession, and developing employee's skills for future needs.
You can also have focus groups to encourage innovation and collaboration which could result in positive employee engagement, productivity, and satisfaction. This strengthens the workforce, increases employee retention, and fosters employee engagement.
3. Boost Productivity and Performance
Organizations can foresee their future staffing requirements by using strategic workforce planning, which takes into account variables including anticipated growth, shifts in market demand, and upcoming projects.
By constantly evaluating the skill gaps in your team and providing them with the necessary training, you can boost employee productivity and performance and achieve higher work quality, which in turn enhances the organization's overall performance.
4. Cost Optimization
Workforce planning focusing on career development, better compensation, and employee engagement will lead to improved employee retention which reduces the cost of new hires.
This cost covers expenses of new hire onboarding and training in addition to the cost of sourcing potential candidates. There is also the cost of time that new hires take to adjust to the team and workplace.
So, by making strategic workforce planning and determining the staff needs, you can increase employee retention and reduce the cost associated with hiring replacement employees.
5. Diversity and Inclusion
Diverse teams approach problems from different perspectives and experiences that lead to efficient solutions for any issue. Including diversity and inclusion in your workforce planning improves problem-solving and decision-making in a team.
A varied workforce can better comprehend and cater to a broad client. Workers with diverse origins contribute viewpoints on other cultures, tastes, and requirements, which helps the company forge closer bonds with customers.
Businesses that put diversity and inclusion first often enjoy a good reputation in the marketplace. Consumers, staff members, and financiers are increasingly appreciating diversity, and businesses that show a dedication to inclusivity can obtain a competitive advantage.
6. Preparation for the Future
To ensure that businesses have the right people with the right skills in the right places at the right times, workforce planning is crucial for future preparation.
By examining changes in the corporate environment, technology breakthroughs, and industry trends, you can predict the skills and competencies that will be needed in the future. This involves figuring out which new abilities align with the company’s strategic objectives.
Through proactive workforce planning, organizations can manage unpredictability, build a resilient and adaptable workforce, and position themselves for future success in a fast-paced business environment.
Strategic Workforce Planning Framework
A strategic workforce planning framework provides a step-by-step process to implement workforce planning in your organization. This is a 4 step process.
1. Market, products, and competition analysis.
When making workforce plans, the most important things to focus on are knowing your products inside and out and the current market trends. You can obtain an advantage over competitors in workforce planning by analyzing the strengths and weaknesses of their products and brands.
2. Organizational strategy
The company's goals for the next five to 10 years are outlined in the organizational strategy, which is a long-term plan. This is a great rule of thumb for staff planning.
3. Quality and quantity of workforce
Quality and quantity of the workforce are the results of the above two analyses. It helps organizations see their current standing in terms of their workforce strength.
4. HR Strategy
After analyzing the market trends, future goals, and workforce strength, HR makes the strategy to fill any skill gap, including sourcing for new hires, talent reviews, providing skill training, and preparing for rewards and promotions for potential employees.
Strategic Workforce Planning Case studies
Microsoft's workforce reskilling program
Microsoft strongly emphasizes reskilling and upskilling its personnel, demonstrating its dedication to keeping a competitive edge in a field where innovation happens quickly. This is evident in the company's workforce planning methodology.
Microsoft has significantly invested in identifying talent gaps and future skill requirements since it recognizes how quickly technology evolves. By taking a proactive approach, Microsoft directs its workforce towards new trends and technologies, keeping its workers at the forefront of industry innovations.
By offering a range of learning opportunities, from online courses to immersive workshops, Microsoft empowers its workforce to develop new competencies and adapt to changing demands. This approach enhances employee satisfaction and retention and positions Microsoft as a hub for top-tier talent seeking continuous growth.
Microsoft's journey is a compelling illustration of how retraining and upskilling programs can foster innovation, guarantee longevity, and solidify an organization's standing as a leader in its industry.
Read More: How WeCP helped Infosys Evaluate 100k+ Super Coders
Walmart's diversity and inclusion in the workplace
Walmart's approach to workforce planning is based on understanding the importance of varied viewpoints. The organization now actively incorporates inclusive practices into its hiring, promotion, and recruitment procedures rather than just adhering to diversity rules. Walmart cultivates a culture of creativity, cooperation, and respect for one another by establishing an atmosphere that celebrates individual differences.
Walmart actively searches out talent from various backgrounds, drawing applicants from a range of areas by utilizing its reach and influence. This strategy not only helps create a more diverse workforce, and makes Walmart a desirable place for bright people looking for a welcoming and encouraging work environment.
Walmart's diversity and inclusion strategy, on its whole, shows that workforce planning is about more than just math; it's about using human diversity to propel organizational performance. Walmart exemplifies how proactive personnel planning can have a beneficial knock-on effect that improves corporate performance and society's impact by cultivating a culture of diversity and inclusion.
General Electric’s analytics-driven workforce planning
The foundation of GE's workforce planning strategy is that data is an important resource. The organization has made well-informed decisions on talent acquisition, skill development, and performance optimization because of its capacity to gather, evaluate, and understand workforce data.
Beyond the short term, GE's dependence on employee analytics is critical in developing long-term initiatives. The organization ensures that its investment in human capital supports its growth trajectory by coordinating labor planning with business objectives, which boosts competitiveness and efficiency.
GE's workforce analytics approach shows that data and insights are powerful instruments for influencing an organization's destiny rather than just being abstract numbers. The company's path offers a fascinating illustration of how data-driven workforce planning can be a key component of strategic excellence, helping businesses take advantage of opportunities, foresee obstacles, maximize performance, and develop a workforce that is ready for success.
Strategic workforce planning process
The workforce planning process is a 3 step process.
- Current Workforce analysis
- Scenario analysis for potential future
- Future workforce analysis
1. Current workforce analysis
Analyzing your current workforce is the stepping stone for any organization’s workforce planning process.
To analyze the current workforce, you should focus on the quality and quantity of the workforce.
Quality of the workforce
Evaluating the quality of your current workforce establishes the foundation for efficient talent management, which involves utilizing your people to the fullest extent possible. Companies should spend time and money to help their employees realize corporate goals and perform at their highest levels.
Quantity of the workforce
Organizations can use quantitative analysis to pinpoint staff surpluses or shortages in particular roles or skill sets. This helps correct imbalances by implementing tactics including downsizing, hiring, training, and redeployment.
It is possible to optimize the mix of full-time, part-time, contract, and freelance workers by analyzing the number of workers. This guarantees that the workforce's composition complies with operational needs and corporate objectives.
2. Scenario analysis for potential future
Business executives in various areas, including finance, HR, and talent acquisition, can anticipate headcount by using scenario analysis. Scenario analysis in the context of the strategic workforce plan can address many issues, including how many people to hire, when to hire, how much to pay, what equity to offer, and more.
As an example, consider this: The Gusto team models situations with various hiring budgets—high, medium, and low. They mimic the team composition using the budget as the constant input in each scenario. They then project the results that the new team will be able to provide.
They can now decide by clearly linking the hiring budget and business objectives.
Businesses are future-focused institutions by definition, striving to generate value for the future. They must establish plans that are likely to occur to guarantee that everything goes according to plan. Here's when scenario planning comes in handy as a useful estimation technique.
3. Future workforce formation analysis
Analyzing how the workforce will be constituted is the final step. Future desired formation and future expected formation are the two factors to consider.
Future expected formation
Future expected formation describes the anticipated distribution of skills, responsibilities, and workforce size based on the current statistics of the company. This includes predictions on the skill sets, demographics, and organizational roles of the necessary employee types during the next three to five years.
Future desired formation.
Future desire formation refers to the ideal workforce composition that a business hopes to attain. Planning for this principle involves considering not just the number of workers but also their responsibilities, competencies, and skill sets required to achieve the organization’s strategic goals.
Strategic workforce planning tools
Tools for workforce planning are instruments that assist in assessing the present and future requirements of the workforce.
These data-driven instruments aid in determining the discrepancy between the workforce's present capabilities and its future requirements. They also assist you in developing solutions to close this gap.
In this article, we will discuss 3 workforce planning tools.
- Strategic workforce planning maps.
- 9-box grid
- HR dashboarding
1. Strategic Workforce planning map
Organizations utilize strategic workforce planning maps as tools to match their workforce capabilities to their strategic goals and objectives.
There are 4 steps in this map:
- Market, products and competition analysis
- Organizational strategy
- Quality and quantity of workforce
- HR strategy
Yes, you get it right.
The strategic workforce planning framework forms the basis of this tool.
A strategic workforce planning map starts with analyzing the market trends, products offered by the organization, and competitor analysis. The competitor analysis helps to find the edge over their products.
These factors then form the basis upon which the board of directors makes decisions on organizational strategy for the next 3-5 years.
To get the right long-term strategy, organizations have to assess their current workforce first.
So we move to the next step: analyzing the quality and quantity of the workforce.
These findings are then used to construct the HR strategy. All of the various functional HR domains, including hiring, performance management, incentives and promotions, etc., use this strategy.
2. 9-Box Grid
Do you recall that in strategy workforce planning maps we discussed, assessing the organization’s current strategy? This can be achieved through the 9-Box grid tool.
In succession planning and talent management, the 9-box grid is a commonly utilized tool. The primary purpose of this tool is to assess and chart individuals according to their present performance level and future growth potential in a company.
3. HR Dashboarding
HR dashboarding tool compiles, examines, and displays important data and metrics intuitively related to human resources. This tool offers a thorough picture of workforce analytics, performance indicators, and other important HR measures, making them helpful for managers and HR professionals.
HR dashboarding reduces the time and effort needed to gather and comprehend HR metrics by streamlining the processes of data collection, analysis, and reporting. At the same time, it encourages accountability and openness inside the company by providing key stakeholders with access to HR metrics.
This dashboard promotes alignment and understanding of HR goals and strategies by facilitating clearer communication of HR data across organizational levels. Predictive analytics features in advanced dashboarding solutions can assist HR departments in foreseeing future trends and taking proactive measures to solve possible issues.
Best Practices for Strategic Workforce Planning
To implement efficient workforce planning, you need to use best practices to cater to your organization's goals and business models.
So let’s have a look at the best practices to follow.
1. Build long-term business goals
As you work toward your goals, having clear, measurable objectives will assist you decide who and how to recruit. Your objectives should be centered on your most important business requirements and serve as a guide for the expansion of your business.
The majority of firms create their goals using the S.M.A.R.T. framework.
- Specific: Every goal should concentrate on a single facet of your company to make the overall aim clear and significant.
- Measurable: Connect each goal to a concrete means of gauging achievement so you can demonstrate your progress.
- Attainable: It's not always advisable to aim high; instead, your objectives should fit within your organization's capabilities and the allotted time.
- Relevant: To make sure you stay on course, goals should be in line with the demands, objectives, and business strategy of your firm.
- Time-sensitive: Establish deadlines for your goals so that you may keep going forward and creating new ones.
To help you anticipate your future workforce demands and set well-informed and practical goals, make use of data analytics based on trends and business growth.
2. Evaluate your current workforce
Assessing what you already have should be the first step in workforce planning. Examine your present roster and note its advantages and disadvantages. Find out what is working effectively in your company and how you can contribute even more.
Workforce planning should be centered around three key workforce issues: maintaining your current workforce, adapting to external changes in your workforce, and implementing your strategic plan.
- Workforce maintenance: Before you plan to expand, consider how to fortify your staff through improved training, a renewed emphasis on employee well-being, or programs to increase employee engagement.
- External elements: Determine the external elements that will impact your workplace, such as new competitors, diversity programs, the adoption of remote work, or other causes.
- Strategic plan: Determine how well your staff is achieving your present objectives and what needs to be done to reach a point of satisfaction.
Analyze the expertise, skills, and qualifications that employees need to succeed in the most important roles that have the greatest impact. This will assist you in deciding whether these are roles that need to be filled by external candidates or whether there are current employees who can be trained for them.
3. Estimate future challenges
The secret to a successful workforce plan is speculating about future requirements and possible obstacles. You can prepare for these ahead of time and be prepared to face them head-on.
Compare your current situation to your desired outcome. How many employees are required to complete a project on time? How many will you require next six months if your company expands at the pace you expect? If the estimated amount is higher than expected, you need to make sure you have enough employees to satisfy deadlines.
4. Analyze the market
When developing a strategic workforce plan, it's critical to examine the current market in addition to your present workforce assessment. Gaining knowledge of the labor market and its patterns will help you evaluate future employment needs and provide important insights into the direction your industry is taking.
Keeping a watch on developing trends in the global market, particularly in your sector, will help you figure out what your company needs and how to get ready for it.
5. Consult with experts
For some company executives, creating a personnel plan that is pertinent, effective, and actionable may not come easy. Establish partnerships with consultancy companies who can work together and support you in implementing a strategic workforce plan. As you grow, outside companies that specialize in workforce optimization can also assist you in fine-tuning your business plan.
You can make sure you're not just ready for the future, but also positioning yourself for success by working with an agency to help identify your workforce needs and assistance in your hiring needs.
6. Execute and adjust as needed
A flexible workforce plan is just as important as having a workforce that can adjust. Although your plan should provide you with a good growth trajectory, scaling up will still require changes.
You'll probably run across needs and circumstances that you weren't prepared for. The majority of these demands will be met by your strategy, but there may be some that weren't considered. Under these circumstances, your hiring plan might need to be reviewed and revised.
Conclusion
Having the appropriate people in the right jobs at the right times, both now and in the future, is ensured by strategic workforce planning for companies. You can successfully develop and sustain a strong competitive edge by knowing the advantages and disadvantages of your present workforce capabilities, as well as the company's long-term goals and potential future circumstances.
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