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Why now?
Digital disruption. Customer expectations. Market shifts. Competition. The great resignation. Skills gap… the list of change drivers is long.
For today’s organizations, change is constant and unpredictable, and changing your business means changing the workforce to suit. The time has come for businesses to link their workforce to their business strategy. To think resilience, agility, and shorter planning cycles. In other words, to think continuous workforce planning.
In this ebook, we unpack some of the practicalities of adopting continuous workforce planning and shortening your planning cycles. We’ll set out the steps to a faster, data-driven workforce planning process that will position your organization to respond quickly to uncertainty and change.
What is workforce planning?
Workforce planning is a systematic, fully integrated organizational process that involves proactively planning ahead to avoid talent surpluses or shortages. It’s based on the premise that a company can be staffed more efficiently if it forecasts its talent needs as well as the actual supply of talent that is or will be available. When executed effectively, workforce planning can enable an organization to meet its business objectives by aligning its workforce with its goals, both in the short and long term.
At its core, workforce planning involves analyzing current workforce capabilities to determine the types of skills and competencies the organization needs to meet its strategic goals. This process covers understanding the current workforce composition, identifying future workforce requirements, and then implementing strategies to bridge any gaps between the present and the future. It takes into consideration factors like demographic changes, technological advancements, and shifts in market demand that could impact the availability and necessity of certain skills.
Workforce planning is not a one-time event but an ongoing process that requires continuous attention and adjustment. It allows organizations to be agile and responsive to changes in the business environment, ensuring that they have the right people with the right skills, in the right places, at the right time. By effectively connecting strategy to people, workforce planning facilitates collaboration across teams, cultivating a unified approach to achieving the organization’s vision.
Benefits of workforce planning
Effective workforce planning drives productivity
Studies have shown that effective workforce planning can double productivity. But what exactly do we mean by ‘effective workforce planning’ and what does it include?
- A process that aligns the deployment of your workforce to deliver strategic business goals
- A planning baseline that segments the workforce into key organizational dimensions and understands current cost and headcount
- The ability to instantly identify gaps between workforce supply and demand over time
- The ability to model and assign the right people with the right skills to appropriate work
- Continuous monitoring of progress against both the workforce and business plan, and the ability to course correct as things change
Workforce planning principles
To implement an effective workforce planning strategy, your organization can follow these key principles on flexibility, efficiency, performance, retention, skill development and cost optimization.
1. Flexibility and adaptation
Develop plans that are adaptable to both short-term fluctuations and long-term strategic shifts. This involves:
- Dynamic workforce modeling: Creating scenarios that account for multiple possible future states.
- Agility in workforce deployment: Quickly reallocating resources to respond to new challenges or opportunities.
- Continuous planning cycles: Shifting from static, annual plans to more frequent planning cycles that can pivot with the business.
2. Maximizing efficiency
Optimize skills and talents, minimizing downtime and eliminating redundancies. Key actions include:
- Streamlined processes: Automating and integrating workforce planning processes to reduce manual effort and errors.
- Alignment of resources to business needs: Ensuring the right people are in the right roles at the right time.
- Data-driven decision making: Leveraging data analytics to forecast demand, plan capacity and measure outcomes.
3. Enhancing performance
Align talent strategies with business objectives to drive higher productivity and better results. This principle includes:
- Performance-based workforce segmentation: Understanding which segments of the workforce contribute the most to business goals and optimizing them.
- Regular performance reviews and adjustments: Continuously monitoring workforce performance against set KPIs and making adjustments as necessary.
- Building high-performing teams: Encouraging collaboration, knowledge sharing, and innovation within teams.
4. Boosting retention
Focus on not just filling roles but retaining employees by aligning their career aspirations with organizational needs. Key strategies include:
- Career development pathways: Offering clear paths for progression that align with both individual and organizational goals.
- Employee engagement initiatives: Regularly measuring and enhancing employee engagement to foster loyalty and reduce turnover.
- Personalized retention strategies: Understanding what drives retention for different employee segments and customizing strategies accordingly.
5. Skill development
Account for current skill gaps and future skill needs, creating a sustainable pipeline of talent. This involves:
- Skills gap analysis: Regularly assessing the skills present within the workforce versus those needed in the future.
- Tailored learning programs: Developing targeted training and development programs that cater to both current and future needs.
- Internal mobility opportunities: Encouraging internal mobility to allow employees to grow and develop within the organization.
6. Cost optimization
Manage labor costs while still meeting strategic objectives. Key elements include:
- Forecasting and budgeting: Using predictive analytics to forecast staffing needs and budget accurately.
- Resource allocation: Ensuring the most efficient use of resources, avoiding both understaffing and overstaffing.
Reducing turnover costs: Retaining employees to minimize costs associated with hiring and training new staff.
6 Steps of workforce planning
A structured approach to workforce planning enables organizations to align their talent needs with their strategic goals. What are the steps in workforce planning?
1. Workforce analysis and assessment
Begin by analyzing the current workforce to understand its composition, capabilities, demographics, and costs. This involves collecting data on skills, roles, performance and potential. The goal is to establish a clear baseline of where the organization currently stands in terms of talent.
2. Future workforce requirements
Identify the skills, roles and workforce size needed to achieve future business objectives. Consider factors like market trends, technological advancements and strategic priorities. This step sets the direction for aligning workforce planning with organizational strategy.
3. Gap analysis
Compare the current workforce state with future requirements to identify gaps in skills, numbers, or roles. Gaps could be shortages, surpluses or a lack of specific competencies. This analysis helps pinpoint areas that need immediate attention or long-term planning.
4. Workforce strategy development
Develop a strategy to bridge the gaps identified. This may include hiring, reskilling, redeployment or adjusting headcount. Strategic plans should be aligned with both business needs and budget constraints, focusing on flexibility and agility.
5. Implementation and execution
Execute the workforce strategy through targeted actions such as recruitment, training programs, restructuring or policy changes. Ensure that all stakeholders are aligned and that there is a clear communication plan in place to support the execution.
6. Monitoring and evaluation
Continuously monitor the effectiveness of the workforce plan against KPIs. Regular evaluation allows for real-time adjustments, ensuring the workforce remains aligned with changing business needs and market conditions.
Good workforce planning enhances employee engagement and satisfaction
Workforce planning done well not only focuses on the numbers but also on the human aspects of an organization. By making sure employees are placed in roles that match their skills and aspirations, and by providing clear career pathways and development opportunities, organizations can significantly boost employee engagement and job satisfaction. This approach includes:
- Tailored development programs that align with both individual career goals and organizational needs
- Strategic workforce segmentation to ensure employees are in roles where they can thrive
- Regular feedback mechanisms to align employee aspirations with organizational goals, thereby reducing turnover and increasing loyalty
Strategic workforce planning optimizes financial performance
Strategic workforce planning has a direct impact on an organization’s bottom line. By aligning workforce requirements with business demand, companies can avoid the costs associated with under or overstaffing. Effective workforce planning translates into:
- Improved labor cost management through predictive analysis of staffing needs
- Enhanced agility in financial planning, allowing for more accurate budgeting and resource allocation
- The ability to swiftly adapt to market changes with minimal financial disruption
Successful workforce planning facilitates innovation and competitiveness
In today’s fast-paced and ever-changing business environment, being able to innovate rapidly and efficiently is a key competitive advantage. Workforce planning plays a crucial role in creating an environment where innovation can thrive by:
- Ensuring the organization has the right mix of skills and talents to drive innovation
- Identifying future skills requirements that will be critical for emerging business opportunities and technologies
- Creating a dynamic and flexible workforce structure that supports experimentation, rapid learning, and the adoption of new ideas.
Best practices of workforce planning
Workforce planning helps organizations stay competitive and agile. These strategic workforce planning best practices ensure your workforce planning is effective, strategic and aligned with business goals:
Regular workforce assessments
Workforce assessments help organizations understand the current state of their workforce – its size, structure, skills, demographics and performance levels. By continuously evaluating the workforce, companies can identify skill gaps, excess capacity and areas that require development.
This process should be ongoing, not a one-time event, to stay responsive to changes in the business environment, allowing organizations to anticipate potential challenges and address them proactively, and ensuring they have the right talent in the right place at the right time.
Align with strategic goals
Workforce planning must be closely aligned with an organization’s strategic goals in order to be effective. This means understanding the business’s long-term vision, key objectives and growth plans, as well as ensuring the workforce strategy supports these elements. For example, if a company plans to expand into new markets, the workforce plan should consider the skills and capabilities needed for such an expansion.
Aligning workforce planning with strategic goals also ensures that resource allocation is optimized and efforts are directed toward areas that will deliver the most significant impact. It creates a direct link between talent management and organizational success, building a culture of purpose and direction.
Use analytics and technology
Data analytics and technology is becoming increasingly important in workforce planning. Advanced analytics can provide valuable insights into workforce trends, such as turnover rates, employee engagement levels and future skills needs. Predictive analytics, for example, can forecast talent needs based on historical data, allowing for better decision-making and planning.
Orgvue’s workforce planning tools and software can also automate data collection and analysis, reducing manual errors and saving time. By integrating analytics and technology, organizations can move from reactive to proactive workforce planning, making more informed decisions that are driven by data rather than intuition.
Focus on retention
High turnover can be costly, not just financially but also in terms of lost productivity and knowledge. Organizations should develop strategies to retain employees by focusing on engagement, career development and job satisfaction.
Providing clear career paths, offering training and development programs, and fostering a positive work culture are all effective strategies for improving retention. Regularly seeking feedback from employees and acting on it can also help identify potential retention risks early on, allowing organizations to take proactive measures.
Effective communication
All stakeholders. including HR, department heads and senior leadership, need to be on the same page regarding the workforce strategy. Effective communication ensures that everyone understands the objectives, expectations and timelines associated with workforce planning initiatives.
It helps in managing change, as employees are more likely to support and adapt to changes when they are communicated clearly and transparently. Creating channels for feedback and open dialogue helps fine-tune strategies based on input from various parts of the organization.
Why Orgvue?
Orgvue provides the technology foundation you need to align your workforce capacity, capability and cost to your strategy. How? By bringing together strategic workforce planning, operational workforce planning and organizational design in one continuous planning cycle.
Strategy to people
A single technology that brings together the planning needs of Finance, HR and the business
Data visibility
Overcome data challenges by creating a single source of truth to track baseline, actuals and plan at scale
Business alignment
Align your team efforts to a common vision
Secure collaboration
Minimize risk with a safe environment to model, plan, and consolidate efforts
Business agility
Today’s market is unpredictable. Adopt shorter planning cycles and the ability to pivot when needed
Find out more about Orgvue’s workforce planning software
Solution brief
Workforce planning
Read the solution brief to learn how Orgvue can help you to align your workforce to your organization’s goals with continuous workforce planning.
- Common challenges to overcome with continuous workforce planning
- 4 steps to continuous workforce planning
- A SaaS platform that changes everything
- A customer case study
Workforce planning self assessment
In only one minute see your company’s capability compared with our industry benchmark in your free report with hints, tips, and recommended next steps.
Workforce planning resources
Frequently asked questions
Workforce planning typically involves five key steps:
Setting strategic direction to align workforce planning goals with organizational objectives.
Analyzing the workforce, where current skills and capabilities are assessed in view of future needs.
Developing an action plan to address the gaps between current and future workforce needs. This might include strategies for hiring, training, or restructuring.
Implementing strategies for how planned actions will be executed.
Monitoring and evaluating the outcomes against objectives and adjusting the plan as needed, based on performance metrics and changing business conditions.
Several techniques are central to effective workforce planning. Among these is gap analysis, which identifies the difference between current workforce capabilities and future needs. Scenario planning allows organizations to visualize future states of the business and develop flexible strategies to respond. Workforce analytics uses data analysis to predict trends, inform decision-making, and measure the effectiveness of workforce strategies. Lastly, demand forecasting estimates the number of employees needed to meet future business demands, considering factors like expansion plans, market trends, and technological advancements.
Workforce planning can manifest in different ways, depending on an organization’s specific needs and strategic goals. For example, a tech company might focus on upskilling its workforce to adapt to new software development technologies, ensuring its employees’ skills are current and competitive. Another example is a healthcare organization that might implement succession planning for critical roles to address the potential retirement of senior staff and ensure continuity of care. A retail chain facing seasonal fluctuations in demand could use workforce planning to optimize its mix of permanent and temporary staff throughout the year to meet customer service levels efficiently.
Strategic workforce planning involves taking a long-term view of an organization’s workforce needs based on its business strategy. It requires understanding the critical roles and skills necessary to achieve future business goals, analyzing current workforce demographics and capabilities, and forecasting future workforce requirements. This process includes identifying skill gaps, planning for succession in key positions and developing strategies for talent acquisition, development, and retention. Strategic workforce planning is proactive and focuses on making sure that the organization has the right talent in place to support its continued growth and success in a changing business environment.
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