Many businesses tend to look at human resources (HR) through the rear-view mirror and often only notice what’s wrong when something damaging has already happened.
But wouldn’t it make life easier if you could look into the future and solve problems before the problems actually occur? That’s why HR is getting serious about strategic workforce planning in businesses of all sizes. By looking at where you are as an organisation and doing basic forecasting, it can help ensure that in the future, you have the right amount of people, with the right skill set, at the right time.
Having been a Workforce Planner with one of the largest ministries in the Ontario government for a number of years, I saw firsthand how the workforce analysis I prepared helped shape the workforce strategy for an organisation of over 4000 people. In the most basic terms, workforce planning helps create pictures so stakeholders can visualise what the organisation and human capital gaps look like through charts, graphs, tables and diagrams. These pictures act as a starting point so they can think strategically to fill the gaps in order to remain an efficient and effective business.
What is Workforce Planning?
Workforce planning is the continuous identification and analysis of what an organisation is going to need in terms of the size, type, knowledge/experience/skills of its workforce in order to achieve its business goals. Strategic workforce planning typically covers a 3-5 year forecast period and often includes scenario planning to increase options on how to proceed in the future to reach the business objectives.
Examples of key areas for workforce analysis include:
- Turnover rates – This is the percentage of employees that leave during a certain period of time, most commonly by fiscal year. It is calculated by number of separations divided by average monthly total employment.
- Types of exits – This is the reason why people are leaving and is usually broken down by voluntary (resignation, retirement, return to school, etc.) vs. non-voluntary (layoff, firing or death).
- Potential retirement forecasts – Many organisations have earliest retirement data provided by pension information. This can be used to forecast potential exits and possible skill shortages.
- Recruitment/hiring information – A variety of information can be created on recruitment including sources of hires (internal hires vs. external), basic demographic breakdown of new hires, etc.
- Salary projections – Especially in unionised environments, forecasts can be done on salaries if there is a set merit increase or cost of living adjustments, aiding in general fiscal planning exercises.
- Talent management information – High Potential (Hi-Po) employees can be developed in order to become successors to critical positions. This identifies potential talent gaps including succession plans for critical positions.
- Performance management – Low performing employees can be identified and performance plans can be developed to target issues preventing success.
With the information gathered by this type of analysis, HR and senior executives are better prepared to study the strengths, weaknesses, opportunities and threats that are facing their organisation. Workforce planning also allows for benchmarks to which future measures can be taken. For example, some large businesses have started initiatives designed to lower voluntary exits from their organisation. Knowing the number of voluntary exits prior to the introduction of the initiative is crucial in order to determine if the initiative is a success or not.
What are the benefits of Workforce Planning?
In addition to what is mentioned above, other benefits include:
- Supports business planning and talent forecasts – Workforce planning allows senior management a better understanding of their needs in the future, so that talent action plans can be designed to attract, retain and develop the talent within the organisation accordingly.
- Identifies skill gaps within the organisation and areas of concern – By seeing the strengths within the company, workforce planning also allows you to see where there are gaps that need to be filled, which is the first step in strategic action planning. This is especially important as technology changes and job roles are redefined. Most organisations are in an ever-evolving environment so changing needs and proper workforce planning helps you stay on the right track. We all know that preventing problems is much cheaper than solving them after they occur. With proper workforce planning, you can identify potential issues before they can turn into potential problems through gap analysis and then action planning.
- Supports the budgeting and forecasting process – Proper workforce planning helps to control unplanned talent costs and highlights issues that limit employee productivity, while building competitive advantage through planned versus reactive talent management.
- Provides consistent reporting of results to quantify outcomes – Continuous reporting allows you to evaluate if your strategies are successful and to take action if necessary to adjust them in a timely and efficient manner.
- Improves your image – By being prepared to handle your workforce, it helps inspire confidence and the business’s image to both internal stakeholders and the general public.
If Workforce Planning is so great, why isn’t everyone doing it?
Although there are numerous benefits to having a solid Workforce Planning process in your organisation, there are some challenges as well that need to be considered:
- Getting the right data – For most organisations, some type of software must be used in order to get the workforce information you will be analysing. There are a range of programs available, from a simple Excel spreadsheet system to an advanced HRMS (Human Resources Management System) program. Thorough research must be undertaken to ensure the system you choose is appropriate for the size and needs of the organisation and that will also be viable in the near future as well. Whichever system you choose, it’s essential that whatever information you are gathering be accurate, timely and relevant.
- Buy-In from key stakeholders – Many managers rely on ‘gut-feelings’ or trusting that what has worked in the past, will continue to work in the future. Asking stakeholders to shift their thinking and their level of control and then committing to a new process can be large hurdle to overcome.
How to introduce Workforce Planning into your organisation
- Adopt an appropriate data source – Research different options of workforce/talent management software to determine what would work best for your organisation. Ideally the technology will support supply analytics, forecast capabilities, and action planning.
- Internal workforce analysis – Once you have an appropriate data source, HR needs to evaluate if the supply fits the level of demand. This means evaluating the talent supply whilst also looking at their capability and performance, especially for critical positions within the organisation.
- Gap analysis and action planning – After analysis is complete, review for potential gaps in the organisation and at different business unit levels. With solid data backing up decisions, managers will be able to create strategies to target the gaps within designated timeframes.
- Measures and reporting – One of the best features of workforce planning is the opportunity to evaluate strategies on an ongoing basis. By doing regular reporting on key statistics, you will be providing data-driven results to the key decision makers.
- Updates and adjustments as required – Because of ongoing reporting, it is easier to adjust action plans on a continuing basis in order to ensure your human resources strategies meet their business targets.
In order to be a high-performing organisation, it is essential that a high-quality workforce planning program is developed and sustained. It is a critical component of a well-organised business as it links human resources with program management, budget justifications, and overall organisational goal-setting. By incorporating a fully integrated and systematic process, it allows your organisation to be staffed in the most efficient way possible. Once your organisation fosters a data-driven planning culture, managers at all levels will be better prepared to make decisions for the future, whilst still able to adjust plans on an ongoing basis as the organisation deals with day-to-day operations plus unforeseen anomalies.
Can an organisation be successful without Workforce Planning? Yes but it’s a lot harder! And since crystal balls that reveal the future are in short supply these days, this is the next best thing so your organisation stops looking at their human capital through that rear view mirror.