Workforce planning is a set of procedures that a company can implement to define, align and optimise the workforce capabilities required to execute the organisation’s strategy, both current and in the future.
Essentially, effective workforce planning focuses on matching strategic business requirements with internal and external long-term talent trends and market influences. Workforce planning is a continuous process intended to align the requirements and priorities of the business with its employment needs.
An underutilised tool for success
Given the importance of talent and skills, Deloitte states that “it is time to move beyond instinct, gut and tribal wisdom in making workforce decisions.” If a company is not implementing a comprehensive plan to drive its talent decisions, it may be behind the curve – and at risk of losing competitive edge.
A recent survey by Harvard Business Review Analytic Services found that, for an overwhelming majority of respondents, inadequate workforce planning has prevented them from meeting business goals. The study found that “most companies still approach workforce planning as an annual exercise in which personnel spending is managed as a cost without considering the skills or talent needed to meet business objectives.”
According to IBM, a mere 13% of organisations go beyond simply extending their current skills to effectively predicting future skills. While many organisations look inward before and during the planning process, many do not factor in external elements, such as threats from new or rapidly developing employment trends.
A two-pronged approach to workforce planning
Successful workforce planning requires a two-pronged approach and can essentially be defined as opposite sides of the same coin: strategic and operational.
Strategic workforce planning looks to future business demands and provides a framework to understand future demand scenarios, develop understanding of business environment and labour markets affecting core skills, forecast future talent needs, identify gaps, forecast knowledge drain as employees leave the organisation as well as determine and evaluate likely future sourcing options. According to KPMG, strategic workforce planning plays a significant role in 5 of the 6 key challenges identified by senior HR leaders.
Operational workforce planning provides the tools to plan and deploy people to meet current demands. From this perspective, the organisation aims to understand how demand is measured in all areas of the business, define capacity and capabilities to deliver demand (standard times, productivity), manage systems and processes to deploy resources in time, optimise work schedules and implement workforce analytics to review effectiveness and continuously improve.
In today’s talent-based economy, the workforce itself is arguably the most important tangible asset of an organisation. Despite its importance, this asset is often not carefully planned, measured or optimised. This means that many organisations are not sufficiently aware of the current or future workforce gaps that will limit the execution of their business strategy. Businesses need an approach that moves workforce planning from an intangible domain to an arena of operational effectiveness, driven by a clearly defined strategy and – most importantly – buy-in from all relevant role players.