What Is Workforce Planning? (Definition And Steps)

By Indeed Editorial Team

Published 6 September 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Workforce planning is the process that helps a company analyse its current workforce and determine steps to deploy it most effectively. The workforce is the most important asset that any organisation possesses. Knowing how to effectively plan a company's workforce can help senior management ensure that the right people are working for the company and predict future staffing needs. In this article, we answer ‘What is workforce planning?' and why it is important, its principles, and the steps to planning a workforce to help ensure the company has the human capital for optimum performance.

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What Is Workforce Planning?

In answer to ‘What is workforce planning?', this term refers to the process of analysing an organisation's current workforce, identifying the gaps in workforce supply and demand and planning steps to make sure that the organisation has the right people with relevant skills to carry out its mission and achieve its strategic goals. Senior management may collaborate with the company's human resources personnel to effectively plan employee training for specific roles to ensure they have the appropriate skills to complete tasks efficiently. This supports the efforts of the organisation to maintain effective operations and accomplish its objectives.

Related: Human Resource Planning: Meaning, Importance And Key Steps

Why Is Workforce Planning Important?

Workforce planning is important to ensure that the organisation achieves its long-term objectives and also to support the overall performance of the workforce. Workforce planning offers a strategy for assessing the workforce and evaluating whether current personnel have the right skills to satisfy the demands of the organisation. This makes it easier to spot possible skills gaps, which helps with effective hiring procedures.

Effective planning for potential skills gaps can help organisations prepare for unforeseen challenges. Companies that forego this process might not be aware of their current organisational constraints, which can lead to potential issues where skills gaps hinder their efforts to implement the company's strategic plan. Having a thorough grasp of employee performance and the capacity of the workforce to meet organisational goals can enhance the hiring process since recruitment managers understand which areas require improvement.

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Types Of Workforce Planning

There are two popular workforce planning models that a human resources department can utilise in an organisation:

Operational workforce planning

Operational workforce planning places a strong emphasis on individual planning. Companies may implement procedures to make it easier for employees to carry out their daily tasks. It is primarily helpful in supporting managers to create daily work plans for staff members, help employees understand their duties and sustain productivity throughout the workday. This approach incorporates talent management components to aid in evenly distributing talent across the organisation. This distribution can make it simpler to predict future personnel gaps within the company or discover positions or procedures that no longer contribute to the company's performance.

Strategic workforce planning

Strategic workforce planning focuses on wider organisational challenges and ensures that the workforce appropriately aligns with the overarching goals of the organisation and its long-term vision and objectives. Strategic planning that spans months or years and encompasses every organisational division may utilise this process. Strategic workforce planning includes the design and implementation of an effective strategy for workforce analysis, projecting future talent requirements, assessing possible hiring obstacles and re-evaluating present talent when employees depart the company.

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Primary Criteria For Workforce Planning

Below are the criteria a company might consider when planning its organisational workforce:

  • The number of employees: Senior leaders typically want to ensure that the organisation has the correct number of employees to meet demand while avoiding understaffing and inefficiency.

  • Adequate skill set: Having the ideal combination of talents, knowledge, experience and skills can help an organisation to function well and accomplish its objectives.

  • Budget: Financial planning can determine the best personnel investment to deliver a high return on human resource investments and increase profitability.

  • Flexibility: Training teams to be adaptable and alert to change when market conditions shift can also be helpful for the effective functioning of an organisation.

Principles Of Workforce Planning

Below are some principles that the human resources team can use for workforce planning:

  • Be open to change. Having a flexible, multi-talented staff may better equip an organisation to address changes in demands or requirements.

  • Minimise inefficiencies. The main objective of workforce planning is to assist companies in making the best use of their resources by ensuring the appropriate people are working in optimum positions to increase productivity.

  • Improve quality. By allocating jobs to the most competent employees, workforce planning can produce higher-quality outputs in shorter turnaround times.

  • Enhance retention. Allocating employees to positions where they can utilise their abilities to the fullest extent makes them feel more appreciated and engaged and can increase employee retention rates.

  • Focus on professional skills development. By identifying skill shortages and offering training in these areas, workforce planning can aid in the development of a more competent workforce.

  • Reduce labour costs. By encouraging employee efficiency and removing counterproductive habits, workforce planning can help to lower labour expenditures.

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Steps For Planning A Workforce

Below are the steps for planning a workforce initiative:

1. Strategic framework

Creating a strategic framework includes understanding the primary mission goals and future ambitions of the organisation. It also involves devising a strategy for aligning the workforce with these goals and initiatives to achieve them effectively. Factors to consider in creating an effective framework are short-term and long-term strategies, challenges in the emerging market and the organisation's strengths and challenges.

2. Supply analysis

Supply analysis involves assessing the organisation's status at the time of evaluation and how it might change over time. It includes analysing the supply of labour and skill sets that are essential to the organisation. Along with the number of employees and their abilities, the company might also take into account the demographics of the workforce and the representation of protected groups.

3. Demand analysis

Performing a demand analysis involves identifying the present and future needs of the organisation. The goal is to predict what the workforce is likely to look like in the future. Encompassing concerns such as new product lines, competitive factors, market expansion or contraction on a worldwide scale and projected workforce availability within regional constraints can be helpful when making the prediction.

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4. Gap analysis

After analysing the supply and demand of the workforce, the next intuitive step is to compare the two and identify the gap between the makeup of the current workforce and future demands. It also involves identifying the primary gaps with the most impact on the operation of the organisation. The company may also determine the number of additional employees it requires to fill the skills gap and whether to instigate redundancies to streamline processes.

5. Implementing the solution

The process of solution analysis involves creating plans to fill the gaps in the previous step and enable the organisation to meet its goals. For example, it may meet future skills demands through hiring, rehiring, retraining, utilising contingent labour or outsourcing strategies. The organisation's strategy for growth, downsizing, reorganisation or reliance on temporary personnel to fulfil changing workplace expectations determines the most effective solution.

6. Monitoring progress

To optimise the success of its workforce planning solutions, it is important that the organisation continually assesses how well its strategy is working to address the gaps it intends to fill. Senior management may periodically revise company strategies to account for changes in the strategic framework, personnel availability and demand for workarounds. When monitoring the progress, management may consider factors such as what success means for the organisation and the types of metrics that would help determine success.

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