Workforce Planning: Definition, Types, Importance And Steps
By Indeed Editorial Team
Published 25 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 a vital human resource (HR) task. Organisations undergo this workforce management practice to analyse their workforce and determine necessary steps to prepare for future staffing requirements. As an HR professional, learning about this practice and knowing how you can implement it can enable you to ensure an organisation has the requisite talent to support the changing priorities of the business. In this article, we define what a workforce plan is, list its types, explain its importance and discuss ways to execute it in the workplace.
What Is Workforce Planning?
Workforce planning refers to employing adequate employees with the right skills and assigning them to appropriate roles to ensure the overall productivity and profitability of the company. It involves determining present and subsequent staffing requirements and seeking the most convenient and cost-effective methods of recruiting and retaining these individuals. Workforce plans also involve a continual analysis of workforce effectiveness and implementation of necessary measures, such as learning and development initiatives, to ensure workforce efficiency. This process ensures that an organisation has current and future access to the human capital it requires for performing effectively.
If a workforce plan aligns with the organisation's overall business objectives and long-term vision, it is called a strategic workforce plan. It includes succession planning, which ensures that all senior members of staff have the required skills and knowledge. The HR team uses workforce plans to design the best-performing employee-management groups possible to reach business goals. They analyse, forecast and plan potential recruitment requirements while considering whether existing employees or outside talent can fill those requirements. This involves the use of workforce management solutions and planner software.
Types Of Workforce Plans
There are two models organisations can follow to plan their workforce, including:
Operational or hard planning
An operational workforce plan focuses on individual planning and deals in numbers. It predicts how many people with particular skills are necessary and streamlines daily employee operations. It helps managers develop daily work schedules to increase employee productivity and assists employees in understanding their responsibilities. This model includes talent management to distribute talent among departments fairly, identify potential staffing gaps and find irrelevant or useless roles and processes.
Management information systems employed in operational planning use basic numerical or statistical data to understand the cause and effect of certain phenomena. When analysed and understood in context, this metric can help optimise operations at a person-to-person level. This is essential in developing and putting into practice policies to keep employees satisfied.
Strategic or soft planning
A strategic workforce plan focuses on business strategy and development and ensures that the workforce aligns with the organisation's overall objectives and long-term vision. It may involve planning for goals that require months or years and identifying broad-based issues that involve all aspects of the enterprise. This includes forecasting knowledge drain as employees leave the organisation, anticipating future talent requisites, determining and evaluating likely future sourcing options, estimating potential barriers to hiring and developing and establishing an effective workforce analytics strategy.
Strategic planning improves agility and responsiveness and provides good quality management information, which is the key to identifying and maximising workforce performance and productivity. This approach allows managers to consider a range of possibilities before reaching a stage where circumstances mandate them to take an action.
Importance Of Workforce Planning
A well-planned workforce is often one that is set up for success. Here are some ways planning the workforce can benefit a business:
Talent acquisition: Workforce plans make it easy and efficient to hire talent by minimising and, where possible, eliminating current and future staffing issues. This involves hiring the right talent that is most likely to suit business goals and culture, increasing the interview-to-hire rate and promoting existing talent to higher positions.
Workforce gaps: This implies understanding the gaps in the current workforce, which can limit the execution of business strategy. This helps to form a personnel strategy in terms of recruitment, re-deployment and training to address the workforce inefficiencies.
Future readiness: When a business knows what it wants to achieve in the future, workforce plans can help identify talent requirements in alignment with the organisation's goals and establish a strategy to ensure the organisation has the right talent, technologies and employment models to reach them. This helps the HR department plan the number of employees required to match growth forecasts or pivot to a different business model.
Succession planning: If an organisation identifies and develops employees with the potential for future leadership roles, it can plan for staff leaving with minimal disruption. Succession planning increases employee engagement and motivation.
Investment allocation: Determining the roles that are important for growth and groups of employees that deliver the highest return on investment can help companies allocate greater investment in training and development for them. Through workforce plans, companies can also find areas that may require extra resources to add more value to the business and reach its full potential.
Employee retention: This involves providing raises, additional bonuses and promotions to the right people in the most crucial roles. Businesses can also use their understanding of employee skills to re-deploy them strategically to more suitable roles, instead of hiring new employees for those positions.
Legality and costs: Relevant workforce planner software can ensure that a company's staffing strategy complies with federal, international and local laws regarding labour, number of employees and safety requirements. It also helps monitor and control costs related to health insurance and hiring by maximising productivity within the existing workforce.
Dynamic: Businesses can be more agile if they have a clear workforce plan with recruitment and training structures in place. It enhances the ability to anticipate and react to change efficiently and meet customer demand in different circumstances successfully.
Software-driven: As workforce plans rely heavily on software, businesses stand the chance of acquiring other benefits that technology can offer. This includes scheduling employee hours and shifts using accurate labour and sales forecasting that matches the demand for labour. Workforce planner technology can also help managers better prepare for retirement and design a talent acquisition strategy to replace retiring employees.
How To Implement A Workforce Plan?
Follow these steps to execute a strategic workforce plan in the organisation:
1. Assess the current state
A current state assessment or supply analysis involves a thorough consideration of the critical roles, the skills people have, ways they can grow and their career goals and intentions. It is an in-depth analysis of the current workforce and how it may change over time because of attrition and other trends. This also involves assessing the organisation's financial ability to hire new employees and the company's access to the talent it requires.
2. Visualise the future state
Visualising the future state of the company involves creating goals. This includes a detailed prediction of forecasted internal and external supplies to meet the rising or changing demands of the business. Analysing the specific talent requirements for these demands and the potential duties employees may be responsible for is crucial here. At this stage, you can consider potential changes to staffing, such as whether there may be opportunities for growth or if employees may leave the company.
3. Analyse the gaps
Gap analysis refers to the understanding of gaps between workforce demand and supply. You can perform this analysis by reviewing employees' current skills and credentials, assessing how they align with business objectives and looking for potential surpluses or gaps in certain credentials and skills. In the gap analysis stage, organisations create internal development and mobility strategies and devise external recruitment plans and strategies to work with external partners and organisational design. The aim is to resolve these drawbacks and improve organisational performance.
4. Make an action plan
The solution analysis stage involves taking actions in terms of recruiting, training, outsourcing and implementing other workforce interventions and activities to close identified workforce gaps and enable the organisation to meet its strategic goals. This can also include planning more attractive remuneration packages or rewards for top talent and using contingent staffing, contractors and consultants, or hiring temporary and part-time employees if necessary.
5. Execute and adjust
After implementing the necessary solutions, it is vital to keep monitoring the performance of those solutions. This depends on the strategies' impact on the previous problems and an evaluation of whether they correct the gaps effectively. Post-implementation, the workforce plan processes may require adjusting because of unexpected factors within the organisation or to meet the changing demands of the industry. After this stage, companies continuously improve the solutions to maximise their effectiveness and repeat the process to continue maintaining an efficient workforce.
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