As business leaders, we all want to achieve strong results. We strive to do this with a mix of goal-setting, KPIs, and technology, but one critical element is often overlooked: staffing. We’ll explain how strategic workforce planning helps accomplish business objectives while ensuring a sustainable, scalable approach to hiring.
What is Strategic Workforce Planning?
All companies have strategic objectives, from raising capital, increasing market share, and growing brand recognition. The organization’s business strategy is built to accomplish these objectives, and strategic workforce planning covers the staffing portion of that mission.
Strategic workforce planning ensures the company has the talent and hiring processes it needs in place for the company to achieve its overarching goals now and in the future. It includes initiatives like recruitment, workforce management, employee development, and incentives like bonuses and promotions.
Importance of Strategic Workforce Planning
Disruption–the process via which markets or industries undergo rapid change–is happening faster than ever before. In a PwC survey, 78% of business leaders said they expect their companies to transform within a mere three years.
In the past, this kind of change took decades. It happens almost overnight in tandem with the release of new technology, changing demographics, and societal shifts. Businesses that want to survive in this era of rapid change must have a plan to keep pace.
Strategic workforce planning helps companies adapt amidst faster change and in unprecedented circumstances. The COVID-19 pandemic is a perfect example–companies who had been practicing workforce planning were in a much better place to pivot and adapt to the “new normal” than those with no plan.
By anticipating and preparing for the changes ahead and how they’ll affect the workforce, companies can prevent their skill sets from becoming outdated (or at least slow down the process) and compete more effectively for talent amid current and future labor market conditions.
Workforce Planning Criteria to Consider
Consider four key factors when mapping out your future staffing and hiring plan:
- Skills: For most companies, this is the most relevant area to address because it’s the one that has the potential to derail your operations the fastest. It also poses the biggest challenge, with a persistent and growing skills gap forecasted across industries.
- Depth: How many employees do you need in each position? Consider the required staff numbers to meet your needs and redundancy to cover absences and turnover.
- Agility: How quickly can you adapt to the market, economy, and global shifts? Succession planning and backfilling are two strategies that can help you become more agile.
- Budget: Besides ensuring longevity and accomplishing strategic goals, staffing optimization reduces recruitment expenses and improves the company’s bottom line.
5 Key Steps To Effective Workforce Planning
1. Extend your strategic timeline
Company executives face a huge amount of pressure from shareholders, board members, and the public at large to show results. They have to consistently hit KPIs and “move the needle” to prove that they’re earning their hefty paychecks.
While this may result in short-term gains and stock price bumps, it often comes at the cost of a long-term strategy. Strategic workforce planning should resist such short-term plays and zoom outward, focusing on the long game. This is because workforces don’t transform overnight. Instead, they’re built and molded over many years, which takes consistency and perseverance.
Data is a valuable tool that can help make the case to stakeholders that long-term workforce strategy actually contributes to achieving both short- and long-term company goals–more on this in a moment.
2. Gather the right intelligence
While workforce planning contributes to organizational goals, it shouldn’t be guided by those goals alone. It should incorporate input from a diverse set of sources, including but not limited to:
- Economic news
- Labor market trends
- Industry thought leaders
- Pertinent research
- Historical company and industry performance
- SWOT analysis
- Competitor analysis
- Recruitment metrics like cost per hire and turnover rate
This is far from an exhaustive list, but it’s a solid starting point for gathering the data you need to create an effective workforce plan.
3. Identify talent needs
Based on the data from the sources above, what are the company’s most pressing talent needs for the future?
To illustrate, let’s look at an example using a hypothetical medical device company. Let’s say your data analysis reveals the following:
- Economic news: Your industry is expected to experience an annual growth rate of 8%, which is higher than average
- Labor market trends: Unemployment is expected to remain low, which means a job seeker’s market
- SWOT analysis: Your company’s strengths lie in research and development, but sales is a major pain point
- Competitor analysis: Your top two competitors consistently outperform you in sales, despite having comparable or inferior products
Based on the information above, we can surmise that sales are a skill set that’s lacking within the company and needs to be addressed as an urgent priority to capitalize on the industry’s imminent growth fully.
Not only will shoring up your sales talent help maximize future revenue, but it can also help win back some of the market share that’s currently held by mediocre competitors–two wins for the company overall.
Of course, this is a very basic example, but it demonstrates how trends begin to emerge when you take a holistic look at the right data sources.
4. Identify talent risks
Next up, address talent risks. These are areas where your currently sufficient talent may experience a shortage or misalignment in the future.
Using the same hypothetical example above, we can see that the company is thriving in research and development. Assuming that our competitors are angling for the same success, it’s a solid prediction that they’ll pose a risk to our R&D talent base in the form of poaching.
With this risk identified, we can use workforce planning to mitigate it with strategies designed to promote R&D retention, like internal promotions and employee rewards.
5. Leverage a strategic partner
Workforce planning often falls to HR professionals because they’re the internal specialists in hiring. However, they’re typically not experts in advanced data analytics and modeling that can be greatly useful in strategic workforce planning. It’s expertise all its own.
Thus, companies can benefit from teaming up with a partner that specializes in workforce planning. It’s one of the most commonly outsourced business processes and an especially useful approach for enterprise-level organizations. A strategic workforce planning partner can help you gather the data and identify the right technology to execute on your staffing goals.
6. Analyze the data
If there’s one thing this post should make clear, it’s that data is instrumental in successful workforce planning. Track your progress and results over time and assess them consistently so you can make changes in real-time, not just after you begin to experience growing pains.