Organizations use workforce planning to analyze their current workforce and determine what steps they should take to meet future staffing demands.
Here's what you need to know about workforce planning:
- Effective workforce planning requires a deep understanding of your organization’s mission and objectives.
- Members of senior management should be involved in the workforce planning process.
- Workplace planning helps you devise rock-solid talent attraction, engagement, and retention strategies.
There’s no getting around it: Staffing is a requirement for every employer. And to ace it, you need to perform workforce planning. Skip this step, and staffing becomes an ad hoc process, which leads to a slew of issues — including poor hiring decisions and financial waste.
Read on to learn about workforce planning, including the definition, advantages, and steps in the process.
The definition of workforce planning
The Office of Financial Management says, “Workforce planning is grounded in its contribution to organizational performance. It provides management with a way to align the workforce with the business plan and address current and future workforce issues.”
In other words, organizations use workforce planning to analyze their current workforce and determine what steps they should take to meet future staffing demands.
As an employer, you should have a business plan that details your resource requirements, including when it comes to staffing. Workforce planning allows you to meet the staffing goals outlined in your business plan.
Before you start building your workforce plan, it’s essential to understand your business goals.
The main objectives of workforce planning are to:
- Identify the organization’s talent demands based on current and future business goals.
- Pinpoint the appropriate talent, technologies, and employment models for achieving these business goals
So, before you start building your workforce plan, it’s essential to understand your business goals. Once you know your short-term and long-term goals, you’ll be more equipped to develop an effective workforce plan.
Before we get into how to perform workforce planning, let’s look at how it can benefit your organization.
Advantages of workforce planning
Workforce planning allows you to:
- Tie your workforce requirements directly to your business plan and goals
- Identify gaps in your workforce’s current competencies and the competencies needed in the future
- Determine ways to reduce staffing gaps
- Decide how best to structure your organization and distribute your workforce
- Identify potential external and internal obstacles to reaching your workforce goals, and devise solutions to overcome them
- Determine the types of individuals that should make up your workforce now and in the future — e.g., full- and part-time employees, independent contractors, seasonal workers, and temporary personnel
- Focus on both short-term and long-term staffing needs instead of only those that are immediate
- Respond efficiently to impromptu staffing needs, such as partnering with a staffing agency to supply skilled, temporary labor when an employee suddenly quits
- Have a succession plan ready for when key employees leave.
- Adopt the most fitting employment model(s), such as onsite, remote, or hybrid work
- Create a healthy workplace culture
- Budget smartly for current and future workforce requirements, thus keeping your labor costs under control
- Develop job classes, salary ranges, and career development opportunities
- Anticipate and manage workforce risks
- Establish a reporting structure — e.g., executives, managers, supervisors, team leaders, and employees
- Identify your legal obligations as an employer and implement best practices for carrying them out
Workplace planning helps you devise rock-solid talent attraction, engagement, and retention strategies. It gives you a well-thought-out script to follow, making the process smoother.
Workforce planning lets you develop motivation strategies to incentivize productivity and boost job satisfaction.
For example, it helps you create strong recruitment, screening, interviewing, hiring, onboarding, and training processes to reduce bad hires and new-hire turnover. Moreover, it lets you develop motivation strategies to incentivize productivity and boost job satisfaction.
Who is responsible for completing this effort?
Workforce planning is a discipline of human resources. Therefore, the HR department is largely responsible for most workforce planning initiatives. That said, the wide-ranging nature of workforce planning demands collaboration with various departments.
At a minimum, members of senior management should be involved in the process. This is critical to gathering reliable data on each department’s current and future staffing needs. In organizations with a C-suite, the Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Financial Officer (CFO), Chief Information Officer (CIO), and others will need to weigh in.
Even for small businesses with a minimal reporting structure, HR does not act alone in workforce planning. For instance, they collaborate directly with the business owner and other stakeholders to ensure all grounds are covered in the workforce plan.
Examples of steps in workforce planning
Many models are available from industry experts on how to perform workforce planning. But in the end, the specifics will depend on your unique business factors, including your:
- Job descriptions
- Employment models
- Workforce demographics
As stated, both current and future variables must be considered.
Below we offer 2 examples of how to conduct workforce planning.
Example #1: The Office of Personnel Management’s Model: 5 Steps
1. Establish a strategic direction
Link your workforce planning process to your business plan and the work activities needed to execute your short-term and long-term staffing goals.
2. Analyze your workforce, detect skills gaps, and perform a workforce analysis
- Determine your current resources and how they will change over time via turnover, business expansion, or downsizing situations.
- Note the types, amount, and locations of workers you need to achieve your business mission and goals.
- Identify the gaps between your current and projected workforce requirements.
3. Build an action plan
Identify strategies for closing staffing gaps, implementing gap-closure measures, and reviewing your progress.
These strategies may include:
- Hiring employees
- Training and retraining
- Organizational restructuring
- Hiring independent contractors
- Succession planning
- Upgrading your HR technology to facilitate future workforce demands
4. Implement the action plan
You will need to make sure:
- Your human and financial resources are in place
- Everyone understands their role in the organization
- All relevant marketing, communication, and coordination are happening according to the workforce plan
5. Monitor, review, and update the plan
- Monitor the workforce plan based on established milestones.
- Review your progress and determine areas of improvement.
- Modify the plan to make improvements and address new workforce concerns.
Example #2: The Society for Human Resource Management: 4 Step process
- Supply analysis. Also called the “supply model” or “staffing assessment.” This step involves analyzing the organization’s current workforce supply — including the number of employees, their skills, workforce demographics, protected class groups, and projected attrition
- Demand analysis. Also called the “demand model.” This step requires you to review your future business plans and objectives. The goal is to determine whether labor is readily available to meet future business demands and how you will secure the necessary talent to satisfy these future business needs.
- Gap analysis. This step compares labor supply and demand differences and identifies skill surpluses and shortages. For example, how many employees already possess the requisite skills for future business demands, and how many might you need to let go because they lack the required skills?
- Solution analysis. This step shows you how to manage current and future staffing requirements through targeted strategies — such as recruiting, training and retraining, contingent staffing, outsourcing, employee development, and succession planning.
Effective workforce planning requires a deep understanding of the types of workers needed to achieve your organization’s mission and objectives.
Workforce planning is a comprehensive, systematic process
Effective workforce planning requires a deep understanding of your organization’s mission and objectives, plus the types of workers needed to achieve them. It also calls for collaboration with senior management to ensure everyone is on the same page and to avoid poor decision-making.
If you use the right approach, you can build a strong workforce plan that gets you qualified workers, now and in the future.