Just Why is Workforce Planning the Crucial Component in Good Business Planning?
Most organisations operate in a complex and dynamic environment, managing it with a birds-eye, systematic approach to business planning with little thought given to strategic workforce planning.
Though some naysayers have written it off as a fad, workforce planning is the main contributor to good business sense. It’s perhaps surprising, then, that many organisations don’t take the same systematic approach to planning their workforce.
We’re here to tell you workforce planning is a core component of business planning. Read on to see some of the common misconceptions about workforce planning and why you need to incorporate it in your business strategies.
What is workforce planning?
Workforce planning is the process of preparing your organisation for the future through analysing workforce supply and demand, gaps in workforce capacity and capability, and assessing what current changes need to be made to meet future needs and ensure that the right people are in the right jobs at the right time.
Why is workforce planning important?
Whether you’re a business owner, senior executive, line manager or HR leader, workplace planning can help with both expected and unexpected business crises and changes. We’ve found that strategic workforce planning provides business owners and leaders with a framework and opportunity to collaboratively:
- Understand issues and risks associated with the workforce, which could inhibit your organisation’s ability to deliver its required priorities.
- Make informed, evidence-based decisions in relation to your current and anticipated workforce requirements in terms of capacity, capability, organisational culture, working styles and opportunities for change (e.g., digitalisation, flexible working or automation) as a key component of business planning.
- Develop alternative courses of action to meet changing market environments and stakeholder expectations, to mitigate immediate and longer-term risks.
Why you need to know this
When done well, strategic workforce planning helps managers think, discuss and plan for the workforce needed for their organisation’s sustainability and success. Without it (or when done wrong), it’s near impossible to scale effectively, recruit the right people, and fill arising gaps. That will ultimately cost you resources, time and even market competitiveness. All because you’ll be lacking the skills that drive innovation and success for your organisation.
When in doubt, remember: Being prepared is better than being surprised.
What are the benefits of workforce planning?
Based on our experience, the greatest benefit of workforce planning is the opportunity to talk and collaborate with other managers or stakeholders to work out future workforce needs. We’re not being dramatic when we say the value of the insights and knowledge gained through collaboration cannot be over-estimated.
But for every outstanding benefit, there’s a dozen other great ones that are not to be overlooked. Consider:
- The opportunity to anticipate, proactively plan and manage the workforce to ensure your organisation has the workforce it needs—when it needs it.
- Understanding and using natural workforce ebbs and flows to limit the need for negative workplace outcomes such as redundancies.
- Taking an evidence-based approach to managing the workforce, which helps people functions to be more business-focused and address critical skills gaps.
- Enabling your organisation to tap into and capitalise on its rich people data.
- Providing evidence to support workforce strategies and management activities by identifying what is and isn’t effective within the organisation.
- More shrewdly prioritising the allocation of organisational resources.
- Gaining insights into organisational workforce risks and enabling proactive mitigation of such risks.
How can you approach workforce planning?
There’s a multitude of ways to approach workforce planning, depending on everything from the context and size of your organisation to work area, team and/or project you’re planning for. This is a crucial consideration when beginning a workforce planning process. The desired outcome of your process should inform the actions you take. And while these will differ between organisation, ultimately, it’s to ensure you have the workforce needed when it’s needed.
We’ve found there are four core components to remember when undertaking strategic workforce planning:
- Treat & monitor.
For visual learners, here’s a look at the overarching approach:
First, organise and plan your approach to gain a good understanding of your current workforce and staffing situation, the external environment and the business context. Workforce planning does not need to follow a linear process at a tactical level. By that, we mean the best path forward is to plan your approach and genuinely understand what you need the outcome to be. But, remember that other information you need won’t be ascertained until you start to go through the motions.
Say that you understand your crucial job roles, your talent supply, the environment and so on, but you don’t have a good handle on the capability requirements you’ll need. This is where you start. Other information can be gathered around the current workforce profile, external environmental trends and capabilities as you develop your understanding.
However your path lays out, the key to strategic workforce planning is to take the time to understand your future workforce needs and where you are currently at through conversations with the key stakeholders who have a deep understanding of the skills needed.
Why you need to plan
Lacking structured questions and conversations with key stakeholders and managers will make the process significantly harder. It means you won’t have a clear understanding of the minute capabilities you truly need for your organisation. And without a well-thought-out plan, you’ll find yourself encumbered with numerous uninformed options. Meaning, you may choose something that blows your budget instead of being cost-effective or causes more issues than solutions.
Next, consider your future workforce needs in terms of critical capabilities and crucial job roles and the capacity the business requires.
Gathering data and working collaboratively to identify and understand the future workforce needs often involves the development of scenarios. Four is usually the golden number of scenarios for finding what works best. So you can consider a wide variety of plausible futures and outcomes. These scenarios don’t need to be elaborate or detailed; they simply need to contain enough information to consider which job roles and capabilities are going to be most crucial.
Working through and forecasting potential demand for crucial job roles and capabilities is best supported by focused questions. For example: what are critical job roles and what crucial capabilities are needed to deliver your services or products. It also makes sense to explore opportunities for growth. Such as introducing new technology, how you can leverage capabilities remotely, or how you may minimise your workplace footprint.
Why you need to gather data
Remember that adage it’s better to be prepared than surprised? General scenario planning allows you to take into account the impact of certain variables on your workforce. Of course, there will always be scenarios you can’t foresee, but failing to plan for any scenario leaves your organisation open to economic risk and missed market opportunities. It’s also important to plan for both “good” and “bad” scenarios, as this will help you prepare for possible investments and market expansions as well as disruptions.
The third component asks you to identify the significant gaps and the risks that may arise if left untreated. These significant gaps might be in between where your workforce is now and where you need it to be. For example: not having the right capabilities or the right number of staff to deliver your planned future products or services.
Considering the variety of outcomes you could plan for, we encourage you to spend time discussing and working through your current organisational culture values. This helps to confirm that the culture is right and fit-for-purpose to ensure your success. If the organisational culture needs to change, this should be considered as part of your gap analysis in terms of changed needed for the future.
Why you need to analyse data
Defining multiple possible issues is only a starting point. You need to analyse data to understand the timeframe you might be looking at for your strategic workforce planning, as well as separate certainties and trends from uncertainties. Otherwise, you may find yourself funnelling resources into scenarios that are unlikely to occur or even influence much change for your market standing over ones that will directly impact your investments, revenue and growth.
Treat & monitor
Finally, you’ll need to work through and plan the most impactful and cost-effective solutions to ensure you have the future workforce that can most effectively deliver your business objectives. These strategies or initiatives tend to cover a broad landscape, which at a high level inform how you will manage:
- Demand for particular job roles or capabilities
- Internal supply of talent
- External supply of talent
- Capability proficiency gaps
- Required organisational culture
- Ways of working (e.g. opportunities for new technology and remote or flexible working).
Workforce plan outcomes will often drive decisions around the future operating model (including job role design), attraction, recruitment, learning and development, organisational culture and change, succession planning, performance management, retention activities and future ways of working. Most activities relating to your people will be impacted, as seen below.
Input, ownership of and accountability for implementation of the workforce plan needs to become part of your overall governance framework. For example, the gaps (i.e. risks) can be managed through a risk framework and/or ongoing management and reporting of strategy implementation.
Why you need to monitor your strategic workforce planning
Most components of the employee life cycle are impacted by workforce plans, which can in turn influence and/or drive change across all people-related initiatives and services. This means that the most important outcome of effective workforce planning should be the most impactful and cost-effective solution. Reviewing your workforce plan helps you assess what’s working and what isn’t and make the relevant and timely adjustments needed. and discuss any new organisational issues, saving resources and making meaningful changes when they’re most needed.
Who should be involved in creating a strategic workforce plan?
Each organisational stakeholder will have a different but valuable understanding of how job roles interact and evolve in necessity within your organisation. But speaking in terms of decision-making, there’s two key personnel you’ll want to seek input from.
Business owners and managers are in the best position to provide insights into your organisation’s long-term strategic objectives and short-term business objectives. They have a key understanding of the required job roles, capacity and capabilities required to ensure successful delivery. They also understand the organisation’s external operating environment and how that is anticipated to change. Additionally, managers generally have a deep understanding of current workforce composition (job roles, capacity and capabilities) and future requirements.
HR practitioners facilitate or support the approach, ensuring it is evidence-based. An effective strategic workforce planning framework also provides HR practitioners the opportunity to challenge managers’ thinking. It works by utilising a robust (though not onerous) and repeatable process that produces well-considered and justified outcomes.
Workforce planning—what’s in it for me?
We’re often asked this question. Quite simply, it’s the value you derive from thinking about and planning for your future workforce: The power of proactiveness.
Throughout the process, you’re considering alternative scenarios that you believe your organisation could experience the future. You’re also considering the kind of workforce you will need in those different potential scenarios. Since the outcomes from strategic workforce planning can be training requirements for new or different skills, recruitment for new or different job roles and plans for areas who waver in the number of staff they need at any point in time, you’re enabled to start planning for contingencies now, rather than simply reacting when you may not have the resources to effectively combat issues later.
Ensuring your organisation has the workforce it needs for the future requires planning. Ideally, this should occur as a core component of business planning. Combining the business knowledge of managers and the professional expertise of HR practitioners, through a structured, robust and collaborative process will deliver valuable insights and tangible benefits. We’ve said it before and we’ll say it again: Within complex and dynamic operating environments, workforce planning isn’t a fad. It just makes good business sense.
Book a call today with the team at Panorama and let’s discuss how workforce planning software can drive efficiencies in your organisation.