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What is the Difference Between Strategic Workforce Planning & Operational Planning—and Why is it Important?

Generally speaking, there are four core components utilised during the workforce planning process: organise, gather, analyse, and treat & monitor. Not so generally speaking, these components are vital when you’re developing a strategic or operational workforce plan. We didn’t refer to them as core for no reason.

So, what is a workforce planning process and what’s the difference between strategic and operational workforce planning? Why is this so important? It’s easy to overcomplicate the distinction between strategic and operational workforce planning, not least of all because Google searches tend to throw up individual definitions for either—not comparative ones.

This guide explores the differences between strategic workforce planning and operational workforce planning and why it should matter to business owners, senior executives, line managers and HR leaders.

What is strategic workforce planning?

Strategic workforce planning is a workforce planning process focused on the long-term growth of your organisation. It forecasts possible futures your organisation may experience and informs the change it requires to grow, such as predicting what capabilities and capacities will be required to meet your long-term strategic business plan.

What is operational workforce planning?

Operational workforce planning is a workforce planning process focused on the short-term requirements of your organisation. It identifies risks such as talent shortages and surpluses and solves and responds to critical organisational issues that would impact the business within 12 months.

The difference between strategic workforce planning and operational workforce planning

The main difference between strategic and operational workforce planning is the timeframe the planning focuses on. Strategic workforce planning concentrates on long-term organisational planning, preparing for the future, and meeting long-term business objectives. On the other hand, operational workforce planning concerns the immediate affects that can impact your organisation within 12 months.

Infographic comparing strategic workforce planning to operational workforce planning

Strategic workforce planning forecasts (or “predicts”) the critical capacity and capability needed to meet an organisation’s five-year strategic plan. It focuses on plausible futures and estimates the resulting “magnitude” of change for each scenario. The estimation is based on crucial capabilities and job roles that may or may not be required. The magnitude of change is often more pivotal to planning than any concrete numbers or figures.

Strategic workforce planning activities should consider potential organisational futures and from where labour or specialised capabilities can be sourced. Consider things such as mergers/acquisitions, organisational transformations, restructures and even start-ups. In layman’s terms, strategic workforce planning can inform the change your organisation requires to grow, increase profit or even avoid future disaster.

On the other side of the coin, operational workforce planning has a number of uses, including:

Operational workforce plans are usually more granular than strategic workforce planning. They identify risks in both talent shortages and surpluses that would impact the business in the immediate short-term. They also determine the time period needed to respond to incidents (such as a pandemic or crisis).

Why this matters

Fundamentally, both operational and strategic workforce planning are business-driven processes designed to help organisations better understand the workforce required for their desired future—and the actions necessary to secure that workforce.

When operational workforce planning is undertaken alongside business planning, managers and executives are gifted extremely valuable data about their workforce. This enables them to deal in “what-if” conversations with actual workforce costs and numbers, which greatly improves the accuracy and value of business planning activities.

Why should I care about strategic workforce planning?

Organisations, large and small, are constantly changing and responding to external factors and our evolving VUCA (AKA volatile, uncertain, complex and ambiguous) world. All organisations will be impacted by disruptive technological, regulatory, environmental and social change. 

The impacts on the workforce are immense. To remain successful and competitive, you need to take the time to identify where there are workforce risks—i.e. gaps in capabilities or capacity—which inhibit your organisation’s ability to achieve its business outcomes. Strategic workforce planning is future-focused and fundamentally about ensuring an organisation’s future needs are reflected in current changes. These changes make certain the workforce is readied, able and available to achieve ongoing sustainability and success. The purpose and vision outlined in an organisation’s strategic plan sets the tone for direction and objectives, and the strategic workforce plan outlines the culture and people required to achieve success:

Flowchart showing how strategic workforce planning leads to successfully achieving business outcomes

Why you need to know this

Many organisations fail to recognise strategic workforce planning as a central part of the strategic planning process. This means they aren’t able to proactively plan their future workforce needs when they develop plans for the future. These organisations could then find themselves blindly reacting to sudden, detrimental changes in their workforce that impact their ability to deliver on business outcomes. Plus, the path to achieving any of those best-laid objectives may go awry, leaving your organisation reeling financially and competitively.

How do I create a strategic workforce plan?

Remember those four core components? (Quick refresher: Organise, gather, analyse and treat & monitor.) They’re the bones or foundation of a strategic workforce plan. We’ll flesh it out below, but first have a gander at a high-level overview of the approach here:

Flowchart showing how to create a strategic workforce plan

Organise

First step: Organise and plan your approach. Consider the problem your strategic workforce plan is seeking to solve. Who do you need to involve and collaborate with when creating the strategic workforce plan? A stakeholder analysis will help you work out the key stakeholders you need to involve. With stakeholders gathered, you can collaborate to finalise your timing, activities and approach. 

From our experience, there is no one-size-fits-all approach to creating a plan. It’s about what’s right in the context of your organisation, forecasting period, workforce planning maturity and experience, and the complexity of your problem or overall objective. The key is to take time to develop the most practical and realistic approach.

Gather

Using the insights you’ve collected, you’ll then want to collaborate with key stakeholders to articulate your future business operating environment. Developing up to four plausible, alternative future scenarios enables you to think broadly about possibilities. Your external environment and the insights from stakeholders will shape the potential futures. It’s important to work with stakeholders at this point to consider and forecast your future workforce needs in terms of:

Facilitating discussions through structured questions posed in workshops, interviews or focus groups, or through online tools (which can often more efficiently capture insights) will help you capture and store insights accurately.

Analyse

Next, you’ll need to analyse this data to determine any significant gaps or risks that may impact your organisation if left untreated. We call this a risk analysis. 

A risk analysis enables you to understand where you may lack the capabilities or staff to deliver your planned products or services. The risks will also often relate to broader, complex organisational issues such as the need for cultural change, different ways of working, or even changes to the organisation’s operating model. When developing a set of risks, it’s best to use a risk framework to assess the level of threat against organisational outcomes and prioritise them based on threat. 

Treat & monitor

Finally, it’s time to plan the most impactful and cost-effective solutions to ensure you have the right future workforce to remedy effectively high priority risks and efficiently deliver your business objectives. Your strategic workforce plan outlines where you will (or will not) need to focus your time and resources, such as:  

Once your strategic workforce plan is agreed and signed off on by key stakeholders, it’s important to have ongoing governance in place. This makes sure you’re in a position to review, adjust and act on solutions. If you find they’re not working, then good tracking and reporting results in coming up with alternative solutions. As an added aside, good governance also ensures that quick actioning can be undertaken to respond to any changes in your environment or internal context. 

Key considerations when designing a strategic workforce plan

Here are a few more nuanced and crucial steps you’ll want to consider in order to effectively create your plan. 

  1. Be thorough: If you’ll allow us the cliché, workforce planning is about the journey, not the destination. The effectiveness of your plan is very much asking the right questions and involving the right stakeholders in discussions about current and future workforce.
  2. Assemble your tools: Workforce planning is not a paper-based exercise. Efficiently collecting and managing your data is key. Ideally, you’ll have access to tools which will help you collect and maintain the data in a centralised repository, for ease of access, storage and analysis.
  3. Gather accurate data: We cannot stress this enough. You should have confidence in the quality and credibility of this, so plan for and access the best available evidence about your current staffing situation.
  4. Profile your workforce: Create a one-page profile of the workforce you’re developing your strategic workforce plan for, including both quantitative (e.g. current staff headcounts, classification levels, remuneration costs, diversity etc) and qualitative evidence (e.g. results of engagement surveys).
  5. Begin to think ahead: It’s helpful to create a workforce supply, which maps trends and potential risks of staff supply. This is based on resignations, potential retirements and other staff movements within and external to the organisation.
  6. Understand your environment: To understand key trends and potential impacts on the workforce, you do internal and external environmental scans. You can be broad in this because you’ll summarise of these findings in a one-page billboard of the external environment. Include internal data such as plans, stakeholder/customer data and budgets. The aim is to ensure your information is about the current internal and external environment in order to inform discussions and decision-making throughout the creation of the strategic workforce plan.

What are the benefits of strategic workforce planning?

A key benefit of strategic workforce planning is the opportunity to apply an over-the-horizon mindset to your required future workforce. Often, it’s about a structured approach, involving the right people, utilising the best available evidence and good, old time. 

Long-term, strategic workforce planning enables you to be what all organisations should strive to be: Proactive and forward thinking. Rather than making job roles redundant or needing to lay off staff, strategic workforce planning provides the opportunity to plan for and develop capabilities you’ll need in the future, before you actually need them. And as a substitute to ‘investing’ in redundancy payouts, you invest in learning required for new capabilities and preparing individuals for new job roles or new smarter ways of working. This ensures you have the workforce you need, when you need it.

Why you need to know this

You’ll need time to plan your workforce needs, to collaborate, discuss and share insights about the kinds of job roles and capabilities your organisation will need into the future and research the possibilities. In our crazy busy lives, we don’t often have room in our schedules to do this, and organisations then must (against everyone’s best interests) become overly reactive to workforce decision—to recruit more staff or even terminate them.

In summary

The principles that underpin strategic workforce planning and operational workforce planning are very similar—they are both business-focused activities that utilise collaboration and evidence-based processes to identify future workforce needs. The key differences between the two are the timeframes considered and the level of granularity in each approach. But regardless of whether your focus is strategic or operational, the benefits of undertaking workforce planning are clear. Ensuring your organisation has the workforce it needs when it needs it, is important for business owners, senior executives, line managers and HR leaders.

Book a call today with the team at Panorama and let’s discuss how to drive efficiencies in your workforce planning through digital transformation of WFP processes.