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What Is Strategic Workforce Planning and Why Is It Important?

Global Business Strategy
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Strategic workforce planning is one of the most powerful tools companies can use to achieve their globalization objectives within an increasingly competitive market.

Planning is the driving force and the primary connection point between workforce and talent management. A comprehensive workforce plan is at the heart of a strong human capital management team.

While many organizations realize the need for better planning, most still lack the tools and capabilities to effectively manage and execute the strategic steps necessary to drive significant business results.

Let’s start by defining what workforce planning is, and why it is important.

What is workforce planning?

The Society for Human Resource Management (SHRM) defines workforce planning as the process an organization uses to analyze its workforce and determine the steps it must take to meet current and future staffing needs. It also involves determining the most efficient and cost-effective methods to recruit and retain talent.

Why is workforce planning important?

When you act with purpose, you build your future. Agile workforce planning shapes the employee experience in significant ways. It also helps companies form teams that work well together for impactful, long-term results, improves investor relations, and enhances talent management capabilities.

Workforce planning helps companies to:

1. Reach financial objectives

Finance and human resources are excellent partners in business planning. The productive union of these two teams enhances collaboration through the connection of people, processes, and technology.

As with any successful partnership, finance and human resources depend on each other, since the workforce is a major source of revenue and costs.

The finance department should analyze people data to determine how the workforce is contributing to the organization. With those insights, HR can strategically allocate resources, hire the right people at the right time, initiate programs that nurture talent, and create an optimal workforce mix that aligns with financial goals.

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2. Improve employee experience

People are at the center of effective workforce planning. When a company plans with its people top of mind, it prioritizes and caters to their wellbeing and, ultimately, improves the employee experience.

Workforce planning can help your organization gain business agility through the efforts of engaged employees and their unique, individual talents. That starts with having flexible workforce plans that are tailored to their experiences and needs.

Analyzing your workforce helps you determine how to move toward higher productivity and profitability. This ensures that your hiring strategies meet business requirements and that your workforce plans coincide with your corporate plan.

3. Promote collaboration

Workforce planning is collaborative — it encourages member participation throughout the organization. Identifying interdepartmental connections and understanding the effects of specific actions on other areas of the business require a series of cross-functional insights that can only be obtained through collaboration. Moreover, knowledge and teamwork broaden horizons.

To get the most out of your people require a focused approach. But where should you start? There are four key principles that can help you design your workforce planning model.

4 basic principles of workforce planning

strategic workforce planning

1. Right people

Some companies rely heavily on the additional of new team members to achieve their goals. In these instances, it would be necessary for them to expand their workforce to process their workloads.

In the new remote business world, global barriers have dissipated, making it possible to find the best talent, regardless of where they live. Expand your talent acquisition strategy beyond your local area to find the right people for your team.

Things to consider:

•  A global talent search
•  Factors that affect staffing needs
•  Productivity

2. Right skills

Knowing exactly which competencies your company requires from its talent is critical to meeting future challenges and most effectively filling skills gaps. Identifying the experience levels that support strategic competencies is vital for translating hiring into strategy and turning business models into long-term results.

Things to consider:

•  Key skills needed throughout the organization
•  Impact of skills on your strategy and business model

3. Right place and time 

Continued growth requires placing the right people in the right positions at the right time, and having the right positions to place them in. Accomplishing this requires ensuring employees are optimally distributed throughout the company.

It also means companies must establish clear business goals to ensure they’re hiring team members equipped to help meet current and future company objectives.

Things to consider:

•  Alignment of talent distribution and company needs
•  Adjustment of hiring strategy to meet business objectives

4. Right cost

Plan for direct and indirect costs you can expect to incur while hiring, including costs for job ads, hours spent on applicant interviewing, new employee salaries, benefits, insurance, etc.

Understanding what these costs look like will keep your team within budget. It will also ensure you’re optimizing costs by securing the right talent, only when those specific skills are needed.

Things to consider:

•  Focus on strategies to optimize costs related to talent
•  Planning for direct and indirect hiring expenses
•  Budgeting for only the talent and skill sets your company needs

These principles should act as the foundation of your strategic workforce planning.

7-step strategic workforce planning process

Once you have them in place, use these steps as the building blocks to a successful, engaged, and productive team.

1. Assess objectives

One of the objectives of strategic workforce planning is to ensure that your business goals are achievable. As such, short- and long-term business objectives should be assessed during the first stage of the strategic workforce planning process.

Including the right people in this step is crucial; it is not enough to have a business partner and HR professionals involved. Line managers, financial services representatives, HR technology experts, and business executives are examples of some of the right people to include during strategic workforce planning initiatives.

2. Analyze workforce 

The second step in the planning process is to analyze the current workforce. Business leaders must ensure that both the quantity and quality of the workforce are assessed during this step.

3. Identify skills gaps 

Conducting a skills gap analysis will provide valuable future workforce data. For example, a skills gap analysis would indicate when an employee plans to retire. Instead of scrambling to replace the retiring employee, the skills gap analysis would have provided sufficient time for human resources to prepare.

4. Anticipate future issues

Adequate preparation for the future provides companies with a competitive advantage within their industry.
Business leaders must be sure to develop a workforce plan that anticipates future business issues and provide actionable steps to address them. Examples of future workforce issues range from a supply chain problem to labor market concerns.

5. Develop an action plan

After assessing objectives, analyzing the workforce, identifying skills gaps, and anticipating future issues, the next step is to develop an action plan. This should include strategies for recruiting and retaining talent, restructuring the organization, and enhancing technologies.

6. Implement the action plan

Implementing the action plan means ensuring that the necessary resources are in place, roles are clear, and needs are met in order to execute the plan and achieve business goals. This involves working with leadership and hiring managers to gauge the impact.

7. Test and monitor the plan

As business needs change, workforce planning strategy does as well. Regularly testing and monitoring your plan allows you to identify progress, areas for improvement, and any necessary adjustments to address potential workforce issues.

strategic workforce planning

Remote workforce planning

Strategic workforce planning prepares companies to respond to continuous and inevitable changes in the workplace. It also ensures business agility in times of crisis, such as the Covid-19 pandemic, which has already altered the way people around the world live and work.

Many organizations started encouraging remote work to ensure the safety and wellbeing of employees during the crisis, but remote work is now the new normal.

Companies must adapt their business strategies to the remote work model to enable employees to work productively, and to meet their goals.

Here are some strategies for successful remote workforce planning.

  • Establish remote work policies with clear rules and outlines. These should detail job responsibilities, organizational and departmental goals and objectives, customer impact, and employee job performance.
  • Select the right people for the job. Since not all employees are best suited to work from home, it is necessary to define who will perform best in a virtual setting.
  • Anticipate issues and prepare to respond. It is very important to take action to prevent and solve any problems that could arise.
  • Keep objectives and expectations clear and continue to monitor and test the company’s action plan.

With the ever-changing marketplace, it is even more important to differentiate your business in a way that resonates with talent and customers.

Engaging teams effectively is vital to ensuring they are prepared to thrive, creating opportunities for your organization to excel. Workforce planning is the key to channeling everyone’s skills for the good of your organization’s cause.

Once you have the right team in place, it’s time to ensure they are engaged and adding value to the company. Learn how to support your team with this ebook: “7 Steps of the Remote Employee Lifecycle.”

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