How do you use workforce planning right now? Be honest. It’s a tick box exercise which looks at how many roles you need to make redundant while simultaneously cutting the training budget, isn’t it? What if you used it differently?
Rather than a ‘set-and-forget’ annual activity, workforce planning works amazingly when you use it as a strategic tool. An essential approach to driving business success, both now and in the future.
It does mean thinking more broadly. Using data to determine what skills you need and linking them to business goals, but don’t let that put you off. (There are lots of great tools which can pull information from your existing systems to help you create the story). The key is viewing workforce planning as a way to support and develop your employees, create the core skills programs you need, and secure the long-term prosperity of the business. So, let’s explore:
- What workforce planning really is and why it matters
- The key components to effective workforce planning
- The benefits for your business
- Some challenges to effective workforce planning
- Simple steps to tackling the data
Workforce planning – what it is and why it’s important
For many businesses, workforce planning is little more than a spreadsheet of current headcount and vacancies matched with targets. It’s a shortcut to setting the new year’s budget. When you approach it as a strategic tool, however, you need to go deeper, and look at four main areas:
- Current business goals
- Future business plans
- Current skills and roles across the organization
- Future skills need
These four factors help you build a picture of where you are now and where you want to get to. It demonstrates to leaders how the right mix of skills, roles, and knowledge will drive current and future business results. And it develops that into a plan (and budget) which considers internal development, progression, hiring needs and planned exits to address any gaps or mismatches.
Why it is so important
The short answer is because the success of your business depends on it. Organizations change, and the skills you need today won’t be the ones to ensure their success in the future (just look at the impact of the AI revolution).
Using workforce planning effectively, however, allows you to identify which skills you need next and create programs and career paths to develop them. It has a positive impact both on delivery and employee commitment, making you a much more desirable place to work.
Key elements of effective workforce planning
The old Finance spreadsheet isn’t going to cut it, you’re going to need more data, so here are the key pieces you need:
- Current business goals and performance against them – this is typically the easiest information to access, although it will depend partly on how well your managers set Objectives and Key Results (OKRs) with their teams at the start of the year.
- Future business goals – these may not be set in stone, but most businesses have some sort of plan. Look at any changes to volume, product mix, service offerings, geographies, target market etc. which differ from the current goals.
- Current skills – you may not have these mapped as skills yet, so performance reviews and 360-feedback, especially when you have a system of regular updates, provide a good start point. Assess these against current business goals to see what’s missing.
- Future skills – map your future business goals into a skills plan. Will you need more salespeople, different forms of communication, a change in influencing style, greater cultural awareness for overseas clients etc.? Look critically at the future plan and spot skills gaps or surpluses which need to be addressed.
Gathering this information and doing some initial analysis is step one of the puzzle. You effectively have the outside edges which hold your strategy together. The real magic of workforce planning, though, is finding the missing pieces to finish the picture.
Three steps to a great workforce plan
- Chart your skills gaps – you’ve done some of this work already, but consider individual retention or management risks and the effect of any proposed structural changes. Engagement reports can offer useful insights here to help you spot concerns and assess their potential impact.
- Create your plan – take a step back and assess the trends. Look for the core skills programs you need, opportunities to develop technical skills or relationships to avoid single points of failure, and identify career pathways to develop the right skills mix for the future.
- Monitor actions and reassess your plan – set a timescale for review to check you’re on the right track. There’s a risk workforce planning can become too rigid, change the plan if you need to. Have you under- or over-recruited for a team? Is there a new skill you need to add? Are the career paths working?
Workforce planning as a strategic tool doesn’t stop once the budget is set. It becomes an ethos of continual review to be sure you’re going in the right direction and developing the right skills as you go.
The benefits of a strategic approach
By now, you’re hopefully seeing the benefits workforce planning can offer your business, including:
- Improved flexibility – thinking about current and future needs helps you build teams with broader knowledge and skills which they can use as the organization changes
- Increased engagement and reduced retention – people recognize when you’re genuinely focused on them. Developing career pathways and wider skills programs satisfies their need to grow and progress and encourages them to stay with you
- Lower hiring costs – once you know what you’re looking for, it’s a lot easier to find them
- Better talent management – you can spot the talent you already have and focus budgets on addressing key concerns and development needs. No more guessing what you want based on management feedback. You can spend your money on the programs that will really make a difference.
Understanding the disadvantages of workforce planning
Making a change like this is bound to come with challenges. This process will take longer, for a start. But some of the barriers aren’t as scary as they seem – you just need to know how to tackle them:
- Difficulty analyzing the data – that’s what AI is for. Doing this manually is time-consuming (and is likely the reason lots of people don’t do it). Yet the technology now exists to integrate your systems and pull information from your HR Information system (HRIS), performance review platform, engagement and learning management systems etc.
- Costs to new technology – it’s true, there could be costs associated with this, but often the investment will far outweigh the alternatives such as costs of addressing future talent issues, poor recruitment decisions and disengaged employees
- Company culture struggles with change – this is a tough one to address, but getting the leadership team on board is key. If they recognize the benefits, the next step is to use your workforce planning tools to identify the gaps and develop the skills you need for the future.
- Lack of coordination across departments – there’s a good chance this is an issue now. People working in silos and not considering skills in other departments. Using workforce planning effectively means taking an holistic approach, so you can look at the wider opportunities to achieve success for the business.
Taking your first steps in strategic workforce planning
The first one is reading this article. Learning more about the opportunity workforce planning creates and how you might get it to work. The next is to understand more about skills planning for your business.
Each business has a unique set of skills it needs now and for the future, all you need are the right tools to identify them and link them to your teams. Yet not everyone is at the same point, so your actions will vary as you introduce this approach.
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