Do you know who your most valuable employees are? Or if you’re missing out on opportunities by failing to plug talent gaps? Are your business’s hiring costs sky-high because of a crazy attrition rate? Are you hemorrhaging money on underskilled staff?
Building a successful workforce doesn’t happen overnight. Developing any type of people strategy takes months of hard work, but the effort is worth it, as your people are the bedrock of your success.
If you want to build a motivated and highly skilled workforce, you need to invest in workforce planning. So, what is workforce planning, and what benefits can it offer your business?
- What is strategic workforce planning?
- 13 benefits of workforce planning
- Tools to support the workforce planning process
What is strategic workforce planning?
Workforce planning is a strategic approach to human resource management. When conducting strategic workforce planning, a business’s executives will analyze its current resources and forecasted demand, looking for skill gaps and planning for nurture needs. The goal is to make sure the business has the right people in the right roles based on demand.
For example, during the workforce planning process, you may uncover a higher-than-average turnover in key positions over a short period of time. You can use this information to devise a strategic plan aimed at improving employee retention, including fostering skill development or optimizing organizational design.
13 benefits of workforce planning
Implementing an effective workforce planning process offers dozens of benefits to businesses and their employees. Let’s explore 13 ways effective workforce planning can benefit your business.
1. Greater alignment with organizational goals
By ensuring you hire the right people with the right skills, values, and attitudes, you can build a workforce that is well-aligned with your business objectives.
The process of aligning your workforce with your wider business goals is known as strategic staffing, an integral part of workforce planning. At Runn, we believe strategic staffing should focus on people-centric policies that motivate employees to contribute towards the business’s goals.
2. Decreased hiring costs
Hiring and firing is a costly business, but workforce planning can help decrease recruitment costs in two ways. Firstly, by forecasting future business needs and the resources required to maintain the ideal productivity levels for the organization to run efficiently, you can avoid overstaffing caused by unnecessary (and costly) hires.
Secondly, understanding exactly what type of person and skill set is well-suited to the business helps inform future hiring decisions. By reviewing staffing data alongside anticipated demand, recruitment teams gain a better understanding of what roles and skill sets they need to hire for, streamlining the recruitment processes and ensuring you hire the right people the first time around. In this example, workforce planning helps bring in the right people with the right skills at the right time, minimizing the time during which positions are unfilled.
3. More efficient resource allocation
Using workforce planning to gain clarity on your current workforce’s skills will help you maintain a more efficient workforce allocation process, including managing staffing levels. With an improved workforce management strategy, you can align resources to forecasted projects and business needs, ensuring the right resources are available at the right time.
4. Investment in valuable talent
Do you know who your most valuable players are? Do you reward them for their dedication and hard work? Workforce planning helps HR teams quantify who is deserving of a raise, promotion, or bonus.
Reviewing performance evaluations and other relevant data can not only identify who the organization’s top performers are but also if any of them are at risk of leaving the business. This provides opportunities to implement effective retention strategies — but more on employee retention later.
When others see their peers being rewarded for their high performance, it provides additional incentive to perform.
5. More strategic training and development
If you want to build your ideal workforce, workforce planning can help. With talent management, an integral component of workforce planning, you can upskill your staff and future-proof your workforce.
By anticipating future business needs, HR teams can devise strategic development plans and support staff in building their capabilities. This is especially important when it comes to highly valuable staff members, who you want to keep in the business while furthering their careers.
Learn more ➡️ Empowering Your Workforce:A Guide to Workforce Development
6. Better employee retention
The long-term benefit of ensuring employees are in roles well-suited to their skills, offering recognition for hard work, and supporting employee morale is better retention rates.
Low employee engagement costs businesses $8.8 trillion annually in productivity (around 9% of the global GDP); while your business’s turnover costs will be a fraction of this, understanding your attrition rate and working to increase employee retention is critical.
Retention planning involves showing staff that the business is committed to developing their careers by providing training and rewarding hard work. Workers who feel their employer is invested in their future and values their input tend to feel more satisfied and remain with businesses for longer.
7. Fewer resource risks
For your business to stand the test of time, you must be able to anticipate, plan for, and adapt in the face of change. A workforce plan that is reactive to change helps anticipate and mitigate workforce risks and limits the amount of time spent on decision-making in crises.
For example, workforce planning helps executives understand the impact of delays and disruptions on business operations, allowing risk mitigation plans to be put in place. If you know demand decreases in summer but ramps up quickly in winter, you can create a people strategy that flexes with this demand, reducing the money spent on inactive workers.
8. Less talent gaps
With workforce planning, you want to match talent supply with demand. That means identifying — and working to fill — talent gaps.
You may find several teams could benefit from additional hands on deck, helping them reach their full potential, or that there are opportunities to support expansion and bolster revenue by making new hires.
Dig deeper ➡️ How to Perform a Skills Gap Analysis
9. More diverse and inclusive workforce
Despite many industries making pushes for equality, most organizations still have diversity gaps. Data-driven strategies like workforce planning can help HR teams identify these gaps and create recruitment strategies that aim to overcome them.
Understanding these opportunities to bolster inclusivity can help reduce the risk of unconscious biases in your recruitment process, ensuring you are attracting and hiring candidates from diverse backgrounds.
Creating a more diverse workplace offers many benefits of its own, such as a broader range of skills and experiences among employees, increased creativity, and new ideas being brought to the table.
10. Greater compliance and regulatory alignment
Every HR department needs to stay up-to-date with labor laws and regulations, but monitoring adherence is a difficult task. By regularly completing strategic workforce planning activities, you ensure your team maintains the documentation needed to remain compliant.
Plus, it’s important to remember all staff management decisions have potential legal ramifications. Everything from layoffs to huge growth can have legal implications, and workforce planning helps you anticipate these and plan appropriate mitigation strategies.
11. Enhanced organizational agility
One of the greatest benefits of workforce planning is how it enables businesses to anticipate and quickly adapt to change. In other words, it supports organizational agility.
From changing market conditions to organizational restructures, there are many reasons businesses need to be agile. Workforce planning enables you to predict requirements in the short term and the long term, proactively plan for future hiring initiatives, and put processes in place to develop and retain existing workforces.
This can look like ramping up succession planning due to upcoming retirements or creating a road map and initiatives to support employee wellbeing in the face of potential layoffs.
12. Improved recruitment process
As we’ve touched upon, workforce management supports optimized recruitment processes by revealing the critical skills and traits a business’s current workforce is lacking — or those it’ll need in the future.
By analyzing workforce data, you can identify the traits and skills shared by high-performing employees. This information provides hiring managers with a clear picture of the talent they’re looking for, enabling smoother hiring processes. The end result is a robust hiring criteria that increases the chances of hiring people who will deliver successful results.
13. Better HR decisions
Data-informed decisions are always the best decisions. Strategic workforce planning provides a clear view of how each path available to you will impact your business and your workforce, allowing HR teams to make decisions informed by data. This can include creating a staffing plan, arranging training, planning promotions, organizing layoffs, and much more.
This information also supports human resource teams as they present the rationale behind a workforce strategy to key decision-makers, facilitating clear communication and buy-in.
Tools to support the workforce planning process
Strategic workforce planning isn't possible without the right data. Thankfully, you can use your resource management software to understand your skill shortages, help forecast demand, and inform future staffing plans.
With automated timesheets and live budget reconciliation, your workforce planning tool provides all the data you need to identify your most profitable employees, create a solid business strategy, and plan for the future.
