Strategic workforce planning is an essential part of workforce management. This is why organizations are making the most of workforce planning tools to build an agile workforce, identify performance shortages, close workforce gaps, and make smarter business decisions to achieve business goals.
Before we dig into what you need for your workforce planning efforts, let's explore the topic at a high level. Starting with:
The Importance of Workforce Planning Tools
Workforce planning tools are vital for organizations to organize their human resources activities more efficiently. This means proactively planning and predicting workforce needs to prevent future layoffs and panic hires. It incorporates all the elements of talent management and problem-solving functions. Strategic workforce planning usually covers a forecast period of around 3-5 years. The aim is to improve current business practices by problem-solving and predicting issues before they arise.
While most organizations understand the need for strategic workforce planning, many experience barriers that make it difficult for HR departments to successfully implement it. However, using the right set of workforce planning tools can help organizations perform strategic workforce planning much easier. We’ve prepared a list of 5 strategic workforce planning tools and techniques HR need to start using immediately.
1. Define Your Business Objectives
Organizations first need to identify business objectives, namely their vision, mission, goals, and motives. Subsequently, HR professionals need to develop a strategic plan to align with these objectives. They need to determine the core competencies and skill requirements that will drive business forward.
When creating a strategic workforce plan, HR professionals usually come across two main challenges – linking financial planning and human resources to the workforce plan. HR professionals may find it hard setting a budget without reliable data about human resources, such as turnover rates, talent demand, and talent supply. To overcome these challenges, it’s important to leverage HR analytics. Insight into HR analytics helps calculate costs and develop the following strategic workforce planning processes:
- Talent development – How will the organization attract, develop, motivate, engage and retain talent to attain short, medium and long-term business goals?
- Talent acquisition – How will the organization find, assess and hire talent that meet the business goals of the organization?
- Workforce gaps and risks – How will the organization address and mitigate skill shortage and turnover rates?
Other variable elements such as location, mode, quality, and quantity of work may influence a change of direction in the workforce plan. So a sound ability to forecast business trends is a great asset for HR professionals to possess. Once a strategic workforce plan is ready, it should be communicated across internal sectors.
Therefore, defining business objectives is a key workforce planning tool that HR professionals should use. It’s not enough that HR professionals are familiar with the organization’s business direction. Communication should be clear and organization-wide. Everyone within in the company who contributes to the execution of these objectives should be aware of the organization’s short term and long term goals. This includes managers, supervisors, and even lower ranking employees.
2. Model Current Workforce
Understanding the current workforce in terms of characteristics, capabilities, and distribution allows HR professionals to develop effective gap-closing strategies. Collecting HR analytics on employees is the perfect method to create a workforce profile. To do so, HR professionals should create a database with the following information:
- Employee data – Gathering information including demographics, age, gender, earnings, employment type, employee retention and distribution.
- Turnover and recruitment data – Analyzing vacancy lengths, recruitment rates and number of applicants during recruitment process.
- Internal influence – Identifying any company changes that may influence business processes such as a change in business direction, budget cuts and market pressures.
- Current competencies – Distinguishing skills and competencies of current workforce and looking for ways to improve them.
- Rewards scheme – Generating data about how employees are being recognized and rewarded for their work.
- Competitor analysis – Looking at competitors and comparing their workforce management strategy.
Organizations should include all employees when modeling their current workforce:
- Permanent employees – Employees who are on the organization’s payroll, have regular hours and full benefit entitlements.
- Supplemental direct-hire employees – Employees who are on the organization’s payroll, but don’t have regular work hours or full benefit entitlements.
- Contract workers – Employees are found via a staffing agency and work for a specific time frame and generally without any employee benefits.
Collecting and using this data is an effective workforce planning tool that results in better workforce management.
3. Establish Direction for Future Workforce
Another effective workforce planning tool is establishing clear workforce requirements for future talent. One of the most efficient ways to identify future talent needs is for organizations to continuously analyze internal and external factors influencing business processes. Workforce planning tools like forecasting and following market trends can help to determine necessary changes in the current workforce management strategy to attain future business goals.
Here are some key questions to help HR professionals identify current workforce shortages and predict future workforce necessities:
- How can current skill shortages be filled?
- How can current turnover rates be lowered?
- Which skills and competencies will the organization need to meet business objectives?
- What are some of the biggest challenges currently blocking business objectives?
- What are the ideal types of employment?
- Will they be full-time, part-time, permanent or temporary?
- What will the rewards scheme look like?
- Where will the workforce be located?
- What is the ideal earning profile?
- How will the organization rank with competitors?
Answering these questions will assist HR professionals in effective workforce planning.
4. Address Workforce Gaps
Once an organization has analyzed its current workforce and understood its future workforce plan, it’s time for a gap-closing strategy to eliminate inconsistency between one and the other. Workforce gaps are the areas in an organization that need to be changed in order to reach business goals. For instance, the main workforce gaps are skill shortages, position design, turnover rates, employee profiles, recruitments processes, and business objectives.
5. Develop and Implement a Gap-Closing Strategy
In order to close workforce gaps, HR professionals should develop a gap-closing strategy that will close workforce gaps. An effective gap-closing strategy will increase the capability, capacity, and productivity of employees. Once again, HR professionals will need to look at their gathered analytics to see which areas need to be improved and how. Developing the right gap-closing strategy is an important workforce planning tool that addresses business deficiencies.
A gap-closing strategy can fall into different categories that address different business processes, some of which include:
- Talent retention
- Talent recruitment
- Employee development
- Staff reduction
- Salary projections
HR professionals should address the category that best suits their workforce management goals.
To get the most out of these five workforce planning tools, it’s important for experienced HR professionals to take care of all aspects of the strategic workforce planning process. From defining business objectives to identifying workforce deficiencies, leave it to HR professionals who know what they’re doing. Take a look at this workforce planning template to find out more.
Start using these workforce planning tools and techniques now to meet your business objectives. If you’re unsure about how to implement these workforce planning tools, we’d love to show you how we can help.