What is Strategic Workforce Planning and its Benefits?

Workforce Planning

Are you struggling to get the right workforce for your business? Fret not, you are not alone. With a huge amount of scattered data related to employee skill-sets, companies find it difficult to create the perfect blend of strategic workforce planning that aligns with their objectives. Though, there are many tools and software in the market to drive the implementation of workforce strategies. Still, businesses are unsure about how to use them properly.

Workforce planning has evolved with time; so should the outdated hiring practices. It drives employee training, development, succession planning, business expansion, investment strategies, and more.

Let’s dig deeper into the what, why, and how of workforce planning.

Who is responsible for workforce planning

Most often than not, it is the human resource (HR) department which is considered responsible for all personnel-related plans. However, successful formulation and implementation of these plans require cooperation from all departments. Human resources are a key asset for every department. Thus, while deciding the relevant skill-sets, each department knows the best for itself.

Senior management is a crucial party to the strategic workforce planning process. The C-suit and other leaders are responsible for setting the company’s strategic intent and direction.CFO, CXO, COO, and all work in tandem to create effective plans. Senior leaders and high-level decision-makers ensure that plans are in line with the future needs of the business.

Having said that, HR plays a pivotal role in leading and guiding the discussions on talent management. They are the ones responsible for recruitment, training and development, loyalty programs, compensation benchmarking, and much more.

HR plays a pivotal role in leading and guiding the discussions on talent management. Senior leaders and high-level decision-makers ensure that plans are in line with the future needs of the business.

Strategic workforce planning steps

For the successful implementation of a process, it is essential to have a thorough understanding of its elements. Strategic workforce planning entails mapping the existing employee skills and bridging talent gaps. Followed by, creating future-focussed actionable plans and implementing them to achieve strategic objectives. Then, constant performance monitoring and evaluation to make timely course corrections.

Strategic planning

The process starts with setting the strategic intent and direction for the organization. Workforce processes are then linked to short-term performance plans, business goals, and objectives. The idea is to create workforce plans for achieving broad-based business strategies. This includes coming together of various departments such as HR, finance, and operations. As well as, high-level executives and organizational leaders who are responsible for setting business strategies.

Supply Analysis

The next step is to analyze the labor and skill sets already existing in the organization. This analysis encompasses the number of employees, their skill-sets, and experience as well as the workforce demographics. Demographics are important to maintain a healthy demographic mix. Such as – maintaining a balanced ratio of young and older (experienced) employees, or having a track of those who are nearing retirement.

The main aim of supply analysis is to forecast attrition because of retirements, resignations,  transfers, and promotions. Profiling the current workforce reduces the chances of sudden skill gaps that may arise in the future.

Demand Analysis

Demand analysis is to forecast future human resource requirements and their composition. An organization’s future workforce requirements depend upon many factors including geographic and portfolio expansion plans, competition, availability of labor force, and more.

Demand analysis takes both internal as well as external factors into consideration. Internally, future employee demands can be fulfilled by appropriate training and succession planning programs. Besides, it also gives a bird’s eye view of the employees’ loyalty and retention in case of the anticipated changes in the market. However, fulfilling the demand gap from external sources requires data-driven recruitment. Outsourcing is also an option worth considering.

Gap Analysis

It helps to map the gaps between an organization’s workforce supply and demand requirements. Therefore, studying their impact on organizational performance and goals. Workforce planners create the most plausible future scenarios to understand the likely changes in labor requirements. This helps them identify the required as well as obsolete skill sets for the future.

Solution Implementation

This step involves closing the talent gaps by the development of relevant strategies. It is crucial for achieving the organization’s mission and goals. It encompasses both fiscal and human resources management. Different teams and departments come together for necessary communication, marketing, and coordination. This results in bringing the workforce action plans to life. Managers and leaders help devise various action plans for recruiting, training and retraining, contingent staffing, and outsourcing.

Monitoring and evaluation

Once an enterprise knows its strategic intent, it becomes easy to set reporting, monitoring, and evaluation mechanisms for itself. This is done by creating frameworks, benchmarks, and milestones. Constant improvement and course correction help to adjust the workforce issues and prepare the enterprise for the future.

What are the benefits of workforce planning?

Workforce planning aligns staffing decisions with operational goals and future strategies. It aims to create well-equipped teams that can handle changing business needs. According to a report by the World Economic Forum, more than a billion people will need to be reskilled by 2030. However, most companies find themselves ill-equipped. They lack insights into the reimagining work environments and skill sets required to meet future business requirements.  

However, data and analytics are making it easier and quicker for companies to carry on people management. From providing information about labor market insights to monitoring and evaluating teams’ performance, automation and intelligence have come to the rescue of workforce planners. These tools enable companies to create an integrated workforce strategy that includes:

  • Development of internal human resources
  • Targeted recruitment
  • Employment of contingent workers and third-party outsourcing 

Having said that, strategic workforce planning benefits businesses in numerous ways:

Future-ready workforce

Once the company undertakes scenario-building for the future, it has a bird’s eye view of its future staffing requirements. This means they can reskill their existing workforce. Or, they can recruit new talent. They can even seek help from third-parties to close the potential skill-set gaps.

Training and retraining for improved retention

It is always less costly to fill the skill gaps internally than external recruiting. This holds particularly for senior leadership and high-value positions. The existing employees who have adapted to the corporate culture find it easier to assume new roles and responsibilities. Whereas, it takes more time, effort, and financial resources to train new recruits. Training and development programs such as e-learning, webinars, best courses for recruiters, and on-the-job training are very effective ways of upskilling managerial and leadership personnel.

Cost-effective succession planning

Succession planning identifies and prepares employees for filling key positions in case of employee termination, retirement, or resignation. Effective succession planning ensures the smooth continuation of business with minimal disruption. Besides, it also reduces turnover costs and fosters employee engagement.

Proactive management

For a strong workforce, businesses need to be abreast of the industry trends, analytical tools, and their current team dynamics. This way they can ensure the right person, in the right place at the right time. It is not good to follow reactive management in a crisis situation. Instead, organizations should adopt a proactive approach to talent acquisition. This means they need to have a talent pipeline to meet future business needs. Real-time data analysis can enable taking informed and futuristic business decisions.

According to the Future of Jobs Report 2020, by the World Economic Forum, more than a billion people will need to be reskilled by 2030. However, most companies find themselves ill-equipped. They lack insights into the reimagining work environments and skill sets required to meet future business requirements. 

How AI and analytics are transforming strategic workforce planning?

While creating a workforce strategy, most companies don’t know where to start. They have neither accurate employee counts nor their skill profiles. And even if they do, it is mostly not up-to-date. Besides, the rapidly evolving digital business environments need more proactive skill-based people strategies. Both these factors have necessitated the need for artificial intelligence and advanced analytics. Thus making it a part of the essential HR toolkit. Here are some examples of how AI, data analytics, and automation are reshaping talent management processes:

Evaluation of skill supply

Predictive analytics infers the skill supply within the organization: This enables automated constant evaluation of the skill depth of the workforce. This provides details on changing skill positions within the company. Hence, it ensures targeted workforce planning for the future.

Interaction with job seekers

AI tools such as chatbots engage in constant conversations with job seekers. This enables collecting relevant details about their talents, skills, personality, and interests. Thus, improving the quality of people who apply for the job.

Gap closure recommendations

A thorough understanding of employee skills helps create personalized learning and development plans. This vastly improves employee engagement and retention. The personalized recommendations facilitate internal mobility and enhance the learning experience for the employees.

Employee skill mapping

AI/ML tools take help of job matching algorithms to infer employee skill proficiency levels by tracking their digital footprints. This knowledge enables personalized learning and development recommendations, salary decisions, and job navigation based on their skill sets.

Market trend analytics

There are tools similar to job boards that track labor market trends. They provide insights into the relevant and required skills in demand in the market. This facilitates continuous reskilling and upskilling to keep pace with the market and business environment.

Most companies neither have accurate employee counts nor their skill profiles. Besides, the rapidly evolving digital business environments need more proactive skill-based people strategies. Both these factors have necessitated the need for artificial intelligence and advanced analytics. Thus making it a part of the essential HR toolkit.

JobsPikr is a labor market analytics tool that provides quality and reliable talent insights to make data-driven strategic decisions.

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