The Essential Workforce Planning Guide
Blog // 26-03-2021

The Essential Workforce Planning Guide

by Alex Arundale, Chief People Officer, Advanced

What is workforce planning?

Workforce planning is about making sure you have the right number of people with the right skills in the right departments at the right times.

The ‘planning’ comes into play because it involves thinking about the future, not just the present. It’s about anticipating future requirements and trends as well as filling any gaps you might have within the organisation at the moment.

Your production requirements will ebb and flow. Demand might be seasonal or might be directly linked to new product launches. It’s crucial that you manage the peaks and troughs and plan ahead accordingly. So if you’re expecting to be busier in the months leading up to Christmas, for example, you’ll be struggling if you wait until October or November before addressing your workforce needs.

After all, getting it wrong can lead to understaffing or overstaffing. Having too few members of staff and / or inadequate skills on hand will hit your productivity and cost you money. At the other end of the scale, being overstaffed is a waste of your resources.

Why is workforce planning important?

The world is constantly changing in many different ways, such as in technological advancements, how employees expect to be treated, and how consumers or customers behave. What your business is doing today might be very different from what you expect it to be doing in just a few years’ time, as clearly demonstrated by the impact of both Covid-19 and Brexit in 2020/21.

You need to be agile and able to react to changing demands, whether that is doing what you do now on a larger scale, adding product lines or changing the direction of the business entirely. But you won’t be able to do that without a proper analysis of what your workforce looks like today, what you want it to look like in the future, and where the skills gaps lie.

You want to achieve a situation in which you have sufficient (but not excessive) staffing levels in every department. This can mean enacting better training and development programmes, and / or a more rigorous recruitment process to enable you to find the necessary skills.

A good workforce plan can:

  • cut excess or sub-optimal labour costs
  • identify and react to changing consumer demands
  • help focus your training and development strategy
  • boost employee engagement
  • increase staff retention
  • boost productivity

What does workforce planning involve?

In simple terms, workforce planning is about knowing the ability of your existing employees, both in terms of their skills and in terms of capacity. These factors need to be aligned: it’s no good having a fully trained workforce that is too small to cope with demand, but there’ll also be problems if you have the right number of people equipped with the wrong skills.

Some of the main questions you need to address when you implement workforce planning are:

  • What is the current state of your workforce, and are they adequately skilled?
  • Are you planning to grow the business?
  • What skills will you need in the future?
  • Are you sufficiently agile to cope with changing demands on the business?
  • Do you need to introduce more training and / or step up your recruitment to achieve this?

Workforce planning isn’t something you should do every now and again. It is an ongoing, organic project that lets you always know what your current demands are and what your capacity is, and what to expect in the future. Successful workforce planning can help to identify risks and challenges so that you can be prepared, even as your business grows or the nature of it changes.

Being able to pinpoint any gaps between the demand and supply of talent, both now and in the years ahead, is a key part of your long-term business strategy.

Staff turnover is natural, so people will come and go, and your recruitment process will play a part in filling any gaps that might emerge. But if you regularly find yourself struggling when someone hands in their notice, or if new product launches always leave you scrambling to find enough capable employees to step up, it’s a sign that your workforce planning probably hasn’t been adequate.

What are the steps of workforce planning?

The first thing to do is relatively simple – determine what the needs of your business are, both now and in the future.

  • Are you increasing your production, or planning to do so?
  • If you are, are you growing your existing products and services or are you diversifying? Or both?
  • Are some of your existing products or services being phased out?
  • Do you face increased competition?
  • Is there new technology, or are there new ways of working, that you can adopt?
  • Do you anticipate any social, environmental or political challenges that will require you to adapt your operations?

Once you have done this, summarise the state of your current workforce, looking at a number of factors:

  • your existing headcount
  • your employees’ strengths and weaknesses
  • the cost of your workforce
  • the flexibility of your workforce
  • untapped employee potential
  • any skills shortages
  • diversity gaps within the business

Only when you marry these two core ideas – the current and future needs of your business, and the current state of your workforce – can you start to plan for the future.

What does workforce planning need to consider?

There’s a wide range of things you need to take into account, but some of the main considerations are skills, demographics, staff turnover rate, changing demands and your bottom line.

Skills: You need to know what skills you have within your workforce and what skills are going to be needed in the future. It’s only when you have that information at your fingertips that you can start to look at plugging any gaps.

Demographics: However good you are as an employer, there’ll always be staff turnover, and the demographics of your workforce is a factor in this. For example, if you’ve got a loyal collection of workers who have all stuck together as part of the same team for many years, you might be facing a situation when a large number of them retire over a relatively short period of time.

Staff turnover rate: This is a major factor in planning for the future, and a high number of employees leaving will make it harder for you to draw up long-term plans. If nothing else, your time will be spent trying to recruit to replace the employees you are losing, and you’ll have less time to focus on what lies ahead. This is why employee engagement is so important  – happier, more dedicated staff stay with you for longer and make planning for the future easier.

Changing demands: Consumer demands are rapidly changing, and you need to be able to change with them. Your customers can find alternative suppliers or providers at the touch of a button – and your competitors can find your customers, too. If you can’t adapt to changing needs, there’s a good chance you’ll be left behind.

The role of the HR team

It’s the HR team that takes the lead with workforce planning, but they won’t be able to do it single-handedly.

It’s important that there is a good relationship between HR and the owners / executive team / board members. Although the HR team should be well versed in the current state of play, they won’t be able to plan for the future if you don’t know what the leadership’s plans are.

Likewise, the finance team needs to be fully on board with the process from the outset. It’s a waste of everyone’s time signing off on a plan only to be told that the purse-strings have been pulled tight. Collaboration is crucial.

The best news from an HR point of view is that once you have a workforce plan drawn up, the knock-on effects can be transformative. For starters, it will help you to employ a strategic approach to training and development, recruitment policy and succession planning.

Training and development 

Workforce planning is one of the main reasons you should have a properly resourced learning and development programme.

As well as improving employee engagement (thereby reducing staff turnover), and being cheaper than recruiting to fill skills gaps, you can tailor your training to fit the workforce plan.

And with your employees subsequently more likely to stay with you for longer, you will find it easier to identify which of them might be best suited for learning any new skills that the business requires.

It’s all part of a holistic approach to making sure you have not only the right number of people in your business, but also a workforce that has all the skills your organisation requires.

To find out more about implementing workforce planning systems in your organisation, explore our Cloud HR software.

 

Blog Human Resource
Alex Arundale

Alex Arundale

PUBLISHED BY

Chief People Officer, Advanced

Alex joined Advanced in February 2016 with a track record in senior HR positions. She has been responsible for innovative strategies to lead the company’s talent management.

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