Strategic workforce planning is a high-impact process of human resource management in which organisations identify their workforce needs for the future. By closely aligning with business strategy, a strategic workforce plan aims to meet these talent needs with supply — delivering short- and long-term organisational objectives in the process.
Skilled workers are the most important asset to any business, but major skills shortages and a widening skills gap are making it difficult for organisations to attract and retain the best people. In STEM — one of the fastest-growing industries around — not being able to access these skills can be particularly damaging.
In this current climate, being able to accurately forecast future demands to meet them head-on is integral. However, we’re not saying that the old adage “fail to prepare, prepare to fail” holds any weight in this context. Preparing for the unexpected is one thing. Strategising and creating an actionable plan is another.
With a strategic workforce plan, organisations can build a sustainable pipeline to the talent and skills they need for future growth. But what is a strategic workforce plan, exactly
Understanding the basics
In simple terms, a workforce plan is a matter of supply and demand — or, in this case, demand and supply.
In designing a workforce plan, an organisation first ascertains its current and future demand for key workers and skill sets in order to identify the gaps that exist across the workforce. Once this has been established, the workforce plan sets out how the organisation can meet these demands within a designated timeframe.
To better visualise this, let’s plot some supply-and-demand headcount forecasts onto a graph.
In the example below, an FMCG organisation’s projected supply is unable to meet the projected demand over a two-year period
To close the talent gap within a given timeframe and help deliver on business objectives, developing a comprehensive strategic workforce plan enables businesses like the organisation above to outline exactly how they can get there.
To do so, workforce planning calls on core HR strategies such as hiring, developing internal talent, partnering or outsourcing, redesigning workflows, and/or restructuring teams/departments.
In the graph below, the same organisation implements a strategic workforce plan and goes on to achieve its two-year headcount target.
Ultimately, workforce planning is an ongoing balancing act. Businesses need to balance the demand for labour with the available supply of labour, and workforce planning provides ongoing oversight of these fluctuating metrics.
What are the objectives of workforce planning?
Workforce planning focuses on far more than just headcount, however.
To be strategic, a workforce plan needs to be data-driven, tied to long-term business goals, and connected to specific KPIs. Strategic workforce planning can help businesses:
- Identify skills gaps across the workforce
- Predict future talent demands
- Align and integrate people strategies with organisational strategies
- Ensure that demand for people, skills, knowledge, attitudes, and values are met by supply
- Convince leadership to recognise employees as the most valuable resource underpinning the strategic direction and performance of the company
- Enhance the reputation of human resources within a business
- Mitigate risk exposure (e.g. safety planning and Equal Opportunities training)
Workforce planning is a continuous process, so these objectives may adjust over time depending on the demands and constraints of your industry. However, the fundamental premise remains the same: getting the right people in the right jobs to increase efficiencies and save time and money.
Operational workforce planning vs strategic workforce planning
Strategic workforce planning is often conflated with operational workforce planning, though the two have key differences.
Operational workforce planning occurs at the supervisor level and examines work-unit issues — namely, how to ensure a work unit is able to effectively execute business strategy.
Strategic workforce planning, on the other hand, explore systems-wide issues and strategies. It supports the organisation’s strategic plan, addresses external workforce factors that affect the business, and seeks to maintain organisational capacity.
Another key difference is linked to project duration. Operational workforce planning tends to focus on shorter hiring timeframes (usually up to a year), while strategic workforce planning typically has a timeframe of up to five years.
What are the main principles of strategic workforce planning?
- Current state assessment. This involves ascertaining current supply and demand, as well as looking at external market factors that affect HR decision-making (e.g. employment rates, legislative change, competitor activity, etc.).
- Future state analysis. This consists of determining the future demand for key HR metrics such as staff turnover rate and time-to-hire.
- Strategy formulation. This is the main planning stage. It involves conducting a gap analysis, anticipating potential scenarios, and deciding on project KPIs.
- Execution and adjustments. Once the plan is implemented, an ongoing process of monitoring, measuring, and modifying begins.
How to create a workforce plan
Though the goals more or less remain the same across the board, there is no one-size-fits-all model for strategic workforce planning. Each organisation is unique, each sector presents its own challenges, and each employee has different goals to deliver.
As such, your plan should be designed to scrutinise your current workforce, outline your future workforce needs, and identify key gaps across the business.
For a step-by-step guide on how to create your own tailored workforce plan, download our white paper: a guide to strategic workforce planning for STEM organisations.