Are you constantly struggling to visualize and achieve your organization’s long-term goals?
Do you often resort to last-minute firefighting to mitigate skill shortages/gaps?
Are you wondering how you will make your workforce future-ready and sustain business profitability?
Effective strategic workforce planning is required to address these ongoing challenges. It helps firms anticipate future talent requirements and create a forward plan to ensure that the company has the right mix of talent. It also enables them to achieve future business goals, thereby maintaining profitability and sustainability.
This blog emphasizes the benefits of strategic workforce planning in an organization and elucidates the steps to create an effective plan for the same.
Let’s begin with understanding the basics.
1. What is strategic workforce planning?
Strategic workplace planning is the process of analyzing, forecasting, and planning workforce supply and demand for long-term goals. These goals are designed with a vision of 2 to 5 years of the horizon.
It involves reviewing and examining current and future workforce requirements and then identifying and bridging the gaps. This helps the organization maintain efficient operations and achieve its long-term vision.
The 4R’s of strategic workforce planning are-
1. Right people-
Strategic workforce planning enables you to build a stable staffing level across every department. It allows you to employ the right person who can align with the organization’s values and objectives.
2. Right skills-
It helps proactively anticipate current and future skill demands. This will identify skill gaps and ensure that your workforce has the competencies needed to meet long-term business goals in the most efficient manner.
3. Right place and time
To maintain growth, it is vital that you have the right people in the right positions at the right time. In order to accomplish this, creating an effective workforce planning is essential.
4. Right cost-
The right cost is about ensuring that staff are competitively compensated for their work within the budget. It also helps in managing human resources in terms of hiring, retaining and providing a career path with skill building.
Let’s assume that an IT startup company is currently working from one location. However, within three to five years, the company plans to expand into three different geographical areas. To accomplish this long-term goal, the firm needs the right resources with the right skill sets.
So, what can strategic workforce planning for this startup comprise of?
It can encompass steps like:
- Understanding and defining the long-term goals, i.e., what are the areas where the firm would like to expand its business?
- How many resources do they need for each different place and department?
- What are the skills required for it and identifying the same?
- How to manage the cost and ensure that there is no overrun?
- What are the possible risks that can come across the way?
Now that you have understood the basics of strategic workforce planning let’s analyze its significance.
2. Importance of strategic workforce planning
According to a survey, 77% of HR leaders feel strategic workforce planning is important for their own success.
A. Align workforce requirements with long-term business strategy
It is impossible for firms to have the right resources at the right time without a clear understanding of their future goals. Therefore, creating strategic workforce planning is essential as it helps align the workforce requirements with the business strategy. In addition, it streamlines the hiring process and helps attract and retain top talent, which positively impacts company growth.
B. Helps address skill gaps between current & future demands
Strategic workforce planning helps you carefully analyze the skill sets of the current employees and anticipate the future resource demand. Through this evaluation, one can identify any shortages or skill gaps and take corrective actions ahead of time. This will enable you to acquire top talent or make your workforce future-ready for your company’s success.
C. Deliver current and future projects within time and budget
Various challenges like- unavailability of niche resources, skill gaps, change in prioritization, etc. can negatively impact project delivery. Strategic workforce planning can help you stay ahead of these challenges and be better prepared to handle them by developing a mitigation plan ahead of time. As a result, the projects are delivered within the stipulated time and budget without compromising quality.
D. Prevent unplanned attrition with an appropriate retention strategy
According to a survey By 2023, the attrition rate will be so high that 35% of employees will leave every year to work in a different company.
Unplanned attrition can be a huge loss to an organization since, without resources, projects cannot be completed on time and within budget. It also results in the loss of future opportunities for the business. Strategic workforce planning helps the HRs identify the top performers in the key roles and those at risk of leaving. This will enable managers to implement various employee retention strategies and minimize the risk.
E. Facilitates succession planning for critical roles
When an organization lacks succession planning, projects can stall as there can be a deficit of critical resources, affecting the business. Strategic workforce planning can be leveraged by companies to review key leadership and business-critical roles. This will help them identify and prepare suitable employees to fill critical positions when current employees leave their jobs and ensure a smooth business continuation.
Having understood the importance, let’s see how an optimized strategic plan can be created.
3. How to create an effective strategic workforce plan?
An effective strategic workforce plan centers around five key steps. Let’s discuss these one by one-
A. Understand the long-term objectives
The first step to workforce planning is assessing the long-term goals and objectives of the organization. For this, you can define SMART (Specific, Measurable, Attainable, Relevant, and Time-bound) goals and objectives. This can be done in coordination with various stakeholders, line managers, HRs, and business executives.
In addition, before developing a concrete and detailed plan, it is essential to check if the goals align with the company’s values. This helps determine the strategic areas and ascertains that business goals are more realistic and achievable.
B. Analyze the future resource requirements
After defining the long-term business goals, the second step in the planning process is to analyze the skill demand required to deliver it. The organization needs to understand –
- What are the niche skills required for the strategic goal?
- Is it better to hire freshers or senior-level resources?
- How to maintain the right mix of employees?
In addition to that, the business leaders should both evaluate the quantity and quality of the workforce and their responsibilities in future projects. This will give you a clear picture of the current workforce and help you figure out how and whom to hire.
C. Identify and bridge the skill gaps
Once the requirements are established, it is essential to look into the resource pool and evaluate the skills and competencies. It will help you identify the skill gaps and take the necessary measures to bridge them. For this, the HRs can leverage either internal or external channels in the organization.
They can either go for upskilling or retraining for the existing resources or provide shadowing opportunities for newcomers and less experienced employees. They can also hire permanent or contingent resources based on the project’s requirements and budget. The timely acquisition of resources ensures that the goals are achieved within the deadline.
D. Devise a risk mitigation strategy
Murphy’s Law states, “In any field of endeavor, anything that can go wrong will definitely go wrong.” But this can be avoided while managing the long-term goals. For that, it is imperative to identify and develop a risk mitigation strategy in advance.
Risks always exist in businesses, regardless of how well prepared you are. Some of the risks are unplanned leaves, high-employee turnover, lower employee productivity, market volatility, change in technology, etc. It could cause a roadblock at the last minute, sabotaging the strategic goals. Thus, leaders must develop a plan to anticipate these future issues proactively.
E. Monitor and improve the plan at regular intervals
After creating the strategic plan, the next and final step is to execute and monitor the plan regularly to ensure that it’s on the right path. In the 21st century, technology, the workforce, and the business landscape are constantly changing and evolving. Thus, to align with these changes, strategic workforce planning should be revised from time to time.
For this, you need to monitor your plan using various performance metrics in real-time continuously. It will help identify the areas of progress and improvements and address any issues. This will help organizations to meet their business objectives and strategic goals successfully.
4. How Workforce Planning Software can help in achieving strategic goals?
A modern workforce planning solution enables organizations to build an optimized workforce by offering various advanced features.
The centralized visibility of the tool offers foresight into the pipeline project resource demand. Accordingly, managers can streamline the workforce planning processes by analyzing the existing talent’s current and future capabilities.
Moreover, managers can check various resource attributes like skill sets, competencies, certifications, availability, cost, location, etc., in real-time. This enables organizations to identify the gaps and address them proactively.
Also, using the tool’s accurate analytics and statistical capabilities, firms can evaluate and overcome capacity problems ahead of time. Thereby avoiding last-minute hiring and costly hiring/firing cycles.
Further, the tool gives insights into the individual employee’s performance levels, which lets the management create various retention plans, make the right decisions regarding promotions, and improve the accuracy of succession planning. Conversely, for underperforming resources, they can conduct retraining and create individual development plans and make them future-ready.
Lastly, the modeling and simulation technique implemented in a sandbox environment gives you complete information on how various outcomes of different scenarios can impact your organization and bottom line. This enables managers to select the ideal resource plan and make informed decisions on future projects.
In today’s environment of rapid change and uncertainty, there is constant pressure on businesses to ensure they have the required talent pool to support changing business demands. Therefore, strategic workforce planning is critical in ensuring the organization has the right mix of talent to accomplish these future goals.
When coupled with the right enterprise-level workforce planning tool, the above steps will help you create the best long-term talent management strategy for your firm. It also enables you to gain a competitive edge and improve the bottom line significantly.
So, are you ready to create an efficient strategic plan and reach new heights of success?
6. The Glossary
7. The Saviom Solution
SAVIOM is the market leader in helping multinational clients manage their resources efficiently and effectively. With over 20 years of experience, this Australian-based MNC has a global presence across 50 countries and has helped 100+ clients with their Workforce Planning Software. Saviom also provides tools for Enterprise Project Resource Management, Project Portfolio Management, and Professional Service Automation. Boost your remote team collaboration with Saviom.