Workforce planning: Process and implementation

By analysing current and future requirements for people and skills, and then implementing immediate changes and strategic plans, employers can ensure they are prepared to meet the demands of ever-evolving market conditions.

Surprisingly, research shows the majority of organisations do not currently do this. A report from the Chartered Institute of Personnel and Development (CIPD) found less than half of employers use data to identify skills gaps, while just 31% collect data to identify their future skills requirements.

In this article, we take a closer look at what is involved in workforce planning, why it’s needed, and some workforce planning tools you can implement within your organisation.

What is workforce planning?

Workforce planning is the process of forecasting and planning workforce supply and demand, balancing organisational headcount and skill sets against future workforce requirements. Workforce planning includes the goal of ensuring an organisation has the right people, with the right skills, in the right place, at the right time to meet overall strategic business goals and objectives.

There are several different approaches to workforce planning, each of which can be used by employers in different circumstances. Let’s take a look at the three most common:

• Operational: This is about managing your employees’ performances on a day-to-day level, allocating resources and addressing immediate needs to make sure short-term goals and tasks are adequately addressed.
• Tactical: This is a focus on actions that support a more medium-term plan, often covering a fiscal year, for example. It covers bridging gaps between short-term operations and longer-term strategy.
• Strategic: This is workforce planning over a longer time frame, often between three to five years. The aim of strategic workforce planning is to ultimately align organisational mission and vision with issues like future staffing needs.

These different levels of workforce planning are like building blocks, with operational planning supporting tactical, and tactical supporting the longer-term strategic side. With this structure in place, organisations can ensure their short-term needs are met while simultaneously working towards a long-term vision.

Why workforce planning is important

Workforce planning also reduces the likelihood of employees being overworked or underutilised in their roles. As a result, employers can look to provide more learning and development opportunities for their existing workforce.

By ensuring employees have the ability to learn growth within their roles, employers can maintain high levels of workforce motivation and engagement, improving retention of valued employees as a result.

Address demographic changes

Research indicates that more than 30% of people in employment in the UK are over the age of 50. As a result, employers need to be preparing for the future and thinking about the transition between the current workforce and the next generation of talent.

Furthermore, an ageing workforce can also pose additional problems. For example, older employees are less likely to bring to the table in-demand skills related to emerging technology like artificial intelligence, resulting in significant workforce gaps.

Effective workforce planning facilitates the anticipation of these changes, enabling employers to identify knowledge gaps and address them through targeted hiring and retraining.

Plan for seasonal demand

Many organisations see a surge in demand at certain times of the year. For example, retailers will see a significant increase around Christmas or Black Friday, while the hospitality sector will generally experience their peak season during the summer months.

By anticipating these peaks, employers can determine the required number of employees for specific periods and strategically hire temporary staff. This helps to ensure that demand is met without leaving the workforce bloated and underutilised. It also enables targeted training for seasonal roles and an efficient onboarding process, enhancing workforce adaptability.

Reduce costs

A workplace plan focuses on a number of key areas, including succession planning. By taking proactive steps to train and develop future leaders with the goal of plugging skills gaps internally, employers can avoid costly external recruitment.

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Additionally, workforce planning tools can help an organisation accurately determine the number of employees required at any given time to effectively execute their business plan, helping to prevent overstaffing and reduce unnecessary costs.

How to conduct the workforce planning process

Creating and executing a workforce planning strategy can be an intense process, with numerous factors and stakeholders to consider. Breaking down the process into key steps allows organisations to stay on course and implement the right solutions at the right time.

1. Establish a baseline

At the outset, employers should work out their baseline to take stock of external and internal factors that are impacting their organisation.

External factors are things outside of their control, such as:

• The political climate
• The economy
• Technological progress
• Legal and environmental aspects

On the other hand, internal factors are ones that can be controlled, including an organisation’s:

• Growth plans
• Budget
• Planned future changes

Establishing a baseline provides a clear picture of the current workforce and an organisation’s position in the world. The CIPD recommends conducting a PESTLE analysis to determine external factors and a SWOT analysis for internal ones.

2. Assess workforce supply

Workforce supply data is also crucial to the beginning of the workforce planning process. This is about assessing the current supply of talent, looking at the numbers, availability, roles and skills required to achieve business goals.

Employers need to have a solid understanding of their current workforce, and the supply lines used to fill positions, thinking about their appeal to external candidates and their ability to train and upskill existing staff.

3. Determine demand

Now it’s time to work out the organisation’s workforce needs that aren’t currently being met or those that need to be addressed in the future. This is about looking into the data to find patterns that show what drives workforce demand and identify what workforce needs could be in the future.

To determine demand, you’ll want to speak to leadership to get a gauge on growth ambitions, find any changing patterns when it comes to customer demand, and see if you can identify areas of process improvement.

Then, you can estimate your workforce requirements for both the short and the long term. There are several ways to do this, including analysing budgets and financial forecasts and scenario planning.

4. Conduct a gap analysis

A gap analysis allows employers to work out the difference between the workforce they currently have at their disposal and what they need in the future to achieve their long-term goals and objectives. This requires reviewing the skills of the current employees and looking to identify where gaps exist now and may emerge in future.

During this process, employers should consider questions like:

• What are the most pressing talent gaps?
• When filled, which gaps could contribute to success quickest?
• Which gaps, when solved, could turn into growth opportunities?

5. Put together an action plan

This is the stage where, based on their assessments during the gap analysis conducted previously, employers need to identify and utilise appropriate solutions to meet their workforce planning needs.

There are a number of potential actions employers can take at this point, such as:

• A significant recruitment drive
• Focusing on developing internal talent
• Bringing in contractors or freelancers

6. Deliver the plan

Once the plan has been put together, it’s time to roll it out. Doing so requires working closely with relevant stakeholders, both internal and external, necessitating effective communication and monitoring.

Furthermore, once the plan has been successfully implemented, employers need to measure if it has had the desired effect and contributed to improved performance in relation to their goals and objectives, using analytics and reporting to track progress over time.

To maintain an efficient and agile workforce capable of meeting business needs, employers should repeat the process as often as necessary, using insights gleaned from previous workforce plans to inform future direction.

Embrace workforce planning for a sustainable future

Workforce planning is essential to the long-term success of an organisation, ensuring that the right people with the right skills are available to help adapt to shifts in demand and technological advancement One recent high-profile example of a massive organisation undertaking a workforce planning initiative comes from the National Health Service (NHS), which in 2023 announced its first-ever long-term workforce plan. Amid ongoing difficulties in staffing and running the NHS, the plan is intended to train, retain, and reform the workforce, putting it on a sustainable footing for the future.