Benefits of Strategic Workforce Planning in 2023

When it comes to making staffing decisions, organisations require a framework that allows hiring arrangements to be made based on long-term goals and budgetary resources. A strategic workforce planning framework enables businesses to navigate skills shortages and bypass overstaffing, ensuring that objectives are being met within budget. There are different workforce planning models available, but all are alike in analysing company data to prepare for building the workforce needed in the future.

According to a report by the CIPD and Omni in 2021, less than half of businesses use data to establish skills gaps in their organisation, while only 20% of employers calculate the cost of losing an employee. The reality is that not enough businesses are regularly collecting data to feed into their current and future workforce needs, despite the current recruitment difficulties that many organisations are facing. As a result, many companies are not in a position to attract and retain highly skilled and diverse talent effectively.

There are some components of a workforce planning strategy that are already familiar to managers, such as succession planning and retirement projections, which anticipate change. However, successful workforce planning models require more refined information to cater for uncontrollable changes that will subtract from the workforce and identify key positions that are business-critical and need to be filled immediately.

We explore how strategic workforce planning can help your business think creatively about the future of your workforce, and the benefits of workforce planning when implemented effectively. 

What’s in this article?

• What is strategic workforce planning?
• Why is strategic workforce planning important?
• 7 reasons why workforce planning is important
• What does strategic workforce planning involve?
• Benefits of strategic workforce planning
• Drive company growth in 2023

What is strategic workforce planning?

Strategic workforce planning involves analysing your current workforce to determine the business’s future hiring needs, which enables you to implement a plan to help accomplish its goals and objectives. Identifying the gap in talent that exists between the present and the future is essential to finding suitable solutions.

According to CIPD, the definition of workforce planning is “a core business process which aligns changing organisation needs with people strategy”. It provides market intelligence to help companies pinpoint a range of challenges they may face and prepare initiatives to support long-term business goals.

Every organisation requires the right mix of talent and effective employment models to be able to achieve its goals. Strategic workforce planning equips HR with the information they need to acquire candidates who can contribute to the business’s future success, ensuring stable staffing levels across each department. In a rapidly changing world where uncertainty is becoming increasingly inevitable, it’s vital that organisations secure the right talent to support their changing priorities.

Why is strategic workforce planning important?

Companies rely on workforce planning to identify their existing talent and predict future hiring needs. Analysing the skills gaps within the organisation provides critical insights into a) what skills the business lacks and b) the skills that will be needed to bridge the gap as the company evolves. Strategic workforce planning shapes the employee experience and enables you to act with purpose to deliver long-term results.

Workforce planning solves staffing issues by making sure that the right talent is in the right job role at the right time, which prevents organisations from running into issues with overstaffing and understaffing. It requires a clear business vision and long-term objectives, strong leadership, visible budgets, and collaboration with human resources to be successful.

There are a number of reasons why strategic workforce planning is becoming increasingly important – let’s take a look…

7 reasons why workforce planning is important

1. Reduces costs

Businesses are forced to work smarter as a result of the widening skills gap, so a robust hiring model is necessary in order to navigate the shortage of high-quality talent. It’s vital that companies develop innovative ways of attracting new talent and retaining existing employees, saving money on drawn-out hiring processes and training costs.

2. Added flexibility

The competitive landscape requires companies to be more agile in their approach to staffing, especially during times of economic and political uncertainty. Businesses also need to be flexible when adopting new working models, allowing them to take advantage of opportunities in response to the aforementioned market pressures.

3. Promotes collaboration

Workforce planning is a collaborative process, which involves participation from key stakeholders throughout the organisation. Identifying interdepartmental crossovers and opportunities for collaborative working practices, ensures all areas of the business are catered for within a budget.

4. Demographic changes

As the labour market becomes more competitive, companies face increased pressures to hire new talent or face reskilling challenges and mass retirement that come with an ageing workforce. The widening talent gap prevents valuable skills from being passed down the ranks to more junior staff, leaving companies at risk of losing these vital skills when employees reach retirement.

5. Talent management

Talented employees can be a major competitive advantage for a business, with skilled employees driving constant innovation and improvement. Maintaining a full and diverse talent pipeline is an essential aspect of strategic workforce planning, ensuring the continued success of the company.

6. Employee experience

Catering for the wellbeing of employees will ultimately improve the overall employee experience. It’s important to make sure that employees are engaged and that their individual talents are being used wisely. Flexible workforce plans prioritise your employees’ experiences and needs, as well as identify how the business can achieve higher levels of productivity and profitability.

7. Successful partnerships

Creating a strong partnership between finance and HR teams is essential for successful workforce planning. Staffing levels are a significant source of revenue and expenditure, so it’s crucial that the two teams unite to discuss the impact that people, processes, and technology have on the business’s long-term goals.

The finance department should determine how the workforce is contributing to the company, and HR can use these insights to allocate resources and hire the right talent. This creates the optimum workforce, which aligns with the company’s financial goals. 

What does strategic workforce planning involve?

Strategic workforce planning is about gaining valuable insights into your business’s current state of play and using this information to determine its future demand for skilled talent. Once you have this information available, you can then translate it into a set of actions that will build on the existing workforce and grow the company accordingly to meet that demand.

There are two aspects of workforce planning that can help break down the key focus areas:

• ‘Soft’ workforce planning – This aspect focuses on developing a strategic framework in which the business data can be assessed. During this process, it’s important to be agile and responsive to the needs of the business, while identifying and maximising key performance drivers. Managers should consider a range of possible outcomes before implementing any actions that could be brought about by a change of circumstances.

• ‘Hard’ workforce planning – Data is essential when predicting how many people need to be hired to remedy future skills gaps. However, numerical and statistical data is no longer sufficient if you want your workforce planning strategy to be successful. It’s vital that the data is analysed thoroughly and understood in context to ensure the business objectives are met within budget.

Benefits of strategic workforce planning

Acquiring talent can be challenging, but in today’s market, retaining existing employees is even more difficult. As we find ourselves in the midst of the ‘Great Resignation’, companies are quickly recognising that the power lies in the hands of the candidates. Without thorough workforce planning, organisations risk losing the ability to hire and retain talent when it’s needed the most.

The advantages of workforce planning far outweigh the disadvantages, especially as the growth of the business largely depends on how capital and resources are deployed. Here are some of the benefits of strategic workforce planning.

1. Aligns HR with the overall business strategy
2. Improves employee retention
3. Minimises hiring costs
4. Anticipates change & prepares for the future
5. Overcomes talent gaps
6. Refines recruitment processes

1. Aligns HR with the overall business strategy

Human resources play a critical role in strategic workforce planning by ensuring that the business’s goals are supported. A key part of this involves strengthening the company culture, which can have a significant impact on employee retention and the growth of the business. HR can support workforce planning by aligning company policies, such as:

• Career development and upskilling programmes
• Data protection
• Employee assistance
• Employee benefits
• Learning and development initiatives
• Wellbeing programmes

2. Improves employee retention

Strategic workforce planning enables organisations to identify top-performing employees and those in key positions who are likely to take their skills elsewhere. Businesses can use this information to develop and implement a retention strategy, such as development programmes and salary incentives, to minimise employee turnover, enabling the continued growth of the company.

3. Minimises hiring costs

A detailed overview of productivity, company structure and total headcount is essential to properly manage hiring costs. Strategic workforce planning is a valuable tool that can provide a comprehensive overview of your entire organisation, including departments that can typically be overlooked like HR. When done effectively, it can empower businesses to drive key performance KPIs, such as employee engagement, efficiency, morale and productivity, which can lead to a decrease in recruitment costs.

4. Anticipates change & prepares for the future

The workforce planning model can provide more detailed insights than traditional methods, and identify potential opportunities and risks, putting you one step ahead of the competition. Establishing key benchmarks, such as a high departmental churn, developing skills gaps and upcoming retirements, enables organisations to take the initiative before problems present themselves.

It also allows companies to plan for the future by identifying departmental growth or decline, so that talent acquisition can be managed accordingly.

5. Overcomes talent gaps

Skills gaps are prevalent in new businesses, but they can also develop within experienced teams. These talent gaps can pose a significant risk to a company, especially if employees have cases of prolonged sickness or plan to retire, which can affect the entire department. Strategic workforce planning enables businesses to identify and address skills gaps by highlighting trained individuals within a team and colleagues who would benefit from upskilling.

Identifying employees who are highly productive can also present opportunities for further training and development, ensuring that productive contributors are rewarded. It incentivises employees to remain within the company as their career progresses.

6. Refines recruitment processes

Strategic workforce planning enables organisations to build a detailed persona that outlines the characteristics, skills and traits of high-performing employees. This enables you to tailor the recruitment strategy with these individuals in mind, making them a priority during any vetting processes. It will also crystalise the company culture, which enables hiring managers to accurately represent the organisation during the interview process, while looking for characteristics that would fit well within the department.

Drive company growth in 2023

Creating an effective hiring strategy is vital to driving your company’s growth over the coming year. Strategic workforce planning is a key characteristic of successful organisations that have well-organised operations in place. By forecasting the market trends for the future, you can plan ahead for the challenges that the business may face.

Learn more about FDM’s services and find out how we can help you future-proof your business with the latest high-quality talent. Get in touch today for more information.