All about Strategic Workforce Planning

In order for a business to be successful, good planning and organisational skills are a must. Some 316,310 UK businesses ceased trading in 2020, according to the latest data from the Office for National Statistics (ONS). The business death rate was almost 11% in 2020. Covid-19 created challenging conditions for UK small and medium-sized businesses. Around 47% reduced their operations in 2020, while 31% closed down on a temporary basis.

There are many reasons that businesses do not succeed, or that large corporations are not doing well, and there are many factors that influence success or failure. One thing that is clear is that strategic workforce planning is essential if you want your business to succeed in the long term.

What is strategic workforce planning?

In order to succeed in business, you need to be flexible and have good planning and organisational skills at the very least. The ultimate aim of strategic workforce planning is to ensure that the organisation has a workforce that is able to meet the needs of its business objectives, and is capable of delivering the desired results. This does not need to be complicated and can be adjusted to suit the size and maturity of any organisation.

Strategic workforce planning is about making sure that the right people are in the right roles, at the right time. It involves analysing the current and future workforce needs of the organisation and developing a plan to ensure that it has enough people with the right skills, in the right roles, at the right time, to achieve the business’s objectives.

This also includes ensuring that the business is not overstaffed or understaffed. Looking at the organisation’s current and future talent needs is vital. It is determined by the current resources and capabilities of the company, as well as the broader market.

This includes:

• Assessing the skills and resources within the current workforce.
• Determining future requirements.
• Identifying gaps.
• Implementing initiatives to attract, hire and retain the right talent.

Performance management will also be important in determining what is going well within specific teams and with individual employees, and what may need to be addressed. Performance management is a tool used by employers in order to monitor and support employees in their roles.

This can help to achieve the goals of the business. It also helps employers to track how well their employees are doing in their teams, and it also places accountability on staff as it is important that teams are motivated to produce their best work.

Performance management should look at the performance of each employee individually, as well as the teams in general and how employees are working together. This means that each person can have a tailored plan to work towards that will help them achieve their best work. When each employee has this in place individually, it can help employers to get the most out of their employees, creating a more motivated workforce overall. Something that may be beneficial for this is to create SMART objectives.

For further reading about performance management, please see our knowledge base.

One way of achieving performance management is by having an appraisal. An appraisal is a meeting which provides a regular opportunity for constructive communication between the person who assigns the work and the person who performs it. It should focus on what they expect from each other and how well those expectations are being met currently, and discussing anything which may need to change. An appraisal is now often called a performance review.

Why is strategic workforce planning important?

Strategic workforce planning is important for a number of reasons, including:

• Cost reduction – by understanding the workforce needs, both current and future, it means that workforce costs can be managed. This includes reducing any unnecessary staffing costs. Reducing staff turnover also reduces the costs associated with this. Looking at things such as time management for employees can also help within this process. Good time management can help to achieve bigger goals, can reduce procrastination and increases productivity overall.
• Talent Management – this involves identifying critical roles and skills needed for the future success of the company and developing a plan to recruit and retain the necessary talent. It also helps organisations to identify skill gaps that need to be filled through training and development programmes. Talented employees form a competitive advantage for the company when in competition with other similar companies.
• Ensuring adequate staffing – this involves analysing the current and future workforce needs. Organisations can ensure that they have the right number of employees, with the right skills to meet the business demands. This reduces the risk of understaffing or overstaffing and ensures that the workforce is set up for maximum efficiency.
• Flexibility – this includes having the staffing and resources to make changes as and when needed.
• Demographic changes – things like an ageing workforce need to be considered and how these issues may be likely to impact on the business.
• Reducing risks – organisations can identify potential risks, for example skills shortages, staff turnover and succession planning. By identifying these risks, organisations can develop strategies in order to reduce them and avoid disruptions to the business.

Exploring where you have the right people in the right roles is an important part of the process. This involves ensuring that you have the right number of people, who have the right skills, knowledge and experience to help your organisation reach its goals, both long and short term.

By law, under the Equality Act 2010, employers must ensure that they do not discriminate against, or treat less favourably, any of the nine protected characteristics. This includes existing employees and also during the recruitment process.

It is also important to keep employees engaged, which is an important part of ensuring job satisfaction and achieving organisational objectives. An engaged employee will be an asset to an organisation, therefore keeping employees engaged should be a key part of an employer’s agenda. For further reading about how to keep employees engaged, please see our knowledge base.

Hiring and retaining the top talent are the biggest challenges for organisations. Employers surveyed in research conducted by Ipsos MORI for the British Business Bank found that recruiting and retaining skilled staff was considered “likely to be an issue” by 77% of respondents and a “significant obstacle” by 6% of respondents.

With record low unemployment rates in the UK, this concern is growing. It is important for employers to retain positive and motivated employees as high employee turnover can increase expenses and also can have a negative effect on the organisation, both in terms of other employees and how the business is perceived.

How is a strategic workforce plan created?

Creating a strategic workforce plan requires a collaborative effort from various stakeholders. This includes senior leaders, HR professionals and employees. The process should be data-driven, flexible and aligned with the organisation’s overall plan. It should take into consideration the current and future business needs of an organisation.

There are general steps involved in creating a strategic workforce plan.

These include:

• Defining the organisation’s strategic goals – this involves having a clear understanding of the organisation’s strategic goals and objectives, both in the long and short term. This includes understanding the organisation’s mission, vision and values.
• Assessing the current workforce – this is in order to evaluate the current workforce and identify any gaps you may have in skills, knowledge, capabilities and the number of employees. This includes analysing the current workforce demographics, the skills they have, and their performance overall. There are two areas to explore when gauging the current formation of the workforce. These are quality of the workforce and quantity of the workforce. The quality of the workforce is about current performance and future potential.
• Identifying your future workforce needs – this will be based on your current workforce and your goals and objectives. It will be important to forecast the workforce demand and supply, identifying any potential skill gaps, and being aware of potential changes in the external environment and having a plan in place to deal with these.
• Having workforce strategies in place – this includes recruitment and retention strategies and having strong leadership in place. At the beginning of the financial year 2019/20, the results of a survey of HR professionals suggested that reducing recruitment costs was a top priority and creating a strong succession plan was a close second. A strong succession plan reduces the chances of having periods of disruption if the time comes that crucial roles need to be filled.
• Implementing and monitoring your plan and its progress – this includes tracking key performance indicators, tweaking strategies as necessary, and continuously monitoring the progress.

Benefits of a strategic workforce plan

A strategic workforce plan can help an organisation to better understand its workforce needs, align its talent strategy with its business strategy, and ultimately achieve its goals more effectively and efficiently.

This also includes taking into consideration the risks in relation to your workforce, for example retirements or predicting which staff will leave. Understanding the impact of not having enough people in achieving your goals will give you a clear idea of what problems may arise and when.

The benefits of having a strategic workforce plan include:

• Acquiring and retaining talent.
• Cost savings throughout the business.
• Alignment with the goals of the business.
• Having better control of any risks that the industry may be experiencing or likely to experience.
• Succession planning, which involves ensuring continuity and stability in leadership. When businesses do not prioritise making plans about how to fill vacancies for key roles within their organisations, unnecessary disruption can be caused for their clients, the wider workforce and for the business as a whole.
• Enhanced employee engagement.

It is also important to have the right people in the right place geographically and structurally. You should also consider the availability of people who have the right capabilities in the right locations, to meet current and future demand. You should look at whether there is an opportunity to build strategic hubs, possibly relocating some operations abroad, or whether you could outsource or insource operations, or facilitate more hybrid working which can benefit staff as well as the business.

The six steps of strategic workforce planning

Strategic workforce planning involves a series of steps in order to ensure that an organisation has the right people, with the right skills, in the right roles, at the right time. While different organisations may approach strategic workforce planning differently, there are generally six steps involved.

The six steps of strategic workforce planning generally include:

• Having a plan in place – this involves knowing where your business is going and where you want it to go in the future. Top-level management also need to have clear goals that they are working towards. Workforce planning should start from the top down, and it needs to have an overall goal that everyone is working towards. This may include doubling headcount or increasing the number of leaders.
• Understanding your workforce – this involves analysing the talent you have already; knowing who you currently have working for you, knowing what skills or training they have or what they may need to work on, and what seniority levels you have a lot of. Make sure you take into account everything you currently have, ideally in the form of data and over a period of time to see how you have grown to this point.
• Identifying the next steps – this involves thinking about the space between your current inventory of talent and what your ultimate goal is. What do you need next? Will it be helpful to have more staff and how will you achieve this? What kind of different skills do you need? Do you need more leaders? This will begin to inform you in terms of what you should do now and what you may need to do in the future.
• Understanding talent gaps – this involves firstly thinking about what is missing. Where are the talent gaps in your organisation and how can this be fixed? What kind of talent would help you reach your goal sooner? For example, would hiring the perfect chief executive help to recruit lower level talent?
• Fixes and initiatives – this involves focusing on addressing any gaps that have been identified. This means having a plan of how this will be achieved and planning whether you will focus on campus recruiting, looking at what you offer your staff in terms of the complete bundle of pay, benefits and perks given, or rewards for top talent. What kind of fixes do you need that will help you address those gaps, and help you take the next step in your workforce plan? This will all help you to achieve your goals.
• Measuring your results and delivering – this involves analysing whether your fixes worked, and understanding how much closer you are to your goal. At this stage, analytics and reporting are essential. They can track your progress over time against your goal, and you should be able to have access to reports and data that you can use to continue to push forward.

By knowing the current workforce capabilities, planning future scenarios, determining the desired workforce, and taking steps to align the current workforce with this desired workforce, successful strategic workforce planning can be achieved.