What is Strategic Workforce Planning, and Why is It Important?
A complete guide to strategic workforce planning: its uses, applications, and steps
In the world of international business the term ‘strategic workforce planning’, or ‘workforce planning’, is often thrown about, but what does it actually mean?
Moreover, is strategic workforce planning actually important and, if so, how would you go about implementing it in your company to leverage its many purported benefits?
These are the questions which this article from global business solutions provider Mauve Group will answer.
Banking on over 25 years of expertise in the industry, we provide a straightforward definition and explanation of the process, providing you the tools to construct your own effective workforce plan.
What is strategic workforce planning?
Strategic workforce planning is the process of assessing the workforce needs of your business both at present and in the future, with the goal of optimising labour costs, employee satisfaction and output, and mitigating against potential future disruptions.
Put another way, it’s the art of recruiting, promoting and transferring the right people – equipped with the right skills – into the right roles at the right time and at the right cost, to meet your company’s short- and long-term goals.
Why workforce planning is important: 6 major benefits
The importance of strategic workforce planning cannot be understated. On a macro level, strategic planning is necessary to ensure a business can continue to operate at peak efficiency no matter what its industry climate, competitors, or the world (think of COVID-19) can throw at it. On a micro scale, the benefits are even more numerous. Let’s take a look at 6 of the most important outcomes associated with a well-constructed and enforced strategic workforce plan.
1: Cost reduction
Through careful people management, recruitment, onboarding and salary spending can be reduced and better budgeted for. When the quality of your workforce is audited and adjusted accordingly, you ensure that only the best person for each role occupies it. As a result, there is no wastage of bonuses nor pay rises on those whose performance and potential contributes less to your business goals and results than others. Equally, auditing the quantity of your workforce can address other financial concerns, such as overstaffing.
2: Improved performance and productivity
An important part of any successful strategic workforce plan is talent management, through which employees and independent contractors are sourced to help organisations achieve their goals faster and more effectively. Talent management also applies internally, whereby the potential and performance of every existing employee is assessed, and plans are then made to carefully nurture employees wherever necessary. Roles can also be adjusted or transferred where necessary. The result is an overall more productive team, each member of which is the ideal candidate for their role, receiving the support they need to excel in it.
3: Enhanced resilience in the face of change
To survive in an increasingly competitive and unpredictable world, business leaders must ensure their companies have flexibility and adaptability baked into their structures and organisational strategies. This is exactly what a well-developed strategic workforce plan does: it considers every possibility, every likely future scenario, and develops contingencies to deal with them.
For example, a company which relies on office workers for the bulk of its trade would acknowledge that if future lockdowns required more intensive ‘work-from-home’ measures (like in 2020-22), the company may lose the bulk of its income. By using strategic workforce planning, this same company could not only plan for such a scenario, but also iteratively re-evaluate its business goals and KPIs based on the likelihood of the situation arising.
4: Address skill gaps company-wide
One of the first comprehensive steps to quality strategic workforce planning is to locate skill gaps across all the departments of your company. This evaluation may elucidate macro issues – “no one in my company is confident delivering pitches to investors” – or micro ones – “one of my line managers has poor leadership skills”.
Skill gap analysis may even provide solutions to these same problems. Taking the “line manager” scenario above, for example, an audit of your employees’ skills may show that another employee working in a different department may be better suited to the role, and vice versa.
5: Improve employee retention and work-life balance
In this era of ‘the Great Resignation’, employee retention is key to the success of long-term organisational goals. As a globalised business culture, we’re also beginning to better understand the importance and relevance of employee satisfaction to output, productivity, and brand perception.
Strategic workforce planning requires a certain degree of people management, as has hopefully already been made clear. By employing human resources learning and best practice throughout your plan, you can elevate employees’ satisfaction levels, whilst at the same time affording them a better work-life balance.
These desirable results can be achieved through hybrid work schedules, or simply by transferring employees to teams or departments in which they’re likely to feel more comfortable and apply themselves more creatively.
6: Enable companies to better achieve their short- and long-term goals
By reducing costs, planning for disruption, establishing realistic goal posts, and hiring, promoting and nurturing people with the required competencies into the right roles at the right time, strategic workforce planning facilitates success.
How to develop a winning strategic workforce plan for your business
There is no ‘one-size-fits-all’ version of strategic workforce planning.
It might help to think of the process a little like coaching a sports team: when selecting her team, a coach must make a balanced selection between the best players for the best positions, and the players who cooperate with each other most productively. She must also assess the strengths and weaknesses of each player, and whether it would be more cost- and time-effective to give a weaker player extra coaching during practice than it would be to simply replace that player.
However, the strategic planning used by the coach of this example team would be no use at all to the coach of another.
In the following two sections, we’ll discuss the key components to strategic workforce planning, and the overarching steps you must take to ensure its success. When it comes to the details of these steps, however, they must be left to you to decide, concerning your specific organisation, industry, team, resources, and goals.
The key components to strategic workforce planning
Here is a look at the things we at Mauve deem most important to bear in mind when developing your workforce strategy:
- Workforce strategy should be informed by organisational strategy: Strategic workforce planning helps you achieve your organisational goals; as such, it must be developed with those goals firmly in mind.
- Combine workforce strategy with people strategy: It can be tempting to give more credence to the needs of finance than human resources, or to look at your workforce as raw data rather than human talent. Combining workforce and people strategy, or financial motives with HR motives, your strategic planning becomes more rounded and effective as a whole.
- Implement strategic workforce planning organisation-wide: Likewise, your plan must take all departments, employees, and independent contractors into consideration. It’s no use optimising the sales and marketing department if your production departments remain inefficient.
- Use data collected from audits to drive your strategic workforce plan: The data you collect during the analysis stages of a strategic workforce plan (see below) should inform each of the subsequent steps.
- Keep your plan fluid and responsive by measuring its performance and responding accordingly: The same data-gathering mechanisms you employ in the aforementioned analysis stages should continue to be employed throughout, so that you can measure the effectiveness of your strategic workforce plan in real-time, and adjust the plan accordingly.
The 6 steps to an effective strategic workforce plan
Effective strategic workforce planning requires an iterative application: i.e. it should operate continuously and cyclically. Nevertheless, there are certain steps which you should follow.
1: Analysis of organisation, industry, and objectives
The first step to strategic workforce planning should be to assert and assess clear goals for your organisation, both in the long term and short. These goals should be achievable and supported by your team, who also understand the necessity for strategic workforce planning in achieving them. Once you have your organisational objectives established, in view of analysis of your industry and competitors, you can move onto step two.
2: Skills-gap analysis of the size and quality of the existing workforce
Arguably the most important step in strategic workforce planning is analysing the size and quality of your workforce. This should be an involved, detail- and data-oriented process in which each member of staff is examined to evaluate their skillset, potential, performance, longevity and needs. Questions you could ask regarding each employee may include:
- Are they in the right role for their skillset?
- Are they motivated by the team around them?
- How long have they been with the company, and how long are they liable to stay?
- Are they nearing retirement?
- Do they perform well enough to merit promotion, or indeed to retain their position?
- Are they currently being overworked, underworked, or is the balance equitable?
Having completed this, you’ll have gathered the data necessary for HR and finance to fill skill gaps and prepare for future vacancies (due to retirement or paternity leave) in plenty of time.
3: Anticipation of the future (scenario analysis)
Perhaps the second most important part of an effective strategic workforce plan is this: scenario analysis. Though the future is, of course, impossible to predict, it’s not impossible to plan for likely (and unlikely) potential scenarios. At this stage, your team should take time to look at historic trends in your industry, as well as projections made by expert commentators for the future. They should then compile a list of possible scenarios which may affect your business, or hinder you on the path to your organisational goals. These scenarios can then be planned for in the following step.
4: Anticipation of future workforce needs
Knowing the state of your current workforce, as well as the many potential scenarios which may affect it and your organisational strategy, you can now make contingency plans. At this stage, you want to determine what your future workforce needs will be in order to achieve your organisational goals, provided everything beyond your control goes favourably.
For example, if you’re aiming to double your profit in five years, you may need additional salespeople. Or, if your goal is to establish your brand’s presence in Thailand, then you know you’ll need to hire an overseas team to begin the international expansion process.
Additionally in this step, you should make future workforce plans adaptable to the scenarios you and your team envisioned in the previous step. That way should things not go favourably, you’ll be prepared, nonetheless.
5: Development of an adaptable, functional, HR- and finance-led action plan
You’ve now analysed your workforce’s current state and future needs against your goals and a range of potentially disruptive scenarios. It’s time to take your data – the findings from your research – and turn it into a long-term strategic plan for your workforce. This action plan should cover things like:
- Recruitment strategies
- Upskilling, retraining, and nurturing schemes for existing employees
- Organisational restructuring
- Improving technologies and introducing new ones
- A budget for the above
6: Review outcomes, adapt plan, begin again
With the strategic workforce plan developed and implemented, it is crucial that the work doesn’t stop there. In order for strategic planning to be effective, it must be constantly monitored and the details of it finessed according to the results. Given that your goals may change in tune with the climate of your industry, amid a myriad other factors, this cycle of measure, adapt, repeat ensures greatest success for you and your enterprise.
The importance of strategic workforce planning for managing remote teams
We’ll finish this article with a very brief look at how strategic workforce planning can be implemented even across a remote work, or hybrid work structure. Whether you manage a remote team as a transnational, engage the services of independent contractors in other countries to access the best talent possible, or members of your team simply work from home, locally, strategic workforce planning can still be used effectively.
Example strategies for successful remote workforce strategic planning
- Unable to assess the performances of remote workers in-house, you can set clear and manageable guidelines for how work should be conducted, and what goals are to be pursued via regular video calls and conferences. These can also be utilised as opportunities to gather data on employee satisfaction, skills, future plans, performance and potential.
- Remote working may be leveraged as a tool toward your organisation’s goals, in and of itself. For example, if you aim to reduce overheads like office space rental, etc., then encouraging a remote work culture may be a core part of your strategic workforce plan. Similarly, if your organisation’s goal is to expand internationally, engaging the services of overseas freelancers may be a logical first step.
- Filling the right roles with the right people is not always possible when your available talent pool is limited to a local district or region. By accessing a global talent pool via remote work, your chances at finding candidates with the right skills at the right cost soar dramatically.
- And speaking of the right person, remember that not all people are well-suited to working from home, or working remotely. For some, there may be a noticeable drop in productivity if shifted to a remote work structure. As with any step in a ‘traditional’ office-based strategic workforce plan, you must assess the suitability of each role and each person in it for remote work.
- Remote work may become a crucial cog in your machinery with regards to future planning and crisis mitigation. Without remote work, of course, the coronavirus pandemic would have forced many businesses to close their doors permanently.
A final thought
You don’t have to tackle the complexities of strategic workforce planning alone. Whilst large corporations like Netflix, Shell and Amazon will likely have whole departments dedicated to workforce planning, the same resources are unavailable to most. What you can do, however, is integrate the services of an Employer of Record into your workforce plan.
Employers of Record offer global business solutions focused on the onboarding, payroll and HR management of employees in countries all around the world. As part of your contingency plans and means of achieving your long-term goals, an Employer of Record can be a means of filling talent gaps as and when they appear, in minimal time, at minimal cost, and with minimal stress to your daily operations.
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