When it comes to delivering value and impact, companies that invest in their people are better positioned to succeed in today's volatile business climate. For this reason, firms are turning their attention to workforce planning as a fundamental part – not only of their HR strategy – but also, more importantly, of their overall corporate strategy.
As leading organizations know, people are their greatest asset. Investing in their talent can have a lasting multiplier effect on their productivity, efficiency, and bottom line. Not to mention, their reputation.
Changes to the business environment in recent years have also led to the evolution of workforce planning.
Take for example the phenomenon of the Great Resignation as an aftermath of the COVID-19 crisis. Whereas, before, talent leaders would see an uptick in resignations because workers are finding better career prospects and bigger pay elsewhere amid the global talent war; these days, companies are witnessing the exodus of employees who are searching for more meaningful work post-pandemic. It's a trend no one could have predicted at the start of the crisis. A trend that challenges the concept of workforce planning.
It's tempting to subscribe to traditional notions of workforce planning as simply a method of identifying staffing requirements by department or business unit, then setting a financial plan to prevent over-hiring or under-hiring.
However, if leaders genuinely believe in the strategic role of HR in transforming their business, then they would see workforce planning as a comprehensive approach to both talent and business management. This includes strategies for upskilling/reskilling, talent mobility, and succession planning, to name a few.
What critical factors should organizations consider when designing their approach to workforce planning and allocating resources to workforce management? Here are five elements to ensure success:
1) Enterprise goals
Before embarking on any investment plan, firms look within the organization first to identify their human capital needs. A crucial part of this is incorporating talent plans into the framework of their enterprise goals. Is the organization planning to enter new markets? If so, by how much will the workforce increase and in which regions or divisions? Is the company launching a new product or service within the year? Which skills will they need to develop internally, or hire for externally?
2) Strategy, policy, and process alignment
After setting their business goals, leaders across functions must work together to plan how their objectives will translate into workforce strategies, policies, and processes. For example, organizations that are going through a merger will need to sit down and identify which talent processes will prevail when assessing their staffing and skilling needs.
Another example is when a company enlists the help of a contingent workforce. Managers will need to standardize their approach to onboarding contractors whose roles and access requirements will be different from tenured employees.
3) Talent sourcing and skilling
Workforce planning entails knowing where to look for talent and placing them where they will drive the most impact. Having the right data on staffing requirements is the first step to identifying these gaps. Only then can leaders match requirements with the supply of talent already available in the market.
One trend that is redefining workforce planning today is internal talent mobility or hiring from within the organization. As more individuals explore upskilling, reskilling, and taking on new career challenges, they open a new resource that employers can deploy.
4) Financial planning
An integral part of workforce planning is financial planning. It requires knowing how to budget for the right caliber of talent and the optimal size of the workforce for a given time. This is why HR and talent leaders work closely with Finance to identify the cost to building their talent pool and nurturing their members.
5) Technology investment
All the elements above come together with the right platform in place. Modern workforce management tools shift the focus from static headcount management to active planning by streamlining data from HR, Finance and Corporate teams and preventing silos.
Real-time changes to the workforce can be reflected on a shared dashboard to give stakeholders access to the information they need for optimizing work. Alight's Human Capital Planning solution, for example, goes beyond presenting current staffing requirements. It also analyses and predicts future opportunities for the enterprise by presenting data on workforce expenses and employee performance and turnover.