How to Build Strategic Workforce Planning?

Being strategic about your workforce planning is key to make sure your people game is set up thoroughly to support organization overall business objectives. If you do not have a strategic workforce plan in place, the odds are high you are mostly reacting on business demands with a high chance of delivering mediocre results. Filling skill or headcount gaps ad-hoc will has a high chance of producing mis-hires, or hires who are starting too late, hence blocking your business success. Btw: did you know that a mis-hire costs up to 2.5x of its annual salary?

In this article you will learn how to set up a strategic workforce plan from the start, enabling your organization to be successful.

Define your workforce strategy

The first step to building a strategic workforce planning system is to define your workforce strategy. Your workforce strategy should align with your company's overall strategy and business plan, as well as its human resources (HR) and talent management strategies. This will ensure that the people you hire and retain are aligned with the company goals.

Review your current plans

To inform your workforce strategy from the business perspective you need to start with understanding the company’s overall plan.

Workforce planning is a top down exercise and needs to follow your organization’s vision (e.g. bring your existing product offering to a new market segment) or an overall goal everyone is working toward e.g. doubling revenue over the next 12 months.

You need to understand:

• Where is your business going right now?
• Where do you want it to go going forward?
• What are the current goals of top-level management?

Take stock of your current workforce

Once you have understood where the company is heading to, analyze the current workforce.

Taking stock of your current workforce is an important pillar of building a strategic workforce plan. This includes reviewing:

• Skills
• Demographics and other characteristics
• Performance and engagement
• Attrition levels (how often people leave) and turnover rates (how long it takes for workers to exit).

Anticipate hiring needs

Anticipate hiring needs. Now, understand the factors that will determine your hiring needs over the next 12 months. This can include:

• Business goals (e.g., 10% growth in sales)
• Business needs (e.g., more sales leads)
• Employee turnover (e.g., record low retention rates)
• Employee performance (e.g., high employee engagement scores)
• Employee training (e.g., new software implementation) or development needs, or even just general growth within the company

Validate your plans by benchmarking the organization you are planning to build by looking at industry peers who are 12 months ahead in terms of company stage. Platforms such as The Org give you great visibility in the team compositions of fast-growing startups. The Org can be used to map your own org chart as well. If you do not want to share your org chart publicly though, there are more private solutions you can use, such as ChartHop. Charthop also offers dedicated headcount planning tools to Visualize your headcount plans within the org chart.

Conduct a (skill) gap analysis

As you have learned how your current workforce is composed, and what is needed for the future, you can now identify gaps. Gaps can come in two ways:

• Skill gaps: your organization lacks certain skills to achieve future business goals. E.g. your company has decided to rebuild current products on a blockchain infrastructure but you find you have no Web3 engineering capabilities in your teams
• Headcount gaps: your organization does not lack skills here but simply headcount. E.g. your organizations wants to triple sales numbers in a certain region but does not have enough sales reps to being able to achieve that

While the latter problem (headcount gaps) are straightforward to understand and react to, skills gaps need more diligence. To get on top of your organization's skill gaps, conduct a skill gap analysis. This is a process that helps you identify if your organization's employees have the specific skills and competencies required to meet its strategic goals. This is an important step in building a strategic workforce planning system because it gives you insight into what areas of training are needed for your workers' continued success and growth, as well as what positions need filling based on the needs of the business.

You'll need to perform this analysis carefully as it informs your measures to close any hiring gaps you will uncover. You can use surveys or interviews with line managers and team leaders to find out how they assess their employees' strengths and weaknesses; then look at employee performance reviews (if they exist), job descriptions (if they exist), employee handbooks/policies documents, etc., in order to come up with an accurate picture of where each team stands when it comes to its staff's abilities. Make use of tools supporting you in the steps mentioned above, such as Gloat’s Workforce Intelligence solution or Eightfold.ai’s Talent Management offering.

To have a headstart in understanding your employees’ skills assess them systematically during the hiring process by using assessment tools or structured reference checks. This approach provides your talent management teams with real-time data about how your skill map and respective gaps are developing.

Close the gaps

Based on your status quo, your forecasted workforce and resulting gaps (there will be gaps for sure!) you can start thinking about how to close those gaps.

To start off, there are two ways of filling gaps.

• Hiring the right talent
• Train existing talent

Hiring the right talent

To hire the right people to make your workforce plan a success, stick to the learnings from your skill gap analysis. Make sure your findings are reflected in updated role descriptions. This can mean entirely new hiring strategies for those updated roles that need to be communicated with hiring teams and third parties supporting in hiring i.e. staffing and recruitment agencies.

While executing on reaching your workforce plans make sure you are using innovative hiring practices (here’s a great overview of 8 innovative recruiting methods used by the world’s best recruiting teams)

Train existing talent

Though, hiring the right talent will be your first option in most cases.

Why is that?

- Training your employees to fill skill gaps is expensive (trainings need to be created, conducted, attended) and comes with a strong lead time (your people need time to process new learnings and to build up the new skills required)

- Filling skill gaps internally might put a relief on hiring goals for the respective function, however it will create another skill gap somewhere else e.g. the Business Analyst you train to close the Data Engineering gap in Engineering needs to be re-hired. This argument is especially true for high-growth companies

- Filling gaps internally, e.g. by promoting people to lead teams as you are short of people managers, might come with organizational debt i.e. more and more IC requesting similar career developments which might now align with your workforce plan

Even if developing your own talent to fit future skill gaps is not your primary strategy to fill skill gaps, you should have a talent development program in place to provide people who love your company, mission and vision to develop as long as possible within your organization.

A talent development program is your organization's plan for developing people, which will include the following:

• What types of training do we offer?
• How often do we train our employees?
• How are we measuring if the training works (= performance)?

There’s a bunch of great tools you can use to support your teams in working on the previous questions such as Leapsome or Zavvy. Such platforms allow you to build org- or team-specific training for your workforce. To measure employee engagement and performance make sure to use dedicated platforms e.g. Peakon by Workday, Culture Amp, Lattice or Qulture Rocks.

        💡Key take-away: you need to make the build (= train existing employees) or buy (= hiring new employees) decisions across every position in your entire workforce plan.

Measure the results

As you proceed in executing your workforce plan, make sure to constantly measure how you and your organization are performing. Constantly ask yourself:

- How are we doing?

- How much of our plan have we achieved?

- How much will we have achieved by the end of the planning horizon if we continue doing how we do now?

To efficiently answer the questions above, analytics and reporting tools of your HRM and ATS are essential helpers. Next to tracking and reporting, use methodologies such as Plan-Do-Check-Act to quickly act upon learnings.

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Having a strategic workforce plan is core to being prepared for what’s next. With the right planning and implementation, you can build an effective workforce strategy that supports the long-term success of your company. In this article, we outlined some steps for building such a plan from defining your workforce strategy, taking stock of current needs, anticipating hiring needs in advance (and preparing accordingly), conducting skill gap analysis, to executing upon your plan, and ultimately measuring the results.