What Is Strategic Workforce Planning & Why Is It Important?

two individuals producing a strategic workforce planning strategy

Our world is constantly changing, and it is vital that organisations of all sizes are agile enough to face the challenges they come across.

In the last few years, those responsible for organisational staffing have become increasingly aware of trends and macroeconomic factors including “The Great Resignation”, the ever-increasing skills gap, the after-effects of the pandemic, sustainable business practices, and changing workplace cultures and expectations.

For many businesses, a proactive approach, such as strategic workforce planning, has become necessary due to the high levels of uncertainty caused by these changes. Strategic workforce planning can help businesses create an actionable roadmap to protect themselves against future challenges.

With 10+ years of experience working in permanent IT recruitment, I have advised businesses on workforce planning many times, discussing how it can vastly improve an organisation’s business functions through increased visibility of its workforce.

What is strategic workforce planning?

Strategic workforce planning, or talent planning as it is sometimes referred to, is a business process that focuses on analysing your internal staffing. Strategic workforce planning looks to align your changing organisational needs with your people strategy. By analysing your internal talent capabilities, it ensures you remain functional and don’t become under or over-staffed. The process creates a framework that addresses the adjustments you need to make to meet the challenges you may face and achieve your individual department goals and overall business objectives.

Why is strategic workforce planning important?

Strategic workforce planning is important because it can help you identify and plan for unexpected risks you might face as a business. You, like many other businesses in the past, may have previously felt confident that your business could weather whatever storm came to pass. However, the past few years have seen exponential challenges arise. From this, we have seen significant workforce changes, such as alternative working patterns, heightened employee expectations, and an increasing use of technology.

Statistics show that as many as 73% of businesses are facing hiring difficulties and the average employee turnover has increased by 7.7% in the past 4 years. Both of these issues can seriously disrupt workplace operations. Talent planning can help you improve retention rates by ensuring teams aren’t over stretched and understaffed, that often lead to stress and high employee turnover.

It can also create confidence in your business’ growth plans that can lead to a clear vision being understood by everyone in the business. This means it can be easier to create clear objectives and targets for each section of your organisation, for everyone to work towards. This, in turn, will improve your staffing as employees believe in your vision and are engaged in the business. Organisations with engaged employees can see a 14% rise in productivity, on average.

The benefits and drawbacks of strategic workforce planning

Now that I’ve explored what strategic workforce planning is, it’s important to delve further into how it can benefit businesses, and also why it doesn’t work for others.

The benefits of strategic workforce planning

Visibility

If you have a larger workforce, with multiple offices and departments, it can be difficult to get a clear overview of your employees. A strategic workforce plan will ensure a data analysis and review of key insights into all areas off the business takes place, leaving no area of the business neglected. This thorough research can ensure that your plan is effective and will give confidence to stakeholders. It can also help identify areas of potential internal mobility, which is considered to be key to retention by 70% of talent leaders.

Cost-effectiveness

By improving recruitment and retention, the risk of bad hires and employee turnover will be reduced, lessening the need for costly recruitment campaigns. Furthermore, by understanding your skills gaps you can be a lot more strategic in how and when you hire. This also includes spotting opportunities for internal mobility, which can involve training and upskilling existing employees, reducing overall recruitment costs.

Deloitte found that larger companies that use workforce planning, see savings of around £4.7m per 100 employees, due to the ability to redeploy surplus staff and prioritise hard-to-fill roles in other areas.

Plan for the future

The analysis that a strategic workforce planning model delivers can help you plan for the future. This might include assessing areas of potential high turnover (due to factors like retirement or existing high turnover rates), or teams that need further training and development to upskill them for management and more senior positions. This forward planning can set you up for success in the future, so you’re not just reacting to challenges as they arise which can be costly. It can also bring a sense of confidence in where the business is going and help set out clear expectations and goals for each part of the company.

Agile

An effective strategic workforce planning process will enable businesses to be more agile. Through understanding talent gaps and the needs of the workforce as a whole, it can allow businesses to work quickly and prioritise changes. Additionally, the process will take into account potential risks and challenges to prepare you for different scenarios you may face going forward and provide you with structure on how to proceed.

The drawbacks of strategic workforce planning

Time-consumption

Analysing an entire workforce and putting forward plans for how to support future growth can take a long time. The process will involve the provider (whether an agency or in-house team) and management / internal stakeholders. Everyone needs to be on board with the same vision of the future and agree on how to achieve it. For strategic workforce planning to be cost-effective and work, it is a long-term commitment.

Costs

Of course, there are a number of costs attached to talent planning at this level. Particularly if you are using an agency to support you through the process. If you are a smaller business with a limited workforce, you might not find it useful enough for your business to account for the cost.

Complacency

Workforce planning can predict a lot, but not everything. There is a risk of overconfidence and without a proactive team consistently monitoring, analysing, and adjusting the plan based on each current workforce, you run the risk of becoming complacent and missing the chance to address unexpected issues until they become much bigger.

Inflexible

Rigidity can be a risk in talent planning. Workforce planning needs room for businesses to quickly react to sudden circumstantial changes. However, businesses can be reluctant or face difficulties when responding to these changes if they have a strict plan in place.

 

If you think strategic workforce planning might be needed within your business, or you require assistance with a specific role, please get in touch here.

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