In the book “Work Without Jobs,” the authors explore a future workforce where workers are no longer beholden to strict job titles while business leaders are empowered to synergize with AI. There’s ample potential for synergy between AI and employees, but the traditional way of working needs to be re-examined.
That’s why it’s so crucial to strategically plan for the future of your workforce. In other words, business leaders need to start engaging in strategic workforce planning.
Strategic workforce planning means analyzing your current staffing levels and anticipating future hiring needs to ensure that you are not overstaffing or understaffing and not creating a skills gap when hiring new employees. Implementing a strategic workforce planning framework also helps uncover the training needs of your current and future employees and aligns recruiting with your company’s strategic goals.
What is Strategic Workforce Planning?
The future is unpredictable, so you must implement a strategic workforce planning framework to prepare for the unexpected.
This means that through the lens of strategic workforce planning, leaders in these industries can anticipate that there will be a decreased need for cashiers and that they will need to upskill and reskill employees to move into different roles.
Rapid technological developments and automation are also taking place that are replacing jobs or changing how they are done. The world as we know it will change, but it is unlikely that if a job is affected, everyone who holds it will be fired.
According to Oxford Economics, 32% of companies have a three-year vision for their workforce. It is up to HR leaders to implement strategic workforce planning frameworks so they can anticipate trends and changes and launch attrition, retiring, up- and reskilling programs to avoid mass lay-offs.
What Are Some Workforce Planning Strategies?
Workforce planning analyzes your workforce today and helps you plan what it will look like tomorrow. These are three basic principles of strategic workforce planning.
- Workforce planning requires strategy. The focus is on tactical and strategic decisions and focuses on the long-term.
- Strategic workforce planning aligns with your organizational strategy and is a long-term plan that dictates what your company will strive to achieve during the next five to 10 years.
- It uses the 80/20 Pareto Principle. 20% of the work creates 80% of the results.
When you engage in strategic workforce planning, focus on the positions that contribute most to the organizational results. Overhead and management are secondary concerns.
What Are the Four Major Areas of Workforce Planning?
Ensuring your workforce planning strategy aligns with your business goals is essential. Society of Human Resource Management (SHRM) data shows that 37% of best-in-class organizations integrate their formal talent management strategy with their organization’s business goals. These are four major workforce planning areas you should consider:
- Consider Long-Term Goals: Strategic workforce planning ensures your people can deliver on the organization’s business goals. This is why you should define business goals such as: 1) Where is your company headed in the short- and long-term? 2) What does it want to achieve? 3) What does it need in terms of human capital to achieve this?
- Find Future Skills Gaps: The World Economic Forum’s Future of Jobs Forum report estimates that 54% of all employees will require considerable reskilling or upskilling. Once you have mapped your current workforce, decide whether you hire employees or shift to a project-based employment strategy and use contract workers to fill gaps.
- Ask for Advice: Strategic workforce planning is not easy and should not be taken lightly. Getting buy-in from all stakeholders before you begin, including finance, operations, line managers, and senior management, is essential. Consider hiring a consultant or someone who specializes in strategic workforce planning to support you during the process. They will be able to provide useful advice and tips on how to get started and keep planning on track.
- Monitor and Adapt: Your job is not over once you have built and implemented your strategic workforce strategy. The 21st-century business environment is constantly changing because technology, your workforce, and your customers are evolving. To have a responsive staff, you must have an adaptable workforce plan. To find out what needs adapting, you need to monitor your process using analytics. Then you can modify your strategic workforce plan
How Do You Write a Strategic Workforce Plan?
Strategic workforce planning is about ensuring you have people with the right skills in the right place at the right time so they can deliver on your organization’s business goals. So, when HR professionals ask, “How do you write a strategic workforce plan?” we tell them to start by analyzing their current workforce.
The two areas to explore are the quality and quantity of your workforce. Determine which people and skills you already have in your organization to get insight into factors such as the age demographics of your workforce, seniority profile, types of contracts, and their evolution.
The quality of your workforce entails assessing employees’ current performance and future employees’ potential. Who are your high performers? Do they have high or low potential? The quantity of your workforce is about assessing new hires, employee turnover, and internal promotions. This information helps you with the following:
- Cost Optimization: Strategic workforce planning lets you plan recruitment efforts, manage employee turnover, and increase productivity. Once you know which skills you currently have across your organization, you can optimize those and boost productivity. All these elements combined lead to a significant reduction and cost optimization.
- Deal with Demographic and Workforce Changes: Strategic workforce planning allows you to – at least to a certain extent – prepare for demographic and workforce changes. The workforce is aging. In the US, about 10,000 Baby Boomers turn 65 each day, and in the European Union, 16% of the workforce is made up of workers who are 55 or older. This will create serious challenges for HR, namely, filling the talent and skills gaps left behind by retiring Baby Boomers.
Companies also employ people from up to four generations, and each has unique skills, styles, needs, and goals. Strategic workforce planning enables you to anticipate and prepare for these changes. For example, if you know five senior managers will retire in three years, you can start preparing now.
- Planning a Long-Term Recruitment Strategy: Strategic workforce planning allows you to implement a long-term recruitment strategy. A well-structured, long-term recruitment strategy requires company-wide collaboration because different departments must be aligned, and their processes must be streamlined. You also need a long-term plan to deal with immediate attrition.
Having a long-term recruitment strategy also involves internal recruitment. Internal recruiting tends to take less time and cost less. On top of that, it encourages employees to enhance their skills so they are eligible to be promoted. This is why strategic workforce planning should be as much about developing and upskilling your current workforce as it is about hiring new people.
What is an Example of Strategic Workforce Planning?
An organization’s strategy is determined by the current organization’s capabilities of the company, as well as the broader market.
If a company produces paints and coatings, it has acquired valuable resources, developed unique capabilities in that sector, and has expensive machinery to formulate and mix different products. It also has an experienced staff that knows the industry and market. It would be almost impossible for this company to produce pet foods, for example, because it does not have the resources, industry expertise, and market knowledge.
Therefore, its workforce influences the company’s future direction, along with its current products and competition, and these forces steer the company toward a certain direction.
Another example is a major European airline group that must estimate the number of pilots it needs to attract by monitoring a set of key metrics, including:
- Number of Aircraft Purchased: Long-term orders are planned years in advance and placed after a thorough evaluation of future demand. The number of pilots needed depends on the number of airplanes.
- Age Distribution of the Pilots: The company needs to analyze its workforce and calculate the estimated retirement rate to plan to replace retired pilots.
Using this data, the airline company can predict the number of pilots that must be hired up to 10 years in advance. This helps them to plan recruitment needs because training pilots takes around two years.
What Are the Five Key Elements of Workforce Planning?
One of the biggest trends industry experts see in strategic workforce planning is the deconstruction of jobs to improve agility, a key focus of the aforementioned book “Work Without Jobs,” where the authors help business leaders navigate restructuring a more agile workforce. They help business organizations restructure their workforce by considering questions in “Work Without Jobs” such as:
- What are the current and future work tasks?
- What are the capabilities to perform these tasks?
- What are the best work arrangements to engage those capabilities?
Instead of hiring permanent employees to manage multiple functions, organizations are breaking down jobs into skill sets. This gives them the flexibility to hire contract employees to fill the roles as needed or train permanent employees to do the work.
HR leaders often ask, “What are the five key elements of workforce planning?” They also want to know how companies are deconstructing jobs into more modular and flexible roles to enhance organizational agility and flexibility. We tell them these are five key trends to watch.
- Creating Project-Specific Roles: Some positions are now staffed on a short-term basis to complete specific initiatives rather than as ongoing jobs. This allows more fluid movement as projects change.
- Hiring More Specialized Contractors: Contractors and freelancers with very specialized skills are used to fill tactical needs rather than trying to find full-time candidates with broad portfolios.
- Cross-Training Existing Employees: Workers are developed across multiple skill sets rather than siloed into one function. This supports movement across projects and roles as requirements shift.
- Defining Roles By Deliverables: Some roles are defined less by activities and more by the outputs and deliverables required. This puts focus on the ends rather than the means.
- Using AI For Talent Mapping: Algorithms can dynamically map employees’ skills to identify optimal talent combinations for employees as they emerge.
The overarching goals are to drive higher agility, faster adaptation, enhanced employee utilization, and closer alignment between talent supply and project needs as they evolve.
Why Companies Must Perpetually Reinvent Their Work Environment
Companies must continually reinvent their work environments to stay competitive for a few key reasons:
- Attracting Talent: Top talent is drawn to innovative, cutting-edge workplaces. Stale or outdated environments repel those employees. Reinvention keeps work experience compelling.
- Supporting New Workstyles: Remote and hybrid work, use of collaborative tools, more automation, etc., require evolutions in how workplaces function. Environments must adapt.
- Enabling Flexibility: Fluid teams, cross-training, and breaking down silos demand easily adaptable workspaces. Traditional rigid settings restrict this agility.
- Boosting Productivity: Better layouts, smarter tools, more amenities, and reduced distractions maximize employee productivity over time as tasks evolve.
- Reflecting Culture: As companies change their values and culture, the physical and virtual work environments must authentically mirror this evolution.
- Promoting Innovation: Flexible, inspiring spaces spark creative collaboration and innovative thinking – fuel for competitive advantage.
- Aligning With Business Strategy: Workplaces need to physically and digitally map how the business competes. As strategies shift, so must the designs.
Reinvention in spaces, tools, and virtual access keeps the work experience engaging and optimally aligned to business needs as organizations and workers evolve. It is not a one-time initiative but rather a continual process.
Get Started with Strategic Workforce Planning
If you hire for hundreds of roles each year, you must think strategically about how your workforce can achieve the highest productivity at any moment. A sound strategic workforce planning framework will help you optimize costs, navigate demographic changes, create a long-term recruitment strategy, and improve your bottom line.
Do you want to learn how implementing a strategic workforce planning framework can help maximize resources and future-proof your workforce? Contact us to request a demo.
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