Your guide to strategic workforce planning and analysis

Strategic workforce planning and analysis are two of the most powerful tools a business can use to achieve its objectives within an increasingly competitive market. Once we know we need to translate business strategy into workforce strategy, workforce planning becomes about generating information, analyzing it to inform future demand for people and skills, and translating that into a set of actions that will develop and build on the existing workforce to meet that demand. 

The true meaning of workforce planning 

The Society for Human Resource Management (SHRM) defines workforce planning as the process an organization uses to analyze its workforce and determine the steps it must take to meet current and future staffing needs. It also involves determining the most efficient and cost-effective methods to recruit and retain talent. 

Amplifying workforce analysis 

Workforce analysis is a process that uses data collected from the current state of the workforce to analyze and interpret the state of a workforce. The ‘analytics’ part of workforce planning and analysis refers to the process of determining, with data, whether you have the right number of people with the right skills in each area of the business based on your short- and long-term business plans. By visualizing and modeling HR scenarios, leaders can make workforce decisions faster and with more confidence. 

An organization's workforce is one of its most important assets, and successful workforce planning and analysis are essential to ensure productivity and deliver greater impact. It also helps businesses to be more prepared for future hiring challenges.  

Planning is the driving force and the primary connection point between the workforce and talent management. A robust human capital management team is at the heart of a comprehensive workforce plan.  

Strategic workforce planning 

Strategic workforce planning focuses more on the wider issues of the organization than operational planning. It helps align the workforce with the organization's overall goals, objectives, and long-term vision. It can include evaluating the current talent as people join and leave the organization, anticipating future talent needs, estimating potential barriers to hiring, and developing and implementing an effective strategy for analyzing the workforce. 

Why is workforce planning so crucial? 

Agile workforce planning shapes the employee experience in significant ways. It helps companies form teams that work well together for impactful, long-term outcomes, improves investor relations, and enhances talent management capabilities. 

Most organizations realize the need for better planning, but most still lack the tools and capabilities to effectively manage and execute the strategic steps necessary to drive significant business results. Building an effective workforce plan means understanding the organization’s overall business strategy and goals.  

Workforce planning helps companies to: 

• Reach financial objectives 

Finance and human resources are excellent partners in business planning as the workforce is a significant source of both revenue and costs. The productive partnership between these two teams enhances collaboration by connecting people, processes, and technology. Businesses can focus on strategies to optimize costs related to talent, plan for direct and indirect hiring expenses, and budget for only the talent and skill sets needed. 

• Improve employee experience 

People are at the center of effective workforce planning. When people are put top of mind, their well-being is prioritized, and the employee experience is greatly improved. Analyzing the workforce helps determine how to move toward higher productivity and profitability and means hiring strategies will meet strategic business objectives. 

• Promote collaboration 

Workforce planning is collaborative; it encourages participation throughout the organization. Identifying interdepartmental connections and understanding the effects of certain actions on other business areas requires cross-functional insights that only collaboration can bring.  

• Hire the right people with the right skills 

Workforce planning can help to develop a global talent search. In the new remote business world, global barriers have dissipated, making it possible to find the best talent, regardless of where they live or where and how they want to work. Businesses can expand their talent acquisition strategy beyond their local area to find the right people for their team. Knowing which skills are required is critical to meeting future challenges and effectively filling skills gaps. Identifying the experience levels that support strategic skills is vital for translating hiring into strategy and turning business models into long-term results. 

The 7-step strategic workforce planning process 

Use these steps as the building blocks to a successful, engaged, and productive team. 

1. Assess objectives 

Both short- and long-term business objectives should be assessed during the first stage of the strategic workforce planning process. This should include the right people – this is not just an HR role. Line managers, finance managers, HR technology experts, and executives should all be involved in strategic workforce planning initiatives. 

2. Analyze the workforce  

Analyze the current workforce's quantity, quality, capabilities, and skill sets.  

3. Identify skills gaps  

Skills gap analysis provides valuable future workforce data. It could give insights into how people feel about their jobs, if they may be thinking of leaving, when someone is planning to retire, or if someone is dealing with a severe undisclosed health issue. The skills gap analysis could provide sufficient time for human resources to investigate and prepare. 

4. Anticipate future issues 

Preparation for the future provides businesses with a competitive advantage within their industry. Business leaders must develop a workforce plan that anticipates future organizational issues and provide actionable steps to address them. This could include a supply chain problem or labor market concerns. 

5. Develop an action plan 

After assessing objectives, analyzing the workforce, identifying skills gaps, and anticipating future issues, the next step is to develop an action plan. This should include strategies for recruiting and retaining talent, restructuring the organization, and enhancing technologies. 

6. Implement the plan 

Operational leaders must work with hiring managers across the business to ensure the necessary resources are in place, roles are clear, and needs are met to execute the plan. 

7. Test and monitor the plan 

As business needs change, workforce planning strategy does too. Regularly testing and monitoring your plan allows you to assess the plan’s impact, identify progress, areas for improvement, and any necessary adjustments to address potential workforce issues. 

Workforce analysis tools 

Organizational leaders are under tremendous pressure to hit short-term targets and focus on immediate staffing needs. HR leaders should leverage data to illustrate how strategic workforce planning can mitigate those pressures and set leaders up for future success. HR leaders must then partner with business leaders to understand the strategic objectives and build a business case for the investment in a strategic workforce plan. Nonprofits also need to factor in their incredible bank of skilled and unskilled volunteers that are not necessarily included in their organizational headcount. 

Technology can be used to understand workforce skills and gap analysis. Skills are the new currency, and it is how companies have started to hire and develop talent. If you are only cost-focused and aren’t incorporating skills in strategic workforce planning, you may end up with the right number of people, at the right costs, without the right skills needed to deliver for the business.  

Leveraging data isn’t only crucial for identifying talent; it can help determine the best strategy to close talent gaps. Gartner research shows that only 12% of organizations use talent data effectively to inform business decisions, but data can drive your decision to build, buy, retain, outsource, automate, or look for contract workers, depending on the type of talent gap you face, the business environment and your overall talent strategy. 

Predictive HR analytics 

Predictive HR analytics is a tech tool that HR can use to analyze data to forecast future outcomes. Predictive HR analytics digitally digs through data to extract, dissect, and categorize information and then identify patterns, irregularities, and correlations. Through statistical analysis and predictive modeling, analytics enables data-driven decisions.  

HR leaders can harness the power of predictive HR analytics to anticipate challenges so they can avoid risk, reduce human error, forecast a typical employee profile that’ll thrive in the organization, enhance recruitment practices, encourage optimal work performance, and most importantly, make crystal-clear informed decisions that can increase overall impact and nurture employee motivation, retention, engagement, and productivity. 

How can Unit4 help you? 

Unit4 creates HCM technology specifically designed for the unique needs of people-centric organizations. Helping you to manage and develop your people, attract world-class talent, and ensure and proactively encourage engagement, learning, and development.  

Together with our next-generation ERP and FP&A tools, our software can do everything from suggesting avenues for development to proactively identifying flight risks, allowing you to help your people get the most out of what you can offer them so they can, in turn, contribute effectively to your organization’s goals. 

To discover more, check out our dedicated HCM product pages here. Book a demo and see what our solution can do for your organization yourself.