What is Strategic Workforce Planning?
The benefit and objective of strategic workforce planning (SWP) is to sync the available talent with the future business goals of your organization. The result of the process is a strategy to ensure that a company has the right amount of people with the right skills in the right place and at the right time and best cost.
A workforce is made up of persons, each with their own competencies, contracts, ideas and lives. They can’t be shipped around like goods or installed short-term like a software. Making sure that you have the right people when and where you need them therefore requires a long-term, careful approach.
Why is Strategic Workforce Planning important?
SWP is gaining importance on the priority lists of HR managers because traditional planning methods are not up to the task anymore. The quicker the business environment changes, the more agile an organization needs to become. HR managers today have less time to bring the right people into in the company and train the right skills. SWP is a long-term planning tool for HR managers but also creates the necessary flexibility.
What is the difference between Strategic Workforce Planning and Workforce Analytics?
Workforce analytics (or people analytics) is focused on the relationships between people motivators and business results. SWP on the other hand has a long-term and strategic focus, with its main goal being employee development.
How to approach strategic workforce planning?
1. VERIFY THE MARKET DYNAMICS AND THEIR IMPACT ON YOUR WORKFORCE.
Many different market dynamics influence your business. Understanding the likely impact of those dynamics on your workforce enables you to act on time. You will hardly be able to include all of them but make sure to analyse at least the following.
- Technological change: New types of jobs and new ways of working with technology increase the demand for certain skills. This can rapidly widen the gap between a company´s requirements and its existing talent capabilities.
- Enterprise agility: The ability to quickly adapt to change needs to be supported by processes and culture. Is every person in your company comfortable with project-based work, multidisciplinary teams and virtual collaboration?
- War for talent: You will not be the only company searching for talent with in-demand skills. Is your candidate and employee experience good enough to compete against others?
- New values: Younger generations have new ideas about how they want to work and which role work should play in their lives. Companies will need to think about internal talent mobility, flexible work arrangements and even company missions. Have in mind that Millennials and GenZ are all but the same and bring different values to a company.
These are issues with strategic and financial influence and understanding their impact is not an exclusive task of HR. On the contrary, there will probably be someone in Finance, Strategy or a C-level office who already elaborated an overview you can work with. HR only needs to analyse the specific impact on the workforce.
2. TURN BUSINESS OBJECTIVES INTO SKILL DEMANDS
This is a second, essential step for preparation: building a job architecture for your company. It is the framework that connects your value chain with your people. Just like the architecture of a building, it is a durable structure which you can fill with life. It offers flexibility for changes when needed. What to watch out for:
- Classify your functions and individual job profiles in a way that both the “how” and the “what” of a job describe their specific contribution to your value creation. Start with the critical roles and involve functional managers to capture the true essence of a job.
- Use a task-based approach for writing the job profiles, keeping it simple and broken down into smaller tasks. This will help you to get a better understanding of all performed activities, makes it easier to associate skills to them and match the right people to the right jobs.
- Attach grades to your jobs (that are defined by the tasks and relevant skills). This enables you to pinpoint the financial impact of the previously identified market changes.
These first two steps enable you to model your future requirements. You will be able to answer questions about arising jobs and skills (i.e. the development of automation technologies or managing the ethical responsibility of using them), about jobs/ tasks/ skills with growing importance (i.e. leadership of dispersed teams) and with declining importance (which jobs will become obsolete).
3. ANALYSE YOUR CURRENT WORKFORCE
This sounds like a challenge for many organizations but a suitable software will solve the problem. It’s about answering essential questions about the current state of one’s workforce.
- How is my current workforce performing?
- Which skills and competencies do my employees have? What is their potential?
- How have they been developing?
- What really matters to the employees (e.g., meaningful rewards)?
A software such as a reporting and analysis tool helps to review all employee-related data. It creates one single source of truth, will speed up the creation of reports and improve your ability to gain insights from your data. With artificial intelligence and machine learning you can even recognize invisible patterns in employee behaviour such as retention probability or turnover risk.
But even without such sophisticated tools, the visibility of existing skills alone will enable you to gain valuable insights. Some tips:
- Involve your employees and their managers in the process because they know best what they are truly doing.
- Use different sources to gain knowledge about skills (self-evaluation, manager evaluations, peer surveys or social media) and think about regular updates.
- Incentivize employees to keep their skill profiles updated (gamified platforms, mobile access, recognition tools, meaningful rewards).
- Track more than just existing skills. Look at attributes, competencies, interests and learning ability to estimate growth potential.
- Continuously improve your skill catalogue, including future skill trends. Make use of technology such a as skill clouds or machine learning.
4. UNDERSTAND THE LABOUR MARKET SUPPLY
After analysing your future requirements (steps one and two) and the state of your current workforce (step three) you will know the demand for specific skills in your company. Before thinking about how to satisfy that demand, you should also have a look at the supply-side.
- Have a look at internal, historic data: How have hiring and recruiting been going? What has worked so far to attract relevant talent? What have been the signs/patterns to recognize high potentials? What was successful for promoting them? Which jobs and skills are abundant? Which ones are scarce?
- Then examine external data. Which skills are abundant outside of the organization? What are job and skills trends among competitors? What types of occupations are people looking for (e.g., gig work, part-time, remote)?
Understanding the labour supply within (step 3) and outside of your organization (step 4), enables you to take better decisions about where to place your efforts.
5. CREATE SCENARIOS FOR DIFFERENT TALENT AND SKILL GAPS
You have done a comprehensive analysis but shouldn’t decide for specific activities just yet. Because you have taken a snapshot of a moment in time in a fast-changing environment. Your company’s demands will change with the technologies you will apply, with the business model you pursue and with the skills people are developing. The gaps identified today might be not relevant tomorrow. Write down different scenarios and review them regularly.
6. DECIDE HOW YOU WILL ADDRESS THE GAPS
After this in-depth analysis you will be prepared to take good decisions about how to close the skill gaps. The details obviously depend on your individual situation. But there are some activities which have regularly crossed our path and have proven to be crucial.
- Focusing your learning strategy on reskilling & upskilling. Future jobs will rather require more skills than less. And it’s easier to train your current staff than search talent outside. Once you have identified the most important skills employees should develop, you can throw all your weight behind internal training. Creating the content is as important as showing support for learning (freeing time, culture of continuous learning) and recognition (better development opportunities, rewards).
- Adopting a more “skill-based” approach to talent management.
- Setting up an internal talent mobility program to retain talent.
- Opening an internal talent marketplace. Partially available also to external talent.
- Including various formats of work in your talent acquisition strategy. I.e. allowing for short-term hires (e.g., gig economy) to capture them for the long-run.
- Creating a culture of change and learning to support the upcoming HR initiatives.
Strategic Workforce Planning requires a coherent approach involving various teams and individual decisions for every company. But it’s more an imperative than a choice. Technological and demographic changes lead to scarcity of talent and fierce competition to hire the best people. The best time to assure your company’s future success with Strategic Workforce Planning is therefore today.