Organizations face numerous challenges in talent management. A strategic approach to placing the right talent in the right roles and at the right time helps ease many short-term problems. For example, if an organization trains existing employees in skills needed for future business projects, they ease the problem of finding scarce talent externally. 
This is where strategic workforce planning comes into play.
Strategic workforce planning systematically analyzes an organization’s current and future workforce needs, identifying gaps and developing strategies to bridge those gaps.
Strategic workforce planning is not just a talent management tool but a crucial business strategy component. It enables organizations to align their human capital with their business objectives, ensuring they have the necessary skills and competencies to achieve their goals. It’s alarming that this concept has yet to be universally adopted. How can a company execute its business strategy if they don’t have the right workforce, now and in the future? The urgency and importance of strategic workforce planning cannot be overstated.
This article provides an overview of strategic workforce planning, explaining its importance, the critical components of a successful workforce planning framework, and best practices for implementing it in your organization. Read on if you are considering applying strategic workforce planning in your company and need a quick but comprehensive overview.
What is Strategic Workforce Planning?
The most practical definition is the following: Strategic workforce planning is the process of analyzing an organization’s current workforce, forecasting future workforce needs, and developing strategies to ensure the organization has the right people with the right skills in the right roles at the right time. It involves a systematic approach to identifying the workforce capabilities required to meet an organization’s strategic objectives and developing plans to build, acquire, or retain those capabilities.
The critical steps of strategic workforce planning:
- Analyzing the current workforce supply
- Forecasting future workforce demand
- Identifying gaps between current and future needs
- Developing action plans to bridge gaps
Strategic workforce planning differs from operational workforce planning in that it focuses on long-term workforce needs, typically looking three to five years into the future. Operational planning focuses on short-term needs, usually within one year.
The “7 Rights” framework is often used to describe the goals of strategic workforce planning.
By focusing on these seven elements, organizations can ensure they have the optimal workforce configuration to achieve their strategic objectives.
Why is Strategic Workforce Planning Important?
Strategic workforce planning has been crucial in the past. With the speed and complexity of our business environments growing, it is becoming even more critical. Here are the key reasons why:
Strategic workforce planning ensures the alignment between HR strategy and business goals: It helps organizations align their human capital strategies with their overall business objectives, ensuring that HR initiatives are aligned with and support achieving the organization’s goals. 
Strategic workforce planning helps organizations prepare for the future. By forecasting future workforce needs, organizations create their own capacity to develop strategies to address potential skills gaps proactively and ensure they have the talent they need to succeed long-term.
Strategic workforce planning optimizes workforce costs and productivity: It helps organizations optimize their workforce configuration, ensuring they have enough people — not too many and not too few—with the right skills in the right roles. This maximizes productivity and minimizes labor costs.
Strategic workforce planning improves employee engagement and retention: By investing in the development of their workforce and providing clear career paths, organizations can improve employee engagement and retention. They reduce turnover costs and ensure they retain critical skills and knowledge.
Strategic workforce planning mitigates workforce risks: It helps organizations identify potential hazards, such as skills shortages or an aging workforce. Then, they can develop strategies to mitigate those risks on time.
Strategic workforce planning drives data-driven HR decisions: By leveraging workforce data and analytics, strategic workforce planning enables HR to make better informed, data-driven decisions about talent acquisition, development, and retention. 
Strategic workforce planning facilitates succession planning and knowledge transfer: It helps organizations identify critical roles and develop succession plans to ensure continuity of operations and facilitate knowledge transfer.
Strategic workforce planning enables agility in the face of change: By continuously monitoring workforce needs and adapting strategies as needed, organizations can remain agile and responsive to changing business conditions.
These are solid arguments for engaging in strategic workforce planning in any company. How would you go about it?
The Strategic Workforce Planning Process
The specific steps in the strategic workforce planning process vary depending on the organization. After all, a company’s objectives, current workforce, and culture create unique starting positions. Two different models are usually applied. The Human Capital Institute framework for strategic workforce planning aims to tailor the approach easily and comprises eight steps. The US’s Office of Personnel Management model seeks to provide a simple approach to make it easy to get started. In our practice, we have identified five key phases:
Phase 1: Understand Business Strategy and Direction
- Engage all stakeholders to clearly understand the organization’s strategic objectives, challenges, and opportunities.
- Write down and analyze the internal and external factors that may impact your workforce needs, such as technological advancements, demographic shifts, or regulatory changes.
Phase 2: Analyze Current Workforce
- Gather data to conduct a thorough analysis of the current workforce. Include at least existing roles, skills, competencies, demographics, and performance. Having a job architecture in place would make this easier.
- Identify the key roles and the talent segments critical to achieving your business objectives.
- Assess potential workforce risks, such as retirement eligibility, company culture issues, or high turnover.
Phase 3: Forecast Future Needs
- Project the future workforce demand based on business strategy and growth projections. Which roles will you need to fill with people with which skills and at which point?
- Use scenario planning to model different scenarios based on potential changes in the business environment. Don’t skip this step. There will be changes, even if you don’t know which.
- Analyze talent supply in the internal and external labor markets to identify potential skills gaps. Which skills do your current employees have? How many people with the needed skills are available today or tomorrow on the market?
Phase 4: Identify Gaps and Develop Strategies
- Conduct a gap analysis to identify the difference between current workforce capabilities and future needs. Which skill gaps do you need to fill?
- Develop strategies to address gaps. The four “Bs” of traditional talent management provide a framework.
- Create detailed action plans with timelines, responsibilities, and metrics for success.
Phase 5: Implement, Monitor, and Refine
- Execute the workforce strategies and action plans.
- Continuously monitor progress against goals and metrics.
- Adjust plans as needed based on changing business conditions or workforce dynamics.
- Regularly review and update the strategic workforce plan to ensure ongoing alignment with business strategy.
Whatever framework you choose, they all provide a structured process for developing a comprehensive, data-driven workforce plan and proactively addressing your talent needs.
Best Practices for Effective Workforce Planning
Having a strategy and an action plan is excellent. Having best practices to guide you along the way is even better. Here are the most essential tips to make your strategic workforce planning efforts successful.
Best practice n°1: Secure executive sponsorship and cross-functional involvement. Engage senior leaders and stakeholders from across the organization to ensure buy-in and alignment with business strategy. 
Best practice n°2: Leverage people analytics and planning technology. Use data and analytics to inform your workforce planning decisions, and consider investing in specialized workforce planning software to automate and streamline the process.
Best practice n°3: Integrate workforce planning with other HR and business processes. Ensure that workforce planning is not a standalone activity but integrated with other vital processes (talent acquisition, performance management, learning and development…).
Best practice n°4: Focus on critical roles and capabilities. Prioritize efforts on the roles and skills that are most critical to achieving business objectives. Rather than trying to plan for every role in the organization.
Best practice n°5: Plan for multiple time horizons and scenarios. Develop plans that cover both short-term and long-term needs. And use scenario planning to prepare for different potential futures.
Best practice n°6: Emphasize skills and agility over headcount. Building a workforce with the right skills and adaptability is better than simply hitting headcount targets. 
Best practice n°7: Foster a culture of mobility and continuous learning. Encourage employees to develop new skills and take on new roles within the organization. Provide opportunities for continuous learning and development.
Best practice n°8: Collaborate closely with finance to ensure workforce plans align with budgets and financial forecasts. And there is a clear understanding of the costs and benefits of different workforce strategies.
By incorporating these best practices into your strategic workforce planning approach, you will find it easier to implement your action plan. Developing a more effective, agile, and future-focused workforce that supports your organization’s long-term success becomes easier.
Case Studies: Organizations Successfully Applying Workforce Planning Frameworks
To illustrate the value of strategic workforce planning in practice, let’s look at two case studies of organizations that have successfully applied workforce planning frameworks to achieve their business objectives.
Network Rail (UK)
Network Rail, Britain’s railway infrastructure owner and operator, experienced challenges in attracting and recruiting signallers. It took the company 12 months to recruit and train new people. They had a high turnover and struggled to fill the positions. This increased overtime costs, which harmed well-being, engagement, and safety. 
Network Rail used a collaborative approach, utilizing various qualitative and quantitative data sources, including job shadowing, observations, face-to-face interviews, online surveys, role profiling, and business performance data. They involved managers, Signallers, HR, Trade Unions, Finance, Operations, and Training.
The insights gained from the research and conversations were used to develop a new talent management model for signallers aligned with the organization’s strategic objectives. The action plan included coaching for career conversations, an internal career development portal, and a whole new career path model with career guides and bespoke videos. They also developed an internal Talent Insights Dashboard and a new approach to external recruitment to eliminate ad hoc efforts to fill gaps quickly.
The outcomes are impressive. Employee feedback surveys show improvements in engagement, greater clarity about career progress, managers’ better understanding of how to manage internal talent, a 50% reduction in the time needed for attraction, recruitment, and training, female representation rising from 3% to 12%, and seven-digit savings.
Société Générale (France)
Société Générale used strategic workforce planning to support its structural transformation. Their plan was based on an ongoing internal social dialogue about employment and aimed to adapt HR policies, especially training, and recruiting. 
The financial institution started with three traditional steps: “defining a qualitative and quantitative target concerning the skills that the Group must acquire in the medium to long term to implement its strategy,” “a diagnosis and mapping of the skills available,“ and “identifying the gap between the current situation and the target to implement the levers.“ Employees were the leading players in mapping their skills. However, the process was supported by skills management software.
The action plan of Société Générale included a new hiring policy that fosters a uniform overall process and allows HR to measure how well applicants would embrace the Group’s values, a new hiring process over a centralized web platform. This new onboarding policy gave everyone a standard foundation, connecting Managers directly with specific target groups such as programmers or working students, partnerships with education institutions, new employee retention schemes with varied career paths that can be adapted to employee plans, diversified training options, and many more.
Three years later, 95% of the workforce of Société Générale SA in France was covered by strategic workforce planning practices, 710.000 applications came in through their new web platform, over 109.000 employees had a personalized development plan, 99% of employees completed at least one training course, and 60.000 employees had access to tools to manage their skills.
Should You Engage in Strategic Workforce Planning?
Strategic workforce planning is not a nice-to-have for firms with large budgets and lots of time on their hands. It’s a critical activity for organizations looking to stay competitive and achieve long-term success. Developments such as demographic change, new technologies, or changing employee expectations will impact any organization’s capacity to execute its plans. There is no reason not to have a long-term, practical plan that lays out the activities to ensure having the right people in your company. 
This might be especially valid for large organizations because of the variety of roles you typically find. However, it also applies to mid-sized and even small firms. Specific roles or job families might have an above-average impact on a company’s success. Assuring that these roles can be filled with the right talent might be a question of survival for some. Strategic workforce planning activities in smaller companies tend to be less complex and quicker to execute.
However, effective strategic workforce planning is not a one-time event. It is an ongoing, continuously monitored, adjusted, and refined process. Your organization can develop a more agile, resilient, and future-ready workforce by making workforce planning a regular part of your HR rhythm and leveraging best practices such as cross-functional collaboration, technology, and a focus on critical roles and capabilities.
If you want to start strategic workforce planning, you will likely begin by taking stock. Which critical roles do you have in your company, and which skills will you need in the future?
Our software, Global Job Catalog, provides an easy way to gain transparency in your workforce – today and tomorrow. AI powers it; it is collaborative, comes with standard catalogs, and connects to your HCM. It’s the quickest way to gain a comprehensive overview of your workforce and align it with your strategy.
We would be glad to tell you all about it! Schedule a demo. Or read about the most important frameworks for strategic workforce planning to get an overview of the process.