Workforce planning is an HR plan for the future capabilities of the human resources department. It is a strategic process enabling HR to get the right person at the right time for the specific job, thereby avoiding either under or overstaffing.
According to the 2014 definition of Evers, workforce planning is the strategic planning of the workforce important for the below reasons.
The 4 goals of workforce planning are to have the right agility, cost, shape and size required to meet future and present needs.
Why is workforce planning analytics and people analytics important, and how is it different from workforce planning? Because workforce planning is a method of people and workforce analysis, while people analytics is data-driven, workforce planning is more of an HR tool. Thus workforce planning and workforce analytics may sound alike but are entirely different.
The 3 basic tenets of planning strategically are
Organizational strategy is definitely not the beginning point of workforce planning. However,, it is an integral part of the organization’s strategy,, which is largely determined by its capabilities and resources. Obviously, a company and its workforce are directed towards a particular segment and their abilities in that segment. A car paint company can obviously not turn into an IT company overnight. This means that the current workforce is a huge influencer of strategy and its future direction, competition, and products. Thus, the plan for the workforce begins with the organizational strategy and assessment of employee potential and then cascades downwards. That is why the company’s resources and capabilities are decisive factors of the workforce planning process.
Suppose an organization has 3 product lines A, B, and C, with different revenue goals set by the board of directors. Imagine A is the growing line and C the flagship line that is now dwindling. A matrix of revenues over the past few years will help one create the estimated workforce plan for the next fiscal year. By looking closely at the matrix, one can see some lines being more profitable.
Hence one can calculate the growth percentage and staff required to man it. One can also be decisive about letting go of non-revenue earners like product-line C if the employees do not have the right experience and skills to re-training them. Thus future workforce challenges are laid bare and decision making so much easier based on workforce analytics and workforce planning. Decisions on when to hire are also predictable in this model. The more complicated the model becomes, the better it is for being useful in workforce planning.
The entire process of workforce-planning revolves around these 3 steps.
1. Analysis of workforce current formation: This process starts with evaluating the formations of current employees and is the sum of skills and people the organization has in these two areas of quantity and quality of the workforce.
2. Plot potential analysis for leveraging the future scenarios: The future cannot be predicted but can be planned for. According to Peter Schwartz, the pioneer of scenario planning with digital assistance, one can be prepared for a rainy day. Shell is a real-life example of leveraging the 2013 oil crisis since their staff were trained on future scenarios and leveraged the scenario during the crisis period predicted.
3. Future workforce analysis: This step is important as it reveals the gaps between desired formations and expected formations for the present and future. Expected future formation refers to the future 3 to 5 years and the desired formation for that period, measures are taken etc. and are typically found from the matrix for personnel flow allowing the demand to be extrapolated over larger periods of time and is a close match of the ‘Desired Future’ formation.
The workforce planning goals and purpose of workforce planning revolve around finding the right candidate fit for specific job needs at the proper time. The workforce planning cycle depends on planning for the future and knowing the workforce’s present capabilities when determining the right size and shape of recruitments and matching the desired workforce to future scenarios in a planned strategic manner.
Are you interested in learning more about Analytics in Workforce Management? Take a look at our People Analytics and Digital HR program, in collaboration with IIM Indore. This is a 3-month long program with instructor-led sessions by IIM-I faculty.