Workforce planning is important to meeting an organization’s strategic vision, but it’s something that many consider a kind of fortune telling. In reality, it’s more science than art, and should be a critical component of management’s operational planning.
Workforce Planning isn’t Magic
Strategic workforce planning doesn’t require a crystal ball or a magic wand. But it does require an understanding of what it is, and what it isn’t, to be successful.
Workforce planning is different than annual resource planning. Historically companies would spend part of their annual business budget planning cycle forecasting what resources they would need for the next year. This process was much like fortune telling, expecting leaders to guess at where their industry would be in 4, 5, or even 12 months.
By comparison, strategic workforce planning is an iterative process that occurs all year long. Instead of planning and budgeting for specific resource growth and needs for the entire business budget cycle, plans are reviewed and updated throughout the year.
Also, it’s not uncommon for annual resource planning to occur in a vacuum. Managers and directors look at the kind of work in front of them and what their teams have previously done with little understanding of what they will need in the future. Strategic resource planning, however, strives to align resource needs with overall organizational goals.
With organizations facing the challenges of an aging workforce, dwindling numbers of highly skilled resources, and industries pivoting at breakneck speeds, it’s crucial to approach workforce planning the right way for it to be effective.
Getting the Most from Workforce Planning
Understanding how workforce planning is different makes it easier to grasp what needs to be understood about an organization. Research done by the Human Capital Institute found that 69% of organizations reported strategic workforce planning as being a high-priority, but only 35% are confident in their planning process.
Getting workforce planning right means wrapping your head around a few key items.
- Understand the organization’s strategic objectives for at least the next 12 months: Workforce planning is about aligning HR activities, including hiring, benefits assessments, and salary expectations, with the strategic goals of the entire organization.
- Define where you make money – and who does it: Knowing what parts of the company are profitable, and what roles are required to keep those parts of the business running, is crucial to maintaining current revenue streams.
- Use data to estimate what your workforce will look like in the next 2-3 years: This part requires a little guesswork, but it should all be based on data. Knowing what roles you’ll need to maintain the profitable parts of your business, what your organization’s strategic plans are, and what your workforce will look like – how many people are retiring? Do you have skill gaps? – will make the estimates you develop based solidly in fact.
- Leverage tools that are flexible: Because there is some estimation inherent in the process, and because the business world changes quickly, you need workforce planning software that allows you to run through scenarios and change budgets and plans easily.
The modern business environment has made strategic workforce planning a necessity. Done right, it should be a flexible roadmap that is less about guesswork and more about aligning HR plans with the company’s strategic goals.
Take the guesswork out of your workforce planning with a flexible forecasting system. Businesses of every description rely on the Budget Maestro™ family of Smart Budget software solutions by Centage Corporation to improve the efficiency and effectiveness of their business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.