think more strategically about workforce planning to add significantly to your organization’s productivity
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an introduction to workforce planning
How do you know if your business is getting the right people, doing the right things, at the right time, in the right numbers and with the right skills? If you get workforce planning right, the productivity gains can be substantial.
In a research study with CEBR, we found that workforce planning is a key measure for improving productivity. In the US, better people planning could contribute a whopping $92.2 billion in additional GDP, while in the UK it could help generate an extra £10.4 billion in GDP (1).
In this introduction, we’ll look at how to align your workforce needs with strategic objectives and make informed, data-driven decisions to manage your valuable human capital.
- what is workforce planning?
- workforce planning and organizational design
- effective workforce planning drives productivity
- what stands in the way of workforce planning?
- where workforce analytics and modeling come in
- workforce planning in practice
- building a sustainable future
- orgvue and workforce planning
- design your business of tomorrow, today
what is workforce planning?
Workforce planning is the data-driven process of identifying what an organization is going to need in terms of the size, type, experience, knowledge, and skills of its workforce to achieve its business objectives (2). In simpler terms, it’s about getting the right number of people with the right skills in the right place at the right time for the right cost (3).
The Society of Human Resource Management defines it as the process an organization uses to analyze its workforce and determine how to meet future skills needs, whether through recruitment, training or outsourcing (4).
The UK’s equivalent professional body, the Chartered Institute of Personnel and Development, similarly defines it as the process of analyzing an organization’s workforce, determining skills needed in the future and identifying the gaps in the current workforce (5).
workforce planning and organizational design
Workforce planning is a fluid, ongoing process that tracks and adapts as the organization changes. While organizational design provides the blueprint for how your business will achieve its objectives, workforce planning provides the map of how to get there.
It’s worth making clear exactly what we mean and where the real value lies. The biggest distinction to make is between operational and strategic workforce planning.
Medium-term workforce planning is often referred to as operational. It usually covers the next 12 months and aligns with the annual business planning cycle to deliver business objectives. Longer term planning covers an 18-month to 3-year forecast period and looks at the workforce implications attached to an organization’s vision for the future. This is generally referred to as strategic workforce planning.
Ultimately, workforce planning is about the supply and demand of workers. It’s about knowing the gap between actuals (supply) and target (demand), what’s causing it, and how to do something about it. If organizational design helps businesses to articulate the demand, workforce planning sets out how they will supply the labor to fulfil it.
effective workforce planning drives productivity
Our research shows that organizations see this type of planning as one of the main ways to drive productivity. We found that organizations with better planning capability report a productivity growth rate that’s two times higher compared to organizations with below average capability.
Conner Forrest, analyst for 451 Research, reinforces the link between effective workforce planning and productivity: “Executives and managers must think more strategically about their workforce as a framework for driving innovation and improving the bottom line,” he says.
In our experience, effective workforce planning that’s capable of boosting productivity will include the following activities:
- Planning the deployment of your workforce specifically to deliver strategic business goals
- Identifying gaps between your current workforce and future needs
- Assigning the right people with the right skills to appropriate tasks
- Managing workforce costs into the future
By extrapolating our productivity findings nationally, we calculated that if all companies with over 250 employees improved their workforce planning to match the top 50% performing organizations in the survey, it would improve the overall growth rate in GDP by 0.5% (6).
connect people to profit
To find out more, see our infographic Connect people to profit – the economic benefits of workforce planning.
what stands in the way of workforce planning?
The complexity and connected nature of today’s organizations means workforce planning can no longer be done manually, although many still try. This is one of the big reasons that companies find it so hard.
By getting stuck in the mire of immediate workforce needs, organizations can overlook the opportunity to extract more value from their planning over the longer term. Invariably, they turn to their Human Capital Management (HCM) system and spreadsheets, which limits them to short-term outcomes focused on supply only.
There are a few common barriers that stand in the way of effective workforce planning that relate to process, technology, and data.
Our research shows that less than half (40%) of HR and finance decision makers believe they have a collaborative relationship and only 28% say they had joined up reporting systems and tools to facilitate data sharing (7).
When it comes to technology adoption, only 10% say they use specialist workforce planning software extensively while continue to rely on spreadsheets (48%) or presentation tools (41%).
Related to technology use is data availability. We found 85% of organizations come up against obstacles that are to do with collecting, organizing, and interpreting data.
making people count
You can read more about these research findings in our report Making people count: 2019 study on workforce analytics.
where workforce analytics and modeling come in
Once you’ve begun to address these challenges by developing robust, collaborative processes and good data management practices, how do you extract the most value from your business information?
Workforce analytics brings together data from many sources to provide enriched insights into the workforce, how it operates, how much it costs, and how it changes over time. Data is often described as the new oil (8), but without analytics it’s next to worthless.
When conducting analysis to support strategic decision making, workforce modeling can help organizations build and test possible scenarios using data visualizations before committing to a decision.
Too often, companies try to do all this using their HCM system. They may also have difficulties in cleansing and integrating data from multiple sources. Despite some industry claims, HR systems can’t do it all.
The only way to produce a complete and accurate view of your workforce is with good quality data and best of breed technology to visualize and analyze people, roles, and positions to understand the gap between targets and actuals in your workforce plan.
see orgvue platform
Learn about how the orgvue platform helps with organizational design and workforce planning for large and complex businesses. Find out about the business challenges the orgvue platform helps to solve, benefits, what the platform looks like, customer case studies and more.
workforce planning in practice
When putting your workforce plan into practice, it pays to break down requirements into subfunctions, job families, and locations to make it achievable. You want to answer questions such as “how many sales people do we need each year for product group 1 in Germany?” for example, or “how big should the compliance function be when new legislation comes into force?”
This video simplifies the workforce planning process and clarifies its most fundamental aspects. You’ll see that it focuses on skills and capabilities, not headcount. Importantly, it also places emphasis on making the plan actionable and adjustable.
building a sustainable future
In the end, workforce planning is part of the continuous process of monitoring your organization’s health over the long term. Developing capability in this important business process is just another step on the road to a sustainable future for your organization.
orgvue and workforce planning
The orgvue platform allows you to get workforce planning right – modelling future scenarios, identifying personnel gaps, assigning the right people to the right roles and tasks and so much more. Make your workforce planning projects successful with orgvue. Watch this short video to learn more about how orgvue helps with workforce planning.
connect people to profit infographic
Download our infographic Connect people to profit – the economic benefits of workforce planning
 Infographic (2019) Connect people to profit
 Based on Julie Sloan (2010) The Workforce Planning Imperative
 Rupert Morrison (2014) Data-driven organisation design
 SMHR (2020) Practicing the Discipline of Workforce Planning
 CIPD (2019) Workforce planning
 Infographic (2019) Connect people to profit
 Making people count: 2019 study on workforce analytics
 The Economist (2017) The world’s most valuable resource is no longer oil, but data, 6 May
- infographic connect people to profit: the economic benefits of workforce planningInfographic summarizes the findings from a CEBR research study into how workforce planning improves business performance and productivitysee infographic
- Recent resources
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