Strategic workforce planning (SWP) is the process of forecasting the talent requirements your company needs to fulfill its business goals.
It involves analyzing your current workforce, identifying future talent needs, locating skills gaps, and determining the right workforce solutions so that you never fall behind due to a skills shortage.
When you have the right people who possess the right skills at the right time for the right costs, you’ll position your company to accelerate growth while becoming more adaptable to unforeseen disruption.
What’s included in a strategic workforce planning framework?
Today, creating a strategic workforce planning framework is one of the most crucial HR functions. As market unpredictability rises, companies must be prepared to pivot their strategies on a dime.
Here are the four steps of an effective strategic workforce planning framework.
1. Evaluate the talent, skills, and abilities already available within your organization today
The first step is to understand where your organization stands today. Are the talents you have available today enough to meet the company’s business strategy? What are your core workforce skills? Do you have an abundance of talent (overstaffed) or are you facing a shortage (understaffed)?
Imagine you’re a B2B AI software company. Your primary talents would be AI engineers, data scientists, R&D experts, and programmers. These would be considered your core workforce — the talents you require to build an effective product. Do you have the right number of employees and type of skills within these domains to fulfill your current objectives?
You should also analyze your current workforce to ensure it’s diversified and identify weak spots that you can strengthen. For example, do you have the right ratios of men and women of different racial backgrounds and abilities per department? Do you have a good mix of payroll employees vs non-payroll workers (freelancers, consultants, and contractors)? Do your teams cover the right territories?
2. Identify current skills gaps
In the first step, current skills gaps may have become apparent. This can be in the form of vacant positions or a lack of employees who possess a specific skill or level of expertise. In this case, you’ll want to look outside of your organization to other talent pools.
Independent workers such as freelancers, gig workers, and independent contractors are excellent choices for filling talent gaps. Today, many workers with high-demand skill sets and experience have elected to work for themselves in favor of greater autonomy and flexibility in their schedules.
By outsourcing unmet talent needs, you can access highly skilled workers on a short- or long-term basis without the costs and hurdles of hiring new full-time staff.
3. Determine which skills your business will need as you grow
Now that you understand your current workforce and your current gap, it’s time to plan for the future. To do this, HR must work closely with the executive leadership team to translate each executive business goal to the talents they need in order to achieve them.
With this information, you can forecast the number of workers and mix of skills you will need, and then cross-check this with your workforce budget. This process will help you understand both the current talents you have that may no longer be needed and the new talents your organization will require.
4. Buy, build, or rent the talent you need
With proper planning, you can decide whether you should “buy,” “build,” or “rent” talent to meet the gaps you’ve identified.
- Buy: This refers to hiring workers as full-time employees. Organizations commonly seek to “buy” the talent that is most vital to their primary business and needed on a consistent basis.
- Rent: When you’ve identified a temporary need for a specific skill set, capabilities, or expertise, you can “rent” this talent by enlisting freelancers or independent contractors for a fixed period of time.
- Build: You can also “build” unmet skills within your existing full-time workforce by providing select staff members targeted training and skills development programs.
Different talent requirements should be fulfilled in different ways. For example, if your organization made a strategic decision to expand sales to new markets, you probably need to “buy” qualified SDRs, BDRs, and account executives since you cannot wait to “build” and you won’t “rent” something for such a strategic move. If you want your marketing team to start using a new automation system, you can “build” the needed skills by providing specialized training.
But if your company decides they want to test a new channel strategy, you may not want to make the commitment of hiring a new team. Instead, you may decide to hire a consultant that has previous experience. High-growth companies frequently also rely on independent workers to speed up time to market and avoid lengthy onboarding.
Demand for talent can change quickly, which is one of the reasons why a flexible workforce is so important. With a large pool of qualified and vetted freelancers and contractors, your organization will be able to “absorb the shock” of sudden market fluctuations or internal changes.
5. Monitor supply and demand in labor market
The final component of an effective strategic workforce planning framework is keeping a pulse on the general labor market. By monitoring fluctuations in the market, you will gain a better idea of how difficult or easy it will be to find the best talent and predict changes to business growth.
For example, a high unemployment level is generally bad for the economy and population, but good for businesses that now have a larger pool of candidates to choose from. A low unemployment rate is great for the economy, but makes it harder to win over the best talent.
4 benefits of strategic workforce planning
Taking a proactive approach to strategic workforce planning will position your company to adapt quickly and maintain stability, even when the unexpected strikes. Here are four benefits of making it a top HR priority.
- Prevent skills gaps: Lacking necessary talent and skills within your organization can make it extremely challenging — if not impossible — to accomplish your business goals, retain your customers, meet KPIs, and maintain a healthy work culture. By constantly monitoring your current workforce, you can accurately forecast future talent needs and more quickly fill any unexpected gaps.
- Boost business performance: For any business, your talent is your biggest asset. Strategic workforce planning positions you to always have the best talent in-house, on-demand, or under-development. With a highly qualified workforce, you can tackle any business goal or issue.
- Increase agility and adaptability: Our world changes fast, which means organizations must be nimble and agile. By taking a proactive approach to strategic workforce planning, you can bolster up your ranks and ensure unexpected changes and disruption don’t throw your business out of whack.
- Cost savings: When you perform SWP, you will be able to assess every talent need strategically and determine the most cost-effective approach, whether that is “buying,” “renting,” or “building” talent.
How should my company approach strategic workforce planning?
Although strategic workforce planning will benefit every company, each one must develop its own plan.
Every industry is different, every company has unique goals, and every worker is expected to fulfill different responsibilities and standards. Your plan may even look different from your competition (and that’s probably a good thing!).
The one constant is that every strategic workforce plan should be designed to evaluate your current workforce to identify talent gaps and plan for future needs. By routinely analyzing your talent needs and performance, you will evolve your workforce and avoid the shock of unpredictable shifts.