Strategic Workforce Planning Process Discussion

MAIN STAGE ANNOUNCEMENT: Arianna Huffington to Address Workplace Mental Health at ×
SHRM22
Learn More
Practicing the Discipline of Workforce
Planning
​
Overview
Workforce planning is the process an organization uses to analyze its workforce and determine the steps it must take to prepare for future staffing needs.
appropriate workforce mix is available to accomplish plan goals and objectives. In workforce planning, an organization conducts a systematic assessment
of workforce content and composition issues and determines what actions must be taken to respond to future needs. The actions to be taken may depend
on external factors (e.g., skill availability) as well as internal factors (e.g., age of the workforce). These factors may determine whether future skill needs will
be met by recruiting, by training or by outsourcing the work.
Whether handled separately or as part of the business plan, workforce planning involves working through four issues:
The composition and content of the workforce that will be required to strategically position the organization to deal with its possible futures and
business objectives.
The gaps that exist between the future “model” organization(s) and the existing organization, including any special skills required by possible
futures.
The recruiting and training plans for permanent and contingent staff that must be put in place to deal with those gaps.
The determination of the outside sources that will be able to meet the skill needs for functions or processes that are to be outsourced.
While many see workforce planning as purely a staffing tool for anticipating employment needs, it can also be a critical tool for staff training and
development and succession planning. To be successful, organizations should conduct a regular and thorough workforce planning assessment so that
staffing needs can be measured, training and development goals can be established, and contingent workforce options can be used to create an optimally
staffed and trained workforce able to respond to the needs of the business.
Roles of HR and Senior Management in Workforce Planning
Often, a workforce plan is completed simultaneously with organizational strategic planning and is updated with the same frequency as the strategic plan.
While the HR department is typically responsible for the bulk of workforce planning initiatives, other members of senior management may be involved in
the workforce planning process, including the CEO, COO, CFO and other leaders responsible for organizational strategy. To ensure the effectiveness of a
workforce plan, leaders should evaluate the ability of the plan to anticipate and respond to future needs so that the organization can make and execute
sound business decisions. Performance indicators will include standard organizational performance measures: profitability, ROI, productivity and so on. An
effective performance management system can have a positive impact on the performance indicators of the organization. Benchmarks may also be
established by relying on industry data.
Tips for Effective Workforce Planning
For the workforce planning process to be successful, human resource professionals responsible for leading workforce planning initiatives should make
sure to:
Feedback
Any business plan deals with resource requirements, and, just as financial requirements need to be addressed, the business plan needs to ensure that the
Designate a specific member of the HR team to manage the process.
MAIN STAGE
ANNOUNCEMENT: Arianna Huffington to Address Workplace Mental Health at ×
Find a high-level executive to champion the plan.
SHRM22
Involve key stakeholders in the workforce planning process.Learn More
Align the plan with the company’s strategic business plan.
Coordinate the workforce plan with succession planning and career development initiatives.
Make workforce planning an ongoing activity, with continuous evaluation of changes in the internal and external environment that may affect the
organization’s staffing needs.
Steps in the Workforce Planning Process
Several distinct analytical steps need to be taken in workforce planning:
1. The supply analysis, also referred to as the “supply model” or “staffing assessment,” involves an analysis of an organization’s current labor supply.
3. The gap analysis compares the differences in the supply and demand models and identifies skill surpluses and deficiencies.
4. The solution analysis focuses on how to address gaps in current staffing and future staffing needs through recruiting, training and development,
contingent staffing, and outsourcing.
STEP 1: SUPPLY ANALYSIS
The purpose of the supply model is to analyze the organization as it currently exists—in other words, the supply of labor and skill sets that are vital to an
organization. This analysis should encompass not only the number of employees and their skills, but also factors such as workforce demographics and
representation of protected classes. Demographics may be especially important in workforce planning if the organization has large numbers of workers
nearing retirement age, or if it has large numbers of young workforce entrants with turnover rates exceeding those of older, seasoned employees.
Representation of protected classes will have significance for federal or state government contractors, which must comply with applicable affirmative action
plan requirements, as well as for organizations that have a voluntary affirmative action plans and that wish to improve representation of underused
protected classes. See How does the use of trend analysis fit into the overall workplace planning process? (www.shrm.org/resourcesandtools/tools-andsamples/hr-qa/pages/trendanalysisworkplaceplanning.aspx)
A supply analysis also involves making projections of attrition (due to resignations, retirements, internal transfers, promotions and involuntary terminations)
over the planning horizon being used, so that attrition is taken into account in considering the future supply of labor and skill. From this information, the
workforce planner can develop a profile of current staff as it would exist in the future if no action is taken in recruiting, training or outsourcing.
STEP 2: DEMAND ANALYSIS
The purpose of the demand model is to forecast the organization’s future workforce composition. This forecast should take into consideration a broad
range of business issues, including new product lines, competitive forces and expansion/constriction in global marketplaces, anticipated workforce
availability within geographic boundaries, and myriad other issues.
Internal and external factors need to be considered in the demand analysis. Analyses of internal demand influences may focus on the following questions,
among others:
Will the current workforce, with minimal retraining, have the skill sets necessary to perform new duties with a new product line?
Will current employees remain loyal to the organization if it has anticipated changes in mind?
Analyses of external demand influences may consider these questions:
Is labor readily available that possesses the skills and abilities needed by the evolving organization?
What external pressures will change demand for goods and services that may ultimately affect internal business decisions and, thus, workforce
planning needs?
The future composition of the workforce must also be analyzed. This analysis will seek answers to the following questions:
Feedback
2. The demand analysis, also referred to as the “demand model,” includes a review of future business plans and objectives.
How many employees will be necessary to achieve business plan goals and objectives?
MAIN STAGE
ANNOUNCEMENT: Arianna Huffington to Address Workplace Mental Health at ×
What skills and competencies will be required for the new business?
SHRM22
What is the composition of the available workforce population?
Learn More
What will the organization need to do to attract prospective employees?
What will the organization need to do to attract and retain a diverse group of workers?
STEP 3: GAP ANALYSIS
The next step in the process seeks to compare the supply model with the demand model to identify gaps between the composition of the current
workforce and future workforce needs. The workforce planning professional may want to categorize a variety of future scenarios and then select the future
that is most likely to occur, with contingency planning for alternative futures. When conducting this analysis, the planner should identify the additional
number of employees needed who have the requisite skill sets, as well as the employees who will no longer be needed due to limited skill sets.
Solution analysis involves the development of strategies to close the gaps identified in the previous step. Approaches for meeting future workplace
demands may include recruiting, training and retraining, using contingent staff, or outsourcing. The approaches selected will be dependent on whether the
organization will need to expand, contract, restructure or rely on contingent staff to meet new workplace demands.
Recruiting. When external staff is required to meet a workforce expansion due to demands of new product lines, expanded production or service offerings,
or new geographic areas to be served, external recruitment may be the logical strategy to address gaps. Recruiting may also be required as turnover
occurs, whether due to employees leaving to find other employment opportunities or to retirement, which may be the case for organizations with large
numbers of employees nearing retirement age. Employers can choose among a wide variety of tactics for executing their recruiting strategy. These tactics
vary depending on market conditions, the type of targeted candidates, diversity-related issues and other factors. Cost and time are major issues in
recruitment. Even if the recruitment process is efficient, it typically costs more and takes longer to find, hire and train a new person than to “recycle” a
current employee through internal recruitment. So, in many instances, external recruitment should be the workforce planning strategy of last resort.
See Recruiting Internally and Externally (www.shrm.org/ResourcesAndTools/tools-and-samples/toolkits/pages/recruitinginternallyandexternally.aspx).
Training and retraining. Instead of filling the skills gaps through external recruiting, human resource professionals may choose the less costly solution of
employee development, particularly for key high-value positions. Employee development builds on current intellectual capital, retains the corporate culture,
and motivates and stimulates the workforce. As skill sets become obsolete due to new technology, new services, additional product lines or other
competitive forces, the organization should focus on updating skills and capabilities of their employees as a critical workforce planning strategy. Training,
retraining and development may include many methodologies, such as classroom training, on-the-job training, e-learning, webinars and job aids. These
activities may concentrate on specific job duties and tasks or on leadership and managerial skills for new leaders.
Contingent staffing. When the current number of employees or their skills sets are insufficient to accomplish the work, given the anticipated business
future, contingent staffing may be used to fill that gap. This approach makes sense when the demand model indicates that the numbers of employees will
vary significantly and cannot be leveled out through resource allocation strategies. Contingent staffing is often best used when the future is likely to be
fluid or highly dynamic; in these circumstances, it may be a better alternative than hiring full-time employees who may not be needed on an ongoing basis.
Contingent staffing options include temporary employees, part-time employees, contract workers and consultants. Discussion of each of these types
follows.
Temporary workers
Temporary workers may be found internally or externally, depending on the needs of the organization. Although temporary staff is often hired to perform
traditional clerical duties, the desire for additional flexibility, as well as early retirement, has resulted in higher-level experienced individuals seeking
temporary assignments to meet their personal goals. Today’s temporary workers can be hired to work in virtually every level of an organization, including
CEOs, controllers, accountants, consultants, IT, marketing and HR.
To maximize the benefits of using temporary workers, human resource professionals should consider whether to use an agency or internal resources,
determine selection criteria, ensure successful onboarding, set expectations and effectively manage performance. Organizations will also want to ensure
that policies or procedures are established for issues such as screening and selecting temporary agencies, temporary-to-regular employee classification,
Feedback
STEP 4: SOLUTION ANALYSIS
discipline, work behaviors and legal compliance activities.
MAIN
STAGE ANNOUNCEMENT: Arianna Huffington to Address Workplace Mental Health at ×
SHRM22
Part-time employees
Learn More
Part-time employees are those who typically work less than a full-time schedule. Many of these employees work a partial day every workday; some work
part-week, and some may work part-month. Some may even job-share with another part-time employee. Part-time work can be used to attract diverse
workers, including students, parents of young children, older workers and others who need or want to work but do not wish to work a full-time schedule.
Most organizations require part-time employees to follow all policies and procedures that their full-time employees must follow. Fewer or different benefits
may be offered to part-time employees than to full-time employees.
Contract workers and consultants
Sometimes an organization may need workers who have specialized knowledge or expertise to help meet new business requirements. Independent
contractors and consultants may be used to meet these special requirements. Employers should take care in properly identifying contract workers and
consultants, as misclassification of these workers can result in violations of the Fair Labor Standards Act or Internal Revenue Service regulations.
Classifying a worker as an independent contractor should always be an informed and bona fide business decision, not a subterfuge to avoid the
workplace laws covering “employees” and the growth of the contingent workforce. Misclassification of an individual as an independent contractor can give
rise to a variety of liabilities. See Employing Independent Contractors and Other Gig Workers (www.shrm.org/ResourcesAndTools/tools-andsamples/toolkits/Pages/employingindependentcontractors.aspx).
Outsourcing
Organizations may determine that certain noncore business functions would be better accomplished by outsourcing them to an organization that
specializes in those functional areas. Jobs that are prime targets for outsourcing are those that require a skill that is critical, in short supply and needed
only periodically. If such needs can be handled through contingent staff—for example, by using retirees—the organization will, of course, be ahead.
However, many high-demand, low-supply, leading-edge skill needs may be met only through outsourcing to specialized contractors.
To ensure that outsourced functions are properly managed, HR should consider:
Selecting the right firm.
Establishing guidelines for a partnering relationship.
Communication methodologies and protocols.
Metrics for measuring and ensuring business results.
Companies and providers should work to structure an outsourcing contract that can adapt to the client’s changing needs. See Outsourcing the HR Function
(www.shrm.org/ResourcesAndTools/tools-and-samples/toolkits/pages/outsourcingthehrfunction.aspx).
Succession Planning as a Workforce Planning Tool
Another aspect of effective workforce planning is succession planning. Succession planning is used by organizations to identify and prepare suitable
employees to fill key positions when current employees leave their jobs. An effective workforce planning process will include a review of key leadership
and business-critical roles and will identify key incumbents able to progress into these roles. Having a succession plan in place generally ensures a smooth
continuation of business when key players leave due to retirement, resignations or transfers within the company.
The types of positions included in a succession plan vary by organization. Traditionally, these plans included only executive-level positions. In recent years,
however, companies have been selecting successors for positions throughout the organization. During times of economic upheaval, when the economic
security of organizations and their staffs may be uncertain, the need for up-to-date succession plans increases. With a wavering economic outlook,
downsizing, mergers and acquisitions become more likely. With these events leading to potential increases in turnover, implementing a succession plan is
a key strategy an organization can use to reduce turnover costs and ensure smooth transitions. In addition, a succession plan can help foster employee
commitment because it demonstrates to employees that the organization supports their development and internal growth.
Feedback
employer’s legal obligations to employees. Independent contractor arrangements have drawn increasing scrutiny and significance with the proliferation of
Organizations use a variety of models for succession planning, which may range from self-identification or nomination to highly sophisticated software tools
MAIN
STAGE ANNOUNCEMENT: Arianna Huffington to Address Workplace Mental Health at ×
that maintain information about individual employees’ development plans,
training and education completed, classes taken, performance evaluations, and
SHRM22
recommendations for future development. See Engaging in Succession
Planning
(www.shrm.org/ResourcesAndTools/tools-andLearn
More
samples/toolkits/Pages/engaginginsuccessionplanning.aspx).
HR DAILY NEWSLETTER
Feedback
News, trends and analysis, as well as breaking news alerts, to help HR professionals do their jobs better each business day.
CONTACT US (WWW.SHRM.ORG/ABOUT-SHRM/PAGES/CONTACT-US.ASPX) | 800.283.SHRM (7476)
© 2022 SHRM. All Rights Reserved
SHRM provides content as a service to its readers and members. It does not offer legal advice, and cannot guarantee the accuracy or suitability of its content for a particular purpose.
Disclaimer (www.shrm.org/about-shrm/Pages/Terms-of-Use.aspx#Disclaimer)

Purchase answer to see full
attachment