What’s in this article
Workforce planning is a critical component of modern business strategies and an essential aspect of company success, yet often overlooked or performed haphazardly. Understaffing or overhiring are common (and costly) pitfalls that can undermine a team’s velocity, affect morale and, ultimately, impact your bottom line.
Digital transformation and a changing economic landscape are forcing companies to become more cautious and frugal when it comes to hiring. As a result, traditional workforce planning is akin to an older smartphone model in desperate need of an OS update.
As tech companies move towards rightsizing in an era of layoffs, long gone are the days where relying on instincts or best guesses is good enough — it’s now crucial more than ever to have mindset that puts data at the forefront, giving way for a clearer understanding of your organization’s skills, gaps, and true needs, so you can make strategic decisions that keep your employees happy, engaged and performing.
Numbers speak louder than words: Strategic workforce planning can save a company up to $6 million for every 100 employees, according to Deloitte. That’s no small change.
In this article, we’ll explore the importance of workforce planning, the benefits of a skills-based approach, and key metrics for success.
What is workforce planning and why it matters
Workforce planning refers to the process of identifying and anticipating future workforce needs and then taking action to meet those needs. It’s a critical component of any business strategy, as having the right people with the right skills in place is essential for achieving organizational goals.
If you’re not familiar with the term, know that workforce planning relates to many HR activities, including:
- Flexible working systems
- Demand supply forecasting
- Skills audit/gap analysis
- Talent management
- Role design
- Risk management
- Career development
- Scenario planning
By understanding the current and future demands of your organization, you can make informed staffing, training, and development decisions that will ensure their workforce is equipped to meet business objectives.
When it comes to workforce planning, standards must be raised: According to a 2022 talent planning report, only 31% of employers collect data to identify skills gaps and 28% to identify retention issues. And 30% of companies plan beyond 6 months when considering future workforce needs.
Skill mapping is the cornerstone of workforce planning 2.0
Skill mapping is the foundation of modern workforce planning, and it involves identifying and assessing the skills of your current workforce. It allows you to zoom out and get a better picture of your organization’s resources, and helps you zoom in to your real needs by determining where your strengths and weaknesses lie.
By using a skill mapping tool, you can quickly assess your organization’s talent pool and make informed, data-driven decisions about future staffing and training needs.
Applying the M&A Build-Buy-Partner framework, skill mapping helps identify needs and gaps faster to make the right decisions for your company:
- Build: Training existing employees who’ve been identified as having the potential to fill other roles or gaps. This method, when possible, is definitely the least costly.
- Buy: Acquiring or recruiting employees from other companies, also known as employee poaching. Depending on contract clauses, this could be expensive but worth it.
- Partner: Instead of permanently hiring one person, it’s possible to “hire” a team for a fraction of the price via agencies to fill specific needs your business may not be able to do in-house.
Key benefits of a skills-based workforce planning approach
There are several key benefits to using a skills-based workforce planning approach:
Going from reactive to proactive
One of the biggest benefits is going from reactive to proactive. All too often, especially for small and growing businesses (SMBs), workforce planning is done in real-time in response to incoming requests. By taking a more data-driven approach and monitoring skills gaps and needs in real-time, you can become more proactive and strategic, avoiding costly mistakes made in the heat of the moment.
It’s like swimming in the ocean: a proactive swimmer anticipates the waves, whereas the reactive swimmer is painfully surprised by each one every time and needs to use more energy to recover.
And in the world of business, there will never not be waves.
Prioritizing internal mobility over external hiring
Another benefit is prioritizing internal mobility over external hiring. Without a clear view of your people’s skills and capabilities, it’s easy to default to hiring externally and rely too heavily on consultants to fill the gaps.
External hiring can become expensive over time and may result in turnover, as existing employees go elsewhere to find roles they might have aspired to be promoted for that you already filled with an external consultant — which is terrible for employee morale and trust!
Focusing on reskilling and upskilling can reduce the need for external hiring, ensuring your company doesn’t rely on hiring crutches, and promote career development, which empowers your team.
Employees appreciate when their organization is invested in their career development: Happy employees are 12% more productive than ones that are not satisfied at work.
Bridge skills gaps through training programs
Addressing skills gaps (or skills mismatch) through reskilling and upskilling is a critical component in developing successful training programs, and goes hand in hand with internal mobility. Focusing on internal development reduces the need to hire from outside and maximizes resources at hand.
By equipping employees with the necessary skills and knowledge, companies can not only enhance their internal mobility, but also improve overall productivity and efficiency.
It’s like teaching a person to fish — upskilling ensures you’re building a team of capable fishermen in the long-run, rather than limiting your workforce to rely on outsourcing.
With the right training programs in place, organizations can create a strong and capable workforce, capable of adapting to the changing demands of the market and technology.
Ensuring long-term success and creating a positive work environment that supports growth and success for all.
Upskilling can improve employee happiness too! 71% of employees feel that learning new skills improves their job satisfaction which positively impacts overall company culture.
Create a data-driven culture over politics
Without a clear, systematic, data-driven approach, it’s easy to be held hostage by politics and be at the mercy of competing managers. Skill mapping can help you get a holistic bird’s eye view of your organization and ensure that business priorities, not politics, guide decisions.
Ultimately, a skills-based workforce planning approach will foster greater organizational agility, accountability, and forecasting — and every company needs to get on top of that.
Workforce planning: key metrics of success
There are several key metrics to measure the success of your workforce planning efforts, including internal mobility, forecasts, employee bandwidth and morale, and training and development programs. By tracking these metrics, you and other hiring managers can get a clear understanding of the effectiveness of their workforce planning efforts and make necessary improvements.
Internal mobility, or the number of positions filled internally versus externally, is a critical metric that provides insight into the strength of an organization's internal talent pool and the impact of its training and development programs.
Forecasts, or the accuracy of headcount predictions and budgeting, are another important metric. This will help you understand if you over or under budgeted and what you can do to improve your forecasting in the future.
Employee Bandwidth or Morale
Another key metric is employee bandwidth and morale. If your employees feel overworked and overwhelmed, it may be a sign that you have not properly planned and staffed your workforce. This can lead to decreased productivity and employee burnout, so it’s important to regularly assess this metric to ensure your workforce is healthy and engaged.
Finally, evaluating your training and development programs to ensure they are meeting their goals and contributing to your workforce planning success should be done routinely. This can be measured through metrics such as employee satisfaction, skill acquisition, and employee retention.
Monitoring and tracking these key metrics will help you get a clear understanding of the effectiveness of your workforce planning efforts and what you can do to improve.
It’s all connected. Spot on workforce planning means there’s no no understaffing or overhiring — which leads to employee satisfaction and retention because no one is overworked (or underworked, aka bored).
The future of workforce planning: skill management for data-driven decisions
Workleap Skills planning is an essential aspect of any organization looking to grow and succeed in today's competitive market. With the help of a skills-based approach and utilizing AI tools for better skill mapping, companies can unlock the full potential of their resources, increase internal mobility, reduce external hiring, and ultimately create a more data-driven and agile culture.
At Workleap, we’re paving the way for the future of workforce planning. And getting started is easy. In three simple steps, you can experience the full value of our data-driven skills mapping tool:
- Assess your company’s current resources and skills through skill mapping
- Utilize insights gained to identify gaps and prioritize areas for improvement
- Monitor progress and adjust your workforce planning strategy as needed with real-time data and insights
Incorporating Skills into your workforce planning strategy is a proven way to unlock the full potential of your resources and drive success for your organization.
Book a demo today to see how it can help plan, create and nurture more fulfilling and productive workplaces.