Strategic Workforce Planning for Today’s Leaders
Strategic workforce planning (SWP) is a structured process that ensures an organization has the right people, with the right skills, in the right roles, at the right time to achieve its long-term business objectives.
Emerging with the concept of manpower planning in managing hiring and firing in the 1950s, advances made in HR analytics, artificial intelligence (AI), and predictive modeling have made SWP today more sophisticated. It is now data-driven and scenario based, and it has become a part of our daily lives.
When payroll is integrated with HR analytics through SWP, you can forecast labor costs for potential growth or downsizing scenarios, evaluate the financial impacts of automation strategies, and model compensation and pay equity across regions and jobs. Your analytics may include identifying organizational inefficiencies, budgeting accurately, and making informed decisions about workforce planning and staffing levels for the following:
- Overtime trends
- Workforce demographics
- Absence and turnover costs
- Labor cost forecasting
Develop Your Strategic Needs in 6 Steps
Through my experience in manufacturing, staffing, construction/restoration, hospitality, and banking, I have learned that SWP will vary for each business model.
For instance, the hospitality industry can look to data for sales and number of patrons when planning staffing needs to cover busy times. There may not be big swings in workload in manufacturing, but an upcoming software enhancement might mean the need to ramp down as the software cutover happens and then ramp back in with updated skillsets for the team.
Let’s take a basic six-step approach to determine what your needs are to guarantee a successful initiative.
1. Define How You’re Going to Align With Your Business Strategy
Whether you are in an executive leadership role or are a department lead, every leader must be in tune to what is happening in their organization. Always be asking “What’s next for me, the department, and the company?” and “What can I influence to become more strategic for the organization’s goals?”
As an example, imagine that your company wants to embrace AI in the HR/payroll departments to support future growth in the operations. You may need to reskill existing employees, perhaps moving them from data entry to data analysis, to support that initiative. Perhaps you need to add an AI expert to staff to help with your AI development.
Take steps such as the following to understand your business strategy first:
- Meet with your leaders to review and clarify business objectives, growth plans, and challenges
- Identify how the company is going to achieve that objective, whether by entering new markets, automating processes, or scaling operations
- Translate business priorities into workforce implications (skills, size, structure, and location)
2. Analyze Your Current Workforce
SWP has moved from its infancy of simply managing hiring and firing to aligning your workforce with your company’s goals. Preparing existing staff for the next evolution is part of the planning process.
According to a McKinsey analysis of 2022 S&P 500 shareholder reports, “individuals who are top performers in highly critical roles deliver 800% more productivity than average performers in the same role.” Therefore, when crafting your SWP initiative, it is critical to identify your top performers today and develop those with potential to become your top performers of tomorrow.
Understand what talent you have today by doing the following:
- Gather workforce data (headcount, roles, demographics, skills, turnover, and performance)
- Identify critical roles and skill clusters
- Assess your workforce’s current capability and capacity
3. Forecast Future Workforce Needs
This is where we start leveraging data analytics and predictive modeling techniques in our plan. For example, you may have identified that 10% of your organization’s leaders will retire within five years. Defining a succession plan now will allow for a smooth transition.
Predict what talent you’ll need to deliver business goals by doing the following:
- Estimate future workforce demand (how many and what kinds of roles are needed)
- Estimate supply (who will still be with you based on retirement, attrition, and mobility)
- Identify gaps or surpluses in skills or capacity
4. Develop Workforce Strategies
Identify the gaps in your current strategies and start closing those gaps. Identify where the roadblocks will exist and plan for them in your new strategy. You may not identify all the roadblocks, but you want to eliminate all known variables. Keep in mind your budget and the speed with which the company can tolerate the changes.
Look to the following strategic choices:
- Upskilling existing staff
- Hiring new staff with enhanced skills
- Using contractors, consultants, or partnerships
- Automating to replace manual work
Remember, this is not an all or nothing approach. Ideally, you will be leveraging each of those options in your plan.
5. Integrate, Implement
Embed SWP actions into your business and HR processes by doing the following:
- Align your plan with the company’s budget, recruiting and learning, and succession plan
- Leverage your recruiting and learning systems to find solutions from within that will meet your goals for a succession plan
- Communicate your plans across HR and leadership
- Assign accountability for each workforce action
6. Review, Measure, Adjust as Needed
Your SWP is a continuous process, not a one-time project. Imagine all the companies whose SWP seemed set in stone in March 2020. At the onset of the COVID-19 pandemic, everything changed. Our goals changed, and the workforce changed. These were all things no one ever thought we needed to prepare for. But now, business continuity and disaster recovery plans should be included in your SWP.
Do the following to keep the initiative fluid:
- Set your key performance indicators (KPIs), such as time to fill, skill readiness, critical role changes, and recruiting sources review
- Review progress at consistent timeframes
- Adjust, adjust, adjust. Business priorities shift so adjust your forecasts and strategies.
Be Flexible
An SWP initiative is typically structured over a 12-month timeline, and each component takes approximately two months to complete. Audit your deliverables at the end of each phase to make sure you are on track.
Be prepared to deviate from the original plan as your goals change.
We review our expectations quarterly to ensure they still align with departmental or business objectives. Your leadership will appreciate that you are setting realistic expectations and are aware of the long-term goals, demanding different staffing levels or different skill-setting parameters on your existing team. Be transparent with your goals.
When you are preparing for an SWP project, you will most certainly be asked to provide the return on investment (ROI) of your project deliverables—but you must be fluid with your resources to achieve success. Don’t be afraid to request additional resources or to expand staffing needs, but be prepared for the contraction of staff at the end of the project. It isn’t strategic to merely plan for today and expect everything to stay the same for the long term.
As an example, your organization plans to roll out a new recruiting module. You currently have three recruiters managing the data manually with the expectation that you will only need two recruiters once the project is live. Your ROI would be the wage of the one recruiter who is no longer needed.
However, you will probably need to expand and contract your headcount to reach the end of the project. You may need to hire a consultant for a few months while you install the new module. Your headcount for the recruiting function will immediately increase to four and, at the end, drop to two (loss of the consultant and one recruiter).
And just when you are at the end, you are informed of an acquisition with expectations of increasing overall company headcount by 100. Perhaps you don’t want to lose that one recruiter any longer. Plans change. Stay fluid, stay on track, and update your plan.
Conclusion
SWP is no longer a peripheral in HR, but rather a core business function that influences the corporation’s ability to thrive. By aligning your departmental or organizational goals and anticipating your future skills gaps, market trends, and software enhancements, you can build a resilient workforce prepared to take on whatever the company’s business development needs may bring their way.
Ultimately, the goal of strategic workforce planning is not merely to fill roles, but to ensure you have the right team members with the right skill set in the right place at the right time, able to deliver on departmental and organizational priorities. By investing in that discipline, companies can position themselves to navigate any disruptions, retain critical talent, and sustain the competitive edge.
As the future of work continues to unfold, those who treat workforce planning as a strategic imperative will be best equipped to turn change into opportunity and vision into measurable results.
Cari Breitinger, CPP, is Director of HRIS and Payroll at BELFOR. She is Co-Chair of PayrollOrg’s Strategic Payroll Leadership Task Force (SPLTF) Best Practices Subcommittee, a member of the Board of Contributing Writers, Government Relations Task Force (GRTF) Child Support and Garnishments Subcommittees, and the SPLTF Emerging Technologies, Global Payroll, and Shared Services Subcommittees. She has also been a guest on PayrollOrg’s “PayTalk” Podcast®”.
PayrollOrg (PAYO), is the leader in payroll education, publications, and training. This nonprofit association conducts more than 300 payroll training conferences and seminars across the country each year and publishes a complete library of resource texts and newsletters. Representing more than 20,000 members, PAYO is the industry’s highly respected and collective voice in Washington, D.C. Get more information at www.payroll.org.
For more articles like this, read PAYTECH magazine (available in both printed and digital formats), free for PayrollOrg members!
