Achieving Business and Talent Outcomes Through Workforce Planning

What’s Driving the Need for Workforce Planning? 

Workforce planning – the ability to forecast when, where, and what talent is needed – has become critical for business success as the world emerges from the pandemic. Workforce and talent skill demands are creating the perfect storm for innovation as organizations look ahead to potential growth and/or sustainment opportunities. A staggering 80% of workforce planning leaders report that workforce planning activities are “important or critical in driving business outcomes” and must be considered as a continuous organizational exercise, starting with the business plan and culminating in talent planning. Not only does an overwhelming majority believe there is a need for workforce planning, 66% of leaders are actively looking to upskill workforce planning teams to meet future business needs (Orgvue)[1]. Organizations that make the jump today to implement or update their workforce planning capabilities will be better prepared for external factors that necessitate businesses to develop or redesign their organization’s capabilities. Key considerations driving the need for workforce planning today include the effects of a great reshuffling of the workforce due to factors such as the pandemic and potential recession, shifting employer-employee relationships, and the impacts of new technologies and data on business strategies. 

Fluctuations in Labor Availability and Business Demand 

As the world emerges from the pandemic, workforce planning has become a critical priority due to a highly competitive labor market, spurred on by the prevalence of hybrid and remote working. Not only do these factors impact a business financially, but also influence workforce engagement, productivity, innovation, and retention—which in turn affect business results.  

With the seemingly endless months in lockdown, businesses shifted to a primarily remote working style, up 30% from pre-pandemic, setting the precedent moving forward (Gartner)[2]. This ‘new normal’ working style has fueled changes to workforce plans, removing previous talent constraints held by geography. In addition, the pandemic also uncovered a workforce planning trend of utilizing the gig economy to source talent needed for core competencies and certain skills. Organizations can look to reassess headcount strategies by determining how to alter a workforce to include employees across different locations and address demand gaps with a contingent workforce.

Pandemic trends have recently become apparent drivers for workforce planning revitalization, but they are certainly not novel. Even where workforce planning has been taking place, the pace and—more importantly—the sense of urgency to invest and update capabilities is increasing, prompting businesses to shift towards the new, now.

After more than two years of the pandemic, talent supply strains, and soaring inflation, it is now imperative to carefully plan organizations for a potential recession. A predicted global growth decline of 3.3% in available talent, and thus decreased talent supply, adds to the risk of longer inflation, which in turn raises the wage pressures (IMF World Economic Outlook April 2022)[3]. Learning from historical US recession employment data, most industries including financial services, wholesale trade, and professional and business services will feel some impact by a recession. However, utilities and retail sales will be hit the hardest, with a projected negative growth rate from 2020-2030 (BLS Employment Projections Program)[4]. Businesses that fall within these two sectors should begin to consider what proactive steps can be implemented to recession-proof the organization. Yet, recession-proofing should still be a key consideration for all companies in the coming year. Companies that begin to analyze their current workforce for future changes, revisit pay, rewards, and benefits practices, and identify innovative alternatives for workforce reductions will be one step ahead when the time comes to evaluate enterprise-wide headcount and talent supply and demand.

Shifting of Employer-Employee Dynamic and the Modernization of HR

“The expectations of the workforce have changed dramatically” which has prompted a change in how employers respond (Forbes)[5]. There has been a paradigm shift in the way employees now approach work, seeking to infuse personal and professional goals within one’s career. Historically, organizations focused on what skills were needed to fulfill a company’s mission (SHRM)[6]. Today, employers are beginning to pay greater attention to the needs of employees to retain key talent, considering career preferences and understanding opportunities for upskilling or enhancing an organization’s workforce.

As organizations realize that talent is a key strategic differentiator and that they must continually invest to retain and attract top talent, the HR function slowly shifts from an operational function to a strategic partner that supports the business (Forbes) [5]. By default, HR has historically owned the workforce planning capability. In many organizations, HR is siloed off from the business and finance teams, leading to a lack of alignment in business priorities and outcomes, cross-functional influence, and agility in responding to the business’ needs (Orgvue) [1]. Effective workforce planning requires an immense amount of cross-collaboration across the business, so to be a true strategic partner, HR must be seated at the table to help realize organizational success.

Integration of Technology & Data  

Today, many exciting technologies can be integrated into a workforce planning capability to advance modeling strength; however, many organizations are still in the infancy of harnessing technology. Many companies today have redundant and manual workforce planning processes that increase the time spent on pulling data across multiple systems. Moreover, with an average of four systems being used to access data, the chances of human error in data alignment are amplified. These disjointed systems are the impetus for new technology integrations that will seamlessly connect end-to-end planning processes across HR, finance, and the business.

The time is ripe to conduct workforce planning now because as technologies improve, computing power is allowing for greater proactive forecasting. Learning how to harness raw data and conduct modeling with basic machine learning (ML) technologies and emerging artificial intelligence (AI) advances forecasts from predictive to prescriptive, not only driving talent decisions, but also financial forecasts, research and development budgets, and activities for operational excellence. Leading organizations are leveraging ML and AI more than ever to create solutions that optimize existing forecasting efforts. Unique practices to note include the creation of a Digital Twin used to simulate forecasting scenarios and plan for contingencies.

How can an Organization Benefit from these Capabilities? 

Multiple external factors and pending impacts on the horizon drive the need for workforce planning now. By star today to combat these external pressures and successfully implement optimized workforce planning capabilities, organizations can reap various strategic benefits including:

Proactive Forecasting & Fulfillment:

 Successful workforce planning will shift your organization from reactionary responsiveness to proactive measures that incorporate the business needs and inform support teams (e.g., recruiting, procurement, learning & development) that assist the organization in understanding those needs. This forward-thinking approach would allow your business to identify the right skills and individuals needed at the right place and time to fill open roles, allowing for better skill-to-role matching and optimized fulfillment processes.

Productivity and Strategic Work Optimization:

By creating effective workforce planning capabilities, an organization can better understand how to fill against demand and needed work; by planning accurately against projections, your organization is better situated to complete more priority work. Workforce planning will also provide visibility into how people are spending their time, making sure time is prioritized on activities that support strategic business objectives.

Employee Experience and Career Development Improvements: 

Successful workforce planning not only drives bottom line growth, but also improves employee experience and career development. Strong workforce planning capabilities identify what skills are required by the workforce, enable teams to match work to properly skilled talent, and proactively plan what projects/programs employees can be working on. Sharing this information with employees provides transparency around the future talent needs of your company and the available opportunities one has for career development and progression. A developed pipeline and movement of work enables individuals to understand the future shift in work and prepare, via upskilling and change management initiatives, to meet this future state. 

Businesses can get a head start on workforce planning’s next steps by understanding their current workforce or capacity planning processes and how external forces plug into and affect the workforce planning cycle (across supply, demand, gap, fulfillment, and execution activities). Now is the right time to invest in workforce planning capabilities. Doing so will set an organization apart from its competitors and bolster the company’s headcount management to prepare for external factors. With all the strategic benefits knocking, why wait any longer? 

Contributors:

Russell Klosk (智能虎)

Rishi Agarwal

Callinda Taylor

Katee L.

Liesel Judas

[1] Orgvue. “Workforce Planning Forrester Consulting Study 2022 .” Orgvue, 17 June 2022.

[2] Jackie Wiles. “Workforce Planning for Competitive Advantage Post-COVID-19.” Gartner, 16 July 2020.

[3] “World Economic Outlook, April 2022: War Sets Back the Global Recovery.” IMF, Apr. 2022.

[4] “Employment by Major Industry Sector.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, 8 Sept. 2021.

[5] Klosk, Russell. “Workforce Planning: Modeling The Workforce Of Tomorrow.” Forbes, 2, Sept. 2022.

[6] Harbert, Tam. “Workforce Planning in the Age of COVID-19.” SHRM, SHRM, 6 July 2021.