Important Steps to Approach 2022 Strategic Workforce Planning

More employers are turning to workforce planning to provide the necessary information to better manage their talent pool to meet their organization’s strategic needs.

The events of the past two years have encouraged more organizations to pay attention to workforce planning as they prepare for the opportunities and possible disruptions ahead. A 2021 survey by McKinsey & Company found 33 percent of executives planned to spend more resources on workforce planning this year, ranking it as a higher priority than recruiting or training initiatives.

The Society for Human Resource Management (SHRM) defines workforce planning as a process for organizations to analyze their current team members and determine what steps are needed to meet current and future staffing needs. The process also seeks the most cost-effective and efficient approaches to recruit new employees and retain existing staff members.

Most organizations conduct annual workforce planning as the end of the year draws near. This timetable positions line managers and the HR team to immediately begin addressing workforce needs in the New Year. Putting the right people in the right roles at the right times maximizes their potential to meet the corporation’s 2022 goals and objectives. Workforce planning also helps companies reach their financial objectives, promote collaboration, and improve the employee experience.

Two Approaches to Workforce Planning

Workforce planning begins with your organization’s strategic plan. What goals and objectives have upper management set for 2022? You need a clear picture of where the organization is going before you can create a plan to align workforce decisions with business needs and objectives.

There are two ways to approach workforce planning. The simplest is headcount planning, which typically occurs annually. Headcount planning concentrates on short-term requirements for the upcoming year. The basic steps are:

• Examine the current workforce. Identify expected vacancies. Who might retire next year? Who may be promoted? Also evaluate how well workloads are distributed across various teams.
• Set organizational objectives. Consider how the strategic plan will change current staffing needs.
• Identify hiring needs.  Compare the outputs of the first two steps to identify workforce gaps that may need to be filled by new recruits.

More organizations have shifted to strategic workforce planning, a more robust process that looks at multi-year scenarios for future growth. Still, experts say that fewer than 50 percent of employers truly have an effective, strategic workforce plan in place. The steps to create a comprehensive workforce plan include:

• Review corporate objectives. This approach also begins with the organization’s strategic plan, which spells out the goals and objectives upper management has set for 2022. You need a clear picture of where the organization is going before you can begin creating a roadmap that guides workforce decisions to support reaching the destination.
• Assess current talent. Surveys indicate 40 percent of HR leaders say they do not know what skills their current labor force possesses. Identify not only what skills your employees use on the job, as well as other abilities and training they possess that your organization is not leveraging. How much experience and seniority to do they bring to the table? Some organizations gather this data during the recruitment process, but do not carry that information forward after hiring. One option is having employees fill out a questionnaire listing their skills and background. You should also ask whether employees would like to move to another role or department within the organization, if possible. Supervisors and middle managers can also help identify each employee’s strengths, skills, and growth potential.
• Determine future needs. This is where the strategic plan becomes critical. When you look at the corporate goals for the next year (and perhaps beyond), consider what skills and personnel would enable your organization to be successful. The company may plan to add new products, expand existing departments, or pursue higher revenue goals. For example, if you will enter new geographic markets, you may need to hire local people to staff and run new offices. Implementing a new computer system requires IT teams with specific technical knowledge to deliver and maintain the changes. Doubling the size of a factory or manufacturing new products means hiring more workers — possibly those with specialized skills or levels of expertise. Regulatory changes might also drive the need for more expertise or deeper training. Alternatively, the organization may plan to reduce headcount as it automates certain functions, or it might exit lines of business that required specialized knowledge which will no longer be needed.
• Identify gaps between today and tomorrow. Create a skills gap analysis by comparing your inventory of current skills against the list of future needs. How well does today’s workforce match up? Are there gaps in skills, headcount, leadership, and so forth? You might need more people with different skills, as well as experienced managers and executives to lead those teams.
• Decide how to bridge those gaps. Some organizations may simply need to hire more people, but most need to add specific skills. Find the best approach to meet the company’s needs within its cost constraints. Focus first on addressing the most pressing gaps that must be closed to achieve high-priority goals. Should you step up college recruiting, or do you need to pay more to attract and retain experienced talent? A training needs analysis can guide enhancing existing staff members’ skills. Additional professional development for existing employees {including managers} could help improve retention. Consider hiring contractors and consultants to fill temporary gaps or meet short-term needs while permanent employees come up to speed on their new duties. Any of these decisions carry costs that must be reflected in upcoming budgets.
• Develop an action plan. The workforce plan creates a roadmap to the future. Use the information gathered in the previous steps to detail your workforce plan and share it with organizational leaders.
• Execute the plan. Execution relies on ensuring that roles and accountability are clearly defined. Address ownership of such components as the training and development plan; the recruitment plan; and who is responsible for contingent staff and outsourcing.
• Measure results. Determine what reports and analytics will help you measure the progress and success of your plan. This also allows you to improve the process for 2023 and beyond.

Planning For a Post-COVID Workplace

Workforce planning is not a one-and-done. It requires a continuous process to gather data, monitor results, and adjust to change. Many organizations only revisit their plans once a year, creating static guidance that becomes outdated as soon as something unanticipated occurs. A continuous workforce planning process allows you to modify your approach to meet changing corporate goals or external factors.

The COVID-19 pandemic emphasized the need for flexible plans that allow you to respond to unforeseen disruptions. Many offices closed for months, if not years, and millions of workers began working from home. As more employees head back to the office in 2022, the after-effects of the pandemic are also influencing workforce planning. While you should anticipate that things will not entirely go back to the “normal” state that existed before 2020, there are some unique considerations ahead.

• Demand for remote options remains high. A recent Gartner study found 48 percent of employees expect to work remotely at least part-time after the pandemic passes. Many employers are offering fully remote or hybrid options that allow employees to work from home at least part of the time.
• Larger pool of candidates. More remote work options also mean employers are no longer constrained to hiring those who live close to their offices, providing more options to fill skills gaps. However, the remote trend also creates greater competition for their services, which can drive up payroll costs.
• Greater employee turnover. The Great Resignation of 2021 also has its roots in the pandemic as more employees changed companies or simply dropped out of the workforce. Surveys indicate more than 30% of employees are considering changing jobs. Employers face more challenges in recruiting new hires and retaining valued workers.
• Too much office space. Many organizations now have too much office space available. Closing offices or reducing floor space can also impact workforce planning.

Additional Tips for Workforce Planning

Here are several more suggestions to help ensure a productive and efficient workforce planning process.

• Define the roles. Ensure that the roles of HR, upper management, and other key stakeholders are clearly defined, including who will lead the process.
• Engage senior management. Plans rarely succeed without the support of senior management. Make sure the top leaders are behind your plan.
• Find a champion. Having an executive who believes in the process and champions the cause throughout the organization goes a long way towards overcoming obstacles and ensuring a successful outcome.
• Sometimes companies hand the entire process off to HR and step away. Workforce planning should be a highly collaborative effort where each department addresses their current skills and future needs.
• Evaluate the job market. How difficult will it be to hire the talent you need at an acceptable price? Your industry may be in a hard or soft job market; plan accordingly.
• Don’t view jobs or candidates too narrowly. Virtually every organization needs computer hardware and software skills. However, those needs change quickly as technology evolves. Don’t just hire for today’s technical needs: seek people who are willing to be retrained for broader duties.
• Incorporate succession planning. Replacing retiring executives may require recruiting veteran external leaders or providing professional development that prepares managers to assume more senior positions.
• Support career development. Make sure you have the internal tools to help employees at all levels develop the necessary skills to fill new roles. You may need to go outside the organization for extra training resources.
• Use outsource partners as needed. Not all organizations have the skills and resources available to execute a robust workforce plan. Call on external resources and outsourcing HR consulting partners to help guide the process.

The ultimate goal of workforce planning is making sure your organization has the right people with the right skills in the proper roles at the right times to achieve the company’s strategic goals. With a new year already on the horizon, there is no better time than now to begin workforce planning for 2022.

If you need assistance is your 2022 workforce planning, Innovative’s HR consulting team is here to help. Contact us here.