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DP Taylor
By: DP Taylor

Our Small Business Expert

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Picture this: Your company is getting fired up for a new software platform you’re about to unveil. Your market research team has identified a clear need, your business development team thinks you can spin it off your current platform in a way that will make it easy to upsell to current clients, and the sales team is licking their chops.

Everyone’s ready to launch development of the platform, and then you suddenly run into a problem: You don’t have the staff to work on it. Whoops.

Strategic workforce planning is a vital part of organizational success, but businesses often skip this all-important process. It can be intimidating to create one, because it involves evaluating all facets of your organization, but there’s a way to do it correctly that will improve your business from the ground up.

Overview: What is workforce planning?

A workforce plan is a process in which an organization aligns its hiring processes with its higher priorities and goals.

By tying the workforce and hiring practices to the overall needs of the company, leaders are able to more efficiently hire staff so there aren't gaps in capability or unnecessary spending on personnel.

Executives use a workforce planning model to identify what needs the organization has, what skill sets will be required to fill those needs, and when that staff will need to be in place for maximum effect.

What is the goal of workforce planning?

The goal of workforce planning is to help your organization succeed by hiring the right people at the right time for the right price. You can’t just randomly hire staff and hope to be successful -- you have to be smart about it. There are three essential elements to doing workforce planning right.

Limiting spending

Overspending is a big risk when you take on staff. They are often your most expensive individual assets, so if you fail to plan properly and hire more people than you need, you could be overspending by hundreds of thousands, or even millions of dollars, depending on the size of your organization.

However, hiring too little staff can hurt you in the pocketbook, too, because then you might fail to achieve organizational goals and potentially see a drop in revenue as a result.

Getting the right people

You also need to hire people with the right skill sets and knowledge bases. If you hire people who aren’t qualified, that’s just money down the drain -- almost as if you simply overstaffed.

When you conduct workforce planning, you must carefully identify the skills necessary to staff each position and develop a detailed description of what the employee will look like, which will help you during the hiring process.

This process will also help you with succession planning, which helps you identify new leaders to replace executives when they leave.

Staffing at the right time

You also must hire at the right time. If you hire too early, you’ll have the same problem as if you were overstaffed, and you’ll essentially be wasting money on staff that can't accomplish anything meaningful until you reach a certain milestone.

If you hire too late, you won’t be able to achieve organizational milestones because staff isn't available yet, pushing everything else down the pipeline.

Steps of the workforce planning process

Developing your own strategic workforce plan is daunting to many business managers, and for good reason. There are a lot of moving parts and complexities to the workforce you’ll need to address.

However, by breaking it down into the following six steps, you can maximize your chances for success.

Step 1: Set business objectives

Are you hoping to gain a foothold in a new market segment with a product launch that will require a new marketing and software development team? It’s important to lay this out so you can start mapping out what kind of skill sets will be needed. At this phase, you lay out the high-level goals of your business.

This is an important step that will guide all of the other steps in the workforce planning process, so you should dedicate plenty of time to it.

Tips for setting business objectives:

This step can be a bit intimidating because it involves big decisions about your organization’s future, but it will provide tremendous clarity. Here are a couple of ways to ensure your objectives will make the workforce planning process go smoothly:

  • Involve all stakeholders: When you lay out your business objectives, you need to make sure they are comprehensive, and that means they shouldn’t come from only you. You should also get input from human resources, finance, developers, and every other department in your organization.
  • Be as specific as possible: It’s hard to make staffing decisions when the objectives are vague. For example, instead of saying, “We intend to expand with a new product in the coming months,” it’s better to say, “We intend to build a brand-new cybersecurity software platform for launch by the end of this fiscal year, with 1,000 users signed up by the launch date.” However, don’t be so specific that the objective is likely to change significantly as time goes on.

Step 2: Identify needs

Now that you know what your business objectives are, you can identify needs or gaps.

For example, if you're looking to develop a new piece of software to launch within the next fiscal year, you've obviously got a serious need in terms of workforce to create, market, and sell that software. But your needs may be more granular than that.

At this phase, you need to create a comprehensive list of staffing needs you expect over a specific time frame -- say, the next five years.

Tips for identifying needs:

By correctly identifying your needs, you make it a lot easier to make staffing decisions that are based on solid evidence. Here are a few tips to do it right the first time:

  • Don’t get too in the weeds: A big question you may run into in this step is how detailed you should get. Should extremely specific skill sets be defined, or is a broad job category sufficient? It's easy to get paralyzed by this question, so go with a broader approach first, and then refine if you later determine you need to go deeper to get effective results.
  • Ask key stakeholders: The best way to identify needs is to simply ask key stakeholders, including your division managers, CEO, or investors. They may be able to identify needs you have missed. Once you've identified the needs, run them by those stakeholders again to see if they agree.
  • Compare needs to your business objectives: Is it really a need, or just a want? Examine a stated need and analyze whether it fits into your business objectives. If not, it may be best to chuck it.

Step 3: Audit your current workforce

Now it's time to conduct a full audit of your current workforce. This is necessary to identify areas where you have already filled the needs identified in the previous step.

For example, if you've identified the need for a team to produce and market a new software platform, you may find that your current workforce is not at 100 percent capacity, and you can move some things around to limit hiring instead of spending a lot of money on a whole new team.

Tips for auditing your current workforce:

Creating a detailed picture of your workforce today will go a long way in helping you shape it in the future. There are a couple of things you can do right now to analyze your current workforce to help shape your plan:

  • Reach out to division managers: The first thing you should do is reach out to each division manager and ask them for a report on their department’s workforce. What’s their headcount? What skill sets do they have? What’s their turnover rate? Are they at full capacity, or do they have individuals available for other tasks? What projects are they working on (so you can make a decision on whether to move them to a more important project)?
  • Set up a meeting to talk over the results: You should use those divisional reports to create a larger, top-down report, and then schedule a meeting with all stakeholders to discuss those results. This is a good time to go over some hypotheticals: What if you moved 10 employees from division X to division Y? What would the impact be? Knowing what you can do will help you draft the final plan.

Step 4: Create a plan

Now that you have all of the knowledge about your organization's objectives, needs, and current capacity at your fingerprints, you can start laying out a plan.

This plan should identify areas where you will need skills as well as lay out exactly what staff you will bring on (or move from other departments) and on what time frame. It should also lay out the cost of these employees.

Tips for creating a plan:

There are a lot of workforce planning templates out there, but how you lay out this plan is up to you. You should look into HR software with workforce planning tools to help you put together a professional one. Here are a couple things you can do to make sure your plan covers all of the bases:

  • Start high and work down: A plan like this is going to be complicated, so the best way to get started is to create a top-level plan, and then send that to the division managers so they can map out their own more granular plans that operate within the framework of the broader plan you put together.
  • Don't forget other factors: You’ll also need to factor in things like turnover rates, skill set adjustments, and a gap between when you start the hiring process and when someone actually begins work at the organization. Have a conversation with your division managers on what these factors are, and include them in the plan.

Step 5: Execute the plan

Now that you're ready to execute, you should task a member of your human resources team with helping you run the plan. You should keep your CEO, investors, or any other key stakeholders in the loop with regular updates on the progress of the plan.

It’s essential that you constantly monitor how things are going at the divisional level, especially early on, as that’s when critical problems are likely to crop up.

Tips for executing the plan:

If you’ve done good work in the previous four steps, this might end up being the easiest step of all. However, there are a couple of things you want to do in this stage to prevent the plan from going off the rails:

  • Create a weekly status report: Your stakeholders will want to know what’s going on, and a good way to do that is to have a weekly status report that you send out at the same time each week that lets them know your progress on key aspects of the plan, such as who you’ve hired for which departments.
  • Have a backup plan: You’ll almost certainly run into a few headaches, so monitor the execution of the plan from the beginning, and be ready to make adjustments. You should have a backup plan in place to respond to all problem scenarios. For example, if you’re only able to hire three employees within the first two months instead of the five you planned, you may bring in a couple of other employees from another department with some capacity to fill in until you can find permanent staffers for those roles.

Step 6: Evaluate the plan

After you've hit some key milestones -- say, you've hired the last person in your team tasked with creating and marketing a brand-new software platform -- it's time to conduct a thorough evaluation of the plan.

Did you achieve your objectives in the time frame you set? And if you did, did you get the desired results? Have an in-depth discussion with your divisional managers, and make tweaks if necessary. This plan should be a living document that can adapt as your business needs change.

Tips for evaluating the plan:

Now that the workforce plan is in full swing, you’re hopefully starting to get some good data. After some time, perhaps a quarter or six months, you should take some time to evaluate the plan:

  • Use software to track HR metrics: HR software is good for crunching data, conducting workforce analytics, and creating actionable reports. The conclusions from this report can help you make adjustments and improve the plan going forward.
  • Take a second look at your objectives: Don't forget to analyze your business objectives as well, as they may have shifted in the months since you first implemented the workforce plan. If you find that new projects are on the horizon, or there has perhaps been a wholesale shift in your organization's direction, you may need to start again at the first step.

Kick off the workforce planning process tomorrow

You always need a workforce plan, even if you aren’t expecting a huge project anytime soon.

This plan will help you operate more efficiently as an organization and, ultimately, improve the bottom line as you spend less on staff and pull in more revenue per employee due to greater efficiency. It just comes down to setting aside the time to do it, so set aside an hour tomorrow to get the process rolling at Step 1.

If you can get a new workforce plan in place by the next quarter, you’ll have an advantage over many of your competitors that don’t have a detailed plan in place.

Our Small Business Expert