Guide to Workforce Planning

What is workforce planning?

As a small business owner, you know how important it is to stay on top of your game and make smart decisions to drive your company forward. One area that can greatly impact your success is managing your workforce effectively. That’s where workforce planning comes in!

So, what exactly is workforce planning? Simply put, it’s the process of analysing your current and future workforce needs to ensure you have the right people, with the right skills, in the right place, at the right time. It’s like putting together the perfect puzzle of talent to help optimise your business and make it sing!

To further streamline your HR processes and reduce admin time, check out our free guide here.

Workforce planning involves looking at both the short-term and long-term goals of your business and aligning them with your staffing requirements. By understanding your business objectives, you can anticipate the workforce needs and make informed decisions about hiring, training, and development.

What is the difference between workforce planning and succession planning?

Workforce planning and succession planning are both important aspects of managing your company’s talent, but they focus on different aspects of your workforce.

Workforce planning is all about analysing your current and future workforce needs. It involves understanding the skills and capabilities your business requires to achieve its goals. With workforce planning, you’re looking at the big picture and thinking strategically about how to ensure you have the right people in the right positions at the right time. It helps you address questions like: How many employees do we need? What skills are necessary? Are there any gaps in our workforce that need to be filled? By answering these questions, you can make informed decisions about hiring, training, and development to meet your business objectives effectively.

On the other hand, succession planning is more focused on the long-term stability and leadership of your business. It’s about identifying and developing employees who have the potential to fill key positions within your company in the future. This means the focus is on things like ensuring a smooth transition when key individuals leave their positions due to retirement, promotion, or other reasons. It’s also about identifying high-potential employees, providing them with training and development opportunities, and creating a plan to prepare them for future leadership roles.

For small business owners unsure about when to hire, our comprehensive guide on hiring new employees can provide valuable insights here.

Why is workforce planning so important for a successful business?

Workforce planning is important for a successful business as it ensures the right people with the right skills are in place to support business growth, maximise productivity, and respond efficiently to seasonal changes or changes in the market.

Here’s an example to help illustrate its importance: Let’s say you run a small retail store, and you know that during the holiday season, your sales skyrocket. Without proper workforce planning, you might find yourself short-staffed during the busiest times, leading to frustrated customers and missed opportunities. On the other hand, if you have a workforce plan in place, you can proactively hire additional staff, adjust schedules, or cross-train existing employees to handle the increased demand smoothly.

Effective workforce planning can bring several benefits to your business. It allows you to identify any skills gaps within your workforce, giving you the opportunity to address them through training and development programs. It also helps you anticipate changes in the market, such as new technologies or shifts in customer preferences, so you can prepare your workforce accordingly.

For guidance on upskilling your team for the future, our digital upskilling guide can be found here.

By investing time and effort into workforce planning, you can optimise your staffing levels, reduce turnover, and improve productivity. It’s all about ensuring that you have the right people with the right skills in place to support your business growth and provide excellent products or services to your customers.

What are the signs that indicate the need for workforce planning?

There are some telltale signs that might indicate the need for a more robust approach to headcount planning. If you’ve got a high turnover rate, then this suggests an issue somewhere in the business such as poor management, insufficient training, or a lack of development opportunities. Whatever the reason, it’s worth digging deeper to find out the cause and take action.

To reduce staff turnover, explore our free eBook on the subject here.

If your staff are reporting feeling burned out, overworked or overloaded, or are taking time off for stress, then this is a strong indication that there are issues in workforce planning that need urgent attention.

And if you’re often behind on customer orders or struggling to meet customer demand – this is also a sign that you need a workforce review, stat! Your goal should be to have the right number of employees with the right skills to deliver outstanding customer service. If anything is interfering with this, then it needs to be investigated.

How often should workforce planning be conducted?

How often you carry out workforce planning projects will of course vary depending on the size of your organisation, your industry, and your specific business needs. Nonetheless, it’s something you’ll want to do regularly to ensure you’re optimally staffed at any given point. As such, you could plan to conduct a workforce audit on a quarterly or annual basis. This will also help feed into your business goals and OKRs.

Should a trigger event occur where you need to immediately review your workforce, such as a merger or acquisition, regulatory change, or a sudden change in market demand, then you should seek to do an ad hoc workforce review.

What are common mistakes employers make when it comes to workforce planning?

When it comes to small businesses, with so many plates spinning at all times, it’s easy to fall into the trap of focusing on business as usual, or whatever is most pressing. Not having enough time or resources to look ahead at what is coming down the road can cause problems. Here are the three most common mistakes employers make when it comes to workforce planning:

1. Overlooking employee development

Workforce planning is not just about hiring and recruitment; it also involves developing and retaining existing employees. Neglecting employee development can hinder the growth and agility of the workforce. Employers should prioritise training, upskilling, and career progression opportunities to enhance the capabilities and engagement of their workforce.

2. Forgetting to align with business strategy

Workforce planning should always align with your overall business strategy and objectives. It’s easy to get caught up in day-to-day operations, but neglecting to consider the bigger picture can lead to a workforce that doesn’t support your long-term vision. Make sure your workforce planning efforts are closely tied to your business goals to ensure success.

3. Failing to anticipate future needs

Another common mistake is focusing solely on current workforce requirements and neglecting to plan for the future. Workforce planning should involve forecasting and anticipating future needs based on market trends, technology advancements, and changes in customer demands. By looking ahead, you can avoid skill gaps, staffing shortages, and stay adaptable to changing circumstances.

This means you need a degree of flexibility to adapt to unforeseen circumstances or changes in the business environment. Employers who rigidly adhere to the initial workforce plan without room for adjustments may struggle to respond to unexpected events or market shifts. Flexibility allows for agile workforce management and the ability to both anticipate future needs and make timely adjustments on the fly.

Overcoming common challenges in the workforce planning process

But fear not. Overcoming common challenges in the workforce planning process is easily achievable with the right know-how and the right tools.

As you might have gathered, it’s a lack of oversight within the organisation that often contributes to these challenges, resulting in issues such as overlooking employee development, forgetting to align with business strategy, and losing sight of future needs. By addressing these root causes and implementing effective workforce planning strategies, businesses can successfully navigate these challenges and optimise their workforce for long-term success.

The good news is that by integrating technology into workforce planning, businesses can solve a lot of problems in one convenient go. Using an HRIS platform provides centralised data storage, analytics capabilities, and tools for collaboration, streamlining the workforce planning process and enabling data-driven decision-making. This kind of technology-driven approach helps businesses overcome challenges, enhance efficiency, and improve the accuracy and effectiveness of their strategic workforce planning efforts.

How can Employment Hero make strategic workforce planning easier?

Wondering how to manage all this? Well, first of all, grab a cup of tea and download your copy of the Workforce Planning Guide. It has everything you need to know in one handy place (and it’s a great read).

Then prepare to meet next-level workforce planning, because Employment Hero can help you make light work of strategic workforce planning. Our centralised platform houses important employee data which can be accessed anywhere. Need to put your hands on who has what skills, qualifications, and training? It’s all there. This helps you quickly analyse and identify any skills gaps or development needs within your workforce.

Add to that our in-depth analytics and reporting features that provide insights into your workforce metrics. You can generate reports on employee turnover, performance, and other key indicators to gain a deeper understanding of your workforce dynamics. These analytics help you make data-driven decisions and identify trends and patterns that inform your strategic workforce planning.

When you’re ready to hire, from attracting new candidates right through to onboarding, our ATS will help you give your new headcount the best experience. And once they’ve been onboarded, you can seamlessly manage their entire employee lifecycle, offering unique benefits, training and more, all via our employee self-service app.

With features like Goals, Employment Hero can even assist with succession planning by identifying high-potential employees and creating development plans for future leadership roles. You can identify and nurture talent within your organisation, ensuring a pipeline of skilled individuals ready to step into key positions when needed.

… Ready to optimise your workforce for long-term success?

Speak to one of our small business specialists to learn more.