In the face of economic uncertainty, many companies resort to short-term cost-cutting strategies such as headcount reduction to balance their books and stay afloat. However, despite the illusion that this provides cost-savings in the short term, such strategies can be damaging in the long run.

Take, for example, the post-pandemic state of the airline industry. During the peak of the COVID-19 crisis, many airlines were forced to make drastic staff reductions for cost efficiency. However, as the travel restrictions eased and customer demand increased, the same airlines faced a critical staff shortage, leading to operational disruptions and an unsurprisingly inferior customer experience.

But what might be surprising is that research has found that these cost-cutting measures don't actually result in any profitability or beneficiary financial or business outcomes. Instead, the same article highlights a lack of employee trust and commitment, potential increased turnover costs, and can even damage an organisation's public reputational capital.

This is why it's important for organisations to look beyond the knee-jerk reactions to short-term cost reduction strategies and think about the long-term implications of their workforce alignment. After all, having a well-defined and future-proof workforce strategy is key to an organisation's success.

The Importance of Strategic Workforce Planning

Strategic workforce planning is a process used to ensure that an organisation's workforce is aligned with its strategic goals and objectives. It involves the anticipation of future organisational needs and challenges, making decisions about how to meet those needs, and the implementation of strategies to ensure that they are achieved.

As Jesse Jacks, Senior Manager of Organisational Strategies and Design at Deloitte, explains on the Digital HR Leaders podcast, strategic workforce planning is:

"... it's about whether the people with the skills needed to deliver that work are within that organisation; how do you access them; where do they sit; how do you, as an HR professional, have the ability to look across the organisation and truly understand where those pockets of skills or capabilities might exist, because they might not exist where you think they might from a headcount perspective, or on an organisational chart?"

He continues:

"There's a lot of benefits in taking this type of approach. You invest in your workers' growth, development, and mobility. You're also redeploying resources that can potentially alleviate some of the need for further reductions in force."

In short, effective strategic workforce planning creates a future-proof organisation that can respond quickly and efficiently to address any changes in customer demand or business needs. This allows organisations to remain agile, competitive, and profitable in a rapidly changing and uncertain world.

Though, the challenge for organisations is that strategic workforce planning requires an upfront investment of time, human resources, and analysis to ensure it's done correctly.

Our previous Insight222 playbook: Building the Future Organisation: A New Playbook for Workforce Planning, evaluating almost 50 global organisations found that those companies that successfully implemented workforce planning are those who:

1. Align Workforce Planning with Business Strategy

   To build a future-proof organisation, it is crucial to have a deep understanding of business goals and align workforce planning strategies with these objectives. By linking workforce planning activities directly to the business strategy, organisations can ensure that talent management strategies support their long-term growth and success.

2. Focus on Skills and Cost

   Successful workforce planning entails considering both skills and cost. Organisations should leverage new sources of external data to understand the skills and people they currently possess and the skills they need to acquire from the marketplace to thrive.

3. Measure the Value

   To establish the effectiveness of workforce planning efforts, it is essential to measure and quantify the results in financial terms. This enables organisations to understand the direct impact of workforce planning on their bottom line.

Aligning the Workforce with Future Business Needs

Strategic workforce planning can provide organisations with the information they need to align their workforce with future business needs and create a future-proof organisation. To do this successfully, organisations must develop a comprehensive plan that includes predictive analytics, talent management approaches, strategic objectives and a clear understanding of people's skill sets.

To get started, there are four simple steps that you need to follow for effective strategic workforce planning:

Understand the Current State of the Workforce

First, understand the current state of the workforce. You can do this in many ways, from traditional surveys, assessing job descriptions, or gathering organisational data. Another very impactful way to understand your organisation's current skill set is through evaluating performance management reviews.

Looking at performance management reviews is especially important if your current business objective is to cut down on headcount. As Don Miller, Managing Director of Organisational Design at Delloite, shares:

"...if we're looking at layoffs or restructuring, you always want to know where your folks are from a performance management perspective, however, you do that process; where are your low performers, where folks are on performance improvement plans; are those folks that have the critical skills that Jesse talked about, that may be able to be repositioned and improve performance, but also help the organisation grow?"

Understand the Future Needs of the Workforce

Second, understand the future needs of the workforce. This means looking at your business strategy and identifying what skills will be required to achieve the end goal. It also involves understanding the workplace and external environment in terms of emerging trends and technological advances, as well as any potential industry disruptors or regulations that could impact your organisation.

Here, you want to leverage the power of data and predictive analytics to anticipate future talent requirements and identify any talent gaps anywhere in your current talent pool.

Insight222's 2022 People Analytics Trends report found that people analytics added value when it was used to anticipate future needs and inform workforce planning decisions. And for good reason. For instance, with predictive analytics technologies, you can anticipate the future skills of your workforce and develop strategies to manoeuvre around any foreseeable shifts in the business landscape.

Predictive analytics can also provide insight into which employees are likely to perform best in the future and who could be at risk of leaving - giving organisations a competitive edge when it comes to talent retention.

Conduct Gap Analysis and Scenario Planning

Once you understand the current state of the workforce, labor market, and your future needs, it's time to bridge any potential gaps.

Gap analysis is key in this step as it will help you identify any skills that are missing from your organisation. It can also uncover any redundancies that need to be addressed.

You'll also want to undergo scenario planning as it will help you understand how your workforce could look in different future scenarios and identify any potential risks or opportunities. This will enable you to respond more quickly and effectively when business needs change and essentially plan for the unplanned.

Take Action, Execute, and Adjust

Finally, you need to take action and execute your plan. This could involve looking at talent management practices such as:

Succession Planning: Ensure that there are clear career pathways for high-performing employees and identify any successors or replacements for key roles in the organisation.

Recruitment: Find the best talent to fill any gaps in the organisation's skill sets, as well as stay ahead of potential future needs. This doesn't just have to be permanent employees; you could hire gig workers, contractors, or even part-time workers with specific skill sets that meet your requirements without having to commit to long-term contracts.

Training and Development: Invest in the upskilling and reskilling of current employees to help them develop the skills they need to succeed in their roles, as well as any new positions that may arise.

Retention: Develop strategies to retain top talent in the organisation by understanding their needs and providing resources and support for them to develop professionally.

And remember, once you've taken action, regularly assess your progress and make adjustments when needed. This could involve tracking changes in company goals or organisational structures or assessing the effectiveness of your talent management practices. This will ensure that you stay on top of any changes or potential issues and ascertain workforce alignment with future business needs.

Capabilities to Future-Proof Your Organisation

The success of any organisation's strategic workforce planning is dependent on the capabilities of the organisation and its leaders - in particular, its HR leaders and professionals. It must be said that to truly make an impactful change you will require three key capabilities:

Consulting and Influencing: In order to effectively plan for the future of the workforce, HR leaders need to have the ability to consult and influence senior stakeholders across the business. This includes providing data-driven insights as well as being able to explain and gain consensus around workforce plans.

Analytical Skills: Having a strong understanding of data and trends is essential in order to accurately identify future skills and talent requirements. While they don't have to be people analytics experts, HR professionals should be able to analyse data and draw meaningful insights from it.

Investing in people analytics training courses, such as the myHRfuture workforce planning course, can enhance these analytical capabilities.

Stakeholder Management: Strategic workforce planning requires collaboration and engagement with various stakeholders. HR professionals must excel in stakeholder management to build relationships, gather input, and gain support for workforce planning initiatives.

Embracing Strategic Workforce Planning For a Resilient and Future-Proof Organisation

Strategic workforce planning is a critical driver of organisational resilience and future-proofing. Through effective workforce alignment, predictive analytics, and talent management approaches, organisations can plan for the unexpected and ensure that their workforce is prepared to support future business needs.

HR leaders must have the necessary skills and capabilities in order to effectively identify future needs, identify patterns, engage with stakeholders, and gain consensus around any workforce plans.

TRANSFORM YOUR PEOPLE ANALYTICS FUNCTION TO ALIGN WITH YOUR STAKEHOLDER NEEDS AND DELIVER MORE BUSINESS VALUE

At Insight222, we partner with our clients to ensure their people analytics efforts are calibrated with stakeholder needs and help them develop an effective roadmap for success. We partner with you to build a clear picture of what your business leaders value about people analytics and then help you understand how to reach their aspirations. The outcome is a roadmap with prioritised activities to combine quick-wins and long-term success. This, typically 16-20 weeks in duration, is a perfect way to immerse your team in leading people analytics practices. Contact us today to find out more and being your journey to transform your people analytics function!