How to Create a Data-Driven Approach to Workforce Planning
From economic instability to remote working policies, disrupting events in 2020 have forced many organisations to adapt their business and operating models rapidly. This, in turn, has left many HR leaders wondering how they can best plan for their workforce in a constantly evolving landscape. Tie this in with the current skills shortage that most industries face; the need for an effective workforce planning strategy has never been more transparent.
But workforce planning is more than just forecasting headcount and budget allocations. It is a process that aligns an organisation's workforce with its overall business strategy and goals. It involves understanding the current and future workforce composition, identifying gaps, and developing action plans to bridge them. As our Insight222 People Analytics Trends 2022 report showed, Workforce Planning is also a key area where HR leaders and People Analytics more specifically add business value.
When developing a workforce planning strategy, many factors exist, such as company objectives, external market factors, and workforce trends. But at its core, it should be data-driven.
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Why is a Data-Driven Approach to a Workforce Planning Strategy Important?
To make sound decisions about your future workforce needs, you must clearly understand your current workforce. This is where the power of data comes into force.
Data can provide insights into the following:
The skills and experience of your current workforce
The skills and experience your future workforce will need
The skills gaps that exist within your workforce
The training and development needs of your workforce
The succession needs of your organisation
Making decisions about your future workforce without data is often a shot in the dark. You may invest in training and development that doesn't address the skills gaps within your workforce or hire new employees without considering the skills and experience already present within your current team.
The bottom line is that a data-driven approach provides you with evidence-based insights to help you make informed decisions about your workforce planning strategy.
Building an Effective Data-Driven Workforce Planning Model
There is no one-size-fits-all approach to workforce planning, as each organisation will have unique needs and goals. However, three common approaches can be adapted and applied when implementing a data driven HR framework: strategic, operational, and tactical.
Strategic Workforce Planning involves looking at the organisation's long-term objectives and what the future workforce will need to achieve those goals. This may include forecasting future industry trends and skills needs and identifying potential risks to the workforce.
Operational Workforce Planning focuses on day-to-day workforce management, including employee performance, capability development, and succession planning. It involves identifying skills gaps, training needs, workforce availability, and potential succession candidates.
Tactical Workforce Planning involves addressing immediate workforce needs, such as hiring or redeployment, in response to changes in the business environment. This may include looking at data on employee turnover and attrition rates, external labour market demands, and organisational vacancies.
All three approaches are necessary to have a well-rounded and effective workforce planning strategy. While each may focus on different aspects and time frames, they work together to ensure the organisation's workforce is aligned with its business goals.
In addition to this, from our Insight222 research insights in 2020, investigating the future of workforce planning, we have developed a model called the Insight222 Nine Dimensions for Workforce Planning™
The Insight222 Nine Dimensions for Workforce Planning™ is derived from qualitative and quantitative research across over 70 global organisations and decades of combined experience in the areas of people analytics, workforce planning and talent management. The nine dimensions helps organisations have structure and a practical guide for implementing workforce planning successfully. While the data derived from this research reinstates that there is “no one-size fits all” approach to workforce planning, we did uncover that each one of our Leading Companies did several of these Nine Dimensions to a superlative level.
Why is the Operational Approach Important to Workforce Planning?
More often than not, organisations tend to focus on the strategic and tactical approach but need to pay more attention to the importance of the operational approach in the day-to-day running of the business.
This may be due to the need for more confidence and capability in analysing and using data for workforce planning. In fact, according to Gartner's Workforce and Succession Planning Survey, 'only 33% of workforce planning leaders rate their organisations as effective at using data in Workforce Planning.'
But with an increasing emphasis on people analytics in critical business decision-making and our Insight222 research highlighting the importance of people analytics in workforce planning, your HR team must be equipped with the necessary skills and knowledge to execute this effectively. This includes upskilling them in: data analysis, using workforce planning tools, and understanding workforce planning models and processes.
Essential People Data for Effective Strategic Workforce Planning
In our myHRfuture Academy course on Data-Driven Organisation Design and Workforce Planning, we go through a number of workforce planning models, including the underutilised operational workforce planning process, as well as the various data sets that can be employed, including:
Employee engagement survey results: to identify areas for improvement and development
Performance review data: to assess employee performance and potential succession candidates
Training and development data: to assess skills gaps and training needs
Labour market data: to understand external demand for certain skills
Career progression data: to identify career paths and potential mobility within the organisation
This is just a sample of the data that can be used in operational workforce planning. However, a successful workforce planning model is about understanding and utilising the data and metrics relevant to your organisation's workforce planning needs.
And various workforce planning tools can support this process, such as organisational network analysis (ONA) to understand the relationships and connections within the organisation or workforce planning software to manage, track and scale the workforce planning process.
But while the tools are there to enable a data-driven approach, it is crucial to have a strong understanding of the workforce planning process and how the data can be used to inform decision-making and drive organisational success.
People Analytics as the Driver of Success
People analytics has become a critical tool for organisations, allowing for data-driven decision-making in all workforce and talent management aspects. In terms of workforce planning, it can help forecast future skills needs and identify potential risks to the workforce. It can also assist in managing employee performance and identifying succession candidates.
However, as Alicia Roach, co-founder of eQ8, stated in our Digital HR Leaders podcast episode:
That's a big measure of success; having a strategic workforce plan, with a forecast view from today onwards of what we need in terms of size, shape and skills.
Know what your needs are first in order to implement success later. In today's rapidly changing business environment, organisations need to be agile, adaptable, and able to anticipate future challenges. In doing so they are more secure in achieving their strategic objectives. This can only be achieved with a solid workforce planning strategy, and people analytics can be the key driver in supporting and informing this strategy.
So invest in your workforce planning team's skills and capabilities, utilise the necessary tools and technology, and make data a core component of your workforce planning process. A data-driven approach will lead to a more effective and successful workforce and ultimately drive the success of your organisation.
ABOUT THE AUTHOR
Jasmine Panayides is a seasoned HR Writer and Editorial Lead on the Digital HR Leaders podcast. She writes about all things HR, from recruitment, HR tech, L&D, to people analytics. Jasmine holds qualifications in psychology and HR, and has a wealth of experience in the field. She is a firm believer in the power of data, and is passionate about educating and inspiring her audience to think differently about the future of work.
The myHRfuture academy is a learning experience platform for HR professionals looking to invest in their careers. We have several training courses that are targeted at HR professionals looking to learn about Workforce Planning and Strategic Workforce Planning. Our content helps HR practitioners to become more knowledgeable about how to get started in workforce planning and how to implement every step of the workforce planning process. Sign up and discover how our courses can enable you to drive greater business value through a robust workforce planning strategy.