Strategic Workforce Planning: How to Build a Talent Management Strategy

The only constant is change. That statement may be millennia old, but it feels particularly appropriate to the 2020s. We’ve had pandemics, wars, inflation, Great Resignations, mass layoffs, and an overwhelming sense of uncertainty in virtually every industry.

Just when you thought your organization had adjusted to the “new normal,” it’s time to pivot to the “next normal.”

This makes long-term strategic workforce planning particularly difficult. How can you know what human resources you’ll need in one year’s time, when you can’t be sure what the business itself will look like?

This conundrum is the best reason to take a continuous, dynamic approach to workforce planning. And while that may sound daunting, the right tools and processes make it wholly achievable.

Let’s take a look at what strategic workforce planning means for your business, why most organizations aren’t getting it right today, and how yours can be one of the few that does.

What is strategic workforce planning? 

Strategic workforce planning is the ongoing process through which organizations link their human resources and staffing schemes to the wider business strategy. The goal is to identify and fill future workforce needs based on the company’s strategic objectives, rather than simply to maintain headcount.

You need enough employees in the proper role with the right skills to reach your company’s overall goals, both now and in the future.

Smart talent strategy looks at the following factors:

• Skills: The company must have all the right skill sets in house to achieve your business objectives.
• Coverage: You need enough people with those necessary competencies to ensure you never encounter shortages.
• Cost: You must achieve this skills coverage without ballooning costs or overhiring.
• Flexibility: Ideally, you’ll be able to adjust to changing conditions and fill skills gaps without rehiring or drastic restructuring.
• Culture: You also need a workforce that builds and strengthens a healthy company culture.

Most HR teams know this and can consider each of these factors during a planning phase. 

But what separates the best and most successful from the rest is dynamism: the ability to constantly update talent needs as challenges arise.

The traditional approach

Traditional workplace planning involves a comprehensive annual review of your workforce to determine future staffing needs. Your HR department evaluates and analyzes the state of your workforce, then provides recommendations on what actions to take based on that information.

This makes sense. You’re in the middle of planning the overall business strategy, and it’s easy to spot critical roles and skills you’ll need to support it.

But even the best-laid plans change. Market trends, missed (or overachieved) targets, and investor demands can all lead to a new roadmap. And if your planning cycle is rigid, you simply can’t adjust.

The Covid pandemic was a dramatic example of this. Companies were being forced to downsize or have employees work from home, and current workforce plans were scrapped overnight. Then we had the Great Resignation, then budget cuts, then a very difficult labor market.

What comes next? Most likely even more uncertainty. So your workforce planning process must embrace and reflect this.

Related: Your Complete Guide to Human Capital Management—How HCM Can Transform Your Workforce

How to build a strategic workforce planning process

To successfully adapt, workforce planning needs to be a continuous process. By constantly and collaboratively collecting data, monitoring, and making adjustments to your workforce, you empower your organization to quickly spot signs of change and respond early.

This is in contrast with a static workforce plan that becomes obsolete the moment something unexpected happens. Continuous workforce planning supports a living strategy that can evolve as your business goals change.

To make the switch from annual workforce planning to a continuous model, you’ll need to gather data and build a comprehensive view of the current state of your company. 

Completing the following tasks will give you a solid foundation to make the switch.

1. Identify your business goals

Effective workforce planning should always derive from larger business objectives. You don’t just hire to fill seats — or because your talent acquisition team has targets to hit. You must have real business needs that can’t be met by current employees.

At this first step, we’re really focused on the high-level business goals. These most often include revenue and churn targets, changes to the corporate structure, or a new product roadmap.

These goals should be clearly defined before you can think about human resource management.

2. Align goals to human resources

Once you have clear business objectives, the logical next step is to determine whether they’re achievable with your current staffing levels. If the goals involve building new products or increasing sales, those gains have to come from somewhere. And most often this involves investment.

Workforce supply is usually dictated by team leads and department heads. If the goal is to increase sales by 20% this year, the Sales team will need a number of employees to reach that objective. As an HR leader, your role is to keep expectations at reasonable levels, and only hire where appropriate.

You’re also there to be an objective third party, and help other teams see the big picture. You can best do this once you’ve analyzed the competencies you have at hand, and found the biggest weak points or skills gaps.

3. Do a skills gap analysis

A skills gap analysis ensures that your business has the right people in place by determining the gap between your people’s current skills and the skills they need to exceed in their role.

This isn’t a quick task, and shouldn’t be left to the last minute. In fact, just like strategic workforce planning, skills gaps should be monitored and managed on an ongoing basis.

Here’s a detailed guide on how to identify skills gaps. The key steps include:

• Surveying team members and leading skills assessments to see what competencies you already have in place.
• Using company KPIs to see how the business as a whole performs against its objectives, and therefore what additional skills could be helpful.
• Comparing against external benchmarks and industry best practices.
• Using AI tools to map out your organization’s skills, and spot obvious skills gaps in place.

That last point is important. As we’ll see shortly, the right tooling lets you complete both skills gaps analyses and workforce planning in real time, instead of waiting months for any real results.

4. Perform a training needs analysis

Your skills gap analysis should lead directly to training needs analysis. This helps you determine the training required to help fill those skills gaps.

Despite our focus so far on hiring, proper internal training is a vital part of strategic workforce planning. You shouldn’t only look outside for the top talent; can you bridge workforce gaps by upskilling the people you already know and trust?

Traditionally, a training needs analysis is conducted by training departments who seek out managers to find course topics. Unfortunately, this model falls short because it’s often based on assumptions of what employees need to learn.

Instead, first ask your employees what they want and need to learn. A collaborative approach to training will encourage your entire company to work together to create relevant and effective training. Once you’ve identified your needs, you’ll be able to create an accurate action plan that includes training courses that will fill in your skill gaps.

5. Deliver your (interim) workforce plan

Once you have your business goals in place, an accurate assessment of the current workforce, and clear requests from other teams, you can produce your first strategic workforce plan. Think of it as an interim plan, because this should be a living document. It’s destined to change even sooner than you think.

Despite this, you can still build towards long-term strategic goals. You can also include contingency plans and milestones that will tell you if you’re on the right track or not.

Your plan should also factor in retention. Some level of employee churn is to be expected, and should be reflected in your workforce planning. Your plan should be explicit about whether you intend to replace leavers by default — which most managers will expect — or if there are good business reasons to take another approach.

Finally, prepare your interim plan with the clear expectation that you’ll return to and update it often.

6. Find your planning & reporting cadence

As noted above, the rate of change in recent years feels faster than ever. Annual business plans give way to quarterly or half-yearly planning cycles, and executives must revise their long-term goals more frequently.

Talent acquisition should follow suit. While HR leaders may have previously had an annual headcount target to work towards, it makes more sense to think in the short term and update regularly.

Effective workforce planning works in a loop, based on the actual skills and experience you have in house at any one time. In a perfect world, you don’t even need workforce planning, because you always know what skills gaps exist and what’s required to close them.

But in reality, you’ll always need to report back to stakeholders, secure budget, and align on the right path forward. So even with real-time data and constant feedback from other teams, you need to provide regular reports and update the larger plan.

Expect a detailed review and recommit to your strategic plan at least every quarter. That’s a lot of work, unless you have the right tools to do the heavy lifting.

7. Put real-time planning tools to work

The task of workforce planning involves capturing and analyzing massive amounts of data. That includes those skills gaps and training analyses we saw above. These are vital, but take real time and effort.

Static spreadsheets to plan and manage workforces are too time-consuming, and data quickly becomes outdated.

Workforce planning software makes a continuous strategy possible by centralizing your data and automating data collection and analysis to speed up the process. With this specialized software, you can track and measure a more extensive range of metrics, plan farther into the future, and better anticipate your company’s workforce needs.

Couple this with smart learning management software, and you have a strategic plan for both hiring and upskilling on a continuous basis.

Both of these tools blend your own internal data with industry benchmarks. That’s particularly valuable where you want to meet best practices, but also reflect your unique business and goals.

You also get real-time insights and can model scenarios. Given the uncertainty we’ve touched on several times above, that’s crucial. You want to know the impact that certain staffing strategies will have on your business in a range of scenarios.

Finally, the best tools can even identify trends and offer suggestions automatically using AI. This makes strategic planning dynamic, because you don’t have to commit to a focused planning session to get insights. They’re delivered to you in real time, so you can decide whether to change your existing plan or refocus resources.

Successful workforce planning is ongoing

As is hopefully clear by now, great workforce planning — in fact, all strategic planning — must be dynamic and respond to circumstances as they arise. You can’t realistically hope that your one-year plan from December 2024 will still make sense in December 2025. It may already be out of date by March.

Which leads to an inconvenient truth: the work is never done. The best organizations embrace this and strive to make strategic planning a continuous process.

On top of that, here are a few final keys to successful planning:

• Collaboration is key. Most companies silo workforce planning to their HR department. This misses a great opportunity to collect valuable information that lives in different areas of your organization.
• Good tools make all the difference. Identifying skills gaps and building hiring plans is painstaking work. It can take months, by which time your data and plans are already out of date. Modern tools (especially those powered by AI) automate this leg work and give you the insights you need in real time.
• Training can be just as powerful as hiring. External hires are far from the only way to close skills gaps and add human resources. In fact, a great employee training program can be much faster and more efficient, and is known to increase employee engagement along the way. Ensure that everything from onboarding, to upskilling and reskilling, to one-off training courses reflects and builds towards those company goals we started from.

If you want to get the most from employee training and put their skills to best use, we can help. Learn how Skills by 360Learning lets you define, measure, and manage employee skills, and build an empowered organization that reaches its core objectives.

Strategic workforce planning is about getting the most from your human resources. Learning and development is a crucial piece of the pie — the perfect complement to your hiring plan.