People planning has always been a critical component for the success of an organization. But this is especially the case in 2024 where strong headwinds are still blowing in many industries. In this guide we will discuss:
Workforce planning (a.k.a. people planning) is an important task for all companies with employees. Management look at who works for them now, think about what kind of workers they'll need in the future, and figure out how to get there. This people plan typically requires checking the number and skills of the people that the company has, then predicting what will be required later to achieve success in line with the overall business plan.
Once a people plan has been prepared, then line managers will hire, train, or move people around to fill in the talent gaps. They will have to keep an eye on things because people planning is a continuous exercise. Human Resources will also have to make sure that the business follows the rules and has a diverse group of people in the business to make things fair.
The key difference for people planning in 2024 when compared to prior years is the availability of data. But the main challenge for those preparing workforce plans is knowing what data to use and how to use the data. Look no further, as we have broken the process down in to six simple steps in the next section.
The data-driven workforce planning process involves several steps to align an organization's workforce with its business goals. If you are looking for key components of people planning then skip to the next section which talks about; people strategy, recruitment, employee retention, and succession planning.
But for those of you who want to get straight in to the strategic workforce planning process you are in the right place. The following six key steps have been tailor made for you:
Start by understanding the organization's overall business objectives and goals. This step is crucial because strategic workforce planning must align with these objectives. If there is any confusion then clarify what the organization aims to achieve in the short-term and long-term.
Those responsible for the people planning process must have a good understanding of the overall business plan, so that they can align the business strategy to the workforce plan. Without it they won't be equipped to hire the right talent with the right skills for the future of the organization.
The second step is to examine the organization's existing staff in terms of skills, roles, and performance. It is important that those responsible for the people plan have a deep understanding of employee demographics, capabilities, and experiences. This data and analysis will form the baseline understanding of the current workforce.
Understanding the headcount efficiency of existing staff is easy to do in 2024 with the help of functional headcount benchmarks, like those provided by CompanySights. Equipped with these benchmark metrics, companies can quickly identify functions that may be inefficient today, and focus their efforts on improving them in the future.
While this baseline exercise isn't the most exciting part of the strategic workforce planning process, we would like to highlight that it is the most important. Without an accurate view of the existing workforce then the whole people planning process will be flawed.
The best workforce planners use data to predict the organization's future workforce requirements. This involves considering factors such as expected growth, changes in technology, and industry trends. In summary, this step is all about determining how many people are required and what types of skills the organization will need to take it in the right direction.
A key difference in 2024 relative to other years is the access to relevant benchmarking data that will help you determine how many people the business may need in the future. For example, with just a target revenue figure (usually provided by the Finance team) you can forecast the total headcount required at a high level using the current Revenue per Employee metric.
Then with total headcount you can get a view on how many people the organization should have in each function. These benchmarks will use data from companies that are slightly larger than yours (assuming that the business plans to grow) and give you a view on what your organization will probably look like in the future.
People planning? Use external headcount benchmarks to size up each future function here
The next step is to compare the current workforce with the forecasted future needs. Firstly you need to bridge any gaps in the quantity of people required. Then you need to identify any gaps or mismatches between the skills and capabilities of existing employees and what will be required ahead.
It should be pretty straightforward to identify these gaps after you have performed the baseline and future state exercise (refer to points 2 and 3). These gaps will serve as the basis for the workforce planning strategies that you need to develop.
Now that you have identified the gaps, the challenge becomes how they will be filled. The answer is to create future-proof strategies. This may involve recruiting new talent, training existing employees, reassigning staff, outsourcing or even considering replacing people with new technology.
For example, a leading strategy in 2024 is to leverage Artificial Intelligence ('AI'), which is expected to result in more efficient organizations. It is thought that more productivity will come from technology rather than employees in the future. Whatever the strategies are, once they have been developed then it is time to turn them in to reality.
Put the workforce planning strategies into action. Execute recruitment, training, and development plans, and continually monitor progress and performance. Adjust the strategies as needed based on ongoing data analysis and reviews to ensure alignment with business goals.
Management are usually involved in reviewing the workforce plan as it is implemented. They will typically have many responsibilities such as critical decision making. Their involvement will be important to ultimately reap the business benefits of a successful workforce plan.
By following these six steps, organizations can develop a data-driven approach to workforce planning that helps them proactively meet their talent needs and support the overall strategic objectives of the business.
Preparing and executing the people plan involves many responsibilities that comes in many forms. So we have outlined the five key components that we think should be at the top of your list.
Successful recruitment plays an integral part of the workforce planning journey, which is required to achieve the overall business plan. This includes identifying the talent gaps in the current organization that will be required in the future. Then it is about forecasting when these new roles will be required and ultimately executing the recruitment plan.
Our suggestion is to make sure that the strategic workforce planning process includes a review of how all the backfilled roles and new roles are going to be recruited. Then focus on the number of resources (either employees or those from an outsourced recruitment agency) that will be required to execute the hiring plan.
A common approach is to look at how many new hires a recruiter in your company performs today. Then use this ratio to reverse calculate how many recruiters your business will need in the future based on the forecast number of new hires, which includes both new and backfilled roles. The new roles (a.k.a. growth roles) will be identified in the people plan gap analysis, while backfilled roles relate to the turnover of existing employees and can be forecast using historical churn data.
Let's face it - Most of us are incentivized by money in 2024 (especially after the massive jump in inflation that we saw in 2023). Sure, employment law sets the minimum wage that we can pay people. But the whole reward package must be competitive in your industry, otherwise you haven't got a chance at attracting top talent.
Many employers in 2024 are offering above market pay and reward to attract the right people for their organizations. This strategy can work well, but it does also lead to high costs especially when there are other ways to attract talent, such as promoting the potential development opportunities within job descriptions.
So think through your current employee pay and reward strategy carefully and consider making changes that will help the business achieve its overall objectives.
Research suggests that flexible working is now viewed as a work perk, and those not offering it may miss out on retaining and hiring the best talent. It has been argued by some that flexible working also leads to better well being. Better well being usually results in happier employees who are likely stay and promote the business, which is great for everyone.
Whatever your views on flexible working are, the most important thing to successful long-term workforce planning is to keep your best employees happy, which we look at next.
In 2022 we saw a record number of employees leaving companies. They were empowered by the high number of jobs available on market and tired of spending so much time on video calls during Covid-19.
While 2024 involves a different job market (far more competitive), those responsible for workforce planning should focus on retaining employees, especially those that have demonstrated high performance (a.k.a. top talent).
A common retention strategy can include adding valuable benefits such as an employee assistance programme, which can help address a full range of mental health issues (very relevant in 2024).
The people planning process should also consider the breakdown of the existing workforce. If there is a high average age (e.g. typically over 50 years old), then the HR team should put succession planning on the agenda. Effective people management will need to occur to retain those with critical knowledge long enough to pass it on to more junior staff (tip: the more staff that spread the knowledge, the better).
Many businesses overlook the need for a succession plan. Don't get caught out - Include it in your people plans in order to maintain workforce productivity.
Looking for trusted headcount benchmarks? Search here
People planning has always been a key component for the success of many businesses. This is especially relevant in 2024, which is centered on using high quality data, effective communication and pro-active people management.
Remember that we live in an volatile world (just look back at 2023), so it is also advisable for those preparing the people plan to undertake scenario planning. While the overall business strategy should guide the strategic workforce planning process, we also recommend that Human Resources plan for scenarios which take in to account changes from both internal and external factors.
Workforce plans (and business plans) that embrace data will gain a competitive advantage in 2024. So, what are you waiting for? Get planning for the year ahead using data!
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