To build a successful company, you need to build a winning workforce: Skilled workers are the cornerstone of every successful company. But what happens when there’s a shortage of those workers? How do you tackle internal skills gaps? How do companies cope with them without their productivity plummeting?
The answer to all of these problems (and many more!) lies in strategic workforce planning. This article covers all the details: What the benefits are of having a strategic workforce plan, how to create one, and the best practices to use when designing it.
But first, let’s start by defining what a strategic workforce plan actually is.
Table of contents
- What is strategic workforce planning?
- The 3 most important benefits of having a strategic workforce plan in place
- How to create a strategic workforce plan
- 5 tips and tricks when creating a strategic workforce plan
- Use the right workforce planning tools to build a winning workforce
- ✅ Ready to build a winning team? Try TestGorilla today!
What is strategic workforce planning?
In the simplest terms, strategic workforce planning is a process by which you ensure that you’re not over- or understaffed for any part of your operations.
With strategic workforce planning, you essentially try to match the right employees with the right jobs and responsibilities for them. Otherwise said, you match the strengths of your employees with the available roles to make sure everyone has the right conditions to be productive and excel at their position.
On top of the matching process, a strategic workforce plan will help you understand just how many people you actually need for the operations of your business at present and in the future.
This will prevent your business from over-hiring, i.e. hiring too many people who then wouldn’t have anything to do, or under-hiring, i.e. not having enough people to successfully accomplish your goals.
But why is strategic workforce planning important? There are a number of reasons why you need a strategic workforce plan, but the following four are the most essential:
- Agility in responding to talent shortages: Just because you aren’t dealing with talent gaps at the moment, doesn’t mean you won’t experience them in the future. A senior engineer who is just two years away from retiring will soon leave a void that needs to be filled. And if you’re not prepared for it, your business operations will take a hit when the time comes.
- Cost and talent optimization: Some 30 years ago, businesses could only choose from a local talent pool when hiring. Today, they can easily have access to a global talent pool, which means that businesses can easily optimize costs and build a more skilled workforce to meet the challenges of tomorrow.
- Flexibility: Did you know that there are over 57 million freelancers in the U.S.? When creating a strategic workforce plan, you should consider gig workers and how they can contribute during large projects.
- Talent management: Pipeline, pipeline, pipeline. Business leaders always need to think about nurturing employees so they can take on more senior roles in the company. It’s cheaper and more effective to train an employee who is already working in your organization and help them move to a senior role than it is to hire someone externally.
The 3 most important benefits of having a strategic workforce plan in place
A strategic workforce plan isn’t just a nice-to-have, it’s a must for many companies and organizations if they want to stay competitive. And the following three benefits are the most important ones when it comes to strategic workforce planning:
1. The ability to anticipate workforce gaps
The first biggest benefit of strategic workforce planning is anticipating workforce gaps. No matter the industry, every single organization has felt the effect of the Great Resignation during the 2020-2022 period.
Businesses that had a strategic workforce plan managed to overcome this faster than those that didn’t.
Businesses not only have to plan for retiring employees and their impact on operations, but also for global market trends and movements in the employee market, the availability of talent for certain roles, the satisfaction level of current employees, as well as the churn and turnover rate of their organization.
It’s necessary to consider all those factors if you want your organization to correctly anticipate skills gaps. And if you have a strategic workforce plan in place, you will have an easier time seeing all of these disrupting effects and reacting to them swiftly so that your organization doesn’t suffer.
2. An accurate understanding of your current workforce’s capacity
Analyzing your current workforce will help you evaluate your strengths and the potential risks your organization might face. With an analysis, you will understand what your current company’s capacity is. With that, you will know which projects you’re able to handle successfully and for which projects you might need to hire more people.
This will enable you to prepare for the future: knowing what needs to be upgraded (and downgraded) in the company helps you become more competitive in the market.
3. Better results
Having a strategic workforce plan will improve your company’s results.
First of all, you need to analyze your current workforce and understand what their strengths, weaknesses, skills, and capabilities are. This alone will provide many insights into how to use your workforce better.
For example, you might find employees who could do better in other roles in your company and produce better results.
You’ll also gain a deep understanding of what your workforce needs to perform better, which enables you to design the right learning and development initiatives.
How to create a strategic workforce plan
We went over the benefits of having a strategic workforce plan and why you should have it in your workplace. Now, we’ll go over the steps on how to create it, starting with the 9-box grid framework.
Use the 9-box grid framework
The 9-box grid is a framework you can use to analyze your current workforce and understand how each employee can evolve in your organization (and how you can help them with that).
The 9-box grid is a 3×3 model with 2 axes: performance and potential.
Within the box, we get 9 separate boxes that correspond to the following:
- Bad hires – low performance and low potential: Employees that fall into this category can be labeled as bad hires for your organization.
- Need coaching – moderate performance and low potential: The employees in this category are solid performers, but they need coaching and a reassessment of their current tasks.
- Valuable employees – high performance and low potential: The employees in this box are valuable members of any organization; they’re the worker bees that get things done, but don’t want to rise in rank.
- Employees staying in their comfort zone – low performance and moderate potential: These employees should be challenged in their roles and given goals that would push them out of their comfort zone.
- Core employees to grow your business – moderate performance and moderate potential: This box has employees that can grow both in potential and performance, but require plenty of training and coaching.
- Strategic thinkers – high performance and moderate potential Employees in this category should work on their strategic skills, think about the bigger picture, and acquire the ability to see the organization holistically.
- Hidden gem – low performance and high potential: These are usually seasoned professionals who have been either mismatched with a role or need a different manager.
- Top performers – moderate performance and high potential: Employees in this box are doing extremely well in the company and they need that last push to become the top employees in the company. Invest in coaching them and give them stretch goals.
- Star employees – high performance and high potential: These are the star employees of the company, who can and should be prepared for leadership roles in your organization.
When creating a 9-box grid, you need to ensure that you have objective criteria that would enable you to evaluate employees and assign each person to a specific box. Unconscious bias, however, might make this difficult: The people in charge of assessing employees could make mistakes.
A good way to bypass that problem is to give your employees tests that will provide you with objective and bias-free assessments of their current skills and capacities.
When creating a strategic workforce plan, you won’t just have to use the 9-box grid model to assess your employees and call it a day. You also need to look into all the parts of your organization and prepare strategically for the future.
One of the areas you need to pay close attention to is recruitment. You need to be prepared to hire people fast if you’re anticipating a heavier workload and also have a plan for when the busy period is over. Hint: Freelancers can be a tremendous help here.
Also, you need to realign your hiring process so that you hire the right people at the right time and for the right roles. Pre-employment tests can help with that and enable you to streamline the entire recruitment process.
Take a look at our test library and explore the 280+ scientifically validated tests that provide bias-free and objective results you can trust.
Focus on learning and development
A strategic workforce plan always needs to focus on learning and development. Once you analyze your workforce, you’ll know what needs to be done to help your employees upskill and progress. And that’s exactly where learning and development come in.
A great learning and development process can make the difference between a company that adapts, evolves, and keeps up with market trends and a company that becomes outdated and slowly loses its position and competitiveness.
The half-life of a skill in today’s market is about four years. This means that the skill loses 50% of its importance in four years, and becomes obsolete in about eight. So, learning and development need to be a core part of your strategic workforce planning process if you want your workforce (and your company) to stay relevant in today’s market.
Use rewards, recognition, and promotions
And the last step of strategic workforce planning is to consider rewards and recognition in the workplace.
You don’t only lose employees when they leave your company; when promoting them, you also need to decide who will take on their previous role and fill the gap they leave behind.
So, you need to take into consideration the promotions in your organization and plan them out so nothing breaks down if someone gets promoted.
5 tips and tricks when creating a strategic workforce plan
Creating a strategic workforce plan isn’t easy, but the following five tips and tricks will help you prepare well and make the most of it:
1. Match the right people with the right roles
Once you analyze your workforce, you’ll have a list of everyone’s skills, strengths, and weaknesses. This will enable you to match the right people with the right roles. Try to match people’s strengths with their jobs, because that’s how they’ll perform best and feel the most motivated.
2. Assess your short-term and long-term goals
A company lives short-term but thrives long-term. When creating a strategic workforce plan, you will need to take into account both your short-term and the long-term goals.
In the short term, you need to ensure that your company can operate without disruptions and complete all projects successfully.
At the same time, you can’t neglect long-term goals. You need to plan ahead and implement a long-term plan to ensure that your company can thrive for years to come.
3. Communication, communication, communication
Creating a strategic workforce plan is only a part of the equation; the other part is communication. All relevant stakeholders need to have all the necessary information when it comes to implementing the strategic workforce plan.
Hiring managers need to know what skillsets they need to look for. Team managers need to know what kind of behavior they need to reward and what they shouldn’t tolerate. The learning and development team needs to know what kind of skills are a priority to teach. And to align everyone’s goals and efforts, communication between teams and departments is essential.
4. Use the right metrics
A strategic workforce plan is best supported by the right metrics: The only way to know whether it was successful or not is to define objectives and measure the outcomes.
For example, when developing new learning and development initiatives, you need to know which skills to teach and how you’ll evaluate results. Hiring managers need to know how many people they need to hire for a specific role, what skills they need to look for, and how success will be measured.
Using the right metrics can make all the difference between having a successful strategic workforce plan and one that simply falls through.
5. Stay flexible: Planning is essential, but rigid plans are useless
Maybe you had a great strategic workforce plan a few years ago… And then the pandemic hit. And shortly after, the Great Resignation. No amount of planning could have prepared you for those two events.
So even though planning is essential, plans need to stay flexible. There will be external events and situations that you simply can’t prepare for, so you need to be able to adjust your plans accordingly.
Remember to stay flexible when it comes to your plans and to stay focused when it comes to your goals.
Use the right workforce planning tools to build a winning workforce
Strategic workforce planning will help you create a more resilient organization that is better prepared for unexpected events and crises.
To ensure that you get the right people in the right roles at the right time, you need the right workforce planning tools, such as a skills assessment platform like TestGorilla to evaluate the strengths and weaknesses of your employees.
Sign up for a free 30-minute demo to see how our platform can help you implement the most suitable strategic workforce planning model for your organization – and stay competitive.