Workforce Planning: Strategies for Employers

Workforce planning is the process of analysing and forecasting an organisation’s current and future staffing needs to ensure the right people are in the right roles at the right time. It allows employers to identify skills gaps, anticipate future workforce demands and align staffing strategies with business objectives.

Strategic workforce planning requires collaboration between HR, management, and leadership to ensure the workforce strategy is aligned with long-term goals. For workforce planning to be effective, it has to align with evolving employment trends and expectations, such as remote working, flexible arrangements and advancements in technology, as well as the organisation’s needs.

Failing to anticipate future workforce needs can result in talent shortages or overstaffing, both of which impact profitability and efficiency. Employers must also remain compliant with employment laws, including fair hiring practices, equal opportunities and contractual obligations.

 

Role of workforce planning

 

Continued shortages of skills and labour are placing talent attraction and retention high on organisations’ list of business risks. A proactive approach to workforce planning is one way employers can safeguard their people needs.

Workforce planning is a process that analyses current and future workforce trends, allowing organisations to identify the skills and human capital they need to perform effectively. It also highlights the best and most cost-effective methods for recruiting and retaining staff.

Effective workforce planning enables organisations to make informed staffing decisions, preparing for future challenges with minimal operational disruption. While many larger organisations have dedicated workforce planning teams, smaller businesses may begin the process after a specific event, such as a merger or transformative change programme. At any time, uncovering obstacles or unrealistic targets that hamper progress and providing practical solutions can help minimise risks and focus on a broader workforce plan.

Workforce planning should reduce employment costs by improving workforce flexibility and deployment. It can help organisations identify and respond to changing customer needs, develop strategies for targeted employee training, address inefficiencies, improve staff retention, and boost productivity outputs.

For workforce planning policies to succeed, HR departments and organisations must take the lead. A member of the HR team should be designated to manage the process or champion the plan, involving key colleagues and ensuring alignment with the organisation’s strategic business plan.

Workforce planning should be a continuous, flexible activity, responsive to both internal and external changes. Regular evaluation of evolving business needs is essential to ensure the plan remains effective and relevant.

Business owners, senior management, line managers, and HR departments all have a role to play in hiring staff and encouraging them to stay within the organisation.

 

Approaches to workforce planning

 

 

1. Supply Analysis

 

The purpose of supply analysis is to evaluate the organisation as it currently exists – the skills and experience that are vital to your business. Analysis needs to cover both the number of employees and their skills, and factors, including workforce demographics and whether protected classes are represented. If you have a large number of employees nearing retirement age, or conversely, numerous younger employees with higher staff turnover, demographics will be particularly important.

Supply analysis also requires projections of staff loss, this may be because of resignations, internal transfers, retirements, involuntary terminations and promotion. This enables you to take into account the future supply of talent and where it may be needed. The workforce planner can then develop profiles of existing staff as it would look in the future if no action is taken regarding training, recruitment or outsourcing.

 

2. Demand Analysis

 

This analysis takes into consideration several business issues including new product lines, expansion and contraction of global markets, competitive forces, anticipated availability of workforce within geographic boundaries, alongside many other things. Internal and external issues should be considered during the demand analysis.

Analysis of internal influences could focus on whether the workforce has the skills sets required to perform new duties with a new product line (with limited training), or whether existing workforce remains loyal to the business if it has expected changes.

Analysis of external demand should consider whether staff are readily available and possess the ability and skills required by the evolving business. And consideration of what external pressures may change demand for products or services that could affect internal business decisions, and therefore affect workforce planning requirements.

Future composition of your workforce must also be taken into account, which can be done by answering questions such as the number of employees necessary to achieve your business plan objectives; what competencies or skills are required for the new business; what is the composition of the available workforce; what will the business need to do to attract prospective talent; and what will the business need to do to attract and retain a diverse workforce?

 

3. Gap Analysis

 

Gap analysis compares the supply model with the demand model in order to identify gaps between current workforce composition and future workforce requirements. A workforce planner may decide to war-game future scenarios and then select the future most likely to happen, setting contingency plans for alternative futures. The planner should also identify the staff needed who have the required skills, in conjunction with those employees who will no longer fit within the business because of their limited skill set.

 

4. Solution Analysis

 

This involves the development of a strategy to close the gaps identified in the previous step. Approaches for meeting demand in the future may include training, recruitment, retraining, using casual or temporary staff, or outsourcing. Which approach you take depends on whether the business needs to contract, expand, restructure or rely upon temporary staff to meet any new or transitionary workplace demands.

External staff may be required to meet workforce expansion because of the introduction of new product lines, expanded production or services, or wider geographic areas needing to be served. External hiring can be the strategy to adopt in order to address such gaps.

As turnover occurs, whether that is down to employees leaving for other opportunities or retirement, recruitment may also be required. Recruitment approaches vary depending on market factors, the type of candidate you are looking for, diversity related matters, and other factors. Time and costs are huge issues for recruitment, even if the process is efficient. It generally takes longer and costs more to find, hire and train a new employee, than to redeploy an existing member of staff. In many ways, recruiting externally should perhaps be the last resort for workforce planning.

Training and retraining. Instead of centering on filling skills gaps via external recruitment, your HR team may decide on the less expensive option of employee development. This is particularly useful for key high-value roles. Employee development builds on employees’ existing knowledge, retains the organisational culture, and arguably stimulates and motivates the workforce as a whole. A critical part of your workforce planning strategy should be to focus on updating skills and capabilities as older skills become obsolete because of advances in technology.

Such development may involve classroom or on-the-job training, e-learning, and webinars, and may concentrate on specific job roles, duties and tasks or on managerial skills or leadership for new leaders.

Temporary or casual staffing. These types of workers are often best used in highly fluid or dynamic organisations, because it may be better than hiring full-time staff who may not be required on an ongoing basis. This approach makes sense when the demand indicates that the number of employees is likely to vary and cannot be levelled out following resource allocation methods. Such staffing options include temporary and part-time employees, contract workers and consultants.

You can find temporary workers both internally and externally, depending on the requirements of your business. Temporary workers can be found across a depth of professions and can be hired to work at virtually every level and area of an organisation, including CEOs, accountants, consultants, IT, marketing and HR. You will want to make sure that procedures and policies are established that deal with matters such as screening, and selection, discipline, work behaviours and legal compliance issues.

Part-time employees. Those employees who work fewer than full-time hours are considered part-time, and this can be realised in a variety of ways. Some may even job-share with another part-time employee. Part-time work can be used to attract a more diverse workforce, including parents of young children, students, older workers and others who need a more flexible work schedule.

Contract workers and consultants. These types of workers tend to have specialist knowledge or experience and may be used to meet particular requirements of the business. If you are considering hiring such workers to fill an essential skills gap, you should take care you properly identify the best fit for the business, as these types of workers can be expensive to hire, even on a short-term basis.

There may be times when certain non-core business functions are better undertaken by people outside the company, for example, wages or HR. Jobs that are prime for outsourcing are those areas that require critical skills that may only be needed temporarily or periodically. To ensure outsourced functions are appropriately managed, you or your HR department should ensure you select the appropriate firm, establish guidelines for a partnering relationship, communicate your procedures and customs, and metrics for ensuring and measuring business results arising from the partnership.

 

Workforce planning tools

 

Workforce planning tools can help to bridge the gap between your current workforce position and where it goes in the future. The most commonly used tools include:

 

• Organisational strategy – this is set out by your organisation’s management team
• The 9-box grid – this is used to map the current state of your organisation’s workforce across the boundaries of performance and potential.
• HR Analytics and performance – this is a HR software programme with an analytics and reporting platform that helps create data from all the decisions you make.
• Total comparison and benefits analysis – this essentially distils the price paid for top talent and how it currently reconciles with the wider market.
• Contingency planning – this can also be called “scenario planning” and means envisioning certain scenarios and how your organisation will respond to them.

 

Putting together a workforce plan is as much art as it is science. And no single formula, method or strategy exists that will provide you with a “correct” workforce plan. However, with the aid of this guide and wealth of information available, the trick is about bringing it all together and interpreting it in a meaningful way.

 

How to use workforce planning to manage staffing needs

 

Workforce planning is an essential tool for UK employers to ensure staffing levels align with business goals, both now and in the future. By taking a strategic and proactive approach, employers can effectively manage staffing needs, address skills gaps and reduce operational risks.

 

1. Analyse Current Workforce

 

Start by evaluating your existing workforce. Assess current roles, skills, performance levels and workforce demographics to understand the strengths and limitations of your team. Tools like skills audits or employee surveys can help identify gaps and areas for improvement.

 

2. Forecast Future Requirements

 

Determine your organisation’s future staffing needs based on growth plans, market trends, and anticipated challenges. This includes forecasting the number of employees required, the skills they will need, and whether new roles will be necessary to meet organisational goals.

 

3. Identify Skills Gaps

 

Workforce planning allows employers to identify current and future skills shortages. By understanding where gaps exist, employers can create targeted solutions, such as upskilling current employees, recruiting externally, or outsourcing specific tasks.

 

4. Build Workforce Flexibility

 

Ensure your staffing strategy incorporates flexibility. This may involve adopting more agile working patterns, such as part-time, remote, or temporary roles, to respond quickly to changes in demand. Flexible staffing can help minimise costs during quieter periods and scale up during peak times.

 

5. Plan for Recruitment

 

Workforce planning enables employers to identify when and where recruitment will be necessary. Use data-driven insights to streamline recruitment processes, such as targeting talent pools with relevant skills, investing in employer branding, and ensuring recruitment aligns with long-term business needs.

 

6. Develop Talent from Within

 

Internal development is a cost-effective way to manage staffing needs. Employers can introduce training programmes, mentoring, and succession planning to develop existing employees for future roles. Investing in internal talent also improves retention and employee engagement.

 

7. Anticipate Changes in the Business Environment

 

Monitor external factors, such as economic trends, technology advancements, and changes in employment law, to anticipate workforce challenges. By staying informed, employers can adapt staffing strategies to minimise disruption.

 

8. Regularly Review and Adjust

 

Workforce planning should not be a one-off exercise. Regularly review staffing needs to ensure they remain aligned with your organisation’s goals and external influences. Adjust plans as needed to reflect changes in business priorities or workforce performance.

 

How to Use Workforce Planning to Improve Productivity

 

Workforce planning is a powerful tool for UK employers to optimise staffing levels, improve efficiency, and boost productivity across their organisation. By aligning workforce capabilities with business needs, employers can ensure they are maximising the potential of their people while addressing inefficiencies and skill gaps.

 

1. Align Workforce with Business Goals

 

Effective workforce planning starts by linking staffing strategies to organisational objectives. Employers must assess the skills, roles, and staffing levels required to meet both short-term and long-term goals. By ensuring the right people are in the right roles, employers can avoid underutilisation of talent and eliminate productivity bottlenecks.

 

2. Identify and Address Skills Gaps

 

Workforce planning highlights areas where employees lack the skills needed to perform their duties effectively. By identifying gaps, employers can introduce targeted training programmes or upskilling initiatives to ensure their workforce is equipped with the knowledge and capabilities required to meet evolving business demands. This investment in development can lead to improved performance and higher output.

 

3. Optimise Resource Allocation

 

Employers can use workforce planning to distribute resources more efficiently. By analysing workflows, workloads, and team structures, organisations can identify underperforming areas, reassign responsibilities, or restructure teams to improve productivity. Flexible staffing solutions, such as temporary or part-time roles, can help manage peak demand without overburdening permanent staff.

 

4. Reduce Overstaffing and Understaffing

 

Poor staffing levels—whether too high or too low—can impact productivity. Workforce planning allows employers to forecast staffing needs accurately, helping to prevent the inefficiencies caused by overstaffing and the stress and delays caused by understaffing.

 

5. Focus on Employee Engagement and Retention

 

A key component of productivity is employee satisfaction and engagement. Workforce planning helps employers identify ways to retain top performers by offering development opportunities, succession planning, and clear career progression pathways. Employees who feel valued and supported are more likely to perform at their best.

 

6. Embrace Technology and Automation

 

Workforce planning can highlight areas where technology or automation could replace manual processes, freeing up employees to focus on higher-value tasks. Employers can use this insight to integrate tools like workflow automation software, HR systems, or AI solutions, driving both efficiency and productivity.

 

7. Enhance Work-Life Balance and Flexibility

 

Modern workforce planning takes into account flexible working patterns, including remote or hybrid models, to accommodate employee preferences. Well-structured flexibility can improve morale, reduce absenteeism, and lead to higher productivity levels.

 

8. Regularly Monitor and Adjust Plans

 

Workforce planning should be dynamic and continuously monitored. By regularly assessing team performance, employers can identify areas for improvement and adapt workforce plans to ensure ongoing alignment with productivity goals.

 

Workforce succession planning

 

Workforce succession planning is an important aspect of workforce planning that focuses on identifying and preparing employees to step into key roles as they become vacant. This process ensures continuity in leadership, critical operations, and business relationships when existing employees retire, resign, or transition to new roles. By future-proofing your organisation through effective succession planning, employers can build resilience and agility to adapt to change.

A successful succession plan starts with a review of key leadership positions and other critical roles within the organisation. Employers should identify which roles are essential to the business’s success and where any potential vulnerabilities exist. From here, it’s crucial to assess current employees to pinpoint individuals with the skills, potential, and ambition to progress into these roles when needed.

Investing in employee development is central to succession planning. Employers should implement targeted training programmes, mentoring, and leadership development initiatives to help employees acquire the skills required for progression. Identifying future leaders early and nurturing their growth creates a talent pipeline that reduces the risk of skills shortages.

During periods of economic uncertainty, such as mergers, acquisitions, or restructuring, succession plans become even more important. They can help stabilise operations by ensuring there is a clear strategy for filling key roles and maintaining business continuity. Employers who prioritise internal progression also benefit from increased employee engagement and retention, as individuals see a clear path for development and growth within the organisation.

To future-proof your organisation, succession planning should be treated as a living document. Regularly review the plan to ensure it aligns with your organisation’s strategic goals, anticipated challenges, and workforce changes. By taking a proactive approach, employers can safeguard against sudden talent gaps and position their organisation for long-term success.

Incorporating succession planning into broader workforce planning strategies allows employers to respond effectively to external changes, such as technological advancements or shifting industry demands. This forward-thinking approach ensures the organisation remains competitive, adaptable, and equipped with the skills needed to thrive in an evolving business landscape.

 

Need assistance?

 

DavidsonMorris’ professional HR consultants  bring expertise in workforce planning and development. For advice on how to improve your approach to identifying, attracting, developing, engaging and retaining key talent, speak to us.

 

Workforce planning FAQs

 

What is workforce planning?

Workforce planning is the process of analysing an organisation’s current and future staffing needs to ensure the right people are in the right roles at the right time.

 

Why is workforce planning important for UK employers?

It helps businesses anticipate staffing needs, address skills gaps, improve productivity, and manage costs while preparing for future changes in the workforce.

 

What are the key steps in workforce planning?

The process typically involves assessing current staff capabilities, forecasting future needs, identifying gaps, and developing strategies to recruit, train, or reskill employees.

 

How can workforce planning address skills shortages?

Employers can use workforce planning to identify gaps in skills and develop targeted training programmes, upskilling initiatives, or recruitment strategies to attract the right talent.

 

What risks can arise from poor workforce planning?

Failing to plan effectively can lead to understaffing, overstaffing, skills shortages, increased operational costs, and reduced productivity.

 

How often should employers review workforce plans?

Workforce plans should be reviewed regularly, especially when there are changes in business goals, market conditions, or workforce trends.

 

Can workforce planning help with succession planning?

Workforce planning can identify key roles and prepare for transitions by training and developing employees to step into those positions when needed.

 

How does workforce planning account for remote or flexible working?

Employers can incorporate flexible working arrangements into workforce planning to ensure they meet operational needs while accommodating changing employee preferences.

 

Is workforce planning suitable for small businesses?

Small businesses can benefit from workforce planning to improve efficiency, manage limited resources effectively and prepare for growth.

 

How can technology improve workforce planning?

HR software and analytics tools can provide valuable insights into staffing trends, skills gaps and workforce performance, helping businesses make informed decisions.

 

Glossary

 

Term	Definition
Workforce Planning	A strategic process used by employers to ensure they have the right number of people with the right skills in the right roles at the right time.
Skills Gap	A shortfall between the skills employees currently have and those needed to meet organisational goals.
Succession Planning	The process of identifying and developing employees to fill key roles in the future.
Talent Management	Strategies used to attract, retain, develop and deploy employees effectively across the organisation.
Resourcing	The process of identifying and securing the human resources needed to meet current and future workforce demands.
Turnover Rate	The rate at which employees leave and are replaced within an organisation over a given period.
Headcount	The total number of people employed within an organisation at any given time.
Labour Market	The supply of available workers and the demand for workers by employers in a given area or sector.
Forecasting	The use of data and analysis to predict future workforce needs based on organisational strategy and market trends.
Strategic Workforce Planning	Long-term planning that aligns workforce development with the organisation’s business goals and future challenges.