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Making a Risk Management Plan for Your Business

It’s impossible to eliminate all business risk. Therefore, it’s essential for having a plan for its management. You’ll be developing one covering compliance, environmental, financial, operational and reputation risk management. These guidelines are for making a risk management plan for your business.

Developing Your Executive Summary

When you start the risk management plan with an executive summary, you’re breaking apart what it will be compromised of into easy to understand chunks. Even though this summary is the project’s high-level overview, the goal is describing the risk management plan’s approach and scope. In doing so, you’re informing all stakeholders regarding what to expect when they’re reviewing these plans so that they can set their expectations appropriately.

Who Are the Stakeholders and What Potential Problems Need Identifying?

During this phase of making the risk management plan, you’re going to need to have a team meeting. Every member of the team must be vocal regarding what they believe could be potential problems or risks. Stakeholders should also be involved in this meeting as well to help you collect ideas regarding what could become a potential risk. All who are participating should look at past projects, what went wrong, what is going wrong in current projects and what everyone hopes to achieve from what they learned from these experiences. During this session, you’ll be creating a sample risk management plan that begins to outline risk management standards and risk management strategies.

Evaluate the Potential Risks Identified

A myriad of internal and external sources can pose as risks including commercial, management and technical, for example. When you’re identifying what these potential risks are and have your list complete, the next step is organizing it according to importance and likelihood. Categorize each risk according to how it could impact your project. For example, does the risk threaten to throw off timelines or budgets? Using a risk breakdown structure is an effective way to help ensure all potential risks are effectively categorized and considered. Use of this risk management plan template keeps everything organized and paints a clear picture of everything you’re identifying.

Assign Ownership and Create Responses

It’s essential to ensure a team member is overseeing each potential risk. That way, they can jump into action should an issue occur. Those who are assigned a risk, as well as the project manager, should work as a team to develop responses before problems arise. That way, if there are issues, the person overseeing the risk can refer to the response that was predetermined.

Have a System for Monitoring

Having effective risk management companies plans includes having a system for monitoring. It’s not wise to develop a security risk management or compliance risk management plan, for example, without having a system for monitoring. What this means is there’s a system for monitoring in place to ensure risk doesn’t occur until the project is finished. In doing so, you’re ensuring no new risks will potentially surface. If one does, like during the IT risk management process, for example, your team will know how to react.

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Writing a Business Plan

define workforce planning in business terms

While it may be tempting to put off, creating a business plan is an essential part of starting your own business. Plans and proposals should be put in a clear format making it easy for potential investors to understand. Because every company has a different goal and product or service to offer, there are business plan templates readily available to help you get on the right track. Many of these templates can be adapted for any company. In general, a business plan writing guide will recommend that the following sections be incorporated into your plan.

Executive Summary

The executive summary is the first section that business plans open with, but is often the last section to actually be written as it’s the most difficult to write. The executive summary is a summary of the overall plan that highlights the key points and gives the reader an idea of what lies ahead in the document. It should include areas such as the business opportunity, target market, marketing and sales strategy, competition, the summary of the financial plan, staff members and a summary of how the plan will be implemented. This section needs to be extremely clear, concise and engaging as you don’t want the reader to push your hard work aside.

Company Description

The company description follows the executive summary and should cover all the details about the company itself. For example, if you are writing a business plan for an internet café, you would want to include the name of the company, where the café would be located, who the main team members involved are and why, how large the company is, who the target market for the internet cafe is, what type of business structure the café is, such as LLC, sole proprietorship, partnership, or corporation, what the internet café business mission and vision statements are, and what the business’s short-term objectives are.

Services and Products

This is the exciting part of the plan where you get to explain what new and improved services or products you are offering. On top of describing the product or service itself, include in the plan what is currently in the market in this area, what problems there are in this area and how your product is the solution. For example, in a business plan for a food truck, perhaps there are numerous other food trucks in the area, but they are all fast –food style and unhealthy so, you want to introduce fast food that serves only organic and fresh ingredients every day. This is where you can also list your price points and future products or services you anticipate.

Market Analysis

The market analysis section will take time to write and research as a lot of effort and research need to go into it. Here is where you have the opportunity to describe what trends are showing up, what the growth rate in this sector looks like, what the current size of this industry is and who your target audience is. A cleaning business plan, for example, may include how this sector has been growing by 10% every year due to an increase in large businesses being built in the city.

Organization and Management

Marketing and sales are the part of the business plan where you explain how you will attract and retain clients. How are you reaching your target customers and what incentives do you offer that will keep them coming back? For a dry cleaner business plan, perhaps if they refer customers, they will get 10% off their next visit. In addition, you may want to explain what needs to be done in order for the business to be profitable. This is a great way of showing that you are conscious about what clear steps need to be taken to make a business successful.

Financial Projections & Appendix

The financial business plan section can be a tricky one to write as it is based on projections. Usually what is included is the short-term projection, which is a year broken down by month and should include start-up permits, equipment, and licenses that are required. This is followed by a three-year projection broken down by year and many often write a five-year projection, but this does not need to be included in the business plan.

The appendix is the last section and contains all the supporting documents and/or required material. This often includes resumes of those involved in the company, letters of reference, product pictures and credit histories. Keep in mind that your business plan is always in development and should be adjusted regularly as your business grows and changes.

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Workforce Planning

Workforce Planning is the process of analyzing, forecasting, and planning workforce supply and demand, assessing gaps, and determining target talent management interventions to ensure that an organization has the right people - with the right skills in the right places at the right time - to fulfill its mandate and strategic objectives.

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1. Strategic Direction

2. supply analysis, 3. demand analysis, 4. gap analysis, 5. solution implementation, 6. monitoring progress.

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workforce planning

Shaun Sutner

Workforce planning is the strategy used by employers to anticipate labor needs and deploy workers most effectively, usually with advanced human resources technology .

Workforce planning is a subset of workforce management , a critical element of most large organizations' software-based human resources and enterprise resource planning systems.

Workforce planning models

Organizations -- including corporations, nonprofit groups, universities and government agencies -- use workforce planning to design the best-performing employee-management groups they can to reach goals, such as profits, productivity or efficiency.

Workforce planning falls into two broad categories: operational and strategic.

Operational workforce planning is on a person-to-person level and streamlines daily, employee-related operations. This approach can help managers develop work schedules and employee hours to maintain business productivity and continuity.

A good operational workforce planning strategy includes elements of talent management and can help ensure talent is well-distributed among divisions and departments, as well as identify organizational needs and the number and types of employees required to do those jobs. It also can pinpoint staffing gaps, which job functions and processes are no longer necessary and whether workers should be reassigned to other roles. Workforce planning also includes developing and putting into practice policies to help employees remain satisfied with their jobs.

Strategic workforce planning deals with broad-based issues that develop over months and years and can encompass all the aspects of an enterprise. Examples include the following:

Benefits of workforce planning

Using workforce planning software, organizations can schedule employee hours and shifts using accurate labor and sales forecasting that matches demand to labor needs. Workforce planning technology can also help managers better prepare for retirements and design a talent acquisition strategy to replace retiring employees.

Executives involved with compliance with federal, international and local laws can use workforce planning software to ensure their staffing strategy dovetails with compliance plans, including having enough people to fill jobs with labor and safety requirements and to control health insurance costs.

Workforce planning vendors

Some HR technology vendors, notably Kronos and Ceridian , have made workforce management and workforce planning software their main offerings. Infor and ADP also have workforce planning modules, and Workforce is a pure-workforce management software vendor whose platform integrates with the SAP SuccessFactors human capital management ( HCM ) suite.

For small and medium-sized businesses that need workforce planning, Paycom, Paylocity and Paychex offer that capability, along with other workforce management and HCM functions, such as payroll and time and attendance .

Mobile workforce management app shows a manager's WFM channels and AI tool for planning employee time off.

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Taking the time to plan and make decisions as part of a broader strategy improves every aspect of your business, including your workforce. Despite the size or type of company, workforce planning is a valuable HR process that ensures you have the staff to execute your business strategy.

Learn what workforce planning is, how it helps with goals and produces positive outcomes, the benefits it can offer, five key steps in workforce planning, and what it looks like in practice.

What is workforce planning?

Primary workforce planning criteria, the goal of workforce planning, how workforce planning affects hr processes, the benefits of workforce planning, the five core workforce planning steps.

Workforce planning is the process of analyzing existing employees and planning for future staffing requirements through talent gap assessment, developing employee management procedures, and setting recruitment strategies.

With effective workforce planning, your business is always staffed with the necessary talent, knowledge, and experience to produce positive business results.

Workforce planning requires developing an appropriate and cost-effective strategy for retaining, recruiting, and training your workforce while also continually assessing employee performance.

A survey by the American Productivity & Quality Center (APQC) shows 89% of 236 organizations integrated workforce planning into their business operations.

The plan for your workforce, what it will look like moving forward, and how to strategize for specific goals are unique to your business and depend on many factors. Typical components that affect workforce planning include:

Strategic workforce planning

Strategic workforce planning is a proactive approach to managing staffing needs and aligns HR processes to business-wide goals. It guides future employee plans and decisions, ensuring they adhere to the company’s long-term vision.

Strategic workforce planning tends to take place at the senior leadership level and focuses on big picture goals such as:

Operational workforce planning

In contrast to strategic workforce planning, operational workforce planning focuses on the business’s immediate priorities. For example, which staff level can efficiently meet the current deadlines and objectives?

Criteria to consider when planning for your company’s future workforce include:

The primary goal of workforce planning is to create a strategy for your staffing needs that ensures you can meet strategic objectives both now and in the future.

To achieve this goal, workforce planning requires an in-depth understanding of your existing workforce, employee skills, experience, load capability, and potential talent gaps.

Through performance tracking and employee assessment, you can take a birds-eye view of your entire workforce and create actionable plans for the future.

Workforce planning allows companies to understand and design their workforce effectively and efficiently with long-term objectives in mind. It prevents problems from developing and allows management to spot issues early, creating plans to remedy them. Examples could include:

Recruitment and employee development

Workforce planning provides the game plan for your company’s recruitment and employee development .

With a clear understanding of your existing workforce and your future goals, you can profile the skills, experience, and knowledge required to meet your needs and develop hiring and training processes to match.

Companies are constantly competing for the same high-end talent. With appropriate workforce planning in place, you can better identify future top employees for your business and develop talent acquisition strategies to attract them to your company.

Plus, workforce planning analysis can help companies formulate proper training and employee development to fill talent gaps while also finding individuals capable of excelling with the correct professional development in place.

This leads us to succession planning and ensuring you maintain successful leadership across your company.

By recognizing the leadership positions currently open or soon to be available, companies can begin assessing existing employees for promotion or targeting outside hires with the right mix of skill and experience.

Workforce planning together with succession planning creates a smooth transition for the critical roles in your company so you can provide an uninterrupted, seamless service or product for your customers.

Performance management

A significant outcome of workforce planning is managing the performance of your employees to increase productivity and efficiency.

With workforce planning, you can understand and develop strategies that get the most out of your employees to increase output and get a higher return on investment from your staffing expenditure.

1. Preparing for the future

With workforce planning, you have a roadmap for your staffing requirements to prepare for the future.

This could mean increasing the number of employees to match growth forecasts or pivoting to a different business model and finding the staff you need to accomplish this.

2. Discovering workforce gaps

Understanding the gaps of your current workforce informs your future personnel strategy in terms of recruitment, redeployment, and training.

3. Effective succession planning

By identifying and developing employees with the potential for future leadership roles, you can effectively plan for staff leaving with minimal disruption.

Succession planning can also have a positive effect on employee engagement. Surveys show that:

4. Improved Retention strategies

Effective workforce planning gives you a clear understanding of employee skills and where they can be the most successful in the business.

So rather than terminating employees, you can retain valuable staff through well-planned redeployment.

5. Flexibility

A clear workforce plan with recruitment and training structures in place can make your business more agile, with the ability to efficiently anticipate and react to change.

You can reduce your overall staffing costs by developing plans to:

Labor costs can account for up 70% of total business costs. Workforce planning allows you to map talent to value and ensure you are getting the best results for the costs.

Successfully implementing new workforce planning strategies is an extensive procedure. However, businesses can break down workforce planning into five core steps to simplify the process.

1. Deciding strategic direction and goals

Workforce planning is a top-down process requiring clear organizational direction and defined strategic goals to inform and guide future decisions.

These are vital questions to ask yourself before analyzing your workforce and implementing new employee management strategies.

It is also important to remember that every process in your business affects another. Therefore, your workforce planning must be an organization-wide endeavor and include effective communication between HR and other departments.

Your new workforce plan must be produced with a collaborative approach that generates a consensus amongst all invested parties. Without organizational buy-in and a rationale for new strategies, you cannot reap the benefits of workforce planning.

Consider this step setting the “soft” workforce planning framework that will define the overall strategy to assess future information rather than the plan’s specific details.

2. Analyze existing workforce

The next step is to properly assess your existing workforce.

Common strategies used in this step include:

These strategies help to answer the following questions:

What you have now is the starting point for future workforce plans. You can begin developing workforce planning strategies when you know what you have (step 2) and where you want to be (step 1).

A common pitfall of workforce planning is ensuring it is based on high-quality information from within the organization and external sources. Workforce planning defined by inaccurate forecasts and undeliverable future goals cannot be successful.

3. Develop your plan

This is where companies must take their overall goal, input the assessment of their existing workforce and produce a concrete plan for the future.

Businesses must plan their workforce to reflect the value and revenue it produces. A simple example of workforce planning in action could be:

A company is manufacturing two models of cars. Model A is the business’ flagship car, selling the most and bringing in the most revenue. However, model B is showing significant growth, and the income from model A is beginning to stagnate.

The car company can produce a simple revenue table based on 2021 figures and 2022’s forecasts.

The revenue per employee for model A is $250,000, and the revenue per employee for model B is $300,000.

Based on growth forecasts, you can estimate that staff working on model B will need to increase by 57 to match increased demand. This process assumes the forecasts are accurate and there are no sudden changes in sales or production. At the same time, model A will likely begin to have a surplus of staff in 2021 and need a reduction of 8 employees.

With workforce planning structures in place, you can develop plans to retrain and redeploy staff from Model A to Model B during 2021. This kind of planning minimizes disruption and reduces employee turnover.

Of course, this is just a plan based on forecasts and does not mean you should immediately move eight employees from model A to model B and hire 49 more. Instead, the business should put redeployment, hiring, and training plans in place to execute when key revenue indicators are met and take a gradual approach that matches the shift in focus of their business.

4. Implement workforce planning

Successfully implementing workforce planning requires:

While the future HR plans for managing your workforce are specific to your business, they will involve some or all of the following:

With many new processes to implement, workforce planning does not transform your company overnight. Instead, it is a gradual endeavor that optimizes each procedure for the given circumstances to get your business closer to your long-term goals.

5. Monitor results

It is crucial to remember workforce planning is an iterative process whereby progress is monitored and measured against specific milestones and long-term goals.

Post-implementation, your workforce planning processes may need adjusting due to unexpected factors within your business or to meet new realities of your industry.

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Workforce planning

Explores the benefits of workforce planning, the activities involved and the stages of the workforce planning process

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Introduction, what is workforce planning, what does workforce planning involve, stages of workforce planning, implementing workforce planning, key action points for workforce planning, useful contacts and further reading, explore our related content.

Workforce planning is a core business process which aligns changing organisation needs with people strategy. It can be the most effective activity an organisation can engage in. It doesn’t need to be complicated and can be adjusted to suit the size and maturity of any organisation. It can provide market and industry intelligence to help organisations focus on a range of challenges and issues, and prepare for initiatives to support longer term business goals.

This factsheet examines the concept of workforce planning. It distinguishes between strategic and operational workforce planning, 'hard' and 'soft' workforce planning, which work together to generate and analyse information before planning actions. It also explores the stages of the workforce planning process and highlights key issues and action points for implementation.

See the full A-Z list of all CIPD factsheets .

Workforce planning is the process of balancing labour supply (skills) against the demand (numbers needed). It includes analysing the current workforce, determining future workforce needs, identifying the gap between the present and the future, and implementing solutions so that an organisation can accomplish its mission, goals, and strategic plan. It’s about getting the right number of people with the right skills employed in the right place at the right time, at the right cost and on the right contract to deliver an organisation’s short and long-term objectives. Workforce planning can enable sustainable organisation performance through better decision-making about the future people needs of the business.

Larger organisations may have dedicated workforce planning teams. Others may start the process following a specific event such as a merger, acquisition or a transformational change project. But a focus on broader workforce planning is important at any time. It can uncover obstacles or unrealistic targets that could hinder strategic change, and provide solutions to mitigate risks to strategic objectives.

Workforce planning processes can:

In turn, this will inform HR practices such as:

For more information on some of these topics, view our other factsheets on talent management , succession planning , recruitment , flexible working , job design and identifying learning and development needs .

Workforce planning will vary in timeframe, scale and the roles covered. It can be seen in fairly basic operational terms, ensuring the right number of people with the right skills are allocated to projects or work areas to meet day-to-day needs. Examples include the need for call centres to be appropriately staffed, or that sufficient people are recruited to fulfil a specific project or deadline. Alternatively, it can be longer-term plan to ensure the best talent in the right roles and better understand what future workforce will be needed. Many people practitioners link workforce planning to talent planning or succession planning and feed the results into resourcing plans which are implemented locally by line managers.

Whatever its precise form, workforce planning should be linked to the organisation’s goals and be part of the strategic business planning process. It offers an important opportunity for senior leaders to engage with and set the agenda for workforce change.

Our Workforce planning practice guide (for CIPD members) gives more detail and a variety of approaches.

Recent developments in workforce planning

The original concept of workforce planning fell out of favour around the early 1980s as some commentators deemed it an inflexible process that failed to predict or allow for downturns in economic growth. One of the perceived failures was that of forecast targets being too narrow and therefore being missed.

More recent interpretations, based on less rigid forecasting, with more flexible target ranges and a greater role for contextual understanding, mean that the technique is an increasingly useful tool. This is especially true as organisations strive to be entrepreneurial, proactive and lead rather than follow change.

Modern approaches to workforce planning are often informed by management information systems such as PESTLE analysis .

Workforce planning practice

Practical workforce planning guidance for CIPD members to help HR and managers deliver a clear people strategy against changing organisational needs

Workforce planning is about generating information, analysing it to inform future demand for people and skills, and translating that into a set of actions that will develop and build on the existing workforce to meet that demand. Understanding of the distinction between ‘soft’ and ‘hard’ aspects can help to explain the renewed interest:

‘Hard’ workforce planning is about numbers: predicting how many people with what skills are likely to be needed. In recent years, using basic numerical or statistical data has become embedded in management information systems to help understand cause and effect of certain phenomena. Metrics alone are not enough however, and they need to be analysed and understood in context.

‘Soft’ (or strategic) workforce planning is about defining a strategy or developing a strategic framework within which information can be assessed. With an increased emphasis on agility and responsiveness, there’s a growing realisation that good-quality management information set within such a framework is the key to identifying and maximising performance drivers. This approach gives managers the opportunity to consider a range of possibilities before reaching a stage where they are forced into action by circumstances.

Some key issues are associated with the start of the process:

Workforce planning flows from organisational strategy and links people management into the operational business process. Read more on this in our strategic human resource management factsheet .

Workforce planning is an integral part of people management and provides the context for most other activities concerned with acquiring, developing and deploying people. Find out more in our Resourcing and talent planning survey reports .

The planning process must be organisation-wide and requires effective communication between the HR team and the rest of the business, as well as input from a variety of stakeholders.

Good-quality information, from within the organisation and from external sources, is vital for good planning.

The workforce planning process can take many forms, but should not be overly complicated. It’s important to involve stakeholders from all parts of the organisation to ensure that they understand the data and what it means for both short- and long-term resourcing needs.

It’s convenient to describe workforce planning as a series of steps. However, it is equally important to realise that it’s an iterative process as indicated in the diagram below, not a rigidly linear one.

The main stages are:

Understand the organisation and the operating environment : What does the organisation’s structure look like now and what’s likely in future? What are the plans to increase productivity, including changes to organisation structure and processes? Are there plans to introduce or update technology ?

Analysing the workforce : Identify and analyse knowledge, skills, abilities and talent profiles, as well as attrition rates and other factors such as employees’ views on job security, satisfaction and intention to leave. Assess other parameters, such as people by geographical location or business division (some functions stretch across divisions), demographic differences within the workforce or contractual differences as to how work is resourced.

Determine future workforce needs : Identify future skills and capabilities, and predict the timeframes involved. Scenario planning can show how different futures might affect people requirements and help to formulate contingency and adaptive plans for achieving future goals.

Identify gaps in workforce skills and knowledge : Future roles are likely to need greater technological and digital awareness. Where recruitment, retention, or both, present a challenge, skills will need to be built via staff development or borrowed via outsourcing or the ‘ gig economy '.

Develop an action plan that has functional, numerical and adaptational flexibility : An agile workforce who can adapt to change will help create a change-ready organisation which can proactively restructure as needed.

Monitor and evaluate action plans and solutions : Develop and agree a set of actions with appropriate support and information for managers and regular reviews of outcomes. Design and embed clear evaluation processes into all stages of the process.

To help with these stages, see our factsheet on employee turnover and retention .

Workforce planning will only add value if it can be implemented positively and successfully. Key issues are:

Generate consensus on the plan : A collaborative approach is vital. It needs wide-ranging consultation with stakeholders to enable all parties to agree and understand the rationale for the actions being taken.

Ensure clear allocation and understanding of responsibilities : It’s essential that everyone involved is clear about what they’re responsible for and what action they need to take.

Provide support for managers : Line managers will need support from people professionals and others to fulfil their responsibilities. They must have the skills and understanding to participate fully in the planning process and act on the outcomes. Skills to interpret data, to input good quality information and analyse performance are essential.

Review and capture learning : Clear and robust mechanisms are needed to review and capture learning and feed this back into the process. Evaluation criteria will depend on the objectives. As workforce planning is about trying to predict the future, evaluation needs to look at outcomes of the decisions and their consequences. Evaluation should be iterative - the more proficient organisations become at workforce planning, the more likely they are to identify relevant evaluation criteria.

Data is kept over time : This allows, for example, snapshots of workforce composition at the same date each year to be easily extracted. Relevant workforce data relies on keeping information on joiners, leavers and movers in each year.

When putting a workforce plan together, people professionals should consider:

Inputs to the plan : What information will be relevant? Does the organisation have good quality data?

Communication : Supporting managers to act on the plan and using appropriate language and data.

Measurement and evaluation : What criteria will be used to assess the success of the plan? How will it be reviewed and refreshed?

The following points are key in workforce planning:

It starts with the organisational strategy and business plan.

It should be ‘future-focussed’ to enable the organisation to deliver the business strategy.

It should be flexible enough to deal with constant change.

It’s a dynamic process and should be subject to constant feedback and review.

It’s not just about numbers. It is also about skills, potential and how these are deployed and organised.

It encompasses the whole organisation and requires buy-in at all levels to be effective.

It brings together operational and strategic planning processes.

It’s as much art as science. No single formula exists that will give a ‘correct’ workforce plan. However, with a wealth of data available, the art is about bringing this together and interpreting it in a meaningful way.

Adam Gibson’s Agile Workforce Planning blog .

PwC - Strategic workforce planning - preparing for the future of work

Willis Towers Watson – Talent analytics

Books and reports

BECHET, T. (2008) Strategic staffing: a comprehensive system for effective workforce planning . New York: Amacom.

GIBSON, A. (forthcoming) Agile workforce planning: how to align people with organizational strategy for improved performance . London: Kogan Page.

SPARKMAN, R. (2018) Strategic workforce planning: developing optimized talent strategies for future growth . London: Kogan Page.

TAYLOR, S. (2018) Resourcing and talent management . 7th ed. London: Chartered Institute of Personnel and Development.

TRIP, R. and WARD, D. (2013) Positioned: strategic workforce planning that gets the right person in the right job . New York: Amacom.

Visit the CIPD and Kogan Page Bookshop to see all our priced publications currently in print.

Journal articles

FARAGHER, J. (2020) You still need to get ready for Brexit (remember Brexit?) People Management (online). 26 March.

KIRTON, H. (2018) Need for workforce planning goes ‘from amber to red’ as net migration slows . People Management (online). 16 July.

MAYO, A. (2015) Strategic workforce planning: a vital business activity. Strategic HR Review . Vol 14. No 5, pp.174-181.

TUCKER, E. (2017) 3 keys to closing workforce planning gaps. TD: Talent Development . Vol 71, No 11, November. pp34-38.

CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.

Members and People Management subscribers can see articles on the People Management website.

This factsheet was last updated by Benjamin Zimpel: Learning Community and Content Curator, CIPD

Benjamin is part of the CIPD Learning team overseeing the CIPD learning communities digitally and face-to-face, and the curation and presentation of learning to support professional development and learning. He primarily focuses on the core areas of HR, Technology and Projects.

Introduction to Strategic Workforce Planning

Identify current and future organisational needs, challenges and opportunities and respond effectively through workforce planning.

The many merits of workforce planning

Episode 150: Workforce planning practices can deliver a higher return on investment and offer insights into the future of work

Resourcing and talent planning report

Our trend analysis and benchmarking data on recruitment, workforce planning and retention helps HR and employers recruit and retain effectively

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What is Workforce Planning?

Workforce planning refers to the process of ensuring an organisation has current and future access to the human capital it needs to perform effectively. Workplace planning involves identifying current and future personnel needs and exploring the most appropriate and cost-effective methods to recruit and retain these individuals. There is also an element of continual analysis of workforce effectiveness and implementing the necessary measures, such as learning and development initiatives, to ensure the workforce remains efficient.

Strategic workforce planning is workforce planning that is aligned to the organisation’s overall business objectives and the long-term vision. In this regard strategic workforce planning may place importance on succession planning as a measure to ensure the necessary skills and knowledge are always present in senior members of staff.

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Workforce planning definition - what is workforce planning?

The workforce planning process can help answer some of your business’s most pressing questions: Who do you need to employ? Who do you have on hand? How do you keep your top talent around? In this article, we answer each, while providing an actionable guide to strategic workforce planning success.

Planning around your workforce starts with a great people strategy.

What is Workforce Planning?

What is strategic workforce planning, why is workforce planning important, who is in charge of workforce planning, do you need workforce planning tools, the six steps of the workforce planning process, how does workforce planning benefit employees, start strategic workforce planning with hr software.

Workforce planning is the analysis and evaluation of an organisation's current and future talent needs. It involves assessing the skills and resources within the current workforce, determining future requirements, identifying gaps and implementing initiatives to attract, hire and retain the right talent to support long-term success.

Workforce   planning  is the supply and demand of your organisation’s talent landscape. It’s the process of analysing and planning the future of your workforce, assessing where you lack resources (skills, etc.) and bolstering that lack with initiatives to attract, hire (and retain) the right people.

The purpose of workforce planning  is to find out where you have the right people in the right roles. It’s ensuring you have the right number of people, who have the right mix of skills, knowledge and experience to help your organisation reach its goals. These often will include both your short and long-term goals.

An example of workforce planning  can start in sales. Let’s say that your business has ambitions to expand internationally, but your sales staff is centred in one country, in one language, and attuned to the needs of one target group. Your workforce planning efforts would involve finding out:

The number of new sales staff you need

The number of languages you want to cover

If those sales staff should be based in other countries

If members of that staff should have certain regional skills or knowledge

A common workforce plan  will often include a brief analysis or summary of your current workforce, your future needs, and how you plan to bridge the gap in between. This might include hiring plans,  learning and development opportunities , or identifying key hires that are not necessarily related to scaling your business (like a new leader or content specialist).

Strategic workforce planning  is designed to meet scenarios three-to-five years in the future. Therefore, it must be aligned with business needs and objectives. It also requires the knowledge and time to prepare a plan that looks at future business strategy and includes scenario planning.

What Is The Workforce Planning Process?

The workforce planning process encompasses:

Workforce planning might come across as a vague term. Especially when it comes to overall business strategy. But. it has a very straightforward purpose and reasoning behind it.

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In today’s talent-based economy, the key element that keeps successful companies running is people.

But, as  the SHRM  states: “Despite its importance, this asset is often not carefully planned, measured, or optimised. This means that many organisations are not sufficiently aware of the current or future workforce gaps that will limit the execution of business strategy.”

As anyone who has ever experienced staff shortages will know, not having the right talent in place can cause enormous strain on a business. The professional services and HR consulting firm,  Mercer , explains it well: “A weak pipeline or hidden talent issues can shake your organisation’s very foundation before anyone has realised there might be a problem.”

However, if organisations are able to look ahead and plan what roles, skills, and people will be needed to meet their business goals now, and in the future, they are more likely to thrive.

Of course, this is often easier said than done. It involves a systematic, rigorous, and disciplined process combined with a:

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The short answer: a lot of people! In some organisations, there are a multitude of stakeholders in charge of the workforce planning process (HR, sales leaders, even the CEO). In some, it’s simply a mystery left to the C-suite. But, should it be that way? The responsibilities of workforce planning may reveal to us who truly should be in charge of steering the conversation.

After all, HR teams are the ones doing the majority of the sourcing, vetting, recruiting, and hiring. Being accountable to results like those means having a place at the table. This is most often where  strategic human resource management  comes into the equation as a tool to enable HR teams to lead conversations on greater workforce planning.

All of this is to say that the responsibilities of workforce planning will vary by organisation. It really depends on the role an HR team has, and whether or not they have been able to reserve their own spot at the table of management.

Workforce planning tools can help offset some of the uncertainty surrounding workforce planning. That’s because it is an attempt to bridge the gap between where your workforce currently stands, and where it can go.

Check out our article about the top five workforce planning tools you can try today.

The workforce planning process can be categorised into six key steps. As an organisation, it helps to sit down and define answers to each of these to try and bring meaning to each.

And, as mentioned before, while HR may drive the conversation, it is imperative that many key stakeholders find themselves a seat at the table. They all should be able to weigh in, in order to align your ‘people plan’ with your business plan.

Check out our guide to aligning your HR’s goals with the company’s goals today.

the strategic workforce planning process

1. What Is The Plan?

Where is your business going? Where do you want it to go? What are the current goals of top-level management? Workforce planning needs to start from the top down, and it needs to be set out by some kind of vision or overall goal to work toward. Whether that is doubling headcount or increasing the amount of leaders.

How do you formulate a proper HR strategy, overall? Here’s our guide to the process.

2. Who Do We Have Now?

The next step is to analyse the talent you have on hand. Who do you currently have working for you? What skills or training do they have? What seniority levels do you have a lot of? Take into account everything you currently have, ideally in the form of data and over a period of time to see how you’ve grown to this point.

3. What Do We Do Next?

Think about the space in between your current inventory of talent and your ultimate goal. So, what do you need next? Do you need more people? Different kinds of skills? More leaders? This will begin to inform you in terms of what you should do and what concrete measures you may need to implement.

4. Talent Gaps

Let’s dig a bit deeper. If we think about what we need to do next, first we need to think about what’s missing. What are the most pressing talent gaps in your organisation? Which ones would help you reach your goal sooner? For instance, would hiring the perfect high-level executive help to recruit even more mid-level talent? Which gaps, when solved, turn into their own amazing opportunities for growth?

5. Fixes & Initiatives

To address those gaps, what will you do? Will you focus on campus recruiting, formulating a more compelling remuneration package or rewards for top talent? What kind of fixes will help address those gaps, help you take the next in your workforce plan, ultimately to achieve your goal.

6. Measure Results

Did your fixes work? How much closer are you to your goal? Here, analytics and reporting are absolutely essential, as they can track your progress over time against your goal. And, in a click or two, you should be able to have a report that you can use and bring to executive management.

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Mercer puts it this way in their  Global Talent Trends Report 2020:  “It can’t just be about employee capacity and business unit alignment, [workforce planning] must recognise employees’ potential and engagement and be intertwined with the company’s technology roadmap.”

Sadly, the same report which gathered insights from 7,000+ people from nine industries and 16 regions says that two in five HR leaders say they don’t know what skills they have in their workforce today!

That means that successful workforce planning requires a combination of:

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Start your workforce planning journey on the right foot with an HR software like Personio. Unlock the power of employee data management, enhanced reporting, and improved decision making. Upgrade your people operations for now and into the future by starting a free trial with Personio today .

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What is workforce planning, and why is it important?

Workforce planning is a fundamental business process which aligns business goals and needs with people strategy. In the startup world, you create a business plan to present to investors hoping that your new business venture will get funding – which is necessary to pay your bills, including employee salaries. But even established businesses create plans for strategy, growth, and new product lines. It’s a fundamental part of doing business.

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workforce planning

Table of contents:

What is workforce planning?

What is involved in workforce planning, how to create a workforce plan.

Workforce planning is the people side of planning, but some businesses skip it, thinking that people will just appear when needed. Workforce planning aligns core business goals with people strategy . It makes no sense to plan on a new product launch next year without thinking about R&D, supply chain, and sales staff.

Workforce planning is the tool you use to ensure that alignment.

The Chartered Institute of Personnel and Development (CIPD) identifies the critical points of workforce planning as follows.

This article will break down these points and how they apply to your business.

1. Reduce labor costs in favor of workforce deployment and flexibility

Labor is often the highest cost for businesses outside of manufacturing. Some estimates put labor costs at 60% and even 70% of expenses . With these costs, planning to reduce costs while increasing flexibility is critical to continued success.

This isn’t advocating for low-balling employees or providing rotten benefits for employees. It’s about getting the right people in the correct positions. An engaged, competent, happy employee will cost less than an unhappy, unqualified employee. Remember, turnover is expensive as well .

2. Identify and respond to changing customer needs

The classic case study of a company that didn’t respond to customer needs is Kodak. As the king of film, Kodak had digital technology early but decided to focus on film, thinking digital was a fad. It wasn’t, and the company struggled for survival, dropping from a peak of 145,000 employees to 5,000 as of August 2020 .

Human resources departments need to be a bit of a fortune-teller to accurately predict workforce needs. Because SHRM doesn’t issue crystal balls, HR needs to work closely with each department to help predict needs and create plans for meeting these. Open communication between HR and each department is critical.

3. Identify relevant strategies for focused people development

The very premise of workforce planning is that business changes, and because business changes, people need to change. Figuring out talent gaps and plans to fill those gaps is a core function of workforce planning.

People development needs to happen before the need exists. Remember, you can go out and search for the “unicorn” candidate to fill a need immediately, but it’s often more manageable if you plan and develop an employee to take care of that specialty skill gap – if you do it right . This can mean training classes, graduate programs, or stretch assignments.

4. Target inefficiencies

If you’ve ever heard “we’ve always done it that way” as an explanation, then you know that the business has inefficiencies that can be rooted out. Good HR will ask; “What should we stop doing?” as well as “What should we do?”. You can find inefficiencies in all areas of the business.

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5. Improve employee retention

Turnover is expensive – not only does it take time and money to find, interview, and onboard a new employee, training them can take months. Good HR focuses on retaining employees who have potential. (You shouldn’t retain just to retain – if someone is a toxic employee , giving them more technical skills won’t eliminate their toxicity.) Creating career paths within the company can be an excellent workforce planning tool to aid employee retention .

6. Improve productivity and quality outputs

While managers need to figure out how to improve productivity and quality, HR can provide support. For instance, are there policies and procedures that can increase productivity and quality? What support do employees get for reaching their goals? When HR takes a look at the workforce, they can spot problems that decrease productivity. For instance, an employee who bullies their coworkers can destroy productivity in a department.

HR needs to plan to find, coach, or remove such employees, as well as helping managers find better ways to do things.

7. Improve employees’ work-life balance

Employees are at the center of workforce planning – without employees, all plans are worthless. You can increase your productivity by requiring everyone to work 80-hour weeks, but your turnover will shoot through the roof, and your quality will collapse.

Through making sure that employees have sufficient downtime and are supported at work, your workforce will be a lot more stable.

8. Make recommendations to deliver strategic value through talent

Sometimes managers can undervalue employees – they think if they can get someone cheaper, they should. But, good workforce planning demonstrates that you pay for top skills. While we use the word talent often in HR, you really should think about it in terms of skills. What skills do these employees have that can make a difference in your business?

Remember that treating employees right is a lot easier than trying to squeeze value out of people who are exhausted and burnt out .

This is more than just figuring out who you need to hire. There are many ways to approach this, but here are four critical elements that will make your workforce planning a success.

1. Understand the company’s mission and goals

Workforce planning doesn’t exist in a vacuum – it needs to support the company’s goals. Are you looking to expand across North America? Well, that’s quite different from a company that is content operating out of a single location.

The company’s mission matters as well. What’s the most important thing to the CEO, shareholders, employees, and customers? Make sure you have that answered before you move to step two.

2. Conduct a present gap analysis

This is a systematic method of understanding the gaps in the organization. What is missing? While workforce planning focuses on the people side of the business, keep in mind that a gap analysis looks at all business areas, not just skills and talent .

People aren’t at their best unless they have the equipment, training, and support they need. This is looking at the situation now. Remember all the points above – you need to look for improvement in all these areas.

3. Project for the future

This involves speaking with company leadership and involving every unit in the business. You’re looking for where the growth will be and where the workforce will shrink. You want to determine what skills the company will need in the coming years, not just now.

4. Conduct a future gap analysis

Knowing what you do about the current employment situation and the business’s goals and projected path, put together what the workforce will need and look at your gaps:

Make sure you look at external trends as well. In 2019, no one would have guessed the massive shift toward remote work, but now, you’d be remiss not to consider where the workforce will be in the future. Will employees continue to work remotely or will they expect to? If so, is your company prepared to support people in other states? Or do you want to limit hiring to your local area, regardless of where they work?

Of course, there are many more things that you can do to plan for your workforce’s future, but these will get you a solid foundation. And, one last note: remember to be flexible. Plans change, and your workforce planning documents need to flex as the world changes as well.

Frequently asked questions

How do you do labor planning.

Labor planning (also known as workforce planning) is the process that generates information and analyzes it to inform future demand for people and skills in order to create a set of actions that will develop or build on existing workforce members who can meet these demands.

What are the three stages of workforce planning?

The pre-hiring phase of labor planning is the most important, as it helps to ensure that new hires are productive from day one. This includes making sure they have all the necessary skills and training for their position.

Who is responsible for workforce planning?

Senior management is always involved in the process of planning for their company's future workforce. This includes key executives like CEO and COO, alongside other leaders who provide insights into organizational strategy, such as finance officers or human resources managers.

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Strategic Workforce Planning

Translate business strategy into workforce strategy, strategic workforce planning insights.

Today’s environment of rapid change and uncertainty increases pressure on HR to ensure the organization has the required talent to support changing business priorities. Strategic workforce planning sets HR up to identify talent needs associated with the organization’s future goals and establish a strategy to ensure the organization has the right mix of talent, technologies and employment models to reach these goals.

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Strategic workforce planning begins with business strategy

The first step in building an effective workforce plan is understanding the organization's business strategy and goals. HR leaders should partner with business leaders to understand strategic objectives and build a business case for the investment in a strategic workforce plan. Tip: Business leaders are under tremendous pressure to hit short-term targets and focus on immediate staffing needs. HR leaders should leverage data to illustrate how strategic workforce planning can mitigate those pressures and set leaders up for future success.

67% of users surveyed rate their organization's HR function as not effective at using data in workforce planning, while 33% rate their organization's HR function as effective.

Insights You Can Use

Gartner offers insights, advice and tools, like Gartner TalentNeuron, that help HR practice effective workforce planning, thinking ahead to address tomorrow's talent and business needs today.

define workforce planning in business terms

Sources of Workforce Planning Intelligence

To develop a successful workforce planning strategy, organizations must gather intelligence to understand business strategy, identify talent risks associated with successfully executing that strategy and develop a plan to address those risks. In this Gartner research, we detail 13 internal and external labor market sources HR can leverage during the workforce planning process.

define workforce planning in business terms

Build a Business Case for Workforce Planning

Based on extensive research on strategic workforce planning, this Gartner presentation template is designed to help HR leaders build a business case for workforce planning. The template includes guidance on building a proposal, explaining the importance of workforce planning and how to address potential challenges.

define workforce planning in business terms

How to Leverage Data for More Influential Workforce Planning

Effectively use data in workforce planning to ensure business leaders consider talent implications when making strategic business decisions. Data will help identify future needs and communicate the top talent risks to executing business objectives.

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How Gartner Helps CHROs with Strategic Workforce Planning

define workforce planning in business terms

Reengineer Workforce Planning for Transformation and Cost Savings

Business disruption increased 260% in the past five years, and COVID-19 further turbocharged this disruption. This webinar addresses the necessity to know where you need to reassign roles by skill and build internal skill sets for future workforce needs.

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The Unbounded Workforce: Decode the Future of Business

This complimentary webinar spotlights how trends like remote work, increased reliance on a contingent workforce, and the decoupling of critical skills and critical roles bring new challenges and opportunities to the forefront for human resource leaders.

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define workforce planning in business terms

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Understand the top challenges HR leaders face while workforce planning at their organizations, the implications of those challenges and how insight into the external talent market allows the HR team to best address each challenge.

Strategic Workforce Planning Case Studies

How does gartner support your future workforce strategy.

Ram Vadivelu, Senior Director, Talent and Workforce Analysis, Qualcomm, shares how Gartner TalentNeuron helped his team accurately identify emerging skills to solidify their talent strategy and how they rely on TalentNeuron's robust analytics and tools to support strategic planning and drive decisions.

Gartner TalentNeuron helps with both strategic and operational workforce planning. TalentNeuron figured out a way to synthesize over 60,000 data points that you can pull, leverage and then present to your senior leadership.

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Workforce planning questions Gartner can help answer

What is workforce planning.

In strategic workforce planning, HR evaluates workforce supply and demand, assesses skill gaps and determines what talent management initiatives are required for the workforce to drive business objectives now and into the future. 

To successfully implement a future-proof workforce planning model, HR leaders need to gather the right information to inform them of the existing skills gaps in the organization and identify pathways to filling those gaps as the business grows and develops. 

The workforce planning model is the roadmap of where HR’s hiring practices are currently and where they need to be to develop and acquire the strategic skills needed for the future.

Why do you need strategic workforce planning?

Organizations rely on workforce planning to map existing and future talent needs. Without strategically analyzing the skills gaps within the business, and projecting what skills will be required as the business evolves, the organization will lack the critical talent and knowledge needed to deliver on strategic goals.

What is the role of HR in workforce planning?

HR needs to drive the future-proofing of the workforce. If HR fails to fill skills gaps strategically, the workforce will continue to lack the necessary talent to develop and deliver on business strategy. 

Additionally, HR needs to educate and influence business leaders on the importance of upskilling employees and developing leaders to thrive in the digital workplace.

What are the key focuses of a workforce plan?

Keys to executing a successful workforce plan include:

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