Workforce planning for Plan International

Following on from work IES carried out looking at the people

management content of the strategic plans developed by Plan's country
offices, IES was asked to support a workforce planning pilot. The aims
were to:
 develop a distinctive Plan workforce planning guide fitting the
organisation's culture and needs

 help People and Culture professionals and managers work through the
workforce planning process, including definition of roles and
responsibilities

 select the appropriate workforce planning tools that would be useful to

these staff

 identify what skills and knowledge required to perform effective

workforce planning.

An initial event was run in Woking with representative country directors

and People and Culture managers to build the workforce planning
model. Subsequent sessions were then held to train more HR staff in
workforce planning techniques and how to apply them in a Plan context.

Using the newly created Plan guide to workforce planning, HR managers

were asked to develop their own country workforce plans against a set
format.

Remote support was given to HR teams around the world to complete

the plans both through group working and individual advice sessions.
Draft plans were also critiqued by IES to ensure the appropriate
standards were met. The best examples of the use of workforce planning
tools were added to the online workforce planning guide.
Strategic Workforce Planning: A
3-Step Process Guide
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Posted by Erik van Vulpen

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Workforce planning is often mentioned – but rarely explained. What is workforce

planning, and how do you do it? When used well, strategic workforce planning

enables HR to plan for the capabilities they need in the future. In this article, we will

dive into what workforce planning is, the process, give a number of examples, and

end with a toolkit on how to get started when you want to start planning your

workforce.

Contents

What is Workforce Planning? A definition

Workforce planning and HR analytics

The workforce planning process

An Example of Workforce Planning

The Steps in Workforce Planning – A do-it-yourself Template

Conclusion
What is Workforce Planning? A
definition
Workforce planning, also called strategic workforce planning, is about making sure

that the right person is in the right job at the right moment. This means that there

are not too many people available (overstaffing) nor too few (understaffing).

Workforce planning thus solves staffing problems for today and for the future.

According to Evers (2014), strategic workforce planning is becoming increasingly

important for a number of reasons.

 Demographic changes: An aging workforce poses a number of different

problems, including a lack of in-demand skills, reskilling challenges, and

mass-retirement.

 Cost reduction: Increasing global competition forces companies to work

smarter. At the same time, the aging workforce is a more expensive one –

but not necessarily a more productive one.

 Talent management: Talented employees form a competitive advantage

for the company. Having people with the right drive and lining up a talent

pipeline to replace the aging group of senior management and executives

in the company is essential.

 Flexibility: Today’s competitive landscape requires faster and more

disruptive innovation. The revenue produced by products that are less

than a few years old has increased tremendously in the last few decades.
 At the same time, the tactics that got us here won’t get us where we need

to go next.

When it comes to workforce planning, there are four criteria.

As explored in our HR Metrics & Dashboarding Certificate Program, the goal of

workforce planning is to have a workforce with the right size, shape, cost, and

agility.

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 The goal of size revolves around the number of people and job roles. A

workforce that is too large is overstaffed and works inefficiently while a

workforce that is too small, means that the company isn’t producing what

it potentially could produce. This can be indicated by an excess of

vacancies.

 The goal of shape revolves around having the required competencies

needed today and tomorrow (in the form of succession planning).

 The goal of cost revolves around reaching an optimum labor cost. Too

much will bankrupt the company but too little will result in work not

getting done.

 The goal of agility is about having a workforce that is lean and flexible and

can adapt to changing market demands.

Strategic workforce planning therefore revolves around ensuring that the

company’s workforce has the right size, shape, cost, and agility for the future.

Workforce planning and HR analytics

On this platform, we write mostly about people analytics. You may be wondering:

what’s the difference between workforce planning and people analytics? This

difference is not always easy to define – and may be more methodological than

anything else.
People analytics is defined as a data-driven approach to managing people at work

(Gal, Jensen & Stein, 2017). Strategic workforce planning fits this definition, so it can

be considered one of the tools in an HR data analyst’s arsenal.

However, where people analytics mostly focuses on analyzing relationships

between people drivers and business outcomes, strategic workforce planning has a

much more long-term and strategic focus and is predominantly occupied with

employee formation. This is also the main difference between the two.

Workforce planning shouldn’t be confused with workforce analytics, which is mostly

used as a synonym for people analytics.

The workforce planning process

So how does workforce planning work? There are multiple approaches to workforce

planning but the process is usually similar. However, before we go into the process,

let’s start off with a number of basic guiding principles.

Basic principles of workforce planning

Workforce planning is the dynamic between what we have today and what we need

tomorrow. Our current (employee) formation is therefore relevant when we make

decisions about tomorrow’s ideal formation.

Here are three basic principles of strategic workforce planning

1. Strategic workforce planning is in line with the organization’s strategy. The

organizational strategy is a long-term plan that dictates what the company

 strives to achieve in the next five to ten years. This is an excellent guideline

for planning your workforce

2. Good workforce planning follows the 80/20 Pareto principle. 80% of the

effect is achieved by only 20% of the work. When you engage in strategic

workforce planning, focus on the organization’s primary functions (also

called: critical roles). These are the ones that contribute most to the

organizational results. Overhead and management are of secondary

concern.

3. What’s in the name: workforce planning is strategic. It focuses on tactical

and strategic decisions and therefore has a long-term focus.

The workforce planning process

As we said before, strategic workforce planning is in line with the organization’s

strategy. However, organizational strategy is not the starting point.

Organizational strategy is determined by the current resources and capabilities of

the company, as well as the broader market.

In other words, if a company is very good at producing car paint, it will have

acquired valuable resources and developed unique capabilities. It will have

expensive machines that can make and mix different paint colors, it has knowledge

about chemical compositions of the paints, knows what to mix paints with to make

it stick better to different kind of materials, and it will have experienced managers

and workers that know the industry and the production process.
It will be almost impossible for this company to become a digital marketing

company: it simply doesn’t have the right configuration to do something else

entirely.

This means that the current workforce influences the future direction of the

company, along with its current products, and competition. These forces will steer

the company towards a certain direction.

A workforce plan always starts with the organizational strategy and cascades down

So organizational strategy is formed by market, products, and competition.

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Strategic workforce planning is formed by the organizational strategy. If a company

is looking to double its revenue in the next two years, this will have an impact on

the workforce. Using current data you can calculate how many salespeople you

would need in order to facilitate this growth. This helps in planning your

recruitment pipeline.

——————

An example is a major European airline group. The SWP team in this organization

estimates the number of pilots they need to attract by tracking a number of key metrics.

 Number of aircrafts purchased. These are long-term orders planned years in

advance. These orders are placed after a meticulous analysis of future

demand. The number of pilots needed in the organization depends on the

number of airplanes
  Age distribution of the pilot workforce to calculate the retirement rate. Retired

pilots need to be replaced.

Using this data, the airline company is able to predict the number of pilots that need to

be hired (because of aircraft fleet expansion and retirement) up to 10 years in advance.

This helps them to plan their recruitment activities. Getting pilots ready only takes

around 2 years. This way the company is able to anticipate the increasing shortage in

airline pilots by recruiting with very specific hiring targets which help in planning

recruiting activities.

An Example of Workforce Planning

Let’s take an example of a company with three product lines. The board of directors

has set a number of revenue goals per product line. One of the product lines is

growing very fast and is expected to keep growing, while product line C – which

used to be the company’s flagship product – is slowly dwindling.

A simple calculation model can look like this. We know the figures of 2018 and

based on the potential of the three product lines, we’ve created a revenue goal for

the next year, 2019. By putting all these numbers in one overview, we have a

relatively simple way of assessing how our staff will grow.

A revenue matrix that enables you to create a workforce plan for the next year (2019)

As you can see, some product lines are more profitable than others. We don’t know

the exact cost of personnel (we can easily calculate this and add it to the model),

however, if staffing costs between departments are equal, product line B is much

more profitable than product line C. The revenue per employee in B is $ 1.6 million

divided by 8 people, which is a revenue of $ 200,000 per employee. For C this is $

113,000 per employee.

Based on the growth percentage, you can estimate the growth of staff per

department. Exact numbers are hard to pinpoint. However, assuming there are no

sudden increases in sales and support efficiency, you will have to hire between 12

and 18 people for department B.

Based on this information, you will also know that product line C is unlikely to grow.

In fact, the people who will become redundant in product line C could go to B – as
long as they have the right skills and experience. If not, you can either retrain them,

or let them go.

As you can see, through strategic workforce planning you discover future workforce

challenges. Based on this information, you can already start to retrain a few

workers in department C to work for product line B. This will ensure better

succession and you will have people ready when you need them.

Of course, this doesn’t mean you start to hire 18 people immediately. These growth

numbers are projections. However, it does mean that you should keep an eye out

on the leading indicators for this growth throughout 2019. An example of such an

indicator is new product leads.

If the number of leads in January 2019 grows steeply compared to December 2018,

that’s a good sign that you need to start hiring immediately so you will have the

people to follow up on these new leads in March.

Now this is a very simple model with only a few factors. We can include much more

information, including employee turnover, employees switching product lines,

revenue per employee, function levels, or types and much more. This will make our

model much more complicated but also even more useful.

The Steps in Workforce Planning – A do-

it-yourself Template
In this section, we will present a workforce planning template with the different

steps involved.

Workforce planning centers around three key steps. The first is an analysis of the

current workforce. The second is a conceptualization of the future. The third is an

analysis of the workforce in the future. Let’s discuss these one by one

1. Analysis of the current formation of the workforce

Workforce planning starts with the current employee formation. It answers the

question about what people and skills a company currently has.

There are two areas to explore when gauging the current formation of the

workforce. These are quality of the workforce and quantity of the workforce.

1.1 Quality of the workforce

The quality of the workforce is about current performance and future potential. We

all know the terms high-performer and high-potential. These are people who either

perform very well today, or who are expected to perform very well in the (near)

future.

Assessing the quality of the workforce lays the groundworks for effective talent

management. Talent management revolves around capitalizing on the full potential

of the employees. To achieve this, companies spend time and money enabling their

people to perform well.

In the first step of the analysis of the current workforce formation, the quality of the

workforce is assessed. Employees are rated on their current performance and

future potential.

A good example of this is the 9-box grid framework. It helps in mapping the

workforce. This map is useful as it enables HR to effectively manage talent.

Part of the strategic workforce planner’s role is to map out what the future will look

like, which includes consideration to market trends and emerging capabilities. If, for

example, a company wants to expand its machine learning capabilities,

performance and potential today do not equal performance and potential in the

future. Mapping employee potential against a diverging path is much more

challenging.
The 9-box grid is a tool for workforce planning

Different groups of people need different talent management policies.

 High potentials need coaching and training

 High potential managers need management development

  High performers with low potential shouldn’t get raises or promotions, as

they cannot develop much more. Doing so would make the organization

top-heavy. In addition, if people stop performing, there’s no incentive for

them to leave as they are very well-paid. The banking sector tends to

struggle with these kinds of problems.

 Low performers with low potential shouldn’t get raises or promotions.

These are the people you should part with as they are likely to be happier

in a different job.

We can write a book about different talent management strategies based on this

simple 9-box grid quality map. The purpose of this example is to show how useful a

simple workforce planning exercise can be to structure a complex process like

talent management.

1.2 Quantity of the workforce

The next step is to assess the quantity of the workforce using a personnel flow

matrix. This matrix includes new hires, employee turnover, and internal

promotions.

As you can see below, this matrix divides employees into four categories, top

management, middle management, production staff, and support staff. The matrix

shows how many employees from each category were there on 1-1-2018. For

example, there are 45 people in top management (category A). 28 of these

remained until 1-1-2019, 15 quit, and 2 were demoted to middle management.

A complicated model – but a workforce matrix can show changes in the workforce once you
know how to read the model

This model shows risk factors in the organization. In this case, turnover among top

management is dangerously high. It also shows internal mobility, external mobility,

and provides an overview of the biggest changes in the organization.

This model is fairly simple. Additional information can be added (like the total of

internal replacements), categories can be changed into different departments, the

data can be filtered based on employees with different attributes or skillsets. It

would, for example, provide a great overview in terms of diversity in internal

mobility if you compare this overview for both sexes.

The data can also be filtered based on the type of function. Not everyone in the

organization is mission-critical. Focusing on critical functions, for example, would

make sense. These are the 20% of the organization that account for 80% of its

results.

An example of this is Johnson & Johnson. Out of the 30,000 employees, 150 critical

roles generated 80% of the company’s value. Imagine the value of such an overview

for these 150 roles!

2. Anticipate the future: Leverage scenario analysis to

plot potential futures

It’s good to know where you are now. However, to be ready for the future, you need

to have a sense of what could be coming.

The future is impossible to predict, but you can create scenarios of possible future

outcomes. These can help you create action plans in advance.

One of the pioneers of scenario planning is Peter Schwartz. In this brief clip, he

explains the scenario planning process and gives a real-life example related to

digital assistances.
Schwartz pioneered his scenario planning philosophy at Shell. This anticipation of

possible futures has long been in the company’s DNA. According to a 2013 HBR

article titled “Living in the future”:

Scenarios have the power to engage and open the minds of decision makers so that

they pay attention to novel, less comfortable, and weaker signals of change and

prepare for discontinuity and surprise. When the oil crisis of October 1973 hit,

Shell’s committee of managing directors had already considered a comparable

scenario. As one scenario team member put it, “And then, of course, high oil prices

came, and everybody said, ‘You’re very clever, you’ve got that right.’ And we all said,

‘No, wrong. We’re not forecasters. We’re your ‘personal trainers.’”

Shell was one of the very few oil companies to proactively react to this crisis and

was able to leverage it to build a competitive advantage.

3. Analysis of the future formation of the workforce

The last step is to analyze the future formation of the workforce. There is a

difference between the expected formation and the desired formation.

3.1 Future expected formation

The expected formation is the formation in 3-5 years when the company keeps

doing what it is currently doing. The personnel flow matrix we showed earlier is

helpful in this as it enables us to extrapolate these numbers over a longer period of

time.

However, the question is whether the future expected formation is in line with the

desired formation.

3.2 Future desired formation

An example is the transport sector. A recent report by the International Transport

Forum estimates that the demand for drivers will be reduced by 50-70% in the US

and Europe by 2030.

In a recent conversation with a friend who worked in a railway technology

consultancy, he pointed out that trains are capable of autonomous driving and that

the role of the train operator has been reduced to someone who needs to be there

in case of emergencies. Within two to three years, there will be no need for the

operator at all.

These kinds of developments are challenging for the workforce. The expected

formation will tell you that your train operator workforce will still be significant in 2-

3 years. However, their job will be automated by then so your desired formation

will be very different.

Knowing this gap will help you in solving it. Especially in unionized countries, it will

take a long time before these jobs can be removed. Knowing what is coming

through smart workforce planning will help you anticipate these difficulties and

take appropriate action at the appropriate time.

Conclusion
The goal of workforce planning is to have the right people in the right jobs at the

right time. This happens by knowing the current workforce capabilities, planning

future scenarios, determining the desired workforce, and taking steps to align the

future workforce with this desired workforce.

Workforce planning is not something that you can easily do on a rainy afternoon in

your office. It is a complex exercise that requires careful data aggregation and

planning. However, when done well, workforce planning is a fantastic and incredibly

valuable tool that can help to build a competitive advantage for your organization.

FAQ
What is workforce planning?
Workforce planning is ensuring the right person is in the right job at the right

time. If NASA discovers they need five more astronauts by next month, they

needed to have started hiring and training them already two years ago.

Workforce planning prevents these kinds of surprises.

What is the goal when workforce planning?

The goal of workforce planning is having the right person in the right job at

the right time. This means that an organization is never overstaffed – but also

never understaffed. Planning the workforce is therefore crucial for large

companies.

What are the steps in workforce planning?

Workforce planning is about identifying the gap between the workforce the

organization needs in the future – based on its strategy – and its current

workforce. Once this gap is identified, actions are taken to reduce this gap.

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Erik van Vulpen

Erik van Vulpen is the founder and Dean of AIHR. He is an expert in shaping modern HR

practices by bringing technological innovations into the HR context. He receives global

recognition as an HR thought leader and regularly speaks on topics like People

Analytics, Digital HR, and the Future of Work.

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