Workforce Planning

define workforce planning in business terms

Ivan Andreev

Demand Generation & Capture Strategist, Valamis

January 17, 2022 · updated April 5, 2024

11 minute read

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:

  • Talent availability
  • Business growth
  • Age of the existing workforce
  • Current knowledge/skill gaps
  • And much more

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:

  • Structural organization
  • Employee redeployment
  • Succession planning
  • Staffing budgets
  • Maintaining capacity
  • Reducing risk

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?

Skills gab analysis cover

How to conduct a skills gap analysis and what to do next

Start building your foundation for strategic workforce development.

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

  • Employee numbers : getting the correct workforce size so the business is not overstaffed and inefficient but not too small to hinder growth and fail to match demand.
  • Skillset : having the right mix of skills, capabilities, knowledge, and experience to perform effectively and achieve your goals.
  • Budget : finding the optimal staffing expenditure to achieve a high return on investment from employees and maximize profits.
  • Flexibility : developing your workforce to be agile and adapt quickly when changes in the market occur.

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:

  • Identifying understaffed departments and potential bottlenecks
  • Staffing requirement to scale operations
  • Excess employees for redeployment or termination

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.

Read: Skills gap and skills gap analysis

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:

  • 62% of employees would be “significantly more engaged” if they had a succession plan at their company.
  • 94% of employers said having succession plans in place positively impacted employee engagement .

define workforce planning in business terms

Succession planning template

It can help you navigate crises and leadership transitions with ease.

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:

  • Increase your productivity and workforce ROI
  • Retain talent and reduce costs associated with employee turnover
  • Develop a flexible workforce that can meet customer demand in different circumstances

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 .

The 5 core workforce planning steps

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.

  • What direction do you see your business going in?
  • What are you hoping to achieve through workforce planning?
  • What are the primary goals/milestones you are targeting?
  • Why does your business need new workforce planning structures?

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:

  • Demand planning – Determining the number of employees needed for each role required to reach your goal. Demand planning requires accurate business forecasts to determine your workforce’s future number, structure, and composition.
  • Internal supply – Internal supply planning needs accurate talent evaluations, an understanding of the expected employee turnover rate (retirements, resignations, etc.), and the design of training and professional development programs.
  • Gap analysis – Identifying the gaps in your workforce and making plans to close them through recruitment, redeployment, and training.

These strategies help to answer the following questions:

  • Do you have the right-sized workforce?
  • What skills, knowledge, and experience do your current employees have?
  • Do your employees need additional training?
  • What new resources can improve workforce performance?
  • Is your workforce correctly structured? (This includes organizational design, departments, communication channels, etc.)
  • What is your current employee turnover rate?

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 2023 figures and 2024’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 2024 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 2023. 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:

  • HR personnel to clearly understand their new roles and responsibilities.
  • Strategies and processes for recording all relevant data and information.
  • Effective communication channels between all invested parties to support the plan.
  • Defined measurement and evaluation criteria to assess the plan’s success.

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

  • Recruitment
  • Redeployment
  • Outsourcing
  • Deploying new technology

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

Workforce planning definition.

Workforce planning is a strategic process used by organizations to anticipate and manage their future workforce needs in order to achieve their business objectives effectively and efficiently. It involves assessing the current workforce, forecasting future workforce requirements, and developing strategies to bridge any gaps in skills, talent, and capacity.

Organizations use workforce planning to align their workforce with their business goals and objectives. It involves forecasting future workforce needs, identifying skill and talent gaps, and developing strategies to ensure that the organization has the right people with the right skills in the right positions at the right time.

Modern workforce planning tools help organizations optimize their human capital, reduce turnover, control labor costs, and ensure they have the right talent in place to achieve their strategic objectives. It’s an essential element of organizational strategy, particularly in industries and markets that are subject to rapid change and evolving skill requirements.

Workforce Planning FAQs

What is workforce planning software.

Workforce planning software, also known as HR workforce planning software or human capital management (HCM) software, is a specialized technology solution designed to streamline and enhance the workforce planning process within organizations. This software is used by HR professionals, talent management teams, and organizational leaders to effectively manage, analyze, and optimize an organization’s workforce, ensuring it aligns with the business strategy and future goals.

Key features and functions of workforce planning software include data management, analytics and reporting, demand forecasting, supply analysis, scenario modeling, succession planning, talent acquisition, skills gap analysis, budgeting and resource allocation, integration, compliance and legal reporting, collaboration and communication, and a user-friendly interface.

The specific features and capabilities of workforce planning software can vary among vendors, so organizations should select a solution that best fits their unique needs and objectives. Overall, this software plays a crucial role in helping organizations make informed decisions about their workforce, optimize talent management, and align their human capital with strategic long term goals.

What is the Workforce Planning Process?

While specific approaches may vary depending on the organization’s size and industry, here is a general overview of the key components of the workforce planning process:

Demand Forecasting

Workforce capacity planning enables organizations to assess their future labor needs based on factors such as business growth, changes in market conditions, technological advancements, and industry trends. This involves projecting the number of employees needed and the skills required to meet business goals.

Supply Analysis

Evaluating the current workforce’s composition, skills, and capabilities is crucial. This includes analyzing the existing workforce’s strengths and weaknesses, assessing turnover rates, and understanding retirement trends or other factors that may impact the workforce.

Gap Analysis

By comparing the demand (future workforce needs) and supply (existing workforce capabilities), organizations can identify gaps in skills, knowledge, and talent. Workforce supply and demand analysis helps pinpoint areas where the organization needs to hire, train, or develop employees to bridge those gaps.

Recruitment and Talent Acquisition

Based on the gap analysis, organizations may decide to recruit new talent externally to fill skill shortages. This can involve various hiring strategies, such as recruiting entry-level employees, experienced professionals, or specialized experts.

Training and Development

The process often includes strategies for developing the skills and knowledge of existing employees to meet future needs. This may involve training programs, leadership development, or cross-training to increase employee versatility.

Succession Planning

Identifying and nurturing potential future leaders within the organization is a critical aspect of workforce planning. Succession planning ensures that there are individuals ready to step into key roles when needed.

Flexible Staffing Models

Organizations may consider flexible staffing models, such as temporary employees, contractors, or freelancers, to adapt to changing work demands more efficiently.

Monitoring and Adjustment

Workforce planning is an ongoing process. Organizations continuously monitor their workforce and make adjustments as needed based on changing business conditions.

Technology Integration

Many organizations use technology, such as workforce management software, financial management software and data analytics, to facilitate the workforce planning process. These tools can help in data collection, analysis, and decision-making.

What are the Benefits of Workforce Planning?

Workforce planning offers several significant benefits to organizations, helping them align their human resources with their strategic goals and adapt to changing business environments. Some of the key advantages of effective workforce planning include:

  • Strategic Alignment : Workforce business planning ensures that an organization’s workforce is closely aligned with its strategic objectives. This alignment allows the organization to focus its resources and efforts on achieving its long-term goals. Optimized Talent Acquisition : By forecasting future talent needs, organizations can proactively recruit and hire the right talent, reducing the risk of skill shortages and ensuring a more efficient hiring process.
  • Cost Control : Workforce planning and analytics help organizations manage labor costs effectively. It allows for more accurate budgeting and resource allocation, reducing unnecessary labor expenditures.
  • Enhanced Productivity : A well-planned workforce is more likely to have the right skills and capabilities needed to perform their jobs effectively, leading to improved productivity and operational efficiency.
  • Improved Employee Engagement : When employees see that their organization invests in their development and career growth, they tend to be more engaged and satisfied with their work. This can lead to lower turnover rates and higher retention of top talent.
  • Talent Development : A robust workforce planning tool will help identify skill gaps within the organization, prompting targeted training and development programs to upskill employees and prepare them for future roles.
  • Succession Planning : Organizations can groom future leaders and ensure a smooth transition of leadership through succession planning, reducing disruptions during key personnel changes.
  • Adaptability : Implementing a workforce planning framework makes organizations more adaptable to changes in the business environment. It allows them to quickly respond to market shifts, industry trends, and emerging technologies.
  • Risk Mitigation : By identifying potential talent shortages or gaps in critical skills, organizations can proactively address these issues, reducing the risk of project delays or operational disruptions.
  • Data-Driven Decision-Making : An effective workforce planning strategy relies on data analysis and forecasting, enabling organizations to make informed decisions about their workforce based on real-time and future needs.
  • Competitive Advantage : Having the right talent in place when needed can provide a competitive edge. Organizations can seize opportunities, respond to market demands, and outperform competitors with more agile and skilled workforces.
  • Legal Compliance : Workforce planning solutions can help organizations ensure compliance with labor laws and regulations, reducing the risk of legal issues related to staffing and employment practices.
  • Improved Employee Morale : Employees are more likely to feel secure and motivated when they see that their organization has a thoughtful and strategic approach to workforce planning, as it demonstrates a commitment to their long-term well-being.
  • Enhanced Customer Satisfaction : A well-trained and skilled workforce is better equipped to meet customer needs and deliver high-quality products or services, leading to increased customer satisfaction.
  • Sustainability : Effective workforce planning promotes long-term organizational sustainability by ensuring that the workforce is adaptable and prepared to meet future challenges.

What is Strategic Workforce Planning?

Strategic Workforce Planning (SWP) is a specialized form of workforce planning that focuses on aligning an organization’s human capital with its long-term strategic objectives. The strategic workforce planning framework is a proactive and forward-thinking approach to managing an organization’s workforce to ensure that it has the right talent, skills, and capabilities in place to meet its strategic goals and address anticipated challenges.

A strategic workforce plan is especially valuable for organizations operating in rapidly changing industries or environments where talent shortages, technological advancements, and evolving market conditions play a significant role in long-term success. Strategic workforce planning tools ensure that an organization’s workforce remains agile and capable of supporting its strategic objectives over the long haul.

Workforce planning processes are a continual effort that involves not only retaining, recruiting, and providing training to your workforce, but also routinely evaluating their performance. There are various workforce planning models, each with a different focus. Here are some of the most common models:

Equilibrium Model

In this approach, historical data is scrutinized to identify critical metrics, such as turnover rates, employee retention rates. By conducting this analysis, you can position your company more effectively for the future, leveraging insights derived from the current workforce status. Fledgling enterprises lacking their own data should leverage alternative sources, such as industry benchmarks or competitor data – the earlier the better. There are no rigid rules to adhere to in this model, allowing you the flexibility to tailor it to your specific requirements. The primary objective here is to strategize for the company’s future based on both historical and current trends.

Deterministic Model

This model is centered on anticipating forthcoming developments, such as retirements or promotions. For example, if certain managers are nearing retirement or promotion, it is imperative to proactively plan for their replacements. Numerous foreseeable events can be predicted with reasonable accuracy, often several months in advance. Consequently, these events need to be factored into the analysis of your workforce needs, addressing immediate manpower requirements in the near term as well as the long term.

In this model, the focus is on assessing ongoing changes within the company and posing straightforward questions to determine the appropriate course of action. For instance, if your product development team is in the process of creating a new AI-driven offering, you will need to have sales personnel with AI expertise. The options include hiring new employees, upskilling existing staff, or engaging freelance consultants. To effectively implement this model, company leadership must collaborate closely with the HR team to ascertain hiring priorities based on evolving business goals.

Optimization Model

This model revolves around leveraging existing talent to attain business goals. This approach takes a backward-looking perspective, where business objectives are first defined, and then the path to achieving these goals is determined by working in reverse. Given the complexity of the variables involved, manual design of this model is impractical. Workforce planning software is necessary to facilitate the execution of multiple models and conduct what-if scenarios rapidly. This technological support enhances data analysis, enabling a deeper understanding of the steps required to achieve organizational objectives.

What are Some Workforce Planning Examples?

Workforce planning examples can vary widely depending on the organization’s industry, size, and specific needs. Here are some scenarios and examples of how workforce planning can be applied in different contexts:

Growth and Expansion Scenario : A technology startup has secured funding for rapid expansion into new markets. Action : The organization conducts demand forecasting to determine the number and types of employees needed in sales, marketing, and technical roles in various locations. This includes recruiting, onboarding, and training plans to support opportunities for growth.

Talent Retention Scenario : A large manufacturing company faces high turnover rates among its skilled technicians. Action : The company conducts exit interviews to identify reasons for turnover and develops strategies to improve retention, such as offering competitive compensation packages, career development programs, and a more supportive work environment.

Skills Gap Mitigation Scenario : A financial institution identifies a significant gap in cybersecurity skills among its IT staff. Action : The organization creates a skills development plan, including training programs and certifications, to upskill existing IT employees and address the cybersecurity skills gap. It may also hire cybersecurity experts to fill immediate needs.

Cost Reduction Scenario : An organization faces budget constraints and needs to reduce labor costs. Action : The organization conducts a workforce analysis to identify areas where it can reduce headcount or optimize staffing levels without compromising essential functions. This may involve restructuring, reassigning tasks, or automating certain processes.

Diversity and Inclusion Scenario : A technology company aims to improve diversity and inclusion within its workforce. Action : The organization sets diversity goals, creates recruitment strategies to attract underrepresented talent, implements diversity training programs, and monitors progress toward achieving a more diverse workforce.

Technological Advancements Scenario : A manufacturing company is adopting advanced automation and robotics technologies. Action : The organization assesses the impact of automation on its workforce, identifies which roles will be affected, and develops reskilling and redeployment plans for affected employees.

Does Planful Help With Workforce Planning?

Yes. Integrating workforce planning with FP&A ensures alignment between human resource decisions and financial goals. This involves budgeting for staffing needs, evaluating the financial impact of talent strategies, and understanding how workforce changes affect financial forecasts. By closely linking FP&A and workforce planning, organizations can make more informed decisions, optimize resource allocation, and achieve better financial outcomes.

From talent acquisition to managing the financial performance of the organization’s workforce, Planful helps you tackle every facet of workforce planning . Our platform helps simplify and automate time-consuming tasks and build alignment across departments, giving you more time to create a stronger people strategy.

With Planful, you can easily build models and what-if scenarios with our highly intuitive workforce planning templates , report on key results, and collaborate with leaders across the business to bring your plans to life; solve talent challenges by connecting financial and operational data to highlight gaps, project people costs, and build an optimized headcount planning process; and team up with Finance to conquer HR challenges and gain visibility and insight into budgets, people, and team strategies while building trust across the business.

Future-proof your business with the power of workforce planning. Get up and running with Planful in no time and without the need for IT support with an easy-to-manage platform. Check out our workforce planning demo today to see how Planful can help you build a more resilient, productive workforce.

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What Is Workforce Planning?

define workforce planning in business terms

Workforce planning is critical for the health and growth of any organization. As an HR professional, you know how much of an undertaking it is to hire the right people with the right skill set at the right time. Then add on the responsibilities of budgeting for new hires and internal promotions, keeping current employees engaged and retention rates high, all while growing a business — it's overwhelming. 

To help you keep calm and workforce plan on, we created a brief guide that covers the basics of workforce planning. Feel free to click on the links below to jump ahead.

Use our template to seamlessly calculate your own employee retention rate.

Table of Contents

What is Workforce Planning?

Benefits of strategic workforce planning, stages of strategic workforce planning.


Workforce planning is the process of auditing, predicting and managing the employment needs of your company in relation to its greater strategic business goals.

Think about it this way, your product team is constantly evaluating the product —  what customers like and want more of — while at the same time predicting what’s going to be the next big thing. Similarly, your company needs to continuously evaluate its people — what they like and don’t like in their roles — as well as how the company is projected to grow and who will need to be hired, promoted or reorganized to meet those needs.

When it comes down to it, the goal of workforce planning is to help your workforce meet  the following criteria as closely as possible:


Workforce planning is a massive undertaking, especially the first time you do it. It can be difficult to know where and how to start as well as what resources are required to build a strategic workforce plan. Before we delve into the details, check out a few benefits of creating a workforce plan that make the effort worthwhile.

Help teams justify additional hires

Save time and money by anticipating growth and change 

Prepare for organizational changes proactively

Support finance team in budgeting for future workforce needs

Collaborate with the strategic business planning process

Recognize gaps in the workforce that need filling

Identify critical roles and teams to expand for growth

Balance business goals alongside hiring

Prioritize employee retention and engagement to reduce hiring needs


Analyze Strategic Direction

In order to plan for future workforce needs, you first need to analyze the current state of your workforce. Start by answering these questions:

What departments are running lean and could use additional support?

What is the manager-to-direct report ratio?

What individual contributors are ready for a promotion?

Do current employees need additional training to advance their careers at the company?

Is there a skills gap among current employees that needs to be filled by an external hire?

How long do employees typically stay at your company?

Why do employees leave your company?

To answer the majority of these questions, you need to take a deep dive into your overall employee lifecycle , which  will also help you better understand why people apply for roles at your company and why they leave.

Additionally, look carefully at your recruitment metrics so you can better optimize your strategy. 

Forecast Workforce Supply & Demand

Now that you've analyzed the current state of your workforce, look more closely at the employees you currently have, otherwise referred to as your workforce supply, and predict how their roles will change over time. These factors play a significant role in how, who and when you should hire candidates. Key areas to consider are: 

Employee retention: Determine roles that can be filled by internal candidates through promotion or professional development 

Turnover: Anticipate turnover by knowing individual employee goals and career paths.

Departmental attrition: Are certain departments or roles becoming obsolete or less valuable to the company, and if so, will you need to downsize or reorganize.

Physical office space: Is there enough physical office space and equipment to sufficiently support more employees?

Recruiting resources: Identify which roles need to be filled by external candidates what resources your team will need to recruit them — professional recruiters, money for job boards and advertisements, etc.

Communications resources: Recruiting and building an employer brand consumes a significant amount of time and resources. Check to see if anyone on your marketing team has the bandwidth to help out.

Once you’ve estimated your current workforce supply, you’ll want to consider the demand of each area. Understanding the difference between supply and demand in your workforce will help you identify gaps between what resources are readily available and what resources your organization needs to grow on track. In terms of workforce demand, you’ll want to look at:

Employment market: Take a look at the recruitment market to see which roles are in high demand and will be difficult to hire. 

Upcoming funding: What roles are critical right now and which ones can wait until you raise more capital?

Skills training: Will you need to train new or current employees skills to ensure they will keep up with change, or will you need to hire already skilled candidates for the roles.

Keep in mind the supply and demand of workforce planning will change over time so it's important to include your team in the workforce supply planning process because the decisions made will ultimately affect their jobs and careers.

Create a Workforce Planning Budget

At this stage, you should have a fairly detailed blueprint of who you have employed today, who you will need in the future and any gaps between the two. Now, you need to start prioritizing your roles by the most difficult to fill, highest priority and cost-per-hire.

How you prioritize roles will also depend on your external hiring and internal retention budgets. To hire talented candidates — and pay them what they’re worth — you need to determine a budget through workforce planning.

Figure out how long it takes to hire someone and how much it will cost by comparing your external hiring budget to your current recruitment metrics. By looking at the metrics, you should also be able to pinpoint areas of the recruitment strategy that need improvement.

Set a Hiring Timeframe 


From here, build out a timeline that prioritizes certain roles and takes into account how long it will take to hire each role. This timeline can span between one year to 10 years depending on your strategy. Regardless of how far out your strategy spans, include intermittent short term goals throughout the plan to ensure you're always pacing on track.

Also, keep in mind this plan is not set in stone, it will fluctuate over time and require adjustments along the way.

Reevaluate Workforce Plan

Once you’ve created a workforce plan, you’re not done. In fact, you will constantly be monitoring the workforce needs of your company as business goals change and your internal workforce evolves. It's important to frequently get feedback and buy-in from employees, especially as the company grows.

If you create a culture that is open to having tough conversations with employees about their roles, performance and future career, you will be significantly better equipped to anticipate and adjust your workforce plan as changes occur. Employees will also be more keen to stay at your company and refer cohorts to open roles, thus further simplifying your recruiting and retention process. Even as the plan you create changes over time, it will always be a guideline for your teams to assess the effectiveness of their strategies and keep them on track over the course of several years.

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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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Explore the 6 Stages of Workforce Planning

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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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The Empuls Glossary

Glossary of Human Resources Management and Employee Benefit Terms

Workforce planning encompasses a systematic approach to anticipate and align future staffing needs with the organization's strategic goals. It goes beyond traditional HR functions by integrating workforce data, talent analytics, and organizational strategy to inform decision-making. By forecasting demand and supply of talent, businesses can proactively address skill gaps, mitigate risks, and capitalize on emerging opportunities.

What is workforce planning?

Workforce planning is the process of strategically aligning an organization's human capital with its business goals and objectives. It involves forecasting the future workforce needs of an organization, determining the necessary skills and competencies, and developing strategies to meet those needs efficiently.

What is strategic workforce planning?

Strategic workforce planning is a subset of workforce planning that focuses on aligning the organization's workforce requirements with its long-term strategic goals. It involves analyzing current workforce capabilities, identifying future workforce needs, and developing strategies to acquire, develop, and retain talent to support the organization's strategic objectives.

What does workforce planning include?

Workforce planning includes various elements such as:

  • Analyzing current workforce demographics, skills, and capabilities.
  • Forecasting future workforce needs based on business goals and objectives.
  • Identifying gaps between current and future workforce requirements.
  • Developing strategies to address those gaps, including recruitment, training, development, and retention.
  • Monitoring and evaluating the effectiveness of workforce planning efforts and making adjustments as necessary.

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What is the purpose of workforce planning?

The purpose of workforce planning is to ensure that an organization has the right people with the right skills in the right place at the right time to achieve its business objectives. It helps organizations anticipate and proactively address workforce challenges, minimize disruptions, and optimize resource allocation.

Why is workforce planning important?

Workforce planning is important for several reasons:

  • It helps organizations adapt to changing business environments and market conditions.
  • It enables better strategic decision-making by aligning workforce strategies with business objectives.
  • It improves workforce productivity and efficiency by ensuring that resources are allocated effectively.
  • It helps organizations identify and address talent gaps and skills shortages.
  • It enhances employee satisfaction and engagement by providing opportunities for development and advancement.
  • It reduces costs associated with turnover, recruitment, and training by promoting workforce stability and retention.

What are the 5 key elements of workforce planning?

The five key elements of workforce planning are:

  • Strategic alignment with business goals and objectives.
  • Analysis of current workforce demographics, skills, and capabilities.
  • Forecasting future workforce needs based on business projections and industry trends.
  • Identification of gaps between current and future workforce requirements.
  • Development and implementation of strategies to address those gaps, including recruitment, training, development, and retention initiatives.

What are the benefits of workforce planning?

The benefits of workforce planning include:

  • Improved alignment of workforce strategies with business goals and objectives.
  • Enhanced organizational performance and competitiveness.
  • Increased workforce productivity and efficiency.
  • Reduced talent shortages and turnover.
  • Greater employee satisfaction and engagement.
  • Cost savings associated with turnover, recruitment, and training.
  • Better strategic decision-making through data-driven insights.

What are the critical focus areas in developing workforce plans?

The critical focus areas in developing workforce plans include:

  • Understanding the organization's strategic goals and objectives.
  • Developing and implementing strategies to address those gaps, including recruitment, training, development, and retention initiatives.

What are the five steps in the workforce planning process?

The five steps in the workforce planning process are:

  • Assessing current workforce capabilities and needs.
  • Forecasting future workforce requirements based on business projections and industry trends.
  • Analyzing workforce gaps and identifying areas for improvement.
  • Developing strategies to address identified workforce gaps, including recruitment, training, development, and retention initiatives.
  • Implementing the workforce plan and monitoring its effectiveness, making adjustments as necessary to align with changing business conditions.

How are workforce plans related to business and HR strategies?

Workforce plans are closely linked to both business and HR strategies. They align workforce requirements with business goals and objectives, ensuring that the organization has the necessary talent to execute its strategy effectively. HR strategies, such as recruitment, training, and development, are developed in alignment with workforce plans to support the organization's overall strategic direction.

How to implement workforce planning?

To implement workforce planning effectively, organizations should:

  • Gain leadership support and commitment.
  • Establish clear goals and objectives for the workforce planning process.
  • Allocate resources, including time, budget, and personnel, to support workforce planning efforts.
  • Engage stakeholders across the organization, including HR, business leaders, and employees.
  • Collect and analyze relevant data to inform workforce decisions.
  • Develop and implement strategies to address identified workforce gaps.
  • Monitor and evaluate the effectiveness of workforce planning efforts and make adjustments as necessary.

define workforce planning in business terms

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

define workforce planning in business terms

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.

define workforce planning in business terms

eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

define workforce planning in business terms

  • Promoters Employees who have responded positively or agreed.
  • Detractors Employees who have reacted negatively or disagreed.
  • Passives Employees who have stayed neutral with their responses.

How does workforce planning help a business?

Workforce planning helps a business in several ways:

  • It enables the organization to anticipate and address future workforce needs.
  • It aligns workforce strategies with business goals, improving organizational performance and competitiveness.
  • It enhances workforce productivity and efficiency by ensuring that resources are allocated effectively.
  • It reduces talent shortages and turnover by proactively addressing skill gaps and promoting employee development.
  • It supports strategic decision-making by providing data-driven insights into workforce capabilities and requirements.

How to create a workforce plan?

To create a workforce plan, follow these steps:

  • Understand the organization's strategic goals and objectives.
  • Analyze current workforce demographics, skills, and capabilities.
  • Forecast future workforce needs based on business projections and industry trends.
  • Identify gaps between current and future workforce requirements.
  • Develop strategies to address those gaps, including recruitment, training, development, and retention initiatives.
  • Implement the workforce plan and monitor its effectiveness.
  • Continuously evaluate and adjust the workforce plan as needed to align with changing business conditions.

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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.

  • 1 What is Workforce Planning?
  • 2 What Is Strategic Workforce Planning?
  • 3 Why Is Workforce Planning Important?
  • 4 Who Is In Charge Of Workforce Planning?
  • 5 Do You Need Workforce Planning Tools?
  • 6 The Six Steps Of The Workforce Planning Process
  • 7 How Does Workforce Planning Benefit Employees?
  • 8 Start Strategic Workforce Planning With HR Software

What is Workforce Planning?

Workforce planning is the strategic evaluation and management of an organisation's present and future talent requirements. It involves analysing, forecasting and planning workforce supply and demand. The goal is to ensure that organisations have the right people with the right skills in the right places at the right time to drive success.

What is the Purpose of Workforce Planning?

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.

What is an Example of Workforce Planning?

Here's an example of workforce planning: 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 p

lanning 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).

What Is Strategic Workforce Planning?

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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Why Is Workforce Planning Important?

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:

Future-forward view of the world

Solid grasp of business strategy

Deep understanding of human talents and capabilities

Strategic, time-conscious, and thoughtful process

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Who Is In Charge Of Workforce Planning?

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.

Do You Need Workforce Planning Tools?

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 Six Steps Of The Workforce Planning Process

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.

Here’s how to create reports in an instant with Personio.

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How Does Workforce Planning Benefit Employees?

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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Workforce planning

Last updated 22 Mar 2021

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For most businesses, large or small, the task of identifying what work needs doing and who should do it is a continuous challenge! Workforce planning is the approach most businesses take to address this challenge.

It is rare that a business of any size operates for long without having to recruit or remove employees.

For example, consider why a business might need to recruit staff:

  • Business expansion due to
  • - Increasing sales of existing products
  • - Developing new products
  • - Entering new markets
  • Existing employees leave:
  • - To work with competitors or other local employers
  • - Due to factors such as retirement, sick leave, maternity leave
  • Business needs employees with new skills
  • Business is relocating – and not all of existing workforce want to move to new location

The world of work is also changing rapidly:

  • Increase in part-time working
  • Increased number of single-parent families
  • More women seeking work
  • Ageing population
  • Greater emphasis on flexible working hours
  • Technology allows employees to communicate more effectively whilst apart
  • People rarely stay in the same job for life

Businesses need to understand and respond to these changes if they are to recruit staff of the right standard – and keep them!

So what is workforce planning?

Workforce planning is about deciding how many and what types of workers are required

There are several steps involved in workforce planning:

  • The workforce plan establishes what vacancies exist
  • Managers produce a job description and job specification for each post
  • Job description
  • Detailed explanation of the roles and responsibilities of the post advertised
  • Most applicants will ask for this before applying for the job
  • Refers to the post available rather than the person

Job specification

  • Sets out the kind of qualifications, skills, experience and personal attributes a successful candidate should possess.
  • A vital tool in assessing the suitability of job applicants
  • Refers to the person rather than the post
  • Workforce planning
  • Flexible working

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Manpower Planning: Meaning, Objectives, Process and Types

What is manpower planning.

Manpower planning, also known as human resource planning, is the process of forecasting an organization’s future human resource needs and ensuring that it has the right number of employees with the right skills in the right positions at the right time. It involves analyzing the organization’s current workforce, identifying future staffing requirements, and developing strategies to address any gaps between the two. It helps organizations anticipate and proactively address future workforce challenges and opportunities, thereby enhancing their competitive advantage and long-term sustainability.

Key Takeaways:

Manpower planning involves anticipating future staffing needs based on factors such as business growth projections, market trends, and technological advancements. Effective manpower planning aligns human resource strategies with broader business objectives and goals. Manpower planning is an ongoing process that requires continuous monitoring, evaluation, and adjustment.

Table of Content

Objectives of Manpower Planning

Process of manpower planning, types of manpower planning, importance of manpower planning, factors to be considered for manpower planning, examples of manpower planning, advantages of manpower planning, problems of manpower planning, manpower planning – faqs.

1. Forecasting Future Workforce Needs: Manpower planning aims to forecast the organization’s future staffing requirements based on factors such as business growth projections, market trends, technological advancements, and changes in industry regulations.

2. Optimizing Workforce Utilization: Manpower planning seeks to optimize the utilization of the organization’s workforce by ensuring that the right people with the right skills are in the right positions at the right time.

3. Ensuring Talent Availability: Manpower planning aims to ensure the availability of talent to meet current and future organizational needs. This includes identifying and attracting top talent, developing existing employees through training and development programs, and implementing succession planning initiatives to cultivate a pipeline of future leaders.

4. Supporting Strategic Decision-Making: Manpower planning provides valuable insights and data to support strategic decision-making at all levels of the organization. By aligning human resource strategies with broader business objectives, manpower planners help organizations make informed decisions about workforce investments, resource allocation, and organizational structure.

5. Mitigating Risks and Uncertainties: Manpower planning helps organizations mitigate risks associated with workforce shortages, skills gaps, turnover, and other workforce-related challenges.

1. Establishing Objectives and Scope: The first step in manpower planning is to define the objectives and scope of the planning process. This involves clarifying the organization’s strategic goals, identifying key workforce challenges and opportunities, and determining the timeframe and resources available for manpower planning activities.

2. Environmental Analysis: Manpower planning begins with an analysis of the external and internal factors that may impact the organization’s workforce needs.

3. Demand Forecasting: The next step is to forecast the organization’s future demand for human resources based on the analysis of environmental factors and business objectives. This involves projecting staffing requirements by department, function, or skillset over a specified time period, taking into account factors such as business growth, expansion into new markets, and changes in technology.

4. Supply Analysis: Once the future demand for human resources has been determined, manpower planners conduct a comprehensive analysis of the organization’s current workforce capabilities and availability.

5. Gap Analysis: Manpower planners compare the projected demand for human resources with the existing supply to identify any gaps or mismatches between the two.

6. Developing Strategies and Action Plans: Based on the findings of the demand forecast, supply analysis, and gap analysis, manpower planners develop strategic initiatives and action plans to address identified workforce challenges and opportunities.

7. Implementation and Monitoring: Manpower planners implement the strategies and action plans identified in the manpower plan and regularly monitor their progress and effectiveness.

8. Evaluation and Feedback: The final step in the manpower planning process is to evaluate the outcomes of the planning efforts and gather feedback from key stakeholders.

1. Strategic Manpower Planning: Strategic manpower planning aligns human resource strategies with the organization’s long-term strategic objectives. It involves forecasting future workforce needs based on anticipated changes in the business environment, market dynamics, and technological advancements.

2. Operational Manpower Planning: Operational manpower planning focuses on addressing immediate staffing needs and optimizing workforce efficiency and productivity. It involves short-term forecasting of workforce requirements based on current business operations, seasonal fluctuations, and project demands.

3. Tactical Manpower Planning: Tactical manpower planning bridges the gap between strategic and operational planning by translating strategic objectives into actionable workforce strategies and initiatives. It involves medium-term forecasting of workforce needs, typically spanning one to three years.

4. Succession Planning: Succession planning is a specialized type of manpower planning focused on identifying and developing future leaders within the organization. It involves assessing current talent pools, identifying high-potential employees, and implementing development programs to groom them for key leadership positions.

5. Skills Gap Analysis: Skills gap analysis is a focused approach to manpower planning that identifies discrepancies between the skills possessed by the current workforce and those required to meet organizational goals. It involves assessing the competencies, qualifications, and training needs of employees and comparing them to the skills demanded by current or future job roles.

6. Contingency Planning: Contingency planning involves preparing for unforeseen events or disruptions that could impact workforce availability or effectiveness. It involves developing backup strategies and contingency plans to address potential risks such as natural disasters, economic downturns, or supply chain disruptions.

1. Strategic Alignment: Within the framework of manpower planning, there is the correspondence of the number of employees with the company’s strategic direction and business goals.

2. Optimized Resource Utilization: Smart manpower planning is key in achieving quality resource deployment by employing the best qualified with the right skill at the designated time. This reduces the inefficiencies caused by overstaffing or understaffing, hence improving the productivity of staff and reducing expenditure on recruitment.

3. Talent Acquisition and Retention: Manpower planning serves as a driver of proactive talent acquisition, employee mentoring and other retention strategies.

4. Adaptability and Agility: Organizations of today should learn to be ready to change and keep ahead. Manpower planning will help businesses to foresee and react to market variations, technology upgrade, and the trends in the industry by having the best capability of workers so that the companies will be able to enjoy all the benefits.

5. Succession Planning and Leadership Development: It is the human resource management function, which is of high importance in succession planning and leadership development.

1. Business Objectives and Strategy: Manpower planning should align with the organization’s overall business objectives and strategic direction. Consider factors such as expansion plans, market growth opportunities, product diversification, and technological advancements that may impact future workforce requirements.

2. Economic Conditions: Economic conditions, such as GDP growth, inflation rates, and unemployment levels, can influence workforce demand and supply. Consider how macroeconomic trends may affect labor market dynamics, wage rates, and talent availability in different regions or industries.

3. Industry Trends: Industry-specific factors, such as regulatory changes, technological innovations, and market competition, can impact workforce needs. Analyze industry trends, market forecasts, and emerging opportunities or threats that may affect the demand for specific skills or occupations.

4. Organizational Structure and Size: Consider the organization’s current structure, size, and complexity when forecasting future workforce needs. Evaluate how changes in organizational design, business processes, or workflow patterns may impact staffing requirements and skill mix across different departments or functions.

5. Workforce Demographics: Analyze the demographic profile of the organization’s workforce, including age distribution, tenure, retirement eligibility, and turnover rates. Consider how demographic shifts, such as the aging workforce or generational changes, may affect succession planning, talent retention, and recruitment strategies.

1. Healthcare Sector: A hospital implements manpower planning to provide the necessary medical staff; the types of staff includes doctors, nurses, and support personnel to contribute towards the effective patient care. This is done by anticipating patient volumes, examining staffing ratios, and figuring out precisely where some extra resources might be needed like for specialty departments or during peak hours.

2. Manufacturing Industry: A manufacturing organization undertakes a workforce planning exercise in order to cut costs and achieve set production outputs. This is done through the evaluation of production schedules, workforce skills and capacities appraisal, and the formation of workforce scheduling strategies to maintain required workforce levels on the production floor without burdening the system with downtime and labor costs.

3. Technology Company: For example, a tech business engages in manpower planning to help it with R&D projects as well as the company’s innovative activities. This includes the R&D timeframe planning, identifying technical abilities and experience needed for each project as well as recruitment and training associated with special talents in emerging technologies or programming languages.

4. Retail Sector: An clothing store company does man power planning to adequately staff its shops and provide quality customer service. There will be such tasks as sales data study, customers inflow prediction, planning staff basing on peak hours and seasonal fluctuations. Also, manpower planning could include training the employees to perform different tasks in order to create redundancy and improve the company’s flexibility and adaptability.

1. Alignment with Organizational Goals: Manpower planning defines a workforce of the organization which is well coordinated with the overall strategic plan and thereby pulls together human resources and business objectives.

2. Optimized Workforce Utilization: With workforce forecasting and highlighting skill deficits manpower planning facilitates to the effective functioning of the organization and avoidance of wastage associated with over-staffing or under-staffing.

3. Cost Savings: Proper manpower planning can be a source of cost savings, hereby reducing recruitment expenses, turnover ration, and increasing productivity of the invested labor through better managing of the employees.

4. Improved Productivity and Performance: Through enabling the most competent people for the critical tasks, manpower planning assures enhanced performance of the employees that results in desired performance for the organization in general.

5. Talent Acquisition and Retention: Organizations can set up proactive strategies of talent acquisition and retention, such as planning for lateral recruitment and succession, thus building culture of talent integrity and reducing recruitment costs and turnover rates.

1. Inaccurate Forecasts: The basis of manpower planning is on workforce needs projections for the future which take into consideration the changes in the business environment through trend analysis, economic circumstances and technological advancements. Yet, occasionally, the inaccurate predictions may result in saturating the workforce or shortage of it, which in its turn, would result to inefficiency and to added expenses.

2. Changing Business Conditions: Before businesses are urgently required to revise their strategies, that can be changeable as oblique movements in the market situation concerning economic fluctuations or industry disruptions or shifts in customer preferences, they may have difficulty planning manually capacity for the future when facing these rapid changes in the business environment.

3. Skill Shortages: The task to be able to spot the proper talent which have the desired skill along with required competencies could be quite a challenging situation, especially when there is a shortage of skills or the market demand is high for the tasks needs specialist skills. This results in talent gaps creation that may paralyze the corporate operations.

4. Employee Turnover: Last but not the least I would like to point the fact that high churn rates create a very unstable workforce which makes manpower planning efforts and recruitment / training costs inefficient. Staff turnover is caused by the reasons like lack of fulfillment of roles and responsibilities, career stagnation, and also by competition in the job market.

5. Technological Advancements: Fast technology development can threat machines to the job by making some job positions extinct or new skills necessary. Manpower planning must be no longer situated far behind these changes, for getting the workforce ready to face new technical requirements is the major task.

Summarizing, whereas manpower planning is appreciated due to multiple advantages, it faces the questions that check its effectiveness. Challenges such as inaccurate forecasting, competence shortages, and outflows of personnel, technological resistance, budget restrictions, and data quality are among the ones involved. Nonetheless, through the implementation of preventive actions like comprehensive data analytics, developing resilience, and prioritizing the engagement and development of personnel, companies can mange these problems and improve on their ability to plan the manpower. In the end, an adaptable and quickly reacting human resources represents the main tool for enterprises to cope successfully with complexity of daily business environment as well as to stay in the game for a long time.

What is manpower planning?

Manpower planning, another adjectival phrase of human resource planning, is the strategic process of estimating the organization’s future needs of the workforce and making arrangements to acquire right individuals with the right skills at the right time to accomplish the organizational goals.

What is manpower planning for?

Human Resources planning is significant as it helps in aligning a workforce with strategic goals, efficacious utilization of resources, attracting and retaining best human resource, minimization of risks and adjusting to the changing business conditions effectively.

What are the advantages of human resource planning?

Advantages of manpower planning include the matching of workforce supply with organizational needs, the optimized utilization of the workforce, cost savings, improved productively and performance, talent acquisition and retention, employees engagement and satisfaction, risk mitigation, flexibility and adaptability, and compliance with legal and regulatory requirements.

What are the issues in workforce planning?

The challenges to manpower planning are unrealistic forecasts, dynamic business conditions, skill shortages, staff turnover, technological revolutions, demographic shifts, globalization and diversification, budget restraints, resistance to change, and data quality and analytics problems.

What are the ways to control the obstacles of the personnel planning?

Organizations could avoid manpower planning challenges by implementing robust data analytics, promoting change adaptability, taking care of employees’ engagement and development, and applying pro-action strategies to solve specific problems of skill scarcity and staff turnover.

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Employee Onboarding Guide

Onboarding definition & overview.

Last updated: May 15th, 2024

Quality onboarding is crucial for new employees' long-term success and organizational productivity. Learn why a solid employee onboarding process can make a significant impact on employee experience and retention, plus innovative ideas to approaching welcoming new staff.

Onboarding Guide Navigation

> Definition & Overview

colleagues welcoming new coworker shaking hands and smiling

What Is Onboarding?

Onboarding is the process of integrating new employees into an organization. It includes the orientation process and opportunities for new hires to learn about the organization's structure, culture, vision, mission and values. Onboarding can span one or two days of activities at some companies; others offer a more extensive series of activities spanning months. 

Onboarding is often confused with orientation. While orientation is necessary for completing paperwork and other routine tasks, onboarding is a comprehensive process involving management and other employees and can last up to 12 months. 

Why Is It Important to Get Onboarding Right?

All new employees are onboarded—but the quality of the onboarding makes a difference. Too often, onboarding consists of handing a new employee a pile of forms and having a supervisor or HR professional walk the employee around the premises, making introductions on an ad hoc basis. When onboarding is done well, however, it lays a foundation for long-term success for the employee and the employer. It can improve productivity, build loyalty and engagement, and help employees become successful early in their careers with the new organization.

A study by  Gallup  showed that while only 12 percent of employees felt their company did a great job with onboarding, those employees were nearly three times as likely to say they have the best possible job. Overall, only 29 percent of new hires felt they were prepared and supported to excel in their new role. This leaves a lot of room for improvement.

Other studies consistently show a positive correlation between engaged employees and a company's profitability, turnover rate, safety record, absenteeism, product quality and customer ratings. An effective onboarding plan offers an ideal opportunity to boost employee engagement by, for example, fostering a supportive relationship between new hires and management, reinforcing the company's commitment to helping employees' professional growth and proving that management recognizes the employees' talent.   For further reading learn  how to optimize the onboarding process  and the importance of good onboarding . 

Relatedly, an  employee value proposition  (EVP) defines the value employees will get from working for a particular organization. It embodies the promises made during recruitment and is lived out every day through company culture. Onboarding gives employees their first look at how an organization's EVP may or may not be realized.

Onboarding Process Summary

While there are many ways to design an onboarding program, some components are integral to the process:

1. Preboarding

Consider inviting new employees to tour the facility, sending informational material, providing care packages, and assigning a buddy to help them integrate before their official start date.

2. Orientation

Introduce employees to the organization's structure, vision, mission, and values; review employee handbook and major policies; complete paperwork; cover administrative procedures; and provide other mandatory training.

3. Foundation Building

Ensure the onboarding process consistently embodies an organization's culture, mission, employee value proposition, brand, and other foundational elements, recognizing that assimilating these values takes time.

4. Mentoring and Buddy Systems

In partnership with hiring managers, enlist mentors or buddies to provide new employees with guidance, assistance, and insights into organizational nuances.

View our full guide on onboarding process steps.

Innovative Approaches to Onboarding

Various components of an onboarding program can be delivered using different approaches and methodologies combined to suit the organization and available resources.

Some employers are using innovative practices, such as games, video, and team-building exercises, to get new hires excited about joining the company. They're also working to make sure people can hit the ground running with functional workstations and equipment. Some examples of this include: 

Facebook has its "45-minute rule," which means all new employees can begin to work within 45 minutes of arriving because all of their systems and devices have been set up before they report for their first day.

Leaders at Suffolk Construction, a national construction firm based in Boston, invite entry-level hires to participate in a variety of team-building exercises, including rowing the Charles River. 

New employees at Bedgear, a Farmingdale, N.Y.-based manufacturer of performance bedding, take a walking tour of downtown Manhattan to visit other retailers that sell customized products, including Warby Parker and Samsung.

View more  original onboarding options, shared from 4 HR leaders . 

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Continue Learning About Onboarding

Additional resources:.

  • Checklist for Developing Onboarding/New Hire Practices
  • New Hire Orientation Checklist
  • New-Hire Orientation Process
  • New Hire Survey
  • New Hire Survey – Remote Employee
  • Onboarding Companies and Vendors in the SHRM Vendor Directory  
  • SHRM Store resources on  Onboarding

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Artificial intelligence in strategy

Can machines automate strategy development? The short answer is no. However, there are numerous aspects of strategists’ work where AI and advanced analytics tools can already bring enormous value. Yuval Atsmon is a senior partner who leads the new McKinsey Center for Strategy Innovation, which studies ways new technologies can augment the timeless principles of strategy. In this episode of the Inside the Strategy Room podcast, he explains how artificial intelligence is already transforming strategy and what’s on the horizon. This is an edited transcript of the discussion. For more conversations on the strategy issues that matter, follow the series on your preferred podcast platform .

Joanna Pachner: What does artificial intelligence mean in the context of strategy?

Yuval Atsmon: When people talk about artificial intelligence, they include everything to do with analytics, automation, and data analysis. Marvin Minsky, the pioneer of artificial intelligence research in the 1960s, talked about AI as a “suitcase word”—a term into which you can stuff whatever you want—and that still seems to be the case. We are comfortable with that because we think companies should use all the capabilities of more traditional analysis while increasing automation in strategy that can free up management or analyst time and, gradually, introducing tools that can augment human thinking.

Joanna Pachner: AI has been embraced by many business functions, but strategy seems to be largely immune to its charms. Why do you think that is?

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Yuval Atsmon: You’re right about the limited adoption. Only 7 percent of respondents to our survey about the use of AI say they use it in strategy or even financial planning, whereas in areas like marketing, supply chain, and service operations, it’s 25 or 30 percent. One reason adoption is lagging is that strategy is one of the most integrative conceptual practices. When executives think about strategy automation, many are looking too far ahead—at AI capabilities that would decide, in place of the business leader, what the right strategy is. They are missing opportunities to use AI in the building blocks of strategy that could significantly improve outcomes.

I like to use the analogy to virtual assistants. Many of us use Alexa or Siri but very few people use these tools to do more than dictate a text message or shut off the lights. We don’t feel comfortable with the technology’s ability to understand the context in more sophisticated applications. AI in strategy is similar: it’s hard for AI to know everything an executive knows, but it can help executives with certain tasks.

When executives think about strategy automation, many are looking too far ahead—at AI deciding the right strategy. They are missing opportunities to use AI in the building blocks of strategy.

Joanna Pachner: What kind of tasks can AI help strategists execute today?

Yuval Atsmon: We talk about six stages of AI development. The earliest is simple analytics, which we refer to as descriptive intelligence. Companies use dashboards for competitive analysis or to study performance in different parts of the business that are automatically updated. Some have interactive capabilities for refinement and testing.

The second level is diagnostic intelligence, which is the ability to look backward at the business and understand root causes and drivers of performance. The level after that is predictive intelligence: being able to anticipate certain scenarios or options and the value of things in the future based on momentum from the past as well as signals picked in the market. Both diagnostics and prediction are areas that AI can greatly improve today. The tools can augment executives’ analysis and become areas where you develop capabilities. For example, on diagnostic intelligence, you can organize your portfolio into segments to understand granularly where performance is coming from and do it in a much more continuous way than analysts could. You can try 20 different ways in an hour versus deploying one hundred analysts to tackle the problem.

Predictive AI is both more difficult and more risky. Executives shouldn’t fully rely on predictive AI, but it provides another systematic viewpoint in the room. Because strategic decisions have significant consequences, a key consideration is to use AI transparently in the sense of understanding why it is making a certain prediction and what extrapolations it is making from which information. You can then assess if you trust the prediction or not. You can even use AI to track the evolution of the assumptions for that prediction.

Those are the levels available today. The next three levels will take time to develop. There are some early examples of AI advising actions for executives’ consideration that would be value-creating based on the analysis. From there, you go to delegating certain decision authority to AI, with constraints and supervision. Eventually, there is the point where fully autonomous AI analyzes and decides with no human interaction.

Because strategic decisions have significant consequences, you need to understand why AI is making a certain prediction and what extrapolations it’s making from which information.

Joanna Pachner: What kind of businesses or industries could gain the greatest benefits from embracing AI at its current level of sophistication?

Yuval Atsmon: Every business probably has some opportunity to use AI more than it does today. The first thing to look at is the availability of data. Do you have performance data that can be organized in a systematic way? Companies that have deep data on their portfolios down to business line, SKU, inventory, and raw ingredients have the biggest opportunities to use machines to gain granular insights that humans could not.

Companies whose strategies rely on a few big decisions with limited data would get less from AI. Likewise, those facing a lot of volatility and vulnerability to external events would benefit less than companies with controlled and systematic portfolios, although they could deploy AI to better predict those external events and identify what they can and cannot control.

Third, the velocity of decisions matters. Most companies develop strategies every three to five years, which then become annual budgets. If you think about strategy in that way, the role of AI is relatively limited other than potentially accelerating analyses that are inputs into the strategy. However, some companies regularly revisit big decisions they made based on assumptions about the world that may have since changed, affecting the projected ROI of initiatives. Such shifts would affect how you deploy talent and executive time, how you spend money and focus sales efforts, and AI can be valuable in guiding that. The value of AI is even bigger when you can make decisions close to the time of deploying resources, because AI can signal that your previous assumptions have changed from when you made your plan.

Joanna Pachner: Can you provide any examples of companies employing AI to address specific strategic challenges?

Yuval Atsmon: Some of the most innovative users of AI, not coincidentally, are AI- and digital-native companies. Some of these companies have seen massive benefits from AI and have increased its usage in other areas of the business. One mobility player adjusts its financial planning based on pricing patterns it observes in the market. Its business has relatively high flexibility to demand but less so to supply, so the company uses AI to continuously signal back when pricing dynamics are trending in a way that would affect profitability or where demand is rising. This allows the company to quickly react to create more capacity because its profitability is highly sensitive to keeping demand and supply in equilibrium.

Joanna Pachner: Given how quickly things change today, doesn’t AI seem to be more a tactical than a strategic tool, providing time-sensitive input on isolated elements of strategy?

Yuval Atsmon: It’s interesting that you make the distinction between strategic and tactical. Of course, every decision can be broken down into smaller ones, and where AI can be affordably used in strategy today is for building blocks of the strategy. It might feel tactical, but it can make a massive difference. One of the world’s leading investment firms, for example, has started to use AI to scan for certain patterns rather than scanning individual companies directly. AI looks for consumer mobile usage that suggests a company’s technology is catching on quickly, giving the firm an opportunity to invest in that company before others do. That created a significant strategic edge for them, even though the tool itself may be relatively tactical.

Joanna Pachner: McKinsey has written a lot about cognitive biases  and social dynamics that can skew decision making. Can AI help with these challenges?

Yuval Atsmon: When we talk to executives about using AI in strategy development, the first reaction we get is, “Those are really big decisions; what if AI gets them wrong?” The first answer is that humans also get them wrong—a lot. [Amos] Tversky, [Daniel] Kahneman, and others have proven that some of those errors are systemic, observable, and predictable. The first thing AI can do is spot situations likely to give rise to biases. For example, imagine that AI is listening in on a strategy session where the CEO proposes something and everyone says “Aye” without debate and discussion. AI could inform the room, “We might have a sunflower bias here,” which could trigger more conversation and remind the CEO that it’s in their own interest to encourage some devil’s advocacy.

We also often see confirmation bias, where people focus their analysis on proving the wisdom of what they already want to do, as opposed to looking for a fact-based reality. Just having AI perform a default analysis that doesn’t aim to satisfy the boss is useful, and the team can then try to understand why that is different than the management hypothesis, triggering a much richer debate.

In terms of social dynamics, agency problems can create conflicts of interest. Every business unit [BU] leader thinks that their BU should get the most resources and will deliver the most value, or at least they feel they should advocate for their business. AI provides a neutral way based on systematic data to manage those debates. It’s also useful for executives with decision authority, since we all know that short-term pressures and the need to make the quarterly and annual numbers lead people to make different decisions on the 31st of December than they do on January 1st or October 1st. Like the story of Ulysses and the sirens, you can use AI to remind you that you wanted something different three months earlier. The CEO still decides; AI can just provide that extra nudge.

Joanna Pachner: It’s like you have Spock next to you, who is dispassionate and purely analytical.

Yuval Atsmon: That is not a bad analogy—for Star Trek fans anyway.

Joanna Pachner: Do you have a favorite application of AI in strategy?

Yuval Atsmon: I have worked a lot on resource allocation, and one of the challenges, which we call the hockey stick phenomenon, is that executives are always overly optimistic about what will happen. They know that resource allocation will inevitably be defined by what you believe about the future, not necessarily by past performance. AI can provide an objective prediction of performance starting from a default momentum case: based on everything that happened in the past and some indicators about the future, what is the forecast of performance if we do nothing? This is before we say, “But I will hire these people and develop this new product and improve my marketing”— things that every executive thinks will help them overdeliver relative to the past. The neutral momentum case, which AI can calculate in a cold, Spock-like manner, can change the dynamics of the resource allocation discussion. It’s a form of predictive intelligence accessible today and while it’s not meant to be definitive, it provides a basis for better decisions.

Joanna Pachner: Do you see access to technology talent as one of the obstacles to the adoption of AI in strategy, especially at large companies?

Yuval Atsmon: I would make a distinction. If you mean machine-learning and data science talent or software engineers who build the digital tools, they are definitely not easy to get. However, companies can increasingly use platforms that provide access to AI tools and require less from individual companies. Also, this domain of strategy is exciting—it’s cutting-edge, so it’s probably easier to get technology talent for that than it might be for manufacturing work.

The bigger challenge, ironically, is finding strategists or people with business expertise to contribute to the effort. You will not solve strategy problems with AI without the involvement of people who understand the customer experience and what you are trying to achieve. Those who know best, like senior executives, don’t have time to be product managers for the AI team. An even bigger constraint is that, in some cases, you are asking people to get involved in an initiative that may make their jobs less important. There could be plenty of opportunities for incorpo­rating AI into existing jobs, but it’s something companies need to reflect on. The best approach may be to create a digital factory where a different team tests and builds AI applications, with oversight from senior stakeholders.

The big challenge is finding strategists to contribute to the AI effort. You are asking people to get involved in an initiative that may make their jobs less important.

Joanna Pachner: Do you think this worry about job security and the potential that AI will automate strategy is realistic?

Yuval Atsmon: The question of whether AI will replace human judgment and put humanity out of its job is a big one that I would leave for other experts.

The pertinent question is shorter-term automation. Because of its complexity, strategy would be one of the later domains to be affected by automation, but we are seeing it in many other domains. However, the trend for more than two hundred years has been that automation creates new jobs, although ones requiring different skills. That doesn’t take away the fear some people have of a machine exposing their mistakes or doing their job better than they do it.

Joanna Pachner: We recently published an article about strategic courage in an age of volatility  that talked about three types of edge business leaders need to develop. One of them is an edge in insights. Do you think AI has a role to play in furnishing a proprietary insight edge?

Yuval Atsmon: One of the challenges most strategists face is the overwhelming complexity of the world we operate in—the number of unknowns, the information overload. At one level, it may seem that AI will provide another layer of complexity. In reality, it can be a sharp knife that cuts through some of the clutter. The question to ask is, Can AI simplify my life by giving me sharper, more timely insights more easily?

Joanna Pachner: You have been working in strategy for a long time. What sparked your interest in exploring this intersection of strategy and new technology?

Yuval Atsmon: I have always been intrigued by things at the boundaries of what seems possible. Science fiction writer Arthur C. Clarke’s second law is that to discover the limits of the possible, you have to venture a little past them into the impossible, and I find that particularly alluring in this arena.

AI in strategy is in very nascent stages but could be very consequential for companies and for the profession. For a top executive, strategic decisions are the biggest way to influence the business, other than maybe building the top team, and it is amazing how little technology is leveraged in that process today. It’s conceivable that competitive advantage will increasingly rest in having executives who know how to apply AI well. In some domains, like investment, that is already happening, and the difference in returns can be staggering. I find helping companies be part of that evolution very exciting.

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