Even the most talented minds in business need the support of committed, able employees to bring their ideas to life. Building an effective workforce can be a challenging proposition, but having a solid workforce plan can help smooth the path.

Simply put, workforce planning is anticipating your organization’s future staffing needs, and identifying the steps needed to build that ideal workforce. Whether you’re expanding, maintaining, or downsizing, a workforce plan is an essential blueprint for managing the direction of your company.Workforce Planning

1. Gather Market Data

Your first task is to gather market data. Learning about the national and local job markets—and the factors that influence them—will help you form your workforce plan.

Key data points to examine include the local employment rate, community demographics, and your competitors. For example, a pool of skilled employees looking for work in your region may allow you to readily snap up great candidates for mid- and high-level positions. Likewise, if there are many college graduates coming onto the market in your area, filling entry-level slots may take little effort on your part. To attract these candidates, you need to know what your competitors are offering, and make sure your compensation and benefits packages are in line with your industry.

Also, research social, technological, and economic trends relevant to your business. A recession, for example, may allow you to attract highly skilled employees with ease, while a booming economy may make it trickier to find new candidates, increasing the importance of retaining your valued employees.

Political and legislative trends also play their parts. Changes in federal, state, or local laws may have a positive or negative effect on your industry, your hiring ability, or the kinds of benefits you're able to offer your employees.

Gathering data will take time, but there are many resources available to help you. As you research, keep in mind that this information is the foundation of your workforce plan, so be thorough. Monitor news reports, competitors’ annual reports, and trade publications or websites. Avail yourself of industry networking opportunities, and periodically check news releases from agencies such as the U.S. Department of Labor and its state counterpart, and the U.S. Bureau of Labor Statistics. You may have a timeline for preparing a workforce plan, but data-gathering should be an ongoing effort that keeps your finger on the pulse of all the factors that impact your business.

2. Get to Know All About You

After getting up to speed on market conditions and trends, Step 2 is analyzing your specific organization. Begin by gathering and examining information about your existing workforce, starting with a review of current positions. Pay close attention to the number of employees, broken down by job type and the strategic importance of each position.

Next, delve deeper with an assessment of organizational capabilities, including:

  • A detailed inventory of each employee’s knowledge, abilities, skills, and years of experience;
  • A review of employee performance in essential areas like teamwork and leadership; 
  • An analysis of any specialized expertise or qualifications; and
  • An assessment of employee potential for telecommuting or flex-time work.

 

3. Assess Workforce Supply and Demand

After examining your workforce, develop basic supply and demand information in Step 3. Begin with demand, including employees who are planning to retire and your turnover rate. Input from senior management is critical at this juncture; reviewing the organization’s short- and long-term business strategy can help assure that you are staffed appropriately to meet the stated goals.

Next, determine your ability to meet anticipated staffing needs by assessing the workforce supply, including:

  • Identifying employees who can be promoted;
  • Locating open positions that can't be filled internally;
  • Assessing the availability of potential candidates in your area;
  • Evaluating training requirements; and
  • Determining any need for succession planning.

4. Make a Plan

Now you’re ready for Step Four, which is to develop your implementation plan, drawing on the information and analyses you have conducted up to this point. Your plan should include a timetable for filling current open positions and positions you anticipate will be created through business growth, turnover, and retirement.

Be sure to build into the plan any pertinent information uncovered during your examination of job market conditions and trends--for instance, relevant data about the economic environment or competition. Additionally, your plan should allow sufficient time for finalizing job descriptions and recruitment advertising.

5. Change Course if Necessary

Workforce planning is an ongoing endeavor, which brings us to Step 5: reviewing your plan annually to accommodate growth and change, including:

  • Changes in staffing needs due to the growth or contraction of your business;
  • Changes in management that require hiring outside the firm or promoting from within;
  • Changes in the economy;
  • Changes in the physical location of your company; and
  • The development of new products or service areas that require employees with specialized skills.

Cost Per Hire

In closing, let’s have a word about cost-per-hire formulas, which take into account the expenses associated with attracting and securing new talent, and can be a useful tool in your workforce planning. Typically, cost per hire formulas add together costs such as:

  • Advertising;
  • Employee referral rewards;
  • Recruiters;
  • Recruitment technology;
  • Travel;
  • Background checks; and
  • Relocation.

The total cost is then divided by the number of individuals hired, to arrive at an average cost-per-hire amount.
Beyond informing your workforce planning, the cost-per-hire metric can be used in additional ways, including comparing hiring methods within an organization, deciding whether to outsource recruitment, and assessing the economic impact of employee turnover on a company. While cost-per-hire data can help you manage your recruitment and hiring costs, it's important to bear in mind that a higher cost per hire may in fact be justified by the acquisition of high-quality talent.

Secrets to Successful Hiring [Video Blog]

Topics: Workforce Planning

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