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:
- Employee referral rewards;
- Recruitment technology;
- Background checks; and
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.