What are the best methods to manage your talent pool at all times? Talent shortages, changing demographics, economic fluctuations, these are just a few of the many factors that have made talent management quite a challenge. Workforce Planning emerges as a solution to align human resources with evolving market demands and adapt to these changes quickly. Without adequate workforce planning and the foresight that comes with it, both the business and its employees suffer. This is happening right in front our eyes: in 2023, over 262,000 tech employees were laid off due to overhiring during the pandemic years, and this trend has unfortunately continued into 2024.
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Clearly, companies are under mounting pressure to optimize their most valuable asset — their workforce. Decisions about who to hire, train, or let go can mean the difference between thriving and barely surviving. While no amount of workplace planning can be 100% future-proof, it does help managers, decision makers, and HR professionals to scale up efficiently, downsize responsibly, or transform labor through upskilling.
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Starting with recruitment strategy, those who are responsible for hiring need to decide which roles require more staff and which are less critical. Now, this might sound like a no-brainer, but recruitment priorities are subject to more frequent changes as developments in AI technology and automation tools pick up pace.
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And this brings us to the importance of understanding where your organization's talent pool currently stands versus where you'd like to steer it. Gap analyses of this discrepancy can gauge current performance and identify what's needed to achieve the ideal productivity levels. In the meantime, to ensure that current employees are engaged and motivated, a healthy talent pipeline with a blueprint for succession planning can help identify and nurture future leaders.
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While more resources are being allocated to critical job functions, an honest review of current workforce expenses can also uncover what's worth spending money on, and what's draining the cashflow unnecessarily. In this case, cost analyses can also be used as a way to compare and weigh the pros and cons of different cost reduction tactics. The goal here is to do more with less.
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A sound recruitment strategy with the right expectations lays the groundwork for team success before the first day on the job. Unfortunately, 74% of new hires are already looking for a new job within the first six months. Bad hiring not only makes the employees miserable, it also makes the company suffer financially. The cost of a bad hire extends beyond the initial recruiting costs into onboarding and training expenses. In fact, it's estimated that a bad hire can cost a company up to 30% of the employee's first-year earnings.
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In the context of evolving trends and tech disruptions, such as the rise of generative AI, a well-thought-out recruitment strategy should inform stakeholders on the best ways to adapt their workforce for future demands. This can include examining automation's potential to decide on roles to expand or reduce, ensuring resources are allocated where human skills are most necessary.
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Given the varying seniority levels needed, tailored approaches to hiring channels can also make the process more efficient. Certain platforms, for instance, are specifically catered to entry and junior level positions, which can lead to an influx of applicants who are recent grads and open to learning new ways of doing things.
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To understand how the current state of your talent pool compares to its aspirational state, consider using gap analysis. This evaluative process allows managers to pinpoint specific areas where additional resources and manpower, better processes, or further training are needed.
Gap analyses can be based on a variety of benchmarks that are relevant to the subject in question. In the case of workforce planning, a common benchmark is FTE, or full-time equivalent. FTE helps managers and HR professionals understand the workload of employees in a standardized fashion, whether they work full-time or part-time.
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Look at it this way, if there are 20 customer support specialists on your team and each has an FTE of 0.7, that means altogether this team of customer support specialists make up 14 FTE. By tabulating the FTE of each role, one can see which roles are understaffed and need more help for the amount of workload they're assigned, and which roles are overstaffed and can be downsized.
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Once a clear understanding of the current workforce's composition is established, next is to secure the company's future through succession planning. This strategy opens the path for a consistent inflow of talent who are capable of stepping into key roles as needed. Tools like the nine-box grid categorizes employees based on their performance and potential, highlighting those suited for leadership roles.
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Employees who fall in the "future leader" category are your best bet, as they've not only demonstrated consistently stellar performance, but also exhibit high ambition and drive. On the other hand, those in the "underperformer" category are not only subject to career stagnation, but could also be the first ones to be impacted during times of downsizing.
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Ultimately, when the right employees are assigned to the right kind of work, it's a win-win situation — not only does it optimize the business values that each employee can produce by utilizing their biggest strengths and best skillsets, but the validation of their performance can also encourage better employee retention. It's estimated that the total costs to hire someone new can be three to four times the position's salary – So it's definitely worth the money and the effort to keep the best employees happy.
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When the cost of sustaining a workforce outweighs the business values that are generated, then your headcount is no longer an asset but a burden. When it comes to workforce planning, part of cost analyses is assessing the current situation as it is. For example, what is the total cost of the workforce? This can be broken down by performance level, seniority, or job functions.
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Another way to conduct this analysis is by going off of the team's organization chart. For example, for a team whose main job is to market and sell, how much does it cost the company to support employees who manage the PR program under that umbrella? What about those who are in charge of the go-to-market strategy?
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The other part of cost analyses is comparing different cost saving options. Cost savings can come in different forms. For example, despite recent pushbacks from some CEOs, a company might still find that increasing the percentage of remote workforce can generate the greatest cost savings. Another common cost saving strategy is downsizing, or some companies like to use the euphemism "reorganization". In that case, it would be worth calculating what part of the workforce should be reduced without compromising the quality of work. Is it frontline workers, or would it be first-level and second-level supervisors?
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Last but not least, reports and dashboards allow internal decision makers to have the adequate numerical and statistical references to make the right calls. Some of these dashboards are not only helpful for workforce planning, but also indispensable when it comes to Human Resources management in general. For example, charts showing headcount composition by different variables, such as job type or department.
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Tracking employees who are close to retirement can also help with succession planning, as we mentioned earlier. How many people will be retiring soon? And what would the company need to do to fill these roles? Would it be through hiring externally? Or through promoting internally?
With Workforce Planning, managers gain a robust toolkit to navigate the shifting supply and demand of today's talent pool. From devising savvy recruitment strategies aligned with technological advances to conducting gap analyses that reveal and remedy deficiencies, these strategies serve as underpinnings to future-proof businesses. Cost analysis, succession planning, and potent reporting mechanisms further arm decision-makers with an efficient allocation of human resources. These frameworks support the evolution and resilience of a company's most valuable asset: its people.
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