Workforce Planning: An Awesome Opportunity to Enhance & Grow Your Business

Workforce planning is the process an organization uses to analyze its workforce and determine the steps it must take to prepare for future staffing needs.  Great and successful businesses understand the importance of proper workforce planning.  It's time to give your business that same edge.  Keep reading to understand 4 steps to conduct your own workforce planning and give your business a leg up on the competition.

There are several distinct analytical steps that need to betaken in workforce planning:

1. The supply analysis, also referred to asthe “supply model” or “staffing assessment,” involves an analysis of anorganization’s current labor supply.

2. The demand analysis, also referredto as the “demand model,” includes a review of future business plans andobjectives.

3. The gap analysis compares thedifferences in the supply and demand models and identifies skill surpluses anddeficiencies.

4. The solution analysis focuses onhow to address gaps in current staffing and future staffing needs throughrecruiting, training and development, contingent staffing, and outsourcing.

Step 1: Supply analysis

The purpose of the supply model is to analyze theorganization as it currently exists—in other words, the supply of labor andskill sets that are vital to an organization. This analysis should encompassnot only the number of employees and their skills, but also factors such asworkforce demographics, including representation of protected classes.

A supply analysis also involves making projections ofattrition (due to resignations, retirements, internal transfers, promotions andinvoluntary terminations) over the planning horizon being used, so thatattrition is taken into account in considering the future supply of labor andskill. From this information, a profile can be developed of current staff as itwould exist in the future if no action is taken in recruiting, training oroutsourcing.

Step 2: Demand analysis

The purpose of the demand model is to forecast theorganization’s future workforce composition. This forecast should take intoconsideration a range of business issues. These issues may include newproduct lines, competitive forces and expansion/constriction in globalmarketplaces, anticipated workforce availability within geographic boundaries,and a myriad of other issues.

Internal and external factors need to be considered in thedemand analysis. Analyses of internal demand influences may focus on thefollowing questions, among others:

• Will the current workforce, with minimal retraining, have the skill sets necessary to perform new duties with a new product line?
• Will current employees remain loyal to the organization that has anticipated changes in mind?

Analyses of external demand influences may consider thesequestions:

• Is labor readily available that possesses the skills and abilities needed by the evolving organization?
• What external pressures will change demand for goods and services that may ultimately affect internal business decisions and, thus, workforce planning needs?

The future composition of the workforce must also beanalyzed. This analysis will seek answers to the following questions:

• How many employees will be necessary to achieve business plan goals and objectives?
• What skills and competencies will be required for the new business?
• What is the composition of the available workforce population?
• What will the organization need to do to attract prospective employees?
• What will the organization need to do to attract and retain a diverse group of workers?

Step 3: Gap analysis

The next step in the process seeks to compare the supplymodel with the demand model to identify gaps between the composition of thecurrent workforce and future workforce needs. The workforce planningprofessional may want to categorize a variety of future scenarios and thenselect the future that is most likely to occur, with contingency planning foralternative futures. When conducting this analysis, the planner will want toidentify the additional number of employees with requisite skill sets that willbe needed, as well as the employees who will no longer be needed due to limitedskill sets.

Step 4: Solution analysis

Solution analysis involves the development ofstrategies to close the gaps identified in the previous step. Approaches formeeting future workplace demands may include recruiting, training andretraining, utilizing contingent staff, or outsourcing. The approaches selectedwill be dependent upon whether the organization will need to expand, contract,restructure or rely on contingent staff to meet new workplace demands.


Content from SHRM.ORG

How To Budget for Human Capital Initiatives with 6 Easy Points

The entrepreneur’s or HR professional’s responsibility is to align the HR budget with strategic business goals within organizational guidelines and procedures. Budgeting involves the methodical collection of information and data so that the finances needed to support a business’s objectives can be forecasted. New businesses have no prior financials to use for evaluation; therefore, forecasting and estimating will be needed for the initial HR budget. From an HR perspective, the data needed to generate a new budget includes the following forms of data:

1. Number of employees projected for the year.
2. Benefits cost projections.
3. Projected turnover rate.
4. Any actual costs already incurred in the current year.
5. New benefits/programs planned.
6. Other policies, business strategies, laws or regulations that may affect costs.

Forecasts may be simple or complex and, based on actual costs or projections, depend on the nature of the operating costs and the data available. Managers or business owners preparing an HR budget for the first time will need to collect every source of obtainable data to make knowledgeable projections.


Information taken from SHRM.ORG

5 People Metrics Every Entrepreneur MUST Understand

The HR function of a business has long been seen as a cost center.  But what happens when you begin measuring people matters and running your HR function more like a profit center?  As your business grows, there are certain people measurements that will enable you to make decisions that effectively and efficiently develop your organization.

1.  Revenue Factor:  total organization revenue/# of full time employees

This is an important factor, especially for small businesses.  As a company looks to grow, be sure to have a firm grip on this number.  You’ll soon realize the benefit to adding sales people or productive staff over administrative and overhead personnel.

2.  Total labor as a percent of operating expenses:  total labor costs/total operating expenses

Understanding how much your labor is costing you is important to look at while beginning and growing your business.  Labor is most likely your largest expense, so it’s important to have a pulse on where your labor costs stand.  Be sure to pay attention to it.

3.  Quality of Hire:  average job performance scores/performance scores for all employees or # new hires promoted within period/all employees promoted within period.

When you’re a small or growing business, the quality of your hire means everything.  Being able to quantify this factor could be key for your business.  Understanding the quality of hire could also help you improve your consistency in hiring high quality candidates if you have complete, historical and detailed information on this topic.  Improving the quality you hire?  Priceless.

4.  Cost per hire:  advertising + headhunters + referral bonus + travel costs + interviewer time + relocation/number of hires

Most great entrepreneurs know that second to a million dollar idea, successful business requires rock star talent.  It’s also commonly known that acquiring this talent can be expensive.  Understanding your cost per hire may better position you to make the strategic hires necessary to move your organization forward.

5.  Turnover:  # of employees terminated/total # of full time employees

This metric is important in every organization, regardless of function, industry, size, etc.  It may be of particular benefit to separate “voluntary turnover” as well as “desirable turnover” from this factor.  This factor can help you better understand many things about your business including morale, culture, labor forecasting, etc.  If you calculate no other HR metric, be sure to know your turnover.

Having and understanding data, and making informed decisions based on data are what moves an organization forward.  Imagine if you could progress your people function above the competition?  Jackpot.  There a variety of other HR metrics an organization can follow (and should follow).  But, we’ll save these for another day and another post.