This guide is part of a progression set comprised of Core, Advanced, and Emerging Workforce Planning practices.

What it is

Core workforce planning is a business-aligned process that identifies and describes the current level of employee headcount, assesses future needs based on both internal strategies and external trends and generates an employee replacement analysis. It engages quantitatively based approaches to understanding the makeup and historical tendencies of the workforce as a whole, reviewing worker demographics, tenure levels, and other parameters. It considers current external economic, industry, and workforce developments to assess their impact on potential labor supply requirements, such as workforce participation and availability trends, unemployment levels, and skill shortages. It considers internal business strategy directions, growth patterns, changing skill and capability requirements, and employee turnover tendencies to examine future internal demand requirements.

The process leverages a set of standard employee loss and sentiment metrics to evaluate the likelihood of increased (or decreased) turnover, which drives replacement requirements and leads to a headcount planning exercise where talent management processes are engaged well in advance of the losses for replacement strategies and plans. 

Another related term for this is "headcount planning," which is typically a finance function-driven exercise that serves to understand the costs vs. budgets for employees. That process generally leverages the use of “full-time equivalents,” or FTEs, which are estimates of the productive and unproductive time on the job. It often includes a calculated reduction for each full-time employee's planned absence time (vacation days, sick days, family leave, required training, etc.) so that a regular, full-time employee is actually less than 100% productive (e.g., equivalent to a 0.85 headcount), it provides an incomplete picture of actual headcount requirements. For workforce planning, a full-time employee is calculated at 100% so that staffing, replacement, and training needs can be calculated for the number of unique individuals at any given point in time.

Why use it

Core workforce planning practices enable better preparation and advance notice of headcount losses and projected net staffing increases for the coming year in a way that improves the organization's ability to meet product and service output demands. With improved foresight, functional managers and HR teams bring a more continuous flow of hiring and employee capability development into play to minimize gaps in the volume of employees needed to meet the company's business plans and production requirements productively. It provides a common language and set of considerations to engage leaders and managers in conversations related to the rationale and purpose of various HR programs and practices designed to meet the challenges the organization will face as it meets staffing and associated operational requirements.  

It enables the organization to better manage its support workflows and costs (recruitment, onboarding, training, etc.) with improved insights into how many staffers will be needed by function and role and when that headcount will be required. It also helps focus functional managers' attention on the criticality of retaining the talent they have and the continuous building of skills that are necessary for an organization to "win" in the labor market today.

Outcomes

The adoption of core workforce planning practices brings invaluable benefits to the organization. It provides a basic but crucial projection of the outflow and required additions to staffing levels for the coming year(s). This advanced notice of expected changes to the workforce makeup enables significantly improved planning by the HR teams, finance organization, operations, and the line managers they support. The outputs are shared with line leadership and HR business partners for reviewing opportunities to reduce expected talent outflows due to voluntary terminations. They are also provided to those responsible for talent management processes to support the definition of advanced strategies, plans, and resources/budget requests designed to guide retention and replacement activities. Leveraging a quantitative view of projected losses and required gains, the HR team can inform and guide leadership toward more objective decision-making regarding investments in talent management capabilities, strategies, and programs.

Practice guides at this level

Generating alignment between workforce planning and business strategies.

Creating business alignment of the workforce planning effort requires both a review of the company's strategic direction and targeted discussions with leadership regarding key changes.

Identifying and calculating the internal supply of available talent.

Understanding the current state of talent available and deployed across the enterprise informs the internal "supply" side of the supply vs. demand analysis that will ultimately be conducted.  

Projecting future headcount demand requirements from business plans and external estimates.

Incorporating workforce changes to be considered by reviewing the external environment for trends that may impact the company's ability to retain and maintain sufficient staff.

Closing the projected headcount gaps through talent management strategies.

Developing plans to close headcount gaps through acquiring or developing the talent needed to fulfill business goals and objectives.