what is workforce planning and why is it important to large-volume employers?

It’s no secret that the ongoing labour shortage is negatively impacting employers across the globe. This isn’t the only challenge facing employers today. The growing skills gap, fluctuating inflation concerns and shifts in workers’ expectations are also making it difficult for many employers to not only acquire talent but to retain workers as well.

While nearly all sectors are impacted by the tight labour market, those industries that require a large-volume workforce are especially hit hard. For instance, the June 2022 Statistics Canada report showed many of these sectors have the highest vacancy rates, such as:

• accommodations and food: 10%
• construction: 6.5%
• transportation and warehousing: 6.5%
• manufacturing: 5.0%
• retail: 4.6%

This is not surprising considering these organizations face a variety of additional challenges, including fluctuating production demands due to logistics issues, seasonal shifts and changes in consumer demands.

These employers don’t need to just fill full-time roles with the right candidate. They also need to maintain a high-quality, flexible workforce that the company can scale up and down quickly and efficiently. 

If these challenges sound all too familiar, a well-implemented workforce planning process can help your company mitigate today’s talent challenges and prepare your workforce for the future. This guide provides more information about what workforce planning is and tips for implementation .

what is workforce planning?

Workforce planning is the process of continuously assessing your organization’s current and future talent needs and developing, implementing and monitoring a strategic plan to meet these ongoing objectives.

Whether you realize it or not, it’s likely that your company is already practicing some form of workforce planning. It would be nearly impossible to manage a large volume workforce without some type of planning that goes beyond day-to-day operations.

The question your organization needs to ask isn't whether it has some level of workforce planning, but rather, does it have a well-structured, workforce management plan that drives results for today and helps it prepare for the future?

Even if you do have a strategic plan in place, when was the last time your company revamped its workforce management plan? A lot has changed in workplaces across the country in the last few years, even in the last few months. Is your plan still effective in today’s tight labour market and increased workers’ demands?

If your company is managing a high-volume workforce, having a structured workforce management plan in place is critical. Without a plan, it can be hard enough to manage today’s challenges, let alone prepare your workforce for the next 3, 5 or 10 years.

operational vs strategic workforce planning

There are two components of effective workforce planning, including operational workforce planning and strategic workforce planning. While both planning types are critical to your company’s overall success, they are very different in scope, goals and objectives. It’s important to understand the difference between these workforce planning components and how they fit into the overall workforce planning strategy.

operational workforce planning

Operational workforce planning focuses on the short-term needs of the company. It involves assessing the day-to-day operations of the business to identify current needs, such as filling job vacancies and setting shift schedules. Typically, operational managers and the HR department handle the operational workforce planning process.

strategic workforce planning

Strategic workforce planning (SWP), on the other hand, focuses on the company’s long-term talent needs. It involves assessing the company’s future talent needs and forecasting what skills it needs in the next 2, 5 or 10 years. At this point the team, which consists of HR, finance, operational managers and executives, collaborates to develop a plan for acquiring these skills and talent.

It can be easy during a time of overwhelming talent challenges to solely focus on operational workforce planning. After all, making sure you have enough workers scheduled for each shift is a top priority. The lack of a solid short-term workforce planning strategy can be costly. For instance, unfilled roles often result in lower production rates, increased overtime and delayed delivery times — all of which cost the company money.

Certainly, operational workforce planning is crucial to meeting the company’s current needs. However, without a long-term strategic workforce plan also in place, your company may have difficulty remaining competitive and be unable to prepare its workforce for the future.

Despite these factors, studies show that less than 50% of employers actually have a long-term workforce planning strategy in place. This sole focus on operational workforce planning can leave your company in a perpetual state of always trying to catch up to the competition. On the other hand, workforce planning allows your company to prepare for the future and can give its competitive edge.

advantages of strategic workforce planning

Your company can reap numerous benefits when creating and implementing a workforce planning strategy, such as:

prepare for current and future needs

One of the most important benefits of workforce planning is that it helps your company prepare for the future. This is especially vital for employers managing a large volume workforce where needed skill sets are constantly evolving. For example, manufacturers investing in emerging technologies and automation need to acquire the right tech skills and talent to manage this new technology. Workforce planning allows your company to do just that, by developing a plan to recruit new workers, including flexible workers, with the desired skills or invest in reskilling your current workforce.

narrow the skills gap

Studies show that 70% of Canadian employers are struggling to find the skilled talent they need. Unfortunately, this labour challenge is likely to only worsen as technology in the workplace continues to expand and advance. For example, the advancement of technology and automation in the workplace requires even entry-level workers to have experience working with technology. When hiring for a large volume workforce, the demand to hire qualified workers can seem overwhelming. Workforce planning can help alleviate some of this pressure by allowing your company to align its workforce management objectives with its business goals. Then, it can develop effective strategies, such as upskilling, training and selective hiring to secure the skills it needs both today and in the future. Without a comprehensive workforce planning strategy, your company could invest in acquiring the wrong skills or wait until the competition to acquire these skills is even greater.

build an agile, flexible workforce

If COVID-19 and its aftermath taught employers anything, it’s the need to build an agile and flexible workforce. Moving forward, it’s critical for employers to have a workforce that they can scale up and down upon demand. Contingent workers can offer this benefit, but only if your company has a plan in place to maximize the use of this flexible workforce.

In fact, our studies show that non-traditional workers, such as contingent workers, already make up 30% of the current workforce. It’s likely that this number will continue to grow in the upcoming years. Now is the time to develop a strong workforce planning strategy that allows you to build an agile workforce of contingent workers that can shift with production demands.

drive business growth

When implemented correctly, workforce planning offers an excellent ROI. Not only can this type of planning improve hiring outcomes, while reducing recruitment cost, but it can also increase productivity rates by reducing production delays and securing the talent and skills the company needs. This combination provides cost savings to your organization.

While these cost savings could help grow your company, the skills gap could prevent its growth. A recent study shows that 98% of IT leaders say that the lack of digital skills is impacting their technology investment decisions. Using a workforce planning strategy to identify and acquire the skills your company needs both now, and in the future can help utilize the technology and automation it needs to streamline business and production processes and grow the business.

enhance operational efficiencies

Businesses operate at peak performance when equipment, supplies, logistics and talent are in sync. If just one of these areas is underperforming, it can impact the effectiveness of all other areas. For instance, high levels of absenteeism or tardiness can hinder production rates or damage quality control, even if equipment, supplies and logistics are all in place. Workforce planning can help you develop strategies for dealing with these challenges and improve your company’s overall operational efficiencies.

5 steps of the workforce planning process

Workforce planning requires collaboration between executives, HR teams, finance, shift supervisors, line leaders and any other key players. It’s not a set-it-and-forget-it strategy, but rather an ongoing process. Below is a look at the five main steps of the workforce planning model.