How to Optimise Workforce Planning


Continued shortages of skills and labour are placing talent attraction and retention high on organisation’s business risks.

A proactive approach to workforce planning is one way that employers can safeguard their people needs. Workforce planning is a process that analyses current and future workforce trends, or human capital, allowing organisations to identify their business needs so it can perform effectively. In addition, workforce planning also highlights the best and most cost-effective methods for recruitment and retainment of staff.

Workforce planning enables organisations to make effective staffing decisions, allowing you to prepare for the future and navigate challenges with minimal operational disruption.

Many larger organisations have dedicated workforce planning teams, other smaller businesses may begin planning after a specific event, such as after a merger or transformative change programme. Uncovering obstacles or unrealistic targets that hamper change and providing solutions that minimise risks to your organisation’s objectives and focus on a broader workforce plan is valuable at any time.

Workforce planning should focus on reducing employment costs that favour workforce flexibility and deployment, identify and respond to any changing customer needs, develop relevant strategies for focussed employee training, target inefficiencies, improve employee retention including productivity outputs, and make recommendations regarding delivery of strategic value through talent.

For workforce planning policies to be successful, organisations and HR departments who are responsible for leading planning initiatives should initially designate a particular member of their HR team to manage the process or find someone to champion the plan. Involve key colleagues in the planning process and make sure it is aligned with your organisation’s strategic business plan.

Workforce planning should be an ongoing activity, not stopping when the plan is formed and flexible enough to be responsive. Business environments change and your plan must respond to outside influences as well as those coming from within it. Continuous evaluation of change, both internal and external, is essential in meeting your future business needs.

Business owners, senior management, line managers and HR departments all have a role to play in employing staff and encouraging them to stay within the organisation.


Steps in the workforce planning process

1. Supply Analysis

The purpose of supply analysis is to evaluate the organisation as it currently exists – the skills and experience that are vital to your business. Analysis needs to cover both the number of employees and their skills, and factors, including workforce demographics and whether protected classes are represented. If you have a large number of employees nearing retirement age, or conversely, numerous younger employees with higher staff turnover, demographics will be particularly important.

Supply analysis also requires projections of staff loss, this may be because of resignations, internal transfers, retirements, involuntary terminations and promotion. This enables you to take into account the future supply of talent and where it may be needed. The workforce planner can then develop profiles of existing staff as it would look in the future if no action is taken regarding training, recruitment or outsourcing.


2. Demand Analysis

This analysis takes into consideration several business issues including new product lines, expansion and contraction of global markets, competitive forces, anticipated availability of workforce within geographic boundaries, alongside many other things. Internal and external issues should be considered during the demand analysis.

Analysis of internal influences could focus on whether the workforce has the skills sets required to perform new duties with a new product line (with limited training), or whether existing workforce remains loyal to the business if it has expected changes.

Analysis of external demand should consider whether staff are readily available and possess the ability and skills required by the evolving business. And consideration of what external pressures may change demand for products or services that could affect internal business decisions, and therefore affect workforce planning requirements.

Future composition of your workforce must also be taken into account, which can be done by answering questions such as the number of employees necessary to achieve your business plan objectives; what competencies or skills are required for the new business; what is the composition of the available workforce; what will the business need to do to attract prospective talent; and what will the business need to do to attract and retain a diverse workforce?


3. Gap Analysis

Gap analysis compares the supply model with the demand model in order to identify gaps between current workforce composition and future workforce requirements. A workforce planner may decide to war-game future scenarios and then select the future most likely to happen, setting contingency plans for alternative futures. The planner should also identify the staff needed who have the required skills, in conjunction with those employees who will no longer fit within the business because of their limited skill set.


Solution Analysis

This involves the development of a strategy to close the gaps identified in the previous step. Approaches for meeting demand in the future may include training, recruitment, retraining, using casual or temporary staff, or outsourcing. Which approach you take depends on whether the business needs to contract, expand, restructure or rely upon temporary staff to meet any new or transitionary workplace demands.

External staff may be required to meet workforce expansion because of the introduction of new product lines, expanded production or services, or wider geographic areas needing to be served. External hiring can be the strategy to adopt in order to address such gaps.

As turnover occurs, whether that is down to employees leaving for other opportunities or retirement, recruitment may also be required. Recruitment approaches vary depending on market factors, the type of candidate you are looking for, diversity related matters, and other factors. Time and costs are huge issues for recruitment, even if the process is efficient. It generally takes longer and costs more to find, hire and train a new employee, than to redeploy an existing member of staff. In many ways, recruiting externally should perhaps be the last resort for workforce planning.

Training and retraining. Instead of centering on filling skills gaps via external recruitment, your HR team may decide on the less expensive option of employee development. This is particularly useful for key high-value roles. Employee development builds on employees’ existing knowledge, retains the organisational culture, and arguably stimulates and motivates the workforce as a whole. A critical part of your workforce planning strategy should be to focus on updating skills and capabilities as older skills become obsolete because of advances in technology.

Such development may involve classroom or on-the-job training, e-learning, and webinars, and may concentrate on specific job roles, duties and tasks or on managerial skills or leadership for new leaders.

Temporary or casual staffing. These types of workers are often best used in highly fluid or dynamic organisations, because it may be better than hiring full-time staff who may not be required on an ongoing basis. This approach makes sense when the demand indicates that the number of employees is likely to vary and cannot be levelled out following resource allocation methods. Such staffing options include temporary and part-time employees, contract workers and consultants.

You can find temporary workers both internally and externally, depending on the requirements of your business. Temporary workers can be found across a depth of professions and can be hired to work at virtually every level and area of an organisation, including CEOs, accountants, consultants, IT, marketing and HR. You will want to make sure that procedures and policies are established that deal with matters such as screening, and selection, discipline, work behaviours and legal compliance issues.

Part-time employees. Those employees who work fewer than full-time hours are considered part-time, and this can be realised in a variety of ways. Some may even job-share with another part-time employee. Part-time work can be used to attract a more diverse workforce, including parents of young children, students, older workers and others who need a more flexible work schedule.

Contract workers and consultants. These types of workers tend to have specialist knowledge or experience and may be used to meet particular requirements of the business. If you are considering hiring such workers to fill an essential skills gap, you should take care you properly identify the best fit for the business, as these types of workers can be expensive to hire, even on a short-term basis.

There may be times when certain non-core business functions are better undertaken by people outside the company, for example, wages or HR. Jobs that are prime for outsourcing are those areas that require critical skills that may only be needed temporarily or periodically. To ensure outsourced functions are appropriately managed, you or your HR department should ensure you select the appropriate firm, establish guidelines for a partnering relationship, communicate your procedures and customs, and metrics for ensuring and measuring business results arising from the partnership.


Workforce succession planning

An additional source of workforce planning that is used by many organisations is to identify and then prepare those employees who are suitable to fill key roles when existing employees move on. This process is likely to involve a review of key leaderships and critical business roles and identification of those able to progress into these roles when the time comes. Having a succession plan in place typically makes sure there is a smooth continuation of business and relationships when those in key roles leave the organisation.

The types of roles that can be included in succession planning vary between organisations. During times of economic upheaval, when the economic security of the business is in jeopardy and staffing uncertain, the need for an up-to-date succession plan increases. At times of bumpy economic outlook, mergers, downsizing, and acquisitions become more likely. A succession plan can help encourage greater employee engagement and commitment because it shows the organisation supports their internal growth and development.


Workforce planning tools

Workforce planning tools can help to bridge the gap between your current workforce position and where it goes in the future. The most commonly used tools include:

  • Organisational strategy – this is set out by your organisation’s management team
    The 9-box grid – this is used to map the current state of your organisation’s workforce across the boundaries of performance and potential.
  • HR Analytics and performance – this is a HR software programme with an analytics and reporting platform that helps create data from all the decisions you make.
  • Total comparison and benefits analysis – this essentially distils the price paid for top talent and how it currently reconciles with the wider market.
  • Contingency planning – this can also be called “scenario planning” and means envisioning certain scenarios and how your organisation will respond to them.

Putting together a workforce plan is as much art as it is science. And no single formula, method or strategy exists that will provide you with a “correct” workforce plan. However, with the aid of this guide and wealth of information available, the trick is about bringing it all together and interpreting it in a meaningful way.


Need assistance?

DavidsonMorris’ professional HR consultants  bring expertise in workforce planning and development. For advice on how to improve your approach to identifying, attracting, developing, engaging and retaining key talent, speak to us.


Workforce planning FAQs

What are the 5 key elements of workforce planning?

Setting strategic planning, analysing your current workforce profile, developing an action plan, implementing the action plan, and monitoring, evaluating and revising your plan are the key elements of active workforce planning.

What are the steps of workforce planning?

Analysing your talent supply, consideration of your organisation’s future needs, identifying the gaps, and finding the solution are all steps of strategic workforce planning.

What is workforce planning and why is it important?

Workforce planning is the process of analysing, forecasting supply and demand, assessing gaps and talent management and are ways to ensure an organisation employees the right people with the right skills, placing them in the right roles at the right time.

What are the three stages of workforce planning?

You should be aware of the external factors impacting your organisation, focus on understanding how your organisation and its functions are being tasked to change, and obtain information on local, national, regional and global skills markets.

Last updated: 15 February 2023


Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.

She is a recognised by Legal 500and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.

Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals

About DavidsonMorris

As employer solutions lawyers, DavidsonMorris offers a complete and cost-effective capability to meet employers’ needs across UK immigration and employment law, HR and global mobility.

Led by Anne Morris, one of the UK’s preeminent immigration lawyers, and with rankings in The Legal 500 and Chambers & Partners, we’re a multi-disciplinary team helping organisations to meet their people objectives, while reducing legal risk and nurturing workforce relations.

Legal Disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct at the time of writing, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.

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