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Human resource experts have identified various common stages for multiple types of workforce planning. While different experts may say there are three, four, or five stages, all seem to agree on the basic planning process: analyze the current supply of employee talent and come up with a prediction of future demand; identify the gap between the two; develop a strategy for filling the gap. 

A more in-depth overview of these stages are below:

Stage 1: Supply and Demand Analysis

Supply analysis looks at the current workforce in detail: the number of employees, the jobs they fill, their skills and qualifications, where they work, and performance levels. 

A larger company will need a workforce management system is important to organize and store personnel information. It’s beneficial to create a skills inventory, including education, training, and capabilities. The skill inventory is useful when looking for internal job candidates. Employers could also use it to decide who needs a skills update.

Once the human resources supply is understood, the next step is forecasting future employment needs. Demand analysis should go deeper than a headcount estimate. Required skills and location are additional factors to consider aside from looking at the current number of employees doing one job. Other employees in different locations could do the work remotely or receive more training. 

When deciding how many employees a company needs, workforce planning should account for personnel changes like promotions, retirements, transfers, and normal turnover that will reduce the current workforce.

Stage 2: Gap Analysis

This stage is devoted to understanding gaps between the current and future workforce needed to meet business goals. Prioritizing gaps based on business goals will help determine the order and how to address them. The analysis should also include diversity gaps, not just skill and competency gaps.

When looking at the external supply of future workers, it’s beneficial to add labor market trends such as the aging workforce, more workers with children and older relatives to care for, advances in technology, and future government regulations.

The result of the gap analysis stage is ideally a detailed report on the types of jobs needed in the future, the number of employees a company needs to fill the jobs, and their locations.

Stage 3: Develop and Implement an Action Plan

Strategies during this stage are important to bridge the gap between the current and future workforce. Recruiting and hiring new employees is not the only option to consider. 

In some cases, a company may need to lay off employees to align the workforce size with the overall business strategy. Other options include updating the skills of current employees to meet future requirements, relocating employees, and using remote or contract workers. 

Human and financial resources are vital to implementing an action plan. Once underway, the plan should be communicated and marketed in terms of strategic goals within the company and then monitored over time for progress towards milestones. 

Real-World Workforce Planning

Although a company may well understand the workforce planning process, many organizations have difficulty because they don’t integrate their workforce processes. Workforce management systems that integrate and coordinate data from various common activities like timekeeping and training make it easier to coordinate workforce planning with business planning. 

Those who do workforce planning must seek involvement and support from managers and team leaders who will be carrying out the plan. Without their help in the design and development of the plan, there is little chance for success.

A workforce plan is effective when it helps an organization balance the demand for workers with the supply by either attracting new employees or retraining existing employees to fill new positions. The value of a workforce plan can be judged by how closely its forecasts align with reality.

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