How can workforce planning give your business a competitive advantage?


This means that many business leaders are preoccupied with working in, rather than on, their business. Longer term planning, however, can pay dividends; and workforce planning is a clear example.

Ask most business owners or CEOs what their key asset in their business is, and they will say it is their human capital. It therefore makes sense that workforce planning should be an integral part of any business plan.

How can workforce planning give your business competitive advantage?

Workforce planning involves understanding your current and future labour markets to identify where your workforce is coming from so that you are able to meet goals, improve business performance and enhance long-term capital value.

Workforce planning can often be triggered by a specific event or a change to structure, such as merger, acquisition or a transformational change project.  It is however important for your business to focus on workplace planning at other times too.

What is involved in putting together a workforce plan for your business:

1. Understanding the organisation and its environment
A PESTLE analysis is one of the most effective ways you can gain greater insight into the market your business operates in. It looks at six key factors: Political, Economic, Sociological, Technological, Legal & Environmental.

2. Understanding your labour markets
A labour market refers to skillsets of potential employees and the geographical area they are likely to come. For some workforce groups, you may only need to understand a very local labour market. For others, the market can be regional, national or even international.

3. Understanding your operating model and organisational strategy
An operating model is the combination of roles, skills, structures, processes, assets and technologies that enable you to provide service or product promises.  This can be split into 5 categories; Process, Information systems, Location and buildings, Human capital and Suppliers and partners.

Strategic planning can have an impact on workplace planning. Some businesses have long product cycles while others will have a mix of different timeframes in different divisions, functions and locations.

4. Determine future workforce needs
Often described as getting the right people, with the right skills, in the right roles, at the right time and at the right cost, a business can adopt the five ‘rights’ of workforce planning - right shape, right skills, right size, right costs and right location.

5. Identifying workforce gaps against future needs

Once you have a plan for your current and future workforce you will be able to identify gaps and form an action plan.  There are three key steps:

1. Select the most critical gaps
2. Identify potential actions
3. Prioritise actions

One example comes from management guru David Ulrich’s ‘build versus buy versus borrow’ resourcing approach which focuses on developing skills and filling jobs internally (build), or recruiting externally (buy) or from a contingency labour market (borrow). 

By taking a strategic and intentional approach to workforce planning, business are likely to build a competitive advantage in one of the most critical areas of success: people. The potential long term impact on generating capital value is profound, and mid-sized businesses in the UK should be thinking about it today.

The author, Ruth Cornish, is a Fellow of the Chartered Institute of Personnel and Development and founded Amelore Limited , an HR consultancy providing HR services to fast growing businesses.

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