4 Steps Of The Workforce Planning Process

Workforce planning should be a top priority for talent acquisition teams, although many organisations tend to overlook its importance.

4 Steps Of The Workforce Planning Process

In a nutshell, workforce planning is a process involving four steps. First, an organisation examines its current workforce and the talent it has available. The next step is to determine future employee requirements for meeting specific business objectives. Finally, it identifies the steps that should be taken to close the gap between current and future needs.

Although this process should be a top priority for talent acquisition teams, many organisations tend to overlook its importance. A survey sponsored by KPMG showed that the workforce planning process in 45.2% of companies is only at an emerging stage and there is a need for improvement.

Why Is Workforce Planning Important?

It can significantly lead to a decrease in labour costs. You will be able to identify the needs of your organisation through strategic planning and you will not have too many or too few employees at any given time.

If you have too many employees, the cost of labour will be too high and may not necessarily align with the output and revenue. This can result in overall losses. The same can happen if you do not have enough staff; your organisation may not be able to keep up with the required deliverables, in turn resulting in losses.

Workforce planning also helps in improving productivity and employee retention rate. If you have enough employees to work at your organisation, they will not be overworked or constantly tired. They can be more productive and have a good work-life balance. In turn, you will be able to create a better employee experience through strategic staff planning.

This process will also help you with talent management. It is crucial to have the right skills at the right time. For example, if you are not regularly hiring any young employees, you may be faced with an ageing workforce and mass retirement. This can result in a lack of in-demand skills or cause reskilling challenges. The reality is that you need to have a strategy in place to prevent these situations.

Key Steps In The Planning Process

There are 4 key steps in the workforce planning process.

Supply Analysis

In this step, you need to assess the current supply of labour within your organisation. You need to consider the following:

  • the current number of employees and their skills
  • demographic factors such as the age of the employees, their gender, and race

Demographic factors form an essential part of the supply analysis as they inform you about future retirements and whether or not you have adequate diversity and representation within your ranks.

The supply analysis process requires both a quantitative and qualitative aspect. For quantitative analysis, you need to evaluate the labour supply by job role, accounting for potential loss in employees due to retirement, as well as turnover or internal job transfers. For qualitative analysis, you need to look at your employees’ skills and performance for each job category.

Your organisation can use a Machine Learning (ML) software to estimate the risk of retirement, turnover or internal job transfers. The ML software can use various datasets such as employees’ demographics, salary inequalities, work benefits and external factors like the stock market and the local job market to give the risk estimations.

Demand Analysis

Now that you have identified your current labour supply, you need to know what will happen in the future. In the demand analysis step, the objective is to predict your company’s future workforce composition.

You need to consider the company’s strategies and vision such as new products and services that will be launched, your competitors, the local and international market outlook, and availability of skilled employees within your geographic location.

Some of the questions you need to ask include the following:

  • How many employees will be needed to accomplish the organisation’s objectives?
  • Which qualifications, skills, and experience do they need to have?
  • What can the organisation do to attract, hire, and retain top candidates?

Gap Analysis

The next step is to conduct a gap analysis. Here, your aim is to compare the supply analysis with the demand analysis and to identify any gaps between your current workforce and your predicted workforce for the future.

You can come up with various future scenarios and choose the one which is most likely to occur, but you need to have contingency plans for the other scenarios as well.

During the gap analysis, you need to determine how many new skilled employees the organisation needs to recruit and how many current employees will need to leave due to their limited or undesired skills.

Situation Analysis

In this last step, you will develop strategies that will allow you to close the gaps between supply and demand of labour that you identified in the gap analysis step.

Some of the actions that you may need to take in the situation analysis step include hiring new employees, training current and new employees, or resorting to contingency staffing. This means that you can employ temporary, part-time or contract workers depending on the needs of your organisation.


If you follow the key steps in the workforce planning process as given in this article, your organisation will always have the right skills at the right time. Although the planning process can be quite challenging, it should be a priority for your HR team as it has multiple benefits.