Workforce Forecasting: Plan for Future Talent Needs with a Skills-Based Strategy
A great culture. Smart strategy. Continuing innovation. These are all hallmarks of winning organizations, but all of them rely on the talent of your workforce. Your organization’s ability to attract, retain, engage, and develop talent is vital. The foundation for an effective talent strategy? Accurate workforce forecasting.
SHRM’s State the Workplace report found that 84% of organizations faced labor shortages. While no organization has been immune to the economic tumult of recent years, companies that make workforce forecasting part of their ongoing HR processes are better equipped to respond to recruiting, retention, and development challenges.
What is Workforce Forecasting?
Workforce forecasting—sometimes called workforce planning—is the process of understanding the what, the where, and the how involved in your future workforce needs, and then developing a plan to meet those needs.
- What skills will your future workforce need?
- Where will you need those skills—in which locations, business units, and functions?
- How many people will you need with those skills?
Workforce forecasting can be done on two different time horizons:
Operational workforce forecasting
Operational workforce forecasting focuses on shorter-term workforce needs over the next 12 months. This might include initiatives such as planning for seasonal changes in demand, key business initiatives occurring in the next year, or responding to unexpected disruptions, such as a pandemic.
Strategic workforce forecasting
Strategic workforce forecasting is typically focused on a longer time frame—perhaps 2-5 years into the future. This strategic forecast is concerned with where the business is headed in the long run, changes to the competitive environment, and changes to the talent marketplace.
3 Steps to Implementing a Successful Workforce Forecasting Process
After deciding if you’re focused on short-term operational forecasts or long-term strategic planning, there are three key steps you should take:
1. Assess your current workforce through a skills lens. Reliable data on the skills your workers have is critical to this process.
2. Forecast future needs based on predictive analytics and your organizational strategy. Include detailed information about what skills your future workforce will need, where you’ll need those skills deployed, and how many people you’ll need to deploy them.
3. Develop a plan to close the skills gap between your current workforce and your future workforce needs.
For each of these steps, human resource analytics can help you develop a more accurate forecast and a more robust plan to meet your future workforce needs. This planning can also highlight opportunities to reinforce your organizational culture, strengthen your employer brand, and provide time efficiencies and cost savings.
Now that we’ve outlined each of the three steps, let’s break them down a little further:
1. Assess your current workforce through a skills lens
The first step for any organization to take when conducting workforce forecasting is to understand the current state of its talent. During this step, it’s important to identify ‘hidden’ capabilities and development opportunities that may not be apparent.
For example, many organizations know what skills are required for existing roles and what skills they’ve enhanced through learning and development programs. But do you know what skills your workforce has acquired via external training?
Another SHRM study found that 45% of U.S. workers say they possess some form of alternative skill credential, and among those who don’t have them almost half have considered earning one. Alternative skill credentials include training certificates, course completion certificates, and industry or professional certifications. That means it’s almost certain that at least some of your employees possess skill credentials you may not be aware of. Robust HR analytics that allow employees to list third-party verified skill credentials on individual profiles opens the door to a deeper understanding of your workforce.
In your workforce planning process, this understanding allows you to see where your current workforce can take on new roles, and who may have opportunities and an interest in upskilling or reskilling to meet new requirements.
Predictive HR analytics can also help you forecast future changes to your workforce due to technological advances, role redundancy, retirement rates, and more.
2. Forecast future needs based on predictive analytics and your organizational strategy
The next step in workforce forecasting is to assess what your company’s workforce needs will be in the future.
Consider likely changes the organization will face. This could include technological advances, growth plans, leaving existing markets or entering new markets, M&A activity, and industry trends. Also consider how shifts in the labor market might impact your organization.
Machine learning capabilities to build custom predictive models are now available, and can help you stay ahead of disruptive change in demand patterns due to economic fluctuations or changes in technology adoption rates.
With these external and organizational changes in mind, work through what roles your company will need in the future and what skills will be needed in those roles. Identifying specific skill needs is critical, as your talent planning efforts will be based on not just the number of people you hire, but what skills those people will need to be successful.
With in-depth knowledge about your current workforce and your future workforce needs in hand, you’re ready to develop a plan to close the gap.
3. Develop a plan to close the gap between your current workforce and your future workforce needs
Based on the gap between your current workforce and your future workforce needs, you can develop a plan to evolve your organization’s talent. What’s in your plan will depend, of course, on how big your skills gap is, but here are some general factors to take into consideration:
What should your future workforce look like? Should your mix of full time vs. part time and temporary vs. permanent change? How many of your new roles can be filled with external hires and how many with internal promotions? Which roles will be made obsolete by technology, and which new roles will technology create?
How can you provide new career opportunities for your current workforce? As you tap into your workforce’s existing skills, you’ll also create opportunities for internal mobility, which is highly valued by employees. According to Josh Bersin insights, just 11% of companies offer formal career programs for employees, which means for many workers the only way to move up is to move out. Create a plan that shows your employees that you’re investing in them.
How can you upskill or reskill existing talent? Talent management professionals are well aware that providing professional development opportunities is critical to keeping the workforce engaged and productive. But with L&D budgets often being the first to be slashed, it’s important to take an intentional and tailored approach in order to maximize ROI.
By taking a data-based approach to upskilling and reskilling, you can gain insight into your current talent pool, analyze where skill gaps exist, and strategically deploy training in order to fill those gaps and future-proof the business.
Take a Comprehensive, Skills-Based Approach to Workforce Forecasting
Workforce forecasting is made easier and faster with tools that integrate with your existing systems and allow you to access accurate data on a wide variety of talent-related questions.
Our workforce solutions give organizations forward-looking analytics, forecasting tools, and verified skills data that workforce planning teams can use to take a skills-based approach to talent management.
Schedule a demo to learn more today.