How to Create an Effective WFM Strategy

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Knowing how to create an effective WFM strategy that results in happy employees and an efficient workplace is important for every organization.

It is no secret that the world of work is changing. We are seeing the rise of remote and hybrid working arrangements, a raging war for talent, and many emerging technologies. In an increasingly tight labor market, knowing how to utilize your best resource – your employees, is essential to your companies’ immediate success.   

While many organizations realize the need for workforce planning, most still lack the tools and knowledge to understand how to create an effective business WFM strategy.   

What is Workforce Management?  

One of the most significant challenges companies face in today’s highly uncertain global economy is understanding their current and future staffing needs. Companies without a plan for addressing their labor needs, put the whole company at risk, by being understaffed or overstaffed.  

Workforce management aims to optimize productivity strategically and ensure that resources are used at the right place and at the right time.   

The proper workforce management (WFM) strategy analyzes the composition of the workforce and aligns it with the short and long-term goals of the company. It also involves time and attendance tracking, forecasting, skills management, absence management, labor scheduling, and budgeting activities.   

The actions usually taken may depend on external factors such as skill availability and internal factors like demographic changes in the workforce. Depending on these factors, the HR teams can aim to fulfill the company’s future needs by recruiting, training, or outsourcing the work.  

Workforce planning is a complex exercise that requires a lot of data analysis and planning to ultimately help employers make better-informed decisions and understand how to create an effective WFM strategy.   

What are the Benefits of Workforce Planning?  

• Decreased labor costs  
• Improved work-life balance 
• Increased productivity 
• Increased employee retention 
• Devise strategies for career and talent development
• Identification of changing employee and customer needs 
• Better informed business leaders 
   

Why is Workforce Planning Essential?  

Challenges with recruiting and retaining talent combined with an aging workforce made talent shortages a top concern for leaders around the globe. According to one survey, global talent shortages are at a 15-year high, and more than 1 in 3 U.S. employers reported difficulty filling jobs.  

Another recent report estimates that talent shortage could cost firms nearly $8.5 trillion in lost revenue by 2030. Although it is difficult to quantify the effects of poor workforce planning accurately, it is clear that this problem needs to be acknowledged. 

Businesses that do address these issues and plan accordingly with an effective WFM strategy will enjoy many benefits. Organizations that indicated a strong alignment between workforce and business planning processes showed 61% greater year-over-year improvement in revenue growth and more than twice the process improvement in customer satisfaction.  

Workforce planning solves many current and future staffing problems. Strategic workforce management is becoming increasingly important for numerous reasons.  

• Demographic changes: The aging of the population poses several different challenges, including a lack of in-demand skills, reskilling challenges, and redefining retirement. As companies can rely less on external hires to fulfill positions, they need to consider upskilling and creating internal mobility of their workforce.  
• Reducing expenses: The increasing global competition is demanding that organizations work smarter. Hence why many organizations are starting to look for talent in non-traditional places and adapt quickly to meet the evolving needs of the marketplace. 

• Succession planning: One function of workforce planning is identifying the critical positions in an organization and developing plans for individuals to assume those positions. Without talent management and no strategy on passing the leadership roles, the top talent in your organization will look elsewhere for opportunities.   
• Flexibility: Today’s economy demands better working conditions and higher flexibility. Not just that, but the pandemic also highlighted the need for employers to provide better mental and behavioral health support. Employers need to be aware of the shifting priorities of their employees in terms of their own well-being and provide a better work-life balance to retain and accurately conduct labor forecasting analytics.  

What are the Steps in the Strategic Workforce Planning Process?  

There are several steps to the cycle of strategic workforce planning that can serve as a roadmap to follow when creating an effective WFM strategy.  

1. Analyze business objectives – The first step is to analyze the strategic goals and objectives of the business. Figure out the top priority for your organization currently and in the future.  
2. Analyze workforce – This step involves the analysis of the current quantity and quality of the workforce. Look for any knowledge or skill gaps which may limit an organization’s ability to grow and adapt. 
3. Forecasting – By forecasting, employers can better prepare and anticipate future issues and misalignments between demands and supply. This skills gap analysis would give employers enough time to prepare for any upcoming disruptions to business operations.  
4. Find solutions to the gap – The last step focuses on developing an action plan and finding solutions to any gaps in the workforce through recruiting, reskilling and training, and outsourcing. By creating a learning culture in the workplace, all employees will be in the right mindset to expand their knowledge and fill these gaps as part of their own successful career path. 

By following these four steps, implementing a workforce strategy that drives business growth is easily within reach. Employers who do so will enjoy the benefits of greater work efficiency, increased productivity, and increased employee and customer satisfaction.   

What are Some Tips for Effective Workforce Planning?  

There are several tips HR professionals need to be mindful of for workforce planning and an effective WFM strategy to be a success: 

• Set concrete short and long-term business goals 
• Align the workforce plan with the company’s strategic business plan 
• Involve all key stakeholders in a collaborative workforce planning process  
• Designate a special employee to lead the workforce management process  
• Anticipate issues and prepare for different workforce scenarios that could impact your business
• Align workforce planning initiatives with succession planning objectives  
• Ensure workforce planning is an ongoing activity with continuous evaluation of the external and internal factors  
• Invest in HR analytics that can assess the performance and quality of the current workforce  
• Monitor, review, reassess results and make adjustments as necessary  

Conclusion 

While many employers see workforce planning as a tool for anticipating staffing needs, it can be crucial for development, training, and succession planning. It is essential to be prepared to thrive and create opportunities with the ever-changing marketplace. Understanding how to create an effective WFM strategy is the key to ensuring the right amount of people are in the right position and at the right time.