However, despite following the best resource management practices, organizations often face challenges in cracking the ideal resource retention strategy.

Employee expectations go beyond a mere paycheck today. They prefer a rewarding work environment that will provide them with opportunities to grow and excel in their career.

The onus is on decision-makers facilitating an employee-centric culture while considering the firm’s long-term objectives.

This article takes you through some tips you can leverage when formulating a meaningful employee retention strategy and nurturing a positive work environment. But first, let’s understand the term employee turnover.

What is employee turnover?

Employee turnover refers to the rate at which employees leave an organization and are replaced by new hires. It is a measure of the number or percentage of employees who exit a company within a given period, usually on an annual basis. A high turnover rate can indicate issues within the company, like dissatisfaction or poor management practices, while a low turnover rate can suggest a balanced and content workforce.

Turnover can be voluntary and involuntary. Voluntary turnover is when the worker chooses to leave the company due to better job opportunities, burnout, disengagement, workplace conflicts, etc. Involuntary turnover is when the organization decides to terminate the employee due to performance issues, behavioral issues, etc.

Staff turnover can be expensive for companies. Hence, calculating turnover allows organizations to understand the financial impact of losing and replacing employees. In addition, it can help firms find gaps and opportunities for improvement, leading to better company productivity and growth.

How to calculate turnover rates?

Turn around rate can be calculated monthly, quarterly or yearly. To calculate the staff turnover rate, divide the total number of employees leaving the company during the specified period by the average number of employees that work within the selected time. Multiply that number by 100.

For instance, the total number of employees working in an organization is 150 and 25 employees quit the firm in a month. The turnover rate will be approximately 16.7 per cent.

The equation is:

Total number of employees leaving the firm/Total number of employees working in the firm *100

That is 25/150*100 = 16.7%.

Knowing what employee turnover is and how to calculate it, let’s understand the factors leading to a turnover.

What are the main causes of employee turnover?

High turnover rates can be an unfavorable condition for organizations. High employee turnover can be attributed to various reasons:

Lack of purpose

LinkedIn says companies with a purposeful mission see 49% lower attrition.

Employees are motivated to work in companies that have purposeful missions. Organizations with a strong culture and clear goals and objectives can retain employees better. The inspiring company culture encourages employees to perform better and make their experience at work more purposeful.

Absence of career growth and development

When employees do not see a future in their organization, there are chances of high turnover rates. Without clear pathways for development, employees may seek opportunities elsewhere. Workers may leave the organization when they do not offer skill-based training, coaching, mentoring, career development programs, or leadership development programs.

Poor management and leadership

“Employees don’t leave the organization; they leave the managers.” This saying holds in companies where unsupportive managers can contribute to employee turnover. Incompetent managers can significantly cause employee stress that can adversely affect their performance. Negative relationships with a supervisor are common reasons workers seek new employment.

Work-life imbalance

According to Flexjobs, 82 per cent of respondents say they would be more loyal to their employers if they had flexible work options.

Employees who persistently experience high-stress levels, long working hours, or an imbalance between work and personal life are likely to leave. Improper work-life balance can cause burnout and job dissatisfaction and impact overall well-being.

Excessive workload and employee burnout

When employees are overburdened with work, it leads to burnout which is one of the main reasons to quit the organization. At times, increased workloads are not entirely avoidable. For instance, employees might need to put in more work hours during peak seasons or in larger projects with strict deadlines. However, this may lead to dissatisfaction, stress and burnout.

Misalignment in organizational culture and values

If employees feel that their values or beliefs do not align with the company’s culture, they may choose to leave. A toxic or unsupportive work environment, lack of inclusion and diversity, or a mismatch between an employee’s and company’s values can all contribute to turnover.

Lack of proper recognition

Employees who feel their contributions are unrecognized or appreciated may become disengaged and seek opportunities elsewhere. A lack of reward and recognition programs or a failure to provide timely feedback can contribute to employee dissatisfaction.

Poor compensation

When employees are dissatisfied with their salaries or hikes, it may result in high attrition. Employees often consider compensation a significant factor in their decision to stay or leave a company. Employees who believe they are not adequately compensated for their skills, responsibilities, or market value may seek opportunities elsewhere that offer better pay and benefits.

These are some of the major factors that contribute to high employee turnover. Let’s dive deep to understand the consequences of high employee turnover.

What is the impact of high employee turnover rate?

High employee turnover lowers the overall efficiency and profitability of the organization. Here are some expected consequences associated with high turnover rates:

Increases overall costs

Employees resigning costs a considerable amount to the company. The cost involved in training, educating and providing specific licenses requires money. Moreover, frequently replacing departing employees can be costly as companies must invest in advertising job openings, conducting interviews, and onboarding new hires. Training costs are also significant, as new employees need time and resources to speed up their learning process. High turnover rates can lead to a continuous cycle of recruitment and training, straining the company’s resources.

Decreases workplace morale

Labour turnover may negatively impact employee morale. This can arise when employees are overburdened with work due to a lack of a trained workforce causing stress and disengagement. Additionally, new hires may experience low morale as they struggle to learn their duties and responsibilities. Constantly having such an environment will make it difficult for organizations to retain good-quality employees.

Lowers employee productivity

When employees leave the organization, existing workers experience a loss of productivity as they spend time training new hires to get attuned to the new work. Lower productivity and sub-par work quality will affect the business’s day-to-day operations. High turnover rates can lower overall output and negatively affect the company’s performance.

Loss of institutional knowledge

Experienced employees who quit the organization take their knowledge, skills, and experience with them. This loss of institutional knowledge can harm the organization, especially if they hold critical or specialized roles. New employees may take time to gain the same level of expertise, impacting decision-making, problem-solving, and overall organizational effectiveness.

Disruption in team dynamics

Companies with high turnover rates can disrupt team dynamics and working relationships. Cohesion within teams may be affected as members constantly adjust to new colleagues. Continual turnover can lead to decreased morale, increased stress, and a lack of stability, negatively impacting teamwork and collaboration.

Impedes company reputation

High-turnover rates can damage a company’s reputation, both internally and externally. Employees may perceive a high turnover rate as a sign of instability, poor management, or an undesirable work environment. Externally, potential candidates may restrain from applying to the company due to its reputation. This will ultimately impact the organization’s brand.

Hence, it is imperative to proactively address the challenges organizations face due to high turnover rates. Now, let’s investigate the importance of reducing employee turnover.

Why must organizations reduce employee turnover rates?

Employees are critical to the success of an organization. Hence, companies must ensure that their employees are cared for to reduce staff turnover. Improving employee retention can help organizations save on recruitment, onboarding, training, and lost productivity costs. Retaining talented employees and minimizing the need for frequent replacements can lead to cost savings and improved financial performance.

Furthermore, when employees stay longer, organizations can retain this knowledge, ensuring continuity, smoother operations, and improved decision-making. In addition, when workers are with the company longer, they become more familiar with their roles, processes, and organizational culture. This helps them work more efficiently, improving their performance and productivity.

Moreover, companies with low turnover rates can nurture a more positive work environment, boost employee morale, and increase engagement. Engaged employees are more likely to be motivated, productive, and committed to the company’s success. By reducing turnover, organizations can increase their chances of retaining key talent. Additionally, organizations valuing and retaining their employees tend to have a stronger employer brand.

Lastly, reducing employee turnover is essential for organizations to create a positive work environment, retain top talent, improve financial performance, and achieve long-term success.

These are some potential benefits companies can derive by reducing turnover rates. Let’s know some of the best practices to lower employee turnover.

12 effective strategies to reduce employee turnover

To retain top talent, businesses must take appropriate measures to reduce staff turnover. Organizations must implement specific methods to improve employee retention besides providing career growth opportunities, work-life balance, compensation benefits, and more.

Listed below are a few strategies:

Hire the right resources

Hiring a resource should never be a spur-of-the-moment decision. Rather, it requires meticulous planning and preparation to ensure the right fit is recruited. For this, managers must have complete visibility into pipeline project resource requirements. Based on that, they can conduct a capacity vs. demand gap analysis to identify existing skill gaps.

It would provide them with insights into missing skill sets required for the successful completion of current and pipeline projects. With this foresight, managers can develop robust talent acquisition strategies to recruit the right person ahead of time. It eliminates last-minute hiring costs and maintains a high-quality resource pool to avoid future project bottlenecks.

Allocate the right resource to the right job

When resources are allocated to tasks that do not align with their skill sets or interests, it often leads to disengagement and reduced productivity. Moreover, if the resource is underqualified, they can feel overwhelmed when executing critical tasks beyond their capabilities, leading to stress and burnout. On the other hand, if over-qualified employees are deployed to low-priority tasks, they feel their potential is not being realized and become demoralized.

In either case, the chances of turnover are high. Therefore, allocating the right resources to the right job is important to ensure employee satisfaction. Managers must implement an intuitive resource scheduling tool to ensure competent resource allocation across the enterprise. It provides a unified view of the workforce’s skills and schedules, allowing managers to book suitable resources for projects. This ensures full utilization of employees’ skills, boosts productivity, and reduces churn.

Provide competitive compensation and benefits

A major contributing factor to high employee turnover is inadequate compensation and benefits. Being underpaid makes employees feel undervalued and unappreciated, increasing the likelihood of them leaving the organization for a competitor. Thus, it is imperative for businesses to offer competitive compensation packages as per market standards to retain their top talent.

In fact, according to a LinkedIn report, companies that provide good compensation and benefits witnessed a 56% lower attrition compared to those that offer poor salary packages.

Organizations must also provide additional benefits such as paid time off, commission, bonuses, health insurance, stock/equity, retirement funds, etc., to boost employee satisfaction and engagement. Ultimately, offering competency-based salaries and benefits shows that organizations care about their workforce’s well-being and contribution, which results in greater employee retention.

Optimize workforce utilization

According to a Deloitte survey, 42% of employees have left their job due to burnout”.

Sub-optimal utilization can have grave consequences on workforce productivity and engagement. Persistent overutilization can put employees under immense pressure, contributing to work-related stress and burnout. At the same time, underutilization can lead to low morale and disengagement. In both instances, workers experience job dissatisfaction, which ultimately leads to attrition.

Thus, optimizing resource utilization in real-time is critical to maintain high productivity and prevent churn. Managers can use BI dashboards to track and redistribute the workload of under/overloaded resources to minimize the risk of disengagement or burnout. Moreover, they must periodically mobilize resources from non-billable to billable or strategic tasks. This will help improve profitable utilization.

Implement diversity, equity, and inclusion (DEI) initiatives

DEI initiatives are an excellent pathway for organizations to build inclusive work environments that value employees’ contributions and provide equitable opportunities to everyone, regardless of their socio-economic backgrounds. More importantly, these initiatives help curb instances of hostility, microaggressions, and unconscious bias in the workplace.

Therefore, by implementing DEI practices, organizations can nurture a safe and equitable environment, which can reduce employee turnover and improve retention significantly. They must first analyze the internal pool and their demographics to understand where they are lacking. Next, they can create anti-harassment, family-friendly, and disability policies to accommodate their employees’ needs. Lastly, they must adapt their hiring strategies to actively recruit from underrepresented groups.

Recognize and reward employees appropriately

Employees need a boost of motivation every now and then to perform to the best of their abilities. When they feel their work is not being recognized or appreciated by their superiors, it can demoralize them and affect their productivity. Therefore, organizations must devise a framework to reward their top-performing employees and keep them motivated.

For this, they can use resource management software to track and analyze the performance of their resources. They can identify eligible candidates and incentivize them with bonuses, paid time off, thank you emails, certifications, etc. By rewarding them appropriately, organizations can retain these employees in the long run and prevent attrition.

Offer flexible work schedules

In the post-COVID-19 pandemic era, working from home has become the new normal. As WFH promotes a healthy work-life balance, it has become an essential aspect of job satisfaction. While flexi-work hours may be a luxury for specific businesses, adjusting the hours and planning response times gives employees better focus and results in higher efficiency. It also empowers them to balance their personal and professional commitments, leading to better retention.

Furthermore, when managers consider team members’ skills and interests while assigning work, it enhances employee engagement and productivity. So, managers can use the “open seat” feature of an ERM tool to publish vacant positions and encourage interested candidates to apply. When firms consider the resource’s interests, it motivates them to perform better.

Minimize bench time

Once a project is over and if resources are not scheduled for another project, they will spend bench time until they are allocated a new project. Extended bench time leads to significant issues such as lesser ROI as the resources are not generating revenue for the organization. It can lead to planned attrition, which affects a firm’s reputation, as well as unplanned attrition, when employees begin to look for other job opportunities for growth and development.

For effective bench management and to reduce unplanned attrition, managers can employ an effective resource management tool to predict resources that will end up on the bench in advance. Project vacancy reports can be used to quickly assign them to billable or strategic work before they land on the bench. If their skills are unsuitable for project vacancies, on-the-job training or reskilling can be used to make them billable. Moreover, advanced planning on pipeline projects will help you allocate them better.

Organize effective team-building activities

Facilitating strong bonds among colleagues is proven to improve the efficacy of employees and enhance employee engagement. Companies that highly emphasize employee retention must highly value interpersonal relationships. This is because coherent teams result in enhanced communication, lower stress levels, and greater output

According to Goremotely, “extremely connected teams demonstrate a 21% increase in profitability”. Moreover, employees who feel they have made meaningful friendships at the workplace are more likely to stick around.

Managers should therefore invest in team-building activities to promote a cohesive work culture. One example is the buddy system- when new employees join, they are assigned a mentor (buddy) from the same team who hand-holds in following the protocols. The Buddy system ensures the new employee is well integrated into the team and company. Other ways to empower the team include organizing monthly team lunches, weekly informal meetings, etc.

Plan tailored training & development programs

Providing training and development programs displays the commitment given by the company. A resource manager can help the resources by projecting a career path, thereby giving a purpose and setting direction. Managers can implement an Individual Development Plan or IDP to help employees reach short and long-term career goals and improve current job performance. Training facilitates self-growth and will allow the resources to contribute better. They can take up more responsibility in the team or even be eligible for higher roles.

Managers can track the project’s progress and gauge the employee’s key strengths and weaknesses based on how they perform the tasks. Based on this, they can motivate them to learn new skills and practice on the job. When the workforce feels that their goals and objectives are being taken care of, they are likely to stay with the firm for the long term.

Identify key performers

Every business needs a set of worker bees who are diligent in their work. Employees are expected to show up promptly on time, get the job done, and keep the flow of work going. To effectively grow the company, one needs to nurture and reward the top performers for keeping up the employee morale of those who put a little extra into their work.

Employees who go beyond their job description and exhibit leadership deserve a pat on the back.

These key performers can be considered for senior or strategic roles. It will help them move upward and diversify their work portfolio, improving their job satisfaction and engagement. Furthermore, it will help the organizations to establish a robust talent pipeline that is immune to disruptions caused by unplanned attrition or dynamic market changes.

Develop a comprehensive performance appraisal framework

A comprehensive performance appraisal framework is necessary because it allows managers to share constructive feedback with employees. It gives them an opportunity to acknowledge employees’ strengths and also address the areas of improvement. When resources know their leaders are promoting individual development, it will boost their motivation levels and eventually increase retention.

While giving feedback is necessary to help the workforce grow, it is also important to take feedback from them. Employee feedback through surveys and one-on-one sessions is instrumental in sharing their experience and expectations and makes them feel valued. If something is not aligning with their goals, you can work on it as a manager and provide them with more opportunities. Expressing gratitude should also be a part of feedback sessions to acknowledge their work and efforts.

Key takeaways

The workforce is the success driver for any organization. In the long haul, companies need profitability & success to thrive and stay relevant in an ever-evolving market. With an evolved employee-centric culture, employers must ensure that they provide an optimistic work environment to retain their top talent.

The strategies mentioned above, coupled with a modern resource management tool, can sort your resource-related worries and help you retain valued talent within the firm.

The Glossary

The SAVIOM Solution

SAVIOM is the market leader in offering the most powerful and configurable solutions for managing enterprise resources efficiently and effectively. Having more than 20 years of experience, this Australian-based MNC has a global presence in over 50 countries. It is also popular with more than 100 customers and helping them to achieve their business goals. SAVIOM also has products for project portfolio management, professional service automation, and workforce planning software which can be easily customized as per business requirements.

Is it possible to achieve this year-on-year?

A successful workforce planning process that enables HR departments to strategize for their future capabilities can make this achievable.

The workforce is undoubtedly the most important tangible asset for every organization. Despite its importance, it is often not carefully planned, measured, or optimized. Many organizations do not have visibility of their current or future workforce requirements.

There is also a lack of a consistent process by which they conduct workforce planning. As a result, it hurts both the top and the bottom lines of their business. It has consistently topped the wish list of HR executives within any organization. But it has always remained a challenging area when it comes to execution.

Strategic or Operational; Long-term business strategy or Short-term goals: Where do I need to pay maximum attention? These questions often baffle C-level executives.

This article describes the characteristics and different workforce planning processes and how successful organizations have adopted this practice.

But first, let’s start with workforce planning definition.

What is workforce planning?

Workforce planning is the process of planning and ensuring that the right number of human resources are available for the right role at the right location at the right cost with the right competencies.

In other words, it is a process of matching the workforce’s capacity and capability to meet its demands, now and in the future. By forecasting future work demand, organizations can identify the gap against the capacity so that the necessary resourcing steps can be taken to bridge the gap.

Types of workforce planning

There are primarily two types of workforce planning: strategic and operational. Let us go over some of the workforce planning definitions.

A strategic workforce plan is developed to help the organization achieve its long-term vision. Strategic workforce planning is created by designing a process that proactively anticipates future human resource requirements. It will ensure that the organization has a highly skilled workforce needed to meet its business goals. It assists in the following:

• Support the organization’s strategic plan
• Address external workforce factors that affect the entire business
• Maintain organizational capacity
• Mitigate risk exposure

On the contrary, operational workforce planning helps in deciding what needs to be done to achieve the business’s immediate priorities. It aims to create a focused, realistic plan to deliver unit-level business objectives. It helps to run the day-to-day activities in the company as efficiently as possible. At this level, it also complements an organization’s strategic plan for the long-term future.

Operational workforce planning focuses on immediate resource requirements for the activities within a six to twelve months horizon. If the organization plans for its workforce beyond three years, it comes under strategic workforce planning.

Anything in between can be described as tactical workforce planning, which has not received much attention in the industry.

What is the importance of workforce planning?

Organizations spend a significant amount of time and money to define their vision and future roadmap. Consulting companies have developed frameworks and have built various offerings around this subject. In this case, one can visualize the new business model and what resources will be needed in the future.

If goals and strategies are our vision of an ideal future, shouldn’t we focus our attention on achieving our long-term goals? Are short-term goals as important as long-term vision?

Extensive research has indicated that short-term goals are just as important as long-term ones. Without the former, there is a higher chance of failure in meeting the ultimate objective. Many HR organizations and consulting companies primarily focus on strategic workforce planning and suggest a blueprint around that. At the same time, they must not overlook the organization’s immediate requirements, which can be the need of the hour.

If there is a challenge in addressing short-term business requirements, it will derail its long-term strategy. Effective resource capacity planning addresses the short-term and medium-term requirements of workforce planning. It is the process of forecasting the gap between capacity and demand.

What is workforce optimization?

Workforce optimization is an ongoing process of matching workforce supply with the changing workforce demand to increase billable utilization. It requires centralizing information from various systems for decision-making. It uses all aspects of the complete workforce management life cycle and provides valuable insights into the workforce’s performance based on customer experience.

It implies asking your employees to “work smart and not work hard.”

It is a business strategy that balances customer satisfaction, service levels, resource allocation, operational costs, and other key performance metrics for a business to get the best performance out of the employees.

A workforce planning example

Let us take a hypothetical situation in an organization where:

• Three different projects are running with different start and end dates.
• For two projects, the end date cannot be extended. However, the third project has some flexibility with its timeline.
• There are three different categories of resources based on their skill set.
• Some of the selected resources can play the role of a project manager along with their primary skill.
• We have ten workers in each category, and all are deployed in projects with a certain amount of resource loading.
• Many resources are partially available and have some spare capacity.

At this stage, the firm gets a new order for which there is additional work of ten resources in each category for six months duration (Billable work for thirty FTE for six months period). The work requires two project managers on a full-time basis for the duration of the project. However, the remaining activities can be carried out on an hourly basis.

Without a proper workforce planning process, the firm may decide to hire thirty new personnel to deliver this project. As a result, the firm will have excess capacity at the end of the project.

Is it a cost-effective solution?

According to Paycor, “Labor Costs contribute to 70% of total business investment, including wages, benefits, payroll, and related taxes.”

• A systematic planning framework will raise the following questions for the decision-maker:
• What happens at the end of six months? Is there visibility of more projects or any other strategic work? If not, the company has to let go of thirty newly hired employees. How will it impact the brand image of the company?
• Is it possible to hire so many new employees within such a short notice period? Will you be forced to compromise on quality that can impact the delivery?
• How does the organization maximize its profit from this new initiative?
• Are we fully utilizing the capacity of the existing workforce with this quick decision? If not, can we adjust the current workforce’s allocation and get maximum utilization out of them?

After applying capacity planning principles, the organization will decide to:

• Free up two project managers from the existing pool of resources after reallocating their work to other project managers having excess capacity.
• Extend the timeline of the project, which has flexibility.
• Find the Total available capacity within each skill category.
• Calculate the gap between demand and available hours.
• Arrive at the workforce requirement in each category based on this gap.
• The project is for a short duration, and there is no information on future projects; use a contingent workforce instead of hiring new resources for delivery.

The above example highlights the importance of operational workforce planning. This immediate business requirement cannot be ignored at the cost of its long-term human resource strategy.

Operational workforce planning (benefits & best practices)

Operational workforce planning enables an organization to achieve short-term objectives. Keeping track of day-to-day operations, assigning people to prepare for immediate operational or resource needs, and addressing ad-hoc changes come under its umbrella.

What are operational workforce planning benefits?

A workforce planning model delivers both tangible and intangible benefits. Some benefits, such as cost reduction, can be immediately realized. Other benefits, such as employee satisfaction, have long-term implications. In this section, we discuss some of its benefits.

Reduce project resourcing cost significantly

With operational workforce planning, an organization can significantly reduce resource-related costs within a project. It can be achieved by deploying the right resource (no under/over skilled) to the project, leveraging global resources from a low-cost location, avoiding over/under allocation of resources, etc.

Improve billable and strategic utilization of the workforce

The process forecasts different types of utilization of resources. It identifies resources spending time in administrative or low-priority work and mobilizes them to more productive work.

Create visibility of resource competency

The workforce planner provides visibility of people’s information across the matrix organization and controls the rights to modify them. The system can achieve a 360-degree view of all types of work demands.

Deploy competent resources to the appropriate opportunity

The process ensures that you do not deploy a senior resource for a junior position, which will be a waste of his skillset. At the same time, if an inexperienced resource is given the task of an important role, there will be delivery challenges.

Forecast skill shortage proactively and apply necessary measures

Resource planning solutions can identify skill shortages ahead of time and take corrective action. It retrains and upskills bench resources ahead of time to make them billable, use a contingent workforce for short-term assignments, etc.

Ensure that excess capacity is not wasted with early forecasting

The system can identify excess capacity ahead of time for necessary corrective action. It brings forward project timelines to absorb additional resources, restart initiatives that were shelved earlier, etc.

Align sales and delivery by managing pipeline opportunities

It enables the sales team to estimate and forecast demand for various resources based on the sales pipeline opportunities. The delivery team ensures that the right resources are available at the right time to finish the project as they are given sufficient lead time.

What are operational workforce planning best practices?

Operational workforce planning has been critical for all projects to reduce resourcing costs. It allows businesses to reorganize and become responsive to the changing market conditions quickly. It goes beyond the basics of measuring the demand against capacity. Some of the best practices include:

Minimize project resource cost with a combination of local and global resources

Multinational companies have made global resources from low-cost countries accessible. It has created new opportunities for organizations to control costs and increase their profitability without compromising delivery qualities.

In a survey conducted by HR.com, “60% of businesses unanimously agreed that they saw cost-saving benefits within twelve months of using a workforce management solution.”

Forecast resource capacity vs. demand in advance

The workforce planning software allows businesses to forecast capacity vs. demand by role, department, team, location, skills, etc. It also allows people with different roles to view their specific information at the right time, which helps in decision-making.
Track Competency Matrix Across the Enterprise

It is critical to track and keep up-to-date information about the competency of the workforce. It allows the right resource with skill, experience, qualifications, individual preferences, etc., to be allocated to the proper work. It will enable resource managers to identify the right resource for a new opportunity.

Manage pipeline projects effectively

Once a prospect reaches a certain probability of closure, capacity planning activities can be initiated for the pipelined opportunities. It will avoid any last-minute rush and improve the hiring process as there will be sufficient lead time, and the quality of the new resources will also not be compromised.

Forecast profitable and overall resource utilization

The operational workforce planning process allows tracking and forecasting short or long-term billable, strategic, and overall utilization. It can be achieved with the help of an appropriate tool. One can take corrective actions to ensure high utilization and protect the business’s profitability.

Publish project vacancies and manage bench effectively

It effectively utilizes internal resources who have finished their previous assignment and are waiting for new work. It will provide foresight into both future resource needs and the details of the available workforce.

Streamline resource requisition and allocation process

Most of the conflict happens when different projects are eyeing a key resource for their delivery. The resource requesting and allocations are done through email or phone requests. In this scenario, a person can be double-booked if multiple clients select the same person. The project that confirms billing in the first instance is given priority to get the resource.

Strategic workforce planning (benefits & best practices)

Strategic workforce planning enables HR to plan for the capabilities they need in the future. It ensures that the company’s workforce has the right size, shape, cost, and agility for the future.

What are strategic workforce planning benefits?

Strategic planning looks into the future requirements of the workforce. The organization may want to expand or sell some of its business functions as a part of its long-term strategy. The business may re-badge human resources from another organization during M&A or transition part of its workforce to its partner if they are selling certain entities. These decisions come under long-term strategic planning. Here are some of the benefits:

Utilize the capacity of the workforce

• Avoid surplus or excess labor; If not appropriately managed, it will result in layoffs or costly hiring.
• Provide sufficient lead time for hiring so that quality is not compromised.
• Performance-based planned attrition to maintain quality; create a productive workforce.
• Use technology, such as RPA, AI, etc., to improve efficiency.
• Build a supply of contingent resources using empaneled vendors.

Minimize employee turnover and hiring Cost

• Provide a well-defined career path to the workforce.
• Encourage multi-skill building using Individual Development Programs.
• Allow movement of the workforce within departments.
• Create a retention plan for talent management.
• Use employee referral programs for hiring new talents.

According to Kornferry, “By 2030, there will be a talent deficit of roughly 85 million people, and if left unchecked, could result in $8.5 trillion unrealized annual revenue.”

Develop skills for future requirements

• Identify and align skills as per business needs.
• Hire resources as per current and future requirements.
• Promote cross-skilling and make the workforce flexible.
• Match business goals with employee development aspirations.
• Assist the employees in pursuing higher education or industry certification.

Improve overall productivity

• Right resource for the right job; no under/over skilled resource for any position
• Retaining critical employees for a more extended period promotes employee loyalty.
• Engage the workforce with job rotation and provide new opportunities
• Minimize Demand Supply Gap with effective resource capacity planning.
• Optimize billable resource utilization of each employee.

What are strategic workforce planning best practices?

Strategic workforce planning best practices align the organization’s talent strategy with the business goals and long-term objectives. Following are some of the best practices in this area:

Company-wide collaboration

Strategic workforce planning is aligned with the business strategy of an organization. Although it is an HR-driven initiative, other departments also have a significant role to play. Input from all stakeholders can be collected using a workforce planning template which will help derive specific action plans.

Use past data judiciously

Lessons learned and the use of past data can provide deep insights into a company’s business. Examining the patterns that occurred, when the business succeeded, and what your staffing levels were like at that time can give a good indication of staffing requirements. It helps to break this down into different segments (department, project, etc.) so that the overall picture becomes more evident.

Define metrics for performance measurement

The decision-making and review process becomes streamlined with cold, hard stats. An unplanned attrition rate will decide how many new hires need to be hired on a regular basis. It also needs to be planned on a staggered basis so that there is minimum impact.

Get stakeholder’s buy-in in advance

One needs to get executive buy-in for a widespread project. This initiative will impact every department within an organization. Unless the leadership team has approved certain key decisions, they will not get implemented. With management support, one can get complete visibility of the company’s new direction.

Workforce planning is a continuous process

Many organizations fail because they do the whole process once and forget about it after making initial changes. The workforce will change over time regardless of what happens. People will leave. People will retire. People will be promoted. At the same time, the business model will also change with new product lines. A workforce strategy needs to address all these parameters.

What are the steps in workforce planning?

Developing talent is a critical component of successful workforce planning. By talent, we mean the various skills and competencies of the workforce as per the business requirements. Talent acquisition ensures that you have the right number of resources for both short-term and long-term opportunities.

The following are different steps:

Forecast & take stock of workforce capacity

• Take an inventory of all the full-time, part-time, contractor, or freelance resources of your organization.
• Note those resources that will be available within 1 – 2 months after finishing their assignment.
• Include resources who will be joining or leaving during this period.
• Assign calendar (Workweek and Holiday list) to your resources if they are working from different locations and time zones.
• Track the skills and competencies of the selected resources.
• Identify the hot skills and tag them against the applicable resources.

Establish work-in-hand (demand) in short-term

• List down all the current and future projects, including internal projects.
• Include the projects which are there in the pipeline with a 75% or above probability of closure.
• Account for non-project activities like BAU, support maintenance, administrative work, training, etc.
• Categorize the projects into billable, strategic, and non-billable projects and prioritize them.

Perform workforce demand against capacity gap analysis

• Analyze resource capacity vs. demand
• Identify the gap between resource capacity and demand
• Identify skill shortages or excesses.
• Prepare a resource plan to bridge the gap.

Establish a workforce planning framework for excess/shortfall

For shortfall of resources:

• Decide on a full-time or contingent workforce based on the duration of the assignment.
• For full-time hiring, identify the locations and skillset and consider future deployability.

For excess of resources:

• Bring forward the timeline of the existing projects by deploying additional resources.
• Restart some of the projects that were shelved earlier
• Ask the sales team to look for new opportunities based on the available skillset actively.

Book the available resources for the identified projects

• Assign the right resources to the right Project.
• Apply selection criteria such as resources belonging to the same location, years of experience, cost rate, etc.
• Ensure you are not allocating over-skilled or under-skilled resources
• Allocate generic / ghost resources as placeholders on future projects.

With an understanding of how to develop an effective workforce planning strategy, let’s take a look at some of the best workforce planning practices.

Best practices for successful workforce planning

Successful workforce planning requires a deep understanding of both business goals and resourcing needs. Enlisted below are some workforce planning best practices that organizations can leverage to their advantage.

Regularly review the workforce plan

Successful workforce planning requires ongoing monitoring and adjustment to ensure its effectiveness. This involves regularly reviewing resource data, key performance indicators, and market trends to identify any shifts that may impact workforce needs.

This way, organizations can proactively address emerging challenges and optimize their talent management strategies accordingly. Regular feedback from managers, employees, and stakeholders also plays a crucial role in identifying areas for improvement and implementing necessary changes.

Leverage workforce planning software

Technology and analytics have revolutionized the field of workforce planning, providing organizations with powerful tools to gather, analyze, and interpret data for informed decision-making. By leveraging workforce management software, organizations can gain valuable insights into their current and future workforce needs.

These solutions can help identify skill gaps, assess workforce capabilities, and forecast future talent requirements more accurately. Additionally, automated systems can streamline administrative tasks, freeing up HR professionals to focus on strategic workforce planning initiatives.

Offer internal training, external courses, and mentorship programs

Training and upskilling programs are essential for ensuring that employees have the necessary skills and competencies to meet evolving job requirements. As part of workforce planning, organizations should identify skill gaps and develop targeted training programs, IDP, and succession plans to address them.

This can include internal training initiatives, external courses, mentoring programs, etc. By equipping employees with the knowledge and skills they need to succeed, organizations can enhance employee engagement, retention, and performance, while also future-proofing their workforce against emerging skill demands.

Promoting diversity and inclusion

Diversity and inclusion are critical aspects of successful workforce planning. Embracing diversity in the workforce brings together resources with different backgrounds, perspectives, and experiences, leading to greater innovation, creativity, and problem-solving.

Organizations should actively include DEI initiatives in their workforce planning strategies for sustainable growth and development. A diverse and inclusive workforce not only fosters a positive work environment but also enables organizations to effectively cater to the diverse needs of their customers and clients.

By embracing these best practices, organizations can achieve their organizational goals and position themselves for long-term success in a rapidly changing world.

How can workforce planning software help create an effective workforce plan?

The importance of workforce planning cannot be overstated. It can shape a successful future for organizations and help them maximize the potential of their human capital. Let’s take a look at how organizations can leverage robust workforce planning software to create design and implement an effective workforce plan:

• Enterprise-wide visibility- The tool offers 360-degree resource visibility into critical metrics such as demand, availability, capacity, financials, etc. This enables organizations to evaluate workforce capacity and project demand for current and future opportunities.
• Forecasting and capacity planning- The forecasting and capacity planning capabilities of the tool allow managers to identify and mitigate capacity vs. demand gaps ahead of time.
• Real-time reporting analytics- The tool’s intuitive reporting dashboards and analytics provide in-depth insights into KPIs in real-time. Reports such as forecast vs. actual, utilization heat maps, project vacancy, and people on the bench can help managers identify potential bottlenecks and plan for corrective action.
• Competency matrix- The in-built competency matrix captures and maintains the professional attributes of the workforce. It helps organizations to keep track of their resources’ capabilities.
• What-if analysis- The what-if analysis facility of the tool enables managers to simulate various scenarios and pick the most-well suited workforce plan.

Therefore, these features and modules play a key role in effective workforce management.

Conclusion

Some of the large companies are at risk of becoming too large to adapt to changes quickly. They put a lot of time and effort into defining the long-term vision and strategizing on the expansion plan in multiple geographies. As a result, many immediate priorities are overlooked, and they can end up in a sticky situation.

While long-term goals are important, short-term business objectives also need to be addressed promptly. One needs a proper workforce plan to steer the company in the right strategic direction, even if there is no large project in the pipeline in the near future. It improves the bottom line as you spend less on the workforce and generates more revenue per employee due to greater efficiency.

The Glossary

The SAVIOM Solution

SAVIOM is the market leader in providing highly configurable and robust solutions for managing and planning your workforce. With 20 years of experience, it has a presence in many countries. Many Fortune 500 companies are currently using and have benefited from this product. SAVIOM also provides tools for resource management, project portfolio management, and professional service automation. The workforce planning software can be configured for any industry, and it helps solve short-term resourcing problems.

All businesses, regardless of size, need the right talent to stay competitive amid market volatility and enhance their business profitability. The same holds true for professional services firms as well.

An efficient workforce is imperative for controlling resourcing costs, driving profitability, embracing agility, and preparing for the future.

Despite this, service firms often fail to implement measures to plan, retain, and optimize their human resources. This results in widening skill gaps, reduced profit margins, and lost business opportunities.

Therefore, firms should design a systematic workforce planning process that helps meet their long-term business goals, streamlines day-to-day operations, improves service delivery, and more.

This blog emphasizes the critical benefits of workforce planning in professional service firms.

Let’s begin.

Why is workforce planning crucial in professional services?

According to an IDC study, the market for digital transformation in professional services is forecast to reach approx. $208 billion by 2025.

Professional service firms are undergoing rapid changes due to globalization and emerging technologies such as AI, ML, blockchain, etc. It has enabled PS firms to diversify their services and venture into newer markets to accommodate ever-changing client requirements. Therefore, it is imperative to implement a strategic workforce plan to ensure the availability of a skilled workforce to meet these changing demands.

For instance, if a marketing services firm intends to expand globally in the next 6-7 years, it needs to consider technology-enabled market changes and skill requirements that satisfy its future requirements. With proper workforce planning, they will be able to identify the talent demands and future-proof their workforce with appropriate technical training and upskilling opportunities.

Additionally, the transformation of the business market has led to increased global competition and service proliferation. As a result, PSOs must provide high-quality services at a lower cost. With a proper workforce plan, PSOs can identify skilled cost-effective consultants to deliver these services. In addition, it also helps PS firms to stay forewarned and mitigate resource-related risks such as talent shortage, high turnover, etc., due to constantly changing demands in a competitive and volatile market.

For example, a law firm experiences a surge in demand for bankruptcy attorneys at the start of the year, particularly during the week before tax filing. With a robust workforce plan, law firms can hire on-demand professionals in advance to prepare for the peak season and complete projects on time and within budget.

Thus, in a market characterized by constant evolution and uncertainty, workforce planning prepares PS firms to have the control and visibility they need to deal with the ever-changing market and adapt to future challenges.

Now having learned about the basics of workforce planning in PS firms, let’s dig deeper to understand the benefits.

Benefits of workforce planning in professional services firms

Workforce planning offers myriads of benefits to professional service organizations, which helps them enhance their profitability. Here are a few significant ones –

Reduces resourcing costs with the right mix of consultants

Professional services firms leverage many generalists and specialized resources like consultants, analysts, actuaries, associates, etc., to generate revenue. As a result, identifying the right talent for the right cost becomes critical to maintain profitability. With workforce planning, organizations can analyze the immediate skill requirements and determine whether they are one-time or recurring.

Based on that, managers can recruit permanent and contingent consultants or create a judicious mix of both. For example, an audit and accounting firm can leverage a skilled junior financial analyst to work on a two-month-long tax project instead of a senior analyst. This reduces the consultant cost significantly, thereby ensuring the successful delivery of the projects within budget.

Helps maintain workforce competency matrix in real-time

For a professional services firm to scale new heights, consulting managers must understand the practitioners’ current capabilities and skills. However, if the workforce’s competency exists in silos or is unavailable in real-time, managers may struggle to find the right consultant within the organization. Further, this can lead to data duplication and double bookings, causing scheduling conflicts.

Through workforce planning, PSOs can leverage a centralized competency matrix to capture, update and verify the core competencies of the consultants. This enables the consulting managers to easily search for specific skills within the team and assess if they have the technical proficiency required for specific projects. Thus, it helps in enhancing organizational efficiency and improving the bottom line.

Bridges consultants’ capacity vs demand gaps

When professional service firms foresee the resource requirements at the eleventh hour, it leads to last-minute firefighting and increases the hiring cost, resulting in schedule and budget overruns. Therefore, managers have to forecast the demand for pipeline projects, estimate consultant requirements, and take appropriate steps to mitigate gaps.

For example, a construction firm hired workers in bulk for an ongoing project, and after their work was completed, they were quickly released. Following this, supervisors can sell this excess capacity of workers at a discounted price, adjust project timelines, or redeploy them to other tasks. Conversely, in case of a shortage, supervisors can hire or train existing workers. Thus, proactively forecasting and bridging the gap eliminates the chances of last-minute hiring hassle and unnecessary cost escalations.

Streamlines planning for seasonal and market fluctuations

Professional service firms frequently experience an increase in workforce demand during seasonal and market fluctuations. Therefore, understanding daily operations and forecasting seasonal demands can help consulting managers build an on-demand contingent workforce. In addition, it will help them handle seasonal peaks and troughs effectively without increasing the project’s cost. This way, companies can streamline labor planning and reduce administrative overheads.

For instance, a marketing firm experiences a sudden peak in promotional and sales activity during a product launch at the end of the year. Through workforce planning, marketing managers can predict the rise in the demand for different roles and hire freelance graphic designers, content writers, sales marketers, etc. This will help significantly reduce the resource cost without compromising the quality, ensuring high client satisfaction and profitability.

Identifies the right practitioners for stretch assignments

Over the last few years, assigning stretch assignments has gained momentum in PS firms as they offer consultants a unique opportunity to broaden their skillsets and competencies. Further, it paves the way for resources to grow by improving their billability. Therefore, determining the right people to assign these stretch assignments is crucial.

Through workforce planning, managers can identify the right practitioners for stretch assignments to diversify their existing skills. For example, in an IT Consultancy firm, managers assign an HTML developer the task of learning Java language and building an app. If the developer succeeds, the PS firm can consider them for diverse projects and promotions. Additionally, this on-the-job training will increase their engagement and productivity, thus enhancing employee performance.

Helps create retention strategy for new joiners

According to a survey, “between 10 and 25 percent of new hires leave within the first six months of hiring.”

It is important to create a good impression with the new hires so that they can take up assignments quickly and develop a sense of belonging to the organization. If the first impression is not up to the mark, many consultants can leave within a few months of joining. Efficient workforce planning guides PSOs in building a long-term retention strategy by establishing an engaging onboarding process for new hires.

It helps assign individual mentors to these new hires, familiarize them with the organizational structure, and expedite the address of their queries. Furthermore, managers can provide them with diverse work opportunities and facilitate training and upskilling programs to hone their skills. In addition, associates must also be given timely constructive feedback and be compensated as per the market standards. This will increase their engagement, motivate and effectively retain them.

Future-proofs consultants’ skill-sets for emerging technologies

According to estimates, by 2030, nearly 20% of the workforce will be significantly under-skilled for their jobs

Due to emerging technologies like AI, ML, and automation, numerous PSOs require professionals with extensive knowledge in analytics and data science. In addition, when consultants fail to update their skills regularly, it leads to obsolescence. A robust workforce planning provides firms with a road map for consultants to diversify and update their knowledge through various programs like IDPs, training/upskilling, etc.

Additionally, it encourages organizations to implement learning methods, such as peer-to-peer coaching, reverse mentoring, shadowing, etc., for each consultant. This will prepare the workforce to take on multi-faceted projects in the future and boost their efficiency and effectiveness. Further, these initiatives will help bridge their skill gaps, improve performance, future-proof the workforce and enable PSOs to stay relevant in the digital age.

Facilitates succession planning for critical consultants

Succession planning is a process of talent management that helps create a skilled workforce capable of filling leadership and other critical roles as the business grows or changes. However, when a PS firm lacks succession planning, important projects can halt due to a shortage of critical consultants, causing revenue losses and negative client experiences.

Strategic workforce planning aids PSOs in identifying top performers across all departments and helps enforce best practices to train and promote them to critical positions. It also enables PS firms to offer consultants mentoring, technical and soft skills training and shadowing opportunities to advance their knowledge. This ensures smooth business continuation as well as prepares them for future undertakings.

Aids intraday management of PS firms

Intraday management is the workforce planning process that monitors workload and adjusts schedules as required. It allows managers to respond to rapidly changing situations and ensure that the consultants and projects stay on track in the long run. In addition, by revising the workforce plan regularly, managers can ensure that consultants work as per the timeline and that the demand matches the forecast value.

For instance, a marketing firm lands a critical project at the final hour, and the deadline is approaching. Through intraday management, the firm can reduce the impact of this unanticipated workload by reassigning professionals. Further, the firm will be able to streamline the peaks and troughs by tracking daily workflows, ensuring dependable performance and superior client service.

Considering the advantages of workforce planning in professional services firms, let’s look at how resource management software can help.

How can a futuristic workforce planning tool help professional service firms?

An advanced workforce planning software enables professional services firms to create an optimized workforce.

Here’s how-

• The centralized visibility of the tool offers foresight into the pipeline consulting project resource demand. Accordingly, managers can streamline the workforce planning processes by analyzing the existing talent’s current and future capabilities.
• Moreover, firms can maintain a competency matrix to check various resource attributes like skill sets, competencies, certifications, availability, cost, location, etc., in real-time.
• Also, using the tool’s capacity vs demand report, PS firms can identify gaps and overcome capacity problems ahead of time. Thereby avoiding last-minute hiring and costly hiring/firing cycles.
• Further, the color-coded heatmaps help identify under/overutilized resources. Managers can thereby implement appropriate optimization techniques to optimize consultants’ utilization levels.
• Additionally, the tool offers real-time reports on various resource indicators such as forecast vs actual, availability, project vacancy, and people on the bench reports for improved business decisions. The forecast financial reports enable tracking financial variances and taking remedial steps to reduce resourcing costs.
• Last but not least, the modeling and simulation technique lets firms explore the potential effects of different scenarios in a sandbox environment. The consulting managers can then analyze and compare the outcomes of each scenario and select the best-fit plan.

Conclusion

Effective workforce planning is crucial for PS firms’ sustainability and profitability. It plays a vital role in keeping the organization future-ready and competitive amidst the volatile and uncertain market. However, it is only possible to attain the above benefits when firms use the right workforce planning tool to help identify and mitigate bottlenecks. This will also help leverage the maximum resource potential for higher productivity and business efficiency.

So, are you ready to create an efficient workforce plan in your firm and reap these benefits?

The SAVIOM Solution

SAVIOM is the market leader in helping multinational clients manage their resources efficiently and effectively. With over 20 years of experience, this Australian-based MNC has a global presence across 50 countries and has helped 100+ clients with their Workforce Planning Software. Saviom also provides tools for Enterprise Project Resource Management, Project Portfolio Management, and Professional Service Automation.

The above statistics highlight that the audit and accounting industry is experiencing significant growth and transformation. This is mainly attributed to technological advancement and the adoption of cloud-based accounting, automation, AI, and more. To adapt to this transformation, audit and accounting firms need highly skilled accountants and consultants adroit in technical expertise.

However, workforce challenges such as skill shortages, high employee burnout, early retirement, sub-optimal utilization, etc., stipple the growth of audit and accounting firms.

This is where efficient workforce planning comes into the picture.

It helps foresee future workforce requirements, acquire the right talent, and successfully achieve business goals.

This blog lists the efficient ways to implement workforce planning in the audit and accounting sectors.

Let’s get started!

Significance of workforce planning in audit and accounting firms

Workforce planning forecasts, analyzes, and identifies future requirements, assesses gaps, and implements measures to achieve business objectives.

An efficient workforce plan will enable audit and accounting firms to align resource needs with strategic and operational business objectives. For example, a multinational audit and accounting firm want to grow its global client base by 150% in the next 5 years. With a strategic workforce plan, decision makers can assess the future demand for accounting personnel and carefully plan to bridge the gaps within the organizations.

On the other hand, an operational workforce plan focuses on tracking day-to-day operations, identifying immediate resource demands, and addressing ad-hoc changes to enhance operational efficiency. For instance, audit and accounting firms experience a spike in demand for auditors during the fiscal year’s end. Therefore, an operational workforce plan enables accounting firms to hire on-demand financial professionals in advance and provide training to existing internal accountants to prepare for the peak season.

Thus, workforce planning enables accounting organizations to avoid last-minute firefighting, reduce resourcing costs, and maintain a balanced mix of permanent and contingent professionals. Additionally, it also helps maximize the billable consultant utilization and enhances business profitability.

Now, let’s look into ways to help audit and accounting firms use their talent pool best.

Steps to implement a workforce plan in audit and accounting firms

An effective workforce plan is critical for audit and accounting firms to boost their sustainability and profitability.

Here are the best ways to implement workforce planning in your organization:

Understand the operational and strategic business goals of audit and accounting firms

The first step to creating an efficient workforce plan is evaluating the organization’s long-term and short-term goals and identifying roles required to meet these business objectives. For this, the accounting managers, HR, stakeholders, and executives communicate and coordinate with each other to form the workforce planning strategy.

For instance, the strategic goal of an accounting firm is to diversify its services to asset management in the next 3-5 years. This long-term goal is later divided into smaller milestones of a particular duration, which becomes a significant part of the operational workforce plan. This includes enlisting professionals such as investment managers, financial advisors and investing in software like Robo-advisors.

Assess immediate and future accounting project requirements

Once the organizational goals are clear, the next step is to assess immediate and future project demands. This helps accounting resource managers evaluate the demand for consultants and ensure their availability.

For instance, an upcoming audit and accounting firm project must detect financial fraud risks for a client. For this, the firm needs forensic accounting specialists, auditors, risk analysts, Certified Fraud Examiners (CFE), lawyers, etc., to perform research to trace funds and identify assets for recovery.

Identify future skill requirements and conduct a gap analysis of accounting personnel

The next step is to analyze and identify future skill requirements. For example, suppose there are various projects lined up, and the firm needs more auditors and consultants skilled in CAATT (Computer-aided-audit tools and techniques).

Therefore, managers would look into the resource pool to identify the consultants and auditors with matching skills. In addition, they would conduct a capacity vs. demand gap analysis to determine whether there are sufficient consultants with CAATT skills to complete the project. In case of any shortages/excess, they can take corrective measures accordingly.

Implement a mitigation plan to meet accounting project demands

Once the skill gap has been determined, accounting and audit firms must proactively frame a mitigation plan to bridge the excess and shortages. Next, the HRD will evaluate the business scenario and formulate appropriate strategies for each situation.

The mitigation plan should encapsulate various elements such as recruitment, training, and succession planning strategies.

For excess, they can bring forward project timelines, provide shadowing opportunities, etc. Likewise, for shortages, they can resort to retraining/upskilling measures for the existing consultant pool, implementing out rotation and backfill strategy, or conducting planned hiring. Additionally, they can also facilitate succession planning to identify and prepare consultants for senior roles.

Maintain the right mix of permanent and on-demand consultants

As an industry that experiences seasonal peaks, audit and accounting firms requires more accountant and auditors to meet these demands. With an operational workforce plan, the manager would analyze whether the demand is one-off or recurring. Accordingly, they can hire a permanent/contingent workforce or maintain a mix of both.

In addition, the high resourcing costs of niche skilled resources such as forensic accounting specialists, actuaries, etc., make it challenging for firms to maintain a permanent talent pool. For instance, if an accounting firm requires an actuary, a high-cost niche skilled professional, for a project, they can hire them on demand instead of recruiting a permanent resource. This helps control project costs and increase billable opportunities, enhancing the bottom line.

Monitor and control accounting workforce plan periodically

The final step is to monitor and control the workforce plan regularly, which helps ensure that it is in the right direction. Workforce planning is an ongoing process measured against certain milestones, timelines, and goals. For example, the firm’s strategic objective is to increase its revenue by 10% in the next 4-6 years.

However, due to evolving market demands, seasonal peaks, troughs, or customers’ changing preferences, accounting firms might have to revise their strategic and operational workforce plan accordingly. For this, they have to monitor the plan using various performance metrics in real-time, identify the areas of progress and improvements, and address any issues.

Now that we have understood the various ways of implementing a workforce plan let’s see how advanced software can help in better workforce planning.

How can modern workforce planning software help improve the efficiency of audit and accounting firms?

Workforce planning provides various benefits to audit and accounting companies, such as maximizing billable utilization, timely delivery of projects within the budget, enhancing business profitability, etc.

Implementing advanced workforce planning software streamlines the processes and helps maximize the potential of your audit and accounting personnel.

The tool offers centralized visibility into resource information that helps managers to identify the best-fit accounting personnel for the right project at the correct cost and time.

The tool’s advanced forecasting capabilities and capacity planning feature help analyze future resource requirements to forward plan and meet seasonal demand fluctuations. Accordingly, managers can proactively identify excess/shortfalls of professionals and take resourcing treatments to bridge the gap.

Moreover, it provides a competency matrix that helps audit and accounting firms to implement effective employee retention and succession planning strategies.

The business intelligence reports, such as forecast vs. actuals, financial reports, project vacancy, and utilization heatmaps, provide real-time insights into crucial resource metrics. It helps accounting supervisors track and monitor the consultant’s performance; if there is any variance, they can take course-corrective measures ahead of time. Furthermore, managers can use utilization reports and mobilize skilled accountants from non-billable to billable projects to maximize billable utilization.

Accounting supervisors can create scenarios and check the outcome with the what-if-analysis feature. This will enable them to better their decision-making process. Also, whenever there is a resource constraint, managers can use this feature to narrow down an ideal plan that will help effectively utilize the consultants in current or upcoming projects.

Wrapping up

“Quality management starts with building a high-quality workforce.” – Pearl Zhu, Writer & Prolific Blogger.

A skilled labor force is necessary for businesses to be profitable in volatile market conditions. Effective workforce planning enables audit and accounting firms to build and maintain an optimized resource pool. It helps them assess their current and future workforce needs, identify the skill gaps and implement solutions to meet short and long-term goals.

With dynamic workforce planning software, accounting firms can proactively overcome resourcing challenges like poor utilization, silos of information, and talent gaps. In addition, it will positively impact the organization’s profitability and sustainability.

The SAVIOM Solution

SAVIOM is the market leader in offering the most powerful and configurable solution for managing your enterprise resources effectively and efficiently. With over 20 years of experience, this Australian-based MNC has created its global presence across 50 countries and helped more than 100 customers achieve their business goals. SAVIOM also has highly customizable products for project portfolio management, professional service automation, and workforce planning software based on business requirements.

By Harvey Mackay, New York Times best-selling author.

The statement above rightly highlights the vital role that the workforce plays in driving business success. A skilled workforce offers enhanced productivity, advanced problem-solving abilities, consistent performance, and better output quality.

Despite the numerous benefits, organizations spend little to no effort improving their workforce management strategies. The absence of effective workforce planning can create operational and strategic bottlenecks that derail business sustainability. These bottlenecks include skill shortage, higher attrition, suboptimal productivity, etc.

Therefore, organizations have to leverage efficient workforce planning to anticipate future resource requirements and ensure that they have a skilled resource pool at their disposal.

This blog will highlight some of the workforce planning challenges and how to resolve them.

Let’s begin.

What are the adverse effects of poor workforce planning?

Efficient workforce planning can help organizations save costs, meet strategic goals, improve operational efficiency, and boost business growth. In contrast, poor workforce planning can have devastating effects on an organization.

Companies need adequate foresight into the skill demands of potential pipeline opportunities to build an optimized workforce. However, neglecting workforce planning makes it challenging to identify and address skills gaps and resource shortages within an organization. In addition, it leads to frequent hiring/firing cycles, which affects the company’s reputation and organizational efficiency.

Apart from this, in the absence of a workforce planning strategy, managers fail to formulate Individual Development Plans (IDP) and multi-skill building opportunities for employees. As a result, employees often work on similar projects, leading to monotony and stagnancy, resulting in disengagement and loss of productivity.

Without an effective workforce plan, Human Resources Department (HRD) finds it difficult to forecast the adequate number of employees and skill levels required for business continuity. Furthermore, workforce planning directly impacts an organization’s financial health. Companies face project delays and budget escalations in the absence of an optimized resource pool, leading to poor client satisfaction. Consequently, it results in missed business opportunities, hampers market reputation, and reduces profitability.

Now that we understand the effects of poor workforce planning, let’s delve into its significant challenges.

Major challenges of workforce planning

Workforce planning is a core business process that allows organizations to gain a competitive advantage within their marketplace. However, it necessitates significant time and financial investment.

Enlisted below are the primary workforce planning challenges that companies face:

Misalignment between workforce strategy and business goals

In an ideal scenario, companies should align their workforce strategy with their overall business objectives. But, most often, there is a disconnect between the two. Generally, business leaders who create short-term and long-term business goals fail to consult HRD to design the best policies for effective talent management and HR policies.

A lack of planning means HR professionals grapple with attracting and retaining skilled resources. In addition, the absence of collaboration prevents HRD from performing organization capability assessments and identifying gaps in current abilities and future workforce needs. Consequently, it impacts the organization’s ability to meet immediate and long-term business priorities.

Lack of visibility into organizational workforce competency matrix

Most companies capture the core competencies and skills of the employees during the hiring process. However, due to a lack of planning strategies, they often fail to track, update, and maintain the competencies of their workforce regularly. Without clear visibility into the competency matrix across the organization, managers have difficulty identifying and allocating the right resources for current and pipeline projects.

Instead, they assign the first-visible resource to project vacancies, who may not always be the best fit employee. This causes increased bench time for underutilized resources and high burnout for overloaded employees. Furthermore, if this situation persists for a long time, it affects overall productivity and causes unplanned attrition.

Difficulty in forecasting & bridging skill gaps in advance

Due to growing market volatility and intense competition, bridging skill gaps between supply and demand is a top priority for business leaders. However, it’s a challenge for organizations to forecast and bridge this gap when there is a lack of visibility into pipeline projects. Without adequate foresight and proper planning, most companies experience a frequent mismatch between resource capacity and demand.

Due to rapid technological advancements, technical abilities have a short life. But organizations cannot adequately predict future skill requirements without workforce planning. As a result, they cannot plan for regular training & upskilling programs, which leads to skill obsolescence. When the workforce is not optimally skilled, companies cannot gain operational efficiency and often lose future business opportunities.

Inability to address immediate & seasonal project demands

Addressing immediate and future resource demand is critical for organizations to maintain a competitive edge in the market. However, a lack of foresight into pipeline projects and ineffective capacity planning can prevent organizations from anticipating future resource requirements. As a result, managers are forced to recruit sub-par or expensive resources without sufficient lead time to fulfill immediate project demands.

Conversely, these resources are let go when there is a trough in demand. Therefore, it results in frequent hiring and firing cycles. Additionally, the inability to forward plan project demands means that managers hire permanent resources instead of contingent workers to meet seasonal demand, resulting in higher resourcing costs.

Incapable of having the right mix of permanent & contingent workforce

With rising costs, organizations must think critically about creating a cost-effective workforce. A balanced mix of permanent and contingent workforce enables organizations to meet demand volatility and reduce resourcing costs. In addition, it helps organizations with temporary peak demand without incurring permanent administrative overhead.

However, most companies lack the appropriate planning to build and maintain a mix of a permanent and on-demand contingent workforce. As a result, companies hire permanent resources, leading to cost escalations for short-term requirements. This can cause frequent hiring/firing cycles and impact the financial health and business sustainability.

Unable to deliver projects on time & within budget

A lack of visibility into utilization levels of resources can lead to project delays. Most organizations use multiple applications to manage their projects and resources, which creates silos of data. Due to the absence of a centralized platform, managers cannot analyze employees’ performance and identify and remedy over/underutilization on time.

Sub-optimal resource utilization affects the workforce’s productivity and results in stress, burnout, unplanned attrition, and low employee morale. This affects project workflow and quality. Therefore, failure to leverage the workforce optimally causes schedule and budget overruns.

Ineffective employee retention and succession planning strategy

Intense market competition has made it challenging for organizations to attract and retain talent. Creating long-term employee retention and succession planning is key to maintaining an optimized workforce. However, most companies fail to provide adequate career opportunities and fair compensation, which leads to attrition.

High turnover affects profitability and hurts the reputation of the company. In addition, a lack of succession planning can make a company vulnerable to disruptions. When critical resources retire or leave the organization, and there are no appropriate replacements, it impacts the overall workflow and productivity.

Now that we have discussed workforce planning challenges let’s look at how advanced workforce planning software help resolve them.

How can robust workforce planning software help resolve these challenges?

Maintaining an optimized workforce in a competitive, skill-based economy is challenging for every organization. Businesses must leverage effective workforce planning to maximize the potential of their human capital and gain a competitive edge.

The tool offers 360-degree visibility into various resource metrics such as demand, availability, capacity, allocation, financials, etc. It enables you to plan, schedule, and allocate resources efficiently and effectively.

The tool’s forecasting capabilities can help you predict future workforce requirements and plan for seasonal variations. Additionally, the capacity planning feature can help you identify excess/shortfalls of resources ahead of time. As a result, you can take preemptive course-corrective action to bridge the gap.

Additionally, it offers real-time reports on various resource indicators such as forecast vs actual, availability, utilization heat maps, project vacancy, and people on the bench reports. The forecast financial reports enable you to track financial variances and take remedial steps. Therefore, it can help you reduce resourcing costs and prevent project budget escalations.

Furthermore, the software helps maintain a competency matrix across the organization, enabling you to develop and implement employee retention and succession planning strategies. Therefore, it can help you futureproof your workforce and ensure that you have an optimized resource pool to meet pipeline requirements.

Lastly, the tool enables you to perform advanced scenario-based modeling and simulation with the What-If Analysis feature. Organizations can compare different scenarios and analyze corresponding outcomes. It provides guidelines to engage your workforce in the prioritized projects when there is a resource constraint.

In conclusion, enterprise-grade workforce planning software can help your organization identify your staffing needs, bridge existing skills gaps, ensure effective workforce utilization, and improve profitability.

Final Thoughts

Although workforce planning can be challenging, it’s an integral component that cannot be overlooked. Good workforce management can help organizations improve operational output, reduce resourcing costs, and ensure business sustainability. Business leaders and HR professionals must work cohesively to address critical workforce challenges so the organization can optimally utilize its resources.

The Glossary

The SAVIOM Solution

SAVIOM is the market leader in offering the most powerful and configurable solution for managing your enterprise resources effectively and efficiently. With over 20 years of experience, this Australian-based MNC has created its global presence across 50 countries and helped more than 100 customers achieve their business goals. SAVIOM also has highly customizable products for project portfolio management, professional service automation, and workforce planning software based on business requirements.

Some of the KPIs include annual recurring revenue, profit margins, client retention rates, and more.

While these indicators are undeniably pivotal, another crucial factor people often overlook is workforce planning. It involves determining the current workforce’s capacity and skills, identifying future resource requirements, finding skill gaps, and proactively implementing measures to fill them.

Creating an efficient planning strategy is imperative for every organization to control resourcing costs, drive profitability, and make the workforce future-ready.

However, in the absence of it, a company may face widening skill gaps, reduced profit margins, and lost business opportunities.

This blog talks about the role of workforce planning in a company and highlights some tell-tale signs that indicate your company doesn’t have a robust strategy in place.

So, let’s get started.

How does workforce planning impact an organization?

As a significant portion of revenue is spent on hiring, training, and paying salaries to the workforce, it’s imperative to utilize them effectively and unleash their true potential. An effective workforce planning strategy helps identify an organization’s current and future staffing needs. In addition, it helps create a plan to bridge the capacity vs. demand gap and ensure the right resource is allocated to the right job at the right time and cost.

Besides, it enables organizations to stay forewarned and mitigate resource-related risks due to constantly changing demands in a competitive and volatile market. Secondly, it provides managers with enough lead time to hire the right mix of cost-effective resources and do succession planning for the future.

Without proper operational and strategic workforce planning, organizations can face high turnover, employee disengagement, poor quality deliverables, and other such consequences. Moreover, in the long run, they will lose their credibility and market reputation, failing to attract top talent and stunted growth.

Unfortunately, many organizations fail to implement an effective workforce planning strategy. For better understanding, we have listed some telltale signs that indicate your organization lacks a proper workforce planning strategy.

9 Signs of a poor workforce planning strategy

Enlisted below are the signs that show your organization needs to revisit your workforce plan to manage resource-related bottlenecks.

Frequent mismatch between demand and supply

The inability to assess the existing workforce capacity against future demand can cause a failure to initiate the right resourcing measures and bridge gaps proactively. This further leads to a misalignment between supply and demand. If continued for a long, it is a clear indication that the management lacks a robust workforce planning strategy. Moreover, it also leads to consequences like subpar deliverable quality, poor customer relations, budget/time overruns, and eventually results in loss of business.

Multiple hiring/firing cycles

SHRM reveals that firing an employee can cost employers up to 200% of the employee’s annual pay.

In the absence of forecasting capabilities, organizations rely on guesstimates for resource planning. In turn, it can lead to frequent and expensive hiring/firing cycles, which indicates that the company’s workforce planning is not efficient. For instance, if you hire a permanent niche skilled resource for a one-time assignment, it will be difficult to find suitable opportunities after the project finishes. So, the firm will have no option but to let go of the resource. Later, when there is a requirement for a similar skillset, the organization has to resort to expensive hiring for this niche-skilled resource. This constant hiring/firing cycle in the long term affects a firm’s profitability and reputation.

Increase in bench time for several resources

During project ramp-down, if resources frequently spend bench time due to a lack of suitable work, it depicts there is no proper workforce planning strategy. Factors like a lack of foresight into future demand, inability to schedule them for future appropriate tasks in advance, hiring of incompetent employees, etc., can cause a sudden increase in bench size. If not addressed, it can disengage benched employees, cause unplanned attrition and impact the company’s overall profitability and sustainability.

Constant firefighting during peak season

Failure to forecast upcoming ramp-up activities and future demands during the peak season can cause last-minute firefighting, especially for the niche-skilled workforce. If this situation persists, it clearly signals a poor workforce planning strategy. This can lead to wrongful and expensive hiring, compromised quality of deliverables, and other consequences. This can impact the overall financial health of the business. If such signs persist long-term, a company won’t stay sustainable.

Project delays due to wrongful hiring of global resources

If a company constantly struggles/fails to deliver projects on time, it can jeopardize the recurring business from existing clients, adversely impacting future growth. When an organization witnesses such signs, it can be due to improper workforce planning strategy, resulting in wrongful hiring and allocation of resources. For instance, if a company hires less competent employees from low-cost locations and allocates them to critical tasks, it will affect the project workflow. This can also lead to sub-par deliverables quality, low customer satisfaction, reduced recurring revenue, and loss of business.

Surge in unplanned attrition

If you witness that the turnover rates for a business are growing at an alarming rate, it is a sign of an ineffective workforce plan. This can be due to multiple factors. First, if work allocation is beyond a resource’s capacity, it can cause stress and burnout. Second, if an employee is not allocated to work matching their skill sets, it can result in lower employee morale and engagement. In either case, the employees may look for better opportunities outside the organization and contribute to increased unplanned attrition.

Low employee morale and engagement

A recent survey reveals that it is becoming increasingly difficult for senior management in global companies to keep their employees engaged.

A lack of suitable upskilling/training opportunities, uneven workload distribution causing under/over utilization, etc., can reduce employee engagement and morale. If this situation arises often, it is a strong indicator of a firm’s inability to create a robust workforce planning strategy. This can adversely affect overall productivity and the bottom line.

Missed opportunities for business growth

Inaccurate estimation of skillsets required to future-proof the workforce against market volatility and evolving trends and technology demands can make a company miss out on several billable opportunities. Moreover, frequent hiring/firing or layoffs can further worsen the situation. If frequent and persistent, it clearly signals the need to rethink and strengthen the company’s workforce planning strategy. This can help avoid shrinking revenue, reduced client base, and increased unplanned attritions, etc.

Misalignment between long-term strategy and execution

Organizations often lack clarity on the types of resources required to fulfill their long-term vision and end up fulfilling workforce demands only for immediate goals and day-to-day objectives. This indicates that a company doesn’t have robust workforce planning in place. As a result, managers can find it challenging to execute succession planning, formulate suitable training programs, and prioritize work to help firms achieve long-term vision and goals.

If you witness any of the above signs in your company, then it’s time to create an effective workforce planning strategy.

Let’s understand how:

How to create an effective workforce planning strategy?

Every organization adopts a unique approach for workforce planning based on its business model and requirements. However, here are a few proven practices you can follow to create an efficient workforce planning strategy.

Set clear long-term goals

While most organizations manage to tackle day-to-day activities and meet short-term goals, they struggle with creating a long-term vision. However, a strategic vision is essential to help the company sustain in the long run. So, one should begin with defining SMART (Specific, Measurable, Attainable, Relevant, and Time-bound) goals and objectives.

Further, before creating and finalizing a detailed plan, the leadership must also check and ensure that the established goals align with the company’s values. It will help identify strategic areas and make the business goals more realistic and achievable.

Asses the existing workforce

Once the strategic goals are established, the next step in workforce planning is analyzing the organization’s existing workforce and skill demands. This will enable management to analyze and determine the quantity and quality of the workforce and the skills needed to achieve long-term goals.

Accordingly, the company can implement suitable training and reskilling measures, create individual development programs (IDPs), and improvise the overall hiring strategy to fulfill current and future demands.

Foresee resource shortage in advance

Based on the evaluation of the current talent pool, the company can assess the current and future skill shortages caused due to retirement of certain employees or evolving technologies. Accordingly, they can implement suitable internal or external resourcing channels to bridge skill gaps proactively.

Moreover, if a company doesn’t have people with requisite skills at all, it can hire them on a permanent or contingent basis as appropriate or create a judicious mix of both. The hiring decision can be made in accordance with the short-term and long-term assignments and demands.

Plan and adapt to change

The global business landscape is evolving rapidly and witnessing evolving market demands, changing customers’ preferences, technology advancement and automation replacing human jobs, and so on. So, along with determining how to bridge future skill gaps, firms must also be prepared for industry-specific developments, unexpected scenarios, or even a global recess.

For instance, they should implement proactive upskilling and reskilling programs to keep the existing workforce relevant. This can help them avoid large-scale layoffs and attrition in the near future.

Get advisors and stakeholders onboard

While finalizing the workforce planning strategy, discussing it with stakeholders like the CEO, the board of directors, and other senior management personnel is imperative. Large organizations can also hire a consultant specializing in a specific industry to assist in strategic planning.

Moreover, creating a weekly status report to inform the stakeholders of the daily progress on key aspects can be a good idea. Further, it should be ensured that suggestions given by stakeholders are considered and incorporated if deemed fit.

Constantly monitor your plan

Once your strategic plan is ready and implemented, the last ongoing step is continuously monitoring and ensuring it does not get derailed. Deciding on key performance indicators in terms of timelines, budget, clients acquired, milestones, and growth percentage can help track the plan.

Furthermore, the leadership must consider ever-evolving market conditions, customers’ preferences, seasonal fluctuations, and other factors to make amends accordingly and keep the plan relevant. If any roadblocks are faced in meeting KPIs, managers must take suitable measures to eliminate them and keep the plan on the right track.

So, it is evident that one can create an efficient workforce planning strategy by following the proven steps discussed above.

The following section explains how a resource management solution can contribute to a robust workforce plan.

How can resource management software help?

Advanced resource management solution can help organizations in creating effective workforce planning. The tool offers real-time insights into the pipeline projects’ demands through vacancy reports. In addition, the resource capacity planning feature of the tool helps foresee excesses or shortages ahead of time so that managers can take proactive measures to bridge the gap.

The automated resource requisition workflow process helps bridge communication gaps and maintains an audit trail to avoid scheduling conflicts. Moreover, the 360-degree visibility of the tool provides information about the workforce’s attributes like skills, competencies, qualifications, and availability. As a result, it helps managers allocate resources effectively and create individual development programs.

This enables them to keep them future-ready and engaged, thereby avoiding last-minute fire-fighting and high-cost hiring of the resources. Additionally, insights into future project demands and their nature help them to create the right mix of permanent and contingent employees. This helps to reduce overhead costs and meet short-term and long-term business goals.

Conclusion

Workforce planning forms a cornerstone of a successful business and is the key to staying profitable. So, every organization must ensure to make it effective and efficient. The points mentioned above will help managers identify the signs of poor workforce planning and implement ways to course-correct the same. This can also help you gain a competitive edge and enhance the firm’s bottom line.

So, does your organization have an effective workforce planning strategy?

The Glossary

The SAVIOM Solution

SAVIOM is the market leader in helping multinational clients manage their resources efficiently and effectively. With over 20 years of experience, this Australian-based MNC has a global presence across 50 countries and has helped 100+ clients with their Workforce Planning Software. Saviom also provides tools for Enterprise Project Resource Management, Project Portfolio Management, and Professional Service Automation. Boost your remote team collaboration with Saviom.

The statement above is relevant for every organization, regardless of size and industry. Without appropriate planning, organizations will face issues like skill shortages, last-minute hiring, project delays, client dissatisfaction, etc. As a result, they will not be able to meet their long-term goals and maintain profitability.

Therefore, developing a comprehensive workforce management strategy is crucial for companies to succeed in a competitive business environment.

Operational workforce planning, a subset of workforce planning, is a fundamental ingredient that helps organizations acquire, retain, and deploy a skilled resource pool.

It enables businesses to anticipate labor requirements and assign the most competent resources to the appropriate projects at the right time and cost. It also improves employee productivity, enhances organizational efficiency and lays the groundwork for companies to reach their strategic goals.

This blog post explains the key business benefits of operational workforce planning.

Let’s begin with the basics.

Definition of operational workforce planning

Operational workforce planning involves setting short-term, realistic goals that help organizations achieve their strategic business objectives. It’s a roadmap that outlines the daily, weekly, and monthly activities that every department or team must complete to reach their business targets.

It enables organizations to set a benchmark that helps them recognize operational inefficiencies and optimize their internal processes accordingly.

Usually, companies that tend to think long-term often create operational plans for the entire fiscal year. Meanwhile, others make operational plans on a quarterly or half-yearly basis.

When one compares operational planning vs. strategic workforce planning, the primary difference between the two is the purpose, scope, and timeline. An operational plan focuses on immediate business priorities; however, a strategic plan focuses on long-term value-driven differentiation that helps organizations gain a competitive edge.

An operational planning example:

An engineering equipment manufacturing plant plans to increase its production by 50% in the next three years. The company has identified the critical areas of focus that will help them achieve its targets- procurement, manufacturing, warehousing, and distribution. The plant installs new equipment, hires additional employees to operate the machinery, and strengthens its supply chain to meet the increase in its production capabilities. They also create an operational plan which details the daily requirements of every department and ensures that every resource (human and non-human) is optimally utilized against its capacity.

The objectives of operational planning are:

• Provide organizations with a blueprint for their daily operations that helps them achieve the strategic plan’s objectives.
• Enables firms to maximize their operational efficiency.
• Reduce manufacturing costs and overheads by optimizing processes and methods.

Now let’s understand the business benefits of operational planning in detail.

What are the business benefits of operational workforce planning?

Implementing an operational plan can help organizations understand how to achieve their long-term goals efficiently. Here are the business benefits of operational workforce planning:

Provides data-driven insights into demand vs. supply gap

An operational workforce plan provides organizations with the requisite foresight that helps them identify the gaps between demand vs. supply in advance. Accordingly, managers can proactively take appropriate resourcing treatment to bridge the gap.

For example, managers can utilize capacity vs. demand reports to identify skill shortages and implement measures such as retraining/upskilling, out rotation and backfill strategy, or hiring to address the bottleneck. Similarly, they can ensure that excess resources are not wasted by initiating training programs, shadowing opportunities, bringing forward future work, or selling the extra capacity at discounted rates.

Streamlines labor planning for seasonal & market changes

Certain industries experience seasonal demand fluctuations. Therefore, understanding daily operations and forecasting current and pipeline demand can help managers prepare a contingent workforce to handle seasonal peaks and troughs effectively. In addition, an on-demand workforce comes in handy when companies implement cost-cutting measures to tackle market changes like sudden price surges. This way, companies can streamline labor planning and reduce administrative overheads.

A perfect example of seasonal demand is the sudden peak of activities that accounting and auditing firms face at the end of each financial year. During this period, they have to manage the new client requests, prepare year-end tax filings, and certify balance sheets. Audit firms can use an on-demand contingent workforce during the peak season to fulfill these seasonal demands instead of hiring expensive permanent resources. As a result, it can help them significantly reduce resourcing costs without compromising quality.

Provides a roadmap to achieve strategic business goals

Operational planning provides an accurate high-level perspective of whether the company is on track to achieve its long-term strategic goals. If they are off track, they can take corrective measures ahead of time. For example, suppose the management discovers that they are falling short of daily objectives. In that case, managers can swiftly review the KPIs, determine where extra training or support is required, and implement a solution.

Operational plans are more limited in scope since they focus on the minute details that each department prioritizes while working on individual projects. While strategic plans highlight what organizations can do to improve their business sustainability and profitability, operational plans show them how they can do it. In other words, operational workforce planning provides companies with a roadmap to meet their long-term goals.

Reduces resource costs with the right mix of workforce

Labor expenses frequently account for the lion’s share of total expenditures for organizations. With the help of operational planning, businesses can analyze the cost of labor at a granular level and implement measures to reduce them.

One of the ways in which organizations can reduce their operational costs is by maintaining a balanced mix of a permanent and contingent workforce.

In addition, operational planning can help managers leverage a cost-effective global workforce and ensure a high quality of project deliverables. It can help managers identify and utilize junior resources for appropriate project tasks instead of high-cost, senior-level resources. This way, they can control resourcing costs and keep project budgets under control.

Minimizes frequent hiring and firing of resources

Without accurate forecasting and planning strategies, organizations resort to hasty hiring to meet the project requirements. However, once that project is over, these resources are laid off due to a lack of suitable billable opportunities. But, when a project with a similar resource requirement comes up in the future, they initiate the hiring process again. This constant hiring/firing cycle increases resource costs and affects the firm’s reputation.

Operational planning provides visibility into current and pipeline resource demand, which can help minimize the frequent hiring and firing cycle. Managers can forward plan and build an optimized workforce to take on pipeline projects and fill current project vacancies. Thus, it helps to minimize hiring costs and improve overall ROI.

Improves employee retention rates

A robust operational plan lays out the individual contribution of employees toward the organizational goals. Employees with realistic short-term goals are more focused, engaged, and productive. Conversely, without defined goals, employees may lose focus which can hamper their performance and output.

Therefore, an operational plan ensures that employees know their distinct roles and responsibilities. When employees know their deliverables for each day of the week, they tend to work meticulously towards achieving their targets. It helps improve their productivity and engagement. This, in turn, can help enhance employee retention rates.

Enhances overall organizational profitability through timely delivery

Effective operational workforce planning involves frequent employee productivity tracking and internal process assessments. When managers have visibility into the resource utilization levels, they can administer appropriate measures to boost productivity and ensure efficient workflow.

When managers discover that specific processes and methods are not producing the desired output, they can reconfigure or eliminate the process. As a result, they can optimize the processes to course-correct operational inefficiencies, thereby ensuring optimal operational efficiency for the timely completion of project deliverables.

Now that we understand how beneficial operational workforce planning is for businesses, let’s talk about how workforce planning software can help.

How can futuristic workforce planning software help in achieving operational goals?

From what we have discussed till now, it is evident that operational planning is an important aspect that cannot be overlooked by organizations focused on long-term growth. Operational workforce planning offers numerous benefits that help companies maintain a healthy bottom line and reach their strategic goals.

Saviom’s futuristic workforce planning software is the perfect tool to help your organization create a robust operation plan. The tool provides 360-degree visibility of the entire resource pool within the organization. Therefore, managers can quickly identify and allocate the best-fit resources to critical tasks and ensure optimal utilization of all resources under their span of control. Additionally, enterprise-wide visibility of resources can help businesses efficiently manage a global workforce, thus helping them reduce resourcing costs.

Furthermore, the tool’s forecasting and capacity planning capabilities can help determine seasonal changes in demand along with shortages or excesses of resources. As a result, it can help your organization take appropriate resourcing treatments ahead of time and mitigate the risk of operational disruption.

The software offers multiple reports such as resource utilization, forecast vs. actual, and utilization heatmaps that provide in-depth insights into crucial employee metrics. Managers can use this data to optimize and adapt their operational efficiency and overall performance.

Conclusion

Operational workforce planning is essential for businesses to gain a competitive advantage. When organizations know how to achieve their unit-level business objectives, it becomes easier for them to fulfill their bigger, long-term goals.

Operational workforce planning breaks down the functional structure into smaller components and helps organizations identify areas for improvement. They can implement the operational plan to troubleshoot inefficiencies long before they become significant bottlenecks.

The Glossary

The SAVIOM Solution

SAVIOM is the market leader in helping multinational clients manage their resources efficiently and effectively. With over 20 years of experience, this Australian-based MNC has a global presence across 50 countries and has helped 100+ clients with their Workforce Planning Software. Saviom also provides tools for Enterprise Project Resource Management, Project Portfolio Management, and Professional Service Automation. Boost your remote team collaboration with Saviom.

Do you often resort to last-minute firefighting to mitigate skill shortages/gaps?

Are you wondering how you will make your workforce future-ready and sustain business profitability?

Effective strategic workforce planning is required to address these ongoing challenges. It helps firms anticipate future talent requirements and create a forward plan to ensure that the company has the right mix of talent. It also enables them to achieve future business goals, thereby maintaining profitability and sustainability.

This blog emphasizes the benefits of strategic workforce planning in an organization and elucidates the steps to create an effective plan for the same.

Let’s begin with understanding the basics.

What is strategic workforce planning?

Strategic workplace planning is the process of analyzing, forecasting, and planning workforce supply and demand for long-term goals. These goals are designed with a vision of 2 to 5 years of the horizon.

It involves reviewing and examining current and future workforce requirements and then identifying and bridging the gaps. This helps the organization maintain efficient operations and achieve its long-term vision.

The 4R’s of strategic workforce planning are-

Right people-

Strategic workforce planning enables you to build a stable staffing level across every department. It allows you to employ the right person who can align with the organization’s values and objectives.

Right skills-

It helps proactively anticipate current and future skill demands. This will identify skill gaps and ensure that your workforce has the competencies needed to meet long-term business goals in the most efficient manner.

Right place and time

To maintain growth, it is vital that you have the right people in the right positions at the right time. In order to accomplish this, creating an effective workforce planning is essential.

Right cost-

The right cost is about ensuring that staff are competitively compensated for their work within the budget. It also helps in managing human resources in terms of hiring, retaining and providing a career path with skill building.

Now, let’s understand strategic workforce planning with an example.

Let’s assume that an IT startup company is currently working from one location. However, within three to five years, the company plans to expand into three different geographical areas. To accomplish this long-term goal, the firm needs the right resources with the right skill sets.

So, what can strategic workforce planning for this startup comprise of?

It can encompass steps like:

• Understanding and defining the long-term goals, i.e., what are the areas where the firm would like to expand its business?
• How many resources do they need for each different place and department?
• What are the skills required for it and identifying the same?
• How to manage the cost and ensure that there is no overrun?
• What are the possible risks that can come across the way?

Now that you have understood the basics of strategic workforce planning let’s analyze its significance.

Importance of strategic workforce planning

According to a survey, 77% of HR leaders feel strategic workforce planning is important for their own success.

Here’s why-

Align workforce requirements with long-term business strategy

It is impossible for firms to have the right resources at the right time without a clear understanding of their future goals. Therefore, creating strategic workforce planning is essential as it helps align the workforce requirements with the business strategy. In addition, it streamlines the hiring process and helps attract and retain top talent, which positively impacts company growth.

Helps address skill gaps between current & future demands

Strategic workforce planning helps you carefully analyze the skill sets of the current employees and anticipate the future resource demand. Through this evaluation, one can identify any shortages or skill gaps and take corrective actions ahead of time. This will enable you to acquire top talent or make your workforce future-ready for your company’s success.

Deliver current and future projects within time and budget

Various challenges like- unavailability of niche resources, skill gaps, change in prioritization, etc. can negatively impact project delivery. Strategic workforce planning can help you stay ahead of these challenges and be better prepared to handle them by developing a mitigation plan ahead of time. As a result, the projects are delivered within the stipulated time and budget without compromising quality.

Prevent unplanned attrition with an appropriate retention strategy

According to a survey By 2023, the attrition rate will be so high that 35% of employees will leave every year to work in a different company.

Unplanned attrition can be a huge loss to an organization since, without resources, projects cannot be completed on time and within budget. It also results in the loss of future opportunities for the business. Strategic workforce planning helps the HRs identify the top performers in the key roles and those at risk of leaving. This will enable managers to implement various employee retention strategies and minimize the risk.

Facilitates succession planning for critical roles

When an organization lacks succession planning, projects can stall as there can be a deficit of critical resources, affecting the business. Strategic workforce planning can be leveraged by companies to review key leadership and business-critical roles. This will help them identify and prepare suitable employees to fill critical positions when current employees leave their jobs and ensure a smooth business continuation.

Having understood the importance, let’s see how an optimized strategic plan can be created.

How to create an effective strategic workforce plan?

An effective strategic workforce plan centers around five key steps. Let’s discuss these one by one-

Understand the long-term objectives

The first step to workforce planning is assessing the long-term goals and objectives of the organization. For this, you can define SMART (Specific, Measurable, Attainable, Relevant, and Time-bound) goals and objectives. This can be done in coordination with various stakeholders, line managers, HRs, and business executives.

In addition, before developing a concrete and detailed plan, it is essential to check if the goals align with the company’s values. This helps determine the strategic areas and ascertains that business goals are more realistic and achievable.

Analyze the future resource requirements

After defining the long-term business goals, the second step in the planning process is to analyze the skill demand required to deliver it. The organization needs to understand –

• What are the niche skills required for the strategic goal?
• Is it better to hire freshers or senior-level resources?
• How to maintain the right mix of employees?

In addition to that, the business leaders should both evaluate the quantity and quality of the workforce and their responsibilities in future projects. This will give you a clear picture of the current workforce and help you figure out how and whom to hire.

Identify and bridge the skill gaps

Once the requirements are established, it is essential to look into the resource pool and evaluate the skills and competencies. It will help you identify the skill gaps and take the necessary measures to bridge them. For this, the HRs can leverage either internal or external channels in the organization.

They can either go for upskilling or retraining for the existing resources or provide shadowing opportunities for newcomers and less experienced employees. They can also hire permanent or contingent resources based on the project’s requirements and budget. The timely acquisition of resources ensures that the goals are achieved within the deadline.

Devise a risk mitigation strategy

Murphy’s Law states, “In any field of endeavor, anything that can go wrong will definitely go wrong.” But this can be avoided while managing the long-term goals. For that, it is imperative to identify and develop a risk mitigation strategy in advance.

Risks always exist in businesses, regardless of how well prepared you are. Some of the risks are unplanned leaves, high-employee turnover, lower employee productivity, market volatility, change in technology, etc. It could cause a roadblock at the last minute, sabotaging the strategic goals. Thus, leaders must develop a plan to anticipate these future issues proactively.

Monitor and improve the plan at regular intervals

After creating the strategic plan, the next and final step is to execute and monitor the plan regularly to ensure that it’s on the right path. In the 21st century, technology, the workforce, and the business landscape are constantly changing and evolving. Thus, to align with these changes, strategic workforce planning should be revised from time to time.

For this, you need to monitor your plan using various performance metrics in real-time continuously. It will help identify the areas of progress and improvements and address any issues. This will help organizations to meet their business objectives and strategic goals successfully.

Now let’s look at how workforce planning software can assist in achieving these goals.

How Workforce Planning Software can help in achieving strategic goals?

A modern workforce planning solution enables organizations to build an optimized workforce by offering various advanced features.

The centralized visibility of the tool offers foresight into the pipeline project resource demand. Accordingly, managers can streamline the workforce planning processes by analyzing the existing talent’s current and future capabilities.

Moreover, managers can check various resource attributes like skill sets, competencies, certifications, availability, cost, location, etc., in real-time. This enables organizations to identify the gaps and address them proactively.

Also, using the tool’s accurate analytics and statistical capabilities, firms can evaluate and overcome capacity problems ahead of time. Thereby avoiding last-minute hiring and costly hiring/firing cycles.

Further, the tool gives insights into the individual employee’s performance levels, which lets the management create various retention plans, make the right decisions regarding promotions, and improve the accuracy of succession planning. Conversely, for underperforming resources, they can conduct retraining and create individual development plans and make them future-ready.

Lastly, the modeling and simulation technique implemented in a sandbox environment gives you complete information on how various outcomes of different scenarios can impact your organization and bottom line. This enables managers to select the ideal resource plan and make informed decisions on future projects.

Conclusion

In today’s environment of rapid change and uncertainty, there is constant pressure on businesses to ensure they have the required talent pool to support changing business demands. Therefore, strategic workforce planning is critical in ensuring the organization has the right mix of talent to accomplish these future goals.

When coupled with the right enterprise-level workforce planning tool, the above steps will help you create the best long-term talent management strategy for your firm. It also enables you to gain a competitive edge and improve the bottom line significantly.

So, are you ready to create an efficient strategic plan and reach new heights of success?

The Glossary

The Saviom Solution

SAVIOM is the market leader in helping multinational clients manage their resources efficiently and effectively. With over 20 years of experience, this Australian-based MNC has a global presence across 50 countries and has helped 100+ clients with their Workforce Planning Software. Saviom also provides tools for Enterprise Project Resource Management, Project Portfolio Management, and Professional Service Automation. Boost your remote team collaboration with Saviom.

Organizations need to invest in a highly skilled and efficient workforce to stay ahead of the competition and meet their strategic goals. This is where strategic workforce planning comes into the picture.

It enables organizations to analyze and assess gaps and implement measures to ensure that they are equipped with the right people, for the right roles, at the right time for their long-term business vision.

In addition, it also helps reduce resourcing costs, minimize hiring/firing cycles, futureproof the workforce, etc. This blog highlights the key business benefits of strategic workforce planning.

But first, let’s begin with the basics-

What is strategic workforce planning?

Strategic workforce planning is a process that helps businesses and HR professionals proactively anticipate future human resource requirements to meet evolving business demands. It ensures that the organization has the right mix of talent to meet these goals and typically spans over a period of three to six years. Some examples of strategic workforce planning include global expansion initiatives, streamlining and optimizing work processes, career path development, etc.

The objectives of strategic workforce planning are to:

• Help accomplish critical future goals in an environment characterized by evolving demographics.
• Enable businesses to operate efficiently by anticipating fluctuating labor costs, economic trends, market prospects, and capability gaps.
• Assist in developing a comprehensive picture of where gaps exist between current and future competency requirements and implement gap reduction strategies.

Now that we have established what strategic workforce planning is, let’s look at some of its business advantages.

Business benefits of strategic workforce planning

Strategic workforce planning brings numerous benefits to an organization that enhances business profitability and sustainability. Below are the key business benefits of strategic workforce planning:

Aligns HR policies with long-term business strategy

As a part of a successful strategic workforce planning strategy, the HR department needs to proactively formulate the organization’s long-term goals and objectives with the key stakeholders. It will help them identify the strategic areas, roles, and skillsets required to attain the business goals.

It enables them to analyze the skill shortages and gaps within the organization in the short and long term. Additionally, it provides them sufficient lead time to implement suitable resourcing measures, including hiring well in advance to meet the new requirements. Finally, it ensures they have the right resources to meet their long-term goals.

Bridges the workforce capacity vs. demand gap for future projects

Strategic workforce planning enables organizations to forecast the gap between demand and supply to identify the shortfall or excess resources. For example, if a multinational company wants to double its sales in four years, they need to ensure they have the necessary engineering and other critical talents in operations.

So, managers have to foresee the capacity vs. demand gaps in advance and proactively take steps to fill the gap for their numerous business units in various regions. They can train/upskill current employees in the required field, begin planned recruiting to attract qualified resources and ensure the seamless execution of future projects.

Future-proofs your workforce for new initiatives

Bridging the skills gap and futureproofing the workforce enables organizations to stay relevant in the digital age, ensuring business growth and sustainability. In this ever-transforming business landscape, employees must regularly update their competencies to prevent them from becoming obsolete. Therefore, organizations must facilitate continual learning programs like retraining, upskilling, and other development opportunities.

It provides a road map for employees to diversify their knowledge and skill set, prepares them to take on multi-faceted activities in the future, and boosts efficiency and effectiveness. These initiatives help improve employee performance and accelerate organizational growth and development while ascertaining they are future-ready.

Minimizes resourcing costs significantly

Strategic workforce planning ensures that the right resource is allocated to the right project. In addition, it also helps to identify cost-effective global resources for projects and reduce resourcing costs. For example, an organization needs ten programmers and twenty developers to work on a strategic project in the next three years. Since the local resources could be expensive, leveraging global resources from low-cost locations can reduce project costs without compromising quality.

It helps organizations maintain the project’s financial health without compromising quality. In addition, strategic workforce planning also enables organizations to identify skilled junior resources for projects instead of expensive senior resources to control the costs. This enables them to gain a competitive edge and remain profitable and sustainable in the long haul. It can be aligned with their future diversification and expansion plans in different geographies.

Reduces frequent hiring and firing cycles

Due to a lack of proper workforce planning strategies, managers often recruit high-cost permanent resources for short-term requirements. However, when the project gets over, they are released to avoid an increased bench size. However, when another project arises that requires the similar expertise of the terminated resource, the company initiates the hiring process again.

If the hiring-firing cycle continues, it leads to cost escalations and reputational damage, resulting in missed market opportunities. To overcome such setbacks, organizations can formulate a strategic workforce plan to predict future resource shortages and implement corrective actions, thus ensuring that they have sufficient resources for their projects and minimizing the costly hiring and firing cycles. As a result, short-term opportunities can be effectively fulfilled by contingent resources.

Enables succession planning for critical roles.

Succession planning enables the identification of the next generation of leaders who can take over crucial positions after the current employees are promoted, leave for new career opportunities, or retire. Strategic workforce planning guides managers by providing a roadmap to maintaining business continuity even amidst changes.

It enables organizations to offer mentoring, technical and soft skills training, and shadowing possibilities to employees to advance their knowledge. It also helps the existing employees gain practical experience, better equip them for future undertakings, and relieves the pressure on critical resources.

Helps build a long-term retention strategy.

Most often, employees resign from organizations for various reasons like retirement, work stress, burnout, unequal pay, lack of career advancement opportunities, etc. It overburdens the existing employees and affects project progress and delivery. As a result, the company suffers considerable losses due to decreased productivity, morale, and competitive edge.

Strategic workforce planning guides organizations in building a long-term employee retention strategy, fostering enduring relationships with staff, and reducing employee turnover. It also helps facilitate Individual Development Programs (IDPs), shadowing opportunities, reverse mentoring, and cross-department collaboration to improve job performance and productivity. In addition, since employees are given opportunities to work on multi-faceted projects and expand their potential, they will naturally stay for the long term, thus reducing turnover rates.

How can workforce planning software help in achieving strategic goals?

An advanced workforce planning solution enables organizations to plan, forecast, and build an optimized workforce.

• The tool provides real-time centralized visibility into future projects’ resource demands. It helps managers initiate the workforce planning process by looking into various resource attributes like skill sets, competencies, availability, cost, location, etc.
• Additionally, the tool generates cost estimates for pipeline projects, allowing managers to identify, hire and schedule cost-effective resources for each project.
• Furthermore, capacity vs. demand reports helps identify potential talent shortfalls and surpluses and implement measures to overcome capacity problems in advance. It also helps prevent unnecessary hiring/firing cycles and last-minute hiring of high-cost resources.
• Last but not least, the modelling and simulation technique lets you explore the potential effects of different scenarios in a sandbox environment. Managers can then analyze and compare the outcomes of each scenario and select the best-fit resource plan and make informed decisions on future projects.

Conclusion

Strategic workforce planning is the lifeline of a successful and well-operating organization. The benefits mentioned above of strategic workforce planning have proved significant in the current business scenario. An enterprise-level workforce planning solution enables one to prepare for demographic change and create a long-term talent management strategy to improve your bottom line.

Does your organization seriously invest in strategic workforce planning?

The Glossary

The SAVIOM Solution

SAVIOM has over 20 years of experience helping multinational clients manage their resources efficiently and effectively. With over 20 years of experience, this Australian-based MNC has a global presence across 50 countries and has helped 100+ clients meet their specific business goals. SAVIOM also provides tools for project portfolio management, professional service automation, and workforce planning software. So, SAVIOM can help your business to establish an efficient system geared towards your specific business challenges.