Workforce Planning: Aligning Finance and HR for Strategic Execution

by Jim Perry

Embedding driver-based workforce planning at every stage of the strategic planning process can help narrow the gap between the Finance and HR departments to uncover trends related to the creation of new roles and the evolving nature of existing ones.

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Systematized workforce planning helps companies eliminate subjectivity in their business-critical hiring decisions. With the right systems in place, practitioners can analyze workforce alignment to the business, develop succession plans, and measure the productivity and quality of their company’s people assets. Done right, workforce planning operates as a fine-tuned engine that can power a business forward.

Workforce planning typically begins with business strategy and its implications for future hiring needs. Managers of individual business units (BUs) identify pipeline gaps and then use that insight to develop plans to fill them over time. But that process can get bogged down quickly. Organizations and roles change so rapidly that it is a struggle to accurately forecast skills and resource requirements.

Embedding driver-based workforce planning at every stage of the strategic planning process can help narrow the gap between the Finance and HR departments to uncover trends related to the creation of new roles and the evolving nature of existing ones. 

Being able to forecast trends gives companies lead time as to when emerging skills are on the horizon or talent pools become available. Workforce plans that are aligned with the organizational strategic plan can also help companies to develop realistic hiring plans, including when exploring expansion to another location, or when considering an acquisition. If a critical talent segment is in short supply or is costlier in a certain location, that information can help shape talent acquisition, along with the company’s business strategy, operational plan, and even real estate inventory.

Without good data, organizations overlook labor market demand and underestimate market availability of key skills. Too often, workforce planning and people analytics are treated as a secondary job, rather than a core function. 

How many employees do we have? How many do we need? How many will we need next month? Next year? Where will we hire them in the organization? What sort of skills should we prioritize when vetting candidates?

Workforce planning – forecasting headcount, developing succession plans, creating recruitment pipelines – requires the use of data. Enterprise performance management (EPM) forecasting functionality can assist companies with headcount planning and eliminate the guesswork and manual drudgery of staffing decisions. 

1. Balance supply and demand

As with any resource, talent pools are a function of supply and demand, and the trick is to maintain a balance between the two. Put simply, the demand is an organization’s forecasted need for employees; the supply is the workers that are available to work at that time.

A best-in-class EPM solution can help finance and HR teams predict the number and positions/roles of the employees needed, and the anticipated supply (factoring in the impact of the turnover rate on the headcount). 

2. Align the HR function with broader organizational strategy

The idea that HR does not contribute to the bottom line still exists – and is still a misconception. Data-driven HR forecasting is one way to help HR practitioners demonstrate that their department is making a direct contribution to organizational efficiency. An aligned team is an effective team. To empower finance and HR to leverage workforce planning and people analytics as foundational elements of the strategic planning process, begin by establishing the organization’s strategic aims and targets/KPIs and calculating the personnel requirements. Then determine the requirements that the recruitment strategy must address and agree relevant HR plans and activities to have the right people in the right place, at the right time.

3. Align finance and HR forecasting

By leveraging decision packages and “what if” scenario models, a more sophisticated contribution can be made with a range of forecasts. Staffing-driven forecasts determine factors related to personnel changes: turnover, promotions, additional shifts, and so on. 

Process-driven forecasts anticipate the effect of changes to ways of working (e.g. changes to the manufacturing process or customer engagement strategies) that will have a staffing implication.

EPM solutions make a meaningful contribution to organizational productivity and agility by increasing the accuracy and actionability of workforce plans.  

As the modern workforce continues to undergo dramatic transformational shifts – from the types of skills necessary to thriving in the current corporate landscape, to the ever-increasing importance of implementing new and emerging technologies, it can be difficult to keep the multiple strategies and business goals aligned. By employing a modern workforce management system that helps to forecast trends and offer data-driven predictions, businesses can ensure their workforce is working in tandem with goals, creating efficiencies and directly lending to overall successes. 

Jim Perry is Director, Enterprise Performance Management Practice, Infor.