Strategic Workforce Planning is proactively planning to provide:
- the right number of people,
- with the right skill sets,
- in the right location,
- at the right time,
- at the right cost
to ensure successful completion of our business objectives.
Let's look at a one example:
Is your business ready for the baby-boomer retirement wave and their impact on the workforce?
What is the magnitude of people retiring? How can we forecast the hiring needs of our company? How will it affect YOUR company? The example below will demonstrate a forecasting model which can be used in any company. The industry name for this activity is workforce analytics, a portion of the entire Strategic Workforce Planning process.
To demonstrate, I will use Company A which has approximately 5500 employees and is in a fairly mature industry, i.e. this model will not need to account for any rapid growth in the company's strategy. We will assume that the company desires a constant employee population over the next few years.
To begin developing a model, let's consider how people leave: they can retire, be terminated, quit their job or (unfortunately) die. Since the main impact I would like to demonstrate in this model is the vast number of retirements on the horizon, I will group my data into 2 categories: retirements and terminations (which will include voluntary and involuntary terminations as well as death).
Now, how do we predict what will happen in the future? Well, let's start with the terminations category. I examined the past 3 years of history and found that on average, 11% of people are “terminated.” I will then use this 11% as a future value in the workforce planning model.
Can we deal with retirements in the same way? We can, but I'll use a small modification. In examining the past 3 years of retirements, it is found that while many people reach the average retirement age (also determined by past history), only about 20% of those people actually retire. I will use this 20% value to forecast how many people will retire in the next 5 years.
A simple workforce planning model can then be created as shown below. [ Click on the model below for a larger image. ] This model will allow companies to forecast their hiring needs, predict the cost of retirement packages to the organization, guide recruitment strategies, talent management, success planning, etc.
Note: This model is highly simplified as a demonstration of what can be done. Other factors like corporate strategy come into play in the full model (acquisitions, location opening and closings, predicted market growth, etc.). Models can also be built for a subset of the employee population in case a company only wished to focus on certain departments within their organization. In this case, we would also need to add a model variable for internal movements in and out of that department.
As you can see, it is possible to estimate the impact of retirements and terminations on a company's workforce in order to forecast recruitment needs.