beyond layoffs - strategic workforce planning as a way to reduce costs.

Finding the right people with the right skills is a worthy goal for any HR manager. When economic fluctuations and world conflicts affect market demand, the ability to adapt the workforce becomes critical to the success of an organization.

Laying off and rehiring employees as needed is an unworkable solution at best, with negative repercussions over time. Instead, develop an agile workforce by creating long- and short-term HR strategic plans to help support company goals.

understanding strategic workforce planning

Put simply, strategic workforce planning is a strategy or plan worked out in advance concerning your employees and their skills. This plan should complement your organization’s aims and objectives, and it should consider external factors, like customer demand and the economy.

By anticipating future demands on your workforce, you can help ensure you have the correct number of employees with the necessary skills to accomplish the work — too many employees and expenses are too high, too few and you won’t meet production quotas. The goal is to get it just right, and that’s effective capacity management.

Sudden layoffs and hiring freezes are not the solution to a change in market demand. Why? Because they leave you stranded when the market inevitably shifts again; moreover, these actions undermine your employer brand.

Strategic HR planning, in contrast, provides long-term solutions that consider both employee management and business finances. It helps create an agile workforce, one that can meet increased demands, handle new technology and cover skills gaps. It’s also the best way to respond to economic fluctuations rather than with impulsive actions. The steps below can help you create an HR strategic plan in your organization.

assess current workforce needs

You always need a starting point before you can move forward. To begin workforce planning, you need information. For example, you should know how many positions or roles are necessary for your business to run successfully. How many employees are needed to fill those positions? What skills are required?

To find the answers to the above and other necessary questions, you must extensively analyze your current workforce and your organization.

It might help to start from the company’s perspective. That way, you’re not influenced by current staff levels.

• determine what roles are necessary for optimum performance. You can create categories, such as upper and middle management, production workers, IT staff and office personnel.
• consider how many employees are needed for each role to be handled successfully.

Now it’s time to work with your current employee figures.

• list the number of employees and their roles within the organization.
• identify desired skills. A detailed skills inventory is helpful for cross-training purposes and company expansion opportunities.
• review employee data, including hours worked, productivity output, turnover ratios and absenteeism rates.

Now, compare the two sets of information. You may be surprised at what you find. Some areas may be understaffed, while others have too many unproductive workers. You may discover that a department performs above par with fewer people than you thought necessary. After analyzing your results, highlight roles, skills or specific employees critical to business continuity.

align workforce planning with business objectives

Before you create your plan, you must have agreement between leadership and the HR department, which means a complete understanding of the organization’s short and long-term aims. Increasing market share or implementing a new product line can significantly impact the number and types of employees you require. Also, consider decisions relating to business operations, such as the desire to digitize or increase the use of technology or automation.

Once you fully grasp future objectives, you can prioritize key roles and skills necessary to meet those concerns. You can also identify individuals who are essential to achieving business goals. If necessary, you may need to restructure your workforce to ensure a continuous balance between employee productivity and market demand.

Consider the possibility of reskilling or upskilling employees to fill future voids. Promoting current employees lets you take advantage of high-performers, giving you an already vetted, reliable worker in a critical role.

If economic fluctuations are causing top management to scale back, identify ways to keep current employees active. Assess cross-training employees in different roles or allow more flexibility in schedules.

develop talent retention strategies

During economic downturns, it’s easy to think of reducing staff. However, as we saw above with Schiphol, that can lead to long-term struggles and lost revenue. Losing one or more key employees or critical skills can quickly derail recovery attempts. And you might find that rehiring individuals to replace those you lost may cost more than you saved. Finding ways to retain top talent is essential, as is keeping loyal support staff.

Periods of low market demand provide opportunities for training and development. This strategy lets you enable employees to step forward immediately once demand increases, endowed with new skills and knowledge, and further engage in the company. Your already completed workforce assessment and goals alignment can provide assistance in where to focus. For example, to ensure you’re training and developing the right skills and the right employees:

• use your workforce analysis to determine which employees have the greatest potential within your organization.
• consult the short- and long-term business objectives to identify future HR needs.
• review skills inventory to find shortages.

adopt flexible work arrangements

An agile workforce can save you money in operating costs while improving employee morale. Explore ways to incorporate more flexibility in the workplace. Because not every position is conducive to remote work, find other ways to offer employees enhanced flexibility.

Consider part- or flex-time scheduling, job sharing, a four-day work week or hybrid work models to incentivize employees without increasing salaries. Flexible work arrangements can also reduce operating costs, such as cleaning, utilities, security and office equipment.

Job sharing and part-time work increase employee engagement and loyalty, as workers can arrange their personal lives (i.e., children, elderly parents, doctor’s appointments) thanks to more flexible schedules. The company benefits by having two experienced employees equally trained for the same role. You can even schedule overlap should market demand suddenly return to normal. Some job sharers may be willing to forgo benefits to enjoy the improved flexibility.

Regardless of how you choose to restructure your workforce environment, the one essential component is constant communication. Remote workers need to feel just as plugged in as in-house staff. They remain an integral part of the team and should be kept aware of challenges, economic and otherwise. In addition, you must provide equal opportunity for remote workers to participate in training and development and apply for promotions.

leverage technology for efficiency

McKinsey & Company, through its work with manufacturing companies, has found that implementing digital and analytical tools helped reduce costs by 5%, much greater than the 2% attributed to traditional methods, like employee cutbacks. Resilient companies have discovered that technology, when used correctly, can greatly improve efficiency.

Employees freed from repetitive, manual tasks can be reassigned to other roles, ones that provide more scope for initiative and engagement. Technology savings can range from reduced errors to increased productivity. Using machines for repetitive or strenuous activities can prevent worker injury and time lost. Video conferencing and shared worksites help ensure collaboration between remote and on-site workers.

Before investing in new technology, calculate net savings, factoring in the initial outlay, training costs and update or renewal requirements with overall productivity gains.

a volatile economy demands strategic HR planning

When it comes to economic uncertainty, you need a strategy that looks beyond the immediate. A reactive style of management can leave you trailing behind your competitors. Prepare for market swings, down and up, by creating a plan that covers each scenario.

Making information-based decisions requires data on your employees, their skills and your company’s short- and long-term objectives. Armed with a plan and backed by authentic data, you can create an agile workforce that adapts as needed, eliminating the need for layoffs.

Your business relies on its people to succeed. As an HR professional, you can strengthen your organization by improving people management. An effective strategic workforce plan is vital to long-term success and short-term survival.