The rise of skills-based workforce planning 

Many organisations are evolving their thinking from budget-driven headcount planning towards strategic workforce planning (SWP).

This planning method is integrated into strategy, financial, and operational processes and includes company-wide governance. Although some organisations are already set up for success — with clean data access, modern technology, clear governance and buy-in from senior leaders who understand its value — others are just starting out on the SWP journey. 

As they begin building their SWP capabilities, organisations are realising that the focus can’t be only on headcount planning. There must also be an understanding of the future skills required within the workforce (and which skills are declining in relevance). This evolving mind-set has resulted in the rise of skills-based workforce planning.

But why has a skills-based approach to SWP become such a big deal?

As Canadian President Justin Trudeau stated so succinctly, “The pace of change has never been this fast, yet it will never be this slow again.” Transformation at pace has become a corporate way of life.

Yet it can take six months to retrain an employee or hire new talent. That kind of timeframe in a fast-moving environment demands joined-up skills-based planning. A skilled workforce has always been an important part of the recipe for a successful business. But at a time when dynamism and change are integral to any progressive organisation’s strategic plan, there’s a growing risk of chronic disjunction between available skills and what’s actually needed. 

Indeed, our research shows that 98% of HR leaders report that their organisation faces significant skills shortages, with the potential to derail plans for business transformation. The good news is that there’s also real enthusiasm among employees to keep learning: 91% have recently taken steps to learn a new skill. 

So it’s never been more important for companies to quantify and qualify the skills they have within the workforce and those they lack. By investing in retraining and redeploying existing employees, they can not only close these skills gaps but also save money, bolster their reputations and ensure a better experience for colleagues keen to broaden their skill sets.

At the same time, the pandemic has brought home for many businesses just how vulnerable they are in the face of unforeseen disruption. Having a workforce plan to see them through other possible scenarios is critical. 

As organisations recognise that skills are increasingly their key currency, they are looking for new ways to enable talent to flow effectively to wherever it’s needed. An agile people strategy is crucial, along with a clear overview of evolving workforce requirements — particularly as digitalisation strengthens its grip on business plans and operations. 

But understanding what you need from your workforce requires accurate data and technology. We’ll discuss how technology and data can enable headcount and skills-based planning in a future blog.

For now, we know that skills-based workforce planning can seem quite far off for many organisations. The process of getting buy-in from the business and selling leadership on the value of running SWP cycles and integrating SWP into the strategy can be slow. We recommend taking the following actions:

  1. Begin the conversation with business leaders. 
    Are they thinking about the future requirements of the workforce, in terms of both headcount and skills? Where might there be increasing or declining demand? What is the current supply?
  2. Start gathering workforce data on skills. 
    Such data might be self-reported via learning platforms or obtained through a larger skills taxonomy project that maps skills to your job architecture using tools and technology, such as the Mercer Skills Library.
  3. When you feel ready, start thinking about the best way to run SWP in practice.
    Will this be facilitated out of a centre of excellence or through HRBPs? Will you need external support for a pilot project?
We’ll cover these steps in greater detail in future blogs. In the meantime, if you need help getting started on your journey towards skills-based workforce planning, please get in touch.
Paul Habgood

- Partner, Workforce Transformation

Lauren Pindar
Frankie Watkinson
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