Workforce Planning

People—from your in-house employees to the contractors you bring in to get a job done—drive your business. They keep your company moving towards its goals, ensure your customers stay satisfied and make certain your product and services are delivered on time and on budget.  They’re at the heart of every business. Which is why making sure you have the right people, with all of the right skills, is a critical part of any HR team’s role. Workforce planning empowers you to do that, helping you plan your team now and for the future. With an effective workforce planning process, you’ll be able to stay on top of your day-to-day People needs while keeping an eye ahead—on potential market and industry changes and the skills or headcount you’ll need to meet your business goals.  But workforce planning can also be a major investment of time and budget—which means getting it right the first time is key. That success is built on a commitment to accuracy and an attention to detail. And for that, you need to consider every element closely,  starting with the following: 1 What is workforce planning? 2 Operational vs. strategic workforce planning 3 Contingent workforce planning 4 The workforce planning process 5 Aligning HR strategy with your business goals 6 The role of a skill gaps analysis 7 HR budgeting: how to plan your HR costs 8 Workforce planning metrics 9 5 workforce planning reports 10 4 workforce planning best practices What Is Workforce Planning? Workforce planning is the process of analyzing your workforce and forecasting and planning for your business’s current and future needs. It helps your organization stay on track with its goals by ensuring you have the right people in place to accomplish those objectives—and that the people you do employ are equipped with the skills your business needs. With that in mind, workforce planning typically considers: How your workforce is positioned to meet current and future business objectives   The skills your team needs for the future and where it may be lacking   The best talent acquisition and talent management programs to fill those gaps    Any outsourcing requirements you might have and the best ways to fill them   The costs of maintaining and developing the workforce you need By drawing on all of the tactics available and analyzing the data along the way, workforce planning keeps you on the path your organization has set and allows you to forecast the future. All so that you can put a plan and budget in place that allows you to stay on top—and ahead—of your business’s needs.  Operational vs. Strategic Workforce Planning There are actually two levels of workforce planning—one that looks ahead and one that makes sure you stay on track in the moment. Consider both in turn: Operational Workforce Planning Operational workforce planning is all about the short term. It helps you keep up with your day-to-day workforce needs, putting employees on task, making any necessary tweaks along the way and addressing seasonal and project-based headcount requirements as they come up. Usually a function of HR or of the managers within each relevant team, operational workforce planning should be part of their daily workload, with processes in place to keep everything running smoothly. But it’s only one part of your workforce planning efforts. Strategic Workforce Planning Strategic workforce planning looks ahead—usually up to five years into the future. As such, it concentrates on your larger goals and how they align with your business strategy—as well as any long-term obstacles that may get in the way. It’s this kind of planning that will help you determine where the skills gaps in your company exist and allow you to identify how you might fill them. It’ll also help you put plans in place to attract the best employees and contractors and build the skills you already have in-house. While your strategic workforce planning is usually led by HR, involvement from your executive team, board of directors, finance and operations teams and department heads will help keep everything on track.  Contingent Workforce Planning But your workforce planning doesn’t stop with your in-house team. While data varies, more conservative numbers show that at least 1 in 5 U.S. jobs is fulfilled by a contract worker. Using freelancers and contract workers can save money in the long run, but keeping on top of those workers requires its own processes, administrative tasks and hiring procedures.  And with contingent workers often needing to be scaled rapidly (think of those being brought on for seasonal work or a big project) and spread across several departments, they come with challenges of their own. Yet Deloitte found that only 29% of organizations track these workers’ compliance with work contracts and only 32% track their quality of work.  But there are planning and operational best practices that enable you to optimize your contingent workforce: Start them out with a trial period or small project to see how they fit with your organizational culture.   Give them identifiable goals, processes of communication and training that let them stay aligned with your business and empower them to continually succeed at their jobs.   Offer programs that help them build their skills and potentially earn more, while giving you the chance to bring additional skills to your business.    Continually forecast ahead to determine future contingent labor needs in order to identify where you may need to add new contractors to meet your goals.   Focus on your workers’ experience with your organization. Making them feel like part of the team can add to their productivity and general effectiveness.  While contingent workers may not be full-time employees, they can provide significant value to your workforce and fill in gaps in the skill sets you have available. As such, managing and developing this workforce should be a key part of your planning process. The Workforce Planning Process So where do you start your planning—and how do you successfully align it to your goals? These six steps will help guide you through the workforce planning process and help you get the most from your efforts: Step 1: Strategic Direction Determine your business goals and the top-down strategy your executive team has set—then consider how you can align your workforce to those goals. As you do, look at all of the tactics at your disposal: talent acquisition and headcount planning, training and development programs, outsourcing and so on can all help you fill your workforce needs.  Step 2: Supply Analysis Analyze your workforce and where it might change. That is, where you might see turnover and movement without any interventions or major business shifts. What does your workforce look like as a whole—how many employees are there, what skills are they bringing to the table and what do the overall demographics look like? Are there workers headed to retirement? Employees you expect to see turnover for other reasons? Finally, what skills are your organization relying on and how will that predicted turnover affect how you do business? Step 3: Demand Analysis But interventions are necessary if you want to grow—so you need to consider those as well. What business strategies, product releases, industry changes, geographic expansions, etc. do you need to prepare for? Where may your current team fall short in supporting those goals? And what’s the best way to make sure you’re ready for what’s around the corner?  Step 4: Gap Analysis This is where you analyze any skills gaps that exist. Can your current team keep up with the future your company has planned? Will additional training be enough to fill those gaps? Or will you need to recruit new talent? What about your HR and labor budgets—will you have the resources to keep up, or do you need to focus your efforts on the roles with the greatest future impact? Step 5: Solution Analysis and Implementation Next, it’s time to take the actions you need to meet your workforce goals and fill the gaps you’ve identified. That might mean introducing a recruiting strategy to add the skills you’re missing, building your in-house team or outsourcing new contractors or contingent staff. It might also mean restructuring or redesigning the jobs you have or adding training and development programs that help you fill in some of those missing skills in your current team. Step 6: Monitoring Your Progress Of course, you don’t stop planning even after you start to implement your workforce changes. Rather, continue to monitor and measure the results of your changes and their impact on the organization itself. Are you on the right path towards your future goals or do you still see gaps that need to be filled? A Workforce Planning Example For an example of how to get the most out of your workforce planning efforts, consider Saddle Creek Logistics, one of the largest third-party logistics firms in the U.S. Headquartered in Florida, Saddle Creek has 5,000 employees across 50+ locations throughout the United States. Saddle Creek integrated their workforce planning, revenue planning, OpEx and CapEx into a single database, allowing them to work from a single source of truth. The result was an end-to-end budgeting process and smarter, data-driven decision making. Templates helped drive the process, freeing executives’ time for more granular analysis. “Tasks just flow from one person to the next without any manual intervention,” says Paige Williamson, Saddle Creek’s Associate Director of Fixed Assets and Systems.  Learn how Vena helps the Kansas City Chiefs meet its workforce planning needs. Aligning HR Strategy With Your Business Goals Aligning HR with your corporate strategy is a crucial part of the workforce planning process. From your learning and development programs to your talent acquisition strategy, you’ll see better results if you keep in mind your business goals. But alignment happens on more than one level so consider the following: Vertical alignment happens between the various levels of your business. If the executive team has built out a set of business goals, for instance, it’s up to your HR team to align their goals and actions to them, to maximize all of your people and resources and ensure everyone is working towards the same set of outcomes. Horizontal alignment happens between departments and teams—and it’s just as important. After all, it’s not unusual for departments to use competing strategies to meet the same goals—wasting both time and resources. By aligning with other departments, HR can better determine which actions and projects to prioritize and where resources should be allocated.  Four best practices can help you better align along both levels: 1. Don’t Be a Silo Collaborating and partnering with your executive team and other departments and understanding the market and industry at large, will get you to your goals faster and ensure you have the right support along the way. 2. Know Your Culture and Budget To ensure you’re hiring people likely to thrive in your business environment, your workforce planning tactics should be built with your organizational culture in mind, while the right HR budget can mean the difference between success and failure. 3. Put Your Data To Work Through accessible HR dashboards and integrated company-wide data, you can begin to visualize your most critical metrics—analyzing where you’re falling short of your goals and where you’re thriving.  4. Align Your HR Activities and Team By identifying the targeted actions you need to achieve your goals—and assigning the right people to make them happen—you can get on a clearly defined path toward making your business strategy a reality.  When HR is aligned with your business goals, you make better decisions around talent acquisition, retention strategies and training needs—fueled by a better understanding of any gaps that exist.  Find out more about how to align HR strategy with your business goals. The Role of a Skills Gap Analysis The skills we rely on to keep up with our business demands are always changing. Understanding the skills you no longer require—and anticipating those you’ll need in the future—is part of ensuring you have the right team for your business. And that’s where a skills gap analysis comes in. Your HR and workforce planning teams will use a skills gap analysis to identify—and eventually fill—the skills shortages that exist in your company, in order to meet current and evolving needs and pave the way for future plans. Such an analysis will help you determine where those changes may be necessary within your organization, to let you better keep up with emerging technology and industry changes and keep pace with your future business demands. Specifically, it can help your organization: Recognize where important skills are missing  Identify individual growth opportunities in your employees Better target your recruitment efforts Plan ahead for your workforce and growth goals For a successful skills gap analysis, either consider each employee individually and the skills they bring to the table or focus on the overall gaps in your departments or business as a whole, to figure out which skills you need to add. From there, follow a series of steps: 1. Determine Your Business Goals  Consider where your organization is going in the near and long terms and which strategies you’re going to use to get there—as well as the skills you need for that to happen.  2. Look Into the Future  Take a look at where your industry and the workforce itself are going, modeling for future scenarios—then determine what skills you’ll need to maintain a competitive edge.  3. Dig Into the Data Create a single source of data—drawing from employee KPIs, surveys, skill assessments, 360-degree performance reviews and other sources—to create a full inventory of skills.  4. Fill the Gaps  Add the missing skills you need through learning and development programs, job redesigns, outsourcing and recruitment. Don’t stop there, though. Ideally, your skills gap analysis should be an ongoing part of your annual HR budgeting process and the forecasting you do throughout the year.  Find out more about how to make a skills gap analysis work for you. HR Budgeting: How To Plan Your HR Costs  Without the resources to fuel your workforce planning efforts, you won’t get far—and you might find you have to prioritize your efforts according to the resources you do have available to you. Which is why filling your skills gap, achieving your HR goals and meeting all of your workforce planning needs starts with your HR budget.  Your budget should take into consideration three main components: 1. Compensation and Benefits  This will likely represent the largest allocation of resources by far. And since salaries and benefits both hugely influence your ability to maintain and attract talent, keeping on top of industry and job-level expectations will also be critical. 2. Learning and Development  The best learning and development programs not only ensure your team members continue to grow and stay challenged in their roles, but also help you avoid potential turnover and keep up with future skills gaps.  3. Recruitment Your HR budget will have to incorporate not only the costs associated with advertising any new jobs, but allocate for relocation costs and background checks, while also incorporating any interview periods or onboarding training.  Either a zero-based budgeting approach or an incremental budgeting approach will allow you to keep your budget in balance, while regular check-ins and adjustments will ensure you’re staying on track throughout the year.  Get the most out of your HR budget with these five best practices.  Workforce Planning Metrics As with most business planning processes, workforce planning success means measuring your ongoing progress. Measurement will fuel every aspect of the process, allowing you to better determine where your skills gaps exist, the headcount planning you need to do to fill them and any other programs you decide to focus on.  To stay on top of your workforce needs, then, these are some of the metrics you might want to consider: Productivity Are your teams able to get their work done? And if there are productivity problems, what might be the cause? Are teams struggling because they don’t have the skills they need to accomplish the tasks at hand? Is there too much on their plate to finish or do you have employees who aren’t carrying their load? Turnover and Attrition What does employee turnover and attrition look like at your organization? Why are employees leaving and who, exactly, is jumping ship? Attrition happens naturally in any company, but knowing what it looks like at your organization—and at what point turnover can lead to potential problems in reaching your goals—can assist you in your planning efforts. You’ll be able to identify what you need to do to retain your highest performers and most critical employees, plan recruitment and offboarding programs and determine where contingent workers might help create a better transition along the way. Diversity, Equity and Inclusion  How diverse is your workforce? Diversity across race, gender and age—spread across all levels of your organization—brings a range of perspectives to your business. It can also lead to improved innovation and better financial performance. But to create a healthy workforce, it’s important that all of your employees feel like they belong, which means working DEI into your workforce planning efforts, from recruitment to training. Salary  How are salaries distributed throughout your organization? Do you have senior-level members everywhere you need them, to lead your individual teams towards their goals, and are you paying them enough to stay in those roles? Are you fairly compensating the skill sets and teams you expect to rely on to meet your future business objectives and offering competitive salaries in those areas you’re looking to recruit new talent? Engagement How engaged your employees are (or aren’t) with their work can help predict future turnover, as well as overall productivity and absenteeism. All of which can let you better understand where you may need to invest in your current team—through learning and development, upskilling, reskilling or other programs.  Performance Are your employees meeting their objectives—and are they doing so on schedule and error-free? How do their managers and colleagues rate them in their performance reviews? Do they show potential for advancement? Performance metrics like these let you identify the top performers in your business and those with potential for leadership roles. Revenue Understanding your company’s revenue as divided by your total number of employees can help you calculate how much each employee, on average, is contributing to your company. It will also let you better understand the cost of turnover so that you know how much to invest in keeping your employees happy and engaged. Cost How much is your organization spending on your workforce? An understanding of where your money is going—considering everything from compensation and benefits to recruitment and training costs—can help inform your HR strategy and budget.  5 Workforce Planning Reports After you’ve assembled your workplace planning metrics, it’s time to create your reports. Your CEO’s asking you questions, such as: “Do we have the talent required to achieve our short-term business goals? In which departments do we have a talent deficiency? What’s the ongoing cost of our current workforce?” What’s your process for delivering these answers quickly and accurately? Here are five common workforce planning reports you can use to get your CEO the information they need: Headcount Report Your CEO knows your organization’s most important resource is its people. They also want to know if the company is acquiring—and more importantly, retaining—them. On average, it costs $4,129 to hire an employee. That’s before training. A headcount report is an HR report that provides clarity on your headcount, employee tenure, which departments experience the greatest turnover and which have stronger retention. Compensation Report No matter your headcount, the compensation report is valuable—especially when your organization’s compensation structure varies by employee. It shows salary, benefits, overtime paid, bonuses and commissions, payroll deductions and when and how much paid time off is taken. Performance Report What value has that new employee (who cost approximately $4,129 to hire) added? A performance report reveals which employees are meeting objectives, which teams are reaching their goals without exceeding their budgets and each employee’s performance grade. The performance report also identifies which employees display the greatest potential for advancement as well as which managers are best developing their team’s talent. Recruiting Report Successful recruiting may be the difference between success and failure—especially during a candidate’s market. A recruiting report highlights positions open and recently filled, number of applications and interviewees per position, average time-to-hire and average cost-to-hire. The recruiting report helps the talent acquisition team remain on budget and identify qualified candidates faster. Variance Analysis Report Your CEO will inevitably approach you with more questions, such as: “How much are we spending on employee benefits next year? Who are our top performers? Which teams have the weakest retention?”   Now that you have five common human resources and workforce planning reports, you can get those answers—quickly and accurately. 4 Workforce Planning Best Practices Successful workforce planning will keep your business running smoothly, with the right people on hand to pave the way. To get the most out of your workforce planning efforts, consider four best practices for keeping your process on track: 1. Ensure You Have the Support You Need Your workforce planning process isn’t going to get anywhere without the right people supporting and championing its ongoing success. While HR traditionally steers the ship—hopefully with one specified leader at the helm—finance and operations will play important roles in making sure the resources are available to support your goals. Executive support is also critical to seeing those goals build momentum throughout the company and integrating them into the overall business strategy. Getting key stakeholders from every department on board will help ensure company-wide support. 2. Choose the Right Technology The right technology is also critical and can keep the entire workforce planning process moving smoothly. Automating the more repetitive, manual functions will let you focus on analysis and planning, while dashboards and reporting will enable you to visualize the ongoing results. Meanwhile, a single source of truth—with data integrated from throughout the company—will make it possible to track the entire process. 3. Keep an Eye on the Data Data should help drive every stage of your workforce planning process—enabling you to make decisions on which gaps to prioritize and how to fill them and allowing you to evaluate your success in building towards your business goals. Your integrated in-house data can help you keep track of key metrics such as workforce costs, revenue per employee, employee performance and rate of turnover, while market and industry data will ensure you’re on top of salary expectations, benefit expectations and upcoming market changes. 4. Never Stop Looking Ahead Workforce planning doesn’t have a finish line. Your workforce is always changing, as is the market and your business strategy. That means your workforce planning should be continuous as well. Even as you work towards your goals, you should be measuring the effectiveness of your actions and making any necessary tweaks along the way—and looking at the market to see if anything outside of your organization is changing that might affect the strategy you have underway.  While there’s a lot to consider, successful workforce planning can mean the difference between having the team you need to fulfill your business goals and falling short on the skills you require. Done right, it can play an integral role in your business success. Get the most out of your workforce planning with Vena. Recap The Ultimate Guide to Workforce Planning Workforce planning is the process of analyzing your workforce and forecasting and planning for your business’s current and future needs. It helps you stay on track of your business goals by ensuring you have the right skills in place. There are two levels of workforce planning. Operational workforce planning helps you keep up with your day-to-day workforce needs, while strategic workforce planning concentrates on your larger future goals and how they align with your business strategy.  Aligning HR with your corporate strategy is a crucial part of the workforce planning process—both vertical alignment (between various levels of your organization) and horizontal alignment (between departments and teams).  A skills gap analysis helps you identify—and eventually fill—the skills shortages that exist in your company, both now and based on future goals.  Your HR budget helps ensure you have the resources available to meet your goals, while the right metrics will help measure your ongoing efforts.

What are your organization’s growth goals—and what business tactics are you using to achieve them? Are you focused on product innovation? On differentiating the services you offer or expanding the market you’re targeting? Are you making technology your focus, to add efficiencies to the production cycle? Or maybe you’re intent on elevating your customer service above the competition to help your business shine? Whatever the strategies you rely on, chances are they all have at least one thing in common. They all rely on people.  Achieving your organizational goals starts with applying the right set of skills to them. It’s no wonder, then, that aligning HR with your corporate strategy is a crucial part of doing business. From your learning and development programs to your talent acquisition strategy, you’ll see better results if you keep in mind your business goals—as well as the financial planning that helps ensure you have the right resources to make them happen.  Only by aligning human resources and business strategy will you keep on top of your workplace needs and the goals you hope to achieve. So start with the following: 1 Aligning HR strategy with business strategy on all levels 2 4 best practices for HR and business alignment 3 Why successful alignment makes for a successful business   Aligning HR Strategy With Business Strategy on All Levels Before we get to how to align human resources with your corporate strategy, let’s talk about what we mean by alignment. Because alignment can happen on a range of levels—and the best strategies will take them all into account. That includes both vertical and horizontal HR strategy alignment. Here’s a breakdown of each: What Is Vertical Alignment?  Vertical alignment happens between various levels of your business. If your executives have built out a set of business goals, for instance, it’s up to your HR and workforce planning teams to align your own goals and actions to them. Only through this alignment will you be able to maximize all of your people and resources to ensure everyone is working towards the same set of outcomes—all of which contributes to business success. But even when everyone’s working towards the same finish line, you can still find different departments using competing strategies to get there—which can be a drain on your team and resources. That’s why horizontal alignment is just as important as vertical alignment. What Is Horizontal Alignment? While they may all be contributing to a single strategy, it’s not unusual for every department to work within their own silo to get there. That can be wasteful and counterintuitive, not only affecting the efficiency of your business strategy but also potentially impacting your bottom line. By aligning with other departments and teams, HR can better determine which actions and projects to prioritize—and where resources should be allocated to ensure they’re achieved. Yes, your strategies should contribute to the big picture, but they should also complement each other so that everyone’s getting the most from your resources and team.  4 Best Practices for HR and Business Alignment With that in mind, how do you go about aligning HR and organizational strategy both vertically and horizontally—to make sure your HR team is working towards the right goals to help your business thrive? Start with these best practices. 1. Don’t Be a Silo Great HR teams partner and collaborate across all parts of the business—and that collaboration is a key ingredient in building a strategy that aligns with your organization as a whole. True alignment means keeping in touch with the rest of the business and working together to create programs that complement each other. But HR should look further than that, casting an even wider net to the industry and market as well. Only by understanding the industry and current market will you be able to understand how to attract the best talent and better train the people you have. Then, by working in conjunction with other departments and truly understanding their needs, you’ll be able to determine how best to apply and augment that talent to achieve your business goals. 2. Know Your Culture and Budget  Understanding your business goals is critical to HR alignment—but it’s also just the start. After all, your business is more than just a strategy and set of goals. Your organizational culture, for one, is just as key to the success of your HR plan and to achieving your organizational objectives. After all, in most companies it plays a substantial role in how your people work together and the type of new talent that will excel—therefore helping you reach those end goals. Your talent acquisition strategy and other tactics should be built with that organizational culture in mind so that you’re hiring the people who are most likely to thrive in your particular business environment and giving those already onboard the skills they need to navigate it. Just as integral: the budget you have to support your goals. The right HR budget could mean the difference between success or failure, helping you identify where you need to devote resources and where you can make cuts without affecting your game plan. 3. Put Your Data To Work Measurement is key to HR success. Through accessible HR data and dashboards, you can begin to visualize your most critical metrics—analyzing where you’re falling short of your goals and where you’re thriving. And that workforce data can feed into your business plans. For true alignment, though, the KPIs you choose to follow should be relevant to your greater business goals—which means you shouldn’t limit yourself only to HR data. By integrating data across your business, you’ll be able to identify where and how HR decisions are impacting your business strategy—either for better or for worse. Integrating your data will also allow you to apply tools such as forecasting and predictive analytics, for a better idea of how your current HR decisions will impact future business success. 4. Align Your HR Activities and Team Once you understand your business goals, budget and culture—and have the data to see where HR contributes to them and where it falls short—you can start getting to work. That begins by aligning your HR strategy and goals, of course, but there’s more to it than that. You’ll also need to identify the targeted actions you need to achieve those goals—then assign the right people to make them happen. Those actions should put you on a clearly defined path towards making your business strategy a reality.  Why Successful Alignment Makes for a Successful Business  When HR is aligned with your business goals, you can make better decisions around talent acquisition, retention strategies and training needs. You can work with finance to ensure the resources exist to fund those needs. And you can create efficiencies in your business by working with every other department too, to ensure you’re all taking complementary actions. In doing so, you ensure you’re contributing to your business’s future success. And that you’re doing it as a team—with everybody doing their own part.  And isn’t that what a successful business is all about?  

From lamplighters and milkmen to switchboard operators and bowling pinsetters—there are plenty of jobs that once got people up in the morning but no longer have a place in the workforce today. For whatever reason—whether upgrades in technology or changes in the way we do our day-to-day business—those skills are no longer considered critical. Other jobs, though, have arisen in their place. Think social media managers, digital marketers and app developers—50 years ago, would anyone have even imagined their existence? In fact, the skills we rely on to keep up with our business demands are always changing. And it’s up to HR, in partnership with business leaders, to stay on top of those needs. Understanding the skills you no longer require—and anticipating those you’ll need in the future—is part of ensuring you have the right team for your business. That’s where a skills gap analysis comes into play. To determine where you need to fill your skills gap—and how—consider the following: 1 What is a skills gap analysis? 2 Why do you need a skills gap analysis? 3 4 steps to a successful skills gap analysis 4 What comes next? What Is a Skills Gap Analysis? HR and workforce planning teams can use a skills gap analysis to identify—and eventually fill—the skills shortages that exist in their company, in order to meet current and evolving needs and pave the way for future plans.  After all, those gaps aren’t just a hypothetical: data shows that of those employers actively hiring, 70% report a skills shortage. And by looking closer at that gap, you can better determine the best way to fill it—whether that means investing in learning and development programs, upskilling, reskilling or recruiting. You can also start to see who on your teams are suited for executive or leadership roles and begin to prepare them for those future positions. Such an analysis might be par for the course for your company as you look ahead and identify all of the pieces you need to put in place to meet your growth goals. It may be part of your recruitment strategy as you identify exactly what skills to prioritize as you hire for your future needs. Or you may decide to undertake a skills gap analysis when you find that your current team isn’t keeping up with your business needs—to better understand whether they’re missing some of the key competencies they need to do so. Whatever the reason you decide to initiate a skills gap analysis, it can be a critical tool to help you build towards your people and business needs. Why Do You Need a Skills Gap Analysis? By 2022, the World Economic Forum predicts that at least 54% of employees will require upskilling or reskilling to keep up with workplace demands. Technological changes, rising automation, artificial intelligence and machine learning are all having an impact on the types of jobs people do. But they’re just as likely to add jobs as replace them—in fact, in the same study, 28% of employers said expanding their current workforce because of automation was part of their current growth strategy.  In other words, some jobs will become obsolete and others will be introduced in their place—while others will be redesigned completely. A skills gap analysis will help you determine where those changes may be necessary in your own business—not just to keep up with emerging technology and industry changes, but to keep pace with your own future business demands. Specifically, a skills gap analysis can help your organization: Recognize where important skills are missing as well as which employees are most in need of them—allowing you to target your learning and development programs accordingly to meet your business goals. Identify individual growth opportunities in your employees, to determine how they might develop in their roles and within the company. These kinds of opportunities can benefit the organization by building on the skill sets available to you while also keeping employees challenged in their roles. Inform your recruitment efforts, empowering you with the data you need to determine which candidates have the requisite skills to fill your current gaps and keep up with future needs. Empower your workforce planning by letting you determine not just whether you have enough people to keep up with your growth goals, but that they also have the skills you need to thrive. In doing so, it can improve your long-term productivity and team building—ensuring you have the right people in the right jobs and that they’re equipped with the right skills to empower everyone. So how do you go about undertaking a skills gap analysis and determining the competencies your business demands? 4 Steps to a Successful Skills Gap Analysis  Where you start your analysis is up to you—and will depend on where you see the most need in your organization. But there are a couple of different skills gap analysis methods you can use: Consider each individual employee and the skills they bring to the table. How do they match up with the skills their job requires and the goals your company is trying to achieve—both now and in the future? Consider each team or department, or the company as a whole, and the skills you need to complete the projects currently underway and those you’re planning on undertaking in the future. Do your teams have everything they need to bring your strategy to fruition—and what’s the best way to fill the shortage?  The first step, then, is determining what level of analysis you want to start with—then putting a plan in place for how you’re going to get it done. From there, a skills gap analysis example might look something like this:  Step 1: Determine Your Business Goals Not every business is created equal or operates based on the same set of strategies. And because of that, not every organization needs the same set of skills. The skills you do require will largely depend on your business goals.  With that in mind, every skills gap analysis—no matter the method you’re using—should start by determining your business goals. Consider where your organization is going in the near and long terms and what strategies you’re going to use to get there. Do you have the team in place to make it all possible? Are there new jobs you need to fill or skills you should add to your existing team’s repertoire to get to where you want to go?  Step 2: Look Into the Future While knowing your business goals is critical for success, your organization doesn’t work in a bubble. Technology advancements and other trends will influence the skills you require almost as much as your own internal strategies will. Regulatory changes, a need for specific technology expertise or industry trends may all factor in and affect future skills requirements.  To stay ahead, take a look at where your industry and the workforce itself are going—and determine what skills you’ll need in order to maintain a competitive edge. Then consider the opposite as well. Are there jobs you see becoming obsolete—whether due to automation or new directions your business is taking? And will you need other skills to replace them?  Step 3: Dig Into the Data Data drives all aspects of business today, so it’s no surprise that it plays a critical role in your skills gap analysis as well. A skills inventory will help you get the data you need, with data accumulated from: Employee KPIs Surveys or skill assessments 360-degree performance reviews From there, you’ll need to define the role-specific competencies you require and where your employees’ skill sets align. Consider the research you’ve done on future needs and the goals you’ve established for your business. Gathering all of this data into a single source of truth will let you better analyze the key information and identify the gaps that exist. Step 4: Fill the Gaps Of course, identifying the gaps is just the start. You need to fill them as well. Upon completing your skills gaps analysis, you’ll have a clearer idea of where the biggest disparities exist between the skills you already have on your team and what you need to meet your current and future goals. Then it’s time to put those discoveries to work and figure out the best way to fill the spaces that exist. Likely that will involve a range of tactics—including upskilling and reskilling your current employees through learning and development programs, redesigning jobs to better meet your business needs and putting together a hiring strategy that will allow you to recruit new team members that have the experience and skills that don’t exist internally. Your HR budget should also reflect the plan you make going forward to ensure you have the resources you need to make it a reality. Relevant change management processes, meanwhile, might help you retain the high-performing employees most critical to future success even as you make other shifts in your workforce.  What Comes Next? Of course, filling the skills gaps in your organization isn’t a one-time thing—ideally, it should be part of your annual HR budgeting process and the forecasting you do throughout the year. After all, your business goals will change and evolve, technology is always advancing and industry standards are often in flux—all of which means the skills you need on your team will always be changing. So even after your skills gap analysis is over, it’s important to stay on top of your team requirements—so that you have the right people in place for whatever comes next. Why not get started with this free Workforce Planning Template? (Check out The Ultimate Guide to Workforce Planning to help you plan your team now and for the future.)

Building the right team takes a lot of different skills, including recruiting, interviewing, onboarding, training and more. But one skill that’s often overlooked? Creating an HR budget that puts the right resources in place to let you get the most out of all those initiatives.  A critical part of your workforce planning efforts, your budget will fuel your company’s HR plans, ensuring you’ve got the funds in place to cover all of your critical People goals. With that in mind, the best HR budget planning considers many different components—including your organizational objectives, expected business growth and the industry and market changes happening around you. It will also empower your team to keep up with those changes, letting you continue to maintain and add to the talent you need to keep your business thriving. You can learn more about workforce planning in our Ultimate Guide to Workforce Planning. The best workforce planners will implement an HR budgeting process that looks ahead, considers your business strategy, accounts for possible risks and allows for ongoing iterative changes along the way. And the best budget will in turn help you stay agile to evolutions in your business, industry and the market as a whole. So where do you start your HR budgeting process—and what are some best practices for planning your HR costs? Start with the following: 1 The 3 main components of any HR budget 2 5 HR budgeting best practices 3 How to plan for the costs of HR   The 3 Main Components of Any HR Budget For most workforce planners, three categories will fuel the majority of your HR expenses. Here’s a refresher: 1. Compensation and Benefits  Not surprisingly, compensation and benefits play a huge role in your HR budget—in fact, they’ll likely represent the largest allocation of resources by far. After all, this category includes your employees’ salaries, along with any type of overtime compensation, benefits and insurance. And since salaries and benefits both hugely influence your ability to maintain and attract talent, keeping on top of industry and job-level expectations when setting your budget will be critical to getting these right. 2. Learning and Development  The best learning and development programs not only ensure your team members continue to grow and stay challenged in their roles, they also help you avoid potential turnover and let you keep up with future needs by promoting from within. Your training budget may include workshops and conferences, classes, learning stipends or certification programs that will help you build your team’s skills.  3. Recruitment Replacing someone can cost your business as much as 33% of that employee’s annual wage. One reason why: the cost of recruitment. Your HR budget will have to incorporate not only the costs associated with advertising a new job, but allocate for relocation costs and background checks, while also incorporating any interview period or onboarding training. Together, these three categories make up most of your HR budget. But there are other things to consider too—for example, employee relations, performance management programs and technology investments. Each category will overlap as you allocate your resources accordingly—and together, they should support your business as a whole. 5 HR Budgeting Best Practices While the best HR budget examples are continuous and ongoing, most teams still employ an annual cadence in keeping with their overall budgeting cycle. That means you need to consider both your present needs and those for the year ahead when putting together your HR budget. Regular check-ins and adjustments can help make sure you’re still on track throughout the year, while either zero-based budgeting or an incremental budgeting approach will allow you to keep everything in balance. With that in mind, consider these best practices when developing your HR budgeting process: 1. Start With Your Business Goals You won’t get far in reaching your business goals without the right people in place to achieve them. So take a look at where your organization is going: are you in growth mode or holding steady, looking to develop a new product or focusing on improving sales for the one you’ve already got? Is one particular region a hotspot for growth or are there a few untapped spots you want to try tentatively dipping your toe into? How much you allocate to headcount and where you spread the wealth will depend on those goals. Being able to tie each budget allocation to a particular deliverable will empower your planning further. 2. Stay on Top of Your Actual Workforce Needs  Every department has its own HR priorities, but it’s up to you to determine which are truly urgent, as well as which will best support the company as a whole. Only by staying on top of your entire business will you be able to allocate your budget across teams and roles, planning your headcount growth accordingly. But it doesn’t stop there—you’ll also need to take into consideration salary trends across roles and regions, as well as the benefits potential new hires expect in order to make your company desirable to them. Meanwhile, including departmental leaders in the planning process—soliciting their feedback and input along the way—will not only ensure you consider everyone’s needs, but will also help build support for the budget itself. 3. Integrate Your Data Integrating your data into a single source will let you better plan salaries, benefits and taxes, helping to ensure you stay on budget while building on your business strategy and growth. Having all of your data in one place also allows you to take a more holistic look at labor costs, create more efficient HR processes, improve your workflows and build on your technology stack. By connecting your data, you also help make the entire hiring and onboarding process easier for your team—and take the guesswork out of your workforce planning efforts. 4. Plan for Every Scenario Just as it does in other areas of financial planning, scenario modeling can help you stay ahead of your HR budget and plan for any situation. Scenario modeling allows you to consider several different future scenarios and to stay ready for all of them in the case of potential market changes. You’ll also be able to compare and contrast possible budgeting decisions to see what makes the most sense for your organization. While there are always plenty of scenarios to plan for, focus on the ones that pose the biggest risks, assessing their impact on your plan. Through those comparisons, you can build the insights you need to make the right decisions going forward. 5. Put the Right Technology in Place The right technology can help you put your data to work, reduce the number of manual tasks your team is taking on and let you dig into the insights you need to better align your HR budget with your business goals. It can also help you visualize your workforce planning efforts and ensure you have the resources available for every project and process you want to introduce. With the right tools in place, you can begin to plan salaries and benefits more effectively, optimize your expenses and ensure you have enough in the coffers for future training and recruitment needs. Starting with a tool that’s easy to use, such as Excel, can help get everyone on board.  How To Plan for the Costs of HR  If people are the engine that keeps every business running, your HR budget is the fuel that ensures nothing breaks down along the way. With the right budget in place, you’ll always have the team you need to move your business forward and the resources to support them at every turn—letting you maneuver through whatever changes come up ahead. Get more out of your workforce planning with Vena.