Every company faces similar challenges when optimizing operational processes to improve business performance. One of these challenges is hiring a high-performing workforce, which is especially true in today's competitive market as organizations require more and more specialized talent.

As a result, businesses are increasingly focused on their current workforce capacity planning processes.

The good news is that certain initiatives can help companies improve their headcount strategy and ensure employees remain motivated and perform well. This includes practices such as speaking to each department to understand their operational needs, knowing which new roles are going to drive the greatest impact, having a clear budget set in place, and aligning organizational goals across all teams.

What is Strategic Workforce Planning?

Strategic Workforce Planning (SWP) is the proactive process of aligning an organization's talent requirements with its business goals, ensuring the right people with the right skills are in the right roles at the right time.

By focusing on long-term objectives and anticipating future demands, SWP helps companies allocate resources effectively, control labor costs, and adapt to changing market conditions.

Organizations save 10% of annual labor budgets through workforce planning, with a 20% reduction in recruitment costs and 15% higher retention.

2 Key Frameworks for SWP

When implementing a strategic workforce plan, several recognized frameworks can help guide an organization's approach. Two widely cited models are HCI (Human Capital Institute) and OPM (U.S. Office of Personnel Management).

HCI Model

The HCI model emphasizes aligning business strategy with talent strategy. It breaks down workforce planning into clear stages, from identifying future demands to building action plans.

OPM Model

The OPM model focuses on the entire employment lifecycle within government agencies, but its principles can apply broadly: analyze current workforce, develop strategies, implement solutions, and evaluate results.

Below are the top 5 mindset shifts all business leaders should be making toward strategic workforce planning.

5 mindset shifts all business leaders should be making

1. From the short-term to the long-term

Human resource initiatives were an afterthought during a company’s annual planning. These practices were only considered during periods of high demand or when there was a sudden increase in the number of vacancies. However, as today’s business landscape continues to evolve, organizations must now take a more strategic and tactical approach to their hiring processes and keep sight of their long-term vision. 

Strategic workforce planning presents a unique approach compared to old methods as it aims to create a sustainable solution that benefits organizations in the long run. With its rise in popularity, businesses have started to see the importance of developing a more strategic workforce planning approach to support growth and remain relevant in the future. This requires business leaders to think beyond the next quarter and plan for future scenarios.

Incorporating Scenario Planning

Scenario planning helps organizations anticipate a range of future conditions, from shifts in demand to evolving economic challenges. By developing strategies rooted in different possible outcomes, companies can stay nimble, adjust hiring timelines, and ensure their long-term workforce plans remain resilient in unpredictable markets.

Learn more: Integrate your workforce planning into budget planning seamlessly with the top 2023 WFM tools

2. From hasty hiring to addressing talent gaps

Traditionally, Talent Acquisition and Finance were not aligned when it came to headcount planning. As a consequence, TA department tended to simply filling in open positions without considering which ones to prioritize or how each hire would impact the overall performance of the organization. However, due to the growing demand for more specialized talent, the hiring process was forced to evolve and take on a more tactical approach.

With the emergence of strategic workforce planning, corporate leaders are now identifying skill gaps within each function to assemble their all-star team and generate a greater impact on overall performance. Therefore, understanding the specific workforce gaps has become critical to knowing how each hire will impact other functions and ultimately drive change. 

One useful method for identifying a company’s talent shortages is to speak directly with the company’s current workforce. Aside from communicating with current employees, organizations must also factor in industry seasonality, market conditions, or changes in demand to see how their day-to-day operational needs will shift over time.

3. From full-time to hybrid hiring modalities

Many companies nowadays recognize the importance of having a varied skill set among their staff to position themselves for success.

“Diversity is in demand, particularly for companies that are experiencing rapid growth.”

Stacey Zhou

But is hiring full-time employees really necessary to fill all sorts of talent gaps? There are numerous approaches to building a dream team, one of which is to consider recruiting part-time or freelance workers to fill temporary talent needs, as the amount of work necessary for some particular functions does not always justify prioritizing a full-time new hire.

More and more, part-time workers and independent contractors are being welcomed at the table to assist businesses in growing after achieving significant milestones. Keeping a flexible headcount plan and adding punctual expertise as needed enables organizations to increase efficiency immediately, overcome challenges, and deliver results without having to incur significant long-term costs.

4. From a siloed to a cross-functional approach

The world is more interconnected than ever before. Modern business operations are no exception, especially given the wide range of possibilities provided by new technologies in terms of corporate performance management and alignment.

At the heart of strategic workforce planning is the need to break down silos while taking a more tactical approach to hiring. The reason behind it? To enhance communication between all teams and involve not only Finance and HR but the entire company in the headcount plan.

Taking a birds-eye view and streamlining departmental communication to ensure all voices are heard are two of the secrets to hiring the greatest workforce. Thus, the stronger the internal communication, the easier it is to agree on the appropriate talent needed to meet company goals.

5. From spreadsheets to FP&A software

When it comes to planning headcount, using technology to your advantage is the key to success. Today’s tech solutions allow organizations to consolidate data, streamline processes, and complete tasks in a fraction of the time.

Modern companies are now moving away from number-crunching in spreadsheets and instead focusing on workforce planning software that supports data automation, internal collaboration, and a number of enhanced capabilities.

Conducting headcount planning processes in spreadsheets can be tedious and inflexible. To integrate modern solutions into a company’s tech stack, the first step is to determine what needs to be changed and which tools would be most beneficial for streamlining procedures and increasing productivity. All-sized companies wishing to consolidate all data sources into a single source of truth should consider FP&A software as a go-to alternative.

Today’s FP&A tools offer strategic insight that provide business leaders with an overview of a company’s health, allowing them to make better and faster decisions for both short-term initiatives and long-term goals.

Learn more: Top financial planning software tools most used by growing mid-sized businesses

How Abacum can help you improve your strategic workforce planning process

If you're looking to plan strategically rather than simply react to events as they happen, consider integrating FP&A software early on to assist in all operational workforce planning initiatives for your organization.

Abacum's a 3rd-generation software designed to help your finance team streamline processes, cross-collaborate with other functions, and ultimately position your organization for success. We offer an easy way to create customized models that will allow you to see how your business is performing from every angle, as well as analyze data to make informed decisions about your current and future workforce with just a click of a button.

‍Request a demo today to learn how our product can put workforce planning at the heart of your strategic business objectives.

Summary and Next Steps

Implementing Strategic Workforce Planning is a powerful way to connect present needs with future goals. By following recognized frameworks like HCI or OPM and adopting these five mindset shifts, organizations can build a more effective, flexible, and proactive approach to talent management. To keep the momentum going, consider using Abacum to help align your workforce strategy with the rest of your financial and operational plans.

Ready to dive deeper? Explore our platform to see how we can support your journey toward more strategic, data-driven workforce planning!