CHAPTER 36

Talent Development’s Role in Strategic Workforce Planning

Barbara Goretsky

Strategic workforce planning is about having the right people, at the right time, with the right skills, at the right cost to meet business goals. As simple as that sounds on paper, many organizations either don’t do it or don’t do it well. As the need for new and upgraded skills in organizations increases, and the supply of people who have those skills decreases, the need to create a strategic workforce plan with talent development’s involvement has become critical. This chapter explains the importance of strategic workforce planning and the role that talent development professionals play.

Strategic workforce planning (SWP) is the process an organization uses to analyze the current workforce and plan future staffing needs. It refers to the process of forecasting the types and volumes of talent that will be needed to meet organizational goals and assessing those needs against both current capabilities and projected availability in the labor market. Strategic workforce planning occurs as an organization’s strategy is being developed, when new strategic objectives are set, or on a regular basis as business conditions change (ATD 2020). Typically, the planning period is three to five years, which allows longer-term business needs to be properly identified and plans made to ensure that robust pipeline of talent is in place.

Operational workforce planning and workforce planning are terms similar to strategic workforce planning, with the main difference being the timeframe. Operational workforce planning may project talent needs for the next year, while workforce planning considers the head count needed on a daily, weekly, or monthly basis.

Hindrances to Effectively Planning Future Workforce Needs

There are varying reasons organizations don’t effectively plan for their future talent needs. These reasons include:

•  Not having the proper data to reasonably forecast the talent they will need

•  Continual changes in the environment that affect the organization and make it difficult to forecast

•  Blindly assuming that the talent will be available to hire if and when it is needed

•  A disjointed, siloed approach to organizational planning

Not conducting a robust strategic workforce planning process can lead to organizations missing important strategic goals. According to Harvard Business Review (2016), inadequate workforce planning has prevented an overwhelming majority of organizations from meeting their business goals. A brief review of each of these reasons for often inadequate strategic workforce planning will illuminate the issues and opportunities for talent development’s involvement in the process.

Data Not Available

One reason organizations don’t prepare robust plans is that they don’t have the proper data to reasonably forecast the talent they will need. According to the same 2016 HBR survey, most companies do not have sufficient information about their workforce in four areas:

•  What is happening with talent acquisition and attrition and why

•  How the workforce plan contributes to the success of the business plan

•  How changes in the workforce will cause variance from the plan

•  What roles or talent are required to meet business objectives

The talent management function is positioned very well to provide insights into this kind of information. Talent management can provide talent analytics (for example, projections on turnover, retirement, skill availability, and so forth) to help the organization craft an actionable workforce plan. If talent management has not provided this type of information in the past, it will inevitably lead to the perception that the data is not available. Talent management must continually show value by demonstrating a knowledge of the workforce as well as the business so that they are perceived as a part of the strategic workforce planning process.

Continual Changes

Coupled with the need for talent information, organizations are in a state of constant flux, which hinders effective strategic workforce planning. Jobs are changing, and the skills needed to perform these new jobs are changing too. In 2020, companies estimated that around 40 percent of workers would require reskilling that took six months or less, while other workers would require a longer period of time to reskill. The window of opportunity to reskill and upskill workers is also becoming shorter and shorter (WEF 2020). Organizations simply cannot reskill their workers fast enough to meet future needs.

This need to reskill also applies to workers who are likely to stay in their roles—for them, the percentage of core skills in their current jobs that will change in the next five years is 40 percent (WEF 2020). Add to that the rapid increase in the half-life of knowledge (that is, the length of time before knowledge gained in college courses, training programs, or work experiences becomes obsolete), and the need for reskilling becomes a strategic imperative.

Changes in technology, markets, and demographics have continually shifted organizational strategy and operations. This is not new; however, unexpected disruptions have caused problems. The loss of talent in the US workforce significantly increased during the COVID-19 pandemic. It is estimated that 3.2 million baby boomers in the US retired from their jobs during the pandemic alone (Bersin 2020a). Between October 2019 and October 2020, there were 2.2 million fewer women in the workforce due to job losses, shuttered schools, lack of childcare, and pay disparities (Matuson 2021). Non-college-educated workers also suffered worse unemployment rates than workers with a bachelor’s degree or higher (Congressional Research Service 2021). This loss of talent has severely affected organizational success.

Blindly Assuming Talent Will Be Available

Without strategic workforce planning, organizations fall into a reactive mode of trying to hire and fire as business conditions change. In this cycle, the focus (and pressure) tends to be more on talent acquisition and less on talent development. As new roles emerge and new skills are needed in the organization, the pool of skilled and available workers will continue to shrink, leading to an overreliance on talent acquisition. However, recent history has demonstrated that the requisite talent needed to meet new and emerging organizational demands (like ICU nurses, data scientists, and so forth) is in short supply. No longer can organizations assume that the needed talent will be available to hire if and when it is needed.

A Disjointed Process

Another issue affecting organizations’ ability to successfully plan for their future workforces is the siloed approach to the process. Many times, HR or talent management is determining the talent needs of the organization by looking at talent analytics and basing future projections on past experiences. Alternatively, business leaders are forecasting their head count needs based on where they see the business going, and not including HR or talent management in those discussions. Having a cross-functional team of business and HR or talent management leaders working collaboratively on the strategic workforce plan should lead to a better outcome. The owner of the plan could be determined by deciding who monitors the execution of the plan.

If your organization does not currently engage in this process or if the process is disjointed, you can take the lead in creating a sense of urgency with the appropriate stakeholders (such as business leaders, HR, or finance) and reviewing the benefits of creating and maintaining such a plan. As the need for talent continues to grow in organizations, all leaders must understand that future workforce planning is essential to organizational success and working together to create a strategic workforce plan will produce better results.

Traditional Steps to Developing a Strategic Workforce Plan

Strategic workforce planning is a three-phased approach: align, assess, and plan (Figure 36-1). Six detailed steps are included within that framework. You can download this tool to use as you help your organization develop its workforce plan. It is located at the handbook’s website, ATDHandook3.org.

Align: Step 1

Understand the longer-term organizational strategy by examining the organization’s vision, mission, values, and strategic plan. Talent management professionals must be closely linked to business leaders and understand the direction the organization is taking over the planning period (that is, three to five years, depending on the industry). Additionally, talent management must demonstrate an understanding of the labor requirements for meeting such plans. Being proactive enables you to participate in the planning process and create a viable strategic workforce plan.

If you have never been a part of your organization’s strategic planning process from which a strategic workforce plan can be developed, you should familiarize yourself with the strategic plan to understand the future state of your organization. If that plan is not available to you, interview business leaders about the future of their business.

Here are some typical questions asked during a needs analysis. These help ensure data collected can be used to identify training needs and conduct a strategic workforce analysis:

•  What do you see happening in your business area in the next three to five years?

•  What are some of the product and service shifts being contemplated?

•  What do you think are the skills and competencies your business area will need to succeed in the future?

•  How will technology changes affect your business?

•  What other changes do you see coming?

•  How can we partner with you to build the talent that you need?

Align: Step 2

The focus of this step is to identify what the critical roles and skills are for achieving the organization’s strategies, and what the future demand for those roles is likely to be.

A critical role can be defined as a role vital to the long-term success of the organization. These are roles required by the strategic plan for success and are sometimes referred to as strategic roles. Of course, not all roles are considered critical to organizational success. Other potential roles include:

•  Key roles, which are critical to delivering results related to the current business strategy

•  Core roles, which are foundational roles that support and run the day-to-day business

•  Transactional roles, which are not critical to business strategies, but deliver operational objectives

Once you understand what the roles are, you can begin to estimate the need in your organization. There are numerous ways to estimate future talent demands and, depending on the size and complexity of your organization, you may use one or more of them. Forecasting future demand is one method to estimate future demand; however, forecasting can be tricky because it relies heavily on making assumptions that may or may not turn out to be correct.

Strategic planning often involves examining different potential future scenarios, which enable the organization to prepare their workforce under differing circumstances. Scenario planning, for example, may be helpful in estimating future talent demands without the need to be as exacting as forecasting. There are also other approaches to estimating, which all have advantages and disadvantage. Their intent is to detail the specific skills and roles needed in the organization to achieve success.

What skills your organization needs will depend on the roles it has or will need based upon product and service changes or industry advances. Researching the labor market for these skills—especially those needed for critical roles—and understanding the competition for them is essential. If certain skills, like data science, are in high demand in your industry, yet there is a limited supply, your organization may want to develop in-house talent in those skills. Two sources for such labor market demand and availability are the Bureau of Labor Statistics and the US Census Data.

Predictive analytics and algorithms are also helping employers identify the skills required. However, even without technological assistance, research shows that some of the most needed new competencies and skills across all roles are soft or “human” skills like communication and flexibility, in addition to more technical skills like data science and cybersecurity (Shepherd and Phaup 2020).

In addition, the roles you identify as critical may not be new to the organization. Many current roles will stay, but with significant changes. As automation continues to take over some of the more mundane tasks, employees will be expected to perform new or different tasks that require new skills. A strategic workforce plan should include any new skills that the current workforce will need.

Assess: Step 3

Understanding the supply of talent by assessing the current workforce is the next step in the process. This involves looking at those individuals by roles (as defined above), starting with the critical roles. You should look at both the quantity and the quality of the current workforce in different roles:

•  Quantity. Use talent analytics to examine the number of workers in each role; the demographics of the workers; projected turnover or retirement in these roles; the time to fill and the time to productivity in these roles; the number of high potentials; the number of certifications and licenses; and other pertinent data to help create a comprehensive view of the workforce.

•  Quality. Use a variety of data from talent management or other processes, such as performance management, talent reviews, assessment instruments, individual development plans, assessments by leaders on the perceived gaps, employee engagement data, and other organizational processes that may yield talent gaps, such as proposal bids for work (ATD 2020). Talent development professionals can add a feedback loop from their learning programs, such as post-class skill assessments, to the strategic workforce planning process. Training courses are a rich source of data on how well learners have mastered or struggled to master a new skill.

Data analysis is where talent development professionals have a valuable role to play. As owners of much of this data, you are in a great position to know the talent of your organization far better than most other functions. Both formalized assessments such as the ones you already use (for example, Hogan, 360-degree assessments) and on-the-job measures that, in the future, may come through on-the-job data collection can help you diagnose performance and skills gaps (Shepherd and Phaup 2020).

Assess: Step 4

Compare the forecasted need (demand) to the current workforce (supply). This allows the organization to determine how big of a gap, if any, exists. Looking at gaps by roles (for example, senior software engineer or ICU nurse) can help prioritize where action is needed. A significant contribution that talent development can make here is to review high-supply roles and determine if some of the skills are transferrable to roles with lower labor supply. Again, sources for talent supply data include the US government and independent industry surveys.

Plan: Step 5

Determining how to close the identified gaps is the next step of the process. These are critical decisions that help formulate not only the strategic workforce plan but also a talent strategy. The Six Bs, developed by David Ulrich (2009), are six investments that can be made to upgrade the talent in an organization and close a talent gap:

•  Buy. Getting employees from outside the organization or from another part of the organization through the talent acquisition process. One advantage to this approach is that it brings in new ideas or skills quickly when there is no time to develop the talent internally.

•  Build. Developing employees through talent development initiatives. The advantage to this approach is that it opens up opportunities for current employees to assume new positions by having developed the requisite skills.

•  Borrow. Partnering with others outside the organization to obtain the proper skills and knowledge. One advantage to borrowing talent is that the workers are not considered employees, so they are used only for a specified period of time. This helps keep costs down. According to Gartner, 32 percent of organizations are replacing full-time employees with contingent workers as a cost-saving measure (Baker 2020). When using the borrow strategy, a conscious decision must be made as to how your contingent workforce will be integrated into your talent strategy.

•  Bind. Retaining high-potential and high-performing employees with incentives or other retention tools.

•  Bound. Moving employees through the organization and into higher positions. Some best practices in this area also include programs and perks to retain talent, for example, working from home, customized benefits, and so forth.

•  Bounce. Placing lower-performing employees in more suitable roles or removing them from the organization.

Using the Six Bs as guidance does not mean using only one of these strategies across all roles or business areas. Most times, you must use different approaches for different roles or business areas. Critical roles need more attention and resources than other, noncritical roles. When used for the different roles, these investment strategies form the beginning of a talent segmentation strategy, that is, different attraction, development, rewards, and retention strategies for roles based upon their criticality and unique needs.

These investment strategies also form the basis for specific goals and resourcing—without proper resourcing, these goals often languish and the organization suffers. You should work with your talent management colleagues on the different talent segmentation strategies so that everyone is aligned and focused and knows what the overall objectives and resources are.

Managers typically do not care where the talent comes from. The buy strategy is often used because managers need the talent quickly and claim they do not have time to build the talent. As the pool of skilled and competent talent continues to shrink, organizations will be faced with building their talent internally to meet future business needs. It is not always cost-effective to buy the talent, and in fact, it may be more cost effective to build it. However, building talent takes time, hence the need for a robust, longer-term strategic workforce plan to guide that investment. Additionally, the build strategy may help engage and retain employees who might otherwise leave the organization due to a lack of perceived opportunities.

Plan: Step 6

Monitor the plans and adjust accordingly. Once the strategic workforce plan and the talent segmentation strategies have been developed—including the specific goals and resource allocations—continual follow-up and analysis should be done to ensure the plans are being executed appropriately. As business conditions change or other unanticipated changes occur, the plans should be adjusted to meet the new demands. An annual, formalized review should be conducted to ensure that the plan is on track to meet its objectives. Communication among all stakeholders is a necessity to ensure goals are met or adjustments are made. The owner of the strategic workforce plan (someone who manages and oversees the plan’s execution) will ensure attention is paid to the plan.

Technology Opportunities to Support Your Strategic Workforce Plan

Advances in technology are creating exceptional opportunities to help develop a strategic workforce plan. For example, some newer learning management systems have an integrated skills taxonomy database that helps assess current employees’ skills, as well as hire and train strategically to close skills gaps. Jobs are changing so quickly that building competency models and formal job descriptions is getting too hard to do. Instead, these systems look at the skills that are trending in the organization by looking at employee data. They infer skills by looking at the employee’s experience, performance reviews, learning patterns, and so on (Bersin 2020b). This creates a great opportunity to harvest the data and incorporate it into the strategic workforce plan.

Additionally, as more integrated talent management systems are adopted, data from all systems can be analyzed to get a complete picture of the employees. If you have such an integrated system, you can divide the talent into different talent segments (based on roles) and review the size of that group or pool, the skills the employees have and need, the turnover, the performance, the engagement levels, and so on. Having a robust system can make strategic workforce planning simpler; however, it is not a requirement to developing a solid plan.

If your organization is thinking about what technology to use, be sure to find the right tools to forecast, predict different scenarios, and track the plans. If you have a team of stakeholders developing the plan, find a solution that allows for easy collaboration. However, be careful of business planning tools that are designed more for the finance team than the HR team because they may not meet the needs of the organization’s talent teams or communities.

If your organization does not have the technology to support a robust strategic workforce plan, it might be beneficial to start small, for example, with one business unit or the critical roles only, and work from there.

Talent Development’s Role in Building Talent

As many organizations continue to flatten from their hierarchical, job-based constructs, the identification of the skills and competencies needed to be successful to meet business goals will become paramount. Talent development needs to pay attention to developing the skills and competencies that make a difference in organizational performance in both the short and longer term (Lawler 2017).

Talent development must be strategic and have agile practices and processes, just like the rest of the organization, so it can change quickly as the organizational strategy changes. In that light, talent development has numerous opportunities to build the talent of the organization to meet its business goals. Here are a few examples.

Internships

Working with educational institutions by providing students with internships can help prepare students for full-time jobs after graduation. Additionally, you can work with the educators to let them know which skills your organization needs. As skills gaps widen, ask if they can develop a curriculum that addresses the specific skills your organization will need. In fact, this is how the STEM (science, technology, engineering, and math) program started in the United States. The Department of Labor predicted that there would not be enough engineering graduates to fill all the available jobs, so getting more US students interested in these fields became a presidential priority. It took a partnership between the educators and the business leaders who knew what skills would be needed to make this work.

Onboarding

New employees must get up to speed quickly in their roles. Support the onboarding process by developing learning plans to help employees learn their jobs, address skill needs, and become familiar with the organization quickly. Talent development can also create communities of practice for newly hired employees to learn from one another and develop a network of colleagues. This is also a great time to pair new hires with a mentor or a peer coach to help them learn the intricacies of their position. Supporting the new hires through onboarding is a critical first step in building a relationship with them and establishing a continual learning mindset that helps them succeed and stay with the organization. Keep in mind that leading organizations consider onboarding to encompass the first six to 12 months of a new employee’s tenure, when retention is a key concern!

Upskilling and Reskilling

As jobs shift and technology becomes more pervasive, employees must learn new and different skills; however, skills and competency training can be costly. Talent development can help in this regard by shifting learners’ mindsets from learning as an event to embedding learning in their work. Technology can be a great tool to help in this regard. Artificial intelligence, virtual reality, and augmented reality are becoming more commonplace in the learning space and can be used in the course of the employee’s work. Naturally, the more technology is used in an employee’s job, the more training is needed on that technology.

Talent development can also prescribe role-based learning that employees can access through the learning technology infrastructure. The focus should first be on those in critical roles to ensure that they are prepared for changes in their roles and equipped with the right programs to learn the requisite new skills.

Career Development

Employees are seeking career mobility whereby they can learn and grow in their current organizations or move on to different opportunities elsewhere. Gartner’s 2020 report on future work trends suggests that you should focus more on the requisite skills needed in the future rather than specific roles. It says you should encourage employees to develop critical skills that potentially open up multiple opportunities for their career development, rather than preparing them for a specific next role. For years, employees have asked for more transparent career paths, and for years, talent development has struggled to provide them. At the same time, organizations have flattened and structures have become more complex. As such, career paths are no longer very clear and vertical advancement may be limited. Talent development is in a unique position to support employees’ career development by identifying the skills they will need and providing access to learning those skills.

Performance Management

This organizational process is undergoing significant changes as organizations try to optimize it. Performance management is used for many different purposes—from making compensation decisions like raises and promotions to identifying ways to close skills gaps. This multitude of purposes has left the process inconsistent and ineffective. Many organizations are establishing processes that focus almost exclusively on coaching and developing employees. In these approaches, frequent feedback on performance and support to develop skills and competencies replaces the focus on where performance lacks and how salary decisions are made. Talent development has a significant role in helping managers learn how to coach and develop their employees. Additionally, having formal coaching and mentoring programs can assist employees with enhancing their skills. Talent development has always had a role in fulfilling the learning and development needs that are identified in performance management processes. Even if you do not own the performance management process, you still have a very important role to play in closing skills gaps.

Management and Leadership Development Programs

Leadership positions are typically considered critical strategic roles, and as such, talent development must focus on this talent segment’s learning and development. Most organizations have management and leadership curriculums in place for these critical roles, which are based on the competencies it deems critical to success. As leadership competencies continue to shift, you must refresh the competency models for these roles as well as the curriculums that develop managers and leaders. Coaching and mentoring programs also have a big role to play in developing leaders.

High-Potential Programs

Identifying and developing high potentials for critical roles has always been in talent development’s portfolio of offerings. Either through looking at feeder groups or through pipeline planning, you can develop high-potential programs for those identified as having potential to move up into higher-level roles. High-potential programs have typically been focused on those who exhibit leadership capabilities; however, they can also be expanded to consider all critical roles. As talent pools shrink and the need to retain top talent takes precedence, high potentials who are lower in the organization can be identified and developed earlier—including creating development programs for new college hires to upskill them in longer-term capabilities they will need. Development programs must provide the right experiences to meet the requirements of the future roles. Coaching and mentoring programs also have a big role to play in developing high potentials.

Workforce Development

Partnering with external, local organizations (like two-year colleges or chambers of commerce) can help develop the local workforce to meet the future needs of the organization. Working together to identify and build the needed skills can help ensure a pipeline of talent from the community. Depending on the industry you are in, an apprenticeship program can help develop the talent needed by the organization and provide employment opportunities for those who may need reskilling. Aggressive outreach with community partners is another way you can reach out to potential hires. This could include having your new hires and other employees or leaders speak at public functions to encourage others to join the company. Having these same employees serve on local boards and volunteer in local organizations can also promote the organization to potential hires.

Final Thoughts

All the typical talent development processes and programs must focus on building the workforce for the future. Talent development’s role in strategic workforce planning is becoming more and more critical to the success of the organization as leaders look to you to build internal talent. Understanding why it is so important, how it is done, and your role in it can help you create the proper programs and processes to ensure a properly skilled and talented workforce!

About the Author

Barbara Goretsky has spent her entire career in the talent development profession and HR. After a successful career in various organizations and industries, she began her own consulting practice specializing in talent development, team building, change management, leadership development, and executive coaching. She facilitates several programs for ATD and was a contributing author to the Talent Development Body of Knowledge.

References

Association for Talent Development. 2020. Talent Development Body of Knowledge. Alexandria, VA: ATD.

Baker, M. 2020. “9 Future of Work Trends Post–COVID-19.” Gartner, April 29. gartner.com/smarterwithgartner/9-future-of-work-trends-post-covid-19.

Bersin, J. 2020a. “HR Predictions for 2021.” Josh Bersin. joshbersin.com/hr-predictions-for-2021.

Bersin, J. 2020b. “The War of the Skills Clouds.” Josh Bersin, January 17. joshbersin.com/2020/01/the-war-of-the-skills-clouds-skillscloud.

Congressional Research Service. 2021. Unemployment Rates During the COVID-19 Pandemic. CRS, August 20. crsreports.congress.gov/product/pdf/R/R46554.

Harvard Business Review. 2016. Tackling Talent Strategically: Winning With Workforce Talent. Boston, MA: Harvard Business Publishing.

Lawler, E. 2017. Reinventing Talent Management: Principles and Practices for the New World of Work. Oakland, CA: Berrett-Koehler.

Matuson, R. 2021. “How to Stop the Mass Exodus of Women Leaving the Workforce Due to COVID-19.” Forbes, March 19. forbes.com/sites/robertamatuson/2021/03/01/how-to-stop-the-mass-exodus-of-women-leaving-the-workforce-due-to-covid-19/?sh=77aeb5fc1bd7.

Shepherd, E., and J. Phaup. 2020. Talent Transformation: Develop Today’s Team for Tomorrow’s World of Work. Talent Transformation Press.

Ulrich, D. 2009. “The Six ‘Bs’ Overview.” The RBL Group, Tool 5.1. hrtransformationbook.s3.amazonaws.com/Documents/5.1%206Bs.pdf.

World Economic Forum. 2020. The Future of Jobs Report 2020. Cologny, Switzerland: World Economic Forum.

Recommended Resources

Gibson, A. 2021. Agile Workforce Planning: How to Align People With Organizational Strategy for Improved Performance. London: Kogan Page.

Lawler, E. 2017. Reinventing Talent Management: Principles and Practices for the New World of Work. Oakland, CA: Berrett-Koehler.