Employment attrition rates generally refer to the number of employees who leave a company for various reasons. Whether it’s seeking new opportunities, retirement, reduction, or something else. Strong organizations generally keep their attrition rates at less than 10%.
Meanwhile, others need help with a constant need for new talent to help ensure internal gaps are filled and that there is optimal productivity. With this in mind, the need for talent-demand planning has come become important Human Resources (HR) function.
But what is it, what does it involve, and why should organizations consider it at all? This article attempts to answer these questions.
What is talent-demand planning and forecasting?
Much like every business needs to plan stock, inventory, sales, marketing campaigns, and much more, organizations also need to plan for the future of their talent pools. It’s often stated that employees leave organizations for a many reasons.
These include, but are not limited to: lack of training and development opportunities, poor communication, unclear job descriptions, inadequate staffing levels to cover workloads, lack of recognition, an inability to provide productive feedback, the need for more flexible working hours, and others.
As such, organizations today (at least the more forward-thinking ones) are engaging in talent-demand planning and forecasting. But this is not only about taking inventory of your organization’s current talent pool. It’s a planning process that seeks to address future talent gaps and meet them before they become critical bottlenecks and affect the organization’s competitiveness. In essence, it’s a look today at what talent needs will need to be met tomorrow.
What are the two major types of talent-demand forecasting?
Talent-demand forecasting is generally broken down into operational workforce forecasting and strategic workforce forecasting. Whereas the former looks at an organization’s short-term needs (such as over the next 12 months), the latter looks ahead (approximately two to five years into the future).
Operational workforce forecasting can be accompanied by initiatives that include planning for seasonal changes, specific initiatives over the coming year, or creating an adequate response to unexpected disruptions.
Meanwhile, strategic workforce forecasting looks at the business’ strategic outlook for the mid-term by exploring changes in the competitive environment as well as changes within the talent marketplace.
This brings us to an evaluation of the need for both internal and external talent pool assessments.
The importance of holistic internal and external assessments
It will have become apparent at this point that organizations which seek to thrive and reduce attrition rates will be those that carefully study their internal as well as external environments.
Internally, it’s important to not only study internal needs for talent but this analysis, planning, and forecasting should also be carried out with an external analysis of the state of the industry the business is operating in and the talent market at present and extrapolations into the future.
Consequently, internal reviews and planning strategies should look at:
- Anticipated organizational changes over the next year and more
- A determination of the organization’s current and future talent needs in terms of capacity and not a headcount, per se
- An estimation of how the organizational changes will affect revenue and cash flow to determine what investments can be made in new talent
- A comparison of the current skills reservoir with anticipated future changes (e.g. retirement of some employees, contract expiration for freelancers, etc.)
On the external front, organizations will be well-positioned when they do the following:
- Determine the availability and cost of new talent
- Determine the speed with which such talent can be accessed
- Determine the types of talent that are critical to your organizational needs
Crucial steps involved in workforce-demand planning
In order to plan and forecast your talent and skill needs accurately for the future, it’s important to be aware that this is not an exact science. However, some steps can be taken to ensure your plans and strategies are implemented well ahead of time to meet your future employee needs. With this in mind, take a look at these steps to help guide and inform your process going forward:
Step 1: Look at past HR and employment data and base your forecast on this (loosely).
Step 2: Determine your organization’s short-, medium-, and long-term plans to forecast the expansion of certain teams and the need to recruit highly strategic talent.
Step 3: Work with other departments to establish which talent needs should be met over the short- and long-term periods and attempt to address these before they start becoming bottlenecks.
Step 4: After working with and discussing the talent shortages and anticipated talent shortages within your organization with multiple departments, put all the critical information together and try to look for patterns by identifying the main future talent players in the bigger picture.
Step 5: Carefully study the market you’re operating within both in terms of the broader organizational picture and in terms of talent pools and the right marketplaces for such talent.
Step 6: When you have created the “big picture”, it’s time to analyze the data, and then get internal feedback on it to determine if you are on the right track. Internal feedback loops are an excellent way of confirming and affirming what you need to act upon now for the future benefit of your organization.
The benefits of workforce-demand planning
When it all comes together, workforce-demand planning and forecasting can help organizations compete more effectively and spend less resources on recruiting new staff due to high turnover rates. But there are other benefits as well. Let’s take a look at just a few of these:
- Workforce-demand planning can align with an organization’s strategic planning and objectives
- Get the bigger picture of talent demand and supply issues (in terms of expenses, reporting relationships, locations, and more)
- Helps leaders identify and implement gap reduction strategies
- Assists with organizational restructuring and workforce deployment
- Enables managers to better prioritize their future workforce investments
- It offers leaders the right metrics to identify risks before they become more serious threats
- It helps control unplanned talent costs and improve employee productivity
- It also helps to build an organization’s competitive advantage through planned instead of reactive talent management
- It enables business leaders to quantify and measure meaningful outcomes
- It helps leaders identify and overcome both internal and external barriers that hinder the achievement of strategic workforce goals.
When organizations are looking for talent as part of their internal and external talent force analysis, it may be overwhelming to study the market and resource pool effectively. However, at StorsenDigital, we give you access to many critically in-demand professionals through the Talent resource section on our website. If you need any help with your staffing, recruitment, and talent sourcing needs, feel free to reach out to us and we’ll be more than happy to be of assistance.