Strategic workforce requirement planning: methods and differences

what does workforce requirement planning involve?

By workforce requirement planning we mean a process in which companies systematically work out how many employees they will need in future. Alongside the number of employees, their qualifications are also part of the calculation. The aim of workforce requirement planning is to deploy the right number of employees with the right skills at the right time in the right place. In doing so, workforce requirement planning supports the delivery of business goals. 

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Why is workforce requirement planning so important for companies? 

Workforce requirement planning can be relevant for your company on several levels: 

1. Securing business goals

Effective workforce requirement planning makes sure your company has enough qualified employees. Its primary aim is to meet current and future business requirements. Without forward planning, important positions could stay unfilled. That severely affects your company's ability to reach its goals. 

2. Avoiding resource bottlenecks

Careful planning lets your company avoid bottlenecks in the workforce. This matters especially in industries with a severe skilled labor shortage. But workforce requirement planning should not be underestimated in times of rapid growth either. It is precisely then that the need for qualified staff rises fastest.

3. Cost efficiency 

Well thought-out workforce requirement planning helps you avoid unnecessary costs. Overstaffing leads to unnecessary personnel costs, while understaffing can hurt efficiency and productivity. With the right balance in workforce requirement planning your company can save costs and secure strong performance at the same time. 

4. Staying flexible and adaptable

Workforce requirement planning lets you respond flexibly to changes in the market landscape. Whether through technological change, economic swings or regulatory change: you can adapt better if they plan their staffing resources ahead. 

5. Employee satisfaction and employee retention 

By making sure that capable people sit in the right places in your company, you also encourage a positive working environment. That can raise employee satisfaction and employee retention, because employees are successful and content in their roles. 

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All in all, workforce requirement planning is a decisive factor in the long-term success of your company. It lets you respond to challenges proactively and steer the workforce strategically. That is how sustainable business success can be secured. 

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Which methods of workforce requirement planning are there? 

Workforce requirement planning distinguishes between qualitative and quantitative workforce requirement planning. 

Qualitative workforce requirement planning 

Qualitative workforce requirement planning deals with employees' skills, knowledge and behaviour. It establishes which qualifications an employee needs in order to handle current and future work tasks. This makes sure that the right person is also deployed in the right place. 

Quantitative workforce requirement planning 

Unlike qualitative workforce requirement planning, qualitative workforce requirement planning deals with the actual figures behind workforce requirement planning. It is mainly about establishing target values. That means how many people are needed for the planned volume of work. 

Qualitative workforce requirement planning also factors in how much reserve capacity your company needs. That is to say, in order to cover peaks in workload, absences due to vacation, illness or training are worked out. This produces a staffing requirement that rules out understaffing. 

Within workforce requirement planning there are three different methods for determining the actual staffing requirement: 

Key-figure method: using key figures to determine the staffing requirement 

The key-figure method is a proven technique for large companies to calculate your company's quantitative staffing requirement with the help of specific key figures. The method draws on mathematical and statistical data to make well-founded decisions about the future staffing requirement. Various key figures are used here that relate directly to work performance, productivity and other operational factors. 

1. Productivity key figures: One frequently used key figure is the productivity ratio. It measures the relationship between output (e.g. units produced) and input (e.g. working hours). This key figure key figures can then be used to work out how many employees (or working hours) are needed to reach a certain production volume. This key figure is, however, hard to establish in many companies. Especially where it is less about a measurable product, that is qualitative, and more about qualitative and or even creative work. 
2. Turnover rate: The turnover rate shows how many employees leave your company within a given period. High turnover could indicate that more employees will have to be hired in future to make up for these departures.
3. Utilisation rate: This key figure measures how heavily employees are currently loaded. A low utilisation rate can indicate that the staffing requirement is too high in relation to the work coming in. A high utilisation rate, by contrast, points to overload and therefore to a need for additional staff. 
4. Revenue per employee: Last of all, revenue per employee should also be calculated. If revenue rises but the number of employees stays the same, that could mean, for example, that the existing workforce is hitting its capacity limit and more employees are needed. 

Staffing-plan method: analysing the current staffing plan and matching it against future requirements 

The staffing-plan method is a structural method. With this method your company's current staffing plan is analysed and matched against future requirements. The staffing plan holds information about all positions in the company. That includes the number of posts, how they are filled and the requirements attached to each.

1. Establishing the current headcount: First the current headcount is recorded on the basis of the staffing plan. This step covers determining the number and type of existing posts. In addition it is recorded which employees fill them and what qualifications they bring. 
2. Identifying surpluses and shortfalls: Comparing the current staffing plan with future business requirements reveals surpluses and shortfalls. Those future business requirements can be derived from your business goals. A surplus could arise, for example, where there are too many employees in a particular area. A shortfall, by contrast, points to a lack of staff. 
3. Taking future developments into account: The staffing-plan method also takes into account how the need for certain positions could develop in future. That can be done on the basis of planned company projects, market developments or technological change.
4. Planning measures: On the basis of the analysis, measures are developed to bring the headcount into line with future requirements. That can include hiring new employees, restructuring existing departments or reducing excess capacity. 

Trend analysis: forecasting the future staffing requirement based on past developments 

Trend analysis is a method oriented towards the future of your large company. With this method of workforce requirement planning, your company's historical data is evaluated in order to predict the future staffing requirement. The method assumes that certain patterns and trends observed in the past will continue into the future. 

1. Collecting historical data: First, then, historical data is collected on the staffing requirement, business development, market conditions and other relevant factors. That data can cover the number of employees, turnover rates, production volumes or revenue development, for example. 
2. Identifying patterns: The collected data is then analysed to identify patterns and trends. That can mean, for example, that an increased or reduced workload was determined in certain months or years. That development then led to a change in the staffing requirement, for instance. 
3. Forecasting future developments: On the basis of the patterns identified, the future staffing requirement is forecast. If, for example, your company has grown steadily in recent years, the trend analysis could predict that the staffing requirement will continue to rise. 
4. Adjusting for external factors:Alongside internal historical data, trend analysis also considers external factors. These include economic developments, changes in the industry or technological innovation. They can influence the future staffing requirement.
5. Building scenarios: To account for uncertainty, different scenarios can be developed based on different assumptions. That helps your company respond flexibly to unforeseen developments. 

Quantitative workforce requirement planning is, as you can see, not a simple process. There are many different methods, and a lot of key figures are juggled at the same time. Even so, it is an area you cannot avoid, particularly for long-term business goals and the growth of your company. The methods of workforce requirement planning presented here give you different approaches. That is how you make sure you have the number of employees you need. Each method has its particular strengths. So it is important that you decide which method to go for on the basis of your company strategy and environment.

how do you calculate workforce requirement planning?

As mentioned, planning the exact staffing requirement calls for a great many different key figures. With a few tricks, though, you can get a rough overview of your staffing requirement quite quickly. Here are three ways of calculating it: 

Working out the gross staffing requirement

The gross staffing requirement describes the number of employees needed to handle all the work arising within a defined period. It is often calculated with the following formula: 

Accounting for changes in staffing

Alongside the gross staffing requirement, companies also have to factor in changes in headcount. These include: 

• Turnover: Departures through resignation and retirement
• Sickness: The average sickness rate
• Vacation periods: Statutory and company vacation entitlements

The net staffing requirement is the gross staffing requirement minus existing employees, plus planned departures and taking hiring plans into account.

Conclusion 

Workforce requirement planning is a decisive process for the long-term success of your company. It makes sure that your company has the right number of employees, both in quantity and in quality. Using different methods, you can pinpoint your future staffing requirement. These include the key-figure method, the staffing-plan method and trend analysis. That way you can respond proactively to changes in the market and inside the company. 

Qualitative workforce requirement planning complements these approaches. It makes sure that the employees you have are not only sufficient in number but also equipped with the right skills. That is how you can meet every challenge of the future with confidence and flexibility. 

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