Updated: May 1, 2023 |

Strategic workforce planning for CFOs: from strategy to execution

By

Jake Ballinger
Jake Ballinger

Jake Ballinger is Cube's content manager with 5 years experience in content, including FP&A and Finance. He holds a BA in Computer Science from Allegheny College, speaks 9 languages, and lives in NYC.

Strategic workforce planning for CFOs: from strategy to execution

Headcount planning can feel like a zero-sum game.

Adding another head to Engineering might help you ship a feature faster...

...but that means there's one less head in Customer Success to retain customers.

That's why it's important to dial in your workforce planning.

But how do you get good at workforce planning?

That's what you'll learn in this article. 

Jake Ballinger

Jake Ballinger

FP&A Writer, Cube Software

Jake Ballinger is Cube's content manager with 5 years experience in content, including FP&A and Finance. He holds a BA in Computer Science from Allegheny College, speaks 9 languages, and lives in NYC.

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What is workforce planning?

Strategic workforce planning is an analytical process to assess your workforce concerning short- and long-term goals.

It lets you know if you have enough skilled people to meet those goals. 

If you don't, it helps identify workforce gaps by providing a roadmap for hiring and talent management teams.

Workforce planning also focuses on boosting employee retention rates. Streamlining departmental and company-level workflows helps increase profitability and meet growth targets.

Why workforce plan?

Strategic workforce planning helps you avoid many difficulties related to human resource allocation. Properly executed, it ensures your company has:

  • Adequate headcount
  • Employee-task alignment, and
  • Strategic hiring

Let's examine each.

Adequate headcount

Inadequate headcount is one of the worst issues a business can face, leading to other problems.

The first is obvious: teams will have trouble hitting deadlines. 

As employees are moved around to fill in critical work functions, they'll probably also have to work outside their zone of expertise, resulting in lower-quality deliverables.

High employee turnover is the consequence as workers head for greener pastures.

Effective workforce planning avoids this by ensuring you

  1. have enough employees on a company-wide level and
  2. have enough employees—with the right skills—to fulfill particular tasks in specific departments in accordance with deadlines.

Proper employee-task alignment

Everyone has their zone of genius. If forced to work outside their specialization, productivity suffers.

Employees will likely lose morale as they struggle to fit into a job they're not compatible with. 

Workforce planning ensures you place employees where they'll most contribute to the organization.

Proper alignment also helps reduce production costs, as high quality keeps returns and maintenance requests low.

Strategic hiring

Each piece of your organization is like a section of an assembly line. If one piece isn't functioning optimally, then the efficiency of the whole suffers.

Workforce planning helps you identify gaps in your assembly line, whether in numbers or employee skills.

From there, you hire strategically—each employee needs to have a well-defined purpose that fits into your overall plan. Also, when you know what you're hiring for, you know precisely what area new workers need to be trained in.

Types of workforce planning

Workforce planning is divided into two types: operational and strategic.

Let's take a look at each.

Operational workforce planning

Operational workforce planning views things from the bottom up, starting at the employee level. It ensures departments are well-staffed enough to carry out their day-to-day operations.

It optimizes work schedules, communicates daily expectations, and aims to increase productivity.

Operational workforce planning is the granular view, focusing on your workforce in relation to short-term goals.

Here you'd look at departmental training and link it to day-to-day performance—in other words, you'd be assessing the ROI of your departmental training.

Operational plans can either be single-use or ongoing. Single-use would apply to very narrow, nonrecurring objectives—for instance, how many employees with a particular skill you'd need for a specific marketing project. 

An ongoing plan would focus on a long-term change, like increasing the number of sales a department makes by 2%.

Strategic workforce planning

Strategic workforce planning views things from a company-wide level. It evaluates your current workforce in relation to long-term goals (months to years).

If the current workforce isn't well-tailored for specific future goals, you'd know to either start specific training or make hires. This is also where you'd examine the employee lifecycle to see if anything can be done to reduce attrition rates or hold onto knowledgeable employees longer.

Since strategic planning focuses on the long-term, scenario planning is critical.

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Components of a workforce plan

Of course, a workforce plan is more than just a series of steps. 

It includes capacity planning, succession planning, and headcount forecasting.

Let's look at each. 

Capacity planning

Workforce capacity planning helps determine how many employees you must allocate to each project. This is a balancing act—staff too few and the project most likely won't be completed in time. Even if it is, it might be rushed and not as high-quality as if capacity were higher. 

Staff too many, on the other hand, and you're wasting resources that could be used elsewhere.

Capacity isn't just about numbers—it also includes capability. A worker assigned to an IT project with years of experience in IT is considered to have more capacity than someone who's brand new to the job (however, training can boost the latter's capacity).

Strategic capacity planning looks at the bigger picture—how many employees you'll need to reach the company's goals, whereas operational planning looks at individual departments.

Both operational and strategic capacity planning work together to avoid the problems of being under-staffed—for example, employee attrition.

Employee attrition is a compounding problem—you're losing existing employees because you don't have enough capacity, so the last thing you need is to lose even more employees.

That's why ineffective or absent capacity planning can result in pushed-back deadlines and slower growth, hindering the effectiveness of your long-term plans.

Capacity planning helps you avoid needing to change your roadmap.

Succession planning

As much as you reduce attrition, keeping positions filled forever is impossible—especially if you have an aging workforce.

Succession planning identifies roles that can't stay vacant for long and prepares replacements before the fact. It identifies employees who may make suitable successors as higher-level staff cycle out. 

Having a plan ensures that things like promotion or retirement have a minimal impact on operating capabilities.

Headcount forecasting

Hiring is one of the most enormous costs for organizations. So, fine-tuning your hiring cadence streamlines the company's functioning and optimizes capital efficiency.

One of the best ways to do this is through headcount forecasting. Building an accurate forecast helps you match your future workforce to future demand. Indirectly, it also tells you the labor costs to complete that plan.

For instance, say a plan necessitates growing a department at a specific rate. You determine you'll need to hire N employees with the appropriate expertise over a specific period. But how does this work out with the budget?

An accurate headcount forecast requires transparency between all departments—heads of finance teams should communicate with department heads to determine their needs.

Refine your forecast with sensitivity analysis. This shows how different types of uncertainty might affect the accuracy of your projections.

If work plans change—as they almost invariably will as your business tightens its objectives in response to new data—you must adjust the hiring forecast to reflect this.

Will you need more employees than predicted? Will you need more or fewer employees with a particular aptitude?

The more you do headcount forecasting, the better you'll get at it—keep track of KPIs to determine ROI.

How workforce planning guides your business strategy

Capacity planning, headcount forecasting, and succession planning combine to paint a complete picture of current and future hiring needs, helping you grow most efficiently.

Through workforce planning, the CFO has verified data to inform the CEO whether their plans are viable—if not, it informs how those plans should be adjusted. 

In other words, solid workforce planning data should underlie the whole organizational strategy. According to IBM, with the boost in data-gathering capabilities through software, it's no wonder CEOs expect their CFOs to play "the most crucial role" in business over the next few years.

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The workforce planning process

Workforce planning processes are designed to help you assess your existing workforce and create a skilled future workforce that helps meet business objectives.

Planning workforce supply and demand is a big part of the workforce planning process.

You'll also need to consider staffing costs and the total number of employees you have the capacity to recruit, train, and retain.

1. Determine your goal

Each individual workforce plan should answer a question—whether you have enough capacity for a specific goal.

Therefore, the first step of workforce planning is deciding which strategic objectives you focus on. Is it a long-term goal that involves the whole company—a strategic plan? 

Or is it a short-term goal that involves just one department—an operational one? What skills will be required to successfully complete it?

This will let you know who and what to assess in the next step.

2. Assess your workforce

Evaluate your current workforce. Depending on your goal, this can be a company-wide assessment, on a departmental level, or cover multiple departments.

Create a matrix, and look at each employee. Examine things like:

  • Education and certification
  • Performance reviews
  • Previous job roles
  • Career roadmap

Say your goal is to boost internet marketing efforts. Do you have enough employees with SEO skills?

3. Create a plan

Now that you've assessed your workforce, you'll know whether there are any headcount or talent gaps.

If there are, your two options are to hire or train current employees.

One is not necessarily better than the other. However, hiring is the better option if the plan needs to be fulfilled quickly and there is a gap. That's because it may take too long to train your employees.

If the goal doesn't need to be fulfilled until months down the line, you can save on onboarding costs by training your current workforce.

But you should consider moving those workers to a new project without disrupting operations elsewhere. 

If you can't, you'll most likely want to look into increasing the overall headcount. This is especially true if you have gaps for multiple projects.

4. Execute the plan

Begin training or hiring.

If hiring, work with department heads and hiring teams.

5. Follow-Up

Once your workforce plan has been carried out, you'll want to review the ROI of your hiring or training efforts.

Did they result in the appropriate business outcomes? If not, determine where you went wrong. You may have underestimated the number of people required or honed in on the wrong skill type.

Workforce planning is not a "one-and-done" endeavor. Instead, it's an ongoing, rolling evaluation that assesses current resources against future project needs. Turn the info it provides into action!

A free workforce planning template for you

Using technology to support your workforce planning can save you time and frustration. This free headcount planning template outlines the essential information to organize and evaluate your current employee workforce.

We built this template to work out of the box with both Excel and Google Sheets. 

...but there's a catch.

You still have to load your own salary and planning data.

The good news?

If you're a Cube user, that's super easy. Just fetch your data from Cube.

(It takes just one click.) 

...and if you're not a Cube user, click the image below to request a free demo to see Cube in action. 

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