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An HR Glossary for HR Terms

Glossary of Human Resources Management and Employee Benefit Terms

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Workforce Analysis

What Is a Workforce Analysis?

Workforce analysis (also called workforce planning) is a process that uses both employee and ROI data to inform decisions on (1) recruitment, (2) retention, and (3) employee management. 

The point of conducting a workforce analysis is to maintain proper staffing levels so that critical competencies are fulfilled, succession is well-managed, costs are optimized, agility is achieved, and resiliency is retained. These objectives are reachable when the supply and demand of employees and skills are identified and forecasted accurately and in a timely manner.

What Are the Benefits of Workforce Planning?

The benefits of workforce planning are numerous and include giving employers the ability to:

  • Reduce the costs associated with recruitment by:

    • Searching resumes for keywords.

    • Conducting traditional and/or social media background checks.

    • Avoiding biased decisions in hiring.

    • Finding top talent that best fits the company’s needs.

  • Have higher employee retention rates by:

    • Monitoring and suggesting fixes for employee compensation.

    • Tracking productivity levels.

    • Flagging behaviors of ill-suited employees.

    • Maintaining proper coverage and security in the office.

  • Manage employees by:

    • Setting performance benchmarks.

    • Supporting employees who exhibit potential. 

    • Identifying skill gaps.

    • Offering satisfactory training.

    • Mapping the succession path for high-performing employees.

What Should You Look for During a Workforce Analysis?

During a workforce analysis, employers should be looking for ways to:

  • Incorporate adjustments for workforce changes (e.g. retiring employees, employees who need to learn new skills due to changing technology).

  • Reduce costs by optimizing the workforce according to abilities and automation.

  • Determine future staff excess or shortages, in number as well as in specific skills.

  • Find, secure, and train successors. 

  • Drive faster flexibility in an ever-changing work landscape.

How Can You Use a Workforce Analysis?

A workforce analysis can be used for a variety of reasons. For example, it can be used to assess how the staff can grow and adjust with the launch of a new product line. It can determine whether staffing costs are profitable or excessive. It can forecast future staffing problems due to a shortage of bodies, skill, and experience that occurs when employees quit or retire, or because of an excess of employees after new technology changes the way things are done. 

In other words, a workforce analysis is a tool to identify skill and competency gaps between current and future workforce needs. It is the basis for making action plans that close such gaps.

What Is a Good Workforce Strategy?

A successful strategy is one that follows the three basic principles of good workforce design. There must be:

  1. An organized, long-term (5-10 years) plan that is in line with the company’s mission and objectives.

  2. A focus on critical roles and primary functions that directly and significantly contribute to the company’s desired results.

  3. Obtainable and economical tactics for achieving optimal outcomes.

How Do You Conduct a Workforce Analysis?

To properly conduct a workforce analysis, there are five general stages of the workforce planning process. Follow them and you’ll get a comprehensive analysis that is helpful for coming to conclusions and making intelligent decisions regarding the workforce.

  1. Categorize the quantity of the current workforce using a workforce profile (see explanation below).

  2. Assess the quality of the current workforce by rating both their performance and their potential, both now and in the near future.

  3. Predict and plot potential scenarios. 

  4. Analyze how the future scenarios will affect workforce formation. 

  5. Decide how workforce issues can be planned for and resolved.

What Is a Workforce Profile?

A workforce profile is part of the first stage of doing an analysis. It maps out employee data so that it is able to be used productively. Employees can be categorized by job category (high-level managers, middle managers, production staff, support staff), department, and job classification. Additionally, an employer may choose to add more specific factors into a workforce profile, with the intent of influencing the quantity and quality of the workforce.

Some other factors that could be included are age demographics as well as other diversifying factors such as gender, race, and disability. This should only be done for the purpose of making legal, inclusive adjustments. 

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