Operational Workforce Planning - Where HR & Finance Meet

The subject of strategic workforce planning is a popular topic for business leaders. That makes sense because most organizations must monitor and adjust quickly to new trends and business demands to stay competitive.

However, the process must start with operational workforce planning. Transactional business functions, like HR and Finance, require solid operational plans to keep the business functioning daily. Without a strong operational plan, strategic business goals won’t be achieved.

This blog will provide insight into operational workforce planning and its impact on organizational performance.

What is operational workforce planning? 

Operational workforce planning can be described as the process of aligning workforce resources with an organization’s immediate operational needs. It includes a review of staffing levels, scheduling, skill requirements, and resource allocation.

An operational workforce plan ensures that an organization’s investment in its human capital results in its ability to meet its strategic goals.

Operational workforce planning differs from strategic workforce planning because it focuses on short-term operational plans that focus on meeting current workforce needs.

The importance of HR and Finance leaders 

Departments that keep the business functioning daily rely on structure, policies, and procedures. Forward-thinking leaders rely on those operational departments (Accounting, Administrative Operations, etc.) to build a solid base for future growth.

HR and Finance leaders in particular closely manage operational needs to “keep the lights on” so they can plan strategic objectives to address future change and growth. Collaboration between these functions results in a stronger foundation for mutual operational success.

HR must review and adjust staffing levels as needed to ensure that departments have sufficient staff to conduct daily business. Scheduling has to be monitored and adjusted to adapt to shortages. With frequent hiring and attrition, management has to have skilled workers so resources can be allocated as necessary.

As its name implies, operational workforce planning generally focuses on immediate, short-term workforce needs vs. longer-term, strategic goals. It builds the foundation that will align with the longer-term business goals.

For organizations that don’t have a strategic plan, an operational workforce plan becomes even more important. In that case, HR can still be proactive by creating good HR practices for current and future workforce needs.

A sample process might look like this

Operational objective: Reduce staff costs.

HR requirement: Reduce staff by two full-time equivalents.

Operational decision:  The reduction in staff will be made by not renewing the contract for two employees.

HR's perspective: The HR function has a unique perspective on operational workforce plans, partly due to its name. The human resources of an organization consists of people, from front-line workers to senior management. HR is responsible for all aspects of the people needed to perform the work.

Recruiting and staffing responsibilities may be solely an HR function or shared with the recruiting function or individual department management.

Ultimately, HR is responsible for ensuring that the organization has the following:

• The right number of employees with the right skills.

• And the right people on the right teams at the right time

Ensuring that the right people are in the right place seems obvious but it’s only one part of the equation. HR needs to manage and adjust its operational workforce planning to anticipate and respond to immediate worker shortages. But they’re also responsible for retaining those workers by keeping them engaged and satisfied to reduce turnover.

Finance’s role in workforce planning:

Attrition and excessive time-to-fill stats are not just an HR problem; they’re also a money problem. Finance focuses on the optimization of headcount costs. Their responsibility is managing the current budget and providing enhanced financial forecasting while controlling costs.

Financial management leaders provide the tools for HR and department management to assist the organization in maintaining sufficient resources for continued operations.

What is the difference between operational and strategic workforce planning?

Operational Workforce Planning vs Strategic Workforce Planning

Most organizations would benefit from both of these processes. However, small organizations or well-established niche businesses with no interest in growth or new technology may not need a formalized strategic workforce plan.

Let's take the example of these 2 organizations, a local family restaurant, and a local grocery store.

1. Organization #1: A popular local family restaurant in business for decades probably doesn’t need a formal strategic workforce plan. However, they need an operational workforce plan to ensure they have sufficient employees to continue serving burgers and milkshakes for their customers year after year.

2. Organization #2: A local grocery store must have an operational workforce plan to sustain the current business model. However, if they decide to grow into a regional or national chain, they must have a strategic workforce plan to guide them for future growth and continued sustainability.

   Organization #1: 

   Operational workforce planning is critical to maintaining its current operations. They may want to consider a strategic workforce plan to meet continually changing workforce demands.

   Organization #2:  

   The potential for growth or significant change requires the need to engage in strategic planning just to survive and hopefully thrive. But #2 can’t build a successful strategic workforce plan without the foundation of operational workforce planning. 

   Operational Workforce Planning is the first step in any workforce planning goal.

Improving organizational performance through operational workforce planning

1. Enhance efficiency through documented processes to reduce errors and increase workflow.

2. Streamline processes to reduce downtime and improve productivity. Identify and eliminate outdated or cumbersome steps in work processes.

3. Focus on improved resource utilization. Look for efficiencies that increase performance.

4. Ensure optimal use of workforce resources to meet operational demands. Anticipate and monitor changing operational needs.

5. Strategy for risk mitigation. Develop a risk assessment with a clear process to address issues immediately.

6. Identify and address workforce imbalances and potential bottlenecks. Continually monitor and flex to resolve unexpected barriers to productivity.

Some successful operational workforce planning implementation examples

•  A collaborative financial institution gained unprecedented efficiencies when it updated and aligned its workforce planning with its strategic and management processes. By streamlining the reporting process, multiple department managers had access to critical information to assist them in forecasting current and future workforce needs.

•  A call center experienced an increased demand for efficiency while the local applicant sources became less dependable. The business created remote hiring hubs in another part of the country that was less subject to weather issues. They increased their candidate pool and prevented loss of service during frequent and significant weather outages in the home location.

Common challenges for HR and Finance leaders

HR and Finance share a unique responsibility. HR is responsible for the “human” side of the workforce and finance is charged with managing the costs associated with that human capital. It seems logical that there would be significant collaboration between the two functions that would benefit the entire organization.

Unfortunately, that’s not always the case.

Some areas should not overlap but there are often “silos” of information between these functions that prevent problem-solving and efficient, mutually beneficial communication. Only 12% of business leaders polled in a survey believed that critical data was accessible to those who needed it.

The Harvard Business Review advises that closing the HR-Finance gap can address issues in workforce planning for both functions. Failure to connect operational, people, and financial data to business outcomes prevents agility.

The nature of HR can include significant task-based work which impacts HR’s ability to create and manage an operational workforce plan. Many organizations outsource administrative work so that HR can focus on value-added organization-wide operational planning.

Effective workforce planning involves far more than policies or spreadsheets. HR and finance must align their methods and objectives to create linked resources. The combined knowledge and information of both functions create a more cohesive approach to the needs and goals of the whole organization.

Conclusion

Operational workforce planning is a key component of an organization’s ability to maintain its business operations. It serves as a guide for managing current workforce needs and identifies processes to meet organizational goals. An operational workforce plan aligns operational functions and responsibilities to improve workforce efficiency. It provides the foundation for strategic workforce planning. 

The team at Agentnoon is focused on helping clients with their operational Wworkforce planning needs. Call us to learn how we can help your business too.