Strategic workforce planning: How to integrate with finance

Prophix ImageProphix May 2, 2024, 2:22:00 PM

Imagine your organization as a well-oiled machine where every gear, big or small, works in perfect harmony with the others. That's what workforce planning can look like when strategically integrated with finance.

In this blog, we'll walk you through the why and how of workforce planning, and how your finance and human resources teams can work together. Prepare to discover how workforce planning can become an invaluable asset in your business toolkit, including:

Was ist Personalplanung?

Workforce planning is the process of preparing and evaluating plans for employee expenses, including salaries, hourly wages, benefits, paid vacation, and hiring. Companies use workforce planning to ensure their organization is adequately staffed to deal with demand, can fill gaps in talent as needed, and forecast future needs. When done strategically, workforce planning can then inform investments in training, development, and succession planning. Workforce planning is sometimes broadly described as having the right people, in the right roles, at the right time.

Additionally, effective workforce planning aligns closely with the overall business strategy and increasingly relies on technology and data analytics to predict trends, identify skill gaps, and optimize workforce distribution.

Workforce planning vs personnel planning

While workforce planning, personnel planning, and people planning are often used interchangeably to describe the process of managing an organization's human resources, there are subtle differences between these terms:

  • Workforce planning typically focuses on strategic alignment with organizational goals, forecasting future staffing needs, and identifying skill gaps.
  • Personnel planning, sometimes referred to as HR planning, traditionally centers on assessing and meeting personnel needs, including recruitment and training.
  • People planning, a less commonly used term, emphasizes employee development, engagement, and well-being, highlighting the human aspect of resource management.

Why is workforce planning important?

A company’s most important resource is its people—and workforce planning can help you support this critical asset. Workforce planning is important because it can:

  • Reduce labor costs
  • Improve employee morale and retention
  • Contribute to people development
  • Enhance work-life balance
  • Deliver strategic value through talent

Additionally, workforce planning ensures that the organization's workforce is aligned with its long-term goals and can adapt to changing market conditions.

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Benefits of workforce planning

Streamlines recruitment and hiring

One benefit of workforce planning is its ability to streamline recruitment and hiring. With a clear picture of what employees in similar roles are paid, how long employees tend to stay in their roles, and how well departments are staffed, your HR organization can make informed recommendations when recruiting candidates and drafting offer letters. This strategic alignment helps ensure that new hires fit well with the team and can contribute effectively to the company's goals.

Align HR with the broader business strategy

With insight into critical information about employees from the finance team, HR is better positioned to align their strategy with the broader business’ goals. HR can support workforce planning by making strategic investments in training and development, data protection, and employee programs and benefits to improve employee retention and support growth.

Upskill your organization

Another benefit of strategic workforce planning is that it can identify people within your organization who would benefit from upskilling. When employees go on sick leave or leave the company for one reason or another, you need to be prepared to fill the gaps with your remaining talent. Strategic workforce planning can help you identify highly productive employees who are ready to move up through the ranks.

How to do workforce planning

There are several approaches you can take to do workforce planning, but they all share similar steps:

  1. Identify your strategic direction – Gather all the relevant stakeholders and align your goals for workforce planning. Consider what outcomes you desire, and how your workforce needs to be staffed to achieve them.
  2. Analyze your supply – Compile the necessary data to understand the current state of your workforce. What skills and roles need to be filled? Do salaries align with industry standards?
  3. Evaluate your demand – Consider what outcomes you’re striving towards – do you need to hire additional headcount? Do you need more people in specialized roles?
  4. Conduct gap analysis – Compare your workforce supply with your demand. Identify any gaps and opportunities for promotions and hiring.
  5. Implement your plan – With an understanding of your supply, demand, and gaps in your workforce, it’s time to put your plan in place. Your plan should include strategies for recording all relevant data, processes for communicating, and defined evaluation criteria to assess the plan’s success.
  6. Monitor results – Workforce planning is an iterative process, so you should always be monitoring results, and reevaluating your plans on a regular basis. Utilize technology and workforce planning tools to enhance data analysis and real-time monitoring for more informed decision-making.

What is the business impact of workforce planning?

Now that you’re familiar with the steps involved, let’s explore the business impact of effective strategic workforce planning.

How finance and human resources can work together for workforce planning

With an integrated business planning platform, finance and human resources (HR) can collaborate effectively to enhance their organization's workforce planning processes. Finance can compile all the relevant employee information, such as salaries, benefits, tenure, and skills, enabling seamless access and analysis of this data by both departments. HR can work alongside finance to review this information and make strategic decisions that support business objectives.

Through forecasting and scenario planning, finance and HR can model different future scenarios to assess potential impacts on the workforce. This cooperation aids HR in devising necessary training programs, activities, and compensation plans, helping finance ensure that workforce planning is effective, compliant, and risk managed.

A continuous feedback loop also allows for the regular updating and adjustment of workforce plans in response to evolving business needs and market conditions, fostering a dynamic partnership between finance and HR for strategic alignment and organizational success.

FAQs about workforce planning

What’s the difference between workforce planning and personnel planning?

Workforce planning focuses on aligning staff with strategic goals and future needs, personnel planning deals with meeting current staffing requirements, and people planning emphasizes employee development and well-being.

How do you create a workforce planning strategy?

To create a workforce planning strategy, first align your organization's long-term business goals with HR objectives, then analyze current workforce capabilities and future needs to identify gaps. Implement solutions such as recruitment, training, and development to address these gaps, continuously monitoring and adjusting the strategy as needed.

What’s the difference between HR and workforce planning?

Workforce planning is oriented towards strategic alignment and forecasting future needs, while HR (personnel) planning traditionally focuses on meeting current staffing requirements through recruitment and training.

Conclusion: Invest in strategic workforce planning

In conclusion, strategic workforce planning is a pivotal component of organizational success, and leveraging technology to support planning efforts is essential.

Prophix One Integrated Business Planning is a vital tool in this process, seamlessly bridging finance and HR through data integration, scenario planning, and continuous feedback loops in a single, unified financial performance platform.

By fostering a dynamic collaboration between these departments, Prophix One ensures that workforce planning is not only effective but also aligned with the broader business objectives, ready to meet the evolving demands of the market with precision.

Want to see what you can do with Prophix One? Watch our workforce expense planning demo.

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