The Workforce Planning Checklist: The “Why,” “What, and “How” for Business Success

Whether you’re a PE-backed or enterprise company, you know the importance of workforce planning: having the right people in place at the right time is what keeps your business chugging. Still, a lot of businesses don’t have the tools to workforce plan strategically & effectively—and that’s where our checklist comes in.

Let’s dig into why systemized workforce planning is transformative to business, what exactly it’s used for, and how to make it happen:

The Why: Workforce Planning is Transformative

Designing a streamlined workforce planning process is worth the investment. Here’s why:

• A well-planned workforce can unlock value creation plans.

The “people” in a “people, process, technology” effort is paramount. Having a well-thought-out workforce plan helps ensure that companies are aligning talent with growth opportunities, operational improvements, and profitability to ultimately drive value creation.

• Workforce-related operations, without efficiency efforts, can be a financial drain.

Workforce-related costs tend to be the single biggest expense for most companies, averaging anywhere from 50-70% of total operating costs. Efficient workforce planning can help you efficiently and accurately forecast and monitor these costs commensurate with their impact on financial performance and EBITDA.

• Workforce planning affects all areas of the business.

Workforce planning doesn’t just apply to your Finance or Accounting teams. It affects all key functions (Strategy, Finance, HR, and Recruiting teams, to name a few), and it’s essential that everyone is aligned and working cohesively and efficiently to streamline operations.

• A volatile economy demands workforce planning proactivity—not reactivity.

Preparedness is essential as business cycles and conditions change frequently. Workforce planning scenario models help you move from reactive to proactive management, whether you’re modeling more tactical “what if” scenarios that highlight company bonus payout ranges or more strategic scenarios that cover potential expansion plans.

The What: Workforce Planning Can Touch Many Parts of Your Business

Workforce planning impacts everything—finance-related activities, HR plans, and broader strategic initiatives. Below we outline some common workforce planning use cases, many of which are interrelated:

• Financial forecasting of compensation costs: This generally includes sourcing a roster of current employees, layering in hiring plans, and calculating key employee-related P&L accounts (salary, bonus, benefits, etc.). This is a foundational use case that is relevant for almost every high-growth company to get a grip on where things stand.
• Modeling of resource/employee “supply and demand”: This typically involves gathering a census of employees who work on certain activities or projects (supply) and balancing that against upcoming activities or projects (demand) to better understand and model imbalances.
• Talent Planning: This can involve things like identifying current employees’ skills & skill gaps, creating training plans, matching employees to relevant areas of career growth, and aligning employees with fitting open internal roles (internal hiring moves). It can also involve evaluating BPO opportunities.
• Incentive Comp Planning: This is a subset of financial forecasting specifically focused on more involved variable pay modeling, such as performance-based/sales bonuses, target goal setting, and other non-traditional bonus structures.
• Headcount & Hiring Planning: This is tightly linked to the above processes, but in some cases requires a deeper level of focus.  Key “deep dive” areas can include making the “requisition to hire” process efficient and integrating recruiting and hiring market data with HR and finance plans.
• Strategic Workforce Modeling: This often touches most of the above areas as inputs, but typically involves 1) modeling a longer-term time horizon or 2) linking “what if” business initiatives to hiring plans.

The How: Your Workforce Planning Checklist

That covers the “why” and the “what”—so what about the “how”? Leveraging an organized checklist from the get-go sets the stage for an efficient process and real-time understanding of the current state of costs, headcount allocation, and other related metrics. Here’s how to empower best-in-class workforce planning:

1. Get buy-in from other leaders on your goals.

Your goals should include:

• More accurately projecting personnel costs on the P&L (by employee role and department) to support overall forecasting and budgeting cycles
• Automating key data sources to make the forecasting process as efficient and “real time” as possible
• Coordinating workforce drivers and approval gates, such as headcount, hiring plans, and other benefits and comp drivers
• Understanding headcount concentration and business operations allocations

2. Identify your outputs.

Your tangible outputs should include:

• P&L projections and reporting for personnel-related accounts
• Headcount reporting
• Variance reporting
• Workforce analytics (fully-loaded employee costs, average salaries, attrition rates, headcount allocations across departments, and more)

3. Prepare your data for automation.

You should pull & prepare the following data for technology integration:

• Workforce roster data from HRIS system(s) that contains a listing of current employees and their annual compensation numbers, as well as other relevant information (start date, target bonus, job role, etc.)
• Actual payroll data by month by person
• Actual GL data for payroll accounts by department/organization
• A feed of TBH/open requisitions, to the extent to-be-hired roles are initiated in another process or system
• Systems containing external drivers, such as state and federal tax rates

4. Determine your projected efficiency gains.

With workforce planning done right, automating the data above will deliver a real-time view into core aspects of your business, including:

• Projected monthly headcount based on current employees
• Projected hiring plans that factor in start and end dates
• Base salary calculations using sourced annual pay data (existing employees), market data (TBHs), and monthly logic related to payroll cycles, along with merit increase assumptions
• Standard bonus calculations, using individual’s target bonus %, along with overall company attainment assumptions
• Benefits calculations, driven by headcount (i.e., healthcare costs, training stipends) and % of salary (i.e., 401K costs)
• Tax calculations (state and federal taxes) based on individuals’ work and/or home locations
• More specific bonus and incentive calculations, including things like ESP, profit sharing, pooled bonus plans, and non-standard bonuses
• Currency conversion (if applicable)

5. Choose the right workforce planning technology and utilize its full capabilities.

Implementing the right technology (and knowing how to use it) enables a broad range of both core and extended workforce planning features, including:

• “Roster management”, including systematic transfer, termination, and promotion capabilities
• Attrition modeling, based on inherent business knowledge and/or historical data-based algorithms
• Standardized calculations, reporting, and analytics
• Variance reporting
• Scenario management (monthly forecasting, etc.)
• Workflow-related to TBH/requisition to hire process
• Automated “reconciliations” that summarize and bucket employee changes over time
• Driver variance reporting
• Target setting & what-if modeling

Workforce planning plays a crucial role in business: aligning your workforce with value creation objectives, optimizing operational efficiency, empowering management teams, facilitating effective succession planning, and more. By strategically understanding the “why,” “what,” and “how,” both PE-backed and enterprise companies can master the workforce planning process to maximize performance and drive sustainable growth—ultimately delivering long-term value to investors and stakeholders.