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Useful terms

Learn more about commonly used workforce planning terminology.

Workforce segmentation is grouping your workforce by similar characteristics.

Some approaches to workforce segmentation can include:

  • Role-based or job family: Jobs are segmented by the type of work performed, for example, customer service officers, machine workers, administrative support, or by similar occupational groupings such as accountants, engineers or carpenters. This approach allows you to identify and focus on the skills and capabilities that are important to your business.
  • Employee-based: Segmentation can be by demographic such as work location, gender or age profile.  This approach can inform workforce risks from potential workforce availability by these segments.
  • Business structure: Many businesses display their workforce structure through an organisational chart, which is useful for demonstrating business units and reporting lines. However, organisational charts don’t show the skills and capabilities within the business, which is essential for workforce planning.

Workforce information covers a range of intelligence and data that exists or can be created about your workforce. This information can include:

Quantitative:

  • Positions: How many are filled and vacant?
  • Positions: What positions have been budgeted for?
  • Resignations: How many and why?
  • Recruitment: How many positions, by type and reason for the particular role needed?
  • Diversity information: What is the diversity of your workforce in terms of age (including youth and mature age), gender, cultural background, declared disability?
  • Qualifications: What type of qualifications are required?
  • Skills: What specific skills are required?

Qualitative:

  • Learning and development needs
  • Employee engagement
  • Work life stage (new to the workforce, early -, mid-, end-career workers)
  • Career aspirations
  • Individual worker intentions to stay or leave

Whilst this is not an exhaustive list of workforce information that a business may have available, it demonstrates the breadth of information that already exists or can be gathered to assist with workforce planning.

Workforce supply is the size of your current and future workforce. It takes into consideration employee turnover through resignations and retirements and how these affect the size of your workforce over time.

Scenario

Your business has 30 employees. There are six resignations a year (20 per cent) and you have one person retire each year. If you did nothing — that is, not replace these employees as they left — at the end of three years, there would only be nine employees left in your business.

Workforce demand is the number of employees you will need today and into the future to deliver against your business plan.

Scenario:

Your business has 30 employees. If you are to increase by two employees every year, at the end of the three years, you would have 36 employees.

A workforce gap occurs when there is a mismatch between supply and demand. That is, you do not have enough employees to meet your business needs or, in some cases, too many employees for your business needs.

Scenario:

Your business currently has 30 employees and you need to grow by two people each year. Analysis of your workforce data shows that on average six people resign and one person retires every year. Assuming you do nothing to replace these seven
employees at the end of the first year, you will have a gap of nine people. In other words, you will have 23 employees instead of the 32 employees you require. This gap will widen to 18 people at the end of the second year if you continue to take no action. You will have only 16 workers as opposed to the 34 employees you forecast you required to meet your business requirements. By the end of the third year, when you had hoped to employ 36 workers, the gap is now at 27, with just nine employees available if you do nothing.

Once you understand your potential workforce gap, you can then start planning to address it through relevant strategies and actions.

A workforce risk is any workforce issue that could result in an event that is detrimental to a business’s outcomes and outputs. Risks arise where is a gap between a business’ existing workforce and the workforce required to deliver its products, services and goals.

Workforce risks can come from two main sources:

  • internal to the business through business strategy and direction, resources, workplace culture, business structure, workplace health and safety, leadership, resignations, and workforce skills and capabilities.
  • external to the business through market competition, disruptive technologies, economic environment, customer behaviour and industry trends.

By undertaking regular workforce planning, your business should be able to identify most workforce risks. Identifying and understanding workforce risks can involve a number of activities, including:

  • monitoring and analysing relevant workforce data that will impact on business delivery, such as high workforce turnover or unplanned absences
  • employee survey results that measure job satisfaction and future intentions to stay or go
  • number of vacant positions, including how long it takes for the new employee to commence.

Committing to monitoring and reporting workforce data and regularly reviewing your workforce plan will enable you to identify emerging issues as they arise and to adequately respond.