Workforce Planning: The Complete Guide to Optimizing Your Team

Lucija Bakić

January 4, 2024

A screenshot of a workforce planning tool, depicting a resource plan with employee schedules across projects and upcoming weeks.

Workforce planning ensures that you have the right team at the right time to navigate the competitive service industry landscape.

In this guide, we’ll discuss all of the essentials of the process to help you get the most out of your resources, from key steps and benefits to top tools.

Key Takeaways

  • Workforce planning is a process that aligns an organization’s workforce with its business goals.
  • Key steps in workforce planning include analyzing current workforce capabilities, forecasting future requirements, conducting gap analysis, developing action plans, and implementing and monitoring these strategies.
  • Workforce planning should be aligned with your hiring strategies in order to ensure effectiveness. These include talent acquisition, retention, diversity, equity, and inclusion (DEI) initiatives.
  • The key benefits of workforce planning include enhanced efficiency by avoiding over or under-staffing, effective change management to adapt to market and industry shifts, and aligning the workforce with business goals to optimize performance.

What Is Workforce Planning?

Workforce planning is a process of aligning your organization’s workforce with business strategy and goals, usually by balancing labor supply with demand. According to research, this process is usually undertaken by professionals to achieve three main purposes:

  • to obtain a clear representation of the workforce needed to accomplish the organization’s strategic intent
  • to develop and align a set of human resource management policies and practices–in other words, a comprehensive plan of action–that will ensure that the appropriate workforce will be available when needed
  • to establish a convincing rationale–a business case–for acquiring new authority and marshalling resources to implement the human resource management policies and programs needed to accomplish the organization’s strategic intent

Source: An Operational Process for Workforce Planning

Learn more about the key benefits of enterprise resource planning.

The Importance of Workforce Planning

According to the 2023 State of the Global Workforce survey, 51% of workers said they are watching for or actively seeking a new job. The same survey results show that 59% of employees are not engaged at work, while 18% are actively disengaged at work.

Employee engagement is associated with many important success factors, such as increased accountability, higher quality of work, reduced turnover, and better customer satisfaction. This becomes even more crucial considering the existing shortage of skilled IT labor.

In light of these statistics, workforce planning becomes one of the most fundamental processes for achieving success. It not only helps you properly utilize your employees’ capabilities and strengths, but also manages their daily satisfaction by supporting core HR activities such as talent retention and hiring. Some of the main benefits of workforce planning include: 

  • Efficiency: It helps to avoid over or under-staffing, reducing costs.
  • Change management: It ensures readiness for future market and industry changes.
  • Effectiveness: Aligns your workforce with your business goals for optimal performance.

The Strategic and Operational Aspects of Workforce Planning

In our guide to capacity planning and management, we briefly discuss the importance of implementing your strategies across different time periods — long-term, mid-term, and short-term.

This also applies to workforce planning initiatives, which we can separate into strategic and operational:

  • Operational: Concern short-term strategies that are focused on handling day-to-day challenges and changes.
  • Strategic: Concerns long-term business prospects, usually across a 3- to 5-year time horizon, that include agency mission, vision, and goals.

Aligning short and long-term strategies in workforce planning is necessary for maintaining organizational coherence and adaptability. By ensuring that daily operations support long-term goals, businesses can effectively navigate immediate challenges while steadily progressing toward their business goals. Making sure that employees across all levels of management are aware of both short and long-term goals can support this cohesion.

Learn more about resource planning with software:

The Main Steps of the Workforce Planning Process

The workforce planning process is a long-term strategy for human resources optimization. It can be divided into several main steps, which include defining core issues or areas of focus, analyzing current capabilities and capacity gaps, forecasting future requirements and availability, and developing and implementing staffing strategies.

1. Understanding the Current and Future Workforce Needs

To be able to proceed with the workforce planning process, you’ll first need to provide answers to the why questions: why are you looking to implement workforce planning, and what are you looking to achieve?

An understanding of the broader business context is essential for developing this strategic approach to managing human resources. Once you have a solid grasp of your main business strategies, investments, various external and internal factors, and what-if scenarios, you can proceed to an analysis of your current and future workforce needs. 

This forms the foundation for subsequent steps in the workforce planning process, guiding decisions on hiring, training, development, and workforce restructuring.

Workforce Analysis

Analyzing the current workforce composition and skills involves a detailed evaluation of employees’ skills, qualifications, and experiences, along with assessing the workforce’s demographic characteristics, such as age, gender, and cultural background. By examining technical abilities, soft skills, leadership qualities, and other competencies, organizations can identify areas of strength and weakness.

This analysis is crucial for identifying skill gaps, informing talent management strategies, and making decisions about future hiring, training, and development. It ensures the workforce aligns with the organization’s current operations and strategic objectives, facilitating informed planning for future needs.

A workforce planning report showing a breakdown of billable and worked hours by department and employee. The table format displays data for individuals in Development, Project Management, Leadership, and Design, with corresponding percentages of billable hours.

With productive, you can track your utilization rate across departments and employees

Forecasting Future Needs

The ability to anticipate and prepare for future changes is key to maintaining an agile and effective workforce. Effective forecasting helps businesses stay resilient and proactive despite external and internal changes.

When forecasting, you’ll need to consider the following issues:

  • Job categories requiring significant changes, such as upscaling or downsizing: Identify which roles are likely to evolve or become redundant due to changing business needs or technological advancements.
  • Positions that are expected to be hard to fill or have a significant learning curve: Highlight roles that may face recruitment challenges or require extensive training for new hires.
  • Changes in business operations or activities: Assess how shifts in business strategy or operations could alter workforce requirements.
  • Major project or capital expenditures: Consider the workforce implications of significant projects or investments, including the need for specialized skills or temporary staffing increases.
  • External factors such as changing labor market dynamics and demographics: Analyze how broader market and demographic trends could influence the availability and type of talent.

The ultimate goal of forecasting within workforce planning is to align the organization’s human resource capabilities with its evolving needs to support sustained growth and success. This is not a one-and-done event, but a continuous process of gathering, updating, and interpreting workforce-related data.

Forecasting Charts have assisted our organization significantly. The way you can see in a glance that your team is allocated (Scheduled), to how much of the budget you have remaining or to see whether the budget has been invoiced, is obviously extremely insightful.

Patric Osburn,
Service Operations Manager at Quintica

2. Gap Analysis

After establishing your current and projected capabilities, the next step is gap analysis and solution development. Gap analysis can be a dynamic and complex process that targets different factors in a specific context — for example, in a marketing agency, gap analysis might focus on aspects such as:

  • The variance between current campaign results and desired outcomes
  • The variance between current and target profit 
  • The variance between current and needed staffing levels

Workforce planning gap analysis usually contains two main steps: supply and demand analysis and identifying skill gaps.

Conducting Supply and Demand Analysis

This involves a detailed comparison of the current workforce (supply) against the projected needs (demand). This analysis helps identify discrepancies between the available skills, numbers, and roles in the current workforce and what will be needed in the future.

It’s a meticulous process that considers various factors like retirement rates, potential turnover, and the impact of technological advancements on job roles.

Screen capture of a team scheduling interface showing weekly assignments and capacity for team members, with visual indicators of workload distribution, including an overbooked status notification.

productive supports your operational planning with heatmaps for easy allocation oversight

Identifying and Addressing Skill Gaps

The main gap analysis process is pinpointing specific areas where the workforce’s current skills do not align with future requirements. This includes identifying roles that are at risk of becoming obsolete and those that will be in high demand.

It also involves assessing the depth of the learning curve for new technologies or processes and understanding where additional training or recruitment is necessary.

3. Solution Development and Implementation

Once gaps are identified, the next step is to develop and implement solutions. This could involve a range of strategies, such as targeted recruitment for hard-to-fill roles, upskilling or reskilling programs for existing employees, and succession planning for critical positions.

Additionally, organizations might consider organizational restructuring or changes in work processes to better align with future needs.

Monitoring and Measuring Effectiveness

Your workforce planning efforts should be monitored and measured in order to ensure that you’re addressing your identified capacity gaps and forecasted future needs. Ask the following questions:

  • Are your strategies contributing to business success?
  • Are there changes in business goals that require a revision of the strategy?
  • Are there changes in the workforce that affect the strategy?
  • Is the strategy flexible enough to adapt to external changes?

Secondly, in order to measure the real impact of your workforce planning strategies against target goals, you can monitor certain key performance indicators. Some of these key capacity planning KPIs are attrition rate, retention rate, tenure, quality of hire, and diversity metrics.

Key Workforce Planning Metrics

  • Attrition Rate: This metric measures the rate at which employees leave the organization over a specific period. A high attrition rate can indicate issues with employee satisfaction or engagement.
  • Retention Rate: In contrast to attrition, this measures the rate at which employees stay with the organization. A high retention rate often reflects positive workplace conditions and effective employee engagement strategies.
  • Tenure: This refers to the average length of time employees stay with the organization. Longer tenure can indicate stability and employee loyalty, while shorter tenure might suggest issues with retention or job satisfaction.
  • Quality of Hire: This metric assesses the effectiveness of the recruitment process by measuring the performance and contribution of new hires. It can include factors like job performance, cultural fit, and the speed of reaching full productivity.
  • Diversity Metrics: These metrics evaluate the composition of the workforce in terms of diversity, including aspects like gender, ethnicity, age, and other demographic factors. They are crucial for understanding and promoting diversity and inclusion within the organization.

To gauge your agency’s performance, it’s useful to compare your outcomes with industry standards and competitors. For example, according to the Bureau of Labor Statistics, the overall turnover rate in the US in 2023 was 4%, with quitting accounting for 2.5%. Furthermore, the average duration of employment was reported to be 4.1 years. You can consider these numbers in the context of your industry and agency environment.

Strategic Workforce Planning Models

There are two commonly known workforce planning models: HCMI and OPM.

The HCMI model consists of eight steps. It addresses workforce-related questions, followed by scenario analysis and macro (management input) and micro (line manager input) demand forecasting. It also includes internal and external supply modeling, gap analysis between demand and supply, and the development of a workforce action plan.

In contrast, the OPM model follows a five-step process. It starts by setting a strategic direction linked to the agency’s broader plans. The second step involves analyzing the workforce and identifying skill gaps. Developing and implementing an action plan comes next, focusing on strategies like recruitment and training and ensuring that resources are well coordinated.
Finally, it concludes with monitoring, evaluating, and revising the plan.

Both models prioritize strategic alignment and continuous evaluation, but HCMI leans more towards in-depth analysis at each stage, while OPM focuses on a clear, structured process integrating workforce planning with overall strategic objectives.

Key Steps to Implementing Workforce Planning

To summarize our discussion of the workforce planning processes, here are our main tips to ensure efficiency and effectiveness:

  • Define clear objectives within the parameters of the broader agency context, such as business strategies, investments, and external factors
  • Make sure to get a thorough understanding of your current workforce, including their strengths, weaknesses, and skill gaps
  • Anticipate future challenges by utilizing a mixture of market analysis and the insights mentioned above
  • Continuously review your strategies and monitor key performance indicators such as attrition and retention rate to ensure sustained success

Optimizing Your Workforce Planning

After exploring the main steps to developing your workforce planning strategies, this section outlines the three fundamental ways to optimize your results: managing skills and knowledge effectively with human capital planning, leveraging technology, and monitoring workforce utilization.

These steps ensure a skilled, well-equipped, and efficiently deployed workforce, aligning human resources with business objectives.

Effective Management of Skills and Knowledge

The basic first step of optimizing workforce utilization and productivity is effectively managing the skills and knowledge possessed by your agency’s resources. This activity, known as human capital planning, is a fundamental aspect of strategic HRP.

Human capital planning can help you:

  • Promote employee development to nurture and retain critical skills
  • Enhance existing employee skills through continuous training
  • Identify potential leaders and enable succession planning
  • Achieve strategic alignment between business needs and workforce capabilities
  • Evaluate and realign job roles based on changing business strategies
  • Foster a culture of innovation and agility

In the later sections of the guide, we’ll cover essential HR strategies that help cultivate your agency’s resources, such as talent retention and management.

Leveraging Technology to Enhance Workforce Planning

According to research by Gartner, technology was placed as one of the top three priorities for HR leaders in 2024. However, 56% of HR leaders noted that their HR technology solutions and strategy do not match their current and future business needs. HR leaders are also uncertain about which technology to adopt and how to proceed.

Garner suggests focusing on the following main concerns: 

  • Who will own, maintain, and manage the technology?
  • How will this impact current versus future ways of working?
  •  What is the impact on skills, roles, responsibilities, and digital dexterity? 
  • What is happening in the vendor landscape? Can we wait, or should we build our own solution? 

In the following section, we’ll discuss the best tools for effective workforce planning and introduce key features that support day-to-day agency operations.

Get Started With Workforce Planning

Productive is an all-in-one platform for agencies that supports all levels of workforce planning, from human resources to financials.

Book a demo

Tools for Effective Workforce Planning

Since workforce planning is a complex process, there’s a variety of solutions available that can support your planning, both on an operational and strategic level. Here’s a brief comparison of potential types of software solutions you might encounter during your research:

  • Cloud-based vs enterprise: The main difference between cloud-based and enterprise solutions is how they host their data, which affects access, privacy, and implementation. Cloud-based tools are easier to implement and are usually more affordable, as many tools offer various subscription-based pricing models. Enterprise solutions require a bigger upfront investment and a longer implementation time, but they are a better fit for companies that handle sensitive data.
  • Specialized vs all-in-one: Specialized tools target a certain part of a workforce planning process, such as time tracking, capacity management, or budgeting and billing. On the other hand, all-in-one tools support a strategic approach by combining these processes on one platform. The best comprehensive tools offer a set of features such as project management, budgeting, resource planning, and reporting and forecasting.
  • Agency vs generic: Certain tools are created specifically for agencies, such as consultancies, design agencies, marketing companies, and others. Other software may support various industries, including retail and manufacturing. The latter can offer features and workflows that aren’t fully compatible with the needs of a service-providing business.

Consider the above factors when looking for the best workforce planning software for your agency. In the following section, we’ll explore some key features of Productive,  a popular all-in-one solution, as an example of a good option to look out for.

Productive – The All-in-One Agency Management Tool for Workforce Planning

Productive is a comprehensive agency management tool for agencies of all shapes and sizes. It gathers key features that support workforce planning, including billable hours management, resource management, task allocation, utilization forecasting, and more.

A digital workforce planning schedule showing various tasks and time allocations for team members across a multi-week timeline. The chart includes project assignments, vacation periods, and personal time, organized by individual and project name.

productive’s resource planning integrates time off management

Key Features Include:

  • Resource Planning: Productive’s resource planning tools support daily and strategic workforce planning. With its responsive resource management plan, you can check resource availability and reallocate employees across multiple projects. Then, by switching to the Profitability view, you can get insights into your budget burn and profit margins. Productive also su
  • Time Tracking: Productive helps you manage your agency’s most valuable resource with its time tracking feature. You can manage your billable hours by tracking time with an integrated timer, inputting it manually, or setting up your tracking automatically with resource planning. Managers can easily request changes and mark time as billable or non-billable with time approvals.
  • Reporting: Productive offers a library with more than 50 reporting templates for agencies, including metrics such as billable utilization, time off usage by people, performance by specific sales representative, invoiced revenue by client, and more. Data can be organized into dashboards and shared with project stakeholders, or scheduled to be sent to email.
  • Budgeting: Productive’s financial management features include budgeting, billing, and purchase orders. This facilitates workforce planning by providing clear financial oversight, enabling organizations to allocate resources efficiently and make informed staffing decisions based on budgetary constraints and projections.
  • Project Management: Productive helps your teams maintain full visibility of their project progress with multiple views such as Gantt, Kanban, and Calendar. Task management offers dependencies, milestones, to-dos, automatic notifications, and various other features that simplify the repetitive parts of project management.

Additional features of Productive include Sales, Docs, and Automations. Productive also includes a variety of integrations that help maintain continuity with your established workflows, such as Xero, QuickBooks, Google Calendar, Slack, HubSpot, Zapier, and more.

We’re able to see our schedule out for the next three months easily, and I can put in tasks where I know we have work coming up. That allows me to make sure that I’m not overbooking people or it lets me know where people are overbooked and that I need to get some resources to help us out with the workload. That’s been the biggest shift—at any time Bryan can ask me “Hey, when do we have free time available?” and I can tell him.

Heather Schneider,
Senior VP of Production at 4Site

Managing Your Workforce Utilization

Billable utilization is the fundamental metric for tracking the success of your capacity management efforts. In short, it’s the ratio between billable hours and overall hours worked, tracked per employee, team, or department (learn more: what are billable hours and how to calculate them).

A low utilization rate signifies that much time is spent on non-billable work, which can signify ineffective processes. However, an overly high utilization rate — industry standards usually recommend a maximum utilization rate of 90% — often means that your employees are being overworked.

This can lead to increased turnover, significantly impacting the success of your workforce planning efforts.

Utilization rates can also help guide your long-term planning. For example, you can forecast scenarios and decide whether you have enough resources for potential projects. Otherwise, you can view which services will be underutilized in certain parts of the year, and either restructure your teams or guide sales efforts towards acquiring specific clients.

Find out more about managing your utilization in crisis times:

Integrating Workforce Planning with HR Processes 

By integrating workforce planning into your HR planning process, you can optimize human capital and employment models, ensuring you have the right skills in the right places. Your organization’s success in integrating workforce planning with other HR strategies relies on a comprehensive understanding of both the strategic and operational aspects of workforce planning.

Key areas of integration include:

  • Recruitment: workforce planning informs the kind and number of talents required
  • Performance management: aligning employee objectives with organizational goals
  • Succession planning: preparing for future leadership needs. 

This holistic approach ensures that workforce planning is a continuous process aligned with the broader HR strategy to enhance organizational agility and resilience.

Attracting and Retaining Top Talent

In this section, we’ll explore strategies for human resources management. We’ll delve into effective methods for attracting and retaining employees and managing workforce diversity, equity, and inclusion (DEI), essential elements in building a strong, dynamic, and inclusive workforce.

Strategies to Attract Top Talent

To ensure your company’s success, it’s important to develop talent acquisition strategies that have the capacity to reach a wide audience, as well as the right profile of employees for your agency. Here are some tips for improving your talent acquisition:

  • Expand your value propositions: Consider both your traditional (job titles, compensations, benefits) and non-traditional (hybrid work, flexible hours, childcare assistance) value propositions. Monitor how they compare with industry standards. Staying ahead of the competition can be important to attracting top talent.
  • Invest in employer branding: According to LinkedIn statistics, 75 % of job seekers consider an employer’s brand before applying for a job. Ensure you get your name out there while highlighting positives such as unique value propositions or workplace culture.
  • Track hiring metrics: Consider tracking some key hiring metrics, such as time to hire, acceptance rates, as well as new hire retention, cost per hire, and quality of hire. By understanding these metrics in depth, your organization can continuously optimize its talent acquisition methods to better meet evolving business and workforce demands.

Techniques for Retaining Key Personnel

The 2020 Work Institute Report presents the following factors as the main reasons for voluntary turnover:

  • Lack of career and personal development (20%)
  • Misaligned of work-life balance (12%)
  • Poor management behavior (12%)
  • Limited resources, poor training, and workload issues (10%)
  • Lacking compensation and benefits (9%)
  • Hostile work environment (6%)

Consider these statistics when developing strategies for employee retention. Every agency and industry is different, but some basic tactics include working on comprehensive training plans to ensure that employees feel valued and engaged. Another important tactic is proper succession planning, which provides employees with a career path within the organization to work and grow toward.

Finally, promoting a healthy workplace culture is very important. This means ensuring a balanced daily workload by avoiding overtime and micromanagement. Additionally, businesses should work to actively encourage a balance between personal and professional life to increase employee satisfaction.

Managing Workforce Diversity, Equity, and Inclusion (DEI)

Here’s a simplified explanation of the three tenants of workplace diversity, equity, and diversion initiatives, or DEI:

  • Workforce diversity involves understanding the unique needs and talents of diverse individuals and cultivating an environment where everyone feels valued.
  • Equity in the workplace means ensuring all employees receive fair treatment and have equal opportunities for professional growth and career advancement.
  • Inclusion involves cultivating an environment where all individuals feel valued and engaged, promoting a diversity of viewpoints to stimulate innovation.

A Pew Research Center survey shows that about six-in-ten (61%) US workers say their company or organization has policies that ensure fairness in hiring, pay, or promotions, and 52% say they have training or meetings on DEI at work. Majorities of those who have access to these measures say each has positively impacted where they work. 

To apply these strategies to your own workplace, consider the four Ps of DEI:

Process: Achieving inclusivity usually requires developing and implementing new approaches, rather than just working on changing employee mindsets.

Protocol: It’s essential to have clearly documented systems. Furthermore, these should be well communicated to ensure everyone knows them.

Procedure: These new protocols need to be regularly monitored to ensure that all steps are being followed in order to achieve the pre-set goals.

People: The commitment of your team to your vision is crucial. They should not only be aligned with DEI goals but also understand and share a passion for their importance and value.

Best Practices for Workforce Planning

There are three key principles to follow for successful workforce planning. First is adaptability, or the capability to account for adjustments and align with evolving business needs and market trends. The second is improving efficiency, or eliminating outdated processes by identifying skill gaps, tracking key metrics, and modernizing technology. Finally, focusing on workforce quality is vital for overall business success.

Some best practices include:

  • Involvement of both HR and business leaders in the planning process to ensure a comprehensive understanding of business needs.
  • Regular communication between key parties, including management and HR leaders.
  • Use of analytics and tools for insights into supply and demand to make data-driven decisions.
  • Regularly reviewing and updating your workforce plan to reflect changes in business needs and goals.
  • Staying flexible and adapting as necessary to maintain alignment with strategic goals.

Closing Remarks: Workforce Planning for Professional Services

In conclusion, successful workforce planning is an intricate and dynamic process that requires a sophisticated approach. From aligning HR processes with organizational goals to implementing modern technology, each aspect plays a pivotal role in shaping a robust workforce.

By implementing these strategies, organizations can effectively attract, retain, and nurture top talent while staying adaptable and efficient. Ultimately, this comprehensive approach to workforce planning is key to fostering a productive, engaged, and diverse workforce that drives business success.

If you’re looking for a tool to help shape your workforce planning strategies, consider booking a demo with Productive, the all-in-one agency management software.


What are the 5 key elements of workforce planning?

The five key elements or steps of implementing workforce planning are aligning your strategy with your business needs, identifying skill gaps, forecasting future availability to prepare for potential challenges, monitoring and evaluating processes, and reiterating by using data. 

What are the 5 Rs of workforce planning?

The 5 Rs of workforce planning refer to having the right size of the workforce, the right skills, the right shape or organizational structure, the right site, and the right spend or budget. These principles guide organizations in creating a balanced, skilled, and cost-effective workforce aligned with business objectives.

What are the 5 activities of workforce planning?

Workforce planning involves analyzing the current workforce, forecasting future requirements, conducting gap analysis, developing action plans to address these gaps, and implementing and monitoring these plans to ensure alignment with evolving business needs.

What are the 4 stages of workforce planning?

The four stages of workforce planning are analyzing the current workforce, forecasting future needs, developing strategies to address identified gaps, and implementing and monitoring these strategies for effectiveness and alignment.

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Lucija Bakić

Content Specialist

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