employees looking at laptops in a conference room

Every business has questions about staffing levels. Here’s a common scenario: The annual budgetary planning cycle begins, and a department asks for 20 new positions. A senior leader suspects that some requests are inflated but has no real data to support the instinct. A new round of negotiations ensues, and after much wringing of hands the ask lowers to 15, only to have the final dust settle at an arbitrary 11 or 12. With a data-driven workforce model, the discussion can shift away from guesswork to a concrete conversation about departmental resourcing in support of the larger organizational growth. But how can you close the gap between the known and the unknown?

The Workforce Model

A workforce model is intended to help departments quantify their needs and improve the planning process. Ideally, it is a collaborative, standardized and transparent process that is developed in conjunction with supportive leadership. The primary purpose is to determine the workforce requirements for an upcoming time period. It also works in tandem with other organizational measures and metrics to reveal important relationships. For one property and casualty insurance company, a key predictor of business growth was the forecast of the number of vehicles and number of policies in force, so these were essential to the model. Marketing’s forecast for the upcoming budget year were plugged into their model, and the total full-time equivalents (FTE) for all customer contact, non-customer contact, support and ancillary positions were produced. That became the number going forward for the rest of the annual operating planning cycle. Once a model is completed, it is easy to test multiple scenarios rapidly.

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Building Blocks

As George Box famously said, “All models are wrong, but some are useful.” It follows that the quality of the output of any analytical model depends on the quality of the input. To that end, it’s important to define the difference between workforce and staffing. In workforce planning, an FTE is a measure of effort required to complete an annual unit of work. It is not necessarily a full-time employee. Think of an organization as a large table with many chairs placed around it. Determining the number of chairs an organization needs around this table is what we call workforce planning. Who the individuals are that sit in those chairs is the domain of staffing. Management can decide to fill one chair with a full-time employee, or they could use two-part timers, a contractor, overtime or contingent workers. The number of chairs is the domain of workforce management/planning. You may also hear this referred to as “spaces versus faces.”

Aside from FTE, another critical factor defining a workforce model is scope. Is this model for the entire organization, one department or a single strategic business unit? Further, what type of work is being performed? In most cases, the answer will fall into one of several categories: transactional, manufacturing, knowledge, oversight or business support.

In the next part of this series, I will explain what workforce planning in these categories may look like and the benefits of these models.