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The Case for Long-term Workforce Planning in Competitive Markets

  • Introduction
  • Why?
  • Workforce Change
  • Strategic Planning
  • Case Study
  • Best Practice
  • Build for Future
  • More

Introduction



Any organization that fails to consider its workforce needs in five to 10 years is at risk. As technology advances, demographics shift, and the economy changes, organizations that want to succeed must focus on building and maintaining competitive workforces.

For decades, Kodak was a leader in photography, even pioneering the first digital camera in 1975. Yet, despite recognizing the digital shift, the company failed to realign its workforce. Kodak’s expertise in film manufacturing didn’t translate to the emerging digital landscape, where success required semiconductor technology, software development, and consumer electronics expertise. By the time it attempted to pivot, competitors had already seized the market.

The lesson is clear: Recognizing change isn’t enough — organizations must ensure their workforces are equipped to adapt. Without strategic workforce planning, even industry giants can falter.

This cautionary tale highlights a critical truth: Success in today’s fast-evolving business landscape requires more than just innovative products or services — it demands a forward- looking workforce strategy.

To stay competitive, organizations must anticipate the skills, roles, and talent pipelines needed to meet future challenges head-on. The following sections will explore why long- term workforce planning is essential, the trends shaping tomorrow’s workplaces, and practical steps HR leaders can take to secure their organization’s future.



 

Why Workforce Planning?

Workforce planning across a range of time frames is critical. From short-term planning — in the next one to two years — to medium-term and long-term planning, anticipating workforce needs and implementing best practices to provide the right talent pipeline is critical.

Keeping abreast of current trends affecting the workforce and implementing a long-term workforce planning process are crucial. No company wants to be the next Blackberry or Toys R Us.

Strategic workforce planning ensures companies have the talent they need to stay competitive in the face of rapid change, as demonstrated by Microsoft’s forward-thinking approach to artificial intelligence. Recognizing the transformative potential of AI early on, Microsoft invested in reskilling its workforce and launched initiatives such as the AI Business School to empower employees with the knowledge and skills to thrive in an AI-driven future. At the same time, the company strategically aligned hiring efforts to recruit top AI talent and collaborated with academic institutions to nurture a steady talent pipeline.

These actions not only positioned Microsoft as a leader in AI but also allowed the company to adapt to evolving market demands and stay ahead of competitors. This proactive alignment of workforce capabilities with business goals exemplifies the power of effective workforce planning.

Businesses often have strategic plans that look several years into the future. Three-year to five-year time frames are commonly recommended, but actual time frames may vary from company to company based on the preferences of executives and other factors. The longer in the future that a strategic plan extends, the greater the uncertainty and the unknowns are that are embedded in the plan.

HR leaders should consider both their organization’s long-term strategic planning and other factors, such as demographic trends, that will influence the current workforce as well as the potential future workforce.

Those same forces will also shape your organization’s workforce and the larger talent marketplaces in which you and every employer operate. Without long-term strategic workforce planning, your talent tactics risk being out of step with business goals. That may mean that when it’s time to act on a business initiative, the company won’t have the talent it needs.

Overhead photo of office workers having a meeting

Top HR Priorities in 2024

Recruiting dominates—but leadership development is close behind.

While 43% of HR professionals cite recruiting as a top priority, leadership and manager development follows closely at 27%. This signals a growing recognition that a strong leadership pipeline is essential to sustaining long-term workforce success.

Manager and leadership development need urgent reinvention.

According to HR executives, manager development (43%) and leadership development (41%) are the most critical areas in need of transformation—signaling a clear demand for future-ready leaders who can navigate ongoing change.

Succession management is the #1 talent priority.

Nearly half (47%) of CHROs say succession management is their top focus within talent management followed by workforce planning (40%). Long-term workforce readiness depends on building strong internal pipelines today.

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Workforce Planning: The Future of Work

Explore the critical aspects of workforce planning within your organization and learn to support the implementation of a talent management strategy.

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Five Forces of Workforce Change

Five key workforce trends that will shape your strategic hiring decisions.

1. A faster pace of change.

Technology and other forces are reshaping how we live and work at a faster pace than ever before. That means workplaces and industries are evolving more quickly. Consider the ways work environments have changed since 2019, the year before the COVID-19 pandemic changed everything: more widespread fully and partially remote roles and the rise of AI are just some examples.

Cultural changes, such as the shifting landscape for workplace inclusion and diversity efforts, have also contributed to rapid changes, becoming everyday concerns for both leaders and employees. By looking further ahead, HR executives can better anticipate how the skills and capabilities of their entire workforce need to change.

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2. Evolving business strategies.

A PwC survey of more than 4,700 CEOs around the world found that nearly half worried that their companies wouldn’t be viable a decade from now if they didn’t transform their businesses. A faster-moving, more uncertain business environment is changing how companies develop and implement strategy. Forces such as digitization and the emergence of social media have altered the competitive landscape, creating new opportunities and new threats — the same disruptive trends that struck Toys R Us and many other companies.

3. A move to a skills-first stance.

One obstacle for CEOs seeking to reinvent their businesses to adapt to changing market conditions is a lack of workforce skills — 52% of chief executives cited “lack of skills in my company’s workforce” as a barrier to business reinvention in PwC’s 27th annual Global CEO Survey.

Many organizations have already shifted to skills-based talent management practices. That’s when specific skills may be more important than formal educational credentials or years of experience — at least for some roles. Why? Rapid technological advances, bigger talent pools, increasingly agile business strategies, changing educational methods, and demographic shifts are making it difficult to evaluate candidates without focusing on the skills they have.

Coworkers discussing a meeting agenda in an office setting.
Smiling customer service representative.

4. The rise of “soft skills.”

As more tasks are automated, the tasks that only humans can do become more critical. This will create a demand for people who have those skills. An analysis on LinkedIn found that the top three in-demand skills on its platform were communication, customer service, and leadership. The rest of the list of top 10 skills was also dominated by human-centered responsibilities, sometimes known as “soft skills.”

The National Bureau of Economic Research found that wages and job growth in “social-skill-intensive” occupations have, for decades, been rising faster than in science, technology, engineering, and math jobs.

5. Generational shifts.

By the end of the decade, employers will be faced with managing a workforce that includes five different generations: Baby Boomers, Generation X, Millennials, Generation Z, and Generation Alpha (those born since 2010). This will create skills challenges and cultural and compensation issues for employers to address, with different generations prioritizing different goals.

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Future-Proof Your Workforce: Retirement, Knowledge Transfer & Leadership Continuity

An episode of Tomorrowist

Explore how retirement readiness and succession planning impact your organizational resilience. From building internal talent pipelines to capturing institutional knowledge before it disappears, this conversation with Peter Cappelli from The Wharton School at the University of Pennsylvania, breaks down what business leaders need to know to future-proof their workforce — and how to take action before it’s too late.

Longer-term Strategic Workforce Planning to the Rescue

Some of these workforce trends are the result of changes over many decades. Others, such as the rise of remote working, happened suddenly and unexpectedly due to unanticipated external events like the COVID-19 pandemic. None of them are simple to address.

Organizations will be better positioned to take on these issues if they shift to longer-term strategic workforce planning. This gives HR leaders time to consider complex issues around workforce capabilities, recruiting and retention, upskilling and reskilling, and potential changes to benefits and compensation.

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Workforce Planning Follows a Four-step Process:



1. Supply Analysis

You need to understand your organization’s current talent. How many employees are there, and in what roles? What career stage are they in? And perhaps most importantly, what skills and capabilities do they have?

2. Demand Analysis

This involves gathering input from key stakeholders across the organization, reviewing the business strategy and long-term business plan, and gathering data on industry and talent trends. A key part of this demand analysis centers on how the organization’s skill needs are likely to change.

3. Gap Analysis

This part of strategic workforce planning uses the findings from the previous two steps to identify the missing pieces — people, roles, and skills — in your workforce. Given where the company will be in five years, is your current workforce adequate, or will new skills and roles be required?

4. Solution Analysis

With a clear understanding of the gap, it’s time to explore solutions to ensure that when the future arrives, your workforce will be ready. In most cases, there won’t be just one solution. Instead, a mix of training, recruiting, targeted retention efforts, and other initiatives will be required to bridge the gap.


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Case Study: Santander

A compelling example of strategic workforce planning is Santander’s approach to aligning its workforce with future business needs. Santander implemented a comprehensive methodology that included job family design and clustering, workforce demand and supply modeling, gap analysis, and the development of strategic HR initiatives. By grouping its current workforce into skill clusters within job families, it could effectively project future demand and supply, identify skills gaps, and determine areas requiring significant upskilling or reskilling.

This meticulous planning enabled Santander to anticipate workforce gaps, particularly in digital positions such as data and technology specialists. Consequently, it launched targeted HR initiatives focused on attraction and recruiting, compensation, learning, performance and attrition management, and internal mobility. By proactively aligning its workforce capabilities with its strategic objectives, Santander ensured it had the necessary talent to navigate the evolving digital landscape and maintain a competitive edge in the financial sector.

Santander’s success underscores the transformative potential of strategic workforce planning when applied effectively. By proactively addressing workforce gaps and aligning talent strategies with business goals, organizations can not only adapt to change but also thrive in competitive markets. The next sections will dive deeper into the actionable steps HR leaders can take and best practices to future-proof your organization’s talent pipeline.

business woman looking at laptop
Tawanda Starms and Holistic Talent Strategy

An episode of People + Strategy

In this episode of the SHRM Executive Network's People + Strategy podcast, Betty Thompson, former Executive Vice President and Chief People Officer for Booz Allen Hamilton, discusses the powerful demographic and social changes sweeping into our workplaces over the coming decade and how innovative HR leaders can put winning people strategies in place to seize on the opportunities ahead.



 


Best Practices for Longer-term Workforce Planning

Creating a longer-term workforce plan — especially for the first time — can be an intimidating project. Here are some best practices to help it go smoothly.

A longer-term workforce plan is not just another task on someone’s to-do list. The multiple-stakeholder aspect, as well as the uncertainties inherent in multiyear planning, mean a team is needed to execute it successfully. Finding a high-level executive to champion the plan is crucial for company buy-in and follow-through.

Office working aligning post-it notes on a glass board.

Consider pulling in representatives of the company’s strategy function and other key business units to ensure the plan meets organizational needs and accounts for marketplace trends. This is particularly important during the demand analysis and gap analysis. Strategic workforce planning is only effective if it serves the company’s strategy and goals. “Understanding your company’s business strategy and growth drivers helps determine the skills your workforce needs to meet company goals,” noted Jagdish Chugani, now chief people officer at Synapse Health.

Business people discussing upcoming work in a meeting.

There are likely to be aspects of an organization’s multiyear workforce plan that feel obvious. But the value of a longer-term workforce plan is partly in identifying factors that are not obvious. Using data — about your current workforce, industry trends, business opportunities, demographics, and more — can help planners unearth insights that can provide a significant competitive edge.

Office working looking at data analytics.

Workforce planning is about more than job roles. Consider the impact of workforce demographics on churn, retention, and hiring — and how these will vary from the youngest to the oldest workers. When writing a solution analysis, make sure it is multipronged in the challenges it addresses and the solutions it recommends. In addition to recruiting, upskilling and reskilling can be efficient ways to transform your current workforce into the one your organization will need in the next five years.

Office scene with employees of varying diversities.

No plan should be developed in isolation. Involve key business leaders and other stakeholders early in the process. Keep them informed by providing periodic updates throughout the planning process. In addition to gathering key feedback, this can also help build internal buy-in for the action items and new initiatives identified during the solution analysis.

Wooden blocks illustrating the loop between input and feedback, emphasizing communication, improvement, and interactive processes in work or learning environments

Especially in large enterprises, strategic workforce planning involves a lot of data about current and potential future employees. Many different software tools can help analyze and visualize this data. Some platforms may be able to integrate with your current HR information system, which simplifies information gathering. There are also vendors that can provide market intelligence and data on industry trends. Investing thoughtfully in the right tools and services can make multiyear workforce planning less onerous and more effective.

An analyst uses a computer and dashboard for data business analysis and Data Management System with KPI and metrics connected to the database for technology finance, operations, sales, marketing

Finally, just like any business-planning initiative, an organization’s longer-term workforce plan should be reviewed and updated at least annually. Changes in business plans, technology, and the economy all influence how a strategic workforce plan should evolve over time. The good news is that once the process has been done, updating and revising the plan — though still a major exercise — should be faster and simpler.

Two mid adult businesswomen discussing in meeting, woman in her 30s with serious expression, talking

Building a Workforce for the Future

Long-term workforce planning isn’t just a strategic advantage — it’s a necessity for organizations aiming to remain competitive in a rapidly evolving world. By adapting to technological advancements and shifting demographics as well as addressing skills gaps and fostering adaptability, the companies that invest in their workforces today are setting the stage for sustainable success tomorrow.

HR leaders can create a dynamic, future-ready workforce by understanding current talent, anticipating future needs, identifying gaps, and implementing tailored solutions. However, workforce planning is not a one-time initiative. It requires ongoing refinement informed by data, trends, and business goals.

As you consider the insights and strategies outlined in this e-book, remember that the best workforce plans are those that are proactive, inclusive, and aligned with broader organizational objectives. With the right approach, your organization can not only navigate change but also emerge stronger, more innovative, and more resilient in the face of uncertainty. The future of work is now — start planning for it today.

Start Here to Build a Future-ready Workforce

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