An effective HR strategy includes many different components. Three powerful tools for achieving the best results are workforce planning, performance management and succession planning. But what are the defining characteristics of these three very different concepts? And how do they all fit together to ensure your organization is optimally staffed and prepared for the future?
What is workforce planning?
Workforce planning is one of the most strategic activities that HR professionals are tasked with. The objective is to ensure that your organization always has the talent it needs to meet its business goals. At the same time, it means ensuring the right level of staffing (avoiding either overstaffing or understaffing).
Some of the main activities involved in workforce staffing are:
- Identifying future and current staffing needs
- Hiring to ensure you have the right talent and the right number of people
- Scaling down your workforce if needed, depending on changes in your organization’s business
- Controlling labor costs
- Ensuring adequate staffing to promote workplace health, safety and optimal job satisfaction
- Identifying possibilities for employees to effectively move into other positions within your organization
Flexibility is a key ingredient to successful workforce planning. HR departments today face fast-paced changes. It’s important to be able to effectively predict changes and leverage them as a strength. This is why many HR leaders now rely on agile working methods and tools like the PESTLE analysis to gain a clearer overview of their organization’s needs.
What is performance management?
Once you’ve got the right people in place, performance management helps you give them the guidance they need to continually develop in their career. In part, that means setting KPIs and clearly defining what you expect of each employee based on their job description. It also means preparing employees for future responsibilities in line with your organization’s goals.
Key activities of performance management include:
- Ensuring that each employee understands what you expect them to achieve
- Setting goals for each employee’s performance and monitoring their progress
- Evaluating the employee’s performance at regular intervals
- Identifying areas for improvement and offering the right measures to help the employee develop
- Rewarding employees for reaching their goals
To implement performance management, HR should put a standard system of meetings and job appraisals in place. While most organizations hold job appraisals once a year, experts increasingly argue for shorter appraisal periods. A lot can happen in one year. To make the appraisal more meaningful, and to ensure that goals are realistic, consider implementing appraisal and goal-setting meetings once every 3 to 6 months.
Effective performance management creates a culture of continual improvement. This helps maximize talent in your workforce. It’s also directly linked to better employee engagement. Deloitte has reported that employee engagement increased by 90% at organizations that have put an effective, modern performance management policy in place.
What is succession planning?
Now that you’ve got a talented, continually improving workforce in place, you want to keep it that way. That’s what succession planning is for. It means planning for the future, to ensure that when one key employee leaves the company, someone is well prepared to step up and take their place.
The main activities related to succession planning are:
- Identifying critical positions that need to always be filled
- Defining the key competencies that are needed to ensure continuity
- Spotting high-potential employees through performance management
- Focusing development activities towards preparing high-potential employees for future roles
- Connecting employees and building relationships through mentoring and coaching
The most critical roles in your organization are often leadership positions. That’s why succession planning usually focuses strongly on developing leadership skills. Forbes recommends using the PEOPLE model, a holistic approach to succession planning that incorporates “performance, emotional agility, optimism, persistence, leadership and entrepreneurship.”
Summary: How do they all fit together?
While these three areas each have different, specific purposes, they are all interconnected:
- Workforce planning ensures that you get the right people into your organization at the right times.
- Performance management keeps those people engaged in their work and enables them to develop their talents.
- Succession planning is embedded into your organization’s performance management: through regular job appraisals, you can identify high-potential employees and set them on a track to fill higher positions down the road. It’s also part of your workforce planning, because both are focused on meeting your organization’s changing staffing needs.
Understanding the connections between these three activities puts you in a better position to fulfill your strategic role as an HR leader.
Interested to know more about how technology can help your Workforce Planning, Performance Management and Succession Planning processes? Reach out to us today and we’ll show you it can be done.