Workforce Analysis
Workforce Analysis refers to the process of evaluating the current capacity of an organization in context to its labor force. It involves assessing the skills, capabilities, productivity, and other factors related to the employees within an organization. This analysis helps to identify any gaps between the employees’ existing skills, the organizational objectives and to plan for future workforce requirements.
Last updated: September 28, 2023 • 10 min read
What Is Workforce Analysis?
Workforce Analysis is the process of studying the employees in an organization to understand their capabilities, skills, competencies, and capacity to meet the organization's strategic objectives. It involves the assessment of staff distribution, diversity, compensation, staff turnover, and performance levels. This analysis helps to identify gaps in skills, areas of overstaffing, understaffing, and supports strategic workforce planning.
What Is the History of Workforce Analysis?
The history of Workforce Analysis isn't easily traceable to a specific point in time as it is largely embedded in the broader history of human resource management and business strategic development. However, one can outline a few key moments:
Scientific Management (Early 1900s): Frederick W. Taylor's theories emphasized efficiency and productivity, laying the groundwork for analyzing work and employee productivity.
Industrial Revolution Period: The need for Workforce Analysis further evolved with the industrial revolution in the 18th and 19th centuries. The growth of organizations necessitated a systematic approach to labor management.
Human Relations Movement (1924-1932): Research conducted by Elton Mayo at Western Electric Hawthorne Works in Chicago highlighted the importance of social factors in the workplace, pushing workforce analysis beyond just productivity metrics.
Post World War II: The rapid business expansion and increased competitiveness following World War II led to increased interest in strategic workforce planning and analysis.
Technological Advancements (1990s - Present): The explosion of technology and data analytics tools expanded capabilities for Workforce Analysis, allowing for more sophisticated, real-time, and comprehensive analysis.
Nonetheless, this history is an oversimplification. The practice of Workforce Analysis has continuously evolved and is still transforming with changes in business, labor laws, technology, and societal attitudes towards work.
What Are the Key Steps in Conducting a Workforce Analysis Calculation?
The key steps in conducting a Workforce Analysis calculation are as follows:
Define the objectives: Determine the specific information you need from the analysis such as identifying skills gaps, workforce diversity, or forecast staffing needs.
Identify the data required: Clarify the kind of data that needs to be collected. It can be employee skill levels, performance data, demographics, or work hours.
Gather the data: Collect the required data from relevant sources. This could be from HR records, employee surveys, performance evaluations, or other databases.
Clean and preprocess the data: Ensure the data is accurate and ready for analysis. This might involve removing errors, filling in missing data or standardizing formats.
Analyse the data: Use appropriate statistical or computational methods to analyse the data. This could involve calculating averages, identifying trends, or applying more complex algorithms.
Interpret the results: Draw conclusions from the resulting data. This might involve identifying skills shortages, predicting future staffing needs, or spotting trends in employee turnover.
Formulate strategies based on results: Based on the conclusion drawn, formulate HR strategies to address the insights gotten from the analysis. This could be recruitment plans, training programs, or employee retention strategies.
Review & monitor: Regularly revisit the workforce analysis to update data and validate the effectiveness of strategies implemented. Adjust as required.
Each step plays a crucial role in ensuring the accuracy and relevance of workforce analysis outcomes.
What Are Some Examples of Workforce Analysis?
Skills gap analysis: This is an analysis of the skills currently available in an organization versus the skills required for the company to achieve its goals. It identifies where there are shortages and helps to plan training and recruitment.
Workforce diversity analysis: This analysis checks the demographic makeup, such as age, gender, race, and nationality, of a company's workforce. It's useful for ensuring a diverse and inclusive workplace.
Turnover rate analysis: This type of analysis checks the rate at which employees are leaving the organization. High turnover rates often indicate dissatisfaction among employees and can impact organizational performance.
Workforce productivity analysis: This type of analysis measures how much each employee or team produces within a stipulated period. It helps in identifying high performing individuals and teams and understanding the factors contributing to their performance.
Succession planning: This analysis is used to identify and develop employees who can replace key leaders within the organization in the future. It uses workforce analysis to identify potential candidates based on performance, skills, and experience.
Staffing forecast: This analysis involves using trends and growth projections to predict future hiring needs. It helps an organization to better plan its recruitment strategy.
Compensation analysis: This process examines how pay in your organization compares to industry norms and standards and helps ensure the organization offers competitive salaries.
Employee satisfaction survey analysis: This analysis reveals employees' satisfaction levels. It can identify areas for improvement and can be used to increase retention and productivity.
Remember, these are only a few examples, and the type of workforce analysis an organization would choose to conduct typically depends on its objectives.
How Does Workforce Analysis Differ From Human Capital Management?
Workforce Analysis and Human Capital Management are two interrelated concepts within the field of Human Resource Management, but they focus on different aspects and have distinct objectives:
Workforce Analysis is a process that involves collecting and analyzing data related to the employees in an organization. Its aim is to identify current workforce strengths and weaknesses, forecast future workforce needs, and detect gaps in skills or competencies. It is a tool that helps to understand 'what is' and 'what will be needed' in terms of workforce for achieving the company's strategic goals.
On the other hand, Human Capital Management (HCM) involves practices and processes designed to manage and optimize the human resources of an organization. HCM is more comprehensive and encompasses a broad range of activities, including talent acquisition, learning and development, performance management, compensation management, benefits, and succession planning.
In essence, workforce analysis provides the insights and human capital management uses those insights to develop and implement strategies that align the workforce with the organization's objectives. These strategies may involve decisions around hiring, training, diversity, engagement, rewards, and retention. Thus, while they are different, both concepts are essential and contribute to an organization's success.
What Are Some Examples of Human Capital Management?
Some examples of Human Capital Management (HCM) activities include:
Recruitment and Onboarding: Identifying, attracting, and hiring suitable candidates for available positions. Onboarding new hires to get them acquainted with the company culture and job requirements.
Performance Management: Evaluating employees' work performance, providing feedback, and setting personal objectives to align with the company's strategic direction.
Learning and Development: Providing training programs and opportunities for employees to improve their skills, knowledge, and competencies.
Compensation and Benefits: Designing and managing a compensation system (salaries, bonuses) and a benefits program (health insurance, pension plans, etc.) that are competitive and align with the company's strategy.
Workforce Planning: Forecasting future staffing needs, analyzing current workforce, and developing a plan to bridge the gap.
Succession Planning: Identifying and preparing potential employees through mentoring, training, and job rotation, to fill key organizational positions.
Employee Engagement: Implementing strategies to motivate employees, enhance their commitment, and increase their job satisfaction.
Talent Management: Identifying, developing, and retaining high-performing employees to ensure the organization meets its future strategic objectives.
These activities are typically supported by HCM software systems which help in centralizing the data and streamlining these processes.
What Differentiates Workforce Analysis From Strategic Labor Force Planning?
Workforce Analysis and Strategic Labor Force Planning are two interrelated but distinct aspects of human resource management strategy.
Workforce Analysis is focused on understanding the current situation of the workforce in an organization. It's about collecting and analyzing data to get insights into the existing employee profiles, such as the skillsets, competencies, diversity, turnover rates, etc. It's about answering the question, 'What is the current status of our workforce?'
Strategic Labor Force Planning, on the other hand, takes the data-driven insights from workforce analysis and uses them to anticipate future labor needs. It means developing a plan to ensure the organization will have the right people with the right skills, in the right places, and at the right time in the future. So, it's about answering the question, 'How do we optimally align our future workforce with our strategic goals?'
Thus, essentially, workforce analysis provides the foundational data and insights needed for strategic workforce planning to be effective.
What Are Some Examples of Strategies Employed in Strategic Labor Force Planning?
Here are some examples of strategies employed in Strategic Labor Force Planning:
Recruitment strategies: Once future needs are identified, strategies to attract and hire necessary talent can be developed. This could involve partnerships with universities, job posting in certain markets, or offering competitive packages.
Succession planning: If vacancies for critical positions are expected, organizations can develop strategies to identify and prepare internal candidates to assume these roles in the future.
Retention strategies: If it's been identified that employee turnover is higher than desired, plans can be made to improve employee satisfaction and retention. This could involve enhancing benefits, improving work conditions, or providing additional training and development opportunities.
Training and Professional Development: If a skills gap is identified, organizations can arrange for targeted training and development interventions to upgrade the skills of the existing workforce.
Redeployment strategies: If an oversupply of workers in one part of the organization is identified, while there is a shortage elsewhere, plans can be made for redeployment or cross-training of personnel.
Outsourcing strategies: If it is identified that certain services or functions could be more efficiently handled externally, organizations could consider outsourcing them.
Diversity and inclusion strategies: If the workforce analysis shows a lack of diversity, organizations can develop strategies to recruit and retain a more diverse workforce.
Contingency planning: Depending on the volatility of the organization's environment, contingency strategies can also be developed. This is to ensure flexibility and adaptability in case of unexpected changes such as economic downturns, regulatory changes, or sudden loss of key personnel.
These strategies can vary widely based on the specific needs and goals of the organization. The key is to ensure alignment between these strategies and the organization's overall strategic plans.
What Are the Benefits of Workforce Analysis?
Workforce Analysis can bring a range of benefits, such as:
Improved Decision Making: Insights from workforce analysis provide a solid data-driven foundation for decision-making in areas such as recruitment, training, and succession planning.
Identification of Skills Gaps: Workforce analysis can identify areas where employees might need additional training or credentials to meet the organization's current and future needs.
Increased Efficiency: By understanding the workforce's skills and abilities, organizations can optimize operations and improve productivity.
Better Recruitment Strategy: Analysis can reveal staffing shortages and hiring needs, allowing organizations to plan effective recruitment strategies.
Effectiveness in Succession Planning: Regular analysis of the workforce can highlight potential leaders within the business, aiding in succession planning.
Cost Management: Workforce analysis can help in better budgeting and controlling costs related to staffing, overtime, and training.
Diversity and Inclusion: A good workforce analysis can also inform about the diversity and inclusivity in the workplace, helping to build a more representative workforce.
Improved Compliance: It can ensure that the organization complies with different legislations related to fair employment, diversity, compensation, and others.
Overall, workforce analysis is a key tool to help organizations manage their human resources in alignment with their business goals.
What Are the Potential Drawbacks or Disadvantages Associated With Conducting Workforce Analysis?
While Workforce Analysis has many benefits, it is also important to acknowledge potential drawbacks or disadvantages:
Time and Resource Intensive: Collecting, analyzing, and interpreting workforce data can be time-consuming and requires dedicated resources and expertise.
Data Accuracy: Workforce Analysis depends on accurate and up-to-date data. If the data is incorrect or outdated, it could lead to faulty analysis and misguided decisions.
Privacy Concerns: There are legitimate privacy concerns when collecting and handling employee data. Mismanaged data could lead to breaches of privacy and potential legal ramifications.
Resistance to Change: The results of a Workforce Analysis may suggest significant changes to the organization's structure or operation. There could be resistance from employees or management to these changes.
Need for Continuous Monitoring: After the workforce planning strategies are implemented, there's a need for continuous monitoring and adjustments based on the changing business and labor market conditions.
Risk of Misinterpretation: There's always a risk of misinterpreting the data or failing to consider important variables, which could lead to poor decision-making.
To mitigate these issues, organizations should have clear objectives, employ appropriate data collection and analysis methodologies, respect privacy regulations, and be prepared to manage change effectively.
Which Types of Employers Are Most Impacted by Implementing Workforce Analysis Processes?
Implementing Workforce Analysis processes can impact a wide range of employers, but its impact might be most palpable in certain types of organizations:
Large Corporations: These organizations can vastly benefit from workforce analysis due to their large number of employees and the complexity of managing such a workforce spread across different geographical locations and functions.
Growing Businesses: As these businesses scale, workforce analysis can help to strategically plan for growth, avoiding excess staffing or shortages and ensuring the right people are in the right roles.
Organizations undergoing Change: Organizations going through restructures, mergers/acquisitions, or any major changes benefit from workforce analysis by understanding the skills they currently have and identifying what they may need for their new direction.
Industries with High Turnover Rates: Employers in industries like retail, hospitality, or healthcare, where turnover rates are typically high, can utilize workforce analysis to understand and possibly address the reasons for high attrition.
Industries with Fast Technological Changes: Industries like IT and telecommunications where roles keep evolving due to technological advancements, workforce analysis becomes crucial in predicting future skill requirements.
Public Sector: Government organizations that must adhere to certain standards of diversity and fair representation can use it to help ensure compliance with these standards.
While these organizations might be most impacted, it's important to remember that any employer looking to make strategic decisions about human resources could benefit from implementing workforce analysis processes. It ultimately helps optimize the utilization of human capital, irrespective of the industry or the size of the organization.