Expert Workforce Planning Process Guide for UK Businesses

Workforce planning is an important component of any business strategy. If you’re developing a detailed growth or scaling strategy, for example, you’ll need to have a watertight overview of the workforce you’ll need to thrive.

An effective workforce planning process includes everything from simple headcounts to careful skills gap analyses. However, these processes are becoming increasingly difficult to complete, partly because digital systems become more complex as your business scales, and partly due to external factors, such as UK skills shortages and strict compliance laws.

We’ve got your back. In this guide, we’ll cover workforce planning in detail. We’ll introduce you to the different types of workforce planning models and the best workforce planning software for UK businesses. We’ll also share a comprehensive seven-step workforce planning process to help you get started and stay on the right track.

Key takeaways

• There are three main types of workforce planning for different needs: strategic workforce planning, operational workforce planning, and scenario-based planning.

• It’s important to set out your business goals before you begin workforce planning; only then can you identify your unique workforce needs.

Workforce planning software like Rippling can help businesses streamline the planning process and reduce costs.

What you’ll learn

• What is workforce planning?

• Why workforce planning is so important

• A 7-step workforce planning process guide for UK businesses

• The most common workforce planning models and frameworks you should know

• Common workforce planning challenges in the UK

• The best workforce planning software for UK businesses

• Rippling workforce planning capabilities in action

• Start your workforce planning process today

• FAQs

What is workforce planning?

Businesses use workforce planning to ensure their workforce is matched to their business goals. It’s about having the right people, in the right numbers, at the right time, to facilitate an organisation’s growth and goal fulfilment.

Workforce planning is also essential for mitigating certain risks (like critical skill gaps or roles with high attrition) and keeping costs on budget.

However, workforce planning isn’t a one-size-fits-all process. There are different types of workforce planning UK businesses regularly use, including:

Strategic workforce planning 

This is long-term workforce planning (with a one- to five-year timeframe) that aims to align workforce needs with long-term, strategic goals. It’s ideal when considering factors that may affect your future readiness, like:

• Large-scale automation

• Succession risks

• Future capability needs

Operational workforce planning 

This is when businesses plan workforce movements in order to overcome short-term operational needs (usually over weeks or months). It’s generally more tailored to:

• Headcount planning

• Shift coverage needs

• Scheduling

• Productivity targets

Scenario-based planning 

This could be a mixture of both strategic and operational workforce planning. In this model, businesses develop workforce plans to address specific, unique scenarios that could occur, such as:

• Rapid growth in a new market

• Business mergers

• Significant regulatory changes

Why workforce planning is so important 

Many businesses mistakenly think workforce planning is just about making sure you have enough employees in each department. In reality, workforce planning is about making sure your business has the right skills in place to reach your strategic goals.

Without it, a business can face big problems.

Business impact

On the surface, this is the biggest risk of not having a strategic workforce planning process in place. Without comprehensive planning, you may struggle with:

• Growth: To grow sustainably, your business needs the right talent in the right roles. You may find it difficult to scale if you’re understaffed or if you have significant skills/capacity gaps.

• Efficiency gains: Many UK businesses face a common problem: experiencing low productivity despite having the right headcount. Workforce planning is as much about positioning employees appropriately and ensuring their skills match your needs as it is about hiring enough people.

Talent market hurdles

Your business can’t directly improve the talent market, but it can plan ahead to avoid certain risks that a tight talent market can present.

• Skills shortages: There’s extremely high demand for certain skills in the UK. GOV.uk suggests employment demand in key areas could reach 6.7 million by 2030. If your business will need skills that are in short supply, workforce planning can help you get ahead of the competition.

• Employee expectations: UK employees are currently suffering from low engagement and high burnout, and expectations regarding hybrid working and L&D (learning and development) options are shifting. Businesses that address these concerns in their workforce planning can increase employee retention.

Financial burden

Labour is one of the biggest segments of any business’s costs. Better workforce planning has the power to drive costs down and maintain a better balance.

• Budgeting accuracy: Workforce planning includes financial analysis (not just of salaries, but also of leave and tax obligations). Developing a clearer picture of your workforce needs will help you reach your budgeting goals.

• Over- and understaffing: Both overstaffing and understaffing can create serious financial risks. Overstaffing means wasted revenue, and understaffing means missed revenue. Workforce planning is the easiest way to get your headcount right and reduce financial drag.

Compliance and risk

Workforce planning is about preparing for future needs, but it’s also about mitigating current risks. Businesses with a strong workforce plan are better able to respond to and avoid key dangers.

• Labour laws: The UK is introducing the Fair Work Agency, which, alongside HMRC, the HSE, and other similar bodies, will oversee strict employment rules. Planning ahead in key areas (like minimum wages and leave entitlements) prior to onboarding is a must.

• Business resilience: Workforce planning is a cornerstone of continuity planning. Should something go wrong, such as a senior leader becoming ill or an industrial action pausing business, you need to have solid workforce contingency plans in place.

A 7-step workforce planning process guide for UK businesses

It can be difficult to know where to start with workforce planning. That’s why we’ve developed a tried-and-tested seven-step workforce planning process. Following these steps will make your workforce planning easier and more efficient:

1. Align with business strategy

You shouldn’t go straight into workforce planning with analysis and forecasting. The first, most important step is to figure out why you need workforce planning to begin with.

First, consider your business goals. Is your main goal to cut costs, or is it to grow by 10% or expand into a new market? Only when you’ve defined your goals can you create a proper workforce plan. For example, if your goal is to cut costs, you’ll want to focus more on headcount and automation capacity.

Once you have your goals in place, you can translate your strategy into talent needs. Another important step here is to make sure all stakeholders (leaders, finance, HR) agree on the plan.

2. Analyse your current workforce supply

Before you start compiling a workforce plan, you need to identify where you currently stand. This involves auditing your current workforce supply in detail. 

You might consider:

• Headcounts: Find out exactly how many employees you have in each department.

• Skills mapping: Find out exactly which skills your organisation possesses (regardless of job title).

• Skills taxonomy: Organise your business’s skills into categories, including sub-skills.

Next, you need to segment your workforce. Separate critical roles (which your business relies on for minimum performance) from non-critical roles and permanent workers from contingent workers.

Also, analyse your data sources or your HRIS (Human Resources Information System) to make sure all the data you’re collecting is up-to-date and valid.

3. Forecast future workforce demand

In order to discover the workforce gaps holding you back, you need to forecast your future workforce demand. This means determining the specific workforce (how many people, which particular skills) you’ll need in the future.

However, this can vary based on different factors. You might consider, for example:

• Growth projections: How much will your business grow by (or how much do you want it to grow by)?

• Market expansion: Do you plan to enter a new international market?

• Technology adoption: Will automation replace some of your existing roles?

There are several forecasting methods businesses use to get a clearer picture of their future needs. The most common examples include:

• Trend analysis: One of the simplest methods is to identify historical trends and project them into the future. This is particularly useful when your business is stable and your workforce has recurring workloads.

• Ratio analysis: This is where the business analyses how many employees are needed per unit of business activity. Analysts compare the relationship between a business variable and workforce size to forecast demand.

• Scenario planning: If developing an overview isn’t sufficient, you might need to forecast demand in a certain hypothetical situation, such as high growth or sudden cost-cutting.

4. Use example scenarios 

A truly comprehensive HR workforce planning process includes scenario-based planning, which helps you analyse your future workforce needs under specific circumstances (not just assuming everything stays the same, for example).

Common scenarios businesses plan for include:

• Rapid growth: If your business grew by 20% this year, how would that affect your workforce needs (both in terms of headcount and skills)? 

• Hiring freeze: Imagine there’s an emergency, and your organisation suddenly needs to cut costs. You might implement a hiring freeze. How might your business meet workforce demand with a frozen supply?

• Automation impact: Many estimates predict AI could automate as much as 50% of the workload (or even roles). If your business were to lean into automation capability, how would this affect your workforce needs?

5. Identify workforce gaps

It’s now time to get a clearer picture of the exact gaps between your workforce supply and your workforce demand (i.e., the workforce you have and the workforce you’ll need). 

Businesses should go beyond headcount and consider more specific workforce gaps, including:

• Skills gaps: Skills gaps are often more important than headcount gaps. After all, you could have the right number of employees but still lack the necessary skills you need to reach your business goals. Consider which skills, not job roles, you’ll need to succeed.

• Capacity gaps: How many employees will the business need to meet the required workload? Under- or overstaffing can lead to significant financial drain and decreased productivity.

• Leadership gaps: Just as important as skills and employees is having people who can lead teams and projects. Consider the number of senior team members you may need.

Take the time to consider key risks that arise from workforce gaps as well. Pay close attention to:

• High-attrition roles: Account for the fact that some roles have particularly high turnover rates, which leave some skills unaccounted for and drive up hiring costs.

• Succession risks: Plan for an eventuality in which one key person (e.g., a project manager) suddenly leaves a role. Who would take over? Would you need to hire someone new?

6. Develop your workforce strategy

In step six, you should consider the various ways to close your workforce gaps. This isn’t always a case of hiring new employees; there are several (often more efficient and cost-effective) ways to reach your workforce goals.

One handy framework is the ‘Build vs Buy vs Borrow vs Automate’ system:

• Build: Upskill and train existing employees instead of hiring new ones

• Buy: Hire new talent to meet key workforce or skill demands

• Borrow: Use contractors or freelancers (temporary employees)

Automate: Use technology (AI automation) to fulfil some of your workforce needs

Upskilling involves training existing team members in new or more advanced skills through L&D programmes. Such programmes are often cheaper and more efficient than hiring.

If you need to hire, try to source talent from a diverse range of backgrounds. The best, most sustainable hiring decisions often come from pools you may not have considered at first.

7. Execute, monitor, and adjust

Your workforce plan isn’t complete when you implement it. For top results, businesses should continuously monitor and adjust their workforce plans. You should analyse the following trends and metrics at least quarterly:

• Hiring progress

• Attrition and retention trends

• Productivity

• Early-warning signals

Always be ready to adjust your plan if circumstances change. Examples of workforce plan adjustments include:

• Business changes (growth or shifting markets)

• Role prioritisation

• Hiring freezes or accelerations

• Upskilling initiatives

• Contingent workforce shifts

The most common workforce planning models and frameworks you should know

You may find you need different workforce planning models for different situations. For example, determining your headcount needs will require a different formula than the one you use to identify your skills needs.

Here are four of the most common workforce planning frameworks in the UK:

1. The supply and demand model

The supply and demand model is a simple, foolproof workforce planning tool that gives businesses a clear overview of their basic workforce capacity gaps. 

First, the business analyses its current capacity. Then, it uses trends and projections to forecast its future workforce capacity needs. Finally, it assesses the gap between the two.

The supply and demand model is the go-to framework when:

• You need a clear picture of your capacity gaps

• You want simple headcount forecasting

• Workforce size directly impacts business growth

2. Skills/competency-based planning

Skills-based planning is very similar to the supply and demand model, but instead of analysing your headcount gaps, you analyse your skills gaps. 

The process is very similar to supply and demand modelling: the business assesses its current skills taxonomy, then asks whether it matches the projected future skills taxonomy. If it doesn’t, the organisation will need to hire or upskill.

This is a great option for:

• Businesses that are expanding their product/services

• Businesses considering automation capacity

• Situations in which skills, not headcount, are the game-changer

3. Workforce segmentation

A critical and often-overlooked part of workforce planning is workforce segmentation. This involves analysing which roles are business-critical and which aren’t, as well as which roles are easier to replace and which roles see the highest turnover.

This model doesn’t tell you exactly which skills your business needs, but it helps you allocate your resources more effectively.  For example, you may find that you don’t have enough senior leaders, which could create a succession risk.

Workforce segmentation is favoured when:

• Businesses have a particularly large workforce

• Businesses have tight budgets

• There are many different role types in your business

4. Workforce capacity planning

Workforce capacity planning is a great way to determine whether your business can meet its actual workload. Essentially, it helps answer the question, ‘Does the business have enough employees to cover the necessary workload?

This often goes hand-in-hand with supply-and-demand modelling, although the focus is specifically on the time needed to complete the workload (rather than roles or skills). The process is very similar, however: The business compares its workforce supply (specifically, the number of working hours available) and its workforce demand.

This is particularly useful for:

• Short-term workforce planning

• Addressing fluctuating workloads

• Services that depend on a particular number of staff

Common workforce planning challenges in the UK

Regulations, skills shortages, and changing employee expectations can all make workforce planning more difficult. Let’s explore the most common workforce planning challenges for UK businesses so you can stay ahead of the curve:

Labour market dynamics

It’s not as simple as hiring the people you need when you need them. The UK’s current labour market presents many challenges, including:

• Low talent availability: British businesses often find they face tighter talent pools in certain roles (such as technical or frontline roles). There’s also high variation in talent availability between different regions, particularly in the Midlands and the North of England. 

• Skills shortages: The UK is suffering significant skills shortages, which can make it hard to fill certain roles. For example, around a third of roles in Digital, Adult Social Care, Construction, and Engineering are proving difficult to fill.

Workforce mobility: Employers often find they need to widen their talent sourcing pool beyond their immediate local markets to acquire the employees and skills they need, which can prolong the hiring process.

Regulatory and compliance environment

The UK’s labour laws are highly centralised and regulated. Although this is essential, it can make workforce planning a longer, more complex process.

Employment laws: The Employment Rights Act 1996, National Minimum Wage Act 1998, and the Working Time Regulations 1998 dictate strict rules regarding working time, statutory rights, dismissal risk, and broader workforce planning decisions.

• Worker classifications: ACAS guidelines specify that employment status depends on actual duties performed, not contact labels or job titles. Classification, in turn, determines legal rights. This system can create significant compliance risks. 

• Industry-specific regulations: Different industries have different rules (such as working time requirements) that affect workforce planning. In some cases, employers also need to account for occupation-specific visa rules.

Workforce trends and challenges

Changes in working arrangements and demographics are all putting pressure on workforce planners in the UK.

• Remote/hybrid work: Studies show that over one quarter of all UK workers now have a hybrid working arrangement. This may affect your hiring flexibility, but also your skills capacity, as remote workers often require stronger digital communication and more self-management.

• Demographic shifts: By 2030, half of adults in the UK will be over 50 years old. An ageing workforce increases the need for retention and succession plans, as well as streamlined skills transfer routes.

Strategic implications for UK employers

UK businesses need certain workforce planning tools and approaches to combat these challenges. Here’s a breakdown of the strategies many businesses are employing to deal with them:

• Adjustments to hiring strategies: UK employers are increasingly shortening their hiring cycles and broadening their geographic sourcing to counteract the current labour market challenges.

• Workforce flexibility: You might find that alternative workforce models (including hybrid models, or using contractors and freelancers) are more convenient, although these can complicate employment status rules and working time requirements.

• Talent sourcing approaches: Businesses may find they need to adopt several hiring approaches for different roles, such as local hiring for administrative roles, UK-wide sourcing for certain skills, and even international recruitment for specialist needs.

The best workforce planning software for UK businesses

Workforce planning is often a complex and time-consuming process, especially if you’re using multiple planning models. However, workforce planning software is making the process easier. The best platforms can automate a huge chunk of the work and even make your results more accurate.

I’ve done some research and found the top workforce planning tools on the market today:

1. Rippling

Rippling has an incredible 4.9-star rating on Capterra and a stellar reputation for workforce planning capability, particularly headcount planning. Rippling stands out for its vast automation capabilities, which can save UK businesses many hours of tedious manual work. Above all, it centralises HR, payroll, IT, and finance into one easy-to-use platform.

Source: Rippling

2. SAP SuccessFactors

SAP SuccessFactors is a major player in the HR software space, with core HR, talent, and people analytics that extend to strong planning insights for headcount planning and skills gap analysis. It’s a large suite that’s better suited to large enterprises with high employee numbers.

Source: SAP SuccessFactors

Source: SAP SuccessFactors

3. Oracle Fusion Cloud HCM

Oracle Fusion Cloud HCM is a strong choice for end-to-end workforce planning in bigger organisations, especially where HR planning needs to connect closely with finance, time, labour, and scheduling. Like Rippling and SAP, Oracle is a single, centralised HCM platform.

Source: Oracle Fusion Cloud HCM

4. Sage People

Sage is a smaller HR platform aimed at making workforce planning more accessible for small and mid-sized businesses. It offers solid reporting and people analytics without the complexity of a larger suite.

Source: Sage People

5. IRIS Software Group

IRIS Software Group has a strong UK presence and is often appealing when payroll, compliance, scheduling, and sector-specific HR needs matter, particularly in areas like education and for UK SMBs.

Source: IRIS Software

Rippling workforce planning capabilities in action

Hundreds of UK businesses have transformed their workforce planning process with Rippling’s cutting-edge HR capabilities. To see how workforce planning software like Rippling can change the way you plan your workforce in real life, explore these Rippling success stories:

High Speed Training doubles down on growth

When High Speed Training doubled in size, it knew its old system of fragmented HR platforms couldn’t keep up. To meet workforce demand and reach its business goals, the company needed a unified, expansive software that could handle its workforce planning needs.

Rippling delivered, helping High Speed Training:

• Save hours on routine tasks

• Reinforce strategic direction with valuable data

• Meet complex workforce compliance demands quickly 

SurrealDB navigates international workforce growth with Rippling

SurrealDB, based in the UK, was left juggling disconnected, non-compliant tools as its business and workforce grew across international borders. They found Rippling and were soon able to navigate the complex world of local employment laws, benefit requirements, and payroll needs on one simple platform.

The switch to Rippling made a significant impact:

• It cut SurrealDB’s onboarding time from weeks to minutes

• It saves the company £200 per employee per month

• SurrealDB now has instant compliance across eight countries

Start your workforce planning process today

Workforce planning spans everything from simple headcount planning to complex, large-scale skills-based modelling. To determine which planning method(s) your business needs, it’s important to follow a proven workforce planning process.

In this guide, we’ve laid out seven workforce planning process steps every business should follow:

• Align with business strategy

• Analyse your current workforce supply

• Forecast future workforce demand

• Use example scenarios

• Identify workforce gaps

• Develop your workforce strategy

• Execute, monitor, and adjust

The best way to make your workforce planning quicker, cheaper, and more accurate is to adopt the right workforce planning tools. Software like Rippling centralises HR, payroll, IT, and finance into one system and offers advanced workflow automation so you can scale your organisation across borders with ease.

Reach out today and request a demo to see first-hand what Rippling can do.

FAQs

What is workforce planning?

Workforce planning is the process of anticipating a business’s future workforce needs and creating strategies to meet them. That could include hiring new talent, upskilling, or even cutting back; it all depends on the workforce forecast. Workforce planning often revolves around headcount planning and skills gap analysis.

Why is workforce planning important for UK businesses?

Workforce planning helps businesses prepare for future workforce demand ahead of time and avoid costly delays and disorganisation when the demand arrives. This is particularly important in the UK, where skills shortages can create labour market friction and strict employment regulations make hiring complex.

What’s the best workforce planning model?

It depends on your business goals. If you need long-term headcount planning, the supply and demand model is sufficient. If you need to pinpoint shortages or training needs, workforce gap analysis is best. If you want to anticipate a particular event (for example, rapid growth), then scenario planning is the best option. There are dozens of workforce planning models for different needs.

What’s the best workforce planning software for UK businesses?

Rippling is consistently rated the best HR platform for UK businesses. With its comprehensive analytics and headcount planning features, as well as its advanced automation capabilities, Rippling is a top choice for UK businesses that want centralised, hassle-free workforce planning on one system.