Workforce planning for small business

Planning your workforce can help you avoid the negative impacts of having too many or not enough staff available, or not having the right person for a role. Find out what you can do to best prepare for the future.

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What is workforce planning?

Workforce planning is about having the right people, with the right skills, in the right roles, at the right time and at the right cost.

Workforce planning will help you:

  • achieve your business goals by aligning your people strategy with your business needs
  • decide how to best prepare for the future
  • plan recruitment and training
  • create a flexible and responsive workforce.

Make workforce planning part of your business planning

By combining your workforce planning with your business planning, it will be easier for you and your workforce to respond to changes in your business environment.

Why workforce planning is necessary

Small businesses often rely on the skills and experience of a small number of employees. If any of these employees resign or retire it can be costly to your business and it could result in the loss of key business skills and knowledge. Workforce planning can help your business:

  • respond quickly to change
  • be more effective and productive
  • reduce employee turnover by increasing job satisfaction and engagement
  • retain positive and motivated employees
  • do more successful recruitment
  • reduce skills shortages
  • identify staff training and development needs.

Workforce planning is becoming increasingly important because of:

  • demographic changes—an aging workforce raises new issues, including lack of in-demand skills, reskilling challenges, and mass retirement
  • increased need to reduce costs—increasing global competition is forcing small businesses to try to reduce their operating costs
  • increased need for talent management—to keep a competitive advantage, you need to have staff available who'll be able to replace the skills and experience of retiring or exiting employees
  • increased need for flexibility—the competitive small business landscape and the speed of product innovation means businesses need to keep changing tactics and adapt to a changing environment.

Consider a short course on recruitment

The Back to Work program offers 1–2 hour online courses to help small business employers recruit and retain employees. The Recruitment for small business course provides practical information on:

  • efficient workforce planning
  • lawful and effective recruitment.

Plan your workforce

To start your workforce review, consider these 4 factors:

  1. Size: Do you have the right number of people and roles? Do you have vacancies? Are you over- or understaffed?
  2. Shape: Does your staff have the right key skills and experience? And for the future? Do you have a succession plan to replace exiting staff?
  3. Cost: Have you reached the best labour cost for your business, or are there ways you could save money?
  4. Agility: Is your workforce active, resilient and flexible? Can your workforce adapt to change?

Use the Workforce Planning Connect resources

Workforce Planning Connect offers free resources to help you plan for the skills and workforce you need.

Micro to small businesses

The Workforce Planning Connect workbook is a practical, self-guided resource to help you build a full workforce plan or to focus on specific workforce needs.

Small to medium-sized business

The Workforce Planning Connect toolkit is a comprehensive resource to support your workforce planning. Use the toolkit to:

  • develop a complete workforce plan
  • address a specific workforce challenge, opportunity or need within a business.

There are also toolkit resources, including fact sheets and templates on:

  • who to involve
  • knowing your business and workforce
  • workforce supply, future demand, and gap analysis
  • risk assessments
  • developing a detailed workforce plan.

The disability sector and agriculture industry

Working with the disability sector and agriculture industry, Jobs Queensland developed workforce planning resources for micro, small and medium-sized enterprises in these industries.

Find these resources for industry on the Workforce Planning Connect website.

Succession planning

Succession planning is an important part of workforce planning. It's about identifying and developing people who can move up into critical roles when these positions become vacant.

Why succession planning is important

  • Having a clear plan to fill key roles will ensure your business can continue with little or no interruption.
  • It's often more cost-effective to develop current employees for key positions rather than hire new people.
  • Giving your employees a clear path forward in their career can increase employee engagement, reduce your staff turnover and cut recruitment costs.

Succession planning in 5 steps

  1. Identify the key positions in your business. These are not necessarily only leadership and management roles.
  2. Assess how likely these key positions are to become vacant, and when (e.g. through retirement or resignations)
  3. Identify potential successors (inside or outside your current workforce) and:
    • what development they'll need (read information below on determining training and development requirements)
    • when they might be ready.
  1. Design and implement plans to address these development needs through, for example:
    • career pathways
    • mentoring
    • formal training
    • performance management
    • reward and recognition programs.
  2. Do ongoing planning – identify gaps and focus on the developing high performers.

Addressing skill gaps

The skills and experience of your workforce can be key to the success of your business. That's why it can be very useful to do a skills assessment before:

  • recruiting new staff
  • deciding what training and development to offer employees.

A skills gap analysis can:

  • help you identify the strengths, weakness and gaps in your current workforce
  • help with succession planning
  • identify current staff skills that you weren't aware of
  • identify skills that can be used in other areas of your business
  • identify staff who could take on additional responsibility with more training
  • understand what training or development is required.

When you do a gap analysis, consider:

  • the skills required across your business, rather than just looking at individuals.
  • your future staffing requirements
  • what skills are the most important to your business goals.

Skills-gap analysis and management in 5 steps

  1. Identify the skills needed: Look at your workplace, succession plans and business plan to list the skills:
    • your business needs to operate and grow
    • individual employees need to do their work successfully.
  2. Review the existing skills: List the strengths, weakness and skill sets in your business by:
    • looking at employee records and performance reviews
    • using individual observation and discussions
    • asking for employee feedback.
  3. Identify the gaps: Compare the skills you have available in your business to the skills your business needs. What skills do you need to add?
  4. Plan to fill the gaps. Do you need to:
    • buy new equipment or use new technologies
    • hire new staff
    • train and develop existing staff?
  5. Implement your plan: Depending on your decisions in step 4:
    • start recruitment
    • buy new equipment
    • organise training and other professional development.

Tools to identify individual skills

Understanding the skills and capabilities of your employees is good for your business and the individual. The tools you use will depend on the person you're assessing, as well as your time and resources. These tools include:

  • performance reviews
  • observation and discussion
  • feedback from their supervisor, team and/or clients
  • psychometric testing – to assess an employee's suitability for a role
  • personality testing – to determine individual strengths that can support effective teamwork.

Also consider...