Including 5 steps to developing and implementing a plan

Being prepared can save you a lot of time. As a leader in compensation or total rewards, you know how fast things can change within an organization. So how can you be better prepared for not only expected workforce changes, but also the unexpected changes as well? The short answer…strategic workforce planning.

Strategic workforce planning helps you prepare for tomorrow’s business needs by identifying gaps between your current workforce and future requirements. This proactive approach ensures you can support your company’s key objectives with the right talent, at the right time.

Let’s dive in to better understand the importance of workforce planning and how it connects to total rewards.

What is strategic workforce planning?

Strategic workforce planning is a process that helps you anticipate and prepare for your organization’s future talent needs. It involves analyzing your current workforce, forecasting the skills and headcount required to meet business goals, and identifying any gaps between today and tomorrow. By doing this, you can make informed decisions about hiring, training, redeployment, and compensation strategies to ensure you have the right people in the right roles at the right time. This proactive approach enables you to align your people practices directly with your company’s long-term strategy, helping you manage change effectively and support business success.

Why strategic workforce planning matters

In times of change and uncertainty, your workforce plan becomes the foundation for delivering business strategy. It provides a clear, data-driven approach for prioritizing, developing, and funding the people practices that matter most.

Whether your company is investing in digital transformation or responding to economic shocks, strategic workforce planning will help you to:

• Align compensation and rewards strategies with future workforce needs to attract and retain key talent
• Identify where to source tech-savvy talent externally and determine which existing employees can be upskilled
• Decide how to manage workforce reductions thoughtfully, focusing on critical skills retention
• Understand how organizational structure may evolve through natural attrition or redeployment

Create and implement a strategic workforce plan

To create a strategic workforce plan that truly supports your business goals, you need to follow a clear and practical process. Here are the five key steps you’ll take:

1. Translate business strategy into workforce needs

Start by understanding your company’s objectives and identifying the specific skills, roles, and headcount required to achieve them. This step sets the foundation for your entire plan.

2. Measure talent supply and demand gaps

Use data and analytics to compare your current workforce with future needs. This helps you spot where you have shortages or surpluses in skills and headcount.

3. Model solutions and scenarios

Explore different ways to address the gaps you’ve identified. This could include hiring new talent, upskilling existing employees, redeploying people, or adjusting your compensation strategies.

4. Formulate and implement the workforce plan

Develop a clear, actionable plan based on your analysis and models. Make sure it’s flexible enough to adapt as your business environment changes.

5. Monitor and adjust continuously

Keep track of how your workforce plan is performing and make adjustments as needed. This ongoing process ensures your talent strategy stays aligned with evolving business priorities.

By following these steps, you’ll create a strategic workforce plan that helps you make informed decisions and align your compensation and rewards programs with the future needs of your organization.

How this impacts your compensation and total rewards strategy

Strategic workforce planning gives you the insights needed to design compensation programs that support future talent priorities. By understanding where skill shortages or surpluses will occur, you can tailor rewards to attract talent for critical roles and skills, optimize budget allocation, and enhance employee engagement.

For example, if your workforce planning shows that in the next 18 months you will need to ramp up on hourly workers due to increased production demand, then you can earmark budget for those future hires, better ensuring you don’t have a cost overrun down the line. Perhaps you could even identify new ways of encouraging employee referrals or budget for sign-on bonuses.

Plan for your workforce future

Rather than reacting to change, you can lead it. A forward-looking, data-driven workforce plan allows you to address risks and opportunities in a cost-effective way. This positions your organization—and your compensation strategy—to adapt and thrive in a dynamic business environment.

If you want to discuss how to integrate strategic workforce planning into your compensation strategy, consider connecting with a Mercer specialist via email at surveys@Mercer.com or give us a call at 855-286-5302.

About the author

Rebecca Hall, Principal

Rebecca spent much of her career working in compensation in various corporate roles then transitioning to consulting with Mercer. Her current role, as the Content Leader for imercer.com, allows her to leverage her knowledge of human resources and talent strategy to create materials supporting Mercer’s Products & Services in North America.