Workforce Planning

What workforce planning is

The CIPD describes workforce planning as a core business process that aligns changing organisation needs with people strategy. It defines it as the process of balancing labour supply (skills) against demand (numbers needed): analysing the current workforce, determining future workforce needs, identifying the gap between the two, and putting solutions in place. In plain terms it is about having the right number of people with the right skills, in the right place, at the right time, at the right cost and on the right contract.

The CIPD also says the process does not need to be complicated and can be adjusted to the size and maturity of any organisation. That matters for a small business: workforce planning does not require a specialist team or software. It can be a short document that answers what work is coming, who can do it, and how you will fill the gap.

The stages of workforce planning

The CIPD describes the process as a series of steps that repeat as conditions change. The version below adapts them for a small business hiring remotely.

1. Understand the business and its environment. What are the goals for the next planning period? Which products, markets, processes or technology are changing? What will that do to the work people do?
2. Analyse the current workforce. List the people and contractors you have, their skills, where they work, how they are engaged, and any signs of turnover risk. Note which skills depend on a single person.
3. Determine future needs. Estimate the skills and capacity the plan requires, and by when. Use scenario planning, which the CIPD says can show how different futures might affect people requirements and help you build contingency plans.
4. Identify the gaps. Compare steps 2 and 3. Gaps can be in numbers, in skills, in timing (needed before you can hire) or in budget.
5. Develop an action plan. Decide how to close each gap. The CIPD notes that where recruitment or retention is a challenge, skills can be built through staff development or borrowed through outsourcing. A common shorthand is build, buy or borrow: develop people you have, recruit, or use a contractor or provider.
6. Monitor and evaluate. Agree the actions, give managers the support they need, review outcomes regularly, and feed what you learn back into the next plan.

Hard and soft planning

The CIPD distinguishes two sides of the work. Hard workforce planning is about numbers: how many people with which skills are likely to be needed. Soft, or strategic, planning is about defining a strategy and a framework within which the information can be judged. The CIPD adds that metrics alone are not enough and need to be understood in context. For a small business that means pairing a simple headcount and budget table with a short written view of what the business is trying to do.

Workforce planning and headcount planning

Headcount planning counts positions against a budget for a period. Workforce planning is wider. It includes headcount, but also the skills each position needs, how people will develop, how the work could be organised differently, and which employment route fits each need. A company can hit its headcount target and still lack the skills the plan depends on.

What changes when you hire remotely

Remote and cross-border hiring adds decisions to each stage.

• Route: for each role, decide between an employee, a contractor, an employer of record, staff augmentation or an outsourcing provider. The hiring model selector and contractor vs employee explain the trade-offs. A contingent workforce can add flexibility but also needs managing.
• Location: compare countries on talent, legal route and working hours. The Time Zone Overlap tool shows overlap, and multi-shore strategy covers using more than one location.
• Cost: put salary, employer costs, equipment and onboarding side by side in the Remote Hiring Cost Calculator, and check pay levels in the salary benchmark explorer.
• Lead time: recruiting across borders, setting up payroll and onboarding all take time, so plan hires earlier than you would locally. See talent acquisition and onboarding.

Forecasting methods

Quantitative methods use past data. Trend analysis projects past headcount growth forward, and ratio analysis relates headcount to a business driver such as the number of customers or orders handled per person. Qualitative methods use judgement: managers estimate their needs, and scenario planning asks what would change under different strategic assumptions, such as entering a new market or launching a product. Use both. Start with a simple baseline and test it against two or three scenarios, such as slower growth, planned growth and faster growth, so you know in advance what you would do in each case.

Keep data over time. The CIPD advises keeping records of joiners, leavers and movers each year so you can compare snapshots of the workforce on the same date and learn from them.

Who should be involved

The CIPD stresses involving stakeholders across the organisation so that they understand the data and what it means for short- and long-term needs. In a small business that means the owner, the people who manage the work, and whoever handles finance. Managers know where work piles up and which skills are fragile; finance knows what is affordable. A plan written by one person alone tends to miss one or the other.

A worked example in words

Suppose a business plans to open a second sales region next year. The planning team first writes down the goal and the date. It then lists who currently covers customer calls, which skills they have, and which hours the new region needs. The gap is coverage during the new region's business hours, plus a language skill nobody has. The options are to train an existing employee, recruit a local employee through an employer of record, or contract a provider for the first months while volume is uncertain. Each option is costed in the Remote Hiring Cost Calculator, checked for time zone fit with the Time Zone Overlap tool, and given an owner and a start date. The team notes the assumption that the region will grow, and sets a review date to test it. Nothing in this process needs special software, only clear questions and written answers.

Key-person risk and succession

Workforce planning also asks what happens if someone important leaves. Identify the people whose absence would stop a process, document what they do, and train a second person or arrange cover. The CIPD links workforce planning to succession planning and talent management, and notes that results feed resourcing plans carried out by line managers. For a small team, a simple list of critical tasks, the person responsible and the backup is a useful first step.

Common pitfalls

• Planning in isolation from the business strategy, so the plan is tidy but does not support the goals.
• Counting seats instead of skills, which leaves you with the right number of people in the wrong roles.
• Treating the plan as an annual document. Review it when conditions change and at regular intervals.
• Relying on one person's knowledge with no cover or documentation.
• Ignoring the time needed to recruit, contract and onboard, especially across borders.
• Leaving managers out. The CIPD stresses consensus on the plan, clear responsibilities, and support for managers.

A simple template for a small business

• The business goals for the next planning period, in a few lines.
• A table of roles: current holder, skills, engagement type, location and cost.
• The work that is expected to grow, shrink or change, with the date each change is expected.
• The gaps, each with a chosen action (develop, recruit, contract, outsource or change the process), an owner and a date.
• The assumptions behind the plan and the review dates, so you know when to revisit it.

Sources

• CIPD, Workforce planning factsheet

References checked on 13 October 2026. Where this page describes stages and distinctions, it follows the CIPD factsheet; the small-business adaptation and template are this site's own. This page is general information, not legal or tax advice.