What are the steps in workforce planning? A 7-step guide for HR teams

Only 12% of organizations do long-term workforce planning, according to McKinsey's HR Monitor 2025. The rest hire when a role opens and hope the skills are there.

Below, you get each step with its question, output and usual owner, plus a worked example and the mistakes that derail plans. Follow the steps in order and you will have a plan you can review every quarter.

Workforce planning matches the people and skills a business has with the people and skills it needs to hit its goals. The work runs in seven steps: set direction, analyze supply, forecast demand, find gaps, choose actions, implement, monitor.

TL;DR:

• The 7 steps in workforce planning are: set direction, analyze supply, forecast demand, run a gap analysis, choose actions, implement, and monitor.
• Each step should end with a concrete output, such as a skills inventory, a demand forecast by role or a gap list ranked by business risk.
• Most organizations still plan only for the next year: McKinsey's HR Monitor 2025 found 73% do operational planning but only 12% plan long term.
• Close every gap with one of four moves: build (upskill), buy (hire), borrow (contractors) or redeploy (internal moves). Use the cheapest move that is fast enough.
• Measure skills, not job titles. A skills inventory built from assessments shows real gaps that a headcount report hides.
• Review the plan every quarter. The most common mistakes are planning on gut feel, ignoring internal talent and leaving stakeholders out.

What are the steps in workforce planning?

Workforce planning follows seven steps, from setting direction to monitoring results. Each step builds on the one before it and ends with a clear output. The cycle repeats as the business changes, so the plan stays useful.

What is workforce planning, and why does it matter?

Workforce planning is a repeatable process that aligns an organization's talent with its business goals by comparing the workforce it has with the workforce it will need. The workforce planning definition covers two horizons:

• Operational workforce planning: The next 12 to 18 months. Headcount, hiring plans and budgets for the coming year.
• Strategic workforce planning: The next 3 to 5 years. The skills and roles the business will need as its strategy, products and technology change.

The case for doing it well is getting stronger. SHRM's 2025 Talent Trends survey found that 69% of organizations struggle to fill full-time roles, and over a third now train existing employees for hard-to-fill roles. A plan tells you which roles will be hard to fill before the requisition opens, so you can start sourcing or training early.

Most companies are not there yet. McKinsey's HR Monitor 2025 found that 73% of organizations do operational workforce planning, but only 12% do long-term strategic planning, and just 3 in 10 of those use skills data.

Gartner reports that only 15% of CHROs say their organization practices strategic workforce planning, even though it ranks among HR's top three priorities.

Step 1: What should you decide before planning the workforce?

Step 1 sets the strategic direction: the business goals the plan must support, the time horizon and the roles that matter most. Without it, workforce planning turns into a headcount spreadsheet that nobody uses.

Start with the business plan, not the org chart. Growth targets, new markets, new products, automation projects and regulatory changes all change the people you need.

For each one, ask what roles and skills it depends on.

Then agree on three things:

1. The horizon: 12 to 18 months for an operational plan, 3 to 5 years for a strategic one. Many teams run both.
2. The critical roles: The small set of roles that drive revenue, carry risk or take longest to fill. Plan these in detail and the rest at a summary level.
3. The stakeholders: Finance, department heads and executives. Workforce planning fails when HR plans alone, because only managers know what their teams will need.

Pro tip: Put finance in the room from day one. A plan that is not tied to the budget becomes a wish list, and finance already holds the revenue and cost forecasts your demand model needs.

Step 2: How do you analyze the current workforce?

Analyzing the current workforce, also called supply analysis, means building an accurate picture of the people you have today: how many, where, at what cost, with which skills, and how likely they are to stay. This baseline is what every later step compares against.

Go beyond headcount and job titles. Collect:

• Headcount and cost: By team, location, level and employment type, including contractors.
• Skills: A skills inventory that shows which skills each person has and at what level. Self-reported skills are a start, but assessments give you a measured baseline.
• Performance and potential: Tools such as the 9-box matrix show who is ready for a bigger role and who needs development.
• Movement: Attrition rate, retirements, promotions and internal transfers over the last 2 to 3 years.

Use data over gut feel. Planning on anecdotes, such as "engineers always leave after two years", is one of the most common workforce planning mistakes.

Pull the numbers from your HRIS, ATS and performance system, and check them with managers.

Step 3: How do you forecast future workforce needs?

Forecasting workforce demand means estimating the roles, skills and headcount the business will need over the planning horizon, based on its goals and the forces that will change the work. The output is a demand forecast by role and skill.

Common ways to forecast:

• Ratio and trend methods: Tie headcount to a business driver, for example one support agent per 400 customers, then apply the growth forecast.
• Manager input: Ask each department head what their team needs to deliver next year's plan, then sense-check it against the numbers.
• Scenario planning: Build three versions (expected, faster growth, downturn) instead of betting on one forecast.

Account for change inside the workforce too: turnover, retirements and promotions all open roles you will need to fill. And plan for shifts in the work itself.

The IBM Institute for Business Value estimated in 2024 that the share of the workforce needing reskilling has risen from a historical 6% to 35%, as AI and automation change what roles involve.

Step 4: How do you run a workforce gap analysis?

A workforce gap analysis compares supply (Step 2) with demand (Step 3) to show where you will be short of people or skills, where you will have too many, and which critical roles have no successor. The output is a ranked list of gaps.

Run it in three passes:

1. Headcount gaps: Roles where forecast demand is higher or lower than projected supply after attrition.
2. Skills gaps: Skills the plan needs that the current workforce lacks or has at too low a level. A skill gap analysis makes this concrete.
3. Succession gaps: Critical roles with no ready-now or ready-soon successor.

Rank the gaps by business risk, not by size. A gap of two data engineers can matter more than a gap of twenty support agents if a product launch depends on them.

Step 5: How do you choose actions to close workforce gaps?

Choosing actions means deciding, gap by gap, whether to build skills internally, buy them through hiring, borrow them through contractors or redeploy people already in the business. Most plans use a mix, chosen by how fast each gap must close and what it costs.

A few rules keep these choices sound:

• Look inside first: Internal candidates already know the business. Our guide to internal mobility vs external hiring shows when each one wins.
• Plan succession for critical roles: Name successors, then close their readiness gaps with development plans. See how to develop a succession plan.
• Build in flexibility: The CIPD workforce planning factsheet recommends flexible plans, such as a contingent workforce for demand spikes and multi-skilled teams.
• Hire for more than technical skills: Assess communication, problem solving and collaboration alongside hard skills, so new hires work well in the team.
• Widen the talent pool: Diverse sourcing and fair, structured selection reach more qualified people and reduce bias.
• Invest in employer branding: A clear employer brand makes hard-to-fill roles easier to fill.

Step 6: How do you put a workforce plan into action?

Implementing a workforce plan means turning each chosen action into a funded task with an owner and a deadline: requisitions for TA, programs for L&D, and moves for managers. The output is a hiring plan, a training plan and a budget everyone has agreed.

Make it real:

• Assign an owner to every gap: One named person, not a team.
• Set realistic timelines: Rushed hiring leads to poor hires. If a role is urgent, cover it with an interim contractor and keep the hiring bar high.
• Build a pre-screened pool: For roles you hire often, keep a pool of assessed candidates so you can move fast when demand spikes.
• Communicate the plan: Tell managers what is changing and why. Tell employees about new roles, training and internal openings.

Step 7: How do you monitor and adjust a workforce plan?

Monitoring a workforce plan means tracking a small set of metrics against the plan, reviewing them on a fixed schedule and changing the plan when the business or the labor market changes. Workforce planning is a cycle, not a one-off project.

Review the plan every quarter, and straight away after a big change such as an acquisition, a funding round or a market shift. After each hiring cycle, collect feedback from hiring managers and candidates and fix what slowed you down.

Our guide on how to measure the success of a workforce plan goes deeper on metrics.

Key takeaway: The plan is only as good as its last review. A plan built in January and not opened again until December is a budget document, not a workforce plan.

What does a workforce plan look like in practice?

A workforce plan in practice is a short document that links each business goal to the roles it needs, the gap for each role and the action that closes it. Here is an illustrative example for a 600-person SaaS company planning the next 12 months.

1. Direction: The company plans to grow customers by 40% and launch in Germany. Critical roles: support agents, solutions engineers and a German-speaking sales team.
2. Supply: 60 support agents today, with 25% annual attrition. Two solutions engineers, one of them a likely retirement within a year. No German speakers in sales.
3. Demand: At one agent per 400 customers, 40% growth means 84 agents by year end. Four solutions engineers and five German-speaking account executives.
4. Gap: Support needs 24 more agents for growth plus about 15 to replace leavers, so roughly 39 hires. Solutions engineers: a gap of 3. German sales: a gap of 5.
5. Actions: Buy 39 agents through volume hiring with skills tests. Build 1 solutions engineer from the senior support team and buy 2. Borrow a German-speaking contractor for 6 months while hiring 5 account executives.
6. Implement: TA owns hiring with a monthly target, L&D owns the support-to-solutions-engineer program, the sales director owns the Germany launch.
7. Monitor: Quarterly review of headcount vs plan, time to fill and agent attrition. If growth hits only 25%, the agent hiring target drops to about 30.

What are the most common workforce planning mistakes?

The most common workforce planning mistakes are planning on gut feel, building a rigid plan, ignoring internal talent and leaving stakeholders out. Each one maps to a step, so the fix is to do that step properly.

A related mistake is treating every skills gap as a hiring need. Often a gap is better closed by training or a role redesign; see not every skills gap needs a headcount.

How do skills assessments support workforce planning?

Skills assessments support workforce planning by replacing guesses about skills with measured results, in two places: the supply analysis in Step 2 and the hiring and internal moves in Step 5.

• For the skills inventory: Testing current employees on the skills a critical role needs shows who is ready, who is close and where the real gaps are.
• For internal moves and hiring: The same tests compare internal and external candidates on the same criteria, so redeploy and buy decisions rest on evidence.
• For volume plans: When a plan calls for dozens of hires in a quarter, skills tests rank applicants before the first interview.

Testlify offers 3,500+ validated tests across technical, cognitive, language, role-specific and personality areas, and its AI test builder creates a custom assessment from a job description. Results feed reporting and analytics and sync with 100+ ATS and HRIS tools.

Ready to measure the skills behind your workforce plan?

Start with your critical roles. Book a demo to see how teams build a skills baseline and hire against it.

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