Insights for Organisations

How Can Businesses Prioritise Strategic Workforce Planning in 2023?

John Smith

As the ‘Great Resignation’ continues, organisations across the UK are navigating the digital skills gap while facing the challenge of attracting and retaining talent. In a time when many businesses are struggling to recruit, one in five UK workers are considering changing jobs in the next six months in search of greater job satisfaction and better pay.

The number of UK employees moving from one job to another reached 3% in the second quarter of 2022, rising from 2.6% in the same period the previous year. Despite the current recruitment challenges that many organisations are facing, less than 50% of businesses are using valuable internal data to identify the talent gaps within the company. This prevents organisations from identifying ways in which they can attract and retain highly talented individuals effectively.

As the New Year looms, how can organisations use strategic workforce planning to avoid falling victim to the changing landscape of work? Let’s find out.

The changing landscape of work

The COVID-19 pandemic changed how organisations work, and although most workplaces adjusted to the new ways of working, there is still some uncertainty around what the future has in store. Over the past year, the end of government restrictions has witnessed the UK return to some degree of normalcy – but what about when it comes to work?

For many businesses, hybrid working arrangements have been the answer to navigating the challenges of the pandemic, with 78% of organisations adopting hybrid working models. According to a report by the UK Parliament, around 22% of Great Britain’s workforce now work from home at least one day a week and 13% work from home exclusively, which remains higher than pre-pandemic figures. Clearly, the hybrid model is here to stay for the foreseeable future.

However, hybrid working does not come without its implications for workforce planning, as organisations must consider the ‘work perks’ that impact a company’s ability to attract and retain the right talent. A recent study by Remote found that over 76% of Brits’ most desired ‘work perk’ is flexible working hours.  In a labour market that is in favour of employees, businesses must now consider how best to accommodate these perks or risk jeopardising company growth.

However, perhaps the most concerning implication is how the effects of the global pandemic have affected the mental health of employees across the country.

Human resources are facing challenges unlike any we have seen before, from a highly competitive labour market to an exhausted and burnt-out workforce. In 2020, during the height of the pandemic, it was revealed that 56% of UK workers had not received any mental health support from their employers, and yet, 26% of adults experienced mental distress for the first time during the pandemic. The number of UK employees reporting suffering from mental and physical exhaustion due to workplace pressures has also exceeded record highs, with 88% of employees experiencing some level of burnout over the last two years.

Employees have more options for changing jobs than ever before and with staff drowning in work, burnt-out employees are leaving their existing roles in favour of organisations that support their workforce. As employers continue to feel the impact of the ‘Great Resignation’ phenomenon, their focus has shifted to providing solutions to cultivate a better employee experience.

5 strategic workforce planning priorities in 2023

Attracting new and retaining existing talent has never been more challenging for businesses than it is today. Organisations must look to their HR teams to actively manage the ‘new normal’ of work and support key stakeholders with acting upon the organisation’s internal findings.

In our research, we identified the five main areas below as being key areas of focus when looking at workforce planning into 2023. We also spoke to Jonathan Young, Chief Information Officer at FDM, to get his thoughts and comments based on his experience..

  1. Improve employee experience
  2. Effective leadership and management
  3. Manage change through organisational design
  4. Refine your recruitment strategy
  5. Plan for the future of your workforce

1. Improve employee experience

Creating clear career paths for employees to transition through is critical to employee retention, and yet, 44% of HR leaders don’t believe their organisations have compelling career paths. It’s important that employees are confident in their career path within the organisation, or risk losing high-quality talent to external positions. Some reasons employees may consider leaving their current roles include better career trajectories, better development opportunities and better salaries.

“The pandemic increased the dependency of enterprises on technology. This dependency happened overnight and those companies, which had prepared or were mature, prospered over those that had to catch up. The challenges of large-scale offshoring of workforces, not just in IT, were more exposed.

“This drove a rise in demand for onshore IT resources from a pool which, essentially, remains the same size. So, largely the same pool of people have been in greater demand, increasing attrition rates and salary costs. Retention and performance of resources were also impacted as this tech-savvy workforce demands a great experience with their enterprise applications.”

Resultantly, companies should no longer look at HR as a support function, but rather as a critical function for maximising business impact. The value of people analytics should play a central role in attracting and retaining talent throughout 2023.

2. Effective leadership and management

Effective and emotionally intelligent leadership is critical during a labour shortage, such as the one the UK is currently experiencing. A recent Gallup study found that at least 70% of the variance in employee engagement can be attributed to managers. This research also identified that around 1 in 10 individuals possess a natural talent for managing people, with 18% of those within management roles displaying this aptitude and a further 20% showing some rudimentary talent. Combined, these groups contribute around 48% higher profit to their companies than average, which demonstrates the importance of effective leadership.

According to research from McKinsey, 86% of interpersonal relationships at work are governed by employee relationships with management, accounting for almost 40% of total job satisfaction. Identifying and promoting the correct individuals to positions of leadership is essential if organisations wish to minimise churn. In turn, this will lead to employee advocacy, reducing future hiring challenges and costs.

3. Manage change through organisational design

For any business to meet its goals and objectives, organisational design plays a fundamental role in establishing internal structures and processes, which enable it to fulfil its purpose. Organisational design provides a framework of strategic grouping decisions that can refocus an organisation’s architecture around its core goals.

Balancing the increased focus on tech around typical business as usual is going to be a challenge for all organisations.

“Find potential tech talent in your existing workforce. Rather than downsizing your non-IT teams, you could repurpose the employees who know your business inside out and have shown an interest and the talent in IT to cross-train. Not only do they bring a wealth of knowledge about your company, but they are committed to you and could easily be retrained in IT.” 

Organisational design provides companies with a powerful tool to address the upcoming workforce challenges of 2023. Embracing change immediately ensures companies will stay ahead of their competitors while meeting defined goals.

4. Refine your recruitment strategy

Volatility within the labour market is placing increased pressure on recruitment teams and, more importantly, on recruitment strategies for 2023. According to a recent survey by Gartner, 36% of HR leaders report insufficient strategies for acquiring top talent to bridge the digital skills gap. One way organisations can distinguish themselves from their competitors is by exploring alternative talent networks.

“Military people understand tech, IT Security, data protection and project management. It has been proven that they can enhance a team and bring extraordinary value to their roles. The same can be said about graduates – trained and prepared for the office via the FDM training programme.”

Recruitment will certainly prove challenging over the next 12 months, but embracing change and adopting a flexible hiring approach will see prepared organisations flourish under these unique pressures. Companies should prepare for multiple future scenarios and consider the business’s long-term skill requirements, which could ultimately hinder performance.

5. Plan for the future of your workforce

Many of the workforce planning strategies companies employ are ineffective in today’s volatile labour market. Effective workforce planning models require HR departments to make educated predictions regarding the organisation’s future talent needs. In particular, the rate at which digital literacy will continue within the workforce and whether any existing skills gaps are likely to resolve in the near future.

Prepared organisations can take advantage of an untapped talent pool – returners.

“Despite massive evolution in the tech market, many of the things we do today are easily understandable for returners. For example, a returner will understand the effort required to deploy a large enterprise system to live or test – and so “get” DevOps really quickly.

“On top of this, a legacy developer will already understand all the behaviours and collaboration required to work as a large team working on a shared enterprise code base. They won’t leave you vague variable names and useless comments. They have already experienced the pain!

“A returner may have used a mainframe or DEC VAX server, which you connect to from any wired terminal anywhere in the office. Cloud services are not much different. The service is just a machine or set of machines in a data centre somewhere (like the mainframe) and the internet is the route to connection rather than wires in the office.”

Identifying trends within the industry and exploring flexible hiring policies will be invaluable for organisations to remain competitive. Opportunities exist for companies to win an advantage over their competitors and prepared organisations will see their efforts rewarded.

Planning for 2023 and beyond

Due to the myriad of challenges organisations have faced over the past 3 years, the labour market has undergone significant and irreversible changes. Many businesses will need to move fast to ensure that they are not left behind, which means tracking trends, understanding employees and leveraging people data to prepare for the future.

An increasing number of organisations are diverting their focus towards existing employees to minimise the impact of labour market shortages on their business. However, this will only ever be a short-term solution and organisations need to develop effective hiring strategies to ensure their longevity. Regardless, companies have a major opportunity to embrace these changes and all the potential benefits that can come with them. Those who do adopt future-facing practices and engage with new ways of working will find their efforts rewarded and will fare significantly better than their counterparts in 2023.

Discover more about FDM’s services and find out how we can help you future-proof your business in 2023 with access to high-quality candidates. Get in touch today for more information.