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Without a clear understanding of what your workforce is capable of today, planning for tomorrow becomes a guessing game. This is where workforce analysis becomes a game-changer — transforming vague assumptions into informed decisions.
Yet Gartner research reveals that only 8% of organizations have reliable data on the skills their workforce currently possesses — and those that drive business success. This gap isn’t just a missed opportunity: it’s a critical vulnerability.
The solution lies in mastering workforce analysis, which leverages data to uncover trends, anticipate challenges, and align talent strategies with organizational goals. Discover some of the common barriers to successful workforce analysis, and the steps to implement the process in your organization.
What Is Workforce Analysis?
Workforce analysis is the strategic evaluation of your organization’s talent landscape, providing a data-driven foundation for decision-making. It identifies opportunities to optimize your workforce, close skill gaps, and proactively address risks.
It’s the backbone of an effective workforce planning system, enabling HR leaders to align their talent strategies with high-level business priorities, ensuring the organization remains agile and competitive.
The workforce planning process typically involves two key stages: supply analysis and demand analysis. Supply analysis examines the existing workforce, assessing metrics like the number of employees, employee skills, succession readiness, engagement levels, and retention risks. On the other hand, the demand analysis step of workforce analysis focuses on projecting future needs, considering factors such as business growth, new initiatives, and market trends.
Together, these analyses provide a comprehensive view of the organization’s workforce landscape, enabling data-driven decisions to ensure the workforce remains engaged, agile, and capable of driving the organization’s long-term success.
5 Challenges to Successful Workforce Analysis
While strategic workforce analysis has transformative potential, its effectiveness depends on overcoming a common set of challenges.
Fragmented Data Systems
One of the most significant obstacles is fragmented data, dispersed across multiple systems such as HR software, payroll platforms, and performance management tools. These disconnected systems make it difficult for HR teams to compile a complete and accurate picture of the organization’s talent landscape.
Fragmented data can lead to inefficiencies in the supply analysis stage, where inconsistencies make it challenging to assess workforce capacity. It also complicates the demand analysis step of workforce planning, as incomplete data limits the ability to forecast future staffing needs accurately. Consolidating this data into a single, unified system is critical for creating a accurate, high-level view of your workforce.
Inconsistent Data Quality
Even when data is centralized, its quality can present another data challenge. Errors such as outdated employee records, missing information on skill sets, and unverified turnover statistics can undermine the reliability of your workforce analysis. These inaccuracies often result in flawed insights, derailing your efforts to align strategic workforce decisions with business objectives.
For instance, conducting a thorough pay equity analysis requires precise data to identify and address disparities effectively. With high-quality data, leaders can make strategic decisions about top talent and pay that align with broader business goals.
Inadequate Tools
Technology plays a pivotal role in enabling effective workforce analytics. A successful and comprehensive workforce analysis process requires deep analytical capabilities such as predictive modeling, and machine learning. In addition, an effective data analysis tool should integrate with all your siloed data sources and scale appropriately as your organization grows. Most importantly, a workforce analysis tool needs to be accessible to the workforce managers and employees using it. Without proper access and training on data analysis tools, teams might default to a less effective solution such as clunky and risk-prone Excel sheets.
Lack of Real-Time Insights
Static, outdated data fails to capture the dynamic needs of the business. Without access to real-time insights, HR teams may struggle to adapt to evolving conditions, such as unexpected employee turnover or shifting market demands.
Real-time data is particularly important in the demand analysis step of workforce planning, where timely information can inform decisions about hiring, training, and future staffing needs. Organizations that rely on outdated or static workforce metrics risk falling behind their competitors.
Misalignment with Business Strategy
A common pitfall in workforce analysis is failing to align workforce plans with broader business strategy. When HR teams and leadership are not on the same page, workforce planning systems can become disjointed and ineffective.
For example, if an organization aims to drive digital transformation but fails to use workforce analysis to pinpoint critical technical skill gaps, it risks falling short of its strategic goals and losing its competitive edge.
How to Conduct a Unified Workforce Analysis Process
Workforce analysis focuses specifically on evaluating and interpreting data to inform decisions. Below is a step-by-step breakdown of the analysis process.
Step 1: Define the Scope of Analysis
The first step in workforce analysis is to clearly define the scope of the analysis. This involves identifying the specific workforce metrics and organizational priorities the analysis will address. For example, are you focusing on turnover trends, leadership readiness, or the skill sets required for a new product line?
At this stage, you must establish the objectives of the analysis and align them with the organization’s goals and objectives. This alignment ensures that the analysis focuses on areas that will have the most significant strategic impact. For instance, if your company is planning a digital transformation, your analysis should prioritize evaluating technical skills and identifying gaps in those areas.
The scope of the analysis also dictates the data you’ll need to collect, ensuring that the process is both targeted and efficient.
Step 2: Gather and Consolidate Data
Data collection is the foundation of workforce analysis. In this step, you’ll compile information from various sources, including HR systems, payroll platforms, performance reviews, and employee surveys. Some key data points to collect include:
- Employee headcount and demographic information
- Current skill sets and certifications
- Historical and current turnover rates
- Productivity and performance metrics
Consolidating this data into a centralized dashboard or workforce planning template can simplify the evaluation process. Tools like Power BI, specialized workforce planning software, or extended planning and analysis platforms (XP&A), like Acterys, are invaluable for integrating data from multiple systems into a unified view.
Data accuracy and completeness are crucial at this stage. Cleaning and verifying data ensures that subsequent analyses are reliable and actionable.
Step 3: Conduct the Workforce Supply Analysis
The supply analysis step involves evaluating the current workforce to understand its capacity to meet present and future needs. This stage provides a snapshot of your workforce’s strengths and weaknesses, highlighting areas where your team is well-equipped and where gaps exist.
During the supply analysis, focus on assessing factors affecting your ability to operate, such as:
- The number of employees across roles and functions
- Current and projected availability of key skill sets
- Employee engagement and retention risks, particularly in critical roles
- The readiness of internal talent for leadership transitions, contributing to succession planning
This analysis enables HR teams to categorize employees based on their contributions and potential, helping to prioritize future actions like upskilling, recruitment, or retention efforts.
Step 4: Perform the Workforce Demand Analysis
The demand analysis step of workforce planning shifts focus to future needs. This involves forecasting the roles, skills, and headcount your organization will require to achieve its strategic objectives. Demand analysis should consider both short-term needs and long-term goals, ensuring that your workforce strategy is sustainable.
To conduct a demand analysis, review:
- Business strategy documents to identify key initiatives
- Planned projects or expansions that will require specific skills or additional headcount
- Industry trends that might impact staffing, such as emerging technologies or labor shortages
Scenario planning templates are a powerful tool at this stage. By modeling different scenarios — such as increased recruitment costs or shifts in market demand — you can prepare for a range of potential outcomes. Advanced analytics dashboards and AI-driven workforce planning tools can provide the real-time insights needed to fine-tune your forecasts.
Step 5: Conduct a Gap Analysis
With both workforce supply and demand analyses complete, the next step is to compare the two to identify gaps. These gaps can take many forms, including:
- Insufficient headcount in key areas
- Missing skill sets required for upcoming projects
- Leadership gaps that could hinder succession planning
The gap analysis phase is critical because it highlights the most pressing issues that need to be addressed. For example, if your analysis shows a high turnover rate in roles essential to your business, this should be a top priority for retention efforts. Similarly, if a gap exists in technical expertise, targeted recruitment or upskilling initiatives may be necessary.
Visualizing these gaps through dashboards or workforce analysis templates makes it easier to communicate findings to stakeholders and prioritize actions.
Step 6: Synthesize Findings Into Actionable Insights
The final step of the workforce analysis process is to synthesize your findings into clear, actionable insights. This step bridges the gap between analysis and planning, ensuring that the insights gained are translated into strategies that drive results.
For example, if your analysis reveals a shortage of technical skills, you might recommend specific action plans such as recruiting specialists, implementing targeted training programs, or partnering with external consultants. If turnover rates are high, you might prioritize initiatives to improve employee engagement and retention.
Presenting these insights in a clear and concise manner is essential for gaining buy-in from leadership and aligning teams around shared goals. Use visual tools, such as XP&A platforms, to illustrate key findings and proposed solutions.
The Future of Workforce Analysis
Workforce analysis is more than just a snapshot of your current and future staffing needs — it’s a dynamic process that empowers you to align talent strategies with your long-term vision. By mastering the steps of supply and demand evaluation, identifying gaps, and transforming insights into actionable strategies, you lay the foundation for sustainable growth and adaptability.
Lead your organization into the future with integrated, real-time workforce analysis. Discover how you can align your workforce objectives with your organizational goals with Acterys’ workforce planning and analytics solution.
