The ultimate workforce planning process for Australian businesses

Workforce planning isn’t just about plugging existing skills gaps with the right talent. It’s also about preparing your business for its future needs. By analysing and forecasting future talent supply and demand, your business can gain a significant competitive advantage and thrive where it needs to most.

However, a thorough workforce planning process can take weeks or even months of serious hard work and dedication, with dozens of factors to consider (from budgets and goal-setting to stakeholder communications and detailed skills mapping).

Not sure where to begin? We’ve developed this workforce planning process guide to help. We’ll walk you through the entire workforce planning process from start to finish so you can develop your workforce more efficiently and at less cost.

Key takeaways

• There are multiple types of workforce planning, including strategic workforce planning, operational workforce planning, and scenario-based planning.

• Workforce planning is essential to manage costs and scale effectively while remaining compliant.

• Every successful workforce planning project uses a trusted seven-step process.

What is workforce planning?

Workforce planning refers to the strategic process of aligning your workforce supply with your talent demand. Essentially, it ensures you have the right people in the right place at the right time.

But why might you need workforce planning? The main goals of workforce planning are to address critical skills gaps, future-proof and reduce risk, and optimise costs and budgeting.

However, there’s more to workforce planning than you may think. For large organisations, detailed workforce planning can take months of careful analysis and hard work. 

It’s also important to understand the types of workforce planning:

Strategic workforce planning

Strategic workforce planning zooms out and looks at the bigger picture. It usually asks: “What workforce will my business need over the next one to five years?” 

Strategic workforce planning tends to focus on things like:

• Future capability needs

• Succession risk

• Automation impact

• Talent sourcing (building vs. outsourcing, for example)

Operational workforce planning 

This is when you develop plans to address more pressing, short-term workforce needs. Essentially, it’s about finding ways to staff for business needs now and over the coming weeks and months. It usually focuses on:

• Headcount deployment

• Shift coverage

• Scheduling

• Leave coverage

• Productivity targets

Scenario-based planning 

This is a more specific type of workforce planning that focuses on what would happen if a particular condition were to change. For example, a retail store might plan what would happen to workforce needs if sales flatlined or if it experienced 10% growth. Scenarios that require workforce planning might include:

• Sudden growth

• Recession

• Regulatory changes

• Mergers

Why businesses should take workforce planning seriously

Planning for your workforce needs (or not planning appropriately) can significantly impact your business operations, as well as your ability to meet your goals. Remember, workforce planning isn’t simply about hiring people with the right skills. There are other factors to consider:

1. Business impact

Workforce planning can make or break your business’s ability to reach its goals and succeed in a crowded market. There are two clear ways it can help you:

Make growth possible 

No business can grow without appropriate staffing. You need the right people ready when demand arrives, not afterwards. This is especially important in Australia, where skills shortages are a persistent problem. A strategic workforce planning process lets you phase hiring and build effective pipelines so they’re ready when you need them.

Boost productivity 

You don’t always need to hire more, but you do need to hire right. The RBA (Reserve Bank of Australia) reports that unit labour costs are rising. This means businesses aren’t getting the productive output they’d like from their labour input. 

Planning helps reduce that drag. It helps you align your existing skills and rosters with actual demand so you don’t have to rely on reactive hiring, which often isn’t cost-effective.

2. Talent market challenges

Some workforce factors are beyond your control, but proper planning can help you mitigate those risks. 

Address skills shortages

The latest Occupation Shortage Report from Jobs and Skills Australia shows that while the national fill rate is 70.7%, Skill Level 3 positions are still hard to recruit for (the fill rate is just 54.5%). 

If you suddenly need to fill a role for which talent is scarce, you could struggle to recruit. Planning helps you stay ahead of this curve.

Meet changing employee expectations 

COVID-19 significantly changed how people work. The latest ABS report on working arrangements shows that 36% of all employees in Australia now usually work from home, for instance. In fact, the National Employment Standards now state that employers can’t refuse flexible working arrangements without reasonable business grounds. This means workforce planning now has to consider flexibility, job design, and manager capability, not just vacancy numbers.

3. Financial implications

Workforce planning is as much about finance as it is about HR. Better planning can improve budgeting accuracy and actually drive costs down, if done right. There are two key tasks in this area:

Improve budgeting accuracy

Labour (including taxes) is a primary cost category for almost every business. This makes salaries, superannuation, overtime, contractors, and related on-costs both a huge expense base and a controllable one. Whether you’re hiring or slimming down, workforce planning is key to better budgeting.

Address overstaffing and understaffing

The ABS reports that 31% of employed people regularly work extra hours or overtime. This figure indicates that many businesses could be understaffing, which can lead to missed revenue and slower delivery. Overstaffing can create other issues, such as higher costs and suppressed productivity. Workforce planning helps organisations choose the lowest-cost, lowest-risk staffing model.

4. Compliance and risk

Workforce planning isn’t just about gaining productivity advantages, but also about mitigating key business risks. Tips for successfully doing that include:

Comply with Australian labour laws 

Fair Work and NES rules are strict and ever-changing. For example, intentionally underpaying recently became a criminal offence, and there are new rules regarding flexible working arrangements. Planning ahead on classifications, rosters, awards, leave coverage, and payroll setup is the best way to avoid legal risk.

Bolster business resilience

All manner of workforce issues, such as illnesses, industrial issues, and disasters, can impact business continuity. If you want to continue operating effectively through challenges, it’s a good idea to map critical roles and build workforce contingency plans.

The 7 workforce planning process steps you should follow

Workforce planning is a continuous process that you need to keep revising. 

But that’s a lot to keep on top of, especially in a large or growing organisation. These key workforce planning process steps will make your workforce planning easier:

1. Align with business strategy

The first stage in an effective workforce planning process is to consider your business goals. Is your main aim to grow, to expand into a new market, to cut operational costs, or something different?

Identifying your overall business strategy will help you align your workforce needs with those goals. For example, if you’re expanding into a new market, you may want to think about whether or not you need local market experts or translators. If you’re in a growth stage, are there key skills you’ll need to staff, or can you upskill existing staff?

Finally, it’s essential to align stakeholders with your workforce plan. Make sure HR, leadership, finance, and others agree on the plan and who will carry it out and how.

2. Analyse your current workforce supply

The next step is to complete a comprehensive workforce audit. If you don’t know what your current situation is, you can’t plan for the future. To ensure the effectiveness of your audit:

• Compile a workforce inventory, including headcounts by role and department

• Develop a skills map and taxonomy to identify current capabilities

• Segment your workforce, including critical vs non-critical roles and permanent vs contingent workers

  • Analyse your data sources, including HRIS systems and performance reports

3. Forecast future workforce demand

Refer to your business goals and consider what kind of workforce (size, skills, etc) you’ll need to meet those demands. 

Here are a few things to consider: 

• Growth projections: By how much will the business grow over the next five years?

• Market expansion: Are you entering a new market in a different country?

• Technology adoption: Do you plan to automate certain roles?

You should also consider different forecasting methods, including:

• Trend analysis: This is where you use historical workforce data to find patterns and project them. It’s useful for stable environments with recurring workloads.

• Ratio analysis: Evaluate the relationship between a business variable and workforce size to forecast demand (to find out how many employees are needed per unit of business activity).

• Scenario planning: This approach models different possible futures rather than predicting one outcome. You might want to test a high-growth scenario or a cost-reduction scenario, for example.

4. Use example scenarios

Scenario-based planning lets you analyse how your business could respond to various situations that could affect your workforce needs (both supply and demand). Through these analyses, you can develop contingency plans you can use when conditions change.

Analyse how your workforce needs would change based on common scenarios, such as:

• Rapid growth: How exactly would you need to increase your headcount or upskill employees if your business grew by 10%? Would you need employees for roles that have an occupation shortage?

• Hiring freeze: How might you restructure your workforce if your business suddenly needed to pause hiring to reduce costs in an emergency?

• Automation impact: How might AI and automation reduce your headcount or change roles (such as increasing productivity) in key areas?

5. Identify workforce gaps

In stage five, you need to dive deeper into the real gaps between the workforce you currently have and the workforce you’ll need. This involves analysing key workforce areas, such as:

• Skills gaps: Your team could be fully staffed and still lack the skills you need to deliver on business goals. This is what we call a skills gap. It may consist of:

• Capacity gaps, which occur when there simply isn’t enough staff or time to meet the required workload. Signs include persistent overtime, missed deadlines, backlogs, and low work quality.

• Leadership gaps, which are apparent when you don’t have enough senior leaders (people who can lead teams and manage projects). Key indicators include a lack of strategic direction and a few overworked leaders.

• Risk identification: Find out which teams and roles are vulnerable and what would happen if they failed. Essentially, you’re analysing how your capacity and leadership gaps create risk. Pay special attention to:

• High-attrition roles: Find out which roles see particularly high turnover, such as frontline roles or high-pressure jobs. These can drive up hiring costs and leave services disrupted.

• Succession risks: If a role depends heavily on one employee, you could be in trouble if that person leaves. This is a succession risk. You need to be aware of how this could cause serious disruption and even revenue loss.

6. Develop your workforce strategy

Now it’s time to put your workforce findings into action. In step six of the workforce planning process, you figure out how to close the workforce gaps you identified in step five.

One common decision framework you might want to use is ‘Build vs Buy vs Borrow vs Automate’:

• Build: Upskill current employees and build your capacity internally

• Buy: Hire talent from the external market

• Borrow: Access temporary talent (e.g., contractors or freelancers)

• Automate: Use technology to complete workflows without hiring extra people

You can’t necessarily hire your way to success, as this will often entail high costs. To reach your goals, upskilling your current workforce could be just as important. You could consider:

• Learning and development programmes: Focus on skills that you really need (not general training) and consider investing in things like technical skills training, leadership development, compliance training, and graduate development.

• Internal mobility: You may be able to plug workforce gaps by maneuvering existing talent across the business through promotions and project assignments.

Finally, you should also think about diversity and inclusion. Workforce planning isn’t just a numbers game; it’s also about sustainable, fair decisions that help you reach the best talent you possibly can.

7. Execute, monitor, and adjust

Now it’s time to implement your workforce plan. This can be a long and complex process. You need to consider:

• Your hiring process

• Those who are accountable for decision-making

• Budget alignment

• Your recruiting timelines

• The best way to communicate with stakeholders

• The HR systems, like Rippling, that can make recruiting and onboarding easier

However, no workforce plan is ever finished. It requires constant, careful attention and refinement. You should monitor these factors at least quarterly:

• Hiring progress

• Attrition and retention trends

• Productivity

• Early-warning signals

• Real-time reporting

When you spot inefficiencies or your needs change, consider making adjustments, such as:

• Business changes (growth or shifting markets)

• Role prioritisation

• Hiring freezes or accelerations

• Upskilling initiatives

• Contingent workforce shifts

4 workforce planning models and when to use them

There are many different workforce planning processes you can use. Each uses a different set of data and formulas to illuminate a different plan.

Here are four important workforce planning models you can try today.

1. The supply and demand model

This is perhaps the most common workforce planning framework. It’s simple: you compare the skills and people you currently have (the workforce supply) with the skills and people you’ll need (the workforce demand).

You use business plans and growth trends for workforce demand forecasting. Then you conduct an internal audit to assess your current headcount and skills capacity.

The supply and demand model is a simple, practical way to identify your workforce gaps. It’s best when your workforce size is tied to growth, headcount forecasting is a must, or you want a clear gap analysis.

2. Skills/competency-based planning

If you want to go beyond headcount and get into the precise capabilities your organisation needs, skills, and competency-based planning is a good option.

You identify critical future capabilities, then assess whether those capabilities exist in your current workforce. This gives you a clear roadmap of the skills you need to develop, whether that’s through hiring or talent development programmes.

Skills-based planning is ideal when your strategic goals require new capabilities, automation is changing roles, or you want to figure out how to upskill effectively.

3. Workforce segmentation

Workforce segmentation divides your workforce into different groups so you can plan according to the importance of each segment. Some roles, for example, are critical to the business, while others may be harder to replace or are particularly high-volume.

You might need different strategies for roles segmented by risk level, strategic value, ease of replacement, or customer impact. This will help you channel resources more effectively.

Workforce segmentation is the go-to when you have a particularly large workforce, different groups have different needs, or you want to marshal resources more efficiently.

4. Workforce capacity planning

Workforce capacity planning focuses primarily on workload. It looks at how much work literally needs to be done and asks if you’ve got enough people and time to do it. Again, you compare workforce supply analysis with workforce demand and focus particularly on avoiding over- or understaffing.

This is a popular method when it comes to short-term planning in fast-paced environments. It’s great when the workload fluctuates a lot and service depends on the number of staff.

Common workforce planning challenges in Australia

There’s no end of workforce planning challenges waiting to trip businesses up, but you can mitigate them. Use our list below to prepare for the most common problems:

Tough labour market dynamics

The Australian economy is strong, but the labour market is struggling to keep up. While you can’t directly impact the labour market, you can plan for it.

In particular, you should be aware of how Australia’s current skills shortages can slow down your hiring process. The latest Australian Bureau of Statistics’ job vacancy data shows that over 337,900 jobs remain unfilled in Australia, mostly in key technical, digital, and trade skills.

Strict regulatory compliance requirements

It’s not as simple as hiring the people you need. You need to account for complex employment laws and award systems, which can affect everything from pay to leave entitlements.

In Australia, the main regulations affecting employment come from:

• Employment laws: These include the strict employee protections governed by the Fair Work Commission and the National Employment Standards.

• Worker classifications: The modern awards set out detailed distinctions between different types of workers, distinctions that determine pay and other entitlements.

Evolving workforce trends

The Australian workforce is rapidly changing, and employee expectations and demographics are shifting.

When it comes to workforce planning, the main trends you should be aware of are:

• Remote/hybrid adoption: ABS findings show the number of remote/hybrid workers is increasing. It now accounts for more than a third of all workers. This may have serious implications for your workforce plans.

• Demographic shifts: Australia’s population is ageing. Over the next four decades, the number of people over 65 is expected to more than double. This could make the labour market even more competitive.

What these challenges mean for Australian businesses

Tighter labour markets, strict compliance requirements, and shifting employee expectations are all making workforce planning harder in Australia. However, the right strategies can help you manage the workload these challenges create.

Australian businesses are responding to workforce challenges in three main ways:

• Hiring strategy adjustments: Employers are adopting a faster, more branded hiring process to attract and retain top talent (often using advanced HR software).

• Workforce flexibility: Australian companies are increasingly using alternative employment types, such as contractors or hybrid workforce models.

• Talent sourcing approaches: Businesses are increasingly turning to global talent to address key skills shortages. Others are focusing on upskilling existing employees through comprehensive development programmes.

The best workforce planning software for Australian businesses

Workforce planning doesn't have to be a manual, resource-intensive process anymore. The right planning software can help you plan effectively in a fraction of the time, and also automate the bulk of your workforce planning tasks.

Here’s a brief rundown of the best workforce planning software for Australian businesses right now:

1. Rippling

Rippling is the only all-in-one HR, IT, payroll, and finance platform built on a single employee record, so workforce planning works off one source of truth. Automation handles the repetitive work, from headcount modelling to approval workflows, so your team can focus on the planning itself.

Source: Rippling

2. Workday

Workday is a popular global HR system. With dedicated workforce planning features, such as headcount planning and capacity planning, it’s a good option for larger Australian organisations that want HR and finance aligned.

Source: Workday

3. ADP Workforce Now

ADP is another big name in the global workforce planning software market. It’s a comprehensive HR suite with dedicated workforce planning capabilities, plus the ability to connect to ADP Global Payroll for multi-country operations.

Source: ADP Workforce Now

4. Employment Hero

Employment Hero may not be the most widely known HR platform on this list, but it’s built and marketed directly for Australian SMBs and lower mid-market businesses. This means easier native compliance and strong ease-of-use for Aussies.

Source: Employment Hero

5. Humanforce

Humanforce is built for frontline, shift-based, award-heavy Australian workforces. However, it’s not a classic workforce planner, and it lacks some of the more advanced workforce planning features white-collar employers might need.

Source: Humanforce

How Rippling has transformed the workforce planning process for Australian businesses

Rippling centralises HR, payroll, IT, and finance for workforce planning that cuts costs and guarantees compliance.

Here are just two of the Australian businesses that Rippling has helped transform their workforce planning processes:

Mentorloop effortlessly manages its global workforce with Rippling

Mentorloop is an Australian business specialising in advanced mentoring software across Australia and the UK. Initially, the company’s disparate HR systems made regional compliance and global workforce management time-consuming and expensive.

Source: Rippling

With Rippling, they centralised their HR systems and:

• Gained real-time insight into their global workforce

• Automated key compliance workflows

• Reduced their onboarding time by 20%

AssuranceLab drives down onboarding time and scales at speed

AssuranceLab, a Sydney-based Australian company (acquired by US firm Sensiba), was struggling to plan for rapid global scaling using its existing system of inefficient and error-prone Google Drive spreadsheets. They turned to Rippling, who helped them centralise their HR and payroll systems to gain a clearer workforce planning roadmap.

Source: Rippling

With Rippling, the company has achieved:

• A reduction in onboarding times of more than 75% 

• 18 new hires onboarded in less than two months

• Two new full-time HR employees saved from headcount

Ready to revolutionise your workforce planning process?

Every business’s workforce planning needs are different. There are dozens of workforce planning models tailored to different planning needs, including supply and demand modelling, scenario-based modelling, capacity planning, and skills-based modelling. 

However, whichever model you use, it’s a good idea to follow our seven-step workforce planning process: 

1. Align with business strategy

2. Analyse your current workforce supply

3. Forecast future workforce demand

4. Use example scenarios

5. Identify workforce gaps

6. Develop your workforce strategy

7. Execute, monitor, and adjust

Advanced HR platforms can speed up your process and make planning more efficient for your business. Rippling, the #1 HR and payroll software, offers dedicated workforce planning capabilities.

Get a demo today and see for yourself how Rippling can transform your workforce planning process.

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