7-Step Workforce Planning Process for Canadian Businesses

Workforce planning, the process of organizing a workforce to meet business demand, is the backbone of many business operations. Even businesses that aren’t planning on rapid growth or international expansion can benefit from a strong, watertight workforce planning process.

However, there are many types of workforce planning, as well as many different planning models and frameworks. Each approach lends itself to a different business need. So how does a business know where to begin?

In this guide, we’ll break down everything you need to know about workforce planning in Canada. We’ll cover the different types of workforce planning, the ultimate seven-step workforce planning process, the top software you should be using to save time, and much more.

Key takeaways

Here’s a quick breakdown of the main takeaways from this guide:

• There are many types of workforce planning, including strategic workforce planning (long-term), operational workforce planning (short-term), and scenario-based planning.

• Following a proven seven-step workforce planning process can help mitigate risks and speed up the workforce planning experience.

• Top workforce planning tools, such as Rippling, provide advanced automation and centralized control to make the workforce planning process faster and more accurate.

What we’ll cover

• What is workforce planning?

• Why workforce planning matters for Canadian businesses

• The 7-step workforce planning process

• 4 workforce planning models every Canadian business should know

• The best workforce planning software in Canada

• Level-up your workforce planning capability today

• FAQs

What is workforce planning?

On the surface, workforce planning is the process of aligning a business’s workforce supply with its business demand. The fundamental objectives of workforce planning are usually to make sure the business has the right people in the right place at the right time, to optimize costs/budgeting, and to mitigate key workforce risks (such as talent gaps or lack of senior leaders).

Not all workforce planning is the same. Depending on their business goals, Canadian companies use a range of workforce planning approaches, including:

• Strategic workforce planning: Aligning workforce supply with business needs over the long term (one to five years). Usually utilized to prepare for succession risks, the impact of automation, talent sourcing needs, and future capability (skills) requirements.

• Operational workforce planning: Planning to address immediate and short-term workforce needs (one to 90 days). Rather than aligning with long-term strategic goals, businesses analyze shift coverage, scheduling, productivity targets, and leave coverage to meet immediate demand.

• Scenario-based planning: This type of workforce planning aims to assess workforce demand for a specific, hypothetical scenario. For example, if the business expanded into an overseas market, how would that affect their workforce demand? Common scenarios include rapid growth, recession, cost-cutting, and regulatory changes.

Why workforce planning matters for Canadian businesses

Workforce planning forms the backbone of a wide range of operations, not just recruitment. Depending on the type of workforce planning the business is conducting, the results can impact everything from scheduling and headcounts to compliance and, ultimately, bottom-line revenue.

Here are just some of the ways workforce planning affects Canadian businesses:

Business impact

Proper workforce planning can open up new business opportunities and bolster your key metrics.

• Growth enablement: No business can grow without the necessary workforce supply, whether that’s the headcount (the right number of people) or capability supply (the right skills). Workforce planning helps businesses fuel their growth initiatives and improve their chances of success.

• Productivity gains: An imbalanced workforce supply can drain your resources. This is a big problem in Canada; studies show unit labour costs are increasing, which means productivity per employee is decreasing. Proper planning helps ensure you’re not wasting resources by over- or understaffing.

Talent market challenges

A strategic workforce planning process can help your business mitigate the many risks that a turbulent labour market presents, including:

• Skills shortages: Seventy-seven per cent of Canadian businesses struggle to find qualified candidates for their vacancies. This speaks to the country’s widening skills gap, one that’s costing the economy over $2.6 billion a year and slowing business growth. Workforce planning can help your business secure scarce talent before your competitors do.

• Employee expectations: Hiring isn’t as simple as it used to be. A younger generation is bringing new expectations to the workforce. Flexibility in working arrangements (such as hybrid setups), entitlements, and working times are all making workforce management harder. However, planning helps you meet these expectations as you pursue your business goals.

Financial implications

Workforce planning has a significant impact on your bottom line. Here’s how:

• Labour costs: On average, labour is one of the biggest cost categories in any business. Businesses don’t just have salaries to consider, but superannuation, overtime, tools, and more. That’s where detailed workforce planning that includes these myriad cost factors can make a huge impact on an organization’s budgeting accuracy. 

• Overstaffing and understaffing: Overstaffing can increase your costs and decrease your productivity. Understaffing can lead to missed revenue and slower delivery. Getting the balance right is hard, but essential. Workforce planning gives you better insight into your headcount demand.

Compliance and risk

Workforce planning helps Canadian businesses mitigate significant compliance and business continuity risks, as well.

• Labour laws: Labour law in Canada is governed by both the federal Canada Labour Code and provincial employment standards. This can make entitlements, including leave, overtime, allowances, minimum rates, and more complicated. Advance planning can help you stay on the right side of these regulations and avoid penalties.

• Workforce continuity: Workforce problems, such as sudden illness, industrial disruption, cyberattacks, and even natural disasters, can all leave a business exposed and, in some cases, even inoperable. Workforce planning helps you develop watertight contingencies that mitigate the business impact of such disruption.

The 7-step workforce planning process

The workforce planning process is circular; it’s never complete. Businesses should revise and update their workforce plans regularly to reap the full benefits of the process.

With that in mind, here are the seven workforce planning process steps Canadian businesses use:

1. Align with business strategy

Developing an effective workforce plan begins with understanding your business goals. Be specific. Do you want to grow by 10% in the next four quarters? To gain X% of market share in a specific new market? To reduce overheads by 15%?

These goals will dictate your workforce planning approach. For example, if your main business goal is to grow by 10% in the next four quarters, you might want to consider both headcount planning (will you need more staff?) and skills-based modelling (will you need key skills to achieve this growth?).

At this stage, you also need to align stakeholders before moving on. Make sure key leaders in HR, finance, and other affected areas agree on the strategy and goals.

2. Analyze your current workforce supply

The second step is to develop a clear picture of your existing workforce supply, including how many employees you have, what they do, which skills they possess, and how much they produce.

First, compile a comprehensive workforce inventory that includes:

• Workforce headcounts

• Skills mapping

• Current capabilities

• Skills taxonomy

Next, segment your workforce into:

• Critical and non-critical roles

• Permanent and contingent workers

Finally, analyze and update your data sources, including:

• HRIS data

• Reports and performance data

3. Forecast future workforce demand

It’s time to think ahead. Setting aside your workforce supply, analyze your business goals (from step one) and figure out the workforce you’ll need to reach those goals. How many employees will you need? Which skills will be required? This is your workforce demand.

When forecasting, consider how these factors will affect your workforce demand:

• Growth projections

• Market expansion

• Technology adoption

It’s also a good idea to use different forecasting methods instead of relying on one. Here are three to explore:

• Trend analysis: Identify key patterns in historical data and project them to get a solid idea of future demand (assuming conditions are stable).

• Ratio analysis: Identify how many employees are required per unit of business activity by analyzing the relationship between a business variable and workforce size.

• Scenario planning: Determine how workforce demand varies based on different scenarios (we’ll take a deeper dive on that next).

4. Use example scenarios

Leverage scenario-based planning to determine how specific circumstances would affect your workforce demand. Even if you don’t anticipate a particular scenario, workforce planning is all about preparing for it.

A few common workforce planning example scenarios include:

• Rapid growth: Would your current workforce be able to fuel a sudden growth rate of 20% over the next two quarters? Consider how this would affect your headcount or skills needs.

• Hiring freeze: If a cost emergency prohibited your business from hiring new talent, how would you best meet workforce demand with your current supply? Would you maneuver employees or upskill existing workers?

• Automation impact: Could automation technology significantly increase productivity in certain roles or even replace the need for some roles in their entirety.

5. Identify workforce gaps

Now that you have a clear picture of your workforce supply and demand, you can home in on your key workforce gaps. These are areas where your supply doesn’t match your demand.

Three types of gaps to consider are:

• Skills gaps: These are skills your team doesn’t currently have but will need for the business to reach its goals. This could include certain digital skills or frontline qualifications, for example.

• Capacity gaps: A capacity gap exists when your workforce doesn’t or won’t have enough employees to meet the required workload. Missing deadlines and persistent overtime are both signs of a capacity gap.

• Leadership gaps: This is when your organization doesn’t have enough team leaders or managers to oversee projects and the strategic direction. 

It’s important not only to identify gaps, but also to understand the risks they create. Pay special attention to:

• High-attrition roles: When a role sees a particularly high turnover, it can lead to high hiring costs and continuous disruptions.

• Succession risks: When a project or process is too reliant on one person, that person’s absence can slow delivery and reduce work quality.

6. Develop your workforce strategy

It’s now time to close your workforce gaps. There are many ways to do this. In Canada, most businesses rely on a simple “Build vs Buy vs Borrow vs Automate” workforce planning framework. 

This approach outlines the four main ways to close a workforce gap:

• Build: Train current employees to step into skilled or senior roles (upskilling)

• Buy: Hire new, permanent employees from an external talent market

• Borrow: Hire contractors or freelancers on a short-term basis

• Automate: Rely on automation technology to fulfil basic administrative functions

Workforce planning focuses on more than simply hiring new talent, although that remains an option. For many companies, especially SMBs, it’s quicker and more cost-effective to train existing team members through learning and development (L&D) programs.

If you decide to upskill existing employees, invest in specific skills you really need, rather than in general training programs. Consider how your business can actually benefit from the L&D course.

Consider diversity and inclusion, also. You want the best available talent to fill your workforce gaps, so always source talent from the widest and most diverse talent pool possible.

7. Execute, monitor, and adjust

In step seven, you’ll need to implement your workforce plan, considering multiple factors, such as:

• Your hiring process

• The roles that are responsible 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

Remember, the workforce planning process is never finished. Workforces and market conditions are always in flux, so it’s important to revise and adapt your plan regularly to meet new demands. Consider conducting a quarterly workforce plan review, taking into account your:

• Hiring progress

• Attrition and retention trends

• Productivity

• Early-warning signals

Always be ready to adjust your workforce plan as conditions and goals change. 

4 workforce planning models every Canadian business should know

Businesses can use different workforce planning models and frameworks for different planning approaches. Each provides a new perspective to the workforce plan and has its own best use cases.

Let’s look at four of the most popular workforce planning frameworks in Canada:

1. The supply and demand model

The supply and demand model is among the most common workforce planning models. It’s a simple formula: compare the business’s current workforce supply with its forecasted workforce demand and identify the capacity gap. This is sometimes referred to as “headcount planning.”

The supply and demand framework is a simple and hassle-free way to assess your headcount needs relatively quickly. It’s the best model to use when:

• You need clear insights into your capacity gaps

• Your headcount is of particular importance

• Your growth is dependent on the workforce size

2. Skills/competency-based planning

Skill gaps are often more important than capacity gaps for growing businesses, especially those expanding their service or product range. However, the process is very similar: the business assesses its current skills taxonomy against its future capability needs and identifies the gap.

Like the supply and demand model, competency-based planning has the benefit of being extremely simple (although it can take time to accurately assess a business’s true skills taxonomy). It’s a great option for businesses that are:

• Expanding their services

• Considering automation adoption

• Looking to invest in the right L&D programs

3. Workforce segmentation

Workforce planning doesn’t always apply equally to all types of employees. Some roles may have higher strategic value than others, for example, or be much easier/harder to replace. Others might have a more significant impact on the customer experience.

Workforce segmentation involves categorizing the workforce to allocate your resources more efficiently based on priorities.

This is a particularly useful model when:

• The workforce is very large

• You want to prioritize resource allocation

• Different types of workers specialize in different areas

4. Workforce capacity planning

Whereas supply and demand modelling assesses a business’s headcount gap, and competency-based modelling assesses the skills gap, workforce capacity planning identifies the workload capacity gap.

With workforce capacity planning, businesses assess how much work needs to be done to meet their business goals and whether the current workforce supply can meet that workload. It focuses more on practical, short-term workload needs, rather than long-term skills needs.

This is the go-to model when:

• Workload is uneven and hard to predict

• Service levels depend directly on staff numbers

Common workforce planning challenges in Canada

Effective workforce planning factors in any challenges that can affect business operations. Below, we’ll break down the most common workforce planning challenges Canadian businesses might face:

Labour market dynamics

Labour markets around the world are currently struggling, including in Canada. Serious skills shortages and imbalanced talent availability are making it harder to secure the right people at the right time.

Businesses should be aware of how these factors influence workforce planning:

Talent availability

The hiring experience varies widely based on the city or province in Canada where a business is located. There is broad talent available, but it’s spread unevenly across regions, with large cities like Toronto, Montreal, and Vancouver claiming a disproportionate share. 

Skills shortages

Canada is facing growing skills shortages in key areas like healthcare, agriculture, and transportation. Many skilled tradespeople are also reaching retirement age. These factors can make it difficult to source skilled workers domestically, and many businesses are turning to global talent sourcing for a solution.

Regulatory and compliance requirements

Strict, often complicated employment regulations can make managing disparate, multi-layered workforces challenging in Canada. Particular challenges include:

Employment laws 

Employment laws are two-tiered in Canada; the federal Canada Labour Code and provincial laws (like the Ontario Employment Standards Act and the Alberta Employment Standards Code) work in tandem. This can make assessing employee entitlements and working arrangements costly and time-consuming.

Worker classifications

When planning workforce changes, it’s important to consider how the worker classification, including whether they’re employees or contractors, affects pay and entitlements. Otherwise, you could end up paying more than you expected. Misclassification can also lead to legal repercussions. 

Industry-specific regulations

Workforce plans should account for industry-specific regulations, particularly when licensing and Occupational Health and Safety laws apply. These can impact workforce costs. For example, you might find that compliance costs increase as your team expands.

Workforce trends

Changes in working arrangements and demographics are also putting pressure on workforce planners.

Remote/hybrid adoption

The nature of working arrangements is changing in Canada. As few as 20% of employees even consider a fully in-person role in 2026; hybrid working is quickly becoming the predominant employment model. This will impact HR teams that may need to hire to meet workforce demand.

Demographic shifts

Over the next 50 years, the share of people over 65 in Canada is expected to rise to between 22.6% and 32.5%. This will make succession planning harder and increase the need for effective talent pipeline development.

What these challenges mean for Canadian businesses

Canadian businesses need new, improved strategies to effectively deal with labour market, compliance, and workforce expectation challenges.

Here are just a few ways in which businesses are adapting to these challenges. They’re methods that will help you mitigate workforce planning risks and ensure smooth workforce management:

Hiring strategy adjustments 

One-size-fits-all hiring strategies don’t work in 2026. Hiring needs to reflect the varied nature of the labour market, so businesses are increasingly favouring localized hiring campaigns, shorter hiring cycles for scarce roles, and early hiring for critical positions.

Workforce flexibility 

Hybrid and remote models are increasingly expected to be the standard, especially for knowledge-based roles. If employers want to attract top talent, they must be willing to offer flexible working arrangements and not necessarily insist on in-person work.

Talent sourcing approaches

Employers are increasingly turning to international labour markets to fill critical roles. In fact, immigration now accounts for nearly all of the labour force growth in Canada. Consider various talent sourcing approaches, including global talent sourcing, but also upskilling and internal mobility.

The best workforce planning software in Canada

Workforce planning is traditionally a time-consuming, data-intensive operation. However, these days, advanced workforce planning tools are automating a huge portion of manual work and making workforce planning both quicker and more cost-effective.

Of the top workforce planning software options on the market, these performed best for Canadian businesses:

Workforce planning is traditionally a time-consuming, data-intensive operation. However, these days, advanced workforce planning tools are automating a huge portion of manual work and making workforce planning both quicker and more cost-effective.

Of the top workforce planning software options on the market, these performed best for Canadian businesses:

1. Rippling

Rippling stands out as the best all-around HR platform for Canadian businesses. It combines HR, payroll, IT, and finance into one centralized system and offers advanced automation features to speed up a range of time-consuming HR processes, including headcount planning. As testament to its popularity, Rippling has a strong 4.9-star rating on Capterra.

Source: Rippling

2. Workday

Workday is a vast HR system, complete with specific workforce planning features, such as headcount planning and capacity planning. Like Rippling, it offers comprehensive automation and full HR-payroll alignment. However, Workday is a particularly large suite that may be too complex for Canadian SMBs.

Source: Workday

3. Dayforce

Although smaller than Rippling and Workday, Dayforce offers two key advantages: it’s a Canadian company (which means it provides easy compliance), and it has dedicated strategic workforce planning software. This makes auditing and scenario-based planning particularly easy.

Source: Dayforce

Source: Dayforce

4. Employment Hero (formerly Humi)

HR giant Employment Hero recently bought Humi and folded it into its Canadian service offerings. Like Dayforce, Humi was built in Canada specifically for Canadian businesses, so it makes certain workforce planning processes (like compliance) completely hassle-free. However, it doesn’t offer as many automation features as larger competitors, such as Rippling.

Source: Employment Hero

5. Rise People

Rise People has been delivering workforce planning tools for Canadian businesses for nearly 15 years, so it stands out as one of the top software options for Canada-specific workforce planning. It offers strong operational workforce planning features, like time management and scheduling, but it lacks some more advanced strategic workforce planning capabilities.

Level-up your workforce planning capability today

Workforce planning is a pivotal component of business operations in Canada, regardless of the business’s size or goals. Operational workforce planning helps businesses meet short-term workforce needs with immediate impact. Strategic workforce planning helps businesses reach their long-term business goals.

The key to successful workforce planning is using a proven process. In this guide, we’ve provided the ideal seven-step process:

1. Align with business strategy

2. Analyze 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

Traditionally, workforce planning has been a long, data-intensive, and often error-prone process. However, modern workforce planning software is changing that. Advanced automation capabilities have made workforce planning faster, cheaper, and more accurate.

Request a demo today to see for yourself how easy workforce planning is with Rippling.

FAQs

What is workforce planning?

Workforce planning is the process of aligning your workforce supply with your workforce demand. Essentially, this involves assessing your business’s current headcount and skills against the headcount and skills it needs or will need to reach its business goals.

What are the different types of workforce planning?

There are three main types of workforce planning: 

1. Strategic workforce planning (analyzing workforce supply and demand for long-term business goals, such as growth) 

2. Operational workforce planning (assessing short-term or immediate workforce needs)

3. Scenario-based planning (planning for specific scenarios, such as rapid growth)

How does workforce planning software help businesses?

Workforce planning software centralizes and automates the workforce planning process. This means all the necessary data will be easily accessible and always in the right place (not spread out in spreadsheets). Plus, many tedious manual tasks associated with workforce planning, such as data entry, can be fully automated. Modern workforce planning tools save time and money and ensure more accurate data insights.