Planning
What is planning?
Planning is all about making sure that your organization employs the right number of people with the right skills to cope with the anticipated scale of the business in the long term. It includes disciplines such as long-range forecasting, capacity planning, budgeting, recruitment, and training.
Forecasting is the part of the WFM cycle where you establish the number of staff required in the short term, typically at 15 or 30-minute intervals, looking a few weeks or months into the future. By contrast, planning deals with the total number of full-time equivalent (FTE) employees that you will need in the coming months and years, typically at monthly intervals.
Why does planning matter?
The most important element of every organization is the employees. Even if you can forecast workload with 100% accuracy and perfectly optimize your schedules around customer demand, if you simply have the wrong number of employees on the payroll, you are in trouble. You can’t hire and train new employees overnight, so it’s vital to always have a clear picture of your long-term staffing needs and take action to make sure you have the right number of people.
How does planning work?
Planning can be broken down into 2 main steps:
- Long-term forecasting
- Capacity planning
1. Long-term forecasting
The first step in the planning process is to forecast the workload that you will be handling per month for the next 12, 18, 24, or more months into the future. A survey conducted for an injixo webinar revealed that the most common time horizon for long-term forecasting is 12 months, but over 20% of the people surveyed planned for 24 months or more into the future. Since the number of required staff is a function of both activity levels and average processing time, it’s important to forecast average processing time for the same future period.
The further into the future you look, the greater the uncertainty of any forecast. Long-term forecasting is therefore about providing ‘directionally correct’ information to inform the planning process at a monthly level. It is not necessarily about predicting the precise number of interactions or other activities that will need to be handled in each 15 or 30-minute interval for the next few years, although that does give you insights into the sort of shift patterns you will be hiring for.
When performing long-term forecasting, the more history you have, the better you can detect growth trends, seasonal patterns, and the impact of repeating special events such as public holidays. Ideally, you will have at least 3 years of historical data. Just as with short-term forecasting, good practice includes analyzing the data to find anomalies such as gaps in history and one-off spikes in volume. These don’t belong in the forecast and must be removed.
After creating a forecast based on historical data, the next step is to add business intelligence. Business intelligence is about identifying possible reasons why the future will be different from the past and adjusting the forecast of activity levels and/or average processing time accordingly. Examples include new product launches, the introduction of customer self-service options and entry into new markets. Business intelligence depends on constant vigilance and good collaboration with colleagues in any department which can affect workload - for example, marketing.
The final step in the long-term forecasting process is to convert the monthly forecast of total activity level and average processing time into the number of full-time equivalent (FTE) employees that you will need each month. The simplest way to do that is to multiply the monthly activity level by average processing time to calculate the total workload, then divide by the number of hours worked by a full-time employee. The required FTE count, together with data about employment costs form inputs to the budgeting process.
Having a mixture of full-time and part-time employees enables better schedule optimization. If you do employ part-timers, clearly the total number of employees on the payroll will exceed the FTE requirement.
2. Capacity planning
Capacity planning starts by establishing the number of existing staff you will have in your organization across the period of the long-term forecast. You can only take informed steps to close the gap between supply and demand once you know how many employees you currently have available - and will have available.
The first step is to determine how many individual employees you currently have. This can be done using the human resources (HR) system or workforce management (WFM) system. You should only count the employees you intend to schedule. Typically this will be those that handle the workload directly, but may include team leaders as well. It’s good practice to ensure consistency between your HR and WFM systems regarding staff count, to maintain, ‘one version of the truth’.
The next step is to calculate the number of FTEs that you already have available. The staffing requirement from the long-term forecast is stated in FTE, therefore, the calculation of available staff should also be based on FTE, so you can compare supply and demand on a like-for-like basis. It is standard practice to calculate FTE numbers based on contracted hours. For each employee, take the number of hours they are contracted to work and divide by the number of hours worked by a full-time employee. For example, if an employee works 24 hours per week and a full-timer works 40 hours per week, divide 24 by 40 to establish that this employee counts as 0.6 of an FTE.
Once you’ve established the available FTE count, the next step is to adjust for staff attrition. The annual attrition rate is calculated as the number of employees who left in a previous 12-month period divided by the total number of staff positions available. The simplest way to adjust for attrition is to reduce the total available FTEs each month by 1/12 of the annual attrition rate. In practice, attrition tends not to be consistent across the year. There are peaks and valleys. It is therefore good practice to perform a more granular calculation. Attrition can be voluntary or involuntary. Voluntary attrition occurs when employees resign from the organization. Involuntary attrition occurs when employees are dismissed. In each case, the underlying reasons for departure are different and the monthly pattern of departures will be different.
The final part of capacity planning is to identify how you will close the gap between required FTEs and available FTEs month-by-month across the period of the long-term forecast. There are many possible ways to achieve this. The obvious solution is to recruit permanent employees to fill the gap. It’s good practice to meet your recruiting and training departments at least every month. Staffing requirements will continually change as you gather new data and update your forecasts. There will always be constraints on the number of people you can hire and train each month.
Since the required number of FTEs will vary month-by-month, you need to introduce some flexibility. One strategy is to hire sufficient employees to cover the requirement in the quietest month of the long-term forecast and fill the gap in busier months with overtime, temporary staff, gig workers, or business process outsourcers (BPOs). Another strategy is to hire sufficient employees to cover the average month or the peak month, then reduce surplus headcount by scheduling training or having a higher time-off quota in the quieter months. A further solution is to introduce annualized-hours contracts, whereby employees work more hours during busy months than quieter months.
What impact does planning have?
Without the right number of people at your disposal, the whole workforce management process is jeopardized. Employees are the backbone of every organization. Accurate workload forecasting and optimized scheduling are vital to success, but to schedule employees efficiently, they must be available in the first place. To ensure that your business operates smoothly, it is important to plan your long-term staffing needs, because recruiting and training new employees takes time and effort.