6 Reasons Why Poor Workforce Planning Inhibits Business Growth

6 Reasons Why Poor Workforce Planning Inhibits Business Growth

September 14, 2023
Failing to prioritize workforce planning can result in organizations missing out on the advantages of expansion. Below, we explore six ways inadequate workforce planning can hinder the progress of a business.

Poorly Skilled Workers

A crucial aspect of workforce planning involves gauging the requisite talent level for an organization's envisioned future state. For instance, if a company currently heavily relies on individual contributors, there might be a necessity to bolster the number of team leaders in anticipation of a larger, more intricate organization with an expanded portfolio of products and services two years down the road.
Effective workforce planning encompasses a forward-looking perspective that considers ongoing and future training needs for existing staff while also forecasting potential skill additions through new hires. In contrast, inadequate workforce planning neglects to account for the forthcoming skills and knowledge required by employees, resulting in rapid obsolescence of existing skills, diminishing their value to the organization over time. In the absence of a well-crafted workforce plan that anticipates employee training needs, employees may find it challenging to work smartly and efficiently due to a lack of the requisite skills and knowledge.

Underdeveloped Leadership Pipeline

As organizations expand, the need arises for a well-structured alignment of employees based on their specific roles and responsibilities, whether categorized by function, location or project. As businesses mature and teams demand more day-to-day management, the demand for leadership talent grows. When the business fails to recruit and train a sufficient number of individuals for leadership roles, the issue can rapidly escalate as the organisation’s needs surpass the capabilities of its current managers.
Effective workforce planning moves beyond predicting the requirement for individual contributors and frontline staff; it also includes identifying the required number of leaders, their skill levels, and where they should be deployed as the business evolves. Nurturing a leadership pipeline as an essential element of workforce planning. Some consequences of a weak leadership pipeline due to poor planning are:

  • Managers struggle to establish connections with employees and build trust in their team.
  • Leaders lack the necessary skills and training to set expectations and provide effective feedback for guiding employee performance.
  • Newer leaders may find themselves in management roles before they’re ready to lead, due to a scarcity of leadership talent elsewhere in the organization.
  • The organization may need to recruit executive leaders externally because an insufficient number have been cultivated internally.

Low Employee Engagement

Employee engagement has persistently hovered at low levels for a considerable period. Ineffectual workforce planning can exacerbate this already challenging situation, as it may engender feelings of undervaluation and neglect among employees. Indeed, it's a daunting task for employees to sustain high levels of engagement when their organization appears to be reactively structuring its staffing plan to accommodate growth.
A lack of transparency about workforce staffing plans contributes to employees feeling uninformed about company decision-making, which can also lead to poor employee engagement. If company leaders fail to plan (or don’t at least send clear signals that there is a plan), employee commitment can wane over time. Poor transparency can have a particularly negative impact on the engagement of leaders outside the C-suite. When department and division leaders feel left out of key staffing decisions they’re expected to implement, they can become disengaged and unmotivated.

Underproductive Employees

The efficiency and speed with which employees operate significantly contribute to a company's ability to meet its growth objectives. Nevertheless, inadequate workforce planning can divert attention away from the critical elements such as technology, training, and resource allocation that can amplify employee productivity. In the absence of comprehensive workforce strategies, employee productivity can suffer, unable to surmount challenges associated with workloads and skill levels.
Subpar workforce planning also hinders an organization from honing in on the most value-added employee activities and from optimally aligning talent with the fundamental drivers of company growth. Workforce planning transcends mere staffing considerations; it also ensures that teams and individuals are engaged in tasks that align with the company's core objectives. A case in point is a company that experienced a 6 percent boost in productivity when it implemented a workforce plan that strategically realigned work responsibilities across various functions.

Higher Turnover

Inadequate workforce planning can result in reactive hiring decisions that come too late to effectively address evolving business requirements. Prolonged talent shortages in rapidly expanding sectors can lead to excessive reliance on current employees to compensate, ultimately causing heightened stress, burnout, and increased turnover.
Failure to proactively plan for and manage turnover hinders company growth, as it incurs both time and financial costs to replace departing employees. Estimates suggest that replacing an employee can cost anywhere from 50 percent to 200 percent of their salary. When workforce planning falls short, the Human Resources department and company managers end up dedicating more time and resources to devising solutions for talent gaps and recruiting replacements. This leaves them with fewer resources and less time to focus on activities essential for fostering growth, such as training and developing the existing workforce.

Less Collaboration Across Teams

Company growth and innovation are closely intertwined, but achieving innovation becomes a challenge when teams operate disjointedly, and lack an organizational structure that encourages open communication and collaboration. Workforce planning should extend beyond recruitment, emphasizing the creation of an organizational structure that aligns teams effectively, enabling them to work together and share insights across the various departments and functions. Neglecting a well-structured workforce plan can lead to isolated, inward-focused teams that hinder innovation, and therefore business growth.

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