Workforce forecasting: The smart staffing strategy

Meteorologists take their jobs seriously, and for good reason. They’d be unsuccessful in their careers—and the talk of the town—if they let their friends and neighbors traipse through brutal heat in a parka or a torrential downpour in a tank top. Their jobs depend on accurate predictions rather than speculation.

Workforce forecasting works the same way and relies on data to predict staff usage and workforce planning trends. Workforce management (WFM) uses these trends to forecast skill gaps and staffing needs, which helps optimize schedules. Forecasting also identifies roadblocks (just like meteorologists recognize cold fronts and prepare weather reports). Read on to learn how to leverage workforce forecasting and understand potential staffing plans.

More in this guide:

• How workforce forecasting works
• 8 benefits of workforce forecasting
• How to forecast workforce needs
• Key components of workforce planning and forecasting
• WFM forecasting methods
• Frequently asked questions
• Support strategic workforce forecasting with Zendesk

How workforce forecasting works

Workforce forecasting—also known as workforce management forecasting—uses historical data and staffing projections to predict personnel needs. When paired with workforce management metrics, forecasting helps businesses analyze and optimize operations.

Although the goals are similar, there are two types of workforce forecasting:

• Operational workforce forecasting: This focuses on an organization’s short-term needs (usually within 12 months) based on seasonal demand, internal initiative updates, and unplanned disruptions
• Strategic workforce forecasting: This focuses on an organization’s long-term needs (usually between one and five years) based on internal goal adjustments, competitor landscape changes, and talent pool evolution.

Both types of forecasting aim to respond to these five questions:

1. Do we have the capacity for a new project?
2. Where can we reallocate tasks?
3. How will a workforce change impact our strategy?
4. Are teams spread too thin?
5. Do we need to diversify our workforce?

Understanding these questions and workforce capacity can help organizations identify skill and staffing gaps before they become problematic. By using a workforce planning template, organizations can quickly recognize talent changes and personnel dips while aligning current and future workforces with business goals and objectives.

Operational forecasting example

As a customer service manager for a retail store, it’s your responsibility to prepare for potential staffing demands. During the holiday rush, you need to adjust your staff’s schedules to accommodate an influx of customers. After the holidays, you must be prepared to reallocate employees and resources to avoid overstaffing during lulls in business.

Operational workforce forecasting enables you to quickly adjust schedules and make hiring decisions before your teams enter peak periods. These short-term forecasts focus on upcoming situations that impact an employee’s day-to-day experience and an organization’s bottom line. Staying ahead of the curve with operational forecasting helps you strengthen team dynamics while preparing your team for potential disruptions.

Strategic forecasting example

Imagine you work in a call center fielding customer phone calls and directing requests. No matter how good your customer service is, callers can become frustrated with lengthy wait times due to an understaffed center.

Instead of leaving callers irritated and causing wait times to soar, businesses can use workforce forecasting to proactively identify staffing needs. Successful call center workforce management allows teams to prioritize scheduling and allocate resources during peak demand times. Now, you can maintain satisfaction levels, avoid under- or overstaffing, and reduce overtime simply by identifying trends and planning accordingly.

8 benefits of workforce forecasting

Not all staffing trends are easily predictable, but workforce forecasting positively impacts the customer and employee experience (EX). These eight advantages alone can significantly affect workforce planning.

1. Improves resource planning and allocation

Your workforce is an irreplaceable resource. Workforce forecasting uses past market trends and data-backed predictions to accurately calculate staffing needs. Forecasting also helps project staff availability and reduces budgetary waste in the form of unnecessary hires.

2. Increases efficiency

Forecasting provides insights into an organization’s lulls and peak periods and allows teams to identify potential skill and schedule gaps, ultimately increasing operational efficiency. When coupled with resource planning, workforce forecasting enables organizations to optimize staff schedules, respond to sales trends, and deploy workers when needed—saving time and money.

3. Identifies training and management opportunities

Businesses can use workforce forecasting data to determine the type of training employees need, such as developmental seminars or customer service skills labs. By analyzing this data, you can identify when your team members have time to invest in their development, what skills they need to focus on, and how often you should schedule training or management courses.

4. Diversifies the talent pool

Workforce forecasting provides more than a blueprint for optimized resource and staffing planning—it gives teams an in-depth look into diversification opportunities. Forecasting identifies the need for specific skills, which guides hiring managers and training decisions. By investing in new hiring strategies and skills training for team members across various positions, organizations can prioritize workforce diversification and better products from the inside out.

5. Enhances business scheduling

Forecasting is good for more than just identifying skill or schedule gaps—it’s ideal for optimizing schedules, too. Well-scheduled teams are less likely to experience burnout or high levels of employee turnover. Plus, forecasting protects against over- and under-scheduling and excessive overtime, which can lead to unbalanced employee schedules.

6. Secures finances

Financially secure organizations can sustainably scale operations. Workforce forecasting helps organizations optimize budgets, address financial concerns head-on, and propose sustainable resource allocation. If businesses prioritize these factors and use real-time and historical analytics to drive budgeting decisions, they can be one step closer to financial security.

7. Helps close skill gaps

Whether an organization faces sudden growth or internal changes, accurate forecasting allows teams to stay agile and maintain operations. The unexpected departure of a team member may cause a skill gap, but previously trained or reallocated employees should be able to fill the need quickly.

Using historical and future data, organizations can identify gaps early on and prepare for potential demands before the lack of a team member or skill impacts operations.

8. Encourages a positive work environment

Never underestimate the value of the employee experience. A positive work environment directly correlates to accurately predicting staffing needs and providing the appropriate employee support. Leveraging AI for employee experience, balancing team schedules, and prioritizing work-life balance improves employee retention, satisfaction, and skill progression.

How to forecast workforce needs

According to the Zendesk Customer Experience Trends Report 2024, 69 percent of CX leaders agree that accurate future labor forecasting is a significant challenge—even with agent management tools at their disposal. Yet the need for strategic forecasting continues to grow. To take the guesswork out of team planning and scheduling, follow these five steps to forecast staffing needs.

1. Define your business goals

When it comes to workforce forecasting, organizations must assess internal factors first. Clear business goals address organizational vision, mission, motive, and core competencies, which affect internal and external strategies. If an organization can’t identify its own goals, workforce forecasting is impossible.

It’s also important to communicate these goals to reduce internal confusion and clarify organizational direction with all stakeholders. Teams dedicated to business development use company-wide goals to align processes, identify new opportunities, and drive business growth. Overall, goal identification is the first step toward distinguishing long- and short-term workforce needs and skill gaps.

2. Investigate the current workforce

Identify your workforce’s strengths and weaknesses by evaluating current goal progress and workforce distribution. Similar to customer profiles, employee profiles use demographic, skills, and competency information to assess the strengths and gaps of your current workforce.

Consider creating a company-wide database that includes information about turnover rates, employee satisfaction metrics, internal shifts in budget, and data about competitor strategies. A database can provide invaluable insight into current capabilities and potential gaps.

3. Consider your future needs

Businesses can forecast future workforce requirements by recognizing potential demands based on organizational goals, growth, and other factors. Think about internal and external factors, including customer needs and staffing behaviors, by asking the following questions:

• What are your customers thinking about?
• What platforms and communication channels do your customers prefer?
• What needs to change to reduce turnover rates?
• What skills are necessary to reach business goals?
• How does an organization compare to its competitors regarding workforce management?

The answers to these questions can help businesses build targeted recruiting methods and hiring practices that keep organizational and customer goals front and center.

4. Identify gaps between current and future talent pools

While team members may effectively cover the latest needs of a business, they may not have the skills or be equipped to handle future demands. Businesses can identify these gaps by:

• Evaluating the workforce’s strengths and abilities and whether they are adequate to hit organizational goals
• Identifying employee competencies and potential weaknesses compared to historical market trends and customer data
• Assessing inadequate staffing and hiring processes
• Recognizing patterns in employee performance and departures
• Examining employee profiles to compare skills, demographics, and career aspirations to a workforce’s abilities

Gap identification is crucial for adapting to changing business goals and identifying training areas for current employees.

5. Fill workforce gaps

Knowing your workforce gaps isn’t enough—you need to fill them, too. To do this, deploy a strategy that:

• Focuses on strategic talent acquisition and employee onboarding designed to drive retention and attract future employees
• Invests in employee experience software, professional development, HR tools, and other training programs to encourage workforce competency
• Evaluates teams and reduces or reallocates staffing levels to strategically prepare for skills gaps
• Follows and forecasts compensation trends to ensure packages are fair, competitive, and evolving

Not every gap-filling strategy will focus on new hires. Reallocating staff can fill workforce needs just as effectively and may even be an easier process for workforce managers and employees alike.

Key components of workforce planning and forecasting

Workforce forecasting is not a shot in the dark. Instead, it’s a blend of three key components that work together to provide a comprehensive picture of an organization’s future staffing health.

Historical data

The foundation of workforce forecasting is historical data. Scheduling, staffing, and skill patterns from previous seasons provide insight into market trends and potential weaknesses in a business’s structure.

The three most important historical data insights to track are:

• Seasonal patterns: Identifying cycles based around seasonal peaks and lull periods allows organizations to optimize operations and allocate resources.
• Employee turnover trends: Recognizing turnover patterns and retention challenges helps businesses address issues and improve team composition.
• Skills gap insights: Acknowledging skill shortages allows teams to hire, train, and reallocate team members, preparing for and bridging gaps.

Based on past experiences, these insights provide organizations with a broad look into a workforce’s trends, anomalies, and future possibilities.

External factors

No matter your product or service, the market is constantly evolving. From emerging technologies to a shift in customer expectations, external factors constantly affect workforce planning and employee experiences.

The three most important external insights to track are:

• Economic trends: Economic shifts like GDP and unemployment growth or regression can signal times of economic boom or recession.
• Industry insights: Forecasting considers how industry-specific regulatory and compliance updates and consumer trends affect workforce gaps.
• Technological changes: Emerging technologies like AI and augmented reality impact the necessary skills and knowledge of a workforce

As these factors fluctuate, so do workforce needs. Considering these factors, in conjunction with historical data, can increase the flexibility and agility of an organization.

Internal factors

As an organization changes and grows, so does its workforce. Workforce forecasting must consider a business’s current internal factors to be accurate, especially if they change due to historical trends or external elements.

The three most important internal insights to track are:

• Growth goals: The trajectory of an organization’s growth into new markets, products, and technologies has a lasting impact on staffing.
• Operational evolutions: Operational evolution will change based on an organization’s goals, directly affecting business staffing expectations.
• Turnover patterns: Predicting turnover rates allows organizations to minimize disruptions, nurture workforce growth, and ideate retention strategies.

Treat forecasting as an ever-evolving entity. There’s no one-and-done workforce forecasting strategy—it’s a dynamic process using historical data and external and internal factors to identify potential needs and gaps.

WFM forecasting methods

Just as accurate data is essential for creating a precise weather forecast, the same can be said for workforce planning. Depending on organizational and industry demands, workforce managers can use specific forecasting methods and tools to illuminate staffing and scheduling patterns.

Quantitative techniques

Quantitative techniques depend on data. For organizations with data-backed history, quantitative techniques help identify historical trends and patterns associated with workforce planning.

Organizations should consider using quantitative techniques like:

• Trend analysis: This type of analysis uses historical data like employee demographics and past employment figures to identify staffing, scheduling, turnover, and retention trends.
• Regression analysis: This examines how factors like growth, financial performance, and customer demand impact workforce needs and deployment.
• Time series analysis: This tactic uses cyclical historical data to identify seasonal patterns and trends dependent on specific time periods.

While quantitative methods are powerful at identifying trends and cycles, it’s important to note that these cannot be guaranteed in the future. Most organizations will combine these techniques with other methods to provide a holistic forecast.

Qualitative techniques

For organizations or products with less historical data, qualitative techniques may be necessary for successful workforce forecasting. Insights gleaned from qualitative methods rely on the honest attitudes, behaviors, and responses of experts or focus groups.

In these situations, organizations should consider using qualitative techniques like:

• The Delphi method: This method uses an expert consultation process to gather opinions and forecast insights from high-level experts.
• Scenario planning: Based on gathered assumptions, this technique creates scenarios designed to help organizations visualize unique workforce needs.
• A simulation and sensitivity analysis: Simulation techniques assess the impact of certain variables on scenarios, while sensitivity analysis tests how variable changes impact entire forecasts.

For businesses using qualitative techniques, it’s crucial to remember that the data and scenarios represented are often based on personal experiences or opinions. This method personalizes workforce forecasting, but it’s never completely accurate.

Hybrid techniques

Blending quantitative and qualitative methods, a hybrid technique can refine workforce forecasting. This holistic approach to forecasting and planning uses equal parts data and opinion to identify workforce patterns and trends.

Organizations can use hybrid techniques like:

• Demand-driven method: This blends historical sales data and employee insights to anticipate future workforce needs due to turnover, reallocation, or consumer behavior.
• Technology-infused method: This blends trend analysis and expert opinions from tech leaders to ensure a business considers emerging technologies in hiring and training decisions.
• Market expansion method: This blends scenario planning and regression analysis to identify potential skill gaps and upcoming market trends.

Like all forecasting methods, no hybrid technique is perfect. However, organizations that use hybrid forecasting frequently receive more in-depth and well-rounded insights than those using other methods.

Casual method

Similar to a hybrid technique, a casual forecasting method uses a variety of key components for long-term planning. This method analyzes historical data and compares these findings to the potential effects of external factors. The casual method is best for identifying extended periods where workforce gaps are expected and recognizing the best preparation methods.

Frequently asked questions

Automate customer service workforce forecasting

Without accurate workforce forecasting, you could send your employees headfirst into a storm that is nearly impossible to navigate. This is especially true for customer service teams because unoptimized schedules can lead to frustrated agents, angry customers, and unfulfilled organizational goals.

Zendesk WFM provides AI-powered demand forecasting using your own Zendesk data, automatically schedules your agents by shifts and focus areas based on the forecast, and offers real-time and historical reporting on your team’s performance—ultimately helping you manage costs and boost productivity.

Try it today.