Skill Management and Strategic Workforce Planning are two important HR practices that are both essential for organizations to stay competitive, especially in a rapidly changing business environment. While both practices are focused on ensuring that an organization has the right people with the right skills at the right time, there are some key differences with practical implications.

Skill Management is focused on meeting current and short-term requirements. It is based on the analysis of skill requirements and existing skill levels and aims to achieve maximum coverage in the workforce by mapping them to employees and optimizing resources. The role of HR is to create the framework and offer short-term development opportunities, while the role of managers is to find ideal candidates for short-term projects and position requirements. Employees can understand their company’s skill requirements and manage their personal career development. Data gathering and analytic systems play an essential role.

Strategic Workforce Planning, on the other hand, is focused on the longer-term (3-5 years) requirements of the business. The planning horizon is usually not longer than five years as it is difficult to know which requirements will be relevant by then. It is based on roles or job clusters (clusters of roles) and focuses on critical roles (quantity and quality). The role of managers is to provide long-term workforce requirements, while the role of HR is to design and execute the respective workforce development initiatives. Employees have little involvement in this domain and it can often be done with existing IT tools.

Key Differences Between Skill Management And Strategic Workforce Planning

Skill Management focuses on the skills, competencies, qualifications, traits, and drivers of individual employees. Additionally assigns skills to job roles.  Strategic Workforce Planning looks at the organization as a whole and how the workforce aligns with the organization’s long-term objectives.

Skill Management is focused on meeting current and short-term position/project/gig requirements. Strategic Workforce Planning is focused on long-term workforce requirements (3-5 years).

Typically, Skill Management is more detailed and granular, looking at specific skills, competencies, etc. On the other hand, Strategic Workforce Planning is more general, looking at key roles and/or clustered roles.

Skill Management creates the opportunity for employees to manage their own career development. In Strategic Workforce Planning employees have little involvement.

Skill Management relies heavily on internal data gathering (+ market data) and analytic (AI) systems to identify and track skill levels, requirements and target simulations on talent marketplaces. Strategic Workforce Planning often starts with external market predictions amended with managers business expectations to identify workforce needs and supplies as well as the impact of technological change.

Skill Management is tactical / operational, executed by HR and managers. Workforce Planning is strategic, executed by HR with the involvement of the board.

Skill Management is reactive, adjusting to changes in the short term. Workforce Planning is proactive, anticipating changes in the long term.

Skill Management requires specific software to identify, track and manage skills. New software needs to be integrated into the existing HR technology landscape. Strategic Workforce Planning may use existing IT tools.

In Skill Management, all skills are relevant in all HR practices (Hire to Retire) and therefore should be consistently used. New skill management affects most HR processes. Strategic Workforce Planning has only a few touch points with HR processes like position mapping, job architecture, HR strategy, etc.

Key Similarities of Skill Management And Strategic Workforce Planning

Both practices should be implemented with a view to the overall business strategy to ensure that the workforce is aligned with the organization’s goals and objectives.

Both practices should be continuously reviewed and improved based on feedback and results. This will help to make both a driver of agile adaptation to changes in the business environment incl. employee experience.

Clear and effective communication is important for both practices. Next to managers especially the employees should be informed about the organization’s skills requirements and how they can meet them.

Both practices are collaborative processes and involve to different degrees HR, managers, board, IT, workers councils and employees.

Both practices require budget and resources to be effectively implemented. While the budget for Skill Management may be more focused on tools & process integration, employee training and development, the budget for Strategic Workforce Planning may support long-term workforce development initiatives.

Both practices should be measurable to evaluate their effectiveness. Measuring the success of Skill Management may include (among others) tracking employee skill levels while measuring the success of Strategic Workforce Planning can include tracking the alignment of the workforce attributes (e.g. age structure) with the organization’s goals and objectives.

Even though Skill Management and Strategic Workforce Planning have different objectives and time frames, their overlap can be used to mutually reinforce one another. In Strategic Workforce Planning it is necessary to develop an understanding of the nature of the (future) roles in an organization. This can be recorded in the form of skills. Which skills are needed to be successful in the roles? The view to the future development of roles and the identified gaps can then help to paint a picture of the skills needed in the longer term. Which skills are likely to be needed in the roles that develop on the horizon? Joining both practices makes both more powerful, and e.g. helps design a clean job architecture with better grading & leveling, which in turn helps management to take better decisions.

Both, Skill Management and Strategic Workforce Planning have a direct impact on the organization’s ability to achieve its business objectives through increasing productivity, greater innovation, and quicker reaction to the demands of the market. They can be implemented simultaneously, consecutively, or even joined together. But one is never a replacement for the other.