Vacancy Factors, Scenario Planning, and Build vs Buy Decisions

Workforce planning budgets rarely reflect a single fixed headcount, and this video addresses the mechanisms that bring greater realism to financial planning. It covers vacancy factors — including how they are calculated using historical turnover data and time-to-fill metrics — and examines why applying a single organisation-wide figure can obscure meaningful differences between roles and functions. The video also sets out how the cost of hiring delays extends well beyond a temporarily unspent salary line, touching on lost productivity, overtime, temporary worker expenditure and the cumulative pressure placed on remaining team members.

The video then turns to scenario planning and sensitivity analysis as tools for preparing workforce budgets under uncertainty. It works through the logic of constructing optimistic, pessimistic and base-case scenarios, each carrying distinct workforce implications for headcount, skills requirements and cost. Sensitivity analysis is addressed alongside scenario planning, with the video examining how changes in individual assumptions — such as turnover rate or pay award percentage — alter overall budget outcomes and which variables carry the greatest planning risk.

Build versus buy decisions form the third substantive area, framed around whether organisations should develop capability internally through training or acquire it externally through recruitment. The video considers factors including training costs, time-to-competence, recruitment expenditure, market salary premiums, and the retention and engagement dimensions of internal development. Taken together, these topics sit directly within AC 2.1 of FREE03, connecting the mechanics of annual budgets, reforecasting and headcount planning to the judgements people professionals are expected to inform and influence.