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Internal And External Factors Affecting Workforce Planning

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Question:

Identify and Explain the Important aspects of Workforce Planning and Discuss how Workforce Planning is affected by a Range of Internal and External Factors and Strategies for Retaining and attracting Skilled Labour.
 
 

Answer:

Introduction

According to the Minnesota Management and Budget, workforce planning is a continuous process that helps a business organisation in analysing its current workforce, forecast future human resource needs, identification of gaps between the present and the future and implement solutions that can help an organisation in achieving its mission, goals and objectives (Getting Started, n.d.).

Workforce planning is considered to one of the most important functions in human resource management and actively aids business organisations in becoming more effective and efficient. Workforce planning further includes some important elements, such as strategic planning, workload projections, legislative forecast, turnover analysis and budget projections. It is a tool that has an effect on all human resource functions, such as recruitment and selection, compensation and benefits, training and development, performance management, attraction and retention of staff, etc.

Aspects of workforce planning

As discussed above, workforce planning is an important task as it helps business organisations in getting the right number of people with the right skills at the right job so that an organisation can achieve its organisational goals and objectives (Workforce planning, 2016). Workforce planning has some important aspects that helps an organisation in achieving success by becoming better and more efficient. Some important aspects of human resource planning are discussed below:

Forecasting and assessment

Forecasting and assessment is one the most critical aspects of workforce or human resource planning that helps business organisations in forecasting the demand and supply of human resource in the future. Forecasting and assessment involves an evaluation of the past workforce trends along with the present situations and future events.

Human resources are the most important resources in any business and without the presence of human resources no business can work. A business organisation can lose its effectiveness in case there is shortage of workforce or surplus workforce at any point of time because shortage of workforce can halt the operations of a company while a surplus workforce will increase the operational expenses of the company (Lohrey, n.d.). Thus, organisations carry out workforce planning using data from the past, present and the future so that they can be assure of the human resource requirements in the future, compare them with the present condition of human resources, analyse the gap between where they are and where they want to be and design steps that would allow them to meet the identified gap. Forecasting and assessment ensures that an organisation is never short of workforce at any point of time. In this process, the management gathers various information related to the human resources, such as upcoming retirements & promotions, employee turnover rates, retention rates, absenteeism, etc. and uses this data to forecast the human resource requirements in the future.

 


Forecasting is the stepping stone of workforce planning because an organisation cannot make plans for its workforce until and unless it has some crucial data that can help it in the planning phase. It not only helps in identifying the gaps between the present and the future human resource needs but also helps an organisation in becoming more efficient by ensuring optimum workforce at all times and avoiding surplus or shortage of workforce. Further, it also helps in identifying some important human resource factors, such as employee turnover rates, retention rate, future retirement and promotions, etc. One real life example that demonstrates the effectiveness of forecasting and assessing in workforce planning related to Hewlett-Packard. The company had a workforce of almost 300,000 employees and was experiencing a turnover ratio of 20%, which implies that employees working with HP would leave on average within 5 years of joining. In 2011, two scientists working at HP combined data from past two years and concluded that all employees working at HP had a likelihood of quitting the company (Vulpen, n.d.). Also, on the basis of their study, they were able to identify the reasons because of which the turnover rates were sky rocketing. Therefore, they started dealing with the issues and were ultimately able to save $300 million by retaining employees using forecasting and assessment in its workforce planning.

Recruitment

Employee recruitment and selection has been considered to be one of the most critical aspects in human resource management as well as in workforce planning. Employee recruitment is a process that allows business organisations to attract and hire new candidates so that the company can meet its present and future human resource demands (Recruitment Definition, n.d.).

Once the management of a company is done with forecasting and assessing the demands of the human resources in the future, it then has to take important decisions regarding the recruitment of new candidates so that it can bridge the gap between the present and the future human resource requirements. In order to bridge the gap between the two states, an organisation can choose from two types of recruitment techniques – internal recruitment or external recruitment. In internal recruitment, an organisation can meet its human resource requirements with the help of existing workforce using various methods, such as internal job postings, job rotations, re-employment of ex-employees, etc. On the other hand, external recruitment is a process in which business organisations fulfil the human resource demands by hiring people from outside the organisation using various methods, such as job advertisements, employee referrals, employment exchange, job centres, job portals, head hunters (recruitment agencies), etc. (Recruiting Internally and Externally, 2016). Both the techniques of recruitment have their own advantages and disadvantages and the choice of recruitment method is totally dependent upon the management of the company.

Recruitment is considered to be one of the most important aspects of workforce planning because it helps business organisations in finding out the right fit for the right job at the right time.

Succession planning

Succession planning is another aspect of workforce planning which involves identification and development of employees who can take up higher job positions in the organisation that are likely to become vacant in the near future. Succession planning also helps businesses in meeting their future human resource demands using existing human resources. (HR Planning - Succession Planning, n.d.).

Succession planning is an issue that most organisations fail to address whereas it is very important for present day business organisations to be into succession planning. Once an organisation has executed forecasting and has also identified the techniques of recruitment, it can start succession planning as a stepping stone for internal recruitment. Sometimes, it is best suited for organisations to meet their future human resource demands internally i.e. by promotions, job rotations, transferring or by hiring ex-employees. If a company feels that it can meet the future human resource requirements of its workforce by promoting an existing employee, it can start succession planning for that employee. Succession planning is a continuous process that can help an organisation in identifying the positions that are most likely to become vacant in the near future due to a number of reasons, such as retirement, employee turnover, death, etc. The process of succession planning consists of three main steps – identifying job positions that are likely to become vacant in the near future, identifying employees from existing workforce who can fill up the vacant positions and preparing them for the new job positions. Succession planning also involves keeping a check on the attrition rates and to ensure retention of employees who have been identified to have a potential to fill up new job positions.

 


Succession planning also contributes towards the overall success of an organisation. In succession planning, business organisations are indirectly helping their employees in the development of their careers. When the employees feel that they have a bright future in the company for which they are working, they become more committed to their jobs and the company and a fall in the employee turnover rates is achieved as a result of it. One of the best succession planning strategy was adopted by Apple, which is the wold’s top consumer electronics company. Apple did a great work in training and developing Tim Cook, who succeeded Steve Jobs (Founder CEO of the company) after his demise (Bersin, 2011). The company developed Tim Cook for several years so that he could capture the essence of Steve Job’s management policy and continue to lead the company on its pathway to success.

Training and development

Training and development in human resource management is aimed at increasing the job related skills and technicalities of the employees so that they can become more competitive and can contribute more towards the achievement of organisational goals and objectives (Training and development, n.d.). Training and development not only helps business organisations in developing the skills of their employees but also forms an important aspect in the planning of the workforce.

Once an organisation has conducted a thorough forecast of its human resource needs in the future, it has to identify strategies that can help it in bridging the gap between its present situation and the future state. No matter how an organisation plans to staff its workforce, it will have to arrange for training and development programs for the employees who are hired internally as well as the employees who are hired externally. Training and development ensures that the employees learn the skills that are required to help the organisation in achieving its goals and objectives in the future. Training and development can be arranged for those individuals who have been identified in the succession planning stage to take up higher job positions in the organisation so that they can learn all those skills and technicalities that would help them in carrying out their future job duties and responsibilities.

Training and development is one of the most important aspects of workforce planning and human resource management. It not only helps in making the workforce more competent but also helps in motivating them, increasing the level of job satisfaction and to make the employees more committed towards their job and the company (Employee Training and Development: Reasons and Benefits, n.d.).

Internal and external factors affecting workforce planning

Workforce planning is dependent on a number of internal and external environmental factors. These factors are discussed below:

External factors

Employment:

Workforce planning can be largely affected by the employment conditions prevailing in the country. For example, a country where there is greater unemployment, a company might feel pressure from the government to recruit more individuals so that the rate of unemployment can be curbed. On the other hand, an organisation operating in a country where there is shortage of labour might have to hire employees from a different country.

Technical changes in the society:

The rate at which technology changes take place is very fast and workforce planning falls vulnerable to the changes that the society experiences in technology. Whenever there are technological changes occurring in the society, business organisations have to hire new employees that possess the required technical knowledge and at the same time deal with the existing employees.

 

Demographic changes:

Demographic changes refer to the changes in factors, such as age, population, composition, etc. of the society. Demographic changes can result in retirements, graduation of new candidates, etc. This can have an impact on the workforce planning of a company.

Pressure groups:

Business organisations have to keep the interests of certain pressure groups in mind. Groups like human resource activists, media, woman activists, etc. can create a lot of trouble for businesses and can cause a significant change in the workforce planning of companies.

Competition:

The extent of competition in an industry can also have a great deal of impact on the workforce planning of the companies operating in that industry. Employers of choice in an industry have an advantage in the workforce planning process as the candidates are themselves interested in working with them and will contact the recruitment cells of such companies on their own. On the other hand, workforce planning for smaller companies can be difficult as they have to make extra efforts to advertise and promote vacancies in their workplaces (Benjamin, n.d.).

Labour laws and legislations:

Every country has its own set of labour laws and legislation and all companies working in that country are required to adhere to the labour laws of that country. In case there are new labour policies or the government decides to introduce changes in the existing labour policies, an impact on the workforce planning can be experienced by the companies. Further, a company operating in more than one nation (a multinational organisation) has to adhere to special labour laws, such as ratio of home country employees to host country employees, etc. set up by the government of the host country for foreign investors. Such factors can have a huge impact on the workforce planning of business organisations.

Internal factors:

Organisational changes:

Organisational changes can also have a huge impact on the workforce planning of a company. With new products coming in and with diversification taking place, an organisation can experience an impact on its workforce planning.

Employee relations and company policy:

Internal policies of a company can also have an impact on its workforce planning. Workforce planning of a company that gives more importance to internal promotions will differ from the workforce planning of a company that gives more important to external sources of recruitment.

Budget:

The human resource budget of a company can have a significant impact on the workforce planning of a company. The number of employees a company can hire is dependent upon its staffing budget (Ashe-Edmunds, n.d.).

Skill levels:

The skills levels that a company requires in its employees can change from time to time and can have a consequent effect on the human resource planning of a company.

Strategies to attract and retain skilled labour

Attracting and retaining talented or skilled workforce is one of the most important functions in human resource management. It has been observed that high employee turnover results in frequent recruitment and selection processes, which can be 1.5 times costlier than the salaries that the companies are already paying to their employees. Therefore, it is important for business organisations to implement strategies that can help them in retaining and attracting talented employees. Some strategies that can be used by companies to attract and retain talented employees are discussed below:

Attracting employees

One of the best strategies to attract talented employees is to research the market continuously and discover the places where the potential candidates can be found. Secondly, knowing more about the competitive firms and having information about what they are offering can also help in designing compensation and benefits plans for the employees and attracting them for employment. Thirdly, companies should be transparent internally as well as externally so that the employees know what the company has to offer to them and can place their trust in the company. Fourthly, companies can gather feedback regarding their attraction strategies from the candidates that apply for recruitment so that the company can know about the strategies which are working and the ones which are not. Fifthly, companies can create a potential network using various sources of media and technology where it can advertise its job openings and can increase the chances of attracting skilled employees (Lattimer, 2015). Lastly, being ethical towards the existing employees can also help business organisations in attracting talented employees as it helps in improving reputation in the market and also because talented employees are looking for companies that care about their human resources and have a good market reputation.

 

Retaining employees

Business organisations are investing billions of dollars in the management of their human resources and to make their human resource more competitive as it helps them in achieving their organisational goals and objectives. When a company experiences high employee turnover rates, the resources that it invests in the development of human resources are wasted while it also has to bear high costs of recruitment and selection processes (HEIKKILA, 2016). There are a number of strategies that business organisations can use to retain its skilled labour. Firstly, business organisations should have clear mission and vision statements that give a specific direction to the employees and make them feel that the company values them. Secondly, business organisations should ensure that the employees are constantly engaged in the workplace by providing them challenging work that they can enjoy. It has been found that one of the greatest causes of high employee turnover is boredom i.e. when the employees become bored of their jobs. Thirdly, business organisations can arrange for training and development programs for their employees so that they can polish their skills and develop their career options. Fourthly, empowering the employees can also help a company in increasing their interest in their respective jobs and becoming more satisfied with their jobs. Fifthly, business organisations should definitely implement performance management programs in the workplace because such programs are not only helpful in optimising the performance of the employees but can also help in keeping the employees engaged and motivated. Sixthly, business organisations should carefully design compensation and benefit plans for the employees so that they do not feel underpaid and tend to quit the organisation as a result of it. Seventhly, business organisations should try to fulfil higher positions in the hierarchy through internal recruitment processes as it offers talented employees with a chance to develop their career. When employees perceive career growth in an organisation where they are working, their tendency to quit the organisation becomes very less. Lastly, flexible work arrangements can help business organisations in retaining their employees. It has been found that an improper work life balance is the main cause of high employee turnover rates in business organisation. If business organisations can implement flexible working hour policies in the workplace, they can definitely increase their retention rates to a great extent (Yazinski, 2009).

Memo for the nursing staff

To: The nursing staff

From: The management, XYZ Hospital

Subject: Regarding a change in the weekend shifts

Date: 12th April, 2017

It has been found that the employees working in the nursing staff want to attend the weekend shifts rather than the company selecting particular employees to work on the weekends. As a result, the management of the company has decided to take the feedback into consideration and offer an equal opportunity to all the members to work during the weekends. From now on, all members of the nursing staff will be given weekend shifts at regular intervals so that there can be an equality in the workplace.

The main objective behind the change is to make the nursing staff feel that the management values their feedback and will try to do its best to improve the work conditions for them. By providing the staff with the working conditions that they desire, the management expects them to perform better and contribute more towards the achievement of organisational goals and objectives.

Change in overtime compensations

ABC organisation Pvt. Ltd. has recently discovered through a number of surveys that the employees are not satisfied with the overtime policies of the company. It has been identified that most of the employees prefer being paid for the extra time that they work for rather than being awarded rostered days off as a compensation for the overtime that they put in. As a result, the management of ABC organisation Pvt. Ltd. has decided that the employees will be given a fixed compensation for every additional hour (except the normal working hours) that they work for.

The change has been brought by keeping in mind that the flexibility that was being offered to the employees by offering them rostered days off was difficult for the company to handle and was also reducing the overall productivity of the organisation due to absence of employees working overtime during some important meetings and discussions. Further, offering incentives to the employees for the overtime that they work for will also allow them to earn more than their regular pay scale and manage their expenses in a better way. Putting an end to rostered day offs will also allow the company to deal with staff shortages that were occurring in the past and help the company in dealing with high demand periods by sharing a small portion of its profits with the employees who have put in extra efforts to help the organisation in achieving its goals and objectives.

 

References

Getting Started. (n.d.). Retrieved April 12, 2017, from sol.mmb.state.mn.us: https://sol.mmb.state.mn.us/wfp-get-started

Workforce planning. (2016, August 24). Retrieved April 12, 2017, from www.cipd.co.uk: https://www.cipd.co.uk/knowledge/strategy/organisational-development/workforce-planning-factsheet

Lohrey, J. (n.d.). Forecasting Techniques in Human Resource Planning. Retrieved April 12, 2017, from yourbusiness.azcentral.com: https://yourbusiness.azcentral.com/forecasting-techniques-human-resource-planning-25543.html

Vulpen, E. v. (n.d.). Predictive Analytics in Human Resources: Tutorial and 7 case studies. Retrieved April 12, 2017, from www.analyticsinhr.com: https://www.analyticsinhr.com/blog/predictive-analytics-human-resources/

Recruitment Definition. (n.d.). Retrieved April 12, 2017, from www.simplehrguide.com: https://www.simplehrguide.com/recruitment-definition.html

Recruiting Internally and Externally. (2016, September 29). Retrieved April 12, 2017, from www.shrm.org: https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/recruitinginternallyandexternally.aspx

HR Planning - Succession Planning. (n.d.). Retrieved April 12, 2017, from hrcouncil.ca: https://hrcouncil.ca/hr-toolkit/planning-succession.cfm

Bersin, J. (2011, August 26). The Real Succession Plan For Steve Jobs: Apple Thinks Different With Apple University. Retrieved April 12, 2017, from blog.bersin.com: https://blog.bersin.com/the-real-succession-plan-for-steve-jobs-apple-thinks-different-with-apple-university/

Training and development. (n.d.). Retrieved April 12, 2017, from www.whatishumanresource.com: https://www.whatishumanresource.com/training-and-development

Employee Training and Development: Reasons and Benefits. (n.d.). Retrieved April 12, 2017, from managementhelp.org: https://managementhelp.org/training/basics/reasons-for-training.htm

Benjamin, T. (n.d.). External & Internal Environmental Factors Influencing HR Activities. Retrieved April 12, 2017, from smallbusiness.chron.com: https://smallbusiness.chron.com/external-internal-environmental-factors-influencing-hr-activities-34745.html

Ashe-Edmunds, S. (n.d.). Internal Factors to Consider in Human Resource Planning. Retrieved April 12, 2017, from smallbusiness.chron.com: https://smallbusiness.chron.com/internal-factors-consider-human-resource-planning-60960.html

Lattimer, C. (2015, December 23). 13 Key Strategies to Attract and Retain Highly Talented People in 2016. Retrieved April 12, 2017, from www.inc.com: https://www.inc.com/christina-lattimer/13-key-strategies-to-attract-and-retain-highly-talented-people-in-2016.html

HEIKKILA, A. (2016, February 11). How To Attract And Retain The Best Employees In 2016. Retrieved April 12, 2017, from www.talentculture.com: https://www.talentculture.com/how-to-attract-and-retain-the-best-employees-in-2016/

Yazinski, S. K. (2009, August 03). HR and Employment Law White Papers. Retrieved April 12, 2017, from hr.blr.com: https://hr.blr.com/whitepapers/Staffing-Training/Employee-Turnover/Strategies-for-Retaining-Employees-and-Minimizing-

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