2.1. Functions and Evolutions of Human Resource Planning
- Workforce/human resource planning
- Process of anticipating current and future demand for workers in both the short and long term
- Lessens hiring mistakes at the cost of time and money
- A workforce plan includes
- Careful consideration of current abilities and what will be needed in the future (short-term or long-term)
- Identifying gaps and considering ways of addressing these
- Noting any training needs
- Developing training, recruitment and other personnel policies (e.g. appraisals, employee welfare)
- Considers labour demand of an organization, which depends on:
- Historical data: average length of service, labor turnover rate, etc.
- Workload, specializations and flexibility of workforce
- e.g. flexible workforce can deal with sudden shortage of staff
- Capital Intensity (i.e. use of machinery)
- Work study (time and motion study or efficiency studies)
- Best number of people to complete a job efficiently
- Derived demand (from forecast output)
- Demand for labor depends on demand for product
- Natural wastage (aging/retirement)
- Staff/labor turnover
- Percentage of workforce that leaves the company in a time period
- (Number of leavers / Total number of staff) x 100
- Low turnover suggests good workforce planning and recruitment
- High turnover suggests incompetent employees and poor job satisfaction
- Reason why people leave their jobs
- CLAMPS (M.J. Yates)
- Challenge, Location, Advancement, Money, Pride, (Job) Security
- Poor morale, which is seen in:
- Militant workforce
- Frequent union representation to management
- Low suggestion rates
- Widespread rumors
- Factors affecting workforce plan
- Supply of labor
- Demographic changes
- Net birth rate
- Net migration rate
- Life expectancy and retirement age
- Workforce flexibility, skills, and education
- Women in workforce
- Mobility of labor (geographic and occupational)
- Flexibility of internal workforce
- Cost of living
- Cost and availability of transportation
- Rate of unemployment
- Government
- Finances
- Structure of business
- Effectiveness of communication
- Morale of workforce
- Leadership style of managers
- Need for change/reaction to change
- Recruitment process
- Job analysis
- Skill and training required for the job
- Qualifications and personal qualities needed
- Rewards needed to recruit and retain the job holder
- Job description
- Outlines the details of the job (i.e. duties and responsibilities)
- Element of flexibility – not incredibly specific
- “Any other reasonable job assigned by employer”
- Person specification
- Profiles ideal candidate
- e.g. type of engineer, experience, skills
- Job advertisement
- Internal (w/in company)
- Advantages
- Cost effective
- Less time needed to acclimate to company culture
- Less risk
- Motivational
- Disadvantages
- Fewer applicants
- Time consuming
- No new ideas
- Internal politics
- External (outside the company)
- Advantages
- New blood (wide range of experiences)
- Larger pool of applicants
- Disadvantages
- Even more time consuming
- Expensive
- Uncertainty
- Need for TRAPS – truthful, relevant, accurate, positive, short
- Application process (resume, cover letter, application form)
- Selection process
- Screen applications and shortlist suitable candidates
- Interview the shortlisted candidates
- Perform testing (if applicable)
- Check each shortlisted candidate’s references
- Offer job to best candidate
- Sign the contract of employment
- Carry out induction of new recruit
- Monitor (paper trail)
- Training
- Process of providing opportunities for workers to acquire skills and knowledge
- Training is the improvement of task-specific skills
- Development involves enhancing personal skills that improve workforce flexibility
- Benefits
- Improve efficiency and effectivity
- Less wastage
- Higher morale
- Adapt to change easily
- Flexible workforce
- Drawbacks
- Cost
- Employees may leave since they are qualified for better jobs
- Types of training
- Induction
- Introduction to company policies, general info
- May involve meeting other personnel, touring the premises, etc.
- Advantages
- Establishes expectations
- Understand company culture
- Morale booster
- Disadvantages
- Time consuming
- Personnel have to be freed to work on the induction
- Info overload
- On the job
- Learn from coworkers by experience
- May involve being mentored by or shadowing senior managers
- Advantages
- Relatively cheap
- Relevant job-specific skills are learned
- Fewer disruptions to work
- Establish team relationships
- Disadvantages
- Possibility of learning bad working habits
- Trainers may lack the best training skills
- Trainers may not be able to work properly
- Off the job
- Learn from specialists from third party (e.g. university, speakers)
- Advantages
- Expert expertise
- Wide range of training
- No distractions
- Networking
- Disadvantages
- Expensive
- Loss of output
- Skills may be irrelevant
- Cognitive
- Theoretical training in the hopes of improving overall intelligence
- Advantages
- Improves brain function (memory, reasoning, etc.)
- Knowledge may apply to a wide variety of situations
- Disadvantages
- Costly
- May not be immediately practical/applicable
- Behavioral
- Practical training in order to improve employee attitudes/behaviors
- Advantages
- May make for more competent and assertive employees
- Improves customer and intra-company relations
- Disadvantages
- Costly
- Difficult to track progress
- Appraisals
- Annual formal assessment of performance judged against pre-set criteria
- Reasons
- Assess performance in line with job description and targets
- Identify hindrances
- Identify training needed
- Reflect on performance (areas for improvement)
- Praise good performance
- Set new goals/targets
- May be costly and time consuming (thus isn’t done often), subjective, offensive, and biased (especially when appraising someone higher up)
- Appraisal Methods
- Essay
- Written appraisal on employee’s strengths and weaknesses
- Flexible and more applicable when employees are put in different situations
- Open-ended, subjective and takes a lot of time to train appraisers, and to appraise each employee
- Rating system
- Highly structured scale of employee performance
- Faster to carry out, structured, equal treatment
- Some traits assessed may not be relevant, perceived meaning of scale descriptors may not be universal
- Peer
- Same level employees on the business hierarchy appraises you
- Appraiser and appraisee are familiar with requirements for job
- Might be reluctant to criticize peers
- Upwards
- Employee appraises seniors
- Subjective, appraiser afraid of appraisees
- MBO (Management by Objectives)
- Base all appraisal on how well employee has met his own objectives as determined by employer and appraiser
- Objectives must be realistic
- Formative
- Appraisal during a specific job process
- Used to get feedback to guide improvement
- Summative
- Appraisal after a specific job process
- Compares the performance of an employee to a benchmark
- 360 degree
- Appraisal from many different sources (managers, peers, subordinates, customers, etc.)
- Comprehensive – many perspectives
- Subjective, influenced by group norms, time consuming
- Self-Appraisal
- Need for employees to set targets for improvement
- Steps
- Look at staff records and reports
- Appraisal meeting
- Appraiser writes a report
- Appraiser and the appraisee sign the final report
- Countersignature of a senior manager
- Dismissals and redundancies
- If employee performance is below par:
- Issue advisory letter
- Counselling – strategies for improvement
- Dialogue concerning consequences
- Dismissal and Redundancies
- Monitor (paper trail)
- Dismissal (by the business)
- Must have valid reason which is included in the contract
- Otherwise, unfair dismissal – company may be sued
- Valid reasons include:
- Employee incompetence or misconduct
- Breach of legal requirements/contract
- Redundancy
- Occurs when there is a change in company structure, downsizing, etc.
- Company cannot afford to pay employee or job stops existing
- Voluntary – employee volunteers to be made redundant in exchange for a redundancy package (compensation)
- Involuntary – may be done through LIFO or retention by merit
- Changing employment patterns and practices
- Factors
- Employment sector (primary, secondary, tertiary)
- Aging population
- Labor supply
- Flexible work structures
- Teleworking/home working
- Portfolio/Project based/Contractual working
- Part time employment
- Flexitime
- Advantages
- Increased flexibility for both
- Work from afar
- Flexible and extended work hours
- Company needs only to train core employees
- Employees exercise more autonomy
- Less office overhead expense
- Disadvantages:
- Requires investment in ICT, which may be unreliable
- Employees are harder to control
- Less job security for employees
- Outsourcing, offshoring, and reshoring
- Outsourcing/subcontracting
- Transferring the internal business activities to an external firm
- e.g. business outsources bookkeeping duties to accounting firms
- Reasons
- Activities are not the core function of the business
- Business lacks the specific skills
- Cost reduction
- Advantages
- Better focus on core activities
- Helps reduce production and labor costs
- Ensures high quality standards
- Disadvantages
- Requires effective two-way communication, coordination and mutual trust
- Subcontractors need to be monitored and managed properly
- Quality inconsistency
- Possibility of unethical practices
- Offshoring
- Transferring of internal business activities overseas
- Usually done in countries with low minimum wage
- Reasons
- Cut down labor costs
- Enter new markets in growing countries
- Overcome political limitations and regulations
- Advantages
- Reduce labor cost
- Help the business expand and gain exposure
- Business has access to large talent pool
- Stimulate host country’s economy (job opportunities, trade, etc.)
- Disadvantages
- Language and cultural barrier
- Time difference
- Communication
- Reshoring
- Bringing back offshore/outsourced personnel and services back to the original location
- Reasons
- Foreign labor costs are increasing
- Problems with delivery/logistics
- Advantages
- Greater control
- Increased proximity to customers/shorter supply chain
- Product quality may increase
- Disadvantages
- May still be more costly
- Local country may lack the labor supply
- Innovation, cultural differences, and ethical considerations
- Innovation
- “Culture of innovation”
- Company must hire innovative people and foster the environment for innovation
- Involves training and development costs
- Innovation also affects HR itself
- Outsourcing, offshoring, Shamrock organization (see below)
- Cultural differences
- HR must manage cultural diversity within the company
- Productivity may be affected due to conflicts arising from culture
- Need to raise awareness on cultural differences between employees
- May imply behavioral training is needed
- Ethical considerations
- Need to follow anti-discrimination laws
- e.g. racial, sex, disability, etc.
- Equal pay
- Health and safety at work
- Costs for training employees and ensuring a safe environment
- May benefit from lower absenteeism, better image, and fewer compensation claims