1. Chapter 5: Workforce Planning

2. Objectives After reading this chapter, you should be able to:
Explain why workforce planning is an important activity of managers.
Describe the internal and external factors that affect labor supply and demand.
Discuss the tactics managers use to remedy labor shortages and labor surpluses.
Discuss the advantages and disadvantages of various workforce planning tactics.
Describe how a firm’s organizational demands affect its workforce planning decisions.
Explain the impact environmental factors have on a firm’s workforce planning decisions.
Discuss the legal aspects of the workforce planning tactics companies use.

4. Workforce Planning
Making sure individuals with the right skill sets are where they need to be at the right time to meet current and future needs. Key terms:
Labor demand — number and types of employees the company needs
Labor supply — current or potential employees to perform jobs
Labor shortage — when demand for labor exceeds available supply
Labor surplus — when supply of labor is greater than demand

6. Internal Factors
Turnover - voluntary and involuntary termination of employees
Employee movements – promotions, transfers and demotions
Employee productivity
Company performance
Strategic direction – Company evolution, mergers and acquisitions

7. Employee Movements
Promotions – moving employees to higher level positions, which often are associated with increased levels of responsibility and authority
Transfers – moving employees to other jobs with similar level of responsibility
Demotions – moving employees to lower level positions within the company

10. External Factors
Local Labor Market – size and composition of the local labor market
Economic Conditions – unemployment rate, growth of economy, etc.
Industry Trends

11. Tactics for Labor Shortages
Overtime — having employees work extra hours beyond their regular work schedule
Outsourcing and contingent labor
sending work to other companies (payroll, cafeteria, maintenance)
Hiring workers to work on a temporary or non- standard basis

12. Tactics for Labor Shortages (continued)
Retention
Lowering turnover lowers a firm’s costs of recruiting, selecting, and training new employees
Employee satisfaction is a key predictor of turnover
Promotion, transfers, and demotions
Effective and fast way to deal with labor shortage
New hires

13. Labor Surplus Tactics
Layoffs — quickly reducing the number of workers employed
Attrition and hiring freezes
Decision not to fill vacant positions
Ban on all hiring for a period of time
Early retirement — financial incentive to have employees retire early (can result in mass exodus)
Employee promotions, transfers, demotions — can move people to other areas of the firm facing shortages

16. Workforce Planning in Practice: Organizational Demands
Strategy
Required speed to deal with shortages and surpluses
Criticality of employee groups
Company characteristics
The relative impact of labor shortages and surpluses
Who carries out workforce planning

17. Workforce Planning in Practice: Organizational Demands (continued)
Culture
Likelihood of using different tactics
Employee reactions to workforce planning tactics
Employee concerns
Employee stress and work/life balance issues
Perceptions of procedural and distributive justice

18. Workforce Planning in Practice: Environmental Influences
Labor Force Trends
Availability of internal and external workers
Which tactics to use
Technology
The number of employees needed
The types of workers needed
The quality of workforce planning forecasts

19. Workforce Planning in Practice: Environmental Influences (continued)
Globalization
Where the workers are
Which workforce planning tactics to use
Ethics
Community reactions to workforce planning tactics
How companies help employees cope

20. Workforce Planning in Practice: Regulatory Issues
Requirements for mass layoffs and plant closing (WARN)
Determining who is an employee versus an independent contractor