1. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-1 Human Resource Management Chapter Five Workforce Planning

2. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-2 Importance of Workforce Planning Having the right number of employees with the right skill sets will enable a firm to take advantage of business opportunities Operating in excess of staffing requirements is an inefficient use of financial resources A company’s effectiveness is directly affected by the quality of workforce planning decisions

3. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-3 Definition of Workforce Planning Making sure individuals with the right skills sets are where they need to be at the right time to meet current and future needs 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

4. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-4 Framework for Workforce Planning

5. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-5 Internal Factors Turnover: voluntary and involuntary termination of employees Creates stress on co-workers who must pick up the slack Adds costs and time demands associated with filling open positions

6. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-6 Internal Factors (cont’d) Employee Movements: Promotions—moving to higher level positions Transfers—moving to jobs with similar responsibility Demotions—moving to lower-level positions

7. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-7 Tracking Employee Movements Replacement charts—identifying potential replacement employees for positions that could open up within the organization Succession planning—identifying employees who might be viable successors for top managerial positions Transition matrix—model for tracking movement of employees throughout the organization to plan for the future

8. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-8 Replacement Card Sample

9. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-9 Transition Matrix

10. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-10 Employee Productivity Productivity is the level of a firm’s output (products or services) relative to inputs (employees, equipment, materials, etc.) Productivity ratio—the number of employees needed to achieve a certain output level Managers can calculate the number of employees needed once they have productivity ratios

11. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-11 Impacts on workforce planning include: Expansion of operations to gain market share Reduction of operations Mergers or acquisitions Size of local labor market and types of skills Economic conditions and unemployment rates Industry trends Actions of competitors Strategy and Workforce Planning

12. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-12 Tactics for Labor Shortages Overtime—quick solution for short duration but will be costly and may lead to stress, burnout, turnover Outsourcing—sending work to other companies (payroll, cafeteria, maintenance) Contingent labor—hiring employees on a temporary or contractual basis

13. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-13 Employee Retention Lowering turnover lowers a firm’s costs of recruiting, selecting, and training new employees Employee satisfaction is a key predictor of turnover

14. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-14 Labor Surplus Tactics Layoffs—quickly reducing the number of workers employed Used to quickly adjust the size and composition of the workforce Focused on short-term cost containment Can produce feelings of job insecurity and lead to lower commitment and higher turnover  Attrition—decision not to fill vacant positions

15. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-15 Labor Surplus Tactics (cont’d)  Hiring Freeze—ban on all hiring for a period of time Early Retirement—financial incentive to have employees retire early (can result in mass exodus) Promotions, transfers, demotions—can move people to other areas of the firm facing shortages

16. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-16 Company Characteristics and Workforce Planning Companies focused on cost will deal with labor surplus quickly (layoffs) Companies focused on differentiation may have more ability to absorb costs of surplus and will be reluctant to outsource certain positions Smaller companies will feel a greater impact of shortages or surpluses

17. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-17 Who Conducts Workforce Planning Larger companies use HR department and technology to track labor force Smaller companies look to managers and supervisors Companies in early development often require managers to “wear many hats”

18. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-18 Culture and Workforce Planning Companies loyal to employees may be hesitant to implement layoffs, others are more willing to take drastic measures Tactics consistent with culture will strengthen values of company Tactics inconsistent with culture may lead to lower employee morale and greater turnover

19. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-19 Stress and Work/Life Balance Layoffs create stress on employees who lose jobs but also on families and communities where they live Current employees have to work harder, put in more hours or work in new areas

20. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-20 Perceptions of Justice It is important that employees understand the rationale behind the decisions (procedural justice) Even if employees agree with decision, they may disagree with how the practice is implemented (distributive justice) Key is open lines of communication to maximize employee involvement and acceptance

21. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-21 Labor Force Trends and Workforce Planning Stay current on emerging labor force trends that affect company (occupational and demographic trends) Many companies are increasingly competing with other companies for limited supply of workers Bureau of Labor Statistics of the U.S. Department of Labor is good source www.bls.gov

22. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-22 Selecting Tactics to Use Actively retain employees to prepare for labor shortages Modify the nature of the job Actively recruit older employees

23. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-23 Determining Number of Employees Needed Automation—machines performing tasks that could otherwise be performed by people Technological improvements help companies redesign processes and improve productivity ratios Technology also changes types of skills employees need to service customers

24. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-24 Workforce Planning Forecasts Companies can track skill sets of employees and identify potential matches for jobs Succession planning increases ability to identify and track future replacements Globalization has fueled trend toward offshoring and global opportunities for U.S. workers (IT jobs, call centers)

25. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-25 Globalization Benefits include access to a large labor supply Wages are a fraction of what they are in the United States Opportunities to operate a firm “24/7” without any downtime Risks include maintaining product and service quality