budget in hr

7/27/2019 Budget in Hr

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Most organizations have a system in place, whether formal or informal, for developing an operating

budget. A budget requires a systematic and thoughtful review of likely expenses and designated

funds and helps a business allocate those expenditures over a designated period of time.

Comparisons of actual expenses to budgeted expenses then provide a means for making

adjustments where needed to address variances from expectations over time.

The human resource practitioners responsibility is to align the human resource departments budget

with strategic organizational goals within organizational guidelines and procedures. This is

particularly important in order to ensure that HR is viewed as a strategic partner who is able to

substantiate expenses and link HR activities with the organizations overall program of work. It is also

critical because HR is often viewed as a cost center rather than a revenue-generating function and

may therefore be scrutinized as an area where costs can more readily be cut. A well-planned and

well-documented HR budget demonstrates thoughtful consideration of spending directly linked to the

organizations programs and activities.

That said, what follows is an overview of the budgeting process followed by some of the unique

issues HR practitioners face and a checklist of items commonly found in HR department budgets.

The HR Budgeting Process

Budgeting involves the systematic collection of information and data so that the finances needed to

support an organizations objectives can be projected. Most organizations have some sort of process

for developing a budget. Two common methods are:

Incremental budgeting--using the current budget, a new budget is developed by making

adjustments upwards or downwards to each item based upon expectations.

Zero-based budgeting--every item included in the budget must be justified before being included;

therefore, the process begins with a clean slate.

Budgeting requires the collection of many forms of data. From a human resource perspective, thedata needed to create a new budget include the following:

Number of employees projected for next year.

Benefits cost increases or projections.

Projected turnover rate.

Actual costs incurred in the current year.

New benefits/programs planned.

Other changes in policy, business strategy, law or regulation that may impact costs.

HR revenue (via consulting, savings [from compensation, benefits, turnover reduction, training

costs, etc.], rent, etc.).

Projections may be simple or complicated and based on actual costs or guesses, depending on the

nature of the expense and the data available. For example, the cost of advertising may be easier to

project for a firm with consistently low turnover or one with a steady stream of unsolicited applicants,

while it may be much harder to project for a firm with significant fluctuations in turnover and staffing

needs. On the other hand, the projected total cost of health insurance premiums may be fairly simple

once armed with notice of the premium increase for the next plan year and some idea as to the


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number of employees to be covered. Those preparing an HR budget for the first time will need to

gather every source of available data in order to make educated projections.

In cases where budgeting has been ongoing, it may be helpful to use several years worth of actual

expense data, such as training expenses or employee recognition awards, to develop a realistic

budget. However, if a cost has fluctuated over time, it is important to look at the reasons for the

fluctuations and to try to predict what is likely to happen over the next year. For example, if the

organization used to hold lavish holiday parties but has no plans to do so in the future, historical data

will be of little use.

Each cost should be examined carefully while asking the following questions:

Is this cost fixed (meaning the cost wont change for the year) or variable (i.e., dependent on the

number of employees or actual utilization)?

If it is a variable cost, will it fluctuate with some level of certainty (such as staff cannot exceed a

maximum pre-approved number) or subject to change based upon business needs (i.e., use of

temporary staff during temporary upswings)?

Is the employer in control of the cost or is it controlled by an outside entity (i.e., outsourcing

fees based upon hours of service)?

What is the best and worst case based upon available data?

What is the justification for the expense--in what way would the business be adversely

impacted if the cost was eliminated?

Are there external forces that could affect this expense (i.e., downsizing, mergers, unexpected

growth, mid-year cost increases, etc.)?

While it is impossible to predict every scenario that could impact an HR budget, the questions

above provide a thoughtful means of assessing each expense from an objective viewpoint.

Once annual cost projections are known, it is important to make some effort to spread the cost overthe months or quarters of the budget year. This provides a tool for monitoring the departments cash

flow each month. It will also provide a means for making adjustments as needed if business

pressures so dictate.

Once the draft is complete, it is time to take a close look at what is included and how it compares

with what has been spent in the past by the department. Significant increases or decreases in costs

should be examined and explained. Costs impacted by the number of employees should be

reviewed for consistency with variations justified. Documentation used to prepare the budget can be

reviewed and organized in case questions arise as to the basis of certain costs. If available, external

data, such as industry norms, can be collected for comparison with the organizations own

projections.

HR Department Budgeting Challenges

One of the challenges that impact the budget process is fluctuations in costs based upon employee

utilization. For example, a corporate restructuring may cause higher utilization of outplacement

services while freezing salary increases and promotions. And benefits costs may increase or

decrease based upon any number of external influences. Good documentation will enable the HR


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practitioner to substantiate any questions raised during the budgeting process related to significant

variances from budget.

HR can also be subject to unexpected expenses for which funds may not have been specifically

allocated. Tragedies may cause a need for counseling services, new business may require

increased use of recruitment advertising or agencies, and allegations of employee misconduct may

require added costs for training and investigation services. Any number of things can occur that can

wreak havoc with a carefully designed budget. Planning for such contingencies can be tricky.

Designation of a miscellaneous fund for business-related contingencies may therefore be

appropriate.

Another factor that can vary in the HR budgeting process is the extent to which costs are allocated

to individual departments within an organization or centralized within HR. Salaries, payroll taxes,

training fees and even recruitment costs could be allocated to the departments according to the

employees they are responsible for. This is a philosophical issue that should be evaluated consistent

with other organizational budgeting parameters. For example, if the costs for telephones and other

office equipment are allocated to departments, then individual employee costs may be as well, at

least to some extent.

HR Department Budget Items

While there are many items that may or may not be included in an HR departments budget, below is

a list of some of the most common ones to consider. Although the list below is not all-inclusive, it

should provide a solid foundation for the types of items typically found in an HR budget. In addition,

please visithttp://www.shrm.org/hrtools/forms_published/CMS_007509.asp to see a sample HR

budget.

Selection and Placement

Recruitment advertising

Agency fees Temporary help

Employee referral program

Skills testing

Drug testing

Background checks

Recruitment-related travel

College recruitment giveaways

Printing costs--applications, recruiting brochures

Web development/maintenance

Applicant tracking system costs

Training and Development

External programs

Registration fees

Travel expenses
http://www.shrm.org/hrtools/forms_published/CMS_007509.asphttp://www.shrm.org/hrtools/forms_published/CMS_007509.asphttp://www.shrm.org/hrtools/forms_published/CMS_007509.asphttp://www.shrm.org/hrtools/forms_published/CMS_007509.asp


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Certification exam costs

Internal programs

Consulting fees/trainers salary

Program materials

Food and beverages

Supplies for attendees

Audiovisual rentals

Compensation and Benefits

Employee salaries

Payroll costs

Overtime

Incentive compensation

Health, dental, vision

Life insurance

Short- and long-term disability insurance/funding

Pension/401(k)/profit sharing

Cafeteria plan administration

Telecommuting expenses

Survey reports

Employee and Labor Relations

Recognition program

Service awards

Attitude survey administration

Performance appraisal software Attendance incentives

Employment attorney fees

Outplacement expenses

Suggestion program awards

Labor relations expenses (attorneys, consultants)

Diversity management program administration

Health, Safety and Security

Employee assistance program

Smoking cessation

Fitness facilities

Safety training/promotion

Workplace violence prevention/training

Revenues

Other

Strategic planning (data/consultants)


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Charitable donations

HRIS administration

HR databases/subscriptions/memberships/books

Intranet design and maintenance

Manpower Planning which is also called as Human Resource Planning consists of putting right number of people

kind of people at the right place, right time, doing the right things for which they are suited for the achievement

of the organization. Human Resource Planning has got an important place in the arena of industrialization. Huma

Resource Planning has to be a systems approach and is carried out in a set procedure. The procedure is as follow

1. Analysing the current manpower inventory

2. Making future manpower forecasts

3. Developing employment programmes

4. Design training programmes

Steps in Manpower Planning

1. Analysing the current manpower inventory- Before a

manager makes forecast of future manpower, the current

manpower status has to be analysed. For this the following

things have to be noted-

Type of organization

Number of departments

Number and quantity of such departments

Employees in these work units

Once these factors are registered by a manager, he goes for the

future forecasting.

2. Making future manpower forecasts- Once the factors affecting the future manpower forecasts

are known, planning can be done for the future manpower requirements in several work units.

The Manpower forecasting techniques commonly employed by the organizations are as follows:

a. Expert Forecasts: This includes informal decisions, formal expert surveys and Delphi

technique.


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b. Trend Analysis: Manpower needs can be projected through extrapolation (projecting

past trends), indexation (using base year as basis), and statistical analysis (central

tendency measure).

c. Work Load Analysis: It is dependent upon the nature of work load in a department, in a

branch or in a division.

d. Work Force Analysis: Whenever production and time period has to be analysed, due

allowances have to be made for getting net manpower requirements.

e. Other methods: Several Mathematical models, with the aid of computers are used to

forecast manpower needs, like budget and planning analysis, regression, new venture

analysis.

3. Developing employment programmes- Once the current inventory is compared with future

forecasts, the employment programmes can be framed and developed accordingly, which will

include recruitment, selection procedures and placement plans.

4. Design training programmes- These will be based upon extent of diversification, expansion

plans, development programmes,etc. Training programmes depend upon the extent of

improvement in technology and advancement to take place. It is also done to improve upon the

skills, capabilities, knowledge of the workers.

Importance of Manpower Planning

1. Key to managerial functions- The four managerial functions, i.e., planning, organizing, directing

and controlling are based upon the manpower. Human resources help in the implementation of

all these managerial activities. Therefore, staffing becomes a key to all managerial functions.

2. Efficient utilization- Efficient management of personnels becomes an important function in the

industrialization world of today. Seting of large scale enterprises require management of large

scale manpower. It can be effectively done through staffing function.

3. Motivation- Staffing function not only includes putting right men on right job, but it also

comprises of motivational programmes, i.e., incentive plans to be framed for further

participation and employment of employees in a concern. Therefore, all types of incentive plansbecomes an integral part of staffing function.

4. Better human relations- A concern can stabilize itself if human relations develop and are strong.

Human relations become strong trough effective control, clear communication, effective

supervision and leadership in a concern. Staffing function also looks after training and

development of the work force which leads to co-operation and better human relations.


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5. Higher productivity- Productivity level increases when resources are utilized in best possible

manner. higher productivity is a result of minimum wastage of time, money, efforts and

energies. This is possible through the staffing and it's related activities ( Performance appraisal,

training and development, remuneration)

Need of Manpower Planning

Manpower Planning is a two-phased process because manpower planning not only analyses the current

human resources but also makes manpower forecasts and thereby draw employment programmes.

Manpower Planning is advantageous to firm in following manner:

1. Shortages and surpluses can be identified so that quick action can be taken wherever required.

2. All the recruitment and selection programmes are based on manpower planning.

3. It also helps to reduce the labour cost as excess staff can be identified and thereby overstaffing

can be avoided.

4. It also helps to identify the available talents in a concern and accordingly training programmes

can be chalked out to develop those talents.

5. It helps in growth and diversification of business. Through manpower planning, human

resources can be readily available and they can be utilized in best manner.

6. It helps the organization to realize the importance of manpower management which ultimately

helps in the stability of a concern.

OBJECTIVE

The objective of manpower planning/budgeting is to plan and regulate recruitment, selection, training,

career planning and other human resource activities, at the right time and with right people to meet

(Organization)s short range and long range organisational objectives.

POLICY

Human Resource Planning/Budgeting is part of the annual budgeting exercise and aims to estimate the

needs of (Organization) over the period covered. Key policies relating to this aspect are as follows:

Human resource requirements are built around (Organization)s business plans i.e. the targets,

development plans and service standards etc. which it aims to achieve.


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Manpower requirement is forecasted for a particular department/functional area by the head of the

respective department/function for preparation of the manpower budget, keeping in view the

objectives and future needs of the department in the period under review and targets set in the

business plans.

Proper justification is required for each requisitioned position. Due consideration is given to various

factors such as work load of existing human resources, planned expansion of the department, external

developments etc. while developing arguments justifying requisitioned position(s).

Departmental manpower budgets are submitted to the Human Resource department at least 10-12

weeks before the end of the operating financial year of (Organization), unless otherwise specified in

writing by the HR department.

PROCEDURE

Head of the each department/function completes the prescribed form indicating person specifications

and number of vacancies. The specific action steps involved in the receiving and processing of

manpower budget are described below:

Responsibility of different people involved in budgeting:

Head of Human Resource department

Distributes HR Planning Forms to the heads of respective departments with a cover note indicating the

date by which completed forms are to be returned to the Human Resource department.

Co-ordinates the budgeting exercise and provides assistance to the heads of departments as and when

requested.

Head of Respective Departments


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Receives and arranges to complete the Manpower Budget Data Form specifying number of vacancies,

estimated salary, planned date of induction etc., and forwards the form to the Head of Human Resource

department.

Head of Human Resource Department

Receives and checks Manpower Budget Data Forms to ensure that they are correct, complete and

consistent while being filled by the requisitioning departments. Prepares a report summarising

manpower requirements of departments and forwards it alongwith the Manpower HR Planning Forms

to the Executive Committee for review/ decision.

Executive Committee

Receives and reviews the summary report and supporting Manpower Budget Forms, assesses the

necessity of the requisitioned new positions and discusses with the concerned departments, if

necessary.

Approves as proposed or with modification and returns HR Planning forms to the Head of Human

Resource department.

Head of Human Resource Department

Receives the approved HR Planning summary and ensures that modifications, if any, are reflected in the

HR Planning form of the concerned department. Distributes copy of HR Planning form to respective

head of department, with appropriate comments and files, original in the HR Planning File.

Human Resource Planning, Budgeting and Research Policy Direction andCoordination:

developing and coordinating long term public sector manpower planning andbudgeting policy and operational guidelines, and provides leadership and

professional expertise in these areas;

developing and maintaining sound manpower planning systems, procedures

and records and liaising with Ministry of Finance and Development Planning,

and other ministries and agencies on all aspects of manpower planning andbudgeting; and

reviewing approved manpower planning and budgeting policies, priorities,

systems and procedures, and conducting research on human resourceplanning and budgeting.

Assessment of Manpower Demand:

studying the long and medium term national development objectives, policies,

programmes, targets and strategies with a view to assess their manpowerrelated implications;


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examining current employment trends in the public service, developing and

maintaining a statistical database on the characteristics of national and public

sector labour force; and

producing periodic reports on public service manpower demand situation.

Public Sector Manpower Forecasting:

conducting research and forecasting the changes in national policies on socio-

economic development, education and employment, incomes and wages,industrial training, etc.

Assessment of Manpower Supply Situation:

developing and analysing the composition and characteristics of the labourforce and public sector employment and maintaining an inventory of existing

supply of manpower;

developing and maintaining profile studies of the public sector work force and

keeping an up-to-date database on all manpower training and development

programmes;

examining the programmes offered by educational and training institutions in

order to assess their output rate and project future manpower availabilities,shortages and surpluses in terms of numbers, skill mix and timing; and

producing detailed reports on public service manpower supply status forplanning, development and deployment purposes.

Manpower Demand and Supply Balance:

identifying shortages and surpluses on the basis of identified needs and

assisting ministries/departments in the development and implementation of

manpower training plans;

advising government on appropriate manpower allocation policy formulation

strategies on the basis of current and projected levels of supply and demand;

developing appropriate criteria for allocation, deployment, utilisation and

development of manpower among competing sectors of the economy; and

reviewing the status and effectiveness of existing manpower policies,

regulations and priorities, and keeping user ministries and manpower

development institutions informed of the manpower demand and supplysituation and of the approved government allocation.

Public Service Annual Manpower Budgeting:

developing sound public service annual manpower budgeting system andcoordinating the implementation of the approved system;

developing and maintaining an effective approach for assessing requests forcreation of public service posts or changes in the existing establishment;

maintaining up-to-date records of all public service approved posts andperiodically evaluating the effectiveness of the budgeting system; and


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providing professional advice and guidance on all aspects of manpower

planning and budgeting.

Inventory of Public Service Manpower and Skills:

developing and maintaining an effective public service human resource

information system and database with a view to developing profile studies

and historical trends which could be used for manpower planning, utilisationand research;

developing and maintaining job related statistical data of all posts in the

public service;

developing and maintaining government-wide computerised human resources

management system that will become the hub of DPSM and ministries' dailyoperations, providing consistent and accurate information and services to all

managers and staff involved in human resources activities;

maintaining an inventory of all approved posts, personal data of officers in

government and establishing personal files for officers;

providing a networked infrastructure for the facilitation of human resourcemanagement;

providing technical and procedural support to ministries and departments;

providing workflow management system;

implementing a document management system that will enable all

government officers to access policy documents from their PCs, e.g.

General Orders;

Directives/Circulars;

Public Service Act and Regulations; and

Schemes of Service

continuously monitoring the administration of the system to ensure that itremains up-to-date, reliable and accessible by all the users; and

reviewing available data and liaising with users and generators of the data.


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The elements in HR department budget would vary with

-company policy

-budget process

-company accounting system

-nature of the business operationetc

HERE is a broad set of guidelines.

-recruitment/ selection [ internal/ outsourcing ]

-contractors [external ]

-salary/ wages

-training/ development [ includes induction/ orientation]

-staff benefits

-staff amenities

-workplace facilities

-workplace safety [ OHS]

-salary contingency

-workers compensation

-staff communication [ includes newsletter/ intranet ]

-labor relations [ legal/ investigations]

-HR administration

-HR travels

etc etc.


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================================

ONCE again the reviews vary with organizations.

Majority review the HR component every six months,

and in others it is reviewed quarterly.

The more the labor intensive the industry is the more

frequency it is.

In service sector, like

-banking

-telecommunication

-BPO

-business services

-hotel industry

-hospitalityetc

WHAT IS MANPOWER PLANNING?

manpower planning is an important development in human resources

management. It has spread rapidly to nearly every size organization in almost

every kind of business.

The primary function of manpower planning is to analyze and evaluate the

human resources available in the organization, and to determine how to obtain

the kinds of manpower needed to staff positions ranging from assembly line

workers to chief executives. Smaller companies put manpower planning in the

human resource or manpower department. Some of the largest corporations

have established separate departments for this function.

WHAT ARE THE PURPOSES OF MANPOWER PLANNING?


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manpower planning aims to reduce waste in employing people, lessen

uncertainty about current manpower levels and future needs, and eliminate

mistakes in staffing.

Its purposes also include avoiding worker and skills shortages, stopping the

profit-eroding effects of being over- or understaffed, preparing succession plans

and shaping the optimum future work force by hiring the right managers,

technical specialists and skilled workers in appropriate numbers.

WHAT ARE THE TRENDS THAT IMPACT MANPOWER PLANNING?

A manpower planner seeking to identify trends in human resource

management should include the following variables:

1. The state of the economy. The larger the

company's sphere of operations, the broader the

spectrum of economic activity to consider.

2. Demographics. The age and sex groupings of the

population and what may happen to them in the

future.


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3. Employee losses or turnover. How will

retirements, deaths, promotions and resignations

affect the current number of individuals employed

at every level?

4. New skill requirements. What new skills will

be needed due to new technology markets or

products?

5. Obsolescence of current skills and its effects.

6. The status and direction of materials prices.

7. The availability of materials--can they be cut

off by uncontrollable events?

8. Technological changes.

9. Social changes. What effects do upgrading of

educational backgrounds have on the willingness of

people to take menial or other types of lower

level jobs?


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10. Labor costs. In which direction and how far will

they go? What are the alternatives?

HOW DOES A COMPANY ORGANIZE FOR MANPOWER PLANNING?

While manpower planning does not require formation of an independent

department in most companies, it does require a manager or executive

responsible for studying trends and for identifying and calculating manpower

requirements. The responsible person, who may have other duties in the

company, must know company policy and be acquainted with its long-range

objectives. He or she should understand what's involved in training and career

development, and should be able to design career programs to improve basic

capabilities, develop professional competence and teach new skills.

The manpower planner must organize in the following areas:

- Maintenance of a good data base of the

organization's human resources.

- Acquisition, retention and career development of

the company's high talent people, such as engineers,

scientists, and key managers and executives.


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- Supervision of the design of various training

programs.

- Surveys of current economic and social conditions

and their trends.

WHERE DOES THE MANPOWER PLANNER FIT INTO AN ORGANIZATION?

Companies with fewer than 100 employees usually assign the manpower

planning function as an additional duty to a specific executive, such as general

manager, production manager or the manpower manager. Large companies

employ a manpower-planning specialist and may create a separate department

for the function.

The position of the planner is not as important as the qualifications of the

individual. The task is advisory and investigative. Whoever runs the planning

operation is a staff rather than line person and will not issue direct orders to

other managers.

WHERE DOES MANPOWER PLANNING BEGIN?


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manpower planning begins with a clear understanding of the current

manpower situation in the company. The first step is an analysis of current

manpower--numbers, skills and skill levels. The second is the creation of a skills

inventory.

HOW DO EMPLOYMENT APPLICATIONS CONTRIBUTE TO MANPOWER

PLANNING?

Employment applications, when properly constructed, can help build a database

for manpower planning. Research starts with employment applications. The

more detailed the application, the more information the planner can gather.

From the employment application form, the manpower planner can compile

certain information such as:

1. Number of secondary school graduates

2. Number of college graduates

3. Disciplines studied at colleges and types of

degrees earned

4. Listings of prior work experiences


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5. Listings of types of work desired

WHAT INFORMATION SHOULD BE INCLUDED IN AN INVENTORY OF SKILLS

CURRENTLY AVAILABLE IN A COMPANY?

A well-designed skills inventory includes much information not directly related

to on-the-job skills and performance. Include many kinds of information for the

start-up of manpower planning. Your organization may grow, shrink or have

changing needs. It's easier to gather information at the beginning rather than to

re-work it at a later date.

Include the following data in your skills inventory:

Name, address, telephone number Date of birth

Current position Skill level

Years (months) with company Education

Marital status Dependents and their

ages


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Salary history Seminars and

training completed

Disciplinary actions Date of retirement

Future assignments Future assignments

(company planned) (employee

preferences)

Willingness to relocate Language abilities

Restrictions on assignments Hobbies

Published works Patents obtained

Special qualifications Unusual combinations

of high-level skills

For each group of employees, gather as much information in your skills

inventory as possible. Some companies supplement the information gathered

from the employment application by asking employees to fill out comprehensive

personal history files after they've been on the job for awhile. Add new items as


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they seem necessary. Be sure to keep the inventory up-to-date as changes are

made. And in all cases maintain only that information permitted by federal and

state law.

WHAT ARE THE STEPS TO DEVELOP HUMAN RESOURCE DATA FOR FUTURE

MANPOWER NEEDS?

Organizing the data requires a certain amount of cross-filing and tabulating. In a

small organization, this can be done manually, though a personal computer will

serve to make organizing, updating and accessing data easier.

Large companies use their central data processing systems to store human

resource data and write programs to accomplish tasks the manpower planner

desires. Among the data processing capabilities the planner should have are

abilities to sort data relating to the length of service, pay grade, educational level,

disciplinary background, marital status, and number of dependents. Other

classifications are possible, especially when the data is gathered and stored by

computer. The Human Resources Data Sequence Checklist (7-01) graphically

depicts the data gathering and organization sequence.

HOW CAN OCCUPATIONAL CODES BE DEVELOPED TO HELP ORGANIZE AND

ACCESS EMPLOYEE INFORMATION?


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An occupational code, which is a numerical designation for each type of job,

focuses on the qualities of each individual and permits planners to see at a glance

not only the skills of each individual, but the level of competence and other data.

Most planners do not need the precise designations of an occupational code

that the government has devised, though you can use such a system if available.

Usually, a simple alphabetical list of skills will serve the purpose of listing

individuals with the same qualifications under one heading.

For instance, a partial listing might look like this:

- Assembler, electrical

- Assembler, mechanical

- Machinist

- Mechanic, fork lift

- Operator, drill press

- Operator, milling machine


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List the names of each person possessing a skill on the appropriate skill card, or

store on a computer. List those with combinations of skills, too.

WHAT ARE THE EFFECTS OF TURNOVER ON MANPOWER PLANNING?

Turnover creates unnecessary expense and reduces efficiency. Productivity

drops. When a planner identifies high turnover in a specific department, the

quality of training and supervision in that department should be looked into. As a

part of the human resources function, the planner would contribute to the

decision on what steps should be taken to remedy the turnover situation, such as

training, pay and incentive improvements, and the like. The human resources

manager would then go to management with the problem of turnover and make

the combined recommendations.

It's also important to determine exactly why workers, supervisors or managers

leave. Every departing employee should have an exit interview and your

company should maintain a record of the reasons for leaving. You should ask

individuals who quit to fill out an Exit Interview Attitude Survey.

Plans to reduce turnover are an important part of a manpower planner's job.

The success in the task of reducing turnover goes a long way to insuring that a

company has the right number of persons with the right skills to fulfill the

company's needs and make it a successful organization.


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WHAT USES DO MANPOWER PLANNERS MAKE OF TURNOVER FIGURES?

Planners use turnover figures to pinpoint departments where turnover is

occurring and to discover its causes. For instance, the planner may find that poor

supervision is an important cause of turnover. If so, he or she can take steps to

have something done about the quality of supervision in the affected area.

Age is also a factor in turnover. Older employees tend to be more stable than

young workers. Overqualified employees are very unstable and entry level

workers are likely to quit soon after they are hired.

Among executives, a high turnover rate among the younger ones often indicates

that something is wrong with the way the company manages its career

advancements. manpower planners should bring these matters to the attention

of top management with recommendations for corrective actions.

HOW DO CHANGES SUCH AS AUTOMATION AND COMPUTERIZATION AFFECT

MANPOWER PLANNING?

When planners examine company records, they should learn whether the

introduction of new machines, methods or materials have altered the numbers of

people with certain skills. Such information is important for forecasting future

requirements.


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If the introduction of a computer-controlled machine, for example, results in the

elimination of machine operators, these skills should be eliminated from the

inventory of needed skills. They should be replaced, of course, with those needed

to run the computer-controlled machines and with specialists skilled in electronic

maintenance.

As planners uncover such changes and trends, they can concentrate on the new

skills needed and no longer consider those that are not. Turnover figures also

affect training programs. The planner examines them to find out how well or

poorly such programs are serving the company's objectives.

WHAT IS THE ROLE OF THE MANPOWER PLANNER IN CAREER PLANNING?

The manpower planner usually has a distinct advantage over other managers

and executives when it comes to career matters. It is essential for successful

execution of the job that the planner be very clear and up-to-date about the

organization's objectives.

The objective of career management from the company's viewpoint is to ensure

the availability of qualified successors for every important position. Managers

and supervisors want to get ahead, earn good salaries and gain new

opportunities. Only rarely can these individuals clearly define what getting ahead

means to them.

The planner, though, knows what sort of person should be in a specific job, or as

a backup for a specific person. Through skillful career guidance, the planner has


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the leverage to encourage supervisors and managers to prepare for

advancement.

HOW DOES THE MANPOWER PLANNER PREPARE FOR FORECASTING FUTURE

MANPOWER REQUIREMENTS?

Practical manpower forecasting should generally be limited to five years or less.

Society and technology change too rapidly to permit accurate forecasting for

longer periods of time.

The planner begins by studying the company's operational plan in detail to

determine its objectives regarding:

- Capital investment in buildings and new machinery

- Proposed changes in product design

- Proposed introductions of new products

- Changes in materials to be used

- Changes in sales volumes forecast


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In addition to these major influences on future manpower requirements, the

planner considers turnover rates, retirements, internal promotions, and effects of

improved supervision. He or she must also consider the learning curve, that is,how long it takes for qualified manpower to reach full output after any changes

have been made.

HOW DOES THE MANPOWER PLANNER ESTIMATE THE NUMBERS OF PEOPLE AND

THE SKILLS THE COMPANY WILL NEED?

Estimates of the company's economic activity, usually prepared in the marketing

or budgeting area, form the basis for the planner's calculations. He or she first

determines the relationship between how many and what kinds of people the

company requires to produce the current volume of product.

There is not a linear relationship between increases in volume and manpower

requirements. An increase of 50 percent in annual production will not necessarily

require a 50 percent increase in managers. It might, though, require a 50 percent

increase in entry-level workers, depending upon their productivity levels.

The manpower Requirements Planning Form--Short Term, is used by planners

to estimate the numbers of people and skills a company will need within the nextyear. The manpower Requirements Planning Form--Long Term, is used for

periods beyond one year. When using the worksheet, a planner discusses actualneeds with various managers. He or she also gets input from top management.

The planner enters on the worksheet a consensus, tempered by personal knowledge

and experience, of everyone's best estimates.


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Forecasting high-level manpower needs is directly related to the accuracy of

the company's plans, particularly its long-range ones. The planner must make

allowances for promotable individuals within the company, as well as the need to

recruit managers from outside.

Requirements for high-level manpower do not appear as quickly as for

production people. The business can grow substantially before it becomes

necessary to create new areas which require managers or new divisions or groups

headed by general managers. A planner must take these lags in the timing of

manpower requirements into account.

WHAT ROLE DOES THE MANPOWER PLANNER PLAY IN SUCCESSION PLANNING?

Every company should have a succession plan that identifies a qualified

subordinate who is ready to replace each key manager or executive. While the

planner has no authority to select successors, he or she should, with the help of

top management, prepare a succession chart that does name subordinates who

can step up when a superior departs.

The Succession Chart (7-05) should, of course, be kept strictly confidential.

Advance publication is likely to demoralize managers who find themselves passed

over.

The names above each job title are the incumbents. The names below the line

are the prospective successors. A more complete chart would extend further to


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show the succession at more levels, especially in a large company. To be useful,

the succession chart must be kept up-to-date.

HOW DOES MANPOWER PLANNING HELP COPE WITH SKILL SHORTAGES?

Rapid advances in technology cause serious mismatches between the jobs that

are available and the number of people with the necessary skills to fill those jobs.

In addition, rising levels of education have brought with them rising expectations

among employees at all levels. As a result, some workers will not accept training

or positions that they believe are not beneficial to their careers.

By analyzing tasks, the manpower planner often finds that a company is not

achieving maximum efficiency in its use of a certain type of talent. Some jobs are

held by individuals who have more advanced skills or training than is needed.

Sometimes the task can be done by a lower-level worker, rather than, say, a

university educated employee. The planner should bring this situation to the

attention of managers who have the authority to make the necessary changes

and thus relieve what seems to be a skills shortage.

Another approach which the planner might use would be to redesign jobs.

Reducing boredom and monotony, and increasing comfort, often increases

productivity. As a result, positions for which skills are in short supply may not

require more manpower, as more productive and skilled individuals produce

more.


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One company, faced with a shortage of skilled warehouse workers, built

automated warehouses. That reduced the number of workers needed while

increasing efficiency in the warehousing operation. Other options include finding

machines that can do the work; breaking down skilled jobs into less skilled

components; or modifying the product to eliminate the need for the skill that is in

short supply.

WHAT IS INVOLVED IN ADMINISTRATIVE CONTROL REGARDING A MANPOWER

PROGRAM?

The planner must monitor the system on a continuing basis to ensure that it

gets results. Your manpower planner will benefit from clearly expressed interest

in the program from top management. Such recognition gains cooperation

throughout the organization.

Whatever actions are taken in manpower planning that affect the skills or

experiences of workers, office employees, supervisors or managers, must be

recorded. All such data must be made part of each individual's manpower

record. They must also be entered on the planner's skills inventory. Only when

this is done can the planner know the nature and number of manpower and skills

available.

Regular reports from department heads play a part in administering the

manpower planning program. Information the manpower planner should receive

on a regular basis includes:


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- Absentee rate

- Turnover rate

- Hard-to-fill jobs

- Names of exceptional individuals and their skills

- Requests for training programs

- Individuals who have been trained in certain skillsbut are not working at the

skill in which they are

most proficient

Monitoring the program allows the manpower planner to compare what was

planned with what is actually happening. Thus, monitoring provides an important

form of administrative control.

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