workforce planning
DESCRIPTION
An overview of workforce planning, its elements and sample applications.TRANSCRIPT
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Workforce PlanningPresented by Senga Consulting Inc.
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Participants will learn the…
Categories of HR forecasting. Rationale for attention to specialist, technical and executive
personnel in forecasting. Impact of environmental and organizational variables on HR
demand and supply. Various demand forecasting techniques. Methods of determining external and internal HR supply. Relationship between forecasting and succession planning.
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Workforce Planning
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Workforce Planning
Business process for ensuring an organization has access to talent to ensure future success.
Access to talent includes considering all access sources. Talent: The skills, knowledge, predisposition and ability to
undertake required activities including decision making.
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Getting Started
Obtain support from senior leaders. Communicate benefits and results to managers. Establish a workforce planning team of knowledgeable
employees from different functional areas and levels. Develop and implement a plan. Solicit continuous feedback for ongoing improvements.
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Workforce Planning Steps
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Step 1Supply Analysis Staffing levels Workforce skills Workforce demographics\ Employment trends
Step 2Demand Analysis Workforce skills needed Staffing patterns Anticipated workload changes
Step 3Gap Analysis Compare supply analysis with demand analysis Determine future gaps (shortages) and surpluses (excesses) Identify future changes in workforce demographics Identify areas in which management action will be needed
Step 4Strategy Development
Plano Recruitingo Successiono Employee development and retrainingo Organizational change
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Workforce Planning Model
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Strategic Direction Setting
Supply, Demand,
Discrepancies
Develop Action Plan
Implement
Action Plan
Monitor, Evaluate,
Revise
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Environmental Scanning
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Government Regulations
Cost and availability of capital
Labour availability
Competition
Supplier power
Customer expectations
Globalization
Technology
• Raw Materials• HR• Information• Financial resources• Equipment
INPUTS TRANSFORMATION
• Product/Services• Employee Behaviour• Profits/losses• Waste/Pollution
OUTPUTS
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Techniques
Scanning – identify early signals of changes and trends. Monitoring – follow key indicators that affect the organization. Forecasting – after monitoring, project the impact on the
organization. Assessing – describe the impact of the monitored trend on the
organization, make a judgment of the probability of outcomes.
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Forecasting Methods
Trend Analysis – a quantitative approach to forecast future personnel needs based on extrapolating information from historical changes.
Delphi Technique –forecasts and judgments of a group of experts are solicited and summarized to determine the future of employment.
Impact Analysis –trends are analyzed by a panel of experts who then predict the probability of future events.
Scenario Planning –creating future scenarios that differ radically from those created by extrapolation of present trends
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Environmental Factors
Economic climate –the economy affects HR management Globalization – affects sovereignty, prosperity, jobs, wages, and
social legislation Political and legislative factors – influence organizations with
changes to laws and regulations Technological factors –new issues include online HR functions,
identity theft, e-learning, answering email on vacations Demographic factors –include age, gender, family status,
education, economic status, labour market Social and cultural factors
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Exercise
What key environmental factors affect your organization’s ability to achieve its goals?
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What are the HR implications?
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The HR Forecasting Process
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Learning Topics
Categories of HR forecasting activity and their relationship to the HR planning process
Rationale for attention to specialist, technical, and executive personnel groups in the HR forecasting process
Impact of environmental and organizational variables on the accuracy and time period of estimates derived from future estimates of HR demand and supply
Various stages in the process of determining net HR requirements
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Forecasting Activity Categories
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Transactional-based forecasting
Event-based forecasting
Process-based forecasting
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Human Resources Supply and Demand
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Human Resources
Supply
Human Resources Demand
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Key Personnel Analyses
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Key Personnel
Specialist Technical
Professional
Employment Equity
Managers and Executives
Recruits
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Designated Group
Receive the most discrimination within organizations
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D
G
Aboriginal descent
People with disabilities
Visible minorities
Women
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5 Stages of the Forecasting Process
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Identify Goals
Identify demand
Assess Internal Supply
Determine Demand
Develop Strategies
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Organizational Factors
Corporate mission, strategic goals Operational goals, production budgets HR policies Organizational structure, restructuring Worker KSAs, competencies, expectations HRMS level of development Organizational culture, climate, job satisfaction,
communications Job analysis
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Environmental Factors
Economic situation Labour markets and unions Government laws and regulations Industry and product life cycles Technological changes Competitor labour usage Global market for skilled labour Demographic changes
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Time Horizons
3. Medium-run – 2 - 5 years
4. Long-run– 5 or more years
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1. Current – up to 1 year
2. Short-run – 1 - 2 years
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Ascertain HR Supply
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Internal SupplyOrganizational
workforce who can be retrained,
promoted, transferred, fill
future requirements
External SupplyEmployees
receiving training, working for
competitors, members of professional
associations, in transition or unemployed
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Determine NET HR Requirements
External supply requirements = replacement + change supply components
Change supply = hiring to increase (or decrease) the overall staffing level
Replacement supply = hiring to replace all normal losses
External supply = current workforce # x (replacement % per year + change % per year)
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Example
External supply = current workforce x (replacement % per yr + change % per yr)
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Deficit =
1000 x (4% per year (0.04) + -7% per year (-0.03)
40 + -70 = -30Need to reduce by 30 employees
Surplus =
1000 x (4 % per year (0.04) + 2 % per year (0.02)
40 + 20 = 60Need for 60 employees
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Your Turn
External supply = current workforce x (replacement % per yr + change % per yr)
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Deficit =
10,000 x (6% per year (0.06) + -8% per year (-0.08)
+ = Need to reduce by employees
Surplus =
10,000 x (3.5 % per year (0.035) + 3 % per year (0.03)
+ = Need to hire employees
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HR Surplus/Deficit
Internal workforce supply exceeds the organization’s requirement or demand for personnel
Demand exceeds the current resources available in the organization's workforce
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HR Demand
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Learning Topics
Demand forecasting Linkages between labour demand forecasting and the supply Various demand forecasting techniques
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HR Demand
Projected human resources requirement
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Trend Analysis
Historical relationship between a business index (e.g., sales, contracts, units sold etc.) and the number of employees required to achieve that index (labour demand)
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Effective Trend Analysis
Five steps to conducting an effective index/trend analysis:1. Select the appropriate business index2. Track the index over time3. Track the total number of employees over time4. Calculate the average ratio of the business index to the total
number of employees5. E.g. employee requirement ratio - the relationship between
the business index and the demand for labour6. Calculate the Forecasted Demand for Labour
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Employee Requirement Ratio
Year Sales ($000) # of Employees Ratio (Sales/EE)
2007 $3,000 123 24.39
2008 3,200 155 20.65
2009 3,300 170 19.41
2010 3,400 165 20.61
2011 3,560 180 19.78
2012 3,600 189 19.05
2013 3,800 190 20.00
2014 4,000 199 20.10
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Current Year
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Steps for Delphi Technique
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Define and refine the issue or question
Identify the experts, terms, and time horizon
Orient the experts
Issue the first-round questionnaire
Issue the first-round summary and second-round questionnaire
Continue issuing questionnaires
Sequential surveys with feedback on opinions in previous rounds
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Steps for the Nominal Group Technique
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Define and Refine the Issue or Question and the Relevant Time Horizon
Select the Experts
Issue the HR Demand Statement to the Experts
Apply Expert Knowledge, State Assumptions, and Prepare an Estimate
Meet Face-to-Face
Discuss the Demand Estimates and Assumptions
Vote Secretly to Determine the Expert Demand Assessment
Long-run forecasting technique utilizing expert assessments
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HR Budgets
Quantitative, operational or short-run demand estimates that contain the number and types of personnel required by the organization as a whole and for each subunit, division, or department
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HR Budgets: Staffing Table
Staff Demand Requirements Sales ($ Millions)
Executive Positions $1-10 >$10-25 >$25-50 >$50-75
President 1 1 1 1
Vice Presidents 1 1 2 3
Directors 3 3 4 5
Management Positions
HR 3 4 7 10
Financial 3 5 7 11
Operations 2 2 4 6
Marketing 1 2 2 3
Sales 2 2 3 4
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Scenario Forecasts
Projections of future demand for human resources based on differing assumptions about future events.
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Optimistic
Normal
Pessimistic
Sal
es
TimeNow T + 2 YearsT + 1 Year T + 3 Years
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Regression Analysis
Presupposes a linear relationship between independent (casual) variables and dependent (target) variable, e.g., HR demand
Linearity is the relationship between the independent and dependent variables
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Regression Analysis
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Y –
Dep
ende
nt V
aria
ble
X – Independent Variable
Y = dependent variable (HR demand)A = constant (Y intercept)B = slope of linear relationship between X and YX = independent variable (e.g. level of sales)
A
B
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Regression Prediction
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𝐵= σ𝑋𝑌− 𝑁ሺ𝑋തሻ(𝑌ത)σ(𝑋2) − 𝑁(𝑋ത)2
Y = A + BXY = dependent variable (HR demand)A = constant (Y intercept)B = slope of linear relationship between X and YX = independent variable (e.g. level of sales)
Where
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ExerciseData
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XSales
($ Millions)2.03.54.56.07.0
Y# of Marketing Personnel
2032425566
5 Sets of observations
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Exercise Step 1Calculate XY, X2, average X and average Y
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XSales
($ Millions)2.02.53.55.06.5
19.5
Y# of
Employees2528303854
175
XY
5070
105190351
766
X2
4.006.25
12.2525.0042.25
89.75
Average X = 19.5/5 = 3.9 Average Y = 175/5 = 35
N = 5
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Exercise Step 2Calculate the value of B (slope of the linear relationship between X and Y)
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XY5070
105190351
766
X2
4.006.25
12.2525.0042.25
89.75
Average X = 3.9
𝐵= σ𝑋𝑌− 𝑁ሺ𝑋തሻ(𝑌ത)σ(𝑋2) − 𝑁(𝑋ത)2
𝐵= 766− 5ሺ3.9ሻ(35)89.75− 5(3.9)2 𝐵= 766− 68389.75− 76.05 𝐵= 6.09
N = 5 Average Y = 35
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Exercise Step 3Calculate A (constant or intercept)
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IFY = A + BXThen𝐴= 𝑌ത− 𝐵𝑋ത
ANDA = 35 – (6.09)(3.9)A = 11.23
Average X = 3.9 Average Y = 35 B = 6.09
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Exercise Step 4Determine the regression prediction equation
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Y = 11.23 + (6.09)(X)
A = 11.23
X = Dependent Variable
B = 6.09
Whew! So what?
Independent causal variable X(e.g., sales) AND Dependent variable Y(e.g., predicted # of personnel)
Even if sales are zero the value for A is 11.23 (round to 11.0) or 11 persons.
For every increase unit ($1 Million) sales (X) there is a predicted increase of 6.09 staff (Y) associated with that change.
Y = A + BX
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Exercise Step 5Calculate predicted HR demand (Y) by inserting values for X
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Predict the HR demand for personnel at $8 million and $10 million.
Y= 11.23 + (6.09)(X)
A = 11.23
X = Sales ($M)
B = 6.09
Y = A + BX
Y = 11.23 + (6.09)(10)
Y = 72.1872/73 Staff required
A = 11.23
X = 10
B = 6.09
Y = A + BX
Y = 11.23 + (6.09)(8)
Y = 59.9960 Staff required
A = 11.23
X = 8
B = 6.09
Y = A + BX
$10 million$8 million
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Ascertaining HR Supply
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Learning Topics
Relationship between demand / supply forecasting Relationship between forecasting and replacement management Methods of determining external and internal supply of
employees such as: Skills and management inventories, Replacement analysis, Markov models, Linear programming, Movement analysis, Vacancy/renewal
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Human Resources Supply
Source of workers to meet demand acquired internally or externally.
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Skills Inventory
Record held on employee except management or professionals1. Personal information2. Education, training and skill competencies, licensing etc.3. Work history4. Performance appraisals5. Career information6. Hobbies, interests, volunteerism, community involvement
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Management Inventory
Record for managerial, professional, or technical personnel that includes all elements in the skills inventory with the addition of information on specialized duties, responsibilities, and accountabilities.
1. History of management or professional jobs held2. A record of management or professional training courses3. Key accountabilities for the current job4. Assessment centre and appraisal data5. Professional and industry association memberships
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Replacement Management
Process of ensuring that pools of skilled employees are trained and available to meet the strategic objectives of the organization
Process of finding employee for key managerial positions
1. Long-term successiona) Training and work experience to enable individuals to assume higher-
level job appointments in the future
2. Short-term emergency replacementa) Individuals who have quit, been terminated due to performance
problems, have died, and so on
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Replacement Analysis
Improve effectively filling vacancies
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VP SalesJ . O b rey (A 2)
B . A n d rew s (B 3)D . Je ffe rs (C 1)
VP OperationsA . C ha n g (A 2)E . S in g h (B 1)K . P e te rs (C 3)
VP M arketingT . S he rm a n (A 1)
U . L a u (C 1)H Y u e n (D 2)
PresidentJa ck N e w la ndS . L an d a r (A 1)K . C h ow (A 2)
ReadinessA Ready nowB Ready in 1 yearC Ready in 2 yearsD Not suitable for this job
Performance1 Outstanding2 Above average3 Average/good4 Below Average5 Unacceptable
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Ripple Effects
Caused when one promotion or transfer in the organization causes several other movements as a series of people are promoted to fill the openings
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Markov Model
Produces a series of matrices that detail the various patterns of movement to and from the various jobs in the organization
Determines the likelihood that an individual will display movement behaviours
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Sample Markov Matrix*
Year 2010
Year 2009 Senior Analyst
Analyst Clerk Exit
Job A (n = 3) 1(0.25) 1(0.25) 1(0.50)
Job B (n = 5) 1(0.10) 3(0.75) 1(0.15)
Job C (n = 8) 1(0.05) 6(0.90) 1(0.05)
Supply (n = 16) 2 5 6 3
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*Adapted from Strategic Human Resources Planning, Belcourt and McBey, Nelson, 2010.
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Markov Analysis Conclusions
Number of people who move between job levels annually Number of external hires needed Movement patterns and expected duration in specified jobs
associated with patterns of career progression Number and percentage of starters at a particular job who
target a future job within a specified time
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Linear Programming
Mathematical procedure used for project analysis in engineering and business applications
Determine the optimal supply mix to minimize costs or other constraints.
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Movement Patterns
1. Remain in current job2. Promotion to higher job classification 3. Lateral move4. Exit from a job (e.g., termination, layoff, voluntary exit)5. Demotion
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Movement Analysis
Analyze people supply and the ripple effect that promotions or job losses have on the movements of others in the organization
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Exercise*
5% increase for levels 6-9 1 additional level 4 6 additional level 5 Historical annual loss rates
Retirementso 2 positions level 5o 15% levels 6-9Turnovero 10% levels 5 and 6o 15% level 7o 20% level 8o 25% level 9
Positions are start of yearo 1 – level 4o 6 – level 5o 20 – level 6o 32 – level 7o 40 – level 8o 50 – level 9
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Belcourt and McBey, Nelson, 2010.
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Exercise
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Start at the top with the most senior positions since most movement in organizations is up due to promotions and replacements.
Level Positions at Start of Period Staff Changes Staff Losses Positions to be Filled
4 1 1 0 1
5 6 6 3 9
6 20 1 5 6
7 32 2 10 12
8 40 2 14 16
9 50 3 21 24
149 15 53 68
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Vacancies Total Ripple Movement
1 = 1
9 + 1 = 10
6 + 1 + 9 = 16
12 + 1 + 9 + 6 = 28
16 + 1 + 9 + 6 + 12 = 44
24 + 1 + 9 + 6 + 12 + 16 = 68
68 5 36 18 24 16 167
Exercise
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Movement analysis has identified this year’s need to fill 68 vacancies.167 moves will be required because of promotion from within.
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Vacancy Model
Analyzes people flow throughout the organization at each functional or compensation level
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Use the following information to calculate next year’s supply forecast.
HR loss during the year
Level 88 (president = 100%Level 87 (vice presidents) = 15%Level 86 (directors) = 17%Level 85 (managers) = 20%Level 84 (senior analysts) = 25%Level 83 (analysts) = 50%
Replacement Policy (% external / % internal)% external % internal
Level 88 0 100Level 87 10 90Level 86 20 80Level 85 30 70Level 84 55 45Level 83 100 0
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Exercise*
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Salary Level
Positions at Start of Year
Annual Losses Promotions to Level
Level Outflows External Hiring
1 1 1 1 1 0
2 4 1 2 2 0
3 18 3 4 5 1
4 45 9 9 13 4
5 88 22 14 31 17
6 156 78 0 92 92
Total 314 114 30 144 114
*Adapted from Strategic Human Resources Planning, Belcourt and McBey, Nelson, 2010.
Start at the top and work your way down
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Supply and Retention Programs
Monitor and control absenteeism and turnover Retention programs are vital to keeping experienced,
high-performers
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Costs of Replacing Employees
Hard Costs Advertisements Headhunter, recruiting fees Interview training Travel costs Admin expenses Costs of lost production Bonuses Increased salaries Cost to replace a fully proficient
employee - 70-200% annual salary
Soft Costs Lost business and customer
contacts Decreased productivity due to
training and learning curve gaps Orientation and training time Decline in team morale and
productivity Increased turnover due to the
“follow-me” effect
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Retention Programs
Offering effective communication programs Facilitating an enjoyable and collegial work atmosphere Designing meaningful jobs Formulating and administering performance and
compensation systems that reward better performers Offering more flexible and attractive work arrangements) --
flextime, telecommuting, cafeteria-style benefits plans Mentoring and developing intellectual capital
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Succession Management
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Learning Topics
Evolution of succession management Steps in the succession management process Compare job and competency approaches Identifying high potential talent Management development methods Measuring success of management succession Limitation of succession management
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Importance of Succession Management
Process of ensuring that a pool of skilled employees ready to achieve the strategic objectives of the organization
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Evolution of Succession Management
Process of finding replacement employees for key managerial positions
Replacement planning has evolved into succession management by: Broadening the focus Expanding the time horizon Creating a talent pool Improving the evaluation system
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Reasons for Succession Management
1. Provide opportunities for high-potentials2. Identify replacement needs3. Increase the talent pool of promotable employees4. Contribute to implementing strategic business plans5. Help individuals realize their career plans6. Tap the potential for intellectual capital7. Encourage the advancement of diverse groups8. Cope with the effects of voluntary separation programs9. Decide which workers can be terminated10. Cope with the effects of downsizing11. Reduce headcount to essential strategically important jobs only
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Succession Management Process
1
•Align Succession Management Plans with Strategy
2
•Identify the Skills and Competencies Needed to Meet Strategic Objectives
3
•Identify High-Potential Employees
4
•Provide Developmental Opportunities and Experiences
5
•Monitor Succession Management
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Step 1Align Succession Plans with Strategy
Organizations must start with the business plan Using environmental scanning, managers try to predict where
the organization will be in three to five to ten years
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Step 2Identify the Skills and Competencies
1. Job-Based Approach
2. Competency-Based Approach
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Job and Competency Approaches
Job Based Approach – Focus on duties, skills, job
experience, and responsibilities required to perform the job
Not adequate since jobs change rapidly
Competency-Based Approach Focus on measurable attributes Differentiate successful employees
from non successful Hard and soft skills Produce more flexible individuals
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Types of Competencies
1. Core competencies
2. Role or specific competencies
3. Unique or distinctive competencies
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Step 3Identify High-Potential Employees
Several approaches to identify managerial talent, including: Temporary replacements Replacement charts Strategic replacement Talent management culture
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Management Development Methods
Promotions Job Rotations Special Assignments Formal Training and Development Mentoring and Coaching
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Leadership Development Activities*
Use% Very Effective
% Moderate or Extensive Use
Special projects within job responsibility 77 69
Special projects outside of job responsibility 46 55
Expatriate assignments 26 54
Coaching with internal coaches/mentors 48 45
Formal workshops 85 42
Coaching with external coaches/mentors 28 42
Articles/books 65 27
Tests, assessments or other measures of skills 52 26
Computer based learning 38 16
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* From Strategic Human Resource Planning, Belcourt and McBey, Nelson, 2010.
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Management Development Methods
Promotions Job Rotations Special Assignments Formal Training and Development Mentoring and Coaching
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Step 5 Monitor Succession Management
Corporations with strong succession management programs are higher performers in revenue growth, profitability and market share
HR metrics can be used to help monitor succession management
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Succession Management Metrics
Increase engagement scores Increase positive perceptions of development opportunities High potentials’ perceptions of the succession management
process Higher participation in developmental activities Greater number involved in the mentoring process
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HR Metrics – Lag Measures
Increased ave # of candidates
Reduced ave # of positions with no identified successors
Increased % of managers with replacement plans
Increased % of key positions filled according to plans
Increased ratio of internal to external hires
Increased retention rates of key talent
Increased % of positive job evaluations
Increased # of manager as talent developers
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Contact Information
Wayne Rawcliffe
Senga Consulting Inc.
604.909.3840
205, 1275 West 6th Avenue
Vancouver, BC V6H 1A6
www.senga.ca
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