Achieving workforce planning targets
How recruitment, appraisal, training, dismissal and redundancies enable firms to achieve their workforce planning targets
A business has to assess its needs for people, as it does the requirements for other resources. Human resource management (HRM) is concerned with how many people to employ, and with which skills. This is considered in the context of:
- Trends in product demand
- Trends in the numbers of people with particular skills
- Trends in other internal and external factors
A human resource manager aims to:
- Match employee skills to the strategic direction of the business
- Develop a competitive advantage by maximising quality and motivating the workforce to perform at their best
- Maximise efficiency of the workforce
In previous sections we examined recruitment, selection, appraisal, training, dismissal and redundancy. The combination of all of these is required to produce a workforce that achieves the targets set by the organisation.
For instance, if demand is falling in a recession, the firm will need to consider redundancy and redeployment as a response. Redeployment will have fewer staff consequences and because of compensation requirements, may be the cheaper alternative. However, the question has to be asked as to whether the surplus employees have the skill levels required for their new functions. This is clearly where training and professional development is important.
In boom periods the opposite will apply as the firm will be focusing on recruitment and selection. However, training is even more important here to induct new employees and to provide the information and skills required for the job.
We have already discussed the dynamic nature of the business environment, so appraisal and training form the pillars of ensuring a match between demand patterns and the productive capacity of the firm. New technologies, for instance, will require a reappraisal of human resource requirements.
To measure the success of the firm's HRM performance we need some yardsticks. Many of these will be qualitative (people's views and opinions), but there are also some quantitative (numerical) measures that we can look at as well. HRM performance is normally measured against:
- Increased labour productivity - this is the average output per worker over a specific period of time. Increases in this normally, reflect improvements in the skills, attitudes, training and motivation of the workforce.
- Labour turnover - this is measured by the following formula:
This gives the percentage of staff who have left the organisation in a particular time period - normally a year. By reducing labour turnover and producing a stable workforce, the firm will reduce disruption and lost output, reduce the cost of recruiting and training new staff, maintain high levels of motivation.
Causes of high labour turnover need to be addressed. Reasons for a high turnover may include; low wages, poor morale, low job satisfaction, poor working conditions, poor recruitment policy, lack of training and development opportunities.
- Reduced absenteeism - absenteeism is measured by the following formula:
A good HRM programme aims to reduce absenteeism, as this leads to falling productivity, higher employment costs (new workers will be needed to cover those who are absent) and impacts on worker morale. Absenteeism might be caused by:
- inadequate application of health and safety standards and high accidents levels
- poor management/employee relationships which stifle originality and can lead to stress-related problems,
- boring and repetitive jobs and a lack of financial incentives.
Firms also need to keep:
(a) Accurate records of personnel and what duties they perform
(b) Workforce planning programmes and targets for every department
If a firm gets its planning wrong it will have serious implications. The firm will probably suffer from:
- An inability to hire the right people at the right time
- Poorly trained staff
- Falls in motivation and the quality of output.
- Increasing levels of absenteeism.
- Higher levels of labour turnover
- Increasing costs
All of these will cause productivity and profitability to fall.