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Workforce Planning

This article will go over what a workforce plan is, components of a workforce (human resource) plan and internal influences and external influences of a workforce plan as well. Feel free to skip to the parts most relevant to you.

A workforce (or HR) plan assesses the current and future capacity of a business’ workforce and sets out actions necessary to meet the business’ future workforce needs.
Components of (Human Resource) workforce plan:
  1. Consider the overall corporate objectives of the business – The workforce plan must contribute to the achievement of the business’s overall or corporate objectives.
  2. Take a strategic view of employees – Consider how human resources can be managed to assist in achieving the business’s corporate objectives. This may entail considering factors such as the use of technology and how this might complement or replace some human input into the production.
  3. Those responsible for workforce planning will have to make a judgement about the size and type of workforce the organisation will require over future years.
  4. Once comparison is complete the firm can decide upon policies – This can be recruitment, training, redeployment and redundancy all necessary to convert the existing workforce into the desired one.
The workforce plan will specify the business’s desired workforce and how the business will implement its human resource policies .
A business’s workforce plan will contain…
Information on the business’s current workforce which will set out:
·        Number of employees the business currently has.
·        Skills and qualifications possessed by its current employees.
·        Where its employees are currently employed (for big companies, this could be in many different countries).
Analysis of likely changes in the demand for the business’s products
In turn this will affect the business’s need for labour in the forth-coming period. Clearly, changes in demand will have a significant effect on the number of employees needed, especially if the business is heavily dependant on employees as the central part of the production process.
Analysis of the likely factors affecting the supply of labour
This could include forecast rates of labour turnover for a business, factors affecting the local labour markets, such as the entry of a new business in the local area, which may recruit heavily; or the arrival of large numbers of migrants from Eastern Europe into the local labour market.
Recommendations on actions needed to acquire the desired workforce
These actions are likely to set out changes in recruitment, training, redeployment and redundancy. The workforce plan will set these out in detail and will also explain the impact on each element of the business and also the timescale over which the changes will be implemented.
Internal Influences on Workforce Plans
Corporate Plans
These set out the goals of the entire organisation. The goals included in corporate plans may include:
  • Growth
  • Increased market share
  • Competing in new markets (possibly overseas)
  • Earning the highest possible profits.
A corporate plan suggesting expansion into a market overseas will result in employees being redeployed. It could also result in jobs being lost if the expansion involves joint ventures allowing some rationalisation and staffing reduction.
Marketing Plans
The achievement of marketing objectives assists a firm in attaining its corporate objectives. If a firm plans to increase market share it may introduce new products. This might require the workforce plan to create a labour force with different skills through recruitment, training and redeployment.
Operations Plans
As with marketing plans, the objectives in operations plans are a central part of the firm’s corporate strategy. Operations may become capital intensive, requiring fewer employees with greater skills. Alternatively, a business might wish to give employees more responsibility for operations as it adopts total quality management. This may require the workforce plan to prepare for delayering and empowerment.
Financial Constraints
Workforce planning operates within tight financial guidelines. Training, recruitment, redeployment and even redundancy are expensive. Firms operating a ‘soft’ approach to HRM may have to grant a larger budget for workforce planning as they seek to develop their employees. On the other hand, advocates of ‘hard’ HRM would wish to effect workforce planning with minimal costs.
The Type of Business
The type of business will impact on the process of workforce panning. For example, a business committed to global growth may have to have redeployment of experienced employees as a central feature of its workforce plan. In contrast, innovative businesses may require diverse workforces to generate and assess unique and creative ideas as a basis for new products.
External Influences on Workforce Plans
Sales Forecasts
Estimating sales for the next year or two can be a prime influence on workforce plans. This helps the business to identify the quantity and type of labour the firm will require meeting the expected demand for its products. Businesses experiencing rising sales will expect to recruit more employees.
Demographic Trends
Workforce planners need information on potential entrants to the labour force, which depends on demographic factors such as migration and birth rates. This can be a major influence on their decision making.
Wage Rates
If wages are expected to rise, then businesses may reduce their demand for labour and seek to make greater use of technology. This may entail a large investment by businesses in technology and also in training the remaining employees to operate the technology efficiently.
Technological Developments
Changes in technology will impact on planning the workforce, as they may reduce the need for unskilled or even skilled employees, while creating employment for those with technical skills.
Changes in Legislation
Employment laws may limit the number of hours employees can work each week or may require businesses to offer employees benefits such as paternity leave. Such changes may mean that a business requires greater amounts of labour or persuade it to replace labour with capital equipment.
It is important to recognise that workforce plans do not always reduce the size of a business’s workforce; they are also used to expand it.

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