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Chapter 5: Workforce Planning

Chapter 5: Workforce Planning. Objectives. After reading this chapter, you should be able to: Explain why workforce planning is an important activity of managers. Describe the internal and external factors that affect labor supply and demand.

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Chapter 5: Workforce Planning

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  1. Chapter 5: Workforce Planning

  2. Objectives After reading this chapter, you should be able to: • Explain why workforce planning is an important activity of managers. • Describe the internal and external factors that affect labor supply and demand. • Discuss the tactics managers use to remedy labor shortages and labor surpluses. • Discuss the advantages and disadvantages of various workforce planning tactics. • Describe how a firm’s organizational demands affect its workforce planning decisions. • Explain the impact environmental factors have on a firm’s workforce planning decisions. • Discuss the legal aspects of the workforce planning tactics companies use.

  3. Workforce Planning Making sure individuals with the right skill sets are where they need to be at the right time to meet current and future needs. Key terms: • 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. Internal Factors • Turnover -voluntary and involuntarytermination of employees • Employee movements – promotions, transfers and demotions • Employee productivity • Company performance • Strategic direction – Company evolution, mergers and acquisitions

  5. Employee Movements • Promotions – moving employees to higher level positions, which often are associated with increased levels of responsibility and authority • Transfers – moving employees to other jobs with similar level of responsibility • Demotions – moving employees to lower level positions within the company

  6. External Factors • Local Labor Market – size and composition of the local labor market • Economic Conditions – unemployment rate, growth of economy, etc. • Industry Trends

  7. Tactics for Labor Shortages • Overtime—having employees work extra hours beyond their regular work schedule • Outsourcing and contingent labor • sending work to other companies (payroll, cafeteria, maintenance) • Hiring workers to work on a temporary or non- standard basis

  8. Tactics for Labor Shortages (continued) • Retention • Lowering turnover lowers a firm’s costs of recruiting, selecting, and training new employees • Employee satisfaction is a key predictor of turnover • Promotion, transfers, and demotions • Effective and fast way to deal with labor shortage • New hires

  9. Labor Surplus Tactics • Layoffs—quickly reducing the number of workers employed • Attrition and hiring freezes • Decision not to fill vacant positions • Ban on all hiring for a period of time • Early retirement—financial incentive to have employees retire early (can result in mass exodus) • Employee promotions, transfers, demotions—can move people to other areas of the firm facing shortages

  10. Workforce Planning in Practice: Organizational Demands • Strategy • Required speed to deal with shortages and surpluses • Criticality of employee groups • Company characteristics • The relative impact of labor shortages and surpluses • Who carries out workforce planning

  11. Workforce Planning in Practice: Organizational Demands (continued) • Culture • Likelihood of using different tactics • Employee reactions to workforce planning tactics • Employee concerns • Employee stress and work/life balance issues • Perceptions of procedural and distributive justice

  12. Workforce Planning in Practice: Environmental Influences • Labor Force Trends • Availability of internal and external workers • Which tactics to use • Technology • The number of employees needed • The types of workers needed • The quality of workforce planning forecasts

  13. Workforce Planning in Practice: Environmental Influences (continued) • Globalization • Where the workers are • Which workforce planning tactics to use • Ethics • Community reactions to workforce planning tactics • How companies help employees cope

  14. Workforce Planning in Practice: Regulatory Issues • Requirements for mass layoffs and plant closing (WARN) • Determining who is an employee versus an independent contractor

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