WORKFORCE PLANNING

WORKFORCE ASSESSMENT

• Definition of workforce assessment - Workforce

assessment is comprised of all the processes, systems
and tools used by an organization to make accurate ,
reliable and effective decisions about jobs needed to
achieve biz objectives .

• The purposes of workforce assessment

• Management of employee life cycle
• Creation and design of jobs
INFORMATION INCLUDED IN STAFFING PLAN
 Budget information  Recruiting sources
 Redeployment plans
 Classification information
 Retention data
 Compensation and benefits
 Retirement plans
information
 Selection and staffing information
 Demographic data
 Succession planning information
 Diversity issues
 Technology use
 Employee experience (internal
 Training and development
and external)
information
 Health and safety issues  Turnover data
 Identification of unionization and  Work–life balance issues
bargaining units  Labour market analyses
 Job analysis information (e.g.,  Performance data and evaluations
employee knowledge, skills, and
abilities)
FORECASTING FIRM’S LABOUR
DEMANDS

 Seasonal forecasts -

-
Interest forecasts

 Currency exchange rate forecasts

 Competition-based forecasts

 Industry and economic forecasts

 Legal forecast

 Other factors

 Increase or decrease in consumer spending

 Increase or decrease in the unemployment rate
 Increase or decrease in disposable income of consumer
 Increased or decreased purchase or durable goods
HOW WILL YOU MANAGE YOUR PEOPLE IN
THESE CASES

 A major acquisition
 Emergence of ominous new competitor

If you do not have the right people in the right roles to

guide your company through such choppy waters, you put
your company at grave risk.

You may be forced to promote untested junior manager or

hire outsiders who can’t adjust to your company’s culture
fast enough to successfully lead change.
THE RECRUITMENT AND SELECTION PROCESS

 Decide what positions to fill, through human resource

planning and forecasting
 Build a pool of candidates for these jobs by recruiting
internal or external candidates.
 Have candidates complete application forms and perhaps
undergo initial screening interviews.
 Use selection tools, like tests, background investigations,
and physical exams to identify viable candidates.
 Decide who to make an offer to, by the supervisor and
perhaps others interview candidates
PLANNING AND FORECASTING

Employment (or human resource) planning is the process

of deciding what positions the firm will have to fill and
how to fill them.
This flows from firm’s strategic plan
Forecasting Personnel
Needs

Forecasting Supply of
Personnel plan requires
Inside Candidates

Forecasting Supply of
Outside Candidates
WORKFORCE PLANNING AND
FORECASTING

• Strategy and workforce planning

• Forecasting personnel needs (labor demand)

o Trend analysis
o Ratio analysis
o The scatter plot
TREND ANALYSIS

 Refers to studying variations in your firm’s employment

levels over the last few years
 Can provide an initial estimate of future staffing needs

 Limitations
 Employment needs rarely depend on just on passage of time
 Other factors like changes in volumes and productivity also
affect staffing
RATIO ANALYSIS
 Refers to making forecasts based on historic ratio
between (1) some causal factor e.g. sales volume, and (2)
the number of employees required e.g. number of sales
person

 Limitations
 Assumes that similar conditions exists in the organization and
its environment.
BASIC RATIO ANALYSIS FORMULA
 Ratio analysis formulas use a specific historical business
data, commonly called a business factor, to establish a
quantitative relationship between the factor and
employee requirements.
 The factor can be anything from previous staffing
levels to historical gross sales revenues to historic
employee data.
 Once a ratio calculation is complete, it’s then compared
against a forecast for the coming year to determine
employee demand.
BASIC RATIO ANALYSIS FORMULA
 Assume the previous year's gross sales for a small-
business retail operation were $750,000 and the business
employed the equivalent of 15 full-time employees.
 The sales-to-employee ratio is 75:15, which can be
reduced to 5:1
 $50,000 in sales the business requires the equivalent of
one full-time employee.
 If sales forecasts predict sales will increase by $100,000,
HR will need to hire the equivalent of two full-time
employees.
SCATTER PLOT
 Shows how two variables- e.g. sales and your firm’s
staffing levels- are related
Size of Hospital No. of registered nurses
(No. of beds)
200 240
300 260
400 470
500 500
600 620
700 660
800 820
900 860
SCATTER PLOT
SCATTER PLOT- DRAWBACKS
 They generally focus on historic sales/personnel
relationships and assumes that the firm’s existing
activities will continue as is
 They tend to support compensation plan that reward
managers for managing ever-larger staffs, irrespective
of the company’s strategic needs
 They tend to institutionalize existing ways of doing
things, even in the face of change
FORECASTING SUPPLY OF INSIDE
CANDIDATES
 Requires knowledge of current employees’ skills set-
their current qualifications

DISCUSS
STAFFING TABLE
 Provides a clear graphical view of all organizational
jobs and the current number of employees at each job.
 Presents a simple visual understanding of an
organization’s staffing level within each department and
the organization as a whole
 This information is useful in evaluating staffing levels
by department, branch, or project; the types of staff at
each level; and the combination of staff in all categories
 Are relatively simple and thus frequently used as a
precursor to more complex methods of forecasting future
HR supply, such as a Markov analysis.

REPLACEMENT CHART
 Is used to estimate vacancies in higher level jobs and
identify how potential HR supply can fill these vacancies
via internal movements from lower levels jobs.
 Comprehensive replacement chart will include
information regarding possible replacements for vertical
or horizontal movement.
 Generally, it includes information about employees’
performance, readiness to fill the position, and
education.
 PRESIDENT/CEO
Possible Replacements
L. Moffat E/2/M
J. Bennett S/2/P
R. Ellis E/3/M
M. Manoy S/1/M

VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT

FINANCE VICE PRESIDENT
HUMAN RESOURCES SALES & OPERATIONS/DISTRIBU
L. Moffat MARKETING R. Ellis TION
Possible Replacements T. Bennett Possible M. Manoy
K. Nagra S/1/B J. Lee* Possible Replacements Replacements
Possible Replacements S.
S/2/M M. Sanghera* E/3/B T. L. Anderson S/2/M Mayer* E/3/B L. Bonett
T. Cox E/1/M Mitchell N/1/P F. Hewer M. Harding N/1/P R. E/2/M N. Fernandez N/2/C
S/2/M Allen S/2/M

* Identifies minority membership

Key Present Performance
E=Excellent S=Satisfactory N=Needs Improvement
Promotional Potential
1=Ready Now 2=Training Required 3=Questionable
Education
P=Doctorate level M=Masters level or Professional certificate B=Bachelors level
C=College or less
MARKOV ANALYSIS
 Helps predict internal employee movement from one
year to another by identifying percentages of employees
who remain in their jobs, get promoted or demoted,
transfer, and exit out of the organization.

 Helps to forecast internal labour supply.

LIMITATIONS
 Small samples yield unstable estimates of future
availabilities.
 Can’t detect multiple moves during specified time
period.
 Job category shouldn’t be too broad (unit of analysis).

 Doesn’t explain underlying causes among specific

employees
 Only retirement can be predicted as exit, not resignation.

 Time bounded employees can be only taken under

studies.
FORECASTING HR DEMAND
 Identifies the future workforce requirements needed to
maintain the organization’s mission and goals.
 End result of a demand analysis is
 the identification of the required number of employees in an
organization and
 the necessary functions that the employee must perform to
meet organizational objectives
FORECASTING HR DEMAND CONTD…
Factors that need to be considered when forecasting demand include
the following:
 Environmental scanning, including economic, legislative, and
competitive pressures
 The organization’s future strategic goals and plans

 Expected demand for products or services, including expected sales

(across the organization or at the business unit level)
 Estimated productivity measures of workforce (can be stable,
increase, or decrease)
 Organizational design or job design, including technological
advancements and administrative changes
 Projected budgets or financial resource availability

 New products/processes/ventures that the organization will be

launching in the future
METHODS OF HR FORECASTING

 As a result of high number of environment- and

organization-specific variables that influence demand
analysis, there is no single correct way to estimate future
HR demand.
 Instead, a number of quantitative and qualitative
methods

Quantitative Method Qualitative Method

Trend Analysis Delphi Method
Ratio Analysis Nominal Group Method
Regression Analysis Scenario Method
REGRESSION ANALYSIS

 Provides statistical projections using mathematical formulas to determine

the correlation between multiple measureable output factors (independent
variables) and an organization’s employment level (dependent variable).
 Is useful in predicting the strength and direction of a linear
relationship between two variables, but in situations of a non-linear
relationship, estimates would not be valid.
 Planning team must
 have access to a large sample size of data (individual or group level data);
 have or be able to acquire the statistical skill set required to run the regression
(most often completed using regression software); and
 be educated on the interpretation and use of this data.
 Is most often used in large organizations.
 Any changes that alter this assumption while forecasting HR demand
(e.g., new product lines, new ventures, technology, etc.) should be
adjusted for accordingly
DELPHI TECHNIQUE
 Involves a panel of experts using their judgements to
make estimates of short-term future demands.
 Experts use a variety of factors to make their
judgements, including economical, demographical,
technological, legal, and social conditions outside of the
organization, as well as production, sales, turnover,
experiences, and education levels of the workforce
within the organization.
 Experts are not permitted to engage in direct face-to-
face contact or communication (to avoid group think).
DELPHI TECHNIQUE CONTD..
Process:
 Identification of experts.

 Each expert submits HR demand forecasts, including

specification of sources of information and assumptions used to
estimate demand.
 Summarization of results by HR planning group.

 Aggregated results are sent back to the experts, who then

adjusts their forecasts based on the information provided in the
summaries.
 These steps are repeated until the expert opinions converge,
something that may occur after three to five rounds.
 Each feedback loop provides an opportunity for experts to understand
their position relative to others and the reactions of others to the
summaries provided.
NOMINAL GROUP TECHNIQUE (NGT)

 Involves multiple experts (usually line and

department managers) meeting face to face to discuss
independently formulated positions of an organizational
issue, with the ultimate aim of securing an accurate
assessment of a given situation.
 Used to
 help forecast HR demand for an organization or
 used to solve other organizational issues (e.g., decisions
about launching new products or processes, managing
change, establishing sales targets, etc.).
NOMINAL GROUP TECHNIQUE (NGT)
CONTD…

Process
 Generally five or six experts participate in the NGT. Each expert is asked the
same specific question (e.g., What are your predictions for future HR demand
in this branch/unit/department/organization for the next X number of years?
What are the causes of any expected changes in demand?). Independently,
each expert writes down their solutions to the issue or question.
 Experts meet face to face (usually around a table) and individually present
their solutions. Solutions recorded on flipcharts or blackboards to allow for
comparisons in later steps. Interruptions and discussions discouraged at this
point.
 Clarification questions after presentation

 Each expert secretly ranks estimates. Voting is anonymous and calculated

using equal participation from team members. The facilitator then uses the
estimate from step 1 that draws the highest ranking as the estimate used to
forecast HR demands.
SCENARIO ANALYSIS

 A method that provides multiple estimates of future HR

demand, contingent on a unique set of assumptions and
circumstances for each scenario
 Involves recognizing uncertainties about the future.

 Expert brainstorming activities help to develop

agreement on long-range factors and the impact of
changes on the HR forecasts.
 The possible result of these changes will create a
forecast for each possible scenario that the organization
can expect
CASE 1
Suppose that it has just been projected that, because of a
number of technological innovations, your firm will need 20
percent fewer clerical employees within the next three years.
There are currently 123 clerical positions in the company,
split between three departments of equal size. Retirements at
this level are projected to be roughly 2 percent per year.
Annual voluntary turnover and involuntary turnover for
Department A is 2 percent and 5 percent, respectively;
Department B is 3 percent and 3 percent; and Department C
is 5 percent and 0 percent. Do you project a labour shortage
or surplus in the next three years for clerical positions? What
actions would you take in this situation?
CASE- 2
A successful franchise owner of a prestigious sporting goods chain is
feeling the effects of technology, with more and more online sales
and less and less customers in the shops. Locally there are three
stores, and typically each store needs the following positions staffed
for optimum profitability and success: a store manager, an assistant
manager, five department managers, and 20 customer service
representatives, averaging $1 200 000 in annual revenue. However,
there has been a trend of 20 percent sales decline in stores, with an
increase of 30 percent sales online (last year the online revenue
stream was $300 000). The franchise owner was able to handle all of
the online sales with a team of five full-time remote workers
(working from home) last year. The owner wants each store to
maintain their productivity, which he measures as the revenue per
employee. He also thinks that there is potential to grow the online
business.
CASE (2)- QUESTIONS
1. Using your HR planning expertise, forecast the demand
of labour in the stores and the online environment over
the next three years.
2. Assuming an annual 15 percent turnover level of in-
store workers and a 30 percent turnover level of online-
focused employees, determine HR supply estimates
over the next three years.
3. Do you forecast a labour shortage or surplus? Develop
a clear plan to help address the forecast labour shortage
or surplus.
CREATE AN INTEGRATED LEADERSHIP
DEVELOPMENT PROGRAM
Characteristics
 Is owned by everyone in the organization

 CEOs and VPs develop plans for replacing themselves

 Board members actively identify and develop using

rising stars
 Line managers willingly relinquish their best performers
to other units so emerging leaders can gain cross-
functional experts.
CASE OF AMAZON
Amazon in its Early Days
 Company was going beyond books into electronics, toys, and more

 This required  to persuade brands to sell their products on its

website
 Graduate from top schools and veterans from traditional retailers
who already had relationships with suppliers were hired
Amazon now
 Many brands have become more interested in selling on the
marketplace, where they—not the Amazon retail team—controlled
prices, images and product descriptions.
 They simply logged into an Amazon portal that would determine if
Amazon liked the deal being offered and the quantity it was willing
to buy. No small talk. No give and take. 
CASE OF AMAZON
 Under an initiative called “hands off the wheel,” the
company has shifted tasks like forecasting demand,
ordering inventory and negotiating prices to algorithms.
 “Amazon realized a lot of expensive employees were
spending a lot of time working on things that should
really be automated,” recalls Elaine Kwon, who worked
as a vendor manager at Amazon from 2014 to 2016
Source: Amazon’s clever machines are moving from the warehouse to headquarters:
Under an initiative called ‘Hands Off the Wheel’, Amazon is shifting jobs to
algorithms, Amazon’s clever machines are moving from the warehouse to
headquarters, www.livemint.com, accessed on 20 June 2018
CASE OF INDIAN BANKS
Current State of Banks
 Four of the country’s 21 state banks have yet to appoint
replacements for departed chief executive officers, and another
has seen its CEO stripped of her powers due to fraud charges.
 Over the coming months, nine more of the lenders are due to
lose their top executives, at a time when spiralling bad loans
and an intensified crackdown on financial sector-corruption
make the jobs less appealing than ever.
 Low salaries are offered at state banks, when compared with
their private sector peers. For e.g. Ananthasubramanian earned
about Rs30 lakh at PNB in the year ended March 2017, about
5% of the Rs6 crore earned by Chanda Kochhar, the CEO of
the country’s second-largest private lender ICICI Bank Ltd.
Source: Just when they need leadership, India’s state banks are headless,  Jun
07 2018, www.livemint.com, accessed on 20 June 2018
CASE OF TCS
 The company will go for on-demand hiring because of
increased automation in software delivery process.
 has issued 20,000 job offers to freshers and around 4,000
offers to non-freshers this year.
 The company had given offers to over 40,000 freshers
around 3-4 years ago, which declined to 35,000 in 2016
Position Total E01 E02 E03 E04 E05 E06 E07 E08 EXIT
number
of
Employe
es
E01 56 48 2 6

E02 19 10 6 3

E03 115 112 1 2

E04 35 32 3

E05 26 21 5

E06 16 16

E07 10 10

E08 3 3

Total 280

Employe Internal 48 12 118 33 25 21 10 3

es
Position Forecasted Actual Difference Reason

E01 8 58 10 Promotion of
supervisors

E02 12 12
E03 118 118
E04 33 33
E05 26 26
E06 20 20
E07 10 10
E08 3 2 01 resigned
 2015 Plant Manager Department Foreman Machine General Exits
Superintenden Operator Labour
2014 t

Plant Manager 87% 6%

N=3 7%

3 0 0

Department
Superintendent 7% 76% 12% 5%
N=15
1 1
11 2
Foreman N=60

3% 75% 9% 15%

2 45 5 8
Machine
Operator
N=102 15% 12% 25%

5 12 26
General Labour
N=306
10% 67% 23%

Projected 4 13 62 85 31
217 205 105 70
Supply 2015
 Current Tech 1 Tech 2 Tech 3 Tech Sup Quit

Tech 1 30 0.60 0.20 0.05 0.00 0.15

Tech 2 20 0.05 0.65 0.20 0.00 0.10

Tech 3 15 0.00 0.05 0.70 0.15 0.10

Tech 6 0.00 0.00 0.00 0.90 0.10

Sup.
METHODS OF HR FORECASTING
Trend analysis
 Predicts the demand for labour based on projections of
past relationship patterns over a number of years
between an operational index (e.g., revenue per
employee, productivity per employee) and the demand
for labour (number of employees).
 As one of the simpler methods of forecasting HR
demand, trend analysis assumes that an organization’s
past employment needs are indicative of future needs
when linked with an operational index.
METHODS OF HR FORECASTING
Ratio Analysis
 Determines future HR demand based on ratios between assumed casual
factors and the number of employees needed.
Difference Between Trend Analysis & Ratio Analysis
 the primary difference is that there is no requirement for significant
historical data collection.
 This allows organizations that do not have easy access to multiple years’
worth of data to use current ratios to help estimate future demand.
 while trend analysis links one business or operational index over time,
ratio analysis allows for multiple causal factors to be used to predict
demand.
 Ratio analysis is also useful in benchmarking organizational efforts with
industry or competitive standards to help identify areas of strength or
weakness in an organization.
RATIO ANALYSIS ON A HYPOTHETICAL
MANUFACTURING FIRM (25 PERCENT GROWTH)

Level 2014 Actual Employee Est. 25% Growth

Count Requirements for 2015
Plant manager 3 4
Department supervisor 15 19

Foreman 60 75

Machine operator 105 128

General labourer 306 383

Total 486 609

RATIO ANALYSIS ON A HYPOTHETICAL
MANUFACTURING FIRM, 550
EMPLOYEES
Level 2014 Actual % of Workforce Demand for 550
Employee Count (2014) Employees in
2015
Plant manager 3 0.6 3

Department 15 3.1 17*

supervisor
Foreman 60 12.3 68

Machine operator 105 20.9 115

General labourer 306 62.9 346

Total 486 99.8** 549

RATIO ANALYSIS ON A HYPOTHETICAL
MANUFACTURING FIRM, 550 EMPLOYEES
CONTD..
 ** due to rounding, values do not add up to 100%
 Note: In 2014, 3.1% of the internal labour force was
supervisors. Using an organizational forecast of 550
employees in 2015, the organization would need 17
supervisors (3.1% of 550)