Workforce Planning

1. Workforce PlanningPresented by Senga Consulting Inc.

2. Participants will learn the…Categories of HR forecasting.

3. Rationale for attention to specialist, technical and executive personnel in forecasting.

4. Impact of environmental and organizational variables on HR demand and supply.

5. Various demand forecasting techniques.

6. Methods of determining external and internal HR supply.

9. Workforce PlanningBusiness process for ensuring an organization has access to talent to ensure future success.

10. Access to talent includes considering all access sources.

12. Getting StartedObtain support from senior leaders.

13. Communicate benefits and results to managers.

14. Establish a workforce planning team of knowledgeable employees from different functional areas and levels.

15. Develop and implement a plan.

17. Workforce Planning StepsStep 1Supply AnalysisStaffing levels

18. Workforce skills

19. Workforce demographics/li>Employment trendsStep 2Demand AnalysisWorkforce skills needed

20. Staffing patterns

21. Anticipated workload changesStep 3Gap AnalysisCompare supply analysis with demand analysis

22. Determine future gaps (shortages) and surpluses (excesses)

23. Identify future changes in workforce demographics

24. Identify areas in which management action will be neededStep 4Strategy Development Plan

25. Recruiting

26. Succession

27. Employee development and retraining

30. Environmental ScanningCost and availability of capitalGovernment RegulationsLabour availabilityCompetitionTechnologySupplier powerGlobalizationCustomer expectations8Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

31. TechniquesScanning – identify early signals of changes and trends.

32. Monitoring – follow key indicators that affect the organization.

33. Forecasting – after monitoring, project the impact on the organization.

35. Forecasting MethodsTrend Analysis – a quantitative approach to forecast future personnel needs based on extrapolating information from historical changes.

36. Delphi Technique –forecasts and judgments of a group of experts are solicited and summarized to determine the future of employment.

37. Impact Analysis –trends are analyzed by a panel of experts who then predict the probability of future events.

39. Environmental FactorsEconomic climate –the economy affects HR management

40. Globalization – affects sovereignty, prosperity, jobs, wages, and social legislation

41. Political and legislative factors – influence organizations with changes to laws and regulations

42. Technological factors –new issues include online HR functions, identity theft, e-learning, answering email on vacations

43. Demographic factors –include age, gender, family status, education, economic status, labour market

45. ExerciseWhat key environmental factors affect your organization’s ability to achieve its goals?

48. Learning TopicsCategories of HR forecasting activity and their relationship to the HR planning process

49. Rationale for attention to specialist, technical, and executive personnel groups in the HR forecasting process

50. Impact of environmental and organizational variables on the accuracy and time period of estimates derived from future estimates of HR demand and supply

57. Organizational FactorsCorporate mission, strategic goals

58. Operational goals, production budgets

59. HR policies

60. Organizational structure, restructuring

61. Worker KSAs, competencies, expectations

62. HRMS level of development

63. Organizational culture, climate, job satisfaction, communications

65. Environmental FactorsEconomic situation

66. Labour markets and unions

67. Government laws and regulations

68. Industry and product life cycles

69. Technological changes

70. Competitor labour usage

71. Global market for skilled labour

75. Determine NET HR RequirementsExternal supply requirements =replacement + change supply componentsChange supply =hiring to increase (or decrease) the overall staffing levelReplacement supply =hiring to replace all normal lossesExternal supply =current workforce # x (replacement % per year + change % per year)24Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

76. ExampleExternal supply = current workforce x (replacement % per yr + change % per yr)Surplus =1000 x (4 % per year (0.04) + 2 % per year (0.02) 40 + 20 = 60 Need for 60 employeesDeficit = 1000 x (4% per year (0.04) + -7% per year (-0.03) 40 + -70 = -30 Need to reduce by 30 employees25Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

77. Your TurnExternal supply = current workforce x (replacement % per yr + change % per yr)Surplus =10,000 x (3.5 % per year (0.035) + 3 % per year (0.03) + = Need to hire employeesDeficit = 10,000 x (6% per year (0.06) + -8% per year (-0.08) + = Need to reduce by employees26Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

78. HR Surplus/DeficitInternal workforce supply exceeds the organization’s requirement or demand for personnel

81. Learning TopicsDemand forecasting

82. Linkages between labour demand forecasting and the supply

85. Trend AnalysisHistorical relationship between a business index (e.g., sales, contracts, units sold etc.) and the number of employees required to achieve that index (labour demand)31Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

86. Effective Trend AnalysisFive steps to conducting an effective index/trend analysis:Select the appropriate business indexTrack the index over timeTrack the total number of employees over timeCalculate the average ratio of the business index to the total number of employeesE.g. employee requirement ratio - the relationship between the business index and the demand for labourCalculate the Forecasted Demand for Labour32Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

90. HR BudgetsQuantitative, 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 department36Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

92. Scenario ForecastsProjections of future demand for human resources based on differing assumptions about future events.OptimisticSalesNormalPessimisticNowT + 2 YearsT + 1 YearT + 3 YearsTime38Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

93. Regression AnalysisPresupposes a linear relationship between independent (casual) variables and dependent (target) variable, e.g., HR demand

95. Regression AnalysisY = dependent variable (HR demand)A = constant (Y intercept)B = slope of linear relationship between X and YX = independent variable (e.g. level of sales)BY – Dependent VariableAX – Independent Variable40Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

96. Regression PredictionY = 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)Where41Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

98. Exercise Step 1Calculate XY, X2, average X and average YXSales($ Millions)2.02.53.55.06.519.5Y# of Employees2528303854175XY5070105190351766X24.006.2512.2525.0042.2589.75Average X = 19.5/5 = 3.9 Average Y = 175/5 = 35N = 543Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

99. Exercise Step 2Calculate the value of B (slope of the linear relationship between X and Y)XY5070105190351766X24.006.2512.2525.0042.2589.75Average X = 3.9N = 5Average Y = 3544Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

100. Exercise Step 3Calculate A (constant or intercept)Average X = 3.9Average Y = 35B = 6.09IFY = A + BXThenANDA = 35 – (6.09)(3.9)A = 11.2345Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

101. Exercise Step 4Determine the regression prediction equationY = A + BXWhew! 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.A = 11.23B = 6.09X = Dependent VariableY = 11.23 + (6.09)(X)46Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

102. Exercise Step 5Calculate predicted HR demand (Y) by inserting values for XPredict the HR demand for personnel at $8 million and $10 million.Y = A + BXY = A + BXY = A + BX$10 million$8 millionA = 11.23A = 11.23A = 11.23B = 6.09B = 6.09B = 6.09X = Sales ($M)X = 8X = 10Y= 11.23 + (6.09)(X)Y = 11.23 + (6.09)(8)Y = 59.9960 Staff requiredY = 11.23 + (6.09)(10)Y = 72.1872/73 Staff required47Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

104. Learning TopicsRelationship between demand / supply forecasting

105. Relationship between forecasting and replacement management

106. Methods of determining external and internal supply of employees such as:

107. Skills and management inventories,

108. Replacement analysis,

109. Markov models,

110. Linear programming,

111. Movement analysis,

114. Skills InventoryRecord held on employee except management or professionalsPersonal informationEducation, training and skill competencies, licensing etc.Work historyPerformance appraisalsCareer informationHobbies, interests, volunteerism, community involvement51Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

115. Management InventoryRecord 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.History of management or professional jobs heldA record of management or professional training coursesKey accountabilities for the current jobAssessment centre and appraisal dataProfessional and industry association memberships52Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

116. Replacement Management Process of ensuring that pools of skilled employees are trained and available to meet the strategic objectives of the organization

117. Process of finding employee for key managerial positionsLong-term successionTraining and work experience to enable individuals to assume higher-level job appointments in the futureShort-term emergency replacementIndividuals who have quit, been terminated due to performance problems, have died, and so on53Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

118. Replacement AnalysisImprove effectively filling vacanciesPerformance1Outstanding2Above average3Average/good4Below Average5 UnacceptableReadinessAReady nowBReady in 1 yearCReady in 2 yearsDNot suitable for this job54Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

119. Ripple EffectsCaused when one promotion or transfer in the organization causes several other movements as a series of people are promoted to fill the openings55Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

120. Markov ModelProduces a series of matrices that detail the various patterns of movement to and from the various jobs in the organization

123. Markov Analysis ConclusionsNumber of people who move between job levels annually

124. Number of external hires needed

125. Movement patterns and expected duration in specified jobs associated with patterns of career progression

127. Linear ProgrammingMathematical procedure used for project analysis in engineering and business applications

129. Movement PatternsRemain in current jobPromotion to higher job classification Lateral moveExit from a job (e.g., termination, layoff, voluntary exit)Demotion60Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

130. Movement AnalysisAnalyze people supply and the ripple effect that promotions or job losses have on the movements of others in the organization61Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

131. Exercise*5% increase for levels 6-9

132. 1 additional level 4

133. 6 additional level 5

134. Historical annual loss ratesRetirements2 positions level 5

135. 15% levels 6-9Turnover10% levels 5 and 6

136. 15% level 7

137. 20% level 8

138. 25% level 9

139. Positions are start of year

140. 1 – level 4

141. 6 – level 5

142. 20 – level 6

143. 32 – level 7

144. 40 – level 8

146. ExerciseStart at the top with the most senior positions since most movement in organizations is up due to promotions and replacements.63Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

147. ExerciseMovement analysis has identified this year’s need to fill 68 vacancies.167 moves will be required because of promotion from within.64Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

148. Vacancy ModelAnalyzes people flow throughout the organization at each functional or compensation levelUse the following information to calculate next year’s supply forecast.HR loss during the yearLevel 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 % internalLevel 88 0 100Level 87 10 90Level 86 20 80Level 85 30 70Level 84 55 45Level 83 100 065Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

150. Supply and Retention ProgramsMonitor and control absenteeism and turnover

152. Costs of Replacing EmployeesHard CostsAdvertisements

153. Headhunter, recruiting fees

154. Interview training

155. Travel costs

156. Admin expenses

157. Costs of lost production

158. Bonuses

159. Increased salaries

160. Cost to replace a fully proficient employee - 70-200% annual salarySoft CostsLost business and customer contacts

161. Decreased productivity due to training and learning curve gaps

162. Orientation and training time

163. Decline in team morale and productivity

165. Retention ProgramsOffering effective communication programs

166. Facilitating an enjoyable and collegial work atmosphere

167. Designing meaningful jobs

168. Formulating and administering performance and compensation systems that reward better performers

169. Offering more flexible and attractive work arrangements) -- flextime, telecommuting, cafeteria-style benefits plans

172. Learning TopicsEvolution of succession management

173. Steps in the succession management process

174. Compare job and competency approaches

175. Identifying high potential talent

176. Management development methods

177. Measuring success of management succession

179. Importance of Succession ManagementProcess of ensuring that a pool of skilled employees ready to achieve the strategic objectives of the organization72Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

180. Evolution of Succession ManagementProcess of finding replacement employees for key managerial positions

181. Replacement planning has evolved into succession management by:

182. Broadening the focus

183. Expanding the time horizon

184. Creating a talent pool

186. Reasons for Succession ManagementProvide opportunities for high-potentialsIdentify replacement needsIncrease the talent pool of promotable employeesContribute to implementing strategic business plansHelp individuals realize their career plansTap the potential for intellectual capitalEncourage the advancement of diverse groupsCope with the effects of voluntary separation programsDecide which workers can be terminatedCope with the effects of downsizingReduce headcount to essential strategically important jobs only74Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

188. Step 1Align Succession Plans with StrategyOrganizations must start with the business plan

191. Job and Competency ApproachesJob Based Approach –Focus on duties, skills, job experience, and responsibilities required to perform the job

192. Not adequate since jobs change rapidlyCompetency-Based ApproachFocus on measurable attributes

193. Differentiate successful employees from non successful

194. Hard and soft skills

197. Step 3Identify High-Potential EmployeesSeveral approaches to identify managerial talent, including:Temporary replacements

198. Replacement charts

199. Strategic replacement

201. Management Development MethodsPromotions

202. Job Rotations

203. Special Assignments

204. Formal Training and Development

207. Management Development MethodsPromotions

208. Job Rotations

209. Special Assignments

210. Formal Training and Development

212. Step 5Monitor Succession ManagementCorporations with strong succession management programs are higher performers in revenue growth, profitability and market share

214. Succession Management Metrics Increase engagement scores

215. Increase positive perceptions of development opportunities

216. High potentials’ perceptions of the succession management process

217. Higher participation in developmental activities

219. HR Metrics – Lag MeasuresIncreased ave # of candidates

220. Reduced ave # of positions with no identified successors

221. Increased % of managers with replacement plans

222. Increased % of key positions filled according to plans

223. Increased ratio of internal to external hires

224. Increased retention rates of key talent

225. Increased % of positive job evaluations

227. Contact InformationWayne RawcliffeSenga Consulting Inc.604.909.3840205, 1275 West 6th AvenueVancouver, BC V6H 1A6wayne@senga.cawww.senga.ca87Senga Consulting Inc. Copyright © 2009 | All Rights Reserved

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