The purpose and functions of human resource planning

Human resource planning, also known as workforce planning, is the process of predicting and fulfilling an organisation's staffing requirements both now and in the future. It ensures that the right number of employees with appropriate skills are available to meet business goals, for example, by hiring extra chefs when a café expands its menu.

Key functions of human resource planning

• Recruitment - Finding and hiring suitable candidates for job vacancies.
• Induction - Introducing new employees to the organisation, its policies, and their roles.
• Retention - Keeping existing staff through motivation and support to reduce turnover.
• Dismissal and redundancies - Handling the removal of employees, either for performance issues or when roles are no longer needed.
• Training - Developing employees' skills to improve performance and adaptability.
• Performance appraisals - Assessing employees' work to provide feedback and identify development needs.
• Monitoring employee-employer relations - Overseeing interactions to maintain positive professional relationships.

Benefits of effective human resource planning

Successful planning uses data such as past workforce numbers, workload levels, employee adaptability, turnover rates, demographic patterns, and absenteeism (the percentage of staff absent from work) to inform decisions. It helps organisations gain a competitive edge by aligning staff with business strategies, ensuring employees are well-trained and motivated for peak performance.

Calculating and interpreting labour turnover

Labour turnover refers to the rate at which employees leave an organisation over a set period, such as a year. Some turnover is unavoidable, like when staff leave to start families or seek better roles elsewhere, but high rates can disrupt stability and increase costs.

Formula for labour turnover

$\text{Labour turnover}=\frac{\text{number of staff leaving per year}}{\text{average number of staff}}\times 100$

Where:

• Number of staff leaving per year = Total employees who exit the organisation in that year
• Average number of staff = Typical workforce size during the period (%)

Causes of high labour turnover

• Competitor attractions - Better pay or conditions offered by rival firms.
• Employee dissatisfaction - Feelings of discontent or poor workplace morale.
• Insufficient training - Leading to staff feeling unskilled or unmotivated.

Impacts of high labour turnover

Organisations aim to keep turnover low to avoid expenses like recruitment, training new hires, and the time managers spend on these processes. New employees also cause temporary productivity drops as they adjust, which can threaten overall business continuity and stability.

Worked example - Calculating labour turnover

A company had an average of 320 employees last year, and 48 staff left during that time. Calculate the labour turnover rate.

Step 1: Identify the values

• Number of staff leaving per year = 48
• Average number of staff = 320

Step 2: Apply the labour turnover formula

$\text{Labour turnover}=\frac{48}{320}\times 100$

Step 3: Calculate the labour turnover

$\text{Labour turnover}=0.15\times 100=15\%$

Demographic changes affecting workforce planning

Demographic changes involve shifts in population characteristics, such as age structure, gender balance, education standards, and average household earnings. These trends influence how organisations plan their workforce.

Key demographic trends

• Aging population - Caused by declining birth rates, lower death rates, and greater life expectancy, leading to more people working beyond traditional retirement ages.
• Increasing female participation - More women entering or staying in the workforce, often delaying family plans to focus on careers.

Implications for workforce planning

• Reduced labour mobility - Older workers may be less willing to relocate or switch roles.
• Lower productivity - Potential declines due to age-related factors in some sectors.
• Shifting consumption patterns - Affecting demand for certain products or services, which in turn impacts staffing needs.

Changes in labour mobility

Labour mobility describes how easily workers can change jobs or locations. It affects workforce planning by determining the availability of skilled staff.

Types of labour mobility

• Occupational mobility - The ability and readiness of workers to switch between different types of jobs, requiring relevant skills or qualifications.
• Geographical mobility - The willingness to move to a new area for work opportunities.

Causes of labour immobility

• Occupational immobility - Lack of necessary skills, training, or qualifications preventing job changes.
• Geographical immobility - Barriers like family ties, high relocation costs, differences in housing prices, or varying costs of living; international moves often need substantial incentives like higher pay.

Improving labour mobility

Organisations can enhance mobility through internal training programmes, skill development initiatives, and support for relocations, helping to fill gaps in the workforce more effectively.

The impact of new communications technologies on human resource planning

Advances in communications technologies, such as digital platforms and mobile tools, transform how organisations handle workforce planning by making processes more efficient and global.

Benefits for recruitment and assessment

• Global recruitment - Online job postings and video interviews allow access to a worldwide talent pool.
• Cost reductions - Lower expenses for advertising vacancies, processing applications, and evaluating candidates through digital methods.

Advantages for working arrangements and training

• Flexible working - Improved computing and mobile tech enable remote or adaptable schedules.
• Efficient training - Online courses and webinars allow multiple employees to participate simultaneously, with computerised tests to track progress.
• Virtual meetings - Reduced costs for business gatherings and seminars through video conferencing, freeing up resources for other HR needs.