Manpower planning is about the existing workforce and brings the external workforce into the internal.
External Labour Market
Whatever the size of the business, it will be affected by national costs and trends
The difference in wage levels is called wage differential. There are several factors that contribute to this
- Where there is a shortage of workers with appropriate skills, there will be more competition and wages will be higher
- Where there is a high demand for labour, there will be more competition and wages will be higher
- Where there is little demand for and a surplus of labour, wages will be lower
- Dangerous jobs and/or anti-social working to be compensated by higher wages
- Jobs that require long training periods and/or higher qualification will command higher wages
The external labour market includes the number of unemployed in the local and national area. For John Lewis the unemployed could be suitable to be the new employed for their department stores, warehouses, admin offices, or even Waitrose stores.
Unemployment Levels
Local unemployment levels give an indication of the general availability of labour and suggest whether it will be easy or difficult to recruit. It is also important to find out more about organisations in a locality have been laying off workers. Often, when a major employer closes down or discards labour, this provides an opportunity for another local company, which may be able to employ the workers who have been made redundant. These employees might have the right sorts of occupational skills or transferable skills that could be applied to similar work.
A study of local employment trends will give an idea of whether demand for certain types of work is rising or falling. Where demand increases this will lead to shortages (and also to rising wages).
Unemployment is a count of jobless people who want to work or able to, are available to work, and are actively seeking employment. The unemployment levels are measured by the number of people claiming job seekers allowance.
The table below gives the break down of unemployment in the different countries of the UK and then a break down of the unemployment rates for the different areas of England. The unemployment rates are given as a percentage of the population in the area. The population of the area is also shown.
Internal staffing
Effective Human Resources planning also involves looking at labour within the business. Before recruiting externally it is important that a business has access to all the relevant information on its current workforce. The sort of thing the company will look at are, the number of people who work within a particular job role, the skills available, the performance of staff and promotions available to the staff, the age, sex, ethnic group and disabilities of the staff to insure that there is no discrimination against any one group of people and the staff turnover. The company needs to be able to gain an overview of the workforce in the form of statistical analysis in order to form effective strategic plans for future requirements.
John Lewis PLC has over 57,000 working within the partnership. This figure includes Department stores, Waitrose food branches and Warehouse staff.
All the partners have a wide variety of skills and roles so that they can carry out there specific jobs
There are some factors that will have to be considered in planning the human resources
- The stability of the workforce or the labour turnover. This is the average length of times that each employee stays with the business. There is a formula that the business can use to calculate labour turnover.
Labour turnover = No. of staff leaving per year x 100
Average no. of staff Employed
in per year
The labour turnover can be calculated for a shorter or longer period than a year if it is required. For example John Lewis may wish to know how many of their partners leave before they have been in the partnership for 3 years. They use three years as after three years the benefits change such as the discount it goes from yellow discount, which is 12% to a red discount, which is 25% of most goods sold in both Waitrose and the John Lewis Department stores
Causes of Labour Turnover
If the rate of labour turnover is increasing, it may be a sign of dissatisfaction within the workforce. If so, the possible causes could be either internal to the firm or external.
Internal causes of an increasing rate of labour turnover could be:
- A poor recruitment and selection procedure, which may appoint the wrong person to the wrong post. If this happens, then eventually the misplaced workers will wish to leave to find a post more suited to their particular interest or talents.
- Ineffective motivation or leadership, leading to workers lacking commitment to the firm. They will feel no sense of loyalty or ownership to the business, and will tend to look outside the firm for promotions or new career opportunities. They will not be interested in looking for new ways in which they could contribute to the firm.
- Wage levels that are lower than those being earned by similar workers in other local films. If wage rates are not competitive, workers will feel dissatisfied by their position. They may look elsewhere to find a better reward for doing a similar job.
- Pregnancy’s of women, May result in the women and sometimes men wanting to spent the first few years with a new born child which means they will end up leaving their jobs.
- Long term illness in an employee may result in them having to leave their job or being paid off by the company. This could because of health problems in other employees if they remain at work.
- A death of an employee will mean that the company will have a job vacancy and will make turnover higher.
- Retirement may mean that a company is loosing an experienced worker and it will mean that they will have to replace that worker. The company will know in advance if a worker is going to retire, so therefore they can employee someone before the worker does retire which may make the turnover lower.
- Redundancy is where there isn’t work for an employee anymore. In order for a company to make employees redundant they must confirm with all areas of the business and managers or directors of the company. The business will need to pay the employee for a few months after they leave so that they can still afford to pay for the basic while they look for a new job.
- Dismissal of employees for any number of reasons such as unprofessional behaviour or not turning up for work on a regular occurrence will leave the company with high labour turnover
The company should be most concerned about the labour turnover of people who leave voluntary because of dissatisfaction with the job.
External causes of an increasing rate of labour turn over could be:
- More local vacancies arising, perhaps due to the setting up or expansion of other firms in the area.
- Better transport links, making a wider geographical area accessible to workers. New public transport systems enables workers to take employment that was previously out of their reach.
Consequences of High Labour Turnover
A high rate of labour turnover can have both negative and positive effects on a firm. The negative aspects would be:
- The cost of recruitment of replacements
- The cost of retraining replacements
- The time taken for new recruits to settle into the business and adopt the firm’s culture
- The loss of productivity while the new workers adjusts.
On the positive side, labour turnover can benefit the business in several ways:
- New workers can bring new ideas and enthusiasm to the to the firm
- Workers with specific skills can be employed rather than having to train up existing workers from scratch
- New ways of solving problems can be seen by workers with a different perspective, whereas existing workers may rely on tried and trusted techniques that have worked in the past.
On balance, then, there is a need for firms to achieve the right level of labour turnover, rather than aiming for the lowest possible level.
- The absenteeism rate and the major reasons given. High numbers of employees suffering from stress, injury or sickness should lead the business to ask if the heath and safety policy is being properly implemented, or whether there are problems with motivation.
Most companies will keep a record of the following:
- Notified absences. When employees are going to be absent from work (e.g. to attend a funeral, a hospital appointment, a wedding, etc.)
- Absences due to sickness. Employees will need to produce a doctor’s note so that they are entitled to sickness benefits, etc.
- Unauthorised absences. When employees simply do not turn up for work, without telling anyone
As a result of these records, a firm can record absences as a percentage of the hours/days, etc that could possibly have been worked. Absence records can be kept for individual employees, and for the workforce as a whole.
Such a detailed statistical analysis enables the organisation to keep an eye on where problems lie- with an individual, with a particular section of workers or with the organisation as a whole. Comparisons can then be made with other workers and with past records (for the individual employee), with other teams/sections (for teams/section) in the workplace, and with comparable organisation. Breaking down the statistics further highlights whether the problem lies with sickness or with unauthorised absence. And by keeping these records for a number of years, it is possible to establish trends.
- The accident rate at work should also be an important factor for the business to keep an eye on. If there is a high accident rate within a certain area of the business then it should prompt the business to investigate into heath and safety of the employees
Accident rates are calculated by recording the number of accidents at work and are then recorded as a percentage.
Places of work should have a health and safety committee with the responsibility to:
- Investigate and report on accidents or incidents.
- Examine national health and safety reports and statistics.
- Review health and safety audit reports.
- Draw up works rules and instructions on safe working practices
- Oversee health and safety training
- Promote and advise on relevant publicity campaigns
- Maintain links with external health and safety bodies
- Recommend updates to the company safety policy
- Consider and advise on impending legislation
- The productivity of the workforce. If productivity per employee is low, then the business may need to look at the training or motivation of staff rather than simply employing more staff.
Labour productivity can be calculated by:
Output in a period of time
Average number of employees in a period
How the output is measured will depend on the type of business. Some business may measure output in hours worked per employee whereas other may measure output in number of units produced in a certain amount of time.