Workforce planning determines the human resources required by the organization to achieve its strategic goals and prepares and implements programmes for satisfying those requirements. It was defined by the CIPD (2010: 4) as: ‘A core process of human resource management that is shaped by the organizational strategy and ensures the right number of people, with the right skills, in the right place and at the right time to deliver short- and longterm organizational objectives’.
Workforce planning (often called human resource planning) is based on the belief that people are an organization’s most important strategic resource. It is generally concerned with matching resources to business needs in the longer term, although it will also be concerned with shorter-term requirements. It addresses people needs both in quantitative and qualitative terms. This means answering two basic questions: (1) How many people? and (2) What sort of people? Workforce planning also looks at broader issues relating to the ways in which people are employed and developed in order to improve organizational effectiveness. It can therefore play an important part in strategic human resource management.
Link to business planning
Workforce planning should be an integral part of business planning. The strategic planning process defines projected changes in the types of activities carried out by the organization and the scale of those activities. It identifies the core competences the organization needs to achieve its goals and therefore its skill and behavioural requirements.
Workforce planning interprets these plans in terms of people requirements. But it may influence the business strategy by drawing attention to ways in which people could be developed and deployed more effectively to further the achievement of business goals. It may also focus on any problems that might have to be resolved in order to ensure that the people
required will be available and will be capable of making the necessary contribution. As Quinn Mills (1985: 105) indicated, human resource planning is ‘a decision-making process that combines three important activities: (1) identifying and acquiring the right number of people with the proper skills, (2) motivating them to achieve high performance, and (3) creating interactive links between business objectives and people-planning activities’.
Hard and soft workforce planning
A distinction can be made between ‘hard’ and ‘soft’ workforce planning. The former is based on quantitative analysis in order to ensure that the right number of the right sort of people is available when needed. Soft planning is concerned with broader issues about the employment of people than the traditional quantitative approach is. But it also addresses those aspects of human resource management that are primarily about the organization’s requirements for people from the viewpoint of numbers, skills and how they are deployed.
However, it must be recognized that although the notion of workforce planning is well established in the HRM vocabulary, it does not seem to be embedded as a key HR activity. As Rothwell (1995: 175) commented about human resource planning: ‘Apart from isolated examples, there has been little research evidence of increased use or of its success’. She explains the gap between theory and practice as arising from:
- the impact of change and the difficulty of predicting the future – ‘the need for planning may be in inverse proportion to its feasibility’;
- the ‘shifting kaleidoscope’ of policy priorities and strategies within organizations;
- the distrust displayed by many managers of theory or planning – they often prefer pragmatic adaptation to conceptualization;
- the lack of evidence that human resource planning works.
Research conducted by Cowling and Walters (1990) indicated that the only formal and regular activities carried out by respondents were the identification of future training needs, analysis of training costs and analysis of productivity. Fewer than half produced formal labour supply and demand forecasts, and less than 20 per cent formally monitored HR planning practices.
Summarizing the problem, Taylor (1998: 64–65) commented that: ‘It would seem that employers, quite simply, prefer to wait until their view of the future environment clears sufficiently for them to see the whole picture before committing resources in preparation for its arrival. The perception is that the more complex and turbulent the environment, the more important it is to wait and see before acting.’
Be that as it may, it is difficult to reject out of hand the belief that some attempt should be made to determine broadly the future human resource requirements as a basis for strategic planning and action. And research conducted by the CIPD (2010) confirmed that some large organizations are taking a serious interest in it.
Approaches to workforce planning
Resourcing strategies show the way forward through the analysis of business strategies and demographic trends. They are converted into action plans based on the outcome of the following interrelated planning activities:
- Demand forecasting – estimate future needs for people and competences by reference to corporate and functional plans and forecasts of future activity levels.
- Supply forecasting – estimate the supply of people by reference to analyses of current resources and future availability, after allowing for wastage. The forecast will also take account of labour market trends relating to the availability of skills and to demographics.
- Forecasting requirements – analyse the demand and supply forecasts to identify future deficits or surpluses with the help of models where appropriate.
- Action planning – prepare plans to deal with forecast deficits through internal promotion, training or external recruitment. If necessary, plan for unavoidable downsizing so as to avoid any compulsory redundancies, if that is possible. Develop retention and flexibility strategies.
Although these are described as separate areas they are closely interrelated and often overlap. For example, demand forecasts are estimates of future requirements, and these may be prepared on the basis of assumptions about the productivity of employees. But the supply forecast will also have to consider productivity trends and how they might affect the supply of people.
A flow chart of the process of workforce planning is shown in Figure 16.1, which represents an ideal deterministic model of how it should happen. It is useful to have such a model and the activities involved in mind, but it should be remembered that, in practice, organizations tend to do their workforce planning on the hoof, for the reasons given earlier. Some or all the activities represented on the model may take place, but not in a neat sequential sequence. As Mabey et al (1998: 520) commented: ‘Much SHRM literature assumes a naive, over-rationalist view of organizational decision-making’. It ignores both the political realities and the inability of senior managers to make SHRM decisions. This applies as much if not more to workforce planning as to any other SHRM activity.