The Benefits of Workforce Planning - Essay Example

Workforce Planning Name: Unit: Course: Professor: Submission Date: Contents Contents 2 Workforce Planning 1.0. Introduction 1.1. Rationale of the Study Workforce planning is an essential element of any human resources department that performs or intends to perform well in the contemporary business world. Many organizations fail in this area either because they are unaware of the benefits of workforce planning or because it is a daunting endeavor to implement workforce planning (Sullivan 2002). Workforce planning is important to an organization in many ways. For instance, it is significant in forecasting talent needs in an organization to prevent surprises regarding labor shortages or surpluses. Surplus hiring leads to layoffs that kill the morale of the remaining workforce, and this may increase the rate of employee turnover. On the other hand, shortage of employees may cause the organization to indulge in panic hiring that may lead to the acquisition of unqualified staff. Therefore, the talent inventory needs proper management to avoid shortages or surpluses. Further, workforce planning enables the human resource professionals to plan adequately for business cycles of boom and recessions in their organizations. Lack of workforce strategy or plan to deal with business cycles causes the pain of budget cuts during recessions and under production during booms. Therefore, the inability of the HR department to prepare for the business cycle dynamics may puzzle the functional capacity of other departments in an organization (Sullivan 2002). Also, effective workforce planning ensures acquisition and retention of skill-appropriate employees as well as ensuring proper training and development. It also ensures replacement of talent on time to prevent surprises in case of sudden turnover. This also helps in preventing unnecessary labor costs and turnover while enabling the organization to take advantage of opportunities as they arise. Unfortunately, many organizations have failed to utilize the benefits of workforce planning. They maintain routine workforce and start panic hiring when a crisis occurs or just react to events in the business cycle such as booms and recessions instead of formulating a long-term workforce plan. Studies have shown that other departments in organizations such as purchasing, marketing, research and development, accounting and finance, and manufacturing departments have well established planning mechanisms. The Human Resource Management department is often overlooked in many organizations. This research aims at emphasizing the importance of workforce planning in ensuring good performance in an organization (Sullivan 2002). 1.2. Aim of the Study The aim of this study is to emphasize the importance of workforce planning in ensuring efficient and effective production in an organization in the long run. 1.3. Objectives of the Study i. To identify the various HRM models, assess their effectiveness, and determine how they influence workforce planning ii. To determine the extent to which the HRM models assist managers in making their businesses globally competitive iii. To identify the various components of workforce planning and highlight their importance to an organization 1.4. Research Questions i. What are the various HRM models and how effective are they in influencing workforce planning? ii. To what extent do HRM models assist managers in making their businesses globally competitive? iii. What are the components of workforce planning and how important are they to an organization? 2.0. Literature Review International Personnel Management Association (2002), workforce planning is a great challenge to many organizations in the modern business world. Imbalances always exist where skilled workers available don’t match the requirements of the work that needs to be done or they are not adequate to undertake all the tasks that need to be performed. Planning is mostly done, for the short-term without future foresight (IPMA 2002 P.1). According to IPMA, workforce planning is a tool that has made it possible to strategize towards aligning workforce to business needs. IPMA proposes that human resource should be a priority and planning should as well encompass workforce issues to ensure a better future for the business. The study puts forward the Generic Workforce Planning Model and provides a description of the competency-based planning model. The model involves three components; workload assessment, workforce assessment, and competency assessment then aligns these to the long-term strategic planning of the organization (IPMA 2002 P.19). Rivera, Labs, & Smolders (2013), the workforce is the “whole game”, people are what drive results. The human resources management needs to be elevated to the same professional and integrity level as the financial management. This study identifies three components of operational workforce planning. The first one is identifying employee capabilities, skills, knowledge, and competencies and mapping them to job profiles. The second is determining the current number of employees in the organization. The third is determining the gap between the actual employees and the desired ones. Effective workforce planning has four steps: preparation, planning, consolidation, and execution (Rivera, Labs, & Smolders 2013 P.4-5) The Conference Board (2006), workforce planning is a modern development in business. It is essential to plan replacement of aging and retiring employees, anticipate labor shortages, match globalization dynamics, use human capital to maximize returns, and facilitate the keeping of modern technology trends. The study finds out that all organizations face similar problems of employee turnover, age and retirement wave, and concentration on other departments while HR department receives little attention (The Conference Board 2006 P.5). The American Management Association (2010) also argues that workforce planning is a new technique that helps in controlling labor costs, assessing talent needs, making informed business decisions, and assessing risks and needs of the human capital. The technique aims at assisting companies to have the appropriate workforce, in the right designation, at the appropriate time, and at the right price. Al-Salamah (2011), workforce planning is paramount in determining the needed workforce size to meet production demands without incurring unnecessary costs. According to the study, many companies, especially the manufacturing ones face frequent workforce planning problems especially if demand for their product (s) keeps on fluctuating. In a fluctuating demand situation, the company needs short-term employment strategy, but that involves training and nonproductive costs. The hire-fire decisions for the short-term also involve a layoff cost. The study proposed a technique of simulated annealing algorithm to perfect mixed integer model solving that had been found to have difficulties even solving a small problem (Al-Salamah 2011 p.1-2). Bobinski (2004) highlights the importance of integrating workforce planning with strategic planning if the success of the organization is to be ensured. The selection employees, staffing, and training and development of employees are interlinked with the organizational development. It is, therefore, vital to indulge in effective and efficient workforce planning to ensure the success of the organization. According to Brooks (2015), the importance of workforce planning continues to increase given that there are rampant skill shortages that keep adapting. Only a few organizations have implemented impactful workforce planning. Brooks emphasizes the importance of workforce planning by arguing that effective workforce planning makes a significant contribution to the success of a business. Workforce planning should evolve with the business as it is a continuous process. The barrier to the implementation of effective workforce planning strategies is a lack of information about its benefits by many stakeholders. Chauran& Ross (2013), before any effective strategy on workforce planning, can be implemented; the future of the organization should be predicted or speculated. The argument is that no one plans effectively for the unknown. The study identifies various aspects about the workforce that must match the long-term strategy of the organization. The aspects include competencies, turnover rate, age, and retirement wave. The workforce planning must align with the mission, vision, and the corporate strategy of the organization (Chauran& Ross 2013 p.2). Crettenden, McCarty, Frenech, Heywood, Taitz&Tudman (2014), identifies various challenges to workforce planning that include shortages, demography, cost challenge, co-ordination challenge, distribution challenge, and the problem of implementation of workforce reforms. The study further highlights the importance of effective workforce planning in informing policy development. The planning or anticipation of staff outflows through retirement, death, career change or emigration is fundamental to ensuring immediate inflow replacement to avoid disruptions in production (Crettenden, McCarty, Frenech, Heywood, Taitz & Tudman 2014 p.2-3). Croteau (2009), the scare occasioned by the H1N1 virus, the pandemic flu outbreak in 2009 is nothing compared to the damage that lack of workforce planning will do to organizations in the long run! He argues that leadership succession, employee turnover, and sourcing high skilled replacements should be the priority of organization’s HR department. Croteau provides tips for workforce planning that include developing skills map, creating employee database, creating professional development plans, recruiting to fill gaps, and creating succession culture. Erickson (2011), organizations with workforce planning mechanisms perform better than those not practicing workforce planning. Some organizations lack essential systems, appropriate tools, and data to undertake effective workforce planning, and they view these as roadblocks to their efforts. Erickson provides a case study of NiSource Company. NiSource produces and distributes natural gas and transmits electricity. The company faces the challenges of a high retirement of employees in the same time range, and market dynamics requiring standard skills. The company’s efforts to develop a workforce plan were curtailed by unclear market circumstances. However, the company overcame the challenges and developed internal capabilities, processes, and skills that in addition to networking and outsourcing ideas from other companies helped the company establish a viable workforce planning strategies. 3.0. Methodology 3.1. Sampling This study uses purposive or judgmental sampling to widen the scope of the data exposed. The study narrows down to idiographic sampling or critical case sampling, a form of experience sampling, by taking a phenomenal case study of a single firm to promote proper understanding of the complexities or experiences by the individual firm, and thereby provide relevance to the study findings. Purposive sampling is a robust non-probability sampling technique whose efficiency is ensured by its inherent bias (Tongco 2007 p.147). The study focuses on a case study of Nokia Corporation, making the sample an idiographic purposive sample. Critical case purposive sampling is convenient for a limited resources research or in cases where the focus is on a single unit. However, critics of this sampling technique argue that it is based on judgment and, therefore, it is subjective and may contain researcher’s bias. 3.2. Data Type and Data Collection This study uses secondary data. It collates, summarizes, and synthesizes existing research materials on workforce planning. As opposed to primary research where data is collected from research subjects, this secondary research uses other researcher’s primary researches contained in publications and reports. The use of secondary data is economical because it is easily accessible. It is also efficient because little time and energy are required to obtain the data. Secondary data also adds depth to primary data (Brodeur, Israel & Craig 2011 p.1). However, the problem with secondary data is its age and accuracy. Therefore, the source and accuracy of secondary data must be evaluated to ensure it does not provide misleading information (Brodeur, Israel & Craig 2011 p.2). 4.0. Analytical Findings 4.1. The Case Study The Nokia Corporation is a mobile communications company located in Espoo, Finland. The company employs over 59,000 employees globally. The company decided to concentrate on mobile communications in the 1990s sourcing employees internally from Finland and with no problems in getting the right talent. The company has expanded operations and competed globally. In 2010, the company commanded a large share of the international market, but since 2011, its market share began declining. Sales fell, profits declined, and the firm associated the misfortunes with trading difficulties in China and Europe (Pahjanpalo& Ben-Aaron 2011). Nokia’s dramatic growth and dominance of the mobile phone market was due to product diversification, use of digital technology that outcompeted competitors such as Motorola and Ericson, and well-planned distribution channels. However, a poor decision made by the firm’s management in 2003 proved distasteful to consumers prompting the firm to reorganize (Pahjanpalo& Ben-Aaron 2011). The recent emergence of new competitors with sophisticated technology such as Apple’s iPhone using Android, Samsung, and China phones is slowly squeezing Nokia out of the market.Nokia’s inability to shift to modern production methods involving software and applications from its traditional hardware and communications production has made Nokia lose its market share as well as taint its reputation. Earlier on in 1990s, Nokia was entrepreneurial, innovative, and competitive. In 2010, the CEO Steve Elop compared the Nokia’s predicament to that of a person standing on a hot, burning oil ring (Pahjanpalo& Ben-Aaron 2011). 4.2. Discussion The case study provides a case of success and failure. It is unfortunate for a firm that had been performing tremendously well to start dwindling in profit making and face the threat of being pushed out of the market. It could all be blamed on the management, corporate strategy, workforce planning, and skill development. According to Al-Salamah (2010), it is normal to experience fluctuating demand especially during recession but if the workforce problems are persistent, then the management is to blame. The Nokia Corporation had been performing exemplary well in workforce planning until 2011. For instance, it introduced the Electronic Human Resources (EHR) system in 2007 that collaborates human resources information and information technology. The invention centralized human resources function enabling easy management and control of the workforce. All HR functions were integrated with the system such as recruitment, performance management, compensation, workforce planning, learning and development, and employee relationships (EHR Consultants 2007). However, from 2010 things started going haywire for the Nokia Corporation. For instance, between 2010 and July 2011, the company laid off about 1900 employees. The layoff was occasioned by dwindling profits. Further, in 2011, the firm slashed other 7000 employees globally, transferring 3000 of them to Accenture Plc., a technology-consulting company (Pahjanpalo& Ben-Aaron 2011). These frequent layoffs of high magnitude have the impact of killing the remaining employee’s morale and lowering their productivity indicating that failure to plan workforce is plan for the organization to fail (Cascio 2009 p.2 & 3, Rivera, Labs & Smolders 2013 p.5). This can, in turn increase employee turnover resulting in low production levels (International Personnel Management 2002 p.19). Further, management is the face of an organization. If the management including human resources management fails, the organization fails as well. Therefore, this emphasizes the importance of linking workforce planning with strategic planning (Bobinski 2004). Nokia’s management can be partly blamed for its predicament. For instance, in 2011, Nokia’s chief technology officer departed from the firm due to management inefficiencies that left him unhappy. It is alleged that the management declined the introduction of MEEGO Smartphone that had been developed by the technologist into the market. It is also argued that Mr. Tirri who replaced the departed officer was incompetent and painfully, a “return to basics” (Saltmarsh 2011). This is a failure on the part of management to have the right people take the right positions at the right time in the organization (American Management Association 2010). The management should also be blamed for not predicting or speculating a probable turnover and doing workforce planning to prepare a succession plan (Chauran & Ross 2013 p.2). Failing to adopt effective workforce planning in an organization is like failing to treat a deadly disease that ends up killing you (Croteau 2009). 4.2.1. HRM Models and their Applicability HRM models have been developed to legitimate particular HR practices, establish employee relationships, and explain the significance of HRM. The various HRM models developed include the Guest’s Model of HRM, the Harvard Framework, the Storey’s Hard and Soft HRM, Best Practice Model, Patterson’s Model of HRM, and the Contingency or Best Fit Model. A summary of these models’ components follow and a detailed discussion of the one recommended for the Nokia Case study comes after the summary. The Harvard Framework Model focuses on four policy areas in HR; human resource flows, employee influence, reward systems, and work systems. The four policy areas further lead to 4C’s policies that include commitment, congruence, competence, and cost effectiveness that must be achieved for the success of any organization. The model advocates for the management of the HR department separately from other departments. It is also not long-term oriented. The Storey’s Hard and Soft HRM Model contains two versions; soft and hard HRM. The “soft” HRM that views employees adding competitive advantage to the organization and as valued assets. The reality is “hard” incorporating costs associated with workforce and their impact on strategic aspects, thus the need to control the number of employees (Gill 1999 p.1). The Guest’s Model of HRM advocates for the acquisition of high-quality employees committed to the organization and flexible all the time. Guest argued that commitment to the firm gives the best HRM outcome, and binds the employees to the organization to obtain behavioral outcomes of cooperation, involvement, organization citizenship, and increased effort (Marsden 2002 p.21). The Best Practices model identifies seven practices of effective HRM strategies. These are job descriptions, internal career opportunities, results-oriented appraisals, employment security, participation, formal training systems, and profit sharing (Akhtar, Ding & Gloria 2008 p.15). The Patterson’s Model of HRM advocates for improving worker skills and abilities, developing a positive attitude among employees, and expanding employee responsibilities to utilize their full potential to improve the performance of the organization. The Best Fit or Contingency Model’s argument is that an efficient and effective HR strategy should be tailored to meet the internal and external business environment. In the external fit, the HR strategy should be interconnected with marketing and operations strategy. The two constitute the competitive strategy of the business. In the internal fit, there must be coherence between policies by the HR and practices and avoidance of parallel policies such as encouragement of teamwork and rewarding of individual performance. This study recommends the contingency model to the Nokia predicament. The model suggests that the HRM strategy must be linked to the competitive strategy of the firm. It supports Bobinski (2004) on linking workforce planning with strategic planning. It encourages sustainable competitive advantage (Jery&Souai 2014 p.282). The Nokia Corporation predicament led to high layoffs, employee turnover, and a threat of loss of market share. The firm lost some of the most skilled and talented employees due to poor HR strategy that could not match the internal and external strategies of the firm. The firm also lacks essential talent with the appropriate technological know-how to enable it to compete favorably in the international market. Brooks (2015) argued that there is a need to have a workforce that evolves with the business. This can only be achieved through effective and efficient workforce planning (Erickson 2011). Had the firm adopted a contingency HRM approach to acquiring sustainably competitive employees, train and develop their skills, motivate their talent, and link the internal with external strategies it would not be facing difficulties in workforce planning, and the threat of exit from the international market? All the HRM models aim at improving the performance of an organization both in production and financial management. The HRM is as important as all other departments in an organization, and effective application of HRM models results in improved output and sustainable competitiveness (Akhtar, Ding & Gloria 2008 p.15). Workforce planning through strategic HRM practices such as training and development, results-oriented appraisals, participation, and internal career opportunities improves the overall productivity of the organization. 4.2.2. Workforce Planning Components and their Link with HRM Models The various components of workforce planning include forecasting and assessment, recruiting, leadership development, succession planning, contingency workforce, redeployment, retention, potential retirement’s management, internal career path, internal placement, and performance management (Sullivan 2002). The HRM models help in the formulation of strategies that align to workforce planning components. Hence, the HRM models and the workforce planning components are interlinked through their aim of establishing a sustainable talent pool in an organization. 5.0. Conclusion Workforce planning is a modern development in the human resources management that enables organizations to source, recruit, develop, and maintain the right talent at the right place in the right time. It enables firms plan for business cycles such as boom and recessions. Workforce planning entails such components as forecasting and assessment, recruiting, leadership development, succession planning, contingency workforce, redeployment, retention, potential retirement’s management, internal career path, internal placement, and performance management Many organizations have not fully utilized the benefits of workforce planning such as the Nokia Corporation in the case study that is characterized by high layoffs, employee turnover, and poor performance in the international market. There is a need for the organization to adopt a contingency approach to resource internationally competitive workforce, train and develop it, and establish effective HR strategies to retain the workforce so as to maintain a sustainable competitive advantage in the international market. The HRM models include Guest’s Model of HRM, the Harvard Framework, the Storey’s Hard and Soft HRM, Best Practice Model, Patterson’s Model of HRM, and the Contingency or Best Fit Model. They aim at improving the performance of an organization both in production and financial management by linking their performance with the HRM strategies. The HRM is as important as all other departments in an organization and effective application of HRM models results in improved output and sustainable competitiveness. 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