Session-13

Unit-21
 Workforce Planning
 Workforce Planning is the:
 process of analyzing, forecasting, and planning
workforce supply and demand.
 Assessing gaps, and determining talent management
interventions to ensure that an organization has:
 The right people –
 With the right skills
 In the right places
 At the right time –
 to fulfill its mandate and strategic objectives.
 Setting Your Strategic Direction
Workforce Planning- 1
 Setting the strategic direction for your workforce plan
involves understanding key mission goals and future
objectives set by organization leadership and how the
workforce needs to be aligned to achieve them.
 What is your short-term and long-term organizational
strategy?
 What challenges exist in the emerging market, economic,
and political environments?
 What legislation, policy or regulation changes may impact
your organization
 How well positioned is your organization to survive change
?
 Conducting a Supply Analysis
Workforce Planning-2
 Conducting a supply analysis involves understanding the
current workforce and how it is projected to change over
time, due to attrition and other trends.
 How well does the current workforce align/support you
business strategy?
 How will turnover of key staff affect your organization's
ability to deliver services?
 Where are my difficult positions to fill? Where am I
challenged to fill positions with quality applicants?
 Are there local recruitment sources that can provide top
talent?
 Conducting a Demand Analysis
Workforce Planning-3
 Conducting a demand analysis involves understanding
your organization's current and future workforce
requirements.
 What drivers affect my organization's workload?
 How is workload measured from service to service?
 How many staff are needed to deliver each service?
 Are there anticipated changes in technology, policies,
regulations, or customer base that would affect workload
demand?
 How would workload in each service line be impacted by
those changes?
 Analyzing Your Gaps
Workforce Planning-4
 This phase involves understanding the gaps between
workforce demand and supply and to define top
priority gaps with the greatest impact on
organizational performance.
 What competency/skill gaps exist in my workforce?
 Are there certain occupations or geographic area with
hard to fill positions?
 Are there certain occupations that require hard-to-find
skills?
 How will retirement affect the overall spread of
employees?
 Solution Implementation
Workforce Planning-5
 The appropriate workforce interventions and activities
to close identified workforce gaps and enable your
organization to meet its strategic goals.
 How do I use short-term and long-term organization
plans/ strategy to inform workforce goals?
 How can I use data to inform workforce
planning/identify action?
 Monitoring Progress
Workforce Planning-6
 It is important to regularly monitor the performance of
implemented workforce planning solutions and their
impact on the gaps they were designed to address.
 The strategic direction, workforce supply, and
workaround demand changes over time and strategies
need to be updated accordingly.
 How will my organization define what success looks
like?
 What types of metrics will help me determine success?
 Labor Market
Labor Supply
 The most general definition of the labor market is that
it consists of workers who are looking for paid
employment and employers who are seeking to fill
vacancies.
 The amount of labor that is available to firms – labor
supply – is determined by the number of people of
working age who are in employment
 or seeking employment and the number of hours that
they are willing to work.
 Labor Demand
 Generally speaking, a higher wage will attract more
people into the labor market and a lower wage will
attract fewer
 The number of jobs on offer to workers – labor
demand – is the sum of people in employment plus the
number of vacancies waiting to be filled.
 The demand for labor is determined by the level of
demand for the goods and services produced by firms
in the market.
 Labor Supply and Demand
 When sales and production are rising, firms’ demand
for labor rises.
 When sales fall and production is cut back, firms’
demand for labor falls.
 Workers enter the arena in search of jobs and
employers enter it in search of workers.
 Competition between employers for workers and
between workers for jobs results in a ‘market wage’
that adjusts to relative changes in labor demand and
supply.
 Nature and Characteristics of
Labor Market
 Research has shown that rates of pay vary between firms in the
same industry operating in the same local labor market (Nolan
and Brown, 1983).
 Wages do not respond instantly to changes in labor demand.
 Employment policies vary considerably among firms.
 For example, some employ labor on a casual hire and fire basis
while others offer long-term employment security and career
development.
 This has led labor economists to recognize that firms are not all
equally influenced by the external labor market.
 Instead they develop a variety of employment systems which can
be differentiated from each other in terms of the extent to which
competitive labor market forces influence terms and conditions
of employment.
 Employment systems
 Some of the most important contributors to the
discussion of employment systems are Kerr (1954),
Doeringer and Piore (1971) and Osterman (1984,1987).
 Their classifications of employment systems vary in
terms of the number of different systems they identify
and the labels that they attach to them. These are:
 the open or unstructured external labor market;
 the occupational labor market;
 the internal labor market.
The open or unstructured external
labor market
 This corresponds most closely to the simple model of
the labor market.
 It is external in the sense that employers draw their
labor from an external pool and do not seek to foster
long-term employment relationships.
 Workers are hired and fired as needed.
 It is also unstructured because there are no clear
occupational boundaries within it and it is easy for
workers to enter the market and move from job to job
because no prior training or qualifications are
necessary.
The open or unstructured external
labor market
 Furthermore, there is little institutional regulation in
the open external labor market.
 Workers have few legal rights or protections and trade
unions are weak or non-existent.
 Therefore workers compete with each other for
employment and employers determine the level of
wages in the light of how abundant or scarce labor is in
the market.
 This means that employees are continually exposed to
external market forces.
The occupational labor market
 Occupational labor markets arise where workers have
skills that can be transferred from one firm to another.
 Labor markets for professional workers are often of
this type; for example, doctors can work in different
hospitals, teachers can move from one school to
another and lawyers from one law firm to another
without having to retrain.
 Occupational labor markets are external in the sense
that, because workers’ skills are transferable across
firms, employers can fill vacancies by drawing on the
pool of qualified workers that exists outside the firm.
The occupational labor market
 Workers can also look to further their careers by
moving from one firm to another in search of
promotion and better opportunities.
 Clearly there is potentially an element of competition
in the occupational labor market.
 However, unlike workers in the open external labor
market, those in structured occupational labor
markets are able to insulate themselves from pressures
of labor market competition to a considerable extent.
The occupational labor market
 Occupational labor markets are structured on an
occupational basis, with occupational boundaries
being defined in terms of the tools or materials used,
or skills and qualifications.
 Movement between occupations is therefore difficult
because of the time and expense involved in retraining
to obtain a new set of occupational qualifications.
 This limits the extent to which workers in an
occupation are exposed to competition from workers
outside it.
The occupational labor market
 Professional associations or trade unions control entry to
the occupation, for example by making the right to work in
it conditional on having certain minimum qualifications.
 Control of entry means that the number of workers can be
restricted.
 This limits competition further and means that those in
the occupation are ensured of employment.
 It also gives trade unions and professional associations a
measure of bargaining power, which they can use through
negotiation with employers to regulate pay and conditions.
 The internal labor market
 Internal labor markets are essentially enterprise-based
employment systems.
 In other words, terms and conditions of employment
are determined by rules that are internal to the
organisation rather than by competitive forces in the
wider labor market.
 They are internal in the sense that external
recruitment is limited to junior and trainee positions
within the organisation.
 Other vacancies are filled through internal transfers
and promotion.
 The internal labor market
 Skills are learned on the job and are specific to the organisation
in which they are acquired, rather than being transferable across
firms.
 This restricts the mobility of workers between firms, since the
skills learned in one organisation are not equally useful in
another.
 Workforce reductions are achieved through ‘natural wastage’,
that is by non-replacement of workers who leave, rather than by
dismissals.
 Therefore there is a high degree of long-term employment
security for workers.
 Internal labor markets are also highly structured in that they
consist of hierarchies of jobs that are graded in relation to each
other in terms of skill, responsibility and pay.
 The internal labor market
 Job hierarchies are also designed to provide career
progression paths or ‘job ladders’ that provide
opportunities for internal transfer and promotion and
so retain and motivate trained workers.
 Workers can climb job ladders by acquiring training
and experience in lower -level jobs that prepare them
for the next rung on the ladder.
 In practice, promotion is often based on length of
service in a lower-level job.
 Internal labor markets are subject to a high degree of
internal institutional regulation.
 The internal labor market
 There may also be rules that regulate management’s ability
to dismiss workers should this become unavoidable.
 A common example is the ‘last in, first out’ or seniority rule
whereby it is those with the shortest length of service who
are first selected for dismissal.
 In practice, internal labor markets vary in terms of the
opportunities for internal promotion that they offer and
the strength of their guarantee of long-term employment
security.
 Research has found that internal labor markets are more
highly developed for technical and administrative workers
in these respects than for manual workers (George and
Shorey, 1985; Osterman, 1987).
 The internal labor market
 There are two variants of internal labour market:
 the salaried internal labor market(technical and
administrative workers) and the industrial internal labor
market (manual workers) (Osterman, 1987).
 Long-term employment security, structured career paths
and opportunities for internal promotion are more highly
developed in the salaried internal labor market than in the
industrial internal labor market.
 This has led some to argue that the industrial internal
labor market should be seen as a fourth type of
employment system rather than as a variant of the internal
labor market (Hendry, 1995).
 Labor Market Trends
 A pattern of gradual change in a condition, output, or
process, or an average or general tendency of a series of
data points to move in a certain direction over time,
represented by a line or curve on a graph.
