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Long-term planning of a company’s staffing needs

HRD-Ukraine, № 11-12 (254-255), 2014

Article written byEvghenia Hvostova,

Head of recruitment  in the NRG recruiting company

Yevgeniya Khvostova, Head of Recruitment of NRG

Yevgeniya Khvostova, Head of Recruitment of NRG

The planning of staff needs is part of the overall strategic planning of the company. In order to properly and accurately plan the need for personnel, one must take into account many factors, such as:
• Political and economic conditions in the country;
• The overall situation of the labor market, in particular, among competitors;
• The level of wages in the market and in a given company;
• Long-term plans, strategies and budgets of the organization.
The planning of the staff needs can be started at the beginning of each year. There is planning for five or more years with the possibility of adjustments. The long-term planning is usually done by companies that are under active development and stabilization. Businesses on the stage of stagnation do not plan to increase their number of employees.
Before beginning the process of staff planning, you must know the number of available vacancies in each department, the personal files of the employees, the rate of employees being let go, the level of wages and the existence of a motivation system for the employees.
If we consider the planning of staff as a project, it can be divided into several key steps:
1. A forecast of future staff requirements based on an analysis of internal resources.
2. Being able to determine what type of employees, how many and their level of qualification will be needed for the company (periodicity – month/quarter/year/three to five years, based on the business strategy).
3. Depending on the internal policy of the company to determine if there is a chance that the inside needs can be met from the existing human resources.
In order to know the need for new employees, for instance in an industrial organization, it is necessary to take into account the fact that statistically the turnover in the industrial sector is about 10%. In the case of an actively growing business, this figure could increase to 20%.
Here is an example for a company with 200 employees. According to the list of employees as of December 31st – there are 190 employees. The number of vacancies is 10. Staff turnover is 20% or 40 employees.
Let us take into account the risk of losing 15% or 30 employees due poaching, sick leaves, and other external factors.
Based on a company’s data, the calculation of the company’s staff needs can be made for a specific period of time: 10 (vacancies) needed + 40 (employees with turnover) + 30 (risk in regard to personnel) = 80.
In the case when a company is actively expanding and has ambitious plans of increasing sales by 20%, it will lead to a selection of extra options (10-30% of the workforce) + 20 employees. Accordingly, we must include 100 people for the required period of recruitment during planning, which represents 50% of the present number of employees.
For example, in a pharmaceutical company planning for staff recruitment takes place for five years ahead and is calculated based on the sales plan.
1. Sales per person (growth must be registered).
2. Cost of labor per sale (a decrease must be registered).
3. Cost of labor per person (a decrease must be registered).
4. The ratio of labor costs for the main departments (finance, IT, HR, administration costs) and the total cost of labor (costs should not increase due to the main departments).
Hence, in stable market recruitment planning would look like this. If there were new large projects being launched (the introduction of new products) and an investment in personnel would be needed than the breaks of KPI would have been justified.
In another company- distributor –planning is based on the following factors:
1. The marketing position of the organization for the period (a specific description of the business model of the company for achieving the goals of a specific period of time).
2. Production tool description – strategic sessions for top managers.
3. The HR often plays the role of a moderator. The company has rules for conducting these sessions.
4. Once the business model is described (in which markets it operates /s which product/ product positioning / channels of its progress and all other marketing tools – price, advertising, promotional activities and so on), the HR manager can:
a. Complete the self planning of required staff.
b. To link with other systems of personnel management.
4.1 Calculate how many people are needed and when (insert figures in the plan and budget of recruiting).
4.2 Requirements for employees (in terms of recruitment and training plan).
4.3 The cost of human resources for the company (in the budget payroll).
In addition to short-term and long-term planning needs for staff, there are quantitative and qualitative needs.
Qualitative – when we have a clear binding to the professions, specialties, categories and other requirements.
Quantitative – need for staff with no specific qualifications.
If the process of staff planning is approached correctly, one may avoid extra personnel costs, not disturb the production process and make the business as efficient as possible.

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