Planning Staffing Requirements
As your business grows, naturally you'll need to hire more people to handle the increased workload. New skills will be required, too, to deal with the ever-widening range of activities. As increased demands arise, you'll need to have these new employees in place and be ready to provide opportunities for development and training. This takes cash and time, so future salary and training costs need to be part of cash flow forecasts and financial plans. Foreseeing these requirements is extremely important.
A number of statistical methods exist to help businesses analyze, predict, and plan future staffing requirements. Each business is different, so there is no single answer to how best to plan. Essentially, though, you'll need to forecast sales and plan future production levels; estimate the amount and type of work that will be required; identify who can do this work; and identify the training and recruitment needed to fill any gaps.
No. Link staff planning to a wider strategic planning process. Your staffing plan should be based on a long-term sales development forecast and the required increases in working capacity it represents. First, identify and quantify various types of work so that you can then determine costs. You'll need to project these costs over the long term (say, five years), the year ahead (as part of an annual budget), and perhaps month-by-month, too, to show how changes can be phased in during the following year's operation and aligned with projected cash flow. All of this data should be reflected in your overall strategic plan for developing the business.
In addition to estimates for future production, you need information about how work is done, who does it, and the options for making adjustments.
Step one is analyzing current jobs: List the respective primary duties and determine how much work is required to perform them. Don't make too many assumptions about what people do and how they do it. Your staff better understands how work really gets done, so ask them—and accept their assessments. What looks like a small job, for example, may take much longer than you think; another task may be so boring that it seriously threatens effectiveness and job satisfaction. While a scientific "work study" can be useful, informal discussions and team meetings are just as effective and are a far more diplomatic way to look at how work is performed.
Next, you need to estimate how workloads will increase. Using sales forecasts, you can work out the required levels of monthly production. From these estimates, determine appropriate staffing levels. The number of workers required often increases in direct proportion to the volume of work, that is, doubling the workload means doubling the workforce. In some cases, the workload might be eased by additional training or introducing different methods. Even so, it usually is helpful to create estimates based on the amount of work required to produce one unit of production (dubbed the "workload method"). The work required to produce one unit is split into its constituent tasks, allocating the time required to perform each task. These can then be multiplied by the number of units required to arrive at the total amount of work each type requires. For example (and this will change depending on how many hours constitute a normal work day in your own organization):
| Type of work | Time/unit | @180/month | @200/month |
| Assembly | 1.0180 hrs | (24 days) | 200 hrs (26.6 days) |
| Testing | 0.472 hrs | (9.6 days) | 80 hrs (10.6 days) |
| Packaging | 0.236 hrs | (4.8 days) | 40 hrs (5.3 days) |
Fluctuations in demand are common to many industries. In some cases you may need to hire some workers on a periodic basis to meet peak demand. Some industries schedule employees to work a set number of hours per year but stagger work shifts based on demand. This may mean, for example, that employees will work the majority of their hours in the summer months while their wages are spread evenly throughout the year. This kind of plan eliminates the business having to pay overtime as well as having to continually train casual workers. It may also help better allocate resources or avoid amassing inventory to even out fluctuations. In most cases, organizations do not want to carry extra inventory to avoid tying up cash in materials and storage costs and to reduce potential losses due to fire, theft and other risks.
It can be helpful to create employee work profiles by summarizing and collating information about them into a single quick-reference document. For example, you could look at what each person does, areas of competence, qualifications, and development options. By listing this information on a single sheet, you can better judge various options for development. Include in your profiles such basic data as salary and length of service.
You can also profile your workforce as a whole by identifying key measures of its development. For example, you could look at the following areas:
- Staff turnover—number leaving per year divided by total workforce
- Staff growth—the number of payroll employees year by year
- Supervision—number of employees per supervisor/manager
- Promotion—number of managers promoted from within the workforce compared to the number recruited from the outside
- Annual recruitment costs
- Annual training costs
- Productivity—turnover divided by number of employees
- Longevity & stability—the average time employees stay with the company; add employers' total years of service, then divide by total number of employees.
Staff planning is never an exact science. Comparative information may be available from your trade association. Key measures simply help you understand your present situation, set targets, and measure success. There may be limits to what you can achieve; for example, in a competitive environment, promotion opportunities may be limited or salary increases difficult to give.
Adjusting individual work roles can become very complicated. If a large team is working on a variety of projects, changing one factor can impact everyone. You need a simple way to look at who does what, then to see what happens if you change who does what, and the effects the change will have over a given period of time. A computer spreadsheet program is useful for such an exercise, since you can adjust values without having to recalculate totals each time.
One approach is to create a matrix that lists individuals within specific work areas. For example, calculating an average of 18 working days per full-time employee per month (allowing for sickness and vacation), you can then allocate how much time (in assigned work days) each employee should spend on tasks such as sales and administration, research, editing and proofing, data processing, and so forth.
An overview chart for the following year is a useful budgeting tool, too. A month-by-month chart showing fluctuations in production requirements helps a manager plan and implement timely changes to meet future commitments.
Staff planning provides the best opportunity you have to act on plans for developing individual employees. Your personnel policy document should be a useful framework to help you make such decisions.
Job design and job satisfaction are two important areas to consider. As a company and its employees change and develop, new jobs will need to be defined. Be sure to clearly define roles and job descriptions and build variety into the positions. Look for activities that complement each other and suit the skills and experience of the people concerned.
When it comes to management development, be open-minded about what people can achieve. Don't assume that some people aren't up to taking on new responsibilities—or that others will jump at them. To fully encourage staff development, try to hire new people at the most junior level and promote existing staffers to new positions of greater responsibility when more senior-level vacancies arise.
If changes to your business or its activities require new skills, consider whether existing employees could be trained to shoulder them. The cost of training a new person should be compared with the benefit of being able to use a person familiar with the business who is a known quantity. Training should both benefit and motivate staff members.
Some kind of annual pay increase policy is all but essential today. Without one, you may be saddled with high turnover—which effectively means you're training someone else's future employees and managers. An established compensation plan that includes competitive long-term benefits across the board will also help long-term financial planning. Be ready to compete with others in your industry—and your locale—if you hope to retain your experienced employees. Sub-par pay may keep your prices competitive for a time but will not contribute to your long-term performance. Start by collecting information about standard pay rates; then create salary levels based on skills, experience, and responsibility.
Don't forget that any new employee needs time to settle in. Even the most competent individuals take time to learn a new job, gain the trust of their colleagues, and feel comfortable. When you need to recruit, lead times for advertising, interviewing, selection, relocation (if required), training, and induction can be long—usually longer than expected. You may need to start the process up to six months before you expect a new hire to be performing a full workload at peak efficiency. Recruiting can consume much of a manager's workload, too. Keep this in mind as you do long-term staff planning.
Use simple analysis and planning methods for the best results. Unless specific circumstances dictate otherwise, it's always best to develop and retain your existing workforce before thinking about recruiting from outside your company.
Remember to talk to your staff first about how jobs, individuals, and teams can be developed and improved. No one knows more about how your business really operates than your own employees who experience it daily. Don't ignore them! Even when you do need to bring in an outsider, he or she will still need the support and cooperation of your existing workforce.
Your employees are your most important assets. Treat them that way.
Kishel, Gregory F. and Patricia Gunter Kishel.
Society for Human Resource Management: www.shrm.org
U.S. Department of Labor: www.dol.govwww.dol.gov
Workforce Management: www.workforce.com