Business Notes Unit 2.

Human Resource Planning

Introduction
Labor is one of the 4 factors of production. Human Resource Planning is the management process of anticipating an organizations current and future staffing need. It includes the number of employees required and the type of workers sought. This can be carried out by: a) Historical data and trends- Data on trends such as the rate of change in the size workforce over the past couple of years or the shift to part-time and flexible working hours is helpful. b) Sales and income levels- More employees will be required if the demand by the customers are increasing. High levels of income and spending in the economy will lead to more jobs being created. c) Labor turnover rates- this is the measure of the employees who leave a firm as a percentage of its workforce, per year. The higher the turnover rate, the more employees needed to be recruited. d) Demographic changes- these are readings from the govt. regarding the changes in the demographics of the workforce e.g. the changes in the number of the female workers in the economy. This can help managers to forecast human resource needs. e) Technological changes- Advances in technology can bring both opportunities and threats. Opportunities such as people can work from home. Capital Intensive firms do not require as much labor force.

Supply of Human Resources and Demographics Changes

Supply of human resources in a country is affected by demographic changes in labor force. Demography is the statistical study of population characteristics. Factors that affect changes are: a) Net birth rate- this is calculated as the difference between number of births and the number of deaths per period time.

b) Net migration rate- measures the difference between the number of people entering and leaving a country (immigrants - emigrants). If net migration is positive, then human resource increases. c) Retirement age- legal age when people can stop working and claim money from their pension. d) Flexibility of workforce- Businesses or countries which have multi-skilled people tend to have a much more flexible workforce. e) Level of unemployment- high rate of unemployment means a high potential supply of labor in the economy. This increases the choice of workers for a business. f) Women returning to work- a more positive attitude toward female workers in terms of employment practices will increase the supply of human resources. g) Mobility of labor- this is the extent to which labor can move to different locations and their flexibility in changing jobs. Human resources supply also depends on: a) Internal workforce- these are employees who already work for the organization. If the internal workforce is highly flexible and willing to adapt to change then there will be no need to hire workers from outside. b) Competition- existing and potential workers will consider the overall package of financial and non-financial factors offered by a firm in relation to those offered by rival firms. c) Cost of living- living in cities deters potential employees as the cost of living is high therefore reducing supply of workers. d) Cost and availability of transportation- Businesses located in areas with good transportation systems attract more workers. e) Rate of unemployment in local areas- higher the rate of regional unemployment the higher the availability of human resources. An Ageing population occurs when the average age of the population increases. Effects include: a) Increased dependent population- this consists of people below the working age, those out of work and those above the retirement age. With an ageing population, less people will be working in proportions to those who have retired, thereby adding to the pressure placed on taxpayers to contribute towards government expenditure. b) Reduced labor mobility- young people are more geographically mobile and have more chances of switching occupations. Labor mobility reduces a countrys workforce thereby making it less internationally competitive.

c) Changes in consumption patterns- different age groups have different spending patterns. Hence, an ageing population can create opportunities for businesses which cater adult needs. d) Change in employment patterns- average workforce has risen as more people are educated. Coupled with an ageing population, this means that people entering the workforce are more likely to retain staff beyond the retirement age due to labor shortages.

Workforce Planning
Also known as human resource planning is the process of anticipating the current and future demand for workers in an organization.