HR and workforce planning for the recovery

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HR managers are currently seeking solutions to the problems of the GFC. Argues that HR managers should learn from the mistakes of the 1990s and prepare for the recovery.

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HR and workforce planning for the recovery

  1. 2. <ul><li>Gerry Treuren </li></ul><ul><li>Centre for HRM </li></ul><ul><li>University of South Australia </li></ul><ul><li>http://people.unisa.edu.au/Gerry.Treuren </li></ul>
  2. 3. Centre for HRM www.unisa.edu.au/chrm <ul><li>Newly established research centre </li></ul><ul><li>Main areas of expertise: </li></ul><ul><ul><li>Diversity management </li></ul></ul><ul><ul><li>Psychological contract analysis </li></ul></ul><ul><ul><li>Turnover and retention analysis </li></ul></ul><ul><ul><li>Recruitment approaches </li></ul></ul><ul><ul><li>International HRM </li></ul></ul>
  3. 4. UniSA HRM programs <ul><li>SA’s only fully-featured HRM programs: </li></ul><ul><ul><li>undergraduates (approx 320 students), </li></ul></ul><ul><ul><li>postgraduates (approx 130 students), and </li></ul></ul><ul><ul><li>research degrees (Ph.Ds, about 10 students) </li></ul></ul><ul><li>10 full time teaching and research staff (including four new appointments this year ) </li></ul>
  4. 5. Key question: <ul><li>How are the current decisions of HR contributing to the capacity of organisations to </li></ul><ul><ul><li>Recover after the recession? </li></ul></ul><ul><ul><li>Prosper after the recovery? </li></ul></ul>GFC Recession Recovery
  5. 6. Key points <ul><ul><li>Responding to the GFC requires a short/medium/long term HR perspective </li></ul></ul><ul><ul><li>Retention will be a major issue </li></ul></ul><ul><ul><ul><li>During recession and recovery, skill and talent will still be in demand. </li></ul></ul></ul><ul><ul><ul><li>HR’s short term response needs to anticipate and include medium term needs. </li></ul></ul></ul><ul><ul><li>Business-driven workforce planning is HR’s main responsibility </li></ul></ul>
  6. 7. Short-term issue for HR <ul><li>Many organisations are cost-cutting </li></ul><ul><ul><li>Direct response to reduced revenue/bleak forecasts </li></ul></ul><ul><li>What informs the staff reductions? </li></ul><ul><ul><li>Last on, first off? </li></ul></ul><ul><ul><li>Popularity? </li></ul></ul><ul><ul><li>Talent ranking system/succession planning? </li></ul></ul><ul><ul><li>Analysis of organisational value-creation? </li></ul></ul>
  7. 8. Perhaps a tidy up… <ul><li>And some businesses are using the GFC as the justification for implementing unpopular measures </li></ul>
  8. 9. Medium term issue: how are we preparing for recovery? <ul><li>The recovery will come… </li></ul><ul><li>How well is your organisation positioning itself for recovery? </li></ul>
  9. 10. Lessons from the past: downsizing in the 1990s <ul><li>Best to plan beforehand… </li></ul><ul><ul><li>Some were made redundant then rehired as consultants to fill gaps. </li></ul></ul><ul><ul><li>Voluntary redundancies – snapped up by the High Potential (HiPo) workforce, leaving the deadwood. </li></ul></ul><ul><ul><li>Who is going to do the work? Is work intensification sustainable? </li></ul></ul>
  10. 11. And what about those who remain? <ul><li>Poorly managed redundancy rounds can damage those who remain… </li></ul><ul><ul><li>Survivor guilt (affecting 70% in one study) </li></ul></ul><ul><ul><li>Erosion of attachment to the organisation </li></ul></ul><ul><ul><li>Those with market appeal may look for a more secure environment; </li></ul></ul><ul><ul><ul><li>… leaving the organisation with a higher percentage of core staff of anxious under-performers. </li></ul></ul></ul>
  11. 12. Search for workplace efficiencies <ul><ul><ul><li>Unwanted HiPo turnover is a very real possibility/ Early signs of inter-employer HiPo competition in US </li></ul></ul></ul><ul><ul><li>As businesses face the recessionary marketplace, they will want: </li></ul></ul><ul><ul><ul><li>To keep their productive employees </li></ul></ul></ul><ul><ul><ul><li>To fill any vacancies with productive employees </li></ul></ul></ul><ul><ul><li>Coupled with the need for recruitment firms to maintain their solvency </li></ul></ul><ul><ul><ul><li>Increased competition for HiPo employees </li></ul></ul></ul>
  12. 13. More efficient after recovery <ul><li>Businesses are likely to be more efficient </li></ul><ul><ul><li>They have reduced costs </li></ul></ul><ul><li>But efficiency does not equal productivity </li></ul><ul><ul><li>Efficiency gains can reach a plateau and can decline </li></ul></ul><ul><ul><li>Productivity is the result of process improvement, better technologies and better human capital </li></ul></ul><ul><ul><ul><li>Increased demand for skill and talent </li></ul></ul></ul>
  13. 14. Decade-long productivity slide <ul><li>Productivity growth determines medium to long-term business success and community living standards. </li></ul><ul><li>Labour productivity has declined in Australia over the past decade (about 4% pa in 1998, to 1% pa from 2006) </li></ul>
  14. 15. Long term issues <ul><li>Global/national-level issues </li></ul><ul><ul><li>Change in focus of global trade system </li></ul></ul><ul><ul><li>Return of regulation </li></ul></ul><ul><ul><li>Higher average levels of taxation </li></ul></ul><ul><ul><li>For many businesses: </li></ul></ul><ul><ul><ul><li>Productivity and innovation will be crucial </li></ul></ul></ul><ul><ul><ul><li>Efficiency based strategies offer no competitive advantage </li></ul></ul></ul>
  15. 16. And the other issues still remain… <ul><li>Environment: </li></ul><ul><ul><li>Access to water </li></ul></ul><ul><ul><li>Overall quality of life as the climate changes </li></ul></ul><ul><ul><li>Emission trading systems </li></ul></ul><ul><li>Demographic changes </li></ul><ul><ul><li>Changes in demographic mix </li></ul></ul><ul><ul><li>Rise in immigration </li></ul></ul><ul><li>New Industrial Relations framework </li></ul>
  16. 17. Meanwhile, back in Adelaide: <ul><li>Our underlying skill shortage </li></ul><ul><ul><li>SA/Australia’s demographic shift </li></ul></ul><ul><li>The sources of growing labour demand </li></ul><ul><ul><li>Mine-related </li></ul></ul><ul><ul><li>High-tech </li></ul></ul><ul><ul><li>Water and energy-related </li></ul></ul><ul><ul><li>Emissions trading systems-related </li></ul></ul>
  17. 18. Examples <ul><ul><li>By 2011, 42% of the SA public sector will be over 50 (2007 numbers) </li></ul></ul><ul><ul><li>Growing demand for aged care facilities/ personal care workers due to the aging population </li></ul></ul><ul><ul><li>People needed to build/manage desalination plant(s) </li></ul></ul><ul><ul><li>SA – major supplier of renewable energy </li></ul></ul><ul><ul><li>Downstream effects of Olympic Dam and Prominent Hill </li></ul></ul>
  18. 19. The big HR issues: <ul><li>Finding and retaining suitable labour, </li></ul><ul><li>skill and talent </li></ul><ul><ul><li>workforce planning as a routine part of HR practice </li></ul></ul><ul><li>(Senior Manager buy-in already: see, for example, AIM VicTas and Hudson reports) </li></ul>
  19. 20. Attraction <ul><li>Relatively well-understood area </li></ul><ul><ul><li>Employer branding </li></ul></ul><ul><ul><li>Employer of choice models </li></ul></ul><ul><ul><li>Realistic job previews </li></ul></ul><ul><ul><li>Search for new pools of potential labour </li></ul></ul><ul><ul><li>Employee referral schemes </li></ul></ul><ul><ul><li>Alumni networks/better use of networks </li></ul></ul><ul><ul><li>Web 2.0 </li></ul></ul>
  20. 21. Retention – less well understood <ul><li>HR Management’s choices: </li></ul><ul><ul><li>No retention strategy </li></ul></ul><ul><ul><li>Retention strategy </li></ul></ul><ul><ul><li>Retention + attraction strategy </li></ul></ul><ul><ul><li>Business-driven workforce planning of retention + attraction strategies </li></ul></ul>
  21. 22. Retention management <ul><li>Why do people stay? </li></ul><ul><li>Why do people leave? </li></ul><ul><li>Everyone has the answers but what is the reality for your organisation? </li></ul>
  22. 23. Several recent examples <ul><ul><li>A well-managed organisation specifically recruited for entrepreneurs…a disproportionate number who then left to </li></ul></ul><ul><ul><ul><li>set up their own business </li></ul></ul></ul><ul><ul><ul><li>take better jobs </li></ul></ul></ul><ul><ul><li>Another had negligible turnover (which was dysfunctional) and lots of complaints because the workforce could see no better jobs around. </li></ul></ul><ul><ul><li>Elsewhere, a workforce hated the organisation but loved the work…turnover was high amongst younger workers, low amongst the older. </li></ul></ul>
  23. 24. Why do people leave? Current thinking Traditional account of turnover Unfolding Theory of Turnover and Job Embeddedness account <ul><li>People leave a job because they are dissatisfied and have a job to go to. </li></ul><ul><li>Only about 15-30% of actual turnover explained </li></ul><ul><li>Different triggers prompt different pathways out of the organisation </li></ul><ul><li>Job and organisational embeddedness can dampen the effect of dissatisfaction or shock </li></ul><ul><li>Management can improve or weaken embeddedness </li></ul>Different triggers % Different pathways out of the organisation Dissatisfaction + Job Alternative 26.0 The traditional explanation for turnover Dissatisfaction + No Job Alternative 7.7 Job is so unbearable – just had to leave Shock + Job Alternative 29.4 Pulled towards a better job Shock + No Job Alternative 14.9 Pushed out of job Planned leaving 22.4 Was going to leave when…
  24. 25. Why do people stay? Job embeddedness <ul><li>There are forces – personal, economic, professional – that attach people to their jobs and their outside work life. </li></ul><ul><ul><li>These forces vary between person, job, economic context, stage of life, business, etc. </li></ul></ul><ul><li>These forces can help/hinder the decision to stay. Management can influence aspects of this. </li></ul>
  25. 26. Job embeddedness and turnover…
  26. 27. Minimising potential causes of turnover <ul><li>Two steps: </li></ul><ul><ul><li>Identify the organisationally unique form of employee embeddedness </li></ul></ul><ul><ul><li>Implement appropriate policies to alleviate barriers to embeddedness </li></ul></ul>
  27. 28. How? <ul><li>Management can work out organisational job embeddedness, through: </li></ul><ul><ul><li>Job embeddedness and pulse surveys </li></ul></ul><ul><ul><li>Exit interviews </li></ul></ul><ul><li>This data can be obtained from: </li></ul><ul><ul><li>Existing workforce planning processes </li></ul></ul><ul><ul><li>Staff satisfaction/employee engagement studies </li></ul></ul>
  28. 29. Diversity management: soon to be commonplace <ul><li>Demographic changes will necessitate the adoption of retention strategies recognising diversity: </li></ul><ul><ul><li>Increased and changing female participation </li></ul></ul><ul><ul><li>Work-life balance </li></ul></ul><ul><ul><li>Older workers </li></ul></ul><ul><ul><li>NESB/migrant workers </li></ul></ul><ul><li>These policies are aimed at achieving fit of these groups within the organisation. </li></ul>
  29. 30. Immigration-based attraction and retention <ul><li>One big and under-utilised source of labour, skill and talent is the vast supply of migrant labour: </li></ul><ul><ul><li>India/Pakistan/China/South America/Africa </li></ul></ul><ul><li>Slow employer uptake on non-Caucasian labour </li></ul><ul><ul><li>Big four accounting firms establishing international student recruitment schemes </li></ul></ul>
  30. 31. Workplace planning as a routine activity <ul><li>All HR managers are involved in workforce planning (even if they are not aware of it) </li></ul><ul><ul><li>Either in an ad hoc way or through a Grand Workforce Planning Process or through a regular process </li></ul></ul><ul><li>The practical question is: how far and how detailed is the planning? </li></ul>
  31. 32. Demystifying workforce planning <ul><li>At its simplest, workforce planning is gap analysis : </li></ul><ul><ul><li>How many people do we need? (A) </li></ul></ul><ul><ul><li>How many people do we have? (B) </li></ul></ul><ul><ul><li>Gap = A-B </li></ul></ul><ul><ul><li>How will we fill the gap if A-B > 0? </li></ul></ul><ul><ul><li>What do we do if A-B < 0? (etc) </li></ul></ul>
  32. 33. Routine workforce planning <ul><li>Starts off with answering the gap question, then moves to more detailed questions: </li></ul><ul><ul><li>Quality of labour (training, development, mentoring) </li></ul></ul><ul><ul><li>Turnover and retention (and thus managerial practices) </li></ul></ul><ul><ul><li>Recruitment approach and sources, etc… </li></ul></ul><ul><li>… identify and then implement a solution. </li></ul>
  33. 34. Business-driven workforce planning <ul><ul><li>Organisation develops clear overall business strategy </li></ul></ul><ul><ul><li>HR undertakes gap analysis (to whatever level of detail needed) </li></ul></ul><ul><ul><li>HR implements the resulting plan </li></ul></ul><ul><ul><li>Revisited regularly with continuous evaluation </li></ul></ul>
  34. 35. Business-driven workforce planning Business strategy HR gap analysis Implementation Evaluation External environment
  35. 36. Retention and attraction <ul><li>Business-driven workforce planning will necessarily emphasise: </li></ul><ul><ul><li>Retention </li></ul></ul><ul><ul><ul><li>How do we keep the knowledge and skills we have </li></ul></ul></ul><ul><ul><ul><li>How do we maintain the productivity we already have? </li></ul></ul></ul><ul><ul><li>Attraction </li></ul></ul><ul><ul><ul><li>How do we find the knowledge and skills we want? </li></ul></ul></ul>
  36. 37. Business-driven workplace planning as a regular activity <ul><li>This process will quickly (and routinely) identify problems with current retention and attraction arrangements </li></ul><ul><li>This will lead to the search for appropriate solutions for your organisation. </li></ul>
  37. 38. Workforce planning <ul><li>This process should be driven by senior HR: </li></ul><ul><ul><li>Who else can: </li></ul></ul><ul><ul><ul><li>identify the key issues? </li></ul></ul></ul><ul><ul><ul><li>negotiate the resources? </li></ul></ul></ul><ul><ul><ul><li>engage with senior management? </li></ul></ul></ul>
  38. 39. Takeaway points <ul><li>1/ GFC is prompting restructuring </li></ul><ul><ul><li>Short-term: Cost-cutting/layoffs </li></ul></ul><ul><ul><li>Medium-term: Managing for productivity and retention </li></ul></ul><ul><ul><li>Long-term: Managing around labour, skill and talent shortage </li></ul></ul>
  39. 40. Takeaway points <ul><li>2/ In past recessions, employers have worried primarily about short-term cost savings at medium-term expense </li></ul><ul><li>3/ Clever employers will manage their recession strategy to maximise their post-recovery options </li></ul>
  40. 41. Takeaway points <ul><li>Retention will be the key medium-term issue </li></ul><ul><li>Workforce planning is the responsibility of every senior HR manager and the principal tool for HR planning </li></ul>
  41. 42. Thank you. Questions?

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