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Essay: HRM strategies and workforce planning

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The UK government wants to reduce unemployment to help the economy. One way that the government is helping the tight labour market is apprenticeships. The government UK website states that apprenticeships combine practical training in a job with study. To encourage employers to provide apprenticeship – and to raise additional funds to improve the quality and quantity of apprenticeships – the UK government introduced the apprenticeship levy. If an employer has a wage bill of over £3 million per year, they must pay the apprenticeship levy. The apprenticeship levy is a levy on UK employers to fund new apprenticeships. The levy is charged at a rate of 0.5% of an employer’s total wage bill. Each employer receives an allowance of £15,000 to offset against their levy payment. Reports have highlighted that Britain is behind many of European countries, with a shortage of young people’s skills and education. As a result, the UK Government introduced the apprenticeship levy. This is intended to promote the use of apprenticeships and to assist the government in reaching its target of three million or more apprenticeships by 2020. In order to increase the range of skills within the workforce, more firms are being encouraged to take on apprentices under the age of 25; giving them the opportunity to create new talent pools that address the skills shortage within their company.

The Spanish Government

The Spanish government introduced a reform act in 2012, which benefited the Spanish economy in two ways. Firstly, they increased the internal flexibility of firms by giving greater priority to collective bargaining agreements at the firm level, over those at the sectorial or regional level. This led to significant wage moderation, affecting workers living standards and contributing to safe jobs. Secondly, a reduced rigidity of the Spanish legislation on dismissals gave employers incentives to hire more permanent employees. (Leandro and Romero, 2016) The reforms carried out at the end of the 1990s and during the first decade of the 21st century have accentuated the differences between stable workers and those workers with a precarious presence in the labour market. The reform also set time limits for court proceedings hat were for dismissing employees in order to help reduce long court cases. Long court cases resulted in organisations paying the highest amount of dismissal pay rather than paying court fees. This resulted in the implementation of new permanent contracts, which were directed at younger employers with a one-year trial period, further resulting in fewer dismissals.

A report in “The Corner” titled “Spain no longer has trade unions and nobody cares” stated that the two biggest trade union headquarters in Spain had nearly 3 million members in 2008 and they now have no more than 2 million. Barciela (2007) stated that the majority of these members work in the public sector.

An article in Focus Economic identifies that one of the most important accomplishments of the reform act was that it made wages more flexible. This was needed to help the Spanish economy, as it previously had “unsustainable real wage growth compared to its low productivity”. Making wages more flexible helped boost cost competitiveness. Nonetheless, the reform did not solve all the issues that the Spanish labour market faces. For example, it did not solve the issue of high numbers of temporary workers. A quarter of jobs in Spain are temporary and often badly paid, providing little to no incentive for organisations to invest in their employees and help their development. (Reynolds, 2017)

Employer of Choice

“A term used to describe a public or private employer whose practices, policies, benefits and overall work conditions have enabled it to successfully attract and retain talent because employees choose to work there” IQPC

The Employers-of-CHOICE (EOC) proposed six principles of choice which evolve around the intrinsic aspects of motivation: (1) Caring about employees; (2) Honesty and fairness in management; (3) Open communication, to help build a positive environment; (4) Involving employees in decisions, which in return boosts commitment to the success of an organisation; (5) Coaching employees, to inspire them to develop and achieve goal; and (6) Ethical management, which brings meaningfulness and purposefulness.

A survey conducted by Gallup showed that 24% of employers are engaged, 51% are neutral and 25% are disengaged. If employees are disengaged it can lead to significant costs for an organisation, increased absence and attrition, as well as lower productivity. If employees are engaged, it can lead to engaged customers.

Porter’s Generic Strategies

Porter put forward a generic business strategy that could be used to help organisations become an ‘employer of choice’. This looks at the extent to which the scope of the organisation relates to its position within the industry. Porter proposed that an organisation’s strengths fall in to one of two categories: cost advantage and differentiation. If these are applied to a broad or narrow scope then it results in three generic strategy results: (1) focus, (2) cost leadership, and (3) differentiation. (Quickmba.com, 2010)

Cost Leadership Strategy

This strategy focuses on a low cost produce in an industry for a certain level of quality. Therefore, an organisation will sell product at a lower price than its competitors in the industry, in order to gain a profitable advantage. Take Primark or Lidl, for example: both organisations sell product at a lower price than their competitors with a slightly lower quality. (Quickmba.com, 2010)

Differentiation Strategy

This strategy focuses on a higher quality product or service – which is in someway unique to whatever an organisation’s customers value – putting them ahead of competitors. An example of this is Waitrose, who pride themselves on their quality of food, despite their prices being higher than other supermarkets: customers by their product for the quality. (Quickmba.com, 2010)

Focus Strategy

This focuses on a particular service or product – looking to achieve a cost advantage or differentiation. This results in customer loyalty and discourages other organisations from competition. (Quickmba.com, 2010)

EOC McDonald’s

In a tight labour market, businesses have to sell themselves to prospective employers. This can be achieved through wages, benefits and good branding. An example of this is McDonald’s. McDonald’s have recently put out an advert about why employers should work for them. They state that working at McDonald’s is about ‘you’; relating to principle 1 in the EOC. In fact, McDonald’s are in line with all six of the principles above. Their promise is around their people and they show this through offering employees opportunities, championing communities and offering flexibility. They list eight things which make McDonald’s a great place to work: flexibility, support, a loyal team, responsibility, opportunities, life skills, diversity, and friendship. Moreover, in relation to Porter’s generic strategy McDonald’s take a cost leadership approach and provide a product at low cost compared to competitors (for example, their 99p cheeseburger).

Employer Branding

The CIPD define employer brand as ‘…a set of attributes and qualities, often intangible, that makes an organisation distinctive, promises a particular kind of employment experience, and appeals to those people who will thrive and perform best in its culture’. They also note that all employers in some way brand themselves to allow them to stand out in the labour market. A good employer brand helps an organisation compete for talent and retain and engage employees.

Currently, DCK are looking to rebrand themselves. To do this, a new logo has been developed and the organisation has renamed from DCK Concessions to DCK Group. This is as a result of DCK branching out to design and create other fashion items, such as bags, umbrellas and clothing (rather than solely focusing on jewelry). To promote this across the organisation and in the recruitment market, new letterheads have also been made, alongside a new website and social media accounts.

Question 3

Workforce Planning

Workforce planning is an organisation-wide concept and is an instrument to establish staffing levels and help organisation budgets; enabling the company to meet its objectives. It is about producing information and then analysing that information to advise on future demand for employees and skills. This is then translated into a collection of actions that will build on the existing workforce. Workforce planning involves “getting the right number of people with the right skills, experiences, and competencies in the right jobs at the right time”

Human Resource Planning, A Strategic Approach to Employment, Sharma, 2009

There are two types of workforce planning: hard and soft. CIPD (2018) Hard workforce planning is based on quantitative analysis, predicting how many employees, with what skills, are expected to be needed. Soft workforce planning ‘is more explicitly focused on creating and shaping the culture of the organisation so that there is a clear integration between corporate goals and employee values, beliefs and behaviors’ (Marchington and Wilkinson, 1996). It’s about finding a strategy within which information can be considered. The CIPD note the main stages of workforce planning to be: understanding the organisation and the operating environment, analysis of the workforce, determining future workforce needs, identifying gaps in the workforce, developing an action plan, and monitoring and evaluating action plans and solutions. Workforce planning aligns the strategic and business planning process with hiring and retention planning. When workforce planning is properly implemented, it can have many benefits. It can help identify issues early to avoid disruptions and costs. It can also help to identify roles and shortage of talent in the organisation, in order to fill the roles. An example of this is when an organisation is looking to expand their workforce and they can identify what sort of employees they need in order to make the expansion properly. Another advantage of workforce planning is that it can help an organisation retain employees. For example, if there is high turnover in a certain department, workforce planning can help an organisation find the cause of that certain turnover and put strategies in place to prevent it and retain employees. Furthermore, another advantage of workforce planning is that it can help avoid delays or disruptions that can have a negative effect on business profits.

Nonetheless, there are disadvantages of workforce planning. For example, the future is uncertain and there are many external factors that can have an affect on the employment opportunities, such as technological, political and cultural factors. Therefore, organisations cannot rely on workface planning. A further disadvantage of workforce planning is that it is time-consuming: organisations need to acquire all sorts of information and personal requirements of the workforce and then find suitable solutions. The process can also be an expensive one. All the work that is needed to carry out the process involves manpower, which can be expensive.

There are different tools for workforce planning for example: supply, demand, pestle, SWOT and gap analysis.

Pestle Analysis

A pestle analysis is a management framework and a diagnostic tool, which helps identify external factors that may impact the organisation. Pestle is an acronym for the following:

  • Political – This takes into account the government’s policies and political stability (e.g. tax impactions, trade agreements and regulations).
  • Economic – This takes into account exchange rates, economic growth, globalisation and inflation. It will also consider cost of living and labour costs.
  • Social – These factors include lifestyle choices, cultural norms and expectations, such as career attitudes and work life balance.
  • Technology – This looks at how an organisation uses technology as it is constantly changing and what disruptions this may cause the business.
  • Legal – Legal requirements are constantly changing, so organisations need to ensure compliance. For example, the new data protection (GDPR), labour law and employment tribunals.
  • Environment – This looks at the impact the organisation has on the environment. For example, companies have corporate social responsibility and need to ensure ethical source of goods and labour.

This tool helps identify the specific risk to an organisation within their industry. It would be useful to use as a starting point for a business plan, as it would help board members and senior management have an overview of the organisation and where it is going.

Supply Analysis

A supply analysis includes understanding the present workforce and how that may change with time. It looks at what future skills/workforce an organisation is likely to need in the future, it helps determine how many employees, what skills are needed, and when they will be needed. Supply analysis helps to reduce disruption from resignations, retirements and replacements of employees.

Demand Analysis

A demand analysis is a capability approach, which identifies the required skills, values, knowledge and attitudes that the future workforce needs. This helps an organisation be the best for delivery.

Gap Analysis

A gap analysis is a method that integrates the steps from supply and demand to identify any gaps in the present or future. An organisation should then prioritise the gaps that are vital for future success. For example, DCK have signed another online brand. Since the majority of DCK brands are retail stores instead of online retailers, they will need to look at what workforce they have and what workforce they need in order to deliver for the online brand.

The CIPD defines succession planning as ‘the process of identifying and developing potential future leaders or senior managers, as well as individuals to fill other business-critical positions’ (CIPD, 2018). It is a ‘middle manager’ concept and entails an integrated, methodological approach that helps identify, develop and retain skilled organisations are faced with skill shortages. There are five steps to succession planning:

Step 1 – Identify key areas and positions.

Step 2 – Identify capabilities for key areas and positions.

Step 3 – Identify interested employees and assess them against capabilities.

Step 4 – Develop and implement succession and knowledge transfer plans.

Step 5 – Evaluate effectiveness.

(Tbs-sct.gc.ca, 2009)

Succession planning allows a company to reduce risk. If a plan is properly put together, then it will help an organisation avoid financial loss and inefficiencies. For example, if a senior member of an organisation leaves, there should be a plan in place to replace the missing skill set; which will minimise loss of productivity. However, succession planning in some cases can be a waste of resources. Succession planning can be costly and time consuming; meaning that if it is put in place for something that is very unlikely to happen, it could be a waste of time. (Wolfe, 2017).

A practical example of where succession planning was advantageous for an organisation is when IBM announced that Virgina Rometty would be taking over as senior vice president (SVP) when Samuel J. Palmisano retires. Virgina had progressed through the ranks at IMB from an entry-level position to become a SVP. IMB ensured that a structure was in place to provide such a pathway for employees. (Ang, 2018)

A career development plan is an individual concept and is a list of short-term and long-term goals that employees set for their future and current jobs. It is defined as ‘a deliberate process of: (1) becoming aware of self opportunities, constraints, choices and consequences; (2) identifying career-related goals; and (3) programming work, education, and related developmental experiences to provide the direction, timing and sequence of steps to attain a specific career goal’ (Werner and DeSimone, 2012)

Advantages and disadvantages of Career Development Planning

Advantages of career development planning include to ability to identify career opportunities and room for self-development, in order to put a plan in place to reach them. It can also help with job satisfaction if you are able to see and reach your goals, as well as helping employees get promotions (which in turn increases retention and productivity).

Nonetheless, career development planning can have its disadvantages. For example, it can be time-consuming and lacks flexibility: if an employees’ circumstances change or the plan becomes outdated, it will no longer be valid.

The business cycle fluctuates between economic growth and depression. It considers expansion, peak, recession, depression, trough and recovery. Employee terminations can be a result of excess labour, which could be caused by the economy, differentiation within markets, or bad management

If the human resources plan isn’t succeeding then the workforce needs to be downsized. This is the process of reducing the size of the workforce by getting rid of employees. The human resources plan identifies that employee numbers need to be reduced and then enables HR to develop succession and career development plans for the employees that are left. In order to reduce employees an organisation could turn to redundancies or a recruitment freeze.

The business dictionary defines recruitment as ‘The process of finding and hiring the best-qualified candidate (from within or outside of an organisation) for a job opening, in a timely and cost effective manner.’ CIPD acknowledge that the duration and difficulty of a recruitment process can vary across organisations and roles; however, there are four stages that should be included in all recruitment: (1) defining the role, (2) attracting applicants, (3) managing the application and selection process; and (4) making the appointment. ACAS provide best-practice tips for recruitment for organisations. They state that an organisation needs to firstly work out the number of new employees they need to recruit and what specific skills they are looking for (i.e. a job description). In order to do this, the employer will need to conduct a job analysis.

Page Personnel define job analysis, as ‘the process used to collect information about the duties, responsibilities, necessary skills, outcomes, and work environment of a particular job’. It is important to conduct a job analysis in order to know exactly what employee you want to join the organisation. A job analysis will include: what the job involves, knowledge/skills need to fulfill the role, what sort of attitudes an organisation looks for in an employee, the context of the job, and the jobs responsibilities.


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