WHAT IS PERSONNEL PLANNING?

Personnel planning is an important development in human resources management. It has

spread rapidly to nearly every size organization in almost every kind of business.

The primary function of Personnel planning is to analyze and evaluate the human resources
available in the organization, and to determine how to obtain the kinds of personnel needed to
staff positions ranging from assembly line workers to chief executives. Smaller companies put
Personnel planning in the human resource or personnel department. Some of the largest
corporations have established separate departments for this function.

WHAT ARE THE PURPOSES OF PERSONNEL PLANNING?

Personnel planning aims to reduce waste in employing people, lessen uncertainty about current
Personnel levels and future needs, and eliminate mistakes in staffing.

Its purposes also include avoiding worker and skills shortages, stopping the profit-eroding
effects of being over- or understaffed, preparing succession plans and shaping the optimum
future work force by hiring the right managers, technical specialists and skilled workers in
appropriate numbers.

WHAT ARE THE TRENDS THAT IMPACT PERSONNEL PLANNING?

A Personnel planner seeking to identify trends in human resource management should include
the following variables:

1. The state of the economy. The larger the

company's sphere of operations, the broader the
spectrum of economic activity to consider.

2. Demographics. The age and sex groupings of the

population and what may happen to them in the
future.

3. Employee losses or turnover. How will

retirements, deaths, promotions and resignations
affect the current number of individuals employed
at every level?

4. New skill requirements. What new skills will

be needed due to new technology markets or
products?

5. Obsolescence of current skills and its effects.

 6. The status and direction of materials prices.

7. The availability of materials--can they be cut

off by uncontrollable events?

8. Technological changes.

9. Social changes. What effects do upgrading of

educational backgrounds have on the willingness of
people to take menial or other types of lower
level jobs?

10. Labor costs. In which direction and how far will

they go? What are the alternatives?

HOW DOES A COMPANY ORGANIZE FOR PERSONNEL PLANNING?

While Personnel planning does not require formation of an independent department in most
companies, it does require a manager or executive responsible for studying trends and for
identifying and calculating Personnel requirements. The responsible person, who may have
other duties in the company, must know company policy and be acquainted with its long-range
objectives. He or she should understand what's involved in training and career development, and
should be able to design career programs to improve basic capabilities, develop professional
competence and teach new skills.

The Personnel planner must organize in the following areas:

- Maintenance of a good data base of the

organization's human resources.

- Acquisition, retention and career development of

the company's high talent people, such as engineers,
scientists, and key managers and executives.

- Supervision of the design of various training

programs.

- Surveys of current economic and social conditions

and their trends.

WHERE DOES THE PERSONNEL PLANNER FIT INTO AN ORGANIZATION?

Companies with fewer than 100 employees usually assign the Personnel planning function as
an additional duty to a specific executive, such as general manager, production manager or the
personnel manager. Large companies employ a Personnel-planning specialist and may create a
separate department for the function.

The position of the planner is not as important as the qualifications of the individual. The task
is advisory and investigative. Whoever runs the planning operation is a staff rather than line
person and will not issue direct orders to other managers.

WHERE DOES PERSONNEL PLANNING BEGIN?

Personnel planning begins with a clear understanding of the current Personnel situation in the
company. The first step is an analysis of current Personnel--numbers, skills and skill levels. The
second is the creation of a skills inventory.

HOW DO EMPLOYMENT APPLICATIONS CONTRIBUTE TO PERSONNEL PLANNING?

Employment applications, when properly constructed, can help build a database for Personnel
planning. Research starts with employment applications. The more detailed the application, the
more information the planner can gather.

From the employment application form, the Personnel planner can compile certain information
such as:

1. Number of secondary school graduates

2. Number of college graduates

3. Disciplines studied at colleges and types of

degrees earned

4. Listings of prior work experiences

5. Listings of types of work desired

WHAT INFORMATION SHOULD BE INCLUDED IN AN INVENTORY OF SKILLS

CURRENTLY AVAILABLE IN A COMPANY?

A well-designed skills inventory includes much information not directly related to on-the-job
skills and performance. Include many kinds of information for the start-up of Personnel
planning. Your organization may grow, shrink or have changing needs. It's easier to gather
information at the beginning rather than to re-work it at a later date.

Include the following data in your skills inventory:

 Name, address, telephone number Date of birth

Current position Skill level

Years (months) with company Education

Marital status Dependents and their

ages

Salary history Seminars and

training completed

Disciplinary actions Date of retirement

Future assignments Future assignments

(company planned) (employee
preferences)

Willingness to relocate Language abilities

Restrictions on assignments Hobbies

Published works Patents obtained

Special qualifications Unusual combinations

of high-level skills

For each group of employees, gather as much information in your skills inventory as possible.
Some companies supplement the information gathered from the employment application by
asking employees to fill out comprehensive personal history files after they've been on the job
for awhile. Add new items as they seem necessary. Be sure to keep the inventory up-to-date as
changes are made. And in all cases maintain only that information permitted by federal and state
law.

WHAT ARE THE STEPS TO DEVELOP HUMAN RESOURCE DATA FOR FUTURE
PERSONNEL NEEDS?

Organizing the data requires a certain amount of cross-filing and tabulating. In a small
organization, this can be done manually, though a personal computer will serve to make
organizing, updating and accessing data easier.

Large companies use their central data processing systems to store human resource data and
write programs to accomplish tasks the Personnel planner desires. Among the data processing
capabilities the planner should have are abilities to sort data relating to the length of service, pay
grade, educational level, disciplinary background, marital status, and number of dependents.
Other classifications are possible, especially when the data is gathered and stored by computer.
The Human Resources Data Sequence Checklist (7-01) graphically depicts the data gathering
and organization sequence.

HOW CAN OCCUPATIONAL CODES BE DEVELOPED TO HELP ORGANIZE AND

ACCESS EMPLOYEE INFORMATION?

An occupational code, which is a numerical designation for each type of job, focuses on the
qualities of each individual and permits planners to see at a glance not only the skills of each
individual, but the level of competence and other data.

Most planners do not need the precise designations of an occupational code that the
government has devised, though you can use such a system if available. Usually, a simple
alphabetical list of skills will serve the purpose of listing individuals with the same qualifications
under one heading.

For instance, a partial listing might look like this:

- Assembler, electrical

- Assembler, mechanical

- Machinist

- Mechanic, fork lift

- Operator, drill press

- Operator, milling machine

List the names of each person possessing a skill on the appropriate skill card, or store on a
computer. List those with combinations of skills, too.

WHAT ARE THE EFFECTS OF TURNOVER ON PERSONNEL PLANNING?

Turnover creates unnecessary expense and reduces efficiency. Productivity drops. When a
planner identifies high turnover in a specific department, the quality of training and supervision
in that department should be looked into. As a part of the human resources function, the planner
would contribute to the decision on what steps should be taken to remedy the turnover situation,
such as training, pay and incentive improvements, and the like. The human resources manager
would then go to management with the problem of turnover and make the combined
recommendations.
 It's also important to determine exactly why workers, supervisors or managers leave. Every
departing employee should have an exit interview and your company should maintain a record of
the reasons for leaving. You should ask individuals who quit to fill out an Exit Interview
Attitude Survey.

Plans to reduce turnover are an important part of a Personnel planner's job. The success in the
task of reducing turnover goes a long way to insuring that a company has the right number of
persons with the right skills to fulfill the company's needs and make it a successful organization.

WHAT USES DO PERSONNEL PLANNERS MAKE OF TURNOVER FIGURES?

Planners use turnover figures to pinpoint departments where turnover is occurring and to
discover its causes. For instance, the planner may find that poor supervision is an important
cause of turnover. If so, he or she can take steps to have something done about the quality of
supervision in the affected area.

Age is also a factor in turnover. Older employees tend to be more stable than young workers.
Overqualified employees are very unstable and entry level workers are likely to quit soon after
they are hired.

Among executives, a high turnover rate among the younger ones often indicates that something
is wrong with the way the company manages its career advancements. Personnel planners
should bring these matters to the attention of top management with recommendations for
corrective actions.

HOW DO CHANGES SUCH AS AUTOMATION AND COMPUTERIZATION AFFECT

PERSONNEL PLANNING?

When planners examine company records, they should learn whether the introduction of new
machines, methods or materials have altered the numbers of people with certain skills. Such
information is important for forecasting future requirements.

If the introduction of a computer-controlled machine, for example, results in the elimination of

machine operators, these skills should be eliminated from the inventory of needed skills. They
should be replaced, of course, with those needed to run the computer-controlled machines and
with specialists skilled in electronic maintenance.

As planners uncover such changes and trends, they can concentrate on the new skills needed
and no longer consider those that are not. Turnover figures also affect training programs. The
planner examines them to find out how well or poorly such programs are serving the company's
objectives.

WHAT IS THE ROLE OF THE PERSONNEL PLANNER IN CAREER PLANNING?

 The Personnel planner usually has a distinct advantage over other managers and executives
when it comes to career matters. It is essential for successful execution of the job that the
planner be very clear and up-to-date about the organization's objectives.

The objective of career management from the company's viewpoint is to ensure the availability
of qualified successors for every important position. Managers and supervisors want to get
ahead, earn good salaries and gain new opportunities. Only rarely can these individuals clearly
define what getting ahead means to them.

The planner, though, knows what sort of person should be in a specific job, or as a backup for a
specific person. Through skillful career guidance, the planner has the leverage to encourage
supervisors and managers to prepare for advancement.

HOW DOES THE PERSONNEL PLANNER PREPARE FOR FORECASTING FUTURE

PERSONNEL REQUIREMENTS?

Practical Personnel forecasting should generally be limited to five years or less. Society and
technology change too rapidly to permit accurate forecasting for longer periods of time.

The planner begins by studying the company's operational plan in detail to determine its
objectives regarding:

- Capital investment in buildings and new machinery

- Proposed changes in product design

- Proposed introductions of new products

- Changes in materials to be used

- Changes in sales volumes forecast

In addition to these major influences on future Personnel requirements, the planner considers
turnover rates, retirements, internal promotions, and effects of improved supervision. He or she
must also consider the learning curve, that is, how long it takes for qualified personnel to reach
full output after any changes have been made.

HOW DOES THE PERSONNEL PLANNER ESTIMATE THE NUMBERS OF PEOPLE AND
THE SKILLS THE COMPANY WILL NEED?

Estimates of the company's economic activity, usually prepared in the marketing or budgeting
area, form the basis for the planner's calculations. He or she first determines the relationship
between how many and what kinds of people the company requires to produce the current
volume of product.

There is not a linear relationship between increases in volume and Personnel requirements. An
increase of 50 percent in annual production will not necessarily require a 50 percent increase in
managers. It might, though, require a 50 percent increase in entry-level workers, depending
upon their productivity levels.

The Personnel Requirements Planning Form--Short Term, is used by planners to estimate the
numbers of people and skills a company will need within the next year. The Personnel
Requirements Planning Form--Long Term, is used for periods beyond one year. When using the
worksheet, a planner discusses actual needs with various managers. He or she also gets input
from top management. The planner enters on the worksheet a consensus, tempered by personal
knowledge and experience, of everyone's best estimates.

Forecasting high-level personnel needs is directly related to the accuracy of the company's
plans, particularly its long-range ones. The planner must make allowances for promotable
individuals within the company, as well as the need to recruit managers from outside.

Requirements for high-level personnel do not appear as quickly as for production people. The
business can grow substantially before it becomes necessary to create new areas which require
managers or new divisions or groups headed by general managers. A planner must take these
lags in the timing of personnel requirements into account.

WHAT ROLE DOES THE PERSONNEL PLANNER PLAY IN SUCCESSION PLANNING?

Every company should have a succession plan that identifies a qualified subordinate who is
ready to replace each key manager or executive. While the planner has no authority to select
successors, he or she should, with the help of top management, prepare a succession chart that
does name subordinates who can step up when a superior departs.

The Succession Chart (7-05) should, of course, be kept strictly confidential. Advance
publication is likely to demoralize managers who find themselves passed over.

The names above each job title are the incumbents. The names below the line are the
prospective successors. A more complete chart would extend further to show the succession at
more levels, especially in a large company. To be useful, the succession chart must be kept up-
to-date.

HOW DOES PERSONNEL PLANNING HELP COPE WITH SKILL SHORTAGES?

Rapid advances in technology cause serious mismatches between the jobs that are available
and the number of people with the necessary skills to fill those jobs. In addition, rising levels of
education have brought with them rising expectations among employees at all levels. As a
result, some workers will not accept training or positions that they believe are not beneficial to
their careers.

By analyzing tasks, the Personnel planner often finds that a company is not achieving
maximum efficiency in its use of a certain type of talent. Some jobs are held by individuals who
have more advanced skills or training than is needed. Sometimes the task can be done by a
lower-level worker, rather than, say, a university educated employee. The planner should bring
this situation to the attention of managers who have the authority to make the necessary changes
and thus relieve what seems to be a skills shortage.

Another approach which the planner might use would be to redesign jobs. Reducing boredom
and monotony, and increasing comfort, often increases productivity. As a result, positions for
which skills are in short supply may not require more personnel, as more productive and skilled
individuals produce more.

One company, faced with a shortage of skilled warehouse workers, built automated
warehouses. That reduced the number of workers needed while increasing efficiency in the
warehousing operation. Other options include finding machines that can do the work; breaking
down skilled jobs into less skilled components; or modifying the product to eliminate the need
for the skill that is in short supply.

WHAT IS INVOLVED IN ADMINISTRATIVE CONTROL REGARDING A PERSONNEL

PROGRAM?

The planner must monitor the system on a continuing basis to ensure that it gets results. Your
Personnel planner will benefit from clearly expressed interest in the program from top
management. Such recognition gains cooperation throughout the organization.

Whatever actions are taken in Personnel planning that affect the skills or experiences of
workers, office employees, supervisors or managers, must be recorded. All such data must be
made part of each individual's personnel record. They must also be entered on the planner's
skills inventory. Only when this is done can the planner know the nature and number of
personnel and skills available.

Regular reports from department heads play a part in administering the Personnel planning
program. Information the Personnel planner should receive on a regular basis includes:

- Absentee rate

- Turnover rate

- Hard-to-fill jobs

- Names of exceptional individuals and their skills

- Requests for training programs

 - Individuals who have been trained in certain skills
but are not working at the skill in which they are
most proficient

Monitoring the program allows the Personnel planner to compare what was planned with what
is actually happening. Thus, monitoring provides an important form of administrative control.