1.6 Organizational Success

Workforce planning is important to organizations because it identifies future organizational demands and then supplies the human capital to meet those demands.  When implemented correctly, workforce planning reduces the expenses associated with excessive turnover and absenteeism, low productivity, and an unproductive training program. In discussing workforce planning, it is important to understand two basic concepts: workforce characteristics and distribution of workforce characteristics. 

Workforce Characteristics

Workforce characteristics are those integral characteristics of the workforce that are necessary for organizational success, which can be influenced by human resource management policy decisions. Examples of workforce characteristics can include any of the knowledge, skills, or abilities that employees must have to perform their jobs correctly.

Distribution of Workforce Characteristics

The distribution of workforce characteristics describes the occurrence of an employee characteristic within the organization. Distribution can be measured as the number of individuals (inventory) or positions (requirements) distributed across the organizational levels within the firm. 

Over the last few decades, executives have come to realize the important relationship between the quality of the workforce and organizational performance. Many corporate executives have concluded that insufficient or unqualified human resources are as serious a production bottleneck as scarcity of capital, and that HR investments are as important a factor in company planning as the acquisition of plants, equipment, or materials. Workforce planning is important because it influences almost all other HR activities, including recruitment and selection, training and development, and career management. It is important that both HR professionals and line managers recognize that workforce planning is based on the organization's strategic needs.

Without workforce planning, an organization may find itself with a plant or office but without the people to run it. Organizations can no longer assume that the right number of appropriately qualified people will be ready when and where the organization wants them.  As a result, on a broad level, the workforce planning process can be assessed on the basis of whether or not the organization has the people it needs. 

Because the HR department is (or, should be) intimately involved with the firm's strategy, the HR department should take an active role in determining the organization's goals, plans, and objectives, and thus the linkages that exists between corporate and HR policies. Linkage between workforce planning and strategy is vital because it fosters HR strategies that parallel and support the firm's business plans.  Employee characteristics and HR policies vary depending on the organization's strategy.  For example, employee characteristics and HR policies will be different if a firm adopts an entrepreneurial strategy instead of a rationalization/maximize-the-profit strategy. In the case of entrepreneurial strategy, the organization needs to adopt HR policies that lead employees to be innovative and risk taking.  As such, policies may be more relaxed with incomplete integration, emphasizing results criteria, be future-oriented, encourage high employee participation, and recognize the accomplishment of groups rather than single individuals. In contrast, the rationalization/maximize-the-profit strategy, used by organizations at a mature stage, needs employees to focus on high output, low risk, and highly repetitive behavior in the short term.