Organisational Management and Information Systems: Managing Human Resources Is Especially Hard during a Time of Economic Uncertainty, Writes Alan Marsden, Who Offers His Guide to HR Planning

By Marsden, Alan | Financial Management (UK), July-August 2009 | Go to article overview

Organisational Management and Information Systems: Managing Human Resources Is Especially Hard during a Time of Economic Uncertainty, Writes Alan Marsden, Who Offers His Guide to HR Planning


Marsden, Alan, Financial Management (UK)


There has probably never been an era in living memory when the long-term future of the economy has been so hard to predict. A BBC survey of leading economists in April found a wide divergence of opinion, with forecasts ranging from an upturn in 2010 through to a depression lasting a decade or more. On the other hand, there is a broad consensus on two things: that the recession's effects will be with us for some time, entailing yet more bankruptcies and job losses; and that the upturn will come--at some point.

In such uncertain conditions both business planning and HR planning are especially difficult. This becomes clear when you consider the nature of the latter process. In essence, this involves comparing an organisation's existing human resources with its forecast need for labour in the light of its corporate objectives and then specifying the measures necessary for the acquisition, training and redeployment or divestment of staff. It also involves the estimation of labour turnover, an analysis of the consequences of changes in working practices and the preparation of skills inventories among the organisation's more important processes.

[ILLUSTRATION OMITTED]

It's important to note that the HR plan depends on the business plan, because the need for labour is a derived demand. The diagram opposite shows a generally accepted framework--proposed by Laurie Mullins in Management and Organisational Behaviour (FT/Prentice Hall, 2007)--outlining the four main stages of HR planning:

* An analysis of existing staffing resources.

* An estimation of changes in resources by the target date, considering factors such as staff turnover, improvements in employees' performance and external factors such as the availability of labour. This determines the supply forecast.

* A forecast of staffing requirements needed in order to achieve the corporate objectives by the target date. This determines the demand forecast.

* A series of measures to ensure that the appropriate resources are available when they are needed. This reconciliation of supply and demand is the basis of the HR plan and action programme.

Of particular interest in the context of this recession is the fact that effective HR planning, like business planning, depends on accurate demand forecasts. The downturn's global nature has made such forecasts especially hard. But what is apparent is that, while many industries are suffering, others are still prospering. Supermarket chains, for example, are having little difficulty with HR planning because demand is holding up and it's almost business as usual for them. Indeed, companies such as Asda and Tesco have completed their HR plans for the coming year and plan to recruit several thousand more people. On the other hand, car makers are facing low demand and HR planning is likely to be most difficult for them.

The immediate future is fairly easy to predict: demand is falling off a cliff, with sales having declined by between 20 and 40 per cent year on year for most manufacturers. In such circumstances short-term HR planning is virtually irrelevant as firms are forced into cost-cutting measures such as redundancies, short-time working and negotiated pay cuts. But planning for the longer term is a big headache for them. Most know that, if they are to be competitive when the recovery comes, they need to have the right people and plant in place to enable them to hit the ground running. The problem for them is how to retain sufficient skills so that when the upturn comes they are in a position to resume production quickly.

So far, responses have varied from company to company and from nation to nation. The recession's impact on the industry has been such as to result in pleas for state assistance in a number of countries. In the US General Motors and Chrysler have sought loans worth billions of dollars to tide them over, but even this help hasn't prevented large-scale job losses (both companies are being financially restructured as FM goes to press). …

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Organisational Management and Information Systems: Managing Human Resources Is Especially Hard during a Time of Economic Uncertainty, Writes Alan Marsden, Who Offers His Guide to HR Planning
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