International

Journal of Planning for Human Resources

Manpower
15,6
in the 1990s: Development of
an Operational Model
36
Rachid Zeffane and Geoffrey Mayo
University of Newcastle, New South Wales, Australia

In the past decade or so, human resource management researchers and

International Journal of Manpower,
Vol. 15 No. 6, 1994, pp. 36-56.
© MCB University Press,
0143-7720
professionals have tended to place greater emphasis on employee attitudes and
on the development of personnel strategies to search for the enhancement of
positive employee feelings and commitment. On the whole, these strategies
have lacked sufficient concentration on the need to control the flow of personnel
within and across organizational boundaries[1]. As a result, human resource
planning (HRP) has taken a backward step in priority-placing within the overall
human resource management system [2]. In the current, highly uncertain socio-
economic climate, the HRP function is emerging as a focal human resource
activity as it is increasingly becoming an essential (and very prominent)
boundary spanning function[1,2]. As such, that function endorses the crucial
role of dealing with the necessary changes in the volume and make-up of the
workforce.
Fundamentally, HRP consists of a range of tasks designed to ensure that the
appropriate number of the right people are in the right place at the right time. In
essence, it involves assessing current levels and utilization of staff and skills,
relating the internal elements to the market demand for the organization’s
products, and providing alternatives to match human resources with
anticipated demand (see for example[3]). The planning for human resources is
fundamentally a dynamic process that endeavours to monitor and manage the
flow of people into, through, and out of the organization in order to achieve an
equilibrium. This process has to take into consideration the total corporate plan
and the many environmental issues that affect the employment of people. In
broad terms, the major factors that can influence HRP requirements can be
divided into two major sets of parameters: first the external forces, such as
market forces, technological change, changing nature of the workforce and the
emerging patterns of work arrangements, and second, the internal parameters,
such as the age structure of the workforce, productivity, and labour mobility.
This article outlines some of the major issues surrounding the HRP function
in the face of the above uncertainties and changes. An operational HRP model
designed to cater for these is proposed and outlined. The article culminates with
practical suggestions for applying the model by means of simple spreadsheets
or a basic computerized decision support system. Resulting from such
suggestions, the basic principles and mechanics of a software system
(“RightPlan”) currently being developed are put in perspective.
Emerging External Forces Human
The external (or environmental) forces affecting the process of HRP are many, Resources in
and encompass those pertaining to the nature of the technology, the nature and the 1990s
type of competition, the dominant legislation and regulation by government,
and the changing social norms and expectations. At the macro socio-economic
level, there are a number of pressures calling for changes and creating the
opportunity to alter the shape, nature, and organization of work. There are also 37
strong predictions that in the 1990s, an increasing proportion of the new labour
entrants will be women, members of minority groups and immigrants[4,5]. The
issue of women in the workforce has also become more pertinent for
appropriate human resource plans. This is even more evident when one
considers that by the end of the century, women will in fact make up over 50 per
cent of new entrants to the workforce and will bring a greater variety of the
skills employers need[6]. There is, however, some agreement that jobs that can
be performed on a project basis may in fact be more suited to working mothers.
This might facilitate the entry of females in certain professions, previously less
accessible to them. The argument here is that more flexible work arrangements
will reduce employers’ fear of high turnover among females[7]. A better
understanding of these trends will help delineate appropriate requirements in
devising well-balanced (and objective) human resource plans and employment
policies to address the gender issues. In this context, human resource planners
and managers must take into consideration the growing equal opportunity
constraints laid-out (and backed-up) by more forceful statutory and legal
systems[8]. Combined with other external factors, these forces and aspirations
are exerting greater pressure on human resource management in general and
on the planning function in particular. In practice, they are making greater
demand for more open communication throughout the organization, more
flexible benefit systems tailored to employees’ needs, and perhaps a much
greater reliance on employee training/retraining schemes[9,10].
In response to such current socio-economic pressures, many companies are
making greater use of contractors and supplementary labour to align the
growing aspirations of employees for independence/flexibility in some
positions, with company growth. These and other developments in work-
patterns have been grouped under the general term “flexibility” or “flexible
work arrangements”[11]. Flexibility, in the form of employment, incorporates
temporary work, shortened working time and functional flexibility[12]. An
important phenomenon brought about by recent socio-economic forces is the
increasing role played by part-time work in various economies. In many
countries (including Australia) the continued growth of the service sector is
contributing to significant increases in the number of temporary and part-time
job openings[6]. As a result, part-time employment has been undergoing rapid
expansion. In some professions, temporary work is increasingly appealing to
people of all ages and levels of experience with various socio-professional
constraints[13].
International As skill requirements are shifting, management may not always need to
Journal of assume the responsibility for the substantial costs and efforts involved in
Manpower retraining this group of people. The underlying argument is that, because
minority groups may hold a variety of skills (some of which are extremely
15,6 valuable) they can perhaps be hired through a contracting organization to meet
immediate staffing needs, without having to hire full-time employees. Job-
38 hopping has the potential to become a very desirable mode of work for some
employees such as those with high professional profiles or those who have no
desire for continuous employment. For instance the brighter, better educated
and more innovative professionals may develop a tendency to become bored
with the more conventional work arrangements and experience the urge to
move ahead a lot faster. Downsizing has tended to lead firms to reduce the
competent and professionally qualified as well as the less competent and less
qualified. In this respect, job-hopping seems to be a convenient and suitable
alternative, particularly for those individuals with a greater need for personal
control.
However, dealing with job-hopping is a complex issue and the more proactive
companies are finding (and devising) suitable ways to benefit from it[14],
essentially by giving a fair appraisal to the job-hoppers. By and large, where
positive approaches to job-hopping have been endorsed, the results have tended
to nurture a much greater impetus for creativity.
In this perspective, part time and temporary employees should therefore be
an integral part of an organization’s human resource plan. Appropriate plans
need to take into consideration the intrinsic contribution that part-timers and
job hoppers can make to the overall output of the organization, particularly in
terms of productivity gains. However, this could turn out to be a rather intricate
exercise as the parameters affecting the productivity of part-timers and job
hoppers are not always the same as those that apply to full-time employees. For
a start, it is much more difficult to secure adequate commitment from this work-
force to the overall goals and values of the organization. Also, it often takes time
for this group to adjust to the new job. There is a learning process (including the
potential associated training, induction and orientation costs) that must be
catered for. During the training and adjustment period, productivity (in most
cases) will be below that expected.
The combined consideration of both internal and external forces makes HRP
a dynamic process that endeavours to manage the flow of people into, through,
and out of the organization in order to achieve an equilibrium. Overall, an
integrated HRP system requires determining both internal and external factors
affecting strategic plans. Through developing economic and environmental
scenarios, human resource planners attempt to identify external factors that
will affect the organization and calculate the impacts of such change on
strategic human resource plans. In balancing out both internal and external
forces, the human resource plan will lead to a series of implementation
decisions. Such decisions may be taken in the spirit of acquiring or reducing
employment levels. The following sections outline the basic principles and the
emerging trends in devising and implementing personnel strategies to deal Human
with workforce acquisitions and reductions. Resources in
the 1990s
Salient Internal Parameters
In the context of the supply-demand equation, a range of internal factors require
consideration for the purpose of evaluating existing (or anticipated) supply
from within the organization. The supply side issues that HRP should address 39
include the organization’s policy on growth from within or by means of outside
recruitment; the policy on pay and remunerations, and the organization’s view
on employee development. In that context, the conventional human resource
plans take into consideration a series of supply side statistics, such as company-
growth, the age distribution of employees, skill levels, turnover ratios and the
overall profile/distribution of employment across job categories. Among all
these, age and retirement are emerging as important considerations in
workforce planning in the current socio-economic climate. These factors (i.e.
age and retirement) are strongly related in the sense that retirement takes place
on the attainment of a certain age. Catering for age is necessary and is
becoming increasingly the subject of more elaborate mathematical modelling
for workforce planning (see for instance[15]). Additionally, HRP has to take into
consideration the total corporate plan which would incorporate set or
anticipated productivity standards[13].
The more contemporary approaches to HRP need to consider current (and
anticipated/future) changes in the make-up and aspirations of the workforce.
Long-term macro-level forecasts seem to suggest that people in the future will
have a greater desire for self-development and discovery[16]. These aspirations
will trigger requirements for changes in existing corporate structures and
management systems. As a result, human resource professionals and their
organizations may capitalize on the advantage of potential employees who may
be more creative and self-motivated, but they also will face the problem of
developing an environment that will attract and hold such individuals.

Downsizing, Resizing or Rightsizing: The Dominant Staffing Issues

of the 1990s
Reorganization, realignment, and restructuring seem to be the most pertinent
corporate issues of the 1990s[17]. Consequently, when an organization enjoys
sustained growth in business, it needs to develop and communicate a
supportive human resources strategy underlining the acquisition of the
appropriate number and type of employees to support the growth. This may
simply amount to senior management outlining an overall development effort
by clearly communicating what the new demands are/should be. The fulfilment
of additional staff entails engaging in the process of recruitment and selection.
Where the additional in-takes are significant, this practice may be referred to as
“resizing”. Conversely, in recent times there has been a greater emphasis on
reducing (rather than increasing) personnel levels[18]. In fact, these changes
have resulted in an intense increase in the numbers of highly skilled, educated,
International and talented people being made redundant. This trend is commonly referred to
Journal of as “downsizing”. As a distinct strategy from that of “downsizing” or
Manpower conventional “resizing”, “rightsizing” advocates a strategy strictly guided by a
carefully worked out human resource. It is an approach that takes into
15,6 consideration both economic and social costs. By observing a rightsizing
philosophy the current upheavals caused by over-emphasized personnel
40 downsizing might be significantly minimized. In other words, by pursuing a
human resource plan mounted on the fundamental principle of rightsizing,
managers can refrain from using ad hoc functional evaluation approaches to
outline their restructuring strategies[17].

Downsizing or Rightsizing?
As companies face cutbacks resulting from economic downturns, tightened
budgets, and stronger competition, a growing number of professionals,
managers, and employees at various levels are being forced to join the ranks of
the unemployed. These trends seem to revolve around the belief that the new
organization will survive by focusing on the core (or lean) staff concept
[14,19,20]. To help meet the needs of both employers and former employees,
many companies are turning to outplacement programmes[14,21]. The
underlying rationale here is that, if downsizing is properly planned and
managed with sensitivity and care, the detrimental results can be curtailed[20].
The exercise of workforce reduction has been pre-empted by a set of
managerial responses to fundamental structural changes such as mergers and
acquisitions[22,23]. In general, the restructuring has tended to result both from
externally oriented initiatives, such as deregulation, mergers and acquisitions,
as well as internally oriented initiatives, such as technological automation and
various workplace reforms[17,23]. In principle, organizations contemplating a
downsizing decision have to undertake a serious evaluation of the corporate
objectives and the current staffing levels. Following that, they need to reach
agreements among their key executives on the characteristics of the
institution’s current business base and its future potential. If the required
employee reductions are substantial, it may even become necessary for the
organization to explore possibilities of accessing outside professional
assistance, perhaps in the form of specialized outplacement services[14,21,24].
Many of the individual stressors created from restructuring activities can be
mitigated by way of overall organizational actions. The personal effects of a
rightsizing approach to restructuring on employees should be a primary
consideration[17]. Perhaps, one way of pursuing a rightsizing approach to the
prominent staffing issues is by designing an incremental HRP system. Such a
system would attempt to generate forecasts for each stage of the restructuring
process. In the case of a merger for instance, the rightsizing approach could be
undertaken by devising a pre-merger human resource plan, a plan for the first
few months where further shifts in employment may need to take place and a
plan for the remainder of the time-frame being contemplated. In essence, before
embarking on any restructuring, it is important to make a commitment to
communicate the critical positions and to take time to fill these with the right Human
people. During the initial phases of the restructuring process, key managers, Resources in
and those involved in the strategic human resource plan, should make the 1990s
themselves more available, demonstrate full commitment and participate fully,
in the elaboration of a realistic (unbiased) rightsizing. In that process, they
should be more communicative with their employees, since employment
policies and programmes constitute key elements to any successful 41
restructuring (in the spirit of rightsizing) in the initial phase.
Overall, and even more so recently, workforce reductions have tended to be
exercised in the form of voluntary early retirement financial incentives
commonly known as “golden handshakes”. This strategy tends to emphasize
(and wrongly so) costs more than anything else[25]. There is, in fact, little
evidence to suggest that when downsizing has been approached in this way,
those who were retained were necessarily more productive. For instance, a
study of 148 managers in the Bell System telephone company revealed no
meaningful difference in overall job performance between those who retired and
those who stayed[26]. Companies with greater vision seem to be refraining from
using golden handshakes as an easy way to free the company of any
outstanding/unresolved economic problems. With the large number of
downsizings that have occurred in recent years, the more proactive companies
are finding it more rewarding to investigate and scrutinize the rationales for
their layoff procedures well in advance. In this light, a formal and more
systematic human resource plan which incorporates the fundamental criteria
and principles underlying early retirement programmes would prove quite
valuable. Such a plan is vital in determining which jobs are essential and which
are not, and in subsequently deciding whether terminations should be
simultaneous or implemented using a phase-down approach. At least, with a
formal human resource plan, employees are less inclined to feel that the
downsizing exercise has been undertaken in an ad hoc fashion. Further, they
will hence be less likely to perceive the associated managerial actions as a mere
set of parsimonious decisions taken in a vacuum. In addition, the adoption and
implementation of more formal and systematic HRP could also help alleviate
potential repercussions of the downsizing process and minimize the risk of
lawsuits revolving around equal opportunities[27]. The HRP function should
take the lead in introducing and facilitating the transition.

Resizing or Rightsizing
According to some, there are strong indications that the corporate downsizing
which has dominated much of the 1980s and the early 1990s has reached its
threshold and may well be slowing down[28]. Some argue that because the
rationale for downsizing has stemmed primarily from a new focus on workforce
productivity, rather than purely economic conditions, it is bound to reach its end
before the turn of the century[4,26]. More recently, a strong belief seems to
prevail that in the late 1990s, organizations may in fact have to resort to a
significant resizing. Managers at some companies have begun to adopt a new
International approach built around the need to attempt to cut the workload, and not just the
Journal of workforce[25]. Resizing generally leads to new organizational structures and
Manpower would require a carefully designed and elaborate human resource plan aimed at
reshaping the organization by expanding the existing parts of the firm into new
15,6 parts[18]. For instance, executives at companies like H. J. Heinz Co. (Pittsburgh,
Pennsylvania) are discovering that it is possible for a company to be both lean
42 and fit while advocating up-sizing. By emphasizing quality, Heinz managers
have learned to turn conventional cost-cutting logic upside down. Among their
discoveries is that adding workers can boost effectiveness, as can slowing down
a production line. The key is to question long-held assumptions about the way
things work, a process Heinz managers call “paradigm busting”. The major
lesson learned was that some costs just cannot be cut[14]. Many of the
companies that have downsized in the early 1980s are, in fact, already finding
that they are paying for their lack of experienced managers and employees. For
a growing number of those companies, the short term solution has been to
bring back retired managers and other older employees or contract labour.
Companies that once thought they could dispense with older, higher paid
workers are now rethinking some of their notions about how much it costs to
have older people on the payroll. Many companies are now quickly realizing
that the managers they will need for the future are the ones they have now.
Managers in the 1990s are increasingly expected to perform more complex
strategic analyses with fewer staff. As a result developments of appropriate
software to support the human resource function are still in great need.
Technology in the form of mathematical models for HRP has long been
available to support HRP. Moreover, recent developments in microcomputer and
software capabilities allow human resource practitioners to reduce their
dependency on systems professionals to implement such technology. Lee and
Biles[29] developed a microcomputer-based personnel planning model to
demonstrate how readily existing technology can be implemented. Lotus 1-2-3,
the most widely used spreadsheet package, was selected for the software and a
Markov model for the mathematics. Walker[3] proposed an integrated model
that brings together a conceptual, easy-to-use system, or workstation, that
makes it possible to perform several vital HRP activities on one microcomputer.
Information systems, in the area of personnel planning, have tended to focus
mainly on employee supply-demand analyses. With the above outlined
constraints faced by corporations in the 1990s, further elaborations on these
systems are warranted. The new systems will require data entries not only on
employees, but also on the organization, gender constraints, legal constraints,
labour-market forces, demographics, financial constraints, alternative
employment policies, outplacement costs, downsizing costs, employee morale,
turnover intentions, potential applicants, as well as a variety of other
information potentially available from external data bases, to name just a few.
Many new technologies have already been developed to assist the HRP
function. Most of these technologies are computer-based and make use of
mainframe systems, personal computers and microprocessors, information
centres, multiuser systems and local area networks, artificial intelligence/expert Human
systems, and decision support models. Because these have not all been proven, Resources in
users should refrain from opting for the latest system or package merely the 1990s
because it is new. These programs can substantially reduce the time required to
perform a wide range of analyses while increasing its product’s complexity and
sophistication. Some may even include the ability to model the microeconomics
of an entire industry by way of catering for “S-curve” type functions for 43
managing and setting goals[30].

Systematic Approaches to Human Resource Planning

The above trends and constraints clearly suggest that HRP models and systems
must become essential tools for the modern human resource manager. Further,
systematic human resource plans constitute an essential contribution to the
successful implementation of a rightsizing approach to employment levels and
structures[31]. In practice, different models have been developed to
accommodate different types of constraints and the kind of policies under
which the planning system might operate. While pursuing this perspective
however, the majority of existing models have tended to put more emphasis on
financial constraints and on the need to contain labour costs[32-34]. Such
models may describe the constituent components of the personnel system
using, for example, survival analysis techniques. Most of the available models
concentrate either on estimating the grade-wise (or job-level) distributions of
future personnel structures, given the existing structure and promotion (or
demotion) policies, or on deriving policies towards promotion (or demotion),
given the required future structure. It is often suggested that a more useful way
is to look at the personnel system as a whole, using a variety of methods, such
as the Markov chain matrix. In essence, Markov models are descriptive flow-
models that readily permit the testing of various policies (or personnel
decisions scenarios). Estimations of the parameters of models based on the
Markov approach, for sampling frames appropriate to personnel data, form an
important part of the backbone of the methodologies suggested in this area. In
fact all indications are that human resource plans based on Markov models are
being used more and more extensively, particularly in large organizations[35].
There are different versions of the basic Markov model as it applies to HRP. All
of the versions are basically simple to use and easy to implement (see for
example[36]). The more advanced (and more quantitative) Markov-based HRP
models available in the literature have attempted to deal with how
organizational and environmental changes take place and how they may
subsequently affect the overall personnel plan. Gass[37] provides an extensive
(and useful) review of the fundamental quantitative elements contained in these
models. The existing models emphasize transition rates and internal-external
mobility. The result of this emphasis is that very few models have taken a
serious look at the emerging trends in the make-up of the workforce and in the
changing patterns of work (including the role of flexitime and part-time work).
International Among the very few models that have attempted to integrate the emerging
Journal of (and increasing) role of part-time and flexible employment is that of
Manpower Bechtold[38]. Bechtold developed a tractable set of integer programming
models for the days-off scheduling of a mix of full and part-time employees who
15,6 work in a multiple-objective, multiple-location setting. The inherent flexibility
of the implicit modelling approach he adopted was demonstrated by the
44 presentation of different modifications of the basic models. These modifications
(or series of iterations) allowed the use of preference weights on the number of
employee workdays per week or the minimization of payroll costs where
differential pay rates existed. In essence, any systematic human resource model
needs to accommodate time-varying future requirements taking into account
internal mobility and the long-term strategic objectives. By approximate
estimates of the learning curve and the incorporation of the workers’ quit rate
(turnover), a systematic model can be a useful tool. In using such a model, a
subsequent sensitivity analysis (and reasonable estimates) can be performed on
various seniority levels, and demonstrates the effects of changing the internal
parameter on the overall personnel structure and on the required recruitment
rates. Although complex, this analysis can be easily dealt with by
implementing a computerized system.
In general, a computerized HRP model places the human resource
practitioner in complete control of the analytical process. The model may also
serve as a teaching/learning tool that can assist in the task of explaining the
crucial role of HRP in the face of current socio-economic changes. Nissan’s UK
operation uses computerized personnel systems extensively for planning and
control purposes. Computerization within the company’s personnel function
began in late 1985 with the installation of a personnel information system using
“Percom” software. A later linkage of Lotus’ “Symphony” spreadsheet software
to the personnel data-base enabled graphics, modelling, budgeting, and
forecasting capabilities. In-house creation of a computerized recruitment
management system was a recent development[39]. Similar developments have
also been undertaken in the health service[40].
Also, integral to HRP is the formulation of policies to bridge the gap between
forecasted human resource supply and demand. A cost-based model, derived
from matrix-based (or box-flow) HRP systems can be appropriately modelled by
way of simple spreadsheets or database format. When formulated in simple
spreadsheet formats, these systems are capable of providing quick calculations
of the effects of personnel policies on staffing levels in various grades over time.
If all appropriate cost-elements are entered, such systems may also provide
useful estimates of the costs of each alternative policy. In so doing, they enable
the implementors of plans to choose between alternative policies on a more
objective, rather than subjective, basis[41]. Ultimately, the cumulation and
integration of the set of spreadsheets could be translated into a more
sophisticated in-house database (or object oriented decision support) system to
enable timely and more effective personnel planning decisions. The system
would feature (and simulate) a series of scenarios pertaining to the levels of
personnel flows under different constraints. In the initial phases, the Human
spreadsheet format would also allow for the types and levels of constraints to Resources in
be introduced in an incremental or simultaneous fashion so that the effects on the 1990s
required personnel policies could be appreciated and their costs appropriately
estimated at various stages. In general, the different scenarios lead to a number
of alternative staffing strategies which reflect the major trade-offs that
managers should consider when selecting the appropriate personnel policies. 45
The resulting strategies may include decisions on recruitment and selection,
natural attrition, induced redeployment, involuntary redeployment, layoff with
outplacement assistance, layoff without outplacement assistance, etc. A
framework may then subsequently be drawn to cater for potential features
pertaining to workforce under-supply or over-supply. That framework could
also take into account the context of the under-supply or over-supply and its
influence on alternative managerial choices in devising resizing, downsizing or
rightsizing strategies. For example, in implementing personnel plans, human
resource professionals must often screen large numbers of applicants for
position openings or possible retrenchments. This involves evaluating the
applicants’ qualifications and recommending who should be interviewed. This
responsibility can be aided by a set of screening matrices that make use of a
simple personal computer. With such a system, human resource personnel can
easily check to see if an applicant meets the criteria the position requires. The
matrix results in a list of applicants ranked by qualifications. It is clearly
indicated whose overall skills and experience match or exceed the position’s
requirements. The matrix can also serve as a framework for evaluating
interviews and recalculating rankings.

Towards a Simple Matrix Model

Typically, very few practical models have considered the contemporary internal
and external issues faced by organizations in attempting to develop systematic
human resource plans. In general, while many important technical and
application developments have been made in this field, current models do not
sufficiently address the emerging issues faced by many corporations as they
face the socio-economic challenges of the 1990s. Even where contemporary
trends and variables have been included, the models themselves have proved to
be too complex and cumbersome to be of any practical use to managers and
human resource professionals. Also, the typical HRP models rarely incorporate
the potential effects of the much broader constraints, such as equal opportunity
in employment (EEO) and other employment legislation, on expected demands
for given outputs, objectives and capacity[42,43]. In the current socio-economic
environment, some form of systematic HRP is imperative in all organizations.
Elaborate mathematical models and related computer-based algorithms are
now available that can help human resource planners analyse future goals and
establish trade-offs among often conflicting goals. The model suggested here
takes the human resource requirements for future periods as inputs, which are
determined by the changes that take place in the system, and based on the cost
International data, generates optimal personnel policies (recruitment or workforce
Journal of reductions) for future periods.
Manpower
Principles and Basic Mechanics of the Proposed Model
15,6 The proposed model emphasizes a matrix approach espousing the fundamental
principles and mechanics of Markov chains theory. However, unlike previous
46 models based on that theory, the suggested model caters for a number of
internal and external constraints by way of a series of incremental and
simultaneous iterations. The basic operational mechanics of the model consist
of a core matrix featuring personnel forecasts by levels of employment (or job
category), and a series of peripheral matrices representing the factor
constraints affecting changes in the core matrix. Figure 1 illustrates the basic
relationships and the fundamental principles of the model.
In essence, each cell of the peripheral matrices features coefficients (ratios or
probabilities) for each type of constraint and for each job category or level of
employment. The interface of each peripheral matrix with the elements within
the core matrix produces a new set of forecasts for each level of employment or
job category. The mechanics governing the interactions between the peripheral
matrices and the core matrix should be based on the Markov chain principles.
Each peripheral matrix may be taken in turn and its effect on the employment
distributions (or structure) within the core matrix evaluated. In this sense, the

Age distribution
coefficients

Productivity Mobility
ratios rates

Pay Other costs

structure ratios structures

External
Core matrix forces

Absenteeism Gender/minority
rates groups ratios

Full- Part
timers ratios

Figure 1.
Principles Guiding the
Proposed Model
model is incremental. That is, it assumes that each peripheral matrix (or Human
constraint) is taken one at a time to forecast employment (in the core matrix) Resources in
and further (or additional) constraints are brought in incrementally to include the 1990s
their effect (and hence the required changes) in the previous forecast. However,
the model as a whole is also simultaneous in the sense that it ultimately takes
into account all of the above core and peripheral matrices interfacing in an
interactive fashion. By way of analogy, we could refer to the application of the 47
human (hence external) force to a semi-automatic ratchet-tool where each
adjustment of the ratchet itself (signalled by a clicking) forces a new adjustment
of the object at the centre (in this case the bolt itself; in our case the core matrix).
The analogy would be more complete if we were to conceive that several
“ratchet-type” forces (in our case the peripheral forces/matrices) were operating
around a core (i.e. the forecasts generated in the core matrix) simultaneously.
To conform with the above principles, the operational application of the
model necessitates the fulfilment of a series of steps. As explained above, each
step takes into account a specific type of constraint. Typically, all models that
follow the Markov principle attempt, in the first instance, to derive personnel
forecasts on the basis of estimated mobility rates. In accord with previous
research and models in this area, the proposed model also assumes that the
forecasts based on mobility rates should be featured at the start of the process.
The model also factors in a series of internal constraints, featured in a matrix
format (peripheral matrices in the overall model). The added strength of the
model is that it is able to take into account a series of forces likely to affect the
make-up and distribution of the personnel structure across the different job
categories. Among these forces are aspects such as productivity ratios
(representing output expectations and constraints); the anticipated pay
structure and other personnel cost constraints; the age distribution; the
absenteeism rates; the anticipated/desired proportions of part-timers and
contract employees; the anticipated/required gender distribution and the
anticipated proportion of minority groups (including immigrants and
handicapped). Each of these forces would in itself reflect required adjustments
to wider (external) forces. For instance, the anticipated (estimated) ratios of
employment of females (versus males) would follow constraints generated by
the relevant equal opportunity legislation. Similarly, for the employment of
other minority groups. Also, the productivity rates and pay rates (by category)
would be determined (at least in part) by the dominant economic forces,
including the prevailing industrial relations climate. Again, in a similar fashion,
changes in the type/nature of the labour market would constrain the make-up of
the workforce, for instance in terms of the opportunities/possibilities of
employing various proportions of part-timers and contract employees in each
given job category. All in all, these external forces constitute an additional outer
layer affecting the peripheral matrices discussed above. Among the major
external forces that may be featured in this (i.e. the outer layer) are the overall
economic and market forces (including the labour market) and the
legislative/governmental framework.
International Basic Mechanics
Journal of The operationalization of the above model requires undertaking a series of
fundamental steps that constitute the building blocks of the model. Hence, an
Manpower understanding of these three steps is essential to gain an overall insight into the
15,6 fundamental mechanics of the model.
Step 1 : The first step attempts to forecast personnel needs based on
48 sufficient knowledge of mobility rates across different levels of employment as
well as turnover rates. It rests on the simple principle that once the internal and
external personnel mobility rates for each employment level or job category are
appropriately known/estimated for a given period, a workforce surplus (or
deficit) for each employment level (or job category) could be derived. The
surplus (or deficit) would initially assume steady-state (i.e. no change) in the
anticipated output for the forecast period. Then, by taking into account and
inserting, the desired (or anticipated) output levels, the surplus/deficit for each
job category (employment level) could subsequently be determined.
The basic mechanics involved in this step may be illustrated by way of a very
simple example:
Assume an organization has three job levels, or job categories, in total,
these being (1) managers, (2) engineers and (3) technicians. Assume that
historical data on each of these three levels has revealed that over a period of
(say) five years, the following mobility rates tend to occur : (1) for the
managers’ group, 80 per cent remain as managers and 20 per cent exit the
organization; (2) for the engineers’ group, 80 per cent remain at that level, 10
per cent get promoted to managerial positions, 5 per cent get demoted to the
level of technician and 5 per cent exit the organization; (3) for the group of
technicians, 80 per cent remain as technicians, 5 per cent get promoted to the
position of engineer and 15 per cent exit the organization. These mobility
rates are shown in the “mobility rates” matrix represented in Figure 2.
Now assume that, at the start of the planning period, the organization has
100 managers, 200 engineers and 600 technicians. By applying the above
coefficients (or mobility rates) to the staffing levels, for each job category, in
order to estimate the expected staffing levels at the end of the planning
period, the appropriate calculations are shown in the second matrix labelled
“staffing forecasts” shown in Figure 2.
According to these estimates, there are now: 100 managers, 190 engineers
and 490 technicians. This makes our total staffing level 780. This also shows
that according to these estimates, at the end of the planning period there will
be a deficit of 120 individuals. According to these same estimates, to maintain
the overall staffing level at 900 (i.e. no change in output levels and outputs
composition), we need to recruit 10 engineers to maintain the level at 200, and
110 technicians to get back to the 600 we had at the start of the period.
However, if we anticipate an increase in activities (outputs) then we need to
increase the number of recruits in the appropriate categories to meet our
needs. Changes in the make-up of the outputs could also mean that we need to
account for the appropriate allocation of each job category across product
 Estimated mobility rates Human
Managers Engineers Technicians Exits
Resources in
the 1990s
Managers 0.80 – – 0.20

49
Engineers 0.10 0.80 0.05 0.05

Technicians – 0.05 0.80 0.15

Staffing forecasts
Present staffing Managers Engineers Technicians Exits

Managers 100 80 – – 20

Engineers 200 20 160 10 10

Technicians 600 – 30 480 90

Totals 900 100 190 490 120 Figure 2.

Staffing Forecasts
Deficit (hire) – 10 110 Based on Mobility
Rates

groups. This exercise may be slightly more complex, but could be achieved
more systematically if (say) expected productivity-rates for each product-
group, by job category, were available. Hence, assuming no required change in
the make-up of the outputs, if we wish to increase our overall staffing levels to
1,000, then we would need to hire 100 employees in addition to the above 120.
In this case, the allocation of the extra 100 employees across the three job
categories would be achieved on approximations of the existing proportions
across the three job groups. This would give us an allocation of 11 (i.e. 100/900
(or approximately 11 per cent) of the 100) to the management group; 22 (i.e.
200/900 (or approximately 22 per cent) of the 100) to the engineering group
and 67 (i.e. 600/900 (or approximately 67 per cent)) to the group of technicians.
In reality, the decisions on these allocations require more minute
considerations and are based on productivity rates. Further, these allocations
should take into consideration potential (and anticipated) changes in the
volumes as well as the make-up of the outputs (or services), in the case of a
service organization. As mentioned above, these could be further refined and
fine-tuned by taking into consideration other internal forces (such as expected
redundancy rates in each position in different locations); various market
forces affecting different products/services and even the power-distribution
across the different job categories (i.e. intra-organizational dynamics). This
clearly requires consideration of other matrix-based coefficients representing
different constraints.
International What is important to note is that the above example clearly indicates that, given
Journal of the matrix format of the estimates, initially, a very simple spreadsheet can
Manpower easily be built around this example. The spreadsheet could then be used to
introduce a variety of different scenarios on the mobility rates and test their
15,6 implications on staffing surpluses/deficits by category.
At the heart of this step is the need to determine the estimated mobility rates
50 across different levels and out of the organization (or exit-rates, turnover-rates
for each level). These rates could be derived from historical data perhaps by
using simple probabilistic, or stochastic, estimates for a given time period. With
a human resource information system already in place, it would be easy to
derive these estimates by linking the human resource plan to the appropriate
database featuring periodic staff mobility across employment levels and the
number of exits. There is also the need to estimate the expected output for the
forecast period. Here, the actual outputs, in terms of volume of business/services,
could be used. Also, an average productivity ratio for each level of employment
could be derived and inserted in the matrix to balance out the objectives (output
levels) and overall manning levels for each job category. In organizations where
output levels are monitored by way of a computerized system, it would be easy
to link-up the periodic data and estimates from the system to the operational
human resource plan.
Step 2: This step consists of emulating all of the other relevant forces (or
constraints) by way of separate matrices featuring existing/anticipated
coefficients. The procedure followed in deriving the forecasts, from each matrix,
is very similar to that explained in Step 1. The coefficients of each peripheral
matrix would be applied to the resultant matrix from each preceding step to
generate further forecasts that take into account the newly introduced
constraints. As explained earlier, the constraints featured in the (peripheral)
matrices could be applied to each set of the generated forecasts in an
incremental fashion (i.e. in stages) or simultaneously through the aid of a
computer-assisted package such as the one described below (i.e. RightPlan”.
Step 3: This step provides forecasts by category of employment. Where new
recruits are needed, it could also incorporate job analysis of the positions to be
filled which would then trigger appropriate job specifications for each of these
as well as training needs. The aim is to highlight the alternative human
resource policies and actions to be undertaken to implement a rightsizing
human resource planning approach. Each alternative could be weighed against
a set of criteria. The main criteria for the model are those which underline the
principle of “rightsizing”, which takes into consideration both economic and
social costs. For instance, in the case where a decision to reduce employment
levels is being contemplated, all costs to the organization (including social
costs) of such reductions on the morale of the remaining employees (or stayers)
should be taken into account. Because these implications tend to have
repercussions on employee productivity, there are economic costs involved too.
For example, in a rightsizing philosophy, outplacement activities/responsibilities
and their related costs should be borne by the employer. These need to be taken
into account before any decision on staff reductions is fully espoused. This step Human
will also evaluate training needs associated with each of the alternative Resources in
decisions being contemplated. the 1990s
However, because the above model is incremental, it does not specifically
address the issue of potential interactions between constraints. For example, it
is possible that absenteeism rates will decrease as pay is increased.
Nevertheless, we foresee that this limitation of the model could potentially be 51
overcome by incorporating the interactive effects in the final, fully developed,
model. This might prove complex, but could be appropriately addressed by the
development of suitable software.

Software Application: RightPlan a System in the Making

The fundamental principles of the above model can easily be set to operate on a
PC (Personal Computer) while retaining power similar to systems running on a
mainframe. The computerized system may also be appropriately integrated
with existing computerized inventories of employee skills and knowledge such
as those outlined by Gorman and Schwers[44]. Appropriate developments of the
system require obtaining and updating data as well as designing questionnaires
for general and specific criteria. The more popular database systems such as
the “Manpower Planning Inventory” and “StaffPlan”[45] might also prove a
useful complement in adoption and implementation of the proposed system in
large organizations. To cater for the more complex situations, the computerized
application of our model requires sufficient sophistication to allow an
assessment of detailed staffing needs for a wider range of possible sub-units. In
the case where the sub-units are decentralized (cost/profit-centres) with
different/independent needs, a variety of independent sub-systems
incorporating the above scenarios could be devised for each profit/cost centre.
These could then subsequently be aggregated to form an overall corporate
system that interacts with other corporate data-sources. It could then allow a
personal computer to model a relatively complex situation and to spell out
human resource consequences of each alternative strategic decision within each
sub-system and produce an overall corporate plan.
A spreadsheet-based (and ultimately, a database decision support system)
software would be ideal in this case, and the matrix should begin with a
budgeted staffing model for a reasonable time period. The matrix will initially
incorporate average mobility-rates (or probabilities) across the different
employment levels to generate the number of employees remaining at each level
after the mobility rates have been estimated. In taking account of the overall
movements (based on historically estimated mobility rates), net surpluses (or
deficits) in employment levels could be determined. Initially, the system could
be designed to establish surpluses (or deficits) assuming that there will be no
change in the required output levels at the end of the forecasting period covered
by the mobility rates. Subsequently, the anticipated output levels can be
introduced in the matrix to determine the resulting staffing deficits (or gains) at
the end of the period. By varying the output requirements the system will allow
International
Journal of
Manpower Strategic Legal statutory
15,6 plan requirements
data

52 RightPlan

Core matrix

Human resource
information Accounting/
system finance
(database) database

Economic/
Figure 3. market
database
Linking the System
(RightPlan) to Other
External Info
Sources/Systems

management to locate the point where the addition of more staff is needed and
determine the potential effects of these additions on overall productivity.
Additionally, the matrices can be designed to suit the existing organization
structure and may even cater for different types of products or geographical
areas. Further, absenteeism and other special time off (such as times to be
allocated for training and development; health and safety, union activities, etc.)
could subsequently be factored into the system. A summary of results from
each scenario could be obtained following the design of a template.
Figure 3 shows how RightPlan could be integrated with other databases that
may be mounted on a mainframe or on a network involving the use of
minicomputers. The dotted arrows signify that the impact of the forces are
measured only indirectly via their effect on the constraints.

Concluding Remarks
Human resource managers can learn valuable lessons from the most recent
recession about the need to remain lean and to cultivate solutions focusing on
the spirit of rightsizing[19]. One of the primary roles of managers in this
situation is to support and guide top managers during the transition in order to
reduce any of the human resource management difficulties they may
experience. Typically, in advocating and following a rightsizing strategy, the
human resource function would endeavour to establish the criteria that will Human
guide the fundamental human resource plan and to lay down the parameters Resources in
that may be used as a basis for evaluating staff members. By observing this the 1990s
basic, but fundamental, step, the current upheavals caused by over-emphasized
personnel downsizing can be somewhat minimized. As outlined in our model,
this is because careful and timely HRP can instigate observance of the required
ethical and legal standards by the organization, and will help key managers in 53
working to preserve worker dignity. This step might also ease the intricate task
of deciding on which workers are to leave and which are to stay. In this process,
by pursuing a human resource plan mounted on the fundamental principle of
rightsizing, managers can refrain from using ad hoc functional evaluation
approaches to outline their restructuring strategies[17]. Clearly, these functional
approaches might in fact lead to more drastic actions and might in the end
prove counterproductive in resolving the key human resource issues. They tend
to be perceived by employees as reactionary since they may be seen as mere
strategies for targeting specific functions and not others. As part of the
planning process, it is also important that the human resource function
attempts to prioritize the necessary steps and then agree on a timetable for
completing each phase of the plan[46]. As the above model suggests, by
assessing the potential of each individual in an organization, a determination
can be made of the actual ratio of people with upward potential to people with
lateral potential. In attempting to address the above, and other recurrent, issues,
the more dynamic models should lend themselves to a computer application as
this will enhance speed and precision as well as greater standardization. In this
perspective, because of its simplicity, and hence greater accessibility to a wider
spectrum of employees, the simple spreadsheet format continues to be a very
useful way of putting complex planning models into practice. The above
proposed model holds high potential in this regard.
Remaining constantly aware of employees’ strengths and weaknesses and
catering for them in planning future needs should form a primary thrust of
human resource management[47,48]. In applying the proposed model,
managers are able to take stock of the realities of all constraints, internal as well
as external, before embarking on any personnel policy with significant
implications on employment levels and hence (potentially) employees’ morale.
In implementing the model, managers should realize that, for logical reasons,
the underlying philosophy of an effective human resource plan ought to be
governed by a spirit of rightsizing. Further, and as Richards-Carpenter[2]
suggested, human resource managers need to solve four major personnel
planning issues. First, because personnel planning is not a trivial activity,
training is needed on both the interpretation of personnel data and the
translation of the findings into effective policy. Second, because personnel
planning takes time and resources, managers must be prepared to commit their
energies to it. Third, line managers need to understand what personnel
planning is, how it works, and how they can employ it to help achieve their
objectives. Fourth, personnel managers must determine how personnel
International planning fits into the culture of a personnel activity. The proposed model
Journal of facilitates compliance with all of these. In gearing the plan to fulfil the above,
Manpower managers should also make sure that the human resource plan coincides with
the dominant, or desired, organization culture. In doing so, they must ensure
15,6 that the underlying rationales of the personnel plan incorporate (and combine)
elements of independence from the employees’ standpoint with those of
54 interdependence from the environmental standpoint. Objective, formal and
systematic personnel planning systems, such as RightPlan can offer substantial
contributions to this endeavour.
In the current socio-economic environment the human resource function is
forced to become more directly involved in the overall business activities,
including strategy implementation and reorganization. In so doing, the function
is also changing the nature and role of HRP and various practices to respond to
changing business demands. RightPlan provides suitable and practical scopes
to account for these changes in a systematic and more convincing way.

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Further Reading
McEnery, J.M. and Lifter, M.L., “Demands for Change: Interfacing Environmental Pressures and
the Personnel Process”, Public Personnel Management, Vol. 16 No. 1, 1987, pp. 61-87.