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matters by John Darker, AMBIM 7:Saving money by
manpower planning
IN the past decade persistent shortages of skilled and technically qualified people have led many companies to give serious thought to manpower planning. In road transport, it makes no sense at all to devise careful management strategies for fleet depreciation and renewal if equal thought is not given to recruitment and training of staff needed to operate the fleet. If future labour requirements are not anticipated several years ahead operating efficiency—which means profitability--will be affected adversely.
Of course, any attempt to forecast future trends of business--and hence staff requirements—several years ahead is fraught with difficulty. Manpower planning, like weather forecasting, is subject to a wide margin of error. It is best to think more in terms of a range of possible levels of demand for manpower, rather than to attempt a single "correct" estimate. While there are accepted methods of manpower forecasting there is always room for the shrewd assessment of the experienced manager. Much depends on the accuracy of the statistical data and expertise available. Reliable sales turnover forecasts in recent years may give some promise that projections based on them will be accurate for, say, five years ahead. Work-loads based on work-study exercises today will have some relevance in future.
Labour costs Labour costs make up such a high proportion of the total running costs of a transport business—up to 70 per cent for passenger trafficr–that future business success may depend on the close prediction and. control of labour costs. Company manpower planning, published by the Department of Employment (HMSO 40p) says that manpower planning has developed alongside overall business planning. Every firm ought to examine and determine its strategic objectives for a period of five years or more ahead. The manpower implications of these objectives can scarcely be ignored.
What is manpower planning? It may be defined as a strategy "for the acquisition,. utilization, improvement and preservation of an enterprise's human resources". Planning is usually a three-stage process. First, an evaluation or appreciation of existing resources must be made; second, a forecast of labour requirements to meet company objectives is attempted; and third, the necessary measures to ensure that resources are available as and when required are planned.
Company manpower planning says that, in practice, the distinction between the first two preparatory stages and the plan proper is an unreal one; they are complementary to one another and cannot sensibly be treated separately. The results at each stage must be allowed to feed-back into consideration of the other stages. For example, if labour supply is unlikely to meet a given forecast of traffic, the plan must either acknowledge that the target is not feasible or it must permit the labour deficiency to be made good by use of new techniques, more overtime, improved conditions of work, or by sub-contracting. How many managers in road transport ever assume that one day there .may not be Sufficient sub-contractors to meet requirements?
Any company allowing a surplus or a shortage of labour to develop for any significant period of time will find that it cannot compete against its rivals. If vacancies for highly trained people like fleet engineers, or traffic managers are not filled promptly, working efficiency is damaged. Vehicle maintenance costs may rise alarmingly or valued customers be lost. Over-manning results in high labour cost and lower profit margins.
The object of manpower planning exercises is to bring to light at an early stage, the critical points in the labour force where shortages are most likely to develop or where labour is being used inefficiently. Forecasts do not have to be accurate to be revealing. Manpower planning, in short, is a valuable management tool in controlling labour costs in the present and future.
Specifically, seven reasons make manpower planning and forecasting essential:
1, Determination of recruitment levels.
2, Anticipation of redundancies and avoidance of unnecessary dismissals.
3, Determination of optimum training levels.
4, Provision of a basis for management development programmes.
5, Costing the labour element in new projects.
6, Assisting productivity bargaining.
7, Assessing future accommodation requirements.
Estimates of future requirements should be the basis for a sensible recruitment policy, but too many companies wait until
shortages become evident and then hope that the labour market will be fluid enough to provide replacements. If it is rarely possible or desirable to secure an even flow of recruits each month or year, sensible anticipation of demands will help a company to avoid the worst results of a "feast or famine" approach to recruitment. Such an approach often exacerbates wastage problems and creates bottlenecks. The cost of recruitment—not always shown up clearly in balance sheets—should not be overlooked. It may cost £20 or more to recruit a badly needed driver, and perhaps 20 times that sum to recruit the right traffic manager.
When redundancy forecasts suggest that fewer men are likely to be needed by a company in future, control of the rundown of the labour force to the anticipated future level presents management with a knotty problem. There are four basic approaches: normal wastage or "attrition", a word that suggests that some workers may be encouraged to leave by a few well-chosen words from the foreman; reduced hours of work, or other work-sharing devices; transfers within the company or dismissals.
Companies needing to slim their work-force can sometimes use manpower planning techniques to gain enough time to use wastage and transfer programmes as alternatives to large-scale, sudden and disruptive dismissals. Ignoring human aspects, redundancy payments are an increasingly costly expedient and there may be additional complications when the Industrial Relations legislation operates. It makes sense, when dismissals are unavoidable, for employees to be given the maximum possible notice.
Training
Training staffs quite obviously need an estimate not only of the number of future employees but of their skills and the occupational structure of the firm. Lengthy training, as for apprentices, demands that the content of the training course will be appropriate to future needs. Obsolescent skills are ludicrous in this training-conscious age, but they will occur if road transport, as an industry, fails to judge accurately its future needs in trained manpower. The size of unit—already known to be increasing —makes the content of training courses particularly important.
The fitting of the right man (or woman) for senior management responsibility is critical to the future success of any company. The career of individual managers is often planned with precision not attempted at other levels. Hence the importance of knowledge about managerial jobs, in detail, to meet current and future needs.
An under-estimation of labour requirements will result in under-costing and reduced profits. An over-generous manpower allowance may lead to the (wrong) conclusion that the project is unduly expensive and should be abandoned. Careful calculation of the amount and quality of labour required is essential to sound decision-making about future projects.
In essence, productivity bargaining is best seen as a movement towards improved management control of labour costs, with a more constructive approach to industrial relations. A precondition for success in a productivity bargain is that both parties should be able to calculate with some confidence the likely benefits from changed work practices or methods of organization. Hence, the need for managements and unions to look more critically at present practices than has often been the case hitherto. Management cannot sensibly enter into productivity bargaining without estimating future labour requirements, and therefore future manpower costs.
Accommodation An important reason for manpower forecasting is the prediction of future accommodation needs, not least for office staffs, who are growing as a proportion of all staff. Where a firm is expanding on a congested site, estimates of accommodation required may help to determine whether expansion should be concentrated elsewhere.
The recent publication of Manpower '70 by the RTITB shows that on the training front the need for careful and methodical manpower planning is fully appreciated. Before the Board existed it is inconceivable that such a detailed and illuminating survey of employment in road transport could have been prepared; its preparation by an outside firm of consultants would have cost a king's ransom. Just as a firm needs to look closely to the age distribution of its employees, to avoid panic replacement in key areas, so an industry needs to have a well-balanced labour force in terms of age of employees, and appropriate skills.
It may augur well for the future of road transport that its workforce is significantly younger than British industry as a whole. The increase in management and clerical staffs and in the vital craft trades is a good sign. But what conclusion should be drawn from labour turnover figures reaching 60 per cent nationally and 70 per cent in some parts of the country?
The cost to some employers of filling two or three jobs a year on average is a heavy burden. Labour turnover is least with the smallest firms—under 50 employees—and the very large firms, possibly reflecting better personnel management. The medium-sized firms in the industry should adopt manpower planning, jointly with staff and trade union participation.