1 Manpower Planning

Recruitment & Selection

Performance Management

Compensation & Benefits

HR CAPABILITY manpower planning TOOLKIT

Learning & Development

Talent Management & Succession Planning

Employee Relations Career Management

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01 Manpower planning Introduction Purpose Benefits Framework

[ 02 ] [ 02 ] [ 03 ] [ 04 ]

APPENDICES A1.1 Guidelines on manpower planning A1.2 Alternative methods of manpower planning

[ 16 ] [ 23]

case stoRies Atlas Sound & Vision Pte Ltd TME Systems Pte Ltd

[ 29 ] [ 31]

Tools And Templates click to download ( internet connection required )

T1.1

MANPOWER REQUIREMENTS

T1.2 MANPOWER COST ANALYSIS (SAMPLE)

manpower planning

MANPOWER PLANNING - INTRODUCTION & PURPOSE

Introduction Manpower planning is the process of assessing current workforce capabilities, demographics and work processes; determining future workforce requirements; identifying gaps and implementing solutions to bridge the gaps. For start-ups, the typical steps in a manpower planning process may not apply. Such companies are advised to try alternative manpower planning techniques. Please refer to A1.2 Alternative methods of manpower planning.

Purpose This policy establishes the guidelines to plan for the appropriate type and number of employees, avoiding the cost of overstaffing or understaffing.

Copyright © 2012 SPRING Singapore and Singapore National Employers Federation. All rights reserved.

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03

MANPOWER PLANNING - BENEFITS

BENEFITS The outcomes of this process will enable companies to better recruit and select the right people. At the same time, companies will be able to establish effective learning and development plans for its staff. Last but not least, a well thought through manpower plan will enable companies to better strategise its career management plans to develop and groom employees to fulfil their manpower needs. Manpower planning is key to the implementation of a company’s business

Manpower planning also provides management with a good perspective of

strategy. It enables the company to recruit and retain the right mix of people it requires to support its business needs. At the same time, it will serve to pre-empt problems of manpower surplus and shortage. Manpower costs may be lower because management can anticipate imbalances before they become unmanageable and expensive.

how anticipated changes in the business will impact manpower requirements and allows time to locate the right talent to fill existing and forecasted gaps.

A structured manpower planning process allows a company to understand the effort needed for the different activities in each unit, section or department. It ensures that a company has the right mix of skills and the optimal number of people to do the work, leading to more efficient utilisation of workforce. Management can better explore alternative staffing options other than permanent staff, for example, employment of part-timers and re-employment of older employees.

Manp

plan

ower

ning

is ke y to the i mple ment ation of a co mp any ’s busin ess s trate gy.


MANPOWER PLANNING - MANPOWER PLANNING FRAMEWORK

manpower planning framework The manpower planning framework allows a company’s Human Resource Department to develop an action plan for the organisation’s present and future manpower requirements in response to business needs.


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TOOLS / TEMPLATES

[A] FORECASTING FUTURE BUSINESS REQUIREMENTS

[B] DETERMINING MANPOWER REQUIREMENTS FOR THE YEAR

05

APPENDICES / REFERENCES

STEPS IN PROCESS MAP

Business plan

Steps 1, 2, 3

[A1.1] Guidelines for manpower planning [T1.1] Manpower requirements template

[A1.2] Alternative methods of manpower planning

Steps 4, 5

[T1.1] Manpower requirements template

[C] DETERMINING MANPOWER COSTING

[D] DEVELOPING ACTION PLAN

[T1.2] Manpower cost analysis

Budgets

Steps 6, 7

Performance target and standards

Guidelines on: - Recruitment and selection - Learning and development - Career management - Compensation & benefits - Performance management

Step 8

Figure 1-1: Manpower planning framework


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START

1

Define strategic direction of the organisation

MANAGEMenT 2

3

Forecast business requirements

Cascade targets to department level

8

END

Approve Manpower plan, hire if required

4

Determine manpower and skill sets needed in order to meet objectives

5

Conduct manpower analysis; obtain gap information between current and desired staff strength (T1.1 Manpower Requirement)

HEAD oF department 6

Complete manpower cost analysis, include plan with skill sets required from staff to meet business objective (T1.2 Manpower Cost Analysis)

7

Submit plan for management approval

HR department

Figure 1-2: Manpower planning process map



[A] FORECASTING FUTURE BUSINESS REQUIREMENTS

This exercise is conducted on an annual basis during the annual business planning and budgeting exercise. Management will determine the business objectives and growth forecast for the year and subsequent years, where applicable. Examples of these objectives include: Increase annual turnover from $X to $Y Increase demand for product A by 20% by forming partnerships with overseas

Process Owner: Leading Management Supporting Heads of Department (HODs)

distributors Scale down retail operations to focus on core competencies such as marketing and distribution management

The following considerations should be noted during this process as this will impact future needs: Sales and production forecasts Seasonal variations Manpower budget Timeline for acquiring or developing human resources Number of employees Mix of casual, permanent and contract positions


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Changes in the division/department structure (i.e. newly created functions/sections/units and streamlined functions resulting in consolidated, eliminated or expanded sections or units)

Short-, mid- and long-term requirements Existing and required talent pools Existing and required competencies Succession planning Job levels

Employee productivity rates and use of technology or equipment that enhances productivity/efficiency resulting in reduced manpower requirements Changes in employment practices (i.e. use of subcontractors or agency staff, substitution and simplifying tasks/work processes) Changes in government policies (i.e. MOM quota on foreign workers and investment incentives) Based on the objectives set by management, the HODs, in conjunction with the immediate supervisors will set targets for their respective division, department and/or function. This forms the basis for determining manpower requirements for the year.

EXAM

PLE

An example of a target for an F&B company would be to achieve a 10% increase in monthly sales for a particular restaurant outlet.


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[B] DETERMINING MANPOWER REQUIREMENTS FOR THE YEAR

Process Owner: Leading Heads of Department (HODs) Supporting Human Resource Department (HR)

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The HR department is responsible for overseeing and facilitating the annual manpower planning process by providing the HODs with guidelines and templates – including payroll budget, salary ranges, manpower requirements template. Please refer to T1.1 Manpower Requirements, for a sample of a manpower requirements template.

The HODs are responsible for determining manpower requirements for the year ahead to achieve the target established. The HODs should work with supervisors during this process. The typical steps in the manpower planning process are: step

1 step

2 step

3 step

4

Define current department

activities

for

each

Estimate the future staff and manhours required for Executives and NonExecutives Forecast possible loss of existing staff during the year through retirement, resignation and transfers Determine number of people to recruit, redeploy, train and promote during the year



The plan should remain flexible and take into account both micro and macroeconomic considerations. You may need to consider: Factoring in sales and production forecasts, manpower budget and timeline for training and developing employees. Recruiting different types of workers, other than full-time and permanent staff, to meet the varying demand pattern over time. For a restaurant, this may include hiring part-time waiters to supplement full-time crew during a busy weekend period. Employing workers across more than one function. To increase productivity, a waiter may also be assigned to help out with kitchen preparation during off-peak hours. Factor in expected changes in productivity when estimating future activity time. EXAM

PLE

For example, investment in automation will help decrease certain activity time.

Responding to labour supply conditions. EXAM

PLE

For example, when the unemployment rate is low, competition in the labour market will intensify and companies may experience higher employee turnover.

Responding to changes in government policies such as foreign manpower policies and investment incentives. Please refer to A1.1 Guidelines on Manpower Planning for step-bystep instructions on determining manpower requirements and T1.1 Manpower Requirements for a template.


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The HODs are responsible for determining the cost implications of the forecasted manpower requirement of his department. The department’s projected manpower cost for the year is determined by the calculation of current, along with projected manpower costs. These include existing employment costs, estimated salary increments, and statutory payments for the following year along with projected increases of headcount by job level.

[C] DETERMINING MANPOWER COSTING

Process Owner: Leading Heads of Department (HODs) Supporting Human Resource Department (HR)

The aggregate sum of the total projected manpower cost is derived from the following components:

1 2

Head count is the total number of permanent and contract staff that the department is expected to hire based on manpower requirements. Total salary cost refers to gross salary inclusive of overtime payment, allowances, annual bonus and incentive payments.

3

Total benefits cost refers to employee benefits such as medical insurance, annual leave, holiday subsidy, etc.

4

Total statutory payments include CPF, Skills Development Levy and Foreign Worker Levy.

5

Total current employment cost is the sum of total salary cost, total benefit cost and total statutory payments paid by the company for the current year.

6

Average cost per employee is the calculation of total employment cost divided by all employees within each job category.

7

Projected cost increment refers to the percentage increment for all current staff for the following year.


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8

Projected average employment cost per employee for the following year is the sum of the total current employment cost for all employees divided by current head count.

9

Projected total head count refers to the increase (or decrease) in head count based on business needs.

10

Projected total employment cost is the multiplication of projected headcount for the following year with the projected average expected employment cost per employee.

Please refer to T1.2 Manpower Cost Analysis for an example of manpower costing computation.

The HOD is responsible for justifying forecasted manpower requirements and projected manpower cost when presenting to Management for approval. Net benefit of the proposed manpower plan should be evident from the increased productivity of employees and the consequent improved performance of the department. You may consider some of the following measures to determine the net benefit: Employment cost per unit of output Sales per employee Amount of product handled per man hour Management will review the manpower plan and evaluate the net benefit it is expected to bring to the company. If the manpower plan is deemed to be inefficient, Management may implement supplementary measures such as process redesign, train ing and automation to improve productivity. The estimated future man-hours required may decrease as a result of increased productivity.

Proje cted man powe r cos t depe nds on f actor like s head coun t, tot salar al y co st, an d tot statu al tory paym ents.


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After the manpower plan has been approved by Management, the HOD will work with HR to fulfil the manpower requirements. Here are some methods of doing so:

[D] DEVELOPING THE ACTION PLAN

1

Refer to Recruitment and Selection Module for more details.

2 Process Owner: Leading Management Supporting Human Resource Department (HR) Heads of Department (HODs)

Recruitment and Selection Identifying ways and channels to recruit new hires.

Career Management Look within the organisation to find suitable candidates and deploy them to work in new areas. Refer to Career Management Module for more details.

3

Job Redesign This refers to enhancing the scope of an employee’s job to provide an opportunity for the individual to offer more value add in his scope of work. This could include the provision of end-to-end services. EXAM

PLE

In the Hotel industry, it is increasingly common for the guest relations officer to double up as a concierge or to assist in the Food and Beverage department.


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4

Learning and Development Prepare existing employees for new responsibilities by offering on the job or other internal/external trainings. Collaboration with similar organisations may also be considered to reduce the cost incurred for specialised training. Refer to Learning and Development Module for more details.

5

6 7

Restructuring This is a long-term strategy that involves the reorganising of work units to leverage on synergies. There may be a need to reduce workforce over time by redeployment or attrition. Outsource Non-strategic and non-core competencies can be outsourced to external organisations (e.g. cleaning, security services, IT, payroll, warehousing). Other options Company can choose to tap on contract staff and/or interns from tertiary institutions to meet temporary or short-term needs for increased manpower. A permanent role for an employee on a part-time basis (<35 work hours per week) may also be considered. Where appropriate, overtime can also be used as a means to manage temporary increases in manpower requirements.


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Appendices

MANPOWER PLANNING - GUIDELINES ON MANPOWER PLANNING

A 1.1 GUIDELINES on manpower PLANNING Step 1: Define current activities for each department Step 2: Determine the current annual man-hours required for Executives and Non-Executives Step 3: Define future activities for each department Step 4: Estimate the future man-hours required Step 5: Forecast losses of existing staff during the year Step 6: Determine number of people to recruit and promote during the year Copyright © 2012 SPRING Singapore and Singapore National Employers Federation. All rights reserved.

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STEP 1:

DEFINE CURRENT ACTIVITIES FOR EACH DEPARTMENT Develop a complete list of current activities for the department. These activities may be categorized into transaction-type activities (i.e. very repetitive, standard procedures and duration) and non-transaction-type activities (i.e. less repetitive and non-standard). Manpower requirements sample Department: Finance

Transaction type 1 activities No. of invoices processed 2 No. of payments to local vendors 3 Issuing debit noteof petty cash 4 No. claimed 5 No. of credit note processed 6 No. of journal vouchers processed

7 8 9 1 0

Non-transaction type activities Sales interface reconciliation Management reporting Cash position reporting Others (Project A)

Transactio nvolume per yea r

Activity time (hrs) Executiv e and Nonabove exec

Man-hours required per year Executive and abov None exec

For each division/ department/ function and job level, all activities and categorise into transaction or list transaction nontype

Total

Future headcount Current needed headcount Gap/surplu s Loss through resignation (30%)through retirement Loss (0%) Loss through transfer Final (10%) gap/surplus

Figure 1-3: Manpower requirements – sample (Step 1)


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STEP 2:

DETERMINE THE CURRENT ANNUAL MAN-HOURS REQUIRED FOR EXECUTIVES AND NON-EXECUTIVES For transaction-type activities, record the following: The estimated transaction volume/frequency in the current year The activity time (in hours) of Executives and Non-Executives required for each transaction Multiply the transaction volume and activity time to get the total number of man-hours required in a year. For non-transaction type activities, man-hours required in a year may be calculated in the same way, if activity time is quite standard and the transaction volume may be estimated accurately. In some cases (e.g. one-off projects), allocate a reasonably estimated man-hour number for the activity.




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STEP 3:

DEFINE FUTURE ACTIVITIES FOR EACH DEPARTMENT In the same way, develop a complete list of activities for each department. Newly planned activities are included in the list.




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STEP 4:

ESTIMATE THE FUTURE MAN-HOURS REQUIRED Like current man-hours, the future man-hours required for both Executives and Non-Executives are determined by multiplying the transaction volume and activity time for transaction-type activities and by allocation of a reasonably estimated man-hour number for non-transaction type activities. Any changes in productivity level should be reflected in the estimation (e.g. change to activity time or transaction volume).





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STEP 5:

FORECAST LOSSES OF EXISTING STAFF DURING THE YEAR Existing Executives and Non-Executives may be lost due to resignation, retirement or transfers to other departments. The resignation rate, retirement rate and transfer rate during the year is estimated. Multiply them with the current headcount to get an estimated loss of staff during the year.




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STEP 6:

DETERMINE NUMBER OF PEOPLE TO RECRUIT AND PROMOTE DURING THE YEAR Establish the effective hours in a man-day (excluding meal hours and breaks). Establish the number of working days in the year by deducting the number of days of public holidays, rest days and non-working days, annual leave, estimated sick leave, other applicable types of leave and training days. Multiply the result with the effective hours per day to get the effective working hours in a year. Divide the future man-hours required by the effective hours in a year to get a future headcount needed. Deduct the current headcount against future required headcount. Add the forecasted losses during the year. The resulting number is the final gap (i.e. the headcount that has to be recruited or promoted/transferred in during the year).

Figure 1-8: Manpower requirements – sample (Step 6) Copyright © 2012 SPRING Singapore and Singapore National Employers Federation. All rights reserved.

MANPOWER PLANNING - ALTERNATIVE METHODS OF MANPOWER PLANNING

A1.2 Alternative Methods of Manpower PLANNING The usual manpower planning process may not apply to start-ups or companies with limited number of employees. Such companies may refer to benchmarks used within their industry to estimate their manpower requirements.


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THE FOLLOWING METHODS MAY BE APPLIED IN PART OR IN WHOLE WHEN DECIDING ON THE MANPOWER REQUIREMENTS FOR AN ORGANISATION:

1

TREND ANALYSIS This approach involves studying the variation of employees over the last few years in each department (e.g. Sales, Projects, Finance, IT, Marketing). The company may wish to look at the number of employees in each department over the past 3-5 years, or the number of employees in each subgroup at the end of each year over a 3-5 year period. This is done to identify trends that may continue into the future. NOTE

Elements such as sales volume changes and productivity enhancements may also affect staffing figures.

several e r a e r e Th of metho d s power n a m g n i deter min ailable. v a s t n e requirem


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2

RATIO ANALYSIS This approach is done by making forecasts based on the ratio between a causal factor (e.g. sales volume) and manpower required for the work to be done (e.g. number of sales staff). Example: If it takes 20,000 man hours to complete a specific project, completing this project within 6 months (or 180 days), will require a minimum of 14 staff to be on this project for an average of 8 hours per day. In this scenario, historical values are used as a sample to plot estimated manpower requirements.

REQUIRED TO COMPLETE 20,000 MAN HOURS IN 180 DAYS NO. OF HOURS PER DAY = 8 HRS MIN. NUMBER OF STAFF = 20,000 ≈14 (18×8)

NOTE

3

Factors such as sick leave, rest days, non-working days, public holidays and training days have to be taken into consideration. This approach does not take into consideration enhancements in productivity and extra hours put in by employees.

BUSINESS UNIT FORECASTING This approach is done by HR meeting up with supervisors and managers to come up with an estimate for the manpower requirements of the company for the upcoming year. This may involve managers using unit or trend forecasting to derive the estimates.


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FUNCTION SPECIFIC RATIOS Here are some widely accepted ratios for a selection of functions that may be considered when planning for manpower requirements: FUNCTION

HR*

KPI

HR full-time equivalent employees (FTEs) to employee ratio NOTE

To use as a guide especially if <100

GUIDELINE Fewer than 100

3.03

100 to 249

1.36

250 to 499

1.01

500 to 999

0.98

1,000 to 2,499

0.87

EXAMPL

E

If a company has a total staff of 823, the number of HR personnel would be 823 x 0.98 (100)

SALES

ALL

≈8

Sales per person

If the company wants to achieve a sales target of $1 million and sales revenue per person is estimated to be $0.25 million, then number of sales people required is 4.

Ratio of full time staff to part-time staff, temporary staff, interns

For companies that have seasonal variations in manpower requirement, temporary staff and interns may be used during peak periods.

*Source: SHRM Human Capital Benchmarking Study 2009


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INDUSTRY SPECIFIC RATIOS INDUSTRY

Professional Services, Sales, Real Estate, Manufacturing

KPI

Revenue per employee

POSSIBLE CONSIDERATIONS If the target revenue is $5 million and on an average an employee generates $1 million revenue per year, then number of employees required will be 5.

Depends on whether the retail environment is a hightouch or low-touch one, to consider the following options:

Retail

Number of customers to serve

- Ratio of number of service staff to customer (e.g. High Touch – 1:1, Low Touch – 1:5)

OR - Number of service staff responsible per square feet of retail space (e.g. High Touch –

1 staff per 300 square feet, Low Touch – 1 staff per 1000 square feet)

Depending on the quality of service provided and type of cuisine offered, an employer may choose to have a ratio of wait staff to tables in a restaurant.

Food and Beverages

Number of tables per wait staff

EXAMPL

E

For a sit-down dinner for 10 people: Minimum – 1 server per 3 tables Optimum – 1 server per 2 tables Premium – 2 to 3 servers per 3 tables


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case stories

ATLAS SOUND & VISION PTE LTD Fast Facts: • • • •

Year of Incorporation: 1963 Staff Strength: 100 Industry Focus: Retail Sales Turnover: S$20-S$50 Million


MANPOWER PLANNING - CASE STORIES

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Atlas Sound & Vision Pte Ltd Background of company

After attending the manpower planning

Atlas Sound & Vision is a reseller and

training

distributor of premium audio and visual

manpower

products within Singapore, and has a staff

manpower planning on its retail and project

strength of 95 in Singapore, 30 in Malaysia

teams to ascertain the effectiveness of

and 5 in Australia. Incorporated in 1962,

the Toolkit. Through experience, Atlas has

they have seen rapid growth in both their

found the manpower planning template

revenue turnover and headcount over the

more applicable for jobs that are more

past decade with a combination of strong

transactional and predictable in nature.

workshop,

Atlas

requirement

used

the

template

for

leadership and the foresight to capitalise

Benefits of using the HR Toolkit

on business opportunities.

The use of this template has helped the

Self-implementing the manpower planning framework

management of Atlas better understand

Prior to the implementation of the

This knowledge has helped Atlas to

HR

like

improve the recruitment and selection,

most companies in its initial phase of

and performance management for new

development, did not have a clearly defined

employees. With a better understanding

approach to manpower planning. Its

of how to use the template, Atlas will now

organisation structure was unstructured,

use it to evaluate the work done by its

and existed to serve the business needs

Finance team and to see how technology

of the company. Manpower planning was

can be used to reduce the workload of

based on industry and competitor norms

some of its executives.

Capability

Toolkit,

Atlas,

the job activities of each individual.

and supplemented with each business unit’s manpower requirements.


TME Systems Pte Ltd Fast Facts: • • • •

Year of Incorporation: 1986 Staff Strength: 20 (At HQ Level) Industry Focus: IT Engineering Sales Turnover: S$5-S$20 Million


MANPOWER PLANNING - CASE STORIES

32

TME Systems Pte Ltd Background of company

During a deep-dive study of TME’s

TME Systems Pte Ltd Singapore was

manpower needs, the company realised

established in 1986 and specialises in

that they were facing challenges due to

automation testing and measurement

a lack of HR resources. The absence of

solutions for high tech products. Its

business forecasting for each division

core capabilities are in the distribution

also revealed the reason for challenges in

of world-class cutting edge technology

ascertaining its manpower requirements.

products,

A manpower audit also revealed their

industrial

automation

solutions, education trainer solutions

shortage

of

and test and measurement solutions.

to leading its day-to-day operations.

Issues faced by company

TME took up the recommendations made

Manpower has always been a key

by the consultant and customised the

concern for TME as its employees

templates in the HR Capability Toolkit to

have to go through rigorous training to

meet their specialised business needs.

specialise in the niche areas that the

This helps each division to better plan for its

company operates in. Due to the heavy

resources needs. The better management

investment in training, it has been a costly

of workload for its employees has resulted

endeavor whenever an employee leaves

in a lower attrition rate compared to

the organisation as TME would have

previous years, and has given the company

to devote resources in training a new

the confidence to come up with an

employee. This problem is exacerbated

improved set of recruitment and selection

by a lack of dedicated HR resources to

procedures to improve the suitability and

address the attrition issues.

quality of new employees to TME.

Better manpower planning through the HR Toolkit TME worked with SNEF Consultants to better ascertain its manpower gaps and to better plan its manpower needs.


senior

positions

critical

1 Manpower Planning

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