research paper

Andrea Soberg, Trinity Western University, Langley, Canada

ABSTRACT:

Human resource planning involves creating strategic actions that respond to an imbalance of labour within an organization. Many organizations don’t take time to correctly identify the imbalance and thus implement strategies that don’t address all the workforce challenges. This article describes all the types of imbalances and the risks associated with not identifying and/or addressing them. The article has a focus on Canada and some of its specific challenges.

Key Words : human resource planning, labour demand, labour supply, employment equity, diversity, corporate social responsibility

1. INTRODUCTION

The human resource planning process involves “analyzing an organization’s human resource needs under changing conditions and developing activities necessary to satisfy these needs” (Walker,1980). In order to analyze an organization’s needs and develop good strategies a seven-step approach can be applied.

1. Identify the objectives of human resource planning.

2. Gather data on the current HR management practices and activities.

3. Determine the supply of labour.

4. Determine the demand for labour.

5. Identify the imbalance.

6. Develop and implement HR action plans.

7. Monitor the results.

One of the critical steps in the process of human resource planning is Step 5 – identifying the imbalance. The imbalance takes into account all the factors that are used to determine the actual needs of an organization. Some organizations assume that the demand for labour identifies the future requirements for labour, but all this does is identify one part of the equation. All factors that identify both the demand for and supply of labour must be considered before Step 5 is attempted. The amount and type of people identified at this stage is what is used in the Action Planning stage. If the right numbers and types of labour are not clearly identified then actions that are identified and implemented in Step 6 may not effectively address the overall challenges the organization is experiencing as it attempts to achieve its mission.

The goal is to have the right number and type of people in the right job at the right time. To calculate the imbalance the HR planner (this can be a manager within the organization or a HR professional) indicates for both the supply and the demand the following:

· the job positions that the organization has now and plans to have in the future

· the qualities, knowledge, skills and abilities needed to meet the requirements of the jobs listed

· the geographic location where the employee(s) will work

· the timing of when a vacancy will need to be filled and the readiness of the supply

The imbalance is then determined by subtracting the demand for labour from the supply of labour. The imbalance is the gap between what an organization needs in the way of people to be successful and what it currently has or will have in the future.

1.1 The Types of Imbalances

Due to the fact that the supply of and demand for labour are determined by assessing both factors within the internal and external marketplace, the result can be one, or all, of four different imbalances. These types of imbalances (Soberg, 1996) are:

1. Quantitative

2. Qualitative

3. Structural

4. Environmental

An HR planner must determine all types of imbalances before any action plans are identified. This paper discusses the different types of imbalances, how to effectively calculate them, and the risks associated with not addressing them.

2. QUANTITATIVE IMBALANCE

A quantitative imbalance is the gap between the number of people an organization needs to achieve its goals and the amount that it has. There are three types of quantitative imbalances. When the demand for labour is subtracted from the supply of the labour the result is a number that is either positive, negative, or zero. A positive number indicates a surplus gap which means that the number of positions in an organization is less than the number of qualified people available. A negative number indicates a shortage gap which means that the number of positions in the organization is greater than the number of qualified people available. A zero indicates a balance gap which means that the number of positions in the organization is the same as the number of available, qualified people.

Determining the quantitative imbalance is the simplest way of calculating an imbalance. The HR planner uses the actual numbers that were identified in the determination of supply and demand in Steps 3 and 4 of the HR Planning Process. These numbers represent the amount of people with particular knowledge, skills and abilities (KSAs) that an organization needs to achieve its mission in the present and in the future. When the HR planner discusses the quantitative imbalance with the management team, the managers sometimes don't feel that the quantitative gap is something with which they need to be concerned. They may feel that the organization could still achieve its mission, for a period of time, with a surplus or shortage of labour. If this is the case, there must be an understanding of the risks associated with such a decision.

2.1. Risks associated with maintaining a quantitative imbalance

When major labour shortages are predicted in the marketplace, some managers may feel that it is a smart idea to keep some excess supply of labour in their organization in order to be prepared for a possible future need. This may be a strategically wise decision, but the risks of not utilizing all the knowledge, skills, and abilities of the employees is that these people may become bored and de-motivated on the job. These feelings may result in an employee doing things other than their job requirements, coming in late, leaving early, calling in sick, etc. This may then influence the behaviours and actions of others. All of this can result in an overall reduction of productivity, decreased commitment to the organization, and voluntary turnover.

When there is a tight labour market there is limited supply in the external marketplace to fill any shortages an organization might have. This may cause an organization to continue to manage with less people than is needed; the management team may make a decision to manage this way as they may not have the finances to pay salaries and benefits to more employees. If the organization carries the shortage for any length of time, several things may occur. Even though there may not be the right amount of people, certain production or service outputs must be achieved. In these situations organizations typically ask employees to work overtime. This extra time spent at work results in extra costs to the organization as it has to pay an overtime rate to its employees.

In addition to a direct salary cost to the employer for maintaining a shortage in the workplace, there can be other indirect costs that must be recognized. As employees work beyond their normal work hours they become fatigued. This fatigue can result in errors, accidents, or breakage of tools, materials, or machinery. Each of these incidents results in higher production costs for the organization. Some of the errors or accidents can also cause production or service delivery delays. These delays can cause customers and clients to lose faith in the organization and in response the clients move their business to a competitor.

If there is a balance in the quantitative gap, the organization may assume that it is able effectively achieve its mission. Even though this type of gap means that the number of positions in the organization is the same as the number of qualified people, the productivity of the organization may not be what it should be. This type of gap may cause the management to feel that everything is going well in the organization. This lack of need for people may cause the management team to be blinded to other challenges or barriers the organization may have that hinders successful achievement of its goals. In today's competitive world all organizations must remain nimble and prepared to respond to change within the marketplace. An organization must be careful that it does not become stagnant and remain in its "old ways" of doing business. When this type of gap is identified, the HR planner needs to automatically look at the other imbalances that may be present.

3. QUALITATIVE IMBALANCE

A qualitative imbalance occurs when the organization is not effectively utilizing its employees. It is the gap between the expected and actual employee performance levels plus the gap between the employees' expectations and the organizations' deliverables. It is determined by assessing the productivity of the workforce, the turnover rate, the absence rate, and the appropriateness of the organizational culture for achieving the mission of the organization.

After the HR planner gathers all of the above information he/she can then define what type of imbalance is present. There are three types of qualitative imbalances. Over-qualification gap is when the position requirements are less than the qualifications of the incumbent in the position. Under-qualification gap is when the position requirements are greater than the qualifications of the incumbent in the position. Dissatisfaction gap is when the employee's expectations of the organization are greater than the organization's response. If these imbalances are not identified or addressed an organization could experience situations where employees begin to cause problems for the organization.

3.1. Risks associated with maintaining a qualitative imbalance

Several factors contribute to organizations having over-qualified people working for them. The individuals may have been hired for a different position and then the position was no longer needed and so the employees were moved to less demanding job. Many immigrants to Canada have skills and abilities that are not used in the jobs they hold. Many young people accept positions that may be beneath their skills and abilities just to become employed and gain some work experience. Whatever the reason for the over-qualifications, there are several risks associated with not dealing with the situation.

Managers may be excited to have highly qualified individuals working for them, but if these employees' skills and abilities are not fully utilized, or their interests are not tapped, the employees may begin to feel that they are not valued. When this occurs the employees may become impatient for opportunities. This may cause them to seek other opportunities elsewhere which would eventually result in them leaving the organization. Overall this would mean that there is a waste of resources that an organization could be using to become more successful in achieving its mission and/or becoming more competitive in the marketplace. It could also mean that the organization may be giving up an opportunity to move in a new direction that could provide it with a competitive advantage.

Some organizations have an under-qualification gap. There are many situations that may cause this to occur. Some employees may be placed in a job that is above their abilities because there is no-one else to fill that job. When there is an aging workforce, some of the employees in this group may no longer be able to perform certain tasks. New methods of production or service delivery may have been introduced into the organization, and the current employees don't have the requisite skills. Another reason may be that the organization doesn't want to pay the higher wages of the more qualified individuals and so has placed a less qualified person in the job. No matter what the reason for the under-qualification, the gap needs to be identified and addressed. The risks resulting from allowing under-qualification to occur are errors, dysfunction, and general poor quality of work. The employees are not performing their jobs in the manner that they should be and so the goals are not being met. The end result of allowing this to perpetuate is the loss of customers and possibly the business closing its doors.

As in the case of the other two types of qualitative imbalances, dissatisfaction by employees in organizations may be present due to many factors. The duties of the position the employees are holding may not stimulate them. Their supervisor may not reward or recognize their efforts. The compensation may be less than what they want or need. The working environment may be uncomfortable for them. An HR planner recognizes these dissatisfaction factors by noting and responding to individual and collective actions. Individual actions include discouragement, decrease in productivity, de-motivation, and possibly departure from the organization. Collective actions include slowdowns, strikes (if the organization is unionized), deterioration in the climate of the organization, and departure of many employees from the organization.

4. STRUCTURAL IMBALANCE

A structural imbalance is a gap in the appropriate demographics of the workforce that is needed to achieve the goals of the organization. It is when there is an aging workforce and/or there is an under-representation of various labour force groups; in Canada the designated labour force groups include women, Aboriginal peoples, persons with disabilities, and members of visible minorities. Both of these types of structural imbalance refer to the different physical characteristics of people in the workforce. HR planners identify this gap by referring to personnel files and other data that may be collected by the organization on these factors.

These different physical characteristics of employees can bring great benefit to the organization. The benefits of having a diverse workforce in which there is a mix of cultures, genders, ages, and levels of ability are that the needs of specific customer groups may be better met by employees who have similar traits. These are also the groups of people in which the future supply of labour will be found. An article on the benefits of immigration in Canada states, “approximately 4 million people in Canada - 13.4 per cent of our population - are visible minorities. By the end of 2016, we project that visible minorities will constitute about 20 percent of our population. This, combined with the fact that baby boomers will soon retire at a predictable high rate, means that our workforce will comprise a higher proportion of visible minorities. In this context, valuing diversity takes on a new urgency. Diversity must move beyond being a purely intellectual exercise to becoming an inherent component of organizational values. Some companies have already begun investing heavily in formally ingraining diversity into their culture. Organizations that don't follow suit will not be able to fully maximize the talents of their entire staff.” (Conference Board of Canada, 2004)

In Canada there are management challenges associated with having a diverse workforce. An aging workforce is already present and is creating large gaps in some professions and industries due to the lack of qualified supply in the labour force. In addition to this challenge, the productivity levels in this group are declining due to the lack of physical ability to perform at the same levels as when they were younger. The positions that individuals in this group hold are likely to be in more senior positions and so career paths of younger employees may be blocked. This may result in the future labour supply (i.e. the younger employees) leaving the organization.

Having more women in the work place has some challenges that include managing regular leaves of absence, a greater desire to work part-time, and the unwillingness to relocate. In 2006, 26.1% of women and 10.8% of men in the labour force were employed part-time. 14.6% of women working part-time in Canada gave the reason as caring for children; only 1.3% of men working part-time gave this reason. (http://www40.statcan.ca/101/cst01/labor63b.htm and http://www40statcan.ca/101/cst01/labor63c.htm)

4.1. Risks associated with maintaining a structural imbalance

The organizational challenges of having an aging or diverse workforce may seem insurmountable to some organizations, but the risks associated with maintaining a structural imbalance are also great. If there is an under-representation of the labour force groups in the organization there may be a perception of discriminatory practices being present. This may lead to legal action against the organization and then result in a deterioration of the company image. This could in turn result in less people wanting to work for the organization, a decrease in productivity, and the organization not maintaining its customer base and market share.

5. ENVIRONMENTAL IMBALANCE

Organizations today need to be recognized as responsible corporate citizens. Many are managing their organizations with an understanding of the Triple Bottom Line; people, planet, and profit (as coined by John Elkington in 1994). Industry Canada is very keen to have organizations in Canada manage themselves from a corporate social responsibility (CSR) framework. This organization believes that CSR will “make Canadian business more competitive by supporting operational efficiency gains; improved risk management; favourable relations with the investment community and improved access to capital; enhanced employee relations; stronger relationships with communities and enhanced licence to operate; and improved reputation and branding.” (Industry Canada, 2010)

An environmental imbalance is the gap between the values, practices, actions, and behaviours that are demonstrated in an organization and those that should be demonstrated and practiced. These gaps include the following: corporate values not being the same as society’s values; corporate practices not being the same as the demands of legislation; the attraction, by employees, to the organization is less than the attraction to a competitor; an organization’s technology is not as sophisticated as the competitor’s technology; and have poor union-management or government relations. These gaps may not be readily noticed by the HR planner as they are much more intangible than the other types of gaps; they are harder to see and to identify. Usually the only way an HR planner might know that these gaps may be present is when the organization is experiencing a higher than normal turnover rate, it is difficult to attract employees to the organization, the organization is having difficulties with some of its partners, or its market share is declining.

5.1. Risks associated with maintaining environmental imbalances

If these environmental imbalances are not identified and addressed an organization could lose its reputation in the market place and may no longer have co-operation from the local community when it might need it. If an organization does not adhere to legislation governing its actions, fines may be laid against the organization which would continue to perpetuate its poor corporate image. As competitors look on, they may begin to raid the organization's customers and employees. Internal policies and procedures may be called into question by legislated bodies or other external stakeholders. Employees may voluntarily leave and there may be problems in finding qualified employees as the organization no longer looks attractive. If the organization is unionized there may be work slowdowns or strikes. Overall the organization will not be as productive and will not be able to effectively achieve it mission.

6. CONCLUSION

This article is meant to challenge the HR planner, whether that be one of the managers in the organization or a HR professional, to not just advance to the action planning stage of human resource planning after identifying some of the supply and/or demand issues that an organization might be experiencing. To be truly effective at creating and implementing sustainable actions, the HR planner must take time to understand the real human resource imbalance within the organization. These imbalances can be quantitative, qualitative, structural, or environmental in nature. Human resource planners must take care to identify all of these gaps in order to identify and implement the best action plans.

This step in the human resource planning process is also a check-point in the process and allows the planner a time to step back and determine whether he/she has gathered the right information on the supply of and demand for labour. This step is a time to remember that human resource planning is an iterative process and factors that influence the planning change regularly. This is also a time when the HR planner connects with the senior management team to discuss the amount and type of imbalance the organization is experiencing and may experience in the future. In discussions with the management team the HR planner may learn new information about the organization’s strategic direction or external market pressures. When the HR planner informs the management team of the amount and type of labour that is needed by the organization to achieve its future goals, they may feel that the amount and type appears to be too low or too high. At this point the HR planner discusses the data that was gathered and the assumptions that were used to determine the supply and demand. The result of this discussion may cause the planner to re-assess the data and re-determine the imbalance. This time of re-assessing ensures that the most accurate information is used in Step 6, the Action Planning Stage.

7. REFERENCES AND BIBLIOGRAPHY

Conference Board of Canada, Hot HR Issues for the Next Two Years, 2006.

Industry Canada Website, http://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/home.

Soberg, Andrea, Human Resource Planning: An Introduction (2nd Edition), People First Consulting, Victoria, Canada, 1996.

Statistics Canada Website, http://www40.statcan.ca/101/cst01/labor63b.htm

Statistics Canada Website, http://www40statcan.ca/101/cst01/labor63c.htm

Walker, James, Human Resource Planning, McGraw-Hill Publishing, New York, 1980.

AUTHOR PROFILE:

Andrea Soberg earned her Master of Industrial Relations from the University of Toronto, Canada in 1984. She is currently the Dean of the School of Business at Trinity Western University in Langley, B.C., Canada, and is also a tenured, Associate Professor teaching in the area of human resource management. Ms. Soberg is also the owner of a consulting business that specializes in strategic human resource planning; her clients include for profit and not-for-profit organizations in Canada and the U.S.A..