Last reviewed 6 December 2017

If business never changed — same products, steady order book — staffing requirements would not be a problem. We would recognise the exact number of people and skills we needed and, having got them, recruit only to replace leavers. But business is not like that. Order books rise and fall, markets change as do products, new skills become needed, old ones lose their value, and as a result our needs for people and their skills are in constant flux says Bob Patchett.

We cannot turn a tap on and off as needs change; recruitment takes time, there are legal constraints on dismissal, and training usually is a slow process, yet we do not want the expense of people who offer little value. We can only manage this situation effectively by skilful and constant staff planning.

So often in management there is merit in stepping out of the problem and viewing it from a distance, and in this instance a useful technique is zero-based staff planning. Though an academic exercise, it helps focus your mind when making practical decisions. Begin by examining your current or next-year business plan, and translate it into a skills requirement. Ignore what employees and sections you have and instead take a blank page and list the processes that will need to be carried out and the skills needed to perform them. Begin with direct activities such as producing the product; what skills will that require, for how many hours per week, so how many people, how will they relate to other employees, how should they be grouped and controlled? Then how will you market and sell the product, handle product development, what accounting processes, what will purchasing involve? Will you provide HR, transport, catering, credit control in-house or outsource and, if the former, what skills, for how long and so on? This is not an easy exercise. Ideally involve other key managers, though this risks them, understandably and even subconsciously, safeguarding their present territory.

This exercise is largely academic because, if your organisation has operated for some years, it probably has grown and changed in ways that make it quite different from the ideal just constructed. Changes were made piecemeal to adjust to prevailing needs. However, when staff changes need to be made, there may be value in looking at this ideal in case it prompts innovative restructures. Also, the exercise may prompt questioning of current arrangements to find greater efficiencies, for example outsourcing or repatriating functions; rearranging your staff structure to split, merge or redistribute management responsibilities; sharing resources; developing multi-skilling or multitasking among your employees.

Optimising your staff structure calls for an ongoing staff planning operation. This might usefully be headed by an HR professional, but any senior executive with broad understanding of the organisation could lead. Important however is that heads of major sections of the organisation take part. Begin by looking at your business plan for the next five years. Next year should be detailed and be based on a great deal of certainty. Subsequent years also should be expressed in detail, though with decreasing certainty. Then for each year translate the business need into requirements for the numbers of employees with appropriate skills. If your operations are seasonal or other factors cause demands on the business to fluctuate with some regularity, you may have to do the calculations over shorter periods. These exercises will indicate in what areas you will need fewer or more people. And now for the important question — what are we going to do about it? Too often this question is not raised until changes appear over the close horizon, and as a result there is frantic recruitment, moves to make people redundant, or a freeze on recruitment which can result in shortages of people in key areas. By careful and constant management of the staff planning operation, these panics can be avoided because you are able to determine well in advance what pattern of staffing you will need and plan appropriate steps to provide it. The system will not be perfect, but will greatly reduce staffing anxieties.

If the plan indicates that you are likely to have a shortage of people with a particular skill, you have two options. First is recruitment. Consider how best to attract the people you will need. Should you use agencies or handle recruitment yourself? This may come down to cost and convenience on one hand and the resources you have in-house on the other. Whichever you choose, consider how long the exercise is likely to take. Commonly this takes longer than planned; the best qualified candidates cannot attend during the week you want them, the head of department who will make the final appointment decision will be abroad when you want to hold short-list interviews. Consider also the length of notice the most suitable candidate is likely to have to give. Minimise these problems by allowing sufficient time, with a bit to spare, for the whole operation, then note in your diary when you need to press the button to start.

Your second option for meeting a skill shortage is to train existing employees. Clearly this cannot be done in many cases. If you wish to train apprentices or your own graduates, you must think years ahead. Some jobs require professional qualifications or years of training, but many jobs do not. Either they have joined you with experience of something similar to what you want, or you trained them to a level of competence in a short time, in which case you should be able to retrain them quickly to perform other, broadly similar work. Looking ahead, you could begin training them such that they become competent just at the time you need them. Alternatively, you could train them when they are a little slack in their present work and give them occasional experience of it from time to time such that, when they are required full time, they may need only a brief refresher session.

If your plan throws up a surplus of employees at some time in the future, begin planning for it now. Redundancy is an expensive and time-consuming operation that impacts adversely on your employee relations and on your reputation as an employer, therefore again consider retraining current employees. Good employment practice is to offer alternative work to redundant employees, but this may leave insufficient time for retraining. If you train people well in advance, not only are they ready as soon as you need them, they may in the meantime cover for absentees and thereby gain experience. Indeed, if you persuade employees to become multi-skilled you will be better able to deal with changes in skill requirements as well as cover for absent colleagues.

Once the initial five-year staff plans have been set up, updating is quite easy. Ideally have a monthly or quarterly review to make what may be minor modifications, followed by an annual exercise to examine plans more thoroughly, match them up to perceived changes in business plans, and finally construct a new fifth-year plan.

Effective staff planning is a crucial part of management, just as important as financial budgeting, so treat it as a professional activity.