How to Develop a Staffing Plan

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Hello friends.

Now, let’s talk about how the “staffing planning” is done?

So, first of all, we need to answer these 3 questions in this process.

The foremost question is, “How many people should we recruit?” (Repeat)

Now, for this, we need to consider a few things. Firstly, the “Staffing yields”. What is staffing yield? Well, it is the “proportion of applicants moving from one stage of the hiring process to the next”.

Now, suppose, 150 applicants have applied, and amongst that 150, 75 applicants are moving to the next level. So, your staffing yield becomes 1 is to 2.

The second thing is “hiring yields”. This means the “percent of applicants that are ultimately hired”. Now, suppose amongst those 75 applicants, only 1 applicant is hired, you can calculate the percentage based on that and check your hiring yield.

Well, when we have these numbers, we can finally assume how many people we need to call for applying. So, suppose if we know that from 150 only 1 applicant is hired ultimately and suppose we have 2 positions to fill, we will invite that many applications accordingly in order to get the right talent for our organization….

Now, the second question is, “what resources do we need?” (Repeat)

Again, we have to focus on 2 concepts here, the first one is “workload driven forecasting”. Well, it is “based on the historical data on the average number of hires typically that are made per recruiter”.

Suppose a recruiter has historically hired how many people per position, and how many positions they have been able to close.

Then the second concept is “Staffing efficiency-driven forecasting”. Well, “it is the total cost associated with the compensation of the newly hired employee”.

Suppose you are giving a CTC of 5 lakhs to an employee for a particular position, but you probably spend 4 lakhs on his hiring. This is just a hypothetical example. So, your staffing efficiency will be very less, the same way if you are bringing a candidate at a minimum cost, then his overall hiring cost and the amount you are getting from him get balanced out.

Therefore, we have to see what kind of resources we need. How efficient are the recruiters and at the same time how much cost are we willing to bear to bring a new candidate to our organization? And these costs will be different for each level of employee.

For the one who is an entry-level employee, it will be the lowest, and if we are bringing the most experienced, on CXO positions, then the cost will be very high because the future of the whole organization can depend on that particular position. Hence, you would not like to hire the wrong person for that position due to which the hiring cost will only increase. (Right?)

Now, moving on to the third question, “How much time will it take to hire?” So, the first thing is continuous recruiting. Well, when the talent pool is churned continuously, you will get to know how you can shorten the entire hiring timeline.

For instance, let’s say it takes 10 days for you to hire for a particular position. Similarly, if you generate your talent pool continuously, then these timelines can probably be reduced to 2 or 3 days. We will also discuss the hiring timeline in detail as we move further.

So, if we keep building our talent pool continuously and identify the right candidates, then even if someone is leaving a particular position, we will get a backfill immediately. Okay.

Then, the next thing is “batch recruiting”. The batch recruiting is generally feasible for hourly recruiting where you recruit the shop floor workers in batches because many other legal aspects are also associated with them.

Now, suppose you are bringing 100 people in one batch, 50 people in another batch, and so on and so forth. And based on that, you will plan accordingly how many people you want in one batch.

So, how many applicants should you have, then how many of them will clear the medical, clear the interview, there are many parameters in it. And when a batch is ready, you can get them on board.

Now we will talk about the “temporary talent shortage”.

Whenever a talent shortage is created in the market, because of the higher salaries, they increase the overall cost of the organization by many folds.

Therefore, if you hire a candidate at a time of talent shortage, then you will definitely have to bring them at a premium. And at that time an organization has to judge whether there is really a need to bring in a candidate? If yes, then generally, the organization focuses on more expensive recruiting methods.

For example, they will give a particular profile to a search firm, or they will reduce their hiring standards so that more and more people could qualify, but do you think that they can do these tactics or techniques? Well, not in most cases.

Because when there is a talent shortage, then it becomes very difficult to find the right candidate. And when we opt for a more expansive recruiting method, then our overall recruiting budget starts getting exhausted very quickly. Because you are also paying money to an external search firm, or you are taking premium membership in those search portals also. Due to this, your overall recruitment budget starts decreasing gradually. (Right?)

If you reduce your hiring standards as well, then your overall quality of workforce of the company will have a great impact on it, which may not be acceptable in the future.

Generally, there are many lucrative offers that are given to retain the talent in the organization, such as sign-on bonuses, and retention bonuses such as stock options. Or a particular amount of cash after a person completes a certain number of years in an organization.

Well, what happens with this is that there is a motivation with the employees that I have to complete at least this many years with this organization so that I can get the additional cash option or the additional incentive. (Are you getting this?)

Now, let’s talk about the “persistent talent shortage”.

What we saw earlier was the talent shortage that exists for a year or for some time. But if there is a continuous talent shortage, then over a period of time, the shortage of workers and the shortage of employees increases. Therefore, for this, the organization has to take some important steps such as reducing their demand for talent because ultimately the supplies from the front are more restricted. Okay.

Now, what can organizations do about this? They can take advantage of automation or robot process automation. Nowadays people are adopting technology more in many organizations so that the overall work can be streamlined.

Now suppose you are bringing in a talented candidate, and ultimately getting him to do transactional jobs. Well, he is not at all valued for his talent in the organization.

As a result, the organization is not getting much benefit from it, and the candidate is also slowly moving towards dissatisfaction. What will happen ultimately? There will be a threshold point, after which you will either have to provide non-transactional work to that particular candidate where the work is highly strategically oriented or involve him in projects of that type or workload of that type where his talent is actually being used. (Right?)

Otherwise, you will have to release that candidate because ultimately that candidate will also be unhappy with that organization.

Then, next comes, whenever there is a persistent talent shortage, at that time you do not have to hire on the basis of a particular skill, you will have to combine the required skill sets and then hire a candidate.

So, either you can increase the qualification so that you get a lot of skill sets in a single candidate, or if you really have manpower requirements, you can reduce your qualifications a bit so that more people could be set on your parameters.

Now, this is not a practical solution for many organizations, as, in the long run, the organization suffers a lot, if we reduce the quality of the workforce at all. Alright….

Now, let’s talk about “Temporary employee surplus”.

What this means is that suddenly a lot of talent is available in the market, and there are many workers available. Well, when does this usually happen? Whenever there is a slowdown in a market, there is either a cyclical slowdown, which means in a particular few years people will either suddenly be relieved or they will hire temporary workers in their place. Okay.

Now what usually happens is that many organizations hire “temporary or contingent workers”. Okay. Now, when there is a slowdown, first of all, those contingent workers leave the organization. So what does it mean that suddenly a lot of talent is available in the market? There are many workers available.

Well, when does this usually happen? Whenever there is a slowdown in a market, there is either a cyclical slowdown, which means in a particular few years people will either suddenly be relieved or they will hire temporary workers in their place. Okay.

Now what usually happens is that many organizations hire “temporary or contingent workers”. Hence, whenever there is a slowdown, first of all, those contingent workers leave the organization so that the positions of the permanent employees are safe. (Got it?)

Now that these are temporary layoffs, they should not last more than 6 months, as a lot of legal complications start coming after that. Such as "severance cost", "Unemployment cost", "temporary productivity declines", and "rehiring and retraining cost". And too much expense goes into an organization, rather than saving costs.

Therefore, for the organization that has already invested in its people, that investment should not be wasted. So, all the workers whom we have already trained, and those who already know their methods, it is advisable to hire them again after some time because if you go to find new talent again, then you will have to bear a lot of costs. Right?

Now, what can be an alternative to layoffs is that you should make salary cuts across the board, reduce the working hours or reallocate the workers who are there so that they can give their contribution to the area of different businesses as well. Okay.

Now in the time of covid, you all must have seen that a lot of people were laid off. At that time a temporary employee surplus was created in the market.

Now, this is not a very good thing, but yes, by doing this, the organizations had saved the cost to a great extent. In some organizations, the salaries of employees at every level were cut. So that the organization can focus on the operations or can focus on the new investments that have to make with the changing time.

Also, suddenly you must have noticed that as soon as the market opened, many people started getting jobs immediately because there was already a surplus of talented employees in the market. And organizations also easily got a lot of candidates as they had a varied choice. Okay.

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Now, let’s talk about “permanent employee surplus”.

Now, why does this permanent employee surplus come? Well, when a large number of people in a particular region are given “early retirement incentives”, either the employees are being laid off or their backfill is not being created.

So, what happens because of that? Suppose if you are offering an early retirement option to your employees then the “most skilled and highly productive” employees will be the first to leave the organization as they have an adequate skill set and, on that basis, they can easily start their own organization or they can spend their life comfortably on the retirement money that is coming from retirement funds. Okay.

Now if layoffs are done, then the morale of the workforce also declines because it is very difficult for those workers to get jobs again in the industry. And the organization may have saved its cost by laying off, but its reputation gets hampered negatively. (Clear?)

Now if you are not backfilling any position, then the position you have within the organization, will either remain vacant or will remain understaffed.

Because of that, the workload distribution that is within the organization will be hampered and employee dissatisfaction will also be created, due to which ultimately more people will leave your organization.

So, you have to see how you modulate your hiring strategy so that you get the talent you have in the organization and always have a required workforce in your organization. Right?

Then, there are “action plans that address persistent employee surplus", and some things like "reassignments" are included in it.

Now, suppose today someone has done a lot in business development but because of certain reasons the organization has got a new position within the organization itself.

So, the one who has a particular role will be reassigned to that new role and in its place, the existing people might be reassigned, so that perhaps their workload can be distributed.

Then many organizations put this "Hiring freeze" for some time whenever they have to save their cost. When the "Hiring freeze" comes, hiring is done only for the key positions.

Then comes "steering people away from careers in that position to reduce the need for future layoffs". Suppose today people are existing in a particular position. Now, by giving them different career roles, you can steer them on a different career path so that they do not have to lay off in the future for that particular position.

But you have to understand that the planning for this should be started a long time in advance, otherwise, if you try to do all this at the last minute, then a very big mess might be created and as a result, a lot of doubts might be created and the employees might remain dissatisfied.

The next and final point in "permanent employee surplus" is since you are not removing people from your organization, then a surplus will not be created in the market and the adequate balance that should be created will remain the same. (I hope this is clear?)

Now, let’s talk about the “Hiring timeline”.

In how much time does a particular position generally get filled? So, I will give you an example of it now.

Suppose you open the application, for that you have given 14 days to the applicants to apply. Then, after that, you do a quick “telephonic assessment” of all the shortlisted candidates and assume that it takes you 7 days for that.

After that, you call the shortlisted candidates for an interview which will again take an additional 7 days. Finally, job offers are made and a total of 7 days are given to accept the offer to the candidate. Then, suppose it takes 14 days to start training after accepting the job offer. Well, if you look at the total, it sits at a total of 7 weeks. And based on that, you can analyze how much lead time you need to plan the whole process.

So, suppose you want to start a pre-job training on a particular date, then you have to do your backward calculations in such a way that you can hire the right talent within a perfect timeline. (Understood?)

Now, let’s talk about “External cost per hire”.

So generally, whenever we define an external cost, we consider 6 elements under it which are included in the calculation of 90% "cost to hire".

The foremost element is, “Advertising expenses”.

So, whenever you advertise for a particular position, either on a portal, in newspapers, or in digital advertising, there is a cost associated with everything. In making the particular position creative also, there is a cost involved in everything to draft that particular position correctly, which is linked to advertising expenses only. Okay.

The second element is “Agency and search firm fees”.

If you hire an external agency, they also have a particular method of charging organizations. So, they also take their own fees.

The third element is, “Employee referral bonuses”.

So, suppose you open up a position internally and within the organization, you ask for referrals from people, then whoever is giving you the maximum number of referrals, and if their candidates are selected, then you have to give them an “employee referral bonus”. Okay.

Now, the 4^th element is, “recruiter and applicant travel cost”.

Now, suppose if the recruiter is hiring from a particular location, or the applicant is coming to you by traveling, then you have to reimburse their travel cost. Well, again that is a cost but in today's time, most of the interviews are done through telephonic or virtual mode, only for the final round the candidate generally has to go for face-to-face meetings. But again, inside that too, there are a lot of costs associated. (Clear?)

Then the 5^th element is, “Relocation costs”.

Well, if you are hiring a candidate from any other city or state, then again you have to pay for relocation reimbursement which we call relocation cost in which packers and movers, travel costs etcetera is included. This becomes a component of the relocation cost. okay.

Now the last element is, “company recruiter costs”.

Now, if within the organization there is only one employee who is doing the entire recruitment, then you have to count that also in the cost, and the overall recruitment cost is calculated on a pro-rated basis. So, suppose the same person recruits for engagement and development. Also looking at, how much time is being spent in recruitment according to the proportion and against which cost is being incurred for this particular exercise. (Understood?)

Now, let’s talk about “Internal cost per hire”.

“Internal cost per hire” includes 4 elements.

The first one is, “Internal advertising costs” which involves whenever you are opening a position on an internal portal or making some creatives for that position, then everything will be included in that advertising cost. okay.

The second element is, “travel and interview cost”. So, suppose the recruiters are going to do interviews in other cities, then you have to reimburse them for their overall travel, or in some cases, you have to get the travel arranged too.

Then, the third element is, “Relocation costs”. As I said earlier, if we are recruiting a candidate from outside, then whether he hires externally or internally, we have to bear a relocation cost. (Understood?)

The last element is, “Internal recruiter cost”.

Now, if one person is within this organization who is handling the several roles and responsibilities of HR, then you have to see how much time they spend in recruitment against how much it costs.

The recruiter cost was for an external cost per hire, that was for an external recruiter who also sees compliance for you or sees training for you, they are different. They are the ones who guide the organization externally. And these internal employees are on the company's payroll. So, we are talking about the internal employees here. (Understood?)

Well, with this, our topic ends here.

And if you have questions or comments related to this course, then you can click on the discussion button below this video and post them there. By doing so, you will be able to discuss the course with your fellow learners. Okay.

Thank you.

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