NRC: Job grades, job evaluation, and Jobscore.
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6. Long Term HR and Remuneration Planning.

The calculations described in the previous Section are suitable for current term budgeting. However longer range estimates need to consider a number of additional factors, including for example:

  • Changes in the employee mix such as higher proportions of technical staff or outsourcing of activities.
  • Employee turnover for the various classifications of staff.
  • Anticipated higher or lower market demand for various categories of staff.
  • Impact of training programs on employee performance and hence compa-ratios.
  • Expected impact of the economic environment on wage levels in the organisation's employment market.
  • The changing cost of providing certain types of benefits, such as a car.
  • Expected impact of government legislation, such as changes to the Super Guarantee Charge, or FBT.
  • Expected impact of labour union demands, for example working hours, annual leave entitlements, provision of special leave such as maternity/paternity leave.
  • Levels of absenteeism.
  • Expected changes in the organisation's structure.
  • Expected impact on employee numbers and job levels due to realisation of the organisation's business plans.

Employees are a key resource in which the organisation invests and management has a duty to stakeholders in the organisation to ensure that such resource is utilised to maximum effect. Payroll makes up forty per cent of the total operating cost of many organisations. In that regard, it is a significant investment requiring a commensurate level of careful analysis and planning. Human resources planning is therefore an important area in which Human Resources professions can contribute to the effective management of this essential organisational resource.

Long range human resources planning includes consideration of the factors listed above as they influence the cost of employment and employee numbers. Training programs, succession planning, recruitment methods, incentive schemes and such are further components. Like any other significant aspect of managing an organisation, analysing the array of human resource issues to arrive at a conclusion is a complex matter. Solutions can frequently only be arrived at in probabilistic terms. In other words, the assessments of expected outcomes have to be based on the best-informed assumptions one can make, in conjunction with the likelihood of those assumptions eventuating.

Fortunately, models of the various scenarios can be built using spreadsheets. Overly complex models are probably unwarranted because of the looseness of assumptions that need to be made about the expected outcomes for the various factors taken into account. The outcomes of these models in the remuneration context are the numbers and levels of staff required and their total cost of employment.

A major area where Jobscore is used in longer term HR planning is to examine the impact of organisation changes on the size of jobs in the future organisation. Revised job sizes in conjunction with the required changes to numbers of employees in various grades due to restructuring, divestment, acquisition, or growth gives an indication of the corresponding expected total salary bill. This analysis by the HR professional supports other business assessments examining the viability of or the best path forward regarding organisation changes or plans.

Henry Warren

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Copyright 2004 National Remuneration Centre, Melbourne.