Can manpower planning work?

A recent issue of The Economist reported that after Saudi Arabia, the UAE had the second highest middle/senior management compensation on the planet. Whether this encourages you to look at how many you hire, or load your organisation, the reality is that for any organisation to succeed, its cost structure needs to be optimised, and that means carefully managing your manpower.

The reality is that if you talk to any senior HR professional, he/she will tell you that manpower planning is not working.

At the start of the year, most departments make no serious effort of analysing manpower and productivity, and during the year they will ask for additions without any significant justification. Here are a few ideas to make it work better.

At the core of this is structure. When structures are designed, positions are created for activities and sub-activities, without really analysing whether there is enough work for one person in that area.

For example, saying I need one product manager for every product sounds logical, but if the activities will only take 25 per cent of his time, then it is only logical that the person handles 3-4 products.

So my first recommendation is that when structures and positions are created, think about the level of underlying activity before drawing some of the boxes.

Then the real issue of loading: It is critical that one understands detailed activity levels to determine the number of people needed for each position. A quick look at the headcount by department is the starting point.

If 70 per cent or more of the headcount is not customer facing, one has to wonder what are all these people doing? After all, isn't the role of a company to generate sales, and for every sales guy, if there are six people in support, common sense tells you something is wrong.

It gets even worse when these people are in administrative positions.

Activities and loading for most of positions are well understood today. There are plenty of benchmarks available to determine what the right loading or staffing is. Very often benchmarks can be internal.

If a firm has 10 branches, and the average sales call of branch one is 15 per day and the other branch is 6 per day, you have a right to go back to the second branch productivity and loading improvement.

Size and productivity

Technology can also play an important role. In many organisations where we are determining the right size of the organisation, we will look at the current role of technology and see how it can improve productivity. After all, processes are done by people enabled by technology. To be fair, one must compute loading prior to technology upgrade, and post-upgrade.

A few years ago a client asked me to run all the analysis, improve the productivity of the organisation, and then put the benchmark of optimum loading per position on one sheet of paper that he kept in his drawer.

Every time somebody came to him asking for more staff, he simply used the reference loading template, to determine if additional staff was needed or not.

A good round of analysis, some benchmarking, and a single sheet of paper can go a long way in determine if your organisation is right sized, and the only flab you need to worry about is what's on your stomach.

The writer is managing directorof Cedar Management Consulting International, LLC.