Good Evening,
Prepare a one-page Strategic HR Plan for ABC Manufacturing Ltd.
You should include:
Business Strategy → HR Demand → HR Supply → Workforce Gap → HR Strategy → Recruitment/Training → Cost → HR Metrics.
Case Study: Strategic HR Planning at ABC Manufacturing Ltd.
Background
ABC Manufacturing Ltd. is an Indian automobile-component manufacturer with 1,000 employees. The company plans to expand production over the next year because of increasing customer demand.
Management has prepared the following workforce information.
Current Workforce
| Employee Category | Current Employees |
|---|---|
| Production Operators | 600 |
| Engineers | 150 |
| Supervisors | 100 |
| Sales & Marketing | 80 |
| HR & Finance | 70 |
| Total | 1,000 |
Business Expansion Plan
The company expects production to increase by 20% next year.
Management estimates that workforce requirements will increase in approximately the same proportion.
However, the company expects the following employee losses during the year:
- Production Operators: 8% turnover
- Engineers: 6% turnover
- Supervisors: 5% turnover
- Sales & Marketing: 10% turnover
- HR & Finance: 5% turnover
The company also expects that 10% of the current employees in each category will be promoted internally or transferred to other roles, creating additional staffing requirements in their existing positions.
Exercise – Questions
Question 1: Calculate HR Demand
If workforce requirements increase by 20%, calculate the number of employees required next year in each category.
Formula:
HR Demand = Current Workforce × (1 + Expected Growth Rate)
Question 2: Calculate Internal HR Supply
Assume that after considering expected turnover, the company expects to retain the following percentage of its current workforce:
Internal Supply = Current Workforce × (1 − Turnover Rate)
Calculate the expected internal supply for each employee category.
Question 3: Calculate Workforce Gap
Calculate the shortage or surplus for each category.
Formula:
Workforce Gap = HR Demand − Internal HR Supply
- Positive result = Shortage
- Negative result = Surplus
Question 4: Calculate Recruitment Requirement
Assume the company wants to fill 100% of the workforce shortage through external recruitment.
Calculate the number of employees ABC Manufacturing must recruit in each category.
Question 5: Calculate Training Requirement
Management decides that 25% of the required engineers and 30% of the required production operators can be developed internally through training.
Calculate:
- Number of Production Operators to be developed internally
- Number of Engineers to be developed internally
- Remaining external recruitment requirement
Question 6: Calculate Recruitment Cost
The estimated recruitment cost per employee is:
| Category | Recruitment Cost per Employee |
|---|---|
| Production Operator | ₹20,000 |
| Engineer | ₹50,000 |
| Supervisor | ₹35,000 |
| Sales & Marketing | ₹30,000 |
| HR & Finance | ₹30,000 |
Calculate the total recruitment cost if all shortages are filled through external recruitment.
Worked Example:
Step 1: Production Operator Demand
Current production operators = 600
Expected growth = 20%
Demand = 600 × 1.20 = 720 employees
Step 2: Production Operator Supply
Turnover = 8%
Expected supply:600 × (1 − 0.08) = 600 × 0.92 = 552 employees
Step 3: Workforce Gap
Demand − Supply = 720 − 552 = 168 employees
Therefore:
Production Operator shortage = 168 employees
Student Calculation Table
Ask students to complete this table:
| Category | Current Workforce | Demand (+20%) | Expected Supply | Gap | Recruitment Required |
|---|---|---|---|---|---|
| Production Operators | 600 | ||||
| Engineers | 150 | ||||
| Supervisors | 100 | ||||
| Sales & Marketing | 80 | ||||
| HR & Finance | 70 | ||||
| Total | 1,000 |
Challenge Question – Strategic Decision
After calculating the workforce gaps, answer these questions:
“Should ABC Manufacturing recruit all employees externally?”
You must recommend a strategy using the Build–Buy–Borrow–Redeploy–Retain–Automate approach.
For example:
- Build → Train existing employees
- Buy → Recruit employees from outside
- Borrow → Use contractors/temporary employees
- Redeploy → Transfer employees from surplus areas
- Retain → Reduce turnover among critical employees
- Automate → Use technology to reduce manpower requirements
Discussion Questions
- Which employee category has the largest workforce shortage?
- Which category has the highest turnover problem?
- What will happen if ABC does not fill the workforce gap?
- Should the company Build or Buy engineers?
- Should production operators be recruited or trained internally?
- How can the company reduce employee turnover?
- Which positions should be considered critical roles?
- How can technology affect future workforce demand?
- What HR strategies should be included in the company's strategic HR plan?
- Which HR metrics should management monitor?
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