Both internal and external factors influence human resource planning. Internal factors are those within the control of the organization, such as the remuneration (pay and benefits) to its staff. Examples of such interrelated internal factors that influence human resource planning include:

• Size of the organization – The larger the firm, the more involved it needs to be in human resource planning. Not only do larger firms need to recruit more workers, they are more involved in training, appraisals and other related human resource matters.

• Strategic direction of the organization – For example, if growth is a priority, the organization will plan to recruit more workers and internally promote some employees to senior positions.

• Organizational structure – A clear organizational structure helps workforce planning. For example, the HR manager can identify vacant positions and jobs that are redundant, thus can plan how best to address these gaps in the firm.

• Finances of the organization – Effective workforce planning cannot happen without sufficient funding being available. Growth enables the firm to gain more revenue, which will provide it with the finances to hire and pay for more workers. Training and professional development opportunities for workers also require finance.

Finance is vital for human resource planning

• Motivation in the workplace – The level of motivation in an organization is an important internal factor affecting workforce planning. The higher the level of motivation, the more productive workers tend to be, and the lower the labour turnover rate. The human resources department needs to keep records of why people leave the organization in order to retain their employees.

• Corporate culture of the organization – The culture of the organization affects how the HR department operates. In turn, this influences its approach to HR matters such as working hours, flexitime, teamworking, appraisals, job sharing (where two employees share a single job), training and professional development opportunities, dismissal and redundancies, outsourcing, and the internal promotion of staff.

An increasing number of people work from home

External factors are those that are beyond the control of the organization, such as the legal minimum wage or other employment legislation. These external factors include:

1. Demographic change

2. Change in labour mobility

3. Immigration

4. Flexi-time

5. Gig economy

1.  Demographic change

Demography is the study of population and population trends. Demographic change refers to variations in the structure of the population that influence human resource planning. This might include developments and trends in the population, such as:

• The average age of the population

• Distribution of the population by ethnicity

• Gender distribution

• Educational attainment levels, and

• Average household income

• Official retirement age in the country.

Table 1 - 1 - Retirement age, selected countries

Source: Adapted from Wikipedia

In many high income countries, there has been both a lower birth rate and lower death rate, along with increased longevity (life expectancy). These demographic trends have led to an ageing population (a rise in the average age of the population). An ageing population has several impacts on human resource planning. For example, the retirement age in many countries has increased. Labour mobility and labour productivity may both fall, as younger workers tend to be more mobile whilst elderly workers may be less productive.

Table 2 - Ageing populations (countries with the largest percentage of people aged 60 and above)

1. Japan

2. Italy

3. Germany

4. Finland

5. Sweden

6. Bulgaria

7. Greece

8. Portugal

9. Croatia

10. Channel Islands, UK

Source: Global Agenda Council on Ageing Society

Another demographic change in many societies is better employment opportunities for women. In high-income countries, women are typically more career-orientated so have children at an older age. They are also having fewer children, partly due to the higher costs of raising children.

 Theory of Knowledge (TOK)

Can positive discrimination based on gender ever be truly justified?

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Teacher prompts for discussions:

• Ask your student(s) to discuss and reflect on the extent to which their view depends on their own gender?

• Does the view also depend on whether they have female relatives, such as sisters, cousins, grandmothers and aunts?

• What are the economic costs of hiring women (including possible costs for maternity leave)?

• In certain organizations, such as single-sex schools, is there more of a justification for hiring more female/male employees? For example, how acceptable is it to hire a male principal for a girls' school?

• To what extent does ignorance (such as a lack of understanding of different cultures and historical backgrounds) influence our views of perceived gender inequalities in different countries?

2.  Change in labour mobility

Labour mobility measures the extent to which workers have the ability and willingness to move between geographical locations and/or occupations for their employment. Increasing and maintaining labour mobility ensures a more efficient allocation of human resources.

There are two types of labour mobility: occupational mobility and geographical mobility.

(i) Occupational mobility

Occupational mobility refers to the ability and willingness of employees to do another job or pursue a different career. Occupational mobility can be improved if employees have the necessary qualifications, experience and skills to move from one job to another. Occupational immobility occurs due to impediments such as rules and regulations.

All professional careers have their own standards, such as education requirements and training. For example, the supply of doctors, accountants, and lawyers is very limited due to the specialized training and licensing requirements in order to work in these professions. Teachers need a Post-graduate Diploma in Education (PGDE), degree in education, or other similar qualification in order to work in schools.

School teachers need a PGDE (or similar) qualification

(ii)  Geographical mobility

Geographical mobility refers to the ability and willingness of employees to relocate to another location or country for work reasons. Some jobs require their employees to travel long distances for work purposes, such as delivery truck (lorry) drivers, pilots, and sales executives.

Geographical immobility occurs due to the unwillingness of workers to move to another area. Such impediments to geographical mobility include: family ties to a geographic location, relocation costs, lower wages and salaries, fewer benefits, higher property prices, or higher costs of living in the new location.

Long-distance truck drivers need to be geographically mobile

The international mobility of labour is even more challenging to achieve. To attract people to work in overseas locations, businesses tend to have to offer highly attractive remuneration packages. For example, many international schools offer perks (such as flights, educational allowance, housing allowance, health care, and end-of-contract bonuses) as an incentive for the teachers they want to hire to relocate overseas.

Labour mobility can be improved by offering workers improved pay and benefits. Workers can improve their own labour mobility by partaking in training and development programmes. However, this can be expensive for the business, of course.

Labour mobility is important for organizations and economies. In general, greater labour mobility means that workers are able to find better paying jobs in order to improve people’s standards of living. Businesses also benefit because labour productivity should improve as a result of improved morale and motivation.

3.  Immigration

Migrant workers are people who move to other locations or countries in search of job opportunities. For example, many people from rural areas move to the cities in search of employment opportunities as well as better-paid jobs.

On an international scale, the United Nations defines a migrant worker as someone who “is engaged or has been engaged in a remunerated activity in a State of which he or she is not a national”.

In an increasingly globalized world, it is not uncommon for citizens of one country to temporarily work in another country. These citizens, known as "expatriates", may be attracted by higher salaries or favourable working conditions in overseas countries. For these citizens to be considered expatriates (or expats), there is the assumption that they will return “home” after a period of time. An example is teachers working overseas in international schools. A significant number of IB World Schools hire expatriate teachers. Another example is the 400,000+ foreign domestic helpers who work in Hong Kong Special Administrative Region of the People's Republic of China (HKSAR), representing more than 5% of the population of economy. Most of these foreign workers come from the Philippines, Indonesia, and Thailand.

The influx of migrant workers from overseas can provide many business opportunities, such as:

• Easing of skills shortages - Hiring skilled migrants has two advantages to a business. First, they take on the jobs that cannot be filled by domestic workers, perhaps due to a lack of willingness or skills (ability). Secondly, since a skills shortage is prevented, the pool of migrant workers helps to keep wage costs down.

• Flexible work structures - Businesses are able to open for longer hours due to workforce flexibility. Migrants add to the supply of staff willing to work part-time or shift work. This is good news for businesses which have outlets that open 24-hours a day, such as 7-Eleven convenience stores, bars, petrol (gasoline) stations, and hotels.

• Marketing opportunities - Migrant workers are likely to have different habits and tastes from the mass population. This can provide niche marketing opportunities, such as the provision of cultural goods and services. Examples are as varied as Polish beer being sold in Britain, to Malaysian spicy noodles in Finland, or Chinese 'dim sum' cuisine in Denmark.

• Personnel opportunities - The supply of migrant workers allows a business to employ a more flexible and dynamic workforce. They may bring new ideas, experiences and ways of thinking.  Skilled migrants can pose a threat to less-skilled workers in the country. This form of competition can raise the standard of skills in an economy as domestic workers update their skills to retain their own jobs.

• Net social benefits - The majority of migrants are of working age. This means they are likely to pay income tax (good news for the government and the general public). It also means that they have income to spend on goods and services (good news for marketers).

Studies have consistently shown that migrant workers contribute net benefits to an economy. Not only do they raise tax revenues for the government and provide marketing opportunities, they also contribute to the economic prosperity of the country.

Recruiting migrant workers (and part-time staff) can certainly help businesses to meet their short term human resource needs, such as during peak trading times of the year. Businesses also gain if they can hire experienced and highly qualified migrant professionals (sometimes referred to as expatriates, or ‘expats’) on a permanent basis. However, many migrants lack the necessary skills and qualifications needed to secure high-paying jobs, so often end up working in low-waged occupations.

The migration of workers has intensified due to globalization, such as the continual expansion of multinational companies around the world, and the development of trading blocs such as the European Union (thereby easing the geographical mobility of labour between countries).

 International Migrants Day - Famous Entrepreneurs Quiz

In an ever-more integrated and interdependent world, along with advances in telecommunications and transportation, the number of people who have the desire and the capacity to move to other places for work has increased exponentially. Migrant workers, include expatriates, take risks in moving overseas in search of better opportunities, to overcome adversity, and to live a better life.

In recognition of International Migrants Day (18^th December), have a go at the quick quiz about some famous immigrant entrepreneurs who made a real impact on the business world and beyond. International Migrants Day was established by the United Nations in December 2000, after having acknowledged the large and increasing number of migrants across the world.

No.	Clues	Entrepreneur
1.	An immigrant from Germany who settled in San Francisco, USA, who made jeans (denim) popular since the 1870s.	Levi Strauss
2.	Born in 1950 in Athens, Greece, this entrepreneur established The Huffington Post, with its HQ in New York City.	Arianna Huffington
3.	Born in 1971 in South Africa, this entrepreneur migrated to Canada and then the USA before becoming the world’s richest man in 2021 as well as buying Twitter for $44 billion in 2022.	Elon Musk
4.	This Ukrainian entrepreneur settled in the USA as a computer programmer and founded WhatsApp, which was later sold for $19 billion to Facebook.	Jan Koum
5.	True to his global brand name, this British entrepreneur resides in the British Virgin Islands, having given up his British residency in 2013.	Richard Branson
6.	Born in Taiwan but raised in San Jose, California, USA, this entrepreneur went on to co-found Yahoo!	Jerry Wang
7.	Google’s co-founder was born in Moscow, Russia, and migrated to the USA aged 6 in order to escape anti-Semitism.	Sergey Brin
8.	Born in Chicago, USA, the founder of the world’s largest entertainment company, and the world’s most famous mouse, was the son of parents from Canada and Ireland, with German and English ancestry.	Walt Disney
9.	Facebook and Meta’s founder and CEO was born in New York, but his great-grandparents were Jewish emigrants from Austria, Germany, and Poland.	Mark Zuckerberg
10.	Born in San Francisco in 1955, this entrepreneur’s father was a Syrian migrant and mother was a German-American, although they had to give him up for adoption, yet he went on to co-found Apple Inc.	Steve Jobs

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Teachers can download a PDF copy of this quiz to use with students in class by clicking the link here.

4.  Flexi-time

Flexi-time is a form of flexible work practice that enables employees to work a set number of core hours per week, often at the office during peak periods of the day and/or week. The employees then have the flexibility to choose when they work during the rest of the week; so long as their work gets completed.

Many organizations encourage their employees to maintain a work-life balance. The belief is that supporting the well-being of the workforce has direct benefits to the employer in the long run. To do this, a commonly used human resource strategy is to allow employees to adopt a variable work schedule so they can have greater control over when they begin and end work.

Professor Charles Handy first discussed flexible working practises in his Shamrock organization model. Handy suggested that modern organizations would increasingly consist of three elements: core workers, contracted specialists and a flexible workforce (which includes flexitime and part-time staff). As predicted by Handy, the growth in flexitime and part-time employment have reduced the numbers of full-time workers in some professions, such as the retail and fast food industries.

Flexitime empowers workers as they have the autonomy to complete their work in their own time, when it best suits them. It also creates flexibility in their personal schedule, allowing parents to raise their young children, for example. Hence, flexitime can help to improve morale and labour productivity.

Flexitime enables parents to have a job while raising young children

However, flexitime suffers from similar disadvantages to teleworking, such as the potential lack of accountability and productivity. There are also costs implications if managers have to check and approve the hours flexitime staff claim to have worked.

Flexitime is not a new concept, but has been an increasingly common practice, allowing people to have greater work-life balance, especially for those with young children. Watch this intriguing lecture by Dr. Heejung Chung, Senior Lecturer from the University of Kent, who discusses this topic in great depth but in a very succinct way.

Click the icon below to read about part-time employment as a common feature of flexi-time and HR planning.

5.  The gig economy

Gig workers are paid per job, instead of per hour

The gig economy (sometimes referred to as the on-demand economy) refers to labour markets in which workers are given short-term or one-off contracts, such as freelance work, rather than long-term or permanent jobs. Gig workers (sometime referred to as platform workers) are on-call, independent contractors who enter into formal agreements with on-demand businesses to provide certain services to the firm's customers. This is usually done through an online platform or mobile app. Gig workers are paid for each individual job (or "gig") they do, instead of traditional payment methods such as wages per hour or salaries per month. Essentially, workers in the gig economy are more like entrepreneurs (self-employed) than traditional employees of a business.

Watch this short introductory video that explains what a gig economy is.

The gig economy is a growing sector in many parts of the world. For example, in 2021, a report by the McKinsey Global Institute (MGI) suggested that more than 5 million people in the UK worked in the gig economy (around 15.6% of the total full and part-time workforce in the country). Examples of gig workers include:

The gig economy has huge implications for workforce planning as businesses require people for flexible jobs by paying independent contractors and freelance worker instead of full-time employees. In the modern digital world, the gig economy is increasingly common, especially with more people choosing to work remotely or from home. This trend was accelerated across the wprld following national lockdowns and safety measures introduced during the global coronavirus pandemic. Businesses will need to plan for changes to the world of work, including the gig economy, when the COVID-19 pandemic eventually ends.

Advantages of the gig economy

• Workers enjoy freedom and flexibility as they can choose which jobs they want, as well as when and how long to work for. This is ideal for people who prefer part-time employment.

• There is the potential to earn a significant amount of income as gig workers often work for multiple businesses on a job-by-job basis.

• The flexibility also enables some people to have a better work-life balance, such as working parents of young children.

• Businesses can gain from reduced costs of production as they do not need to hire so many full-time workers (along with the pay and benefits associated with full-time employment) and office space.

• The lower costs of production for businesses mean they can provide more price-competitive goods and services to customers.

 Disadvantages of the gig economy

• A gig economy reduces the need for full-time workers in the traditional economy, possibly limiting people's potential for career development.

• Gig workers do not have fixed employment contracts, so may lack job security and a stable income. This could mean that without sufficient jobs/projects, gig workers are not guaranteed to earn even the national minimum wage. There is also pressure for gig workers to continually look for the next job especially as competition for gigs has increased.

• As self-employed people, gig workers have set-up costs of their own, such as the need to purchase their own bicyles or motor vehicles for delivery-related services.

• The lack of a full-time employment contract also means gig workers may miss out on employee rights and benefits, such as paid sick leave, holiday pay, redundancy pay, and maternity leave. They also often miss out on the social aspects of traditional work with colleagues, managers, and customers .

• Workers and customers who are not tech-savvy or who do not use online services, such as mobile apps, may be left out despite the potential benefits of the gig economy.

 Key concept - Ethics

Discuss how ethical considerations may influence human resource planning in business organizations.

 Teacher only box

Possible discussion points could include:

• The use of part time and flexitime workers has raised some concerns about employers who take advantage of these employees yet gain from having lower operational costs.

• The unethical treatment of people in the workplace has huge consequences, e.g., lower staff morale, negative corporate image and costs of possible lawsuits.

• Unethical business practices of some offshored firms, such as the use of child labour, mean that more businesses are choosing to re-shore their operations.

• Flexi-time is a form of flexible working practice that enables employees to work a set number of core hours per week, often at the office during peak periods of the day and/or week.

• Geographical mobility refers to the ability and willingness of employees to relocate to another location or country for work reasons.

• Human resource planning (or workforce plannning) is the systematic process of managing the current and future needs of an organization’s workforce.

• Internal factors are those within the control of the organization. An example, in the context of HRM, is the remuneration a business offers to its workers.

• Labour mobility measures the extent to which workers have the ability and willingness to move between geographical locations and/or occupations for their employment.

• Migrant workers are people who move to other countries in search of job opportunities.