2024 Manpower Planning: How to Build a Workforce Budget

We sat down with Keith Wong, Country Director for Recruitment (Hong Kong, Singapore and Shanghai) at Links International, to gain insights into manpower planning for the upcoming year. Let’s take a look at the intricacies of workforce planning and unveil the roadmap to sustainable organisational success in 2024.

Q: What do you think the outlook for 2024 is when it comes to hiring?

K: I believe that 2024 will be a year of sustaining and maintaining the bottom line which includes profit, people, and planet. Businesses will shift focus on maximising resources already present – including limiting expenses, sales, revenue, and the overall economy. In Asia, the temporary and contractual hiring market is expected to continue spiking – continuing its streak from 2023.

According to an article by Yahoo! Finance, the contractual hiring market is projected to grow USD 130.20 billion in 2030, at a CAGR of 9.06%.Again, this further reinstates the need for a flexible workforce that can fit into that same period of uncertainty.

Q: What are some important factors and considerations decision makers should look out for when drawing up a 2024 manpower budget?

K: Sufficient resource allocation is a starting point, but what’s more crucial is for decision-makers to go beyond just looking at the current workforce. They need to consider the potential growth or changes in the company’s structure, including new hires, organisational realignment, and development programs to foster a seamless integration of new talent. Decision-makers should then analyse the current skills available and identify gaps that could impede business objectives.

Decision-makers should also keep an eye on shifts in the business environment, industry trends, and the competitive landscape to ensure the company remains agile and responsive. Compliance is non-negotiable, and decision-makers need to be well-versed in the legal aspects of employment, covering areas such as employee development, employee engagement and employee rights, and consider all of this during their manpower planning.

Read also: Company Restructuring? Why Businesses in Asia Need Outplacement Services During Retrenchments

Q: On that note, what are some best practices that decision makers encourage managers to follow when drawing up a budget for manpower planning?

K: As with all company budgets, start with defining clear and achievable business goals – setting clear ones that help you maintain your margin and profit. When decision-makers set specific objectives, such as market expansion, product innovation, or operational efficiency, it provides a strategic framework for aligning workforce needs with organisational priorities.

Decision-makers would also advocate for a data-driven approach to manpower planning. Gathering feedback through surveys, analysing data from past budgets, and leveraging comprehensive reports provide a clear and accurate picture of workforce dynamics. This wealth of information empowers managers to make informed decisions, identify trends, and address challenges. By using solid data, organisations can continuously refine their manpower plans, ensuring a continuous improvement cycle that leads to more effective budgets year after year.

Read also: How to Strategically Plan a Budget for HR in 2024

Q: What are some tried and tested methods to use when creating a manpower budget?

K: In budgeting, companies commonly employ two methods: incremental and zero- based budgeting, each with its distinctive approach.

Incremental budgeting

  • adjusting the existing budget based on forecasts
  • it offers a streamlined process, but it carries a risk of perpetuating inefficiencies or overlooking innovative solutions

Zero-based budgeting

  • no prior budgets are referenced, requiring companies to justify each budget item from scratch
  • this approach encourages thorough scrutiny, promoting accountability and efficiency.

In choosing which method to go with, this would largely depend on factors like market conditions and industry type. Incremental budgeting provides stability – ideal for predictable markets, while zero-based budgeting fosters adaptability, suited for dynamic environments.

Q: Coming back to manpower planning, what kind of mistakes should companies avoid during the planning process?

K: In the realm of manpower or workforce planning, companies must navigate potential pitfalls to ensure a strategic and adaptable approach. Here are key mistakes to avoid during the manpower planning process:

  • Lack of Flexibility: Companies should prioritise a dynamic and adjustable workforce and plan a budget that accommodates changes in the market, industry, and internal operations.
  • Ignoring Demographics: Failing to consider generational differences and the unique preferences of diverse employee groups can hinder effective talent acquisition, engagement, and retention.
  • Short-Term Focus: While addressing immediate staffing requirements is essential, a myopic focus on the short term can lead to talent shortages and skills gaps in the future. Companies should strike a balance between current needs and the strategic foresight required for sustained success.

Q: Specifically looking at 2024, what should companies be focusing on when making a budget for their workforce planning?

K: In preparation for the coming year, companies are well-advised to delve into emerging workforce trends tailored to their specific markets and industries, as well as general trends.

For instance, a noteworthy trend highlighted by Forbes suggests that Gen Z is projected to make up 23% of the global workforce by 2024. Understanding and adapting to the expectations and working styles of this generation – such as more flexibility in work and a wider range of career opportunities – becomes crucial for companies aiming to attract and retain diverse talent.

Next, Jared Pope, founder and CEO of Work Shield, an independent provider that aims to create safer workspaces, anticipates a wider application of AI in decision-making processes aimed at reducing human error and administrative burdens.

Pope also notes a shift towards more human-centric work environments. This translates to an increased focus on employee experience, improved communication, and enhanced collaboration within organisations. Other than that, more focus should be given to employee development and learning initiatives in an effort to boost talent retention rates for 2024.

Thirdly, another notable strategy for 2024 involves considering more flexible workforce solutions and contractual work arrangements. This flexibility allows companies to adapt to changing market demands while offering employees diverse and dynamic work experiences.

Read also: Why Corporate Wellness is Important for Talent Retention in Asia

Q: You mentioned ‘a flexible workforce solution’ – could you share more on that?

K: When we talk about a ‘flexible workforce solution,’ we’re referring to a more adaptable employment approach, and businesses will be on the outlook for agile solutions to maintain an agile workforce. For example, hiring on a temporary and contract or secondment basis will see an uptick in trend. Recent statistics from Wiley, a research and publishing house, highlight a noticeable shift from permanent to contract staffing. It showed that 69% of companies acknowledged a significant skills gap, prompting 41% of HR professionals to turn to contract staffing as a means of bridging this gap.

This hiring strategy provides benefits for both employees and employers. For employees, there is greater flexibility and autonomy when it comes to their day-to-day work. For employers, the onboarding process is notably faster. Data from The Josh Bersin Company indicates a 40% increase in the time it takes to hire new staff in 2022 and 2023, compared to pre-2020, partly attributed to complex hiring processes within companies.

A compelling reason to embrace contract staffing is the scalability and infusion of fresher perspectives. With a broader pool of employees to choose from, companies benefit from a diverse range of skills and experiences. This diversity can foster innovation and creativity within project teams, contributing to a dynamic and vibrant work environment.

Q: In your opinion, what should be avoided when transitioning to a flexible workforce solution?

K: In navigating the transition to a flexible workforce solution, strategic considerations play a huge role in ensuring a seamless and successful adaptation. A glaring misstep to avoid is insufficient market and business analysis. Ask yourself the right questions: Is it currently a candidate-driven market? Does the flexible workforce solution complement your organisational objectives? Do you need the same workforce in the next 24 months to cater to business goals in the next 2 years?

Another crucial factor is timing. Making the move to a flexible workforce solution at the wrong time can have detrimental effects. Assessing whether there is enough talent available to meet your staffing demands is essential. Evaluating the market conditions and talent availability ensures that the transition aligns with the external environment, optimising the chances of a successful and smooth integration of flexible workforce solutions into your organisational structure.

Keith concludes the interview by saying that the emphasis is on companies to adapt fluid hiring arrangements. A greater focus will also be on their core and retaining the talent they already have, putting a focus on agile workforce solutions. All in all, during this growth, the key for businesses is to build a team that can navigate the changing economic landscape effectively.

Are you ready to have a skilled, diverse, and motivated workforce in 2024? Take a look at our checklist of must-haves in your manpower budget:

Recruitment and Hiring Costs

  • Advertising and job board fees
  • Costs for conducting interviews, including travel expenses
  • Background checks and pre-employment assessments
  • Onboarding materials and training for new hires

Labour Costs, Benefits and Perks

  • Base salaries. bonuses and commissions
  • Fees and payments to temporary/contracting staffing agencies
  • Payroll taxes and employer contributions to social security, health and unemployment insurance
  • Severance pay and termination related benefits
  • Employee assistance programs and wellness benefits

Training and Development

  • Training programme costs – materials, trainers, and facilities
  • Employee development initiatives and educational resources
  • Certification and skill-building programmes

Technology and Tools

  • HR software systems, including implementation, licensing, and support
  • Hardware and equipment for HR personnel
  • Data analytics and reporting tools for workforce management

Employee Engagement, Retention Initiatives & Succession Planning

  • Employee recognition programs, rewards, and incentives
  • Wellness programmes, including fitness facilities, classes, and wellness events
  • Employee engagement surveys, assessment tools, and action planning resources
  • Identifying and developing internal talent for leadership positions
  • Leadership training and mentoring programmes

Others

  • Legal fees for labour law compliance, such as employment contract reviews
  • Fees for external HR consultants or firms providing specialised HR services
  • Benchmarking and market research

In search of the right talent to drive your organisation? Looking to hire temporary and contracting staff for 2024? Links has over 20 years of experience in recruitment across Asia for various industries. Get in touch with us today to learn more on how we can match you with top talent!


Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcingvisa applicationPEO/EOR Secondmentoutplacementrecruitment and more! Contact us for more information on how we can help leverage your HR function.