Numerous arguments in support of strategic workforce planning have been mounted over the years with various ‘takes’ and ‘angles’ explored to convey its importance. There is little disputing the inherent value of the activity and the impact it can have on bottom line benefits, organisational agility, flexibility and competitive advantage. Until recently, the legal relevance of strategic workforce planning hadn’t really stirred our thoughts, however, a recent seminar we attended created the opportunity ponder.
Brown and Ors v Clermont Coal is an interesting case study highlighting robust workforce planning practices as well as exploring the legal relevance of strategic workforce planning and more specifically, a unique angle on the case for documented workforce plans.
The details of the case are available via the Fair Work Commission, however in summary:
- Facing commercial challenges, Clermont Coal engaged in a restructure at the Clermont mine in September 2014 leading to the positions filled by the Applicants (Brown and Oars) being declared redundant.
- An application for unfair dismissal remedy was lodged by six applicants contending that they could reasonably have been redeployed within the Clermont enterprise or the associated entities.
- Clermont had adopted a model prior to the restructure that allocated the use of contractors for certain areas of the operation.
- 25 contractors were also removed from the Clermont mine in the restructure (14 replaced by redeployed Clermont Coal employees) and Clermont contended that no additional contractor employees were able to be displaced because the business model is such that it requires the use of contractors for:
- Coverage of employee absences due to leave and training requirements. (Demand often fluctuates making it difficult to engage additional employees to cover absences)
- Changing operational requirements altering the types of roles which are required to be performed by contractors
- Specialised work required to be performed in certain areas
- Occasional relief work requiring contractors with specialised skills
- Clear evidence was provided indicating that the model was created prior to the restructure and evolved over time.
- Noting that it is not generally charged with criticising the legitimate business models of companies in exercising its discretion, FWC found it was not reasonable to require Clermont to reduce numbers of existing labour hire to free up positions for the Applicants as the lack of flexibility imposed would cause major operational difficulties and could bring production to a standstill.
The case of Brown and Ors v Clermont Coal uncovers a potentially hidden benefit of strategic workforce planning as well as demonstrating some classic strategic workforce planning aspects.
Firstly, the use of scenario planning by Clermont Coal is clear. The organisation structured itself to cater for fluctuating demand through the employment of contractors in certain circumstances. The link between organisational strategy and organisational structure emerges during the strategic workforce planning process through the exploration of the various scenarios the organisation is likely to face. In the case of Clermont Coal, such scenarios may have involved fluctuating mineral prices, fuel costs (oil prices) and/or Australian dollar. When the coal price dropped due to oversupply, the scenario enacted (as is the case in many mining operations) would have been to process easy to access coal or ‘stockpile’. Based on the altered process, contractors were removed and employees redeployed where possible. Only then were redundancies enacted.
Secondly the company recognised a need for ongoing flexibility in the workforce and structured itself accordingly. The segmentation and analysis of the workforce identified aspects such as absenteeism issues, specialist skillsets and requirements to cover annual leave and training time.
Finally, Clermont identified a way to help control and miniminise cost and operational interruption through the structure and balance of its workforce. The operational strategy, requiring a certain ratio of labour, was leveraged to help cater for fluctuating market conditions and operational variation.
The organisation’s maturity with respect to strategic workforce planning is evident, however, the unique point to the case is the fact that having documented evidence of the existence of the plan, well before the announcement of the restructure, is key to the findings falling in favour of the Respondent. The presence of a plan, relating to the structure, the scenarios and the requirement for flexibility due to internal, environmental and economic drivers was clearly documented.
More and more organisations are turning to strategic workforce planning due to the increasing relevance of the activity driven by the ageing workforce and fluctuating economic conditions. The clear and concise documentation of these plans could end up helping in more ways than originally intended.