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Effective Recruitment and Selection Practices

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Disclaimer

No person should rely on the contents of this publication without first obtaining advice from aqualified professional person. This publication is sold on the terms and understanding that (1) theauthors, consultants and editors are not responsible for the results of any actions taken on thebasis of information in this publication, nor for any error in or omission from this publication, and(2) the publisher is not engaged in rendering legal, accounting, professional or other advice orservices. The publisher, and the authors, consultants and editors, expressly disclaim all and anyliability and responsibility to any person, whether a purchaser or reader of this publication or not,in respect of anything, and of the consequences of anything, done or omitted to be done by anysuch person in reliance, whether wholly or partially, upon the whole or any part of the contents ofthis publication. Without limiting the generality of the above, no author, consultant or editor shallhave any responsibility for any act or omission of any other author, consultant or editor.

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CCH AUSTRALIA LIMITEDGPO Box 4072, Sydney, NSW 2001

Head Office North RydePhone: (02) 9857 1300 Fax: (02) 9857 1600

Customer SupportPhone: 1 300 300 224 Fax: 1 300 306 224www.cch.com.au

Book Code: 39746A

Effective Recruitment and Selection Practices

6th Edition

Robert-Leigh ComptonBill MorrisseyAlan Nankervis

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About CCH Australia Limited

CCH Australia is a leading provider of accurate, authoritative and timelyinformation services for professionals. Our position — ‘‘When you have to beright’’ — is built on the delivery of expert information that is timely, relevant,accurate, comprehensive and easy to use.

We are a member of the Wolters Kluwer group, a leading global informationservices provider with a presence in more than 25 countries in Europe, NorthAmerica and Asia Pacific.

CCH — When you have to be right.

Enquiries are welcome on 1300 300 224

National Library of Australia Cataloguing-in-Publication entry

Author: Compton, RL, author.

Title: Effective recruitment and selection practices/Robert-Leigh Compton,Bill Morrissey, Alan Nankervis

Edition: 6th edition

ISBN: 978-1-925091-15-1 (paperback)

Subjects: Employees — Recruiting; Employee selection

Other authors/contributors: Morrissey, William J, author; Nankervis, Alan R,author

Dewey Number: 658.311

2014 CCH Australia Limited

Published by CCH Australia Limited

First published 1991

Sixth edition published May 2014

All rights reserved. No part of this work covered by copyright may bereproduced or copied in any form or by any means (graphic, electronic ormechanical, including photocopying, recording, recording taping, orinformation retrieval systems) without the written permission of thepublisher.

Printed in Australia by McPherson’s Printing Group

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Table of Contents

Preface ......................................................................................................................... ix

CCH Acknowledgments .......................................................................................... xi

About the Authors .................................................................................................. xiii

Author Acknowledgments .................................................................................... xiv

Chapter Paragraph Page

1 Human resource management, theory and practice 1

What is strategic human resource management? ................... ¶1-100 1

Human resource planning and the strategic business 6plan ............................................................................................ ¶1-150

Benefits of human resource planning ....................................... ¶1-200 10

Linking recruitment and selection with the strategic 11business plan ............................................................................ ¶1-250

The role of recruitment in human resource planning ............ ¶1-300 12

2 The recruitment process 17

Establishing the business case for recruitment ....................... ¶2-100 17

The purpose of recruitment ....................................................... ¶2-200 19

Overview of the recruitment process ....................................... ¶2-300 20

A checking system for recruitment requests ........................... ¶2-400 22

Requisition forms ........................................................................ ¶2-500 23

Who should recruit? .................................................................... ¶2-600 25

Recruitment alternatives ............................................................ ¶2-700 27

3 Legislation and legal issues 29

Scope of this chapter ................................................................... ¶3-100 29

Equal opportunity and anti-discrimination legislation ......... ¶3-150 30

Privacy legislation ....................................................................... ¶3-200 47

Working in Australia .................................................................. ¶3-260 51

Fair Work Act ............................................................................... ¶3-300 55

Enterprise agreements ................................................................ ¶3-350 55

Child-related employment ......................................................... ¶3-400 56

Employment of children ............................................................. ¶3-420 58

Unfair dismissal and unlawful dismissal ................................ ¶3-450 59

4 Job analysis and competency profiling 61

What is job analysis? ................................................................... ¶4-100 61

Purposes of job analysis .............................................................. ¶4-125 62

Processes of job analysis ............................................................. ¶4-150 63

Position description ..................................................................... ¶4-175 64

Constructing a position description ......................................... ¶4-200 65

Person specification ..................................................................... ¶4-225 66

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Australian and New Zealand Standard Classification of 66Occupations (ANZSCO) .............................................................. ¶4-250

Job redesign .................................................................................. ¶4-275 67

Enterprise agreements ................................................................ ¶4-299 68

Examples of position descriptions ............................................ ¶4-300 68

Some problems with job analysis .............................................. ¶4-325 72

Trends in job analysis .................................................................. ¶4-350 74

Trends in job design .................................................................... ¶4-375 75

Competency profiling ................................................................. ¶4-400 76

5 Attracting the best talent 81

Internal or external recruitment? .............................................. ¶5-100 81

Internal recruitment .................................................................... ¶5-150 82

External recruitment ................................................................... ¶5-200 85

Main methods of external recruitment ..................................... ¶5-250 85

Referrals from existing employees ............................................ ¶5-300 87

Union recruitment ....................................................................... ¶5-350 89

Educational institutions .............................................................. ¶5-400 89

Advertising media ....................................................................... ¶5-450 90

Writing successful advertisements ........................................... ¶5-500 94

Print presentation tips ................................................................. ¶5-550 96

Examples of print advertisements ............................................ ¶5-600 96

Handling responses to advertisements .................................... ¶5-650 98

Response analysis ........................................................................ ¶5-700 100

6 Outsourcing recruitment 101

Why outsource? ........................................................................... ¶6-100 101

Communicating an organisation’s staffing needs .................. ¶6-200 102

Agency fee structure ................................................................... ¶6-250 103

Evaluating agencies ..................................................................... ¶6-300 104

What is executive search? ........................................................... ¶6-350 104

When is search appropriate? ...................................................... ¶6-400 105

Managing an executive search ................................................... ¶6-450 105

Consultant fee structure ............................................................. ¶6-500 107

Benefits of executive search ....................................................... ¶6-550 108

Government-funded agencies ................................................... ¶6-600 108

7 Interview preparation 111

Focus of the interview ................................................................. ¶7-100 111

Managing applications ............................................................... ¶7-150 114

Requesting information .............................................................. ¶7-200 117

Privacy ........................................................................................... ¶7-300 120

Short-listing applicants ............................................................... ¶7-350 121

How many should be interviewed? .......................................... ¶7-400 121

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Post-interview planning ............................................................. ¶7-500 124

8 The selection interview 131

Purposes of the interview ........................................................... ¶8-100 131

Different types of interviews ..................................................... ¶8-150 132

Computer-assisted interviews ................................................... ¶8-200 137

Preparation for the interview ..................................................... ¶8-250 138

Interview guide ............................................................................ ¶8-300 139

Conducting the interview .......................................................... ¶8-350 140

Interviewing techniques ............................................................. ¶8-400 142

Critical incident and behaviourally based interviewing ....... ¶8-450 144

Some problem areas in interview techniques .......................... ¶8-500 145

Avoiding the legal pitfalls in interviews .................................. ¶8-550 146

9 Assessing the interview 149

Understanding interviews ......................................................... ¶9-100 149

Why interviews are used ............................................................ ¶9-150 152

Improving interviews ................................................................. ¶9-250 153

After the interview ...................................................................... ¶9-350 155

Using psychological and aptitude tests .................................... ¶9-500 156

The role of tests ............................................................................ ¶9-550 156

Types of tests ................................................................................ ¶9-600 157

Features of good tests .................................................................. ¶9-650 158

Problems with using tests .......................................................... ¶9-700 159

Evaluating tests ............................................................................ ¶9-750 161

10 The selection decision and contracts 163

Making the selection decision .................................................... ¶10-100 163

The hiring process ....................................................................... ¶10-150 165

Privacy aspects ............................................................................. ¶10-200 166

The employment contract ........................................................... ¶10-250 168

Common law contracts ............................................................... ¶10-260 169

Types of written contracts .......................................................... ¶10-300 171

When does a contract of employment end? ............................ ¶10-350 171

Implications of legislation .......................................................... ¶10-400 172

Conditions of employment and general conduct ................... ¶10-450 174

11 Human resource management information systems 175

What is an HRIS? ......................................................................... ¶11-100 175

Using an HRIS in recruitment and selection ........................... ¶11-200 177

Issues in setting up an HRIS ...................................................... ¶11-250 177

Types of employee data .............................................................. ¶11-300 179

Skills inventory ............................................................................ ¶11-350 182

Labour turnover analysis ........................................................... ¶11-400 184

Career and succession planning ................................................ ¶11-450 184

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Performance review data ............................................................ ¶11-500 185

Preserving confidentiality and privacy .................................... ¶11-550 185

Effective HRIS .............................................................................. ¶11-600 185

12 International perspectives 187

Induction ....................................................................................... ¶12-100 187

International human resource management ........................... ¶12-200 188

Staffing international operations ............................................... ¶12-250 189

Competencies and capabilities of international employees .. ¶12-300 192

Health and safety issues in international assignments, and 195their management ........................................................................ ¶12-400

Expatriate recruitment and selection techniques .................... ¶12-500 196

International staff support systems .......................................... ¶12-600 198

13 Evaluation of recruitment and selection 201

Why evaluate? .............................................................................. ¶13-100 201

Evaluation techniques ................................................................. ¶13-150 202

Attracting the right employees .................................................. ¶13-200 206

Strategies for attracting and keeping employees .................... ¶13-250 209

Becoming an employer of choice ............................................... ¶13-300 209

Overall costs of recruitment and selection ............................... ¶13-350 211

14 Induction of new employees 213

The role of induction ................................................................... ¶14-100 213

Reasons for induction ................................................................. ¶14-150 214

Contents of an induction program ............................................ ¶14-200 215

Developing an induction package ............................................ ¶14-250 218

Probationary periods .................................................................. ¶14-300 219

Induction checklist ...................................................................... ¶14-350 220

Further reading ......................................................................................................... 223

Index .......................................................................................................................... 225

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ix

Preface

Since the publication of the fifth edition of this text, the world of work hasbeen transformed. The Coalition Government’s Work Choices legislationwhich was to fundamentally alter the industrial relations context that hadoperated in Australia for over a century was repealed by the incoming RuddLabor Government. From 2008 the Labor Government’s Forward withFairness policy was implemented, changing the industrial relations landscapeagain. However, in 2013 the Labor Government was voted out of office withthe incoming Abbott Coalition Government committed to a review ofemployment relations legislation, specifically the Fair Work Act. The impactthat these legislative changes and changes in government have had onrecruitment and selection decisions for organisations is addressed in this sixthedition.

The global financial crisis, heightened by increasing globalisation and theimpacts of constantly changing technology, has shaken up the dynamics ofrecruitment. As many parts of the business world experience contractions,more creative and innovative human resource management (HRM)‘‘solutions’’ are being sought. Attention to the design of jobs, the attractionand retention of high-calibre employees, and the overall management ofpeople within modern organisations has been sharpened. The sharp decline inthe Australian manufacturing sector has heightened the need for a far moreflexible workplace with HRM strategies being put in place to facilitate thischange in mindset. Competition for high-performing human resources,locally, nationally and at the international level, continues, forcingorganisations to market themselves as ‘‘employers of choice’’ in order toattract the best and brightest candidates for present and future job openings.This process largely involves selling the benefits to be obtained from suchHRM functions as remuneration and employee benefits, flexible job design,learning and development opportunities, challenging work projects, careerpaths, and the organisation’s ‘‘culture’’.

‘‘Best practice’’ organisations, therefore, need to ensure that their HRMfunctions are positioned to provide these attractions to these ‘‘gold collar’’employees through the alignment of all their HRM functions with each otherand with the organisation’s strategies and goals. Thus the roles of HRprofessionals have become more complex, combining the coordination ofhigh-quality employee services, often conducted by business managers or HRspecialist consultants, with the development of HRM strategies and policiesthat reflect organisational imperatives.

Recruitment and selection practices are the fulcrum on which all HRMfunctions operate, as without the right staff, chosen using the right methods,none of the other functions will operate successfully. Therefore, it is crucialthat HR professionals, frontline, middle and senior managers, and HRconsultants continuously analyse and refine their recruitment and selectionsystems and competencies to ensure their effectiveness in providingorganisations with the best employees in terms of their qualifications,competencies and work behaviours.

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This sixth edition of the text provides a comprehensive treatment ofcontemporary recruitment and selection processes and techniques. Itaddresses the legal aspects of recruitment along with the managerialperspective and the practical skills. A new chapter has been added to the sixthedition — International Perspectives — which focuses on those recruitmentand selection processes that will need to be put in place to manageglobalisation and in particular, to manage expatriates.

We trust that readers will find the new edition accessible, informative anduseful in their important task of attracting and retaining high-calibreemployees to lead their organisations into a dynamic future.

Robert-Leigh Compton, Bill Morrissey, Alan Nankervis.

May 2014

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CCH Acknowledgments

CCH Australia Limited wishes to thank the following who contributed to andsupported this publication:

Managing Director: Bas Kniphorst

Editorial Director: Scott Abrahams

Publisher: Adriana Giometti

Editor: Helen Tillman

Project Coordinator: Fiona Harmsworth

Editorial Administration Assistant: Mele Aloua

Production Team Leader: Ashvaani Ramanathan

Production Editor: Khor Sim Aun

Sub-editor: Ch’ng Shear Lane

Indexer: Elilmaran Damalingam

Senior Marketing Manager: Lauren Ma

Cover Designer: Mathias Johansson

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About the Authors

Dr Robert-Leigh Compton is Conjoint Associate Professor in the NewcastleBusiness School within the University of Newcastle, Australia. Dr Comptonhas previously worked as National Head of the Business School at ACUNational, as Foundation Director of Academic Programs at the SydneyGraduate School of Management and MBA Director at the University ofWestern Sydney. He has taught Human Resource Management in Sydney,China, Hong Kong, India, Thailand, Sri Lanka, Malaysia and Singapore.

Dr Compton has co-authored five editions of Effective Recruitment and SelectionPractices (CCH), seven editions (with Dr Alan Nankervis) of Strategic HumanResource Management (Cengage). He is also co-author of Employment Relations(Thomson) released in December 2004 and Staff Selection and PerformanceManagement (Thomson) 2006.

In 2008 Dr Compton’s biography was listed in the inaugural edition of Who’sWho in NSW for his contribution to business education in Australia, SouthEast Asia and the sub-Continent. In the same year, Dr Compton also receivedan Australian Carrick Award for Outstanding Contributions to StudentLearning based on his work on the Thai Burma border.

Bill Morrissey is the Chairman of Pathfinder Talent Solutions, a leadingRecruitment Agency in Hong Kong, and Managing Director of managementconsultancy Pathfinder Human Resources, located in Sydney and Parramatta.After 21 years in senior human resource management roles, he then developedan academic career in 1993 while maintaining a ‘‘hands on’’ role in HRConsultancy. Bill lectures in human resource management, industrialrelations, business management and international human resources,principally at post-graduate level, at the University of Newcastle, Universityof New South Wales and University of Western Sydney, in Sydney and inGuangzhou, China.

Dr Alan R Nankervis is a Professor of Human Resource Management in theSchool of Management, Curtin Business School, Curtin University. Alan wasthe Deputy Director, Sydney Graduate School of Management (UWS) as wellas the Research Director in the School of Management and Head (HRM) atCurtin University. He is the author of more than one hundred texts, bookchapters, journal articles and conference papers.

He has worked at three universities in Australia, and the UK, Canada,Malaysia, Indonesia, Singapore and Thailand, together with consultancies inIndonesia, China and Thailand. Alan is also the Chair of AHRI’s NationalProgram Accreditation Committee.

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Author Acknowledgments

This book is dedicated to the memory of Nita Jean Compton 1925–2013 whowas always there to provide motivation whenever it was lacking.— Robert-Leigh Compton

Again my sincere thanks to David for his generous professional support,thanks David. And my long suffering family I will make it up to you.— Bill Morrissey

To all my students who taught me much more than I taught them.— Alan Nankervis

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DCCH AUSTRALIA LIMITED Date: 24-APR-14 Time: 16:30 Seq: 1

1

Chapter 1

HUMAN RESOURCE MANAGEMENT,

THEORY AND PRACTICE

Key issues

● Human resource management deals with the effective and efficientmanagement of an organisation’s employees.

● All human resource management functions must link to each other and tothe organisation’s goals and strategies.

● Human resource planning aims to ensure that organisational objectives areachieved by getting the right quantity, quality and skills mix of employees atthe right time.

● Recruitment programs are affected by internal and external factors such aseconomic conditions and the nature of the organisation.

● Labour demand forecasting is an important part of human resourceplanning.

¶1-100 What is strategic human resource

management?

Recruitment and selection within an organisation is an integral part of thatorganisation’s overall human resource management and planning process. Assuch, it is related closely to other human resource management processes, forinstance, job design, human resource development, performance appraisaland management, reward systems, career and succession planning,promotions and transfers.

Two key concepts underlie modern human resource management (HRM)practice and are reflected in all activities concerned with the attraction,maintenance and separation of an organisation’s employees. They are:

(1) employees as human resources, human capital or organisational assets,and

(2) human resource management as a long-term, integrative and accountablestrategic process.

The first concept highlights the productive contribution of employees, bothactual and potential, while the second focuses on the approach of humanresource management practitioners to optimise this contribution fororganisational benefit. Where are these concepts more crucial than in thecareful and cost-effective attraction and choice of employees duringrecruitment and selection?

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2 Effective Recruitment and Selection Practices

Social, economic, political and workplace relations changes, together withdevelopments in the human resource (HR) profession, have propelledpractitioners towards innovative managerial perspectives, approaches andstrategies. New skills, especially in the information technology/telecommunications and accounting areas, need to be acquired, applied andevaluated. Economic fluctuations, legislative developments in areas such asworkplace relations, equal employment opportunity, privacy and workplacehealth and safety, environmental and quality of work life issues providehuman resource practitioners with both pressures and opportunities.Restrictions on recruitment strategies and selection techniques are balanced byopportunities to grow current employees in innovative and creativedirections.

Human resource management as a profession is concerned with the effectiveand efficient management of an organisation’s employees (human resources)towards the achievement of desirable objectives and goals. It has displacedearlier models (eg personnel administration, personnel management) becauseof its emphasis on the integration of all traditional personnel functions (eg jobdesign, recruitment and selection, human resource development, rewardssystems, career management, etc) and their management towardsorganisational strategic outcomes and objectives.

Human resource management involves a perception that employees arehuman resources (or even human capital), not unlike other organisationalresources such as finance and technology, who need to be managed in similar(and different) ways in order to achieve productivity and profitabilityoutcomes. Specific human resource management functions then provide themeans by which employees are acquired (eg human resource planning, jobdesign, recruitment and selection), developed (eg human resource development,reward and remuneration systems, performance and career management) andultimately terminated (eg dismissal, retirement and redundancy programs)according to organisational requirements. It thus involves a human resourcemanagement strategy and a human resource management plan, consistentwith overall organisational strategies, which subsequently feed into each ofthe related human resource functions.

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3Human resource management, theory and practice

Diagram 1.1: Recruitment as a strategic HRM tool

Source: Nankervis, A, Compton, R, Baird, M, Coffey, J, 2011, Human resourcemanagement: strategies and processes, 7th edn, Cengage, Melbourne, p 34.

Diagram 1.1 illustrates the ideal relationships between organisational andhuman resource management strategies, plans and functions, and highlightsthe centrality of recruitment and selection in the overall human resourcemanagement framework.

Two important concepts in strategic human resource management are those ofhorizontal and vertical alignment. Horizontal alignment refers to the need forhuman resource professionals to ensure that all human resource managementfunctions (eg job design, recruitment and selection, human resourcedevelopment, performance management, remuneration, retrenchment, etc) areclearly linked to each other and to the organisation’s goals. As an example, anorganisation intending to expand overseas would need to ensure that:

● it could attract skilled and experienced technical and managerial stafffrom Australia or in international markets

● it was using the most suitable recruitment and selection techniques, and

● its remuneration and career development/retention programs matchedits advertised attractions.

On the other hand, its human resource professionals would need to ensurethat all these functions reflected the organisation’s culture, budgets andlonger-term strategies. Culture, budgets and strategies are among the requiredaspects to be considered to achieve vertical alignment with an organisation’sgoals and plans. Two other concepts, of internal and external ‘‘fit’’, are also ofimportance here. Internal fit suggests that all human resource managementfunctions should be designed according to an organisation’s internal culture;whilst external fit refers to the need for all organisations to tailor their HR

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programs to the demands of their (external) industry, national and regionalcontexts (‘‘dynamic environments’’ in Diagram 1.1).

While practical evidence on the role of HR professionals as ‘‘strategic businesspartners’’, demonstrating both horizontal and vertical alignment, internal andexternal fit, is limited, there are some promising indications of its applications.Recent studies (Guest, D, 2011, ‘‘HRM and performance: still searching forsome answers’’, HRM journal, 21(1), pp 1–13; Butler, P, McEvoy, G, 2012,‘‘Strategic human resource management and performance: sharpening line ofsight’’, HRM review, 22, pp 43–56) reveal significant contributions of humanresource management systems to organisational performance, with the latterauthors concluding that ‘‘much of the recent research suggests that HRMpractices can positively affect firm performance, primarily through theirimpacts on human and social capital . . . the HRM objectives are to establishand promote a clear alignment of capabilities at all levels with the firm’sstrategic goals and to create the culture, norms, motivation and opportunity toengage in actions that contribute to these goals’’ (p 54).

Diagram 1.2 below shows the HR professional capabilities (competencies)considered by the Australian Human Resources Institute (AHRI) as essentialcomponents of a business-driven approach to the human resource practitionerroles.

Diagram 1.2: AHRI model of excellence — Driving your success

Source: HR Competency Model (Ulrich & Brockbank 2007) and AHRI HR ManagementModel 2003.

Human resource management is comprised of a number of interrelatedactivities that combine to drive business performance. With a base capabilityof being business driven, HR professionals require the following additional

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capabilities: strategic architect, stakeholder manager, workforce designer,credible activist, expert practitioner, and culture and change agent. Humanresource management knowledge and capability underpin HR practice andinfluence the professional behaviour of HR professionals and how they areperceived. In addition, the overarching goal of people leading business isunderpinned by the following four HR objectives:

● contribute to a profitable and sustainable organisation

● increase workforce competency and engagement

● develop excellence in people management

● create a dynamic and productive work environment.

All of these ‘‘capabilities’’ may be displayed in the specific recruitment andselection functions of human resource management, but perhaps the mostimportant ‘‘capabilities’’ for HR practitioners are those of workforce designer,stakeholder manager, expert practitioner, culture and change agent. Thus, asworkforce designers, practitioners will be engaged in decisions about thestructure, clusters, and tasks involved in particular jobs; as stakeholdermanagers, they manage the expectations of managers, work groups andpotential new employees; as expert practitioners, they must demonstrate theircompetence in the design of effective recruitment and selection processes; andas culture and change agents, use these processes to ensure that newemployees fit into their jobs and work teams.

From a human resource management perspective, recruitment and selectionreflect broader staffing strategies, and represent the first stage of themanagement of human resources (employees) towards organisational goals.They can be considered as the most difficult and yet the most crucial of allhuman resource management strategies. Acquiring the best applicants can bea huge bonus to organisations, but hiring less than the best can result inenormous disruption, reduced productivity, interpersonal difficulties andinterruptions to teamwork, customer service problems, and long-term costs.

As both stakeholder managers and expert practitioners, HR professionals areusually the key organisational informants, interpreters, and advisers withrespect to the workplace impacts of existing and new federal and stategovernment legislation, especially in industrial relations,diversity/discrimination, workplace health and safety, equal employment andprivacy. Perhaps the most important contemporary pieces of legislationrequiring advice from HR professionals in Australia are the Fair Work Act2009, established under the Rudd-Gillard Labor federal government, and thecurrent amendments proposed by the Fair Work Amendment Act 2013 underthe Abbott Liberal government. Together with the new employerresponsibilities associated with the national ‘‘harmonisation’’ of workplacehealth and safety legislation, HR professionals will undoubtedly be requiredto provide considerable interpretative and practical advice on their workplaceimplications. More details on the inclusions and implications of these Acts areincluded in Chapter 3, Legislation and legal issues.

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Getting recruitment and selection processes and techniques right the first timeis crucial and is the product of:

● knowing what you want and where to get it (human resource planning)

● being able to specify the required skills, attitudes and interpersonal skills(job design) to perform the job(s), and subsequently

● providing appropriate challenges, development, rewards andopportunities (human resource development, remuneration systems,career and succession plans) to satisfy and motivate qualified applicants.

This book explores the various methods and techniques to choose the rightapplicants for all organisational positions.

We will first consider human resource plans and their relationships withcorporate plans.

¶1-150 Human resource planning and the strategic

business plan

Described in the past as employment, workforce or manpower planning,human resource planning is ideally a continuous process which aims toensure that organisational objectives are achieved by obtaining the rightquantity and quality of employees at the right time and right costs, with anappropriate skills mix. Human resource planning involves analysis of thestaffing impacts of industry or organisational growth, decline ordiversification and consequent development of corresponding recruitment, re-skilling, outsourcing, re-deployment or redundancy strategies. Manycompanies have built a combination of short-term contracts, 457 visas, andoutsourced service suppliers into their recruitment ‘‘mix’’, in order to bothaccommodate their dynamic staffing needs and to allow them to better assesstheir potential ongoing employees. The Fair Work Act 2009 restricted some ofthese employment options, and it is yet to be seen whether the amendmentsproposed to it by the Abbott federal government will relax these constraints.

Human resource planning can be defined in various ways. For example, it hasbeen explained thus: ‘‘estimating the future supply of and demand for humancapital and then figuring out how to close the gaps. Such planning allowscompanies to think through their workforce alternatives to the high fixed-costs of full-time employees’’ (BCG, 2010, Creating people advantage 2010: howcompanies can adapt their HR practices for volatile times, BCG & WFPMA, Boston,p 21). More broadly, it is a continuing process of analysing an organisation’shuman resources needs under changing conditions to ensure that the rightnumber of people with the right skills, and at the right costs are available atthe right time for the organisation. More narrowly, it may simply be describedas the complex science (or art) of matching labour demand with laboursupply. These definitions suggest that staffing plans should derive from, andbe consistent with, both short-term and long-term goals and objectives of theorganisation, and should in turn inform human resource managementfunctions, such as job design, recruitment and selection, human resourcedevelopment and performance management. Evaluation of the effectiveness of

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each of these functions (see Chapter 13, Evaluation of recruitment and selection)should then feed back into human resource plans in order to further improvetheir capacity to deliver the right employees with the right skills andcompetitiveness, according to organisational requirements.

Accordingly, recruitment techniques will vary from time to time. In periods ofgrowth, alternative sources of contract staff or long-term staff may be sought.During industry decline, internal development activities, retrenchments orearly retirement programs (sometimes called ‘‘negative recruitment’’) may beemphasised. Selection strategies will also differ, consistent with corporatedevelopments.

Ideally, human resource planning focuses on both the strategic (or long-term)and operational (short-term) perspectives. Long-term covers up to five yearsand short-term less than one year, depending on the nature of the industry.

Recruitment and selection should therefore focus on both filling current jobvacancies and preparing for future staffing needs.

More recently, some writers have suggested that human resource planning isa crucial component of ‘‘human capital management’’, which refers to theprocess of measuring (and managing) the alignment of human resourcemanagement and organisational goals, from the perspectives of allstakeholders, including managers, shareholders and investors. It aims to‘‘understand and support (HRM) activities that create sustainable capabilityand external shareholder value’’ (Donaldson, C, 2006, ‘‘Intangibles crucial inHR’s future’’, Human resources, 107(27), June, p 1), or more specifically, toensure that ‘‘organisational capabilities such as talent, speed, collaboration,accountability, shared mindset, learning and leadership are the deliverables ofHR . . . which contribute to an organisation’s market value’’ (Kramar, R, 2006,Cranet Macquarie survey on international strategic human resource management:report on the Australian findings, Macquarie University, Sydney, p 7).

The complexity of human resource planning techniques will vary withorganisational size and the dynamic nature of the organisation or its industrialenvironment, and the perception and status of the human resource function.

Most modern organisations engage in forward planning from time to time, toenable the determination of overall objectives, future directions andopportunities for growth and productivity. This is usually referred to asstrategic (corporate) planning.

As a result of such plans, structures, budgets and resources can be reviewed totake advantage of economic, social, labour market, product or industrychanges. Changes in global, regional or national economies, including theconstant restructuring of the Australian economy, financial crises, fluctuatingcurrency rates, increasing international competition, cross-generational issues,different work attitudes and workplace relations developments, together withmodern management theories, have highlighted the importance of strategicplanning to achieve organisational success. All these factors have a significantimpact on the nature of recruitment and selection programs.

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Such long-term planning is usually undertaken by a team of senior managersin close liaison with the Chief Executive Officer and the Board of Directors.The process commonly involves the following five stages.

STRATEGIC PLANNING PROCESS

(1) Development of a clear mission statement, core vision or prime objective.

(2) Review of likely pressures and opportunities both within and outside theorganisation.

(3) Formulation of alternative scenarios and optional strategies. It should alsoindicate the proportions of full-time, part-time, contract, casual andoutsourced positions, with the view to aligning staff requirements to thedynamic demands of organisations.

(4) Choice of the most effective options.

(5) Preparation of objectives, targets, budgets and operational business plans.

The process is cyclical, incorporating contingency strategies and in-builtmonitoring and review processes.

With growing recognition of the value and costs of an organisation’s humanresources, most organisations now actively integrate human resource planswith corporate plans (see Diagram 1.1). The human resource manager shouldbe well placed to advise on labour market trends, legislative and statutoryrequirements, and the staffing impacts of product or service diversification,relocation, growth or decline. With the support of an efficient human resourcemanagement information system (HRIS) (see Chapter 11), practitioners canprovide a wealth of data relevant to corporate planning. Fully-costed humanresource plans will indicate the relative viability of scenarios and alternativestrategies.

Human resource management policies and practices can be linked to strategicmanagement in at least three ways:

(1) They can be used to reinforce existing corporate strategies (eg throughperformance management or job and work group redesign to improveproductivity).

(2) They can be used to signal and reinforce changes in corporate strategies(eg through the shaping of existing or injection of new corporate values,or the development of new workforce skills).

(3) Human resource data can be used as an input into the strategic planningprocess (eg employee survey data can be used to guide priority setting orprogram development, or human resource planning and employeedemographic data can be used to assess the viability of plans fordiversification, expansion or contraction).

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The relationship between human resource planning and strategic planning isshown in the following chart.

Both human resource planning and corporate planning are by nature subjectto variables within the economy, society, the organisation itself and itsemployees. However, despite its unpredictability, such integrated planning iscrucial for organisational success. Effective planning will directly influence thecontent of position descriptions, the choice of recruitment strategies andselection techniques.

The key external and internal environmental factors (see chart above) whichare likely to influence future HR plans in Australian organisations include(but are no means limited to) the following local, regional and global trends.The ‘‘8 forces’’ facing Australian and regional economies in the next decades

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have been summarised as global competition, new technology andcommunication developments, an increasing demand for employee flexibility,‘‘skills convergence in multi-disciplinary environments’’, global best practice,changing business standards (notably ethical and corporate socialresponsibility issues), and dynamic governmental regulations (Wilson, P,2010, People@Work, AHRI, Melbourne, p 3). More specific issues includeemerging skills shortages in a variety of industry sectors and occupations, atboth professional and technical levels; an ageing workforce in Australia andother regional countries (for example, China, Singapore, Japan) contrastedwith youthful labour markets in India and Indonesia; workplace inter-generational conflict; and ongoing industry sectoral shifts.

With respect to the latter, the resources, manufacturing, aviation, and retailindustry sectors in Australia have all been adversely affected by acombination of increased global and regional competition, the development ofnew technologies, and currency fluctuations. For example, the mining ‘‘boom’’of the early 2000s, which provided significant levels of employment forworkers in Western Australia and Queensland together with contractual jobsfor employees from other states, is now abating. The closure of the Ford MotorCompany and the imminent demise of General Motors signals the end ofvehicle manufacturing in Australia, whilst the deteriorating financial positionof Qantas is likely to result in significant numbers of unemployed skilledworkers. Global online sales have also provided more traditional retailers withconsiderable HRM challenges.

Whether human resource plans form an integral component of corporateplans will depend on the foresight, status and skills of human resourceprofessionals.

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The principal purpose of human resource planning is to ensure thatorganisations have sufficient staff with the required skills, knowledge andabilities to cost-effectively produce the goods or services required to achieveorganisational objectives.

The human resource planner must therefore forecast staffing requirementsand predict labour supply as well as ensure the effective integration of allhuman resource activities. Thus, job analyses must produce positiondescriptions that accurately reflect job content, while allowing fortechnological change. Job design, job rotation or promotion programs mayreduce or remove the need for expensive recruitment and selection processes.Organisational restructuring, involving substantial staff redundancies, mayalter these staffing plans and processes. Alternatively, accurate positiondescriptions will make those processes more effective when they have to beused.

For example, in the information technology industry, specific long-term skillsrequirements may be difficult to determine due to the dynamic nature of theindustry. Position descriptions and recruitment policies will therefore need toreflect this uncertainty by providing for both short-term (such as the use of

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