HR Planning article

8/7/2019 HR Planning article

1/17

A BSTRACT: Human resource planning has traditionallybeen used by organizations to ensure that the right personis in the right job at the right time. Under past conditionsof relative environmental certainty and stability, humanresource planning focused on the short term and was dic-tated largely by line management concerns. Increasingenvironmental instability, demographic shifts, changes intechnology, and heightened international competition arechanging the need for and the nature of human resourceplanning in leading organizations. Planning is increas-

ingly the product of the interaction between line manage-ment and planners. In addition, organizations are real-izing that in order to adequately address human resourceconcerns, they must develop long-term as well as short-term solutions. As human resource planners involvethemselves in more programs to serve the needs of thebusiness, and even influence the direction of the business,they face new and increased responsibilities and chal-lenges.

In an early treatment of the topic, Vetter (1967) definedhuman resource planning as

the process by which management determines how the orga-nization should move from its current manpower position toits desired position. Through planning, management strives tohave the right number and the right kinds of people, at the rightplaces, at the right time, doing things which result in both theorganization and the individual receiving maximum long-runbenefits. (p. 15)

Contemporary human resource planning occurs withinthe broad context of organizational and strategic businessplanning. It involves forecasting the organization's futurehuman resource needs and planning for how those needswill be met. It includes establishing objectives and thendeveloping and implementing programs (staffing, ap-praising, compensating, and training) to ensure that peo-ple are available with the appropriate characteristics andskills when and where the organization needs them. Itmay also involve developing and implementing programsto improve employee performance or to increase em-ployee satisfaction and involvement in order to boost or-ganizational productivity, quality, or innovation (Mills,

1 985b). Finally, human resource planning includes gath-ering data that can be used to evaluate the effectivenessof ongoing programs and inform planners when revisionsi n their forecasts and programs are needed.

Because a major objective of planning is facilitating

February 1990 American PsychologistCopyright 1990 by the American Psychological Association, Inc. 0003.066X/90/$00.75

Vol. 45, No. 2, 223-239

Human Resource Planning

Challenges for Industrial/Organizational Psychologists

Susan E. Jackson an d Ran dal l S. Schul er

New Y ork University

an organization's effectiveness, it must be integrated withthe organization's short-term and longer term businessobjectives and plans.' Increasingly this is being done inleading organizations, although in the past business needsusually defined personnel needs and human resourceplanning, which meant that planning became a reactiveprocess. The reactive nature of the process went hand-in-hand with a short-term orientation. Now, majorchanges in business, economic, and social environmentsare creating uncertainties that are forcing organizations

to integrate business planning with human resourceplanning and to adopt a longer term perspective. For ex-ample, according to Kathryn Connors, vice president ofhuman resources at Liz Claiborne,

Human resources is part of the strategic (business) planningprocess. It's part of policy development, line extension planningand the merger and acquisition processes. Little is done-in thecompany that doesn't involve us in the planning, policy or final-ization stages of any deal. (cited in Lawrence, 1989, p. 70)

John O'Brien, vice president of human resources atDigital Equipment Corporation, describes an integratedlinkage between business and human resource plans asone by which human resource and line managers workjointly to develop business plans and determine humanresource needs, analyze the work force profile in termsof future business strategies, review emerging human re-source issues, and develop programs to address the issuesand support the business plans. According to O'Brien,such joint efforts occur when human resource plannersconvince corporate business planners that "human re-sources represent a major competitive advantage"("Planning with People," 1984, p. 7) that can increaseprofits when managed carefully. This article describes

We thank James Walker, two very helpful anonymous reviewers, andthe special issue editors for their comments on p revious drafts ofthisarticle. In addition, we thank HenryA. Goodstein, BMR, Inc., andDonald K. Brush, the Barden Co rporation, for permitting us to quote

our discussions with them, as well as Donald Laidlaw, the IBM Cor-poration, and Manuel London, AT&T, for their helpful insights.

Cor r espon d en ce c on cer n i n g t hi s ar t i cl e shoul d be addr essed t o SusanE. Ja ckson , D ep ar t men t ofPsychol ogy, 6 W ash i n g t onPl ace, New Yor kUn i ver si ty , Ne w Yor k,NY 10003.

' Throughout this article we u se terms such as business objectivesand business needs in a generic sense to refer to the bottom-line criteriaagainst which an organization evaluates its performance. Our intentionis to include the criteria considered by all types ofemployers, regardlessofwhether they are for-profit organizations.

223


2/17

some of the activities that industrial/organizational (I/O)psychologists are engaged in as they seek to improve thecompetitiveness of organizations through effective humanresource planning.

Factors Underlying Increased Interest inHuman Resource Planning

Undoubtedly, there are many factors that account for the

increased attention directed to human resource planning,but environmental forces-globalization, new technolo-gies, economic conditions, and a changing work force-seem particularly potent (Dumaine, 1989; Dyer & Heyer,1984; Greenhalgh, McKersie, & Gilkey, 1986). Thesecreate complexity and uncertainty for organizations. Un-certainty can interfere with efficient operations, so or-ganizations typically attempt to reduce its impact; formalplanning is one common tactic used by organizations tobuffer themselves from environmental uncertainty(Thompson, 1967).

The changing characteristics of the work force, whichis but one important environmental factor, make theneed for planning evident. Between 1976 and 1980, the

labor force grew an average of 2.8%, but between 1991and 1995, the rate of growth will drop to 1.1 %. Addi-tionally, whereas more than 3 million people joined thelabor force in 1978, less than 2 million people are pro-jected to enter the labor force each year from 1987 to1995. Comparatively, the proportion of younger people(aged 16 to 24) and older people (aged 55 and over) inthe work force will decline. People aged 25 to 54 willconstitute a greater percentage of the labor force, increas-ing from 61% in 1975 to 73% in 1995. The number ofmothers in the work force with children under one yearold increased from 42% in 1980 to 55% in 1989. Theethnic mix of the labor force is also changing. The Bureauof Labor Statistics estimates that ethnic minorities will

account for 57% of the growth in the labor force betweennow and the year 2000. Of the approximately 25 millionworkers added to the work force between 1985 and 2000,42% are expected to be native White women and only15% are expected to be native White men. Fully 22% areexpected to be immigrants (Glickman, 1982; Johnston& Packer, 1987; "Managing Now," 1988; "Needed," 1988;Nelton, 1988).

All of these demographic projections have significantimplications for managing human resources, thereby in-creasing the importance of human resource planning(Coates, 1987; Davis & Associates, 1986). The changingdemographics mean there will be fewer entry-level em-ployees, so competition among employers will increase.

In addition, the changing demographics signal changesin the abilities, skills, interests, and values of tomorrow'swork force. For example, shortages of many types ofskilled workers are imminent, including tool-and-diemakers, bricklayers, shipbuilders, mechanics, machinists,and engineers ("Early Retirement," 1987). Even if or-ganizations are willing to train new employees, the taskmay be difficult, as the U.S. Navy has found. At a timewhen many of its training manuals required 12th-grade

224

reading skills, nearly one fourth of the high school grad-uates who entered the Navy read below the 10th-gradelevel (National Alliance of Business, 1986). Such statisticsare alarming when compared to projections indicatingthat the levels of various skills needed for new jobs arelikely to increase in the future (see Johnston & Packer,1987).

A consideration of how the values of workers who

will soon make up the majority of the work force differfrom those who will begin to leave it suggests additionalchanges on the horizon. There is already evidence ofgrowing resistance from employees to relocation. Greateremphasis on self-evaluation and a reduction in loyaltyand dedication to employers makes it more difficult fororganizations to assume they can move employees aroundanywhere and anytime (Maccoby, 1988; Mills, 1987). Adecline in organizational loyalty is occurring at the sametime that workers are feeling insecure about their em-ployment (Hay Group, 1988).

A recent study comparing the work values of thoseover 40 years old with those under 40 years old suggestedother types of changes for which organizations must pre-

pare. For example, employees from the younger genera-tion, who grew up during the Vietnam war, do not trustauthority as much as do members of the older generation,who are products of the World War II era. The youngergeneration thinks work should be fun, whereas the oldergeneration sees work as a duty and vehicle for financialsupport. Younger employees believe people should ad-vance as quickly as their competence permits, whereasolder workers believe that experience is the necessary roadto promotion. Finally, this study found that for the youn-ger generation, "fairness" means allowing people to bedifferent, but for the older generation it means treatingpeople equally ("Work Attitudes," 1986).

Changes in the work force are just one aspect of the

environment stimulating the need for human resourceplanning. The demographic changes are somewhat pre-dictable, but when they are considered in combinationwith changing technology (see Davis & Associates, 1986)and many of the other external changes described else-where in this issue (e.g., by Offermann & Gowing, pp.95-108), they pose significant challenges for human re-source planning and contribute to its changing statusduring the past two decades.

A Model for Describing HumanResource PlanningIn the remainder of this article, we describe the activitiesengaged in by human resource planners in leading or-

ganizations. Throughout our discussion, we describe fourphases of human resource planning: (a) gathering andanalyzing data to forecast expected human resource de-mand, given business plans for the future, and to forecastfuture human resource supply; (b) establishing humanresource objectives; (c) designing and implementing pro-grams that will enable the organization to achieve its hu-man resource objectives; and (d) monitoring and evalu-ating these programs (Burack, 1988; Odiorne, 1981). Ac-

February 1990 American Psychologist


3/17

tivities related to the four phases of human resource

planning are described for three different time horizons:

short term (up to one year), intermediate term (two to

three years), and long term (more than three years). These

correspond to the typical time horizons for business

planning. Using the same conventions that line managers

use to distinguish between activities with differing time

horizons is one step human resource planners can take

to facilitate integration of their efforts with the needs ofthe business (Hennecke, 1984; Migliore, 1984, 1986;

Walker, 1978).

Although the four phases of human resource plan-

ning are conceptually the same regardless of the time

horizon, there are practical differences in the operation-

alization of the four phases as the time horizon is ex-

tended. Therefore, we describe the activities related to

planning for each time horizon separately and in turn,

beginning with short-term planning. We begin with the

shorter term planning horizon because historically the

activities of many I/O psychologists have been carried

out for the purpose of achieving shorter term objectives.

As organizations and I/O psychologists began to recognize

the potential benefits of engaging in longer term planning,however, consideration of longer term issues became morecommon. As a result, as is described near the end of this

article, many I/O psychologists are now engaged in ac-

tivities designed to prepare organizations for the 21st

century.

In separating our discussion of the phases of human

resource planning activities according to three time ho-

Figure 1Dynamic Linkages Among Components of a Fully Integrated System of Business and Human Resource Planning

CONTENT OF HR SYSTEM MR PLANNING ACTIVITIESTIME NORIZDI(

Projected

Enuironmental Conditions

Competitive Strategy

Life Cycle Stage

Industry Sector

4

I I

4

Projected Assess NO

Enuironmental Conditions Demand S

-Competitive Strategy Supply

-Life Cycle Stage

-industry Sector

4

Assess OR Develop

Demand V Objectives

Supply

t


I

l:i

Develop

Objectives

1

I

I

+ i +

Projected Assess HR Develop

Enuironmental Conditions Demand 8 Objectives

Competitive Strategy Supply

Life Cycle Stage

-industry Sector

rizons, we do not mean to suggest that organizations seg-

regate their planning activities in this fashion. The reality

is that organizations must integrate their activities across

the four planning phases as well across all three time ho-

rizons, as is shown in Figure 1. As the feed-forward andfeed-back arrows connecting the four p h a s e s of planningillustrate, planning activities within a time horizon are

linked together into a dynamic system. Early phases (e.g.,

demand and supply forecasts) serve as inputs to laterphases (e.g., setting objectives). Equally important, or-

ganizations can-learn-from the results generated during

the evaluation phase and then apply what is learned to

make adjustments in objectives and programs.

In addition to the arrows linking the four phases of

planning within each time frame, Figure 1 includes arrows

to illustrate (a) how longer term objectives can influence

shorter term planning (dotted-line arrows), (b) how

shorter term evaluation results can influence projections

about future human resources and programs designed to

meet future demands, and (c ) how the results achievedthrough the implementation of human resource programs

can influence business plans. The arrows connecting

planning activities for different time horizons are impor-tant to note because they emphasize that planning for

one time horizon typically has implications for another.

For example, long-term planning almost always prompts

the development of programs that need to be imple-

mented in the short term and intermediate term. In ad-

dition, the evaluation results obtained for shorter termprograms often lead to reevaluation of longer term pro-

Design & Evaluate Long Term

I mplement Outcomes (3+ Years)

Programs

Design & Evaluate

I mplement Outcomes

Programs

I I I

Intermediate-Term

(2-3 Years)

Design li Evaluate Short-Term

I mplement Outcomes ( 1 Year)

Programs

225


4/17

jections about the availability of human resources, whichin turn may prompt adjustments in programs designedto meet longer term needs. The ideal is to have full in-tegration among all types of human resource planningactivities as well as integration between human resourceand business planning (Walker, 1988).

Short-Term Human Resource Planning

Many I/O psychologists work on activities related to de-signing and implementing programs (e.g., recruitment,selection systems, and training programs) to meet short-term organizational needs. Such activities generally in-volve an element of planning in that they are future-ori-ented to some extent. Even projects for which objectivesare expected to be achieved in as little time as a fewmonths have, ideally, been designed with an understand-ing of how the short-term objectives are linked to theachievement of longer term objectives. For example, anaeronautics company engaged in a recruitment campaignto hire 100 engineers should have a clear understandingof how this hiring goal will help the company achievelong-term goals such as becoming the world's most in-

novative company in that industry. This hypotheticalcompany also might have a college recruiting drive de-signed to find 75 college graduates to enter a trainingprogram in recognition of the fact that a growing com-pany needs to prepare for the middle managers it willneed 5 to 7 years hence, as well as the top level managersit will need in 10 to 15 years. As this hypothetical examplehighlights, in order for a clear linkage to exist betweenhuman resource planning and strategic business planning,it is essential that an organization's top executives havea fully articulated vision for the future, which has beencommunicated and accepted by managers throughout theorganization.

Forecasting Demand and Supply

In a short-term time horizon, demand and supply of hu-man resources can be predicted with some certainty. Hu-man resource objectives follow logically from consider-ation of any discrepancies between demand and supply.Demandrefers to the number and characteristics (e.g.,skills, abilities, pay levels, or experience) of people neededfor particular jobs at a given point in time and at a par-ticular place. Supplyrefers to both the number and char-acteristics of people available for those particular jobs.Salient questions are "What jobs need to be filled (orvacated) during the next 12 months?" and "How andwhere will we get people to fill (or vacate) those jobs?"

What jobs need to be filled and vacated? Answering

the demand question involves predicting who will leavejobs and create vacancies, which jobs will be eliminated,and which new jobs will be created. One method for pre-dicting both vacancies and job growth is to project his-torical trends into the future. This is particularly relevantfor organizations affected by regular, cyclical fluctuationsin demand for their products or services. Behavioral the-ories of the causes of turnover (e.g., Mobley, Griffeth,Hand, & Meglino, 1979; Mowday, Porter, & Steers, 1982)

22 6

combined with employee surveys designed to assess at-titudinal predictors of turnover (e.g., job satisfaction) alsohelp I/O psychologists and human resource planners pre-dict how many currently filled positions are likely to be-come vacant. Such information can produce useful pre-dictions when the organizational unit of interest is large,although making predictions about precisely which po-sitions are likely to become vacant is less precise. Predic-

tions about how many and what types of jobs will beeliminated or created in the short term generally followdirectly from business plans submitted by line managers.

How and where will we get people to fill and vacate

jobs? The first step in answering this question-the sup-ply question-involves determining the desired charac-teristics of employees who fill (or vacate) the jobs of in-terest. Then the availability of those characteristics in theorganization's current work force and in the external labormarket must be assessed. The particular characteristicsof current and potential employees that are inventoriedand tracked by human resource planners are influencedby the nature of the organization and the environmentin which it operates. For example, for human resource

planners in growing organizations, simply finding peoplewith the needed skills and abilities is likely to be a toppriority. For planners in mature and declining organi-zations, the costs (e.g., salary level) associated with em-ployees become more salient, especially if work-force re-ductions are needed. Thus it is important for the humanresource planner to know the business needs and char-acteristics of the organization. This knowledge is gainedby human resource planners meeting with line managersto discuss their business plans as well as their humanresource needs. The process of discussion increases theaccuracy of supply and demand forecasts and facilitatesthe establishment of human resource objectives (seeSchuler, 1988).

Establishing Objectives

With a short-time horizon, objectives are often easy tostate in quantifiable terms. Examples of short-term hu-man resource objectives include increasing the numberof people who are attracted to the organization and applyfor jobs (increase the applicant pool); attracting a differentmix of applicants (with different skills, in different loca-tions, etc.); improving the qualifications of new hires; in-creasing the length of time that desirable employees staywith the organization; decreasing the length of time thatundesirable employees stay with the organization; andhelping current and newly hired employees quickly de-velop the skills needed by the organization. Such objec-

tives can generally be achieved in a straightforward wayby applying state-of-the-art human resource managementtechniques and working with line managers to ensureagreement with and understanding of the program ob-jectives.

Design and Implementation of Short-Term Programs

The technical skills of I/O psychologists are often appliedto short-term program design and implementation. For



5/17

ex ampl e, r ecrui ti n g pr ogr ams are used to i n fl uen ce thesi ze an d qual i ty of the appl i can t pool . Sel ecti on programsar e devel oped for maki n g hi r i n g deci si on s. Performan ceapprai sal systems i den ti fy per forman ce defi ci en ci es to becor r ected an d competen ci es to be r ewar ded. Tr ai n i n gprograms emphasi ze devel opi n g ski l l s for use i n the n earfutur e. Compen sati on systems are desi gn ed to attr act n ewempl oyees, to moti vate peopl e to per for m wel l , an d to

r etai n empl oyees. Even when these acti vi ti es are desi gn edto achi eve shor t-term objecti ves an d are ex pected to haver el ati vel y i mmedi ate pay-offs, they can ser ve to hel p anorgan i zati on achi eve i ts l on ger ter m goal s.

Don al d K. Br ush, vi ce-presi den t an d gen er al man -ager of the Barden Corporati on , descri bed how shor t-termhuman r esour ce pl an n i n g effor ts hel ped hi s organ i zati onachi eve i ts str ategi c goal s (Br ush, person al commun i ca-ti on ,March 8, 1989): Bar den r eal i zed i t had an oppor -tun i ty to si gn i fi can tl y i n crease i ts busi n ess, but to do sowoul d r equi r e them to i n cr ease thei r hour l y work forceby a n et of about 125 empl oyees i n on e year , at a t i mewhen the l ocal un empl oymen t r ate was on l y 2.5%. Pastex peri en ces had taught Bar den that forei gn i mmi gran ts

often became excel l en t empl oyees. Al though ther e wer eman y i mmi gran t s from a var i ety of di ffer en t coun t r i eswho wer e i n ter ested i n empl oymen t , a major hur dl e tothei r i mmedi ate success was thei r l ack of fl uen cy i n En -gl i sh. Br ush descr i bed the probl em an d the sol uti on , l i kethi s:

To begi n t o be fun ct i on i n g, qual i fi ed Bar den empl oyees, n ew-comer s must n ot on l y master t he basi c "Gar den " vocabul ar y,but they must be abl e t o l ook up stan dar d oper at i n g pr ocedur es,r ead Mat er i al Safet y Dat a sheet s, an d they must al so masterbasi c shop mat hemat i cs, measur emen t pr ocesses an d bl uepr i n tr eadi n g... . We asked Per son n el t o i n vest i gat e how we mi ghtt each t hese peopl e en ough En gl i shtopay t hei r way. The upshotwas t hi s: We r etai n ed Ber l i tz. A speci al i n t en si ve cour se wasdevel oped i n cooper at i on wi th our t r ai n i n g un i t.... Al l studen t sar e on our payr ol l an d meet wi th a Ber l i t z i n str uctor four hour sa day for 15 con secut i ve wor k days dur i n g wor ki n g hour s. Theeffect has been el ect r i c. The con fi den ce l evel of the studen ts hassoared as they have t r i ed out t hei r n ew l an guage abi l i t y. Super -vi sor s ar e i mpr essed. An d t he wor d i s get t i n g out t o t he com-mun i t y wi th posi t i ve r esul t s. (Br ush, per son al commun i cat i on ,March 8, 1989)

Thi s ex ampl e i l l ustr ates a probl em that organ i za-ti on s wi l l face i n creasi n gl y i n the n ear futur e, n amel y, ashor tage of qual i fi ed en tr y-l evel job appl i can ts (John ston& Packer , 1987). Thi s demographi c chan ge i s l i kel y tomean that or gan i zat i on s wi l l begi n to shi ft the focus ofthei r short-ter m human r esour ce progr ams. Dur i n g thepast 20 year s, the combi n ed for ces of equal empl oymen t

opportun i ty (EEO) l egi sl ati on an d the abun dan t suppl yof n ew en tr an ts i n to the l abor force were con gruen t wi thhuman r esour ce acti vi ti es ai med at i mprovi n g the abi l i tyof or gan i zati on s to sel ect empl oyees on the basi s of thei rjob-r el ated ski l l s an d abi l i ti es. Or gan i zati on s ben efi tt edfrom i n vesti n g in the desi gn , val i dati on , an d use of sel ec-t i on "tests" of al l sor ts. Thi s i s because even tests wi thr el ati vel y l ow, but n on zero, val i di ty can have econ omi cuti l i ty when sel ecti on r ati os are suffi ci en tl y l ow.

Februar y 1990 Amer i can Psychol ogi st

As the l abor pool shri n ks, however, sel ecti on r ati oswi l l ten d to become l ar ger . As a con sequen ce, smal l mar -gi n al gai n s i n test val i di ty wi l l have l ess econ omi c uti l i tr el ati ve to the past. In order for i n vestmen ts i n the de-vel opmen t an d use of sophi sti cated sel ecti on 'methods toyi el d econ omi c r etur n s, much mor e en er gy wi l l have tobe di r ected toward r ecrui ti n g efforts to i n crease the n um-ber of job appl i can ts because on l y by att r acti n g a l arge

pool of appl i can t s can sel ecti on r at i os be kept l ow. If smal lsel ecti on r ati os can n ot be mai n tai n ed, organ i zati on s maycon cl ude that thei r r esour ces are better i n vested i n tr ai n -i n g effor t s desi gn ed to pr epar e t hose few who ar e avai l abl e.

Exampl es of i n n ovati ve' recrui ti n g progr ams ar e al -r eady plen ti ful . Gi an t Food, In c., has a mobi l e recrui ti n goffi ce-a Wi n n ebago van that i s a sel f-con tai n ed recr ui t-men t cen t er that seeks out job appl i can ts- by vi si ti n gschool s, shoppi n g cen ter s, an d so for th. Coopers & Ly-br an d empl oys successful mi n or i ty busin ess peopl e i n thecommun i ty to hel p r ecrui t mi n or i ty appl i can ts'' an d t oserve as men tor s. McDon al d's Cor porati on has emer gedas a l eader i n the recrui tmen t of ol der empl oyees, whi chi t does by usi n g tel evi si on commer ci al s an d for mal r e-

l ati on shi ps wi th sen i or ci ti zen organ i zati on s. It i s i mpotan t to n ote that such effor ts to broaden the pool of ap-pl i can ts often ' requi r e coor di n ated,- i n ter medi ate ter mprograms desi gn ed to en sur e that n on t r adi ti on al n ewhi r es are effecti ve an d can be r etai n ed.

Evaluating Short-Term Human Resource Programs

As is true for any type of program evaluation, this phaseinvolves assessing how we ll objectives were achieved . Be-cause sh ort-term planning objectives are generally statedin terms that are relatively easy to quan tify (e.g., numbersof appl icants, numbers of hires, and performance levelsof employees) , systematic evaluation of h uman resourceprograms to m eet short-term organizational needs is quite

feasible, and some types of program evaluations are ac-tually common in large organizations. For example, inpart because num erous federal and state laws prohibitsome form s of discrimination, selection programs in par-t icular have been c losely scrutinized to ensure that em -ployers base their selection decisions on characteristics ofapplicants that are job related. Whether such scrutinywil l continue is somewhat uncertain, however, g iven re-cent Supreme Court decisions (e.g., Lorance v. AT&T

1989; Martin v. Wilks, 1989; Patterson v. McLean Credit

Union, 1989; Wards Cove Packing Atonia, 1989).

Legal r egul ati on s have prompted man y or gan i za-ti on s, especi al l y l arge on es, to assess empi r i cal l y the re-l ati on shi p between an appl i can t 's character i sti cs (e.g

abi l i ti es) an d job per forman ce. Such eval uati on studi es(val i di ty studi es) ben efi t empl oyers because they ser ve tomon i tor the object i ve of gett i n g the r i ght peopl e i n ther i ght job. Val i di ty studi es al so serve a sci en ti fi c fun cti onby pr ovi di n g val uabl e data to r esear chers i n ter ested i n

improvi n g our un derstan di n g of the factors that i n fl uen ce

human per for man ce.Un ti l very recen tl y, when progr ams for sel ecti on ,

tr ai n i n g, an d moti vati on wer e eval uated by I/O psychol -

22 7


6/17


7/17

limitations, however. For example, when experts disagree,integrating their opinions to yield a final solution that allparticipants accept can be difficult (see Delbecq, Van deVen, & Gustafson, 1975; Milkovich, Annoni, & Mahoney,1972). Nonetheless, the human resource planner mustintegrate diverse predictions in order to establish humanresource objectives and design programs to achieve thoseobjectives, and line managers must accept the predictions

as reasonable if they are to provide their support duringthe implementation phases of human resource programs.

Both managerial estimates and the Delphi techniquetypically focus on forecasting the number of employeesthat is likely to be needed. Less attention is usually paidto the issue of the qualities (e.g., skills and abilities) thatfuture employees will need, primarily because techniqueshave not been widely available for predicting these(Goodstein, personal communication, February 9, 1989).When psychologists engage in short-term planning, jobanalysis is used to determine the qualities that employeesneed in order to perform currently existing jobs. Rapidtechnological changes mean jobs in the future are sureto differ from jobs in the present (Zuboff, 1988), however.

As an indication of the fact that I/O psychologists arenow more often dealing with problems of intermediate-term planning, research efforts are underway to developprocedures for conducting future-oriented ("strategic")job analyses (Arvey, Salas, & Gialluca, 1989; Schneider& Konz, 1989) and for identifying the managerial com-petencies that are necessary for effective performance inthe future (DeLuca, 1988; Goodstein, personal com-munication, February 9, 1989). Because job analysis re-sults are the foundation on which most human resourceprograms are built (Page & Van De Vroot, 1989), thedevelopment of sound future-oriented job analysis meth-odologies is a challenge that I/O psychologists must meetbefore they can realize their potential as contributors to

the long-term effectiveness of organizations.

Forecasting Intermediate-Term Supply

Supply forecasts can be derived from both internal andexternal sources of information, but internal sources aregenerally most crucial and most available (Bechet & Maki,1987; Miller, 1980). As with forecasting demand, two ba-sic techniques help forecast internal labor supply-judg-mental and statistical. One judgmental technique usedto forecast supply is replacement planning. Replacementcharts show the names of current position occupants andthe names of likely replacements, providing a rough es-timate of the "bench strength" of the organization. Onthe replacement chart the incumbents are listed directly

under the job title. Those individuals likely to fill thepotential vacancies are listed directly under the incum-bent. Such lists can provide an organization with reason-able estimates of which positions are likely to becomevacant, and they can indicate whether someone will beready to fill the vacancy (Walker & Armes, 1979). Presentperformance levels, ages, and information about the loy-alty of current employees can be used to predict futurevacancies caused by raids of top talent, involuntary turn-


over, retirement, and employee-initiated job changes.Consistent with the spirit of integration, increasingly linemanagers and human resource planners jointly establishreplacement charts for middle- and upper-level positions.

Less common techniques to forecast supply are sta-tistical techniques, which include simple inventory mod-els, Markov analysis, simulation (based on Markov anal-ysis), renewal analysis, and goal programming (Dyer,

1982; Niehaus, 1979, 1980, 1988; Piskor & Dudding,1978). Use of statistical methods for forecasting humanresource supply involves two steps, regardless of the par-ticular model used. The first step is generating an inven-tory of current supply (the number of people and theirskills and abilities). The second step involves predictinghow the supply is likely to change over time. Ideally, bothsteps consider both internal and external supplysources,although in practice it is often more difficult to estimatelabor supplies external to the organization.

I/O psychologists have been studying the nature ofhuman abilities and the nature of jobs for most of thiscentury. Consequently, sophisticated techniques areavailable for directly assessing employees' skills and abil-

ities (e.g., see Arvey & Faley, 1988; Schneider & Schmitt,1986), or the supply of skills and abilities available in theorganization's work force can be inferred from job anal-yses of the jobs that current employees are performing(see American Telegraph & Telephone, 1980; Arvey etal., 1989; Fleishman & Quaintance, 1984; Levine, 1983;McCormick, Jeanneret, & Mecham, 1972; U.S. Air Force,1981). By assessing the extent to which the current workforce possesses skills and abilities that can be transferredto aid their performance in jobs predicted to exist in thefuture, I/O psychologists can help organizations assesshow much of a discrepancy exists between their currentskills profile and the profile required to meet their strategicplan. Thus research by I/O psychologists clearly has con-

tributed greatly to making it possible to inventory andforecast human resource supplies. At the same time,computer technology has increased the feasibility ofkeeping information provided from such inventories up-to-date (Murdick & Schuster, 1983). Furthermore, EEOrequirements have led many organizations to view suchinventories as highly desirable and perhaps necessary, sostatistical models have been developed to deal specificallywith this aspect of human resource planning (Bres, Nie-haus, Schinnar, & Steinbuch, 1983; Krzystofiak, 1982;Ledvinka & La Forge, 1978).

For statistical forecasting, current supply informa-tion serves as a starting point. Figures describing the cur-rent work force, both within the organization and exter-

nally, are then transformed through statistical models topredictions of future supply levels. Such models requirethe human resource planner to provide information abouthow employees are likely to flow through the organization.Annual hiring levels, turnover rates, promotions, andwithin-firm transfers typically are considered. The resultis a quantitative prediction of what the future work forcewould probably be like absent the implementation ofprograms designed to change the projected supply.

229


8/17

The accuracy of statistical techniques for forecasting

future supply levels depends entirely on the accuracy ofthe-user-suppl ied f igures about how employees are likelyto flow through the organization and the accuracy of the

statistical m odel used to transform current supplies into

predicted future supplies. Accurate estimates and accurate

m od els of employee flows are most likely to be availablein organizations that have extensive record keeping pro-

cedures because these can be used to identify the typicalmovement patterns of employees in the past. The U.S.

military is one example of such an organization,' and

much of the available research on statistical forecasting

has been supported by the U.S. government. Extensive

use has been made of a simple inventory model in the

U.S. Navy's public shipyards in conjunction with the Na-

va l Sea Systems Command' (NAVSEA) efficiency study(Niehaus, Schinnar, & Walter, 1987). The Navy used goalprogramming models extensively in its work on down-

siz ing the civilian work force after the Vietnam war andin incorporating EEO planning needs (Charnes, Cooper,

Nelson, & Niehaus, 1982;;Charnes, Cooper, Lewis, &

Niehaus, 1978). Other organizations that have successfully

used statistical forecasting include IBM (Dyer & Heyer,1984), Merck (Milkovich & Phillips, 1986) and Ontario

Hydro (Rush & Borne, 1986).

EstablishingIntermediate-Term Objectives

After projecti n g future human resource suppl i es an d de-

man ds, man ds, i n ter medi ate-t er m objecti ves ar e set and actionplans are developed to meet' the objecti ves,through the

join t efforts of the human resource pl ann eran drelevantman ager s throughout the organ i zati on. Di fferencesi n thetypes of objecti ves establ i shed for the short and in ter-

medi ate term reflect differences i nthe typesof chan gesthat ar e feasible with two or three additional years oftime. Thus, whereas short-term objectives include at-

tracting, accessing, and assigning employees to jobs, in-termediate-term objectives are more likely to include

readjusting employees' skills, attitudes, and behaviors tofit major changes in the needs of the business,' as well as

adjusting human resource practices to fit changes in the

needs of employees.'

Intermediate-Term Programs to Help EmployeesAdjust to Changing Organizations

Trai n i n gan dretrai n i n g' programs are oftenthemethodof choice for achievi n g in termedi ate-term objecti ves. The

natureoftrain i n g used to prepare forn eedsthat will exi stin two tothree yearscan varygreatl y. Programs i n cludethose desi gnedt o prov ide basic skills training to newhi r es,advanced educati on for existing employees, languagetrai n i n g,'internships an d work-study programs, an d pub-

l i c school partn ershi ps (see Boli ck & Nestl eroth, ,1988).

The forces prompti n g organ i zati ons to develop such pro-

gr ams are man y; they i n cl ude chan gesi n techn ol ogy, ashi ft from a manufacturing-based to a service-basedeconomy, an d the fail ure of somepublic school systemsto produce high; school graduates who are competen t tojoi n the workforce (Perry, 1988).

230

C ging technology creates the needfortraining.U.S. manufacturers are experiencing a revolution in

technology. A century ago, the concept of assembly-line

production created an industrial revolution; today com-

puters are contributing to an electronic revolution. Blue-

collar employees who previously were expected to per-

form routinized tasks hundreds of times a day are now

being expected to operate the sophisticated robots that

perform the routine work (Johnston & Packer, 1987). Inaddition, they are expected to use computers to monitor

and evaluate, using statistical analyses, the flow of work

through the plant. Learning skills such as these often

means employees first must be trained in basic math and

computer use. In addition, they may be taught, in effect,

the logic of experimental design as a means for diagnosing

the causes of problems that arise. For example, at Frost

Inc., a small manufacturing company in Michigan, em-

ployees were taught how to determine whether a quality

problem was being caused by a particular operator or by

cular machine. Such determinations were possible

because extensive data were stored for each item pro-

duced. The data included information about which par-

ticular machines were used in each step of the process,who was operating the machines, and whether the final

product met various quality standards. Thus, by applying

the principles of analysis of variance, the cause of quality

problems could be detected and corrected (Frost, personal

communication, May 23, 1986). The retraining needed

to provide these skills took approximately three years andwas accomplished mostly on-the-job.

Service-related jobs require new management styles.

Change in manufacturing technologies is a major stimulus

for intensifying training at work, but it is not the only

important stimulus. Another fundamental shift is the

changing balance between goods-producing and service-

related activities. Even within organizations that are pri-

marily goods-producing, the value of a service orientationis now being recognized by U.S. businesses. With moreattention being directed toward service provision, the

natural question that arises is whether different manage-

ment practices are needed to manage service providers.The delivery of services differs from the production

of goods in three ways: products are intangible ratherthan tangible, customers are actively involved in the pro-

duction -of services, and the consumption of services oc-

curs simultaneously with their production (Bowen

Schneider, 1988 ) . The simultaneity of the production an d

consumption processes means that quality control cannot

be achieved by the inspect-and-correct (or reject) methodof performance monitoring traditionally used in manu-

facturing plants. Instead, quality control must occur atthe point of service delivery. The service provider is re-

sponsible for ensuring the quality of service' during each

and every interaction with a client. To maintain control

over quality, service organizations need to control the

process of service production rather than to monitor the

quality of outputs (Mills & Moberg, 198 2 ) . I n o t he r w o r ds ,

service providers must monitor and supervise their own

behaviors.



9/17

Because employees who deliver services must engagein self-supervision, high levels of employee commitmentand involvement are needed. Creating conditions sup-portive of such employee attitudes is complex; it requirescareful planning and, in many cases, a willingness tochange basic assumptions about how much power andinformation lower level employees should be given (seeHollander & Offermann, this issue; Lawler, 1986). I/O

psychologists have already begun to study how variouspersonnel practices affect the involvement and commit-ment levels of employees, so a foundation exists for ex-perimenting with job redesign, use of participative man-agement styles, and organizational structures built aroundsmall, stand-alone businesses instead of large hierarchicaland bureaucratic enterprises.

Gaining cooperation with organizational changessuch as those just noted is particularly challenging becausemanagers' long-held beliefs about how to maximize em-ployee performance are often brought into question. Cre-ating attitudinal and behavioral change is difficult undermost conditions, but it is particularly difficult when thereis uncertainty about the pay-offs. Thus a significant task

is convincing those top-level executives whose resourcesand support are needed that proposed human resourceprograms will be effective. This involves translating thescientific evidence into a form that is both understandableand convincing. Short of this, I/O psychologists can at-tempt to persuade organizational leaders to adopt theperspective that organizational learning is an objectiveworth pursuing in the interest of long-term survival(Guzzardi, 1989). Consistent with this perspective wouldbe a willingness to implement programs on an experi-mental basis in anticipation of gaining knowledge that isvaluable even if the program is ultimately not a completesuccess (see Staw, 1977).

A shortage of well-prepared new hires spurs outreach

programs. In the past, employers generally relied on on-the-job training programs to teach new employees thespecific job skills they needed, but a significant numberof organizations now recognize that they can begin shap-ing their future work force while students are still inschool. Time, Inc., brings disadvantaged students fromnearby schools to their company headquarters in NewYork City weekly during the school year to receive tutoringin reading by employees in their offices. In 1982, Amer-ican Express and Shearson Lehman Hutton began theAcademy of Finance, which is a two-year program forjuniors and seniors. In addition to their normal curric-ulum, Academy students take classes in economics andfinance and attend seminars designed to socialize theminto the culture of the financial services industry. Studentsthen work as paid interns during the summer (Perry,1988).

Honeywell, Inc., sponsors a summer Teacher Acad-emy, where Minnesota high school math and scienceteachers team up with researchers to develop class projects(Ehrlich, 1988). General Electric invested $1 million ina program in a poor, Black, rural area of Lowndes County,Alabama. The program partly pays for tutoring sessions


given by the faculty of Tuskegee Institute for students insecondary school (Teltsch, 1988). Arizona State Univer-sity, armed with a $100,000 grant from AT&T, is tryingto change the Hispanic cultural pattern that discouragescollege for women. Teams of mothers and their teenagedaughters are brought to the college campus to impressthem with the need for college training and to help theyoung women become eligible for entrance (Teltsch,1988). Such educational programs are illustrative of agrowing realization among employers that they must be-gin to attend to the general educational needs of the workforce in order to ensure its future productivity. Theseprograms are particularly striking because they representlarge investments in people who are not yet, and maynever be, employees of the sponsoring organizations.

Economic conditions force downsizing. A third ma-jor stimulus for intermediate-term human resource pro-grams is organizational restructuring, including mergersand acquisitions and the work force reductions that oftenfollow. From their experiences with massive lay-offs inthe past few years, organizations have become increasinglysensitive to the importance of planning programs for

dealing with the effects of lay-offs. Many organizationsare trying to minimize the negative effects of lay-offsthrough redundancy planning, outplacement counseling,buy-outs, job skill retraining, creation of transfer oppor-tunities, and promotion of early retirements ("Early Re-tirement," 1987).

Digital Equipment Corporation (DEC) is an exampleof one company that combined several of these activitieswith an intermediate-term planning horizon to effect alarge-scale work force restructuring (see Kochan,MacDuffie, & Osterman, 1988). It is an excellent exampleof an integrated effort between human resource and linemanagers to solve an intermediate-term planning prob-lem. During most of the 1970s and early 1980s, DECgrew rapidly, but a sudden and sharp stock price declinein October of 1983 dramatically signaled the beginningof a new era for the firm. DEC's senior line managers andthe vice-president of human resources projected staffingneeds for the next two years and determined they wouldneed to go through a major transition (rapid lay-offs wereviewed as inconsistent with the company's organizationalvalues). Top management gave responsibility for effectingthe change to line managers at the plant level. A taskforce of line managers and human resource staff developeda strategy and general guidelines for the process, whichensured some uniformity across different units within thecorporation. The task force established performance asthe primary criterion to be used when making cuts, in-tentionally choosing not to rely on seniority. The decisionnot to emphasize seniority was at odds with the impor-tance given traditionally to seniority by most unionizedand nonunionized manufacturing firms as they downsize(McCune, Beatty, & Montagno, 1988). At DEC, the eval-uation data collected to monitor the downsizing processrevealed that seniority was a major criterion used bymanagers, despite the policy to emphasize performance-based decisions.

23 1


10/17

The task force also developed several training pro-grams. One program wa s for counseling employees andteaching them career planning skills. Managers were

trained to be supportive during the job search process.Retraining was offered to employees who could be trans-

ferred within the company rather than laid off. Transfer

opportunities could be identified by using a computerized

system for matching one's skills to available jobs facili-

tating the reassignment of employees within the firm.

(Interestingly, however, the system was underused because

managers preferred to relyon their informal networks ofcontacts within the company.) In a two-year period,

DEC's worldwide manufacturing work force was de-creased by 5,598 employees.

Kochan et al.'s (1988) description of DEC's experiences

with a work force reduction program raises a number of

interesting issues for I/O psychologists. For example, DEC's

experience with the computerized, but underused, job-

matching system emphasizes the importance of developing

technical supports that capitalize on, rather than ignore,

interpersonal dynamics. Their experience with managers

using seniority rather than performance as a criterion fortargeting employees to be laid offem ph asize s the importanceof understanding perceptions of what constitutes "fair treat-

ment." The DEC example illustrates that even the most

conscientious planning does not guarantee that objectives

will be met. Knowing this, experienced managers might be

tempted to deemphasize the monitoringof outcomes in

order to reduce the visibility of program failures. However,as the DEC example illustrates, by monitoring outcomes,

significant opportunities are created for organizational

learning.

Organizations must adapt to a diverse workforce.The radical demographic transformation of the work force

means that organizations need to develop competence inmanaging a work force that is more diverse on many di-

mensions, including age, ethnicity, family situation, ed-

ucational background, country of origin, and the attitudesand values associated with each of these factors. As aconsequence, there are an increasing number oftrainingprograms designed to sensitize supervisors and managers

to the wide range of individual differences represented inthe organization and the implications of such differences

for organizational functioning. For example, Hewlett-

Packard conducts training sessions for managers to teach

them about different cultures and races and about their

ow n gender biases and training needs (Nelson-Horchler,1988). Proctor & Gamble has implemented "valuing,di-

versity" programs throughout the company. One example

is their mentor program, which was designed to retain

Black and female managers (Copeland, 1988). Examples

of other programs include Equitable Life Assurance So-ciety's support groups for minorities and women, which

periodically meet with the chief executive officer to discuss

problems in the company pertaining to them, and Avon's

employee councils representing various groups, which

inform and advise top management (Copeland, 1988).

Programs such as these show that many organizationsacknowledge the negative consequences of many of the

232

inaccurate stereotypes common in our, society. I/O psy-

chologists working in such organizations now face thechallenge of applying basic research findings on percep-

tion and attitude change to the design of interventions

that will maximize the benefits of work-group diversityand minimize the conflicts that often; arise. Another major

challenge facing employers is the provision of conditionsthat permit employees to be fully productive at work,

while at the same time meeting the needs of their families,

including their parents, spouses, and children. Many of

the programs used by organizations to facilitate theseneeds ar e described by Zedeck and Mosier (this issue,pp. 240-251).

Programs such as these are designed to facilitate the

organization's effective adaptation to the diverse needs of

employees. They are particularly interesting because theyrun counter to the normal tendency of organizations to

manage individual differences through means such as

normative pressure and sanctions intended to reduce thevariance in employees' behaviors (see Katz & Kahn,

1978). Organizational attempts to manage diversity bypressuring employees to conform can be effective when

(a) employees are able and willing to meet organizational

demands, even when these conflict with the behaviorsrequired to perform other, nonwork roles satisfactorily,and (b) the supply of potential human resources is suf-ficiently large that employers can afford to retain onlyemployees who do conform.

The first condition was more easily met when the

typical employee was a man married to a nonworkingspouse who could attend to family needs. As the work

force swells with people who are members of dual-careerfamilies and people who are single heads of households,both the ability and the willingness of employees to con-form to rigid organizational demands are likely to decline.

If, in addition, the total labor supply is relatively low,organizations will find themselves in the unfamiliar sit-uation of seeking ways to relax pressures to conform andto assist employees in meeting their nonwork obligations

as a strategyfor increasing the organization's attractive-ness to the scarce supply of labor. This will represent a

change from using behavior control mechanisms to man-

age the uncertainty diversity creates to managing uncer-

tainty by predicting variations in behavior and adapting

the organization to them.

Evaluating Intermediate-Term Programs

I/O psychologists have spent less time evaluating inter-

mediate-term human resource programs than evaluating

short-term programs, partly because the intermediate

time horizon encompasses more uncertainties and con-

tingencies, as is illustrated in the example of DEC. Also,

because intermediate-term programs are often larger in

scope, the appropriate unit of analysis for evaluation is

often the productivity level of an entire department or

business unit. Although psychologists have sophisticated

measurement methods for assessing the, performance lev-

els of individuals, our measurement techniques do not

translate easily into measures of productivity (see Camp-



11/17

bell & Campbell, 1988). Only recently have I/O psycholo-gists begun to apply aggressively their measurement skillsto developing measures appropriate for larger aggregates ofemployees within organizations (e.g., see Pritchard, Jones,Roth, Stuebing, & Ekeberg, 1988). Progress on this taskshould be particularly valuable for intermediate-term andlong-term human resource planning.

Long-Term Human Resource Planning

Increasingly, long-term human resource planning (forbeyond three years) is becoming critical to the effectivefunctioning of organizations. The rapidly changing andhighly competitive worldwide marketplace is causingfirms to turn to their human resources for survival andcompetitiveness. Because there is a greater understandingthat an organization's work force cannot be turned aroundon a dime, long-term human resource planning is gainingcurrency. It is an activity that demands integration of theskills and knowledge of the human resource planner andall the other executives responsible for strategic planning.Although there are many types of long-term planningefforts, we use succession planning as our primary ex-ample of the process.

Forecasting Demand and Supply: The Challenge ofSuccession Planning

More than ever, a major long-term business concern inorganizations is "What types of managers do we needrunning the business into the 21st century, and how dowe make sure we have them?" (Cowherd, 1986; London,personal communication, February 7, 1986). Considerthis example: "Exxon is so far ahead in the successionplanning game that it has already hired its CEO for theyear 2010. Although it is not public knowledge who thatperson is, he or she is already being challenged, assessedand groomed for the top spot" (McManis & Leibman,1988, p. 24). In describing how succession planning efforts

differ now from the past, Goodstein (personal commu-nication, February 9, 1989) pointed out that the turbu-lence and unpredictability of the current business envi-ronment has resulted in "a discernible trend" of substi-tuting efforts to define more generic competencies forefforts to identify specific knowledge and skills in thespecification of position requirements. H. A. Goodstein(personal communication, February 9, 1989) contrastedthis with

"the old" technology of management succession planning, whichwas largely an exercise in replacement planning. Organizationswere planning within a model of minimal change in organizationstructure (internal environment) and a perceived static externalenvironment. Position requirements could easily be extrapolated

from the job descriptions of current incumbents-factoring intothese requirements those skills and abilities that the currentincumbent lacked. Since position requirements were relativelystable and career paths reasonably well-defined, an effective per-formance appraisal system coupled with opportunities for keyexecutives to observe candidates adequately served the selectionprocess for many companies.

Succession planning programs are complex systemsdesigned to safeguard the long-term health of the orga-


nization. The key activities in succession planning areidentifying high-potential employees, identifying neededcompetencies, and providing learning experiences to de-velop these competencies (DeLuca, 1988). Well-developedprograms include a variety of components: selection pro-cedures, development plans, mentorships, frequent andsystematic performance reviews, and career planning ac-tivities that involve employees in planning and monitoring

their own development (e.g., see Hall & Associates, 1986;Leibowitz, 1988). Those programs known for their ex-cellence, such as those sponsored by IBM, Exxon, Squibb,and General Electric, represent large investments in in-tegrated human resource management systems (seeMahler & Drotter, 1986; Vancil, 1987). Such programsare examples of what can be done with respect' to long-term human resource planning, given the state of ourknowledge about human performance in organizationalsettings, a belief in the value of investing in human re-sources, and cooperation between the human resourceplanner and line management.

Staffing the upper echelons of organizations presentsa number of unique challenges, particularly when a com-

pany practices a promotion-from-within policy. Becausethe planning horizon is so long, greater uncertainty existswhen predicting both future demand and future supply.The uncertainty in predicting supply is compounded bythe small numbers of people and jobs involved, whichchanges the prediction task from one of estimating thepercentage of a pool of employees who are likely to bewith the company x years into the future to one of esti-mating the probability that a few particular individualswill still be with the company x years into the future.Providing developmental experiences to a greater numberof employees helps reduce the uncertainty of forecastedsupply (Leibowitz, 1988), but orchestrating developmen-tal experiences for large numbers of employees can be

very difficult logistically because development is best ac-complished by rotating employees through many key jobsthroughout their careers (see McCall, 1988). Predictingwho will be available and with what capabilities is onlyhalf of the problem, of course. Equally challenging is pre-dicting the needs of the organization (DeLuca, 1988).

Organizations are dynamic systems embedded indynamic environments. When planning for future needs,the only sure bet is that future -needs will be differentfrom current needs. Popular wisdom has long held thatdifferent types of leaders are effective under differentbusiness conditions (Campbell & Moses, 1986; Gerstein& Reisman, 1983). For example, the personal character-istics of managers that lead to success during the start-

up and early growth phases of an organization's life cyclemay inhibit their performance when the organizationreaches the phase of maturity and stability (Gupta &Govindarajan, 1984). For companies currently in the earlygrowth stages, this makes succession planning particularlydifficult. Because the needs of the future are inconsistentwith current needs, the challenge is to find ways to max-imize the effectiveness of managers in the current orga-nizational environment of rapid growth while at the same

233


12/17

time providing experiences for these managers to help

them develop the skills they will need in the mature-stage

organizational environment of the future.

Another type of major change that an organization

may experience during a several-year planning horizon

is a modification of their competitive strategy. Like a

change from rapid growth to mature stability, a change

in competitive strategies may have significant implications

for the types of managers needed. Competitive strategyrefers to the means by which a firm competes for business

in the marketplace (see Porter, 1985). Competitive strat-

egies can differ along a number of dimensions, including

the extent to which firms emphasize innovation, quality-

enhancement, or cost reduction (Schuler & Jackson,

1987). Briefly, the innovation strategy is used to develop

products or services different from those of competitors;

the primary focus is on continually offering something

new and different. Enhancing product or service quality

is the primary focus of the quality-enhancement strategy.

In the cost-reduction strategy, firms typically attempt to

gain competitive advantage by being the lowest-cost goods

producer or service provider. (Although these three com-

petitive strategies are described as pure types, in practicesome overlap often occurs.)

It is likely that successful pursuit of these three dif-

ferent strategies requires employees to adopt different

patterns of behavior. For example, organizations that

pursue innovation as a strategy are likely to experience

uncertainty because. the path to innovation includes a

mix of spurts in progress and unforeseen setbacks (Quinn,

1979). In addition, the innovation process depends heavily

on individual expertise and creativity. Steep learning

curves and the rapid speed at which knowledge is accu-

mulated through experience make it difficult for orga-

nizations to codify procedures. This means that employee

turnover can have disastrous consequences (Kanter,

1985). Furthermore, innovation often threatens the statusquo, causing some natural resistance and a volatile po-

litical climate (Fast, 1976).

These organizational conditions suggest that the

pursuit of innovation is likely to be successful only if em-

ployees behave in particular ways. A large literature on

innovation suggests that some of the behaviors needed

from employees in firms pursuing innovation include

creativeness, cooperation, risk-taking, flexibility, a long-

term focus, and willingness to assume responsibility for

outcomes. Many of these behaviors are quite unlike those

needed when cost reduction is emphasized in an orga-

nization. When cost reduction is the focus, predictability

is valued over creativity, risk-taking is less appropriate,

and a short-term focus usually predominates (see Schuler& Jackson, 1987).

The differences in needed employee behaviors as-

sociated with different strategies have significant impli-

cations for human resource planning. For example, a re-

cent study compared firms pursuing an innovation strat-

egy with firms for whom innovation was of little

importance. Firms pursuing an innovation strategy were

more likely than other firms to emphasize long-term needs

234

in their training programs for managers and to offer

training to more employees throughout the organization.

Supporting the notion that innovative organizations need

to encourage flexibility and creativity, managers in in-

novative companies had jobs that required the use of more

diverse skills (Jackson, Schuler, & Rivero, 1989). Results

such as these suggest that when organizations change

competitive strategies in response to a changing business

environment, they may need to significantly alter broadpatterns of employee attitudes and behaviors in order to

be successful in implementing a new competitive strategy.

To do so, they may implement major changes in various

aspects of their personnel systems. The decision to change

strategies requires a long-term perspective, and its success

depends in part on changing the work environment in

order to support needed changes in employee behaviors,

which also requires a long-term perspective. Clearly, when

organizations attempt to change their competitive strat-

egies, business and human resource planning should be

fully integrated.'

Program Design and Implementation

An early example of a company that used a psychological

testing program to integrate its business needs and long-

term human resource planning was Sears, Roebuck, &

Company. In the early 1960s, Sears realized it, would need

managers with unique abilities to guide the organization

through a period of rapid expansion and growth. Based

on careful evaluation of the available talent and antici-

pated future business conditions, Sears concluded that it

should begin developing a talent pool that would include

people who had greater mental ability, who were psycho-

logically compatible with the company's need for inno-

vation and change, who were skilled administrators and

effective decision makers, and who were emotionally sta-

ble yet aggressive (Bentz, 1968, 1983). To ensure thatsuch people would be available and could be identified,

Sears developed a battery of psychological tests for use in

their selection process, a process aided by the joint efforts

of line management and human resource planners. Such

tests are now a general component of the long-range plan-

ning efforts of many organizations because they help

identify high-potential employees early in their careers

(Bentz, 1983).

For many organizations, succession planning and

career development are tools for integrating diverse

subgroups within a corporation (see Campbell, in press).For example, Sara Lee Corporation has acquired more

than 40 companies during the past several years. The

company uses succession planning to move talented em-ployees through the different subsidiaries in order to build

a consistent corporate culture and a sense of corporate

unity (McManis & Leibman, 1988). The challenge of in-

tegrating diversity is even greater for IBM, which has op-

erations in 132 countries. According to Donald Laidlaw,

director of IBM's executive resources, succession planning

systems at IBM are designed to cover human resource

needs in all 132 countries (Laidlaw, personal communi-



13/17

cation, February 7, 1989). The size ofIBM combinedwith the tremendous diversity of environments with whichit must cope make predicting specific needs in the longterm more or less impossible. This means effective leaderswill be people who can deal well with ambiguity and whoare broadly trained in all aspects of running a business.Developing such leaders is the objective of IBM's extensivesuccession planning and management development ef-

forts. IBM's commitment to a general manager model ofdevelopment led them to design a series of planned de-velopment positions that are used to test high-potentialmanagers. Performance appraisals serve to continuallyrevalidate initial judgments of future potential (and re-duce executive management uncertainty).

Another company that has learned the value of hav-ing employees who can cope with ambiguity is AT&T,whose world was turned upside down in the early 1980s.In 1982, AT&T agreed to divest itself of its operatingtelephone companies. By 1984, more than 11,000 em-ployees had chosen to leave AT&T rather than live withthe massive changes that were about to take place as thisformer monolith was broken into eight different organi-

zational units (Campbell & Moses, 1986). A leader in thedesign and use of assessment centers as a method for se-lecting managers for promotions, AT&T realized the needto begin proactively using assessment centers for devel-opmental purposes. In addition to using assessment cen-ters to develop managers' ability to cope with ambiguity,AT&T is trying to ensure that the organization as a wholeis prepared for the future by developing two very differenttypes of leaders-those with high levels of functional ex-pertise and those with the broad expertise needed to besuccessful general managers (M. London, personal com-munication, February 7, 1989).

Although we have focused on succession planningin this article, it is important to note that other types of

long-term human resource planning efforts are equallyi mportant. Space limitations prohibit us from discussingother types of efforts at length, but we offer one exampleto illustrate what can be accomplished when long-termhuman resource planning is used to its fullest extent tolink competitive strategy and human resource practices.The example is Ford Motor Company's massive qualityimprovement program (see Banas, 1988). In 1979, topmanagement at Ford acknowledged the need to beginworking to develop a new style of human resource man-agement in order to achieve its goal of producing high-quality products at low cost ("At Ford, quality is jobone"). Since 1979, Ford has actively and aggressivelysought to increase employee involvement. Philip Cald-

well, as president of the company in 1978, ushered in thenew era at Ford when he announced to the top executives:"Our strategy for the years ahead will come to nothingunless we ask for greater participation of our workforce.Without motivated and concerned workers, we're notgoing to lower our costs as much as we need to-and wearen't going to get the quality product we need" (citedin Banas, 1988, p. 391). So began a major experiment inorganizational change that included efforts to improve


the quality of work life and the beginnings of an organi-zational restructuring. The experiment is revealing thelimits of our knowledge about how to change an orga-nization's approach to managing people, an4 at the sametime it is contributing to our knowledge about how tomanage change. It is also providing another excellent il-lustration of the integration of business needs and humanresource planning. Most important, the description Banas

has given of the change process is likely to serve as astimulus to new research.

Evaluating Long-Term Programs

Presently most of our knowledge about how to developand improve long-term human resource programs hasbeen generated through trial-and-error rather thanthrough systematic research. Nevertheless, much knowl-edge about individual behavior and development has beengained by analysis of the massive amounts of data gen-erated by large-scale, ongoing management planning sys-tems. The excellent studies conducted within AT&T aremodels for how the practice of I/O psychology can inform

the science of psychology (Bray, Campbell, Grant, 1974;Howard & Bray, 1988). These studies shed light on thequestion of how ability and personality factors contributeto managerial career success, and they also informed usabout patterns of change over the life span and betweengenerations.

Understandably, what rigorous researchers engagedin the evaluation of succession planning programs haveemphasized is the ability to predict individual outcomes,such as career progress and satisfaction. It is also nowappropriate to evaluate long-term programs using cor-porate outcomes such as share price, market share, receiptof industry awards, and so on. In the spirit of integratingbusiness needs and human resource planning, such cor-

porate indicators are legitimate criteria for evaluatingsuccess, in addition to individual outcomes. Doubtlessthere are many difficulties that complex, multifaceted in-terventions and long-term time horizons pose in drawingconclusions about cause-and-effect relationships; none-theless, there are great opportunities for the I/O psy-chologist who adopts a long-term view and for humanresource planners and line managers who coordinate theirefforts to assess the long-term effectiveness of human re-source programs in corporate and individual terms.

Conclusions

Because the pur pose of human r esour ce pl an n i n g i s toen sur e that the ri ght peopl e are i n the ri ght pl ace at the

r i ght t i me, i t must be l i n ked wi th the pl an s of the tot alorgan i zati on . Tradi ti on al l y, ther e has been a weak on e-way l i n kage between busi n ess pl an n i n g an d human r e-source pl an n i n g. Busi n ess pl an s, where they ex i st, havedefi n ed human r esour ce n eeds, ther eby maki n g humanr esour ce pl an n i n g a r eacti ve exerci se. A descri pti on ocon di ti on s i n the 1970s was provi ded by Wal ker (1978)i n the open i n g arti cl e of the i n augur al i ssueofHumanResource Planning:

235


14/17

Companies often give lip service to the importance of humanresources in achievement of business objectives, but rarely isdetailed, thoughtful analysis performed.... Personnel profes-sionals, even human resource planning specialists, often are notwell informed regarding business planning processes (and rarelyhave any direct contact with business planners) and are thus ill-equipped to introduce linkages between human resource plan-ning and business strategic planning. (p. 1)

This was the state of the art when the first professionalassociation for human resource planners, the HumanResource Planning Society, was founded in 1977.

Many organizations now recognize that they canbenefit from a two-way linkage between business and hu-man resource planning. With a two-way linkage, businessplans are considered somewhat malleable in that they areinfluenced by human resource considerations, such asthe cost and availability of labor. Such organizations re-alize that profitability requires that business objectivesbe linked to people-planning activities. If the right peopleare unavailable, performance goals cannot be met. "Atwo-way linkage is evident when astute managers nolonger assume that every plan is doable" (Mills, 1985a,

p. 48).Recently, some organizations have moved toward

havinga completely integrative linkage between businessplanning and human resource planning. In these orga-nizations, organizational effectiveness is facilitated by ahuman resource executive who is a fully participatingmember of the top management team. In this case busi-ness plans can be substantially modified by the humanresource executive, and business results can be substan-tially improved.. For example, Don Rush, vice-presidentand chief executive officer of W eyerhaeuser Forest ProductCompany's Washington division, believes that "by inte-grating HR and business planning, we have 500 salariedpeople doing more than 1,200 did; we have improved

teamwork, morale, commitment, and profitability" ("TheHR Edge," 1988, p. 1). Such integration is likely to spreadamong the most competitive U.S. organizations. As thishappens, the relationships that were illustrated in FigureI among human resource planning activities and thosebetween human resource and business planning shouldbecome more common. Unfortunately, it is beyond thescope of this article to include a description of the man-agement processes that organizations are using to achievecomplete integration between their human resource andbusiness planning activities, but interested readers areencouraged to read the discussions provided by Goldenand Ramanujam (1985), Dyer (1986), Mirvis (1985), andSchuler (1988).

Human resource planning becomes more complexas the time horizon for planning stretches further intothe future, so it is not surprising that companies becomeinvolved in longer term planning activities only after be-coming proficient in shorter term planning activities.Mills (1985b) found support for this pattern in his studyof the planning practices of 291 organizations. An evo-lutionary pattern, going from mastery of techniques forshort-term planning to development of long-term plan-

236

ring capabilities, is also evident in the related technicaland scientific literatures on planning. Much of the re-search conducted by I/O psychologists has been directedat improving short-term outcomes such as attracting ap-plicants, maximizing performance, and minimizing dis-satisfaction and stress in order to retain valued employees.Currently, there is a growing awareness that these activitiesneed to be clearly and explicitly linked to improving or-

ganizational productivity, quality, innovation, and em-ployee satisfaction and involvement (see Campbell &Campbell, 1988).

It seems clear that human resource management ingeneral, and human resource planning in particular, willbecome more closely tied to the needs and strategies oforganizations. As this occurs, human resource planningwill be the thread that ties together all other human re-source activities and integrates these with the rest of theorganization. With the growing recognition that differenttypes of organizations require different human resourcepractices (see, e.g., Kerr, 1982; Miles & Snow, 1984;Schuler, 1987), human resource planners are being chal-lenged to develop packages of practices that fit the unique

needs of their organizations and contribute to effective-ness. Research that will assist planners in the developmentand implementation of integrated human resource sys-tems is urgently needed.

Also needed is research on the change process. Or-ganizations of the future are likely to be in a state ofcontinuous change and uncertainty. Human resourceplanning is likely to be seen not only as the thread thatties together all human resource practices, but also as theinstrument for establishing and signaling when and howpractices should change. In other words, human resourceplanners are likely to take on the role of organizationalchange agents (Beer & Walton, 1987). To be effective inthis role, they will need to adopt a systems perspective

for understanding how the behaviors of individuals influ-ence and are influenced by the larger organizational con-text.

As organizations change more quickly, so will theknowledge, skills, and behaviors needed from employees.This means that people working in organizations will beasked continually to adjust to new circumstances. As-sessing and facilitating peoples' capacity for change aretwo activities that psychologists are likely to be called onto do, yet there is very little research available to consultfor guidance. Whereas organizations are seeking changesfrom employees, employees will be demanding that or-ganizations change to meet the needs of the increasinglydiverse work force. Research designed to help us under-

stand how organizations can establish and maintain em-ployee flexibility and adaptability is likely to make animportant contribution.

Thus a final challenge in human resource planningis balancing current needs-of organizations and theiremployees-with those of the future. The criterion againstwhich this balancing act is measured is whether employeesare currently at the right place doing the right things butyet are ready to adapt appropriately to different activities



15/17

when organizational change is needed. Similarly, I/Opsychologists involved in human resource planning canuse the effectiveness of their current activities and theirreadiness to engage in the new activities needed to facethe challenges of the future as the criteria against whichthey evaluate their own performance.

REFERENCES

Amer i can Telephon e & Telegraph Compan y. (1980).Survey of businessservice center jobs: Technical supplement. Baski n g Ri dge, NJ: Author .

Arvey, R. D., & Fal ey, R. H. (1988). Fairness in selecting employees(2n d ed.). Readi n g, MA: Addi son -Wesley.

Arvey, R. D., Sal as, E., & Gi al l uca, K. A. (1989).Using task inventoriesto forecast skills and abilities. Un publ i shed man uscri pt, Un i versi tyof Mi n n esota, In dustr i al Rel ati on s Cen ter, Mi n n eapol i s.

Ban as, P. A. (1988). Empl oyee i n vol vemen t : A sustai n ed l abor /man -agemen t i n i t i ati ve at t he For d Motor Compan y. In J. P. Campbel l ,R. J. Campbel l , & Associ ates (Eds.), Productivity in organizations(pp. 388-416). San Fran ci sco: Jossey-Bass.

Bechet , T P., & Maki , W. R. (1987). Modeli n g an d forecasti n g: Focusin gon peopl e as a st r ategi c r esour ce.Human Resource Planning, 10, 209-219.

Beer , M., & Wal ton , A. E. (1987). Or gan izat i on al chan ge an d devel op-men t. Annual Review of Psychology, 38, 339-367.

Ben t z, V. J. (1968). The Sear s ex per i en ce i n t he i n vesti gat i on , descr i pti on ,

an d pr edi cti on of ex ecut i ve behavi or . In J. A. Myer s, Jr . (Ed.),Predictingmanagerial success (pp. 59-152). An n Arbor , MI: Foun dati on onResearch for Human Behavi or .

Ben tz, V. J. (1983, August). Executive selection at Sears: An update.Paper pr esen ted at the Four th An n ual Con fer en ce on Fron ti er s ofIn dustr i al Psychol ogy, Vi rgi n i a Pol ytechn ic In sti tute, Bl acksburg.

Bol i ck, C., & Nestl er oth, S. (1988).Opportunity 2000. Washi n gton , DC:U.S. Govern men t Pr i n ti n g Offi ce.

Boudr eau, J. W., & Berger , C. J. (1985). Deci si on -t heor et i c ut i l i t y an al ysi sappl i ed to empl oyee separat i on s an d acqui si ti on s.Journal ofAppliedPsychology, 70, 571-612.

Bowen , D. E., & Schn ei der , B. (1988). Ser vi ces mar keti n g an d man age-men t: Impl i cati on s for or gan izat i on behavi or . In B. M. Staw & L. L.Cummi n gs (Eds.), Research in organizational behavior (pp. 43-80).Green wi ch, CT: JAI Press.

Bray, D. W., Campbel l , R. J., & Gr an t, D. L. (1974).Formative yearsin business: A long-term AT&T study of managerial lives. New Yor k:Wi l ey.

Bres, E. S. III, Ni ehaus, R. J., Schi n n ar , A. P., & Stei n buch, P. (1983).Effi ci en cy eval uat i on of EEO pr ogr am man agemen t .Human ResourcePlanning, 6, 233-247.

Bur ack, E. H. (1988). A str ategi c pl an n i n g an d oper ati on al agen da forhuman r esources. Human Resource Planning, 11, 63-68.

Campbel l , R. J. (i n pr ess). Impl emen t i n g human r esour ce devel opmen tstr ategi es. In K. N. Wex l ey (Ed.),Developing human resources. Wash-i n gton , DC: Bur eau of Nati on al Affai r s.

Campbel l , J. P., Campbel l , R. J., & Associ at es. (Eds.). ( 1988). Productivityin organizations. San Fr an ci sco: Jossey-Bass.

Campbel l , R. J., & Moses, J. L. (1986). Career s from an organ i zat i on alperspecti ve. In D. T. Hal l & Associ ates (Eds.),Career development inorganizations (pp. 274-309). San Fran ci sco: Jossey-Bass.

Casci o, W. F (1986). Costing human resources: The financial impact ofbehavior in organizations. Boston : Ken t.

Char n es, A., Cooper , W. W., Lewi s, K. A., & Ni ehaus, R. J. (1978). Amul ti -l evel coheren ce model for EEO pl an n i n g. In A. Charn es, W. W.Cooper , & R. J. Ni ehaus (Eds.), Management science approaches tornanpoHrr planning and organization design. New Yor k: El sevi er Nor t hIi ol l an d.

Charn es, A.,('(HK er , W, W., Nel son , A., & Ni ehaus,R. J. (1982). Modelex ten si on an d computati on i n goal -ar c n etwork approaches for EEOpl an n i n g.INH)tl, '11(4), I 17

Coates, J. I . (1987) An r n vuon +uen tal scan Pr o)r ct i n g human r esourcetr en ds.tlurnon i 'n'uo rt'hinnrm~. 11), 201) - ? I 1

Copel an d, I..(1988. Ju)y) 'aI ngr,t,sete~t, I'umer r s soul ehamp~on sof chan ge. l'rrsonnrl t10

February 1990 An tctis att 1'x ys i t~t(tsttet

Cowherd, D. M. (1986). On ex ecuti ve successi on : Con versati on wi thLester B. Korn .Human Resource Management, 25, 335-347.

Davi s, D. D., & Associ ates. (Eds.). (1986). Managing technological in-novation. San Fran ci sco: Jossey-Bass.

Del becq, A., Van de Ven , A. H., & Gustafson , D. (1975).Group tech-niques for program planning. Dal l as: Scott .

DeLuca, J. R. (1988). Str ategi c car eer man agemen t i n n on -gr owi n g,volati l e busin ess en vi r on men ts.Human Resource Planning, 11, 49-62.

Dumai n e, B. (1989, Jul y 3). What the l eader s of tomor row see. Fortune,

pp. 48-62.Dyer , L. (1982). Human r esource pl an n i n g. In K. M. Rowl an d & G. R.

Fer r i s (Eds.),Personnel management (pp. 31-47). Boston : Al l yn &Bacon .

Dyer , L. (Ed.). (1986).Human resource planning: Tested practices in fiveUS. and Canadian companies. New York: Ran dom House.

Dyer , L., & Heyer , N. D. (1984). Human r esour ce pl an n i n g at IBM.Human Resource Planning, 7, 111-126.

Earl y r eti r emen t i n cen

HR Planning article

Documents

Transcript of HR Planning article