HUMAN RESOURCE PLANNING

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Human Resource Planning (HRP)Human Resource Planning (HRP)Human Resource Planning (HRP)Human Resource Planning (HRP)

• First component of HRM strategyFirst component of HRM strategy• All other functional HR activities are derived All other functional HR activities are derived

from & flow out of HRP processfrom & flow out of HRP process• Basis in considerations of future HR requirements Basis in considerations of future HR requirements

in light of present HR capabilities & capacitiesin light of present HR capabilities & capacities• Proactive in anticipating & preparing flexible Proactive in anticipating & preparing flexible

responses to changing HR requirementsresponses to changing HR requirements• Both internal & external focusBoth internal & external focus

• First component of HRM strategyFirst component of HRM strategy• All other functional HR activities are derived All other functional HR activities are derived

from & flow out of HRP processfrom & flow out of HRP process• Basis in considerations of future HR requirements Basis in considerations of future HR requirements

in light of present HR capabilities & capacitiesin light of present HR capabilities & capacities• Proactive in anticipating & preparing flexible Proactive in anticipating & preparing flexible

responses to changing HR requirementsresponses to changing HR requirements• Both internal & external focusBoth internal & external focus

Human Resource Planning (HRP)Human Resource Planning (HRP)Human Resource Planning (HRP)Human Resource Planning (HRP)

• Goes beyond simple hiring & firingGoes beyond simple hiring & firing• Involves planning for deployment of human Involves planning for deployment of human

capital in line with organization &/or business capital in line with organization &/or business unit strategyunit strategy

• May involve:May involve:– ReassignmentReassignment– Training & developmentTraining & development– OutsourcingOutsourcing– Using temporary help or outside contractorsUsing temporary help or outside contractors

• Needs as much flexibility as possibleNeeds as much flexibility as possible

• Goes beyond simple hiring & firingGoes beyond simple hiring & firing• Involves planning for deployment of human Involves planning for deployment of human

capital in line with organization &/or business capital in line with organization &/or business unit strategyunit strategy

• May involve:May involve:– ReassignmentReassignment– Training & developmentTraining & development– OutsourcingOutsourcing– Using temporary help or outside contractorsUsing temporary help or outside contractors

• Needs as much flexibility as possibleNeeds as much flexibility as possible

Key Objectives of HR PlanningKey Objectives of HR PlanningKey Objectives of HR PlanningKey Objectives of HR Planning

• Prevent overstaffing & understaffingPrevent overstaffing & understaffing

• Ensure organization has right employees Ensure organization has right employees with right skills in right places at right with right skills in right places at right timestimes

• Ensure organization is responsive to Ensure organization is responsive to changes in environmentchanges in environment

• Provide direction & coherence to all HR Provide direction & coherence to all HR activities & systemsactivities & systems

• Unite perspectives of line & staff managersUnite perspectives of line & staff managers

• Prevent overstaffing & understaffingPrevent overstaffing & understaffing

• Ensure organization has right employees Ensure organization has right employees with right skills in right places at right with right skills in right places at right timestimes

• Ensure organization is responsive to Ensure organization is responsive to changes in environmentchanges in environment

• Provide direction & coherence to all HR Provide direction & coherence to all HR activities & systemsactivities & systems

• Unite perspectives of line & staff managersUnite perspectives of line & staff managers

Types of PlanningTypes of PlanningTypes of PlanningTypes of Planning

• Aggregate PlanningAggregate Planning– Anticipating needs for groups of employees in Anticipating needs for groups of employees in

specific, usually lower level jobs & general skills specific, usually lower level jobs & general skills employees will need to ensure sustained high employees will need to ensure sustained high performanceperformance

• Succession PlanningSuccession Planning– Focuses on ensuring key critical management Focuses on ensuring key critical management

positions in organization remain filled with positions in organization remain filled with individuals who provide best fitindividuals who provide best fit

• Aggregate PlanningAggregate Planning– Anticipating needs for groups of employees in Anticipating needs for groups of employees in

specific, usually lower level jobs & general skills specific, usually lower level jobs & general skills employees will need to ensure sustained high employees will need to ensure sustained high performanceperformance

• Succession PlanningSuccession Planning– Focuses on ensuring key critical management Focuses on ensuring key critical management

positions in organization remain filled with positions in organization remain filled with individuals who provide best fitindividuals who provide best fit

Aggregate PlanningAggregate PlanningAggregate PlanningAggregate Planning

• Forecasting demand Forecasting demand – Considers firm’s strategic plan’s effects on increases or Considers firm’s strategic plan’s effects on increases or

decreases in demand for products or servicesdecreases in demand for products or services– Assumptions on which forecast is predicated should be Assumptions on which forecast is predicated should be

written down & revisited when conditions changewritten down & revisited when conditions change– Unit forecastingUnit forecasting (bottom-up planning) involves “point of (bottom-up planning) involves “point of

contact” estimation of future demand for employeescontact” estimation of future demand for employees– Top-down forecastingTop-down forecasting involves senior managers allocating a involves senior managers allocating a

fixed payroll budget across organizational hierarchyfixed payroll budget across organizational hierarchy– Demand for employee skills requirements must also be Demand for employee skills requirements must also be

consideredconsidered

• Forecasting demand Forecasting demand – Considers firm’s strategic plan’s effects on increases or Considers firm’s strategic plan’s effects on increases or

decreases in demand for products or servicesdecreases in demand for products or services– Assumptions on which forecast is predicated should be Assumptions on which forecast is predicated should be

written down & revisited when conditions changewritten down & revisited when conditions change– Unit forecastingUnit forecasting (bottom-up planning) involves “point of (bottom-up planning) involves “point of

contact” estimation of future demand for employeescontact” estimation of future demand for employees– Top-down forecastingTop-down forecasting involves senior managers allocating a involves senior managers allocating a

fixed payroll budget across organizational hierarchyfixed payroll budget across organizational hierarchy– Demand for employee skills requirements must also be Demand for employee skills requirements must also be

consideredconsidered

Aggregate PlanningAggregate PlanningAggregate PlanningAggregate Planning

• Forecasting supply Forecasting supply – The level and quantities of abilities, skills & The level and quantities of abilities, skills &

experiences can be determined using experiences can be determined using Skills Skills InventoryInventory..

– Annually updated human resource information Annually updated human resource information system (HRIS) is dynamic source of HR informationsystem (HRIS) is dynamic source of HR information

– Markov analysis can be used to create transition Markov analysis can be used to create transition probability matrix that predicts mobility of employees probability matrix that predicts mobility of employees within organizationwithin organization

• Forecasting supply Forecasting supply – The level and quantities of abilities, skills & The level and quantities of abilities, skills &

experiences can be determined using experiences can be determined using Skills Skills InventoryInventory..

– Annually updated human resource information Annually updated human resource information system (HRIS) is dynamic source of HR informationsystem (HRIS) is dynamic source of HR information

– Markov analysis can be used to create transition Markov analysis can be used to create transition probability matrix that predicts mobility of employees probability matrix that predicts mobility of employees within organizationwithin organization

Strategies for Managing Strategies for Managing ShortagesShortages

Strategies for Managing Strategies for Managing ShortagesShortages

• Recruit new Recruit new permanent employeespermanent employees

• Offer incentives to Offer incentives to postpone retirementpostpone retirement

• Rehire retirees part-Rehire retirees part-timetime

• Attempt to reduce Attempt to reduce turnoverturnover

• Recruit new Recruit new permanent employeespermanent employees

• Offer incentives to Offer incentives to postpone retirementpostpone retirement

• Rehire retirees part-Rehire retirees part-timetime

• Attempt to reduce Attempt to reduce turnoverturnover

• Work current staff Work current staff overtimeovertime

• Subcontract work outSubcontract work out• Hire temporary Hire temporary

employeesemployees• Redesign job Redesign job

processes so fewer processes so fewer employees are neededemployees are needed

• Work current staff Work current staff overtimeovertime

• Subcontract work outSubcontract work out• Hire temporary Hire temporary

employeesemployees• Redesign job Redesign job

processes so fewer processes so fewer employees are neededemployees are needed

Strategies for Managing SurplusesStrategies for Managing SurplusesStrategies for Managing SurplusesStrategies for Managing Surpluses

• Hiring freezesHiring freezes• Do not replace those Do not replace those

who leavewho leave• Offer early retirement Offer early retirement

incentivesincentives• Reduce work hoursReduce work hours• Voluntary severance Voluntary severance

leaves of absenceleaves of absence

• Hiring freezesHiring freezes• Do not replace those Do not replace those

who leavewho leave• Offer early retirement Offer early retirement

incentivesincentives• Reduce work hoursReduce work hours• Voluntary severance Voluntary severance

leaves of absenceleaves of absence

• Across-the-board pay Across-the-board pay cutscuts

• LayoffsLayoffs• Reduce outsourced Reduce outsourced

workwork• Employee trainingEmployee training• Switch to variable pay Switch to variable pay

planplan• Expand operationsExpand operations

• Across-the-board pay Across-the-board pay cutscuts

• LayoffsLayoffs• Reduce outsourced Reduce outsourced

workwork• Employee trainingEmployee training• Switch to variable pay Switch to variable pay

planplan• Expand operationsExpand operations

Succession PlanningSuccession PlanningSuccession PlanningSuccession Planning

• Involves identifying key management positions Involves identifying key management positions the organization cannot afford to have vacantthe organization cannot afford to have vacant

• Purposes of succession planningPurposes of succession planning– Facilitates transition when employee leavesFacilitates transition when employee leaves– Identifies development needs of high-potential employees & Identifies development needs of high-potential employees &

assists in career planningassists in career planning

• Many organizations fail to implement succession Many organizations fail to implement succession planning effectivelyplanning effectively

– Qualified successors may seek external career advancement Qualified successors may seek external career advancement opportunities if succession is not forthcomingopportunities if succession is not forthcoming

• Involves identifying key management positions Involves identifying key management positions the organization cannot afford to have vacantthe organization cannot afford to have vacant

• Purposes of succession planningPurposes of succession planning– Facilitates transition when employee leavesFacilitates transition when employee leaves– Identifies development needs of high-potential employees & Identifies development needs of high-potential employees &

assists in career planningassists in career planning

• Many organizations fail to implement succession Many organizations fail to implement succession planning effectivelyplanning effectively

– Qualified successors may seek external career advancement Qualified successors may seek external career advancement opportunities if succession is not forthcomingopportunities if succession is not forthcoming

Guidelines for Effective Succession Guidelines for Effective Succession PlanningPlanning

Guidelines for Effective Succession Guidelines for Effective Succession PlanningPlanning

• • Tie into organization’s strategy (and modified accordingly)Tie into organization’s strategy (and modified accordingly)

• • Monitor the progress and measure outcomes of succession Monitor the progress and measure outcomes of succession planning initiativesplanning initiatives

• • Ensure that all HR functions that impact the succession Ensure that all HR functions that impact the succession plan are iterated and working in tandemplan are iterated and working in tandem

• • Ensure centralized coordination of succession planningEnsure centralized coordination of succession planning

• • Engage and involve managers throughout the organizationEngage and involve managers throughout the organization

• • Tie into organization’s strategy (and modified accordingly)Tie into organization’s strategy (and modified accordingly)

• • Monitor the progress and measure outcomes of succession Monitor the progress and measure outcomes of succession planning initiativesplanning initiatives

• • Ensure that all HR functions that impact the succession Ensure that all HR functions that impact the succession plan are iterated and working in tandemplan are iterated and working in tandem

• • Ensure centralized coordination of succession planningEnsure centralized coordination of succession planning

• • Engage and involve managers throughout the organizationEngage and involve managers throughout the organization

Stages in Human Resource Stages in Human Resource PlanningPlanning

Stages in Human Resource Stages in Human Resource PlanningPlanning

• Forecasting Forecasting • Goal Setting and Strategic PlanningGoal Setting and Strategic Planning• Program Implementation and EvaluationProgram Implementation and Evaluation

• Forecasting Forecasting • Goal Setting and Strategic PlanningGoal Setting and Strategic Planning• Program Implementation and EvaluationProgram Implementation and Evaluation

Forecasting Stage of Human Forecasting Stage of Human Resource PlanningResource Planning

Forecasting Stage of Human Forecasting Stage of Human Resource PlanningResource Planning

• Determining Labor DemandDetermining Labor Demand– derived from product/service demandedderived from product/service demanded– external external in naturein nature

• Determining Labor SupplyDetermining Labor Supply– internal internal movements caused by transfers, promotions, turnover, movements caused by transfers, promotions, turnover,

retirements, etc.retirements, etc.– transitional matrices identify employee movements over timetransitional matrices identify employee movements over time

• Determining Labor Surplus or ShortageDetermining Labor Surplus or Shortage

• Determining Labor DemandDetermining Labor Demand– derived from product/service demandedderived from product/service demanded– external external in naturein nature

• Determining Labor SupplyDetermining Labor Supply– internal internal movements caused by transfers, promotions, turnover, movements caused by transfers, promotions, turnover,

retirements, etc.retirements, etc.– transitional matrices identify employee movements over timetransitional matrices identify employee movements over time

• Determining Labor Surplus or ShortageDetermining Labor Surplus or Shortage

DownsizingDownsizingDownsizingDownsizing

• Downsizing Downsizing is the planned elimination of large is the planned elimination of large numbers of personnel designed to enhance numbers of personnel designed to enhance organizational competitiveness.organizational competitiveness.

• Reasons for downsizing include:Reasons for downsizing include:– need to reduce labor costsneed to reduce labor costs– technological changes reduce need for labortechnological changes reduce need for labor– mergers and acquisitions reduce bureaucratic overheadmergers and acquisitions reduce bureaucratic overhead– organizations choose to change the location of where they do organizations choose to change the location of where they do

businessbusiness

• Downsizing Downsizing is the planned elimination of large is the planned elimination of large numbers of personnel designed to enhance numbers of personnel designed to enhance organizational competitiveness.organizational competitiveness.

• Reasons for downsizing include:Reasons for downsizing include:– need to reduce labor costsneed to reduce labor costs– technological changes reduce need for labortechnological changes reduce need for labor– mergers and acquisitions reduce bureaucratic overheadmergers and acquisitions reduce bureaucratic overhead– organizations choose to change the location of where they do organizations choose to change the location of where they do

businessbusiness

Effects of DownsizingEffects of DownsizingEffects of DownsizingEffects of Downsizing

• Studies show that firms that announce a Studies show that firms that announce a downsizing campaign show worse, rather downsizing campaign show worse, rather than better financial performance.than better financial performance.

• Reasons include:Reasons include:– The long-term effects of an improperly managed The long-term effects of an improperly managed

downsizing effort can be negative.downsizing effort can be negative.– Many downsizing campaigns let go of people who turn Many downsizing campaigns let go of people who turn

out to be irreplaceable assets.out to be irreplaceable assets.– Employees who survive the staff purges often become Employees who survive the staff purges often become

narrow-minded, self-absorbed, and risk-aversenarrow-minded, self-absorbed, and risk-averse. .

• Studies show that firms that announce a Studies show that firms that announce a downsizing campaign show worse, rather downsizing campaign show worse, rather than better financial performance.than better financial performance.

• Reasons include:Reasons include:– The long-term effects of an improperly managed The long-term effects of an improperly managed

downsizing effort can be negative.downsizing effort can be negative.– Many downsizing campaigns let go of people who turn Many downsizing campaigns let go of people who turn

out to be irreplaceable assets.out to be irreplaceable assets.– Employees who survive the staff purges often become Employees who survive the staff purges often become

narrow-minded, self-absorbed, and risk-aversenarrow-minded, self-absorbed, and risk-averse. .

Early Retirement ProgramsEarly Retirement ProgramsEarly Retirement ProgramsEarly Retirement Programs

• The average age of the U.S. workforce is increasing.The average age of the U.S. workforce is increasing.

• Baby boomers are not retiring early for several reasons:Baby boomers are not retiring early for several reasons:– improved health of older peopleimproved health of older people– a fear that Social Security will be cuta fear that Social Security will be cut– mandatory retirement is outlawedmandatory retirement is outlawed

• Many employers try to induce Many employers try to induce

voluntary attrition among older voluntary attrition among older

workers through early workers through early

retirement incentive programs.retirement incentive programs.

• The average age of the U.S. workforce is increasing.The average age of the U.S. workforce is increasing.

• Baby boomers are not retiring early for several reasons:Baby boomers are not retiring early for several reasons:– improved health of older peopleimproved health of older people– a fear that Social Security will be cuta fear that Social Security will be cut– mandatory retirement is outlawedmandatory retirement is outlawed

• Many employers try to induce Many employers try to induce

voluntary attrition among older voluntary attrition among older

workers through early workers through early

retirement incentive programs.retirement incentive programs.

Employing Temporary WorkersEmploying Temporary WorkersEmploying Temporary WorkersEmploying Temporary Workers

• Hiring temporary workers helps eliminate a labor shortage.Hiring temporary workers helps eliminate a labor shortage.

• Temporary employment affords firms the flexibility needed Temporary employment affords firms the flexibility needed to operate efficiently in the face of swings in demand.to operate efficiently in the face of swings in demand.

• Other advantages include:Other advantages include:– temporary workers free a firm from many administrative tasks and temporary workers free a firm from many administrative tasks and

financial burdensfinancial burdens– temporary workers are often times tested by a temporary agencytemporary workers are often times tested by a temporary agency– many temporary agencies train employees before sending them to many temporary agencies train employees before sending them to

employeesemployees

• Hiring temporary workers helps eliminate a labor shortage.Hiring temporary workers helps eliminate a labor shortage.

• Temporary employment affords firms the flexibility needed Temporary employment affords firms the flexibility needed to operate efficiently in the face of swings in demand.to operate efficiently in the face of swings in demand.

• Other advantages include:Other advantages include:– temporary workers free a firm from many administrative tasks and temporary workers free a firm from many administrative tasks and

financial burdensfinancial burdens– temporary workers are often times tested by a temporary agencytemporary workers are often times tested by a temporary agency– many temporary agencies train employees before sending them to many temporary agencies train employees before sending them to

employeesemployees

Outsourcing and OffshoringOutsourcing and OffshoringOutsourcing and OffshoringOutsourcing and Offshoring

• OutsourcingOutsourcing is an organization’s use of an outside is an organization’s use of an outside organization for a broad set of services.organization for a broad set of services.

• Offshoring Offshoring is a special case of outsourcing where the jobs that is a special case of outsourcing where the jobs that move actually leave one country and go to another.move actually leave one country and go to another.

• To help ensure the success of outsourcing:To help ensure the success of outsourcing:– Choose an outsourcing vendor that is large and established. Choose an outsourcing vendor that is large and established. – Jobs that are proprietary or require tight security should not be outsourced. Jobs that are proprietary or require tight security should not be outsourced. – It is a good idea to start small and monitor constantly.It is a good idea to start small and monitor constantly.

• OutsourcingOutsourcing is an organization’s use of an outside is an organization’s use of an outside organization for a broad set of services.organization for a broad set of services.

• Offshoring Offshoring is a special case of outsourcing where the jobs that is a special case of outsourcing where the jobs that move actually leave one country and go to another.move actually leave one country and go to another.

• To help ensure the success of outsourcing:To help ensure the success of outsourcing:– Choose an outsourcing vendor that is large and established. Choose an outsourcing vendor that is large and established. – Jobs that are proprietary or require tight security should not be outsourced. Jobs that are proprietary or require tight security should not be outsourced. – It is a good idea to start small and monitor constantly.It is a good idea to start small and monitor constantly.

Affirmative Action PlanningAffirmative Action PlanningAffirmative Action PlanningAffirmative Action Planning

• It is important to plan for various subgroups within a labor It is important to plan for various subgroups within a labor force. force.

• A comparison of the proportion of workers in protected A comparison of the proportion of workers in protected subgroups with the proportion that each subgroup represents is subgroups with the proportion that each subgroup represents is called a called a workforce utilization review.workforce utilization review.

• The steps required to execute an affirmative action plan are The steps required to execute an affirmative action plan are identical to the steps in the generic planning process discussed identical to the steps in the generic planning process discussed earlier.earlier.

• It is important to plan for various subgroups within a labor It is important to plan for various subgroups within a labor force. force.

• A comparison of the proportion of workers in protected A comparison of the proportion of workers in protected subgroups with the proportion that each subgroup represents is subgroups with the proportion that each subgroup represents is called a called a workforce utilization review.workforce utilization review.

• The steps required to execute an affirmative action plan are The steps required to execute an affirmative action plan are identical to the steps in the generic planning process discussed identical to the steps in the generic planning process discussed earlier.earlier.

The Human Resource The Human Resource Recruitment ProcessRecruitment Process

The Human Resource The Human Resource Recruitment ProcessRecruitment Process

Job Choice

Recruitment Influences

JobChoice

ApplicantCharacteristics

PersonnelPolicies

Recruiter Traitsand Behaviors

RecruitmentSources

Vacancy Characteristics

Recruitment SourcesRecruitment SourcesRecruitment SourcesRecruitment Sources

Internal Sources -Faster, cheaper,more certainty

External Sources - New ideas andapproaches

Direct Applicantsand Referrals - self selection, low cost

Newspaper Advertising -large volume, lowquality recruits

Electronic Recruiting - the Internet

Public & PrivateEmployment Agencies - headhunters, can beexpensive

Colleges and Universities - campus placement services

JOBSJOBS