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Human Resources Planning | 5-1

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Dessler, Chhinzer, ColeHuman Resources

Management in CanadaCanadian Twelfth Edition

Chapter 5: Human Resources Planning

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Human Resources Planning | 5-2

Learning Outcomes• DEFINE human resources planning (HRP) and

DISCUSS its strategic importance.

• DESCRIBE four quantitative and two qualitative techniques used to forecast human resources demand.

• DISCUSS briefly the four stages used to forecast internal human resources supply and three types of market conditions assessed when forecasting external human resources supply.

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Human Resources Planning | 5-3

Learning Outcomes

• DESCRIBE the ways in which a surplus of human resources can be handled.

• EXPLAIN how organizations deal with a shortage of human resources.

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Human Resources Planning | 5-4

Human Resources Planning (HRP)

“The process of forecasting future human resources requirements to ensure that the organization will have the required number of employees with the necessary skills to meet its strategic objectives.”

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Human Resources Planning | 5-5

Strategic Importance of HRPHelps organization:• meet strategic goals and objectives• achieve economies in hiring new workers• make major market labour demands

successfully• anticipate and avoid shortages and

surpluses of human resources• control or reduce labour costs

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Human Resources Planning | 5-6

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Market Labour ShortagesClick icon to add picture

continued

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Human Resources Planning | 5-7

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Market Labour ShortagesClick icon to add picture

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Human Resources Planning | 5-8

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Steps in the HRP ProcessStep 3: Planning and Implementing HR Programs to

Balance Supply and Demand

Step 1: Forecasting the Availability of Candidates (Supply)

Step 2: Forecasting Future HR Needs (Demand)

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Human Resources Planning | 5-9

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Human Resources Planning Model

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Human Resources Planning | 5-10

Environmental ScanningExternal environmental factors monitored include:• economic conditions • market and competitive trends• new or revised laws relating to HR• social concerns (health care, childcare, educational

priorities)• technological changes• demographic trends

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Human Resources Planning | 5-11

Forecasting Supply of Internal Candidates

• skills inventories and management inventories

• replacement charts and replacement summaries

• succession planning• Markov Analysis

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Human Resources Planning | 5-12

Skills Inventories Management Inventories

Skills inventories• summary of current employees’ education,

experience, interests, and skills • used to identify eligibility for

transfer/promotion Management inventories• summary of management employees

qualifications, skills, interests, managerial responsibilities

• used to identify eligibility for transfer/promotion

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Human Resources Planning | 5-13

Replacement ChartsReplacement Summaries

Replacement charts• depiction of who will replace whom in the

event of a job opening• internal candidates age, present

performance rating, and promotability status are listed

Replacement summaries• lists of likely replacements for each position• indicates relative strengths/weaknesses,

current position, performance, promotability, age, and experience

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Human Resources Planning | 5-14

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Sample Management Replacement Chart

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Human Resources Planning | 5-15

Succession Planning• ensuring supply of successors for key jobs so

that careers can be effectively planned and managed

• includes:• analysis of demand for managers and professionals• audit and projection of likely future supply• planning individual career paths, career counseling• accelerated promotions• planned strategic recruitment

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Human Resources Planning | 5-16

Markov Analysis

• a method of forecasting internal labour supply that involves tracking the pattern of employee movements through various jobs and developing a transitional probability matrix

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Human Resources Planning | 5-17

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Markov Analysis

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Human Resources Planning | 5-18

Forecasting Supply of External Candidates

Market conditions assessed:• general economic conditions

• interest rates, wage rates, inflation, unemployment rates

• labour market conditions• demographics: education levels, age,

gender, marital status• occupational market conditions

• relevant occupations (as applicable): e.g. engineers, skilled labour, accountants, etc.

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Human Resources Planning | 5-19

Forecasting HR Needs (Demand) Quantitative Approaches

Trend analysis• predict future needs based on past employment

levelsRatio analysis• ratio of business activity and number of employees

needed, e.g. sales revenue per salespersonScatter plot• used to determine whether two factors (business

activity and staffing levels) are relatedRegression analysis• examines the statistical relationship between

business activity and employees

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Human Resources Planning | 5-20

Forecasting HR Needs (Demand) Qualitative Approaches

Nominal group technique• involves a group of experts meeting face to face• steps include independent idea generation,

clarification and open discussion, and private assessment

Delphi technique• judgmental forecasting method involving outside

experts as well as organizational employees• ideas are exchanged without face-to-face interaction

and feedback is used to fine-tune until consensus is reached

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Human Resources Planning | 5-21

Summarizing Human Resources Requirements

Staffing table• a pictorial representation of all jobs within

the organization, along with the number of current incumbents and future employment requirements (monthly or yearly) for each

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Human Resources Planning | 5-22

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Staffing Table

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Human Resources Planning | 5-23

Balancing Supply and Demand

Labour surplus• the internal supply of employees exceeds

the organization’s forecasted demand

Labour shortage• the internal supply of human resources

cannot meet the organization’s needs

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Human Resources Planning | 5-24

Responding to a Labour Surplus

• hiring freeze/attrition• early retirement buyout programs• job sharing• work sharing• reduced workweek• layoff• termination • leave of absence

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Human Resources Planning | 5-25

Considerations:• survivor syndrome• supplemental unemployment benefits• severance package

• pay• benefits• golden parachute• outplacement assistance

Responding to a Labour Surplus

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Human Resources Planning | 5-26

Responding to a Labour Shortage

Internal solutions:• transfer• promotion• employee retention

External solutions:• recruiting