*Human Resource Planning

Introduction*Success in business is dependent on: Reacting quickly to opportunities Rapid access to accurate information Human resource planning (HR planning): How organizations assess the future supply of, and demand for, human resources Provides mechanisms to eliminate gaps that may exist between supply and demand Requires readjustment as labor market conditions change

Introduction*If effective utilization of human resources is not a significant goal for the organization:Employment planning is likely to be informal and slipshod If top management values stable growth:HR planning will be less important than if the goals include rapid expansion or diversification

Introduction*The types of people employed and the tasks they perform determine the kind of planning necessaryHR planning is critical for implementation of the organizations strategic planHR policies have direct effects on profitability Strategic human resource management (SHRM) means acknowledging that HR policies/practices have critical links to an organizations overall strategy

The HR Planning Process *The four phases or stages of HR planning: Situation analysis or environmental scanning Forecasting demand Analysis of the supply Development of action plans

Situation Analysis & Environmental Scanning *The first stage of HR planning is the point at which HRM and strategic planning first interactThe strategic plan must adapt to environmental circumstances HRM is one of the primary mechanisms an organization can use during the adaptation process Without a plan to support recruitment and selection, it is impossible to stay competitiveThe problems associated with changing environments are greater today than ever beforeSuccess now depends on being a global scanner

Forecasting Demand for Employees*This phase of the process involves estimating: How many employees will be needed What kinds of employees will be needed Quantitative tools can help with forecasting, but it involves a great deal of human judgment The demand for employees is closely tied to the strategic direction that the organization has chosen Growth ReengineeringReorganization

Forecasting Demand for Employees*Techniques to help reduce the uncertainty inherent in HR planning:Expert estimates Trend projectionsStatistical modelingUnit-demand forecastingKey to effective planning is accurately and freely sharing information

The Expert Estimate*One or more experts provide the organization with demand estimates based on:ExperienceGuessesIntuitionSubjective assessments of available economic and labor force indicatorsThis is the least mathematically sophisticated approach

Trend Projection*This top-down technique:Develops a forecast based on a past relationship between a factor related to employment and employment itself Example: Sales levels are related to employment needs

Modeling & Multiple-Predictive Techniques*This top-down approach uses the most sophisticated forecasting and modeling techniques Trend projections relate a single factor, such as sales, to employment Environmental factors could be gross national product or discretionary income Or, the organization may be mathematically modeled so that simulations can be run

Modeling & Multiple-Predictive Techniques*Regression analysis is a mathematical procedure:It predicts the dependent variable on the basis of factors (independent variables)With simple linear regression, one dependent and one independent variable are studied With multiple regression, more than one independent variable is studied

Unit Demand Forecasting*This is a bottom-up approachUnit managers analyze current and future needs person-by-person and job-by-job Headquarters totals the unit forecastsThe sum is the corporate employment forecast If both bottom-up and top-down approaches are used, the forecasts may conflict This can be resolved by averaging the variances The Delphi technique or NGT could also be used

Analyzing the Current Supply of Employees*This phase of HR planning should answer the question:How many and what kinds of employees do I currently have, in terms of the skills and training necessary for the future? This involves more than simply counting current employeesThe smaller and more centralized the organization, the easier it is to conduct a skills inventory

The Skills Inventory*Both a skills inventory and a management inventory:Identify the skills, abilities, experiences, and training employees currently haveAre useful for career planning, management development, and related activities In its simplest form, a skills inventory is a list of:NamesCharacteristicsSkills

The Skills Inventory*Skills inventories vary greatly in their sophistication Some are as simple as a file drawer of index cards Others involve expensive and complex computer databases

Contents of the Skills Inventory*The only data available to the organization for later use is what was designed into the system

Contents of the Skills Inventory*Often omitted, but increasingly important, are:Employees stated career goalsGeographical preferencesIntended retirement dateThe main categories within a skills inventory:Data summarizing the employees past Data summarizing present skills Data that focus on the futureToday, many skills inventories are more complex

Maintaining the Skills Inventory*The two principal methods for gathering data: the interview and the questionnaire The questionnaire is faster and cheaper, but can be inaccurate Some contend that a trained interviewer can complete questionnaires more quickly and accurately Plans for keeping files updated must be made The more often changes are made and the data is used, the more often updates should be performed

Maintaining the Skills Inventory*Should data be stored in a manual system or on a computer? How much does the computer system cost?How frequently the data will be used?A computer allows comparative analysis over time Skills inventories are useful only if management uses the data to make significant decisions Before accessing the data, managers must be trained to avoid abuse of the system

Action Decisions in HR Planning*After the supply of and demand for workers has been analyzed, the two forecasts must be comparedWhenever there is a gap between the two estimates, a course of action must be chosen

Action Decisions in HR Planning*If the supply of workers is less than the demand: It can be filled with present employees who are willing to work overtime If there is a shortage of skilled employees: Train and/or promote present employees Recruit less-skilled employees Recall employees who were previously laid off

Action Decisions in HR Planning*Organizations are using more:Part-time workersSubcontractorsIndependent professionals This is in response to: Intense global competition Rapid technological change Fears caused by recent workforce reductions Over 5 million U.S. citizens are contingent workers

Action Decisions in HR Planning*Possible solutions to an employee surplus:AttritionEarly retirementsDemotionsLayoffsTerminationsEmployees who are considered surplus are seldom responsible for the conditions leading to the surplus

Action Decisions in HR Planning*Most organizations avoid layoffs by using attrition, early retirement, creation of work, and so on Attrition can be accelerated by encouraging employees to leave early Drawbacks to losing workers over the age of 50: They tend to be healthier than younger workersThey have fewer work-related injuriesThey are less likely to change jobsThey take critical skills and experience with them

Action Decisions in HR Planning*By 2010, the median age of the U.S. workforce will be 40.6 years Over half the workforce will be protected by the Age Discrimination in Employment Act Promises should not be made that cant be keptOnce promised, it may be illegal to change them

Action Decisions in HR Planning*If voluntary reductions dont eliminate the gap between supply and demand, layoffs may be necessary Corporations too frequently and quickly turn to layoffsThey fail to consider the consequences About one-third lay off too many workers Poorly designed workforce reductions can kill morale

Human Resource Information Systems*Information is the key to successful HR planningA human resource information system (HRIS) is an integrated way to acquire, store, analyze, and control information flow through an organizationA highly developed HRIS can increase the efficiency and response times of:Tracking applicantsSkills inventoryCareer planningEmployee service programs

Human Resource Information Systems*Computer technology makes it possible to integrate multiple HR needs into a single system:Enrolling in benefits programsProcessing employee transactions (pay increases)Using learning modulesAn HRIS developed for use by upper-level executives is called an executive information system (EISs)Computerized HRISs have allowed organizations to broaden their view of succession planning

Human Resource Information Systems*Factors that make succession planning for executive level positions more important than ever: Large numbers of aging executives Increasingly popular early retirement Fortune 500 companies anticipate 33 percent turnover among their executives over the next five years Many companies now realize the critical need for a comprehensive retention planThis plan may include consulting and part-time assignments

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