Lecture 5

Human Resource Planning

1

Company Values

Environment

Competitive Challenges

Achieving Strategic Fit

Business Strategy

HR EXTERNALPhilosophy

FIT

INTERNAL FIT HR Practices

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HR Policy

HR System

Ensuring the Fit between HR and Organisation Strategy  External 

Focuses on the connection between the business objectives and the major initiatives in HR.

 Internal 

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Fit (or External Alignment)

Fit (or Internal Alignment)

Aligning HR practices with one another to establish a configuration that is mutually reinforcing.

Strategic Flexibility  Organizational

Capability

Capacity of the organization to act and change in pursuit of sustainable competitive advantage.  Coordination flexibility 

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Resource flexibility 

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The ability to rapidly reallocate resources to new or changing needs. Having human resources who can do many different things in different ways.

Human Resource Planning (HRP)  Is

the first component of HRM strategy  All other functional HR activities are derived from and flow out of the HRP process.  Has its basis in considerations of future HR requirements in light of present HR capabilities and capacities.  Is proactive in anticipating and preparing flexible responses to changing HR requirements.  Has both an internal and external focus. PGP 2007-09

HRP and Strategic Planning 

Strategic Analysis 

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Strategic Formulation 

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What human resources are needed and what are available? What is required and necessary in support of human resources?

Strategic Implementation 

How will the human resources be allocated? Human Resource Planning

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Strategic Planning

HR Planning Issues Staffing Questions: How do we manage staffing in times of recession or expansion?  What impact does technology change, mergers or relocation have on staffing issues?  Do we always have the right people in the right jobs at the right time?  How do we get our human resources: buy them or make them or both? 

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Major Objectives of HRP Preventing understaffing and overstaffing  Ensure the organisation has the right employees with the right skills at the right place at the right time  Ensure the organisation is responsive to changes in its environment  Provide direction and coherence to all HR activities and systems 

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Types of Planning Aggregate 

Anticipating the needs for groups of employees in specific, usually lower level jobs and the general skills employees will need to ensure sustained high performance.

Succession 

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Planning

Planning

Focuses on ensuring that key individual management positions in the organization remain filled with individuals who provide the best fit for these critical positions.

HRP and Environmental Scanning  Environmental Scanning  The

systematic monitoring of the major external forces influencing the organization.      

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Economic factors Competitive trends Technological changes Political and legislative issues Social concerns Demographic trends

Scanning the Internal Environment  Cultural 

Audits

Audits of the culture and quality of work life in an organization. How do employees spend their time?  How do they interact with each other?  Are employees empowered?  What is the predominant leadership style of managers? 

 Benchmarking 

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The process of comparing the organization’s processes and practices with those of other companies.

Human Resource Planning Model FORECASTING DEMAND

Considerations

Techniques

• Technology • Trend analysis • Financial resources • Managerial • Organizational growth estimates • Delphi technique • Mgmt. philosophy

Techniques • HR inventories • Markov analysis • Skill inventories • Replacement charts • Succession Planning

External Considerations • Wkforce changes • Mobility • Govt policies • Unemployment

FORECASTING SUPPLY PGP 2007-09

BALANCING SUPPLY AND DEMAND

(Shortage) Recruitment Full-time / Part-time

(Surplus) Reductions • Layoffs • Terminations • Demotions • Retirements

Forecasting Demand for Employees Quantitative Methods

Forecasting Demand Qualitative Methods

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Quantitative Approach: Trend Analysis  Forecasting labor demand based on an organizational index: Select a business factor, e.g. sales, that best predicts human resources needs.  Plot the business factor in relation to the number of employees to determine average labor productivity.  Compute labor productivity for the past five years.  Project human resources demand out to the target year(s). 

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Example of Trend Analysis of HR Demand BUSINESS FACTOR YEAR

(SALES IN ‘000)

÷

LABOR PRODTY

=

(SALES/EMPLOYEE)

HR DEMAND (NO. OF EMPLOYEES)

1999 Rs. 2,935

8.34

352

2000 Rs. 3,306

10.02

330

2001 Rs. 3,613

11.12

325

2002 Rs. 3,748

11.12

337

2003 Rs. 3,880

12.52

310

2004 Rs. 4,095

12.52

327

2005* Rs. 4,283

12.52

342

2006* Rs. 4,446

12.52

355

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*Projected figures

Qualitative Approaches to Demand Forecasting 

Management Forecasts 

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The opinions (judgments) of supervisors, department managers, experts, or others knowledgeable about the organization’s future employment needs.

Delphi Technique 

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An attempt to decrease the subjectivity of forecasts by soliciting and summarizing the judgments of a preselected group of individuals. The final forecast represents a composite group judgment.

Forecasting Supply of Employees: Internal Labor Supply  Staffing

Tables  Markov Analysis  Skill Inventories  Replacement Charts  Succession Planning

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Forecasting Internal Labor Supply  Staffing 

Graphic representations of all organizational jobs, along with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements.

 Markov 

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Tables

Analysis

A method for tracking the pattern of employee movements through various jobs.

Hypothetical Markov Analysis for a Retail Company

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Internal Supply Forecasting Tools  Skill 

Inventories

Files of personnel education, experience, interests, skills, etc., that allow managers to quickly match job openings with employee backgrounds.

 Replacement 

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Charts

Listings of current jobholders and persons who are potential replacements if an opening occurs.

An Executive Replacement Chart

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Forecasting Supply of Employees: External Labor Supply  Factors

Supply:

Influencing the External Labor

Demographic changes in the population  National and regional economics  Education level of the workforce  Demand for specific employee skills  Population mobility  Governmental policies 

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Sources of Information About External Labor Markets  Department

of Labor publications  State and local planning and development agencies  Chambers of Commerce  Industry and trade group publications  State and local employment agencies

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HRP Considerations Balancing supply and demand

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Elements of The HR Plan Acquisition of personnel  Effective Utilization 

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Development and Improvement  

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redeployment methods improvement training to prevent obsolescence

broad-based training and development performance management systems

Retention    

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proper remuneration long-term career planning healthy employee relations good working environment

Requisites for Successful HRP 

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HRP must be seen as equally vital as business planning Top-management support Periodic review and revision of the forecasting techniques and the forecasts Without long range planning concentration becomes focussed on short-term needs resulting in “crisis management” reactions An excellent and up-to-date HRIS Active involvement of line managers and coordination between line mgrs and HR function

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