Human Resource Management Week 5

CHAPTER 5 | HUMAN RESOURCE

PLANNING
Human Resource Planning (HRP) – Process of determining the human resource needs
of an organization and ensuring that the organization has the right number of qualified
people in the right jobs at the right time.
Poor human resource planning can also cause substantial problems in the short term.
The need for HRP is due to the significant lead time that normally exists between the
recognition of the need to fill a job and securing a qualified person to fill that need.
Effective HRP can also help reduce turnover by keeping employees apprised of their
career opportunities within the company.

1. HOW HRP RELATES TO ORGANIZATIONAL PLANNING

In essence, the success of HRP depends largely on how closely the human resource
department can integrate effective people planning with the organization’s business
planning process. Strategic business planning seeks to identify various factors critical to
the success of the organization. To accomplish this, the planning process should provide
i. A clear statement of the organization’s mission.
ii. A commitment from staff members to the mission.
iii. An explicit statement of assumptions.
iv. A plan of action in light of available or acquirable resources, including trained
and talented people.
In essence, the human resource demands and needs are derived from the strategic and
operating planning and then compared with human resource availability. A common
error occurs when human resource planners focus on the short-term replacement
needs and fail to coordinate their plans with the strategic and long-term plans of the
organization.

A. Strategy-Linked HRP
All managers, especially line managers, should view human resource planning as one of
their most important job responsibilities. One of the best ways to encourage genuine
cooperation between human resource managers and line managers is to use what is
 called strategy-linked HRP. Strategy-linked HRP is based on a close working
relationship between human resource staff and line managers.
Linking HRP to the Business Strategy:
v. Be familiar with the business strategy.
vi. Ensure that all traditional human resource programs are satisfying the needs of
senior and functional management.
vii. Identify the human resource implications of the organization’s business
strategy.
viii. Identify those human resource issues that may affect business objectives, and
notify the appropriate functional managers.
ix. Convert business objectives into human resource objectives that can provide the
foundation for a strategic human resource plan.
x. Review the strategic planning process to identify new opportunities to involve
human resource personnel.

2. TIME FRAME OF HRP

A. Short Range (0-2 Years)
i. Demand: Authorized employment including growth, changes, and turnover
ii. Supply: Employee census less expected losses plus expected promotions from
subordinate groups.
iii. Net needs: Numbers and kinds of employees needed.
B. Intermediate Range (2-5 Years)
i. Demand: Operating needs from budgets and plans.
ii. Supply: Human resource vacancies expected from individual promotability data
derived from development plans.
iii. Net needs: Numbers, kinds, dates, and levels of needs.
C. Long Range (Beyond 5 Years)
i. Demand: In some organizations, the same as “intermediate”; in others, an
increased awareness of changes in environment and technology—essentially
judgmental.
ii. Supply: Management expectations of changing characteristics of employees and
future available human resources.
iii. Net needs: Management expectations of future conditions affecting immediate
decisions.

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3. HRP: AN EVOLVING PROCESS
D. Quinn Mills has identified five stages, or benchmarks, along this continuum.
i. Stage 1 companies have no long-term business plans, and they do little or no
human resource planning.
ii. Stage 2 have a long-term business plan, but tend to be skeptical of HRP. At the
same time, such companies do realize to some degree that human resource
planning is important.
iii. Stage 3 companies do engage in some aspects of human resource planning, but
for the most part these efforts are not integrated into the long-range business
plan.
iv. Stage 4 companies do a good deal of human resource planning, and their top
managers are enthusiastic about the process. These companies have at least one
human resource component integrated into the long-range plan.

4. STEPS IN THE HRP PROCESS

A. Determining Organizational Objectives
Specific human resource requirements in terms of numbers and characteristics of
employees should be derived from the objectives of the entire organization.
Organizational objectives - Statements of expected results that are designed to give
the organization and its members direction and purpose. Long-term objectives and
strategies are formulated based on the organization’s mission statement. Short-term
performance objectives generally have a time schedule and are expressed
quantitatively.
Cascade approach to setting objectives - Objective-setting process designed to
involve all levels of management in the organizational planning process.

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The idea is to involve all levels of management in the planning process. This also
ensures that the objectives are communicated and coordinated through all levels of the
organization. When properly used, the cascade approach involves both operating
managers and human resource personnel in the overall planning process.

i. Environmental Factors Affecting Human Resource Need

Many factors in the organization’s external environment may have an impact on the
organization’s objectives and the human resources needed to realize those objectives.
Some of these factors include government influences, general economic conditions, the
competition, and changes in the workforce. Changes in workforce refer not only to the
workforce composition but also to its work habits.

B. Determining the Skills and Expertise Required (Demand)

The key here is not to look at the skills and abilities of present employees but to
determine the skills and abilities required to meet the objectives. A good starting point
is to review current job descriptions. The final step in this phase is to translate the
needed skills and abilities into types and numbers of employees.
i. Method of Forecasting Human Resource Needs
Methods for forecasting human resource needs can be either judgmentally or
mathematically based.
Judgmental methods:
1. Managerial Estimates - Judgmental method of forecasting that calls on
managers to make estimates of future staffing needs.
2. Delphi techniques - Judgmental method of forecasting that uses a panel of
experts to make initially independent estimates of future demand. An
intermediary then presents each expert’s forecast and assumptions to the
other members of the panel. Each expert is then allowed to revise his or
her forecast as desired. This process continues until some consensus or
composite emerges.
3. Scenario analysis - Using workforce environmental scanning data to
develop alternative workforce scenarios.

Mathematically based methods:

1. Time-series analysis – Past staffing levels (instead of workload
indicators) are used to project future human resource requirements. Past
staffing levels are examined to isolate seasonal and cyclical variations,
long-term trends, and random movements. Long-term trends are then
extrapolated or projected using a moving average, exponential
smoothing, or regression technique.

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 2. Personnel ratios – Past personnel data are examined to determine
historical relationships among the number of employees in various jobs or
job categories. Regression analysis or productivity ratios are then used to
project either total or key group human resource requirements, and
personnel ratios are used to allocate total requirements to various job
categories or to estimate requirements for non-key groups.
3. Productivity ratios – Historical data are used to examine past levels of a
productivity index, P=workload/number of people. Where constant, or
systematic, relationships are found, human resource requirements can be
computed by dividing predicted workloads by P.
4. Regression – Past levels of various workload indicators, such as sales,
production levels, analysis and value added, are examined for statistical
relationships with staff ng levels. Where sufficiently strong relationships
are found, a regression (or multiple regression) model is derived.
Forecasted levels of the related indicator(s) are entered into the resulting
model and used to calculate the associated level of human resource
requirements.
Historically, judgmental forecasts have been used more frequently than mathematically
based forecasts. However, with the increasing proliferation of user-friendly software
and computers, mathematically based methods will probably be used more frequently.
In addition to the previously described judgmentally and mathematically based
forecasting techniques, some organizations help forecast human resource needs by
benchmarking what other successful organizations are doing.
Benchmarking – Thoroughly examining internal practices and procedures and
measuring them against the ways other successful organizations operate.

B. Determining Additional (Net) Human Resource Requirements

Once a manager has determined the types and numbers of employees required, he or
she analyzes these estimates in light of the current and anticipated human resources of
the organization.
i. Skills Inventory
Consolidated list of biographical and other information on all employees in the
organization. In most situations, seven broad categories of information should be
included in a skills inventory:
4. Personal data: age, sex, marital status.
5. Skills: education, job experience, training.
6. Special qualifications: membership in professional groups, special
achievements.

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 7. Salary and job history: present and past salary, dates of raises, various
jobs held.
8. Company data: benefit plan data, retirement information, seniority.
9. Capacity of individual: test scores on psychological and other tests, health
information.
10. Special preferences of the individual: geographic location, type of job
The primary advantage of a skills inventory is that it furnishes a means to quickly and
accurately evaluate the skills available within the organization

ii. Management Inventory

Specialized, expanded form of skills inventory for an organization’s current
management team; in addition to basic types of information, it usually includes a brief
assessment of past performance and potential for advancement.

iii. Anticipating Changes in Personnel

Changes such as retirements can be forecasted with reasonable accuracy from
information in the skills inventory. Other changes, such as transfers and promotions,
can be estimated by taking into account such factors as the ages of individuals in specific
jobs and the requirements of the organization. Individuals with potential for promotion
can and should be identified. Planned training and development experiences should also
be considered when evaluating anticipated changes.

C. Developing Action Plans

Once the net human resource requirements have been determined, managers must
develop action plans for achieving the desired results.
i. Adding Human Resources
Contingent Workers and Outsourcing – have the advantage of allowing the organization
to easily accommodate swings in demand for human resources. Other potential
advantages of using contingent workers and, specifically, temporary agencies, is that the
agencies often provide both testing and training for employees before they are hired. A
final potential advantage of contingent workers is that, because of their varied
experiences, they can bring a new perspective to the organization.

ii. Reducing Human Resources

However, if the organization cannot afford the luxury of natural attrition, it can reduce
human resource costs either by cutting the total number of employees or by making
other adjustments that do not result in employees leaving the organization.

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 1. Downsizing – There are four basic ways to downsize: (1) layoffs, (2)
terminations, (3) early retirement inducements, and (4) voluntary
resignation inducements.
2. Other way to reducing human resource cost:
a. Reclassification – Reclassification involves demoting an employee,
downgrading job responsibilities, or a combination of the two
b. Transfer – A transfer involves moving the employee to another part of
the organization.
c. Work sharing – Work sharing seeks to limit layoffs and terminations
through the proportional reduction of hours among employees.
d. Job sharing – job sharing occurs when two or more part-time
individuals perform a job that would normally be held by one full-time
person.

D. Synthesizing the HRP Process

As the figure shows, organizational objectives are influenced by many historical and
environmental factors. Once the organizational objectives have been established, they
are translated into divisional and departmental objectives. Similarly, HR personnel
determine the additional (net) human resource requirements based on the information
submitted by the various organizational units in light of available resources and
anticipated changes.

5. SUCCESSION PLANNING
Technique that identifies specific people to fill future openings in key positions
throughout the organization. The goal of replacement planning is to identify a “backup”
to fill a job when it becomes vacant. The focus is on past performance and
demonstrating the skills necessary to perform the job in question. The emphasis of
succession planning is on developing people rather than naming replacements.
One problem with many succession plans, especially informal plans and those for large
organizations, is the “crowned prince” syndrome. This means management considers
for advancement only those who have managed to become visible to senior
management.
A second problem with succession planning in many organizations is that it is focused
on just the senior-most levels in the organizations.
As organizations evolve from replacement planning to succession planning, there are
four important ingredients for success:
i. Define what competencies (knowledge, skills, abilities, and personal
characteristics) people must possess to move the organization forward both
now and in the foreseeable future.
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 ii. Focus on critical positions, not just the very top.
iii. Evaluate the current talent pools; distinguish between current performance and
future potential.
iv. Identify individual development needs.
Taking a proactive approach to succession planning that includes the above four
ingredients will help ensure an organization’s future success.

6. HUMAN RESOURCE INFORMATION SYSTEMS (HRIS)

A database system that contains all relevant human resource information and provides
facilities for maintaining and accessing these data.
A major advantage of an HRIS is its potential for producing more accurate and more
timely information for operating, controlling, and planning purposes than manual or
payroll-based systems can produce.
Historically the major disadvantage of an HRIS was its financial cost and the labor
requirements for implementing the system.
The following areas represent some specific potential applications for an HRIS:
i. Clerical application – Automating certain routine clerical tasks avoids the use of
additional staff, overtime, and temporary help.
ii. Applicant search expenditures – An HRIS can easily store a summary of
applicant qualifications and subsequently perform searches for candidates for
certain positions.
iii. Risk management –Today it is critical in many industries that people in certain
jobs have licenses, safety training, and even physical examinations.
iv. Training management – An HRIS can compare job training requirements with
the actual training experiences of individual jobholders.
v. Training experiences – An HRIS can provide organization wide training
development and delivery, especially for jobs using computers.
vi. Financial planning –By using an HRIS, human resource managers can stimulate
the financial impact of salary and benefit changes.
vii. Turnover analysis – Turnover can be closely monitored with an HRIS.
viii. Succession planning - An HRIS can identify a logical progression path and the
steps required for advancement.
ix. Flexible-benefits administration – An HRIS can be used to administer a flexible-
benefits program.
x. Compliance with government regulations – An HRIS can be used to keep up with
current EEO and related government-required regulations.
xi. Attendance reporting and analysis – The documentation of sick days, vacation
time, personal time, and tardiness can be a significant expense if done manually.

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xii. Accident reporting and prevention – An HRIS can be used to record accident
details and subsequently provide analyses that can help prevent future
accidents.
xiii. Strategic planning – Today’s client/server systems are transforming human
resource people from simple administrators to strategic planners who can
influence CEO decisions.
xiv. Human resource planning – Human resource planning can be greatly assisted by
an information system that is capable of making projections based on the
current workforce.
A major indirect benefit of an HRIS is that it helps enable HR managers become more
strategic.

A. HR and the Internet

The real value of the Internet to HR professionals is the information that it makes
available. Through the Internet, managers can access massive amounts of information.

B. HR Intranets and Portals

An intranet is a private computer network that uses Internet products and technologies
to provide multimedia applications within organizations. A Web portal is similar to an
intranet except that portals enable other specific groups such as business partners,
customers, or vendors to access an organization’s intranet.

C. HR and Web 2.0

Web 2.0 technologies use Web-based communities and hosted services such as social
networking sites, blogs, and wikis. An emerging use for HR of Web 2.0 is on the
recruitment front by blogging about the organization as a great place to work.

D. Software as a Service
Software as a service (SaaS) or “on-demand software” is a relatively new approach to
software delivery that involves users accessing standard business applications over the
Internet. Major benefits of software as a service are that no large capital expenditure is
required to buy and install equipment and that there are fewer hassles related to
managing the systems.