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McGraw-Hill/Irwin

Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

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Chapter 5

Acquiring Human Resources

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HR Planning
Reacting quickly to opportunities Business success depends on Rapid access to accurate information Human resources Assesses the future supply of, and demand for, human resources

Provides mechanisms to eliminate gaps between supply and demand

Requires periodic readjustment as labor market conditions change

Human resource planning

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HR Planning
Effective use of human resources is not a significant organizational goal

Employment planning is likely informal and slipshod

Top management values stable growth HR planning is less important that it would be under rapid expansion or diversification

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HR Planning
U.S. Dept. of Labor Projections for 2006 through 2016 Asians and Hispanics will enter the labor force at 29.9% White, non-Hispanics will increase by 1.4% Workers 55 and older will increase by 46.7%

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HR Planning Factors

Types of people employed and the tasks they will perform

Availability of skilled and unskilled labor

Hiring the disabled

Hiring of veterans Age of mandatory retirement

Equal opportunity

Executive succession
HR related government policies and regulations

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The Human Resource Planning Process

Strategic Planning Technological forecasts Economic forecasts Market forecasts Organizational planning Investment planning Annual operating plans Human Resource Demand Human Resource Supply

Annual employment requirements Numbers Skills Occupation categories

Existing employment inventory After application of expected loss and attrition rates

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The HR Planning Process

Situation analysis Four Stages of HR Planning Forecasting demand

Develop action plans

Analysis of HR supply

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Situation Analysis/Environmental Scanning

The strategic plan must adapt to environmental circumstances HRM is a mechanism organizations can use during the adaptation process

Without a plan to support recruitment and selection, you cant be competitive

Success today depends on being a global scanner

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Forecasting Demand for Employees

Forecasting Involves Estimating How many employees

What kinds of employees

Can help with forecasting

Quantitative Tools Human judgment needed

Demand for Workers Tied to Org. Strategy Growth Reengineering Reorganization

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Forecasting Demand for Employees

Forecasting Techniques

Expert estimates (top down) Trend projections (top down)

Success depends on accurate and freely shared information

Statistical modeling (top down) Unit-demand forecasting (bottom up)

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Expert Estimate

Subjective assessments of economic & labor force indicators

Experience Experts base demand estimates on

Intuition

Guesses

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Expert Estimate

Delphi Technique Elicits estimates from a number of experts in an iterative manner Estimates revised by each individual based on knowledge of others estimates Developed by the Rand Corporation

Nominal Group Technique Individual estimates followed by group brainstorming

Goal is to generate a group decision that is preferred over any individual decision

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Trend Projection

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

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Modeling & Multiple-Predictive Techniques

Top-down approach
Uses the most sophisticated forecasting & modeling

Trend projections relate a single factor to employment

Environmental factors could be gross national product or discretionary income

The organization may be mathematically modeled so simulations can be run

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Modeling & Multiple-Predictive Techniques

Markov Chain Analysis

Developing a matrix to show the probability of an employee moving from one position to another or leaving the organization

Begins with an analysis of staffing levels from one period to another

Can identify the probability of lower employee retention

Does not suggest a solution to the problem

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Regression Analysis
A mathematical procedure that 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

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Unit Demand Forecasting

Unit managers analyze current and future needs person-by-person and job-by-job

Headquarters totals the unit forecasts

Sum is the corporate employment forecast
If both bottom-up and top-down approaches are used, the forecasts may conflict

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Analyzing Current Supply of Employees

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 employees

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The Skills Inventory

Skills Inventory Management Inventory

Identify the skills, abilities, experiences, and training employees currently have Useful for career planning, management development, and related activities In its simplest form, a list of names, characteristics, skills on index cards Others involve expensive and complex computer databases

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Contents of the Skills Inventory

The only data available to the organization for later use is what is designed into the system
Evaluations
Education

Publications
Licenses Hobbies Qualifications

Date of birth

Name Knowledge Job title Skills

Location
Patents Date hired

Languages
Salary

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Contents of the Skills Inventory

Employees career goals Geographical preferences Intended retirement date

Often omitted, but increasingly important

Categories within a skills inventory

The employees past

Present skills Data that focus on the future

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Maintaining the Skills Inventory

Principal methods for gathering data the interview and the questionnaire Questionnaire is faster and cheaper, but can be inaccurate Trained interviewer may be able to complete them faster and more accurately Files must be updated The more often changes are made and data used, the more often updates should be performed

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Maintaining the Skills Inventory

Manual System versus Computer Database

How much does the computer system cost?

How often will the data be used?

Competitive analysis over time needed?

Skills inventories are useful only if used by management to make significant decisions

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Abuses of the System

Making nice to know requests

Searches that are not backed by bona fide, budgeted requisitions Specifying so many characteristics for a desired employee that no one fits

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Action Decisions in HR Planning

After worker supply and demand has been analyzed, the two forecasts must be compared If demand is higher than the supply Fill with present employees who will 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

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Action Decisions in HR Planning

Organizations are using more
1. Part-time workers 2. Subcontractors 3. Independent professionals

In response to
1. Intense global competition 2. Rapid technological change 3. Fears caused by recent workforce reductions

Over 5 million U.S. citizens are contingent workers

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Action Decisions in HR Planning

Possible

solutions to employee surplus Attrition Early retirements Demotions Layoffs Terminations

Employees

who are considered surplus are seldom responsible for the conditions leading to the surplus

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Action Decisions in HR Planning

Most 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 age 50 They tend to be healthier than younger workers They have fewer work-related injuries They are less likely to change jobs They take critical skills and experience with them

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Action Decisions in HR Planning

Over half the workforce will be protected by the Age Discrimination in Employment Act Organizations must be careful when designing, encouraging, and implementing early retirement programs

By 2010, the median age of U.S. works will be 40.6 years

Dont make promises that cant be kept

Once promised, it may be illegal to change them

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Action Decisions in HR Planning

Companies too often and quickly turn to layoffs

When layoffs become a necessity

About one-third lay off too many workers

They fail to consider the consequences

Poorly designed layoffs can kill morale

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Human Resource Information Systems

Information

is key to successful HR planning A human resource information system (HRIS) is an integrated way to acquire, store, analyze, and control information flow

highly developed HRIS can increase the efficiency and response times of Tracking applicants Skills inventory Career planning Employee service programs

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Human Resource Information Systems

Computer

technology can integrate multiple HR programs into a single system Enroll in benefits programs Process employee transactions Use learning modules

An

HRIS for use by upper-level executives is called an executive information system Computerization allows organizations to broaden their view of succession planning

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Human Resource Information Systems

Succession planning for executive positions is more important than ever Many companies realize the critical need for a comprehensive retention plan

Many aging executives More early retirements Delaying retirement Consulting positions Part-time assignments

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Employee Privacy and Identity Theft

HRIS makes it easier to invade employee privacy

Danger lies both within and outside the organization The friendlier the system, the easier unauthorized access is

Identity theft is using anothers name, address, social security number, or other information

Without the persons knowledge With intent to commit fraud or other crimes

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Employee Privacy, Identity Theft, & HRIS

Identity

theft is becoming a national problem Complaints rose to over 255,000 in 2005 Identify theft is a felony under the Identity Theft and Assumption Deterrence Act of 1998 The problem will continue to escalate

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Employee Privacy, Identity Theft, & HRIS

Costs of identify theft to the employee

$800 in out-of-pocket expenses to restore credit

175 hours researching & tracking the crime

23 months correcting credit reports

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HRIS Privacy Safeguards

Determine the best way to collect data
Limit the information collected to what is relevant Tell employees what information is kept on file and how it is used Let employees inspect and correct their information Keep sensitive information separate

Limit internal use of personal information

Only disclose personal information to outsiders with employee consent
The greatest threat to privacy is when employees dont retain the right to authorize the release of information

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Employee Privacy, Identity Theft, & HRIS

Organizations should carefully evaluate their policies regarding access to HRIS data to determine How much information, legally and ethically, should be disclosed How much control employees should have over the release of personal information No federal legislation guarantees employees the right to inspect and amend data in an HRIS