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
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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 necessary
HR planning is critical for implementation of the

organizations strategic plan

HR 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
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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

interact

The 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 competitive

The problems associated with changing

environments are greater today than ever before

Success now depends on being a global scanner
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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
Reengineering
Reorganization

Forecasting Demand for

Employees
Techniques to help reduce the

uncertainty inherent in HR planning:

Expert estimates
Trend projections
Statistical modeling
Unit-demand forecasting

Key to effective planning is accurately

and freely sharing information

The Expert Estimate

One or more experts provide the

organization with demand estimates

based on:
Experience
Guesses
Intuition
Subjective assessments of

available economic and

labor force indicators
This is the least mathematically sophisticated approach
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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

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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

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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

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Unit Demand Forecasting

This is a bottom-up approach
Unit managers analyze current and

future needs person-by-person

and job-by-job
Headquarters totals the unit forecasts
The 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
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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 employees
The smaller and more centralized the

organization, the easier it is to conduct a skills

inventory
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The Skills Inventory

Both a skills inventory and a management

inventory:
Identify the skills, abilities, experiences, and training

employees currently have

Are useful for career planning, management
development, and related activities
In its simplest form, a skills inventory is a list

of:
Names
Characteristics
Skills
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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
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Contents of the Skills Inventory

The only data available to the

organization for later use is what was

Name
Employee number
designed into the system
Present location

Date of birth

Date of employment

Job classification

Skills, knowledge, education Foreign language skill

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Professional qualifications

Publications

Licenses and patents

Hobbies

Supervisory evaluations

Salary range

Contents of the Skills Inventory

Often omitted, but increasingly important, are:
Employees stated career goals
Geographical preferences
Intended retirement date

The main categories within a skills inventory:

Data summarizing the employees past
Data summarizing present skills
Data that focus on the future

Today, many skills inventories are more complex

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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

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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

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Action Decisions in HR Planning

After the supply of and demand for

workers has been analyzed, the two

forecasts must be compared
Whenever there is a gap between the two

estimates, a course of action must be chosen

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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
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Action Decisions in HR Planning

Organizations are using more:
Part-time workers
Subcontractors
Independent 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
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Action Decisions in HR Planning

Possible solutions to an 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 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
They
They
They

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tend to be healthier than younger workers

have fewer work-related injuries
are less likely to change jobs
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 kept
Once promised, it may be illegal to change them

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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

layoffs
They fail to consider the consequences
About one-third lay off too many workers
Poorly designed workforce reductions can kill
morale

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Human Resource Information

Systems
Information is the key to successful HR

planning

A human resource information system (HRIS) is an

integrated way to acquire, store, analyze,

and control information flow through an organization

A 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 makes it possible to

integrate multiple HR needs into a single

system:
Enrolling in benefits programs
Processing employee transactions (pay increases)
Using learning modules

An 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

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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 plan
This plan may include consulting and part-time

assignments
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