Human Resource Planning

HUMAN RESOURCE PLANNING
LEARNING OBJECTIVES Explain the relationship between strategic HRM planning and operational HR planning Appreciate the importance of HR planning Identify the key environmental influences on HR planning Understand the basic approaches to HR planning Describe the ways of forecasting HR requirements Understand the requirements for effective HR planning
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Human resource planning is better described as employment planning Based on HR forecasts, specific action can be taken to get the right numbers and types of people doing the right work at the right time (that is, planning the flow of people into, throughout the organization).
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Topic 2: HR Planning
Organisation strategy and human resource planning Organisation strategy
Retrenchment strategy Stability Strategy Maintain status quo Downsizing Business sale Shut down
Growth strategy Internally generated growth Acquisitions, mergers or joint ventures
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HR planning Determine number and types of jobs to be filled. Match human resource availability with job openings.
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Importance of HR Planning The focus of human resource planning is on labour demand (the number of people needed by the organization) and the labour supply (the number of qualified people available to the organization). HR planning involves the entry of people into the organization (acquisition), the development of people skills (development) and the exit of people from the organization (departure).
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Effective HR planning is critical to the organization's success because it matches the organization and its HR objectives with its people requirement.
Organizations with surplus employees will need to review their HR policies regarding permanent employment, outsourcing and retrenchments. Likewise, organizations with too many low-skilled employees and poorly qualified employees may face obstacles when introducing new technology, total quality management and other change initiatives.
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Effective HR planning ensures that the available talent is correctly allocated, labour costs are controlled, the employee headcount is appropriate, productivity is improved and talented employees are retained. The purpose of HR Planning To ensure that a predetermined number of persons with the appropriate knowledge, skills and abilities are available at a specified time in the future.
HR Planning
HR planning Determine number and type of jobs to be filled. Match human resource availability with job openings. Human resource demand Human resource supply
Human resource requirements: numbers skills qualifications occupation performance experience career goals
Human resource inventory: numbers skills qualifications occupation performance experience career goals
Variances
Nil
No action
If surplus Stop recruiting Reduce casual and part-time employment Start early retirements Start retirements Start retrenching Reduce working hours If shortage Increase overtime Increase casual and part-time employment Postpone retirements Start recruiting Accelerate training and development Use outsourcing
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HR Planning
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Managers must ask: 1. What mix of knowledge, skills and abilities do we require now? 2. What mix will we require in the future? 3. Do we have the right number of qualified employees today? 4. How will employee numbers change in the future? 5. How do our labour costs and productivity compare with those of our competitors? 6. Where will we find the people we need?
Scarcity of talent Increasingly, what concerns managers is the scarcity of talent. One of the most significant factors contributing to the companys outstanding performance is the quality of its people. Attracting talent and retaining talent has now become a major driver of corporate strategy. A companys talent, moreover, is increasing in importance as a determinant of its price share.
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The major problems facing Sydney, Hong Kong, Singapore in their quest to be the business hub of the Asia Pacific region are their lack of skilled people and a talent brain drain. Australia, for e.g., has a persistent shortage of medical, nursing, teaching, accounting, engineering and technical employees and people with trade skills.
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HR PLANNING FAILURE AND LABOUR IMBALANCES
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Environmental factors affecting HR Planning As part of the strategic process, HR planning considers both the internal and external environmental influences on an organization, its objectives, culture, structure, systems and HRM policies and procedures This is because HR planning must reflect the environmental trends and issues that affect an organization's management of its human resources, including:
Economic factors - (for e.g., Australias high income tax rates make it difficult and expensive to attract international executives) Social factors (for e.g., jobs shunned by Americans as being too hard, too dirty or too menial are done by illegal workers) Demographic factors (for example, one in six Hong Kong residents will be 65 or older by 2015)
Technological factors for e.g., the internet has made geographical location irrelevant, giving organizations the power to transfer jobs from rich countries with expensive labour to poor countries with cheap labour Microsoft is shifting US-based jobs to India in an effort to reduce technical support and development costs. All these factors affect the type and availability of labour.
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Globalization Globalization is allowing skilled labour to move like capital across the world to locations that offer the best compensation and the best future. The United States attracts more educated immigrants than the rest of the world combined.
Australia is losing more than 80 000 residents per year - the majority being academics, managers and professionals primarily to Britain, Hong Kong, Singapore and the US.
China, India and Japan are also suffering brain drains. Up to 50 percent of Indias top engineering and science graduates and 20 per cent of its medical graduates leave each year for jobs overseas.
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Women in the workforce The growing role in women in the workforce depends on improved childcare facilities, the availability of part-time work, job security after an absence for child-bearing, maternity leave, special parental leave and partners prepared to share home duties.
Working class women are following the trend set by upwardly mobile career women and avoiding the mummy track of staying at home and looking after the children.
Other environmental influences Environmental influences that impact on HR planning include: demographic factors for e.g., Immigration An ageing population The number of women in the workforce The casualisation of the workforce Employee literacy level Skill shortages
Approaches to HR Planning The HR Manager needs to be able to forecast the organization's future HR requirements and determine from where they will be obtained. Forecast of the demand for human resources within the organization Forecast of the supply of external human resources A forecast of the supply of human resources available within the organization
Two approaches to HR forecasting planning are: 1. Quantitative approach - The quantitative approach to HR planning uses statistical and mathematical techniques. The focus of this approach is on forecasting HR shortages, surpluses and career blockages; its aim is to reconcile the supply and demand for human resources given the organisations objectives. Quantitative forecasting includes trend projection, econometric modelling and multiple
2. The qualitative approach: The qualitative approach to HR planning uses expert opinion (usually a line manager) to predict the future (for example, the marketing manager will be asked to estimate the future personnel requirements for the marketing department). The focus is on evaluations of employee performance and promotability as well as management and career development. Qualitative forecasting includes Delphi Technique and Nominal Group technique.
HR Planning and HR Forecasting
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The Quantitative Methods
1. Econometric modelling and multiple predictive techniques

Economic modelling and multiple predictive techniques involve building complex computer models to stimulate future events based on probabilities and multiple assumptions. Predictions are based on the statistical relationship discovered among the variables included in the models (for e.g., the relationship of sales, discretionary income and gross domestic product to employment.
Because they tend to rely heavily on past data, quantitative techniques may not be suitable in rapidly changing situations.
2. Trend Projection
Trend projection or time series analysis, makes predictions by projecting past and present trends into the future. Sales or production levels. For eg., can be related to the organization's demand for human resources. This technique is based on the assumption that the future will be a continuation of the past.
The Qualitative Approach
1. The Delphi Technique

A panel of experts, such as key line Managers, make independent anonymous predictions in answer to questions relating to HR planning.
The responses are analyzed by the HR department and the confidential results are fed back to the experts along with series of questions. The managers revise their original estimates in the light of this new information.
The disadvantage of the delphi technique: i) It is time consuming ii) It is costly
2. The nominal group technique

After a problem has been presented, each team member, without discussion, independently generates as many solutions as possible and writes them down. Then, in turn, each member describes a solution to the group. No criticism or debate is undertaken, but team members can seek clarification.
After all solutions have been presented, the group members silently and independently rank each proposed solution. The solution with the highest total ranking becomes the final decision. The advantage of the nominal group technique are: i) Allows group members to meet without restricting the independence of their thinking ii) It produces more and better quality ideas than a traditional group.
Forecasting human resource availability Once the HR manager has estimated the HR needs of the organization, the next challenge is to fill the projected vacancies. Forecasting the supply of internal human resources Techniques for forecasting the internal supply of personnel include: i) Skill inventory ii) Replacement chart iii) Succession planning iv) Turnover analysis v) Markov analysis
Qualitative Methods
1. Skills inventory
Is a method used to evaluate the internal supply of labour. A company maintained record of employees abilities, skills, knowledge and education. The skills inventory permits the HR manager to: i) Identify qualified employees for different jobs ii) Determine which skills are present or lacking in the organization iii) Assess longer-term recruitment, selection, and training and development requirements.
Information that can be listed in a skill inventory includes: Personal data age, sex, marital status Qualifications education, job experience, training, licences Professional membership membership of professional associations Skills computer literacy Languages number and fluency Employment history jobs held, pay record Test data - scores on psychological and employment tests (must be job-related) Medical health information (must be job related) Employee preferences geographic location, management 10/2/2012 Topic 2: HR Planning 31 function (for e.g., marketing, production)
Skill inventories can be quite simple and kept manually, or they may be detailed and maintained as part of an integrated HR information management system (HRIMS). Advantages of skills Inventory i) Inventories provide a mechanism for filling positions by internal promotion, ensuring that existing employees are not overlooked
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2. Replacement charts
A visual representation of which employee will replace the existing incumbent in a designated position when it becomes vacant. Skill inventories are the source of data used in replacement charts. Replacement charts summarize this information in pictorial form for key managers so they can easily identify both the present incumbents and potential replacements (or lack of) for given positions.
Succession planning A systematic, long-term career development activity that focuses on preparing high potential employees to fill key professional and management positions so that the organization can achieve its strategic objectives.
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Quantitative Methods
1. Turnover Analysis
Labour turnover in an organization may result from employee retirement, death, illness or disability, resignation, retrenchment or termination. The reason why a employees resign may be avoidable (for e.g., unfair treatment, poor supervision, lack of challenge) or unavoidable (for e.g., relocation to another state or overseas, return to university, serious illness).
Employees may quit because of dissatisfaction with their working conditions, pay and benefits, training and development, promotional opportunities, relationship with colleagues and so on. Exit interviews giving information on employee reasons for leaving and labour turnover rates from past years are the best source of information.
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2. Markov Analysis
Is a mathematical technique used to forecast the availability of internal job candidates. A matrix is developed to show the probability of an employee moving from one job to another for leaving the organization.
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FACTORS AFFECTING THE EXTERNAL SUPPLY OF HUMAN RESOURCES

Not all vacancies can be filled from within the organisation. Consequently, the organisation must tap into the external labour market (local, regional, interstate or international). External labour market Demographic changes (ageing population) When the number of older people increases relative to the number of younger people in the population e.g. Australia, Hong Kong, Japan, Singapore, South Korea, Taiwan and the US How to tap into the knowledge and experience of older workers while keeping promotion opportunities open to the young Other factors: Female participation rates Increase in school retention rates Changes in the rate of immigration Use of child labour
Outsourcing
Subcontracting work to an outside company that specializes in and is more efficient at doing that kind of work. International outsourcing is called offshoring The reasons for organizations choosing to outside include: 1. An increased focus on the core business organizations want to spend their management time and energy on the key aspects of their business. 2. Cost and quality 3. Access to improved 4. Elimination of union problems
Casualisation of the workforce One dramatic trend is the casualisation of the workforce in industrialized economies. Competitive and economic pressures, changes in technology, the need for more flexible staffing, the increased use of outsourcing and unfavorable IR legislation (which makes companies reluctant to hire full-time permanent employees) have all contributed to this trend. In Australia, 24% are casual workers Most contingent workers prefer to have full-time jobs DISADVANTAGES: Marginalises career paths, training and fringe benefits of young people and women
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International employees Companies are increasingly seeking employees outside their domestic market. Technological advances in communications and transportation and increased labour mobility have facilitated the internationalisation of business. E.g., US companies are shifting engineering
and other technology related jobs to China, Ireland, India and the Philippines. Labour is now a global resource.
Requirements for effective HR Planning Successful HR planning requires HR managers to ensure that: HR personnel understand the HR planning process The organization does not start with an overly complex system The communication between HR personnel and line management are healthy The HR plan is integrated with the organization's strategic business plan There is a balance between the quantitative and qualitative approaches to HR planning
Summary An effective HRP is required for an organisation to be effective A complex system is not whats required Measure of success of the system: if the right people are available at the right time HRP needs to be fully in integrated to the organisations business plan HR managers must be able to demonstrate the success of HRP processes

Human Resource Planning

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Human Resource Planning

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HUMAN RESOURCE PLANNING

Organisation strategy and human resource planning Organisation strategy

Growth strategy Internally generated growth Acquisitions, mergers or joint ventures

HR PLANNING FAILURE AND LABOUR IMBALANCES

HR Planning and HR Forecasting

The Quantitative Methods

1. Econometric modelling and multiple predictive techniques

The Qualitative Approach

1. The Delphi Technique

The disadvantage of the delphi technique: i) It is time consuming ii) It is costly

2. The nominal group technique

FACTORS AFFECTING THE EXTERNAL SUPPLY OF HUMAN RESOURCES

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