fundamentals of

Human Resource Management

3rd edition by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright

CHAPTER 2 Human Resources Strategies And Planning

HR STRATEGIES
Definition: HR strategies are the integration between HR policies and practices with business strategies of an organization. Question: HR strategies lead business strategies. It is: a. Right b. Wrong c. Both right and wrong d. No controversial

Business strategy
1. Corporate-level strategy 2. Business-level strategy 3. Functional-level strategy

CorporateCorporate -level strategy

Strengths Growth strategy

Stablity strategy

Company status

Weaknesses Opportunities

Entrenchment strategy

Environment status

Threats

Growth strategy
Concentration Strategy:
Only 1 business unit Methods: Related/ Concentric Diversification: New business units, related to the current one. Methods: Unrelated/Conglomerate Diversification: New business units, not related to the current one. Methods:

Corporate level strategy Stability strategy Entrenchment strategy

Business-level strategy
Cost - leadership strategy Differentiation strategy Focus strategy

Functional strategy
Marketing strategies Financial strategies R&D strategies HR strategies .

HR STRATEGIES
BUSINESS STRATEGIES
1. Self-Growth strategies 2. Growth by M&A strategies 3. Stability strategies 4. Entrenchment strategies 5. Cost-leadership strategies 6. Differentiation strategies . . .

HR STRATEGIES

HR planning
Definition: The process of forecasting labor demand and supply, determining the labor surplus or shortage, and setting up plans in order to deal with labor surplus or shortage.

Objectives of HR Planning
Recruit right persons, right position, and right time. Respond quickly to changes in business environment. Deal with labor surplus or shortage. Cooperate and link to other HR practices.

Figure 5.1: Overview of the Human Resource Planning Process

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Step 1: Environment scanning

External environment Internal environment

Step 2. Forecasting

Forecasting: attempts to determine the supply and demand for various types of human resources to predict areas within the organization where there will be labor shortages or surpluses.

There are three major steps to forecasting: 1. Forecasting the demand for labor 2. Determining labor supply 3. Determining labor surplus or shortage

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Forecasting the Demand for Labor

Trend Analysis Constructing and applying statistical models that predict labor demand for the next year, given relatively objective statistics from the previous year. Leading Indicators Objective measures that accurately predict future labor demand.

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Forecasting the Demand for Labor

1. Judgmentally-based method:

2. Mathematically based methods:

Step 3. Determining Labor Supply

Transitional matrix: a chart that lists job categories held in one period and shows the proportion of employees in each of those job categories in a future period.

It answers two questions: 1. Where did people in each job category go? 2. Where did people now in each job category come from?

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Table 5.1: Transitional Matrix - Example for an Auto Parts Manufacturer

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Step 3. Determining Labor Supply

Skills inventory
Management inventory

Determining Labor Surplus or Shortage

Based on the forecasts for labor demand and supply, the planner can compare the figures to determine whether there will be a shortage or surplus of labor for each job category. Determining expected shortages and surpluses allows the organization to plan how to address these challenges.

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Goal Setting and Strategic Planning

The purpose of setting specific numerical goals is to focus attention on the problem and provide a basis for measuring the organizations success in addressing labor shortages and surpluses. The goals should come directly from the analysis of supply and demand. For each goal, the organization must choose one or more human resource strategies.

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Discussion
1. Options for Reducing a Surplus 2. Options for Avoiding a Shortage 3. Which of them is the last option that firms may take?

Test Your Knowledge

A public accounting firm of 250 employees realizes they have a surplus of 15 support personnel (not auditors). What should they do?

A. Hire temporary workers B. Offer early retirement C. Downsize people in those positions D. Wait for attrition and implement a hiring freeze for those positions
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Implementing and Evaluating the HR Plan

When implementing the HR strategy, the organization must hold some individual accountable for achieving the goals. That person must also have the authority and resources needed to accomplish those goals. Regular progress reports should be issued. The evaluation of results should not only look at the actual numbers, but should also identify which parts of the planning process contributed to success or failure.

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