CHAPTER 5 HUMAN RESOURCE PLANNING Human Resource Planning

CHAPTER 5: HUMAN RESOURCE PLANNING

Human Resource Planning (HRP) First component of HRM strategy All other functional HR activities are derived from & flow out of HRP process Personnel planning involves deciding what positions the firms will have to fill, and how to fill them Basis in considerations of future HR requirements in light of present HR capabilities & capacities Proactive in anticipating & preparing flexible responses to changing HR requirements

HR planning Human Resource Planning (HRP) identifies: - HR needs or HR demand - Supply of internal candidates - Supply of external candidates HRP also identifies the skills, knowledge and behavior that employees should possess

Key Objectives of HR Planning Prevent overstaffing & understaffing Ensure organization has right employees with right skills in right places at right times Ensure organization is responsive to changes in environment Provide direction & coherence to all HR activities & systems Unite perspectives of line & staff managers

Types of Planning Aggregate Planning Anticipating needs for groups of employees in specific, usually lower level jobs & general skills employees will need to ensure sustained high performance Succession Focuses Planning on ensuring key critical management positions in organization remain filled with individuals who provide best fit

Aggregate Planning Forecasting demand Considers firm’s strategic plan’s effects on increases or decreases in demand for products or services Assumptions on which forecast is predicated should be written down & revisited when conditions change Unit forecasting (bottom-up planning) involves “point of contact” estimation of future demand for employees Top-down forecasting involves senior managers allocating a fixed payroll budget across organizational hierarchy Demand for employee skills requirements must also be considered

Trend Analysis Trend analysis involves investigating the variation of firm’s employment levels over the last few years You might compute the number of employees at the end of each of the past 5 years Alternatively, you can study the variation of individual departments The aim is to identify the trends that might keep going

Google’s trend analysis This statistic represents the number of Google employees between 2012 and 2014. As of that year, the American multinational internet company, headquartered in Menlo Park, California, had 53, 600 full-time employees. Year Number 2012 53, 861 2013 47, 756 2014 53, 600 2015 ? ? ?

Ratio Analysis Ratio analysis involves making forecasts based on the historical ratio between causal factors Causal factors might include production levels and number of employees For example, one person produces 10, 000 units per year. You would need 4 new sales people next year if you want to produce extra 40, 000 units next year

Ratio Analysis Causal factors could be sales volume and number of employees required one person can sell $15, 000 per year. You would need 5 salespersons next year if you want to sell $75, 000 next year

The Scatter Plot Through graphical representation, a scatter plot demonstrates how two variable such as sales and number of employees are related Imagine, a 500 -bed hospital is aiming to expand to 900 beds over the next few years How many nurses do you need to support 900 beds?

The Scatter Plot (Cont. ) You have the following information Number of beds Number of nurses 200 240 300 260 400 470 500 900 ? ? ?

The Scatter Plot (Cont. ) 1000 900 800 Number of Nurses 700 600 500 Number of Nurses 400 300 200 100 0 0 100 200 300 400 500 Number of beds 600 700 800 900 1000

Group Discussion Which tool is most useful in forecasting HR needs? Include 4 reasons to justify the answer.

Aggregate Planning: Forecast the supply of internal candidates You need information regarding performance, educational background and promotability Useful Sources for information : 1. Manual System- Small firms use manual devices to track employee qualification 2. Personnel replacement chart- shows the present performance and promotability of the top managers

Aggregate Planning: Forecast the supply of internal candidates (Cont. )

Aggregate Planning: Forecast the supply of internal candidates (Cont. ) Position replacement card- establish a card for individual positions showing the replacement and the performance, promotion potential, and training of the candidates

Aggregate Planning: Forecast the supply of internal candidates (Cont. ) Computerized skills inventories - The level and quantities of abilities, skills & experiences can be determined using Skills Inventory. - Annually updated human resource information system (HRIS) is dynamic source of HR information Large firms cannot depend on manual devices They computerize information using software systems Search on the system by using keywords -

Aggregate Planning : Identifying the retention rate Markov analysis can be used to create transition probability matrix that predicts mobility of employees within organization

Exhibit 5 -2 Transition Probability Matrix for Restaurant

Strategies for Managing Shortages Recruit new permanent employees Offer incentives to postpone retirement Rehire retirees part-time Attempt to reduce turnover Work current staff overtime Subcontract work out Hire temporary employees Redesign job processes so fewer employees are needed

Strategies for Managing Surpluses Hiring freezes Across-the-board pay cuts Do not replace those who leave Layoffs Reduce outsourced work Employee training Switch to variable pay plan Expand operations Offer early retirement incentives Reduce work hours Voluntary severance leaves of absence

Aggregate Planning: Forecasting the supply of external candidates General economic condition Unemployment rate Education level of the workforce Demographic changes

Succession Planning Involves identifying key management positions the organization cannot afford to have vacant Purposes of succession planning Facilitates transition when employee leaves Identifies development needs of high-potential employees & assists in career planning Many organizations fail to implement succession planning effectively Qualified successors may seek external career advancement opportunities if succession is not forthcoming

Succession Planning (cont. ) Succession Planning - Succession planning is crucial when it comes to filling a top position - Generally top positions are filled by the internal people - Succession planning includes 3 steps 1. Identify key needs 2. Develop inside candidates 3. Assess and choose

Succession planning of Apple

Succession planning of Apple (cont. )

Succession planning of Apple (cont. ) To the Apple Board of Directors and the Apple Community: “I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come. I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee. As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple. I believe Apple’s brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role. I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you. ” Steve

Succession planning of Apple (cont. )

Exhibit 5 -5 Pros & Cons of Disclosing Succession Planning

“You can have the best strategy and the best building in the world, but if you don’t have the hearts and minds of the people who work with you, none of it comes to life. ” – Renee West. “Do not hire a man who does your work for money, but him who does it for the love of it. ”– Henry David Thoreau