Staffing Exam #2 Study Guide- October 29
Chapter 5: Forecasting and Planning
Workforce planning: the process of predicting an organization’s future employment needs
and the availability of current employees and external hires to meet those employment
needs and execute the organization’s business strategy.
Workforce planning is the foundation of strategic staffing because it identifies and
addresses future challenges to a firm’s ability to get the right talent in place at the right time
to execute its business strategy.
Workforce Planning Process
Identify the business strategy
Articulate the firm’s talent philosophy and strategic staffing decisions
Conduct a workforce analysis
Develop and implement action plans
Monitor, evaluate, and revise the forecasts and action plans
Forecasting Business Activity
An organization’s product demand directly affects its need for labor
Locate reliable, high-quality information sources within and outside of the organization to
forecast business activity
Types of business activity forecasts:
Industry and economic
Forecasting Labor Demand
It is a good idea to identify minimal as well as optimal staffing levels when analyzing labor
An organization’s demand for labor depends on its forecasted business activity and its
business needs, which depend on its business strategy.
Assumes that there is a relatively fixed ratio between the number of employees needed and
certain business metrics.
Need consistent historical trends to calculate ratios
Production to employees
Revenue per employee
Managers to employees
Inventory levels to employees Number of customers or customer orders to employees
Labor costs to all production costs
The percent utilization of production capacity to employees
Show graphically how two different variables are related
Uses past employment patterns to predict future needs
Any employment trends that are likely to continue can be useful in forecasting labor
Trend analysis is rarely used by itself in making labor demand forecasts
Relies on the experience and insights of people in the organization to predict future needs
Top-down: organizational leaders rely on their experience and knowledge of their industry
and company to make predictions about what future staffing levels will need to be. Top
managers’ estimates then become staffing goals for the lower levels in the organization.
Bottom-up: uses the input of lower-level managers in estimating staffing requirements.
Based on supervisors’ understanding of the business strategy, each level provides an
estimate of their staffing needs to execute the strategy. The estimates are consolidated and
modified as they move up the organization’s hierarchy until top management formalizes the
company’s estimate of its future staffing needs into staffing goals.
Return on Investment Analysis
Estimate the return on investment from adding a new position based on the costs and
outcomes resulting from that new hire.
First assign dollar value to the benefits you expect from a new hire for the period of
time most appropriate for the position and your organization
Then compare this amount with the cost of adding the new hire
Compare this amount with the value your company will gain to determine the
return on the investment of adding the new position.
Forecasting Labor Supply
Combining current staffing levels with anticipated staffing gains and losses results in an
estimate of the supply of labor for the target position at a certain point in the future.
Anticipated gains and losses can be based on historical data combined with
managerial estimates of future changes.
The external labor market consists of people who do not currently work for a firm.
A firm’s internal labor market consists of the firm’s current employees.
Forecasting the Internal Labor Market
Estimate the competency levels and number of employees likely to be working for the
company at the end of the forecasting period.
To forecast internal talent resources for a position, subtract anticipated losses from the
number of employees in the target position at the beginning of the forecasting period. Anticipated losses could be due to promotions, demotions, transfers, retirements,
Anticipated gains for the position from transfers, promotions, and demotions are
then added to the internal labor supply forecast.
A quantitative technique used to analyze internal labor markets and forecast internal labor
A simple but often effective technique for analyzing an organization’s internal labor market,
which can be useful in answering recruits’ questions about promotion paths and the
likelihood of promotions as well as in workforce planning.
Can also forecast the number of people who currently work for the organization likely to still
be employed in various positions at some point in the future.
The analysis is best performed for a limited number of jobs at a time to keep it easily
Internal Labor Market Forecasting Methods
Talent inventories: summarize each employee’s skills, competencies, and qualifications
Replacement charts: visually shows each of the possible successors for a job and
summarizes their present performance, promotion readiness, and development needs.
Employee surveys: identify the potential for increased turnover in the future.
Labor supply chain management: the basic foundation of any supply chain model is to have
the right product, in the right volume, in the right place, at the right time, with the right
Forecasting the External Labor Market
Organizations monitor the external labor market in two ways
Through their own observations and experiences
Ex. Are the quality and quantity of applicants responding to job
announcements improving or getting worse?
By monitoring labor market statistics generated by others
US bureau of Labor Statistics, etc.
Temporary Talent Shortage
Because higher salaries cost the organization more money throughout the new hire’s tenure
with the company, hiring inducements that last only as long as the talent shortage does are
Companies often turn to more expensive recruiting methods such as search firms, or lower
their hiring standards so that more recruits are considered qualified.
Options include offering hiring incentives such as sign-on bonuses and retention bonuses
such as stock options or cash to be paid after the employee has successfully worked with
the company for a certain period of time.
Persistent Talent Shortage
If it is likely that a worker shortage will last a number of years, an organization must: Reduce its demand for the talents that will be in short supply
By increasing their use of automation and technology, and by redesigning
jobs so that fewer people with the desired talent are needed.
And/or increase the supply of the qualifications it needs
This is not a fast or practical solution for most organizations.
Temporary Employee Surplus
If slowdowns are cyclical or happen frequently, using temporary or contingent workers who
are the first to be let go when business slows can help to provide a buffer around key
Temporary layoffs may need to last more than six months to be cost-effective due to
severance costs, greater unemployment insurance premiums, temporary productivity
declines, and the rehiring and retraining process.
Losing the investments the organization has already made in hiring and training the
laid off workers can also be costly.
Alternatives to layoffs include across-the-board salary cuts or a reduction in work hours, or
reallocating workers to expanding areas of the business.
Permanent Employee Surplus
Early retirement incentives, layoffs, and not filling vacated positions can all reduce an
employer’s headcount, but with a cost.
Action plans to address a persistent employee surplus may also involve reassignments,
hiring freezes, and steering employees away from career in that position to reduce the need
for future layoffs
Retraining employees to fill other jobs in the firm can help bring labor supply and demand
Three questions that need to be answered are:
How many people should we recruit?
Staffing yields: the proportion of applicants moving from one stage of the
hiring process to the next
Hiring yields: the percent of applicants ultimately hired
What resources do we need?
Workload-driven forecasting: based on historical data on the average
number of hires typically made per recruiter
Staffing efficiency driven forecasting: the total cost associated with the
compensation of the newly hired employee
How much time will it take to hire?
Continuous recruiting can shorten the hiring timeline
Bath recruiting: recruiting a new applicant pool each time
External cost per hire
External cost per hire: six basic elements account for 90% of the costs to hire to calculate
the cost of external hiring: Advertising expenses
Agency and search firm fees
Employee referral bonuses
Recruiter and applicant travel costs
Company recruiter costs (prorated salary and benefits if the recruiter performs
duties other than staffing)
Internal cost per hire
Internal cost per hire includes four elements:
Internal advertising costs
Travel and interview costs
Internal recruiter costs
Talent inventories are detailed records or databases that summarize each employee’s skills,
competencies, education, training, pervious performance reviews and chances of being
promoted. – TRUE
Scatter plots show graphically how two different variables are related. – TRUE
A retail store forecasts a greater need for salespeople during Thanksgiving. This is an
example of seasonal forecast. – TRUE
Early retirements programs are a common way of dealing with temporary employee surplus.
Top-down judgmental forecasting uses the input of lower level managers to estimate the
firm’s total staffing requirements. – FALSE
Chapter 6: Sourcing-Identifying Recruits
o Sourcing: identifying and locating high potential recruits
Done for internal as well as external job candidates
Involves the analysis of different possible sources of recruits to identify those best
able to meet the firm’s staffing goals
o Types of Job Seekers:
Active job seekers: people who need a job and are actively looking for information
about job openings
Semi-passive job seekers: people who are interested in a new position but only
occasionally look actively for one
Passive job seekers: currently employed and are not actively seeking another job,
but could be tempted by the right opportunity
Some Recruiting Sources Are
o Faster or cheaper
o Better at acquiring people who fit the corporate culture and work processes o Better at acquiring high-quality people
o Better at acquiring people less likely to leave
o Better at acquiring people with previous work experience
o Better at generating large numbers of hires
o Better at generating professional hires
o Internal recruiting sources: locate people who currently work for the company who would
be good recruits for other positions
Succession management, talent inventories, employee development, referrals, etc.
o External recruiting sources: target people outside the firm
Referrals, advertisements, job fairs, online job boards, career sights, etc.
Internet Data Mining
o Boolean searches: internet search technique that allows a search to be narrowed by using
special terms before the key words
o X-raying: searching for pages that are all on the same host
o Flipping or flip searching: identifying people who link to a web site
o Web crawlers: web sites that continually search for people with desirable talents and sell
access to the sites to recruiters
o Networking sites: leveraging your personal connections to generate applicants.
Creating a sourcing plan
o Profile desirable employees to identify promising sources
Identify what desirable talent and successful current employees in targeted jobs like
to do and how you might reach them if you were to try to recruit them now
Using surveys or focus groups, ask where do they like to go, what media do they
use, what organizations do they belong to, and what events do they attend? What
web sites and other sources would they use if they were to look for another job?
How did they first learn of their first job in your firm?
o Perform ongoing recruiting source effectiveness analyses by tracking
Where applicants discovered the vacancy
Where top candidates discovered the vacancy
How many recruits each source generated
What quality of recruits each source generated, and what was the range of recruit
quality from each source
What were the demographic characteristics of the recruits from each source
Yield ratios for each source
Conversion rates from applicant to hire for each source
Absence and turnover rates by source
Job performance by source
Promotion rates by source
Data relevant to other staffing goals
o Prioritize recruiting sources based on staffing goals and employee profiles
Prioritize recruiting sources based on staffing goals and employee profiles Prioritizing recruiting sources based on staffing goals and the results of the
recruiting source effectiveness analysis
o Integration: the coordination of a single global staffing strategy with the organization
retaining adequate controls over local operations
o Differentiation: the need to acknowledge and respect the diversity of local country cultures
and expectations and thus giving some latitude to local managers to tailor the strategy to
meet the needs of their location
o Local employment agencies: can be a useful source of guidance in terms of information on
the characteristics of the local labor force
o Definition: sourcing recruits based on where they live
Can focus on the local labor market
Can focus on labor markets in locations similar to the organization’s location in
terms of city size, cost of living, climate, recreational opportunities, etc.
Can target individuals likely to find the firm’s location attractive
o Lower-level positions in an organization are typically filled from the local labor market, and
the geographic boundaries tend to widen as the position moves up the organization’s
o For firms whose talent philosophy supports promotion from within, internal sourcing is the
core of the staffing system. – TRUE
o Nepotism is illegal. – FALSE
o Passive job seekers are easy to find, they are constantly on the lookout for jobs. – FALSE
o Internal recruiting sources locate people who currently work for the company who would be
good recruits for other positions. – TRUE
o Applicant flow is number and type of applicants coming from reach recruiting source. - TRUE
Chapter 7: Recruiting
o Recruiting: activities that convert the leads generated during sourcing into job applicants,
generate interest in a company and its jobs, and persuade candidates to accept extended
Can be done by recruiters, hiring managers, or employees
o Applicant reactions
An important goal of recruitments is to give every applicant a positive feeling about
Organizational and individual perspective are both relevant
Effective recruitment requires considering the applicant’s perspective and
Both parties are pursuing a business relationship Three Types of Fairness
o Distributive: the perceived fairness of the hiring or promotion outcome
Did you get the job or promotion?
o Procedural: beliefs that the policies and procedures that resulted in the hiring or promotion
decision were fair
Respect applicants’ privacy, avoid delays, use job-related assessments, give fair
opportunity to perform
o Interactional: fairness of the interpersonal treatment and amount of information received
during the hiring process
Honesty, respect, recruiter warmth, and informativeness
o Spillover effects: indirect or unintended consequences of an action
o Most job candidates do not get the job promotion- so what happens next?
If they were forced to wait extended periods for pre-scheduled interviews, met
unprepared and distracted interviewers, felt that they selection process was unfair,
and were not made to feel importa