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Chapter 4

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Steve Risavy

Chapter 4: Human Resource Planning Human Resources Planning • Its done to review human resources requirements to ensure: o the necessary number of employees o the necessary employee skills • Also done to meet organizational goals (need to know what changes are happening) • Lack of or inadequate HR planning within an organization can result in significant costs when unstaffed positions create costly inefficiencies and when severance pay is required for large numbers of employees being laid off • Ineffective HRP can lead to the inability to accomplish short-term operational plans and/or long range strategic plans Human Resources Planning Process Forecast demand  analyze supply  plan and implement programs to balance supply and demand Importance of Human Resources Planning • achieve strategic goals and objectives • achieve economies in hiring new workers • make major labour market demands • anticipate and avoid staff shortages/surpluses • control/reduce labour costs Results of Inadequate HR Planning • vacant positions create costly inefficiencies • mass layoffs requiring severance pay (reduce morale) • simultaneous layoffs and hiring reduces morale and productivity, creates turnover • inability to meet operational and strategic plans HR Planning and Strategic Planning HR planning  Strategic planning  -reciprocal and interdependent relationship -environmental scanning critical for both -HR needs to be brought to the strategic planning table External Environmental Factors Monitored • economic conditions o these affect supply and demand for products and services which in turn affect the number and types of employees required • market and competitive trends • government and legislative issues (quota system) • social concerns • technological changes • demographic trends (ex. Now we will have to watch and replace the aging boomers) o most significant environmental factor currently – due to labour shortages that are likely to occur over the next two decades Elements of Effective HR Planning 1. forecast future needs (demand) 2. forecast future internal/ external candidates (supply) 3. implement plans to balance supply and demand Forecasting Future HR Needs (Demand) • forecasting the number and type of people needed to meet organizational objectives • in manufacturing firm, sales are projected first, then volume of production required to meet these sales requirements, finally the staff needed to maintain the volume of output Forecasting based on: • projected turnover as a result of resignations or terminations • quality and nature of employees relative to needs • decisions regarding product quality and new markets – upgrade the quality of products or services or enter into new markets, which might change the employee skill mix • plans for technological and administrative change to increase productivity and reduce headcount, such as the installation on new equipment of financial incentive plan • financial resources available for each department Forecasting Future HR Needs (Demand) Quantitative Approaches: • Trend analysis: review past employment levels o study the firms employment levels over the last five years or so to predict future behaviour • Ratio analysis: ratio of business activity/employees o Making forecast based on the ratio between some casual factor and the number of employees required (eg. Sales volume and the number of salespeople) • Scatter plot: graph of business activity/employees o It measures if business activity and staffing levels are related • Regression analysis: statistical relationship between business activity and employees o Use of a mathematical formula to project future demands based on an established relationship between an organizations employment level and some measurable factor of output Qualitative Approaches: • Nominal Group Technique o experts meet face-to-face o group discussion facilitates exchange of ideas o possible subjectivity, group pressure o Advantages: involvement of key decision makers, a future focus, and the fact that the group discussion involved in the third step can facilitate the exchange of ideas and grater acceptance of results • Delphi Technique o experts work independently o wide range of views o difficult to integrate diverse opinions o its useful for long-range forecasting and involves outside experts as well as company employees o drawbacks: judgments may not efficiently use objective data, the time, and cost involved, and the potential difficulty in integrated diverse opinions • Managerial judgment o Summarizing human resource requirements  Long range plans are general statements of potential staffing needs and may not include specific numbers  Shot term plans are more specific and often depicted in a staffing table (a representation of all jobs within the organization along with the number of current incumbents and future employment requirements for each Forecasting Future HR Supply: • two sources of supply o Internal – present employees who can be transferred or promoted to meet anticipated needs o External – people in the labour market not currently working for the organization, including those who are employed elsewhere and those who are unemployed Markov Analysis • tracking the pattern of employee movements through various jobs and developing a transitional probability matrix Skills/Management Inventories • summary of each employee’s education, experience, interests, skills • for managers, also includes managerial responsibilities, duties in current/previous positions, management training • do a development plan • Skills inventory: contain comprehensive information about the capabilities of current employees • Management inventory: data pertaining to managerial staff • To be useful the inventories have to be updated regularly Replacement Charts/Summaries • visual representations of likely internal replacement employees for each position, including age, present performance rating, promotability status • replacement summaries also list relative
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