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Chapter 5

Chapter 5 BU354.docx

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John Coffey

BU354 Chapter 5 – Human Resources Planning Week 4 The Strategic Importance of Human Resources Planning -Human resources planning (HRP) – the process of forecasting future human resources requirements to ensure that the organization will have the required number of employees with the necessary skills to meet its strategic objectives -Proactive process which both anticipates and influences an organization’s future by systematically forecasting the supply of and demand for employees under changing conditions and by developing plans and activities to satisfy these needs -Helps an organization achieve its strategic goals and objectives, achieve economies in hiring new workers, make major labour market demands more successfully, anticipate and avoid shortages and surpluses of human resources, as well as control or reduce labour costs -Key steps in the HRP process include analyzing forecasted labour supply, forecasting labour demands, and then planning and implementing HR programs to balance supply and demand -Lack of or inadequate human resources 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 an organization’s inability to accomplish short-term operational plans or long-range strategic plans The Relationship between HRP and Strategic Planning -HRP must align with the overall goals of the organization as well as both the long-term and short-term strategic plans set by the organization -Alignment of HR planning to strategic decisions is essential to an organization’s success The Importance of Environmental Scanning -Environmental scanning – an assessment of external factors influencing the organizations ability to find and secure talent from the external labour market including economic, competitive, legislative, social, technological, and demographic trends Steps in Human Resources Planning -Aligns forecasted labour supply with the predicted labour demands of the organization -An organization chart an provide HR planners and managers with an understanding of the organizational structure, business units, and possible career paths -An organization must forecast future HR demand and forecast future HR supply -Only after demand and supply is forecast can an organization identify potential labour imbalance issues, which leads to the development and implementation of plans to balance HR Forecasting the Availability of Candidates (Supply) -Short-term and long-range HR demand forecasts only provide half of the staffing equation by answering the question “How many employees will we need?” -How will projected openings be filled? Two sources of supply: -Internal – present employees who can be trained, transferred, or promoted -External – people in the labour market who are not currently working for the organization -While internal forecasting identifies which members of the internal workforce will remain within the organization and where, an awareness of the external labour force can aid organizations in identifying challenges that may occur with expected recruitment of candidates into the internal labour force, such as the number of graduates in a specific program that acts as a significant source of talent, the literacy levels of the local or target population, as well as general economic trends BU354 Chapter 5 – Human Resources Planning Week 4 Forecasting the Supply of Internal Candidates Skills Inventory and Management Inventories -Skills inventory – manual or computerized records summarizing employees’ education, experience, interests, skills, and so on, which are used to identify internal candidates eligible for transfer or promotion -Data gathered for each employee include name, age, date of employment, current position, present duties and responsibilities, educational background, previous work history, skills, abilities, and interests -Management inventories – records summarizing the qualifications, interests, and skills of management employees, along with the number and types of employees supervised, duties of such employees, total budget managed, previous managerial duties and responsibilities, and managerial training received -To be useful, skills and management inventories must be updated regularly Replacement Charts and Replacement Summaries -Replacement charts – visual representations of who will replace whom in the event of a job opening. Likely internal candidates are listed, along with their age, present performance rating, and promotability status -It assumes that the organization chart will remain static for a long period of time and usually identifies three potential candidates for a top level position, should it become vacant -To provide a more objective estimate of future potential this information may be supplemented by results of psychological tests, interviews with HR specialists, and other selection techniques -Replacement summaries – lists of likely replacements for each position and their relative strengths and weaknesses, as well as information about current position, performance, promotability, age and experience -Theses additional data can be extremely helpful to decision makers, although caution must be taken to ensure that no discrimination occurs on the basis of age, sex, and so on Succession Plans -Succession planning – the process of ensuring a suitable supply of successors for current and future senior or key jobs so that the careers of individuals can be effectively planning and managed -There is a strong focus on skills development for a specific list of potential successors within an organization -Because succession planning requires balancing the organization’s top management needs with the potential career aspirations of available candidates, succession should include these activities: -Analysis of the demand for managers and professionals in the company -Audit of existing executives and projection of likely future supply -Planning of individual career paths -Career counselling and performance-related training and development to prepare individuals for future roles -Accelerated promotions with development targeted at future business needs -Planned strategic recruitment aimed at obtaining people with the potential to meet future needs as well as filling current openings Markov Analysis -Markov analysis – a method of forecasting internal labour supply that involves tracking the pattern of employee movements through various jobs and developing a transitional probability matrix -See Figure 5.4 -The skills and capabilities of current employees must be assessed and skills inventories prepared BU354 Chapter 5 – Human Resources Planning Week 4 Forecasting the Supply of External Candidates -Some jobs cannot be filled with internal candidates because no current employees are qualified or they are jobs that experience significant growth -If employees are not encourages to expand their capabilities, they may not be ready to fill vacancies as they arise, and external sources must be tapped General Economic Conditions -Impact of natural fluctuations in economic activity, which impacts all businesses -Include interest rates, wage rates, rate of inflation, and unemployment rates -The lower the rate of unemployment, the smaller the labour supply and more difficult it will be to recruit employees Labour Market Conditions -Demographics of those in the population such as education levels, age, gender, marital status and so on -Demographic conditions remain stable and can be forecast with a relatively high degree of accuracy Occupational Market Conditions -Organizations also generally want to forecast the availability of potential candidates in specific occupations for which they will be recruiting Forecasting Future Human Resources Needs (Demand) -A key component of HRP is forecasting the number and type of people needed to meet organizational objectives -Factors to be considered: -Projected turnover -Quality and nature of employees -Decisions to upgrade -Planned technological and administrative changes aimed at increasing productivity and reducing employee headcount -Financial resources Quantitative Approaches Trend Analysis -Trend analysis – the study of a firm’s past employment levels over a period of years to pr
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