HRM1283 Equity and Diversity in Human Resources ManagemenDonna Verity and Chris Carella
LESSON 2: STRATEGY AND HUMAN RESOURCES PLANNING
This lesson covers Human Resources Planning (HRP) and its intimate connection with
strategic business planning.
Human resources planning (HRP) is the window to Human Resources Management.
Without a plan, it is difficult to determine which activities should be put into place in
order for the organization to meet its strategic directions. HRP answers the basic
questions for organizations - what is the supply and demand for staff to be
competitive, what skills should those staff have, where will you recruit them, what
type of training is needed to make them productive and what labour relations issues
can you anticipate and deal with?
Topics will include:
• what is human resources planning?
• HRP and strategic planning
• HRP and environmental scanning
• forecasting demand and supply
• balancing supply and demand considerations
• strategies to deal with labour shortages and surpluses
• strategies to deal with surpluses of labour
• assessing and measuring strategy effectiveness
At the end of this module, you will be able to:
1. describe the reasons for integrating HRP and strategic planning.
2. explain the difference between qualitative and quantitative demand forecasting
3. outline the importance of the HRIS and the external labour market in
4. identify methods for dealing with shortages and surpluses in the organization
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5. describe the areas to consider when evaluating the effectiveness of planning
TEXT READING: Strategy and Human Resources Planning
Pages 47 - 92
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1. WHAT IS HUMAN RESOURCES PLANNING?
Human Resources Planning (HRP) is the process of anticipating and carrying
out the movement of people into, within, and out of the organization. (Text,
Those people are essential to the production of the goods and services that an
organization needs to achieve. When positions are vacant, or it is not possible to find
skilled people to fill them, the bottom line suffers. HRP coordinates all of the HR
functions in a way to ensure that you have the right person in the right job at the
2. STRATEGIC PLANNING AND HRP
HRP is a response to Strategic Planning – procedures for making decisions
about the organization’s long-term goals and strategies (text page 48).
It only makes sense that when an organization plans its strategies for its future
directions, that it not only consider finances, profit margins and return on
investment, but that it also recognize that people are the key to reaching those
goals. So ideally, HRP and strategic organizational planning should be done together
as Strategic Human Resources Management (SHRM)– the pattern of human
resources deployments and activities that enable an organization to achieve
its strategic goals (text page 48).
Successful organizations recognize that all business decisions have HR implications
and all HR decisions have business implications, so to do the two processes
separately only asks for something to be missed
In an organization that practices SHRM, the HR manager sits at the senior
management table…they are part of all decision making for the organization.
3. THE STEPS IN STRATEGIC PLANNING
A – Mission, Vision and Values
The Mission Statement for an organization answers the question “why does this
company exist?” The Mission is enhanced further by a description of the company’s
vision, that is, what is its future direction…where are we going? And finally, the first
step goes on to describe the core values of the organization – what is our philosophy
towards are customers, our staff and the public. The former department of
Employment and Immigration clearly outlined its core values in 2 statements – our
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clients are why we exist and our staff are our greatest resource. This meant that
when it formulated policies or made decisions, the most common question was “how
does our client benefit”, followed by, “does this decision recognize the value of our
staff in delivering it?”
So the three questions to remember at this level are:
Mission: Why do we exist?
Vision: Where are we headed?
Values: How will act while we’re getting there?
B – Environmental Analysis
• systematic monitoring of the major external forces influencing the
organization (text page 52)
• you are seeking to identify trends and issues that may create an opportunity for
the organization and its HR programs, or threaten the organization
• the most common area that are monitored include:
economic factors – local, regional and global e.g. the value of the dollar
influences whether Canada is able to export its goods – the lower the dollar,
the more people are able to buy from us. When the dollar is high as it is
today, we see the loss of manufacturing jobs because foreign markets
cannot buy as much with the same amount of money and so look to other
world suppliers of goods
industry and competitive trends – the ability to create goods and services
that others find unique and therefore must buy from you. Since only
people can “create”, you can see how important it is to ensure that you can
attract and retain the best work force if your business is going to be
technology including information technology, innovation and automation –
the ability to deal in a global market, to move mundane and repetitive work
to technological solutions and to think of new ways to get your product
and/or services to different clients. Technology has raised the overall skill
level of the work force while at the same time, high school leaving is still
high. Where do you find the people to support technology?
government and legislation – think about the move to “green” – we can
expect the government to move beyond allowing people to do business in
an environmental fashion because it is the right thing to do, to creating
legislation that forces companies in certain directions e.g. by 2012, Ontario
will have seen the end of the light bulb as we know it, in favour of more
energy efficient lighting
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social concerns – what is the responsibility of business in dealing with
society in general? e.g. businesses are increasingly becoming involved in
partnering with educational institutions to fill in when budgets have become
too tight to offer more than the basics
demographic and labour market trends such as age and literacy e.g. while
there is a belief that with increasing health and financial responsibilities
that people should be able to work as long as they wish, most Canadians
are retired by age 62, so if our birth rate is dropping, we resist immigration
and most older people want to retire while they are healthy enough to
enjoy themselves, where does a business find people?
The trick of environmental scanning is identifying issues as quickly as you can, so you
can plan for them well in advance – before they affect your bottom line.
The issues identified above are applicable to every business, but it is important to go
further in your scanning to look specifically at your own business in the area of
There are 5 areas that compete within a business. The goal for an organization is to
keep them in balance because if any become too powerful, you become less
profitable. The 5 areas are:
1. customers – what are the needs of my customers? – do my employees
have the skills and attitudes to meet those needs?
2. rival firms – you can no longer assume that your competition is the firm
that is in the same business as you are e.g. the Canadian Superstore has
been built to compete directly with the Wal-Mart Superstore which is
prevalent in the USA and only being introduced to Canada now. Both
stores are a one stop approach to shopping – food, clothes, furniture – all
in one place. For busy people it makes sense. But Loblaws decided to pre-
empt the Wal-Mart expansion in Canada by jumping out ahead with its
superstores and now competes with Zellers for reasonable priced clothing
and Costco for bulk deals. Can my employees be everything to everyone?
3. new entrants – new people entering your business – The day of monopoly
is over; e.g. think about long distance carriers – who could have imagined
15 years ago that anyone would be in the phone market except for Bell?
And customers are not shy of being unconventional and buying their
services in a myriad of places. Do your staff have the skill, and the heart,
to be different enough to attract customers?
4. substitutes – take the telephone example one step further and look at how
cell phones are replacing land lines; e.g. for young people who find that the
deposits, etc. of land lines is beyond their ability to pay, they simply use a
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cell phone for all their needs – and it seems that everyone these days has a
cell phone. Again, for a country that is still fighting to ensure that there is
phone service everywhere, the land line is starting to disappear in urban
5. suppliers – it is rare for a company to be its own supplier and producer and
up to now, we have thought of supply as raw materials, money, etc. – but
much more essential in this knowledge economy is the supply of people.
With people such an important part of the equation, being able to compete in the
external labour market, to find them, is becoming increasingly difficult. Take a look
at pages 54 and 55 where the issues influencing the external supply of labour are
discussed. What is quite apparent is that you cannot ever assume that you will be
able to find the people you need to be successful, without a lot of hard work.
C. Internal Analysis
• monitoring the internal organization to identify strengths and weaknesses in the
company that will help the organization meet its strategic directions e.g. high skill
• there are 3 “C”s in internal analysis
1. Culture – auditing the culture of an organization gives you an indication if
staff have accepted and demonstrate your values and have a positive
attitude toward the work and each other. Both of these have an impact on
customer satisfaction and company earnings.
2. Competencies – core competencies are becoming important in
organizations – skill and knowledge sets that distinguish one company from
another. The competencies of people are useful if they are:
a. valuable – because they can increase effectiveness and/or efficiency
b. rare – because they are not easily available to the competition
c. hard to imitate
d. organized – so they can be deployed easily and quickly
3. Composition – the makeup of your workforce and their competencies
Some general trends of the positions employees occupy in their organization include:
• core knowledge employees - the permanent staff in the organization who
possess specific skills and knowledge directly related to the company’s strategic
direction – these staff tend to be unique to the company and the company invests
significantly in their training and development
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• traditional job-based employees – these are staff who occupy generic jobs in
the organization and whose skills could be used in any number of businesses e.g.
sales people – there is less investment in training this group
• contract labor – these are also generic staff whose work could be done internally
by staff or contracted out e.g. accounting, HR, payroll
• alliance/partners – these are unique staff that an organization needs to create
a longer term relationship with, but who are not part of the organization’s work
Effective HRP consists of three key elements:
b. supply analysis
c. balancing supply and demand considerations
a. Forecasting Demand for Employees
Forecasting is the HR activity of estimating in advance the number and types of
people needed to meet organizational objectives. There are two approaches to
1. Quantitative Approaches - uses statistical or mathematical techniques such as
trend analysis. To use a quantitative approach, you need a stable environment in
your organization, and historical data has to be available.
2. Qualitative Approaches – this is a less statistical approach and is used in
organizations where there is no historical information and where the environment
is not very stable. It includes techniques such as management forecasts, or the
Qualitative approaches tend to be more popular today simply because of the