7 HR PLANNING. The strategic role of HR Planning 1. Developmental planning for strategic leadership succession planning leadership development 2. Assessment

7HR PLANNING

The strategic role of HR Planning

1. Developmental planning for strategic leadership

• succession planning

• leadership development

2. Assessment of strategic alternatives

• forecasting

• sourcing of talents


3. Adding value to HRM

• HR planning linked to R & D efforts

• HR planning linked to financial performance

• HR planning for CEOs linked to profitability


4. Contribution to strategic HRM

• Top 3 reasons for HR planning

•developing human resources

•avoiding personnel shortages

•obtaining information for decisions

5. Strategic salary planning

• matching compensation structures with business goals

Elements Affecting HR Needs

• PERSONNEL CHANGES– Even if organization’s strategy remains static– Promotions, retirement, turnover

• SUPPLY AND DEMAND– Quantity, quality, time, other measures


• CHANGES IN LEGISLATION– factors in the political environment such as new

wage increases, affirmative action, quotas, etc.

• PRODUCTIVITY CHANGES– reduction/increases in productivity


• ORGANIZATIONAL CHANGES– Changes in organizational goals and strategies create

new positions and change old ones• upgrading/downgrading of products/services

• expanding/reducing markets

• technological/administrative changes

• financial resources

– Leads to downsizing, flattening organizational structures, diversifying, decentralizing, etc.

– Can increase/reduce demand for some jobs

STEPS IN HR PLANNING

1. Interfacing with strategic planning and scanning the environment

2. Taking an inventory of the company’s human resources3. Forecasting the demand for HR4. Forecasting the supply of HR (internal and external)5. Comparing forecasts of demand and supply6. Planning the actions needed to deal with anticipated

shortages or overages7. Feeding back such information into the strategic

planning process

FORECASTING TECHNIQUES

TREND ANALYSIS • studies a firm’s past employment needs over a

period of years to predict future needs.

• requires studying patterns of personnel deployment for some years to see what might continue to happen for sometime

• valuable as an exploratory study


RATIO ANALYSIS

• technique for determining future staff needs by using ratios between variables like sales volume and number of employees needed

• arrived at by cross-multiplying


CORRELATION ANALYSIS

• method of determining statistical relations between two variables. It requires determining first whether two factors - like a measure of business activity and staffing levels - are related.

• if the variables are related, then we can forecast the required staffing level by forecasting business activity.

• if done manually, shown through a scatter plot

FORECASTING INTERNAL SUPPLY OF HR

How many can be recruited inside? This requires compiling and analyzing information on qualifications like:

– QUALIFICATIONS INVENTORIES – REPLACEMENT CHARTS– POTENTIAL INVENTORIES– PERFORMANCE INVENTORIES

Forecasting supply of HR

• Quantitative techniques– Markov analysis (ratio analysis, trend analysis)

– network flow models

– attrition analysis

– computer simulations

– renewal models

• Qualitative techniques– replacement charts (succession planning)

– supervisory estimates

Supply Forecasting Techniques

Percentage of CompaniesUsing Technique

Succession Planning or Replacement Charts 66.7Human Resource Inventories 66.7Supervisor Estimates 48.5Rules of Thumb or Non-statistical Formulas 27.3Computer Simulation 12.1Renewal Models 9.1Regression Analysis 7.6Markov or Network Flow Models 6.1Exponential Smoothing or Trend Extrapolation 6.1Operations Research Techniques 4.5

Demand Forecasting Techniques

Percentage of CompaniesUsing Technique

Supervisor Estimates 69.7

Succession Planning or Replacement Charts 65.2

Rules of Thumb or Non-statistical Formulas 37.9

Computer Simulation 18.2

Exponential Smoothing or Trend Extrapolation 12.1

Regression Analysis 9.1

Delphi Technique 3.0

MANAGERIAL ISSUES IN PLANNING

• Personal Implications - planning requires managerial discipline and processes

• Changing Receptivity towards Planning - HR planning as a shared function between line managers and HRM

• Implications of the European Experience - Europe has strict laws about layoffs making HR Planning the only alternative to avoiding HR surpluses and shortages.

PEST ANALYSIS• Political

– laws, global and local changes, political pressures, political stability, etc.

• Economic– exchange rates, inflation levels, income growth, debt & saving

levels (which impact available money) and consumer & business confidence

• Social– beliefs, values and attitudes that impact on purchasing

preferences and trends, etc.

• Technological

SWOT ANALYSIS• Company strengths and weaknesses need to be

identified in all aspects of the business– relative to the rest of the market (i.e. compared to

competitors)

– relative to previous performance or expected performance

– relative to customer demand (for example all companies in an industry may fail to satisfy a particular customer need. This is a weakness - and the first company to match this customer need will have a strength relative to the other companies in the industry.)

CONDUCTING A SWOT ANALYSIS

• Points to consider:– opportunities arise out of weaknesses

– correcting a weakness presents a marketing opportunity

– failing to maintain a strength is a threat to the company

– weaknesses must not cancel out company strengths

– focus on key areas of concern that require action

– score items in the SWOT analysis (5 is a major strength and 1 a major weakness)


• Marketing AspectsMarket share and market segments addressed · Competitive Structure · Customer base (quality, size, loyalty, etc.) · Demand forecasts · Product range and quality. · Services provided · Distribution capabilities and costs · Sales effectiveness · Promotional effectiveness. Image and reputation · Pricing options · Speed to market · Customer service · R&D and Innovations / new products · Marketing skills and experience · International / export market capabilities


• Operational / Manufacturing Aspects· Production / Manufacturing facilities (age, quality, speed...) · Economies of scale · Skills (Employee, technical, etc.) · Product failure rate · Flexibility · Costs · Supply / raw material availability


• Human Resource Aspects· Employee skills, motivation, dedication and experience · Employee satisfaction · Employee costs · Work environment · Staff turnover rate · Management and Organisational Aspects · Management skills and experience · Leadership and team skills · Ability to respond to market change · Flexibility and adaptabilityFinancial Aspects· Cost of capital · Profitability / Return on investment · Financial Stability · Sales / Employee · Cash availability

KEY STEPS IN CONDUCTING A SWOT ANALYSIS

1. Brainstorming - use a mind map!

2. Translate brainstorm into the top five to ten ideas (per category)

3. Review and discuss each of the top ideas and their potential implications to the organization.

4. Begin with O-T to gain a better understanding of how your organization can relate to its external environment. Then move to S-W to see how they relate to the opportunities and threats external to the organization.

5. Rank and analyze output:

Is both a strength of the organization and an opportunity in the external environment? This represents a potential area for growth.

Is both a weaknesses of the organization and threat in the external environment? This represents an area that needs to be addressed.

Why develop a human resources plan?

An HR plan can serve as an information base for many purposes, such as:

• identifying HR requirements to better meet business objectives

• promoting a proactive approach to HR management and career planning

• reducing the time and cost of future staffing

• identifying opportunities for synergy, such as opportunities for collaborative staffing actions

• identifying employment equity goals and facilitating their realization

Why develop a human resources plan?

An HR plan can serve as an information base for many purposes, such as:

• identifying official languages/skills requirements

• signaling potential work load and/or work force adjustment situations

• predicting potential shortfalls in the labor force and market availability

• highlighting projected retirements and resignations and developing appropriate succession plans

• identifying seasonal or cyclical hiring patterns

Information requirements for HR Planning

• What are the Company’s strategic objectives for the next year; for the next three years; for the next five years?

• What are the capabilities and capacities of the organization's current workforce and what are the organization's current or existing HR needs?

Are there existing employees who can do the work at this time?

What are the strengths and weaknesses of existing resources?

Are the positions classified at the appropriate groups and levels?


Where are the labor markets in which likely

candidates are located?

Is the workforce sufficiently diverse to reflect the labor market availability (i.e. employment equity considerations)?

Is the workforce capable of meeting the obligations?

What are employees' career development needs, plans and aspirations?


• What is the organization's future supply of, and demand for, employees to meet the business plans and priorities in a timely manner?

Which functions will need to be performed?

How will the current functions evolve?

How should the organization be structured?

Will the positions be classified at the appropriate groups and levels?

Which type of competencies/qualifications will be required?


• Will the competencies required to perform the work be the same as now? If not, what will be required?

• How many people will be needed to perform the work? At what point in time and for how long?

• Are there employees who, with appropriate development, could perform the work in the future?

• What attrition will occur, e.g. retirements, deployments or promotions out of the organization?

• How will corporate memory be preserved?

• How will specialized skills or knowledge be retained?


• What use of extended leave is estimated (e.g., sick leave, parental leave, leave-with-income-averaging)?

• How can employees' career development needs, plans and aspirations be accommodated?

• Where will the labor market be in which likely candidates will be found?

• Will the workforce be or remain sufficiently diverse to reflect future labor market availability (i.e. employment equity considerations)?

• Corporate Head count "Fat" Assessment - assessment tools that will let you know in advance where head count and overhead costs are excessive.

• Redeployment / Agility Plans It is not uncommon for new markets and products to open (and close) rapidly. Companies need to have a strategy to remain "agile" and to be able to move people, and resources rapidly from areas of low return to areas of a higher return.

• "Smoke" Detectors (Predictors) If HR is to be proactive it needs to be able to anticipate problems. Developing HR systems and metrics that indicate potential problems might give us sufficient time to develop plans and strategies to either avoid the problem or minimize impact.

STRATEGIC HR PLANNING TOOLS

• Bench Strength (Back Fill) In this time of high turnover, it's increasingly essential to have a strategy of identifying and developing individuals that can take over if an employee leaves. A bench strength plan differs from traditional succession planning in that it only covers replacing key jobs within a single department. It is not a company-wide succession plan. Individual managers are held responsible for developing at least one individual to fill every key job.


• Employee Challenge Plan One of the primary reasons employees leave their jobs is due to a lack of challenge. HR can dramatically increase retention rates if it gets managers to develop individual "Challenge Plans" for workers.

• Retention Plan A retention plan is a corporate strategy to lower turnover. The first step is to identify key performers and hard to fill positions. Individuals that may be "at risk" are identified. Individuals or position -wide strategies are then developed to increase their retention rates. Additional efforts are made to identify why people stay in their jobs and why people leave.


• Quality of Labor Supply Forecasts Identifying the "quality" of the future labor supply is a medium term strategy based on the assumption that the available labor force will not have the competencies and skills that our company needs. Accurate forecasting will allow a company to prepare training and development plans to upgrade the available talent. Adequate preparation will give a competitive

talent advantage over rivals.


• Horizontal Progression Plan Because most companies have de-layered or eliminated many management positions there are fewer opportunities for promotion to stimulate workers. As a result, companies need to develop horizontal transfer and job rotation plans to ensure the continued development of both technical and managerial skills among our top employees.


• Work/Life Balance Supply/Demand Forecasts New hires, as well as current workers are demanding an increasing array of benefits and work life balance options. HR needs to develop strategies to accurately assess what those work life balance demands will be. It must also be able to forecast what percentage of our work force will choose to participate in work life balance programs like job sharing and sabbaticals. This forecast will enable companies to be prepared for the decreased amount of hours employees will be willing to put in.


• Learning / Knowledge Plan Companies are becoming increasingly aware that a major competitive advantage occurs when a company can rapidly acquire information/solutions and swiftly share them throughout the company. HR can help by assisting managers in developing individual and corporate wide learning plans and strategies to increase speed of learning and the application of that knowledge within our company.


• Skills/ Competency Inventories In order to rapidly re-deploy resources and fill unexpected vacancies HR must develop computerized skill or competency inventories. Such inventories allow companies to "throw" talent at a problem because we are aware of which individuals in our corporation have the needed skill or experience to solve that problem. These inventories do not require people to move between positions as they can also be used as sources for advice and benchmarking.


• Interest Inventories In order to retain employees it is essential that we have a strategy for identifying and meeting the changing needs of our workers. By asking workers What projects they might like to work on? What skills they would like to develop? and What individuals or teams would they like to work with? managers can develop strategies for increasing a worker excitement and productivity levels.


• Candidate Expectation (offer acceptance criteria) Forecast The increased number of job openings and the "unique" expectations of the current crop of generation Xer's and college hires makes it increasingly more difficult to get candidates to accept an offer. By using focus groups and surveys companies can identify and forecast the unique offer acceptance demands of it's recruits. Accurate forecasts can give the company sufficient time to develop the array of programs and benefits that are increasingly essential to get a candidate to say yes.


• HR Competitive Analysis As CEOs become increasingly aware of the value of strong HR programs they're demanding that each and every program we offer is superior to that of our direct competitors. This requires a side by side and program by program s assessment on how every HR program we currently have is superior to our competitors. In addition, in order to continually improve, HR must show an improvement each year in our "this year to last years" comparison.


• Bad Management Identification Program One of the primary reasons that employees quit their jobs are the bad management practices of their direct supervisor. Companies often thrown managers into their jobs with little training or preparation Through the use of surveys, 360 degree assessments and interviews companies can identify "bad managers". The organization can then develop strategies for fixing these managers, transferring them back to more technical jobs or for releasing them. Because managers are responsible for meeting many employee needs that are cited as reasons for employee turnover (communicating with the worker, challenging them, recognizing their efforts etc.) fixing bad managers may be the single most important factor in increasing productivity and decreasing turnover.


• Talent Acquisition Through Mergers & Acquisition Plan There are ways to acquire talent beyond traditional recruiting. Acquiring "intact" teams and large numbers of talented people (with similar values) rapidly is possible by having HR "scout out" target firms and then recommending their acquisition just for their employees.


• Targeted Succession plans Targeted succession plans are narrowly focused strategies for ensuring that individuals are available to fill vacant key positions in project teams. Targeted areas often include major software implementations, year 2000 efforts and product development teams. Most succession plans have often failed because they were too broad. Targeted plans allow the focus and forecasting to be more narrowly applied with the goal of increasing the accuracy of the planning.



• Turnover / Exit Forecast A strong economy coupled with large swings in the health of world economies makes predicting the supply of labor increasingly difficult. The other side of this issue is identifying where our company is likely to lose key talent through turnover and retirements. This turnover forecast is designed to predict short term vacancies in the next six months in order to prepare the appropriate recruitment or internal promotion strategies

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7 HR PLANNING. The strategic role of HR Planning 1. Developmental planning for strategic leadership succession planning leadership development 2. Assessment