Human Resource Planning

HUMAN RESOURCE PLANNING

LEARNING OBJECTIVES• Explain the relationship between strategic HRM planning and operational HR planning• Appreciate the importance of HR planning•Identify the key environmental influences on HR planning•Understand the basic approaches to HR planning•Describe the ways of forecasting HR requirements•Understand the requirements for effective HR planning

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• Human resource planning is better described as employment planning

• Based on HR forecasts, specific action can be taken to get the right numbers and types of people doing the right work at the right time (that is, planning the flow of people into, throughout the organization).


Topic 2: HR Planning

Organisation strategy and human resource planning

Organisation strategy

HR planning•Determine number and types of jobs to be filled.•Match human resource availability with job openings.

Retrenchment strategy•Downsizing•Business sale•Shut down

Growth strategy•Internally generatedgrowth•Acquisitions, mergersor joint ventures

Stability Strategy•Maintain status quo

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Importance of HR Planning• The focus of human resource

planning is on labour demand (the number of people needed by the organization) and the labour supply (the number of qualified people available to the organization).

• HR planning involves the entry of people into the organization (acquisition), the development of people skills (development) and the exit of people from the organization (departure).


• Effective HR planning is critical to the organization's success because it matches the organization and its HR objectives with its people requirement.

• Organizations with surplus employees will need to review their HR policies regarding permanent employment, outsourcing and retrenchments. Likewise, organizations with too many low-skilled employees and poorly qualified employees may face obstacles when introducing new technology, total quality management and other change initiatives.04/07/2023 5Topic 2: HR Planning

• Effective HR planning ensures that the available talent is correctly allocated, labour costs are controlled, the employee headcount is appropriate, productivity is improved and talented employees are retained.

The purpose of HR Planning• To ensure that a predetermined

number of persons with the appropriate knowledge, skills and abilities are available at a specified time in the future.


HR Planning

Topic 2: HR Planning

HR planning Determine number and type of jobs to be

filled. Match human resource availability with job

openings.

Human resource demand

Human resource supply

Human resource requirements: numbers skills qualifications occupation performance experience career goals

Human resource inventory: numbers skills qualifications occupation performance experience career goals

Variances Nil

No action

If surplus Stop recruiting Reduce casual and part-time employment Start early retirements Start retirements Start retrenching Reduce working hours

If shortage Increase overtime Increase casual and part-time employment Postpone retirements Start recruiting Accelerate training and development Use outsourcing 04/07/2023 7

HR Planning

Topic 2: HR Planning04/07/2023 8

• Managers must ask:1. What mix of knowledge, skills and

abilities do we require now?2. What mix will we require in the

future?3. Do we have the right number of

qualified employees today?4. How will employee numbers

change in the future?5. How do our labour costs and

productivity compare with those of our competitors?

6. Where will we find the people we need?04/07/2023 9Topic 2: HR Planning

Scarcity of talent Increasingly, what concerns

managers is the scarcity of talent. One of the most significant factors contributing to the company’s outstanding performance is the quality of its people.

Attracting talent and retaining talent has now become a major driver of corporate strategy. A company’s talent, moreover, is increasing in importance as a determinant of its price share.04/07/2023 10Topic 2: HR Planning

• The major problems facing Sydney, Hong Kong, Singapore in their quest to be the business hub of the Asia – Pacific region are their lack of skilled people and a talent brain drain.

• Australia, for e.g., has a persistent shortage of medical, nursing, teaching, accounting, engineering and technical employees and people with trade skills.


HR PLANNING FAILURE AND LABOUR IMBALANCES


Environmental factors affecting HR Planning

As part of the strategic process, HR planning considers both the internal and external environmental influences on an organization, its objectives, culture, structure, systems and HRM policies and procedures

This is because HR planning must reflect the environmental trends and issues that affect an organization's management of its human resources, including:


Economic factors - (for e.g., Australia’s high income tax rates make it difficult and expensive to attract international executives)

Social factors – (for e.g., jobs shunned by Americans as being too hard, too dirty or too menial are done by illegal workers)

Demographic factors – (for example, one in six Hong Kong residents will be 65 or older by 2015)04/07/2023 14Topic 2: HR Planning

Technological factors – for e.g., the internet has made geographical location irrelevant, giving organizations the power to transfer jobs from rich countries with expensive labour to poor countries with cheap labour – Microsoft is shifting US-based jobs to India in an effort to reduce technical support and development costs.

All these factors affect the type and availability of labour.


Globalization‘Globalization’ is allowing skilled

labour to move like capital across the world to locations that offer the best compensation and the best future. The United States attracts more educated immigrants than the rest of the world combined.

Australia is losing more than 80 000 residents per year - the majority being academics, managers and professionals – primarily to Britain, Hong Kong, Singapore and the US.


China, India and Japan are also suffering brain drains. Up to 50 percent of India’s top engineering and science graduates and 20 per cent of its medical graduates leave each year for jobs overseas.


Women in the workforceThe growing role in women in the

workforce depends on improved childcare facilities, the availability of part-time work, job security after an absence for child-bearing, maternity leave, special parental leave and partners prepared to share home duties.

Working – class women are following the trend set by upwardly mobile career women and avoiding the ‘mummy track’ of staying at home and looking after the children.


Other environmental influencesEnvironmental influences that impact

on HR planning include: demographic factors for e.g.,

ImmigrationAn ageing populationThe number of women in the

workforceThe casualisation of the workforceEmployee literacy levelSkill shortages04/07/2023 19Topic 2: HR Planning

Approaches to HR PlanningThe HR Manager needs to be able to

forecast the organization's future HR requirements and determine from where they will be obtained.

Forecast of the demand for human resources within the organization

Forecast of the supply of external human resources

A forecast of the supply of human resources available within the organization 04/07/2023 20Topic 2: HR Planning

Two approaches to HR forecasting planning are:

1. Quantitative approach - The quantitative approach to HR planning uses statistical and mathematical techniques. The focus of this approach is on forecasting HR shortages, surpluses and career blockages; its aim is to reconcile the supply and demand for human resources given the organisation’s objectives. Quantitative forecasting includes trend projection, econometric modelling and multiple


2. The qualitative approach: The qualitative approach to HR planning uses expert opinion (usually a line manager) to predict the future (for example, the marketing manager will be asked to estimate the future personnel requirements for the marketing department). The focus is on evaluations of employee performance and promotability as well as management and career development. Qualitative forecasting includes Delphi Technique and Nominal Group technique.


HR Planning and HR Forecasting

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The Quantitative Methods1. Econometric modelling and

multiple predictive techniques Economic modelling and multiple

predictive techniques involve building complex computer models to stimulate future events based on probabilities and multiple assumptions.

Predictions are based on the statistical relationship discovered among the variables included in the models (for e.g., the relationship of sales, discretionary income and gross domestic product to employment.


Because they tend to rely heavily on past data, quantitative techniques may not be suitable in rapidly changing situations.

2. Trend ProjectionTrend projection or time series

analysis, makes predictions by projecting past and present trends into the future.

Sales or production levels. For eg., can be related to the organization's demand for human resources. This technique is based on the assumption that the future will be a continuation of the past.


The Qualitative Approach1. The Delphi Technique A panel of experts, such as key line

Managers, make independent anonymous predictions in answer to questions relating to HR planning.

The responses are analyzed by the HR department and the confidential results are fed back to the experts along with series of questions. The managers revise their original estimates in the light of this new information.


The disadvantage of the delphi technique:

i) It is time consumingii) It is costly2. The nominal group techniqueAfter a problem has been presented,

each team member, without discussion, independently generates as many solutions as possible and writes them down. Then, in turn, each member describes a solution to the group. No criticism or debate is undertaken, but team members can seek clarification.


After all solutions have been presented, the group members silently and independently rank each proposed solution.

The solution with the highest total ranking becomes the final decision.

The advantage of the nominal group technique are:

i) Allows group members to meet without restricting the independence of their thinking

ii) It produces more and better quality ideas than a traditional group.04/07/2023 28Topic 2: HR Planning

Forecasting human resource availabilityOnce the HR manager has estimated the

HR needs of the organization, the next challenge is to fill the projected vacancies.

Forecasting the supply of internal human resources

Techniques for forecasting the internal supply of personnel include:

i) Skill inventoryii) Replacement chartiii) Succession planningiv) Turnover analysisv) Markov analysis


Qualitative Methods1. Skills inventory Is a method used to evaluate the

internal supply of labour. A company maintained record of

employee’s abilities, skills, knowledge and education.

The skills inventory permits the HR manager to:

i) Identify qualified employees for different jobs

ii) Determine which skills are present or lacking in the organization

iii)Assess longer-term recruitment, selection, and training and development requirements.


Information that can be listed in a skill inventory includes:

Personal data – age, sex, marital statusQualifications – education, job experience,

training, licencesProfessional membership – membership of

professional associationsSkills – computer literacyLanguages – number and fluencyEmployment history – jobs held, pay recordTest data - scores on psychological and

employment tests (must be job-related)Medical – health information (must be job

related)Employee preferences – geographic

location, management function (for e.g., marketing, production)


Skill inventories can be quite simple and kept manually, or they may be detailed and maintained as part of an integrated HR information management system (HRIMS).

Advantages of skills Inventoryi) Inventories provide a mechanism

for filling positions by internal promotion, ensuring that existing employees are not overlooked


2. Replacement chartsA visual representation of which

employee will replace the existing incumbent in a designated position when it becomes vacant.

Skill inventories are the source of data used in replacement charts.

Replacement charts summarize this information in pictorial form for key managers so they can easily identify both the present incumbents and potential replacements (or lack of) for given positions.


Succession planningA systematic, long-term career

development activity that focuses on preparing high – potential employees to fill key professional and management positions so that the organization can achieve its strategic objectives.


Quantitative Methods

1. Turnover Analysis Labour turnover in an organization

may result from employee retirement, death, illness or disability, resignation, retrenchment or termination.

The reason why a employees resign may be avoidable (for e.g., unfair treatment, poor supervision, lack of challenge) or unavoidable (for e.g., relocation to another state or overseas, return to university, serious illness).


Employees may quit because of dissatisfaction with their working conditions, pay and benefits, training and development, promotional opportunities, relationship with colleagues and so on.

Exit interviews giving information on employee reasons for leaving and labour turnover rates from past years are the best source of information.


2. Markov AnalysisIs a mathematical technique used to

forecast the availability of internal job candidates.

A matrix is developed to show the probability of an employee moving from one job to another for leaving the organization.


FACTORS AFFECTING THE EXTERNAL SUPPLY OF HUMAN RESOURCES

Not all vacancies can be filled from within the organisation.

Consequently, the organisation must tap into the external labour market (local, regional, interstate or international).

• External labour market• Demographic changes (ageing population)

– When the number of older people increases relative to the number of younger people in the population

– e.g. Australia, Hong Kong, Japan, Singapore, South Korea, Taiwan and the US

– How to tap into the knowledge and experience of older workers while keeping promotion opportunities open to the young

• Other factors:– Female participation rates– Increase in school retention rates– Changes in the rate of immigration– Use of child labour


OutsourcingSubcontracting work to an outside

company that specializes in and is more efficient at doing that kind of work. International outsourcing is called offshoring

The reasons for organizations choosing to outside include:

1. An increased focus on the core business – organizations want to spend their management time and energy on the key aspects of their business.

2. Cost and quality - 3. Access to improved 4. Elimination of union problems


Casualisation of the workforce One dramatic trend is the casualisation of the

workforce in industrialized economies. Competitive and economic pressures, changes in

technology, the need for more flexible staffing, the increased use of outsourcing and unfavorable IR legislation (which makes companies reluctant to hire full-time permanent employees) have all contributed to this trend.

In Australia, 24% are casual workers Most contingent workers prefer to have full-

time jobsDISADVANTAGES:

Marginalises career paths, training and fringe benefits of young people and women


International employeesCompanies are increasingly seeking

employees outside their domestic market.

Technological advances in communications and transportation and increased labour mobility have facilitated the internationalisationof business.

E.g., US companies are shifting engineering and other technology – related jobs to China, Ireland, India and the Philippines. Labour is now a global resource.


Requirements for effective HR Planning

Successful HR planning requires HR managers to ensure that:

HR personnel understand the HR planning process

The organization does not start with an overly complex system

The communication between HR personnel and line management are healthy

The HR plan is integrated with the organization's strategic business plan

There is a balance between the quantitative and qualitative approaches to HR planning


SummaryAn effective HRP is required for an

organisation to be effectiveA complex system is not what’s

requiredMeasure of success of the system: if

the right people are available at the right time

HRP needs to be fully in integrated to the organisation’s business plan

HR managers must be able to demonstrate the success of HRP processes


Documents

Human Resource Planning