Chapter 5

Human
Resource
Planning

McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 5, Human Resource Planning
Chapter 6, Job Analysis and Design
Chapter 7, Recruitment
Chapter 8, Selecting Effective Employees
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1. Discuss the importance of human resources planning in
organizations and give examples of the critical linkages that
exist between strategic planning and human resources
planning.
2. Analyze how managers forecast demand for and analyze the
supply of employees in the organization.
3. Compare four forecasting techniques that are used in human
resource planning.
4. Differentiate the terms skills inventory, succession planning,
and replacement chart.
5. Discuss how human resource information systems
support an organization's effort for effective human
resource planning

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5-4
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 Reacting quickly to opportunities
Business
success Rapid access to accurate information
depends on
Human resources

Assesses the future supply of, and

demand for, human resources
Provides mechanisms to eliminate Human
gaps between supply and demand resource
planning
Requires periodic readjustment as
labor market conditions change

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 Effective use of human resources is
not a significant organizational goal

Employment planning is likely informal and slipshod

Top management values stable growth

HR planning is less important that it would

be under rapid expansion or diversification

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Asians
Asiansand
andHispanics
Hispanicswill
willenter
enterthe
the
labor
laborforce
forceatat29.8%
29.8%and
and33.1
33.1% %
respectively
respectively

White,
White,non-Hispanics
non-Hispanicswill
willincrease
increase
by
by1.4%
1.4%

Workers
Workers55
55and
andolder
olderwill
willincrease
increase
by
by43%
43%

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Types of people employed and the
tasks they will perform Hiring the disabled

Availability of skilled
and unskilled labor Hiring of veterans

Executive succession Age of mandatory

retirement

HR related government policies

Equal opportunity
and regulations

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 Strategic
Planning
Human Resource Supply
Technological
Existing employment inventory
forecasts
After application of expected loss and
Economic
attrition rates
forecasts
Market
forecasts
Organizational
planning Human Resource Demand
Investment
planning Annual employment requirements
Annual Numbers
operating plans Skills
Occupation categories
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 Situation Develop
analysis action plans
Four Stages
of HR Planning

Forecasting Analysis of
demand HR supply

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 The
Thestrategic
strategicplan
planmust
mustadapt
adaptto
to
environmental
environmentalcircumstances
circumstances

HRM is a mechanism organizations

can use during the adaptation process

Without a plan to support recruitment

and selection, you cant be competitive

Success today depends on being a

global scanner

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 Forecasting
Forecasting How many employees
Involves
Involves
Estimating
Estimating What kinds of employees

Can help with forecasting

Quantitative
QuantitativeTools
Tools
Human judgment needed

Demand
Demandfor
forWorkers
WorkersTied
Tiedto
toOrg.
Org.Strategy
Strategy

Growth Reengineering Reorganization

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 Forecasting
Expert estimates (top down)
Techniques
Trend projections (top down)

Statistical modeling (top down)

Success depends Unit-demand forecasting (bottom up)

on accurate and
freely shared
information

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 Subjective
Subjective
assessments
assessments of of
economic Experience
Experience
economic && labor
labor
force
force indicators
indicators Experts
Experts
base
basedemand
demand
estimates
estimateson
on
Intuition
Intuition Guesses
Guesses

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 Delphi
DelphiTechnique
Technique Nominal
NominalGroup
GroupTechnique
Technique
Elicits estimates from a Individual estimates followed
number of experts in an by group brainstorming
iterative manner
Goal is to generate a group
Estimates revised by each decision that is preferred
individual based on knowledge over any individual decision
of others estimates
Developed by the
Rand Corporation

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Top-down technique
Develops a forecast based on a
past relationship between a
factor related to employment and
employment itself
Example: Sales levels are
related to employment needs

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5-17
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 Top-down approach

Uses the most sophisticated forecasting & modeling

Trend projections relate a single factor to employment

Environmental factors could be gross national

product or discretionary income
The organization may be mathematically
modeled so simulations can be run

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 Markov
MarkovChain
ChainAnalysis
Analysis
Developing a matrix to
show the probability of
Begins with an analysis
an employee moving
of staffing levels from
from one position to
one period to another
another or leaving the
organization

Can identify the

Does not suggest a
probability of lower
solution to the problem
employee retention
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Exhibit 5-4 Probabilities of Retention of
Nurses in Three Local Hospitals

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 A mathematical procedure that predicts
the dependent variable on the basis of
factors (independent variables)

With simple linear With multiple

regression, one regression, more
dependent and one than one
independent independent
variable are studied variable is studied

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 Unit managers analyze current and
future needs person-by-person and job-
by-job
Headquarters totals the unit forecasts

Sum is the corporate employment forecast

If both bottom-up and top-down approaches

are used, the forecasts may conflict

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How many and what kinds
of employees do I
currently have, in terms of
the skills and training
necessary for the future?
This involves more than simply
counting current employees

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 Skills Management
Inventory Inventory

Identify the skills, abilities, experiences, and

training employees currently have
Useful for career planning, management
development, and related activities
In its simplest form, a list of names,
characteristics, skills on index cards
Others involve expensive and complex
computer databases

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5-25
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 Employees career goals
Often omitted,
Geographical preferences
but increasingly Intended retirement date
important

The employees past

Categories
Present skills
within a skills
Data that focus on the future
inventory

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 Principal
Principalmethods
methodsfor
forgathering
gatheringdata
data
the
theinterview
interviewand
andthe
thequestionnaire
questionnaire
Questionnaire is faster and cheaper,
but can be inaccurate
Trained interviewer may be able to complete
them faster and more accurately

Files
Filesmust
mustbe
beupdated
updated

The more often changes are made and

data used, the more often updates should
be performed

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 Manual System versus Computer Database

How much Competitive

does the How often analysis over
computer will the data time
system cost? be used? needed?

Skills inventories are useful only if used by

management to make significant decisions

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 Making nice to know requests

Searches that are not backed

by bona fide, budgeted requisitions

Specifying so many characteristics

for a desired employee that no one fits

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 After worker supply and demand has
been analyzed, the two forecasts must be compared

If demand is higher than the supply

Fill with present employees who will work overtime

If there is a shortage of skilled employees

Train and/or promote present employees
Recruit less-skilled employees
Recall employees who were previously laid off
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 Organizations are
In response to
using more

1. Part-time workers 1. Intense global

competition
2. Subcontractors
2. Rapid
3. Independent
technological
professionals
change
3. Fears caused by
recent workforce
reductions

Over 5 million U.S. citizens are contingent workers

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Possible solutions to employee
surplus
Attrition
Early retirements
Demotions
Layoffs
Terminations
Employees who are considered
surplus are seldom responsible for
the conditions leading to the surplus

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 Most avoid layoffs by using attrition, early
retirement, creation of work, and so on
Attrition can be accelerated by encouraging
employees to leave early

Drawbacks to losing workers over age 50

They tend to be healthier than younger workers
They have fewer work-related injuries
They are less likely to change jobs
They take critical skills and experience with them

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 Overhalf
Over halfthe
theworkforce
workforcewill
willbe
beprotected
protected
In 2010, the bythe
by theAge
AgeDiscrimination
Discrimination
median age of ininEmployment
EmploymentAct Act
U.S. works was
48.7 years Organizationsmust
Organizations mustbe becareful
careful
whendesigning,
when designing,encouraging,
encouraging,and
and
implementingearly
implementing earlyretirement
retirementprograms
programs

Oncepromised,
Once promised,ititmay
maybebeillegal
illegalto
to
Dont make changethemthem
promises that change
cant be kept

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 Companies too About one-third
often and quickly lay off too many
turn to layoffs
When
Whenlayoffs
layoffs workers
become
becomeaa
necessity
necessity
They fail to Poorly designed
consider the layoffs can
consequences kill morale

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Information is key to successful HR
planning
A human resource information system (HRIS) is
an integrated way to acquire, store, analyze,
and control information flow

A highly developed HRIS can increase

the efficiency and response times of
Tracking applicants
Skills inventory
Career planning
Employee service programs
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Computer technology can integrate multiple HR
programs into a single system
Enroll in benefits programs
Process employee transactions
Use learning modules

An HRIS for use by upper-level executives is

called an executive information system
Computerization allows organizations to broaden
their view of succession planning

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 Succession planning
for executive positions Many aging executives
is more important than
More early retirements
ever
Delaying retirement
Many companies Consulting positions
realize the critical need
for a comprehensive Part-time assignments
retention plan

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HRIS makes it easier Danger lies both within and
to outside the organization
invade employee
privacy The friendlier the system,
the easier unauthorized
access is
Identity theft is using Without the persons
anothers name, knowledge
address, social
security number, or With intent to commit fraud
other information or other crimes

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 Identity theft is becoming
a national problem
Complaints rose to over
278,000 in 2009
Identify theft is a felony
under the Identity Theft
and Assumption
Deterrence Act of 1998
The problem will continue
to escalate

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 Costs of identify theft to the employee

$800 in
175 hours
23 months out-of-pocket
researching &
correcting expenses to
tracking the
credit reports restore
crime
credit

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The greatest threat to privacy is when employees dont retain the right to
authorize the release of information
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 Organizations should carefully evaluate their
policies regarding access to HRIS data to
determine

How much information, legally and ethically,

should be disclosed

How much control employees should have over

the release of personal information

No federal legislation guarantees employees the

right to inspect and amend data in an HRIS
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1. Discuss the importance of human resources planning in
organizations and give examples of the critical linkages
that exist between strategic planning and human
resources planning.
2. Analyze how managers forecast demand for and analyze
the supply of employees in the organization.
3. Compare four forecasting techniques that are used in
human resource planning.
4. Differentiate the terms skills inventory, succession
planning, and replacement chart.
5. Discuss how human resource information systems
support an organization's effort for effective human
resource planning
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