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Human Resource Planning and Alignment
McGraw-Hill/IrwinHuman Resource Management, 10/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
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Introduction
Success in business is dependent on: Reacting quickly to opportunities Rapid access to accurate information
Human resource planning (HR planning): How organizations assess the future supply of, and
demand for, human resources Provides mechanisms to eliminate gaps that may exist
between supply and demand Requires readjustment as labor market conditions
change
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Introduction
If effective utilization of human resources is not a significant goal for the organization:Employment planning is likely to be informal and
slipshod
If top management values stable growth:HR planning will be less important than if the goals
include rapid expansion or diversification
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Introduction
The U.S. Dept. of Labor projects that: Asians and Hispanics will join the labor force
at rates of 44 and 36 percent White non-Hispanics will increase by 9 percent Workers 55-64 will increase by 52 percent Workers 65 and older will increase by 30 percent
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Introduction
HR related government policies and regulations: Equal opportunity and promotion call for more HR
planning for women and minorities The age of mandatory retirement is being raised Organizations are encouraged to hire veterans and the
disabled
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Introduction
The types of people employed and the tasks they perform determine the kind of planning necessaryHR planning is critical for implementation of the
organization’s strategic planHR policies have direct effects on profitability
Strategic human resource management (SHRM) means acknowledging that HR policies/practices have critical links to an organization’s overall strategy
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The HR Planning Process
The four phases or stages of HR planning: Situation analysis or
environmental scanning Forecasting demand Analysis of the supply Development of action plans
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Situation Analysis & Environmental Scanning
The first stage of HR planning is the point at which HRM and strategic planning first interactThe strategic plan must adapt to environmental
circumstances HRM is one of the primary mechanisms an
organization can use during the adaptation process
Without a plan to support recruitment and selection, it is impossible to stay competitiveThe problems associated with changing environments
are greater today than ever beforeSuccess now depends on being a “global scanner”
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Forecasting Demand for Employees
This phase of the process involves estimating: How many employees will be needed What kinds of employees will be needed
Quantitative tools can help with forecasting, but it involves a great deal of human judgment The demand for employees is closely tied to the
strategic direction that the organization has chosen Growth ReengineeringReorganization
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Forecasting Demand for Employees
Techniques to help reduce the uncertainty inherent in HR planning:Expert estimates Trend projectionsStatistical modelingUnit-demand forecasting
Key to effective planning is accurately and freely sharing information
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The Expert Estimate
One or more “experts” provide the organization with demand estimates based on:ExperienceGuessesIntuitionSubjective assessments of
available economic and labor force indicatorsThis is the least mathematically sophisticated approach
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The Expert Estimate
The Delphi technique elicits expert estimates from a number of individuals in an iterative mannerDeveloped by the Rand CorporationEstimates are revised by each individual based on
knowledge of the other individuals’ estimates
With the nominal group technique (NGT), individual estimates are followed by group brainstorming The goal is to generate a group decision that is
preferred over any individual decision
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Trend Projection
This 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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Modeling & Multiple-Predictive Techniques
This top-down approach uses the most sophisticated forecasting and modeling techniques Trend projections relate a single factor, such as sales,
to employment Environmental factors could be gross national
product or discretionary income Or, the organization may be mathematically modeled
so that simulations can be run
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Modeling & Multiple-Predictive Techniques
Markov chain analysis involves:Developing a matrix to show the probability of an
employee’s moving from one position to another or leaving the organization
The process begins with an analysis of staffing levels from one period to another
Markov analysis can identify the probability of lower employee retention
It does not suggest a solution to the problem
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Modeling & Multiple-Predictive Techniques
Regression analysis is a mathematical procedure:It predicts the dependent variable on the basis of
factors (independent variables)
With simple linear regression, one dependent and one independent variable are studied With multiple regression, more than one independent
variable is studied
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Unit Demand Forecasting
This is a bottom-up approachUnit managers analyze current and
future needs person-by-person and job-by-job
Headquarters totals the unit forecastsThe sum is the corporate employment forecast
If both bottom-up and top-down approaches are used, the forecasts may conflict This can be resolved by averaging the variances The Delphi technique or NGT could also be used
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Analyzing the Current Supply of Employees
This phase of HR planning should answer the question:
“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 employeesThe smaller and more centralized the organization,
the easier it is to conduct a skills inventory
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The Skills Inventory
Both a skills inventory and a management inventory:Identify the skills, abilities, experiences, and training
employees currently haveAre useful for career planning, management
development, and related activities
In its simplest form, a skills inventory is a list of:NamesCharacteristicsSkills
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The Skills Inventory
Skills inventories vary greatly in their sophistication Some are as simple as a file drawer of index cards Others involve expensive and complex computer
databases
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Contents of the Skills Inventory
The only data available to the organization for later use is what was designed into the system
Name Employee number
Present location Date of birth
Date of employment Job classification
Skills, knowledge, education Foreign language skill
Professional qualifications Publications
Licenses and patents Hobbies
Supervisory evaluations Salary range
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Contents of the Skills Inventory
Often omitted, but increasingly important, are:Employees’ stated career goalsGeographical preferencesIntended retirement date
The main categories within a skills inventory:Data summarizing the employee’s past Data summarizing present skills Data that focus on the future
Today, many skills inventories are more complex
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Maintaining the Skills Inventory
The two principal methods for gathering data: the interview and the questionnaire The questionnaire is faster and cheaper, but can be
inaccurate Some contend that a trained interviewer can complete
questionnaires more quickly and accurately
Plans for keeping files updated must be made The more often changes are made and the data is
used, the more often updates should be performed
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Maintaining the Skills Inventory
Should data be stored in a manual system or on a computer? How much does the computer system cost?How frequently the data will be used?A computer allows comparative analysis over time
Skills inventories are useful only if management uses the data to make significant decisions Before accessing the data, managers must be trained
to avoid abuse of the system
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Action Decisions in HR Planning
After the supply of and demand for workers has been analyzed, the two forecasts must be comparedWhenever there is a gap between the two estimates, a
course of action must be chosen
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Action Decisions in HR Planning
If the supply of workers is less than the demand: It can be filled with present employees who are
willing to 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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Action Decisions in HR Planning
Organizations are using more:Part-time workersSubcontractorsIndependent professionals
This is in response to: Intense global competition Rapid technological change Fears caused by recent workforce reductions
Over 5 million U.S. citizens are contingent workers
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Action Decisions in HR Planning
Possible solutions to an employee surplus:AttritionEarly retirementsDemotionsLayoffsTerminations
Employees who are considered surplus are seldom responsible for the conditions leading to the surplus
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Action Decisions in HR Planning
Most organizations 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 the age of 50: They tend to be healthier than younger workersThey have fewer work-related injuriesThey are less likely to change jobsThey take critical skills and experience with them
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Action Decisions in HR Planning
By 2010, the median age of the U.S. workforce will be 40.6 years Over half the workforce will be
protected by the Age Discrimination in Employment Act
Promises should not be made that can’t be keptOnce promised, it may be illegal to change them
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Action Decisions in HR Planning
If voluntary reductions don’t eliminate the gap between supply and demand, layoffs may be necessary Corporations too frequently and quickly turn to
layoffsThey fail to consider the consequences About one-third lay off too many workers Poorly designed workforce reductions can kill morale
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Human Resource Information Systems
Information is the key to successful HR planningA human resource information system (HRIS) is an
integrated way to acquire, store, analyze, and control information flow through an organization
A highly developed HRIS can increase the efficiency and response times of:Tracking applicantsSkills inventoryCareer planningEmployee service programs
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Human Resource Information Systems
Computer technology makes it possible to integrate multiple HR needs into a single system:Enrolling in benefits programsProcessing employee transactions (pay increases)Using learning modules
An HRIS developed for use by upper-level executives is called an executive information system (EISs)Computerized HRISs have allowed organizations to
broaden their view of succession planning
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Human Resource Information Systems
Factors that make succession planning for executive level positions more important than ever: Large numbers of aging executives Increasingly popular early retirement
Fortune 500 companies anticipate 33 percent turnover among their executives over the next five years
Many companies now realize the critical need for a comprehensive retention planThis plan may include consulting and part-time
assignments
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Employee Privacy, Identity Theft, & HRIS
HRIS makes it easier to invade employee privacy Danger lies both within and outside the organizationThe friendlier the system, the easier it can be for
unauthorized access
Identity theft occurs when:Someone uses another’s name, address, social
security number, or other information:Without the person’s knowledgeWith the intent to commit fraud or other crimes
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Employee Privacy, Identity Theft, & HRIS
Identity theft is fast becoming a national problem Complaints from U.S. victims rose from 1,380 in
1999 to over 210,000 in 2003 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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Employee Privacy, Identity Theft, & HRIS
The costs of identify theft to the employee are numerous:Average 175 researching and tracking the crime 23 months correcting credit reports $800 in out-of-pocket expenses to restore financial
health and standing
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Employee Privacy, Identity Theft, & HRIS
Safeguards to minimize privacy risks in an HRIS: Determine the best way to collect data Limit the information collected to what is relevant Tell employees what information is kept on file and
how it is used Let employees inspect and correct their information Keep sensitive information separateLimit internal use of personal information Only disclose personal information to outsiders with
employee consent
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Employee Privacy, Identity Theft, & HRIS
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
The greatest threat to privacy is when employees don’t retain the right to authorize the release