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Chapter 3: Environmental Influences on HRM

Environmental Scanning at GM
 GM went into bankruptcy and then revitalized through $50 billion government bailout
funds
 GM motorists did not realize rising costs of fuel and increasing environmental
awareness would demolish their gas guzzling SUVs
 GM looked for clues to explain their efficiencies to improve themselves but Japanese
already started designing next generation of cars
 GM cut fixed operating costs and offloaded costly health benefits for retirees
Toronto overtook GM as the largest car maker in 2008
 2011 earthquake in Japan impacted the market share of Japanese auto makers
 Today, many changes in how transportation is viewed with respect to fuel prices,
energy risks, and climate change
 Maybe there will be entrepreneurial ideas from outside the auto industry about
responding innovatively to trends

The external environmental impacts to our organization.


Impact can be 8 months or years from now, not necessarily tomorrow.

Environmental Scanning Sources and Methods

Environmental scanning - systematic monitoring of major factors influencing the


organization to identify trends that may affect the implementation and formulation of
organizational and HR strategies
-to reduce or minimize the risk to the organization

Fad vs trend

Environment
-anything outside organizational boundaries that might influence an organization
-covers factors in national and multinational contexts that
influence organizations
-Not part of the organization but is tightly integrated
-Organizations do not exist in isolation.
-External environment is everything outside
-Changes in social media?

Mandatory retirement - cannot tell someone who is 65+ that they cannot
retire.
Analysis of external environment consists of these stages/process (PART OF MIDTERM)
-this is an ongoing process and organization are always refining the way their particular
company or business goes through the process

Scanning
- identify early signals of changes and trends in environment. Ambiguous,
incomplete, unconnected info.
-check for early warning signs

Monitoring
-systematic approach to following key indicators that may affect the
organization - legislative changes
-example changes in Employment Standards, the emergence of Cannabis industry (whether
they are legislative, political, technological)

Forecasting
-after monitoring, project the possible impact on the organization/business
-doing our due diligence as good HR people, come up with contingency plan

Assessing
-describe the impact of the monitored trend on the organization and make a judgment of the
probability of possible outcomes
-look at pros and cons, put plans in place, ask what happens if?

Sources of Information
-Know the trends not only in the Canadian marketplace but globally

Publications
-HR professionals can scan newspapers, business publications and HR magazines,
journals and newsletters
-Canadian HR trends however lag behind US trends by a year or two and hence US
trends acts as a warning signal for HR professionals in Canada

Professional Associations
-Canadian HR professionals and executives belong to a number of organizations that
publish newsletters and updates on current events
HRPA and Conference Board of Canada have committees that look for any changes to
track trends

Conferences and Seminars


Professionals keep in touch with emerging trends by attending conferences, seminars,
workshops in Canada and US
Professional Consultants/Experts
Organizations that have an active interest in understanding the influence of potential
trends hire consultants to research or interpret these trends for them

Top Ten Trends in HR


 High cost of employee health care
 Changes to federal healthcare laws
 Increased global competition for jobs, markets and talent
 Growing complexity of legal compliance by employers
 Changes in employee rights
 Baby boomers leaving the workplace
 Canada pension
 Knowledge that is not documented. We do not have the resources to maintain
their knowledge. Is there succession planning in place?
 Growth in emerging markets
 Greater need for cross cultural understanding
 Growing national budget deficit
 Taxes to reduce gender gap
 Salary gap between males and females
 Greater economic uncertainty and market violation

HR Planning Today
Society of HRM tried to forecast workplace through environmental scanning and
Only half of the first page are available for preview. Some parts have been intentionally blurred.

collected results for top ten trends that will have strategic impact on workplace:
Continuing high cost of employee healthcare in US
Passage of federal healthcare legislation
Global competition for jobs, markets, talent
Growing complexity of legal compliance for employers
Changes in employee rights due to legislation/rulings
Too many baby boomers leaving workforce in same time
Economic growth of emerging markets like India, China, Brazil
Greater need for cross-cultural understanding/savvy in business settings
Growing national budget deficit
Greater economic uncertainty and market volatility
Most common actions taken by organizations:
Linking employee performance and its impact on organization's business goals
Increasing expectations of employee productivity
Taking steps to protect employees in case of health epidemic
Implement policies and procedures to protect employees and customers from
identity threats
Update technology use policies for employees
Change company policy in response to federal regulations
Investing in technology and services designed to protect company data in case
of disaster
Increase use of technology to perform HR functions
Implement wellness programs
Increase HR's role in promoting corporate ethics
Methods of Forecasting
Competitive Intelligence
Competitive intelligence - formal approach to obtain information about competitors - critical
for organizations to respond because new offers come up from other organizations
Is the source reliable?
What is the likelihood of the information being correct?
Study their websites for information about strategies and product launches;
Train employees to ask questions from vendors about purchasing decision of
competitors
Hire competitors' employees to get insider information about future plans
Some practices may be illegal/unethical
Most important competitive advantage is our people
Challenges in Environmental Scanning
Isolating the Critical from the Insignificant
Scanners have trouble picking out important events
Four criteria to identify significant trends:
Are there ripple effects (change in one aspect impacts another like social media)
Chapter 4 The HR Forecasting Process

Counterproductive behavior

Right amount of people at the right place at the right time

Why is Strategic HR Planning important to Organizations?


Because it attempts to balance between the work that needs to be done and the workforce that performs
the tasks to do the work

Insufficient work and too many employees lead to inefficiencies and lower productivity

Employees may become bored and unmotivated and engage in counterproductive behavior

Why is Strategic HR Planning important to Organizations?


On the other hand, too much work and an insufficient number of employees lead to higher overtime and
wages expenses, while at the same time increases the stress and fatigue of the overworked employeesBoth
scenarios will result in an ineffective organization that might compromise its ability to meet its goals and
objectives

Forecasting Activity Categories (MID TERM EXAM)


There are three forecasting categories:

Transactional-Based forecasting: Focuses on tracking internal change instituted by the organization’s


managers

-transaction there is beginning and an end

-focus on the day-to-day transactions in the organization and the people who are doing that transactions or
for instance new service or new products in the business

-what are those transactions that occur in our business that impact HR planning

Event-Based forecasting: Concerned with changes in the external environment

-AH1N1, SARS, introduction of new employment standards, flood, wildfire, etc that may impact the
organization, planning out or thinking about the future

Process-Based forecasting: Not focused on a specific internal organization event, but on the flow or
sequencing of several work activities

-change in the process that we have within the organization may impact the business, for instance it may
mean outsourcing, introduce automation and what to do with the people if we do it. Being able to look at
those activities
Benefits of HR Forecasting

 Reduces HR Cost – hire the right people, at the right place, at the right time

 Increases organizational flexibility – utilize skillsets inhouse that will allow us to move people in
another function

 Ensures a close linkage to the macro business forecasting process – look at HR and business strategy
and link them together

 Ensures that organizational requirements take precedence over issues of resource constraint and
scarcity (HR Supply and HR Demand)

 Being proactive than being reactive

Human Resource Supply and Demand


Human Resource Supply: The source of workers to meet demand requirements, obtained either internally
(current members of the organization’s workforce) or from external agencies Human Resource Demand: The
organization’s projected requirement for human resources

Key Personnel Analyses conducted by HR Forecasters (Four Areas in terms of Forecasting)


Specialist/Technical/Professional personnel

-they have designations (CHRL, CPA, etc), forecast the quantitative and qualitative information needed in
the future, recognizing anyone that has a designation is a professional from the perspective of the
organization.

-we are looking at those roles in the org and check if there are needs of these professionals/specialist and
forecast them

-for instance changing the technical piece of the organization or to outsource

Employment equity-designated group membership

-the four designated groups are included (women, Aboriginal people, person-with-disabilities, visible
minority)

Managerial and executive personnel

-replacement planning and succession planning

Recruits

-perceived today as entry-level positions


5 Stages of the Forecasting Process
Identify organizational goals, objectives and plans

Determine overall demand requirements for personnel

Assess in-house skills and other internal supply characteristics

Determine the net demand requirements that must be met from external, environmental supply sources

Develop HR plans and programs to ensure that the right people are in the right place.

10 Organizational Factors affecting HR Forecasting


Corporate mission, strategic goalsOperational goals, production budgetsHR policiesOrganizational
structures, restructuringWorker KSAOs, competencies, expectationsHRMS level of
developmentOrganizational culture, climate, job satisfaction, communicationsJob Analysis: workforce
coverage, current data

11 HR Forecasting Time Horizons


Current Forecasts: up to to one yearShort-run Forecasts: From one to two yearsMedium-run Forecasts:
From two to five yearsLong-run Forecasts: For five or more years

12 Outcomes of ForecastsPrediction: A single numeric estimate of HR requirements associated with a


specific time horizon and set of assumptions Projection: Incorporates several HR estimates based on a
variety of assumptions

13 Outcomes of ForecastsScenario: A proposed sequence of events with its own set of assumptions and
associated program details Contingency Plans: Implemented when severe, unanticipated changes to
organizational or environmental factors completely negate the usefulness of the existing HR forecasting
predictions or projections; like a backup plan

Steps in Determining net HR Requirements


Determine HR demand

-decide on what the HR demand of the future will be

Ascertain HR supply (includes internal supply and external supply) and skills inventory- personal database
record on each employee

-look at what area own, what exists, skils inventory

Determine Net HR requirements

Institute HR programs: HR shortage and HR surplus

15 HR Shortage or HR Surplus
HR Shortage: Demand > Supply HR Surplus: Supply > Demand
Dealing with Surpluses
Job Sharing: Occurs when two or more employees perform the duties of one full-time employees

Attrition: The process of reducing an HR surplus by allowing the size of the workforce to decline naturally

Hiring Freeze: A prohibition on all external recruiting activities

Hiring part-time, temporary overtime

Dealing with Shortages


External Recruitment: Finding employees from outside the organization

Internal transfers

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