ADM 551 HUMAN RESOURCE MANAGEMENT

TOPIC 2
HUMAN RESOURCE PLANNING (HRP)
By: Fadilah Bt Puteh FSPPP, UiTM Shah Alam

Learning Outcomes After studying this chapter, you should be able to:

1. Identify the advantages of integrating human resources planning and strategic planning. 2. Understand how an organizations competitive environment influences strategic planning 3. Recognize the importance of internal resource analysis 4. Describe the basic approaches to human resources planning. 5. Explain the linkages between competitive strategies and HR. 6. Understanding the requirements of strategy implementation 7. Recognize the methods for assessing and measuring the effectiveness of strategy.

What is HRP?

Process of anticipating and making provision for the movement of people into, within and out of an organization. (Snell & Bohlander) A process of systematically reviewing human resources requirements to ensure that the required number of employees with the required skills are available when needed. (Mondy & Noe) The process of deciding what positions the firm will have to fill and how to fill them. (Gary Dessler) Process of analyzing and identifying the need for availability of human resources so that the organization can meet its objectives. (Mathis & Jackson)

The importance of HRP

HR Planning Responsibilities

HR Planning Responsibilities

Staff Manager (HR Department Manager) Participates in strategic planning

Line Managers Identify supply-and-demand needs for each division/department. Review/discuss HR planning

process for entire organization. Identify HR strategies

information with HR specialist Design HR Planning data system Integrate HR plan with departmental plans. Compiles and analyzes data from managers on staffing needs Implements HR plan as approved by top management. Monitor HR plan to identify changes need. Review employee succession plans associated with HR plan.

Strategic Planning and Human Resources

Organizations long term goals and strategies or known as strategic planning (SP) are made by focusing on how the organization will position itself in relative to competitors to ensure survival, values and growth. Firms SP must be based on the areas of strength that an organization has which is referred as core competencies. Core competency refers to an unique capability that creates high value that differentiates the organization from its competitors. In many organizations, their core competencies are human resources. Human resources certainly contribute to a competitive advantage for the organizations when they have special KSA that competitors cannot easily imitate. SP and HRM must focuses on the development of core competencies whereby different skill groups in any organization can be classified according to the degree to which they create strategic value, rare and unique to the organization. Many factors determine whether an organization will be successful; human resources are one of them. Firm use its employees to gain or keep competitive advantage against competitors. Firms competitive advantage derived from a proper HRP which ensure effective staffing decisions. Effective management decides the direction of the organization by setting up strategic human resource management (SHRM). SHRM is the pattern of human resources deployments and activities that enable an organization to achieve its strategic goals.

SHRM = SP + HRP
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HRP and SP
Strategic planning at this level provide and formulate general direction of the firm.

Strategic planning at business level provides direction for each department (SBU) to achieve firm goals.

All strategic planning in each SBU is done at this level involving critical activities that determine the department success to achieve organizational goals.

Level of Organizational Strategic Planning (Mondy & Noe)

Linking HRP and SP Processes

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HRP Process / Steps Mondy & Noe (2005)

Strategic Planning
HRP

Forecasting HR Requirements

Comparing Requirements & Availability

Forecasting HR Availability

Demand = Supply (dd=ss)

Surplus (dd<ss)

Shortage (dd>ss)

No Action

Layoff, Early Retirement, Downsizing, Restricted Hiring, Reduced Hours

Recruitment

Selection
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HRP Process / Steps Mathis & Jackson (2003)

Organizational Objectives and Strategies

Scan External Environment for Changes Affecting Labor Supply

Analyze Internal Inventory of HR Capabilities

Forecasting

Organizational Need for People

Survey of People Available

HR Strategies and Plans

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HRP Process / Steps Bohlander & Snell (2009)

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Human Resource Forecasting

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Model of HR Forecasting
FORECASTING DEMAND

Considerations
Product/service demand Technology Financial resources Absenteeism/turnover Organizational growth Management philosophy

Techniques
Trend analysis Managerial estimates Delphi technique

BALANCING SUPPLY AND DEMAND

(Shortage) Recruitment
Full-time, part time Contracts, recalls Outsourcing

Techniques
Staffing tables Markov analysis Skills inventories Management inventories Replacement charts Succession planning

External Considerations
Demographic changes Education of the workforce Labor mobility Government policies Unemployment rate

(Surplus) Reductions
Layoffs Terminations Demotions Retirements

FORECASTING SUPPLY
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Forecasting Employee Demand

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Example of Trend Analysis

BUSINESS FACTOR
YEAR

LABOR PRODUCTIVITY
(SALES/EMPLOYEE)

HUMAN RESOURCES DEMAND

(NUMBER OF EMPLOYEES)

(SALES IN THOUSANDS)

1997 1998 1999 2000 2001 2002

$2,351 $2,613 $2,935 $3,306 $3,613 $3,748

14.33 11.12 8.34 10.02 11.12 11.12

164 235 352 330 325 337

2003
2004* 2005* 2006*

$3,880
$4,095 $4,283 $4,446

12.52
12.52 12.52 12.52

310
327 342 355
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*Projected figures

Forecasting Employee Demand

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Forecasting Employee Supply

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An Executive Replacement Chart

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Markov Analysis for a Retail Company

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HRP Results

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Managing Labor Surplus

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Managing Labor Surplus

Advantages Downsizing, pay reductions, Deliver fast results demotions

Disadvantages May hurt surviving employees motivation and future recruiting

Hiring freeze or natural attrition Early retirement

Avoid the pain of layoffs Less painful than layoffs

Slow to take effect Induce the best employees to leave and may be slow to implement

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Managing Labor Shortage

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Managing Labor Shortage

Advantages Overtime Temporary employees, outsourcing Hiring new employees Can easily be changed if conditions change Staffing level can be quickly and easily modified Strengthens the organization if labor needs are expected to expand for the long term Require investment of time and money Disadvantages May exhaust workers and can hurt morale Do not build an in-house pool of talent Slow and expensive

Transferring and retraining

Enhance the quality of the organizations human resources

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Problems That Hinder Effective HRP

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Problems That Hinder Effective HRP

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END OF PRESENTATION

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Tutorial Questions
1. Discuss why HR is a core competency for organizations?. 2. Define HRP and outline the HRP process. 3. Identify factors to be considered in forecasting the supply and demand for human resource in an organization. 4. Discuss several ways to manage surplus of human resources. 5. Discuss ways to overcome shortage of workers. 6. Discuss requirements and availability forecasts. 7. Explain relationship between strategic planning and HRP. 8. Identify the 3 key elements of the HRP model & discuss the relationship among them. 9. Distinguish between the qualitative & quantitative approaches to forecasting the need for HR. 10. Discuss the importance of HRP.

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