Chapter 3—Planning for

Human Resources
 Objectives
• HR Planning Contributes to an
organization’s competitive advantage
• Why & How firms engage in Strategic
Planning
• Why & How HR planning activities are
conducted
• How HRM practices developed in
response to an HR Plan
• Role of HRIS in HRM activities
Gaining Competitive Advantage
• Nature of AT&T’s business changed needed to
reexamine many of its HRM practices
• Realign staffing practices with its new business
plans
• New breed managers
– Knowledgeable about the firm’s new products and
services
– Manage mergers and acquisitions
– Function effectively in an uncertain environment
Gaining Competitive Advantage
• Solution—develop a career progression
system
• Purpose of system:
– Identify management skills required by the
company’s new global business plans
– Track skill levels of all managers aspiring to top
management positions
Groom and select individuals for
positions as vacancies developed
Gaining Competitive Advantage
• System has the following information
(People File):
– Job history
– Education
– Strengths and Weaknesses
– Leadership Development needs
– Developmental Plans
– Training
– Special skills
Gaining Competitive Advantage
• What has the system enabled AT&T to do:
– Leaderships skills for top mgmt positions
– Specific employees qualified to move into a
position
– Positions with insufficient numbers of “local
candidates”
– Developmental plans for each candidate
Linking HR Planning to Competitive
Advantage
• Business environment is rapidly changing
• HRM strategies are developed based on internal
and external variables
• Human Resource Planning ties human
resource issues to the organization’s
business needs
• HR planning—process of identifying and
responding to organizational needs and
charting new policies, systems and programs
that will assure effective HRM under
changing conditions
Linking HR Planning to Competitive
Advantage
• Purpose of HR Planning:
– Enable organization to anticipate their future
HRM needs
– Identify practices that will help them meet
those needs
– HR planning is “the thread that ties all other
HR activities and integrates these with the
rest of the organization
Linking HR Planning to Competitive
Advantage
• Ford—Mission Statement– “Produce high
quality products at low cost”
• Fulfill mission organization needed to
change HRM practices to increase
commitment and motivation of its
employees
• Discuss Figure 3-1 on page 62
 Serving as a Building Block for
Future HRM Practices
• Implementation of many HRM practices
discussed in this book require careful HR
planning—(KSAs required)
• Discuss Exhibit 3-1 page 63
• Consequences associated with failure to plan
– Forced to respond to events after they occur become
reactive instead of proactive—can’t forecast demand
for employees accurately
– Causes stress in current ees due to increased
workloads
 HRM Issues & Practices
• Strategic Planning ensures organizations
know where they are going
• Strategic Planning Activities:
– Determine the organizational mission
– Scan the organizational environment
– Set strategic goals
– Formulate a strategic plan, part of which
addresses human resource needs
 Strategic Planning Steps
• Step I
– Development of organizational mission (org’s
purpose for existing)
• Step 2
– Scan the organizational environment (both
internally and externally)—Conduct a SWOT analysis
– External environment
• Political
• Social
• Legal
• Economic
• Technological issues
 Strategic Planning Steps
– Internal
• Culture
• Structure
• Current mission
• Past history
• Number of layers of management
• Span of control of management
• Skills of the human resources
• Leadership and power
• Number of functional areas
 Strategic Planning Steps
• Obtain environmental information—not only the
CEO by it also rests with management and all other
employees
• VPs of functional areas provide input into decisions
regarding new strategic direction for the firm
(Discuss Figure 3-2 page 65
• Step 3—Set Strategic Goals
– Desired outcomes if org is going to accomplish its
mission
• Goals need to be specific, measurable, and achievable
 Strategic Planning Steps
• Step 4—Formulate a Strategic Plan
– Once internal and external are scanned
goals are set and org formulates its
strategic plan
 HR Planning

• Now we link firm’s HRM practices to its

strategic business needs identified by the
strategic planning process
• HR Planning can be both short term and
long term (three or more years)
– Identify future needs
– Plan for meeting them
 Demand Forecasting
• Demand forecasting involves predicting the
number and types of people the org will need at
some future point
• Statistical approaches– org predicts the needed
workforce size based on certain business
factors
– Statistical approach is used when an org operates in
a stable environment (patient load to predict number
of nurses needed)—explosive growth need more of a
judgmental approach
 Demand Forecasting
• Trend analysis—most commonly used
statistical method
– Demand for future human resources predicted
on past business trends regarding a business
factor (Discuss Figure 3-3 page 67
• Ratio Analysis—process of determining
future HR demand by computing exact
ratio between the specific business factor
and the number of ees needed
 Demand Forecasting
• Ratio Analysis
– Student-faculty ratio—10,000 students and 500
professors 20:1 faculty student ratio. For every 20
students you have one professor. If enrollment
increases by 1,000 students we would need to hire an
additional 50 faculty
• Regression Analysis—similar to both trend and
ratio analyses in that forecasts are based on the
relationship between business factor and
workforce size.
• This method is more statistically based—regression
analysis—scatter diagram—Discuss Figure 3-2 page 68
 Demand Forecasting
• Estimating future hr needs;
– Supply and demand of each group—25
engineers—five positions becoming vacant—
due to turnover and we need to fill three new
jobs—total of 8
Outcomes of HR Planning Process
• Oversupply employees:
– Smaller workforce—restructuring—due to downsizing
• Hiring freezes
• Early retirements
• Restricted overtime
• Job sharing
• Pay reductions
• Undersupply employees:
– Hire additional staff
– Fill jobs internally or externally—target protected groups—
older, disabled, foreign-origin individuals
– Internal recruitment programs with career development
programs
Outcomes of HR Planning Process
• Alternatives to additional hiring:
– Improve productivity of existing workforce through
additional training
– Overtime
– Additional shifts
– Job reassignments
– Temporary workers
– Improve retention rates—give candidates a realistic
preview of what their jobs would actually be like
– Workers want to feel valued by their org
– Orgs need to train managers to be good managers
Outcomes of HR Planning Process
• Improve retention by having ees actively
participate in the welfare of the
organization
• Workers want recognition for their
contribution—but must be tailored to the
individual needs of the worker
• Telecommuting, job sharing, shorter work
weeks (9/80 at Babcock and Wilcox)
• Cafeteria style benefits
 HRIS
• Management can record, store, manipulate, and
communicate information across wide geographic
boundaries with access to many users
• Discuss Exhibit 3-4 page 73
• Purposes served by an HRIS:
– Central repository for information on benefits, HR
policies, and processes
– Allow users to compare different benefit packages
– Provide managers with instructions on how to implement
15 different HR practices
– Basis for succession planning program
 HRIS
• Through automation HRIS can reduce
paperwork and cut administrative costs
• Organizational members outside HR can
access the data
• HRIS on the “NET”—Internet and Intranet
– Employee handbook
– Benefit info
– Training courses
HR Planning—Manager’s Guide
• HR Planning is an essential function for all
line managers
– Staffing—most important activity
– Employee retention—establish good working
relationships with their employees
– Need to be effective communicators,
motivators, and effective teachers
How the HR Department Can Help
• Now hr professional are included in the
strategic planning process
• Now we plan our futures looking at hr
needs on the front end of the strategic
planning process
• HR is now a full partner with finance,
operations, and marketing
 Developing & Implementing HR
Plans
• HR professionals’ plans must be aligned with
changes spurred by the organization’s strategic
plan. Plan interventions:
– Greater flexibility in the workforce
– Greater rigor in training
– Increased responsibilities for management
– Increased worker participation
– The use of performance incentives
As programs get implemented HR must consider
the corporate culture (pattern of shared values,
mores and behaviors)
 Evaluation of HR Plans
• Only when the operational plans of the HR
department are evaluated can the
organization know if the HR strategies
were effective (Discuss Exhibit 3-7 page
78)