Planning for and recruiting human resources

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All Rights Reserved.

fundamentals of

Human Resource Management 4thedition

by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright

CHAPTER 5

Planning for and Recruiting Human Resources

5-2

What Do I Need to Know?

1. Discuss how to plan for human resources needed to carry out the organization’s strategy.

2. Determine the labor demand for workers in various job categories.

3. Summarize the advantages and disadvantages of ways to eliminate a labor surplus and avoid a labor shortage.

5-3

What Do I Need to Know? (continued)

4. Describe recruitment policies organizations use to make job vacancies more attractive.

5. List and compare sources of job applicants.

6. Describe the recruiter’s role in the recruitment process, including limits and opportunities.

5-4

The Process of Human Resource Planning

• Organizations should carry out human resource planning so as to meet business objectives and gain a competitive advantage over competitors.

– Human resource planning compares the present state of the organization with its goals for the future

– Then identifies what changes it must make in its human resources to meet those goals

5-5

Figure 5.1: Overview of the Human Resource Planning Process

5-6

Forecasting

• Forecasting: attempts to determine the supply and demand for various types of human resources to predict areas within the organization where there will be labor shortages or surpluses.

There are three major steps to forecasting:

1. Forecasting the demand for labor

2. Determining labor supply

3. Determining labor surplus or shortage

5-7

Forecasting the Demand for Labor

Trend Analysis

• Constructing and applying statistical models that predict labor demand for the next year, given relatively objective statistics from the previous year.

Leading Indicators

• Objective measures that accurately predict future labor demand.

5-8

Determining Labor Supply

• Transitional matrix: a chart that lists job categories held in one period and shows the proportion of employees in each of those job categories in a future period.

It answers two questions:

1. “Where did people in each job category go?”

2. “Where did people now in each job category come from?

5-9

Table 5.1: Transitional Matrix – Example for an Auto Parts Manufacturer

5-10

Determining Labor Surplus or Shortage

• Based on the forecasts for labor demand and supply, the planner can compare the figures to determine whether there will be a shortage or surplus of labor for each job category.

• Determining expected shortages and surpluses allows the organization to plan how to address these challenges.

5-11

Goal Setting and Strategic Planning

• The purpose of setting specific numerical goals is to focus attention on the problem and provide a basis for measuring the organization’s success in addressing labor shortages and surpluses.

• The goals should come directly from the analysis of supply and demand.

• For each goal, the organization must choose one or more human resource strategies.

• Organizations should retain and attract employees who provide a core competency (what makes it better than competitors)

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Options for Reducing a Surplus

DownsizingPay

reductionsDemotions

TransfersWork

sharingHiring freeze

Natural attrition

Early retirement

Retraining

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As the average age of many workers in skilled trades grows, the coming demand for workers in many trades is expected to outstrip supply in the United States. There is a potential for employers in some areas to experience a labor shortage because of this.

5-14

Options for Avoiding a Shortage

OvertimeTemporary employees

Outsourcing

Retrained transfers

Turnover reductions

New external hires

Technological innovation

5-15

Table 5.2: HR Strategies for Addressing a Labor Shortage or Surplus

5-16

Test Your Knowledge

• A public accounting firm of 250 employees realizes they have a surplus of 15 support personnel (not auditors). What should they do?

A. Hire temporary workers

B. Offer early retirement

C. Downsize people in those positions

D. Wait for attrition and implement a hiring freeze for those positions

5-17

Implementing and Evaluating the HR Plan

• When implementing the HR strategy, the organization must hold some individual accountable for achieving the goals.

• That person must also have the authority and resources needed to accomplish those goals.

• Regular progress reports should be issued.

• The evaluation of results should not only look at the actual numbers, but should also identify which parts of the planning process contributed to success or failure.

5-18

Applying HR Planning to Affirmative Action

• Workforce Utilization Review: a comparison of employees in protected groups with the proportion that each group represents in the relevant labor market.

• The steps in a workforce utilization review are identical to the steps in the HR planning process.

• The organization must assess current utilization patterns, then forecast how they are likely to change in the near future.

• If the analyses forecast underutilization of certain groups, then goals and a plan will be established.

5-19

Recruiting Human Resources

• The role of human resource recruitment is to build a supply of potential new hires that the organization can draw on if the need arises.

• Recruiting: any activity carried on by the organization with the primary purpose of identifying and attracting potential employees.

5-20

Figure 5.2: Three Aspects of Recruiting

5-21

Personnel Policies

Internal versus external recruiting

Lead-the-market pay strategies

Employment-at-will policies

Image advertising

Several personnel policies are especially relevant to recruitment:

5-22

• Image advertising, such as in this campaign to recruit nurses, promotes a whole profession or organization as opposed to a specific job opening.

• This ad is designed to create a positive impression of the profession, which is now facing a shortage of workers.

5-23

Recruitment Sources: Internal Sources

• Job Posting: the process of communicating information about a job vacancy:

– On company bulletin boards

– In employee publications

– On corporate intranets

– Anywhere else the organization communicates with employees

5-24

Advantages of Internal Sources

1. It generates applicants who are well known to the organization.

2. These applicants are relatively knowledgeable about the organization’s vacancies, which minimizes the possibility of unrealistic job expectations.

3. Filling vacancies through internal recruiting is generally cheaper and faster than looking outside the organization.

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One in Three Positions AreFilled with Insiders

5-26

Recruitment Sources: External Sources

Direct applicants

Referrals

Advertisements in newspapers and magazines

Electronic recruiting

Public employment agencies

Private employment agencies

Colleges and universities

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Figure 5.3: External Recruiting Sources –Percentage of Employees Hired

5-28

Evaluating the Quality of a Source

Yield Ratios

• A ratio that expresses the

percentage of applicants who

successfully move from one

stage of the recruitment and

selection process to the next.

• By comparing the yield ratios of

different recruitment sources,

we can determine which source

is the best or most efficient for

the type of vacancy.

Cost Per Hire

• Find the cost of using a

particular recruitment source

for a particular type of vacancy.

• Divide that cost by the number

of people hired to fill that type

of vacancy.

• A low cost per hire means that

the recruitment source is

efficient.

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Table 5.3:Results of a Hypothetical Recruiting Effort

5-30

Your Experience

• In your last job search, what was your experience with a recruiter or other point of contact before you were offered the job?

A. Lousy, I didn’t take the job

B. Lousy, but I took the job anyway

C. Great, but I didn’t take the job

D. Great, I took the job

E. The experience wasn’t memorable.

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Recruiter Traits and Behaviors

Characteristics of the Recruiter

Behavior of the Recruiter

Enhancing the Recruiter’s Impact

5-32

Recruiter Characteristics and Behavior

True = A False = B

• Applicants respond more positively when the recruiter is an HR specialist than line managers or incumbents.

• Applicants respond positively to recruiters whom are warm and informative

• Personnel policies are more important than the recruiter when deciding whether or not to take a job.

• Realistic job previews should highlight the positive characteristics of the job rather than the negative.

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Figure 5.4:Recruits Who Were Offended by Recruiters

5-34

Enhancing the Recruiter’s Impact

• Recruiters should provide timely feedback.

• Recruiters should avoid offensive behavior.

• They should avoid behaving in ways that might convey the wrong impression about the organization.

• The organization can recruit with teams rather than individual recruiters.

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Recruiting Exercise (1 of 2)

• You are the regional HR director of the restaurant chain (e.g., Ruby Tuesday’s or TGI Fridays) and responsible for recruiting all staff for the restaurants in your region.

• One of the stores in your region needs to hire servers.

5-36

Recruiting Exercise (2 of 2)

1. What knowledge, skills, and abilities are required for the positions you are recruiting?

2. Will your sources of applicants be internal, external, or both? Explain.

3. What recruiting strategies will you use?

4. What metrics will you use to measure your success?

5-37

Summary

• The first step in human resource planning is personnel forecasting. Through trend analysis and good judgment, the planner tries to determine the supply and demand for various human resources.

• The next step is to determine the labor demand for workers in various job categories. Analysis of a transitional matrix can help the planner identify which job categories can be filled internally and where high turnover is likely.

5-38

Summary (continued)

• To reduce a surplus, downsizing, pay reductions, and demotions deliver fast results but at a high cost in human suffering that may hurt surviving employees’ motivation and future recruiting.

• To avoid a labor shortage, requiring overtime is the easiest and fastest strategy.

• Internal recruiting generally makes job vacancies more attractive because candidates see opportunities for growth and advancement.

5-39

Summary (continued)

• Lead-the-market pay strategies make jobs economically desirable.

• Internal sources are usually not sufficient for all of an organization’s labor needs.

• Through their behavior and other characteristics, recruiters influence the nature of the job vacancy and the kinds of applicants generated.