HR Planning

Human Resource Planning (HRP)

• Is the first component of HRM strategy• All other functional HR activities are derived from and

flow out of the HRP process.• Has its basis in considerations of future HR

requirements in light of present HR capabilities and capacities.

• Is proactive in anticipating and preparing flexible responses to changing HR requirements.

• Has both an internal and external focus.

How many people do we need?• Product Demand X Labor Productivity• Turnover

Where are they coming from?• Internal Labor Market

Existing employees

• External Labor Market Potential employees

HR Planning

HR Forecasts

• Labor demand Strategic Planning Succession Planning Managing Retention

• Labor supply Labor markets Specific shortages

Labor SupplyLabor Demand

Major Objectives of HRM Planning

• Prevent overstaffing and understaffing• Right skills in place Monday morning• Ensure responsiveness to change• Alignment of all HRM systems• Gain agreement between line and

management on goals and objective

Forecasting Demand for Employees

• Consider the firm’s strategic plan’s likely impact on the demand for the firm’s products or services.

• Assumptions on which the forecast is predicated should be written down and revisited when conditions change.

• Unit forecasting (bottom-up planning) involves “point of contact” estimation of the future demand for employees.

• Top-down forecasting involves senior managers allocating a fixed payroll budget across the organizational hierarchy.

Forecasting Demand for Employees

• Budgeting• Statistical Techniques

Trend analysis Regression Probability models

• Qualitative Techniques Ask the experts / Delphi Technique

• Needs are then compared to current workforce to identify gaps and decide staffing actions.

• Take into account: Productivity and FTE employees Scheduling and shifts High volume / traffic times

Trend Analysis of HR Demand

1997 $2,351 14.33 164

1998 $2,613 11.12 235

1999 $2,935 8.34 352

2000 $3,306 10.02 330

2001 $3,613 11.12 325

2002 $3,748 11.12 337

2003 $3,880 12.52 310

2004* $4,095 12.52 327

2005* $4,283 12.52 342

2006* $4,446 12.52 355

BUSINESS LABOR = HUMAN RESOURCES

FACTOR PRODUCTIVITY DEMANDYEAR (SALES IN THOUSANDS) (SALES/EMPLOYEE) (NUMBER OF EMPLOYEES)

*Projected figures

Forecasting Supply of Employees

• Staffing Tables• Markov Analysis• Skill Inventories• Succession Planning

Forecasting Internal Labor Supply

Staffing Tables Graphic representations of the number of

employees currently occupying certain jobs and future (monthly or yearly) employment requirements.

Markov Analysis A method for tracking the pattern of employee

promotions up through and organization.

Markov Analysis for a Retail Company

Forecasting Internal Labor Supply

Skill Inventories Databases of employee KSA’s, education, and used to

match job openings with employee backgrounds.

Succession Planning The process of identifying, developing, and tracking key

individuals for executive positions. Listings of current jobholders and persons who are

potential replacements if an opening occurs.

Succession Planning

Staffing Actions

• Recruiting new employees• Developing existing employees• Retaining key employees• Restructuring or redeployment• Outsourcing functions• Using contingent employees• Reassigning shifts