Human Resource Management, 4rd Edition by Raymond J. StonePrepared by Retha Wiesner John Wiley & Sons Australia, Ltd 2002
HUMAN RESOURCE PLANNINGChapter 2
OBJECTIVESAppreciate the importance of HR planningExplain the relationship between strategic HRM and HR planning.Identify the key environmental influences on HR planning.Understand the basic approaches to HR planning.Describe the ways of forecasting HR requirements and availability.Understand the requirements for effective HR planning.
If you dont want to plan for success, what right do you have to worry about non-success? If youre not planning where you want to be, what reason or excuse do you have for worrying about being nowhere?TOM HOPKINS, American sales trainer, motivator and author.Plans get you into things but you got to work your way out.WILL ROGERS (1879-1935), American actor, performer and humorist.
IMPORTANCE OF HUMAN RESOURCE PLANNINGThe purpose of HR planning is to ensure that a predetermined number of persons with the correct skills are available at a specified time in the future. HR planning systematically identifies what must be done to guarantee the availability of the human resources needed by an organisation to meet its strategic business objectives.HR planning cannot be undertaken in isolation. It must be linked to the organisations overall business strategy.
Source:Asia Pacific Management Co. Ltd. 2001
Organisation strategy and human resource planning
HR planningDetermine number and types of jobs to be filled.Match human resource availability with job openings.
Retrenchment strategyDownsizingBusiness saleShut down
Growth strategyInternally generated growthAcquisitions, mergers or joint ventures
Stability StrategyMaintain status quo
STRATEGIC HUMAN RESOURCE MANAGEMENT AND HUMAN RESOURCE PLANNINGAs part of the strategic planning process, HR planning must consider the environmental influences on an organisation, its objectives, culture, structure and HRM .HR planning must reflect the environmental trends and issues that affect an organisations management of its human resources. Government regulations relating to for example conditions of employment, EEO, industrial relations and OHS need to be considered. Other examples include demographic changes, the casualisation of the work force, employee literacy etc. The growing trend of women in the workforce needs to be considered in HR planning.
APPROACHES TO HUMAN RESOURCE PLANNINGTHE QUANTITATIVE APPROACHThe quantitative approach sees employees as numerical entities and groups them according to age, sex, experience, skills, qualification, job level, pay, performance rating or some other means of classification. The focus is on forecasting HR shortages, surpluses and career blockages; its aim is to reconcile the supply and demand for human resources given the organisations objectives.
Trend ProjectionTrend projection or time series analysis predictions work by projecting trends of the past and present into the future. This technique is based on the assumption that the future will be a continuation of the past.
Source:Asia Pacific Management Co. Ltd. 2001
Determine number and type of jobs to be filled.
Match human resource availability with job openings.
Human resource demand
Human resource supply
Human resource requirements:
Human resource inventory:
Reduce casual and part-time employment
Start early retirements
Reduce working hours
Increase casual and part-time employment
Accelerate training and development
Econometric ModellingEconometric modelling and multiple predictive techniques involve building complex computer models to simulate future events based on probabilities and multiple assumptions.
THE QUALITATIVE APPROACHThe qualitative approach to HR planning uses expert opinion (usually a line manager) to predict the future (for example, the marketing manager will be asked to estimate the future personnel requirements for the marketing department). The focus is on evaluations of employee performance and capacity for promotion as well as management and career development
Delphi TechniqueA refinement on this basic approach is the Delphi technique: a panel of experts such as key line managers make independent anonymous predictions in answer to questions relating to HR planning. The responses are analysed by the HR department and the confidential results are fed back to the experts along with another series of questions. The managers revise their original estimates in light of this new information. This process is repeated until a consensus forecast is obtained.
FORECASTING HUMAN RESOURCE AVAILABILITYOnce the HR manager has estimated the HR needs of the organisation, the next challenge is to fill the projected vacancies. Present employees who can be promoted, transferred, demoted or developed make up the internal supply. Constraints may apply on the use of both internal and external labour supplies (for example, a promotion from within policy, union restrictions, management preference and government regulations).
FORECASTING THE SUPPLY OF INTERNAL HUMAN RESOURCESTurnover analysisA detailed analysis of why people leave the organisation is essential if meaningful information is to be obtained. Labour turnover rates from past years are the best source of this information for most organisation. Turnover for each job classification and department should also be calculated because turnover can vary dramatically among various work functions and departments.
Skills InventoryThis consolidates basic information on all employees within the organisation and permits the HR manager to:identify qualified employees for different jobsdetermine which skills are present or lacking in the organisationassess longer term recruitment, selection and training and development requirements.Skills inventories can be quite simple and manually kept, or detailed and maintained as part of an integrated HR information system (HRIS).
Replacement ChartsReplacement charts summarise this information in visual form for key managers so they can easily identify both the present incumbents and potential replacements (or lack of) for given positions.Markov AnalysisThis is a mathematical technique used to forecast the availability of internal job candidates. The underlying assumption is that the movement of personnel among various job classifications can be predicted from past movements.
SUCCESSION PLANNINGSuccession planning is concerned with the filling of management vacancies. It stresses the development of high potential employees and takes a long-term view of the organisations HR needs. The HR managers role is to ensure that succession planning provides the organisations future managers with the necessary preparation to successfully fill potential vacancies. This means having an effective performance appraisal system, needs-orientated training and development programs, and a corporate culture which fosters individual growth and promotion from within.
FACTORS AFFECTING THE EXTERNAL SUPPLY OF HUMAN RESOURCESExternal labour marketLocal regional and internationalDemographic ChangesSuch as the ageing workforceCasualisation of the work forceIn Australia, 24 per cent of all employees are now casual workers.International Employees Companies are increasingly seeking employees outside their domestic market. Technological advances in communication and increased labour mobility have facilitated internationalisation of businesses.
OutsourcingBy strategically outsourcing and emphasising a companys core competencies, argue Quinn and Hilmer, managers can leverage their firms skills and resources for increased competitiveness. The reasons for organisations choosing to outsource include:increased focus on core business cost and qualityaccess to improved technologyelimination of union problems
REQUIREMENTS FOR EFFECTIVE HR PLANNINGSuccessful HR planning requires: HR personnel understand the HR planning processtop management is supportivethe organisation does not start with an overly complex systemthe communications between HR personnel and line management are healthy the HR plan is integrated with the organisations strategic business planthere is a balance between the quantitative and qualitative approaches to HR planning
SummaryThe HR plan affects all HR activities and acts as the strategic link between organisational and HRM objectives.An effective planning process if essential to optimising the organisations human resources.HR managers will have to successfully demonstrate that HR planning is relevant to the needs of line managers.