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)