HUMAN RESOURCE PLANNING

Developing Talent at Procter and Gamble Consumer goods conglomerate P&G has had a long, successful history based on hiring at the entry level and developing and promoting its managers and executives from within. The key to this success is the organization’s Build from Within program, which tracks the performance of every manager within the organization relative to his or her potential and next area for development. Each of the organization’s top 50 jobs consistently has three internal replacement candidates lined up and ready to assume responsibility.Consumer goods conglomerate P&G has had a long, successful history based on hiring at the entry level and developing and promoting its managers and executives from within. The key to this success is the organization’s Build from Within program, which tracks the performance of every manager within the organization relative to his or her potential and next area for development. Each of the organization’s top 50 jobs consistently has three internal replacement candidates lined up and ready to assume responsibility. 1–21–2

Developing Talent at Procter and Gamble Loyalty of employees is paramount to ensuring the success of such a program, and P&G’s history of grooming and training its employees promotes such loyalty. Fewer than 5% of the organization’s non-entry-level hires come from outside the organization, and its rigorous and competitive screening process, in which fewer than 5 percent of applicants are hired, ensures that P&G hires those best suited for the organization and its culture.Loyalty of employees is paramount to ensuring the success of such a program, and P&G’s history of grooming and training its employees promotes such loyalty. Fewer than 5% of the organization’s non-entry-level hires come from outside the organization, and its rigorous and competitive screening process, in which fewer than 5 percent of applicants are hired, ensures that P&G hires those best suited for the organization and its culture. 1–31–3

Developing Talent at Procter and Gamble P&G’s 138,000 employees are tracked via monthly and annual performance reviews in which managers discuss business goals, personal goals, and how they have trained others to assume responsibility. The latter is a key factor in the upward mobility of any manager. P&G prides itself in being able to fill any opening internally “in an hour.” All executives are required to teach in the organization’s training programs, and the CEO assumes direct responsibility for the development of the organization’s top 150 employees.P&G’s 138,000 employees are tracked via monthly and annual performance reviews in which managers discuss business goals, personal goals, and how they have trained others to assume responsibility. The latter is a key factor in the upward mobility of any manager. P&G prides itself in being able to fill any opening internally “in an hour.” All executives are required to teach in the organization’s training programs, and the CEO assumes direct responsibility for the development of the organization’s top 150 employees. 1–41–4

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Human Resource Planning Once the corporate and business unit strategies have been established, then the human resource strategy can begin to be developed. The HR strategy involves taking the organization’s strategic goals and objectives and translating them into a consistent, integrated, complementary set of programs and policies for managing employees.Once the corporate and business unit strategies have been established, then the human resource strategy can begin to be developed. The HR strategy involves taking the organization’s strategic goals and objectives and translating them into a consistent, integrated, complementary set of programs and policies for managing employees. 1–61–6

1–71–7 Human Resource Planning (HRP) First component of HRM strategyFirst component of HRM strategy All other functional HR activities are derived from & flow out of HRP processAll other functional HR activities are derived from & flow out of HRP process Basis in considerations of future HR requirements in light of present HR capabilities & capacitiesBasis in considerations of future HR requirements in light of present HR capabilities & capacities Proactive in anticipating & preparing flexible responses to changing HR requirementsProactive in anticipating & preparing flexible responses to changing HR requirements Both internal & external focusBoth internal & external focus First component of HRM strategyFirst component of HRM strategy All other functional HR activities are derived from & flow out of HRP processAll other functional HR activities are derived from & flow out of HRP process Basis in considerations of future HR requirements in light of present HR capabilities & capacitiesBasis in considerations of future HR requirements in light of present HR capabilities & capacities Proactive in anticipating & preparing flexible responses to changing HR requirementsProactive in anticipating & preparing flexible responses to changing HR requirements Both internal & external focusBoth internal & external focus

1–81–8 Human Resource Planning (HRP) Goes beyond simple hiring & firingGoes beyond simple hiring & firing Involves planning for deployment of human capital in line with organization &/or business unit strategyInvolves planning for deployment of human capital in line with organization &/or business unit strategy May involve:May involve: –Reassignment –Training & development –Outsourcing –Using temporary help or outside contractors Needs as much flexibility as possibleNeeds as much flexibility as possible Goes beyond simple hiring & firingGoes beyond simple hiring & firing Involves planning for deployment of human capital in line with organization &/or business unit strategyInvolves planning for deployment of human capital in line with organization &/or business unit strategy May involve:May involve: –Reassignment –Training & development –Outsourcing –Using temporary help or outside contractors Needs as much flexibility as possibleNeeds as much flexibility as possible

1–91–9 Key Objectives of HR Planning Prevent overstaffing & understaffingPrevent overstaffing & understaffing Ensure organization has right employees with right skills in right places at right timesEnsure organization has right employees with right skills in right places at right times Ensure organization is responsive to changes in environmentEnsure organization is responsive to changes in environment Provide direction & coherence to all HR activities & systemsProvide direction & coherence to all HR activities & systems Unite perspectives of line & staff managersUnite perspectives of line & staff managers Prevent overstaffing & understaffingPrevent overstaffing & understaffing Ensure organization has right employees with right skills in right places at right timesEnsure organization has right employees with right skills in right places at right times Ensure organization is responsive to changes in environmentEnsure organization is responsive to changes in environment Provide direction & coherence to all HR activities & systemsProvide direction & coherence to all HR activities & systems Unite perspectives of line & staff managersUnite perspectives of line & staff managers

1–10 Types of Planning Aggregate PlanningAggregate Planning –Anticipating needs for groups of employees in specific, usually lower level jobs & general skills employees will need to ensure sustained high performance Succession PlanningSuccession Planning –Focuses on ensuring key critical management positions in organization remain filled with individuals who provide best fit Aggregate PlanningAggregate Planning –Anticipating needs for groups of employees in specific, usually lower level jobs & general skills employees will need to ensure sustained high performance Succession PlanningSuccession Planning –Focuses on ensuring key critical management positions in organization remain filled with individuals who provide best fit

1–11 Aggregate Planning Forecasting demandForecasting demand –Considers firm’s strategic plan’s effects on increases or decreases in demand for products or services –Assumptions on which forecast is predicated should be written down & revisited when conditions change – Unit forecasting (bottom-up planning) involves “point of contact” estimation of future demand for employees – Top-down forecasting involves senior managers allocating a fixed payroll budget across organizational hierarchy –Demand for employee skills requirements must also be considered Forecasting demandForecasting demand –Considers firm’s strategic plan’s effects on increases or decreases in demand for products or services –Assumptions on which forecast is predicated should be written down & revisited when conditions change – Unit forecasting (bottom-up planning) involves “point of contact” estimation of future demand for employees – Top-down forecasting involves senior managers allocating a fixed payroll budget across organizational hierarchy –Demand for employee skills requirements must also be considered

1–12 Aggregate Planning Forecasting supplyForecasting supply –The level and quantities of abilities, skills & experiences can be determined using Skills Inventory. –Annually updated human resource information system (HRIS) is dynamic source of HR information –Markov analysis can be used to create transition probability matrix that predicts mobility of employees within organization Forecasting supplyForecasting supply –The level and quantities of abilities, skills & experiences can be determined using Skills Inventory. –Annually updated human resource information system (HRIS) is dynamic source of HR information –Markov analysis can be used to create transition probability matrix that predicts mobility of employees within organization

1–13 Exhibit 5-2 Transition Probability Matrix for Restaurant

1–14 Strategies for Managing Shortages Recruit new permanent employeesRecruit new permanent employees Offer incentives to postpone retirementOffer incentives to postpone retirement Rehire retirees part- timeRehire retirees part- time Attempt to reduce turnoverAttempt to reduce turnover Recruit new permanent employeesRecruit new permanent employees Offer incentives to postpone retirementOffer incentives to postpone retirement Rehire retirees part- timeRehire retirees part- time Attempt to reduce turnoverAttempt to reduce turnover Work current staff overtimeWork current staff overtime Subcontract work outSubcontract work out Hire temporary employeesHire temporary employees Redesign job processes so fewer employees are neededRedesign job processes so fewer employees are needed

1–15 Strategies for Managing Surpluses Hiring freezesHiring freezes Do not replace those who leaveDo not replace those who leave Offer early retirement incentivesOffer early retirement incentives Reduce work hoursReduce work hours Voluntary severance leaves of absenceVoluntary severance leaves of absence Hiring freezesHiring freezes Do not replace those who leaveDo not replace those who leave Offer early retirement incentivesOffer early retirement incentives Reduce work hoursReduce work hours Voluntary severance leaves of absenceVoluntary severance leaves of absence Across-the-board pay cutsAcross-the-board pay cuts LayoffsLayoffs Reduce outsourced workReduce outsourced work Employee trainingEmployee training Switch to variable pay planSwitch to variable pay plan Expand operationsExpand operations

1–16 Succession Planning Involves identifying key management positions the organization cannot afford to have vacantInvolves identifying key management positions the organization cannot afford to have vacant Purposes of succession planningPurposes of succession planning –Facilitates transition when employee leaves –Identifies development needs of high-potential employees & assists in career planning Many organizations fail to implement succession planning effectivelyMany organizations fail to implement succession planning effectively –Qualified successors may seek external career advancement opportunities if succession is not forthcoming Involves identifying key management positions the organization cannot afford to have vacantInvolves identifying key management positions the organization cannot afford to have vacant Purposes of succession planningPurposes of succession planning –Facilitates transition when employee leaves –Identifies development needs of high-potential employees & assists in career planning Many organizations fail to implement succession planning effectivelyMany organizations fail to implement succession planning effectively –Qualified successors may seek external career advancement opportunities if succession is not forthcoming

1–17 Exhibit 5-4 Sample Replacement Chart

1–18 Exhibit 5-5 Pros & Cons of Disclosing Succession Planning