Planning for Human Resources Chapter 3

Understand how human resource planning contributes to a firm’s competitive advantage Explain why and how firms engage in strategic planning Explain why and how human resource planning activities are conducted Describe how HRM practices developed in response to the HR plan Understand the role of human resource information systems in planning and other HRM practices Chapter 3 Objectives

Opening Case: Gaining Competitive Advantage at General Motors Problem: Time spent on completing HR transactions hurts employee and HR productivity. Solution: Developing an employee services center website. How the employee services center enhanced competitive advantage: –Significant reduction in cost and time. –Improvement in speed and quality of employee work. –Improvement in the productivity of HR department.

Linking Human Resource Planning to Competitive Advantage HR planning: Process of identifying and responding to organizational needs and charting new policies, systems, and programs that will assure effective human resource management under changing conditions. Objectives of HR planning –Enable organizations to anticipate their future HRM needs. –Identify practices that will help them meet those needs.

Linking Human Resource Planning to Competitive Advantage (Cont.) HR planning ties together all human resource activities and integrates these with the rest of the organization. It enables companies to gain control of their future by preparing for events that are likely to occur.

Linking Human Resource Planning to Competitive Advantage (Cont.)

Consequences associated with the failure to plan for human resources –Employers are forced to respond to events after they occur; that is, they become reactive, rather than proactive. –An organization may be unable to correctly anticipate an increase in its future demand for employees, leading to understaffing. –Understaffing leads to consequences such as increased stress levels, increase in back orders, decrease in customer goodwill, an increase in competition, and a loss of market share.

Strategic Planning Through the strategic planning process, organizations determine where they are going. The process consists of the following 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 Need a Vision Statement – “What do we do?” Mission statement is a declaration of the organization’s overall purpose. Mission defines the basic business scope and operations that distinguish the organization from others of a similar nature. Step 1: Determine the Organizational Mission

Strategic Planning Step 2: Scan the Organizational Environment External and internal environments must be scanned to identify threats and opportunities. External environment: Includes political, legal, economic, social, and technological issues; the industry environment must also be scanned. Internal environment: Assessment of the firm’s strengths and weaknesses in order to form strategic goals that take advantage of strengths. The task of gathering information for strategy formulation rests with all managers and employees.

Strategic Planning Step 3: Set Strategic Goals Strategic goals specify the desired outcomes that must be reached for the firm to accomplish its mission. They should be specific, challenging, and measurable

Strategic Planning Step 4: Formulate a Strategic Plan Strategic plan specifies the courses of action a firm must take in order to meet its strategic goals. Formulated by: Translating organizational goals into more narrow functional or departmental goals. Devising strategies for meeting these goals.

Human Resource Planning Through HR planning, an organization is able to generate a list of future human resource needs and a plan for meeting them. To derive HR needs, the organization must forecast its demand and supply.

Human Resource Planning (Cont.) Demand forecasting involves predicting the number and types of people the organization will need at some future point in time. Supply forecasting involves estimating which organizational positions are expected to be already filled. Demand Forecast Supply Forecast HR Needs

An organization predicts needed workforce size on the basis of certain business factors. A business factor is an attribute of the business such as sales volume or market share, which closely relates to the size of the needed workforce. Is used when an organization operates in a stable environment. Most commonly used statistical methods are trend, ratio, and regression analysis. Human Resource Planning (Cont.) Demand Forecasting – Statistical Approaches

Human Resource Planning (Cont.) Demand Forecasting – Statistical Approaches Trend Analysis Future demand for human resources is projected on the basis of past business trends regarding a business factor. Ratio Analysis Process of determining future HR demand by computing an exact ratio between the specific business factor and the number of employees needed. Regression Analysis A statistically sophisticated tool where forecasts are based on the relationship between a business factor and workforce size.

Precaution regarding the use of statistical methods –Statistical methods of demand forecasting assume that the relationship between workforce size and the business factor remains constant over time. –If this relationship were to change unexpectedly, the forecast would become inaccurate. Human Resource Planning (Cont.) Demand Forecasting – Statistical Approaches (Cont.)

Human Resource Planning (Cont.) Demand Forecasting – Judgmental Approaches Involves the use of human judgment, rather than a manipulation of numbers. Two most common techniques: Group brainstorming Sales force estimates

Human Resource Planning (Cont.) Supply Forecasting Steps to supply forecasting –Step 1: Organization groups its positions by title, function, and level of responsibility. –Step 2: Estimate within each job group, how many of its current employees will: Remain in their positions during the planning period. How many will move to another position. How many will leave the organization.

Human Resource Planning (Cont.) Estimating Future HR Needs Demand Forecast Supply Forecast HR Needs A firm derives its specific staffing needs by combining the results of the supply and demand forecasts within each job group

The current trend toward organizational restructuring usually results in a smaller workforce. When an organization’s strategic plan calls for restructuring, the HRM response is usually one of downsizing. –Downsizing usually means layoffs. Because of the negative outcomes that are often associated with layoffs, employers are encouraged to seek alternatives. Outcomes of the HR Planning Process Dealing with an Oversupply of Employees

Outcomes of the HR Planning Process Dealing with an Undersupply of Employees Hiring additional workers Alternatives to additional hiring –Improve productivity of existing workforce through additional training –Overtime –Additional shifts –Job reassignments –Temporary workers –Improve retention rates

A computerized information package that provides management with increasing capacity to record, store, manipulate, and communicate information across wide geographic boundaries, with access to many users Human Resource Information Systems (HRIS)

Human Resource Information Systems (HRIS) (Cont.) A company’s jobs Number and types of jobs Number of people needed in each job Qualifications needed to perform each job A company’s employees Individual’s equal employment opportunity classification Date of hire Salary history Performance ratings A Company’s HRIS contains information about:

Human Resource Information Systems (HRIS) (Cont.) Purposes served by a company’s HRIS: Handles most of the record keeping done by HR professionals.Reduces paperwork and cuts administrative costs. Organizational members outside the HRM department can more easily access the information. Store information essential for filling vacant positions.

Human Resource Information Systems (HRIS) (Cont.) HRIS on the “Net” – Intranet –Internet networks that are accessible only to employees within the company. –They can store a great deal of HR information. –It allows companies to save money by eliminating printing and distribution costs. –Employees like it because it allows them to quickly and privately access HR information. HRIS on the “Net” – Extranet –Link a firm's intranet to a variety of outside organizations and vendors. –Gives employees secure access to information and services from outside parties.

Human Resource Information Systems (HRIS) (Cont.) Ensuring the confidentiality of HRIS information –The organization must ensure that user access is limited to relevant information. Sensitive and confidential information should only be accessible by the HRM department or specified individuals. –Institute strong written policies that stipulate the organization’s intention to protect employee privacy rights.