1. McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved. Human Resource Planning Chapter 5

2. Human Resource Planning (HRP) Process of determining human resource needs of an organization and ensuring that the organization has the right number of qualified people in the right jobs at the right time the system of matching the supply of people—internally (existing employees) and externally (those to be hired)—with demand the organization expects to have over a given time frame 5-2

3. Steps in HRP Process Determining organization’s objectives Defining skills, expertise, and total number of employees (demand) required to achieve organizational and departmental objectives Determining additional (net) human resource requirements in light of organization’s current human resources Developing action plans to meet anticipated human resource needs 5-3

4. Determining Organizational Objectives Mission statement : reason for existence Samsung Electronics : 인재와 기술을 바탕으로 최고의 제품과 서비스를 창출하여 인류사회에 공헌한다 POSCO : 꿈과 희망, 소재와 에너지로 더 나은 세상을 YK : 더 나은 생활을 향한 믿음 Vision : an ideal future of one’s company Sometimes interchangeably used with mission LG 화학 : 차별화된 소대와 솔루션으로 고객과 함께 성장하는 세계적 기업

5. Determining Organizational Objectives Strategic (long-term) objectives : Strategic positioning of the company Asia top3 by 2018, Global top 3 by 2020 Financial objective 1 trillion won in revenue by 2018 Short-term objectives generally have a time schedule and are expressed quantitatively Divisional and departmental objectives

6. Determining Skills and Expertise Required (Demand) Ultimately, one has to estimate the types and numbers of needed employees for achieving objectives For this purpose, one can utilize forecasting methods Judgmental methods Statistical methods 5-6

7. Methods of Forecasting Human Resource Needs – Judgmental Methods Managerial estimates – Calls on managers to make estimates of future staffing needs Judgment based on their past experience The managers may not be experts on HR Delphi technique – Uses a panel of experts (including HR experts both inside and outside organization) to make initially independent estimates of future demand An intermediary then presents each expert’s forecast and assumptions to the other members of the panel Each expert is then allowed to revise his or her forecast as desired This process continues until some consensus emerges 5-7

8. Judgmental Methods Scenario analysis Using workforce environmental scanning data (e.g., outsourcing, automation, global expansion) to develop alternative workforce scenarios Developed in brainstorming sessions with line managers and HR managers (Encourages open, out-of-the-box thinking) For each scenario, workforce demand is estimated

9. Methods of Forecasting Human Resource Needs – Statistically Based Include various statistical methods Uses historical data in some manner to project future demand With increasing proliferation of user-friendly software and computers, it will probably be used more frequently 5-9

10. Statistical Techniques Used to Forecast Human Resource Needs 5-10

11. Time-series analysis 0607080910 12341234123412341234 190210203195212221218209211230222212221245235223233252245231 199.5 205207.8 211.5 215214.8 217218218.8 221.3 225228.3 231234235.8 238.3 240.3

12. Productivity ratios P = Workload / # Employees P(2006) = 2,040 Units / 200 = 10.2 P(2007) = 2,180 Units / 210 = 10.4 P(2008) = 2,250 Units / 219 = 10.3 P(2009) = 2,350 Units / 231 = 10.2 P(2010) = 2,470 Units / 240 = 10.3 P(2006~2010) = 10.3 Projected amount of production in 2011 = 2,550 Units # Employees needed = 2,550 / 10.3 = 248

13. Personnel ratios DeptPersonnel ratios(%)# Employees needed Prod. – Assembly lines60245 X.6 = 147 Maintenance5245 X.05 = 12 Administration5 Sales – Domestic15 Overseas5 Staff - Finance2 Marketing2 MIS2 Accounting2 HRM2 Total100245

14. Regression analysis Identify the factors which might influence the size of workforce Sales, production volume, investment in automation, etc. Collect historical data on # employees and above factors (ex: quarterly data 2001~2010) Run regression analysis and construct a regression model Ex: Y(# employees) = 25.5 +.035(Sales) +.051(Production volume) -.024(Investment in automation) Enter projected figures of sales, PV, and IA to the above equation, and compute anticipated # employees in the future.

15. Determining Additional (Net) Human Resource Requirements(Demand) Net Demand = Total Demand – (Current workforce Status + Anticipated Changes) Skills inventory Consolidated list of biographical and other information on all employees in the organization Shows current workforce characteristics 5-15

16. Determining Additional (Net) Human Resource Requirements(Demand) Information to be included Personal data – Age, sex, marital status Skills – Education, job experience, training Special qualifications – Membership in professional groups, special achievements Salary and job history – Present and past salary, dates of raises, various jobs held Company data – Benefit plan data, retirement information, seniority Capacity of individual – Test scores on psychological and other tests, health information Special preferences of the individual – Geographic location, type of job

17. Skills Inventory Form Used by PPG Industries 5-17

18. Anticipating Changes in Personnel Need to predict what would happen in the composition of workforce during the period between present and future time Markov analysis Helps to predict the movements(including transfer, promotion, retirement etc.) of employees within an organization during the anticipated period of time Steps Calculate the anticipated transition rates among jobs time 2 (+1 year) Time 1Job AJob BJob CJob D Resignation Job A.70.10.050.15 Job B.15.60.05.10 Job C00.80.05.15 Job D00.05.85.10

19. Anticipating Changes in Personnel Calculate the predicted number of employees for each job categories using transition matrix 5-19 Time 2 (+1 year) time 1Job AJob BJob CJob DResignation Job A6244(.70)6(.10)3(.05)0(.00)9(.15) Job B7511(.15)45(.60)4(.05)8(.10)7(.10) Job C500(.00) 40(.80)2(.05)8(.15) Job D450(.00) 2(.05)38(.85)5(.10) 5551494829

20. Anticipating Changes in Personnel Net HR demand = Total demand – Workforce supply at a future point in time(e.g., time 2) Decision has to be made If there is a lack -> Add employees If there is a surplus -> Reduce employees

21. Developing Action Plans – Adding Human Resource Decision has to be made whether to hire permanently or temporarily Factors impacting this decision include permanency of needs, availability of qualified recruits Permanent hires – Plans to be made to recruit, select, orient, and train needed personnel, in given time frame Contingency Hires – Advantages Allows accommodating swings in demand for human resources Lower cost of employment – Often do not have same benefits as permanent employees Temporary agencies often provide testing and training for employees before they are hired New perspectives due to varied experiences 5-21

22. Developing Action Plans – Adding Human Resource Outsourcing – Potential providers of outsourcing to be identified and evaluated Attractive because work can often be contracted outside at a cost savings Allows parent company to focus on its core business

23. Developing Action Plans – Reducing Human Resources If time is not of essence, natural attrition can be used Other methods include Downsizing – Reducing total number of employees Layoffs Terminations Early retirement inducements Voluntary resignation inducements Layoff, as opposed to a termination, assumes it is likely that employee will be recalled at some later date Most early retirement and voluntary resignation plans provide some financial inducement to retire early or to resign 5-23

24. Developing Action Plans – Reducing Human Resources Other approaches Reclassification Involves demoting an employee, downgrading job responsibilities, or a combination of the two Usually accompanied by a reduction in pay Transfer Involves moving employee to another part of the organization Work sharing Seeks to limit layoffs and terminations through proportional reduction of hours among employees (i.e., all employees in a department could be cut back to 35 hours per week instead of 40 with less pay) 5-24

25. Other Tools and Techniques of HRP - Succession Planning Shows internal movement of key personnel within an organization Technique that identifies specific people to fill future openings in key positions throughout the organization Organizational replacement chart – Shows both incumbents and potential replacements for given positions within an organization For the Individuals who were identified as candidates to move up Performance appraisal data are reviewed, potential is assessed, developmental programs including CDP are formulated 5-25

26. Simple Organization Replacement Chart 5-26