1. CHAPTER 5:
Human Resource Planning and change management

2. Human Resource Planning (HRP)
First component of HRM strategy
All 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 & capacities
Proactive in anticipating & preparing flexible responses to changing HR requirements
Both internal & external focus
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3. Human Resource Planning (HRP)
Goes beyond simple hiring & firing
Involves planning for deployment of human capital in line with organization &/or business unit strategy
May involve:
Reassignment
Training & development
Outsourcing
Using temporary help or outside contractors
Needs as much flexibility as possible
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4. Key Objectives of HR Planning
Prevent overstaffing & understaffing
Ensure organization has right employees with right skills in right places at right times
Ensure organization is responsive to changes in environment
Provide direction & coherence to all HR activities & systems
Unite perspectives of line & staff managers
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5. Types of Planning Aggregate Planning Succession Planning
Anticipating needs for groups of employees in specific, usually lower level jobs & general skills employees will need to ensure sustained high performance
Succession Planning
Focuses on ensuring key critical management positions in organization remain filled with individuals who provide best fit
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6. Aggregate Planning Forecasting 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
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7. Aggregate Planning Forecasting 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
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8. Exhibit 5-2 Transition Probability Matrix for Restaurant
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9. Strategies for Managing Shortages
Recruit new permanent employees
Offer incentives to postpone retirement
Rehire retirees part-time
Attempt to reduce turnover
Work current staff overtime
Subcontract work out
Hire temporary employees
Redesign job processes so fewer employees are needed
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10. Strategies for Managing Surpluses
Hiring freezes
Do not replace those who leave
Offer early retirement incentives
Reduce work hours
Voluntary severance leaves of absence
Across-the-board pay cuts
Layoffs
Reduce outsourced work
Employee training
Switch to variable pay plan
Expand operations
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11. Succession Planning
Involves identifying key management positions the organization cannot afford to have vacant
Purposes 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 effectively
Qualified successors may seek external career advancement opportunities if succession is not forthcoming
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12. Exhibit 5-4 Sample Replacement Chart
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13. Exhibit 5-5 Pros & Cons of Disclosing Succession Planning
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14. Reading 5.1 Heirs Unapparent
Experts are looking more carefully at leadership needs for 21st century, & warning of:
A shrinkage in pool of available managers
Escalating costs in recruiting outside talent
A lack of attention to developing leaders from within
Blame inattention to succession planning on corporate world’s concentration on cost-cutting & downsizing
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15. Reading 5.1 Heirs Unapparent
Old solutions to succession planning won’t work in increasingly complex world
Essential to develop executives who can cope with globalization & flourish in new corporate climate buffeted by changes
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16. Reading 5.2 Succession Planning Design Shifts
Key design shifts for succession systems:
Identify core strategic capabilities/competencies related to key positions & develop leadership model
Place initiative & responsibility for individual development in hands of candidate employees
Development process that aligns mastery of competencies with firm’s strategic goals & mission
Create succession process more open & less exclusive & secretive
Design succession process for ongoing & frequent review
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17. Reading 5.2 Succession Planning Design Shifts
A succession system must:
Make sense for & be usable by different business units, each having unique needs
Process to focus & guide development of executives to meet strategic purposes
Be aligned with other HR processes also in transition
Assure pool of potential leaders is being prepared for executive positions
Be owned by senior management
Deal with diversity issues & changing demographics
Measurably add value & contribute to business success
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18. Reading 5.3 Strategic Levels of HR
Long-term
Is activity conceptualized as long-term value?
Comprehensive
Does it cover entire organization or isolated components?
Planned
Is it thought out ahead of time & is it well documented?
Integrated
Does it provide basis for integrating multifaceted activities that might otherwise be fragmented & disconnected?
High value-added
Does it focus on critical business success issues or on things that must be done but are not critical?
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19. Reading 5.3 Strategic Levels of HR
Operationally reactive HR
Focuses on implementing day-to-day demands for HR
Operationally proactive HR
Improves upon design & delivery of existing HR basics before problems set in
Strategically reactive HR
Focuses on supporting successful implementation of business strategy
Strategically proactive HR
Focuses on creating strategic alternatives
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20. Reading 5.3 Strategic Levels of HR
HR becomes strategically reactive in business strategy implementation through:
Supporting execution of tactics that drive long-term strategies
Developing cultural & technical capabilities necessary for long-term success
By providing change management support for tactical activities
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21. Reading 5.3 Strategic Levels of HR
Define business unit for which HR practices are being designed
Specify key trends in external business environment
Identify & prioritize firm’s sources of competitive advantage
Define required culture & technical knowledge & skill areas required to support the sources of competitive advantage
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22. Reading 5.3 Strategic Levels of HR
Identify cultural characteristics that firm should reduce or eliminate if it is to optimize competitive advantage
Design HR practices that will have greatest impact on creating desired culture
With these decisions made, firm should establish action plans for detailed design of HR processes
Final step specifies means by which effectiveness of entire process is measured
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23. Reading 5.3 Strategic Levels of HR
Become proactive by:
Learning enough about other functional areas to allow HR to contribute to business
Expanding/enriching parameters of HR agendas through which strategic alternatives are define & created
Creates culture of of creativity & innovation
Involved in full breadth of mergers & acquisition activities
Creates internal capabilities based on future external environmental requirements
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