1. Copyright © 2014 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin FUNDAMENTALS OF HUMAN RESOURCE MANAGEMENT 5 TH EDITION BY R.A. NOE, J.R. HOLLENBECK, B. GERHART, AND P.M. WRIGHT CHAPTER 5 PLANNING FOR AND RECRUITING HUMAN RESOURCES

2. 5-2 Need to Know 1. How to plan for HR needed to carry out organization’s strategy. 2. Labor demand for workers in various job categories. 3. Advantages and disadvantages of ways to eliminate a labor surplus and avoid a labor shortage. 4. Recruitment policies organizations use to make job vacancies more attractive. 5. Sources of job applicants. 6. Recruiter’s role in recruitment process- limits and opportunities. 1. How to plan for HR needed to carry out organization’s strategy. 2. Labor demand for workers in various job categories. 3. Advantages and disadvantages of ways to eliminate a labor surplus and avoid a labor shortage. 4. Recruitment policies organizations use to make job vacancies more attractive. 5. Sources of job applicants. 6. Recruiter’s role in recruitment process- limits and opportunities.

3. 5-3 Process of HR Organizations should carry out HR planning so as to meet business objectives and gain a competitive advantage over competitors. HR planning compares the present state of the organization with its future goals Then identifies what changes it must make in its HR to meet those goals Organizations should carry out HR planning so as to meet business objectives and gain a competitive advantage over competitors. HR planning compares the present state of the organization with its future goals Then identifies what changes it must make in its HR to meet those goals

4. 5-4 Figure 5.1: Overview of HR Planning Process

5. Forecasting Forecasting: attempts to determine supply and demand for various types of HR to predict areas within the organization where there will be labor shortages or surpluses. Forecasting steps: 1. Forecast labor demand Determine labor supply 2. Determine labor surplus or shortage Forecasting steps: 1. Forecast labor demand Determine labor supply 2. Determine labor surplus or shortage 5-5

6. Forecasting Labor Demand Constructing and applying statistical models that predict labor demand for next year, given relatively objective statistics from previous year. Objective measures that accurately predict future labor demand. Trend Analysis Leading Indicators 5-6

7. Determine Labor Supply Transitional matrix: a chart that lists job categories held in one period and shows proportion of employees in each of those job categories in a future period.  It answers two questions: 1. “Where did people in each job category go?” 2. “Where did people now in each job category come from?”  It answers two questions: 1. “Where did people in each job category go?” 2. “Where did people now in each job category come from?” 5-7

8. 5-8 Table 5.1: Transitional Matrix – Auto Parts Manufacturer Example

9. 5-9 Determine Labor Surplus or Shortage Based on forecasts for labor demand and supply, planner can compare figures to determine whether there will be a shortage or surplus of labor for each job category. Determining expected shortages and surpluses allows the organization to plan how to address these challenges. Based on forecasts for labor demand and supply, planner can compare figures to determine whether there will be a shortage or surplus of labor for each job category. Determining expected shortages and surpluses allows the organization to plan how to address these challenges.

10. 5-10 Goal Setting and Strategic Planning Purpose of setting specific numerical goals is to focus attention on the problem and provide a basis for measuring the organization’s success in addressing labor shortages and surpluses. Goals should come directly from analysis of supply and demand. For each goal, organization must choose one or more HR strategies. Organizations should retain and attract employees who provide a core competency (what makes it better than competitors) Purpose of setting specific numerical goals is to focus attention on the problem and provide a basis for measuring the organization’s success in addressing labor shortages and surpluses. Goals should come directly from analysis of supply and demand. For each goal, organization must choose one or more HR strategies. Organizations should retain and attract employees who provide a core competency (what makes it better than competitors)

11. 5-11 Options for Reducing a Surplus Downsizing Pay reductions Demotions Transfers Work sharing Hiring freeze Natural attrition Early retirement Retraining

12. 5-12 As the average age of many workers in skilled trades grows, the coming demand for workers in many trades is expected to outstrip supply in the United States. There is a potential for employers in some areas to experience a labor shortage because of this.

13. 5-13 Options for Avoiding a Shortage Overtime Temporary employees Outsourcing Retrained transfers Turnover reductions New external hires Technological innovation

14. 5-14 Table 5.2: HR Strategies for Addressing a Labor Shortage or Surplus

15. 5-15 Test Your Knowledge A public accounting firm of 250 employees realizes they have a surplus of 15 support personnel (not auditors). What should they do? A. Hire temporary workers B. Offer early retirement C. Downsize people in those positions D. Wait for attrition and implement a hiring freeze for those positions

16. 5-16 Implement and Evaluate HR Plan When implementing the HR strategy, organizations must hold individuals accountable for achieving goals. They must also have authority and resources needed to accomplish those goals. Regular progress reports should be issued. Evaluation of results should look at tactual numbers and identify which parts of planning process contributed to success or failure. When implementing the HR strategy, organizations must hold individuals accountable for achieving goals. They must also have authority and resources needed to accomplish those goals. Regular progress reports should be issued. Evaluation of results should look at tactual numbers and identify which parts of planning process contributed to success or failure.

17. Apply HR Planning to Affirmative Action Workforce Utilization Review: comparison of employees in protected groups with proportion that each group represents in relevant labor market. Steps in a workforce utilization review are identical to steps in HR planning process. Workforce Utilization Review: comparison of employees in protected groups with proportion that each group represents in relevant labor market. Steps in a workforce utilization review are identical to steps in HR planning process. Organization must assess current utilization patterns, then forecast how they are likely to change in near future. If analyses forecast underutilization of certain groups, then goals and a plan will be established. Organization must assess current utilization patterns, then forecast how they are likely to change in near future. If analyses forecast underutilization of certain groups, then goals and a plan will be established. 5-17

18. 5-18 Recruit HR Role of HR recruitment is to build a supply of potential new hires that the organization can draw on if need arises. Recruiting: any activity carried on by the organization with the primary purpose of identifying and attracting potential employees. Role of HR recruitment is to build a supply of potential new hires that the organization can draw on if need arises. Recruiting: any activity carried on by the organization with the primary purpose of identifying and attracting potential employees.

19. 5-19 Figure 5.2: Three Aspects of Recruiting

20. Personnel Policies Several personnel policies are especially relevant to recruitment: Internal versus external recruiting Lead-the-market pay strategies Employment-at-will policies Image advertising 5-20

21. Image advertising, such as in this campaign to recruit nurses, promotes a whole profession or organization as opposed to a specific job opening. This ad is designed to create a positive impression of the profession, which is now facing a shortage of workers. 5-21

22. 5-22 Recruitment Sources: Internal Sources Job Posting: process of communicating information about a job vacancy: – On company bulletin boards – In employee publications – On corporate intranets – Anywhere else organization communicates with employees Job Posting: process of communicating information about a job vacancy: – On company bulletin boards – In employee publications – On corporate intranets – Anywhere else organization communicates with employees

23. 5-23 Advantages of Internal Sources 1. It generates applicants who are well known to the organization. 2. These applicants are relatively knowledgeable about the organization’s vacancies, which minimizes the possibility of unrealistic job expectations. 3. Filling vacancies through internal recruiting is generally cheaper and faster than looking outside the organization. 1. It generates applicants who are well known to the organization. 2. These applicants are relatively knowledgeable about the organization’s vacancies, which minimizes the possibility of unrealistic job expectations. 3. Filling vacancies through internal recruiting is generally cheaper and faster than looking outside the organization.

24. 5-24 4 in 10 Positions Are Filled with Insiders

25. Recruitment Sources: External Sources Direct applicantsReferrals Advertisements in newspapers and magazines Electronic recruiting Public employment agencies Private employment agencies Colleges and universities 5-25

26. 5-26 Figure 5.3: External Recruiting Sources – Percentage of Employees Hired

27. Evaluating the Quality of a Source A ratio that expresses percentage of applicants who successfully move from one stage of the recruitment and selection process to the next. By comparing yield ratios of different recruitment sources, we can determine which source is best or most efficient for type of vacancy. A ratio that expresses percentage of applicants who successfully move from one stage of the recruitment and selection process to the next. By comparing yield ratios of different recruitment sources, we can determine which source is best or most efficient for type of vacancy. Find cost of using a particular recruitment source for a particular type of vacancy. Divide that cost by number of people hired to fill that type of vacancy. A low cost per hire means the recruitment source is efficient. Find cost of using a particular recruitment source for a particular type of vacancy. Divide that cost by number of people hired to fill that type of vacancy. A low cost per hire means the recruitment source is efficient. Yield RatiosCost Per Hire 5-27

28. 5-28 Table 5.3: Results of a Hypothetical Recruiting Effort

29. 5-29 Recruiter Traits and Behaviors Characteristics of Recruiter Behavior of Recruiter Enhancing Recruiter’s Impact

30. 5-30 Recruiter Characteristics and Behavior  True = A False = B Applicants respond more positively when the recruiter is an HR specialist than line managers or incumbents. Applicants respond positively to recruiters whom are warm and informative Personnel policies are more important than the recruiter when deciding whether or not to take a job. Realistic job previews should highlight the positive characteristics of the job rather than the negative.

31. 5-31 Figure 5.4: Recruits Who Were Offended by Recruiters

32. 5-32 Enhance Recruiter’s Impact Recruiters should provide timely feedback and avoid offensive behavior. They should avoid behaving in ways that might convey the wrong impression about the organization. Organization can recruit with teams rather than individual recruiters. Recruiters should provide timely feedback and avoid offensive behavior. They should avoid behaving in ways that might convey the wrong impression about the organization. Organization can recruit with teams rather than individual recruiters.

33. 5-33 Summary First step in HR planning is personnel forecasting. Through trend analysis and good judgment, planner determines supply and demand for HR. Next step - determine labor demand for workers in various job categories. Analysis of a transitional matrix helps identify which job categories can be filled internally and where high turnover is likely. First step in HR planning is personnel forecasting. Through trend analysis and good judgment, planner determines supply and demand for HR. Next step - determine labor demand for workers in various job categories. Analysis of a transitional matrix helps identify which job categories can be filled internally and where high turnover is likely.

34. 5-34 Summary  To reduce a surplus, downsizing, pay reductions, and demotions deliver fast results but at a high cost in human suffering that may hurt surviving employees’ motivation and future recruiting.  To avoid a labor shortage, requiring overtime is easiest and fastest strategy.  Internal recruiting generally makes job vacancies more attractive because candidates see opportunities for growth and advancement.  To reduce a surplus, downsizing, pay reductions, and demotions deliver fast results but at a high cost in human suffering that may hurt surviving employees’ motivation and future recruiting.  To avoid a labor shortage, requiring overtime is easiest and fastest strategy.  Internal recruiting generally makes job vacancies more attractive because candidates see opportunities for growth and advancement.

35. 5-35 Summary  Lead-the-market pay strategies make jobs economically desirable.  Internal sources are usually not sufficient for all of an organization’s labor needs.  Through their behavior and other characteristics, recruiters influence the nature of the job vacancy and kinds of applicants generated.  Lead-the-market pay strategies make jobs economically desirable.  Internal sources are usually not sufficient for all of an organization’s labor needs.  Through their behavior and other characteristics, recruiters influence the nature of the job vacancy and kinds of applicants generated.