1. Human Resource Management MBA & BBA Humana Resource Planning Lectures Week 3 Course Lecturer: Farhan Mir Institute of Management Sciences BZU Multan Copyright © Farhan Mir 2008

2. Objectives After studying this chapter, you should be able to: 1.Identify the advantages of integrating human resources planning and strategic planning. 2.Describe the basic approaches to human resources planning. 3.Identify the tools and techniques of HR planning 4.Overview the emerging role of HR Information Systems

3. Human Resources Planning Human Resources Planning (HRP)  Process of anticipating and making provision for the movement (flow) of people into, within, and out of an organization.  HRP’s purpose is the effective deployment of human resources through:  Anticipating organizational labor supply and demand.  Providing expanded employment opportunities for women, minorities, and the disabled.  Guiding the development and training the workforce.

4. Four Phases to HR Planning “What will we need?”  Determine future HR requirements “What’s available?”  Determine future HR availabilities  Internally  Externally Reconcile requirements and availabilities  Anticipate “gaps”  Develop action plans Control and evaluate

5. Strategic Human Resource Management The acknowledgement that HR policies and practices have critical linkages with an organization’s overall strategy Central premise is that HR policies will have direct effects on an organization’s profitability HR must “fit” strategically with the mission of the organization

6. HRP and Strategic Planning Strategic Analysis  What human resources are needed and what are available? Strategic Formulation  What is required and necessary in support of human resources? Strategic Implementation  How will the human resources be allocated? Human Resources Planning Strategic Planning

7. Linking the Processes of HRP and Strategic Planning Figure 4.1 Source: Adapted from James W. Walker, “Integrating the Human Resource Function with the Business,” Human Resource Planning 14, no. 2 (1996): 59–77. Reprinted with permission. Presentation Slide 4–1 Strategic Analysis Establish the context: Business goalsBusiness goals Company strengths/weaknessesCompany strengths/weaknesses External opportunities/threatsExternal opportunities/threats Source of competitive advantageSource of competitive advantage Strategic Analysis Establish the context: Business goalsBusiness goals Company strengths/weaknessesCompany strengths/weaknesses External opportunities/threatsExternal opportunities/threats Source of competitive advantageSource of competitive advantage Strategy Formulation Clarify performance expectations and future management method: Values, guiding principlesValues, guiding principles Business missionBusiness mission Objectives and prioritiesObjectives and priorities Resource allocationsResource allocations Strategy Formulation Clarify performance expectations and future management method: Values, guiding principlesValues, guiding principles Business missionBusiness mission Objectives and prioritiesObjectives and priorities Resource allocationsResource allocations Strategy Implementation Implement processes to achieve desired results: Business goalsBusiness goals Company strengths/weaknessesCompany strengths/weaknesses External opportunities/threatsExternal opportunities/threats Source of competitive advantageSource of competitive advantage Strategy Implementation Implement processes to achieve desired results: Business goalsBusiness goals Company strengths/weaknessesCompany strengths/weaknesses External opportunities/threatsExternal opportunities/threats Source of competitive advantageSource of competitive advantage Identify people-related business issues Define HR strategies, objectives, and action plans Implement HR processes, policies, and practices

8. Human Resource Planning

9. Strategic Planning & HR Planning at IBM Remember IBM  World Leader in Computer Hardware & Pioneer in Personal Computers  Divided itself into 14 autonomous divisions worldwide  At IBM Strategic Planning begins at Top and then translated downwards  Executives in different business areas develop strategies  Then divisions create functional strategies for development, manufacturing, marketing and service The linkage between Business Plans & HR Plans  The HR Department plays a crucial role  HR concerns and objectives are inserted into the plans by HR specialists at divisional plans in coordination with divisional managers

10. FORECASTING DEMAND Human Resource Planning Model Considerations Product/service demand Product/service demand Technology Technology Financial resources Financial resources Absenteeism/turnover Absenteeism/turnover Organizational growth Organizational growth Management philosophy Management philosophyConsiderations Product/service demand Product/service demand Technology Technology Financial resources Financial resources Absenteeism/turnover Absenteeism/turnover Organizational growth Organizational growth Management philosophy Management philosophyTechniques Trend analysis Trend analysis Managerial estimates Managerial estimates Delphi technique Delphi techniqueTechniques Trend analysis Trend analysis Managerial estimates Managerial estimates Delphi technique Delphi technique Techniques Staffing tables Staffing tables Markov analysis Markov analysis Skills inventories Skills inventories Management inventories Management inventories Replacement charts Replacement charts Succession Planning Succession PlanningTechniques Staffing tables Staffing tables Markov analysis Markov analysis Skills inventories Skills inventories Management inventories Management inventories Replacement charts Replacement charts Succession Planning Succession Planning External Considerations Demographic changes Demographic changes Education of the workforce Education of the workforce Labor Mobility Labor Mobility Government policies Government policies Unemployment rate Unemployment rate External Considerations Demographic changes Demographic changes Education of the workforce Education of the workforce Labor Mobility Labor Mobility Government policies Government policies Unemployment rate Unemployment rate FORECASTING SUPPLY BALANCING SUPPLY AND DEMAND (Shortage) Recruitment Full-time Full-time Part-time Part-time Recalls Recalls (Shortage) Recruitment Full-time Full-time Part-time Part-time Recalls Recalls (Surplus) Reductions Layoffs Layoffs Terminations Terminations Demotions Demotions Retirements Retirements (Surplus) Reductions Layoffs Layoffs Terminations Terminations Demotions Demotions Retirements Retirements

11. The Human Resource Planning Process Variances If Surplus If Shortage End Compared with If none Action decisions Layoff Retirement Termination Overtime Recruitment Contractors Strategic Planning Technology forecasts Economic forecasts Market forecasts Organizational planning Investment planning Annual operating plans HR Demand Annual employment requirements: numbers skills occupation categories HR Supply Existing employment inventory: After application of expected loss and attrition rates

12. Human Resource Planning (HRP) Six steps of effective HRP  environmental scanning—identify and anticipate sources of threats and opportunities, scanning the external environment (competitors, regulation) and internal environment ( strategy, technology, culture)  labor analysis—project how business needs will affect HR needs, using qualitative methods (e.g., Delphi, nominal) and quantitative methods (trend analysis, simple and multiple linear regression analysis)  supply analysis—project resource availability from internal and external sources  gap analysis—reconcile the forecast of labor supply and demand  action programming—implement the recommended solution from the gap analysis  evaluation—monitor the effects of the HRP by defining and measuring critical criteria (e.g., turnover costs, break-even costs of new hires)

13. HRP and Environmental Scanning Environmental Scanning  The systematic monitoring of the major external forces influencing the organization.  Economic factors: general and regional conditions  Competitive trends: new processes, services, and innovations  Technological changes: robotics and office automation  Political and legislative issues: laws and administrative rulings  Social concerns: child care and educational priorities  Demographic trends: age, composition,and literacy

14. Forecasting Demand for Employees Quantitative Methods Qualitative Methods Forecasting Demand

15. Qualitative Approaches to Demand Forecasting Management Forecasts  The opinions (judgments) of supervisors, department managers, experts, or others knowledgeable about the organization’s future employment needs. Delphi Technique  An attempt to decrease the subjectivity of forecasts by soliciting and summarizing the judgments of a preselected group of individuals.  The final forecast represents a composite group judgment.

16. Quantitative Approach: Trend Analysis Forecasting labor demand based on an organizational index such as sales:  Select a business factor that best predicts human resources needs.  Plot the business factor in relation to the number of employees to determine the labor productivity ratio.  Compute the productivity ratio for the past five years.  Calculate human resources demand by multiplying the business factor by the productivity ratio.  Project human resources demand out to the target year(s).

17. Example of Trend Analysis of HR Demand Figure 4.4 1997$2,35114.33164 1998$2,61311.12235 1999$2,9358.34352 2000$3,30610.02330 2001$3,61311.12325 2002$3,74811.12337 2003$3,88012.52310 2004*$4,09512.52327 2005*$4,28312.52342 2006*$4,44612.52355 BUSINESS  LABOR = HUMAN RESOURCES FACTORPRODUCTIVITYDEMAND YEAR (SALES IN THOUSANDS)(SALES/EMPLOYEE)(NUMBER OF EMPLOYEES) *Projected figures

18. Forecasting Supply of Employees: Internal Labor Supply Staffing Tables Markov Analysis Skill Inventories Replacement Charts Succession Planning

19. Forecasting Internal Labor Supply Staffing Tables  Graphic representations of all organizational jobs, along with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements. Markov Analysis  A method for tracking the pattern of employee movements through various jobs.

20. Forecasting Labor Supply Succession Planning  Technique that identifies specific people to fill future openings in key positions throughout the organization  Organizational Replacement Charts  Charts that shows both incumbents and potential replacements for given positions within the organization Commitment Manpower Planning  Systematic approach to HR planning designed to get managers and their subordinates thinking about and involved in human resource planning

21. Action Plans Managers must develop complete action plan to accomplish HR objectives Adding Human Resources  Ad hoc Placement  Temporary & Outsourcing  Permanent Reducing Human Resources  Downsizing  Layoffs, termination  Other approaches  Reclassification  Transfers  Work Sharing

22. Internal Methods of Locating Qualified Job Candidates Human Resources Information Systems (HRIS)  Database systems containing the records and qualifications of each employee that can be accessed to identify and screen candidates for an internal job opening. Job Posting and Bidding  Posting vacancy notices and maintaining lists of employees looking for upgraded positions.

23. Human Resource Information Systems (HRIS) Integrated approach to acquiring, storing, analyzing, and controlling the flow of information about an organization  Useful in nearly all HRM functions  Can increase efficiency and response times of labor/time intensive human resource activities

24. HRIS Applications Clerical Applications Applicant information Basic Employee Records Job Database Sub Modules based on functions  Training  Turnover Analysis  Succession Planning  Benefits Management  Monitoring functions  Attendance

25. A Common HRIS