New Chapter 5

8/3/2019 New Chapter 5

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CHAPTER 5:

HUMAN RESOURCE

PLANNING

Copyright 2005 South-Western. All rights reserved.


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Copyright 2005 South-Western. All rights reserved. 12

Human Resource Planning (HRP)Human Resource Planning (HRP)

First component of HRM strategyFirst component of HRM strategy

All other functional HR activities are derived fromAll other functional HR activities are derived from

& flow out of HRP process& flow out of HRP process

Basis in considerations of future HR requirementsBasis in considerations of future HR requirementsin light of present HR capabilities & capacitiesin light of present HR capabilities & capacities

Proactive in anticipating & preparing flexibleProactive in anticipating & preparing flexible

responses to changing HR requirementsresponses to changing HR requirements

Both internal & external focusBoth internal & external focus


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Human Resource Planning (HRP)Human Resource Planning (HRP)

Goes beyond simple hiring & firingGoes beyond simple hiring & firing

Involves planning for deployment of humanInvolves planning for deployment of human

capital in line with organization &/or business unitcapital in line with organization &/or business unit

strategystrategy May involve:May involve:

ReassignmentReassignment

Training & developmentTraining & development

OutsourcingOutsourcing

Using temporary help or outside contractorsUsing temporary help or outside contractors

Needs as much flexibility as possibleNeeds as much flexibility as possible


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Key Objectives of HR PlanningKey Objectives of HR Planning

Prevent overstaffing & understaffingPrevent overstaffing & understaffing

Ensure organization has right employeesEnsure organization has right employees

with right skills in right places at right timeswith right skills in right places at right times

Ensure organization is responsive toEnsure organization is responsive to

changes in environmentchanges in environment

Provide direction & coherence to all HRProvide direction & coherence to all HR

activities & systemsactivities & systems

Unite perspectives of line & staff managersUnite perspectives of line & staff managers


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Types of PlanningTypes of Planning

Aggregate PlanningAggregate Planning

Anticipating needs for groups of employees inAnticipating needs for groups of employees in

specific, usually lower level jobs & general skillsspecific, usually lower level jobs & general skills

employees will need to ensure sustained highemployees will need to ensure sustained highperformanceperformance

Succession PlanningSuccession Planning

Focuses on ensuring key critical managementFocuses on ensuring key critical managementpositions in organization remain filled withpositions in organization remain filled with

individuals who provide best fitindividuals who provide best fit


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Forecasting demandForecasting demand

Considers firms strategic plans effects on increases orConsiders firms strategic plans effects on increases or

decreases in demand for products or servicesdecreases in demand for products or services

Assumptions on which forecast is predicated should beAssumptions on which forecast is predicated should bewritten down & revisited when conditions changewritten down & revisited when conditions change

Unit forecastingUnit forecasting(bottom(bottom--up planning) involves point ofup planning) involves point of

contact estimation of future demand for employeescontact estimation of future demand for employees

TopTop--down forecastingdown forecastinginvolves senior managers allocating ainvolves senior managers allocating a

fixed payroll budget across organizational hierarchyfixed payroll budget across organizational hierarchy

Demand for employee skills requirements must also beDemand for employee skills requirements must also be

consideredconsidered


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Forecasting supplyForecasting supply

The level and quantities of abilities, skills &The level and quantities of abilities, skills &

experiences can be determined usingexperiences can be determined using SkillsSkills

InventoryInventory.. Annually updated human resource informationAnnually updated human resource information

system (HRIS) is dynamic source of HR informationsystem (HRIS) is dynamic source of HR information

Markov analysis can be used to create transitionMarkov analysis can be used to create transitionprobability matrix that predicts mobility ofprobability matrix that predicts mobility of

employees within organizationemployees within organization


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Exhibit 5Exhibit 5--22

Transition Probability Matrix for RestaurantTransition Probability Matrix for Restaurant


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Strategies for Managing ShortagesStrategies for Managing Shortages

Recruit newRecruit new

permanent employeespermanent employees

Offer incentives toOffer incentives to

postpone retirementpostpone retirement Rehire retirees partRehire retirees part--

timetime

Attempt to reduceAttempt to reduce

turnoverturnover

Work current staffWork current staff

overtimeovertime

Subcontract work outSubcontract work out

Hire temporaryHire temporaryemployeesemployees

Redesign jobRedesign job

processes so fewerprocesses so fewer

employees are neededemployees are needed


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Strategies for Managing SurplusesStrategies for Managing Surpluses

Hiring freezesHiring freezes

Do not replace thoseDo not replace those

who leavewho leave

Offer early retirementOffer early retirementincentivesincentives

Reduce work hoursReduce work hours

Voluntary severanceVoluntary severanceleaves of absenceleaves of absence

AcrossAcross--thethe--board payboard pay

cutscuts

LayoffsLayoffs

Reduce outsourcedReduce outsourcedworkwork

Employee trainingEmployee training

Switch to variable paySwitch to variable payplanplan

Expand operationsExpand operations


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Succession PlanningSuccession Planning

Involves identifying key management positionsInvolves identifying key management positions

the organization cannot afford to have vacantthe organization cannot afford to have vacant

Purposes of succession planningPurposes of succession planning

Facilitates transition when employee leavesFacilitates transition when employee leaves Identifies development needs of highIdentifies development needs of high--potential employees &potential employees &

assists in career planningassists in career planning

Many organizations fail to implement successionMany organizations fail to implement succession

planning effectivelyplanning effectively Qualified successors may seek external careerQualified successors may seek external career

advancement opportunities if succession is not forthcomingadvancement opportunities if succession is not forthcoming


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Sample Replacement ChartSample Replacement Chart


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Pros & Cons of Disclosing Succession PlanningPros & Cons of Disclosing Succession Planning


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Reading 5.1Reading 5.1

Heirs UnapparentHeirs Unapparent

Experts are looking more carefully atExperts are looking more carefully at

leadership needs for 21st century, &leadership needs for 21st century, &

warning of:warning of:

A shrinkage in pool of available managersA shrinkage in pool of available managers

Escalating costs in recruiting outside talentEscalating costs in recruiting outside talent

A lack of attention to developing leaders from withinA lack of attention to developing leaders from within

Blame inattention to succession planning onBlame inattention to succession planning oncorporate worlds concentration on costcorporate worlds concentration on cost--

cutting & downsizingcutting & downsizing


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Heirs UnapparentHeirs Unapparent

Old solutions to succession planningOld solutions to succession planning

wont work in increasingly complexwont work in increasingly complex

worldworld Essential to develop executives whoEssential to develop executives who

can cope with globalization & flourishcan cope with globalization & flourish

in new corporate climate buffeted byin new corporate climate buffeted bychangeschanges


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Succession Planning Design ShiftsSuccession Planning Design Shifts

Key design shifts for succession systems:Key design shifts for succession systems:

Identify core strategic capabilities/competencies related toIdentify core strategic capabilities/competencies related to

key positions & develop leadership modelkey positions & develop leadership model

Place initiative & responsibility for individual development inPlace initiative & responsibility for individual development inhands of candidate employeeshands of candidate employees

Development process that aligns mastery of competenciesDevelopment process that aligns mastery of competencies

with firms strategic goals & missionwith firms strategic goals & mission

Create succession process more open & less exclusive &Create succession process more open & less exclusive &

secretivesecretive

Design succession process for ongoing & frequent reviewDesign succession process for ongoing & frequent review


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Succession Planning Design ShiftsSuccession Planning Design Shifts

A succession system must:A succession system must:

Make sense for & be usable by different business units,Make sense for & be usable by different business units,

each having unique needseach having unique needs

Process to focus & guide development of executives to meetProcess to focus & guide development of executives to meetstrategic purposesstrategic purposes

Be aligned with other HR processes also in transitionBe aligned with other HR processes also in transition

Assure pool of potential leaders is being prepared forAssure pool of potential leaders is being prepared for

executive positionsexecutive positions

Be owned by senior managementBe owned by senior management

Deal with diversity issues & changing demographicsDeal with diversity issues & changing demographics

Measurably add value & contribute to business successMeasurably add value & contribute to business success


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Strategic Levels of HRStrategic Levels of HR

LongLong--termterm

Is activity conceptualizedIs activity conceptualized

as longas long--term value?term value?

ComprehensiveComprehensive Does it cover entireDoes it cover entire

organization or isolatedorganization or isolated

components?components?

PlannedPlanned Is it thought out ahead ofIs it thought out ahead of

time & is it welltime & is it well

documented?documented?

IntegratedIntegrated

Does it provide basis forDoes it provide basis for

integrating multifacetedintegrating multifaceted

activities that mightactivities that might

otherwise be fragmentedotherwise be fragmented

& disconnected?& disconnected?

High valueHigh value--addedadded

Does it focus on criticalDoes it focus on critical

business success issuesbusiness success issues

or on things that must beor on things that must be

done but are not critical?done but are not critical?


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Operationally reactive HROperationally reactive HR

Focuses on implementing dayFocuses on implementing day--toto--day demands for HRday demands for HR

Operationally proactive HROperationally proactive HR

Improves upon design & delivery of existing HR basicsImproves upon design & delivery of existing HR basicsbefore problems set inbefore problems set in

Strategically reactive HRStrategically reactive HR

Focuses on supporting successful implementation ofFocuses on supporting successful implementation of

business strategybusiness strategy

Strategically proactive HRStrategically proactive HR

Focuses on creating strategic alternativesFocuses on creating strategic alternatives


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HR becomes strategically reactive inHR becomes strategically reactive in

business strategy implementation through:business strategy implementation through:

Supporting execution of tactics that drive longSupporting execution of tactics that drive long--termterm

strategiesstrategies

Developing cultural & technical capabilitiesDeveloping cultural & technical capabilities

necessary for longnecessary for long--term successterm success

By providing change management support forBy providing change management support fortactical activitiestactical activities


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1.1. Define business unit for which HR practices areDefine business unit for which HR practices are

being designedbeing designed

2.2. Specify key trends in external businessSpecify key trends in external business

environmentenvironment3.3. Identify & prioritize firms sources of competitiveIdentify & prioritize firms sources of competitive

advantageadvantage

4.4. Define required culture & technical knowledge &Define required culture & technical knowledge &

skill areas required to support the sources ofskill areas required to support the sources of

competitive advantagecompetitive advantage


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5.5. Identify cultural characteristics that firm shouldIdentify cultural characteristics that firm should

reduce or eliminate if it is to optimize competitivereduce or eliminate if it is to optimize competitive

advantageadvantage

6.6. Design HR practices that will have greatest impactDesign HR practices that will have greatest impacton creating desired cultureon creating desired culture

7.7. With these decisions made, firm should establishWith these decisions made, firm should establish

action plans for detailed design of HR processesaction plans for detailed design of HR processes

8.8. Final step specifies means by which effectivenessFinal step specifies means by which effectiveness

of entire process is measuredof entire process is measured


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Become proactive by:Become proactive by:

Learning enough about other functional areas to allow HR toLearning enough about other functional areas to allow HR to

contribute to businesscontribute to business

Expanding/enriching parameters of HR agendas throughExpanding/enriching parameters of HR agendas throughwhich strategic alternatives are define & createdwhich strategic alternatives are define & created

Creates culture of of creativity & innovationCreates culture of of creativity & innovation

Involved in full breadth of mergers & acquisitionInvolved in full breadth of mergers & acquisition

activitiesactivities Creates internal capabilities based on futureCreates internal capabilities based on future

external environmental requirementsexternal environmental requirements

New Chapter 5

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