HUMAN

RESOURCE
PLANNING
 Human Resource (HR) Planning
–The process of analyzing and identifying the need
for and availability of human resources so that the
organization can meet its objectives.
 HR Planning Responsibilities
–Top HR executive and subordinates gather
information from other managers to use in the
development of HR projections for top
management to use in strategic planning and
setting organizational goals
 Benefits
Benefits of
of HR
HR Planning
Planning

 Better view of the HR dimensions of business

decisions
 Lower HR costs through better HR management.
 More timely recruitment for anticipate HR needs
 More inclusion of protected groups through
planned increases in workforce diversity.
 Better development of managerial talent
Human Resource Planning

•Through HR planning, an
organization is able to
generate a list of future
human resource needs and a
plan for meeting them.
•To derive HR needs, the
organization must forecast its
demand and supply.
HR Planning Process

© 2002 Southwestern College Publishing. All rights reserved. 2–5

Human Resource Planning (Cont.)

• Demand forecasting involves predicting the number and

types of people the organization will need at some future
point in time.
• Supply forecasting involves estimating which organizational
positions are expected to be already filled.
Objectives of Human Resources Planning (HRP)
1. Assessing manpower needs in future and creating plans for recruitment and selection.
2. Assessing skills to be required in future.
3. Define training and development needs for the organization.
4. Provisioning surplus or shortage of staff.
5. Control wages and salary costs.

6. Specifying optimum use of human resources

for the organization.

7. Guiding the organization to cope with the

technological development and modernization.

8. Secure higher labor productivity.

 Model of HR Forecasting

FORECASTING
FORECASTINGDEMAND
DEMAND
Considerations
Considerations Techniques
Techniques BALANCING
• •Product/service demand • •Trend analysis BALANCING
Product/service demand Trend analysis SUPPLY
SUPPLYAND
ANDDEMAND
DEMAND
• •Technology • •Managerial estimates
Technology Managerial estimates
• •Financial resources • •Delphi technique
Financial resources Delphi technique
• •Absenteeism/turnover
Absenteeism/turnover (Shortage)
(Shortage)
• •Organizational growth
Organizational growth Recruitment
Recruitment
• •Management philosophy • •Full-time
Management philosophy Full-time
• •Part-time
Part-time
• •Recalls
Recalls
Techniques
Techniques External
ExternalConsiderations
Considerations
• •Staffing tables
Staffing tables
• •Demographic changes
Demographic changes
(Surplus)
(Surplus)Reductions
Reductions
• •Markov analysis • •Education of the workforce • •Layoffs
Markov analysis Education of the workforce Layoffs
• •Skills inventories • •Labor mobility • •Terminations
Skills inventories Labor mobility Terminations
• •Management inventories • •Government policies • •Demotions
Management inventories Government policies Demotions
• •Replacement charts • •Unemployment rate • •Retirements
Replacement charts Unemployment rate Retirements
• •Succession planning
Succession planning

FORECASTING
FORECASTINGSUPPLY
SUPPLY
Demand Forecasting Methods

Staffing Table
Delphi Method
Approach

Regression Analysis Trend Analysis

 The Delphi Technique
Leader identifies judgment issues and develops questionnaire.

Prospective participants are identified and asked to cooperate.

Leaders send questionnaire to willing participants, who record

their judgments and recommendations and return the
questionnaire.

Leaders compiles summaries and reproduces participants’

responses.

Leader sends the compiled list of judgment to all participants.

Participants comment on each other’s ideas and propose a final

judgment.

Leader looks
for consensus

Leader accepts consensus judgment as group’s choice.

Example of Trend Analysis of HR Demand
 Regression Prediction
Y = A + BX
Y = dependent variable (HR demand)
A = constant (Y intercept)
B = slope of linear relationship between
X and Y
X = independent variable (e.g. level of
sales)
Exercise Step 1
Calculate XY, X2, average X and average Y

X Y XY X2
Sales # of
($ Millions) Employees
2.0 25 50 4.00
2.5 28 70 6.25
3.5 30 105 12.25
5.0 38 190 25.00
6.5 54 351 42.25

19.5 175 766 89.75

Average X = 19.5/5 = 3.9 Average Y = 175/5 = 35

N=5

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 Exercise Step 2
Calculate the value of B (slope of the linear relationship between X and Y)

XY X2 N=5 Average X = 3.9 Average Y = 35

50 4.00
70 6.25
105 12.25
190 25.00
351 42.25

766 89.75

766 − 5ሺ3.9ሻ(35) 766 − 683

𝐵= 𝐵= 𝐵 = 6.09
89.75 − 5(3.9)2 89.75 − 76.05
σ 𝑋𝑌 − 𝑁ሺ𝑋തሻ(𝑌ത)
𝐵=
σ (𝑋 2 ) − 𝑁(𝑋ത)2
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 Exercise Step 3
Calculate A (constant or intercept)

Average X = 3.9 Average Y = 35 B = 6.09

IF AND
Y = A + BX A = 35 – (6.09)(3.9)
Then A = 11.23
𝐴 = 𝑌ത− 𝐵𝑋ത

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 Exercise Step 4
Determine the regression prediction equation

Y = A + BX Whew! So what?
A = 11.23 Independent causal variable X
B = 6.09 (e.g., sales) AND
Dependent variable Y
X = Dependent Variable (e.g., predicted # of personnel)
Y = 11.23 + (6.09)(X)
Even if sales are zero the value for A is
11.23 (round to 11.0) or 11 persons.

For every increase unit ($1 Million)

sales (X) there is a predicted increase
of 6.09 staff (Y) associated with that
change.

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 Exercise Step 5
Calculate predicted HR demand (Y) by inserting values for X

Predict the HR demand for personnel at $8 million and $10 million.

Y = A + BX $8 million $10 million

A = 11.23
B = 6.09
Y = A + BX Y = A + BX
X = Sales ($M) A = 11.23 A = 11.23
Y= 11.23 + (6.09)(X) B = 6.09 B = 6.09
X=8 X = 10
Y = 11.23 + (6.09)(8) Y = 11.23 + (6.09)(10)

Y = 59.99 Y = 72.18
60 Staff required 72/73 Staff required
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 Staffing
Tables

Markov
SUPPLY Analysis

FORECASTIN Skill
Inventories
G
TECHNIQUES Replacement
Charts

Succession
Planning
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.
Figure 2–6 Hypothetical Markov
Analysis for a Retail Company
 • Files of personnel education, experience, interests, skills,
Skill Inventories etc., that allow managers to quickly match job openings
with employee backgrounds.

Replacement • Listings of current jobholders and persons who are

potential replacements if an opening occurs.
Charts
Succession • The process of identifying, developing, and tracking key
individuals for executive positions
Planning
An Executive
Replacement Chart
 Strategic Analysis

• What human resources are needed and what

are available?
HRP and Strategic Formulation
Strategic • What is required and necessary in support of
Planning human resources?

Strategic Implementation

• How will the human resources be allocated?

Figure 2–1 Linking
Strategic
Planning
and
Human
Resources
 Step One: Mission, Vision, and Values

Mission Strategic Vision Core Values

The basic purpose of the A statement about where the The strong and enduring beliefs and
organization as well as its scope of company is going and what it can principles that the company uses as
operations become in the future; clarifies the a foundation for its decisions
long-term direction of the company
and its strategic intent
 Step Two: Environmental Scanning
• Environmental Scanning
 The systematic monitoring of the major external forces influencing
the organization.
1. Economic factors: general and regional conditions
2. Competitive trends: new processes, services, and innovations
3. Technological changes: robotics and office automation
4. Political and legislative issues: laws and administrative rulings
5. Social concerns: childcare and educational priorities
6. Demographic trends: age, composition,and literacy
Figure 2–2 Five Forces Framework
Step Three: Internal Analysis
Culture Competencies

Internal
Analysis

Composition

© 2007 Thomson/South-Western. All rights reserved.

• Cultural Audits
 Audits of the culture and quality of work life in an organization.
How do employees spend their time?
How do they interact with each other?
Are employees empowered?
What is the predominant leadership style of managers?
How do employees advance within the organization?
 Competitive Advantage through People

• Core Competencies
 Integrated knowledge sets within an organization that distinguish it from
its competitors and deliver value to customers.
• Sustained competitive advantage through people is achieved if
these human resources:
1. Are valuable.
2. Are rare and unavailable to competitors.
3. Are difficult to imitate.
4. Are organized for synergy.
Composition: The Human
Capital Architecture

Core knowledge workers

• Employees who have firm-specific skills that
are directly linked to the company’s strategy.
• Example: Senior software programmer

Traditional job-based employees

• Employees with skills to perform a predefined
job that are quite valuable to a company, but
not unique.
• Example: Security guard
• Contract labor
 Employees whose skills are of less strategic value and generally available
to all firms.
 Example: General electrician

• Alliance/partners
 Individuals and groups with unique skills, but those skills are not directly
related to a company’s core strategy.
 Example: Independent product label designer
Figure 2–3 Mapping Human Capital
 Step Four: Formulating Strategy

• Strategy Formulation
 Moving from simple analysis to devising a coherent course of action.
• SWOT analysis
 A comparison of strengths, weaknesses, opportunities, and threats for
strategy formulation purposes.
 Use the strengths of the organization to capitalize on opportunities,
counteract threats, and alleviate internal weaknesses.
Corporate Strategy
Growth and Mergers and
Diversification Acquisitions

Corporate
Strategy

Strategic Alliances
and Joint Ventures

© 2007 Thomson/South-Western. All rights reserved. 2–39

 Business Strategy

• Value Creation
 What the firm adds to a product or service by virtue of making it;
the amount of benefits provided by the product or service once the
costs of making it are subtracted.
 Low-cost strategy: competing on productivity and efficiency
 Keeping costs low to offer an attractive price to customers (relative to
competitors).
 Differentiation strategy: compete on added value
 Involves providing something unique and distinctive to customers that
they value.
Functional Strategy:
Ensuring Alignment
External Fit • Focuses on the connection
(or between the business
External objectives and the major
initiatives in HR.
Alignment)

• Aligning HR practices with

Internal Fit one another to establish a
(or Internal configuration that is
Alignment) mutually reinforcing
Figure 2–8
The 7-S
Model
Hard Elements:

Strategy: This refers to the plan and direction an organization takes to achieve its goals. It
includes decisions related to markets, products, competition, and resource allocation.

Structure: Structure involves the formal arrangement of roles, responsibilities, and

reporting lines within an organization

Systems: Systems encompass the processes, procedures, and routines that enable an
organization to function effectively.

Hard Skills: These are the tangible and technical skills possessed by employees that
contribute to the organization's capabilities.
Soft Elements:

5. Shared Values: Shared values represent the core beliefs, culture, and principles that guide
an organization's actions.

Style: Style refers to the leadership and management style within an organization. Different
leadership styles can impact how decisions are made and how employees are motivated.

Staff: Staff includes the human resources within the organization, encompassing their skills,
attitudes, and capabilities.
 Step Five: Strategy Implementation

• Taking Action: Reconciling Supply and Demand

 Balancing demand and supply considerations
 Forecasting business activities (trends)
 Locating applicants
 Organizational downsizing
 Reducing “headcount”
 Making layoff decisions
 Seniority or performance?
 Labor agreements
 Step Six: Evaluation and Assessment

• Evaluation and Assessment Issues

 Benchmarking: The process of comparing the organization’s processes and
practices with those of other companies
 Human capital metrics
 Assess aspects of the workforce
 HR metrics
 Assess the performance of the HR function itself
 Measuring Strategic Alignment
• Strategy Mapping and the Balanced Scorecard
 Balanced Scorecard (BSC)
 A measurement framework that helps managers translate
strategic goals into operational objectives
– financial
– customer
– processes
– learning
Figure 2–9 Balanced Scorecard
 Ensuring Strategic Flexibility for the Future
• Organizational Capability
 Capacity of the organization to act and change in pursuit of
sustainable competitive advantage.
 Coordination flexibility
 The ability to rapidly reallocate resources to new or changing needs.
 Resource flexibility
 Having human resources who can do many different things in different
ways.