PowerPoint Presentation
to accompany
Human Resource Management,
4rd Edition
by Raymond J. Stone
Prepared by Retha Wiesner © John Wiley & Sons Australia, Ltd 2002
HUMAN RESOURCE
PLANNING
Chapter 2
OBJECTIVES
• Appreciate the importance of HR planning
• Explain the relationship between strategic HRM and
HR planning.
• Identify the key environmental influences on HR
planning.
• Understand the basic approaches to HR planning.
• Describe the ways of forecasting HR requirements and
availability.
• Understand the requirements for effective HR
planning.
• If you don’t want to plan for success, what right
do you have to worry about non-success? If
you’re not planning where you want to be, what
reason or excuse do you have for worrying about
being nowhere?
TOM HOPKINS, American sales trainer, motivator
and author.
• Plans get you into things but you got to work your
way out.
WILL ROGERS (1879-1935), American actor,
performer and humorist.
IMPORTANCE OF HUMAN
RESOURCE PLANNING
• The purpose of HR planning is to ensure that a
predetermined number of persons with the correct
skills are available at a specified time in the future.
• HR planning systematically identifies what must
be done to guarantee the availability of the human
resources needed by an organisation to meet its
strategic business objectives.
• HR planning cannot be undertaken in isolation. It
must be linked to the organisation’s overall
business strategy.
Organisation strategy and human resource planning
Organisation strategy
Retrenchment strategy Stability Strategy
•Maintain status quo
•Downsizing
•Business sale
•Shut down
FEEDBACK
(-)
Growth strategy
•Internally generated
growth
•Acquisitions, mergers
or joint ventures
(0)
(+)
HR planning
•Determine number and types of jobs to be filled.
•Match human resource availability with job openings.
Source:Asia Pacific Management Co. Ltd. 2001
STRATEGIC HUMAN RESOURCE
MANAGEMENT AND HUMAN
RESOURCE PLANNING
• As part of the strategic planning process, HR planning must
consider the environmental influences on an organisation,
its objectives, culture, structure and HRM .
• HR planning must reflect the environmental trends and
issues that affect an organisation’s management of its human
resources.
• Government regulations relating to for example conditions
of employment, EEO, industrial relations and OHS need to be
considered.
• Other examples include demographic changes, the
casualisation of the work force, employee literacy etc.
• The growing trend of women in the workforce needs to be
considered in HR planning.
APPROACHES TO HUMAN
RESOURCE PLANNING
THE QUANTITATIVE APPROACH
• The quantitative approach sees employees as
numerical entities and groups them according to
age, sex, experience, skills, qualification, job
level, pay, performance rating or some other
means of classification.
• The focus is on forecasting HR shortages,
surpluses and career blockages; its aim is to
reconcile the supply and demand for human
resources given the organisation’s objectives.
Trend Projection
• Trend projection or time series analysis
predictions work by projecting trends of the past
and present into the future.
• This technique is based on the assumption that
the future will be a continuation of the past.
HR planning
 Determine number and type of jobs to be
filled.
 Match human resource availability with job
openings.
Human resource
demand
Human resource
requirements:
 numbers
 skills
 qualifications
 occupation
 performance
 experience
 career goals
Variances
Human resource
supply
Human resource
inventory:
 numbers
 skills
 qualifications
 occupation
 performance
 experience
 career goals
Nil
No action
If surplus
Stop recruiting
Reduce casual and part-time
employment
Start early retirements
Start retirements
Start retrenching
Reduce working hours
If shortage
Increase overtime
Increase casual and part-time
employment
Postpone retirements
Start recruiting
Accelerate training and
development
Use outsourcing
Source:Asia Pacific Management Co. Ltd. 2001
Econometric Modelling
• Econometric modelling and multiple
predictive techniques involve building
complex computer models to simulate future
events based on probabilities and multiple
assumptions.
THE QUALITATIVE APPROACH
The qualitative approach to HR planning uses expert
opinion (usually a line manager) to predict the future
(for example, the marketing manager will be asked
to estimate the future personnel requirements for the
marketing department). The focus is on evaluations
of employee performance and capacity for promotion
as well as management and career development
Delphi Technique
• A refinement on this basic approach is the Delphi
technique: a panel of experts such as key line
managers make independent anonymous predictions
in answer to questions relating to HR planning.
• The responses are analysed by the HR department and
the confidential results are fed back to the experts
along with another series of questions.
• The managers revise their original estimates in light of
this new information. This process is repeated until a
consensus forecast is obtained.
FORECASTING HUMAN
RESOURCE AVAILABILITY
• Once the HR manager has estimated the HR needs of
the organisation, the next challenge is to fill the
projected vacancies.
• Present employees who can be promoted, transferred,
demoted or developed make up the internal supply.
• Constraints may apply on the use of both internal and
external labour supplies (for example, a ‘promotion
from within’ policy, union restrictions, management
preference and government regulations).
FORECASTING THE SUPPLY OF
INTERNAL HUMAN RESOURCES
Turnover analysis
• A detailed analysis of why people leave the
organisation is essential if meaningful information
is to be obtained.
• Labour turnover rates from past years are the best
source of this information for most organisation.
• Turnover for each job classification and department
should also be calculated because turnover can vary
dramatically among various work functions and
departments.
Skills Inventory
•
•
•
•
This consolidates basic information on all employees
within the organisation and permits the HR manager
to:
identify qualified employees for different jobs
determine which skills are present or lacking in the
organisation
assess longer term recruitment, selection and training
and development requirements.
Skills inventories can be quite simple and manually
kept, or detailed and maintained as part of an
integrated HR information system (HRIS).
Replacement Charts
Replacement charts summarise this information
in visual form for key managers so they can
easily identify both the present incumbents and
potential replacements (or lack of) for given
positions.
Markov Analysis
This is a mathematical technique used to
forecast the availability of internal job
candidates. The underlying assumption is that
the movement of personnel among various job
classifications can be predicted from past
movements.
SUCCESSION PLANNING
• Succession planning is concerned with the filling of
management vacancies. It stresses the development
of high potential employees and takes a long-term
view of the organisation’s HR needs.
• The HR manager’s role is to ensure that succession
planning provides the organisation’s future managers
with the necessary preparation to successfully fill
potential vacancies.
• This means having an effective performance
appraisal system, needs-orientated training and
development programs, and a corporate culture
which fosters individual growth and promotion from
within.
FACTORS AFFECTING THE EXTERNAL
SUPPLY OF HUMAN RESOURCES
•
•
•
•
External labour market
Local regional and international
Demographic Changes
Such as the ageing workforce
Casualisation of the work force
In Australia, 24 per cent of all employees are now casual
workers.
International Employees
Companies are increasingly seeking employees outside
their domestic market. Technological advances in
communication and increased labour mobility have
facilitated internationalisation of businesses.
Outsourcing
•
•
•
•
‘By strategically outsourcing and emphasising a
company’s core competencies,’ argue Quinn and
Hilmer, ‘managers can leverage their firm’s skills and
resources for increased competitiveness.’
The reasons for organisations choosing to outsource
include:
increased focus on core business
cost and quality
access to improved technology
elimination of union problems
REQUIREMENTS FOR
EFFECTIVE HR PLANNING
Successful HR planning requires:
• HR personnel understand the HR planning process
• top management is supportive
• the organisation does not start with an overly complex
system
• the communications between HR personnel and line
management are healthy
• the HR plan is integrated with the organisation’s strategic
business plan
• there is a balance between the quantitative and qualitative
approaches to HR planning
Summary
• The HR plan affects all HR activities and acts as
the strategic link between organisational and HRM
objectives.
• An effective planning process if essential to
optimising the organisation’s human resources.
• HR managers will have to successfully
demonstrate that HR planning is relevant to the
needs of line managers.