Human Resource Planning
• HR Planners attempt to
determine the supply and
demand for various types of
human resources (labor),
and to predict which areas
within the organization will
experience labor shortages
or surpluses.
• This prediction process is
also called HR Forecasting.
There are three major
steps to HR Forecasting:
Forecasting the demand for
labor
WHERE WILL THERE BE OPENINGS IN OUR
ORGANIZATION?
Determining labor supply
WHERE CAN WE FIND CANDIDATES TO FILL
THESE OPENINGS?
Determining labor surpluses
and shortages
ARE WE OVERSTAFFED IN SOME AREAS?
HUMAN RESOURCE PLANNING
FORECASTING HR REQUIREMENTS (DEMAND ANALYSIS)
(Trying to predict future staffing needs)
Managerial Estimates (who is leaving?)
Trend projections (using demand, sales)
Simulation models
Vacancy Analysis (projected turnover based on past history)
FORECASTING HR AVAILABILITY (SUPPLY ANALYSIS)
(Predicting worker flows and availabilities)
Succession or Replacement Charts
Skills Inventories (use of HRIS)
Markov Analysis (Transition Matrix)
Personnel Ratios
Forecasting the Demand for Labor
Trend Analysis
• Constructing and applying statistical models that predict
labor demand for the next year, given relatively objective
statistics from the previous year.
Leading Indicators
• Objective measures that accurately predict future labor
demand.
SIMULATION MODEL/REGRESSION FORECAST
TARGET STORES STAFFING FORECAST
MODEL
Y = 8 + .0011(X1) + .00004(X2) + .02(X3)
Y = Number of employees needed to staff the store
X1 = Square feet of sales space
X2 = Population of metropolitan area
X3 = Projected annual disposable income in millions of dollars
Y = 8 + .0011(50,000sq ft) + .00004(150,000popul) + .00000002($850 million)
Y = 8 + 55 + 6 + 17
Y = 86 employees needed at this store
VACANCY ANALYSIS
Historic departures used to project turnover
LEVEL
# EMPL
TURN %
Expected Vacancies
TOP MGMT
100
20 %
20
80
MID MGMT
200
24 %
48
152
LOW MGMT
600
22 %
132
468
SKILLED W
600
16%
96
504
ASSY WKRS
2000
12 %
240
1760
TOTALS
3500
536
2964
AVERAGE TURNOVER PERCENTAGE = 536 / 3500 =
Expected to Remain
.1531
Determining Labor Supply
Predicting Worker Flows and Availabilities
• Succession or Replacement Charts
Who has been groomed/developed and is ready for promotion right NOW?
• Human Resource Information Systems (HRIS)
An employee database that can be searched when vacancies occur.
• Transition Matrices (Markov Analysis)
A chart that lists job categories held in one period and shows the 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?
• Personnel / Yield Ratios
How much work will it take to recruit one new accountant?
SUCCESSION PLANNING
REPLACEMENT CHART
FOR EXECUTIVE POSITIONS
POSITION REPLACEMENT CARDS
FOR EACH INDIVIDUAL POSITION
------------------------------------------------------------------------
POSITION
WESTERN DIVISION SALES MANAGER
DANIEL BEALER
Western Division Sales Mgr
POSSIBLE CANDIDATES
SHARON GREEN
GEORGE WEI
HARRY SHOW
TRAVIS WOOD
CURRENT POSITION
Western Oregon Sales Manager
N. California Sales Manager
Idaho/Utah Sales Manager
Seattle Area Sales Manager
Outstanding
Ready Now
PRESENT
PERFORMANCE
PROMOTION
POTENTIAL
Outstanding
Outstanding
Satisfactory
Satisfactory
Ready Now
Needs Training
Needs Training
Questionable
-------------------------------------------------------------------------
1–8
HUMAN RESOURCE INFORMATION SYSTEMS
(HRIS)
PERSONAL DATA
Age, Gender, Dependents, Marital status, etc
EDUCATION & SKILLS
Degrees earned, Licenses, Certifications
Languages spoken, Specialty skills
Ability/knowledge to operate specific machines/equipment/software
JOB HISTORY
Job Titles held, Location in Company, Time in each position, etc.
Performance appraisals, Promotions received, Training & Development
MEMBERSHIPS & ACHIEVEMENTS
Professional Associations, Recognition and Notable accomplishments
PREFERENCES & INTERESTS
Career goals, Types of positions sought
Geographic preferences
CAPACITY FOR GROWTH
Potential for advancement, upward mobility and growth in the company
Transition Matrix
Example for an Auto Parts Manufacturer
Forecasting the Supply of Employees:
Internal Labor Supply
1–11
MARKOV ANALYSIS
(STATISTICAL REPLACEMENT ANALYSIS)
TO: 
A TRANSITION MATRIX
FROM:
TOP
MID
TOP
.80
.02
MID
.10
.76
.04
.06
.78
.01
.15
.01
.84
.15
LOW
SKILL
ASSY
LOW SKILLED ASSY
EXIT
.18
.10
.05
.88
.07
------------------------------------------
MARKOV ANALYSIS – 2
(Captures effects of internal transfers)
(Start = 3500)
FROM/ TO: 
TOP
100
MID
200
LOW
600
TOP
.80
.10
A TRANSITION MATRIX
MID
LOW SKILLED
.02
ASSY
EXIT
.18
.76
.04
.06
.78
.01
.15
.01
.84
.15
SKILL 600
.10
ASSY 2000
.05
.88
.07
--------------------------------------------------------END YR WITH:
100
190
482
NEED RECRUITS ?
NEED LAYOFFS ?
0
10
118
KEEP STABLE 100
610
240*
(10)*
200
600
1760
600
[358 left]
368 tot
(10) tot
2000 = 3500 Tot
MARKOV ANALYSIS – 3
(Anticipates Changes in Employment Levels)
Employment needs are changing. We need a 10% increase in skilled workers
(660), and a 15% decrease in assembly workers (1700) by year’s end.
------------------------------------------------------(Start = 3500)
A TRANSITION MATRIX
FROM/ TO: 
TOP
MID
LOW SKILLED ASSY
EXIT
TOP
100
.80
.02
.18
MID
200
.10
.76
.04
.10
LOW
600
.06
.78
.01
.15
SKILL 600
.01
.84
.15
ASSY 2000
.05
.88
.07
---------------------------------------------------------
END YR WITH:
100
NEED RECRUITS ?
NEED LAYOFFS ?
0
NEW LEVELS 100
190
482
610
10
118
50*
1760
[358 left]
(60)*
200
600
660
1700 = 3260 tot
PERSONNEL / YIELD RATIOS
Past experience has developed these yield ratios for recruiting a Cost Accountant:
FOR EVERY 12 APPLICATIONS RECEIVED, ONLY 1 LOOKS
PROMISING ENOUGH TO INVITE FOR AN INTERVIEW
OF EVERY 5 PERSONS INTERVIEWED, ONLY 1 IS ACTUALLY
OFFERED A POSITION IN THE ORGANIZATION
OF EVERY 3 JOB OFFERS MADE, ONLY 2 ACCEPT THE POSITION
OF EVERY 10 NEW WORKERS WHO BEGIN THE TRAINING
PROGRAM, ONLY 9 SUCCESSFULLY COMPLETE THE PROGRAM
THUS:
100 APPLICATIONS MUST BE RECEIVED, so that
8.33 JOB INTERVIEWS CAN BE HELD, so that
1.67 JOB OFFERS CAN BE MADE, and
1.11 PEOPLE MUST BE TRAINED, so that we get
ONE NEW COST ACCOUNTANT!!!
Determining Labor Surplus or Shortage
• Based on the forecasts for labor demand and
supply, the planner can compare the 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.
• How much recruiting will we really have to do?
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