HR PLANNING
7
The strategic role of HR Planning
1. Developmental planning for strategic
leadership
• succession planning
• leadership development
2. Assessment of strategic alternatives
• forecasting
• sourcing of talents
The strategic role of HR Planning
3. Adding value to HRM
• HR planning linked to R & D efforts
• HR planning linked to financial performance
• HR planning for CEOs linked to profitability
The strategic role of HR Planning
4. Contribution to strategic HRM
• Top 3 reasons for HR planning
•developing human resources
•avoiding personnel shortages
•obtaining information for decisions
5. Strategic salary planning
• matching compensation structures with
business goals
Elements Affecting HR Needs
• PERSONNEL CHANGES
– Even if organization’s strategy remains static
– Promotions, retirement, turnover
• SUPPLY AND DEMAND
– Quantity, quality, time, other measures
Elements Affecting HR Needs
• CHANGES IN LEGISLATION
– factors in the political environment such as new
wage increases, affirmative action, quotas, etc.
• PRODUCTIVITY CHANGES
– reduction/increases in productivity
Elements Affecting HR Needs
• ORGANIZATIONAL CHANGES
– Changes in organizational goals and strategies create
new positions and change old ones
•
•
•
•
upgrading/downgrading of products/services
expanding/reducing markets
technological/administrative changes
financial resources
– Leads to downsizing, flattening organizational
structures, diversifying, decentralizing, etc.
– Can increase/reduce demand for some jobs
STEPS IN HR PLANNING
1. Interfacing with strategic planning and scanning the
environment
2. Taking an inventory of the company’s human resources
3. Forecasting the demand for HR
4. Forecasting the supply of HR (internal and external)
5. Comparing forecasts of demand and supply
6. Planning the actions needed to deal with anticipated
shortages or overages
7. Feeding back such information into the strategic
planning process
FORECASTING TECHNIQUES
TREND ANALYSIS
• studies a firm’s past employment needs over a
period of years to predict future needs.
• requires studying patterns of personnel deployment
for some years to see what might continue to happen
for sometime
• valuable as an exploratory study
FORECASTING TECHNIQUES
RATIO ANALYSIS
• technique for determining future staff needs by
using ratios between variables like sales volume
and number of employees needed
• arrived at by cross-multiplying
FORECASTING TECHNIQUES
CORRELATION ANALYSIS
• method of determining statistical relations between
two variables. It requires determining first whether
two factors - like a measure of business activity and
staffing levels - are related.
• if the variables are related, then we can forecast the
required staffing level by forecasting business
activity.
• if done manually, shown through a scatter plot
FORECASTING INTERNAL SUPPLY OF HR
How many can be recruited inside? This
requires compiling and analyzing
information on qualifications like:
–
–
–
–
QUALIFICATIONS INVENTORIES
REPLACEMENT CHARTS
POTENTIAL INVENTORIES
PERFORMANCE INVENTORIES
Forecasting supply of HR
• Quantitative techniques
–
–
–
–
–
Markov analysis (ratio analysis, trend analysis)
network flow models
attrition analysis
computer simulations
renewal models
• Qualitative techniques
– replacement charts (succession planning)
– supervisory estimates
Supply Forecasting Techniques
Percentage of Companies
Using Technique
Succession Planning or Replacement Charts
Human Resource Inventories
Supervisor Estimates
Rules of Thumb or Non-statistical Formulas
Computer Simulation
Renewal Models
Regression Analysis
Markov or Network Flow Models
Exponential Smoothing or Trend Extrapolation
Operations Research Techniques
66.7
66.7
48.5
27.3
12.1
9.1
7.6
6.1
6.1
4.5
Demand Forecasting Techniques
Percentage of Companies
Using Technique
Supervisor Estimates
69.7
Succession Planning or Replacement Charts
65.2
Rules of Thumb or Non-statistical Formulas
37.9
Computer Simulation
18.2
Exponential Smoothing or Trend Extrapolation
12.1
Regression Analysis
9.1
Delphi Technique
3.0
MANAGERIAL ISSUES IN PLANNING
• Personal Implications - planning requires
managerial discipline and processes
• Changing Receptivity towards Planning - HR
planning as a shared function between line
managers and HRM
• Implications of the European Experience Europe has strict laws about layoffs making HR
Planning the only alternative to avoiding HR
surpluses and shortages.
PEST ANALYSIS
• Political
– laws, global and local changes, political
pressures, political stability, etc.
• Economic
– exchange rates, inflation levels, income growth,
debt & saving levels (which impact available
money) and consumer & business confidence
• Social
– beliefs, values and attitudes that impact on
purchasing preferences and trends, etc.
• Technological
SWOT ANALYSIS
• Company strengths and weaknesses need to
be identified in all aspects of the business
– relative to the rest of the market (i.e. compared to
competitors)
– relative to previous performance or expected
performance
– relative to customer demand (for example all
companies in an industry may fail to satisfy a particular
customer need. This is a weakness - and the first
company to match this customer need will have a
strength relative to the other companies in the industry.)
CONDUCTING A SWOT ANALYSIS
• Points to consider:
– opportunities arise out of weaknesses
– correcting a weakness presents a marketing opportunity
– failing to maintain a strength is a threat to the company
– weaknesses must not cancel out company strengths
– focus on key areas of concern that require action
– score items in the SWOT analysis (5 is a major strength
and 1 a major weakness)
CONDUCTING A SWOT ANALYSIS
• Marketing Aspects
Market share and market segments addressed ·
Competitive Structure · Customer base (quality,
size, loyalty, etc.) · Demand forecasts · Product
range and quality. · Services provided ·
Distribution capabilities and costs · Sales
effectiveness · Promotional effectiveness. Image
and reputation · Pricing options · Speed to market
· Customer service · R&D and Innovations / new
products · Marketing skills and experience ·
International / export market capabilities
CONDUCTING A SWOT ANALYSIS
• Operational / Manufacturing Aspects
· Production / Manufacturing facilities (age,
quality, speed...) · Economies of scale · Skills
(Employee, technical, etc.) · Product failure rate ·
Flexibility · Costs · Supply / raw material
availability
CONDUCTING A SWOT ANALYSIS
• Human Resource Aspects
· Employee skills, motivation, dedication and
experience · Employee satisfaction · Employee costs ·
Work environment · Staff turnover rate · Management
and Organisational Aspects · Management skills and
experience · Leadership and team skills · Ability to
respond to market change · Flexibility and adaptability
Financial Aspects
· Cost of capital · Profitability / Return on investment ·
Financial Stability · Sales / Employee · Cash
availability
KEY STEPS IN CONDUCTING A SWOT ANALYSIS
1. Brainstorming - use a mind map!
2. Translate brainstorm into the top five to ten
category)
ideas (per
3. Review and discuss each of the top ideas and their potential
implications to the organization.
4. Begin with O-T to gain a better understanding of how your
organization can relate to its external environment. Then move
to S-W to see how they relate to the opportunities and threats
external to the organization.
5. Rank and analyze output:
Is both a strength of the organization and an opportunity in the
external environment? This represents a potential area for growth.
Is both a weaknesses of the organization and threat in the external
environment? This represents an area that needs to be addressed.
Why develop a human
resources plan?
An HR plan can serve as an information base for many
purposes, such as:
• identifying HR requirements to better meet business
objectives
• promoting a proactive approach to HR management
and career planning
• reducing the time and cost of future staffing
• identifying opportunities for synergy, such as
opportunities for collaborative staffing actions
• identifying employment equity goals and facilitating
their realization
Why develop a human
resources plan?
An HR plan can serve as an information base for many
purposes, such as:
• identifying official languages/skills requirements
• signaling potential work load and/or work force
adjustment situations
• predicting potential shortfalls in the labor force
and market availability
• highlighting projected retirements and resignations and
developing appropriate succession plans
• identifying seasonal or cyclical hiring patterns
Information requirements for
HR Planning
• What are the Company’s strategic objectives for the
next year; for the next three years; for the next five
years?
• What are the capabilities and capacities of the
organization's current workforce and what are the
organization's current or existing HR needs?
 Are there existing employees who can do the work at
this time?
 What are the strengths and weaknesses of existing
resources?
 Are the positions classified at the appropriate groups
and levels?
Information requirements for
HR Planning
 Where are the labor markets in which likely
candidates are located?
 Is the workforce sufficiently diverse to reflect the
labor market availability (i.e. employment equity
considerations)?
 Is the workforce capable of meeting the obligations?
 What are employees' career development needs,
plans and aspirations?
Information requirements for
HR Planning
• What is the organization's future supply of,
and demand for, employees to meet the
business plans and priorities in a timely
manner?
 Which functions will need to be performed?
 How will the current functions evolve?
 How should the organization be structured?
 Will the positions be classified at the appropriate
groups and levels?
 Which type of competencies/qualifications will be
required?
Information requirements for
HR Planning
• Will the competencies required to perform the work be the same
as now? If not, what will be required?
• How many people will be needed to perform the work? At what
point in time and for how long?
• Are there employees who, with appropriate development, could
perform the work in the future?
• What attrition will occur, e.g. retirements, deployments or
promotions out of the organization?
• How will corporate memory be preserved?
• How will specialized skills or knowledge be retained?
Information requirements for
HR Planning
• What use of extended leave is estimated (e.g., sick leave,
parental leave, leave-with-income-averaging)?
• How can employees' career development needs, plans and
aspirations be accommodated?
• Where will the labor market be in which likely candidates will
be found?
• Will the workforce be or remain sufficiently diverse to reflect
future labor market availability (i.e. employment equity
considerations)?
STRATEGIC HR PLANNING TOOLS
• Corporate Head count "Fat" Assessment assessment tools that will let you know in advance where head
count and overhead costs are excessive.
• Redeployment / Agility Plans
It is not uncommon for new markets and products to open (and
close) rapidly. Companies need to have a strategy to remain
"agile" and to be able to move people, and resources rapidly
from areas of low return to areas of a higher return.
• "Smoke" Detectors (Predictors)
If HR is to be proactive it needs to be able to anticipate
problems. Developing HR systems and metrics that indicate
potential problems might give us sufficient time to develop plans
and strategies to either avoid the problem or minimize impact.
STRATEGIC HR PLANNING TOOLS
• Bench Strength (Back Fill) In this time of high
turnover, it's increasingly essential to have a strategy of
identifying and developing individuals that can take over if an
employee leaves. A bench strength plan differs from traditional
succession planning in that it only covers replacing key jobs
within a single department. It is not a company-wide succession
plan. Individual managers are held responsible for developing at
least one individual to fill every key job.
STRATEGIC HR PLANNING TOOLS
• Employee Challenge Plan
One of the primary reasons employees leave their jobs is due to
a lack of challenge. HR can dramatically increase retention
rates if it gets managers to develop individual "Challenge
Plans" for workers.
• Retention Plan
A retention plan is a corporate strategy to lower turnover. The
first step is to identify key performers and hard to fill positions.
Individuals that may be "at risk" are identified. Individuals or
position -wide strategies are then developed to increase their
retention rates. Additional efforts are made to identify why
people stay in their jobs and why people leave.
STRATEGIC HR PLANNING TOOLS
• Quality of Labor Supply Forecasts
Identifying the "quality" of the future labor supply is a medium
term strategy based on the assumption that the available labor
force will not have the competencies and skills that our company
needs. Accurate forecasting will allow a company to prepare
training and development plans to upgrade the available talent.
Adequate preparation will give a competitive talent advantage
over rivals.
STRATEGIC HR PLANNING TOOLS
• Horizontal Progression Plan
Because most companies have de-layered or eliminated many
management positions there are fewer opportunities for
promotion to stimulate workers. As a result, companies need to
develop horizontal transfer and job rotation plans to ensure the
continued development of both technical and managerial skills
among our top employees.
STRATEGIC HR PLANNING TOOLS
• Work/Life Balance Supply/Demand
Forecasts New hires, as well as current workers are
demanding an increasing array of benefits and work life balance
options. HR needs to develop strategies to accurately assess
what those work life balance demands will be. It must also be
able to forecast what percentage of our work force will choose
to participate in work life balance programs like job sharing
and sabbaticals. This forecast will enable companies to be
prepared for the decreased amount of hours employees will be
willing to put in.
STRATEGIC HR PLANNING TOOLS
• Learning / Knowledge Plan
Companies are becoming increasingly aware that a major
competitive advantage occurs when a company can rapidly
acquire information/solutions and swiftly share them throughout
the company. HR can help by assisting managers in developing
individual and corporate wide learning plans and strategies to
increase speed of learning and the application of that knowledge
within our company.
STRATEGIC HR PLANNING TOOLS
• Skills/ Competency Inventories
In order to rapidly re-deploy resources and fill unexpected
vacancies HR must develop computerized skill or competency
inventories. Such inventories allow companies to "throw" talent
at a problem because we are aware of which individuals in our
corporation have the needed skill or experience to solve that
problem. These inventories do not require people to move
between positions as they can also be used as sources for advice
and benchmarking.
STRATEGIC HR PLANNING TOOLS
• Interest Inventories
In order to retain employees it is essential that we have a
strategy for identifying and meeting the changing needs of our
workers. By asking workers What projects they might like to
work on? What skills they would like to develop? and What
individuals or teams would they like to work with? managers
can develop strategies for increasing a worker excitement and
productivity levels.
STRATEGIC HR PLANNING TOOLS
• Candidate Expectation (offer acceptance
criteria) Forecast
The increased number of job openings and the "unique"
expectations of the current crop of generation Xer's and college
hires makes it increasingly more difficult to get candidates to
accept an offer. By using focus groups and surveys companies
can identify and forecast the unique offer acceptance demands
of it's recruits. Accurate forecasts can give the company
sufficient time to develop the array of programs and benefits
that are increasingly essential to get a candidate to say yes.
STRATEGIC HR PLANNING TOOLS
• HR Competitive Analysis
As CEOs become increasingly aware of the value of strong HR
programs they're demanding that each and every program we
offer is superior to that of our direct competitors. This requires a
side by side and program by program s assessment on how every
HR program we currently have is superior to our competitors. In
addition, in order to continually improve, HR must show an
improvement each year in our "this year to last years"
comparison.
STRATEGIC HR PLANNING TOOLS
• Bad Management Identification Program
One of the primary reasons that employees quit their jobs are
the bad management practices of their direct supervisor.
Companies often thrown managers into their jobs with little
training or preparation Through the use of surveys, 360 degree
assessments and interviews companies can identify "bad
managers". The organization can then develop strategies for
fixing these managers, transferring them back to more technical
jobs or for releasing them. Because managers are responsible
for meeting many employee needs that are cited as reasons for
employee turnover (communicating with the worker, challenging
them, recognizing their efforts etc.) fixing bad managers may be
the single most important factor in increasing productivity and
decreasing turnover.
STRATEGIC HR PLANNING TOOLS
• Talent Acquisition Through Mergers &
Acquisition Plan
There are ways to acquire talent beyond traditional recruiting.
Acquiring "intact" teams and large numbers of talented people
(with similar values) rapidly is possible by having HR "scout
out" target firms and then recommending their acquisition just
for their employees.
STRATEGIC HR PLANNING TOOLS
• Targeted Succession plans
Targeted succession plans are narrowly focused strategies for
ensuring that individuals are available to fill vacant key
positions in project teams. Targeted areas often include major
software implementations, year 2000 efforts and product
development teams. Most succession plans have often failed
because they were too broad. Targeted plans allow the focus and
forecasting to be more narrowly applied with the goal of
increasing the accuracy of the planning.
STRATEGIC HR PLANNING TOOLS
• Turnover / Exit Forecast
A strong economy coupled with large swings in the health of
world economies makes predicting the supply of labor
increasingly difficult. The other side of this issue is identifying
where our company is likely to lose key talent through turnover
and retirements. This turnover forecast is designed to predict
short term vacancies in the next six months in order to prepare
the appropriate recruitment or internal promotion strategies
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