CHAPTER 5: HUMAN RESOURCE PLANNING Copyright © 2005 South-Western. All rights reserved.

CHAPTER 5:
HUMAN RESOURCE
PLANNING
Copyright © 2005 South-Western. All rights reserved.
Human Resource Planning (HRP)
• First component of HRM strategy
• All other functional HR activities are derived from
& flow out of HRP process
• Basis in considerations of future HR requirements
in light of present HR capabilities & capacities
• Proactive in anticipating & preparing flexible
responses to changing HR requirements
• Both internal & external focus
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Human Resource Planning (HRP)
• Goes beyond simple hiring & firing
• Involves planning for deployment of human
capital in line with organization &/or business unit
strategy
• May involve:
–
–
–
–
Reassignment
Training & development
Outsourcing
Using temporary help or outside contractors
• Needs as much flexibility as possible
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Key Objectives of HR Planning
• Prevent overstaffing & understaffing
• Ensure organization has right employees
with right skills in right places at right times
• Ensure organization is responsive to
changes in environment
• Provide direction & coherence to all HR
activities & systems
• Unite perspectives of line & staff managers
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Types of Planning
• Aggregate Planning
– Anticipating needs for groups of employees in
specific, usually lower level jobs & general skills
employees will need to ensure sustained high
performance
• Succession Planning
– Focuses on ensuring key critical management
positions in organization remain filled with
individuals who provide best fit
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Aggregate Planning
• Forecasting demand
– Considers firm’s strategic plan’s effects on increases or
decreases in demand for products or services
– Assumptions on which forecast is predicated should be
written down & revisited when conditions change
– Unit forecasting (bottom-up planning) involves “point of
contact” estimation of future demand for employees
– Top-down forecasting involves senior managers allocating a
fixed payroll budget across organizational hierarchy
– Demand for employee skills requirements must also be
considered
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Aggregate Planning
• Forecasting supply
– The level and quantities of abilities, skills &
experiences can be determined using Skills
Inventory.
– Annually updated human resource information
system (HRIS) is dynamic source of HR information
– Markov analysis can be used to create transition
probability matrix that predicts mobility of
employees within organization
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Exhibit 5-2
Transition Probability Matrix for Restaurant
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Strategies for Managing Shortages
• Recruit new
permanent employees
• Offer incentives to
postpone retirement
• Rehire retirees parttime
• Attempt to reduce
turnover
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• Work current staff
overtime
• Subcontract work out
• Hire temporary
employees
• Redesign job
processes so fewer
employees are needed
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Strategies for Managing Surpluses
• Hiring freezes
• Do not replace those
who leave
• Offer early retirement
incentives
• Reduce work hours
• Voluntary severance
leaves of absence
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• Across-the-board pay
cuts
• Layoffs
• Reduce outsourced
work
• Employee training
• Switch to variable pay
plan
• Expand operations
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Succession Planning
• Involves identifying key management positions
the organization cannot afford to have vacant
• Purposes of succession planning
– Facilitates transition when employee leaves
– Identifies development needs of high-potential employees &
assists in career planning
• Many organizations fail to implement succession
planning effectively
– Qualified successors may seek external career
advancement opportunities if succession is not forthcoming
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Exhibit 5-4
Sample Replacement Chart
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Exhibit 5-5
Pros & Cons of Disclosing Succession Planning
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Reading 5.1
Heirs Unapparent
• Experts are looking more carefully at
leadership needs for 21st century, &
warning of:
– A shrinkage in pool of available managers
– Escalating costs in recruiting outside talent
– A lack of attention to developing leaders from within
• Blame inattention to succession planning on
corporate world’s concentration on costcutting & downsizing
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Reading 5.1
Heirs Unapparent
• Old solutions to succession planning
won’t work in increasingly complex
world
• Essential to develop executives who
can cope with globalization & flourish
in new corporate climate buffeted by
changes
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Reading 5.2
Succession Planning Design Shifts
• Key design shifts for succession systems:
– Identify core strategic capabilities/competencies related to
key positions & develop leadership model
– Place initiative & responsibility for individual development in
hands of candidate employees
– Development process that aligns mastery of competencies
with firm’s strategic goals & mission
– Create succession process more open & less exclusive &
secretive
– Design succession process for ongoing & frequent review
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Reading 5.2
Succession Planning Design Shifts
• A succession system must:
– Make sense for & be usable by different business units,
each having unique needs
– Process to focus & guide development of executives to meet
strategic purposes
– Be aligned with other HR processes also in transition
– Assure pool of potential leaders is being prepared for
executive positions
– Be owned by senior management
– Deal with diversity issues & changing demographics
– Measurably add value & contribute to business success
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Reading 5.3
Strategic Levels of HR
• Long-term
– Is activity conceptualized
as long-term value?
• Comprehensive
– Does it cover entire
organization or isolated
components?
• Planned
– Is it thought out ahead of
time & is it well
documented?
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• Integrated
– Does it provide basis for
integrating multifaceted
activities that might
otherwise be fragmented
& disconnected?
• High value-added
– Does it focus on critical
business success issues
or on things that must be
done but are not critical?
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Reading 5.3
Strategic Levels of HR
• Operationally reactive HR
– Focuses on implementing day-to-day demands for HR
• Operationally proactive HR
– Improves upon design & delivery of existing HR basics
before problems set in
• Strategically reactive HR
– Focuses on supporting successful implementation of
business strategy
• Strategically proactive HR
– Focuses on creating strategic alternatives
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Reading 5.3
Strategic Levels of HR
• HR becomes strategically reactive in
business strategy implementation through:
– Supporting execution of tactics that drive long-term
strategies
– Developing cultural & technical capabilities
necessary for long-term success
– By providing change management support for
tactical activities
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Reading 5.3
Strategic Levels of HR
1. Define business unit for which HR practices are
being designed
2. Specify key trends in external business
environment
3. Identify & prioritize firm’s sources of competitive
advantage
4. Define required culture & technical knowledge &
skill areas required to support the sources of
competitive advantage
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Reading 5.3
Strategic Levels of HR
5. Identify cultural characteristics that firm should
reduce or eliminate if it is to optimize competitive
advantage
6. Design HR practices that will have greatest impact
on creating desired culture
7. With these decisions made, firm should establish
action plans for detailed design of HR processes
8. Final step specifies means by which effectiveness
of entire process is measured
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Reading 5.3
Strategic Levels of HR
• Become proactive by:
– Learning enough about other functional areas to allow HR to
contribute to business
– Expanding/enriching parameters of HR agendas through
which strategic alternatives are define & created
• Creates culture of of creativity & innovation
• Involved in full breadth of mergers & acquisition
activities
• Creates internal capabilities based on future
external environmental requirements
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