The Process of Human Resource Planning

• Organizations need to do human resource

planning so they can meet business objectives
and gain a competitive advantage over
competitors.

– Human resource planning compares the present state

of the organization with its goals for the future
– Then identifies what changes it must make in its
human resources to meet those goals
Overview of the Human Resource Planning
Process
 Human Resource Forecasting
• HR Forecasting attempts There are three major
to determine the supply steps to forecasting:
and demand for various
types of human resources, 1. Forecasting the demand
and to predict areas for labor
within the organization 2. Determining labor
where there will be labor supply
shortages or surpluses. 3. Determining labor
surpluses and shortages
 HUMAN RESOURCE PLANNING

FORECASTING HR REQUIREMENTS (DEMAND ANALYSIS)

(Trying to predict future staffing needs)
Managerial Estimates
Sales Projections
Simulations
Vacancy Analysis (projected turnover)

FORECASTING HR AVAILABILITY (SUPPLY ANALYSIS)

(Predicting worker flows and availabilities)
Succession or Replacement Charts
Skills Inventories (use of HRIS)
Labor Market Analysis
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.
 CORRELATIONS/PROJECTIONS

SIZE OF HOSPITAL NUMBER OF NURSES

200 240
300 260
400 470
500 500
600 620
700 660
800 820
900 860
 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 Expected to Remain

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 = .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 Outstanding Ready Now

PRESENT PROMOTION
POSSIBLE CANDIDATES CURRENT POSITION PERFORMANCE POTENTIAL

SHARON GREEN Western Oregon Sales Manager Outstanding

Ready Now
GEORGE WEI N. California Sales Manager Outstanding
Needs Training
HARRY SHOW Idaho/Utah Sales Manager Satisfactory Needs Training
TRAVIS WOOD Seattle Area Sales Manager Satisfactory Questionable

-------------------------------------------------------------------------
 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
 MARKOV ANALYSIS
(STATISTICAL REPLACEMENT ANALYSIS)

TO:  A TRANSITION MATRIX

FROM:
TOP MID LOW SKILLED ASSY EXIT

TOP .80 .02 .18

MID .10 .76 .04 .10

LOW .06 .78 .01 .15

SKILL .01 .84 .15

ASSY .05 .88 .07

------------------------------------------
 MARKOV ANALYSIS – 2
(Captures effects of internal transfers)

(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: 100 190 482 610 1760 [358 left]
NEED RECRUITS ? 0 10 118 240* 368 tot
NEED LAYOFFS ? (10)* (10) tot
KEEP STABLE 100 200 600 600 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: 100 190 482 610 1760 [358 left]
NEED RECRUITS ? 0 10 118 50*
NEED LAYOFFS ? (60)*
NEW LEVELS 100 200 600 600 1700 = 3260 tot
 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.
 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!!!