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Prof. B D Singh IMT, Ghaziabad Take away my people, but leave my factories, & soon grass will grow on the factory floors. Take away my factories, but leave my people, & soon we will have a new & better factory Andrew Carnegie
Strategic planning: the systematic determination of goals and the plans to achieve them
Business strategy plans to build a competitive focus in one line of business
Strategic HRM interrelated practices, policies, and philosophies that facilitate the attainment of organizational strategy Human resource management can be viewed as an umbrella term that encompasses the following:
- Specific HR practices, such as recruitment, selection, and appraisal - Formal HR policies that direct and partially constrain the development of
The truth is that HR has never been more necessary. The competitive forces that managers face today and will continue to confront in the future demand organizational excellence. The efforts to achieve such excellence – through a focus on learning, quality, teamwork and reengineering – are driven by the way organizations treat their people. These are fundamental HR issues. To state it plainly: Achieving organizational excellence must be the work of HR. Human capital-- the sum of employees knowledge, skills, experience, and commitment invested in the organization Talent make capital dance – market move Linking HR Processes to Strategy 7. Start with organizational strategy and then create HR strategy. 8. Start with HR competencies and then craft corporate strategies based on these competencies. 9. Do a combination of both in a form of reciprocal relationship.
- Corporate Strategies leads to HR Strategy – KPO, BPO, LPO etc.
HR Competencies lead to business strategy – Silicon Valley, Bangalore IT & ites Corporate Strategy & HR Strategy go together HR becomes business partners. Why is HR not considered a strategic partner ? Top management does not consider HR as profession. HR professional are not considered experts in business. HR professional do not involve themselves in main stream business. - HR is considered as advisory role. - It is difficult to qualify the contribution of HR.
Are you a strategic partner? 1. Do you understand the business? - Financial parameters? - Customers? - Technologies & technological change? 2. Do you know the corporate plan? 3. Are your HR policies linked with corporate strategies? 4. Are major decisions made with your inputs? So what is HR’s role in future organizations? There is no easy answer, and yet sometimes, the answer is something that has been staring us in the face all along.
The passage of the employee through the organization, aptly termed the Employee Lifecycle embraces talent acquisition and as talent sourcing, talent enabling and development; talent assessment and reward. It is critical to have practices at each stage of this lifecycle that are designed to address not just the current needs of the organization, but also protect its future. Talent acquisition still means selecting people with appropriate abilities for each job. But with organizations working hard to reap the demographic dividend while ironically facing the most acute talent shortage, HR’s greatest contribution to talent sourcing comes in actively developing alternate pools of talent and redefining the talent universe to include sources down the educational stream or even across sectors. Here it is critical to think out of the box, to explore recruitment on the basic tenet of the
Also of crucial importance is the need to closely align the talent demand and supply cycles to optimize costs and improve operational efficiency. Proactive HR departments march to the tune of constantly reviewing the cycle time between demand and supply of talent so that the right person at the right place at the right time, is available with almost Just in Time precision. It is in the area of Talent Assessment and Talent Reward that HR’s contribution to future proofing can be most visibly experienced. These organization clearly link organizational performance. And so, align individual and team compensation quite clearly to organizational revenue and margins. This allows the organization to reward liberally in good years, but also tighten the belt in tough times bringing a much needed element of variability in labor costs. Finally, in establishing an unambiguous link between individual career growth and organizational growth, HR can future proof organizations from developing the proverbial bulge in the middle, so detrimental to organizational progress. Job responsibility
All this does not make for high scores in the popularity stakes. They require painstaking commitment to change and the ability to stay the course. More importantly, they require the movement of the organizational mindset from that of a best employer for all employees to a better employer for better performers and an implementation of the vitality curve in both letter and spirit. But in the final analysis, they create lean, strong organizations with a high performance work ethic, confident of and competent to take on the future. As the function’s famous academic and author Dave Ulrich states “ Achieving organizational excellence must indeed be the work of HR.”
3. Economic climate – Huge International market - From industrial Revolution to knowledge Revolution – New industries - Globalization – Out sourcing from low cost countries, - Need for mergers with international competencies 2. Labour market - Global Labour market - Diverse one - Out sourcing - Flexible work arrangement 3. Political And Legislative Factors - Pay equity - Work force rights
4. Technology E – Commerce - Convergence of work 5. Social Work place violence Retirement trends Work family issue Diversity
12.Stakeholders - Union - Public - Customer - Supplier - Top Management
Environmental Scanning Sources and Methods Environmental scanning systematic monitoring of trends affecting the organization Techniques for Scanning HR professionals can use several methods to generate predictions about the future or extrapolate from current events to determine their impact on HR practices. These methods include trend analysis, the Delphi technique, and impact analysis. Trend Analysis Trend analysis a forecasting method that extrapolates from historical organizational indices. Delphi Technique Delphi technique a forecasting method in which expert opinions are solicited and summarized
Impact Analysis Impact analysis a forecasting method on which past trends are analyzed by a panel of experts who then predict the probability of future events. Environmental Factors 7. Economic Climate 8. From the industrial Revolution Revolution 9. Globalization 10.The Labour Market 11.Political and Legislative Factors 12.Technological Factors 13.Demographic Factors 14.Social and Cultural Factors 15.Stakeholders to the Knowledge
Stakeholders Stakeholder groups of people who have vested interests in an organization’s decisions Shareholders company Customers Suppliers Governments The Public Unions Employees Top Management : Shareholders those who own shares of a
Environment Scanning =forming mission (why we Exist) vision (What we want to be) corporate strategy (Our Game Plan) Corporate strategy-HR strategy • HR Strategy is HR Planning • All other functions like staffing, training, performance management, compensation management, labour relation, & employee separations are derived from it. • HRP is a proactive function- it scans & anticipates various factors- internal & external to develop a plan • It is more important during organizational turbulence
flexible working schedule, childcare programme, employee recognition programmes, employee suggestion programmes, transport and Parking facility programme, discount programme, departmental news letter programme, employee involvement programme. HR Planning is both “top down” and “Bottom up”. While HR plans should be based on overall business needs and strategies, they should take into account the needs and realities of organisational units. The HR planning process should involve managers at all levels. An organization's HR plans are usually developed at the departmental or business line level where business directions are set and decisions made. But HR plans are implemented (and adapted) individual managers in the conduct of their ongoing operations. It is important that managers understand the HR plans and priorities of their organizations so they can guide their actions accordingly.
HR Planning is more than just having the “right people in the right place at the right time”. Its about instituting the people –related practices and activities that will help the organisation achieve, and improve its business results. HR Planning identifies the needs and strategies in this regard. HR Planning in its simplest form, is about answering 3 questions: what are my business needs, how/what do I need to meet those needs and what strategies will I take to ensure my needs are met? Strategic Manpower Planning is a dynamic, proactive, ongoing process of systematically attracting, identifying, developing, mentoring, and retaining employees to support current and future organisational goals. Strategic Manpower Planning focuses specifically on proactive planning to meet anticipated or unanticipated vacancies due to retirement and other factors for classes that serve as essential elements in meeting your public service mandate. Some of the long and short-term strategies that may support the strategic Manpower Planning process, may be retention, induction Programme, employee assistance Programme,
HRP is a forward looking function and an organisational tool to identify skill and competency gaps and subsequently develop plans for development of deficient skills and competencies in human resources to remain competitive. HRP ensures benefits to the organisations by creating a reservoir of talent, preparing people for future cost cutting and succession planning besides creating a back –up in case of diversification and expansion. Optimum manpower planning, therefore, aims at: Balancing demand, supply, distribution and allocation of manpower, Controlling cost of human resources, Formulating policies on transfer, succession, relocation of manpower. HRP is a planning process by which an organization can move from its current manpower position to its desired manpower position. Manpower planning may be defined as a strategy for acquisition, utilization, improvement and retention of human resources.
Human resource planning an integral part of business planning
and acquiring the right number of people with the proper skills Motivating them to achieve high performance Creating interactive links between business objective and resource planning activities
Concept of Human Resource Planning In order to understand the concept and features of HRP, let us consider the following statement: “Although human resource planning means different things to different People, general agreement exists on its ultimate objectives – the most effective use of scarce talent in the interests of the labour and the organization”. On the basis of the review of various definition of HRP, Geisler has emphasized that a suitable definition of HRP should include four aspects – forecasting manpower needs, developing appropriate policies and programmes for meeting those needs, implementing policies and programmes, and controlling these programmes. Based on these aspects he has defined HRP as follows:
“Manpower planning (HRP) is the processincluding forecasting, developing implementing, and controlling – by which a firm ensures that it has the right number of people and right kind of people, at the right place, at the right time, doing this for which they are economically most suitable.” This definition of HRP serves the purpose adequately and most of the definitions are based on this. For example, Decenzo and Robbins have defined HRP as follows: “Specifically, human resource planning is the process by which an organization ensures that it has the right number and kind of people, at the right place, at the right time, capable of effectively and efficiently completing those tasks that will help the organization achieve its overall objectives.” Similarly, Leap and Crino have defined HRP as follows:
“Human resource planning includes the estimation of how many qualified people are necessary to carry out the assigned activities, how many people will be available and what if anything must be done to ensure that personnel supply equals personnel demand at the appropriate point in the future.” Based on the above definitions, following features of HRP may be identified: HRP is a process which includes various aspects through which an organizational tries to ensures that right people, at right placed, and at right time are available. It involves determination of future needs of manpower in the light of organizational planning and structure. Therefore, it depends heavily on these factors. Determination of manpower needs in advance facilitates these factors management to take up necessary actions. It also takes into account the manpower availability at a future period in the organization. Therefore it indicates what actions can be taken to make existing
HRP AT DIFFERENT LEVELS Different institutions make HRP at different levels for their own purposes, of which national level, sectoral level, industry level, unit level, departmental level and job level are important. 1. National Level Adjust the supply through its population policy, family planning, educational policy etc. HRP at national level helps to plan for educational facilities, hospitals, employment plans, agricultural and industrial developments etc. 2. Sectoral Level Manpower requirements for a particular sector like agricultural sector, industrial sector or tertiary sectors are projects based on the government policy, projected output/operations. 3. Manpower needs of a particular industry like cement, textile, chemical are predicted, taking into account the output/operational level of that particular industry.
4. Unit Level This covers the estimation of human resource needs of an organisation or company based on its corporate/business plans. 5. Departmental Level This covers the manpower needs of a particular department in a company. 6. Job Level Manpower needs of a particular job within department like mechanical Engineer are forecast at this level. IMPORTANCE OF HUMAN RESOURCE PLANNING HRP is of primacy nature and, therefore, it precedes all other HRM functions. Without HRP, no other function can be undertaken in any meaningful way. HRP contributes in the following ways in managing human resources in an organisation.
1. Defining future personnel Need. Planning defines future personnel need and this becomes the basis of recruiting and developing personnel. In its absence, there is likelihood of mismatch between personnel needed and personnel available. Steel Authority of India Limited, there are 170000 employees and McKinsey & Company, consultancy firm engaged by SAIL to devise its revival strategy, has suggested pruning of this level to bring it to 100,000. 2. Coping with Changes. There is growing global competition- competing manpower 3. Providing base for Developing Talents. Jobs are becoming more and more knowledgeoriented. This has resulted into changed profile of manpower. For example, in Larsen and Turbro, MBAs, engineers and technicians constitute about 70 per cent of its total employee strength of 20,000. there is a shortage of certain category of personnel and there is frequent movement of personnel from one organisation to
Another. organizations must be ready to face such an eventuality by taking proper HRP steps. 4. Increasing Investment in Human Resources. Every year, cost of acquiring MBAs from reputed institutes is increasing by more than 20-25 percent per annum. Such a high cost has forced many companies to have a relook at their HRM functions and particularly HRP and to align these with new situations. 5. Forcing to Management to involve in HRM. Systematic HRP forces top management of an organization to participate actively in total HRM functions. 6. Casualisation of work place – non- core activities –outsourcing Mechanization, automation & cybernation in place of manpower. 7. Unite the perspective of Line & staff managers 8. Helps determine productivity 9. Helps determine training needs 10. Helps capitalizing on HR strength 11. Incorporates new patterns of working- virtual offices, flexi timing, etc
According to Megginson, “to have an organisation that looks forward to the future and tries to stay alive and prosper in a changing world, there must be active, vigorous, continuous and creative planning”. Thus there is a greater need for planning in order to keep the organisation dynamic in a changing situation of uncertainty. If used properly, it offers a number of benefits: 4. Create reservoir of talent 5. Prepares people for future 6. Expand or contract strength 7. Cut Cost 8. Succession planning
RESPONSIBILITY FOR HUMAN RESOUCE PLANING Formulation of human resource plans is a shared task between top management line managers and HR department Top management is involved in HRP process because ultimately, it approves various plans of the organisation as a whole. Functional managers under whom people work. The responsibilities of HR department in regard to HRP process have been described by Geisler as follows:
– To assists, counsel and pressurize the operating management to plan and establish objectives; – To collect and summaries data in total organizational terms and to ensure consistency with tong-term objectives and other elements of the total elements of the total business plan; – To monitor and measure performance against the plan and keep the top management informed about it – To provide research necessary for effective manpower and organisational planning – Responsibility for HRP at Hindustan Lever- Top Managers, Line
Human resource planning process
HRP is a process and it proceeds through various interrelated activities. Forecasting future manpower requirements, either in terms of mathematical projection of trends in the economy and developments in the industry or of judgmental estimates based upon specific future plans of the company. Inventorying present manpower resources and analyzing the degree to which these resources are employed optimally; Anticipating manpower problems by projecting present resources into the future and comparing them with the forecast of the requirements, to determine their adequacy, both quantitatively and qualitatively and Planning the necessary programmes of recruitment, selection, training deployment, utilization, transfer, promotion, development. Motivation and compensation so that future
Human Resource Planning Organizational objectives
Human resource planning Identification of human resource gap Action plans for bridging Monitoring & control Review Process – HR Audit Forecasting supply of human resources
Forecasting needs for Human resources Surplus human resources
Shortage of human resources
Organizational Objectives, Plans and Policies : Objectives generate various plans an policies which provide direction for future course of action. Out of this direction, various subsystems of the organization devise their own plans and programmes. While going through the process of HRP, organizational policies with regard to effective utilization of human resources should be identified and incorporated in planning process. Specifically, following questions are important in this regard:
1. Are vacancies to be filed by promotions form within or by hiring form outside? 2. How do the training and development objectives interface with the HRP objectives? 3. What union constraints are encountered in HRP and what policies are needed to handled these constraints?
4. How to enrich employee’s job? Should the routine and boring jobs continue or be eliminated? 5. How to downsize the organization to make it more competitive? 6. To what extent production and operations be automated and what can be done about those displaced? 7. How to ensure continuous availability of adaptive and flexible workforce? 8. Outsourcing- Contracting? 2. Human Resource Planning: The planning process consists of two major activities: forecasting needs of human resources and forecasting supply of human resources. Both in terms of quality and quantity – at future date. 3. Identification of Human Resource Gap: Forecasting needs for human resources and forecasting supply of human resources, both taken together, helps to identify gap between human resources needed and their availability – either there may be surplus human resources of there may be shortage of human resources.
4. Action Plans : Various action plans are devised to bridge the human resource gap. If there is surplus of human resources either because of improper HRP in the past or because of change in organizational plan, such as divestment of business or closing down some business because of various reasons, action plans may be devised to prune their size through layoff, voluntary retirement, etc. if there is shortage of human resources, action plans may be devised to recruit additional personnel. 5. Review & Audit :
Human Resource Planning: A Win- Win Process
Wins for Employees 1. Competitive pay and benefits plants.
2. Career development and opportunities for growth
Wins for the Enterprise 1. Appropriate organization structure and people to face challenges and meet corporate objectives, both short and long term. 2. Development of internal resources, leading to stability and culture building.
3. Reduced fear of redundancy.
3. Improved motivation and morale of employees, leading to improved performance.
4. Training and development, leading to continued marketability. 5. Continuity of employment due to organization's ability to retain workforce. 6. Fuller realization of potential, leading to job satisfaction. 7. Conducive work culture and management style leading to satisfaction
4. Productivity gains, leading to cost reduction 5. Improved customer satisfaction, leading to improvement in business. 6. Reduction in hiring and training costs due to the improved ability to retain employees and development of internal resources to fill future vacancies.
Barriers to effective human resource planning
Improper linkage between HRP and Corporate Strategy. Inadequate appreciation of HRP Rigidly in Attitudes Environment Uncertainty Conflict between Long-term and Short-term HRP. Inappropriate HR Information Systems
Measure for making HRP Effective
10. 11. 12.
Commitment and involvement of top management in HRP. Proactive, rather than reactive, human resources management approach. Greater participation of line managers at all levels in HRP process.
4. Effective design of HR information system integrated with the organisation’s management information system. 5. Linking HRP to corporate strategic management process. 6. Enough flexibility in HR plans to take care of changing situations.
JOB ANALYSIS Job analysis can be defined as an examination of the jobs in an organization with a view to documenting the knowledge, skills, and abilities (KSAs e.g., experience) associated with successful performance of those jobs. Job - a grouping of related duties, tasks, and behaviors performed by one or more individuals, namely jobholders Positions refers to the number of individuals who are performing the duties, tasks, and behaviors required by a specific job Job analysis of subdivided work in the organization, both at the level of the individual job and for the entire flow of the production process.
Job description and job specification are the written outcomes (documents) produced by the job analysis process. The job description emphasizes the duties or tasks to be carried out on the job. For job specifications, the emphasis is on identifying the competencies the jobholder must possess to be a successful performer in the specified job.
Job Description The data collected for job analysis provide the basis for preparing job description for each job. This functional description describes what the job entails. Although there is no standard format for a job description, it usually includes: 7. Job title - a title of the job. 8. Job summary – a brief statement of what the job entails.
3. Job activities – a description of the tasks performed, material used and extent of supervision given or received. 4. Working conditions and physical environment – heat, light noise level, hazards are described. 5. Social environment – Information on size of work group and interpersonal inter-actions required to perform the job. Job Specification (vii)Essential attributes – abilities, skills and knowledge that a person must possess. (viii) Desirable attributes – those attributes that one ought to possess. (ix) Contra-indicators – attributes that will become a handicap to successful job performance.
The format for job specification should include the following items: 1. Position title 2. Education/training 3. Experience 4. Knowledge 5. Abilities 6. Skills 7. Aptitude 8. Desirable attributes 9. Contra-indicators, if any Problems Associated with Job Analysis Job analysis that is neither updated nor reviewed Job description or specification that is too vague Contamination and deficiency – Deficiency an error of omission when a job description or specification fails to incorporate important aspects of the job required for success. Contamination an error that occurs when unimportant
or invalid behaviors or attributes are incorporated into a job description or specification. 4 Time and Costs of job analysis – Some organizations are deterred to be associated with the process.
Specific Job Analysis Techniques
• Critical Incidents Technique – critical incidents technique a qualitative process of job analysis that produces behavioural statements along a range from superior to ineffective performance for a specific job. 2. Behaviourally Anchored Rating Scales – behaviourally anchored rating scales a job is divided into a number of key dimension, and each dimension contains a range of statements of job behaviour “anchored” to a numerical scale.
3. Position Analysis Questionnaire – A structured job analysis checklist that includes 194 items or job elements used to rate a job. 4. Functional Job Analysis – Analyses any job using three essential elements: (1) people (important interpersonal relationship on the job), (2) data (obtaining, using, and transforming data in aid of job performance), and (3) things (physical machinery, resources, and the environment). Each of these three dimensions is then rated by level of complexity and importance. 5. The Hay System – The Hay system uses three key factors to analyze each job: (1) know-how (the specific knowledge and skills required to perform the job), (2) problem-solving (the decisions and problems that must be successfully handled on the job), and (3) accountability (the jobholder’s responsibilities for critical task completion and for organizational resources, budgets, supervision of people, etc.
Competency- Based Approaches
Competency any knowledge, skill, trait, motive, attitude, value, or other personal characteristic that is essential to personal characteristic that is essential to perform the job and that differentiates superior from solid performance. Core competencies – characteristics that every member of an organization, regardless of position, function, or level of responsibility with the organization, is expected to possess Role or specific competencies – characteristics shared by different positions within an organization. Only those members of an organization in these positions are expected to possess these competencies.
Methods & Techniques of Demand Management
Forecasting of demand of human resources needs is the first and most important step in any human resource planning process. Forecasting is not a very accurate exercise over a long-term period. For short range planning of less than a year fairly accurate forecast is perhaps possible. No processes or techniques exist that can take into account all the parameters and circumstances required for accurate long-term estimation of manpower needs. Dynamic business circumstances, rapidly changing technologies and their impact on products and methods of production, political and social changes and ever increasing competition keep changing the set of circumstances assumed at the time to forecast.
HR Forecasting What is certain is the uncertainty of the future. As time passes, the working environment changes internally as well externally. Internal changes in the organizational environment include product mix and capacity utilization, acquisition the external environment include government regulations, consumerism, and competence levels of employees, among a host of other factors. Forecasting The Overall Human Resource Requirements The existing job design and analysis may thoroughly be reviewed keeping in view the future capabilities, knowledge and skills of present employees. Further the jobs should be redesigned and reanalyzed keeping in view the organisational and unit wise plans and programmes, future work quantum, future activity or task analysis, future human resources and based on future organisational plans, Job analysis and forecasting. One on the important aspects of demand forecasting is the forecasting of the quality of human resources (skill, knowledge values, capabilities etc.) in addition to quantity of human resources.
Benefits of HR Forecasting 2. Reduces HR costs 3. Increase Organizational Flexibility 4. Ensures a close linkage to the Macro Business forecasting process 5. Ensures that organizational requirements take precedence over issues of resource constraint and scarcity Goal /Stage of HR Forecasting The goal of HR forecasting is to obtain sufficient numbers of trained personnel who will be able perform successfully in jobs when those jobs need to be filled. To do this, the forecasting process has five
1. Identify organizational goals, objectives, and plans. 2. Determine overall demand requirements for personnel. 3. Assess in-house skills and other internal supply characteristics. 4. Determine the net demand requirements that must be met from external, environmental supply sources. 5. Develop HR plans and programs to ensure that the right people are in the right place.
Environmental and organizational factors affecting HR forecasting The HR forecasting process is extremely complex, requiring specific numerical and skill competency targets for personnel to be met despite operating in circumstances of high uncertainty. This uncertainty arises from both external environmental factors and from inside the organization itself. Given this
Uncertainty and the natural rate of change resulting from operating in a turbulent, global economy, the key factor for HR forecasters is to incorporate flexibility into the program responses associated with demand and supply forecasts. HR Forecasting time Horizons 5. Current forecast 6. Short-run forecast 7. Medium-run forecast 8. Long-run forecast Prediction a single numerical estimate of HR requirements associated with a specific time horizon and set of assumptions Projection incorporates several HR estimates based on a variety of assumptions
Contingency plans, plans to be implemented when severe, unanticipated changes to organizational or environmental factors completely negate the usefulness of the existing HR forecasting predictions or projections Determining Net HR Requirements 5. Determine HR Demand 6. Ascertain HR Supply Internal supply – refers to current members of the organizational workforce who can be retrained, promoted, transferred, etc. to fill anticipated future HR requirements. External supply – potential employees who are currently undergoing training (e.g., university students) or are working for competitors, or who are members of unions or professional associations, or currently are in a transitional stage, between jobs unemployed.
Skills inventory employee.
3. Determine Net HR Requirements The third step in the process involves the determination of net HR requirements. From steps one and two above, the following equations are derived: HR demand = external supply + internal supply HR demand - internal supply = external supply Personnel who can fill organizational HR demand requirements must be found from either the current internal workforce supply or from external environmental sources. As explained above, if we are unable to meet the numerical and KSA demands for personnel from internal source, either because of the qualification or performance deficiencies of current workers or because of an explicit organizational
decision to recruit new blood, the residual supply not met through current employees must come from outside: External supply requirements = replacement + change supply components replacement supply = hiring to replace all normal losses (Normal losses are those that result from retirements, terminations, voluntary turnover, promotions, transfers, and leaves, and these losses must be replaced to keep the workforce size at the current level.) change supply = hiring to increase (or decrease) the overall staffing level Recall from our earlier discussion of HR demand that future personnel requirements must not only replace the current
Workforce employees (in terms of numbers and skill competencies), but also reflect desired future changes to staffing levels. external supply = current workforce size x (replacement % per year + change % per year) external supply = 1000 (.11+.07) = 110+70 =180 Another organization with a workforce of 450, which has a historical annual replacement/loss rate of 8% and a corporate downsizing policy that will reduce overall staffing levels by 9.5%, has the following supply requirement: external supply = 450 (.08+ [-.095] = 36-43= -7 HR surplus occurs when the internal workforce supply exceeds the organization’s requirement or demand for personnel
4. Institute HR Programs: HR Deficit and HR Surplus HR deficit = HR demand > HR internal supply HR deficit occurs when demand for HR exceeds the current personnel resources available in the organization’s workforce (HR internal supply) HR surplus = HR demand < HR internal supply
Job sharing occurs when two or more employees perform the duties of one full-time position, each sharing the work activities on a part-time basis Attrition the process of reducing an HR surplus by allowing the size of the workforce to decline naturally because of the normal pattern of losses associated with retirements, deaths, voluntary turnover, etc. Hiring freeze a prohibition on all external recruiting activities.
Factors to be considered before Forecasting demand for employees
Economic factors: as business is an economic activity, forecasts must consider economic aspects like per capita income, employees’ expectations of wages and salaries, cost and price of raw materials, inflation rate, etc. Fiscal policies and liberalization of trade will also influence requirements. Social/ Market Factors: the expectations of existing and potential employees on wages Demographic factors: decisively influential upon future requirements, these include availability of youth, training facilities, women in the active labour force, sex ratio, facilities for professional education, income level, education/literacy etc.
•Competition: Competitors strategies, including advertising, quality of product, pricing, and distribution influence future staffing in a variety of ways. •Technological Factors: Technology has to be stage of the art if company is to survive the competition. Growth and expansion of business: growth is possible through Product diversification Increased capacity of production. Expansion plans are executed through: Merger
Acquisition Joint venture participation Formation of horizontal and vertical integration Establishment of national and international value chains Management philosophy/ Leadership: Top management ultimately decides what levels of staffing are required. Innovative management: As competition increases with globalization and liberalization of trade, management needs to be innovative to stay afloat and sustain competitive advantage.
Assumptions of social environment
Assumptio ns of political environme nt Assumption s of technology conditions
Business plans DEMAND FORECASTING EXERCISE Assumptions of labour market Assumption s of economic trends
Issues in demand forecasting
Social Factors Technologies Factors Political Factors Economic factors Demand Generation Growth Employee Turnover There are several good reasons to conduct demand forecasting. It can help: 10. Quantify of the jobs necessary for producing a given number of goods, or offering a given amount of services 11. Determine what staff-mix is desirable in the future 12. Assess appropriate staffing levels in different parts of the organization so as to avoid unnecessary costs 13. Prevent shortages of people where and when they are needed most 14. Monitor compliance with legal requirements with regard to reservation of jobs
Forecasting techniques vary from simple to sophisticated ones. Before describing each technique, it may be stated that organisation generally follow more than one technique. The techniques are: 4. Managerial judgment 5. Ratio-trend analysis 6. Work study techniques 7. Delphi technique 8. Flow models 9. Others
Managerial Judgement: This technique is very simple. In this, managers sit together, discuss and arrive at a figure, which would be the future demand for labour. The technique may involve a ‘bottom-up’ or a ‘top-down’ approach. In the first, line managers submit their departmental proposals to top managers who arrive at the company forecasts. In the ‘top down’ approach, top managers prepare company and departmental forecasts. These forecasts are reviewed with departmental heads and agreed upon. Neither of these approaches is accurate- a combination of the two could yield positive results. In the ‘bottom-up’ and ‘top-down’ approaches, departmental heads are provided with broad guidelines. Armed with such guidelines, and a consultation with the HRP section in the HRM department, departmental managers can prepare forecasts for their respective departments. Simultaneously top HR managers prepare company forecasts. A committee comprising departmental managers and HR managers will review the two sets of forecasts, arrive at a unanimity, which is then presented to top managers for their approval.
Ratio –trend Analysis
This is the quickest forecasting technique. The technique involves studying past ratio, say, between the number of workers and sales in an organization and forecasting future ratios, making some allowance for changes in the organization or its methods. Exhibit 4 shows how an analysis of actual and forecast ratios, between the number of routine proposals to be processed by an insurance company’s writing department and the number of writers employed could be used to forecast future requirements. Exhibit 4 : Demand Forecast- Inspectors Year Production No. of Employees Ratio Inspector : -3 1500 150 1:10 Actual -2 1800 180 1:10 Last Year 2000 180 1:11 Next Year 2200 200 1:11 +2 2500 210 1:12 +3 2750 230 1:12
Simple Mathematical Methods
The productivity ratio is the average number of units produced per direct labor employee per year. Suppose a company produces sofas and knows from past history that the productivity ratio is about fifty sofas per furniture assembler per year. If the marketing department expects to sell 10,000 sofas in the coming year, then the company needs 10,000/50=200 furniture assemblers. Direct-to-indirect-labor staffing ratios are used to calculate the number of individuals required in other jobs. For instance, if the sofa firm generally has one supervisor for every fifteen assemblers, then about thirteen supervisors will be needed for two hundred assemblers. Past experience also may show that two shipping-and-receiving clerks are required for every fifty assemblers. This means that the company needs a total of eight clerks. Productivity and staffing ratios based on historical data may be modified judgmentally if the ratios are expected to change. For instance, if the union has negotiated a new contract requiring workdays that are thirty minutes shorter and more paid holidays, the expected productivity ratio should be adjusted downward. If an improved order-processing program will be installed in the clerks’ computers, the staffing ratio may change, with fewer clerks needed to service the same number of direct workers.
Delphi Technique Delphi technique can be used for forecasting human resources needs in two forms. First, it can be used to know the trends for changing job profile and, consequently, the changing personnel profile across the country or at international level. Second, this, technique can be used to solicit views of expert in different functional areas of an organisation about the changing profile of personnel in their respective departments in the light of changing environment. Such views are collected and summarized by HR department to arrive at a decision about the types of personnel needed in future. Delphi technique is used primarily to assess long-term needs of human resources.
Work Study Technique
Work-study technique can be used when it is possible to apply work measurement to calculate the length of operations and the amount of labour required. The starting point in a manufacturing company is the production budget, prepared in terms of volumes of salable products for the company as a whole, or volumes of output are then multiplied by the planned volume of units to be produced to give the total number of planned hours for the period. This is then divided by the number of actual working hours for an individual operator to show the number of operators required. Allowance will have to be made for absenteeism and idle time. The number of operative required to complete specified volume of operation is: . Planned output . Standard output per hour * standard hours per person Standard output per hour is not always a constant factor but, generally, it increases over the period of time because of learning.
Work –study technique is a method of forecasting human resource needs. It is a decision Making tool. It is been used in estimating personnel needs from a group of experts, usually managers. The HR experts act as intermediaries, summaries the various responses and report the findings back to experts survey again after they get this feedback. Summaries and surveys repeated until the experts opinions begin to agree. This agreement reached is the forecasting of the human resource needs.
Some other Methods Regression analysis: Past levels of various work load indicators, such as sales, production levels, and value added, are examined for statistical relationships with staffing levels. Where sufficiently strong relationships are found, a regression (or multiple regression) model is derived. Forecasted levels of the retained indicators are
Entered into the resulting model and used to calculate the associated level of human resource requirements.
Productivity ratios : Historical data are used to
examine past levels of a productivity index (P): P= Work load/Number of People Where constant, or systematic, relationships are found, human resource requirements can be computed by diving predicted work loads by P.
Personnel ratios: Past personnel data are examined
to determine historical relationships among the employees in various jobs or job categories. Regression analysis or productivity ratios are used to project either total or key-group human resource requirements, and personnel ratios are used to allocated total requirements to various job categories or to estimate for non-key groups.
Time series analysis: past staffing levels
(instead of work load indicators) are used to project future human resource requirements. Past staffing levels are examined to isolate and cyclical variation, long-term terms, and random movement. Long term trends are then extrapolated or projected using a moving average, exponential smoothing, or regression technique.
Combination of different methods of forecasting human resource needs is followed. Even where work-study technique is followed to assess the human resource needs at the operative level, it is not undertaken every year, as the standards fixed in a year serve the purpose for many years. In order to understand how various methods are applied in practice we shall see in the staffing.
Methods & techniques for supply management
Armstrong has defined forecasting of human resource supply as follows: “Manpower supply forecasting measure the number of people likely to be available from within and outside and organisation, after making allowances for absenteeism, internal movements and promotions, wastage and changes in work hours, and other conditions of work” Reasons for supply forecast are the following: 4. Helps quantify number of people and positions likely to be available in future to achieve objectives 5. Helps clarify the staff mixes that will exist in future 6. Asses staff level in different part of organisation 7. Prevent shortage of people where they are needed most 8. Monitor future conditions with legal requirement for job reservations. Supply source is divided in to two category 10. Internal supply 11. External supply
External Supply – staffing Internal supply can be undertaken by Human resource flow model Human resource inventory Human resource flow model- An organization can be considered as a system of flow- both inflows and outflows of various resources. Based on this concept, a flow model of human resources has been developed which is known as Markov chain analysis model of simply as Markovian model. This can be applied for organization as a whole or any of its sub systems. The basic assumption of this model, and which is true, is that is a system, there are inflows and outflows of personnel during a period, in our case the HR plan period. In this model the forecast of human resource supply proceeds as follows: 6. Determination of the period in which HR flows are measured 7. Establishment of categories of states as called in the model to which an individual can be assigned
3. Counting of annual flows of individuals among states for several time periods a state may be absorbing (gain/losses) or nonabsorbing (Charge in position levels) 4. Estimating the probability of transitions form one state to another based on the past trend;. Estimation of personnel supply based on flows
Sources of inflows No. of persons persons Transfer in 10 No. of supervisor at the beginning of plan period Promotion in 8 Total inflows Total supervisors 18 99 100
sources of outflows Resignations Discharge s Retirement sPromotion s Demotions Total outflows 19
no. of 8 2 3 5 1
Available Similar exercise can be done for other categories of personnel.
Flow models are very frequently associated with forecasting personnel needs. The simplest one is called the Markov model. In this technique, the forecasters will: Determine the time that should be covered. Shorter lengths of time are generally accurate than longer ones. However, the time horizon depends on the length of the HR plan which, in turn, is determined by the strategic plan of the organization. Establish categories, also called states, to which employees can be assigned. These categories must not overlap and must take into account every possible category to which and individual can be assigned. The number of states can neither be too large nor too small. count annual movements (also called ‘flows’) among states for several time periods. These states are defined as absorbing (gains or losses to the company) or nonabsorbing (change in positive levels or employment status). Loses include death or disability, absences, resignations and retirements. Gains include hiring, rehiring, transfer and movement by position level. Estimate the probability of transitions from one state to another based on past trends. Demands a function of replacing those who make a transition.
There are alternatives to the simple Markov model. One called the semi –Markov, takes into account not just the category but also the tenure of individuals in each category. After all, likelihood of movements increases with tenure. Another methods is called the Vacancy Model, which predicts probabilities of movement and number of vacancies. While the semi-markov model helps estimate movement among those who situations and tenure are similar, the vacancy model produces the best results for an organization. Markov analysis is advantageous because it makes sense to decision makers. They can easily understand its underlying assumptions. They are, therefore, likely to accept results. The disadvantages include: (i) heavy reliance on pastoriented data, which may not be accurate in periods of turbulent change and (ii) accuracy in forecasts about individuals is sacrificed to achieve accuracy across groups.
Human resource inventory Normally use to count tangible inputs & outputs Determination of personnel whose inventory is to be prepared, cataloguing of factual information of each individual, systematic and detailed appraisal of these individuals, and detailed study of those individuals who have potential for development. Skill inventory 5. Employee’s personal data 6. Skills- education, job experience, training etc 7. Special achievements, if any 8. Salary and job history and 9. Potentials of the employee Management inventory 11. Personal data 12. Work history 13. Strengths and Weakness 14. Career plan 15. Promotion potentials 16. Number and types of employees managed 17. Total budget managed 18. Any special achievements such as acquisition of additional degrees, papers presented, conferences attended etc.
Existing inventoryii. iii.
Head counts total, department-wise, sex-wise, designationwise, skill-wise, payroll-wise etc. Job family inventory- clerks, cashiers, typists, stenos sub-job family, skill, qualification, similar operations, production engineer mechanical & maintenance engineer, mechanical, job families like general administration production etc. Age inventory-skill, experience, values, capabilities, qualification & training including minute qualifications, inventory of salary grades-pay wise, allowance wise and total salary-wise. Sex-wise inventory, Local and non-local wise inventory, inventory of past performance and future potentialities.
Permanent total loss is due to labour turnover. Labour turnover is measured by the following formula Number of employees left during a specified period ____________________________________________x 100 Average number of employees during the same period Permanent partial loss consists of wastage of skills, capabilities etc. due to ill-health and involvement of employees in accidents.
Temporary total loss of human resource is due to absenteeism Temporary partial loss includes consultancy, advisory and other services offered by the employees to others. Potential Additions iv. Permanent total v. Permanent partial vi. Temporary total vii. Temporary partial viii. Permanent total additions in case of departments include promotions, demotions and transfers within the organisation. Permanent partial addition consists of acquisition of new skills, knowledge, values, aptitude etc. by the existing employees. ix. Deputation
Analyzing source of supply Internal and external factors affecting manpower Local Factors : Local factors include, population density in the area, local unemployment level, availability of employees on part time, temporary and casual basis current and future competition for the similar categories, outcome from local educational and training institutes, residential facilities available, local transport and communication facilities, traditional pattern of employment and availability of manpower with required qualifications and skills, the pattern of place to live, local housing, shopping, educational facilities, medical facilities, regulations of local government like reservation for local candidates, candidates belonging to scheduled backward and minority communities etc. National factors: Technologies, scientists, management graduates computer professionals etc. effect of changing educational patterns, impact of government, national educational policy, impact of government employment regulations such as reservation for candidates belonging to SC, ST and other categories etc. International Factors
Estimating the Net Human Resource Requirements Action plan for recruitment Redeployment, Redundancy and Retrenchment Forecasting future supply from all sources Action plan for recruitment, development etc. Modify the organisational plan If future supply of human resources from all the external sources is estimated to be inadequate or less than the requirements (share of the particular firm in labour market) the manpower planner has to suggest the management to alter or modify the organisational plan. BPOs lay off anti-poaching agreements (E T, 21/11/2006) Retention plan – 10. Adjustment of the salary levels with those of the comparable industries so as to remove inequalities. 11. Providing opportunities for career development, provide training facilities adopting the policy of promoting from within, more systematic promotional procedure, providing opportunities for self-development, assignment of challenging work, etc. 12. Introduction of effective consultation and negotiating machinery, encouragement of grievance redressing and conflict resolution rather than suppressing. 13. Providing of extensive training and development facilities. Encouraging the employees to participate in the management, development programmes and training programmes both within and outside the organisation.
And programmes should be effective in meeting not only organisational but individual needs. 5. Selection procedure should meet the job and organisation requirements not only for the present position to which the candidate has applied but also his potentialities for future jobs in the career line. 6. Provide more conducive working conditions and extensive fringe benefits 7. Provide the scope for extensive participation of the employee in decision-making and create the environment that the system in the organization is participative management but not autocratic management. 8. Provide the facilities and environment for conducive interpersonal relations. 9. Provide the scope for challenging, creative and innovative work. 10. Work life-balance.
Identification of Human Resource Gap
Gap analysis is the process of comparing the workforce Demand Forecast to the workforce Supply Projection. A gap (projected supply is less than forecasted demand) indicates a future shortage of needed employees. A surplus (projected supply is greater than forecasted demand) indicates a future excess in some categories of employees which may also require action.
Managing HR Gap
Shortage Excess/ Surplus
Two types of HR Planning for managing gap
Aggregate Planning Succession Planning Shortage & Supplements Strategies for managing shortage Short Term Long Term
Short Term Increase OT Increase Subcontract Increase productivity Buy back vacation/leave encashment Temporary Assignment Temporary Leaves Transfers (temporary)
Job class modifications Compensation flexibility Succession planning Specialized recruitment and selection Customized training or retraining
Competency- based classification to get flexibility to recruit and mobilize Broad band approach in compensation to get opportunity Succession planning to address future gaps Attract the best talent. Just in time training for new skills and knowledge developments keeping pace technological advancements.
Retention and productivity techniques Re-deployment, career transition, or separation
Design innovative productivity linked incentives. Re-deployment plan within a given job family to successfully get re-deployed.
A purposeful, systematic process for collecting information on the important work-related aspects of a job. Definition Job Analysis is the aspect of employment planning which is concerned with the study of the jobs in an enterprise. In particular, job analysis and the resultant job specifications clarify the following aspects of each job: the work activities; the tools, equipment, and work aids used; jobrelated tangible and intangibles (such as materials used, products made, services rendered) work performance; job context (working conditions) and candidate requirements (such as knowledge, skills, experience and personal attributes)
In JA the following information is gathered (Glueck 1978): Work activities:
– – – – Work activities and processes Activity records Procedures used Personal responsibility
Machines, tools, equipment and work aids used Job-related tangibles and intangibles
– Knowledge dealt with or applied (as in accounting) – Materials processed – Products made or services performed
– Human behaviours such as physical actions and communicating on the job – Elemental motions for methods analysis – Personal job demands, such as energy expenditure
Work performance (Note: Not all JA systems develop the work performance aspects):
– Error analysis – Work standards
– – – –
– – –
Personnel requirements for the job
Work schedule Financial and non-financial incentives Physical working conditions Organisational and social contexts
Job Description A job description is an account of the duties and activities associated with a particular job. A job description is prepared to identify a job, define that job within established limits, and describe its content. It is typically a one or two page summary of the basic tasks performed on a job and constitutes the role expectations relative to that job. Job descriptions have a number of important uses including development of job specifications, work force planning and recruitment, orientation of new employees, and development of performance appraisal systems.
Personal attributes such as personality, interests Education and training required Work experience
Job Specification A job specification describes the characteristics required to perform the job activities outlined in the job description. They focus on the persons performing the job rather than on the work itself. A job specification may also include information on the knowledge, skills, and abilities required to perform the job, as well as such items as the education, experience, and physical attributes needed for successful accomplishment of job tasks. Job specifications are the means by which HRM specialists identify persons with the skills they seek and help focus efforts to recruit them.
Job descriptions and job specifications
– Job Title- title of the job and other identifying information such as its wage and benefits classification – Summary- brief one or two sentence statements describing the purpose of the job and what outputs are expected from job incumbents – Equipment-clear statement of the tools, equipment and information required for effectively performing the job – Environment- descriptions of the working conditions of the job, the location of the job, and other relevant characteristics of the immediate work environment such as hazards and noise levels. – Activities- includes a description of the job duties, responsibilities, and behaviours performed on the job. Also describes the social interactions associated with the work (for example, size of work group, amount of dependency in the work). The job specification evolves from the job description. It addresses the question ‘What personal traits and experience are needed to perform the jo effectively? The job specification is especially useful in offering guidance for recruitment and selection.
Summary Job Analysis A process of Obtaining all Pertinent job Facts Job description A statement containing items such as Job title Location Job summary Duties Machines, tools, and equipment Materials and forms used Supervision given or received Working conditions Hazards
Job specification A statement of human qualifications necessary to do the job. Usually contains such items as Education Experience Training Judgment Initiative Physical effort Physical skills Responsibilities Communication skills Emotional characteristics Unusual sensory demands
Once a thorough JA has been conducted and there are high-quality job descriptions and job specifications available, an organisation can use this information to design or re-design jobs. This information is very useful for structuring job elements, duties and tasks in a manner that will help to achieve optimal performance and satisfaction. Job design is the personnel or engineering activity of specifying the contents of the job, the tools and techniques to be used, the surroundings of the work, and the relationship of one job to other jobs. – Work Simplification – Job Rotation – Job Enlargement – Job Enrichment – Scientific Management and the Mechanistic Approach – Job Enrichment as a Motivational Approach
Job Market & Job DiscriminationLabour Trends
The labour market can be viewed as a process by which the supplies of a particular type of labour and the demand for the same are balanced. The main functions of labour markets are– – A
To fix wages and other terms of employment, To allocate labour among occupations, jobs and employers commodity market refers to physical place where buyers and sellers of a particular commodity gather for engaging in transactions while a labour market is viewed as a process by which supplies of a particular type of labour and demands for that type of labour are balanced, is an abstraction. Secondly, unlike a commodity market, the relationship between the seller and a buyer in a labour market is not temporary and as such personal factors which can be ignored in a commodity market become important in a labour market. Wage, fixing is an essential characteristic of the labour market where (in the absence of unions) the buyers of labour normally sets the price but in the commodity market it is normally the seller who sets the price.
In labour market the price that is set tends to be fixed for some length of time. The labour market is far more complex than the commodity market.
Structured & unstructured labour markets
– We may also distinguish labour markets according to their ‘structure’. Labour markets range all the way from the highly structured to the unstructured, depending upon the presence or absence of rules covering the employment relationship. – Phelps had defined unstructured labour market “as one which contains few, if any, established intitutions by means of which people obtain market information, move into and out of jobs, qualify for advances in rank or identify themselves with any type of organisation”. – The structured labour market is, in general, the market of individual bargains in which there are few rules affecting employment practices. The unstructured labour market has the following features: – There are no unions with seniority riles – Relations between employers and employees is transitory – Workers are unskilled – Payment is by unit of produces and – Little capital is employed The market for domestic servants is an example of unstructured market.
In a structured market, institutional rules limit the movement of workers, they affect hiring policies and often they are the deciding factor in wage determination. Indian Labour Market
– The Indian labour market is dominated by a feature called casual labour. The main feature of a casual labour market is that the relationship between the buyer and the seller of labour is a temporary one. – In India absenteeism is very high and due to a high rate of absenteeism and employment of ‘budlis’ a casual labour market has growth even in the manufacturing industries. – One of the features of the industrial labour in India is its migratory character. – The workers are attracted to the towns, by the lure of higher wages, but the instability of their employment, chronic house famine and high rents prevent them from settling down and bringing their families form the village.
– Gender diversity – Cultural diversity – Age diversity
– Discrimination means the act of making distinctions among people or groups of people. For example, a discriminating employer may make a distinction between men and women for a job and choose only male applicants
– In USA at the early days there was religious discrimination because early settlers often came to America to escape from the religious persecution in Europe.
– In India there is no racial discrimination in the job market.
The Older Worker
– By the year 2000 there will be higher proportion of aged people in the labour force than they are now. Little attention has been given to the older workers who are mostly above 65. In USA one-tenth Americans is over 65 years of age.
Job engineering and job reassignment. These are two things which companies can accomplish to help the older worker. Job engineering refers to redesigning the work stations so that the work can be done in a way that is les taxing on the employee. The work should be planned in such a way that it could be done in a sitting posture, reducing body movement or changing the flow of work. Job reassignment is moving the person into a different position in which the task does not demand so much in terms of dexterity or speed but just as rewarding. Older workers can become good trainers and set up men as well as rework rejects from the production line. Finding employment after the age of forty become more difficult for the following reasons: Seniority and policies of promotion The decline in self-employment Closing of plants force older Retirement age to fifty through VRS
– Women’s liberation movement all over the world has changed the attitudes of women towards the job. Again, equal pay for equal work has become a law in most of the developed countries. – Employment of handicapped
India it is a policy of the Govt. to reserve 2 percent vacancies for the physically handicapped.
– Sons of the Soil – Medical Discrimination
Trends in Labour Supply Changes in the Composition of the Population Subgroup Participation Changes Labour Force Quality Level of Education Women in the Labour Force The Older Employee Handicapped Workers in the Labour Force Part Time & Full Time Work Part time work has increased during the 1980s. Usually a part-time worker is a person who works less than the normal rate of 40 hours a week (or whatever the country’s norm is). To understand well the notion of part-time work, you have to draw a distinction between voluntary and involuntary part-time employees. A person who is working part-time because he/she cannot get full time employment is involuntarily a part-time employee for whom the position means something different than to a co-worker who wished for a part-time assignment.
The major group of part-time workers are:
– Women: Traditionally, with the responsibilities of running homes and child rearing, more women have preferred to work parttime. Furthermore, some experts have found that more husbands would rather have their wives work part time than full time. – Students : in developed countries such as the US & UK, a large number of students between the ages 18-24 enrolled in higher education institutes work part-time. In US, on the average students work 20 hours a week. – Retired and older persons: In order to keep active and to supplement any retirement income or social security payments, a number of older citizens work part-time. Most of these persons are highly skilled and could serve as training resources to new recruits. – Persons with a physical or mental disability: Part-time work is often more suited for handicapped and disabled persons. In some specific disabilities, only part time work enables individuals to work without aggravating their disabilities. While most part-time work is in the service industries there are also numerous opportunities in the retail and wholesale trades and in manufacturing. In a great number of circumstances, there are many advantages in part time work for employees, such as flexibility in scheduling, ability to
Spend more time with their families, additional compensation and stabilization of employment. However for employers, there are also certain disadvantages such as part-time work requiring additional training and record keeping expenses, lack of protecting from trade union etc. trends unions sometimes oppose the use of parttimers, viewing them as robbing work opportunities from additional full-timers who would become their members.
Trends in Labour Demand
India is Asia-Pacific’s cheerleader in hiring.
rise in manpower
– India : 28% – China : 16% – Japan : 15% – Malaysia : 8% – Singapore : 8%
ITeS sizzles, not just in India but also in Asia-Pacific.
rise in manpower
32% 16% 14% 10%
– ITeS : – BFSI : – Manuf: – IT :
As a corollary, talent crunch is rising. Attrition in India is expected to cross 20% this year. 2004 : 14% 2005 : 20% 2006 : 14%
Despite robust growth in the region, India is the worst affected in Asia-Pacific.
: China : Korea : Singapore
20% 15% 12% : 12%
Why they are leaving?
There’s significant mismatch between the reasons why executives leave and the retention strategies that companies are deploying:
External inequity of salary 22% Limited growth opportunities21% Role stagnation 15% Under utilization of skills 9% Lack of recognition 8%
Why/What companies are doing?
The top five retention strategies companies are using to keep them hooked: Work –life balance 11% Leadership accessibility 10% Timely & meaningful Feedback: 10% Pay above market 8% Telecommuting 8%
It’s a last ditch effort but India Inc is making it nevertheless. The customary exit interviews are being taken seriously & companies are using them to offer: Immediate Compensation hikes 23% Pay revisions 35% Immediate role Enhancement 36% Immediate change In role 50% Improved work Life balance 55% Improved work environment 55% Commitment to Career progression 70%
Tapping exit interviews
1. Recruit Permanent Employees Hire Long Tenure employees 2. Offer Incentives to postpone retirement 3. Rehire retired employees- Full Term /Half Term 4. Redesign work so that fewer employee are needed 5. Automise/Cybernise jobs
2. 3. 4. 5. 6. 7. 8. 9.
Short Term Freeze, hires temporarily Reduce OT Reduce Work hours Temporary Shut down / Lay off Excuse absences Temporary out assignments Encourage attrition Encourage sabbaticals
2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Long Term Hiring Freezes No replacement for those who leave Offer VRS/ERS Pay cuts Retrenchments Reduce outserved work Switch over to variable pay Expand work Retrain & Redeploy Transfer Out place
Staffing, the process of recruiting applicants and selecting prospective employees, remains a key strategic area for human resource management. Given that an organisation’s performance is a direct result of the individuals it employs, the specific strategies used and decisions made in the staffing process will directly impact an organisation’s success or lack thereof More extensive, costly, and time-consuming than others. Organisations have great latitude to select from a variety of staffing techniques, each of which offers various degrees of sophistication, such benefits come at a price. Trends such as broader job scope and responsibilities, the move toward leaner staffing and operating with fewer full-time permanent employees, smaller autonomous units, pay for company-wide performance, flatter organisation structures affect the types of individuals and skills that organisation seek and influence how organisations find and screen applicants. The staffing process must be more strategically focused: Newer challenges and considerations must be directly incorporated into an organisations staffing strategy.
c. d. e. f. g. h. i.
Government policies Personnel policies of other competing organisations; Organisation’s personnel policies; Recruitment sources; Recruitment needs; Recruitment cost; Selection criteria and preference etc
Centralized vs. Decentralized recruitment Source of Recruitment Internal Sources : Internal source include: o. Present permanent employees, p. Present temporary/casual employees, q. Retrenched or retired employees, r. Dependents of decreased, disabled, retired and present employees.
External Sources 3. The suitable candidates with skill, knowledge, talent etc. are generally available. 4. Candidates can be selected without any pre-conceived notion or reservations. 5. Cost of employees can be minimised because employees selected from this source are generally placed in minimum pay scale. 6. Expertise, excellence and experience in other organisations can be easily brought into the organisations. 7. Human resources mix can be balanced with different background, experience, skill etc. 8. Latest knowledge, skills and creative talent can be brought into the organisation.
External sources include: c. Educational and Training Institutes, d. Private Employment Agencis/Cosultants e. Public Employment Exchanges f. Professional Associations, g. Data Banks h. Casual Applicants i. Similar Organisations j. Trade Unions.
Staffing takes on even greater importance in the service sector, which continues to create the largest number of jobs in our economy, a service-based economy requires different skills and has higher turnover costs than those associated with manufacturing, payroll typically assumes a higher percentage of overall costs in service organisations. Companies in this traditionally high turnover sector need strategic staffing initiatives that allow them to attract and retain productive employees, minimizing operating expenses.
Temporary Versus Permanent Employees
Provide flexibility In addition to hiring temporary employees from an agency, an organisation can subcontract work to an outside vendor, this is usually done on a project basis. In-house temporary employees provide the organisation with more flexibility Efficiency than it would garner from outside temps Employees have more variety in their work assignments.
Internal Versus External Recruiting
organisation already has performance data on employees Promotion /Rotation from within motivates employees
ADVANTAGES & DISADVANTAGES OF INTERNAL & EXTERNAL RECRUITING INTERNAL Advantages Have performance data available Motivational Less training/socialization time Faster Less Expensive Disadvantages Possible politics Inbreeding
External Advantages Fresh Ideas and view points Expand knowledge base Disadvantages Unknown entities Detrimental to internal applicants Training and socialization time Time- consuming Can be expensive
Methods of Recruiting
Small organisations often do their recruiting very informally, by work of mouth allowing the direct supervisor to find someone of his or her own choosing Ina computrised database, the skills inventory component of the human resource information system can be used to assist in internal recruiting. External recruiting may also be done informally through contact with friends, acquaintances of existing employees Advertising in selected media Internet is one of the fastest-growing recruitment methods Internet gives an employer global exposure to potential applicants, which can be critical if particular language skills or cultural backgrounds are needed.
Employment agencies, more commonly called staffing agencies or staffing services State job service agencies are publically funded by the federal government Private Industry Council College and university on-campus recruiting SELECTION Job Analysis Recruitment Application Form Written Examination Preliminary Interview
Group Discussion Tests iii) Intelligence test iv) Aptitude test v) Interest test and personality test vi) Situational test vii) Judgment test Final Interview Medical Examination Reference Checks Final decision by the line manager Employment
To ensure the success of overseas assignments, employers are increasingly testing employees, adaptability, openmindedness, ability to tolerate uncertainty and ambiguity, and independence. Similarly, many are also interviewing and screening family member adaptation either require the employee to return home before the end of the assignment or have a negative impact on the employee’s performance. Screening employees as part of staffing international operation has consequently become much more elaborate and strategic to ensure the success of the assignment.
MAPPING –A TOOL FOR OPTIMIZING HUMAN CAPITAL
Goals Outsourcing refers to a contractual relationship for the provision of business services by an external provider. In other words, a company pays another company to do some work for it. Currently, outsourcing is being promoted as one of the most powerful trends reshaping management. However, organizations have always outsourced some functions. Outsourcing Outsourcing the practice of one organization contracting with another organization to provide services or products. Outsourcing HR functions In HR, the functions most likely to be outsourced are temporary staffing, payroll, training, recruiting, and benefits administration.
HR Functions that may be outsourced
Compensation • Payroll • Benefits • Compensation administration • Pension Training • Program delivery • Program design and development • Training consulting to line departments • Training needs analysis • Program Evaluation • Strategic Planning for T & D • Administration • Developing training policy Recruitment and Selection • Advertisements • Screening of applications • Testing • Reference checking • Preliminary interviews • Salary negotiations- at the executive level • Exit interviews Health and Safety • Employees assistance program • Wellness programs
Small Business and HR Outsourcing Most businesses do not hire an HR professional until the employee numbers reach about 100, or even 400. But legislated HR functions, such as payroll and benefits, are necessary for every organization, regardless of size, so small businesses turn to other small businesses specializing in HR. The advantages are the following: • Lessens the handling of routine, transactional HR work (payroll) by in-house staff • Offers access to experts who may provide advice in atypical situations (employee fraud) • Provides the management of one-of services (such as computer training) • Ensures that the company is complying with current legislation Outsourcing is not the same as using consultants who may provide assistance on a project-by-project basis. Small businesses are looking for a long-term relationship with a provider who understands small business in general and their business in particular.
The rationale for outsourcing There are at least six major reasons that organizations outsource: Financial: first reason cited for the outsourcing decision is to save money. Organizations believe that costs can be reduced by outsourcing a function such as payroll. Strategic Focus: core competence an internal activity critical to organizational success which creates a competitive advantage and influences future growth. • Activities traditionally performed internally • Activities critical to business success. Core work contributes directly to the bottom line; non-core work doesn’t • Activities creating current or potential competitive advantage • Activities that will influence future growth or rejuvenation.
Core functions that should not be outsourced are orientation, leadership development, employee relations, final selection, performance management, and succession management, as these depend on an understanding of organizational culture, a long-term orientation, consistency, trust, and confidential information. Outsourcing allowed us to get out of low value-added administrative work and become more strategic. We now focus on health and safety, leadership development, total compensation, and employee and labour relations. Our department at head office has 12 staff today compared to 40 in 1994. But, with our change in focus, out performance within the organization has taken a quantum leap. Technical: Technology also enables a company to reduce transaction time (the time it takes to handle a request). Improved Service: Quality improvement is cited as another benefit of outsourcing. Performance standards can be written into the contract more tightly than may be possible with current and long-tenured employees.
Managers can choose the “best of breed” vendors that have outstanding track records and more flexibility in hiring and rewarding their employees Specialized Expertise: Another reason cited by some companies for outsourcing is that they find the laws and regulations governing HR so complex that they decide to outsource to firms that have the specific expertise required. The motto is “Outsource when somebody can do it better than you”. Organizational Politics: An outsourced function is not as visible as an in-house department performing the same tasks. Some organizations make the decision to outsource to get rid of a troublesome department, such as one where employees are underperforming . Outsourcing a functions also reduces the head count. Risks And Limitations
Projected benefits vs. Actual Benefits Service Risks Employee Morale Reduced Value Management of Outsourcing Managing the outsourcing well is critical. First, outsourcing must be subjected to a cost-benefit analysis. Can the contractor do a better job, faster, while main training service levels and meeting legislative requirements? How will this be measured? The following sections describe ways of selecting vendors, negotiating the contract, and monitoring the arrangement. Selecting the Vendor
Negotiating the Contract Monitor the Arrangement Summary: Outsourcing refers to the contractual arrangement wherein one organization provides services or products to another. There is a growing trend to outsource HR functions. The advantages of outsourcing include the reduction of costs, the increased energy and time to focus on an organization’s core competencies, access to technology and specialized expertise, which both result in increased levels of service, and the political advantages of removing a troublesome function or reducing headcount. But there are disadvantages. The anticipated benefits may not be realized. Service levels may decrease. Employee morale and commitment may be reduced, as well as the value of the organization. Managing the contractual arrangement with the service provider is the key to optimizing the benefits and minimizing the risks.
Creating excellence through Talent Management
term “Human Capital” describes the economic value of the organisation’s knowledge, skill and capabilities.
Human Capital is intangible and hence cannot be managed the way organizations manage jobs products, technology, etc. one of the reasons for it is that the employees, not the organizations, own their human capital. If valued employees leave the organization, they take away the human capital with them and investment made by the company in training and developing of those people is lost
Optimizing Human Capital to gain competitive advantage is the concern of current day HR Managers in all organizations, irrespective of their size and nature of business they are engaged in. “Successful Companies of the 21st Century will be those who do the best job of capturing storing and leveraging what their employee know”. Companies manage their human capital successfully through:
Creating a performance –oriented work culture
Minimizing turnover of their premium employee group significantly Maximizing Employee satisfaction Effective investment in employee compensation and development Maintaining efficient back-up for key positions and key performers Implementing efficient performance assessment methods Reset Mind-set: This involves embedding the organization’s value and behavior to all its employees. It is to make all its employees realize that
Potential is about future performance, not past performance. Everyone has potential worth developing Good technical knowledge is not the only criterion for a good managerial position but it has to be coupled with excellent people skills Recognize that business change and a focus on strategic issues require different leadership and management capabilities
Set Focus :
Be linked to selection, recognition, and reward process as well as to annual objectives Be interpreted as an ongoing set of challenges for overcoming resistance Build a state of change readiness to tackle future business opportunities Identify and nurture future leaders Have a spotlight on talent with development needs in mind Identify most valuable employees to tackle new challenges at work.
Assessment of talent:
A Tool for Optimizing the Human Capital position in an organization, and using it for job evaluation, recruitment, training and development, performance management, succession planning etc. the organization effectively communicates what it actually expects from them. The competency frame work serves as the bedrock for all HR applications. As a result of competency mapping, all the HR processes like talent induction, management development, appraisals and training yield much better results.
human capital forms the most valuable asset that can be possessed by any organization. Competency mapping forms an excellent tool for optimizing the human capital. By identifying the key competencies for an organization or a particular
Competency mapping involves identifying the competencies that will be needed by people working in an organization. The level of competency needed by employees at each level must also be specified. This depends on the type of job they do and the environment in which the organization functions. Once this is identified, the remaining process becomes easier. The next step will be to match the existing level of competencies with what is actually required and take measures to bridge the gap.
a round peg fit a square hole? So can’t a wrong employee in a right organization The organization will have to find a correct person who will fulfill its expectations or will have to chisel and shape up the existing employee to fit its expectations.
What is competency mapping
Competency mapping is the process of identifying key competencies for an organization or a particular position in an organization, and then using it for job evaluation, recruitment, training and development, performance management, succession planning, etc. “The competency frame work serves as the bedrock for all HR applications. As result of competency mapping, all the HR processes like talent induction, management development, and training yield much better results.”
Competency and its aspects
skills: these are the basic requirements to perform individual skills. Task management skills: this is the ability to manage a number of different tasks within the job Contingency management skills: this refers ability to deal with the responsibilities and expectations of the work environment, including the ability to work with others.
– Ability to express ones thoughts clearly – Ability to make others understand you – Ability to listen to others – Ability to understand other – Ability to write your thoughts clearly – Ability to summarize ones ideas in a precise way
Interpersonal Relationship Building Ability
– Ability to work in groups or work as a team – Ability to initiate talks – Ability to understand other’s problems – Ability to empathize with others – Courage to apologize on committing mistakes.
Negotiating Ability Behavioral aspects
– – –
Ability to reason Ability to be ethical during the process Ability to predict the next argument of opponents – Ability to survive till the end and not to surrender – Ability to associate various arguments and think logically – Critical Thinking Ability
– Ability to think differently – A keen sense of colors – Ability to present differently – Courage to accept and present the ideas
Relating six sigma to HR Strategy
In all HR practices such strategic intent should be evident. In recruitment and selection, focus should be to select those who have multiple skill sets and who can be utilized interchangeably by cross lateral movement. This requires foreseeing the future skill sets with the changing technology or process. Similarly regular competency mapping and a synergy between individual and organisational competencies need to be achieved through training till they all fit for the purpose. Similar importance to compensation planning, motivation and retention should be given to ensure commitment and loyalty to the organization. There are many ways to design compensation innovatively and also for employees’ retention. Pro-active HR Practices, call for creating a work environment that recognizes creativity, interorganizational co-operation rather than competition, working as cross – functional teams, productive meetings for innovative results, introduction of formal innovation programmes and finally organisation’s receptivity to new ideas and perspectives. Creativity is, therefore, the core competency.
Promotion/Transfer- A tool to fill up HR Gap. HRP at the enterprise level is integrated with transfer, promotion and job rotation. For internal staffing of vacancies, suitable policies on the above areas must exist, or else, the organisation would be constrained to frequently go for redundancy, leaving its fate only to external hiring. For managerial and executive levels, this is addressed by succession planning. For nonexecutive positions, suitable policies on promotion and transfer and also job rotation, facilitate restructuring of manpower and their redeployment to meet the recruitments of HRP
Mobility Job Enrichment Job Enlargement
Career Planning- Development & Succession Planning
HRP encompasses career planning, career development and succession planning. Even though in this era of rapid technological changes, organisations are besieged with the problem of manpower redundancy, organisation are equally concerned with the problem of retention of manpower.
While one way to increase retention is by extrinsic motivational rein forcers, the other way obviously is to address the need of employees, which centers around individual career planning and career development. From an organisation’s point of view also these initiatives reinforce its strategic plans and make its goals and objectives achievable. An organisation without career planning and career development initiatives is likely to encounter the highest rate of attrition, causing much harm to its plans and programmes. Similarly, without succession planning, manning of vacancies, particularly at higher levels, becomes difficult. There are examples of many organizations, who had to suffer for not being able to find a right successor for their key positions. With the increased scope for job mobility and corporate race for global head-hunting of good performers remains awfully short. This again strengthens the need for effective career planning, career development and succession planning.
Career development essentially means the process of increasing an employee’s potential for advancement and career change. In other words, it is a process of planning the series of possible jobs which an individual may hold in the organisation over time and developing strategies designed to provide necessary job skills as the opportunity arises. Therefore, career development relates to the readiness for progression through a series of positions during an individual’s working life. Career development may be differentiated from career planning and career management. Career development is a systematic process of guiding position, whereas career planning is a process of establishing career objectives for an employee (or by the person himself) and developing planned strategies to achieve them including activities which help in making choices with respect to occupations, organisation’s job assignments and self development measures. Career management, on the other hand, relates to specific human resource management activities such as recruitment, selection, placement and appraisal to facilitate career development. Poor career development programme may affect an organisation at least in two ways: High employee turnover, particularly those in their beginning of their career. Decreasing employee involvement.
Overview of Career Development
ADVANTAGES OF CAREER DEVELOPMENT
It reduces employee turnover by providing increased promotional avenues It improves employees morale and motivation It enables organisations to man promotional vacancies internally, thereby providing opportunities to reduce the cost of managerial recruitment It ensures better utilization of employees’ skill and provides increased work satisfaction to employees. It makes employees adaptable to the changing requirement of the organisation.
OBJECTIVES OF CAREER DEVELOPMENT
To attract and retain effective persons in an organisation To utilize human resources optimally To improve morale and motivation level of employees To reduce employee turnover. To practice a balanced promotion from within’ policy To make employees adaptable to changes To increase employees’ loyalty and commitment to the organisations
CYCLES OF CAREER DEVELOPMENT PROCESS
Exploratory Stage: Compulsory job rotation for a reasonable time period. The purpose of such job rotation for a reasonable time period. The purpose of such job rotation is to allow the employee to select his preferred job from a wide range of available jobs in the organization. Establishment Stage: After a new entrant choose his career from different given alternatives (where such options are available), he needs to be provided with regular feedback on his performance. A successful career development process at establishment stage, therefore, is important to retain employees in the organisation and at the same time to develop a sense of loyalty and commitment to the organisation
Maintenance Stage: This is a mid-career stage for employees who strive hard to retain their established name and fame. Therefore, at this stage employees need to put their continuous efforts for selfdevelopment this stage is crucial and unless the organisation adopts suitable career development programmes, it may face high employee turnover Stage of Decline: Employees at this stage, being prepared for retirement, get scared from the possible threat of reduced role or responsibilities in the organization. Career development process at this stage, should aim at helping the employees to get mentally prepared for retirement rituals
Succession planning involves identifying key management positions that the organisation cannot afford to have vacant. These are usually senior management position and / or positions that the organisation has tradionally had a very difficult time filling. Traditional succession planning utilizes a relatively simple planning tool called a replacement chart. Replacement charts identify key positions, possible successors for each of these positions, whether each potential successor currently has the background to assume the job responsibilities, or the expected amount of time it will take for the potential succesor to be ready. Replacement charts are easily derived from the organisation chart and are often part of the human resource information system. Subjective personal assessments. Some organisations, are much more systematic about their succession planning. Their replacement charts may contain specific skills, competencies, and experiences rather then subjective estimates of time readiness.
The 21st century may need to develop much larger pools of talent with very broad sets of skills. Many organisations are beginning to embrace the development of succession planning strategies that are based more on organisation-needed competencies and flexibility than focusing on subjective assessment of “readiness” Critical training and development needs of investmentoriented approach toward employees, it facilitates leadership continuity through succession planning, it facilitates strategic planning by examining the future availability of employees and their skill sets, it facilitates an understanding of shifts and trends in the labor market through an examination of job requirements and employee capabilities, it facilitates employee development by determining the skills that will be needed to achieve strategic objectives as well as to ensure future career success, it facilitates budget planning and resource allocation be determining needs for employees in response to the organisation’s strategic plan, it facilitates efficiency by estimating future employee surpluses and shortage, it facilitates the organisation’s adaptation to its environment.
Importance of Succession Management Succession management – the process of ensuring that pools of skilled employees are trained and available to meet the strategic objective of the organization Resources for Succession Management 7. Provide increased opportunities for high-potential workers. 8. identify replacement needs as a means of targeting necessary training, employee education, and employee development. 9. increase the talent pool of promotable employees 10. contribute to implementing the organization’s 11. help individuals realize their career plans within the organization. 12.Tap the potential for intellectual capital in the organization
7. Encourage the advancement of diverse groups. 8. Improve employee’s ability to respond to changing environmental demands 9. Improve employee morale. 10. Cope with the effects of voluntary separation programs. 11. Decide which workers can be terminated without damage to the organization. 12. Cope with the effect of downsizing. 13. Reduce headcount to essential workers only. Internal Versus External Advantage of Internal Candidates • Organizations have more and better information about internal candidates. • organizations that offer career development and opportunities to internal candidates increase commitment and retention among their employees • internally developed leaders preserve corporate culture.
• Internal candidates can hit the road running, because they know the organization, its people, and its processes. The other employees know the internal candidate, and there is less internal disruption, waiting to see who the new executive is and what changes he or she will make. Internally chosen executives do not replace those who report to them often as external candidates do; externally chosen candidates often get rid of the “old guard”. • Recruitment and selection costs are lower. For example, the replacement cost of a CEO is estimated to be $75,0000, including the use of a search firm and lost opportunities getting the external candidate up to speed. Advantage of External Candidates • The external candidate may have better skills to lead the organization through a major transformation or change in strategy.
The external candidate brings new knowledge and skills to the organization and prevents the organization from becoming inbred and stale.
Succession Management Process • • Align succession management plans with strategy Identify the skills and competencies needed to meet strategic objectives • Identify high-potential employees • Provide developmental Opportunities and Experiences ix)Management development methods x) Promotions xi)Job Rotations xii)Special assignments xiii)Formal training and development xiv)Mentoring and coaching
To the Manor Born?
The cult classic, ‘The Godfather’ dealt with the subject of succession planning in a rather subtle, yet non-distinctive manner. Though Michael Corleone, the youngest among the Corleone sons, didn’t have any inclination towards his father’s business, he had to reluctantly take over after his two elder brothers walked away from the scenario. Michael had neither any prior working experience nor was he versed with the nuances of the business. But since his father was keen on having one of his sons carry on the legacy, Michael wasn’t left with much of a choice. This however, is not the case in organization. Choosing a successor is not an easy task and it becomes harder when there is a need to choose between someone who has the family name and someone with the right qualifications. “Historically, successors have been chosen on the grounds of familial lineage; this is, of course, based on the premise that they are capable of taking over the reigns of the business. However, a successor
is to be judged by merit alone and the definition of merit goes beyond lineage, “says Shrikant Kulkarni, Senior VP-HR, KPIT Cummins Infosystem Ltd. Avirat Sonpal, MD Unisource Group, agrees, “ A successor should be appointed on the basis of his/her skills and his/her ability to run the business with panache and confidence. However, if the heir/heiress takes over, he/she ought to be qualified and experienced enough to be able to assume responsibility for the role that he/she is about to take on.” Several CEOs are facing the dilemma of who to choose from since choosing a leader is an investment that the company is going to make for the long run and any wrong decision on the company’s part can have disastrous consequences. The next in line Succession planning has gained immense meaning in today’s world economy where the war to gain the competitive edge is severe. Successors need to possess just the right mix of work
Experience, talent and change management skills. They have to be well-versed with the organisational objectives and should be able to identify the workforce’s developmental needs. And to pick the right successor, one has to make a choice based on analytical thinking and evaluation rather than emotion. For a long time, there was a trend of companies choosing blood relatives over deserving employees, who deserved to be rightfully, the next in line. However, this outlook is slowly changing. Sonpal opines, “if the business is one’s own or family-run, the liability on the part of an heir/heiress running the business increases and so the efforts invested by an heir/heiress wouldn’t be note worthy.” He/she tends to slack a bit and he/she feels that ‘dad’ is always available in times of need. “But successors who are chosen from within the organisation would be loyal to the cause and would refrain from straying. Also, the person would be aware of the faith instilled in him/her and as a result, the individual output of the employee would also increase,” adds Sonpal. He further adds that while choosing someone from within the organisation to take on the
responsibility of such a caliber, the person concerned needs to have a clear idea of how the company functions, its ideals and principles and other intangible elements which are only acquired over time. Experts, therefore, add that an existing senior employee will have an edge over the heir/heiress to acquire the position of the CEO due to his/her tenure in the organisation. The outside edge Organisaitons need a successor who is a good crisis manager and is competent enough to handle the pressure and give workable solution in times of emergencies. Lack of preparation is the most frequently committed successionplanning mistake. Hence, it is necessary that employers invest a lot of time evaluating various options. Aditya Gupta, Founder and President, Infovision Group gives his take on this issue, “ One can also opt for the right fit from a different organisation. A CEO from another organisation/industry
opens an array of choices for the organisation.” Sonpal agrees, “The candidate would bring with him/her varied experience from another setting, and so he/she might be able to upgrade and positively impact the current systems and processes with his/her vast expanse of knowledge.” Kulkarni believes, “He/she will also have an ability to give direction to the company based on his/her past experience and understanding of the industries he/she has worked in.” Quality Control “A successor should have the ability to go the extra mile and learn the business, if she/she is new to the business. There are chances that there might be conflict within the organisation once the new successor is appointed and he/she should have the ability to tackle such situations,” says Gupta. Vivek Talwar, MD, Nitco Tiles, opines, “A successor should only be chosen by merit and not by birth. An existing employee will bring passion as well as an entrepreneurial skill to take the business to another level.
However, it is necessary to ensure that the person selected has a bit of both so that the company moves forward to another level in a structured manner.” “One of the most important factors that a successor should possess is an ability to maintain strong relationships with key stakeholders that can be translated into an ability to bring about growth in alignment with the company’s goals. Also, he/she should have the ability to execute strategies better, quicker and more effectively, on account of formal and informal networks within the organisation and should have a well-developed value system that is in sync with the corporate culture in terms of close interaction with the leaders,” adds Kulkarni. In the end, it’s success that counts. Choosing Michale Corleone, as the successor was a circumstantial decision and so was his success. But in an organisation, it’s one of the most important decisions that one makes. A succession planning programme should look good both on paper and in practice. In addition, it needs to be constantly, nurtured. So
the question you need to ask now is would you choose someone with the right last name or someone with the right talent?
The question of Succession To plan or Not to plan by Anita Belani Have you noticed that suddenly corporate India is asking some very basic but key questions? We hear many buzz words in recent times which were only uttered very rarely even as early as a decade ago. One such term that is bothering our corporate leaders greatly is the whole issue of Succession Planning. We are living in strange but exciting times – there is so much change is the only constant in our lives at this time. Organisations are going through huge amounts of growth, mergers and acquisitions and re-engineering which often brings up the need for the availability of key management staff or skills at a moment’s notice. It is no secret that talent acquisition is the single most difficult thing for organizations to cope with today-in this increasingly competitive market it is a constant challenge for organizations to keep the pipeline of skilled and talented individuals going and there is a serious recognition of the fact that with all the growth and changes happening, highly
skilled senior managers and experts can be required to fill critical roles at a very short notice. How does one cope with these is sues without having a nervous breakdown? This requires a strategic approach that is as critical as and is a tematic and flexible succession planning process that is part of the DNA of the organisation. What is succession planning? Succession planning is the process that identifies and develops employees for future openings in strategic positions that can arise due to changes in leadership, mergers, growth into new territories etc. if done properly, Succession Planning forms part of a strategic & integrated human resources approach that links career planning, training, potential assessment and performance appraisal. But now often do we see a structured, strategic approach like this being practiced in organisations? Typically a critical departure leads to panic and the knee jerk reaction is either to move a not –so-ready
Person in the role or go outside in search of a replacement. If a robust succession planning process is in place it would minimize the chance of poor choices which may cause adverse impact in the form of loss in productivity, attrition, delays in execution of critical planes etc. A succession plan provides for a sequence of employee moves so that a ready pool of candidates is available to fill critical positions in advance of their opening up. If this identification is made in a systematic manner, candidates can be mentored, coached trained, developed and, therefore, made appropriately ready to occupy specific roles as and when they open up. Just think about the state of the Indian cricket team if the universities, state leagues did not get the next breed to Tendulkars & Dravids ready to take on the mantle as the senior players exit from the international scene. Granted organisations are a lot more complex tan a game of cricket but I am sure you get my drift. Imagine your national team with an old bunch trying to play the young, lean, mean, hungry Australian team. Definitely not a pretty sight. Moral
of the story? The right kind of people for the right kind of jobs cannot be conjured up out of thin air and the sooner we realise that the better. Companies that have figured this out do realise that a workforce that is provided focused development through work experience and skill building is likely to stay with them longer.. Career development and skill enhancement are the two most critical retention tools for any organisation and the importance of such processes cannot be stressed enough. Succession planning aids in this process by enabling organisations to identify individuals that need to developed or grown for future opportunities. There is also a greater sense of commitment & loyalty in the system because employees feel that the company is investing in them, thereby enabling retention of key high potentials. One of the key benefits or a well rounded career/ succession planning process is also a creation of a learning culture which in turn increases the engagement quotient in the organisation. As a result of the assessment of areas that need to be developed in the organisation to cater to future requirements, a more
streamlined approach can be developed to understand where the future talent supply is going to come from, what new roles need to be developed to manage new business areas and thereby helping survive in the global economy. How to Succession – plan? Succession planning is a future oriented process and for it to be successful the CEO has to drive it in the organisation. If the top management does not support the initiative it will become just another policy that languishes on the internal HR portal but is never really utilized to its potential. The most important point to note is that it does not have to be a complicated process but if something is put in place it has to be driven properly to maximize the potential & benefits. As a first step the organisation has to decide how deep the succession plan should be created in the hierarchy. It is recommended that the top two layers of the organisation and some selective critical positions below that should be
planed for. The more granular you get the harder it is to do justice to an exercise like this. The level of detail that’s required to have a well thought out bench strength chart at the end of this exercise will make it difficult to mange if every position in the organisation becomes a part of this exercise. As the next step a proper system should be created to analyse data on potential candidates for future roles. An executive review system which looks at past performance & potential appraisals, experience, skills, education of the individuals and has a mechanism to match these with future role requirements is very important. Also of critical importance is a way to assess personal career goals of individuals so that there is no mismatch in future job match ups. Comparisons of these tow inputs will help organisations understand the training & development requirements to plan for. Additionally, on the job training can also be planned for and an assessment can be made of the gaps that exist in management succession and skill building.
In Conclusion Organisations need to realise that succession planning is as critical as creating a strategy for business success. It is a core necessity. An India moves into the top three economies of the world, it is critical for organisations to be prepared to handle this transition with a tem that can face future global challenges. Succession Planning can greatly help in the regard.
Need for Manpower Training
Knowledge Avoiding Obsolescence Improving Performance Developing Human Skills Imparting Trade-specific Skills Stabilizing the Workforce
Classification of Training Programmes
Depending on the functional level & occupational categories of employees, an organisation can classify training programmes as under:
Nos. 1. 2. 3. 4. 1. 2. 3. 2. 3. 4. 1. 2. 1.
Managers & Executives
Types of Training Introduction Job Training Craft Training Special Purpose Training Induction Foremanship/Shopfloor Supervision Manpower Management Introduction Professional Technical Human Relations Induction Executive Training
Skilling & Multiskilling
Skills of human resources have now become an important factor to address global competitiveness both at the organisational and national level. Skill is defined as a coordinated series of actions that serve to attain some goal or accomplish a particular task. Operationally, skills are defined widely as overt responses and controlled stimulation. Overt responses may be verbal, motor or perceptual. Verbal response typically stresses on speaking (which requires memorization of words), motor responses stress on movements of limbs and body while perceptual responses stress on understanding of sensory response. Controlled stimulation, on the other hand, is energy inputs to the workers, which we express in units of frequency, length, time and weight. Technological change and skill requirements have been made a subject of
Transformations in skill due to technological change occur along two tracks, (i) compositional shift, structural change in occupational pattern due to creation or elimination of jobs of a given skill level and the distribution of persons to job in a sectoral economy and (ii) changes in work content (the technical nature of work and the role relations surrounding work performance). Internationally, the careers of the future will require greater education (more in the form of institutionalized knowledge) at the job entry level and will also demand continuing education to keep pace with technological dynamism. Greater level of technological literacy even for lower skill and low paying occupations will be in demand in future. Conventionally, skill can be defined as those knowledge or attributes, which are deemed vital to organizational success. There are four general types of skills:
Supervisory skills- which enable one to effectively supervise others. Interpersonal skills- which enable people to communicate and interact effectively. General Business skills- lines of business and support infrastructure. Technical, skills are observable, demonstrable and testable. The other skill types are softer, more subjective and difficult to quantify. Any organisation going for skill renewal or skillchange exercise, needs to undertake the following tasks:
– – – Profile the skills required by jobs, Assess the skill levels acquired by individuals Conduct a gap analysis between required and acquired skill. – Training should ideally occur before the skill is needed so that daily work can reinforce training.
Multi skilling is defined as the process to train employees in specific skills that cross the traditional trade-specific or craft-specific skill sets. Thus, to develop multi skills, employees require additional training to enable them to perform more multi skills, employees require additional training to enable them to perform more jobs within the same job family or to do the entire jobs from a holistic point of view. Multiskilling is often misconstrued to succeed downsizing. But downsizing occurs due to skill obsolescence, among other reasons, while multiskilling is for holistic development of human potentialities to effectively address to the requirements of changing production process (more flexible and customized ) organisational systems (decentralized control) and state-ofart technology (numeric control, computer numeric control, direct numeric control etc.). Multi skilling facilitates intraoccupational and inter-occupational job mobility and thereby, reinforces HRP.
are set of behaviours, which encompass skills, knowledge, abilities and attributes. Competencies need to be assessed at the organisation and individual level.
If organisations are structured along functional or specialist lines, there exists a rigidity which inhibits change other than marginal change. JOB FLEXIBILITY Jobs are grouped, job flexibility is concerned with the design or content of individual jobs FLEXIBILITY IN HUMAN RESOURCING A relatively small central core of highly skilled employees on direct, permanent contracts, with the size of this workforce set at close to the minimum expected level of requirement. A larger group of secondary employees, on terms such as fixedterm and temporary contracts which make it possible to change their number relatively quickly and without incurring redundancy costs. An outer ring of workers of various kinds (not employees) such as agency staff, self-employed freelance workers, contractor and consultants. Their use can be changed even more rapidly than of the secondary employees.
Flexible Conditions of employment
the viewpoint of a redundancy avoidance policy, there are several key elements of the employment package where flexibility is of utmost significance. Following issues need to be addressed: Contractual duties Working times Relocation schemes Retirement and pensions
Short –term operational measures that can be taken to avoid or reduce such action, in particular are as under: Natural wastage and recruitment restrictions Stopping or reducing overtime Terminating the employment of nonpermanent workers (temporary, casual, fixed-term contract, self employed, agency employees) Retraining and redeployment Retirement measures Volunteers for redundancy
People Capability Maturity Model (P-CMM)
P-CMM adapts the maturity framework of the Capability Maturity Model for software to managing and developing an organisation’s workforce. To attract, develop, motivate, organize and retain talent to continuously improve capability of an organisation. P-CMM is now widely used in organisations across the world. This is designed to integrate manpower improvement with process improvement programmes. Based on the best current practices in the fields such as human resources and organisational development, the P-CMM provides organizations with guidance on how to gain control of their processes for managing and developing their human resource. P-CMM helps organisations to characterize the maturity of their human resource practices, guides a programme of continuous
Manpower development, set priorities for immediate actions, integrate manpower development with process improvement, and establish a culture of software engineering excellence. It describes an evolutionary improvement path from adhoc, inconsistently performed practices to a mature disciplined development of the knowledge, skills and motivation of the human resources. The P-CMM consists of five maturity levels that lay successive foundations for continuously improving talent, developing effective teams, and successfully managing the people assets of the organisation. Each maturity level is a well-defined evolutionary plateau that institutionalizes a level of capability for developing the talent within the organisation.
Managing manpower redundancy
Technological developments, global competition, the emergence of a new economy and markets, demographic and political changes are some of the factors which influence organisations to go for frequent adjustments in existing structure, systems and processes and redefine their relationships with customers and other stakeholders to right size or downsize workforce and more specifically managing manpower redundancy. There are two aspects to redundancy avoidancelong-term or strategic and short-term operational action can be put in place as a preventive measure, i.e. before anything approaching a redundancy situation occurs, whereas short-term or operational action is taken to avoid or minimize actual or imminent redundancies. The key feature of long-term or strategic measures is planning. Alan Fowler(1999) ‘Managing Redundancy’
Assessment of the likely trends affecting the viability of the business. Eventually be reactive Adopting of crisis management measures, which includes making of sudden changes in the constitution and size of the work force. Age & service profiles Hierarchy and rigid and centralized management systems Be permanent full time employees Redundancy agreements with its trade union
Skills, multi skilling & competency are the major issues concerting HRP.
Shortage of critical skills Another important aspect which deserves the attention of HRP is demographic change process. For developed countries, the problem is ageing population, but for a developing country like India, the problem is just the reverse. Our working population is increasing at an annual rate of 1.09%. By the year 2015, we will have more population in the working age group (15-64 years), which would be 66.7% of the total population against the present rate of 61.2%. Therefore, we need to concentrate on human resource development in a planned manner, duly identifying the skill requirements.
Hewitt seeks futuristic talent development plan 2007 HEWITT Associates on Wednesday recommended creation a a nodal agency for workforce development in India, to align the education system with the skill requirements of the industry. This would enable India to capitalize on the growing opportunities in the global offshoring services space. “With US, UK, Japan and Singapore witnessing change in demographics fuelled by an expanding againg population, India is well positioned to meet the shortfall of service professionals, particularly in software and BPO sectors. However, the challenge is to improve the employability of our workforce to meet this surge.” Anupam Prakash, Asia lead, global sourcing and business transformation, Hewitt
Hiring to increase in Oct-Dec 2006
Main recruitment drivers include retail, media, FMCG, IT and financial services Bangalore projects the highest business outlook index point, followed by Mumbai and Delhi for the next three months Even cities with index points below the national average show more companies are planning to increase hiring activities Hiring trends are highest at 31% followed by IT at 18%, production at 17% finance and others at 11% administration at 8%, & HR at 4%
While India is positioned to cater to the global services requirements, the challenge is to transform the raw talent into employable poll. “Of the three million grads that India produces, only 15% are hirable,” he said. Hewitt has sought a comprehensive futuristic talent development plan for the country. “Under standing the skill requirements of highgrowth and high priority industries and the skill gaps they are experiencing for entrylevel talent will be key to tapping growth opportunities, “Mr prakash said.
JUST HOW DO YOU MEASURE
During an analyst call of a
major IT services company, a question was raised about its attrition rate. The query was directed at the differing number which was arrived at by the company and the analyst, though both were right in their own way of calculating the figure.
methods of calculating attrition-one which is based on the last 12 month while the other being the quarter figure arrived at on an annualized basis. Nitin Sethi, industry leader, IT & ITeS, Hewitt Associates, says: “Calculation of attrition rates in the Indian industry has been no consistent approach or method to calculate attrition rats and the approach may vary from organization to organization.”
The formula for quarter on an annualized basis’ attrition is computed on the premise of the numerator divided by the denominator and it gets extrapolated for the full year. This calculation is prone to being impacted by the seasonality is prone to being impacted by the seasonality in attrition, typically which is high in June and September quarters while the December and March quarters are relatively low. In the formula of last twelve months, attrition is computed on the basis of the trailing 12 months that negates any seasonality in attrition.
calculation and declaration of attrition is also an ‘unaudited’ figure as there are various other elements which may or may not be people under different categories like trainees, probationers, or even the under performers.
Tarun Singh, director, Kenexa Technologies, India, says: “Most organization in practice do not evolve robust measurements for calculating cost of a bad hire or labour turnover. The detailed information required and the measurement metrics are not common onesize-fits –all formulae, but have to be designed based on the nature of business and function of the organization. Thus different models and statistics may be statistics may be specific to and hold true for different organization.”
Providing and examples,
Achal Khanna, country general manager, Kelly Services India, says if a company has 1,00 employees in April 2004 and 2,00 in March 2005, then they may take their base as 2,000 in March 2005, then they may take their base as 2,000 in or as 1,500 (average for the year) and if the number of employees who left is 300 then the attrition figure could be 15% or 20% depending on what base you take.
case of differing attrition rate could be perhaps linked to the growth being experienced by the IT industry and the pressure points in terms of supply of manpower. In this people driven business, it is imperative to have the attrition under control.
According to Bhaskar Das, vice-president- HR, Cognizant, it reports attrition for the quarter on an annualized basis as that’s the globally accepted practice by many companies. Das says “I think investors and analysts do find it difficult to gauge what the real attrition number is, different formulae are used by different companies.” It is also important for the companies to project the ‘right number’ to their stakeholders and its employees as any high degree of attrition could set the ball rolling in the wrong direction.
Sethi says, “Since
attrition rates are a very important factor in determining the health of a company, they would want to adopt different methods of calculating attrition which will suit them(produce lower attrition numbers). “Ms Khanna says, “Attrition number is also a PR or stock/analyst statement and is prone to dressing’ up”.
level of attrition also directly impacts the business of any organization. It not just the various costs which are associated with the people leaving the organization, but hindering its future growth plans. A lower rate of attrition bodes well for any organization.
Attrition also directly relates to the employee engagement in the company as well as the confidence of the customer in the ability of the company to deliver the services. Singh says high attrition rate affects employee morale, inhibits new people from joining and shakes the clients faith in it and even perhaps impacts stock performance. “In some case it can be simply seen as an organisation’s competitor appreciating its quality of hires and the output, posttraining- almost a backhanded compliment, “ says Ms Khanna.
says, “ In the information technology industry people are the core assets. It there is frequent change there would be discontinuity in providing the same level of experience to customers,” he adds. He says attrition data is also used to find out whether any employee engagement process needs to be tweaked to build stronger businesses.
background on the differing viewpoints on attrition, is there a need for own common standard of defining attrition or a set of methodologies, which could actually define how it needs to be calculated.
“Absolutely,” says Sethi, “We need a common standard for the industry. It is very difficult to arrive at industry and company benchmarks if the method of calculating is different from company to company.” Singh feels it would probably be difficult to arrive at a common standard for calculating attrition for various reasons which may range from organizations experiencing high attrition rates and also employee turnover which needs to be split up into component parts like employees who leave within a year of joining or those who are asked to leave due to low productivity.
Mohandas Pai, director, HR & Training Infosys says, reporting attrition is a new phenomenon for any industry especially for IT sector and it is still a evolving process. He says it is upto to the individual companies to choose the methods it would like of calculating attrition and feels that a common standard would evolve over a period of time.
Costs involved in Attrition • Administration cost • Sourcing cost i) Agency cost ii) Advertising cost • Recruitment cost • Training & Development cost • Replacing an employee (Compensating for knowledge loss- learning curve). A Nasscom- Hewitt Associates survey says that the cost of attrition in the industry is 1.5 times the annual salary.
Reasons for attrition 3. Better prospects 4. Further education 5. Health 6. Marriage 7. Migration 8. Others 9. Personal 10. Termination Others include Proximity to residence, Night shifts, Relocation and Dropouts. Personal include relations with other employees, Unhappiness/dissatisfaction, children at home, family etc.
Attrition’s like rust, innovate to fight it Wipro BPO HR head V Anandkumar is co-authoring a book on the BPO industry. The book, meant to be a guide for every entrant to the industry, looks closely at the issues from an employee and employer perspective. Mr. Anandkumar discusses with Writankar Mukherjee various challenges for Indian BPO industry. Can you provide a figure for the cost of attrition which the Indian BPOs are paying? Attrition is like rust. During a simulation exercise, we realized that for a $200 million call centre with 15,000 people and 100% attrition, the cost of attrition would be $25 million. This equals the entire profit of the company (assuming the company makes a profit of 12.5%). Companies need to look at using this kitty to come up with tangible solutions for attrition.
What is the root cause of attrition? Let’s look at the Service Level Agreements (SLA’s) that BPOs sign with utilization at 85%. This means that in 60 minutes, an agent will be on call for 51 minutes. Extrapolate that to 8 hours a day that’s 408 minutes out of 480. it’s humanly impossible to do this day after day. Since the payment terms with the customer is linked to achieving this SLA – the employees get driven to the wall – longer hours and close performance monitoring adds to the stress. Indian call centre agents, on an average, earn less than $3000 per year against the global average of $18,000. With one of the lowest rates in the world, we strive to deliver the highest customer satisfaction and also the highest profits. The combination of these low rates, high SLA’s and the desire for a high profit creates a bubbling cauldron which is the cause of high attrition. However, companies run their captives at much lesser stringent SLA’s than what they sign off with the third party vendors – that’s one of the reasons
why captives have much lower attrition. BPOs are now focusing on tier II and III markets. Do you think this model will work? In metros, costs are spiralling – the rentals in Mumbai alone have gone up by more than three times in the last four years. Pune, Delhi, Bangalore, Hyderabad and Chennai are still able to manage but fast approaching saturation. As a result, companies will now set up 1,000 seat centres in smaller towns – this will help reduce attrition initially when you are the first mover – but when others follow the problem may crop up again. Cost of recruitment in smaller cities is lesser, but investment in training will be higher. But with the rupee gaining and profitability getting affected, companies have to think innovatively-benefits out of squeezing operational efficiency are fast drying up. Setting up centres in college towns like Manipal and Vallabh Vidyanagar can help you get part-time workers.
With Indian BPOs setting up facilities overseas, what are the HR challenges? BPOs will be amongst the first Indian companies to employ large number of people overseas. Managing team of 1,000 – 2000 people overseas requires a different mindset. Transferring people from here is not the solution – you need to hire and integrate the local workforce. Integrating them culturally is a challenge. The largest of Indian companies have an India-centric mindset and even brand initiatives with Indian names. In such a case, communication is critical and lots need to be done on this front. The Economic Times 30 Oct, 2007.
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