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Chapter 2 Strategy and Human Resource Planning

 Pages 39-41; 52-60, 65-67

 Michael Porter: Unique Competitive Advantage or Position
 Kryscynski:
 Where do we compete?
 What unique value do we bring in those markets?
 What resources and capabilities do we utilize
 How do we sustain our ability to provide that unique value

Strategic planning: procedures for making decisions about the organizations long-
term goals and strategies
 Human resource planning and strategic planning must be linked integrated
into the strategic planning process

Human resource planning

 The process of forecasting future HR. needs to ensure that the organization
will have the required number and type of employees to meet its strategic
 Forecasting: involves 3 main steps forecast the supply and the demand then
balance figure 2.4

Quantitative approach – trend analysis

 Forecasting about labor demand on an organizational index
 Select factor that is good predictor of HR. needs
 Plot historical trend (previous years)
 Calculate productivity ratio (per employee)
 Multiply productivity ratio by business factor to determine HR. demand
(ex. Sales/employee * estimated sales for next year)

Qualitative approach – Management forecasts

 Experienced personnel making informed forecasts/estimates
 EX) Nominal Group Technique
 Sample question: what factors are most important in determining the
number and type of people we need
 Delphi Technique – anonymous and discrete (questionnaire)

Forecasting the Supply of Employees (internal)

 Staffing tables
 Markov analysis (pg. 56)
 Skill inventories and management inventories
 Used to: develop replacement chats… a visual representation of potential
candidates to fill job openings (Blackboard)
 Used to perform succession planning: the process of identifying,
developing, and track key people for executive positions

Forecasting Supply (External)

 To project the supply of outside candidates, employees assess:
 General economic conditions (unemployment rate)
 National labor market conditions
 Local labor market conditions (if a factory has closed people would look for
 Occupational market conditions (demand for certain fields of work)

Determine Human Capital Readiness

 Gap Analysis
 Demand for employees (quantity & quality) – Supply of employees (quantity
& quality) = gap

Strategic implementation
 Addressing the gap – step 3
 Balance /reconcile supply and demand
 A labor surplus exists when the internal supply of employees exceeds the
organizations demands
 A labor shortage exists when the internal supply of human resources cannot
meet the organizations needs

Labor surplus
 A labor surplus exists when the internal supply of employees exceeds the
organizations demands
 Employers may respond with:
 Hiring freeze
 Attrition
 Early retirement buyout programs
 Job sharing or part time work
 Reduced work week
 Alternative jobs in the organization
 Temporary layoff
 Supplemental unemployment benefits
 Termination with severance package

Labor Shortage
 A labor shortage exists when the internal supply of human resources cannot
meet the organizations needs
 Employers may respond with:
 Overtime
 Hiring temporary employees
 External recruitment
 Transfer
 Promotion


Strategic planning: Procedures for making decisions about the organization’s long-
term goals and strategies

Human resources planning (HRP): The process of anticipating and providing for
the movement of people into, within, and out of an organization

Strategic human resources management (SHRM): The pattern of human

resources deployments and activities that enable an organization to achieve its
strategic goals

Mission: The basic purpose of the organization as well as its scope of operations

Strategic vision: A statement about where the company is going and what it can
become in the future; clarifies the long-term direction of the company and its
strategic intent

Core values: The strong and enduring beliefs and principles that the company uses
as a foundation for its decisions

Environmental scanning: Systematic monitoring of the major external forces

influencing the organization

Core capabilities: Integrated knowledge sets within an organization that

distinguishes itself from its competitors and delivers value to customers

Cultural audits: Audits of the culture and quality of work life in an organization

Values-based hiring: The process of outlining the behaviours that exemplify a

firm’s corporate culture and then hiring people who are a fit for them

Trend analysis: A quantitative approach to forecasting labour demand based on an

organizational index such as sales

Management forecasts: The opinions (judgments) of supervisors, department

managers, experts, or others knowledgeable about the organization’s future
employment needs
Staffing tables: Graphic representations of all organizational jobs, along with the
numbers of employees currently occupying those jobs and future (monthly or
yearly) employment requirements

Markov analysis: A method for tracking the pattern of employee movements

through various jobs

Quality of fill: A metric designed to assess how well new hires are performing on
the job

Skill inventories: Files of personnel education, experience, interests, and skills that
allow managers to quickly match job openings with employee backgrounds

Replacement charts: Listings of current jobholders and people who are potential
replacements if an opening occurs

Succession planning: The process of identifying, developing, and tracking key

individuals for executive positions

Human capital readiness: The process of evaluating the availability of critical

talent in a company and comparing it to the firm’s supply

SWOT analysis: A comparison of strengths, weaknesses, opportunities, and threats

for strategy formulation purposes
Value creation: What the firm adds to a product or service by virtue of making it;
the amount of benefits provided by the product or service once the costs of making
it are subtracted

Growth and Diversification: Growth hinges on three related elements: (1)

increased employee productivity, (2) a greater number of employees, and (3)
employees developing or acquiring new skills.

Vertical Fit/Alignment: focuses on the connection between the business objectives

and the major initiatives in HR.

Horizontal Fit/Alignment: managers need to ensure that their HR practices are all
aligned with one another internally to establish a configuration that is mutually
reinforcing. The entire range of the firm’s HR practices—from its job design, staffing,
training, performance appraisal, and compensation—needs to focus on the same
workforce objectives.

Layoff Strategies
Attrition: A natural departure of employees from organizations through quits,
retirements, and deaths.
Hiring freeze: A practice whereby new workers are not hired as planned or
workers who have left the organization are not replaced
Termination: Practice initiated by an employer to separate an employee from the
organization permanently
Severance pay: A lump-sum payment given to terminated employees

Benchmarking: The process of comparing the organization’s processes and

practices to those of other companies

Balanced scorecard (BSC): A measurement framework that helps managers

translate strategic goals into operational objectives

Organizational capability: The capacity of the organization to act and change in

pursuit of sustainable competitive advantage