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MAY / 2018

BBPR 2103

NO. MATRIKULASI : 831209145612001

NO. KAD PENGNEALAN : : 831209145612
NO. TELEFON : 0162305487



Human resources are the set of individuals who make up the workforce of an organization. The
effective management of human resources requires sound Human Resource Management
systems. In order to develop a sound HRM system, the organization should have effective
Human Resource Management practices. Human resource management refers to practices that
influence employees’ abilities, motivation and performance (Noe et al., 2008). Human resource
management enables organizations to achieve expected organizational performance and
competitiveness by achieving desired employee performance (Barney, J. B., & Wright, P. M.
(1997). Successful human resource management differentiates successful organizations from
unsuccessful organizations (Marchington and Wilkinson, 2005). It is obvious that applied
practices in human resource management affect the ability of any organization to achieve
expected performance and competitiveness through achieving desired employee performance.

For the purpose of this paper we will identify the environmental factors and assess the influences
of those factors on human resource planning.

Organization chosen:


Founded in August 2008, is a locally registered

Malaysian Bumiputera company.

Teamed up with its affiliated company, Westralian

Engineering Services Pty. Ltd. in Perth, West
Australia and Kelington Group Berhad, Apex
Global Engineering has the capabilities to provide
a number of industry services for oil and gas, mining, petrochemical, chemical, power plant and
marine industries engineering requirements. With all this combined, Apex Global Engineering
can lay claim to be an expert in the heavy engineering, manufacturing, servic-ing and projects in
the oil and gas, petrochemical, marine and resource sectors on a global presence. Currently,
Apex Global Engineering has expanded its business to Apex Trading and Apex Medical.
(Retrieved from


 To be a leading and well-diversified high-technology Company in Asia Pacific region

 Our vision serves as a strategic intend and guides in every aspect

 Our business describing the desire long-term future state of “The Company”


 To deliver our quality services to our customer to their satisfaction, in a cost effective
with safe & sound

 Our corporate values committed to customer through:

 Building Partnership

 Technological Innovations


• Marine & Offshore Vessel Services

• Offshore & Onshore Marine Maintenance
• Crane Manufacturing and Installation Services
• Process Plant Installation & Maintenance
• Industrial Gases Delivery System
• Gas & Chemical Skids Fabrication
• Marine, Onshore & Offshore Trading
• Onshore & Offshore Engineering
• Medical Supply & Services

No of employee: 25


Human resource planning involve five steps;

a) Human resource demand forecast

Human resource (HR) demand forecasting is the process of estimating the future quantity and
quality of people required. The basis of the forecast must be the annual budget and long-term
corporate plan, translated into activity levels for each function and department. HR Forecasting
techniques vary from simple to sophisticated ones. One of the technique that has been used in
APEX is new venture analysis. It was used when APEX GLOBAL ENGINEERING expanded
to APEX TRADING. This technique requires planners to estimate HR needs in line with
companies that perform similar operations. Since the nature of the new business is almost in line
with APEX, the planners took into consideration the current employment levels in APEX
GLOBAL to predict the employment needs for APEX TRADING

b) Human resource supply forecast

Human Resource supply forecasting is the process of estimating availability of human resource
followed after demand for testing of human resource. APEX GLOBAL has used consideration
technique in their human resource supply forecast, specifically the executive evaluation. Every
quarter of the year, general meetings will be held where workers KPI is presented individually to
see if they manage to achieve the set target. After this presentation, they will be individually
evaluated by their supervisors to determine whether they will be promoted, re-assigned, re-
skilled or even dismissed.

c) Internal and external environment

To maximize recruitment and retention, and to minimize employee issues, small business
managers such as APEX must continually monitor internal and external environmental factors
and adjust HR strategy accordingly. To do that, it's important to know what the internal and
external factors can consist of. This will be further discussed in the next chapter.

d) Gap analysis
Small business owners planning for growth and new business opportunities examine their
capabilities in terms of equipment, facilities, finances and suppliers. Another critical piece of
their planning puzzle involves people. In order to achieve its goals, a business needs a workforce
with the right skills. Conducting a gap analysis for human resources gives leaders a reading on
future employment requirements by identifying the competencies their vision requires and
comparing them to those available from current employees.

e) Action planning
An organization has to plan to overcome its manpower shortage and excess. The gap data will
act as a basic input for action planning. Action planning always involves staffing and other
human resource activities.

4 steps in action planning:

 Determine objective

 Making choice about the kind of activity to engage

 Evaluating these activities

 Choosing the right activities

When it comes to human resource management there are several factors that affect day-to-day
operations. So HRM practices differ from one organisation to other organisation and from one
country to another. Ozutku and Ozturkler (2009), suggested that external and internal factors
affecting HR practices differs significantly across countries. There are various factors internal
and external that has their impact HRM practices.

3.1. Internal factors

Internal factors that affect the HRM Practices are related to the events and changes taking place
within the organisation. The internal environment of organizations strongly affects their HR
practices. According to Zheng and Morrison (2009) study show that various HRM practices at
small and medium enterprises are influenced by organizational contextual variables including
ownership, age and size of firms. Milkovich and Boudreau (1991) pointed out that, researchers
have compiled a list of organizational characteristics which are related to HR practices. The
important internal factors are as follows:

3.1.1. Organizations size

The size of organisation has great impact on HR practices. The larger the firm more refined are
specific are the practices. Organisation size plays an important role in explaining the intensity
and type of HR practices within the organisation (Gravana et al. 2008). McPherson (2008)
suggests that there are large numbers of small firms that do not practice formal HR activities. In
APEX, due to the fact that the company is very small, with only 25 employees, the company is
unable to practice formal HR activities due to the lack of manpower and resources.

3.1.2. Top Management and Line Managers

The direction of top management and their priorities could be another factor that impact HRM
practices. HRM Policies could be shaped through the importance which top management give to
HR personnel. The influence of top management on HR practices is acknowledged by most
journals on HRM. In designing and implementing HR policies support and advise of top
managements should be present (Ondrack and Nininger, 1984; Kane and Palmer, 1995). Mabey
and Salaman (1995) point out the importance of shareholder priorities and management agendas

on training and development activities. Rosman et al. (2013) found that, HR department practices
in health care sector are majorly affected by top management interference.

Line managers are those managers to whom individual employees or teams directly report and
who have responsibility to a higher level of management for those employees or teams. Line
Management participation in designing and implementing HR activities is the key to
organizational success. Due to the small size of the company, the top management and line
managers are present most of the time to HR practices in their work and promote good work
practice. Since they knows the requirement and necessities of their team and department, they
play an important role in structuring effective HR policies. Rosman and colleagues (2013)
argued that, managerial style is one the important elements shaping the policies HR department.

3.1.3. Power and politics

Tsui and Milkovich (1987) found that organizational power and politics as exercised by various
constituencies are crucial determinants of HR practices. The influence of power and politics is
considered while implementing new policies and procedures in the organisation. HR manager of
APEX has identified the critical constituent of the HR practices and accurately determine their
source of power. Kane and palmer (1995) found that HR manager has the role in identifying the
stakeholders of critical constituents of hr practices.

3.2. External factors

According to Kane and Palmer (1995) external factors affecting HR practices are those pressures
on organisations that cannot be controlled and changed as per organisation needs For adapting in
Human recourse management field is important to have a close look on external factors as these
impact the HR practices of the organisation. To avoid HR burnt HR have to be sure that they
paying close attention to external influences. So well-developed strategy for human resources
should takes into considers external factors because there is a good chance that these external
factors affects the organisation work

3.2.1. Economic Conditions
One of the biggest external influences is the shape of the current economy. Not only does it
affect the current talent pool in the organisation, but it might affect the complete selection, hiring
ability, compensation structure of the organisation. Satow & Wang (1994) found that due to
development in global economy, the international dimension of HR practices has become more
and more significant. The current economic crises resulted in decrease of employment in APEX.
Employees are required to play multiple roles and multitask. Some project that supposedly
requires a site engineer has been sub-contracted due to lack of manpower. Rosman and
colleagues (2013) stressed the significant interference of national economy on HR policies.

3.2.2. Technological change

Change in technology can provide firm a better infrastructure and business growth. The increase
in the number of technological alternatives or innovation in business functions creates a positive
image for firms which further increase its revenues and image in the market. Changes in
technology have make it possible for the HR department of APEX to improved human resource
functions such as selection, recruitment, educating, training, performance appraisal or observing,
determining wages and salaries. Development in HR can be learned and implemented faster. On
other hand when new technologies are introduced with business growth it is expected to improve
employee salaries and wages. Requirement of more educated and qualified manpower increase
training cost. Due to the economics factor, trainings has to be reduced and employees is forced to
work extra job scope with minimal to no wage increment. This has ultimately pushed some
employees to resign for the sake of their own survival. To reduce this increased cost HR
department start looking at how to reduce the existing manpower and look for ways to save
money by changing its policies and practices. APEX is force to sub contract most of their man
power in the midst of regaining financial stability to sustain and improve current employees

3.2.3. Workforce demographics
One of the most powerful forces affecting work and organizations is changing worker
demographics. Demographics include factors such as gender, age, ethnicity, occupation,
seniority, salary levels, marital and family status. Shenhav & Haberfeld (1992) pointed out that
while diversity was always there in workforce in terms of age and skill but this diversity has
grown more over the last two to three decades. The number of women in the work force has
increased significantly, as have the proportion of different ethnic groups.

APEX is a small engineering firm often working on projects that requires their engineers to do
site-work and travel. For this purpose, APEX needs to hire people that wouldn’t mind working in
this environment. To compensate, APEX provide interesting mileage compensation, several on
site allowance and long maternity leave (for woman staff). However, due to the size of the
company is very small, the staff is also comprising of almost all malay causing the dynamics of
the company to reduce productivity. To curb this, the HR has decided to diversify their
workforce and open the employment to non-malays.

Human Resource Forecasting is the process of projecting the organization future HR need
(demand) and how it will meet those needs (supply) under a given set of assumptions about the
organization policies and the environment conditions where it operate. Without Forecasting we
cannot asses the distinction between the supply and demand.

The purpose of identifying future HR supply requirements is to determine the number of

employees require for each job and their knowledge, skills, abilities and other characteristics. HR
supply forecasting is essential in determining the characteristics of hiring sources with the
predetermined planning horizon in order to establish whether future HR supply is sufficient to
match future HR demands

Forecasting HR demand methods

Forecasting human resource demand is the process of estimating the future human resource
requirement of right quality and right number. Potential human resource requirement is to be
estimated keeping in view the organisation's plans over a given period of time. Analysis of
employment trends; replacement needs of employees due to death, resignations, retirement
termination; productivity of employees; growth and expansion of organisation; absenteeism and
labour turnover are the relevant factors for human resourced forecasting.

Job analysis and forecasting about the quality of potential human resource facilitates demand
forecasting. So, existing job design must be thoroughly evaluated taking into consideration the
future capabilities of the present employees. Due to the fact that APEX is a small company,
qualitative technique is the best way to forecast human resource demand.

a) Managerial Judgement

Managerial judgement technique is very common technique of demand forecasting. This

approach is applied by small as well as large scale organisations which is why this technique
suits APEX. This technique involves two types of approaches i.e. 'bottom-up approach' and 'top-
down approach'. Under the 'bottom-up approach', line mangers send their departmental
requirement of human resources to top management. APEX’s top management ultimately
forecasts the human resource requirement for the overall organisation on the basis of proposals

of departmental heads. Under the Top-down approach', top management forecasts the human
resource requirement for the entire organisation and various departments. This information is
supplied to various departmental heads for their review and approval. However, a combination of
both the approaches i.e. 'Participative Approach' should be applied for demand forecasting.
Under this approach, top management and departmental heads meet and decide about the future
human resource requirement. So, demand of human resources can be forecasted with unanimity
under this approach.

b) Delphi technique

Delphi technique is also very important technique used for estimating demand of human
resources. This technique takes into consideration human resources requirements given by a
group of experts i.e. mangers. The human resource experts collect the manpower needs,
summarises the various responses and prepare a report. This process is continued until all experts
agree on estimated human resources requirement.

Forecasting HR supply methods

Human Resource supply forecasting is the process of estimating availability of human resource
followed after demand for testing of human resource. For forecasting supply of human resource
we need to consider internal and external supply. Internal supply of human resource available by
way of transfers, promotions, retired employees & recall of laid-off employees, etc. Source of
external supply of human resource is availability of labour force in the market and new

a) Succession analysis

Once APEX has forecast the demand for labour, it needs an indication of the firm's labour
supply. Determining the internal labour supply calls for a detailed analysis of how many people
are currently in various job categories or have specific skills within the organization. The planner
then modifies this analysis to reflect changes expected in the near future as a result of
retirements, promotions, transfers, voluntary turnover, and terminations.

Demand forecasting helps in determining the number and type of personnel/human resources
required in future. The next step in human resource planning is forecasting supply of human
resources. The purpose of supply forecasting is to determine the size and quality of present and
potential human resources available from within and outside the organisation to meet the future
demand of human resources. Supply forecast is the estimate of the number and kind of potential
personnel that could be available to the organisation.

Figure 1: The above figure illustrates that internal supply forecasting can be estimated based on the following:

(a) Current Staffing Level

(b) Projected Outflows This Year

(c) Projected Inflows This Year

b) Markov analysis
A transition matrix, or Markov matrix, can be used to model the internal flow of human
resources. These matrices simply show as probabilities the average rate of historical movement
from one job to another. Figure 2 presents a very simple transition matrix. For a line worker, for
example, there is a 20% probability of being gone in 12 months, a 0% probability of promotion
to manager, a 15% probability of promotion to supervisor, and a 65% probability of being a line
worker this time next year. Such transition matrices form the bases for computer simulations of
the internal flow of people through a large organization over time.

Figure 2: Markov Analysis sample


This paper has identified the environmental factors and assess the influences of those factors on
human resource planning of APEX GLOBAL ENGINEERING which is the selected
organization. Human resource planning involve five steps which has been described accordingly.
From this five steps, we notice that From these steps, we note that the internal and environmental
factors can affect the supply and demand forecast of HR. Internal factors includes organization
size, top management and line managers and politics while external factor is more on economic
change, workforce demographic and technological change. Taking into consideration the internal
and external factors, and the five step HR planning, a proposal of forecasted analysis of supply
and demand for appropriate human resources was drawn. Methods of forecasting HR demand
proposed are managerial judgement and Delphi technique, while methods of forecasting HR
supply proposed are succession analysis and Markov analysis.


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