Strategic Human Resources Planning

5th Edition Belcourt Solutions Manual

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Chapter 7—Ascertaining HR Supply Strategic Human Resources Planning, 5e

CHAPTER 7
Ascertaining HR Supply

Chapter Learning Outcomes

After reading this chapter, you should be able to:

Understand the relationship between demand and supply forecasting techniques in the
HR planning process.
Recognize the importance of the human resources management system (HRMS) in
implementing effective supply forecasting procedures.
Comprehend the critical relationship between supply forecasting and succession
planning.
Discuss and evaluate the advantages and disadvantages of the following specific methods
of determining external and internal supply of an organization’s personnel:
a. Skills and management inventories
b. Succession/replacement analysis
c. Markov models
d. Linear programming
e. Movement analysis
f. Vacancy/renewal models

Chapter Summary

This chapter presented six models or techniques used by organizations to determine future HR
supply requirements. Skills and management inventories contain information that allows a
detailed analysis of the current workforce to determine whether we can meet the demand for
personnel replacement from current employees in the organization. Succession/replacement
analysis expands on the inventories approach by using succession/replacement charts and tables
to identify specific replacements for key organizational jobs and to examine whether problems
areas or blockages would occur if specified individuals were to be promoted or transferred. The
Markov model uses historical patterns of individual movement between jobs in the
organizational and attaches transitional probabilities for promotion, transfer, and remaining in
the particular job for an annual or specified future period. In this way, we are able to derive exact
numbers of open positions throughout the organization and can track career progression and the
time required for individuals to reach specified target jobs. Linear programming uses
mathematical equations to determine the optimal or best mix of personnel supply given specified
constraints, such as minimizing labour cost or achieving a desired mix of diverse employee
group memberships. Movement analysis enables us to identify not only the location and number
of open positions that must be filled by the organization but also the total number of individuals
who will be moved to fill these openings. The vacancy model provides specific information on
total personnel flows into and out of each authority or compensation level, as well as for the

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Chapter 7—Ascertaining HR Supply Strategic Human Resources Planning, 5e

organization as a whole. Accordingly, we are able to calculate the exact numbers of internal
promotions and external recruits that will be required by the organization.

Finally, we concluded our discussion of HR supply by pointing out the need for organizations to
develop retention programs to control absenteeism and turnover.

Lecture Outline

Comments Activity
A. Introduction Group Discussion: Ask students to review
the article ―Trends in the Canadian Labour
Organizational HR demand can be satisfied Force‖ on page 166 of the textbook.
through current employees (internal
supply) or individuals not currently Trends for all the designated groups
employed by the organization (external (women, Aboriginals, visible minorities)
supply), or a combination of both. were mentioned except persons with
disabilities. Considering approximately 16
Why do many organizations give to 20 percent of the population are people
preference to internal supply? with disabilities, why is more attention not
given to people with disabilities?
1. Selecting employees for training
and development, and subsequent
promotion, enables the organization
to reinforce employee loyalty and
performance.
2. Employees are already socialized to
the rules, norms, and procedures of
the organization.
3. Employee motivation and
commitment to the organization
may increase when you reinforce
their past loyalty and performance.
4. You possess knowledge (e.g.,
HRMS files) on their performance
and KSAs (e.g., work history and
experience).

Lack of attention to HR planning

practices meant that many organizations
downsized their supply of trained
workers in order to achieve short-run
cost savings, but at a much greater
long-run cost.
HR planners are about to hit a
―demographic wall‖—with the reality
of decreased birth rates and the

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Chapter 7—Ascertaining HR Supply Strategic Human Resources Planning, 5e

retirement of baby-boom personnel, and

reduced labour force participation.
Organizations are scrambling to attract
and retain qualified workers—―war for
talent.‖

B. Skills and Management Inventories Learning Activity: Divide the class into
two groups. Ask one group to review the
Skills inventory is an individualized description of a skills inventory given on
personnel record held on each employee page 167 of the textbook, and the other
except those currently in management or group reviews the description of a
professional positions. management inventory on pages 167–168
of the textbook. What are the elements of
Personal information (e.g., name, each?
employee number, emergency
information, compensation band, etc.).
Education, training and skills
competencies.
Work history (e.g., date of hire, seniority,
current job and supervisor, etc.).
Performance appraisals.
Career information (e.g., future jobs
desired by employees and
recommendations by supervisors).
Hobbies and interests (including
community and volunteer involvement).

Management inventory is an individualized

personnel record for managerial,
professional, or technical personnel that
include all elements in the skills inventory
with the addition of information on
specialized duties, responsibilities, and
accountabilities.

Contain all of the information found in a

skills inventory as well as:
History of management and professional
jobs held.
A record of management or professional
training courses and their dates of
completion.
Key accountabilities for the current job
(i.e., organizational resources, including
the budget size controlled, the number of
subordinates, etc.).

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Chapter 7—Ascertaining HR Supply Strategic Human Resources Planning, 5e

Assessment centre and appraisal data.

Professional and industry association
memberships.

C. Succession/Replacement Analysis Learning Activity: Invite an HR

professional who has responsibility for
• Succession planning is critical to succession planning to class to discuss how
effective organizational functioning. this is implemented in his/her organization.
• Helps the organization in being more Representatives from large corporations
effective to fill vacant positions. are very informative because they can
discuss the use of the HRMS in
• Succession management—The process determining supply.
of ensuring that pools of skilled
employees are trained and available to
meet the strategic objectives of the
organization (See Chapter 8).
• Replacement management—The
process of finding employee for key
managerial positions (See Chapter 8).

Long-term succession is the process of

training and work experience to enable
individuals to assume higher-level job
appointments in the future.

Short-term emergency replacement of

individuals who have quit, been terminated
because of performance problems, have
died, and so on.

Benefits of Succession Planning: Discussion Question: What are the benefits

1. It enables the organization to
respond appropriately and stay on
track when inevitable changes
occur. It provides for continuity and
future direction in the midst of
significant change.
2. It helps develop people as they
prepare for new experiences and
jobs, and this development can also
help improve their performance in
current positions.
3. Employees are positively motivated
when succession planning takes into
account employees’ performance.
4. It supports new organization
of succession planning?
Succession/replacement charts and
tables—Developed for key executive,
managerial, and professional jobs (See
―Figure 7.1—Example of
Succession/Replacement Chart‖ on page
169 of the textbook and ―Table 7.1—
Example of Succession/Replacement
Table‖ on page 170 of the textbook).

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Chapter 7—Ascertaining HR Supply
structures and flexibility by
explicitly providing back-up for
various positions, thereby reducing
organizational dependency on one
employee.
5. It saves time and money by having
plans in place to enable smooth
transition of employees.
Succession readiness code—Codes listed
next to the names of all potential
successors; contain two elements of
information essential for succession
planning:
1. the employee’s level of performance in
the current job and
2. the employee’s readiness for movement
or promotion.
Ripple or chain effects—The effect caused
when one promotion in the organization
can cause several personnel movements in
the organization as a series of subordinates
are promoted to fill the sequential
openings.
D. Markov Models
Markov model—A model that produces a
series of matrices that detail the various
patterns of movement to and from the
various jobs in the organization.
Most popular technique used for supply-
side HR planning.
Used widely in both educational and
personnel planning processes.
More accurate than regression models.
Produces a series of matrices that detail
the various patterns of movement to and
from a wide variety of jobs in the
organization.
Assumed that the pattern of movement is
relatively stable over time.
Steps to Using Markov Models:
Copyright © 2013 by Nelson Education Ltd.
Strategic Human Resources Planning, 5e
Review ―HR Planning Today 7.1—Take
Steps to Keep Business All in the Family‖
on page 171 of the textbook for results of a
study by Deloitte & Touche on the
leadership crises facing family businesses
today.
Learning Activity: Ask students to read
―HR Planning Today 7.2: The Future of
Retirement Around the World‖ on pages
172–173 of the textbook. What are some
typical opinions about retirement from
various countries mentioned in the study?
For a global company, how is it possible to
contemplate these many views about
retirement into the organizational culture?
Discussion Question: What are the possible
movements/changes that employees can
make in organizations?
Answer:
1. Remaining in the current job.
2. Promotion to a higher classified
job.
3. A lateral transfer to a job with a
similar classification level.
4. Exit from the job (e.g., termination,
lay-off, voluntary leaving).
5. Demotion (which is relative rare).
Review ―Table 7.2 for the Markov Model
examples for Ottermere Outbound
Adventures‖ on page 175 of the textbook.
Also consider ―HR Planning Today 7.3—
Using Markov Models to Forecast Ocean
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Chapter 7—Ascertaining HR Supply Strategic Human Resources Planning, 5e

1. Collect historical data on mobility rates Deck Officers‖ on page 176 of the
between jobs in the organization. textbook for an application of Markov
2. Develop matrices to forecast future models.
personnel movement between jobs.
3. Use forecasts of the model to analyze
our HR policies and programs and
instigate necessary adaptive measures.

Transitional probabilities—The likelihood

that an individual in a specific job will
exhibit one of the five movement
behaviours normally one year into the
future.

Markov chains—Sequence of movements

between various job states.

Multiplier effect—The length of a vacancy

chain.

Value of the Markov Model: This model

has great value for determining—
1. The number of personnel who move
annually, and over specified time
periods, between various job levels.
2. The number of external hires that are
required by the organization, and where
the specific jobs are needed.
3. The movement patterns and expected
duration in specified jobs associated
with patterns of career progression for
employees in the organization (i.e.,
career paths).
4. The number and percentage of all
starters at a particular job level who
will successfully attain a future target
job level by a specified time period.

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Chapter 7—Ascertaining HR Supply Strategic Human Resources Planning, 5e

E. Linear Programming

Linear programming—A complex

mathematical procedure commonly used
for project analysis in engineering and
business applications. It can determine an
optimum or best-supply mix solution to
minimize costs or other constraints..

Conditions such as desired staffing ratios

(e.g., the internal/external mix of
employees) can be programmed into the
equation for determining HR supply.
Enables HR planners to calculate ―what
if‖ scenarios by changing or relaxing
various model assumptions.
Like regression analysis, there is an
assumption that the mathematical model
has to contain variables that have linear
relationships among the various
constituent elements.
F. Movement Analysis Review ―HR Planning Notebook 7.1—
Managing the Firm’s Internal Labour
Movement analysis—A technique used to Market: Lessons from the Field‖ on page
analyze personnel supply, specifically the 178 of the textbook. What were the main
chain or ripple effect that promotions or job conclusions reached by the Simon Fraser
losses have on the movements of other Faculty of Business Administration?
personnel in an organization.
The analysis identifies the total number Learning Activity: In groups of three, have
of vacant or open positions in the students review and work through the
organization or department, as well as the movement analysis exercise described in
total number of personnel movements the chapter on pages 178–181 of the
caused by replacing and filling these textbook.
positions. 1. Determine the total number of positions
The total number of personnel requiring replacements over the next
movements is always greater than or one-year period.
equal to the number of vacant positions 2. Determine the impact these openings
to be filled. will have on the current employees’
Enables the HR planner to select the movements throughout the department.
desired mix or percentage of internal and
external supply for those positions Ask the students to review ―Table 7.3—
requiring replacements. Number of Positions to be Filled‖ and
Enables the HR planner to ensure that the ―Table 7.4—Personnel Movement‖ on
organization has sufficient resources page 180 of the textbook.
devoted to the training and development
of its current employees.

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Chapter 7—Ascertaining HR Supply Strategic Human Resources Planning, 5e

G. Vacancy Model Learning Activity: In groups of three, have

students review and work through the
Vacancy, renewal, or sequencing model— vacancy model exercise described in the
Analyzes flows of personnel throughout the chapter on pages 181–183 of the textbook.
organization by examining inputs and 1. What is the specific number of external
outputs at each hierarchical or and internal personnel required at each
compensation level. level and for the organization as a
whole?
1. Vacancy models have been found to
have more predictive capacity than
Markov models over short- and long- Learning Activity: What is the upward
term periods. mobility rate (also called the promotion
2. Common time frame for this model is rate)?
one year into the future.
3. Calculate personnel supply
requirements from the top down
beginning at the highest authority level
because the normal direction of
movement in an organization is from
the bottom to the top.
4. Our need for personnel must be met
either by external recruiting or by
internal promotions of current
employees or the combination of the
two approaches.
5. This model identifies the specific
number of external and internal
personnel required at each level and for
the organization as a whole.

H. HR Supply and Retention Programs Review ―HR Planning Today 7.4—

Organizations need to monitor and
control levels of absenteeism and
turnover (labour wastage).
Retention programs are key to retaining
experienced, high-performing employees
in order to achieve organization goals.
Developing Effective Employee Retention
Policies‖ on page 184 of the textbook.
Why do most organizations break the bank
to attract new employees but fall short on
retaining highly qualified individuals?

Hard Costs of Replacing Employees Review ―HR Planning Today 7.5—

Advertisements Shortages in Labour Supply Lead to
Headhunter, recruiting fees Flexible HR Processes‖ on page 184 of the
Interview training textbook. Why have some cities in Canada
Travel costs altered their recruiting strategies to look
globally for skilled workers?
Admin expenses
Costs of lost production

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Chapter 7—Ascertaining HR Supply
Bonuses
Increased salaries
Cost to replace a trained worker ranges
from 70 to 200 percent of the departing
person’s salary.
Soft Costs of Replacing Employees
Lost business and customer contacts.
Decreased quantity or quality of work
due to training and learning curve gaps.
Orientation and training time.
Decline in team morale and productivity.
Increased turnover due to the ―follow-
me‖ effect.
Retention Can Be Greatly Enhanced by:
Offering effective communication
programs.
Facilitating an enjoyable and collegial
work atmosphere.
Designing meaningful jobs.
Formulating and administering
performance and compensation systems
that reward better performers.
Offering more flexible and attractive
work arrangements) flextime,
telecommuting, cafeteria-style benefits
plans.
Mentoring and developing intellectual
capital.
Copyright © 2013 by Nelson Education Ltd.
Strategic Human Resources Planning, 5e
Review ―HR Planning Notebook 7.2—
Ensuring the Supply of Leadership Talent
for the Future‖ on page 186. What were
some of the conclusions that the IBM
Global Human Capital Study came up with
to build leadership talent?
Review ―HR Planning Today 7.6—
Worksharing‖ on page 187 of the textbook.
What are some of the main stipulations that
the Canadian government has set up with
its federal worksharing program?
Review ―HR Planning Notebook 7.3—
Winning the War for Talent‖ on page 188
of the textbook. Why can organizations not
afford to lose their talented employees?
Review ―HR Planning Today 7.7—
Cutting-Edge Canadian HRM: Leadership
Development and Retention at Ceridian
Canada‖ on page 189. In this interview at
Ceridian Canada, how does the company
develop the core leadership attributes of
aspiration, ability, and engagement?
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Chapter 7—Ascertaining HR Supply Strategic Human Resources Planning, 5e

Exercises

1. Dave’s Dumpsters offers a low-cost disposal system for the high-quality campus food
served at Moosehead University, as well as for many other institutions of higher learning. The
company has retained your services on a lucrative contract to calculate the vacancy model for
next year’s HR forecast. Note: All amounts are rounded up to the nearest whole number.

Level # New # Annual Losses Promotions to Next Level External Hiring

Personnel Personnel Level Outflo
at Start of with 5% ws
Year growth
1 1 1 1 1 x 100% = 1 1 1 x 0% = 0
2 4 4 4 x 0.20 = 1 (1+1) x 90% = 2 2 2 x 10% = 0
3 18 19 19 x 0.22 = 5 (5+1) x 80% = 5 7 7 x 20% = 2
4 40 42 40 x 0.25 = 10 (10+5) x 70% = 11 15 15 x 30% = 5
5 75 79 75 x 0.30 = 23 (23+10) x 50% = 17 34 34 x 50% = 17
6 136 143 136 x 0.50 = 68 0 85 85 x 100% = 85
Total 274 288 107 36 144 109

Note: In order to calculate level outflows, you need to combine annual losses and promotions to
next level. For example: For level 3 outflows

Level 3 Outflows = Level 3 Annual Losses + Level 2 Promotions = 5 + 2 = 7

With rounding, this vacancy model demonstrates the need for external hiring on most levels to
counter the annual losses.

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Chapter 7—Ascertaining HR Supply Strategic Human Resources Planning, 5e

Additional Suggested Exercises

1. Look up www.hr.com and review information on HR supply and HR jobs.

2. Interview an HR professional in a hospital and/or community-based health

organization to determine his/her assessment of the supply/demand for health care
professionals. Is there a deficit or surplus projected? What is the organization doing to
address this concern?

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