Once the corporate and business unit strategies have been established then the human resource strategy can begin to be developed The hr strategy involves taking the organizations strategic goals and objectives and translating them into a consistent integrated complementary set of programs and policies for managing employees. This does not imply however that strategic HR is reactive in nature a Although it is derived from corporate and or business unit strategies Hr strategy is developed in proactive manner with hr staff attempting to design and develop appropriate hr systems to meet the anticipated conditions under which the organization will be operating The senior hr professional as a vital member of the top management team should also be heavily involved in corporate or business unit strategic planning so that the top management team is able to include human resource management concerns in its overall planning Hr needs to inform the top management team of the skills and capabilities of the organizations workforce and how they might impact strategic plans. The first component of human resource management strategy is 1. human resource planning 2. The second component the design of work system
Human resource (HR) planning, which is the process of analyzing and Identifying the need for and availability of human resources so that the organization Can meet its objectives.
All other functional hr activities such as staffing training performance management compensation and labor relations and employee separation are derived and should flow from the HR planning process When undertaking HR planning the organization considers the implications of its future plans on the nature and types of individuals it will need to employ and the necessary skill and training they will require The organization will also need to assess its current stock of employees as well as those available for employment externally The key facet of human resource planning is that it is PROACTIVE PROCESS .it attempts to plan and anticipate what might happen in the various domains of the organizations internal and external environments and to develop plans to address these events prior to their actually happening Rather than react to changes in the industry marketplace economy society and technological world human resource planning ensures that the organization will be able to adapt in tandem with these changes and maintain the fit between the organization and its environment Hr planning is particularly important during periods of organizational turbulence such as during a merger or acquisition when labor market conditions are tight or when unemployment is low. Because human resource planning involves making assumptions about the future particularly the status of economy competition technology regulations and internal operations and resources it is critical that all hr planning initiatives be flexible If events and circumstances materialize differently from how they were anticipated then the organization should not be bound by prior and existing plans 1|Page
HR PLANNING Changes to any planning initiatives should not be viewed as a weakness in the planning process rather they should be a positive signs that the organization is carefully monitoring its external environment and responding appropriately to any changes taking places. In order to facilitate this flexibility it is critical that key decision markets in the organization clarify and write down all the assumptions they make about the external environment and the organization when developing the hr plan If the organization has difficultly achieving its strategic objectives despite following a carefully designed human resource plan, there is a very good chance that inaccurate assumptions were made about what might happen in the future or when expectations failed to materialize. Clarifying and writing down these assumptions make subsequent intervention and corrective action much easier. Many interventions become complicated and time consuming because when decision makers revisit the process the strategy seems to flow logically however a previously noted much of the assessment of the external environment involves assumptions that various conditions of the economy technology marketplace competition regulatory environment Will remain the same or change. These assumptions are often held by key decision makers but not verbalized .As a result correction actions may be stymied ( block) due to an inability to identify the key problems. Human resource planning goes far beyond simple hiring and firing .it involves planning for the deployment of the organizations human capital in the most effective and efficient ways in line with organization and or business unit strategy. In addition to hiring and or separation, human capital management may involve reassignment, training and development. Outsourcing and or using temporary help or outside contractors Modern organizations need as much flexibility as possible in how they utilize human talent in the pursuit of their strategic goals.
HR PLANNING OBJECTIVES OF HR PLANNING:There are five major objectives of hr planning 1. The first is to prevent overstaffing and understaffing When an organization has too many employees it experiences a loss of efficiency in operations due to excessive payroll costs and surplus production that can’t be marketed and must be stored. Having too few employee results in lost sales revenue as the organization is unable to satisfy existing demand of customers. Moreover the inability to meet current demand for products and services due to understaffing can also result in the loss of future customers who turn to competitors. Human resource planning helps to ensure that operations are not only efficient but also timely in response to customer demands. 2. Ensure that the organization has the right employees with the right skills in the right places at the right times Organizations need to anticipate the kinds of employees they need in term of skills, work haits,personal characteristics and time their recruiting efforts so that the best employees have been hired and fully trained and prepared to deliver peak performance exactly when the organization needs them Nonetheless the planning process needs to consider myriad factors including skill levels, individual employee Fit with the organization, training ,work systems and projected demand and integrate these factors as a critical component of its HR strategy. 3. The third objective is to ensure that the organization is responsive to change in its environment. The human resource planning process requires decision maker to consider a variety of scenarios relative to the numerous domains(fields) in the environment For example the economy might grow, remain stagnant or shrink The industry might remain the same or become either more or less competitive Government regulations may remain the same or will be relaxed or become more stringent (strict) Technology may or may not be further developed Human resource planning forces the organization to speculate and assess the state of its external environment Anticipating and planning for any possible chages, rather than passively reacting to such conditions can allow the organization to stay one step ahead of its competitors. 4. The fourth objective is to provide direction and coherence (logical and consistent relationship) to all human resource activities and systems. Human resource planning sets the direction for all other hr functions such as staffing ,training and development, performance measurement ,and compensation It will also ensure that the organization takes a more systematic(modified) view of its human resource management activities by understanding the interrelatedness of the hr programs and systems and how changes in one area may impact the another area
HR PLANNING A coherent human resource plan will ensure for example that the areas in which employees are being trained are being incorporated into their performance measurements and that these factors are additionally considered in compensation decision. 5. Unite the perspective of staff managers and line managers. The fifth objective is to unite the perspectives of line and staff managers although human resource planning is usually initiated and managed by the corporate hr staff; it requires the input and cooperation of all managers within an organization. No one better knows the needs of a particular unit or department than the individual managers responsible for that area Communication between hr staff and the line managers is essential for the success of any hr planning initiatives Corporate hr staff needs to assist line managers in the planning process but at the same time acknowledge the expertise of and responsibility assigned to individual line managers in considering their input to the planning process.
TYPES OF PLANNING: Planning is generally done on two different levels Aggregate planning anticipates needs for groups of employees in specific usually lower level jobs( the number of customer service representatives needed for example ) and the general skills employees needs to ensure sustained high performance Succession planning focuses on key individual management positions that the organization needs to make sure remain filled and the types of individuals who might provide the best fit in these critical positions. AGGREGATE PLANNING: The first step in aggregate planning is forecasting the demand for employees. I In doing so the organization needs to consider its stratetigic plan and any kinds and rates of growth or retrenchment that may be planned. The single greater indicator of the demand for employee is demand for the organizations product or service It is necessary when forecasting the demand for employees to clarify and write down any assumptions that might affect utilization of employees( new technology that might be developed or acquired, competition for retention of existing employers, changes in the production of product or provision for a service, new quality or, customer service initiates or redesign of work systems) Although there are several mathematical methods such as multiple regression and linear programming to assist in forecasting the demand for employees most organizations rely more on the judgments of experienced and knowledgeable mangers in determine employee requirements this may be done through unit forecasting ( sometimes called BOTTOM UP PLANNING),top down planning or some combination of both.
HR PLANNING In UNIT FORECASTING each individual unit department or branch of the organization estimates its future needs for employees for example each branch of a bank might prepare its own forecast based on the goals and objectives of each branch manager has for the particular office., these estimates are then presented to subsequent layers of management who combine and sum the totals and present them to senior management for approval. Advantage of this technique is that we can quickly estimate the need for employees as the need arise but the disadvantage is that this technique can lead to managers to overestimate their own unit needs if there is no mechanism for control and accountability for allocating resources. Top down forecasting involves senior managers allocating a budgeted amount for employee payroll, expenditures and then dividing the pool at subsequently levels down in the hierarchy.Eah manager receives a budget from her his supervisor and then decides how to allocate these funds down to the next group of managers. This technique is similar to sales and profit plans in many organizations whereby each unit is assigned a budgeted amount and then required to make decision on deploying those resources in the manner most consistent with business objectives Although this technique may be efficient as senior management allocate hr costs within a strict organization wide budget there is no guarantee that it will be responsive to the needs of the marketplace. Allocation is based solely on what the organization can afford without regard to input concerning demand and market place dynamics. Unit forecasting promotes responsiveness to customers and the marketplace. Top down forecasting promotes organizational efficiency in resource allocation. Consequently an organization can choose a planning technique that is consistent with its overall strategy an organization whose key strategic objectives involve cost minimization can opt for top down forecasting An organization more concerned with change and adaptability can opt for unit or bottom up forecasting However if an organization has objectives of both responsiveness and efficiency it is possible to use both forms of forecasting and have middle levels of management responsible for negotiating the differences between the two techniques. Once demand for employee has been forecasted the organization then has to plan for an adequate supply of employees to meet this demand This process involves estimating the actual number of employees and determining the skills that these employees must have and weather their backgrounds training and career plans will provide a sufficient fit for the organization future plans
HR PLANNING SKILLS INVENTORY One way to assess the abilities ,skills, and experiences of existing employee is by using a skills inventory .In the past these inventories were usually complied and processed manually but now skill inventories are usually computerized database that are part of the organizations over all HRIS Each employee provides information on his or her experience education abilities job preferences career aspirations’ and other relevant personal information this allows an organization to gain a collective sense of who their employees are and what capabilities they have skills inventories must be constantly updated to be of any value to an organization.changin employee backgrounds and preferences mandate that the skill inventory be updated at least annually. In majority of the medium and large organizations employees change positions and job levels constantly or leave the organization.Consequently any attempt to assess the supply of employees needs to assess
mobility within the organization as well as turnover rates. This can be done through mathematical technique known as markov analysis which describes The probability of employees staying with the job in any job category Moving to another job Leaving the organization over a given period of time usually one year It uses a transition probability matrix that is established based on historical trends of mobility markov analysis can also be utilized to allow managers to identify Problem departments within an organization or positions that appear to be less desirable as reflected in high rates of turnover or low rates of retention a sample of markov analysis is illustrated in 5.2 fig.
TRANSITION PROBABILITY MATRIX FOR A RESTAURANT O one year from now Current year servers Servers 80% hosts 10% buspersons 0% exit 10% 20% 40% total 100% 100% 100%
Hosts 10% 70% 0% Buspersons 15% 5% 40% RE RETENTION LEVELS Servers 80% Hosts 70% Buspersons 40% Incumbents servers hosts 60 server 60*0.8= 48 60*0.10= 6 10 hosts 10*0.10= 1 10*0.70= 7 20 busperson 20*0.15= 3 20*0.05= 1 90 total 52 14 Fig 5.2
20*0.40= 8 8
exit 60*0.10= 6 10*.0.20= 2 20*0.40= 8 16
HR PLANNING For sake of simplicity we will assume that there are three job classifications in the restaurant servers, hosts and buspersons.The horizontal readings show the movement anticipated during the coming year for each job classification based on historical trend for example 80 % of the current staff of server would be expected to remain employed in that capacity one year from now 10 % will become hosts None will become busperson and 10% will leave the organization.
The bottom half of the fig first shows retention levels followed by a forecast of the supply of employees expected in each position. To calculate these values we can take the number of incumbents and multiply them by the percentage Strstrategies for managing shortages of employees Str strategies for managing surpluses of employees Hiring freezes Recruit new permanent employees Do not replace those who leave Offer incentives to postpone retirement Offer early retirement incentives Rehire retirees part time Reduce work hours Attempt to reduce turnover Voluntary severance ,leave for absence Work current staff overtime Across the board concerning everyone)pay Subcontract workout cuts Hire temporary employees Layoffs Redesign job processes so that fewer employees Reduce outsourced work are needed Employee training Switch to variable pay plan Expand operations. from the transition probability matrix summing each of the columns that pertain to job classifications allow us to determine given normal movement expected supply levels of employees one year from now. After reliable estimates have been made for both supply and demand of employees, programs can be implemented to address any anticipated surplus or shortage of employees in any particular job category. In planning for anticipated shortages the organization first need to consider if the shortage is expected to be temporary or indefinite This has implications for if the organization should hire temporary or permanent employee or even consider subcontracting work to an outside vendor If permanent employees are too be hired the plan needs to be comprehensive and consider the types of employees that should be recruited if they should be recruited internally or externally how long they will need for training to perform an acceptable levels and how long the recruiting process has historically taken Another important consideration is if the individuals will need the latest skills or if the organization requires more hands on practical experience The former strategy would suggest recruiting younger employees directly out of formal schooling or training programs the later strategy would suggest recruiting from competitors or possibly having older workers postpone retirement or work on a contract or part time consulting basis.
HR PLANNING If surplus of employees is anticipated a critical strategic issue that must be addressed is if this surplus is expected to be temporary or permanent the most extreme action to reduce a surplus is to lay off employees Layoffs should usually be conducted only as last resort given the effects they can have on the morale of remaining employees as well as the significant economic costs that often result from large scale lay offs Surpluses can also be addressed through early retirement programs transfers and retraining of existing employee. Fig s 2 how some of the strategies of dealing with surplus.
Advantages Lower cost, because not paying external agency to recruit for you May improve morale of existing staff Recognition and reward of the good performance of internal staff Reinforces & supports the company’s succession planning strategies Internal staff are a ‘known’ quantity with existing information Disadvantages Can reinforce existing negative culture Run the risk of ‘in breeding’ Those that are not promoted can become discontent(disatisfiction) A strong performance management system is required Can encourage political ‘in-fighting’ for promotions among internal staff
Job posting Giving current employees the chance to respond to announcements (bulletin board, newsletters, memos, electronic bulletins, tape audio systems) Allows all qualified employees to compete for positions Helps manage individual career development Helps discover talent within the organization Is a communication device Can accommodate seniority Job bidding Allowing employees to indicate an interest in a position that they feel qualified for before one becomes available Encourages employees to be proactive in improving their KSAs Talent inventories (Skill tracking systems) Computerized talent or skill inventories with a list of people who have the needed KSAs Can be time-consuming and costly to maintain
HR PLANNING EXTERNAL RECRUITMENT
Advantages Avoids the risk of creating resentment by promoting ‘favourites’ from the inside Outsiders bring in fresh ideas, skills and Knowledge Forces internal staff to ‘compete’ & update their skills, education, etc Helps to facilitate change in culture • May take longer to fill the vacancy ‘New blood’ & more dynamic workforce • May create resentment from existing Employees DISADVANTAGES New appointee may not fit the existing culture within the organization May affect the morale of internal staff who have been over-looked Require a longer period of induction and orientation May take longer to fill the vacancy May create resentment from existing employees
Former employees Their job performance is known Could cause morale problem among remaining employees Previous applicants Is award of their qualifications Is easier and more efficient Employee referrals Can help identify people who fit well into the organization Is cost-effective Generally results in the highest one-year survival rates (realistic job preview) Can perpetuate existing patterns of discrimination Labor unions Particularly in construction industries Trade and professional associations Specially for skilled or professional jobs Can talk to potential applicants at meetings Walk-ins Open house Is informal and relatively inexpensive Internet Offers several avenues for recruiting across occupations Saves costs and time Reaching an appropriately broad cross section of applicants? Has potential for violating antidiscrimination laws Issues Attracting job applicants – Capitalize on the organization’s reputation or product image. Sorting applicants – Screen out unqualified applicants. Making quick contact
HR PLANNING Establishing personal contact Media advertising o Reaches a large audience of applicants Employment agencies o Public / private employment agencies, and executive search firms o Provides pre-screening services o Can be expensive Educational recruiting o Career or college fairs, school-to-work programs o Reaches broader potential candidates o Can establish long-term relationships Mergers and acquisitions o Needs to integrate a large number of workers quickly o Other companies’ M&A can provide an opportunity for recruitment.
SUCCESSION PLANNING: Succession planning involves identifying key management positions that the organization can’t afford to have vacant These are usually senior management positions and positions that the organization has traditionally had a very difficult time filling Succession planning serves two purposes First it facilitates transition when an employee leaves It is not unusual to have departing employee work alongside her or his successor for a given period prior to departure to facilitate the transition Succession planning aids in this process Second succession planning identifies the development needs of high potential employees’ and assists with their career planning By identifying specific individuals who might be asked to assume high level responsibilities the organization can attempt to develop key skills in these individuals that might be needed in upcoming subsequent assignments Although succession planning programs are relatively easy to understand in concept, actual practice shows that even though organizations realize how critical the processes is they may fail to implement succession planning effectively. Traditional succession planning utilize a relatively simple planning tool called a replacement chart.replacement charts identify key positions possible successors for each of these positions if each
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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 eaisly derived from the organizaiton chart and are often aprt of a human resource information system They can narrow in on and one key position and the subordinates reporting to the individual holding that position A sample replacement chart is presented in a fig down below
SAMPLE REPLACEMENT CHART
J.smith vp mkt
R.jones sales director ready now
c.williams promotions manager 15 months
s.anderson director of makt research 1 year
In this example smith is the vp of mkt and has three direct reports jones Williams and Anderson Beneath the three reports job titles is the expected period of additional time each will need to be ready to assume the vp responsibilities The assessments of time are generally not objective They are usually based on the opinions and recommendations of higher ranking managers In this example smith may have provided the time estimates for the three subordinates based on subjective personal assessments.
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Some organizations are much more systematic about their succession planning .Their replacement charts may contain specific skills, competencies and experiences rather than subjective estimate of time readiness. This may help to overcome problems associated with personal bias and ensure that the most qualified individuals are promoted, Moreover it allows an organization to provide its high potential employee with more specific feedback regarding developmental needs. Such an approach might ensure that woman and minorities have equal access to high level management positions. Succession planning not only helps to ensure that key mgt positions remains filled but it also helps to identify critical training and development needs of both individuals and managers and the organization as a whole Succession planning clearly involves taking an investment oriented approach towards employees Although the benefits of a well developed succession planning program can be significant such programs can also come at a significant cost to an organization An employer should ensure that there is at least one individual able to assume every critical position if something prevents the incumbent from continuing in it however the more prepared an individual is for promotion that he or she does not receive, the greater the possibility that he or she might see such a position elsewhere This is particularly true for succession planning programs built around defined management competencies The end result of this process is the organization invest in an individual and a competitor receives the return on that investment Succession planning initiatives aimed at key managers need to be coupled with a specific retention strategy designed for potential successor. One key issue the organziaitons must address in their succession planning is the extent to which these efforts will be public and if those targeted for grooming for higher level assignments are to be informed of their high potential status These questions have been the subject of ongoing debate as outlined in fig Telling employees that they have been identified as key potential players in the organizations future plans might reinforce these employees decisions to stay with the organization for a longer period of time in light of alternative careers opportunities At the same time it may create expectations for these employees that advancement is guaranteed and or imminent In addition it could create a kind of implied contract to workers that they are guaranteed continued employment Not telling employees has the benefit of the employer not committing to employees and allows some flexibility in changing the mix of employees as business needs and the skills set and experience require to run the business change.
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On the other hand if individuals are are not aware that they have been targeted as high potential they may be more receptive (accepting) to opportunities with other employers or consider going out on their own One recent survey found that 37.5% of employers tell employee that they have been targeted other found that 64 did so There is clearly no consensus as to if such information should be kept confidential among the senior management team and each organization should weigh the pros and cons presented in fig when deciding its strategy Succession planning efforts for the top executive spots have taken on more importance in recent years With increasing pressure from boards and shareholders for continual profitability the job of ceo has become far less attractive particularly as the economy slows Approximately 20% of the ceos of Americas 200 largest corporations were replaced in a recent years and the average ceo tenure currently is less than three years Even more startling is the number of high profile ceos who have departed after 19 months or less on the job either by resignation or ouster including the ceos of P &G procter and gamble ,mattel,Gillette and maytag Although turnover at the ceo level can be beneficial for an organization it also can be highly disruptive consequently organizations’ need to pay special attention to planning at the ceo level. ADVANTAGES DISADVANTAGES
Do not tell
ALLOWS FLEXIBILITY AS BUSINESS NEEDS A HIGH PERFORMERS MAY LEAVE THE CHANGE ORGANIZATIONS ,UNSURE OF THEIR FUTURE RETENTION STRATEGY UNREALISTIC EXPECTATIONS AND IMPLIED CONTRACTS (contract which is deduced through the behavior of the parties involved).
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