Strategic Planning & Human Resource Planning

Human Resource Planning (HRP) Strategic Planning

Determines the company’s present and subsequent HR An organization’s process of formulating

needs and implementing its strategies and
assessing their effects on the internal
Serves as a link between human resource management and external environment of the firm
and the entire strategic plan of the organization

Strategic Planning
● Process by which top management determines overall organizational purposes and objectives
and how they are achieved
Corporate Strategic Plan
● Know the purpose of your existence
● Specify long-term goals
● Define your values and principles
● Opportunities and Threats
● Environmental scanning
● Industry/competitor analysis
● Strengths and Weaknesses
● Forecast demand for employees
● Resources, people, process, systems
● Competitive strategy
● Action plan
● Strategy alignment
● Design, structure, and systems, among others
● Allocate resources
● Leadership, communication/change
● Assessment of goals
● Alignment of strategies to goals
● Providing feedback
Mission Determination
● Mission
- Company’s continuing purpose or reason for being
● The corporate mission is the sum total of the organization’s ongoing purpose
● Mission determination also requires deciding on the principles on which management decisions
will be based
● Arriving at a mission statement should involve answering questions such as:
- What are we in management attempting to do for whom?
- Should we maximize profit so shareholders will receive higher dividends or so share price
will increase?
- Should we emphasize stability of earnings so employees will remain secure?
Environment Assessment

 SWOT Analysis
 Positive Negative

Internal Strengths Weaknesses

External Opportunities Threats

Objective Setting
● Objectives
- The desired end results of any activity
- Objectives should have 4 basic characteristics:
 Expressed in Writing
 Measurable
 Specific as to time
 Challenging, but attainable
● Objectives should be developed only after a cost-benefit analysis of each alternative is
considered
Strategy Setting
● HR professionals should be highly involved in these activities because the composition of the
workforce will certainly influence the strategies chosen
● Lowest-cost Strategy
● Differentiation
● Employee Roles Associated with Competitive Strategies
Strategy Implementation
● Leadership
● Organizational Structure
● Information and Control Systems
● Technology
● Human Resources
Human Resource Planning (HRP)
 ● Systematic process of matching the internal and external supply of people with job openings
anticipated in the organization over a specified period of time
● Sometimes referred to as “Workforce Planning”
● Strategic planning precedes HR planning
● Formulate management philosophy
● Create a healthy company culture
● Outline code of conduct
● Demographic trends
● Outside supply of labor
● Competitor benchmarking
● Personality and competencies
● Predict HR demand
● Predict HR availability and suitability
● Effectiveness and efficiency
● Productivity improvement programs
● External fit / Alignment / Internal fit
● Analyze demand and supply gap
● Termination and separation
● Enhancement programs
● Measure effectiveness of initiatives
● Keeping track of activities
● HRM practice that helps managers in predicting the various HR needs relating to acquiring,
positioning, and utilizing employees
● Aim is to aid managers in placing employees where they fit (qualification-wise), so as to help the
company achieve its goals
Process of HRP
Factors that Affect HRP
● Company’s goals, objectives, and strategies
● Time spent for planning HR needs
● Uncertainties of business activities
● Exactness of forecasting manpower needs
● Structural design of the company
● Internal and external availability of manpower
● Preparation period of positioning talents
Forecasting
● Forecasting involves predicting the company’s future human resource needs
● Three major considerations
- Predicting demand for labor
- Predicting supply of labor
- Reconciling the gap between demand and supply of labor
● Requirements forecast
- Involves determining the number, skill, and location of employees the organization will need
at future dates to meet is goals
● Availability Forecast
- The determination of whether the firm will be able to secure employees with the necessary
skills, and from what sources
Predicting a Firm’s Demand for Employees
● A complete forecast should append recent data, previous experiences, and other probabilities to
be able to come up with a sensible and responsive HR plan
Forecasting Human Resource Requirements
● Zero-Base Forecast
- Uses the organization’s current level of employment as the starting point for determining
future staffing needs
● Bottom-Up Forecast
- Each successive level in the organization, starting with the lowest, forecasts its
requirements, ultimately providing an aggregate forecast of employees needed
Forecasting Human Resource Availability
● To forecast availability, the HR manager looks to both internal sources (current employees) and
external sources (the labor market)
Two Methods of predicting HR needs
● Quantitative
 - Covers the use of numerical information or mathematical procedures in analyzing data
● Qualitative
- Predict future HR needs based on the opinions or gut feel of some selected members of the
organization, outside experts, or others concerned with the future labor needs of the
company
Quantitative Methods
● Trend Analysis
● Ratio Analysis
● Regression Analysis
Trend Analysis
● Based on the concept that what has happened in the past will give the HR officer an idea what
will take place in the future
● Ties past employment flows to subsequent labor needs
● Managers chart trends that affect the number of employees based on certain variables

Ratio Analysis
● The process of anticipating future HR demands by calculating the precise ratio between certain
variables
● Considered more accurate than trend analysis

Teacher Student

300 900

x 1500

● Ratio is 1:3
 ● Following that ratio, what would be the estimated number of teachers needed?
Regression Analysis
● In this method, the organization draws lines and marks called a scatter diagram
- It then calculates a regression line which goes through the middle of the marks on the
scatter diagram
- Proper interpretation of the regression line will enable the company to determine the
number of employees needed for each predictor or variable

Qualitative – Delphi Method

● Aims to minimize biases of forecast by seeking expert opinions and summing up their decisions
- This is done by presenting a certain business scenario to experts
- A set of questions will be asked from these experts and the reasons behind their opinions
- The final forecast is obtained once the panel of experts have converged toward the right
decisions
Predicting the Supply of Employees
● If the demand projection has been made, the company gets a better picture of the number and
type of positions it will need to execute the work at a specific time
- Decisions will then be finalized on which positions will be filled on a certain future time
Supply Forecasting
 ● The organization forms a cluster showing the line of positions from which employees can
anticipate growth
- The cluster may include: job title, function, and degree of autonomy
- Within each group, state which officers will stay in their current positions, how many are
listed for possible transfer, promotion, and retirement
● Should also pay attention to possible mergers, buy-outs, and acquisitions
Outcomes of the HR Planning Process
● Once the HR planning activity is accomplished, the company should set and carry out HRM
practices that will aid the managers in handling the possibility of occurrence of either
undersupply or oversupply of personnel
Dealing with Workforce Oversupply
● If there are more workers than jobs, the first action is to downsize, which typically refers to lay-
off
- However, due to some undesirable effects of lay-offs, managers may consider options such
as:

Reduce Pay Job Sharing

“Freezing”
• Hard Freeze Early Retirement Set Limits to Overtime

• Soft Freeze
Offer Career Breaks (like Study Suspend Hiring
• Smart Freeze
Leave)

Dealing with Workforce Undersupply

● An undersupply of personnel indicates that there are more jobs than workers
● If this happens, the first move of the company should be to hire additional employees
- However, the company may consider the following alternatives:

Encourage Overtime Job Re-Assignment

Innovative Recruiting Compensation Incentives

Create Another Work Shift Strengthen Retention Program

Succession Planning: A Component of Strategic Planning
● Process of ensuring that qualified persons are available to assume key managerial positions
once the positions are vacant
● Includes:
- Untimely deaths
- Resignations
- Terminations
- Retirements