fundamentals of

Human Resource Management 3rd edition

by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright

CHAPTER 2
 Human Resources Strategies
And Planning
 HR STRATEGIES
Definition: HR strategies are the integration between
HR policies and practices with business strategies of
an organization.

Question: “HR strategies lead business strategies”. It is:

a. True
b. False
 Business strategy

1. Corporate-level strategy
2. Business-level strategy
3. Functional-level strategy
 Corporate-level strategy

Strengths
Growth strategy
Stablity strategy

Company
status

Weaknesses Entrenchment strategy

Opportunities Threats
Environment status
 Growth strategy
Concentration Strategy:
 Only 1 business unit
 Methods:
 Related/ Concentric Diversification:
 New business units, related to the current one.
 Methods:
Unrelated/Conglomerate Diversification:
 New business units, not related to the current one.
 Methods:
 Corporate level strategy

• Stability strategy
• Entrenchment strategy
 Business-level strategy
• Cost - leadership strategy
• Differentiation strategy
• Focus strategy
 Functional strategy
• Marketing strategies
• Financial strategies
• R&D strategies
• HR strategies
• ….
 HR STRATEGIES

BUSINESS STRATEGIES HR STRATEGIES

1. Self-Growth strategies ……

2. Growth by M&A strategies ……

3. Stability strategies …….

4. Entrenchment strategies …….

5. Cost-leadership strategies

6. Differentiation strategies …….

 HR planning
• Definition: The process of forecasting labor
demand and supply, determining the labor surplus
or shortage, and setting up plans in order to deal
with labor surplus or shortage.
 Objectives of HR Planning
• Recruit right ____(1) for the right ____(2), and at the
right ____(3).
• Respond quickly to _____(4) in business environment.
• Deal with labor _____(5) or ______(6).
• Cooperate and link to other HR ______(7).
Figure 5.1: Overview of the Human

Resource Planning Process

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 Step 1: Environment scanning
• External environment
• Internal environment
 Step 2. Forecasting

• Forecasting: attempts There are three major

to determine the supply steps to forecasting:
and demand for various 1. Forecasting the demand
types of human for labor
resources to predict 2. Determining labor
areas within the supply
organization where
there will be labor 3. Determining labor
surplus or shortage
shortages or surpluses.

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 Forecasting the Demand for Labor

Trend Analysis Leading Indicators

• Constructing and • Objective measures that
applying statistical accurately predict
models that predict future labor demand.
labor demand for the
next year, given
relatively objective
statistics from the
previous year.

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 Forecasting the Demand for Labor

1. Judgmentally-based method:
 Prediction
 Managers’ decision
 Delphi

2. Mathematically based methods:

 Productivity/Sale rate
 Time base
 Regression

Exercises
 Step 3. Determining Labor Supply

• Transitional matrix: a It answers two questions:

chart that lists job 1. “Where did people in
categories held in one each job category go?”
period and shows the
2. “Where did people now
proportion of employees
in each job category
in each of those job
come from?
categories in a future
period.

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Table 5.1: Transitional Matrix - Example
for an Auto Parts Manufacturer

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• Skills inventory
• Management inventory
• Turnover rate
• Retirement
 Determining Labor Surplus or Shortage

• Based on the forecasts for labor demand and
supply, the planner can compare the figures to
determine whether there will be a shortage or
surplus of labor for each job category.
• Determining expected shortages and surpluses

allows the organization to plan how to address 
these challenges.

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Goal Setting and Strategic Planning

• The purpose of setting specific numerical goals
is to focus attention on the problem and
provide a basis for measuring the organization’s
success in addressing labor shortages and
surpluses.
• The goals should come directly from the

analysis of supply and demand.
• For each goal, the organization must choose
one or more human resource strategies.

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 Discussion
1. Options for Reducing a Surplus
2. Options for Avoiding a Shortage
3. Which of them is the last option that firms may
take? Why?
 Implementing and Evaluating the HR Plan

• When implementing the HR strategy, the
organization must hold some individual accountable
for achieving the goals.
• That person must also have the authority and
resources needed to accomplish those goals.
• Regular progress reports should be issued.

• The evaluation of results should not only look at the
actual numbers, but should also identify which parts
of the planning process contributed to success or
failure.

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