HUMAN R ES O U R CE

P L A NN IN G
CHAPTER OBJECTIVES
AFTER STUDYING THIS CHAPTER, YOU SHOULD BE ABLE TO

1. DEFINE AND EXPLAIN THE IMPORTANCE OF HUMAN

RESOURCE PLANNING (HRP).

2. UNDERSTAND THE BENEFITS OF CONDUCTING HRP.

3. EXPLAIN THE STEPS IN HRP.

4. DESCRIBE THE RELEVANCE OF HRP TO OTHER HR

ACTIVITIES.
 HUMAN RESOURCE PLANNING

•THE PROCESS OF ANALYSING AND IDENTIFYING

THE NEED FOR AND AVAILABILITY OF HUMAN
RESOURCES Right
People

Effective
Rights HR Right
Capabilitie
Place Plannin s
g

Rights
Time
 STRATEGIC PLANNING AND HUMAN
RESOURCES

•STRATEGIC PLANNING
 PROCEDURES FOR MAKING DECISIONS ABOUT THE
ORGANIZATION’S LONG-TERM GOALS AND STRATEGIES

•HUMAN RESOURCES PLANNING (HRP)

 PROCESS OF ANTICIPATING AND MAKING PROVISION FOR THE
MOVEMENT (FLOW) OF PEOPLE INTO, WITHIN, AND OUT OF AN
ORGANIZATION.
THE IMPORTANCE OF HRP
• TO STABILIZE THE WORKFORCE TO FACILITATE IMPLEMENTATION OF CORPORATE STRATEGIES -
PLANNING

• TO OBTAIN AND RETAIN THE NUMBER OF PEOPLE THAT THE ORGANIZATION NEEDS (SKILL, EXPERTISE,
COMPETENCE) – THROUGH SUCCESSION PLANNING

• TO MATCH THE INTERNAL AND EXTERNAL SUPPLY OF PEOPLE FOR THE JOB OPENINGS ANTICIPATED IN
THE ORGANIZATION OVER A PERIOD OF TIME – RECRUITING AND SELECTION OF POTENTIAL CANDIDATE

• TO ANTICIPATE THE PROBLEMS OF POTENTIAL SURPLUSES OR DEFICITS OF PEOPLE – ACHIEVE

EQUILIBRIUM

• TO REDUCE DEPENDENCIES ON EXTERNAL RECRUITMENT WHEN KEY SKILLS IN SHORT SUPPLY –

INTERNAL SOURCE OF RECRUITMENT

• TO MAKE THE BEST USE OF ORGANIZATION’S HUMAN RESOURCES.

THE IMPORTANCE OF HRP

• TO DEVELOP WELL-TRAINED AND FLEXIBLE WORKFORCE.

• TO PROVIDES THE BASIS FOR ESTABLISHING AND MAINTAINING EFFECTIVE HR PROGRAMS AND
FOR COORDINATING THE VARIOUS HRM FUNCTION.

• WHEN CORRECTLY DONE, HRP CAN HELP ORGANIZATION TO SAVE INTANGIBLE COSTS.
• TO DETERMINE WHAT THE COMPANY’S SHORT AND LONG-TERM PEOPLE NEEDS ARE.
• TO MINIMIZE WORKFORCE SHORTAGE AND EXCESS.
• TO PROVIDE INFORMATION TO ASSIST THE COMPANY’S HIRING AND DEVELOPMENT ACTIONS.
 LINKING STRATEGIC PLANNING AND HRP

• STRATEGIC ANALYSIS
 WHAT HUMAN RESOURCES ARE NEEDED AND WHAT ARE
AVAILABLE?

• STRATEGIC FORMULATION
 WHAT IS REQUIRED AND NECESSARY IN SUPPORT OF HUMAN
RESOURCES?

• STRATEGIC IMPLEMENTATION
 HOW WILL THE HUMAN RESOURCES BE ALLOCATED?

Human
HumanResources
Resources Strategic
Strategic
Planning
Planning Planning
Planning
1–7
 TOYOTA

Facilities
• Japan
• USA
Vehicle • Europe
production and • Asia Pasific
sales • China

344,104 People
employees management
• Global assignment
• Employment of
disabilities
• Personnel reform
1–9
 STEP ONE: MISSION, VISION, AND VALUES

• MISSION
 THE BASIC PURPOSE OF THE ORGANIZATION AS WELL AS ITS
SCOPE OF OPERATIONS

• STRATEGIC VISION
 A STATEMENT ABOUT WHERE THE COMPANY IS GOING AND WHAT
IT CAN BECOME IN THE FUTURE; CLARIFIES THE LONG-TERM
DIRECTION OF THE COMPANY AND ITS STRATEGIC INTENT

• CORE VALUES
 THE STRONG AND ENDURING BELIEFS AND PRINCIPLES THAT THE
COMPANY USES AS A FOUNDATION FOR ITS DECISIONS

1–10
STEP TWO: ENVIRONMENTAL ANALYSIS
(EXTERNAL ANALYSIS)
 THE SYSTEMATIC MONITORING OF THE MAJOR EXTERNAL
FORCES INFLUENCING THE ORGANIZATION.

– ECONOMIC FACTORS: GENERAL, REGIONAL, AND GLOBAL

CONDITIONS

– INDUSTRY AND COMPETITIVE TRENDS: NEW PROCESSES,

SERVICES,
AND INNOVATIONS

– TECHNOLOGICAL CHANGES: ROBOTICS AND OFFICE AUTOMATION

– GOVERNMENT AND LEGISLATIVE ISSUES: LAWS AND
ADMINISTRATIVE RULINGS

– SOCIAL CONCERNS: CHILD CARE AND EDUCATIONAL PRIORITIES

– DEMOGRAPHIC AND LABOR MARKET TRENDS: AGE, COMPOSITION,
LITERACY, AND IMMIGRATION

1–11
STEP TWO: ENVIRONMENTAL ANALYSIS (CONT.)

1–12
STEP THREE: ENVIRONMENTAL ANALYSIS
(INTERNAL ANALYSIS)

Culture
Culture Capabilities
Capabilities

Internal
Internal
Analysis
Analysis

Composition
Composition

1–13
 Change in pursuit of
sustainable
competitive
advantage

Internal fit
Capabilities

1–14

flexibility
External fit
 management, R&D,
Core knowledge
workers (top
Traditional job –

operations)
based employees
(salespeople)

Composition

1–
15

Alliance/partne
rs (consultant)
workers)
(maintenance
Contract labor
 On the job and the environment

Customs
Behavior
Attitude
Values
Belief
of people

Organizational culture

1–
16
 STEP FOUR: FORMULATING STRATEGY

•STRATEGY FORMULATION
 MOVING FROM SIMPLE ANALYSIS TO DEVISING A COHERENT
COURSE OF ACTION.

•SWOT ANALYSIS
 A COMPARISON OF STRENGTHS, WEAKNESSES, OPPORTUNITIES,
AND THREATS FOR STRATEGY FORMULATION PURPOSES.

 USE THE STRENGTHS OF THE ORGANIZATION TO CAPITALIZE ON

OPPORTUNITIES, COUNTERACT THREATS, AND ALLEVIATE
INTERNAL WEAKNESSES.

1–17
STEP FOUR: FORMULATING STRATEGY

1–18
STEP FOUR: FORMULATING STRATEGY

Corporate
Corporate Business
Business

Formulating
Formulating
Strategy
Strategy

Functional
Functional

1–19
BUSINESS STRATEGY

1–
20
CORPORATE STRATEGY

1–21
FUNCTIONAL STRATEGY

1–
22
 FORECASTING: A CRITICAL ELEMENT OF
PLANNING

•FORECASTING INVOLVES:
 FORECASTING THE DEMAND FOR LABOR
 FORECASTING THE SUPPLY OF LABOR
 BALANCING SUPPLY AND DEMAND CONSIDERATIONS.

1–23
1–24
FORECASTING DEMAND FOR EMPLOYEES

Quantitative
Quantitative Methods
Methods

Forecasting
Forecasting Demand
Demand

Qualitative
QualitativeMethods
Methods

1–25
 QUANTITATIVE APPROACH: TREND ANALYSIS

• FORECASTING
LABOR DEMAND BASED ON
AN ORGANIZATIONAL INDEX SUCH AS
SALES:
 SELECT A BUSINESS FACTOR THAT BEST PREDICTS HUMAN
RESOURCES NEEDS.
 PLOT THE BUSINESS FACTOR IN RELATION TO THE NUMBER OF
EMPLOYEES TO DETERMINE THE LABOR PRODUCTIVITY RATIO.
 COMPUTE THE PRODUCTIVITY RATIO FOR THE PAST FIVE
YEARS.
 BUSINESS FACTOR X PRODUCTIVITY RATIO = NUMBER OF
EMPLOYEES
 PROJECT HUMAN RESOURCES DEMAND OUT TO THE
TARGET YEAR(S).
1–26
TREND ANALYSIS

1–27
QUANTITATIVE METHODS: CORRELATION ANALYSIS

FORECASTING IS BASED ON MATHEMATICAL FORMULA THAT MEASURES THE DEGREE OF

ASSOCIATION THAT EXIST BETWEEN TWO OR MORE VARIABLES.
 MEASURES THE RELATIONSHIP BETWEEN TWO ITEMS
 IF CHANGES IN ONE ITEM WILL RESULT IN CHANGES IN THE OTHER ITEM
E.G. DOES 3 EMPLOYEES COULD COMPLETE THE TASK GIVEN OR MORE OR LESS
EMPLOYEES? SO, THE MANAGER OR RESEARCHER WILL DO SOME RESEARCH TO GET THE
ANSWER.
1–
29
QUALITATIVE APPROACHES

• MANAGEMENT FORECASTS
• THE OPINIONS (JUDGMENTS) OF SUPERVISORS, DEPARTMENT MANAGERS, EXPERTS, OR OTHERS KNOWLEDGEABLE
ABOUT THE ORGANIZATION’S FUTURE EMPLOYMENT NEEDS.

• DELPHI TECHNIQUE
• JUDGMENTS OF A PRE-SELECTED GROUP OF INDIVIDUALS WHO ARE AN EXPERT IN FORECASTING THE FUTURE
EMPLOYMENT NEEDS.

• THEIR OPINION ARE THEN COMBINED AND RETURNED TO THEM FOR THE SECOND OPINION AND CONTINUOUS UNTIL THEY
AGREED ON A JUDGMENTS.
1–
31
QUALITATIVE APPROACHES
 FORECASTING THE SUPPLY OF EMPLOYEES:
INTERNAL LABOR SUPPLY

•STAFFING TABLES
•MARKOV ANALYSIS
•SKILL INVENTORIES
•REPLACEMENT CHARTS
•SUCCESSION PLANNING

1–33
FORECASTING INTERNAL LABOR SUPPLY

STAFFING TABLES

• GRAPHICREPRESENTATIONS OF ALL ORGANIZATIONAL JOBS, ALONG WITH THE NUMBERS OF

EMPLOYEES CURRENTLY OCCUPYING THOSE JOBS AND FUTURE (MONTHLY OR YEARLY) EMPLOYMENT
REQUIREMENTS.
MARKOV ANALYSIS

• A METHOD FOR TRACKING THE PATTERN OF EMPLOYEE MOVEMENTS THROUGH VARIOUS JOBS.
• PERCENTAGE AND ACTUAL NUMBER OF EMPLOYEES WHO REMAIN IN EACH JOB, AND PROPORTIONS
WHO ARE PROMOTED, DEMOTED, TRANSFERRED OR EXIT.

© 2010 SOUTH-
WESTERN, A PART OF
2–34
CENGAGE LEARNING.
ALL RIGHTS RESERVED.
FORECASTING THE SUPPLY OF EMPLOYEES:
INTERNAL LABOR SUPPLY

1–35
 INTERNAL SUPPLY FORECASTING TOOLS

• SKILL INVENTORIES
 FILES OF PERSONNEL EDUCATION, EXPERIENCE, INTERESTS,
SKILLS, ETC., THAT ALLOW MANAGERS TO QUICKLY MATCH JOB
OPENINGS WITH EMPLOYEE BACKGROUNDS.

• REPLACEMENT CHARTS
 LISTINGS OF CURRENT JOBHOLDERS AND PERSONS WHO ARE
POTENTIAL REPLACEMENTS IF AN OPENING OCCURS.

• SUCCESSION PLANNING
 THE PROCESS OF IDENTIFYING, DEVELOPING, AND TRACKING
KEY INDIVIDUALS FOR EXECUTIVE POSITIONS.

1–36
1–37
 STEP FIVE: STRATEGY IMPLEMENTATION

• TAKING ACTION: RECONCILING SUPPLY AND

DEMAND
 BALANCING DEMAND AND SUPPLY CONSIDERATIONS
– FORECASTING BUSINESS ACTIVITIES (TRENDS)
– LOCATING APPLICANTS
 ORGANIZATIONAL DOWNSIZING, OUTSOURCING, OFFSHORING
– REDUCING “HEADCOUNT”
 MAKING LAYOFF DECISIONS
– SENIORITY OR PERFORMANCE?
– LABOR AGREEMENTS

1–38
HRP RESULTS

1. BALANCE MANPOWER (DD=SS)

2. SURPLUS OF MANPOWER (DD<SS)

3. SHORTAGE OF MANPOWER (DD>SS)
MANAGING LABOR SURPLUS

1. RESTRICTED HIRING - IMPOSE POLICY THAT IS REDUCES THE WORKFORCE BY NOT REPLACING EMPLOYEES WHO LEAVES.

2. REDUCED WORKING HOURS - BY REDUCING THE NUMBER OF WORKING HOURS WORKED TO HOURLY PAID EMPLOYEES.

3. EARLY RETIREMENT - OFFER ATTRACTIVE RETIREMENT PACKAGE TO ENCOURAGE THEM TO TAKE UP THE OFFER.

4. LAYOFFS - TERMINATION OF WORKERS BASED ON PERFORMANCE AND SENIORITY BY USING LIFO METHOD.

5. DOWNSIZING - IMPLEMENT VSS EXERCISE TO GET THE IDEAL NUMBER OF WORKERS.

6. WORK SHARING – IMPLEMENTING WORK SHARING AMONG EMPLOYEES AND GET HALF PAID.
MANAGING LABOR SHORTAGE
1. CREATIVE RECRUITING - EXPLORE NEW METHODS OF RECRUITING.
2. COMPENSATION INCENTIVES - FIRMS COMPETING FOR WORKERS IN A HIGH DEMAND SITUATION MAY HAVE TO RELY ON
COMPENSATION INCENTIVES. ORGANIZATION CAN OFFER ATTRACTIVE INCENTIVES TO ATTRACT THEM TO WORK WITH THE
ORGANIZATION SUCH AS FLEXIBLE WORKING HOURS, CHILD CARE CENTER.
3. TRAINING PROGRAMS - GIVING SPECIAL TRAINING TO ATTRACT THOSE WHO UNEMPLOYED TO WORK WITH THE ORGANIZATION.
IT WILL ENABLE THEM TO SUIT WITH THE VACANCIES.
4. LOWERING THE SELECTION STANDARD - LOWERING THE EMPLOYMENT STANDARD BY ALTERING SELECTION CRITERIA TO ENSURE
ENOUGH PEOPLE ARE AVAILABLE TO FILL THE VACANCIES.
5. HIRING FULL TIME WORKERS
6. RECALLING LAID-OFF WORKERS
7. OVERTIME
8. HIRING TEMPORARY WORKERS
 STEP SIX: EVALUATION AND ASSESSMENT

•EVALUATION AND ASSESSMENT ISSUES

 BENCHMARKING: THE PROCESS OF COMPARING THE ORGANIZATION’S
PROCESSES AND PRACTICES WITH THOSE OF OTHER COMPANIES
 HUMAN CAPITAL METRICS
–ASSESS ASPECTS OF THE WORKFORCE (TOTAL COST
OF WORKFORCE, MANAGEMENT SPAN OF CONTROL,
TALENT MANAGEMENT INDEX).
 HR METRICS
–ASSESS THE PERFORMANCE OF THE HR FUNCTION
ITSELF INCLUDING TRAINING, TURNOVER, RETURN ON
HUMAN CAPITAL

1–42
 BENEFITS OF HRP

•RECRUITMENT
•SELECTION
•TRAINING AND DEVELOPMENT
•COMPENSATION
PROBLEMS THAT HINDER EFFECTIVE HRP

• UNCLEAR ORGANIZATIONAL OBJECTIVES

• TIGHT LABOR MARKET (DD AND SS IS NOT BALANCED)
• LACK OF HRP UNDERSTANDING BY THE HRP PLANNER
• LACK OF QUALIFIED POTENTIAL CANDIDATES
• LACK OF SUPPORT FROM TOP/LINE MANAGEMENT
• LACK OF COMMITMENT FROM HR DEPARTMENT STAFF
KEY TERMS
Balanced Scorecard (BSC)
benchmarking
core capabilities
core values
cultural audits
environmental scanning
human capital readiness
human resources planning (HRP)
management forecasts
Markov analysis
mission
organizational capability
replacement charts
skill inventories
staffing tables
strategic human resources
management (SHRM)
strategic planning
strategic vision
succession planning
SWOT analysis
trend analysis
value creation
1–45
 TUTORIAL QUESTIONS

1.ELABORATE THE STRENGTHS OF HRP

2.DISCUSS THE IMPORTANT ROLES OF TOP
MANAGEMENT/LEADERS IN HRP
3.DISCUSS HOW CULTURAL FACTORS, BOTH
GLOBALLY AND INSIDE ORGANIZATIONS, MUST
BE ADDRESSED AS PART OF STRATEGIC HR
MANAGEMENT
4.EXPLAIN WAYS TO MANAGE SURPLUS AND
DEFICIT IN HUMAN RESOURCES