CANADIAN HUMAN RESOURCE MANAGEMENT

3
Chapter
Human Resource Planning

Krista Uggerslev, NAIT

Three

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Learning Objectives
1. Explain the importance of human resource plans for strategic
success.
2. Describe the human resource planning process.
3. Discuss methods for estimating an organization’s demand for
human resources.
4. Explain the various methods of estimating a firm’s supply of
human resources.
5. Identify solutions to shortages or surpluses of human resources.
6. Discuss the major contents of a human resource information
system (HRIS).
7. Explain how HRIS has contributed to enhancing HR service
delivery.

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Human Resource Planning

• Forecasts an organization’s future demand for and
supply of employees, and matches supply with
demand
• HR department contributes to success:
– Proper staffing is critical
– Different strategies require varying HR plans
– HR planning facilitates proactive responses
– Successful tactical plans require HR plans
– HR planning can vary (Levels 1-5)

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LO1 Relationship Between Strategic and
Human Resource Plans

Schwind 12th Edition, Figure 3-1

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Human Resource Planning

• Human resource planning can vary from capturing
basic information to a more sophisticated approach
 Stage 1: No formal planning

 Stage 2: Minimal; focus on headcount

 Stage 3: Long term forecasts
 Stages 4 & 5: HRP is a core strategic process

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The 5 Levels of Planning Activities

Schwind 12th Edition, Figure 3-2

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LO2
The Human Resource Planning Process

Schwind 12th Edition, Figure 3-3

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Forecasting: Identifying the Causes

that will Drive Demand
• Strategic Plan
• Demographic Impacts
• Turnover
• Legal Changes
• Technological Changes
• Competitors
• Budgets and Revenue Forecasts
• New Ventures
• Organizational and Job Design

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LO3
Forecasting Techniques for Estimating
Human Resource Demand
Techniques for Estimating Future Human Resource Needs
Expert Trend Other

Informal and instant Budget and planning

decisions Extrapolation analysis

Formal expert survey Indexation New-venture analysis

Delphi technique Statistical analysis Simulation models

Schwind 12th Edition, Figure 3-4

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Expert Projection Forecasts
• Nominal Group Technique
 Groups of managers are asked to make forecasts
and the manager’s ideas are discussed by the
group and ranked
• Delphi Technique
 Surveys of groups of experts, summaries are
shared back with the group, and they are
surveyed again until opinions converge

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Trend Projection Forecasts

• Extrapolation
 Extending past rates of change into the future
• Indexation
 Matching employment growth with an index (e.g.
ratio of production employees to sales)

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Other Forecasting Methods

• Budget and Planning Analysis
– Organizations that need HR planning generally have
detailed budgets and long-range plans
• New Venture Analysis
– Planners estimate human resource needs by making
comparisons with similar operations
• Simulation and Predictive Models
– More sophisticated approaches

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Overview of HR Tools used to Estimate

Internal and External Supply of Labour
Internal Supply Indicators External Supply Indicators
• Human Resource Audits • Labour market analysis
 Skill inventories • Community attitudes
 Management inventories • Demographic trends
 Replacement
charts/summaries
• Transition matrices &
Markov analysis

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LO4 The Supply of Human Resources:
Internal Supply Estimates
• HR Audits
– Skills Inventories
 Summary of worker skills and abilities
– Management and Leadership Inventories
 Reports of management capabilities
– Replacement Charts
 Lists of likely replacements for each job
– Replacement Summaries
 Lists of likely replacements for each job and their relative strengths and
weaknesses.
• Transition Matrices & Markov Analysis (see Schwind Figure 3-8)

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Transition Matrices and Markov
(a) Transition Probability Matrix Analysis
Year Beginning Year End
  Job A Job B Job C Job D Exit
Job A   0.80 0.10 0.05 0.00 0.05
Job B   0.10 0.70 0.00 0.10 0.10
Job C   0.00 0.00 0.90 0.05 0.05
Job D   0.00 0.00 0.00 0.90 0.10
(b) Expected Movements of Employees
Initial Job A Job B Job C Job D Exit
Staffing
Level

Job A 200 160 20 10 0 10

Job B 70 7 49 0 7 7
Job C 60 0 0 54 3 3
Job D 100 0 0 0 90 10
Predicted End-of-the-   167 69 64 100 30
Year Staffing Level

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The Supply of Human Resources:

External Supply Estimates
• Labour Market Analysis
– Study of the firm’s labour market to evaluate the present or
future availability
• Community Attitudes
– Affects nature of the labour market

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The Supply of Human Resources:

External Supply Estimates
• Demographic Trends
• Affects the availability of external supply
• ESDC publishes labour force projections
• Statistics Canada publishes reports
• Canadian Occupational Projection System
(COPS)

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Constant Balancing Act

Oversupply

Shortage

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LO5
Strategies to Manage an Oversupply of
Human Resources
• When the internal supply of workers exceeds
the firm’s demand, a surplus exists. There are
various HR strategies:
 Headcount reduction
• Layoffs
• Leave without pay
• Incentives for voluntary separation
• Termination

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Strategies to Manage an
Oversupply of Human Resources

• Attrition
 Hiring freeze
 Early and phased retirement officers

• Alternative Work Arrangements

 Job sharing
 Using part-time employees

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Strategies to Manage
a Shortage of Employees
Develop
Source Service Existing Work
Hire Employees Employees
Providers Arrangements
Internally

•Full-time •Independent •Replacement •Overtime

•Part-time contractor charts •Flexible
•Temporary •Third party •Succession schedules
•Outsource planning •Flexible time
•Crowdsource •Career and location
development •Flex policies
•Float and
transfer

Schwind 12th Edition, Figure 3-10

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Staffing Option #1:

Hire Employees
• Hire full-time employees
– Where internal transfer or promotion is not
feasible, hiring full-time employees may be
required
– Results in additional fixed cost
• Hire part-time workers
– Popular strategy for meeting human resource
needs

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Staffing Option #2:
Contract Out the Work
• Source service providers
– Independent contractor: freelancer (self-employed)
– Consultants: hired to provide expert advice and counsel in a
particular area
– Outsource: contracting tasks to outside agencies or persons
– Crowdsource: takes a function once performed by employees
and outsources it to an undefined network of people as an
open call
– Co-source: a form of contracting that brings an external team
to support and work with an internal team
– Temps working for a temporary employment agency

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Staffing Option #3:

Develop Employees Internally
• Promotions
• Movement of an employee from one job to another
that is higher in pay, responsibility, and/or
organizational level
• Succession and career plans
• Training and development

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Staffing Option #4:

Creating Flexible Work Arrangements
• Overtime
– Employees work beyond the normal hours
• Flexible retirement
– Target those employees close to retirement to extend
their contributions (e.g., retiree return)
• Float and transfer
• Movement of an employee from one job to another that is
relatively equal in pay, responsibility, and organizational level

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Program Measurement and Evaluation

• The final step in the planning process is to
evaluate workforce planning activities against
organizational goals
– E.g., were vacancies in key roles reduced? Was
the target of internal or external recruits
achieved?
– Improvement should be measured year over year

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LO6
Human Resource Information Systems

• A Human Resource Information System (HRIS)

is used to collect record, store, analyse, and
retrieve data concerning an organization’s
human resources
• The major stakeholders who use the
information from an HRIS are HR
professionals, managers, and employees.

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HRIS Functions
• There are many different systems to choose
depending on organizational requirements.
• Key considerations:
 Size
 Information that needs to be captured
 Volume of information transmitted
 Firm’s objectives
 Technical capabilities
 Reporting capabilities

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Components of a Human Resource
Information System with Relational Features

Schwind 12th Edition, Figure 3-12

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Access to HRIS Information

• Access to HRIS Information
– Determining who should have access and who
should have the right to change input data
• Security
– Concerns about unauthorized disclosure of
information, viruses, etc.

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LO7 HRIS – An Important Tool for
Strategic HRM
• Increased efficiency
– Enhanced service delivery
• Increased effectiveness
– Helping stakeholders make better decisions
• Increased contribution to organizational
sustainability
– Talent management
• Increased visibility
– Enhanced HR competencies

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Human Resource Accounting

Human Resource Accounting (HRA)
• A process to measure the present cost and
value of human resources as well as their
future worth to the organization.

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3 Human Resource Planning Summary

After mastering this chapter content, you should be able to:
1. Explain the importance of human resource plans for strategic
success.
2. Describe the human resource planning process.
3. Discuss methods for estimating an organization’s demand for human
resources.
4. Explain the various methods of estimating a firm’s supply of human
resources.
5. Identify solutions to shortages or surpluses of human resources.
6. Discuss the major contents of a human resource information system
(HRIS).
7. Explain how HRIS has contributed to enhancing HR service delivery.

© 2019 McGraw-Hill Ryerson Education Limited Schwind 12th Edition 3-33