Chapter 5

Planning For and Recruiting Human

Resources

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 What Do I Need to Know?
LO 5-1 Discuss how to plan for human resources needed to carry out the organization’s
strategy.
LO 5-2 Determine the labor demand for workers in various job categories.
LO 5-3 Summarize the advantages and disadvantages of ways to eliminate a labor surplus and
avoid a labor shortage.
LO 5-4 Describe recruitment policies organizations use to make job vacancies more attractive.
LO 5-5 List and compare sources of job applicants.
LO 5-6 Describe the recruiter’s role in the recruitment process, including limits and
opportunities.

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 The Process of Human Resource Planning 1

HR Planning
Helps organizations meet business objectives and gain a competitive advantage.
Compares present organization with goals for the future.
Identifies what changes must be made to these meet goals.
Three stages:
• Forecasting.
• Goal setting and strategic planning.
• Program implementation and evaluation.

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 Figure 5.1 Overview of the Human Resource Planning Process

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 1
In which step of the human resource planning process is
downsizing most likely to occur?
POLLING QUESTION
A. Forecasting.
B. Goal setting and strategic planning.
C. Implementing and evaluating the plan.
D. Applying the plan to affirmative action.

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 The Process of Human Resource Planning 2

Forecasting
• First step in HR planning.
• Can use statistical methods or subjective judgment.

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 The Process of Human Resource Planning 3

Forecasting the Demand for Labor

Trend Analysis Leading Indicators

• Constructing and applying statistical
models that predict labor demand for
the next year, given relatively objective
statistics from the previous year.
• Objective measures that accurately
predict future labor demand.
• Measures of economy, actions of
competitors, changes in technology,
trends in composition of workforce.

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 The Process of Human Resource Planning 4

Determining Labor Supply

Transitional matrix:
• Chart that lists job categories held in one period and shows the proportion of
employees in each of those job categories in a future period.
• Answers two questions:
• Where did people in each job category go?
• Where did people currently in each job category come from?

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 Table 5.1 Transitional Matrix: Example for an Auto Parts
Manufacturer
2020 2020 2020 2020 2020 2020 2020 2020
2017 (1) (2) (3) (4) (5) (6) (7) (8)

(1) Sales manager .95 .05

(2) Sales representative
.05 .60 .35
(3) Sales apprentice
.20 .50 .30

(4) Assistant plant manager .90 .05 .05

(5) Production manager
.10 .75 .15
(6) Production assembler
.10 .80 .10

(7) Clerical .70 .30

(8) Not in organization .00 .20 .50 .00 .10 .20 .30

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 The Process of Human Resource Planning 5

Determine Labor Surplus or Shortage

• Planners can compare forecasts for labor demand and supply.
• Will show projected shortages and surpluses in each category.
• Allows organization to plan how to address challenges.

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 The Process of Human Resource Planning 6

Goal Setting and Strategic Planning

Numerical goals provide basis for measuring success.
Goals should come from analysis of supply and demand.
HR strategies must be used to achieve goals.
• Options differ widely in expense, speed, and effectiveness.
• Options to address surplus cause varying degrees of suffering.
• Options to address shortage vary in terms of how easily the organization can undo
change.

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 Table 5.2a Options for Reducing a Surplus

Option Speed of Results Amount of Suffering Caused

Downsizing Fast High
Pay reductions Fast High
Demotions Fast High
Transfers Fast Moderate
Work sharing Fast Moderate
Hiring freeze Slow Low
Natural attrition Slow Low
Early retirement Slow Low
Retraining Slow Low

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 Table 5.2b Options for Avoiding a Shortage

Option Speed of Results Ability to Change Later

Overtime Fast High
Temporary employees Fast High
Outsourcing Fast High
Retrained transfers Slow Hight
Turnover reductions Slow Moderate
New external hires Slow Low
Technological innovation Slow Low

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 The Process of Human Resource Planning 7

Goal Setting and Strategic Planning continued

Core competency: knowledge and skills that make organization superior to
competitors and create value for customers.
• Organizations benefit from hiring and retaining employees who provide a core
competency.

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 The “Entertainment Factor”
Cold Stone Creamery employees give their
company the competitive advantage with
their “entertainment factor.” The company
is known to seek out employees who like
to perform and then “audition” rather
than interview potential employees.

© McGraw Hill Courtesy of Cold Stone Creamery 16

 The Process of Human Resource Planning 8

Downsizing
Planned elimination of large numbers of personnel with four main objectives:
1. Reduce costs.
2. Replace labor with technology.
3. Mergers and acquisitions.
4. Moving to more economical locations.

May hurt long-term organizational effectiveness, loss of talent, and demoralized

employees.

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 The Process of Human Resource Planning 9

Alternatives to Downsizing
Reducing hours.
• Seen as way to spread burden more fairly.
• Less costly than layoffs that require severance pay.

Early-retirement programs.
• Workforce is aging and many older workers do not want to retire.
• Phased-retirement programs can be used.

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 The Process of Human Resource Planning 10

Options to Avoid a Shortage

Employing temporary and contract workers.
• Most widespread method to eliminate shortage.
• Gives employers more flexibility, lower costs.
• Disadvantage: workers not as committed.

Outsourcing:
• Contracting other organizations to provide broad set of services.

Overtime and expanded hours.

• Workers appreciate added compensation in short-term.

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 2
A public accounting firm of 250 employees realizes they have a
surplus of 15 support personnel (not auditors). What do you
POLLING QUESTION
think they should do?
A. Layoff permanent employees and hire temporary workers.
B. Offer early retirement.
C. Downsize people in those positions.
D. Wait for attrition and implement a hiring freeze for those positions.

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 The Process of Human Resource Planning 11

Implementing and Evaluating the HR Plan

Someone must be accountable for achieving goals.
• Should have authority and resources needed.
• Should issue regular progress reports.

Talent management ties planning and recruiting efforts to organization’s

strategy and employee development.
Evaluation should identify which parts of planning process contributed to
success or failure.

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 The Process of Human Resource Planning 12

Applying HR Planning to Affirmative Action

Workforce utilization review:
• Comparison of the proportion of employees in protected groups with the proportion
that each group represents in the relevant labor market.
• Assess current utilization patterns.
• Forecast how utilization patterns are likely to change in future.
• If certain groups are underutilized, goals and a plan are established.

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 Recruiting Human Resources

Recruiting
Any activity carried on by organization with primary purpose of identifying and
attracting potential employees.
Builds supply of potential hires when company needs it.
Three aspects of recruiting:
1. Personnel policies.
2. Recruitment sources.
3. Recruiter traits and behaviors.

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 Figure 5.2 Three Aspects of Recruiting

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 Personnel Policies 1

Internal versus External Recruiting Lead-the-Market Pay Strategies

• Internal policies “promote from
within.”
• Opportunities for advancement are
more attractive for applicants and
employees.
• Pay is an important job characteristic
for most applicants.
• Recruiting is an advantage when pay
for a job is more than current market
wages.

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 Personnel Policies 2

Employment-at-Will Social Presence and Reputation

• Employer or employee may end
employment relationship at any time
unless otherwise stated in contract.
• Due-process policy: Employee may
appeal termination.
• The image of organization impacts its
attraction to prospective recruits.
• The Internet provides many
opportunities to build a positive image
and recruit employees.

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 Recruitment Sources 1

Internal Sources

Job Postings Advantages

Communication about job vacancy to
other employees in organization,
includes:
• Company bulletin boards.
• Employee publications.
• Corporate intranets.
• Generates applicants who are well
known to organization.
• Applicants are knowledgeable about
position; minimizes unrealistic job
expectations.
• Cheap and fast.

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 Recruitment Sources 2

External Sources

Outside Candidates Advantages

• Entry-level or specialized positions.
• Used when there are no internal
recruits.
• May recruit through direct applicants
and referrals, websites,
advertisements, employment agencies,
and schools.
• May expose the organization to new
ideas or new ways of doing business.
• Can help company gain a competitive
advantage.
• Helps companies avoid the appearance
of nepotism.

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 Recruitment Sources 3

External Sources continued

Job search and networking platforms.
• Information systems.
• Indeed, ZipRecruiter.
• Search the résumés that workers have posted on their site and other websites.
• Social media.
• LinkedIn.

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 Recruitment Sources 4

External Sources continued

Help-wanted advertising:
• Placed in online and offline media.
• CareerBuilder, Monster, Textio.
• Local newspapers, professional and trade publications, Craigslist, results of search
page engines, and signs on transit and workplaces.

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 Recruitment Sources 5

External Sources continued

Public employment agencies:
• Social Security Act of 1935 requires everyone receiving unemployment
compensation to be registered with a local state employment office.
• Employers can register their job vacancies with their local state employment office.

Private employment agencies:

• White-collar jobs.
• Employers are charged.
• Provide confidentiality between employer and recruit.

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 Recruitment Sources 6

External Sources continued

Colleges and universities:
• Placement services offer on-campus interviewing.
• Internships.
• Job fairs.

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 Figure 5.3 Top Recruiting Sources Reported by Employers

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Source: Based on SilkRoad, Sources of Hire 2018: Where the Candidate Journey Begins, May 2018, https://www.silkroadtechnology.com
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 Recruitment Sources
Evaluating the Quality of a Source
Yield Ratio
• Percentage of applicants who move
from one stage of recruitment and
selection process to the next.
• Compare yield ratios of different
sources to determine which is most
efficient for each type of vacancy.
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Cost per Hire
• Total amount spent to fill vacancy.
• Divide amount spent using recruitment
source by amount of hires from the
source.
• Low cost per hire indicates an efficient
recruitment source.
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 Recruiter Traits and Behaviors 1

Characteristics and Behavior of the Recruiter

Recruiters should be HR specialist or specialist of job being filled.
Applicants view warm, informative recruiters positively.
• Important to provide a realistic job preview that includes both positive and negative
aspects of job.
• Too positive of a job preview arouses suspicion.

Ultimately, organization’s personnel policies are more impactful than recruiter in

securing job acceptance.

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 Recruiter Traits and Behaviors 2

Enhancing the Recruiter’s Impact

Recruiters should provide timely feedback; applicants dislike delays and may
draw negative conclusions.
Recruiters should avoid offensive behavior.
Organizations may use teams to recruit.
• Applicants view job experts as more credible than HR.
• Recruiting team can include job experts and HR professionals.

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 Figure 5.4 Recruits Who Were Offended by Recruiters

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 End of Chapter 5

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