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Strategic Human Resource Planning


Prof. Neeraj Kataria

After studying this chapter, you should be able to:
1. Identify the advantages of integrating human resources planning and strategic planning. 2. Describe the basic approaches to human resources planning. 3. Identify the tools and techniques of HR planning 4. Overview the emerging role of HR Information Systems

and the disabled.  HRP’s purpose is the effective deployment of human resources through: Anticipating organizational labor supply and demand. and out of an organization. minorities.  .Human Resources Planning •Human Resources Planning (HRP)  Process of anticipating and making provision for the movement (flow) of people into. within.  Guiding the development and training the workforce.  Providing expanded employment opportunities for women.

Four Phases to HR Planning • “What will we need?”  Determine future HR requirements • “What’s available?”  Determine future HR availabilities   Internally Externally • Reconcile requirements and availabilities  Anticipate “gaps”  Develop action plans • Control and evaluate .

Strategic Human Resource Management • The acknowledgement that HR policies and practices have critical linkages with an organization’s overall strategy • Central premise is that HR policies will have direct effects on an organization’s profitability • HR must “fit” strategically with the mission of the organization .

HRP and Strategic Planning •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 Resources Planning Strategic Planning .

Linking the Processes of HRP and Strategic Planning Strategic Analysis Establish the context: • Business goals • Company strengths/weaknesses • External opportunities/threats • Source of competitive advantage Strategy Formulation Clarify performance expectations and future management method: • Values. policies. “Integrating the Human Resource Function with the Business. .1 Source: Adapted from James W. Walker. and action plans Implement HR processes. and practices Presentation Slide 4–1 Figure 4. Reprinted with permission. no. guiding principles • Business mission • Objectives and priorities • Resource allocations Strategy Implementation Implement processes to achieve desired results: • Business goals • Company strengths/weaknesses • External opportunities/threats • Source of competitive advantage Identify people-related business issues Define HR strategies. 2 (1996): 59–77. objectives.” Human Resource Planning 14.

Human Resource Planning .

marketing and service • The linkage between Business Plans & HR Plans  The HR Department plays a crucial role  HR concerns and objectives are inserted into the plans by HR specialists at divisional plans in coordination with divisional managers . manufacturing.Strategic Planning & HR Planning at IBM  World Leader in Computer Hardware & Pioneer in Personal Computers  Divided itself into 14 autonomous divisions worldwide  At IBM Strategic Planning begins at Top and then translated downwards  Executives in different business areas develop strategies  Then divisions create functional strategies for development.

Human Resource Planning Model FORECASTING DEMAND Considerations • Product/service demand • Technology • Financial resources • Absenteeism/turnover • Organizational growth • Management philosophy Techniques • Trend analysis • Managerial estimates • Delphi technique BALANCING SUPPLY AND DEMAND (Shortage) Recruitment • Full-time • Part-time • Recalls Techniques • Staffing tables • Markov analysis • Skills inventories • Management inventories • Replacement charts • Succession Planning External Considerations • Demographic changes • Education of the workforce • Labor Mobility • Government policies • Unemployment rate (Surplus) Reductions • Layoffs • Terminations • Demotions • Retirements FORECASTING SUPPLY .

The Human Resource Planning Process Strategic Planning Technology forecasts Economic forecasts Market forecasts Organizational planning Investment planning Annual operating plans HR Demand Annual employment requirements: HR Supply Existing employment inventory: After application of expected loss and attrition rates • numbers • skills • occupation categories Compared with Variances If none End If Surplus Layoff Retirement Termination End If Shortage Overtime Recruitment Contractors End Action decisions .

culture)  labor analysis—project how business needs will affect HR needs.. break-even costs of new hires) . turnover costs. using qualitative methods (e..Human Resource Planning (HRP) • Six steps of effective HRP  environmental scanning—identify and anticipate sources of threats and opportunities. nominal) and quantitative methods (trend analysis. scanning the external environment (competitors. technology. simple and multiple linear regression analysis)  supply analysis—project resource availability from internal and external sources  gap analysis—reconcile the forecast of labor supply and demand  action programming—implement the recommended solution from the gap analysis  evaluation—monitor the effects of the HRP by defining and measuring critical criteria (e. regulation) and internal environment ( strategy.g. Delphi.g.

services.and literacy  . Economic factors: general and regional conditions  Competitive trends: new processes.HRP and Environmental Scanning •Environmental Scanning  The systematic monitoring of the major external forces influencing the organization. composition. and innovations  Technological changes: robotics and office automation  Political and legislative issues: laws and administrative rulings  Social concerns: child care and educational priorities  Demographic trends: age.

Forecasting Demand for Employees Quantitative Methods Forecasting Demand Qualitative Methods .

Qualitative Approaches to Demand Forecasting •Management Forecasts  The opinions (judgments) of supervisors. •Delphi Technique  An attempt to decrease the subjectivity of forecasts by soliciting and summarizing the judgments of a preselected group of individuals. . experts. department managers.  The final forecast represents a composite group judgment. or others knowledgeable about the organization’s future employment needs.

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.  Project human resources demand out to the target year(s).  Plot the business factor in relation to the number of employees to determine the labor productivity ratio.  Calculate human resources demand by multiplying the business factor by the productivity ratio. .  Compute the productivity ratio for the past five years.

351 $2.02 11.613 $3.306 $3.12 8.34 164 235 352 2000 2001 2002 2003 $3.935 14.748 $3.52 330 325 337 310 2010* 2011* 2012* $4.52 12.12 11.880 10.4 *Projected figures .283 $4.Example of Trend Analysis of HR Demand BUSINESS FACTOR YEAR  LABOR PRODUCTIVITY (SALES/EMPLOYEE) = HUMAN RESOURCES DEMAND (NUMBER OF EMPLOYEES) (SALES IN THOUSANDS) 1997 1998 1999 $2.33 11.095 $4.52 327 342 355 Figure 4.52 12.12 12.613 $2.446 12.

Forecasting Supply of Employees: Internal Labor Supply •Staffing Tables •Markov Analysis •Skill Inventories •Replacement Charts •Succession Planning .

. •Markov Analysis  A method for tracking the pattern of employee movements through various jobs. along with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements.Forecasting Internal Labor Supply •Staffing Tables  Graphic representations of all organizational jobs.

Forecasting Labor Supply • Succession Planning  Technique that identifies specific people to fill future openings in key positions throughout the organization  Organizational Replacement Charts  Charts that shows both incumbents and potential replacements for given positions within the organization • Commitment Manpower Planning  Systematic approach to HR planning designed to get managers and their subordinates thinking about and involved in human resource planning .

Action Plans • Managers must develop complete action plan to accomplish HR objectives • Adding Human Resources  Ad hoc Placement  Temporary & Outsourcing  Permanent • Reducing Human Resources  Downsizing  Layoffs. termination  Other approaches    Reclassification Transfers Work Sharing .

Internal Methods of Locating Qualified Job Candidates •Human Resources Information Systems (HRIS)  Database systems containing the records and qualifications of each employee that can be accessed to identify and screen candidates for an internal job opening. •Job Posting and Bidding  Posting vacancy notices and maintaining lists of employees looking for upgraded positions. .

storing.Human Resource Information Systems (HRIS) • Integrated approach to acquiring. analyzing. and controlling the flow of information about an organization Useful in nearly all HRM functions Can increase efficiency and response times of labor/time intensive human resource activities .

HRIS Applications • Clerical Applications • Applicant information • Basic Employee Records • Job Database • Sub Modules based on functions      Training Turnover Analysis Succession Planning Benefits Management Monitoring functions  Attendance .

A Common HRIS .