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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

Human Resources Planning

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

Four Phases to HR Planning

What will we need?
Determine future HR requirements

Whats 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 organizations overall strategy Central premise is that HR policies will have direct effects on an organizations 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, 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, objectives, and action plans

Implement HR processes, policies, and practices

Presentation Slide 41 Figure 4.1

Source: Adapted from James W. Walker, Integrating the Human Resource Function with the Business, Human Resource Planning 14, no. 2 (1996): 5977. Reprinted with permission.

Human Resource Planning

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, manufacturing, 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

Human Resource Planning Model


Product/service demand Technology Financial resources Absenteeism/turnover Organizational growth Management philosophy

Trend analysis Managerial estimates Delphi technique


(Shortage) Recruitment
Full-time Part-time Recalls

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


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

skills occupation categories

Compared with


If none


If Surplus Layoff Retirement Termination End

If Shortage Overtime Recruitment Contractors End

Action decisions

Human Resource Planning (HRP)

Six steps of effective HRP
environmental scanningidentify and anticipate sources of threats and opportunities, scanning the external environment (competitors, regulation) and internal environment ( strategy, technology, culture) labor analysisproject how business needs will affect HR needs, using qualitative methods (e.g., Delphi, nominal) and quantitative methods (trend analysis, simple and multiple linear regression analysis) supply analysisproject resource availability from internal and external sources gap analysisreconcile the forecast of labor supply and demand action programmingimplement the recommended solution from the gap analysis evaluationmonitor the effects of the HRP by defining and measuring critical criteria (e.g., turnover costs, break-even costs of new hires)

HRP and Environmental Scanning

Environmental Scanning
The systematic monitoring of the major external forces influencing the organization.
Economic factors: general and regional conditions Competitive trends: new processes, services, 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, composition,and literacy

Forecasting Demand for Employees

Quantitative Methods

Forecasting Demand
Qualitative Methods

Qualitative Approaches to Demand Forecasting

Management Forecasts
The opinions (judgments) of supervisors, department managers, experts, or others knowledgeable about the organizations future employment needs.

Delphi Technique
An attempt to decrease the subjectivity of forecasts by soliciting and summarizing the judgments of a preselected group of individuals. The final forecast represents a composite group judgment.

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. Calculate human resources demand by multiplying the business factor by the productivity ratio. Project human resources demand out to the target year(s).

Example of Trend Analysis of HR Demand






1997 1998 1999

$2,351 $2,613 $2,935

14.33 11.12 8.34

164 235 352

2001 2002 2003

$3,613 $3,748 $3,880

11.12 11.12 12.52

325 337 310

2011* 2012*

$4,283 $4,446

12.52 12.52

342 355
Figure 4.4

*Projected figures

Forecasting Supply of Employees: Internal Labor Supply

Staffing Tables Markov Analysis Skill Inventories Replacement Charts Succession Planning

Forecasting Internal Labor Supply

Staffing Tables
Graphic representations 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.

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


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.

Human Resource Information Systems (HRIS)

Integrated approach to acquiring, storing, 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


A Common HRIS