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Corporate Objectives and Human Resource Planning

In an organization everything & everyone is a part of a bigger system that are interrelated and interdependent

Statements of specific outcome that are to be achieved. Objectives are often set in financial terms. That means that the objective is expressed in terms of a financial outcome that is to be achieved. Those could include: Desired sales or profit levels Rates of growth Amount of cash generated Value of the business or dividends paid to shareholders

Some objectives are hard to measure, but are often important. For example, an objective to be: An innovative player in the market A leading in the quality of customer service

Objective as a part of hierarchy

Corporate objectives
Corporate objectives are those that relate to the business as a whole. They are usually set by the top management of the business and they provide the focus for setting more detailed objectives for the main functional activities of the business. They can be illustrated as follows:

Peter Drucker suggested that corporate objectives should cover eight key areas:
Market standing - Market share, customer satisfaction, product range Innovation - New products, better processes, using technology Productivity - Optimum use of resources, focus on core activities Physical & financial resources - Factories, business locations, finance, supplies Profitability - Level of profit, rates of return on investment Management - Management structure; promotion & development Employees - Organizational structure; employee relations Public responsibility - Compliance with laws; social and ethical behavior

Specific The objective should state exactly what is to be achieved. Measurable An objective should be capable of measurement so that it is possible to determine whether (or how far) it has been achieved Achievable The objective should be realistic given the circumstances in which it is set and the resources available to the business. Relevant Objectives should be relevant to the people responsible for achieving them Time Bound Objectives should be set with a time-frame in mind. These deadlines also need to be realistic

SMART objectives

Business Strategy
Business strategy is about how those corporate objectives are to be achieved. Strategy is the way in which a company orients itself towards the market in which it operates and towards the other companies in the marketplace against which it competes. It is a plan an organization formulates to gain a sustainable advantage over the competition.

Business Strategy is about making high-level decisions and forms the management game plan for Satisfying customers (meeting customer needs) Running the business (organizing resources in the most efficient and effective way) Beating the competition (strategies and tactics to gain competitive advantage) Achieving corporate objectives

Human Resource Planning

Human resource planning is a process by which an organization ensures that it has right number and kind of people, at the right places, capable of effectively and efficiently completing those tasks that will help the organization achieve its goals. HRP is the process of forecasting a firms future demand for and supply of the right type of people in right number.

Objectives of HRP
To recruit and retain the human resources of required quantity and quality. To foresee the employee turnover and make the arrangements for minimizing turnover and filling up of consequent vacancies. To meet the needs of the programme of expansion, diversification etc. To foresee the impact of technology on work, existing employees and future hr requirements. To improve the standards, skills, knowledge, etc. To estimate cost of human resources.

Relationship between strategic and HR plans

Overall Corporate Strategy Human Resource Objective Human Resource Plans

Operational/ Tactical Plans

Factors Affecting Human Resource Planning

External Factors

Internal Factors

Government Policies Level of Economic Devlpmnt. Business Environment Information Technology Level of Technology Natural Factors International Factors

Strategies of co. HR Policies of co. Formal/Informal groups Job Analysis Time Horizons Type/Quality of information Trade unions

Strategic Human Resource Planning

Strategic HR planning is an important component of strategic HR management. It links HR management directly to the strategic plan of your organization. Most mid- to large sized organizations have a strategic plan that guides them in successfully meeting their missions. Organizations routinely complete financial plans to ensure they achieve organizational goals and while workforce plans are not as common, they are just as important.

Benefits of Strategic Human Resource Planning

Contributes to enhanced performance Ensures increased employee and organizational productivity Increases survival rate of the business as an entity Reduces employee turnover rate Enhances customer satisfaction Cater to future personnel needs i.e. avoids surplus or deficiency of labour.

Corporate Level Strategies

Stability Strategy Maintenance of Status quo Sustainable Growth Growth Strategy Internal Growth Concentration strategy Mergers/Takeover/Acquisitions Horizontal Integration Conglomerate diversification/vertical intgration Joint ventures Downsizing Strategies Turnaround Divestment Liquidation

Corporate Level Strategies vis-a-vis HR Strategies

Corporate Strategy Stability HR Strategy Motivation & Retention of skilled employees, Job rotation, job enrichment & empowerment Corporate Strategy Growth HR Strategy training the existing employees and promote them to higher levels, employ the new candidates at lower levels and outsourcing some employees

Corporate Strategy Growth (Mergers & Acquisitions) HR Strategy Improving the employee morale Managing and unifying the cultural diversity Counsel the employees regarding resistance to change and adoption to new systems & procedures Corporate Strategy Growth (Horizontal Integration, conglomerate diversification) HR Strategy T&D of existing employees, employing new candidates for the diversified business..etc.

Corporate Strategy Growth (Joint Ventures) HR Strategy formulate the plan programme for management of cultural diversity Train the existing employees in the new technologies and systems of the partner company

Corporate Strategy Downsizing strategies HR Strategy retrenchment Outplacement assistance Cut in salaries, perks, long leave without pay Redeploy employees in sister organizations

Human Resource Planning Process

Defining organizational objectives and policies Forecast of personnel needs and supplies. HR programming HRP implementation Control and evaluation programmes.

Human Resource planning Model 10

1 Analysis Corporate &Unit level strategies

Control & Review Mechanisms

Net HR requirements for future 9 Forecast the future supply of HR in all sources if supply is inadequate

Demand forecast minus Supply forecast resource present requirements inventory of HR

Surplus of future available HR in the organization 6 5 Shortage of future available HR in the organization


Retrenchment outsourcing employment T&D internal mobility

Reduced hours Work sharing Layoff VRS Golden Handshake CRS

Forecasting: A Critical Element of Planning

Forecasting involves:
a. forecasting the demand for labor b. forecasting the supply of labor c. balancing supply and demand considerations

Model of Forecasting HR Demand & Supply



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

Techniques Trend analysis Managerial estimates Delphi technique Work-Study Technique


(Shortage) Recruitment Full-time Part-time Recalls (Surplus) Reductions Layoffs Terminations Demotions Retirements

Techniques Staffing tables Markov analysis Skills inventories Replacement charts Succession planning

External Considerations
Demographic changes Education of the workforce Labor mobility Government policies Unemployment rate


Techniques of Forecasting HR Demand

(1) Ratio-Trend Analysis It is a quick forecasting technique past trends and ratios can be used to forecast HR demand For this purpose, trend analysis predicts the demand for labour based on projections of past relationship patterns over a number of years between an operational index (e.g., revenue per employee, productivity per employee) and the demand for labour (number of employees).

(2) Managerial Judgement

In this technique the managers sit together, discuss and arrive at a figure which would be the future demand for labour. A combination of top-down and bottom up approaches yields positive results. Departmental heads are provided with broad guidelines based on which they prepare their forecasts for respective departments. Simultaneously, top HR managers prepare company forecasts. HR manager reviews the two set of forecasts, arrive at unanimity which is then presented to top managers for their approval.

(3) Work-Study Technique

This technique can be used when it is possible to apply work measurement to calculate the length operations and the amount of labour required. Total production and activities in terms of clear units are estimated. The man hours required to produce each unit is calculated. Later, the required number of employees is calculated.

(4) Delphi technique

This process involves a panel of experts using their judgements to make estimates of short-term future demands. Experts use a variety of factors to make their judgements, including economical, demographical, technological, legal, and social conditions outside of the organization, as well as production, sales, turnover, experiences, and education levels of the workforce within the organization. During the process, experts are not permitted to engage in direct face-to-face contact or communication. This is in an effort to prevent groupthink, influence of others, or confrontation of experts, which can influence the results

Techniques of Forecasting HR Supply

(1) Staffing Tablets
To assess internal HR supply, a staffing table provides a clear graphical view of all organizational jobs and the current number of employees at each job. It presents a simple visual understanding of an organizations staffing level within each department and the organization as a whole, in an effort to help understand the combination of employees that make up an organizations internal workforce.

(2) Markov analysis

A Markov analysis extends to help predict internal employee movement from one year to another by identifying percentages of employees who remain in their jobs, get promoted or demoted, transfer, and exit out of the organization. By tracking and predicting employment movement within an organization, the Markov analysis allows for the development of a transition matrix to forecast internal labour supply. This represents both a stock approach (quantities in apoint of time) and a flow approach (comparing quantities that change over a period of time).

(3) Skills/competency Inventories

Building on the skills inventory, the skills/competency models focus on matching the right skills or competencies needed for each job with the skills available within the organization Unlike other models that predict headcount (e.g., trend analysis or Markov models), this model focus on identifying the skills/competency supply within the organization, and helping focus future recruitment, selection, retention, and training activity in core areas of key skills/competencies needed for the organization to succeed. Use of HRIS aids this technique.

(4) Replacement charts replacement chart is used to estimate vacancies in higher level jobs and identify how potential HR supply can fill these vacancies via internal movements from lower levels jobs. A comprehensive replacement chart will include information regarding possible replacements for vertical or horizontal movement. Generally, a replacement chart includes information about employees performance, readiness to fill the position, and education.

(5) Succession Planning

succession planning focuses on identifying, developing, and tracking future leaders for executive positions or positions that are critical to the success of the organization. Succession planning is a longer-term process of grooming a successor (selected from a pool of candidates on the basis of perceived competency) for management or critical positions. An organization can use the skills inventory, HR audit, or a succession summary to help identify potential successors and skill gaps that can be addressed through succession planning

Barriers to Human Resource Planning

Resistance by Employers and Employees. Uncertainties Inadequacies of Information System. Conflict between quantitative and qualitative approaches to HRP Conflict between short-term and long term needs. Non-involvement of operating managers renders HRP ineffective.

Requisites for successful HRP

HRP must be recognized as an integral part of corporate planning. The planner must be aware of the corporate objectives. Support of top management is essential. HRP responsibilities should be centralized in order to co-ordinate consultation between different management levels. Personnel records must be complete, up-todate and readily available.

The techniques of planning should be those best suited to the data available and the degree of accuracy required. Plans should be prepared by skill levels rather than aggregates. The impact of external forces like technological changes, changes in labour market compositions , etc, needs to be considered HRIS should be used as a decision support system.