Strategy and Human

Resources Planning
Human Resource
Managing
Human Resources
Management
14 edition
Bohlander Snell

14th edition

Snell Bohlander
2007 Thomson/South-Western.
All rights reserved.

PowerPoint Presentation by Charlie Cook

The University of West Alabama

Objectives
After studying this chapter, you should be able to:
1. Identify the advantages of integrating human
resources planning and strategic planning.
2. Understand how an organizations
competitive environment influences strategic
planning.
3. Recognize the importance of internal
resource analysis.
4. Describe the basic tools for human resources
forecasting.
5. Explain the linkages between competitive
strategies and HR.

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Objectives

(contd)
After studying this chapter, you should be able to:
6. Understand the requirements of strategy
implementation.
7. Recognize the methods for assessing and
measuring the effectiveness of strategy.

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Strategic Planning and Human

Resources

Strategic Planning

Procedures for making decisions about the

organizations long-term goals and strategies

Human Resources Planning (HRP)

Process of anticipating and making provision for the
movement (flow) of people into, within, and out of an
organization.

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Strategic Planning and HR Planning

Strategic Human Resources Management
(SHRM)
The pattern of human resources deployments and
activities that enable an organization to achieve its
strategic goals

Strategy formulationproviding input as to what is

possible given the types and numbers of people
available.

Strategy implementationmaking primary resource

allocation decisions about structure, processes, and
human resources.

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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
HumanResources
Resources
Planning
Planning

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Strategic
Strategic
Planning
Planning

26

Figure 21

Linking Strategic Planning and Human Resources

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Step One: Mission, Vision, and Values

Mission
The basic purpose of the organization as well as its
scope of operations

Strategic Vision
A statement about where the company is going and
what it can become in the future; clarifies the longterm direction of the company and its strategic intent

Core Values
The strong and enduring beliefs and principles that
the company uses as a foundation for its decisions

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Step Two: Environmental Scanning

Environmental Scanning
The systematic monitoring of the major external
forces influencing the organization.
1.

Economic factors: general and regional conditions

2.

Competitive trends: new processes, services, and

innovations

3.

Technological changes: robotics and office automation

4.

Political and legislative issues: laws and administrative

rulings

5.

Social concerns: child care and educational priorities

6.

Demographic trends: age, composition,and literacy

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Figure 22

Five Forces Framework

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Step Three: Internal Analysis

Culture

Competencies

Internal
Analysis

Composition

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Scanning the Internal Environment

Cultural Audits
Audits of the culture and quality of work life in an
organization.

How do employees spend their time?

How do they interact with each other?
Are employees empowered?
What is the predominant leadership style of
managers?
How do employees advance within the
organization?

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Competitive Advantage through

People

Core Competencies

Integrated knowledge sets within an organization

that distinguish it from its competitors and deliver
value to customers.

Sustained competitive advantage through

people is achieved if these human resources:
1. Are valuable.
2. Are rare and unavailable to competitors.
3. Are difficult to imitate.
4. Are organized for synergy.

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Composition: The Human Capital

Architecture
Core knowledge workers
Employees who have firm-specific skills that are
directly linked to the companys strategy.

Example: Senior software programmer

Traditional job-based employees

Employees with skills to perform a predefined job that
are quite valuable to a company, but not unique.

Example: Security guard

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Composition: The Human Capital

Architecture (contd)
Contract labor
Employees whose skills are of less strategic value
and generally available to all firms.

Example: General electrician

Alliance/partners
Individuals and groups with unique skills, but those
skills are not directly related to a companys core
strategy.

Example: Independent product label designer

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Figure 23

Mapping Human Capital

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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.

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Figure 24

Model of HR Forecasting
FORECASTING
FORECASTINGDEMAND
DEMAND

Considerations
Considerations

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

Techniques
Techniques

Staffing
Staffingtables
tables
Markov
Markovanalysis
analysis
Skills
inventories
Skills inventories
Management
Managementinventories
inventories
Replacement
charts
Replacement charts
Succession
Successionplanning
planning

Techniques
Techniques

Trend
Trendanalysis
analysis
Managerial
Managerialestimates
estimates
Delphi
technique
Delphi technique

External
ExternalConsiderations
Considerations

Demographic
Demographicchanges
changes
Education
Educationof
ofthe
theworkforce
workforce
Labor
mobility
Labor mobility
Government
Governmentpolicies
policies
Unemployment
Unemploymentrate
rate

BALANCING
BALANCING
SUPPLY
SUPPLYAND
ANDDEMAND
DEMAND

(Shortage)
(Shortage)
Recruitment
Recruitment

Full-time
Full-time
Part-time
Part-time
Recalls
Recalls

(Surplus)
(Surplus)
Reductions
Reductions

Layoffs
Layoffs
Terminations
Terminations
Demotions
Demotions
Retirements
Retirements

FORECASTING
FORECASTINGSUPPLY
SUPPLY

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Forecasting Demand for Employees

Quantitative
QuantitativeMethods
Methods

Forecasting
Forecasting Demand
Demand
Qualitative
QualitativeMethods
Methods

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Quantitative Approach: Trend Analysis

Forecasting labor demand based on an
organizational index such as sales:
1. Select a business factor that best predicts human
resources needs.
2. Plot the business factor in relation to the number of
employees to determine the labor productivity ratio.
3. Compute the productivity ratio for the past five years.
4. Calculate human resources demand by multiplying
the business factor by the productivity ratio.
5. Project human resources demand out to the target
year(s).
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Figure 25

Example of Trend Analysis of HR Demand

BUSINESS
FACTOR
YEAR

(SALES IN THOUSANDS)

LABOR
PRODUCTIVITY
(SALES/EMPLOYEE)

HUMAN RESOURCES
DEMAND
(NUMBER OF EMPLOYEES)

2000

$2,351

14.33

164

2001

$2,613

11.12

235

2002

$2,935

8.34

352

2003

$3,306

10.02

330

2004

$3,613

11.12

325

2005

$3,748

11.12

337

2006

$3,880

12.52

310

2007*

$4,095

12.52

327

2008*

$4,283

12.52

342

2009*

$4,446

12.52

355

*Projected figures

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Qualitative Approaches
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.

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Forecasting the Supply of Employees:

Internal Labor Supply
Staffing Tables
Markov Analysis
Skill Inventories
Replacement Charts
Succession Planning

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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.

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Figure 26

Hypothetical Markov Analysis for a Retail Company

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Internal Demand Forecasting Tools

Skill Inventories
Files of personnel education, experience, interests,
skills, etc., that allow managers to quickly match job
openings with employee backgrounds.

Replacement Charts
Listings of current jobholders and persons who are
potential replacements if an opening occurs.

Succession Planning
The process of identifying, developing, and tracking
key individuals for executive positions.

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Highlights in HRM 2
SuccessionPlanning Checklist
RATE THE SUCCESS OF YOUR
SUCCESSION PLANNING
For each characteristic of a
best-practice successionplanning and management
program appearing in the left
column below, enter a number
to the right to indicate how well
you believe your organization
manages that characteristic.
Ask other decision makers in
your organization to complete
this form individually. Then
compile the scores and
compare notes.

Scores

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Source: From William J. Rothwell, Putting Success into Your Succession Planning,
The Journal of Business Strategy 23, no. 3 (May/June 2002): 3237. Republished with
permissionThomson Media, One State Street, 26th Floor, New York, NY 10004.

227

Figure 27

An Executive Replacement Chart

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Step Four: Formulating Strategy

Strategy Formulation
Moving from simple analysis to devising a coherent
course of action.

SWOT analysis
A comparison of strengths, weaknesses,
opportunities, and threats for strategy formulation
purposes.
Use the strengths of the organization to capitalize on
opportunities, counteract threats, and alleviate
internal weaknesses.

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Corporate Strategy
Growth and
Diversification

Mergers and
Acquisitions

Corporate
Strategy

Strategic Alliances
and Joint Ventures

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Business Strategy
Value Creation
What the firm adds to a product or service by virtue of
making it; the amount of benefits provided by the
product or service once the costs of making it are
subtracted.
Low-cost strategy: competing on productivity and
efficiency

Keeping costs low to offer an attractive price to

customers (relative to competitors).

Differentiation strategy: compete on added value

Involves providing something unique and distinctive to

customers that they value.

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Functional Strategy: Ensuring

Alignment

External Fit (or External Alignment)

Focuses on the connection between the business

objectives and the major initiatives in HR.

Internal Fit (or Internal Alignment)

Aligning HR practices with one another to establish a
configuration that is mutually reinforcing.

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Highlights in HRM 4

Source: Company document.

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Figure 28

The 7-S Model

Source: McKinsey & Company

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Step Five: Strategy Implementation

Taking Action: Reconciling Supply and Demand
Balancing demand and supply considerations
Forecasting

business activities (trends)

Locating applicants
Organizational downsizing
Reducing headcount
Making layoff decisions
Seniority or performance?
Labor agreements

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Step Six: Evaluation and Assessment

Evaluation and Assessment Issues
Benchmarking: The process of comparing the
organizations processes and practices with those of
other companies
Human capital metrics

Assess aspects of the workforce

HR metrics

Assess the performance of the HR function itself

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Highlights in HRM 5
The Top Ten Measures Of Human Capital
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Your most important issues

Human capital value added
Human capital ROI
Separation cost
Voluntary separation rate
Total labor-cost/revenue percentage
Total compensation/revenue percentage
Training investment factor
Time to start
Revenue factor

Source: The Top 10 Measures of Human Capital Management, HRFocus 78, no. 5 (May 2001): 8.
Copyright 2001. Reprinted by permission of the publisher via Copyright Clearance Center.

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Measuring Strategic Alignment

Strategy Mapping and the Balanced Scorecard
Balanced Scorecard (BSC)

A measurement framework that helps managers translate

strategic goals into operational objectives

financial
customer
processes
learning

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Figure 29

Balanced Scorecard

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Figure 210

Assessing Internal Fit

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Ensuring Strategic Flexibility for the

Future

Organizational Capability

Capacity of the organization to act and change in

pursuit of sustainable competitive advantage.
Coordination flexibility

The ability to rapidly reallocate resources to new or

changing needs.

Resource flexibility

Having human resources who can do many different

things in different ways.

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Key Terms

Balanced Scorecard (BSC)

benchmarking
core competencies
core values
cultural audits
environmental scanning
human resources planning
(HRP)
management forecasts
Markov analysis
mission
organizational capability

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replacement charts
skill inventories
staffing tables
strategic human resources
management (SHRM)
strategic planning
strategic vision
succession planning
SWOT analysis
trend analysis
value creation

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Calculating Turnover
and Absenteeism

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Employee Turnover Rates

Computing Turnover Rates:

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Employee Turnover Rates (contd)

Computing Turnover Rates (contd):

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Highlights in HRM 6
Costs Associated With The Turnover Of One Computer Programmer
(Turnover costs = Separation costs + Replacement costs + Training costs)
Separation costs
1. Exit interview cost for salary and benefits of both interviewer and departing employee
during the exit interview = $30+$30 = $60
2. Administrative and record-keeping action = $30
Total separation costs = $60 + $30 = $90

Replacement costs
1.
2.
3.
4.
5.

Advertising for job opening = $2,500

Preemployment administrative functions and record-keeping action = $100
Selection interview = $250
Employment tests = $40
Meetings to discuss candidates (salary and benefits of managers while participating in
meetings )= $250
Total replacement costs = $2,500 + $100 + $250 + $40 + $250 = $3,140

Training costs
1. Booklets, manuals, and reports = $50
2. Education = $240/day for new employees salary and benefits x 10 days of workshops,
seminars, or courses = $2,400
3. One-to-one coaching = ($240/day/new employee + $240/day/staff coach or job expert) x 20
days of one-to-one coaching = $9,600
4. Salary and benefits of new employee until he or she gets up to par = $240/day for salary
and benefits x 20 days = $4,800
Training costs = $50 + $2,400 + $9,600 + $4,800 = $16,850

Total turnover costs= $90 + $3,140 + $16,850 = $20,080

Source: Adapted from the book Turning Your Human Resources Department into a Profit CenterTM by Michael Mercer, Ph.D. (Castlegate Publishers, Inc.,
Barrington, Illinois). Copyright 2002 Michael Mercer. Reproduced with permission from Michael Mercer, Ph.D., www.DrMercer.com.

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Employee Absenteeism Rates

Computing Absenteeism Rates

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