5

Human Resource
Planning and Alignment

McGraw-Hill/Irwin
Human Resource Management, 10/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
 Introduction

 Success in business is dependent on:

 Reacting quickly to opportunities
 Rapid access to accurate information

 Human resource planning (HR planning):

 How organizations assess the future supply of, and demand for, human resources
 Provides mechanisms to eliminate gaps that may exist between supply and
demand
 Requires readjustment as labor market conditions change

Strategic human resource management (SHRM) means

acknowledging that HR policies/practices have critical
links to an organization’s overall strategy
 The HR Planning Process
 The four phases or stages of HR planning:
A. Situation analysis or
environmental scanning
B. Forecasting demand
C. Analysis of the supply
D. Development of action plans
Situation Analysis & Environmental Scanning
 The first stage of HR planning is the point at which
HRM and strategic planning first interact
 The strategic plan must adapt to environmental
circumstances and business strategy
 Without a plan to support recruitment and
selection, it is impossible to stay competitive
 The problems associated with changing environments are
greater today than ever before
 Success now depends on being a “global scanner”
Forecasting Demand for Employees
 This phase of the process involves estimating:
 How many employees will be needed
 What kinds of employees will be needed

 Quantitative tools can help with forecasting, but it

involves a great deal of human judgment
 The demand for employees is closely tied to the strategic
direction that the organization has chosen:
A. Growth
B. Reengineering
C. Reorganization
Forecasting Demand for Employees
 Techniques to help reduce the uncertainty inherent
in HR planning:
 Expert estimates
 Trend projections
 Statistical modeling
 Unit-demand forecasting

 Key to effective planning is accurately and freely

sharing information
The Expert Estimate
 One or more “experts” provide the organization with demand
estimates based on:
 Experience
 Guesses
 Intuition
 Subjective assessments of available economic and labor force indicators
 This is the least mathematically sophisticated approach

 The Delphi technique elicits expert estimates from a number of

individuals in an iterative manner
 Developed by the Rand Corporation
 Estimates are revised by each individual based on knowledge of the other
individuals’ estimates

 With the nominal group technique (NGT), individual estimates are

followed by group brainstorming
 The goal is to generate a group decision that is preferred over any individual
decision
Trend Projection
 This top-down technique:
 Develops a forecast based on a past relationship
between a factor related to employment and
employment itself
 Example: Sales levels are related to employment
needs
Modeling & Multiple-Predictive Techniques
 This top-down approach uses the most
sophisticated forecasting and modeling techniques
 Trend projections relate a single factor, such as sales, to
employment
 Environmental factors could be gross national product or
discretionary income
 Or, the organization may be mathematically modeled so that
simulations can be run
 Markov Analysis
 Regression
Unit Demand Forecasting
 This is a bottom-up approach
 Unit managers analyze current and
future needs person-by-person
and job-by-job
 Headquarters totals the unit forecasts
 The sum is the corporate employment forecast
 If both bottom-up and top-down approaches are
used, the forecasts may conflict
 This can be resolved by averaging the variances
 The Delphi technique or NGT could also be used
Analyzing the Current Supply of
Employees: The Skills Inventory
 Both a skills inventory and a management
inventory:
 Are useful for career planning, management development, and
related activities
 Skills inventories vary greatly in their
sophistication
 Relevant data is used to engender reports for strategic
decisions
Contents of the Skills Inventory
 Often omitted, but increasingly important, are:
 Employees’ stated career goals
 Geographical preferences
 Intended retirement date

 The main categories within a skills inventory:

 Data summarizing the employee’s past
 Data summarizing present skills
 Data that focus on the future

 Today, many skills inventories are more complex

Maintaining the Skills Inventory
 Should data be stored in a manual system or
on a computer?
 How much does the computer system cost?
 How frequently the data will be used?
 A computer allows comparative analysis over time

 Skills inventories are useful only if management

uses the data to make significant decisions
 Before accessing the data, managers must be trained to avoid
abuse of the system
Action Decisions in HR Planning
 Possible solutions to an employee surplus:
 Attrition
 Early retirements
 Demotions
 Layoffs
 Terminations

 Employees who are considered surplus are seldom

responsible for the conditions leading to the
surplus
Action Decisions in HR Planning
 Organizations are using more:
 Part-time workers
 Subcontractors
 Independent professionals

 This is in response to:

 Intense global competition
 Rapid technological change
 Fears caused by recent workforce reductions
Action Decisions in HR Planning
 Most organizations avoid layoffs by using attrition,
early retirement, creation of work, and so on
 Attrition can be accelerated by encouraging employees to leave
early
 Drawbacks to losing workers over the age of 50:
 They tend to be healthier than younger workers
 They have fewer work-related injuries
 They are less likely to change jobs
 They take critical skills and experience with them
Action Decisions in HR Planning
 If voluntary reductions don’t eliminate the gap
between supply and demand, layoffs may be
necessary
 Corporations too frequently and quickly turn to layoffs
 They fail to consider the consequences
 About one-third lay off too many workers
 Poorly designed workforce reductions can kill morale
Human Resource Information Systems
 Information is the key to successful HR planning
 A human resource information system (HRIS) is an integrated
way to acquire, store, analyze, and control information flow
through an organization
 A highly developed HRIS can increase the
efficiency and response times of:
 Tracking applicants
 Skills inventory
 Career planning
 Employee service programs
Human Resource Information Systems
 Computer technology makes it possible to integrate
multiple HR needs into a single system:
 Enrolling in benefits programs
 Processing employee transactions (pay increases)
 Using learning modules

 An HRIS developed for use by upper-level

executives is called an executive information system
(EISs)
 Computerized HRISs have allowed organizations to broaden
their view of succession planning
Human Resource Information Systems
 Factors that make succession planning for executive
level positions more important than ever:
 Large numbers of aging executives
 Increasingly popular early retirement
 Fortune 500 companies anticipate 33 percent turnover among their
executives over the next five years

 Many companies now realize the critical need for

a comprehensive retention plan
 This plan may include consulting and part-time assignments
Employee Privacy, Identity Theft, & HRIS
 HRIS makes it easier to invade employee privacy
 Danger lies both within and outside the organization
 The friendlier the system, the easier it can be for unauthorized
access
 Identity theft occurs when:
 Someone uses another’s name, address, social security number,
or other information:
 Without the person’s knowledge
 With the intent to commit fraud or other crimes
Employee Privacy, Identity Theft, & HRIS
 Safeguards to minimize privacy risks in an HRIS:
 Determine the best way to collect data
 Limit the information collected to what is relevant
 Tell employees what information is kept on file and how it is
used
 Let employees inspect and correct their information
 Keep sensitive information separate
 Limit internal use of personal information
 Only disclose personal information to outsiders with
employee consent
Employee Privacy, Identity Theft, & HRIS
 Organizations should carefully evaluate their
policies regarding access to HRIS data to
determine:
 How much information, legally
and ethically, should be disclosed
 How much control employees
should have over the release of
personal information
 No federal legislation guarantees employees the
right to inspect and amend data in an HRIS