HUMAN RESOURCE PLANNING

Developing Talent at Procter and Developing Talent at Procter and GambleGamble

Developing Talent at Procter and Developing Talent at Procter and GambleGamble

• Consumer goods conglomerate P&G has had a long, Consumer goods conglomerate P&G has had a long, successful history based on hiring at the entry level successful history based on hiring at the entry level and developing and promoting its managers and and developing and promoting its managers and executives from within. The key to this success is executives from within. The key to this success is the organization’s Build from Within program, the organization’s Build from Within program, which tracks the performance of every manager which tracks the performance of every manager within the organization relative to his or her within the organization relative to his or her potential and next area for development. Each of potential and next area for development. Each of the organization’s top 50 jobs consistently has three the organization’s top 50 jobs consistently has three internal replacement candidates lined up and ready internal replacement candidates lined up and ready to assume responsibility.to assume responsibility.

• Consumer goods conglomerate P&G has had a long, Consumer goods conglomerate P&G has had a long, successful history based on hiring at the entry level successful history based on hiring at the entry level and developing and promoting its managers and and developing and promoting its managers and executives from within. The key to this success is executives from within. The key to this success is the organization’s Build from Within program, the organization’s Build from Within program, which tracks the performance of every manager which tracks the performance of every manager within the organization relative to his or her within the organization relative to his or her potential and next area for development. Each of potential and next area for development. Each of the organization’s top 50 jobs consistently has three the organization’s top 50 jobs consistently has three internal replacement candidates lined up and ready internal replacement candidates lined up and ready to assume responsibility.to assume responsibility.

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Developing Talent at Procter and Developing Talent at Procter and GambleGamble

Developing Talent at Procter and Developing Talent at Procter and GambleGamble

• Loyalty of employees is paramount to ensuring Loyalty of employees is paramount to ensuring the success of such a program, and P&G’s history the success of such a program, and P&G’s history of grooming and training its employees promotes of grooming and training its employees promotes such loyalty. Fewer than 5% of the organization’s such loyalty. Fewer than 5% of the organization’s non-entry-level hires come from outside the non-entry-level hires come from outside the organization, and its rigorous and competitive organization, and its rigorous and competitive screening process, in which fewer than 5 percent screening process, in which fewer than 5 percent of applicants are hired, ensures that P&G hires of applicants are hired, ensures that P&G hires those best suited for the organization and its those best suited for the organization and its culture. culture.

• Loyalty of employees is paramount to ensuring Loyalty of employees is paramount to ensuring the success of such a program, and P&G’s history the success of such a program, and P&G’s history of grooming and training its employees promotes of grooming and training its employees promotes such loyalty. Fewer than 5% of the organization’s such loyalty. Fewer than 5% of the organization’s non-entry-level hires come from outside the non-entry-level hires come from outside the organization, and its rigorous and competitive organization, and its rigorous and competitive screening process, in which fewer than 5 percent screening process, in which fewer than 5 percent of applicants are hired, ensures that P&G hires of applicants are hired, ensures that P&G hires those best suited for the organization and its those best suited for the organization and its culture. culture.

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Developing Talent at Procter and Developing Talent at Procter and GambleGamble

Developing Talent at Procter and Developing Talent at Procter and GambleGamble

• P&G’s 138,000 employees are tracked via P&G’s 138,000 employees are tracked via monthly and annual performance reviews in monthly and annual performance reviews in which managers discuss business goals, personal which managers discuss business goals, personal goals, and how they have trained others to assume goals, and how they have trained others to assume responsibility. The latter is a key factor in the responsibility. The latter is a key factor in the upward mobility of any manager. P&G prides upward mobility of any manager. P&G prides itself in being able to fill any opening internally itself in being able to fill any opening internally “in an hour.” All executives are required to teach “in an hour.” All executives are required to teach in the organization’s training programs, and the in the organization’s training programs, and the CEO assumes direct responsibility for the CEO assumes direct responsibility for the development of the organization’s top 150 development of the organization’s top 150 employees.employees.

• P&G’s 138,000 employees are tracked via P&G’s 138,000 employees are tracked via monthly and annual performance reviews in monthly and annual performance reviews in which managers discuss business goals, personal which managers discuss business goals, personal goals, and how they have trained others to assume goals, and how they have trained others to assume responsibility. The latter is a key factor in the responsibility. The latter is a key factor in the upward mobility of any manager. P&G prides upward mobility of any manager. P&G prides itself in being able to fill any opening internally itself in being able to fill any opening internally “in an hour.” All executives are required to teach “in an hour.” All executives are required to teach in the organization’s training programs, and the in the organization’s training programs, and the CEO assumes direct responsibility for the CEO assumes direct responsibility for the development of the organization’s top 150 development of the organization’s top 150 employees.employees.

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Human Resource PlanningHuman Resource PlanningHuman Resource PlanningHuman Resource Planning

• Once the corporate and business unit strategies Once the corporate and business unit strategies have been established, then the human resource have been established, then the human resource strategy can begin to be developed. The HR strategy can begin to be developed. The HR strategy involves taking the organization’s strategy involves taking the organization’s strategic goals and objectives and translating them strategic goals and objectives and translating them into a consistent, integrated, complementary set of into a consistent, integrated, complementary set of programs and policies for managing employees.programs and policies for managing employees.

• Once the corporate and business unit strategies Once the corporate and business unit strategies have been established, then the human resource have been established, then the human resource strategy can begin to be developed. The HR strategy can begin to be developed. The HR strategy involves taking the organization’s strategy involves taking the organization’s strategic goals and objectives and translating them strategic goals and objectives and translating them into a consistent, integrated, complementary set of into a consistent, integrated, complementary set of programs and policies for managing employees.programs and policies for managing employees.

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Human Resource Planning (HRP)Human Resource Planning (HRP)Human Resource Planning (HRP)Human Resource Planning (HRP)

• First component of HRM strategyFirst component of HRM strategy• All other functional HR activities are derived All other functional HR activities are derived

from & flow out of HRP processfrom & flow out of HRP process• Basis in considerations of future HR requirements Basis in considerations of future HR requirements

in light of present HR capabilities & capacitiesin light of present HR capabilities & capacities• Proactive in anticipating & preparing flexible Proactive in anticipating & preparing flexible

responses to changing HR requirementsresponses to changing HR requirements• Both internal & external focusBoth internal & external focus

• First component of HRM strategyFirst component of HRM strategy• All other functional HR activities are derived All other functional HR activities are derived

from & flow out of HRP processfrom & flow out of HRP process• Basis in considerations of future HR requirements Basis in considerations of future HR requirements

in light of present HR capabilities & capacitiesin light of present HR capabilities & capacities• Proactive in anticipating & preparing flexible Proactive in anticipating & preparing flexible

responses to changing HR requirementsresponses to changing HR requirements• Both internal & external focusBoth internal & external focus

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Human Resource Planning (HRP)Human Resource Planning (HRP)Human Resource Planning (HRP)Human Resource Planning (HRP)

• Goes beyond simple hiring & firingGoes beyond simple hiring & firing• Involves planning for deployment of human Involves planning for deployment of human

capital in line with organization &/or business capital in line with organization &/or business unit strategyunit strategy

• May involve:May involve:– ReassignmentReassignment– Training & developmentTraining & development– OutsourcingOutsourcing– Using temporary help or outside contractorsUsing temporary help or outside contractors

• Needs as much flexibility as possibleNeeds as much flexibility as possible

• Goes beyond simple hiring & firingGoes beyond simple hiring & firing• Involves planning for deployment of human Involves planning for deployment of human

capital in line with organization &/or business capital in line with organization &/or business unit strategyunit strategy

• May involve:May involve:– ReassignmentReassignment– Training & developmentTraining & development– OutsourcingOutsourcing– Using temporary help or outside contractorsUsing temporary help or outside contractors

• Needs as much flexibility as possibleNeeds as much flexibility as possible

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Key Objectives of HR PlanningKey Objectives of HR PlanningKey Objectives of HR PlanningKey Objectives of HR Planning

• Prevent overstaffing & understaffingPrevent overstaffing & understaffing

• Ensure organization has right employees Ensure organization has right employees with right skills in right places at right with right skills in right places at right timestimes

• Ensure organization is responsive to Ensure organization is responsive to changes in environmentchanges in environment

• Provide direction & coherence to all HR Provide direction & coherence to all HR activities & systemsactivities & systems

• Unite perspectives of line & staff managersUnite perspectives of line & staff managers

• Prevent overstaffing & understaffingPrevent overstaffing & understaffing

• Ensure organization has right employees Ensure organization has right employees with right skills in right places at right with right skills in right places at right timestimes

• Ensure organization is responsive to Ensure organization is responsive to changes in environmentchanges in environment

• Provide direction & coherence to all HR Provide direction & coherence to all HR activities & systemsactivities & systems

• Unite perspectives of line & staff managersUnite perspectives of line & staff managers

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Types of PlanningTypes of PlanningTypes of PlanningTypes of Planning

• Aggregate PlanningAggregate Planning– Anticipating needs for groups of employees in Anticipating needs for groups of employees in

specific, usually lower level jobs & general skills specific, usually lower level jobs & general skills employees will need to ensure sustained high employees will need to ensure sustained high performanceperformance

• Succession PlanningSuccession Planning– Focuses on ensuring key critical management Focuses on ensuring key critical management

positions in organization remain filled with positions in organization remain filled with individuals who provide best fitindividuals who provide best fit

• Aggregate PlanningAggregate Planning– Anticipating needs for groups of employees in Anticipating needs for groups of employees in

specific, usually lower level jobs & general skills specific, usually lower level jobs & general skills employees will need to ensure sustained high employees will need to ensure sustained high performanceperformance

• Succession PlanningSuccession Planning– Focuses on ensuring key critical management Focuses on ensuring key critical management

positions in organization remain filled with positions in organization remain filled with individuals who provide best fitindividuals who provide best fit

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Aggregate PlanningAggregate PlanningAggregate PlanningAggregate Planning

• Forecasting demand Forecasting demand – Considers firm’s strategic plan’s effects on increases or Considers firm’s strategic plan’s effects on increases or

decreases in demand for products or servicesdecreases in demand for products or services– Assumptions on which forecast is predicated should be Assumptions on which forecast is predicated should be

written down & revisited when conditions changewritten down & revisited when conditions change– Unit forecastingUnit forecasting (bottom-up planning) involves “point of (bottom-up planning) involves “point of

contact” estimation of future demand for employeescontact” estimation of future demand for employees– Top-down forecastingTop-down forecasting involves senior managers allocating a involves senior managers allocating a

fixed payroll budget across organizational hierarchyfixed payroll budget across organizational hierarchy– Demand for employee skills requirements must also be Demand for employee skills requirements must also be

consideredconsidered

• Forecasting demand Forecasting demand – Considers firm’s strategic plan’s effects on increases or Considers firm’s strategic plan’s effects on increases or

decreases in demand for products or servicesdecreases in demand for products or services– Assumptions on which forecast is predicated should be Assumptions on which forecast is predicated should be

written down & revisited when conditions changewritten down & revisited when conditions change– Unit forecastingUnit forecasting (bottom-up planning) involves “point of (bottom-up planning) involves “point of

contact” estimation of future demand for employeescontact” estimation of future demand for employees– Top-down forecastingTop-down forecasting involves senior managers allocating a involves senior managers allocating a

fixed payroll budget across organizational hierarchyfixed payroll budget across organizational hierarchy– Demand for employee skills requirements must also be Demand for employee skills requirements must also be

consideredconsidered

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Aggregate PlanningAggregate PlanningAggregate PlanningAggregate Planning

• Forecasting supply Forecasting supply – The level and quantities of abilities, skills & The level and quantities of abilities, skills &

experiences can be determined using experiences can be determined using Skills Skills InventoryInventory..

– Annually updated human resource information Annually updated human resource information system (HRIS) is dynamic source of HR informationsystem (HRIS) is dynamic source of HR information

– Markov analysis can be used to create transition Markov analysis can be used to create transition probability matrix that predicts mobility of employees probability matrix that predicts mobility of employees within organizationwithin organization

• Forecasting supply Forecasting supply – The level and quantities of abilities, skills & The level and quantities of abilities, skills &

experiences can be determined using experiences can be determined using Skills Skills InventoryInventory..

– Annually updated human resource information Annually updated human resource information system (HRIS) is dynamic source of HR informationsystem (HRIS) is dynamic source of HR information

– Markov analysis can be used to create transition Markov analysis can be used to create transition probability matrix that predicts mobility of employees probability matrix that predicts mobility of employees within organizationwithin organization

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Exhibit 5-2Exhibit 5-2

Transition Probability Matrix for Transition Probability Matrix for RestaurantRestaurant

Exhibit 5-2Exhibit 5-2

Transition Probability Matrix for Transition Probability Matrix for RestaurantRestaurant

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Strategies for Managing Strategies for Managing ShortagesShortages

Strategies for Managing Strategies for Managing ShortagesShortages

• Recruit new Recruit new permanent employeespermanent employees

• Offer incentives to Offer incentives to postpone retirementpostpone retirement

• Rehire retirees part-Rehire retirees part-timetime

• Attempt to reduce Attempt to reduce turnoverturnover

• Recruit new Recruit new permanent employeespermanent employees

• Offer incentives to Offer incentives to postpone retirementpostpone retirement

• Rehire retirees part-Rehire retirees part-timetime

• Attempt to reduce Attempt to reduce turnoverturnover

• Work current staff Work current staff overtimeovertime

• Subcontract work outSubcontract work out• Hire temporary Hire temporary

employeesemployees• Redesign job Redesign job

processes so fewer processes so fewer employees are neededemployees are needed

• Work current staff Work current staff overtimeovertime

• Subcontract work outSubcontract work out• Hire temporary Hire temporary

employeesemployees• Redesign job Redesign job

processes so fewer processes so fewer employees are neededemployees are needed

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Strategies for Managing SurplusesStrategies for Managing SurplusesStrategies for Managing SurplusesStrategies for Managing Surpluses

• Hiring freezesHiring freezes• Do not replace those Do not replace those

who leavewho leave• Offer early retirement Offer early retirement

incentivesincentives• Reduce work hoursReduce work hours• Voluntary severance Voluntary severance

leaves of absenceleaves of absence

• Hiring freezesHiring freezes• Do not replace those Do not replace those

who leavewho leave• Offer early retirement Offer early retirement

incentivesincentives• Reduce work hoursReduce work hours• Voluntary severance Voluntary severance

leaves of absenceleaves of absence

• Across-the-board pay Across-the-board pay cutscuts

• LayoffsLayoffs• Reduce outsourced Reduce outsourced

workwork• Employee trainingEmployee training• Switch to variable pay Switch to variable pay

planplan• Expand operationsExpand operations

• Across-the-board pay Across-the-board pay cutscuts

• LayoffsLayoffs• Reduce outsourced Reduce outsourced

workwork• Employee trainingEmployee training• Switch to variable pay Switch to variable pay

planplan• Expand operationsExpand operations

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Succession PlanningSuccession PlanningSuccession PlanningSuccession Planning

• Involves identifying key management positions Involves identifying key management positions the organization cannot afford to have vacantthe organization cannot afford to have vacant

• Purposes of succession planningPurposes of succession planning– Facilitates transition when employee leavesFacilitates transition when employee leaves– Identifies development needs of high-potential employees & Identifies development needs of high-potential employees &

assists in career planningassists in career planning

• Many organizations fail to implement succession Many organizations fail to implement succession planning effectivelyplanning effectively

– Qualified successors may seek external career advancement Qualified successors may seek external career advancement opportunities if succession is not forthcomingopportunities if succession is not forthcoming

• Involves identifying key management positions Involves identifying key management positions the organization cannot afford to have vacantthe organization cannot afford to have vacant

• Purposes of succession planningPurposes of succession planning– Facilitates transition when employee leavesFacilitates transition when employee leaves– Identifies development needs of high-potential employees & Identifies development needs of high-potential employees &

assists in career planningassists in career planning

• Many organizations fail to implement succession Many organizations fail to implement succession planning effectivelyplanning effectively

– Qualified successors may seek external career advancement Qualified successors may seek external career advancement opportunities if succession is not forthcomingopportunities if succession is not forthcoming

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Exhibit 5-4Exhibit 5-4

Sample Replacement ChartSample Replacement ChartExhibit 5-4Exhibit 5-4

Sample Replacement ChartSample Replacement Chart

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Exhibit 5-5Exhibit 5-5

Pros & Cons of Disclosing Succession Pros & Cons of Disclosing Succession PlanningPlanning

Exhibit 5-5Exhibit 5-5

Pros & Cons of Disclosing Succession Pros & Cons of Disclosing Succession PlanningPlanning