planning for human resources chapter 3. understand how human resource planning contributes to a...

Planning for Human Resources

Chapter 3

• Understand how human resource planning contributes to a firm’s competitive advantage

• Explain why and how firms engage in strategic planning• Explain why and how human resource planning activities are

conducted• Describe how HRM practices developed in response to the HR plan• Understand the role of human resource information systems in

planning and other HRM practices

Chapter 3 Objectives

Opening Case: Gaining Competitive Advantage at General Motors

• Problem: Time spent on completing HR transactions hurts employee and HR productivity.

• Solution: Developing an employee services center website.

• How the employee services center enhanced competitive advantage:– Significant reduction in cost and time.– Improvement in speed and quality of employee work.– Improvement in the productivity of HR department.

Linking Human Resource Planning to Competitive Advantage

• HR planning: Process of identifying and responding to organizational needs and charting new policies, systems, and programs that will assure effective human resource management under changing conditions.

• Objectives of HR planning– Enable organizations to anticipate

their future HRM needs.– Identify practices that will help them

meet those needs.

Linking Human Resource Planning to Competitive Advantage (Cont.)

• HR planning ties together all human resource activities and integrates these with the rest of the organization.

• It enables companies to gain control of their future by preparing for events that are likely to occur.


• Consequences associated with the failure to plan for human resources– Employers are forced to respond to events after

they occur; that is, they become reactive, rather than proactive. – An organization may be unable to correctly anticipate an

increase in its future demand for employees, leading to understaffing.

– Understaffing leads to consequences such as increased stress levels, increase in back orders, decrease in customer goodwill, an increase in competition, and a loss of market share.

Strategic Planning

• Through the strategic planning process, organizations determine where they are going.

• The process consists of the following activities:

Strategic PlanningStep 1: Determine the Organizational Mission

Strategic PlanningStep 2: Scan the Organizational Environment

External and internal environments must be scanned to identify threats and opportunities.

External environment: Includes political, legal, economic, social, and technological issues; the industry environment must also be scanned.

Internal environment: Assessment of the firm’s strengths and weaknesses in order to form strategic goals that take advantage of strengths.

The task of gathering information for strategy formulation rests with all managers and employees.

Strategic PlanningStep 3: Set Strategic Goals

Strategic goals specify the desired outcomes that must be reached for the firm to accomplish its mission.

They should be specific, challenging, and measurable

Strategic PlanningStep 4: Formulate a Strategic Plan

Strategic plan specifies the courses of action a firm must take in order to meet its strategic goals.

Formulated by:Translating organizational goals into more narrow functional or departmental goals.

Devising strategies for meeting these goals.

Human Resource Planning

• Through HR planning, an organization is able to generate a list of future human resource needs and a plan for meeting them.

• To derive HR needs, the organization must forecast its demand and supply.

Human Resource Planning (Cont.)

• Demand forecasting involves predicting the number and types of people the organization will need at some future point in time.

• Supply forecasting involves estimating which organizational positions are expected to be already filled.

An organization predicts needed workforce size on the basis of certain business factors.

A business factor is an attribute of the business such as sales volume or market share, which closely relates to the size of the needed workforce.

Is used when an organization operates in a stable environment.

Most commonly used statistical methods are trend, ratio, and regression analysis.

Human Resource Planning (Cont.)Demand Forecasting – Statistical Approaches

Human Resource Planning (Cont.)Demand Forecasting – Statistical Approaches

• Precaution regarding the use of statistical methods– Statistical methods of demand forecasting assume

that the relationship between workforce size and the business factor remains constant over time.

– If this relationship were to change unexpectedly, the forecast would become inaccurate.

Human Resource Planning (Cont.)Demand Forecasting – Statistical Approaches (Cont.)

Human Resource Planning (Cont.)Demand Forecasting – Judgmental Approaches

• Involves the use of human judgment, rather than a manipulation of numbers.

• Two most common techniques:• Group brainstorming• Sales force estimates

Human Resource Planning (Cont.)Supply Forecasting

• Steps to supply forecasting– Step 1: Organization groups its positions by

title, function, and level of responsibility.– Step 2: Estimate within each job group, how

many of its current employees will:• Remain in their positions during the planning period.

• How many will move to another position.

• How many will leave the organization.

Human Resource Planning (Cont.)Estimating Future HR Needs

A firm derives its specific staffing needs by combining the results of the supply and demand forecasts within each job group

• The current trend toward organizational restructuring usually results in a smaller workforce.

• When an organization’s strategic plan calls for restructuring, the HRM response is usually one of downsizing.– Downsizing usually means layoffs.

• Because of the negative outcomes that are often associated with layoffs, employers are encouraged to seek alternatives.

Outcomes of the HR Planning ProcessDealing with an Oversupply of Employees

Outcomes of the HR Planning ProcessDealing with an Undersupply of Employees

• Hiring additional workers• Alternatives to additional hiring

– Improve productivity of existing workforce through additional training

– Overtime– Additional shifts– Job reassignments– Temporary workers– Improve retention rates

• A computerized information package that provides management with increasing capacity to record, store, manipulate, and communicate information across wide geographic boundaries, with access to many users

Human Resource Information Systems (HRIS)

Human Resource Information Systems (HRIS) (Cont.)

A Company’s HRIS contains information about:


Purposes served by a company’s HRIS:


• HRIS on the “Net” – Intranet– Internet networks that are accessible only to employees within the

company.– They can store a great deal of HR information.– It allows companies to save money by eliminating printing and

distribution costs.– Employees like it because it allows them to quickly and privately

access HR information.

• HRIS on the “Net” – Extranet – Link a firm's intranet to a variety of outside organizations and vendors.– Gives employees secure access to information and services from

outside parties.


• Ensuring the confidentiality of HRIS information– The organization must ensure that user access is

limited to relevant information.• Sensitive and confidential information should only be

accessible by the HRM department or specified individuals.

– Institute strong written policies that stipulate the organization’s intention to protect employee privacy rights.

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