Human Resource Management: Gaining a Competitive Advantage <ul><li>Chapter 5 </li></ul><ul><ul><li>Human Resource Planning...
Learning Objectives <ul><li>After reading this chapter, you should be able to : </li></ul><ul><li>Discuss how to align a c...
<ul><li>3 Stages in HR Planning 1.  Forecasting 2.  Goal Setting and Strategic Planning 3.  Program Implementation and Eva...
Forecasting Stage of HR Planning <ul><li>Determine Labor Demand </li></ul><ul><ul><li>derived from product/service demande...
Options for Reducing  an Expected Labor Surplus Option Speed Human Suffering Fast Fast Fast Fast Fast Slow Slow Slow Slow ...
Options for Avoiding an Expected Labor Surplus Option Speed Revocability Suffering Fast Fast Fast Slow Slow Slow Slow High...
Downsizing <ul><li>Downsizing   is the planned elimination of large numbers of personnel designed to enhance organizationa...
Effects of Downsizing <ul><li>Studies show that firms that announce a downsizing campaign show  worse , rather than better...
Early Retirement Programs <ul><li>The average age of the U.S. workforce is increasing. </li></ul><ul><li>Baby boomers are ...
Employing Temporary Workers <ul><li>Hiring temporary workers helps eliminate a  </li></ul><ul><li>labor shortage and affor...
Outsourcing and Off-shoring <ul><li>Outsourcing  is an organization’s use of an outside organization for a broad set of se...
Affirmative Action Planning <ul><li>Plan for various subgroups within a labor force.  </li></ul><ul><li>Workforce utilizat...
HR Recruitment Process Job Choice Recruitment  Influences Job Choice Applicant Characteristics Personnel Policies Recruite...
Personnel Policies <ul><li>Organizational decisions that affect the nature of the vacancies for which people are recruited...
Recruitment Sources Internal Sources – faster, cheaper, more certainty External Sources  –  new ideas& approaches Direct A...
Recruiters <ul><li>Functional Area  </li></ul><ul><ul><li>HR versus operating area specialist </li></ul></ul><ul><li>Trait...
2 Steps to Enhance Recruiter Impact 1.  Provide timely feedback 2.  Avoid rude behavior 3.  Recruit in teams 1.  Provide t...
Summary <ul><li>HR planning  uses labor supply and demand forecasts to anticipate labor shortages and surpluses to enhance...
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Human Resource Planning and Recruitment

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Chapter 5 of Human Resource Management: Gaining a Competitive Advantage

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  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Chapter 5, HR Planning and Recruiting, examines factors that influence the supply and demand for labor, and, in particular, focus on what human resources managers can do in terms of planning and executing human resource policies that give their firms competitive advantage in a dynamic environment. Two of the major ways that societal trends and events affect employers are through (1) consumer markets, which affect the demand for goods and services, and (2) labor markets, which affect the supply of people to produce goods and services. In some cases, the market might be characterized by a labor surplus. In other cases, the market may be characterized by a shortage of labor. Reconciling the difference between the supply and demand for labor presents a challenge for organizations, and how they address this will affect their overall Competitiveness. There are three keys to effectively utilizing labor markets to one’s competitive advantage. First, companies must have a clear idea of their current configuration of human resources. In particular, they need to know the strengths and weaknesses of their present stock of employees. Second, organizations must know where they are going in the future and be aware of how their present configuration of human resources relates to the configuration that will be needed. Third, where there are discrepancies between the present configuration and the configuration required for the future, organizations need programs that will address these discrepancies. Under conditions of a labor surplus, this may mean creating an effective downsizing intervention. Under conditions of a labor shortage, this may mean waging an effective recruitment campaign. Chapter 5 looks at tools and technologies that can help an organization develop and implement effective strategies for leveraging labor market “threats” into opportunities to gain competitive advantage.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- After reading this chapter, you should be able to : Discuss how to align a company’s strategic direction with its HR planning . Determine labor demand for workers in various job categories. Discuss advantages and disadvantages of various ways to eliminate a labor surplus and avoid a labor shortage . Describe various recruitment policies that organizations adopt to make job vacancies more attractive. List various sources from which job applicants can be drawn, their advantages and disadvantages, and evaluation methods. Explain the recruiter’s role, limits and opportunities in the recruitment process .
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- The Human Resources Planning Process—The process consists of forecasting, goal setting and strategic planning, and program implementation and evaluation. Forecasting- The attempts to determine the supply of and demand for various types of human resources to predict areas within the organization where there will be future labor shortages or surpluses. The second step in human resource planning is goal setting and strategic planning, as. The purpose of setting specific quantitative goals is to focus attention on the problem and provide a benchmark for determining the relative success of any programs aimed at redressing a pending labor shortage or surplus. The goals should come directly from the analysis of labor supply and demand and should include a specific figure for what should happen with the job category or skill area and a specific timetable for when results should be achieved. Program Implementation and Evaluation The programs developed in the strategic-choice stage of the process are put into practice in the program-implementation stage. A critical aspect of program implementation is to make sure that some individual is held accountable for achieving the stated goals and has the necessary authority and resources to accomplish this goal. It is also important to have regular progress reports on the implementation to be sure that all programs are in place by specified times and that the early returns from these programs are in line with projections.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Once forecasts for labor demand and supply are known, the planner can compare the figures to ascertain whether there will be a labor shortage or labor surplus for the respective job categories. When this is determined, the organization can determine what it is going to do about these potential problems. Forecasting determines the demand and supply of human resources and predicts in what positions either surpluses or shortages will exist in the future. 1. Determining Labor Demand Labor demand can be predicted by the use of statistical techniques such as leading indicator , which is an objective measure that accurately predicts future labor demand 2. Determining Labor Supply Internal labor supply is determined by a detailed analysis of how many people are currently in various job categories, modified to reflect changes in the near future caused by retirements, promotions, transfers, voluntary turnovers, or terminations. A transitional matrix is a table used to project internal labor supply. The matrix shows the propor­tion or number, of employees in different job categories at different times and how people move from one job to another in the organization and how many people enter and leave the organization 3. Determining Labor Surplus or Shortage—By comparing forecasts for labor supply and demand for specific jobs, the organization can determine what it needs to do.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Options for reducing an expected labor surplus are: Downsizing Pay reductions Demotions Transfers Work sharing Hiring freeze Natural attrition Early retirement Retraining
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Options for avoiding an expected labor shortage: Overtime Temporary employees Outsourcing Retrained workers Turnover reductions New external hires Technological innovation
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Downsizing – the planned elimination of large numbers of personnel designed to enhance organizational competitiveness.. The four major reasons that organizations downsize: Cost reduction through decreased labor. Closing outdated plants or introducing technological change reduced the need for labor. Mergers and acquisitions reduced the need for large bureaucracies. For economic reasons, many firms relocated parts of operations Although downsizing has an immediate effect on costs, much of the evidence suggests that it has negative effects on long-term organizational effectiveness, especially for some types of firms.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- One study of 52 Fortune 100 firms shows that most firms that announce a downsizing campaign show worse, rather than better, financial performance. Reasons include: Although the initial cost savings are a short-term plus, the long-term effects of an improperly managed downsizing effort can be negative. Many downsizing campaigns let go of people who turn out to be irreplaceable assets. Employees who survive the staff purges often become narrow-minded, self-absorbed, and risk-averse. Downsizing not only leads to a loss of talent, but in many cases it disrupts the social networks needed to promote creativity and flexibility. Many employees also start looking for alternative employment opportunities. The negative publicity associated with a downsizing campaign can also hurt the company’s image in the labor market, making it more difficult to recruit employees later. Especially in an age of blogs and text messaging, the once-private practice of laying off employees is becoming increasing transparent, and any organizational mistake that gets made in the process is likely to become highly public. The key to avoiding this kind of reputation damage is to ensure that the need for the layoff is well explained and that procedures for implementing the layoff are fair. Although this may seem like common sense, many employers execute layoffs in ways that make matters worse. The key to a successful downsizing effort is to avoid indiscriminant across-the board cuts, and instead perform surgical strategic cuts that not only reduce costs, but also improve the firm’s competitive position.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- The average age of the U.S worker is getting older. Because of improved health of the older worker and decrease in physical demand of the job individuals are able to work long past the traditional retirement age. Although an older workforce bring experience and stability, it can be more costly than younger workers because of seniority, higher medical costs, and higher pension contributions. Many employers are stressing early retirement by offering incentive programs to older employees.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Some strategies can be turned on and off fairly painlessly, such as the use of overtime and/or temporary employees. Operational flexibility is the primary reason for this, although the use of temps also frees the firm from many admin­istrative tasks and financial burdens (health insurance, pension, worker&apos;s compensation, life insurance, etc.). Smaller companies may use temporary agencies to do their employment screening for them. Training may be done by the agency as well. Temporary employees bring a fresh perspective to the firm, particularly if they have temped in a number of other organizations.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Outsourcing —This occurs when a firm is interested in a broad set of services performed by an outside organization. Cost savings in this area are easily obtained because rather than purchase and maintain their own specialized hardware and software, as well as specialized staff to support such systems, companies can time share the facilities and expertise of a firm that focuses on this technology. Thus, a moderate-size company that might otherwise need to have a 15- to 30-person HR staff can get by with just 5 to 7 people devoted to HR because they share services with outside In addition to managing the size of the HR unit, it frees up HR managers to focus on more strategic issues a. Offshoring is a special case of outsourcing where the jobs that move actually leave one country and go to another. b. Steps to take that help ensure the success of outsourcing strategies include: - When choosing an outsourcing vendor, it is usually the bigger and older the better. - Jobs that are proprietary or require tight security should not be outsourced. - It is a good idea to start small and monitor constantly.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Work‑force utilization review is a comparison that examines the proportion of a company&apos;s workers in a subgroup to the proportion that each subgroup represents in the relevant labor market. This comparison is used to determine whether any subgroups may be underutilized. Underutilization occurs when the proportion of the subgroup in the organization is lower than that of the labor market. A voluntary affirmative action program may be implemented in which selection programs may be reviewed and revised to decrease the underutilization and/or increase the diversity of the organization and decrease the likelihood of a lawsuit
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Human resource recruitment he practice or activity carried on by the organization with the primary purpose of identifying and attracting potential employees. he practice or activity carried on by the organization with the primary purpose of identifying and attracting potential employees. HR recruitment is any organizational activity that is designed to affect the number of people who apply for vacancies, the type of people who apply for them, and/or the likelihood that those applying for vacancies will accept positions if offered. The goal of recruitment is to ensure that when a vacancy occurs, the organization has a number of reasonably qualified applicants to choose from. All companies have to make decisions in three areas of recruiting: (1) personnel policies, which affect the kinds of jobs the company has to offer; (2) recruitment sources used to solicit applicants, which affect the kinds of people who apply; and (3) the characteristics and behaviors of the recruiter. These, in turn, influence both the nature of the vacancies and the nature of the people applying for jobs in a way that shapes job choice decisions.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Personnel policies , in relationship to recruitment, affect the nature of the vacancies for which people are required and impact the ability of the organization to recruit and its level of requiring success. Internal versus External Recruiting—A decision must be made on whether to recruit from within or outside the organization. Extrinsic and Intrinsic Rewards—Lead‑the‑market pay strategy is a policy of paying higher‑than ­current market wages. Employment‑at‑will policies state that either party in the employment relationship can terminate that relationship at any rime, regardless of cause. Companies that do not have employment at will typically have extensive due processpolicies that describe steps an employee can take to appeal a termination decision. Image advertising promotes an organization as a good place to work in general and may be particularly important for organizations in highly competitive labor markets that perceive them­selves as having a bad image.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Recruitment Sources—Since recruitment sources are unlimited, an organization must decide how to reach the best sources of potential employees. Internal versus External Sources—Relying on internal sources is useful since employees are well known and are knowledgeable about the organization and jobs. However, there may not be enough internal recruits 2. Direct Applicants and Referrals a. Direct applicants are people who apply for a vacancy without prompting from an organization. Referrals are people who are prompted to apply for a vacancy by someone within the organiza­tion. 3. Advertisements in newspapers and periodicals – typically are less effective than direct applicants or referrals and is more expen­sive. 4. Electronic Recruiting – The growth of the information highway as opened up new vistas for organizations trying to recruit talent. 5. Public and Private Employment Agencies—Agencies will search their computerized inventory of individuals searching for work for an organization at no charge. 6. Colleges and universities may be an important source for entry ­level professionals. To increase effectiveness, organizations employ internship programs to get early access to potential appli­cants and to assess their capabilities directly.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Recruiters—The recruiter comes late in the process, at which point an applicant has a good idea whether he or she is interested in the job. Since recruiters are perceived by the applicant to be &amp;quot;selling&amp;quot; the job, their input may be discounted. Recruiters may have more impact depending on a number of factors. 1. The Recruiter’s Functional Area—The recruiter is likely to be perceived as more credible if he or she is from the same functional area the recruit is being considered for. 2. The Recruiter&apos;s Traits—Critical traits appear to be warmth and “informativeness.” 3. The Recruiter&apos;s Realism—Deceiving candidates about the negative elements of a job may increase later turnover; however, telling candidates about negative elements does not appear to inoculate them against disappointment nor make negative elements go away. Personnel policies that affect the job&apos;s attributes are likely to be more critical than recruiter realism.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- Recruiters can provide timely feedback about the status of the job search, avoid unfavorable behaviors that send poor messages about the organization, focus on inexperienced applicants with whom they might be more influential, and avoid mixing recruitment with selection. Recruiting should be done in teams.
  • Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6- HR planning uses labor supply and demand forecasts to anticipate labor shortages and surpluses. It also entails programs that can be utilized to reduce a labor surplus (such as downsizing and early retirement programs) and eliminate a labor shortage (like bringing in temporary workers or expanding overtime). When done well, HR planning can enhance the success of the organization while minimizing the human suffering resulting from poorly anticipated labor surpluses or shortages. HR recruiting is a buffer activity that creates an applicant pool that the organization can draw from in the event of a labor shortage that is to be filled with new hires. Organizational recruitment programs affect applications through personnel policies (such as promote-from-within policies or due process provisions) that affect the attributes of the vacancies themselves. They can also impact the nature of people who apply for positions by using different recruitment sources. Finally, organizations can use recruiters to influence individuals’ perceptions of jobs.
  • Transcript of "Human Resource Planning and Recruitment"

    1. 1. Human Resource Management: Gaining a Competitive Advantage <ul><li>Chapter 5 </li></ul><ul><ul><li>Human Resource Planning and Recruitment </li></ul></ul>Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
    2. 2. Learning Objectives <ul><li>After reading this chapter, you should be able to : </li></ul><ul><li>Discuss how to align a company’s strategic direction with its HR planning . </li></ul><ul><li>Determine labor demand for workers in various job categories. </li></ul><ul><li>Discuss advantages and disadvantages of various ways to eliminate a labor surplus and avoid a labor shortage . </li></ul><ul><li>Describe various recruitment policies that organizations </li></ul><ul><li>adopt to make job vacancies more attractive. </li></ul><ul><li>List various sources from which job applicants can be drawn, their advantages and disadvantages, and evaluation methods. </li></ul><ul><li>Explain the recruiter’s role, limits and opportunities in the recruitment process . </li></ul>5-
    3. 3. <ul><li>3 Stages in HR Planning 1. Forecasting 2. Goal Setting and Strategic Planning 3. Program Implementation and Evaluation </li></ul>5-
    4. 4. Forecasting Stage of HR Planning <ul><li>Determine Labor Demand </li></ul><ul><ul><li>derived from product/service demanded </li></ul></ul><ul><ul><li>externa l in nature </li></ul></ul><ul><li>Determine Labor Supply </li></ul><ul><ul><li>internal movements caused by transfers, promotions, turnover, retirements, etc. </li></ul></ul><ul><ul><li>transitional matrices identify employee movements over time </li></ul></ul><ul><ul><li>useful for AA / EEO purposes </li></ul></ul><ul><li>Determine Labor Surplus or Shortage </li></ul>5-
    5. 5. Options for Reducing an Expected Labor Surplus Option Speed Human Suffering Fast Fast Fast Fast Fast Slow Slow Slow Slow High High High Moderate Moderate Low Low Low Low 1. Downsizing 2. Pay reductions 3. Demotions 4. Transfers 5. Work sharing 6. Hiring freeze 7. Natural attrition 8. Early retirement 9. Retraining 5-
    6. 6. Options for Avoiding an Expected Labor Surplus Option Speed Revocability Suffering Fast Fast Fast Slow Slow Slow Slow High High High High Moderate Low Low <ul><li>1. Overtime </li></ul><ul><li>Temporary employees </li></ul><ul><li>3. Outsourcing </li></ul><ul><li>4. Retrained transfers </li></ul><ul><li>5. Turnover reductions </li></ul><ul><li>6. New external hires </li></ul><ul><li>7. Technological </li></ul><ul><li>innovation </li></ul>5-
    7. 7. Downsizing <ul><li>Downsizing is the planned elimination of large numbers of personnel designed to enhance organizational competitiveness. </li></ul><ul><li>4 Reasons for Downsizing : </li></ul><ul><ul><li>reduce labor costs </li></ul></ul><ul><ul><li>technological changes reduce need for labor </li></ul></ul><ul><ul><li>mergers and acquisitions reduce bureaucratic overhead </li></ul></ul><ul><ul><li>organizations choose to change the location of where they do business </li></ul></ul>5-
    8. 8. Effects of Downsizing <ul><li>Studies show that firms that announce a downsizing campaign show worse , rather than better financial performance. </li></ul><ul><li>Reasons include: </li></ul><ul><ul><li>Long-term effects of an improperly managed downsizing effort can be negative. </li></ul></ul><ul><ul><li>Many downsizing campaigns let go of people </li></ul></ul><ul><ul><li>who turn out to be irreplaceable assets. </li></ul></ul><ul><ul><li>Employees who survive the staff purges often become narrow-minded, self-absorbed and </li></ul></ul><ul><ul><li>risk-averse. </li></ul></ul>5-
    9. 9. Early Retirement Programs <ul><li>The average age of the U.S. workforce is increasing. </li></ul><ul><li>Baby boomers are not retiring early due to: </li></ul><ul><ul><li>improved health </li></ul></ul><ul><ul><li>a fear that Social Security will be cut </li></ul></ul><ul><ul><li>mandatory retirement is outlawed </li></ul></ul><ul><li>Many employers try voluntary attrition among older workers through early retirement incentive programs. </li></ul>5-
    10. 10. Employing Temporary Workers <ul><li>Hiring temporary workers helps eliminate a </li></ul><ul><li>labor shortage and affords flexibility needed </li></ul><ul><li>to operate efficiently during swings in demand. </li></ul><ul><li>3 Advantages : </li></ul><ul><ul><li>temporary workers free a firm from administrative tasks and financial burdens </li></ul></ul><ul><ul><li>temporary workers are often times tested by a temporary agency </li></ul></ul><ul><ul><li>many temporary agencies train employees before sending them to employees </li></ul></ul>5-
    11. 11. Outsourcing and Off-shoring <ul><li>Outsourcing is an organization’s use of an outside organization for a broad set of services. </li></ul><ul><li>Off-shoring is a special case of outsourcing where the jobs that move actually leave one country and go to another. </li></ul><ul><li>To help ensure the success of outsourcing: </li></ul><ul><ul><li>Choose an established, large outsourcing vendor. </li></ul></ul><ul><ul><li>Jobs that are proprietary or require tight security should not be outsourced. </li></ul></ul><ul><ul><li>Start small and monitor constantly. </li></ul></ul>5-
    12. 12. Affirmative Action Planning <ul><li>Plan for various subgroups within a labor force. </li></ul><ul><li>Workforce utilization review is a comparison of the proportion of workers in protected subgroups with the proportion that each subgroup represents . </li></ul>5-
    13. 13. HR Recruitment Process Job Choice Recruitment Influences Job Choice Applicant Characteristics Personnel Policies Recruiter Traits &Behaviors Recruitment Sources Vacancy Characteristics 5-
    14. 14. Personnel Policies <ul><li>Organizational decisions that affect the nature of the vacancies for which people are recruited. </li></ul><ul><li>Characteristics of the vacan cy are more important than recruiters or recruiting sources. </li></ul><ul><li>Personnel Policies vary: </li></ul><ul><ul><li>Internal versus External recruiting </li></ul></ul><ul><ul><li>Extrinsic versus Intrinsic rewards </li></ul></ul><ul><ul><li>Employment-at-will policies </li></ul></ul><ul><ul><li>Image advertising </li></ul></ul>5-
    15. 15. Recruitment Sources Internal Sources – faster, cheaper, more certainty External Sources – new ideas& approaches Direct Applicants &Referrals - self selection, low cost Newspaper Advertising - large volume, low quality recruits Electronic Recruiting – Internet Public & Private Employment Agencies - headhunters can be expensive Colleges& Universities - campus placement services JOBS JOBS 5-
    16. 16. Recruiters <ul><li>Functional Area </li></ul><ul><ul><li>HR versus operating area specialist </li></ul></ul><ul><li>Traits </li></ul><ul><ul><li>warm and informative </li></ul></ul><ul><li>Realism </li></ul><ul><ul><li>realistic job preview </li></ul></ul><ul><ul><li>honesty </li></ul></ul>5-
    17. 17. 2 Steps to Enhance Recruiter Impact 1. Provide timely feedback 2. Avoid rude behavior 3. Recruit in teams 1. Provide timely feedback 2. Recruit in teams 5-
    18. 18. Summary <ul><li>HR planning uses labor supply and demand forecasts to anticipate labor shortages and surpluses to enhance organization’s success </li></ul><ul><li>and reduce human suffering. </li></ul><ul><li>HR recruiting creates an applicant pool should a labor shortage occur. </li></ul>5-
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