Learning Objectives22––22After you have read this PPT, you should be able to:Discuss why human resources can be a core competency fororganizations.Define HR planning, and outline the HR planning process.Specify four important HR benchmarking measures.Identify factors to be considered in forecasting the supply anddemand for human resources in an organization.
Learning Objectives (cont’d)22––33Discuss several ways to manage a surplus of human resources.Identify what a human resource information system (HRIS) isand why it is useful when doing HR planning.
Human Resources as a CoreCompetency22––44Strategic Human Resources ManagementOrganizational use of employees to gain or keep a competitiveadvantage against competitors.Core CompetencyA unique capability in the organization that creates high valueand that differentiates the organization from its competition.
Possible HR Areas for Core Competencies22––55 Figure 2–1
HR-Based Core Competencies22––66Organizational CultureThe shared values and beliefs of the workforceProductivityA measure of the quantity and quality of work done,considering the cost of the resources used.A ratio of the inputs and outputs that indicates the value addedby an organization.Quality Products and ServicesHigh quality products and services are the results of HR-enhancements to organizational performance.
Factors That Determine HR Plans22––88 Figure 2–3
Linkage of Organizational and HR Strategies22––99 Figure 2–4
Human Resource Planning22––1010Human Resource (HR) PlanningThe process of analyzing and identifying the need for andavailability of human resources so that the organization canmeet its objectives.HR Planning ResponsibilitiesTop HR executive and subordinates gather information fromother managers to use in the development of HR projectionsfor top management to use in strategic planning and settingorganizational goals
Typical Division of HR Responsibilitiesin HR Planning22––1111 Figure 2–5
Human Resource Planning (cont’d)22––1212Small Business and HR Planning IssuesAttracting and retaining qualified outsidersManagement succession between generations of ownersEvolution of HR activities as business growsFamily relationships and HR policies
HR Planning Process22––1414HR StrategiesThe means used to anticipate and manage the supply of anddemand for human resources.Provide overall direction for the way in which HR activities will bedeveloped and managed.OverallOverallStrategic PlanStrategic PlanHuman ResourcesHuman ResourcesStrategic PlanStrategic PlanHR ActivitiesHR Activities
Benefits of HR Planning22––1515Better view of the HR dimensions of business decisionsLower HR costs through better HR management.More timely recruitment for anticipate HR needsMore inclusion of protected groups through planned increases inworkforce diversity.Better development of managerial talent
Scanning the External Environment22––1616Environmental ScanningThe process of studying the environment of the organization topinpoint opportunities and threats.Environment Changes Impacting HRGovernmental regulationsEconomic conditionsGeographic and competitive concernsWorkforce composition
Employers’ Use of Part-Time Workers22––1717 Figure 2–7Source: Adapted from “”Part-Time Employment,”(NY: The Conference Board, n.d.) vol. 6 #1.
Internal Assessment of theOrganizational Workforce22––1818Auditing Jobs and SkillsWhat jobs exist now?How many individuals are performing each job?How essential is each job?What jobs will be needed to implement future organizationalstrategies?What are the characteristics of anticipated jobs?
Internal Assessment of theOrganizational Workforce22––1919Organizational Capabilities InventoryHRIS databases—sources of information about employees’knowledge, skills, and abilities (KSAs)Components of an organizational capabilities inventoryWorkforce and individual demographicsIndividual employee career progressionIndividual job performance data
Forecasting HR Supply and Demand22––2020ForecastingThe use of information from the past and present to identifyexpected future conditions.Forecasting MethodsJudgmentalEstimates—asking managers’ opinions, top-down or bottom-upRules of thumb—using general guidelinesDelphi technique—asking a group of expertsNominal groups—reaching a group consensus in open discussion
Forecasting HR Supply and Demand22––2121Forecasting Methods (cont’d)MathematicalStatistical regression analysis—Simulation modelsProductivity ratios—units produced per employeeStaffing ratios—estimates of indirect labor needsForecasting PeriodsShort-term—less than one yearIntermediate—up to five yearsLong-range—more than five years
Forecasting HR Supply and Demand22––2323Forecasting the Demand for Human ResourcesOrganization-wide estimate for total demandUnit breakdown for specific skill needs by number and type ofemployeeDevelop decision rules (“fill rates”) for positions to be filled internally andexternally.Develop additional decision rules for positions impacted by the chaineffects of internal promotions and transfers.Forecasting the Supply for Human ResourcesExternal SupplyInternal Supply
Forecasting HR Supply and Demand22––2424Forecasting External HR SupplyFactors affecting externalNet migration for an areaIndividuals entering and leaving the workforceIndividuals graduating from schools and collegesChanging workforce composition and patternsEconomic forecastsTechnological developments and shiftsActions of competing employersGovernment regulations and pressuresOther factors affecting the workforce
Estimating Internal Labor Supply for a Given Unit22––2626 Figure 2–9
Managing Human ResourceSurplus or Shortage22––2727Workforce Reductions and the WARN ActIdentifies employer requirements for layoff advance notice.60-day notice to employees and the local community before a layoff orfacility closing involving more than 50 people.Does not cover part-time or seasonal workers.Imposes fines for not following notification procedure.Has hardship clauses for unanticipated closures or lack of businesscontinuance capabilities.
Managing Human ResourceSurplus or Shortage22––2828Workforce Realignment“Downsizing”, “Rightsizing”, and “Reduction in Force” (RIF) allmean reducing the number of employees in an organization.CausesEconomic—weak product demand, loss of market share to competitorsStructural—technological change, mergers and acquisitions
Managing Human ResourceSurplus or Shortage22––2929Workforce Realignment (cont’d)Positive consequencesIncrease competitivenessIncreased productivityNegative consequencesCannibalization of HR resourcesLoss of specialized skills and experienceLoss of growth and innovation skillsManaging survivorsProvide explanations for actions and the futureInvolve survivors in transition/regrouping activities
Managing Human ResourceSurplus or Shortage22––3030Downsizing approachesAttrition and hiring freezesNot replacing departing employees and not hiring new employees/Early retirement buyoutsOffering incentives that encourage senior employees to leave theorganization early.LayoffsEmployees are placed on unpaid leave until called back to work whenbusiness conditions improve.Employees are selected for layoff on the basis of their seniority orperformance or a combination of both.
Managing Human ResourceSurplus or Shortage22––3131Downsizing approaches (cont’d)Outplacement services provided to displaced employees to givethem support and assistance:Personal career counselingResume preparation and typing servicesInterviewing workshopsReferral assistanceSeverance paymentsContinuance of medical benefitsJob retraining
Dealing with Downsizing22––3232Investigate alternatives to downsizingInvolve those people necessary for success in the planning fordownsizingDevelop comprehensive communications plansNurture the survivorsOutplacement pays off
Assessing HR Effectiveness22––3333Diagnostic Measures of HR EffectivenessHR expense per employeeCompensation as a percent of expensesHR department expense as a percent of total expensesCost of hiresTurnover ratesAbsenteeism ratesWorker’s compensation per employee
Overview of the HREvaluation Process22––3434 Figure 2–10
Assessing HR Effectiveness22––3535HR AuditA formal research effort that evaluates the current state of HRmanagement in an organizationAudit areas:Legal compliance (e.g., EEO, OSHA, ERISA, and FMLA)Current job specifications and descriptionsValid recruiting and selection processFormal wage and salary system • BenefitsEmployee handbookAbsenteeism and turnover controlGrievance resolution processOrientation program • Training and developmentPerformance management system
Using HR Research for Assessment22––3636HR ResearchThe analysis of data from HR records to determine theeffectiveness of past and present HR practices.Primary ResearchResearch method in which data are gathered first-hand for thespecific project being conducted.Secondary ResearchResearch method using data already gathered by others andreported in books, articles in professional journals, or othersources.
HR Performance andBenchmarking22––3737BenchmarkingComparing specific measures of performance against data onthose measures in other “best practice” organizationsCommon BenchmarksTotal compensation as a percentage of net income before taxesPercent of management positions filled internallyDollar sales per employeeBenefits as a percentage of payroll cost
Doing the Benchmarking Analysis22––3838Return on Investment (ROI)Calculation showing the value of expenditures for HRactivities.A = Operating costs for a new or enhance system for the time periodA = Operating costs for a new or enhance system for the time periodB = One-time cost of acquisition and implementationB = One-time cost of acquisition and implementationC = Value of gains from productivity improvements for the time periodC = Value of gains from productivity improvements for the time periodBACROI+=
HR Business Performance Calculations22––3939 Figure 2–11aSource: Adapted from Jac Fitz-Enz, “Top 10 Calculations for Your HRIS,” HR Focus, April 1998, S-3.
HR Business Performance Calculations22––4040 Figure 2–11bSource: Adapted from Jac Fitz-Enz, “Top 10 Calculations for Your HRIS,” HR Focus, April 1998, S-3.
Doing the Benchmarking Analysis22––4141Economic Value Added (EVA)A firm’s net operating profit after the cost of capital (minimumrate of return demanded by the shareholders) is deducted.Cost of capital is the benchmark for returns for all HRactivities.Utility analysisAnalysis in which economic or other statistical models are builtto identify the costs and benefits associated with specific HRactivities
Human Resource InformationSystems22––4242Human resource information systems (HRIS)An integrated system of hardware, software, and databasesdesigned to provide information used in HR decision making.Benefits of HRISAdministrative and operational efficiency in compiling HR dataAvailability of data for effective HR strategic planningUses of HRISAutomation of payroll and benefit activitiesEEO/affirmative action tracking
Uses of an HRInformation System(HRIS)22––4343 Figure 2–12
Designing and Implementing anHRIS22––4444HRIS Design IssuesWhat information available and what is information needed?To what uses will the information be put?What output format compatibility with other systems isrequired?Who will be allowed to access to the information?When and how often will the information be needed?
Accessing the HRIS22––4545IntranetAn organizational (internal) network that operates over theInternet.ExtranetAn Internet-linked network that allows employees access toinformation provided by external entities.Web-based HRIS UsesBulletin boardsData accessEmployee self-serviceExtended linkage