BA 105 HRM Chapter 5

1. Chapter 5
Human Resource Planning
and Recruitment
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Learning Objectives
LO 5-1 Discuss how to align a company’s strategic direction with its
human resource planning.
LO 5-2 Determine the labor demand for workers in various job
categories.
LO 5-3 Discuss the advantages and disadvantages of various ways of
eliminating a labor surplus and avoiding a labor shortage.
LO 5-4 Describe the various recruitment policies that organizations
adopt to make job vacancies more attractive.
LO 5-5 List the various sources from which job applicants can be
drawn, their relative advantages and disadvantages, and the
methods for evaluating them.
LO 5-6 Explain the recruiter’s role in the recruitment process, the limits
the recruiter faces, and the opportunities available.

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Introduction
Societal trends and events affect employers
through
• consumer markets
• labor markets
Keys to effectively utilizing labor markets
• clear idea of current configuration of human
resources
• know where the organization is going in the
future, how the present configuration of human
resources relates to the configuration that will be
needed
• address discrepancies

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Figure 5.1 Overview of the Human Resource
Planning Process

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The Human Resource Planning Process 1 of 13
Forecasting
• Ascertain the supply of and demand for various
types of human resources
• Predict areas within the organization where there
will be future labor shortages or surpluses
• Can use statistical or judgmental methods
LO 5-1

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The Human Resource Planning Process 2 of 13
Forecasting continued
Determining labor demand
• Demand forecasts are developed around specific job
categories or skill areas relevant to the organization’s
current and future state
• May use statistical models
• Leading indicator predicts future labor demand
• Useful when there is a long, stable history that can
be used to reliably detect relationships among
variables
LO 5-2

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The Human Resource Planning Process 3 of 13
Forecasting continued
Determining labor supply
• Internal labor supply analyzes how many people are
currently in various job categories within the company
• Transitional matrices show the proportion (or number)
of employees in different job categories at different times

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The Human Resource Planning Process 4 of 13
Forecasting continued
Determining labor surplus or shortage
• ascertain whether there will be a labor shortage or labor surplus
for the respective job categories
• determine what to do about these potential problems
LO 5-3

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The Human Resource Planning Process 5 of 13
Goal Setting and Strategic Planning
• 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
• Analyze labor supply and demand and include a
figure for what should happen with the job
category or skill area and a timetable

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Table 5.2 Options for Reducing an Expected
Labor Surplus
Option Speed
Human
Suffering
Downsizing FAST High
Pay reductions FAST High
Demotions FAST High
Transfers FAST Moderate
Work sharing FAST Moderate
Hiring Freeze SLOW Low
Natural attrition SLOW Low
Early retirement SLOW Low
Retraining SLOW Low

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Table 5.3 Options for Avoiding an Expected
Labor Shortage
Option Speed Revocability
Overtime FAST High
Temporary employees FAST High
Outsourcing FAST High
Retrained transfers SLOW High
Turnover reductions SLOW Moderate
New external hires SLOW Low
Technological
innovation
SLOW Low

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The Human Resource Planning Process 6 of 13
Goal Setting and Strategic Planning continued
Downsizing
• Reduce labor costs
• Technological changes reduce need for labor
• Organizations change business location for economic
reasons
• Has negative effects on long-term organizational
effectiveness
• Leads to a loss of talent, disrupts the social
networks needed to promote creativity and flexibility
• Lets go of irreplaceable assets
• Motivation levels drop off

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The Human Resource Planning Process 7 of 13
Goal Setting and Strategic Planning continued
Early Retirement Programs and Buyouts
• Baby Boomers delaying retirement
• Employers concerned about losing the experience,
implicit knowledge of older workers
• Older workers cost more
• Older workers block advancement of younger workers
• Voluntary attrition through early retirement incentive
programs

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Figure 5.2 Aging of the U.S. Population
2000–2020

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The Human Resource Planning Process 8 of 13
Goal Setting and Strategic Planning continued
Temporary Workers and Independent Contractors
• The most widespread means of eliminating a labor
shortage
• Advantages
• Frees the firm from administrative tasks and financial
burdens associated with being the “employer of record”
• Agencies may test employees
• Agencies may train employees
• The temporary person brings an objective perspective to
the organization’s problems and procedures

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The Human Resource Planning Process 9 of 13
Goal Setting and Strategic Planning continued
Temporary Workers and Independent Contractors
continued
• Independent contractors
• Freelancers, not part of an agency
• Agree to do specific tasks for specific time periods as
part of a written contract between the worker and the
employer

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The Human Resource Planning Process 10 of 13
Goal Setting and Strategic Planning continued
Outsourcing, offshoring, and immigration
• Outsourcing uses an outside organization for a broad
set of services.
• Jobs that are proprietary or require tight security
should not be outsourced.
• Offshoring is outsourcing where jobs leave one country
and go to another.
• Immigration
• H2-A and H2-B visas

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The Human Resource Planning Process 11 of 13
Goal Setting and Strategic Planning continued
Altering Pay and Hours
• Garner more hours from current employees
• Cut salaries
• Reduce contributions to 401(k) plans
• Reduce number of hours of all workers
• Furloughs

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The Human Resource Planning Process 12 of 13
Program Implementation and Evaluation
• Make sure that some individual is held accountable
for achieving the stated goals and has the
necessary authority and resources to accomplish
them
• Regular progress reports
• Evaluate the results

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The Human Resource Planning Process 13 of 13
The Special Case of Affirmative Action Planning
• Plan for subgroups within the labor force
• Affirmative action plans forecast and monitor the
proportion of various protected group members,
such as women and minorities
• Workforce utilization review
• Controversial because some non-minorities see
them as unfair

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Figure 5.4 Overview of the Individual Job Choice–
Organizational Recruitment Process
Jump to long description in appendix

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The Human Resource Recruitment Process 1 of 8
Personnel Policies
• Internal versus External Recruiting: Job Security
• A vacancy provides opportunity for advancement and
promotion (promote-from-within policies)
• Sometimes upsets current managers of employees who
are recruited away
• Bringing in recruits from external sources often helps
spur creativity and innovation
• Due process policies
• Employment-at-will policies
LO 5-4

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The Human Resource Recruitment Process 2 of 8
Personnel Policies continued
Extrinsic and intrinsic rewards
• “Lead-the-market” approach to pay
• Paying higher-than-current-market wages
Image advertising
• When an organization promotes itself to help draw
applicants
• Influence the degree to which the person feels attracted
to the organization

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The Human Resource Recruitment Process 3 of 8
Recruitment Sources
Internal versus External Sources
• Internal
• Applicants are well known to the firm and relatively
knowledgeable about the job
• Cheaper and faster to fill vacancies internally
• Inside hires often outperform outsiders
• External
• May not be any internal recruits
• Exposure to new ideas or ways of doing business
• Good way to strengthen one’s own company and
weaken one’s competitors at the same time
LO 5-5

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The Human Resource Recruitment Process 4 of 8
Recruitment Sources continued
Direct applicants and Referrals
• Self-selection
• Liftout

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The Human Resource Recruitment Process 5 of 8
Recruitment Sources continued
• Electronic Recruiting (e-cruiting)
• Use the organization’s web page to solicit applications
• LinkedIn, Craigslist, Monster.com
• Social networking

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The Human Resource Recruitment Process 6 of 8
Recruitment Sources continued
Public and Private Employment Agencies
• State employment office
• Primarily serve the blue-collar market
• Private agencies
• Charge the employer for referrals
• Don’t have to be unemployed to use them
• Executive search firms (headhunters)

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The Human Resource Recruitment Process 7 of 8
Recruitment Sources continued
Colleges and Universities
• Placement services
• Internship programs
• High school recruiting
Evaluating the Quality of a Source
• Yield ratios
• Cost-per-hire data

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The Human Resource Recruitment Process 8 of 8
Recruiters
• Functional area
• Traits
• Realism
• Enhancing recruiter impact
• Provide timely feedback
• Recruit in teams
LO 5-6

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Appendix of Image Long
Descriptions

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Appendix 1 Figure 5.4 Overview of the Individual Job Choice–
Organizational Recruitment Process
Recruitment influences of personnel policies, recruiter traits
and behaviors, and recruitment sources affect vacancy
characteristics and applicant characteristics.
Vacancy and applicant characteristics, in turn, affect job
choice.
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