IT COVERS IN DETAIL ABOUT HRP

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2. • MODULE :02
• HR ACQUISITION

3. HUMAN RESOURCE PLANNING
• Workforce (or employment or personnel) planning is the process of
deciding what positions the firm will have to fill, and how to fill them.
Its aim is to identify and to eliminate the gaps between the employer’s
projected workforce needs and the current employees who might be
suitable for filling those needs.
• Strategy and Workforce Planning
• Workforce planning should be an integral part of the firm’s strategic
planning process. For example, plans to enter new businesses, to build
new plants, or to reduce activities will all influence the personnel skills
the employer needs and the positions to be filled. At the same time,
decisions regarding how to fill these positions will require other HR
plans, such as training and recruiting plans.

4. EXAMPLE
• One consulting firm’s workforce planning methodology illustrates the basic workforce planning process.
• First, Towers Watson reviews the client’s business plan and workforce data (for
• instance, on how revenue influences staffing levels). This helps them understand how projected business
changes may influence the client’s headcount and skills requirements.
• Second, they forecast and identify what positions the firm will have to fill and potential workforce gaps; this
helps them understand what new future positions they’ll have to fill, and what current employees may be
promotable into them.
• Third, they develop a workforce strategic plan; here they prioritize key workforce
• gaps (such as, what positions will have to be filled, and who do we have who can fill them?) and identify
specific (recruitment, training, and other) plans for filling any gaps.

5. Forecasting Personnel Needs (Labor
Demand)
• How many people with what skills will we need? Managers consider
several factors.Most importantly, a firm’s future staffing needs reflect
demand for its products or services,
• adjusted for changes in its turnover rate and productivity, and
• for changes the firm plans to make in its strategic goals. Forecasting
workforce demand therefore starts with estimating what the demand
will be for your products or services. Short term, management should
be concerned with daily, weekly, and seasonal forecasts.9 For example,
retailers track daily sales trends because they know, for instance, that
Mother’s Day produces a jump in business and a need for additional
store staff. Seasonal forecasts are critical for retailers contemplating
• .
5–5

6. HRP
Identify the firm’s Talent
Philosophy and Strategic
Staffing Goals
Business Strategy
Forecast the Firm’s
Demand
for Labor
- Which jobs will the firm
need?
- What competencies
does the business
strategy require?
- What is the firm’s
expected level of
activity?
- How many workers are
needed?
Forecast the Supply of
Labor
Available in the Market
- Which competencies are
available?
- Will the firm be able to
find those competencies
internally or externally?
- How many external
workers possess those
competencies?
Identify gaps
(Projected labor surpluses or
shortages)
Develop Action Plan(s) to
Address the Forecasted
Talent Gaps
Monitor, Evaluate, and
Revise the Forecasts and
Action Plans

7. • end-of-year holiday sales, and for many firms such as
landscaping and air-conditioning vendors.
• Longer term, managers will try to get a sense for
future
• demand by speaking with customers and by following
industry publications and economic forecasts. Such
future predictions won’t be precise, but should help
you address the potential changes in demand.
• Trend analysis means studying variations in the
firm’s employment levels over the past few years. For
example, compute the number of employees at the
end of each of the last 5 years in each subgroup (like
sales, production, secretarial, and administrative) to
identify trends
Forecasting Personnel Needs (Labor
Demand)

8. RATIO ANALYSIS Another simple approach, ratio
analysis, means making forecasts based on the
historical ratio between (1) some causal factor (like
sales volume), and (2) the number of employees
required (such as number of salespeople). For
example, suppose a salesperson traditionally
generates $500,000 in sales. If the sales revenue to
salespeople ratio remains the same, you would require
six new salespeople next year (each of whom
produces an extra $500,000) to produce a hoped-for
extra $3 million in sales
Forecasting Personnel Needs (Labor
Demand)

9. THE SCATTER PLOT A scatter plot shows graphically
how two variables—such as sales and your firm’s
staffing levels—are related. If they are, then if you can
forecast the business activity (like sales), you should
also be able to estimate your personnel needs.
MANAGERIAL JUDGMENT Few historical trends, ratios,
or relationships will continue unchanged into the
future. Judgment is thus needed to adjust the forecast.
Important
factors that may modify your initial forecast of
personnel requirements include decisions to upgrade
quality or enter into new markets; technological and
administrative changes resulting in increased
Forecasting Personnel Needs (Labor
Demand)

10. FORECASTING FIRM’S LABOR
DEMAND
• Accurately forecasting business activity requires
identifying key business activity factors, identifying
quality sources of relevant forecasting information
for those factors, and utilizing these sources to
compile complete, accurate, and timely data. For
example, Con-way Freight compiles monthly
forecasts of customer demand, productivity goals,
and scheduled and unscheduled absences to project
hiring needs one to three months in advance. This
enhances Con-way’s recruiters’ ability to recruit and
onboard the needed drivers, which can take one to
three months.

11. • The time frame for a business activity forecast is at
the discretion of the organization. It may make sense
for organizations.
• There are many external sources of information firms
can tap into to forecast the demand for their
products.
• Seasonal forecasts-For some organizations, business
demands are seasonal and predictable. For example,
United Parcel Service experiences a sharp increase in
shipping volume from November to January every
year due to holiday shipping demand. Landscaping
firms know that they will need more work- ers in the
spring and summer than in the winter
FORECASTING FIRM’S LABOR DEMAND

12. FORECASTING A FIRM’S LABOR
DEMAND
• Interest rate forecasts-can project the likelihood
that the organization will need or be able to build
new plants and increase production in the near
future. Higher interest rates discourage capital
investment by making it more expensive for
organizations to borrow money to fund their
expansion plans. Higher interest rates make it more
expensive for consumers to borrow money as
well.As a result, product demand tends to decline
when interest rates rise.
• Currency exchange rate forecasts-. If a country’s
currency is strengthening against other currencies, it
means that one unit of the country’s currency

13. FORECASTING A FIRM’S LABOR
DEMAND
• Competition-based forecasts
• Industry and economic forecasts
• Legal Factors
• Other Factors-An increase or decrease in consumer spending
• • An increase or decrease in the unemployment rate
• • An increase or decrease in the disposable income of consumers
• • Increased or decreased purchases of durable goods
• • Increased or decreased housing purchases

14. Forecasting the Supply of Inside Candidates
• The personnel demand forecast provides only half the
staffing equation, by answering the question: “How
many employees in what positions will we need?”
Next, the manager must forecast the supply
(availability) of inside and outside candidates.
• Most firms start with possible inside candidates. The
main task here is determining which current
employees are qualified or trainable for the projected
openings.
• Department managers or owners of smaller firms can
use manual devices to rack employee qualifications
(or will simply know who can do what). For example,
you can create your own personnel skills inventory
and development record form.

15. • Personnel replacement charts are another option, particularly for he
firm’s top positions. They show the present performance and
promotability for each position’s potential replacement. As an
alternative, with a position replacement card you create a card for
each position, showing possible replacements as well as their present
performance, promotion potential, and training.
• Larger firms obviously can’t track the qualifications of hundreds or
thousands of employees manually. They therefore computerize this
information, using various packaged software systems such as Survey
Analytics’s Skills Inventory Software.
Forecasting the Supply of Inside Candidates

16. • MARKOV ANALYSIS Employers also use a mathematical process known as
Markov analysis (or “transition analysis”) to forecast availability of
internal job candidates.
• Markov analysis involves creating a matrix that shows the
probabilities that employees in the chain of feeder positions for a key
job (such as from junior engineer, to engineer, to senior engineer, to
engineering supervisor, to director of engineering) will move from
position to position and therefore be available to fill the key position.
Forecasting the Supply of Inside Candidates

17. Forecasting the Supply of Outside Candidates
• you want to go outside for another reason), you will turn to outside
candidates.
• Forecasting workforce availability depends first on the manager’s own
sense of what’s happening in his or her industry and locale. For
example, unemployment rates above 7% a few years ago signaled to
HR managers that finding good candidates might be easier.

18. Matching Projected Labor
Supply and Demand with a Plan
• Workforce planning should culminate in a
workforce plan. This plan should identify the
positions to be filled; potential internal and external
candidates or sources (such as temp agencies) for
these positions; the training and promotions
moving people into the positions will entail; and
the resources that implementing the plan will
require, for
• instance, in recruiter fees, estimated training costs,
and interview expenses.

19. INTERNAL FORECASTING TOOLS
• Judgmental forecasting -Instead of trying to identify past
relationships between staffing levels and various factors as we did
with the previous methods, judgmental forecasting relies on the
experience and insights of people in the organization to predict a
firm’s future employment needs. Asking managers and supervisors
about what they believe future staffing trend analysis using past
employment patterns to predict future needs and employee skill
levels can be is very insightful. Managers are often aware of what is
going on in the lives of their subordinates and may be able to provide
reasonably accurate predictions of their future labor supply. Likewise,
managers are often aware of the retirement eligibility and intentions
of their staff and can use this information to project likely talent
losses several years into the future.

20. INTERNAL FORECASTING TOOLS
• Return on Investment Analysis-It is possible to estimate the return
on investment from adding a new position based on the costs and
outcomes resulting from that new hire The first step is to assign dollar
values to the benefits expected from a new hire for the period of time
most appropriate for the position and the organization—it could be a
month, a quarter, or a year. How much revenue during the period will
be directly generated as a result of this position? How much money
per period will this position save the organization in terms of
increased efficiency, and how much value will it add in greater
productivity, quality, or customer service? The sum of these figures is
the value of adding this position

21. • Talent inventories and replacement charts-Forecasting the likely
number of employees that will be available at a given time is only half
of the picture. Manual or computerized talent inventories are detailed
records or databases that summarize each employee’s skills,
competencies, education, training, languages spoken, previous
performance reviews, and chances of being promoted. As such, a
talent inventory can be a powerful tool for quickly getting the right
talent in the right place when it is needed.
• Replacement charts are a way to track the potential replacements for
particular positions. A replacement chart can be manual or
automated. It visually shows each of the possible successors for a job
and summarizes their strengths, present performance, promotion
INTERNAL FORECASTING TOOLS

22. • Employee surveys -The availability of internal talent is dependent on
turnover rates, which are not always constant. Conducting employee
surveys and monitoring indicators of employee dissatisfaction, such
as employee absenteeism and grievances, can help to identify the
potential for increased turnover in the future. For organizations with
a talent philosophy consistent with retaining employees, or for
organizations for which turnover is particularly harmful to a firm’s
strategy execution, staying in touch with the attitudes of the
company’s employees and managers can be critica
INTERNAL FORECASTING TOOLS

23. 5–23
FIGURE 5–1 Steps in Recruitment and Selection Process
The recruitment and selection process is a series of hurdles aimed at selecting the best candidate for the job.

24. Planning and Forecasting
• Employment or Personnel Planning
• The process of deciding what positions
the firm will have to fill, and how to fill
them.
• Succession Planning
• The process of deciding how to fill the
company’s most important executive
jobs.
• What to Forecast?
• Overall personnel needs
• The supply of inside candidates
• The supply of outside candidates

25. 5–25
Forecasting Personnel Needs
Trend analysis Ratio analysis
Forecasting Tools
Scatter plotting

26. 5–26
Drawbacks to Traditional
Forecasting Techniques
• They focus on projections and historical
relationships.
• They do not consider the impact of strategic
initiatives on future staffing levels.
• They support compensation plans that reward
managers for managing ever-larger staffs.
• They “bake in” the idea that staff increases are
inevitable.
• They validate and institutionalize present planning
processes and the usual ways of doing things.

27. 5–27
Forecasting the Supply
of Inside Candidates
Manual systems and
replacement charts
Computerized skills
inventories
Qualification
Inventories

28. Copyright © 2011 Pearson Education, Inc.
publishing as Prentice Hall
5–28
FIGURE 5–4 Management Replacement Chart Showing Development
Needs of Potential Future Divisional Vice Presidents

29. Copyright © 2011 Pearson Education, Inc.
publishing as Prentice Hall
5–29
Forecasting Outside Candidate Supply
• Factors In Supply of Outside Candidates
• General economic conditions
• Expected unemployment rate
• Sources of Information
• Periodic forecasts in business publications
• Online economic projections
• U.S. Congressional Budget Office (CBO)
• U.S. Department of Labor’s O*NET™
• Bureau of Labor Statistics (BLS)
• Other federal agencies and private sources