-
CHAPTER 2
Strategic
Human Resource Planning
After you have read this chapter, you
should be able to:
●
Discuss why human resources can be a
core competency for
organizations.
●
Explain
how
organizational
culture
and
industry
life-cycle
stages affect HR strategies and
activities.
●
●
Define HR
planning and outline the HR planning process.
Discuss why external environmental
scanning is an important
part of HR
planning and what factors must be considered.
●
Explain how an
internal assessment of current jobs and skills
is vital to HR planning.
●
Identify what a
human resource information system (HRIS) is
and why it is useful when doing HR
planning.
●
Identify factors to be considered in
forecasting the supply and
demand for
human resources in an organization.
●
Discuss
several
ways
to
manage
a
surplus
of
human
resources.
HR
TRANSITIONS
Welfare to Work
Employers who
participate in welfare-to-work programs have found
that
many
welfare
recipients
wanted
to
work
but
had
inadequate
education, skills, or work habits.
To
fill
many
jobs,
particularly
those
requiring
lower
knowledge,
skills, and
abilities, HR managers increasingly are having to
use people
who
are
out
of
work
—
those
on
welfare
—
and
many
success
stories
are
being
told.
The tight labor market has not
been the only factor motivating HR
managers to hire welfare workers. A
major impetus has been the Personal
Responsibility and Welfare
Reconciliation Act of 1996. This act required
that by September 1997, 25% of
individuals receiving welfare assistance
be employed or in work training
programs. The percentage increases each
year to 50% by September 2002. To
attain these targets, many employers
are
“encouraged”
to
hire
welfare
recipients
through
tax
incentives
and
wage-subsidy
programs
during
the
early
tenure
of
workers
formerly
on
welfare.
What some employers
initially
saw as a “social
responsibility” has
evolved
into
a
source
of
workers
to
fill
jobs,
enabling
organizations
to
expand their workforces
in order to meet business objectives. One study
by
the
Welfare
to
Work
Partnership,
composed
of
over
5,000
member
companies,
found
that
in
one
year
135,000
welfare
recipients
had
been
hired by
U.S. companies. The study also reported that over
one million
welfare
recipients
had
stopped
receiving
welfare
benefits
because
of
getting
jobs,
entering
work
training
programs,
or
being
dropped
from
welfare.
Employers who participate in welfare-
to-work programs have found
that
many
welfare
recipients
wanted
to
work
but
had
inadequate
education,
skills,
or
work
habits.
Consequently,
both
government
and
employersponsored
programs
have
been
established
to
assist
the
welfare-to-work
transition.
In
Tulsa,
Oklahoma,
Zebco
—
a
leading
manufacturer of fishing
equipment
—
and the
Metropolitan Tulsa Chamber
of Commerce
developed a program to teach welfare recipients
workplace
skills.
During
the
six-month
program,
individuals
attend
classroom
training four hours daily to learn both
educational skills and how to get
and
hold jobs. Typical topics covered in this training
program, as well as
in
programs
elsewhere,
include
the
importance
of
being
on
time,
what
transportation
arrangements exist, how to find child-care
providers, how
to dress for work, and
how to interview.
Interestingly,
because
a
number
of
welfare
recipients
are
single
mothers, some
private-sector child-care providers have had
success hiring
women on welfare as day-
care workers.
Despite
the
relatively
low
wages
paid
in
the
child-care
industry,
about twothirds of
the former welfare recipients are still employed
after
one year.
About
80%
of
those
who
completed
the
Tulsa
program
are
still
working.
Here are some other success stories:
●
Sprint
Corporation:
About
85%
of
the
former
welfare
recipients
were
still
employed
as
telephone
operators
after
six
months,
compared
with
only
33%
of
the
non-welfare
recipients
hired
into
the
same job
at the same time.
●
United Airlines:
Over
500
of
the
760
former
welfare
recipients hired
were still with the airline a year later.
●
Giant Foods:
Over 100 welfare recipients had been
hired as
cashiers,
pharmacy
clerks,
baker’s
assistants,
and
etc.,
and
about
80%
were still employed
after the 90-day introductory period.
●
Marriott
Corporation: A
leader
in
welfare-to-work
programs,
Marriott
has
hired
several
thousand
welfare
recipients.
Their
success
is
measured by the fact that almost 70%
are still with Marriott. All of these
examples
illustrate
that
additional
sources
for
a
sufficient
supply
of
human resources are being
tapped by employers as part of meeting their
HR planning needs. The examples also
illustrate that a broad range of HR
activities,
but
especially
training,
must
be
seen
as
integral
to
organizations in obtaining the human
resources needed for the future.
Plan Ahead: it wasn’t raining when Noah
built the ark.
RICHARDC
This
chapter
deals
with
planning
for
the
human
resources
that
the
organization
will
need
in
the
future.
The
opening
discussion
of
using
welfare-
to-work programs as a future source of human
resources is one
means.
But
any
description
of
HR
planning
must
begin
on
a
level
one
step higher
—
with
the overall strategic plan of the organization.
Strategic
planning
can
be
defined
as
the
process
of
identifying
organizational
objectives and the actions needed to
achieve those objectives. It involves
analyzing
such
areas
as
finance,
marketing,
and
human
resources
to
determine the capacities
of the organization to meet its objectives.
The
process
of
strategic
planning
can
be
thought
of
as
circular
in
nature.
As
Figure
2
—
1
shows,
the
process
begins
with
identifying
and
recognizing
the
philosophy
and
mission
of
the
organization.
This
first
step
addresses the most fundamental questions about the
organization:
●
●
●
Why does the organization exist?
What unique contribution does it make?
What are the underlying values and
motivations of owners and
key managers?
Once the philosophy and mission of the
organization are identified,
the
next
requirement
is
to
scan
the
environment.
This
scanning
is
especially important when rapid changes
are occurring, such as in the last
several
years.
HR
managers
also
need
the
results
of
environmental
scanning.
For
example,
some
questions
might
be:
What
recruiting
approaches are
competitors currently using to attract
scarce
specialties?
How
are
competitors
using
welfare-to-work
programs?
Will
a
new
product
under
development
require
a
production
process using an expanded number of
workers with different knowledge
and
skills? Answers to these questions illustrate that
HR managers must
be able to predict
what capabilities employees will have to implement
the
business
strategy.
Workforce
patterns
and
conditions,
social
values
and
lifestyles,
and
technological
developments
are
some
external
factors
to
consider.
After external
forces are examined, an internal assessment is
made
of what the organization
can
do
before
a
decision
is
reached
on
what
it
should do.
Internal
strengths
and
weaknesses
must
be
identified
in
light
of
the
philosophy
and
culture
of
the
organization.
Factors
such
as
current
workforce skills, retirement patterns, and
demographic profiles of
current
employees
are
items
that
relate
to
human
resource
capabilities.
Next
comes
forecasting
organizational
capabilities
and
future
opportunities in the environment to
match organizational objectives and
strategies.
The
development
of
strategies
and
objectives
often
is
based
on
a
SWOT analysis,
which examines the strengths and weaknesses of the
organizations internally and the
opportunities and threats externally. The
purpose
of
the
SWOT
analysis
is
to
develop
strategies
that
align
organizational
strengths with opportunities externally, to
identify internal
weaknesses to be
addressed, and to acknowledge threats that could
affect
organizational success.
Finally, specific plans are developed
to identify how strategies will
be
implemented.
Details
of
the
plans
become
the
basis
for
implementation
and
later
adjustments.
Like
all
plans,
they
must
be
monitored,
adjusted,
and
updated
continually.
The
strategic
planning
process
is
circular,
since
the
environment
is
always
changing
and
a
specific step in the process must be
repeated continually.
Organizational Strategy and Human
Resources
The
development
of
specific
business
strategies
must
be
based
on
the
areas
of
strength
that
an
organization
has.
Referred
to
as
core
competencies
by
Hamel
and
Prahalad,
they
are
the
foundation
for
creating
the
competitive
advantage
for
an
organization.
A
core
competency
is
a
unique
capability
in
the
organization
that
creates
high
value and that differentiates the
organization from its competition.
Human
Resources
as
a
Core
Competency
Certainly,
many
organizations
have
voiced
the
idea
that
their
human
resources
differentiate them from their
competitors. Organizations as widely diverse
as
Federal
Express,
Nordstrom’s
Department
Stores,
and
Gateway
Computers have focused on human
resources as having special strategic
value for the organization. The
significance of human resources as a core
competency was confirmed in a study of
293 U.S. firms. The study found
that
HR
management
effectiveness
positively
affected
organizational
productivity, financial performance,
and stock market value.
Some
ways
that
human
resources
become
a
core
competency
are
through attracting and
retaining employees with unique professional and
technical
capabilities,
investing
in
training
and
development
of
those
employees, and
compensating them in ways that keep them
competitive
with
their
counterparts
in
other
organizations.
The
value
of
human
resources
was
demonstrated
several
years
ago,
when
United
Parcel
Service workers went
on strike. In offices around the country,
customers
had concerns that the brown-
shirted UPS drivers, whom customers often
knew
by
their
first
names,
were
not
working.
Fortunately
for
UPS,
its
drivers,
and
their
customers,
the
strike
was
settled
relatively
quickly.
Another
illustration
is
what
happened
in
the
banking
industry
with
the
many mergers and acquisitions. Smaller,
community-oriented banks have
picked
up
numerous
small-
and
medium-sized
commercial
loan
customers because they
emphasize that “you can talk to the
same person,”
rather than having to
call an automated service center in another state.
Resource-Based
Organizational Strategies
There has
been growing recognition that human resources
contribute
to sustaining a competitive
advantage for organizations. Jay Barney and
others have
focused on
four factors that are
important to organizational
strategic accomplishments.4 Those
factors, called the VRIO framework,
are
related to human resources as follows:
●
Value:
Human
resources
that
can
create
value
are
those
that
can
respond
to
external
threats
and
opportunities.
Having
this
ability
means that employees can make decisions
and be innovative when faced
with
environmental changes.
●
Rareness:
The
special
capabilities
of
people
in
the
organization
provide
it
significant
advantages.
Especially
important
is
that
the
human
resources
in
an
organization
be
provided
training
and
development
to
enhance
their
capabilities,
so
that
they
are
continually
seen
as
“the
best”
by
customers
and
industry
colleagues.
This
rareness
also helps in attracting and retaining
employees with scarce and unique
knowledge, skills, and abilities.
Reducing employee turnover is certainly
important in preserving the rareness of
human resources.
●
Imitability:Human
resources
have
a
special
strategic
value
when they cannot be easily imitated by
others. Southwest Airlines, Disney,
and
Marriott Corporation each have created images with
customers and
competitors
that
they
are
different
and
better
at
customer
service.
Any
competitors trying to
copy the
HR management “culture”
created in these
organizations
would
have
to
significantly
change
many
organizational
and HR aspects.
●
Organization:
The
human
resources
must
be
organized
in
order for an entity to
take advantage of the competitive advantages just
noted.
This
means
that
the
human
resources
must
be
able
to
work
effectively
together,
and
have
HR
policies
and
programs
managed
in
ways that support the
people working in the organization.
Using
a
VRIO
framework
as
the
foundation
for
HR
management
means that people
are truly seen as assets, not as expenses. It also
means
that
the
culture
of
organizations
must
be
considered
when
developing
organizational and HR strategies.
Organizational Culture and
HR Strategy Organizational culture is a
pattern
of
shared
values
and
beliefs giving
members
of
an
organization
meaning and
providing them with rules for behavior.
These
values
are
inherent
in
the
ways
organizations
and
their
members
view
themselves,
define
opportunities,
and
plan
strategies.
Much
as personality
shapes
an individual,
organizational culture
shapes
its members’
responses and defines
what an
organization can or is willing
to do.
The
culture
of
an
organization
is
seen
in
the
norms
of
expected
behaviors,
values,
philosophies,
rituals,
and
symbols
used
by
its
employees. Culture
evolves over a period of time. Only if an
organization
has a history in which
people have shared experiences for years does a
culture
stabilize.
A
relatively
new
firm,
such
as
a
business
existing
for
less
than two years, probably has not developed a
stabilized culture.
Managers
must
consider
the
culture
of
the
organization
because
otherwise
excellent
strategies
can
be
negated
by
a
culture
that
is
incompatible
with
the
strategies.
Further,
it
is
the
culture
of
the
organization, as viewed
by the people in it, that affects the attraction
and
retention of competent employees.5
Numerous examples can be given of
key
technical,
professional,
and
administrative
employees
leaving
firms
because
of
corporate
cultures
that
seem
to
devalue
people
and
create
barriers
to
the
use
of
individual
capabilities.
In
contrast,
by
creating
a
culture
that
values
people
highly,
some
corporations
have
been
very
successful at attracting, training, and
retaining former welfare recipients.
The
culture
of
an organization
also
affects the
way
external
forces
are viewed.
In
one
culture,
external
events
are
seen
as
threatening,
whereas
another
culture
views
risks
and
changes
as
challenges
requiring
immediate
responses.
The
latter
type
of
culture
can
be
a
source
of
competitive
advantage,
especially
if
it
is
unique
and
hard
to
duplicate.
This is especially true as an
organization evolves through the life cycle in
an industry.
Organization/Industry Life-Cycle Stages
and HR Strategy
As noted, organizations
go through evolutionary life cycles, and the
stage
in
which
an
organization
finds
itself
in
an
industry
affects
the
human
resource strategies it should use. For example,
the HR needs of a
small, three-year-old
hightechnology software firm will be different
from
those of Netscape or America
Online. The relationship between the life
cycle
of
an
organization
and
HR
management
activities
is
profiled
in
Figure 2
—
2.6
EMBRYONIC
At the
embryonic stage a high-risk, entrepreneurial
spirit pervades the organization.
Because the founders often operate with
limited
financial
resources,
base
pay
often
is
modest.
When
skills
are
needed, the organization recruits and
hires individuals who already have
the
necessary
capabilities.
Training
and
development
are
done
on
an
as-needed basis.
GROWTH
During
the
growth
stage,
the
organization
needs
investments to expand facilities,
marketing, and human resources to take
advantage of the demand for its
products and services. Often, backlog and
scheduling problems indicate that the
organization has grown faster than
its
ability
to
handle
the
demand.
Extensive
efforts
are
made
to
recruit
employees to handle
the expanded workload. It is also important to
have
HR plans, and planning processes,
rather than just reacting to immediate
pressures.
Compensation
practices
have
to
become
more
market-competitive
in
order
to
attract
sufficient
employees
with
the
necessary
capabilities.
Communicating
with
those
employees
about
career opportunities
affects their retention, so career planning
efforts and
HR development efforts to
support them are expanded.
SHAKEOUTS
In
the
shakeout
stage
the
industry
reacts
to
rapid
growth, and not all firms will continue
to exist. Some will be bought out
by
other
larger
competitors;
others
will
fade
from
the
industry.
The
explosive growth in Internet businesses
and
the
consolidations
of
Internet
providers
by
such
firms
as
America
Online,
Microsoft,
and
Yahoo
illustrate
how
shakeouts
occur.
Regarding HR management in a shakeout
industry, competition to retain
human
resources is important, especially while
restructuring and reducing
the number
of jobs to control costs.
Compensation
costs must be monitored, but a balance is required
in
order
to
retain
key
employees
using
short-
and
longer-term
incentives.
HR
development
is
focused
on
high-
potential,
scarce-skilled
employees
who
are
seen
as
ones
who
will
ensure
that
the
organization
is
a
major
player following the
shakeout.
MATURITY In
the
maturity
stage,
the
organization
and
its
culture
are
stabilized. Size and success enable the
organization to develop even
more
formalized
plans,
policies,
and
procedures.
Often,
organizational
politics
flourish
and
HR
activities
expand.
Compensation
programs
become a
major focus for HR
efforts, and they are expanded to reward
executives as well. Extensive HR
development occurs, coordinated by an
internal training staff.
DECLINE
The
organization
in
the
decline
stage
faces
resistance
to change. Numerous examples can be
cited in the manufacturing sectors
of
the U.S. economy.
Manufacturing
firms
have
had
to
reduce
their
workforces,
close
plants, and use their accumulated
profits from the past to diversify into
other
industries.
During
the
decline
stage,
employers
try
certain
HR
practices such as
productivityenhancement and cost-reduction
programs.
Unionized
workers
resist
the
decline
by
demanding
no
pay
cuts
and
greater
job-security provisions in their contracts.
Nevertheless,
employers
are
compelled
to
reduce
their
workforces
through
attrition, early retirement incentives, and major
facility closings.
Linking
Organizational Strategies and HR Plans
Strategic
planning
must
include
planning
for
human
resources
to
carry out the rest of the
plan. Figure 2
—
3 shows the
relationship among
the variables that
ultimately
determine
the
HR
plans
an
organization
will
develop.
Business
strategy
affects
strategies
and
activities
in
the
HR
area.
For
example, several years ago, a large
bank began planning to become one
of
the top financial institutions in the country. Two
parts of its strategic
plan
were
(1)
to
adopt
a
global
focus
and
(2)
to
improve
service.
HR
plans
to
support
global
goals
included
integrating
compensation
and
benefits
systems
and
hiring
policies
for
international
operations
and
domestic
operations.
Service
improvement
plans
hinged
on
welltrained,
capable first-
level employees. But an HR diagnosis turned up
basic skills
deficiencies
in
employees.
As
a
result
of
HR
planning,
a
series
of
programs designed to remedy basic
skills problems in the workforce was
developed.
The
coordination
of
company-wide
strategic
planning
and
strategic
HR
planning
was
successful
in
this
case
because
HR
plans
supported corporate strategic plans.
There are many possible approaches to
understanding the strategies
that an
organization may choose.7 To illustrate the
relationship between
strategy
and
HR,
two
basic
business
strategies
can
be
identified:
cost-leadership
and differentiation.8
Figure
2
—
4
compares
HR
needs
under
each
strategy
and
suggests
the HR approaches
that may be most appropriate.9 The first strategy
may
be appropriate in a relatively
stable business environment. It approaches
competition
on
the
basis
of
low
price
and
high
quality
of
product
or
service. The differential strategy is
more appropriate in a more dynamic
environment
characterized
by
rapid
change
(such
as
the
computer
software industry).
It requires continually finding new products and
new
markets. The two categories may not
be mutually exclusive, because it is
possible
for
an
organization
to
pursue
one
strategy
in
one
product
or
service area and a different one with
others.
The
cost-
leadership
strategy
requires
an
organization
to
“build”
its
own
employees
to
fit
its
specialized
needs.
This
approach
requires
a
longer
HR planning horizon. When specific skills are
found to be needed
for
a
new
market
or
product,
it
may
be
more
difficult
to
internally
develop
them
quickly.
However,
with
a
differentiation
strategy,
responsiveness means that HR planning
is likely to have a shorter time
frame,
and
greater
use
of
external
sources
will
be
used
to
staff
the
organization.
The
HR
Perspective
discusses
a
study
that
examined
the
involvement
of
HR
executives
when
determining
organizational
strategies and core competencies.
H R
P E R S P E C T I V E
Research
on
Human
Resources
as
a
Core
Competency
and
Organizational Strategy
A
group
of
researchers
(Wright,
McMahan,
McCormick,
and
Sherman) conducted a
study of the effect of organizational strategy,
core
competencies, and HR executive
involvement on both organizational and
HR
management
performance
in
some
petrochemical
refineries.
As
reported
in
Human
Resource
Management,
the
researchers
mailed
surveys to all
petrochemical refineries in the United States and
received
responses from 86 of them.
The
surveys
asked
about
each
refin
ery’s
organizational
strategy,
as
reflected
in
the
product
mix
produced
and
the
refinery’s
financial
performance.
The
surveys
also
asked
petrochemical
HR
executives
to
evaluate employee skills and
motivations and indicate the involvement of
HR executives in the strategic
management of their firms.
The study results showed that HR
involvement in strategic decision
making
is
more
positive
when
the
refinery
was
following
a
product
innovation strategy
instead of one emphasizing cost control.
Interestingly,
the
relationship
between
HR
executives
and
the
effectiveness
of
HR
activities
was higher where skilled employees were seen as
being a core
competency of he refinery.
Using both of these findings,
the
researchers
suggest that
when
an
organizational strategy
of differentiation and innovation is being
followed,
then human resources are a
core competency supporting that strategy. In
those
situations,
HR
executives
are
more
involved
as
strategic
decision-makers,
thus allowing them to ensure that human resources
are
viewed as a “core”
strength of the organization. However, when human
resources are seen as costs to be
constricted when a cost-control strategy
is
being
followed,
then
HR
executives
are
not
as
heavily
involved
in
organizational strategic decision
making.
Human Resource Planning
The
competitive
organizational
strategy
of
the
firm
as
a
whole
becomes
the
basis
for
human
resource
(HR)
planning,
which
is
the
process
of
analyzing
and
identifying
the
need
for
and
availability
of
human
resources
so
that
the
organization
can
meet
its
objectives.
This
section
discusses
HR
planning
responsibilities,
the
importance
of
HR
planning in small and entrepreneurial
organizations, and the HR planning
process.
HR
Planning Responsibilities
In
most
organizations
that
do
HR
planning,
the
top
HR
executive
and
subordinate staff specialists have most of the
responsibilities for this
planning.
However,
as
Figure
2
—
5
indicates,
other
managers
must
provide
data
for
the
HR
specialists
to
analyze.
In
turn,
those
managers
need
to
receive
data
from
the
HR
unit.
Because
top
managers
are
responsible for overall strategic
planning, they usually ask the HR unit to
project the human resources needed to
implement overall organizational
goals.
HR
Planning
in
Evolving
Small
and
Entrepreneurial
Organizations
HR
management
and
ultimately
HR
planning
are
critical
in
small
and
entrepreneurial
organizations.
“People
problems”
are
among
the
most
frustrating ones faced by small-
business owners and entrepreneurs.
EVOLUTION OF HR ACTIVITIES
At
the
beginning
of
a
small
business’s
existence,
only
very
basic
HR
activities
must
be
performed.
Compensation
and
governmentmandated
benefits
must
be
paid.
As
the
organization
evolves,
more
employees
must
be
recruited
and
selected.
Also, some orientation and on-the-job
training are necessary, though they
are
often done haphazardly.
The evolution
of the business proceeds through several stages.
The
focus of each stage reflects the
needs of the organization at the time. In
the initial stage, the organization
first hires an HR clerk, then possibly an
HR
administrator.
As
the
organization
grows,
it
may
add
more
HR
professionals, often including an
employment or benefits specialist. With
further growth, other specialists, such
as trainers, may be needed. From
this
point, additional clerical and specialist
employees can be added, and
separate
functional
departments
(employment,
compensation,
benefits,
and training) can
evolve.
SMALL BUSINESS AND
FAMILY ISSUES
One
factor
often
affecting
the
planning
of
HR
activities
in
small
firms
is
family
considerations.
Particular
difficulties
arise
when
a
growing
business
is
passed
on
from
one
generation
to
another,
resulting
in
a
mix
of
family
and
nonfamily employees. Some family members may use
employees as
“pawns” in disagreements
with o
ther family members in the firm.
Also, nonfamily employees may see
different HR policies and rules
being
used for family members than for them.
Key to the successful transition of a
business from one generation to
another
is having a clearly identified HR plan. Crucial in
small businesses
is
incorporating
the
role
of
key
nonfamily
members
with
HR
planning
efforts.
Often,
nonfamily
members
have
important
capabilities
and
expertise that family members do not
possess. Therefore, planning for the
attraction and retention of these
“
outsiders” may be vital to
the future
success
of
smaller
organizations.
One
survey
of
over
3,000
small
businesses
found
that
management
succession
was
one
of
the
top
challenges faced by
family-owned firms.11
It
even
may
be
that
the
nonfamily members will assume top
management leadership roles, with
some
or
all
family
members
who
are
owners
serving
on
the
Board
of
Directors,
but
not
being
active
managers
in
the
firm.
Additionally,
nonfamily executives may be the
intermediaries who focus on the needs
of
the
business
when
familymember
conflicts
arise.
Small
businesses,
depending on how small they are, may
use the HR planning that follows,
but
in
very
small
organizations
the
process
is
much
more
intuitive
and
often done entirely by
the top executives, who often are family members.
HR Planning Process
The
steps
in
the
HR
planning
process
are
shown
in
Figure
2
—
6.
Notice
that
the
HR
planning
process
begins
with
considering
the
organizational
objectives and strategies. Then both external and
internal
assessments of HR needs and
supply sources must be done and forecasts
developed.
Key
to
assessing
internal
human
resources
is
having
solid
information,
which
is
accessible
through
a
human
resource
information
system (HRIS).
Once the
assessments are complete, forecasts must be
developed to
identify the mismatch
between HR supply and HR demand. HR strategies
and
plans
to
address
the
imbalance,
both
short
and
long
term,
must
be
developed.
HR
strategies
are
the
means
used
to
aid
the
organization
in
anticipating and managing the supply
and demand for human resources.
These
HR strategies provide overall direction for how HR
activities will
be developed and
managed. Finally, specific HR plans are developed
to
provide more specific direction for
the management of HR activities.
DEVELOPING THE HR PLAN
The
HR plan must be guided by
longer-term
plans.
For
example,
in
planning
for
human
resources,
an
organization
must
consider
the
allocation
of
people
to
jobs
over
long
periods
of time
—
not just for the
next month or even the next year. This
allocation
requires
knowledge
of any
foreseen
expansions
or reductions
in
operations
and
any
technological
changes
that
may
affect
the
organization.
On
the
basis
of
such
analyses,
plans
can
be
made
for
shifting
employees
within
the
organization,
laying
off
or
otherwise
cutting back the
number of employees, or retraining present
employees.
Factors
to
consider
include
the
current
level
of
employee
knowledge,
skills,
and
abilities
in
an
organization
and
the
expected
vacancies
resulting from
retirement, promotion, transfer, sick leave, or
discharge.
In
summary,
the
HR
plan
provides
a
road
map
for
the
future,
identifying where
employees are likely to be obtained, when
employees
will be needed, and what
training and development employees must have.
Through
succession
planning,
employee
career
paths
can
be
tailored
to
individual
needs
that
are
consistent
with
organizational
requirements.
Succession plans are discussed in more
detail in Chapter 11.
Further,
the
compensation
system
has
to
fit
with
the
performance
appraisal
system, which must fit with HR development
decisions, and so
on.
In
summary,
the
different
HR
activities
must
be
aligned
with
the
general business
strategy, as well as the overall HR strategy, in
order to
support business goals.
EV
ALUATING HR
PLANNING
If HR planning is done well,
the
following benefits should result:
●
Upper
management
has a
better view of the human
resource
dimensions of
business decisions.
●
HR
costs
may
be
lower
because
management
can
anticipate
imbalances before
they become unmanageable and expensive.
●
More
time
is
available
to
locate
talent
because
needs
are
anticipated and identified before the
actual staffing is required.
●
Better
opportunities
exist
to
include
women
and
minority
groups in future growth plans.
●
Development of
managers can be better planned.
To the
extent that these results can be measured, they
can form the
basis for evaluating the
success of HR planning. Another approach is to
measure projected levels of demand
against actual levels at some point in
the future. But the most telling
evidence of successful HR planning is an
organization in which the human
resources are consistently aligned with
the needs of the business over a period
of time.
Scanning the
External Environment
At
the
heart
of
strategic
planning
is
the
knowledge
gained
from
scanning the external environment for
changes. Environmental scanning
is the
process of studying the environment of the
organization to pinpoint
opportunities
and
threats.
Scanning
especially
affects
HR
planning
because
each
organization
must
draw
from
the
same
labor
market
that
supplies
all
other
employers.
Indeed,
one
measure
of
organizational
effectiveness
is the ability of an organization to compete for a
sufficient
supply of human resources
with the appropriate capabilities.
Many
factors
can
influence
the
supply
of
labor
available
to
an
employer.
Some
of
the
more
significant
environmental
factors
are
identified in Figure
2
—
7. They include government
influences; economic,
geographic,
and
competitive
conditions;
workforce
composition;
and
work patterns.
Government Influences
A
major element that affects labor supply is the
government. Today,
managers are
confronted with an expanding and often bewildering
array
of government rules as regulation
of HR activities has steadily increased.
As a result, HR planning must be done
by individuals who understand the
legal
requirements of various government regulations.
Government trade policies and
restrictions can affect HR planning.
Under
a
closed-
import
policy,
foreign
firms
may
establish
more
American-based
manufacturing
operations
using
American
labor.
An
open-import
policy,
on
the
other
hand,
creates
an
entirely
different
economic labor environment.
Tax
legislation
at
local,
state,
and
federal
levels
also
affects
HR
planning. Pension provisions and Social
Security legislation may change
retirement patterns and funding
options. Elimination or expansion of tax
benefits for job-training expenses
might alter some job-training activities
associated
with
workforce
expansions.
Employee
benefits
may
be
affected
significantly by tax law changes. Tax credits for
employee day
care and
financial aid for education may affect employer
practices
in
recruiting
and
retaining
workers.
In
summary,
an
organization
must
consider
a
wide
variety
of
government
policies,
regulations, and laws when doing HR
planning.
Economic
Conditions
The general business cycle
of recessions and booms also affects HR
planning.
Such
factors
as
interest
rates,
inflation,
and
economic
growth
help
determine the
availability of workers and figure into
organizational plans
and
objectives.
Decisions
on
wages,
overtime,
and
hiring
or
laying
off
workers
all
hinge
on
economic
conditions.
For
example,
suppose
economic conditions lead to a decrease
in the unemployment rate. There
is a
considerable difference between finding qualified
applicants in a 3%
unemployment market
and in a 7% unemployment market.
In
the
3%
unemployment
market,
significantly
fewer
qualified
applicants are
likely to be available for any kind of position.
Those who
are available may be less
employable because they are less educated, less
skilled, or unwilling to work. As the
unemployment rate rises, the number
of
qualified
people
looking
for
work
increases,
making
it
easier
to
fill
jobs.
Geographic and Competitive Concerns
Employers must consider the following
geographic and competitive
concerns in
making HR plans:
●
●
●
●
Net migration
into the area
Other employers in the
area
Employee resistance to geographic
relocation
Direct competitors in the
area
●
Impact of
international competition on the area
The net migration into a particular
region is important. For example,
in
the past decade, the population of U.S. cities in
the South, Southwest,
and West have
grown rapidly and provided a ready source of
labor.
Other
employers
in
a
geographic
region
can
greatly
expand
or
diminish
the
labor
supply.
If,
for
example,
a
large
military
facility
is
closing or moving to another geographic
location, a large supply of good
civilian labor, previously employed by
the military, may be available for a
while. In contrast, the opening of a
new plant may decrease the supply of
potential employees in a labor market
for some time.
Within the last decade,
there has been growing reluctance on the part
of
many
workers,
especially
those
with
working
spouses,
to
accept
geographic relocation
as a precondition of moving up in the
organization.
This
trend
has
forced
organizations
to
change
their
employee
development
policies and practices, as well as their HR plans.
Direct
competitors
are
another
important external
force in
staffing.
Failure to
consider the competitive labor market and to offer
pay scales
and benefits competitive
with those of organizations in the same general
industry and geographic location may
cost a company dearly in the long
run.
Underpaying
or
“undercompeting”
may
result
in
a
much
lower-quality
workforce.
Finally, the impact of
international competition, as well as numerous
other
external
factors,
must
be
considered
as
part
of
environmental
scanning.
A
global
competition
for
labor
appears
to
be
developing
as
global competitors shift jobs and
workers around the world.
Workforce
Composition
and
Work
Patterns
Changes
in
the
composition
of
the
workforce,
combined
with
the
use
of
varied
work
patterns,
have
created
workplaces
and
organizations
that
are
very
different from those of a decade ago.
As noted in Chapter 1, demographic
shifts
have
resulted
in
greater
workforce
diversity.
Many
organizations
are
addressing
concerns
about
having
sufficient
workers
with
the
necessary
capabilities,
and
have
turned
to
such
sources
as
welfare-to-work
programs.
The
use
of
outsourcing
and
contingent
workers also must be considered as part
of human resource planning. As
Figure
2
—
8
indicates,
part-time
employees
are
used
in
various
ways.
Working
patterns
and
arrangements
are
also
shifting,
and
these
shifts
must be considered during HR planning.
ALTERNATIVE WORK SCHEDULES
The
traditional
work
schedule,
in
which
employees
work
full
time,
8
hours
a
day,
5
days
a
week at the employer’s
place of
operations, is in transition.
Organizations
have been experimenting
with many different possibilities for change: the
4-day,
40-hour
week;
the
4-day,
32-hour
week;
the
3-day
week;
and
flexible
scheduling.
Many
employers
have
adopted
some
flexibility
in
work schedules and locations. Changes
of this nature must be considered
in HR
planning. These alternative work schedules allow
organizations to
make
better
use
of workers
by
matching
work
demands
to
work
hours.
Workers
also
are
better
able
to
balance
their
work
and
family
responsibilities.
One type
of schedule redesign is flextime, in which
employees work
a
set
number
of
hours
per
day
but
vary
starting
and
ending
times.
The
traditional starting and ending times
of the 8-hour work shift can vary up
to
one
or
more
hours
at
the beginning
and
end
of
the normal
workday.
Flextime allows management
to relax some of the traditional “time
clock”
control
of
employees.
Generally,
use
of
flextime
has
resulted
in
higher
employee morale and
reduced absenteeism and
employee
turnover.
However,
some
problems
must
be
addressed
when flextime is
used, particularly if unionized workers are
involved.
Another
way
to
change
work
patterns
is
with
the
compressed
workweek,
in
which
a
full
week’s
work
is
accomplished
in
fewer
than
five
days.
Compression
simply
alters
the
number
of
hours
per
day
per
employee,
usually
resulting
in
longer
working
times
each
day
and
a
decreased
number of days worked per week.
ALTERNATIVE WORK ARRANGEMENTS
A growing number of
employers
are
allowing
workers
to
use
widely
different
working
arrangements.
Some
employees
work
partly
at
home
and
partly
at
an
office, and share office
space with other “office
nomads.” According to
data
from governmental statistics for a recent year,
over 21 million U.S.
workers worked at
home for some or all of the time.13
Telecommuting
is
the
process
of
going
to
work
via
electronic
computing
and
telecommunications
equipment.
Many
U.S.
employers
have
telecommuting
employees
or
are
experimenting
with
them,
including such firms
as American Express, Travelers Insurance, and J.C.
Penney Co. Other types of
nontraditional work arrangements have been
labeled in various ways.
Although
it
does
not
deal
with
working
hours,
another
work
arrangement
is
hoteling,
in
which
workers
check
in
with
an
office
concierge,
carry
their
own
nameplates
with
them,
and
are
assigned
to
work
cubicles or
small offices.
A
worker
uses
the
assigned office
for
a
day or
more, but other workers may use the same office in
later days and
weeks.
Other
employees have virtual offices, which means that
their offices
are
wherever
they
are,
whenever
they
are
there.
An
office
could
be
a
customer’s
project
room,
an
airport
conference
room,
a
work
suite
in
a
hotel
resort, a business-class seat on an international
airline flight, or even
a rental car.
The shift to such arrangements means
that work is done anywhere,
anytime,
and that people are judged more on
results than on “putting in
time.”
Greater
trust, less direct supervision,
and more self-scheduling are
all
job
characteristics
of
those
with
virtual
offices
and
other
less
traditional arrangements.
Internal Assessment of Organizational
Workforce
Analyzing the
jobs that will need to be done and the skills of
people
currently available to do them
is the next part of HR planning. The needs
of the organization must be compared
against the labor supply available.
Auditing Jobs and Skills
The
starting point for evaluating internal strengths
and weaknesses is
an audit of the jobs
currently being done in the organization. This
internal
assessment
helps
to
position
an
organization
to
develop
or
maintain
a
competitive advantage.14 A
comprehensive
analysis
of
all
current
jobs
provides
a
basis
for
forecasting
what
jobs
will
need
to
be
done
in
the
future.
Much
of
the
data
to
answer
these
questions
should
be
available
from
existing
staffing
and
organizational
databases.
The
following
questions are
addressed during the internal assessment:
●
●
●
●
●
strategy?
●
Organizational Capabilities Inventory
As those doing HR planning gain an
understanding of current jobs
and the
new jobs that will be necessary to carry out
organizational plans,
they can make a
detailed audit of current employees and their
capabilities.
The
basic
source
of
data
on
employees
is
the
HR
records
in
the
organization. By utilizing different
databases in an HRIS, it is possible to
identify the employees’ capabilities,
knowledge,
and skills. Planners can
use
these
inventories
to
determine
long-range
needs
for
recruiting,
What are the
characteristics of anticipated jobs?
What jobs now exist?
How
many individuals are performing each job?
What are the reporting relationships of
jobs?
How essential is each job?
What
jobs
will
be
needed
to
implement
the
organizational
selection,
and HR development. Also, that information can be
the basis
for determining which
additional capabilities will be needed in the
future
workforce that may not currently
exist, but will be needed.15
COMPONENTS
OF
ORGANIZATIONAL
CAPABILITIES
INVENTORY This inventory of
organizational capabilities often consists
of:
●
Individual employee
demographics
(age,
length
of
service
in
the organization, time in present
job)
●
Individual
career
progression
(jobs
held,
time
in
each
job,
promotions or other job changes, pay
rates)
●
Individual performance data (work
accomplishment, growth in
skills) These
three types of information can be expanded to
include:
●
●
●
●
●
●
Education and
training
Mobility and geographic
preference
Specific aptitudes,
abilities, and interests
Areas of
interest and internal promotion ladders
Promotability ratings
Anticipated retirement
All
the
information
that
goes
into
an
employee’s
skills
inventory
affects the
employee’s
career. Therefore, the data and their use must
meet
the
same
standards
of
job-
relatedness
and
nondiscrimination
as
those