5-1McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Human Resource Management

CHAPTER 7Planning For and Recruiting

Human Resources

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The Process of Human Resource Planning

• Organizations should carry out human resource planning so as to meet business objectives and gain a competitive advantage over competitors.– Human resource planning compares the present

state of the organization with its goals for the future

– Then identifies what changes it must make in its human resources to meet those goals

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Figure 5.1: Overview of the Human Resource Planning Process

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Forecasting

• Forecasting: attempts to determine the supply and demand for various types of human resources to predict areas within the organization where there will be labor shortages or surpluses.

There are three major steps to forecasting:

1. Forecasting the demand for labor

2. Determining labor supply

3. Determining labor surplus or shortage

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Forecasting the Demand for Labor

Trend Analysis• Constructing and

applying statistical models that predict labor demand for the next year, given relatively objective statistics from the previous year.

Leading Indicators• Objective measures that

accurately predict future labor demand.

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Determining Labor Supply

• Transitional matrix: a chart that lists job categories held in one period and shows the proportion of employees in each of those job categories in a future period.

It answers two questions:1. “Where did people in

each job category go?”2. “Where did people now

in each job category come from?

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Determining Labor Surplus or Shortage

• Based on the forecasts for labor demand and supply, the planner can compare the figures to determine whether there will be a shortage or surplus of labor for each job category.

• Determining expected shortages and surpluses allows the organization to plan how to address these challenges.

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Goal Setting and Strategic Planning

• The purpose of setting specific numerical goals is to focus attention on the problem and provide a basis for measuring the organization’s success in addressing labor shortages and surpluses.

• The goals should come directly from the analysis of supply and demand.

• For each goal, the organization must choose one or more human resource strategies.

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Options for Reducing a Surplus

Downsizing Pay reductions Demotions

Transfers Work sharing

Hiring freeze

Natural attrition

Early retirement Retraining

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Downsizing

Downsizing: In a business enterprise, downsizing is reducing thenumber of employees on the operating payroll. Some usersdistinguish downsizing from a layoff , with downsizing intendedto be a permanent downscaling and a layoff intended to be atemporary downscaling in which employees may later berehired. Businesses use several techniques in downsizing,including providing incentives to take early retirement andtransfer to subsidiary companies, but the most commontechnique is to simply terminate the employment of a certainnumber of people.

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Work-Sharing

• Work-Sharing (WS) is an adjustment program designed tohelp employers and employees avoid layoffs when there is atemporary reduction in the normal level of business activitythat is beyond the control of the employer. The measureprovides income support to employees eligible forEmployment Insurance benefits who work a temporarilyreduced work week while their employer recovers.

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Hiring freeze,

• In a hiring freeze, an employer decides to stop hiring employees for all non-essential positions. It allows an employer to consolidate current employees and potentially restructure departments, to complete the work that is essential for serving the customers of the business.

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Options for Avoiding a Shortage

Overtime Temporary employees Outsourcing

Retrained transfers

Turnover reductions

New external hires

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Table 5.2: HR Strategies for Addressing a Labor Shortage or Surplus

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Test Your Knowledge

• A public accounting firm of 250 employees realizes they have a surplus of 15 support personnel. What should they do?A. Hire temporary workersB. Offer early retirementC. Downsize people in those positionsD. Wait for attrition and implement a hiring freeze

for those positions

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Answer

• A public accounting firm realizes they have a surplus of support personnel (not auditors). What should they do?

a. Hire temporary workersb. Offer early retirementc. Downsize people in those positionsd. Wait for attrition and implement a hiring freeze for those positions

There may be more than one good answer depending on the student’s rationale. D would have the least negative impact but may take a long time. “B” Early retirement would likely entice more than just support personnel and perhaps more than just 15 people which could cause a labor shortage. Downsizing would be fast but could create morale problems and a poor public image although with the small numbers this may not be much of a problem.

“A” is not appropriate until the surplus is managed.

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Implementing and Evaluating the HR Plan

• When implementing the HR strategy, the organization must hold some individual accountable for achieving the goals.

• That person must also have the authority and resources needed to accomplish those goals.

• Regular progress reports should be issued.• The evaluation of results should not only look at the

actual numbers, but should also identify which parts of the planning process contributed to success or failure.

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Recruiting Human Resources

• The role of human resource recruitment is to build a supply of potential new hires that the organization can draw on if the need arises.

• Recruiting: any activity carried on by the organization with the primary purpose of identifying and attracting potential employees.

• The goals of recruiting (encouraging qualified people to apply for jobs) and selection (deciding which candidates would be the best fit) are different enough that they are most effective when performed separately, rather than combined as in a job interview that also involves selling candidates on the company.

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Figure 5.2: Three Aspects of Recruiting

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Personnel Policies

Internal versus external recruiting

Lead-the-market pay strategies

Employment-at-will policies

Image advertising

Several personnel policies are especially relevant to recruitment:

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• Image advertising, such as in this campaign to recruit nurses, promotes a whole profession or organization as opposed to a specific job opening.• This ad is designed to create a positive impression of the profession, which is now facing a shortage of workers.

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Recruitment Sources: Internal Sources

• Job Posting: the process of communicating information about a job vacancy:– On company bulletin boards– In employee publications– On corporate intranets– Anywhere else the organization communicates

with employees

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Advantages of Internal Sources

1. It generates applicants who are well known to the organization.

2. These applicants are relatively knowledgeable about the organization’s vacancies, which minimizes the possibility of unrealistic job expectations.

3. Filling vacancies through internal recruiting is generally cheaper and faster than looking outside the organization.

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One in Three Positions AreFilled with Insiders

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Recruitment Sources: External Sources

Direct applicants

Referrals

Advertisements in newspapers and magazines

Electronic recruiting

Public employment agencies

Private employment agencies

Colleges and universities