Human Resources Planning Process

Dr Sorab Sadri and Prof. Jayashree Sadri

The Process of Human Resource Planning

• Organizations need to do human resource planning so they can 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

Overview of the Human Resource Planning Process

Human Resource Forecasting

• HR Forecasting attempts to determine the supply and demand for various types of human resources, and 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 surpluses and shortages

HUMAN RESOURCE PLANNING

FORECASTING HR REQUIREMENTS (DEMAND ANALYSIS)

(Trying to predict future staffing needs)

Managerial Estimates

Sales Projections

Simulations

Vacancy Analysis (projected turnover)

FORECASTING HR AVAILABILITY (SUPPLY ANALYSIS)

(Predicting worker flows and availabilities)

Succession or Replacement Charts

Skills Inventories (use of HRIS)

Labor Market Analysis

Markov Analysis (Transition Matrix)

Personnel Ratios

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.

CORRELATIONS/PROJECTIONS

SIZE OF HOSPITAL NUMBER OF NURSES

200 240

300 260

400 470

500 500

600 620

700 660

800 820

900 860

SIMULATION MODEL/REGRESSION FORECAST

TARGET STORES STAFFING FORECAST

MODEL

Y = 8 + .0011(X1) + .00004(X2) + .02(X3)

Y = Number of employees needed to staff the storeX1 = Square feet of sales spaceX2 = Population of metropolitan areaX3 = Projected annual disposable income in millions of dollars

Y = 8 + .0011(50,000sq ft) + .00004(150,000popul) + .00000002($850 million)

Y = 8 + 55 + 6 + 17

Y = 86 employees needed at this store

VACANCY ANALYSISHistoric departures used to project turnover

LEVEL # EMPL TURN % Expected Vacancies Expected to Remain

TOP MGMT 100 20 % 20 80

MID MGMT 200 24 % 48 152

LOW MGMT 600 22 % 132 468

SKILLED W 600 16% 96 504

ASSY WKRS 2000 12 % 240 1760

TOTALS 3500 536 2964

AVERAGE TURNOVER PERCENTAGE = 536 / 3500 = .1531

Determining Labor SupplyPredicting Worker Flows and Availabilities

• Succession or Replacement ChartsWho has been groomed/developed and is ready for promotion right NOW?

• Human Resource Information Systems (HRIS)An employee database that can be searched when vacancies occur.

• Transition Matrices (Markov Analysis)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?

• Personnel / Yield Ratios How much work will it take to recruit one new accountant?

SUCCESSION PLANNING

REPLACEMENT CHARTFOR EXECUTIVE POSITIONS

POSITION REPLACEMENT CARDSFOR EACH INDIVIDUAL POSITION

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

POSITION WESTERN DIVISION SALES MANAGER

DANIEL BEALER Western Division Sales Mgr Outstanding Ready Now

PRESENT PROMOTIONPOSSIBLE CANDIDATES CURRENT POSITION PERFORMANCE POTENTIAL

SHARON GREEN Western Oregon Sales Manager Outstanding Ready NowGEORGE WEI N. California Sales Manager Outstanding Needs TrainingHARRY SHOW Idaho/Utah Sales Manager Satisfactory Needs TrainingTRAVIS WOOD Seattle Area Sales Manager Satisfactory Questionable

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

HUMAN RESOURCE INFORMATION SYSTEMS (HRIS)

PERSONAL DATA

Age, Gender, Dependents, Marital status, etc

EDUCATION & SKILLS

Degrees earned, Licenses, Certifications

Languages spoken, Specialty skills

Ability/knowledge to operate specific machines/equipment/software

JOB HISTORY

Job Titles held, Location in Company, Time in each position, etc.

Performance appraisals, Promotions received, Training & Development

MEMBERSHIPS & ACHIEVEMENTS

Professional Associations, Recognition and Notable accomplishments

PREFERENCES & INTERESTS

Career goals, Types of positions sought

Geographic preferences

CAPACITY FOR GROWTH

Potential for advancement, upward mobility and growth in the company

Transition Matrix

Example for an Auto Parts Manufacturer

MARKOV ANALYSIS(STATISTICAL REPLACEMENT ANALYSIS)

TO: A TRANSITION MATRIX

FROM:

TOP MID LOW SKILLED ASSY EXIT

TOP .80 .02 .18

MID .10 .76 .04 .10

LOW .06 .78 .01 .15

SKILL .01 .84 .15

ASSY .05 .88 .07

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

MARKOV ANALYSIS – 2(Captures effects of internal transfers)

(Start = 3500) A TRANSITION MATRIX

FROM/ TO: TOP MID LOW SKILLED ASSY EXIT

TOP 100 .80 .02 .18

MID 200 .10 .76 .04 .10

LOW 600 .06 .78 .01 .15

SKILL 600 .01 .84 .15

ASSY 2000 .05 .88 .07

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

END YR WITH: 100 190 482 610 1760 [358 left]NEED RECRUITS ? 0 10 118 240* 368 tot

NEED LAYOFFS ? (10)* (10) tot

KEEP STABLE 100 200 600 600 2000 = 3500 Tot

MARKOV ANALYSIS – 3(Anticipates Changes in Employment Levels)

Employment needs are changing. We need a 10% increase in skilled workers (660), and a 15% decrease in assembly workers (1700) by year’s end.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

(Start = 3500) A TRANSITION MATRIX

FROM/ TO: TOP MID LOW SKILLED ASSY EXIT

TOP 100 .80 .02 .18

MID 200 .10 .76 .04 .10

LOW 600 .06 .78 .01 .15

SKILL 600 .01 .84 .15

ASSY 2000 .05 .88 .07

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

END YR WITH: 100 190 482 610 1760 [358 left]NEED RECRUITS ? 0 10 118 50*

NEED LAYOFFS ? (60)*

NEW LEVELS 100 200 600 600 1700 = 3260 tot

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.

PERSONNEL / YIELD RATIOS

Past experience has developed these yield ratios for recruiting a Cost Accountant:

FOR EVERY 12 APPLICATIONS RECEIVED, ONLY 1 LOOKS PROMISING ENOUGH TO INVITE FOR AN INTERVIEW

OF EVERY 5 PERSONS INTERVIEWED, ONLY 1 IS ACTUALLY OFFERED A POSITION IN THE ORGANIZATION

OF EVERY 3 JOB OFFERS MADE, ONLY 2 ACCEPT THE POSITION

OF EVERY 10 NEW WORKERS WHO BEGIN THE TRAINING PROGRAM, ONLY 9 SUCCESSFULLY COMPLETE THE PROGRAM

THUS: 100 APPLICATIONS MUST BE RECEIVED, so that8.33 JOB INTERVIEWS CAN BE HELD, so that1.67 JOB OFFERS CAN BE MADE, and1.11 PEOPLE MUST BE TRAINED, so that we getONE NEW COST ACCOUNTANT!!!