The Process of Human Resource Planning

1. 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

2. Overview of the Human Resource Planning Process

3. 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: • Forecasting the demandfor labor • Determining labor supply • Determining labor surpluses and shortages

4. 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

5. 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.

6. CORRELATIONS/PROJECTIONS SIZE OF HOSPITALNUMBER OF NURSES 200 240 300 260 400 470 500 500 600 620 700 660 800 820 900 860

7. 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 store X1 = Square feet of sales space X2 = Population of metropolitan area X3 = 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

8. VACANCY ANALYSISHistoric departures used to project turnover LEVEL# EMPLTURN %Expected VacanciesExpected 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 200012 %2401760 TOTALS35005362964 AVERAGE TURNOVER PERCENTAGE = 536 / 3500 = .1531

9. Determining Labor SupplyPredicting Worker Flows and Availabilities • Succession or Replacement Charts Who 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: • “Where did people in each job category go?” • “Where did people now in each job category come from? • Personnel / Yield Ratios How much work will it take to recruit one new accountant?

10. SUCCESSION PLANNING REPLACEMENT CHART FOR EXECUTIVE POSITIONS POSITION REPLACEMENT CARDS FOR EACH INDIVIDUAL POSITION - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - POSITIONWESTERN DIVISION SALES MANAGER DANIEL BEALER Western Division Sales Mgr Outstanding Ready Now PRESENT PROMOTION POSSIBLE CANDIDATESCURRENT POSITIONPERFORMANCEPOTENTIAL SHARON GREEN Western Oregon Sales Manager Outstanding Ready Now GEORGE WEI N. California Sales Manager Outstanding Needs Training HARRY SHOW Idaho/Utah Sales Manager Satisfactory Needs Training TRAVIS WOOD Seattle Area Sales Manager Satisfactory Questionable - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

11. 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

12. Transition MatrixExample for an Auto Parts Manufacturer

13. 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 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

14. 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 STABLE100 200 600 600 2000 = 3500Tot

15. 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 LEVELS100 200 600 600 1700 = 3260tot

16. 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.

17. 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 that 8.33 JOB INTERVIEWS CAN BE HELD, so that 1.67 JOB OFFERS CAN BE MADE, and 1.11 PEOPLE MUST BE TRAINED, so that we get ONE NEW COST ACCOUNTANT!!!