Human Resource Planning

Sometimes referred to as ‘Workforce

Planning’

Analyzing and forecasting the number

of workers and the skills of those
workers that will be required by the
organization to achieve its objectives.
 Human Resource Management (HRM)

The strategic approach to the effective

management of an organization’s
workers so that they help the business
gain a competitive advantage.

Competitive advantage - An advantage

that a firm has over its competitors,
allowing it to generate greater sales
and/or retain more customers than its
competition.
 HRM includes:

Workforce planning
Recruitment, selection and induction of
new employees
Training and development of staff
Performance management and
performance appraisals
Promotion and relocation of staff
Reviewing remuneration packages
Disciplinary and grievance procedures
Looking after the welfare of employees
 HR Planning or Workforce Planning

Many entrepreneurs argue that people

are a firm’s most valuable resource.
Employing the right people helps
businesses to achieve their aims and
objectives. To do this, a firm needs to
use human resource planning (or
workforce planning).
 Workforce Planning

Is the process of anticipating the current and

future demand for workers in an organization. It
can be short term or long term:
 Short term workforce planning deals with the

existing and upcoming demands of an

organization, such as employing workers to
cover for staff who are about to resign, retire
or go on maternity leave.
 Long term workforce planning looks at the

human resource needs of the business in the

foreseeable future.
 Demand for labor depends on several factors:

Historical data and trends – such as

the change in the size of the
workforce over the past few years or
the popularity of part-time and flexible
working hours. However, past data is
not indicative of what actually
happens in the future.
 Demand for labor depends on several factors:

Sales and income levels – higher levels

of income and spending in the economy
will lead to more jobs being created.
Labor turnover rates – measure the
number of employees who leave a firm
as a percentage of its workforce, per
year. The higher the staff turnover rate,
the more workers a firm will need to
recruit.
 Demand for labor depends on several factors:

The flexibility and workload of staff –

a highly flexible and skilled workforce
may be able to cope if there is a
sudden shortage of staff. In a firm
where people are over-specialized and
where workload is mounting, it might
be necessary to employ more staff.
Demand for labor depends on several factors:

Demographic changes – government

data regarding changes in the
demographics of the workforce, such
as the changes in the number of
female workers in the economy or the
number of graduates, can help
managers to forecast their human
resource needs.
 Reasons why people leave their jobs
CLAMPS

Challenge
Location
Advancement
Money
Pride (or Prestige)
Security (Job)
 Low Turnover Rate

Managers have recruited the right

people for the job
Existing employees are content and
motivated to work
Employer offers training for both
personal and professional
development (helps boost morale as
staff see their employers valuing their
contributions and development)
 High Turnover Rate

Staff are incompetent or lack job

satisfaction
Better job opportunities and
remuneration packages offered by
other employers
Add to the costs of recruiting and
training new staff in addition to the
lost productivity when experienced
staff leave
 Supply of HR &
Demographic Changes

Demography – is the statistical study

of population characteristics.

Businesses need to understand these

changes so that they can respond
appropriately.
Demographic changes can be caused by
changes in various factors.

Net birth rate

Net migration rate
Retirement age
Women entering or returning to
the workforce
 Effect of demographic changes on labor
supply

1. Natural population growth (or

decline) – birth rate exceeds death
rate (or vice versa)
 Opportunities:
 May be easier to recruit good staff as
the working population increases.
 Constraints:
 Increased birth rates may take years
before they impact on the working
population.
 Effect of demographic changes on labor
supply

2. Net migration (immigration compared

with emigration)
 Opportunities:
 May be easier to recruit good staff at lower
rates of pay.
 Higher qualified staff might be recruited from
other countries.
 Constraints:
 ‘Brain drain’ of qualified and experienced staff
to other countries will reduce competitiveness.
 Immigrants may need more training, e.g. in
language and cultural issues.
 Effect of demographic changes on labor
supply

3. Aging population (the average

age of the population increases as a
result of rising life expectancy)
 Opportunities:
 It is often claimed that older staff are
more loyal and reliable than younger
workers – what do you think?
 Constraints:
 Older staff may be less flexible and
adaptable, e.g. to the introduction of
new workplace technologies.
 Other factors that will affect the supply of
labor

Internal workforce (employees who

already work for the organization)
Cost of living in a particular area
Cost and availability of
transportation
Rate of unemployment in the local
area
 Demographic Changes

http://www.youtube.com/watch?v=2XIQkDldp
mI
Internal factor that influence HR planning: Changes in
labor mobility

Mobility of labor is the extent to

which labor can move to different
locations (geographical mobility) and
their flexibility in changing different
jobs (occupational mobility)
 Labor mobility

Key terms:
 Occupational mobility of labor –
extent to which workers are willing
and able to move to different jobs
requiring different skills
 Geographical mobility of labor –

extent to which workers are willing

and able to move geographical
region to take up new jobs
 Geographical mobility limitations

Friends and family ties

Relocation costs (moving expenses)
Fear of the unknown
The cost of living in a particular area
Language and cultural differences
 Occupational mobility limitations

Tends to be greater with acquired attributes

of a worker (such as education,
qualifications, skills, experience and training)
Younger people tend to be more mobile as
they often change careers
Some workers are immobile because they are
highly specialized in their area of expertise
If employers discriminate against people’s
age, gender, religion or race then this will
also hinder the workers mobility
 Labor mobility

High labor mobility helps a country achieve

economic efficiency.
A mobile worker means that if jobs are lost in
one industry or region, workers are willing
and able to move to other jobs and/or other
occupations.
This helps to keep structural unemployment
low.
 Structural unemployment – when a worker loses his
job due to the changing structure of the nation’s
economy (ie. Developing country moves from an
agricultural base to a manufacturing base and farming
techniques become less labor intensive and more
 Labor mobility

In developed economies, labor tends to be

relatively immobile because:
 High level of home ownership mean that
workers are reluctant to pay the cost in
time and money of arranging a house
sale and purchase in another region
 High skill levels in one occupations may

mean that workers are not equipped to

deal with machines, processes and
technologies in other industries and
occupations
 Labor mobility

In emerging market countries, despite strong

family and ethnic ties to one area, mobility
tends to be higher because:
 Home ownership is low
 Low skill levels mean that workers

can undertake low-skilled jobs in

many different industries
 Labor mobility

A high degree of geographical mobility,

especially between rural and urban areas,
can lead to over-crowding and very poor
living conditions in towns and cities.
Many governments pursue policies to
attempt to increase labor mobility. These
include:
 Relocation grants for key public sector workers
 Job center and other gov’t. offices to advertise job
vacancies nationally
 Training and retraining programs for the unemployed
 External factor that influence HR planning:
New Communication Technologies

Recruitment – use of ICT (Information

Communication Technology) ex.
LinkedIn to advertise jobs, online
application, video-conferencing
Meetings – Skype, video-conferencing
Appraisals – use of Google Docs
Flexitime and teleworking
Online training courses
 Recruitment and Selection

 Vital to the running of the business since labor is

an essential factor of production needed to provide
goods and services
 Hiring the right people ensures that businesses can
function effectively
 Hiring is very time consuming and expensive,
therefore managers must ensure the steps in the
process of recruitment are effective
 The process starts when a vacancy becomes
available within the organization, perhaps due to
expansion of the business or simply to replace staff
who have decided to leave the organization.
 Summary of the recruitment process

1. Conduct a job analysis to determine the firm’s need

to hire new employees
2. Produce a job description and person specification
3. Advertise the vacant post
4. Check applications and shortlist suitable candidates
5. Interview the shortlisted candidates
6. Perform aptitude testing (if applicable)
7. Check references for shortlisted candidates
8. Job offer made to the best candidate
9. Issue and sign the contract of employment
10. Carry out induction of new recruit
 Key Terms

Job analysis – part of the recruitment process

that involves scrutinizing the different
components of a job (such as the routine
tasks and responsibilities of the post holder)
to determine what it entails.
Job description – is a document that outlines
the nature of a particular job (roles, tasks and
responsibilities).
Person specification – is a document that
gives the profile of the ideal candidate for a
job, such as their skills, qualifications and
experience.
 Job Analysis

Before a business recruits new workers,

managers usually carry out a job analysis.
Managers may want to verify:
 The skills and training required to do the job

 The qualifications and personal qualities needed to carry

out the job

 The rewards needed to recruit and retain the post

holder

The job analysis help create 2 documents:

 Job description

 Person specification
 Job Description

Is a document that outlines the details

of a particular job.
It refers to what the job entails rather
than the type of person required for
the job.
Includes job title, roles, duties and
responsibilities.
A typical statement in a job
description that allows flexibility is
‘and any other reasonable job
 Person Specification

Is a document that profiles the ideal

candidate, such as the qualifications,
skills, and experiences sought by the
employer.
Lists of personal attributes that the
successful applicant should possess,
such as the ability to lead a team and
to think critically.
 Advertise the JOB

Include important information such as

 the hours of work
 the rate of pay and fringe benefits
 contact name and address for the business
 Deadline date for receiving applications
It is usual to advertise a job internally
(within the organization) and
externally.
A good job advertisement will
ultimately attract only suitable
applicants who have the potential to
 The 5 TRAPS in designing effective job
advertisements:
Truthful
 Should not make exaggerated or false claims about the job,
the pay or the organization
Relevant
 Need to be succinct (concise) in order to attract people’s
attention and interest
Accurate
 Job description and person specification must be precise
Positive
 Helps encourage people to apply for a job in the
organization
Short
 Given that advertising space is expensive, only appropriate
and necessary information should go in a job advert.
 The Application/Selection Process

Application Methods:
 Application Form
 Curriculum Vitae (resume)
 Covering Letter

Selection Process:
 Interviews
 Testing
 References
 Testing

4 main types of testing:

 Psychometric tests – assess a candidate’s personality.

The tests help to gauge the attitude of potential

recruits and their level of motivation.
 Aptitude tests – examine the ability and skills of

potential employees (ie. Typing, problem solving and

reasoning tests).
 Intelligence tests – calculate the mental ability of an

applicant such as their skills of numeracy, literacy and

general knowledge.
 Trade tests – are used to examine a candidate’s specific

skills (ie. Voice tests when recruiting for television

newsreaders).
 References

Written statements about an applicant from

an independent source, such as a previous
employer.
Referees may be asked to confirm the
strength and weaknesses of an applicant.
Final security check to ensure the
information given by candidates in their
application form, CV and interview are
accurate and truthful.
Employers can determine the suitability of
the applicant for the advertised position.
 Final Steps

The contract of employment

 Written statement of the terms and conditions of the

new employee’s employment

Induction
 Induction training for new hires to help them settle
into their new role
 Contents of an employment contract

1. Job title
2. Specific duties of the job
3. Date the job starts (and ends, if the agreement is a finite
contract)
4. Hours and days of work
5. Rate(s) and method of pay
6. Holiday and sick pay entitlements
7. Pension scheme arrangements
8. Outline of disciplinary procedures
9. Period of notice that must be given when employemnt is
terminated (from either party)
10. Names and signatures of both parties, and dated on the
contract
 Internal and External Recruitment

Internal recruitment – involves hiring people

who already work for the business to fill a
vacant post
External recruitment – is the process of hiring
people from outside the business. Methods:
 Newspaper advertising
 Specialist trade publications
 Internet advertising
 Commercial employment agencies
 Job centers
 Headhunting
 University visits
 Employee referrals
 Advantages and Disadvantages of
Internal Recruitment

Advantages: Disadvantages:
Cost effective Fewer applicants
Less down-time ‘Dead wood’
Less risk Time-consuming
Motivational Internal politics
 Advantages and Disadvantages of
External Recruitment

Advantages: Disadvantages:
‘New blood’ Greater degree of
Wider range of uncertainty
experiences Time-consuming
Larger pool of Expensive
applicants
 TRAINING

It is the process of providing opportunities

for workers to acquire employment-related
skills and knowledge.
Training is regarded as an important
investment in what is perhaps the
organization’s most valuable asset.
Training is not just for new staff! If it is to be
successful, it must be for all employees and
ongoing.
 Training starts with a strategy

It is important that a business provides

training that is consistent with the business
strategy.
The main steps in developing a training
strategy are to:
 Identify the skills and abilities needed by employees;
 Draw up an action plan to show how investment in
training and development will help meet business
goals and objectives;
 Implement the plan, monitoring progress and training
effectiveness
 Objectives of training & development

To enhance efficiency and effectiveness of

staff
To improve the quality of work by the
employees
To facilitate career and personal development
of employees
To develop a multi-skilled and productive
workforce
To help staff adapt to change (such as
technological, organizational, social and legal
changes)
 Benefits of training

A better skilled and more flexible workforce leads to

organizational targets being met
Improve competence leads to greater efficiency and
better productivity help to reduce costs
Higher morale as workers progress within the
organization (reduce absenteeism and staff turnover)
Business might find it easier to attract good quality
workers
Quality of output and level of customer service are
likely to increase
Helps employees adjust better to change
Workforce becomes more flexible, motivated and
productive
 Drawbacks to training

Financial costs
Effective training takes time to plan
Consumes large amount of a manager’s
valuable time
There is no guarantee that employees will
stay at the business after being skilled
 Types of Training

On-the-job (including induction and

mentoring)
Off-the-job
Cognitive
Behavioral
 On-the-job training

Training carried out while at the workplace

Can be delivered by the head of department,
supervisor or other specialist
Trainees learn from the skilled colleague
delivering the training at the place of work
Type of training involves “learning by doing”
Types:
 Induction training – introducing new employees to the
org.
 Mentoring training – involve partnership between 2
people
 Off-the-job training

Training carried out off-site

Ex: IB workshops
May involve day-release for training or
attendance at evening classes
Often middle managers are chosen to attend
these training courses and are then expected
to pass on the skills and knowledge that they
have acquired to the rest of their team
members
Trainee may be asked to give employer or
service provider some form of official
feedback
 Appraisal

Is the formal assessment of an employee’s

performance in fulfilling his/her job based on
the tasks and responsibilities set out in their
job description.
May be conducted annually or quarterly
 Reasons for appraisals

Assess and record an employee’s performance

Assist staff in reflecting on their performance at work
Provide opportunity to praise staff
Identify any barriers hindering the performance
Identify appropriate training and development needs
Set new targets and goals for continuous improvement
Aid professional development, helping employees to
plan their careers
Aid management in assessing the suitability of
individuals for a pay rise or promotion
 APPRAISALS

Advantages Disadvantages
 Time consuming
 Used to set targets  Feedback and follow-up action
 Allow managers to requires funding and
monitoring
praise staff  Can be subjective as
 Used for feedback perception and relationship at
 Identify strengths work can interfere with the
process
and areas in need  Staff may get offended
of improvement  Appraisers may lack the skills,
 Used as part of experience and confidence to
carry out effectively
evaluation to work  Employees may experience
out levels of pay unnecessary anxiety and
stress
 Types of Appraisal

Formative
Summative
360-degree feedback
Self-appraisal
 Formative Appraisals

Planned and ongoing process in which

appraisal evidence is used by employees to
inform them about what to do to improve
their work practices
Often used for appraising staff hired for a
probation (trial) period
Goal:
 Monitor the performance
 Identify strengths and weaknesses
 Problem areas can be identified
 Summative Appraisal

Written description of an employee’s

performance at work, summarizing personal
performance and achievements during the
year
Usually has recommendations for
improvements
Goal:
 To evaluate the performance or contribution of
workers by comparing this with a predetermined
standard or benchmark
 360-degree Feedback Appraisal

Involves collecting evidence about the

appraisee’s job performance from peers,
subordinates, line managers or other parties
(such as suppliers or customers) who have
direct contact with the employee
Obtained by questionnaires or interviews
Popular in appraising managers, with the aim
of providing useful and practical feedback to
improve managerial effectiveness
May not be suitable to all businesses since it
often relies on opinions rather than factual
evidence
 Self-appraisal

Employees appraising themselves based on

predetermined criteria
Appraisees are expected to be honest about
their strengths and weaknesses
Need to set realistic targets
Some may require to rate themselves
Quite often, the self-appraisal is compared to
the assessment carried out by the line
manager and then used as a basis for
subsequent discussions
 Steps for appraisal

Staff records and reports

Appraisal meeting
Appraiser completes a written report
Appraiser and appraisee sign the final written report
Countersignature from senior manager (if necessary)
If below ‘moderate’
Advisory letter to the employee
Counseling
Dialogue if not improvement
Closely monitor the performance
If no improvements, agreed time to dismiss the
employee
 Termination of Employment

Employment can be terminated in

the following:
Dismissal

Redundancy
Retirement
Resignation
 Dismissal

The termination of a worker’s employment

due to incompetence (unsatisfactory
performance) or a breach of contract
Person is ‘sacked’ or ‘fired’
Dismissal due to:
 Incompetence – ex. underperformance in the job
 Misconduct – ex. attendance, harrassment, missing
deadlines
 Gross misconduct – ex. theft, fraud, endangering
others
 Legal requirements – ex. dishonest about
qualifications
 Steps for dismissal

Initial verbal warning

Official written warning
Sign the letter of termination
 Redundancies

Also known as ‘retrenchments or lay-offs’

Occur when a business can no longer afford to
employ the worker or when the job ceases to exist
Options:

 Voluntary redundancies – when employer asks for

volunteers to leave; they offered redundancy package
(severance pay)

 Compulsory redundancies – when the employer has to

choose which workers to make redundant; LIFO method
(last in first out) or ‘retention by merit’ method (least
productive are made redundant)