Strategic HR Planning Report

SHR Planning

Joseph Winthrop B. GodoyJoseph Charles VilladelgadoMMT – Batch 36

Strategic HR ManagementStrategic HR Management• Strategic Human Resource ManagementStrategic Human Resource Management

– Involves aligning initiatives involving how people are managed with organizational mission & objectives

• Strategic Management ProcessStrategic Management Process– DDeterminingetermining what needs to be done to achieve corporate what needs to be done to achieve corporate

objectives over 3 - 5 yearsobjectives over 3 - 5 years– EExaminingxamining organization & competitive environment organization & competitive environment– EEstablishingstablishing optimal fit between organization & its environment optimal fit between organization & its environment – RReviewingeviewing & & revisingrevising strategic plan strategic plan

Process of Strategic ManagementProcess of Strategic Management

Major Factors Affecting HRM

StrategicStrategicHRMHRM

TechnologicalTechnologicalAdvancementAdvancement

DemographicsDemographicsand Diversityand Diversity

GlobalizationGlobalization

The Human Resource Environment

What do you think are the possible common job of the people in the pictures here?

Human Resource Planning

• What is Planning?– Planning is the process of predetermining a

course of action.

1.Planning is both a function and a skill.a) As a function, planning includes setting objectives,

scheduling work, evaluating suggestions and the skill of planning.

b) The skill of planning is the process of devising the methods by which the organization will proceed from its present situation


• What is Planning?

2. Planning is selecting and relating facts and devising and employing assumption about the future in the formulation of proposed activities believed necessary to accomplish desired results .• Through planning, managers and supervisors try to look

ahead, anticipate eventualities, prepare for contingencies, map out activities, and provide an orderly sequence for achieving the objective.


• What is Strategic Planning?– is an organizational management activity that is used

to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization's direction in response to a changing environment.


• What is Strategic Planning?– It is a disciplined effort that produces fundamental

decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future.

– Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful.

– Involves aligning initiatives involving how people are managed with organizational mission & objectives


• What is a Strategic Plan?– A strategic plan is a document used to

communicate with the organization the organizations goals, the actions needed to achieve those goals and all of the other critical elements developed during the planning exercise.


• Why Plan?1. Planning provides for effective utilization of all

company resources, including personnel, facilities and capital.

2. Planning helps reduce the potential problems associated with the uncertainties and risks that the future may bring.


• When to Plan?1. Planning must take place before acting. To

reverse this relationship would be an absurdity.2. All plans are tentative and subject to revision

as new facts become known.3. Typically, plans are re-examined frequently

and, if necessary, modified to provide for new conditions.

4. “If you fail to plan, you plan to fail!”


• How to Plan?– Planning will give you freedom to determine how

to accomplish your plan or objectives spelled out by management or immediate superior.

– Planning is part of every manager’s responsibility.1. Asses the present situation.

– Analyse all your current responsibilities to identify exactly what is being achieved and what isn’t.

– Know where you stand, where you will go and how to get there (goals)


• How to Plan?2. Identify and state the problem that the planning is intended

to solve.– Determine exactly what you are trying to accomplish by planning.– Identify what present conditions appear to to require modification or

elimination and what additional activities, personnel, and other resources seem desirable

– Consider what major hurdle (stumbling block) will have to be overcome

3. Forecast the future environment.– With knowledge and experiences– Identify the most important variables– Develop contingency plans in advance of future situation


• How to Plan?4. Obtain and classify information about the proposed

activities.– Examine carefully all the information available to you about the

plan might include.– Classify the information to reveal what is relevant to the

planning at hand and what relationship is among the various pieces of information.

5. Select planning premises.– After forecasting future conditions and classifying relevant

information, identify the assumptions under which the future activities are to be carried out

– These assumptions constitute the planning premises


• How to Plan?6. Examine alternative courses of actions.

– The goals that have been set for every Department can be achieved through various alternatives. Narrow them down to the few that seem to offer the best possibilities. Then examine these more closely.

7. Select a course of action.– When you have decided upon a course of action, you

have, in effect, adopted a plan.

8. Determine the details and timing of the selected plan.


• How to Plan?8. Determine the details and timing of the selected plan.

– In developing the details of your plan, address the following questions:

» What is necessary?» Where will the activities take place?» When will the activities occur?» Who will do it?» How will the work be done?


• What to avoid?1. Adhering too rigidly to the planning procedures.

2. Not consulting all levels before finalizing a plan.

3. Making assumptions about critical elements.

4. Overlooking training.


• Steps in Planning (Christian Practical View)• Luke 14:28-30 (28) If one of you is planning to build a

tower, you sit down first and figure out what it will cost, to see if you have enough money to finish the job. (29) If you don't, you will not be able to finish the tower after laying the foundation; and all who see what happened will make fun of you. (30) 'You began to build but can't finish the job!' they will say.

1. Pray – ask God’s wisdom for the plan – WHAT?2. Objective – to achieve the set goal/s – WHERE?3. Program – possible activities to be done - HOW?4. Schedule – beginning to the end of work - WHEN?5. Budget – manpower/people need funds – WHO?


A person may plan his own journey, but the

LORD directs his steps.Proverbs 16:9 (God’s Word)

Strategic Human Resource Planning


• Human Resources Planning (HRP) is a process that identifies current and future human resources needs for an organization to achieve its goals.

• Human Resources Planning should serve as a link between human resources management and the overall strategic plan of an organization.


• Right number of people with right skills at right place at right time to implement organizational strategies in order to achieve organizational objectives

• In light of the organization’s objectives, corporate and business level strategies, HRP is the process of analyzing an organization’s human resource needs and developing plans, policies, and systems to satisfy those needs


• Setting human resource objectives and deciding how to meet them

• Ensuring HR resource supply meets human resource demands

Factors Factors Affecting HRPAffecting HRP

Internal Factors These are the factors that relate to what is

already happening inside the business. This includes how the organisation is changing

to cope with new methods of working or new demands made on it, such as the introduction of technology or new products or services.

Also a way of considering the new skills that will be needed in the future and those that the existing staff already have. The gap between the skills already present and those that are needed can be measured.

Internal Planning Factors

1. Organizational Needs

2. Skills Requirements

3. Workforce Profiles

Organizational Needs The workforce needs to be able to adapt to

changes. Demand for products and services will affect

the number of people needed in certain roles. More staff may be needed in as

the business grows.

Skills Requirements Assessing the skills of the current workforce is

an essential part of HR planning as it enables a business to build up a profile of the training, experience and qualifications that employees already have.

This is very important whether the business is capital intensive or labour intensive.

As the nature and type of work changes within an organization, so do the skills requirements. An organization must measure the skill levels of its workforce in order to plan for the future - appraisals, awards, certificates etc.

Workforce Profiles This means that a manager can view and monitor

the types of employee working for the business. The people involved in HRP usually include

details such as age, gender, ethnicity and availability.

Knowing ages can help you plan for the future and also ensures that you fulfill any legislation requirements.

Profiling the qualifications and training of your workforce allows a business to make use of any special skills staff members have.

External Planning Factors

These are the factors that influence the business from outside its direct control.

1. Supply of Labor

2. Labor Costs

3. Workforce Skills

4. Government Policies

5. Labor Market Competition

External Planning Factors

6. Changing Nature of Work

7. Employee Expectations

8. Impact of Automation

9. Demand for Products and Services

Supply of Labor Typically, the supply of labour is dependent

on trends in unemployment and the types of skills that are needed by employers.

Labor Costs The cost of labor will depend on whether the

business is capital or labor intensive, as well as the extent to which the skills needed by that organization are available and accessible.

Workforce Skills Using published national statistics,

organizations can see the types of skills that are available in their local area or region.

Businesses need to consider their future needs and those of their competitors in order to make sure they attract the right people - this may mean extra incentives being offered.

Government Policies Government policies and changes to

education policies can lead to gaps in skills, or gaps in skills being addressed.

Labor Market Competition

As a business plans its workforce needs for the future, so do other businesses within the same industry.

There may not be enough skilled employees for each business, so you may need to offer more money to attract the right staff, however, you need to manage your funds well to make a profit.

Changing Nature of Work

Nowadays, employees need a wider range of skills and be willing to change employer and job role in order to stay in work.

Overnight working, flexible working hours and working from home are now common in the workplace. Flat organizational structures mean employees may have to move to get a promotion.

Employee Expectations

Differing types of contracts (part-time, full-time, temporary, casual, permanent) Everyone is different and employees may have business at home to take care of meaning they cannot work full-time.

Impact of Automation This addresses the changes in technology

over time and how this affects organisations - such as the internet and email, no need for phone operators, customers entering their own details online.

Demand of Products and Services

A business may have to alter or change its HR requirements or staff levels based on the natural changes in demand for goods or services.

Excess capacity is when an organization has too many goods or services on offer compared to the number of customers.


HRP Process• Interfacing with strategic planning

and scanning the environment• Taking an inventory of the company’s

current human resources• Forecasting demand for human

resources• Forecasting the supply of HR from

within the organization and in the external labor market

HRP Process Cont.• Comparing forecasts of

demand and supply• Planning the actions needed

to deal with anticipated shortage or overages

• Feeding back such information into the strategic planning process.

Example of the Basic Human Resources Planning Model

Organizational Objectives

Human Resource Requirements

Human Resource Programs

Feasibility Analysis

HRP Model

• Strategic Human Resource Planning – Links 1 & 5: HR objectives are linked to

organizational objectives and planning• Designed to insure consistency between

organization's strategic planning process and HRP. – So objectives of strategic plan are

feasible and– HR programs are designed around what

organizational objectives and strategies require in terms of human resource goals

Example of the Basic Human Resources Planning

ModelOrganizational Objectives

Human Resource Requirements

Human Resource Programs

Feasibility Analysis

1 2 3

4

5

HRP Model Cont.• Operational Human Resource

Planning– Steps 2,3, & 4

• Ensure HRP programs are coordinated and allows the organization to meet its human resource requirements.

Example of the Basic Human Resource Planning Model

Open new product line

Open new factory and distribution

system

Develop staffing for new installation

•Production workers

•Supervisors

•Technical staff

•Other managers

Recruiting and training programs feasible

Transfers infeasible because of lack of managers with right skills

Recruit skilled workers

Develop technical training programs

Transfer managers from other facilities

Develop new objectives and plans Recruit managers

from outsideToo costly to hire from outside

1 2 3

4

5

6

Link 1: Determine Demand (labor requirements)• How many people need to be working and in

what jobs to implement organizational strategies and attain organizational objectives.

• Involves forecasting HR needs based on organizational objectives

• Involves consideration of alternative ways of organizing jobs (job design, organizational design or staffing jobs)

• Example - Peak production could be handled by temporary workers or assigning overtime. Machine breakdowns assigned to maintenance department or handled by machine operators

Link 2: Determine HR Supply (availability)• Choose HRM programs (supply)

• Involves forecasting or predicting effect of various HR programs on employee flowing into, through and out various job classifications.

• First determine how well existing programs are doing then forecast what additional programs or combination of programs will do

• Need to know capabilities of various programs and program combinations

Determine Feasibility Links 3 & 4

• Capable of being done – Requires knowledge of programs, how

programs fit together and external environmental constraints (e.g., labor force, labor unions, technology created skill shortages) and internal environmental constraints (skill shortages within the organization, financial resources, managerial attitudes, culture)

• Do the benefits outweigh the costs– Difficulty in quantifying costs and benefits

Revise Organizational Objectives and Strategies

Link 5

If no feasible HR program can be devised, the organization must revise strategic plans.

Shortcomings of the model - HRP in Practice• Oversimplification of planning

process -Planning does not normally proceeds till find first acceptable plan

•More than one set of HR goals to satisfy link 1 and more that one acceptable plan to satisfy link 2 so:

•Typically choose the best HR goal for the strategic plan and the best program to satisfy that HR goal

Shortcomings of the model - HRP in Practice• Oversimplification of the benefit of planning is

the specific plans that result– Planning process has value in and of itself

• HRP in practice is usually less rational and may omit one or more of the steps– May lack knowledge required for forecasting– Incorrect assumptions about effectiveness

of HR programs– Does not engage in strategic planning– Resistance to change present HR systems

HRP should be :• Done to guide and coordinate all HR

activities so they work together to support the overall strategy

• Responsive to internal and external environment

• Planning - done in advance

• Strategic - linked with higher level planning

Human Resource Forecasting

• Process of projecting the organization’s future HR needs (demand) and how it will meet those needs (supply) under a given set of assumptions about the organization’s policies and the environmental conditions in which it operates.

• Without forecasting cannot assess the disparity between supply and demand nor how effective an HR program is in reducing the disparity.

Forecasting as a Part of HRPDEMAND FORECASTING

SUPPLY FORECASTING

Determine organizational

objectives

Demand forecast for

each objective

Aggregate demand forecast Does aggregate

supply meetaggregatedemand?

Go to feasibility analysis steps

Choose human resource programs

External programs

• Recruiting

• External selection

•Executive exchange

Internal programs

•Promotion

•Transfer

•Career planning

•Training

•Turnover control

Internal supply forecast External supply forecast

Aggregate supply forecast

No

Yes

Internal Supply Forecasting Information

• Organizational features (e.g., staffing capabilities)

• Productivity - rates of productivity, productivity changes

• Rates of promotion, demotion, transfer and turnover

External Supply ForecastingInformation

• External labor market factors (retirements, mobility, education, unemployment)

• Controllable company factors on external factors (entry-level openings, recruiting, compensation)

Demand ForecastingInformation

• Organizational and unit strategic plans

• Size of organization• Staff and Managerial

Support• Organizational design

Considerations in Establishing a Forecasting

System

•How sophisticated•Appropriate time frame•Subjective versus

objective forecasting methods

System Sophistication• Organizational size

– large organizations require more complex forecasting systems and likely to have the required skilled staff• Organizational complexity

– complex career paths and diverse skill requirements lead to more complex forecasting systems• Organizational objectives

– the greater the gap between current HR situation and desired HR situation the more sophisticated the system• Organizational plans and strategies

– the complex the plans are the more complex the forecasting system

Forecasting Time Frame

Depends on degree of environmental uncertainty

Factors creating uncertainty (shortening time frame)– many new competitors, changes in technology, changes in social, political and economic climate, unstable product demand

Factors promoting stability (longer time frame)– strong competitive position, slowly developing technology, stable product demand.

Subjective VS. Objective Forecasting

Objective is inappropriate when:– Lack expertise to use objective

methods– Lack the historical data or HR

data base is inadequate– Forecasting horizon is too long

for the available objective method

Demand Forecasting Methods

•Delphi Method•Staffing Table Approach•Regression Analysis•Time Series Analysis•Linear Programming

Supply Forecasting Methods

•Skills Inventory•Replacement Charts•Succession Planning•Flow Modeling/Markov Analysis•Computer Simulations

Organizational Life-Cycle Stages and HR Activities

LIFE-CYCLE STAGE

STAFFING COMPENSATIONTRAINING

AND DEVELOPMEN

T

LABOR / EMPLOYEE RELATIONS

Introduction

Attract best technical and professional talent.

Meet or exceed labor market rates to attract needed talent.

Define future skill requirements and begin establishing career ladders.

Set basic employee-relations philosophy of organization.

Growth Recruit adequate numbers and mix of qualifies workers. Plan management succession. Mange rapid internal labor market movements

Meet external market but consider internal equity effects. Establish formal compensation structures.

Mold effective management team through management development and organizational development.

Maintain labor peace, employee motivation, and morale.

Organizational Life-Cycle Stages and HR Activities (cont’d)LIFE-

CYCLE STAGE

STAFFING COMPENSATION

TRAINING AND DEVELOPMENT

LABOR / EMPLOYEE RELATIONS

Maturity Encourage sufficient turnover to minimize layoffs and provide new openings. Encourage mobility as reorganizations shift jobs around.

Control compensation costs.

Maintain flexibility and skills of an aging workforce.

Control labor costs and maintain labor peace. Improve productivity.

Decline Plan and implement workforce reductions and reallocations, downsizing and outplacement may occur during this stage.

Implement tighter cost control.

Implement retraining and career consulting services.

Improve productivity and achieve flexibility in work rules. Negotiate job security and employment-adjustment policies

How does HR Planning occur?

1. What does the environment look like?2. What are our future personnel needs?

(forecast demand)a. Judgmental

Estimates Rule of Thumb Delphi Technique NGT Brainstorming

The Nominal Group TechniqueA small group of 4-5 people gathers around a table. Leader identifies judgment issue and gives participants procedural instructions.

Participants write down all ideas that occur to them, keeping their lists private at this point. Creativity is encouraged during this phase.

Leader asks each participant to present ideas and writes them on a blackboard or flipchart, continuing until all ideas have been recorded.

Participants discuss each other’s ideas, clarifying, expanding, and evaluating them as a group.

Participants rank ideas privately in their own personal order and preference.

The idea that ranks highest among the participants is adopted as the group’s judgment.

The Delphi TechniqueLeader identifies judgment issues and develops questionnaire.

Prospective participants are identified and asked to cooperate.

Leaders send questionnaire to willing participants, who record their judgments and recommendations and return the questionnaire.

Leaders compiles summaries and reproduces participants’ responses.

Leader sends the compiled list of judgment to all participants.

Participants comment on each other’s ideas and propose a final judgment.

Leader looksfor consensus

Leader accepts consensus judgment as group’s choice.


1. What does the environment look like?2. What are our future personnel needs?

(forecast demand)b. Statistical

Regression

Statistical Techniques Used toProject Staffing Demand NeedsName

Regression analysis

Productivity ratios

DescriptionPast levels of various work load indicators, such as sales, production levels, and value added, are examined for statistical relationships with staffing levels. Where sufficiently strong relationships are found, a regression (or multiple regression) model is derived. Forecasted levels of the retained indicator(s) are entered into the resulting model and used to calculate the associated level of human resource requirements.

Historical data are used to examine past levels of a productivity index (P):

P = Work load / Number of PeopleWhere constant, or systematic, relationships are found, human resource requirements can be computed by diving predicted work loads by P.

Statistical Techniques Used to Project Staffing Demand Needs (cont’d)Name

Personnel ratios

Time series analysis

Description

Past personnel data are examined to determine historical relationships among the employees in various jobs or job categories. Regression analysis or productivity ratios are then used to project either total or key-group human resource requirements, and personnel ratios are used to allocated total requirements to various job categories or to estimate for non-key groups.

Past staffing levels (instead of work load indicators) are used to project future human resource requirements. Past staffing levels are examined to isolate and cyclical variation, long-tem terms, and random movement. Long-term trends are then extrapolated or projected using a moving average, exponential smoothing, or regression technique.

Regression Analysis1. Statistically identify historical predictor of workforce size

Example: FTEs = a + b1 sales + b2 new customers

2. Only use equations with predictors found to be statistically significant

3. Predict future HR requirements, using equationExample: (a) FTEs = 7 + .0004 sales + .02 new

customers (b) Projected sales = $1,000,000 Projected new customers = 300 (c) HR requirements = 7 + 400 + 6 = 413

Determining the Relationship Between Hospital Size and Number of Nurses


b. Statistical (cont.) Ratio analysis

2. What are our future personnel needs? (demand forecast cont.)


3. Are resources available – internally or externally – to fill those needs?a. Internal Replacement charts

Employee Replacement Chart for Succession Planning


3. Are resources available – internally or externally – to fill those needs?a. Internal Replacement charts Promotability


3. Are resources available – internally or externally – to fill those needs?a. Internal Replacement charts Promotability Succession planning Skills inventory Transition (Markov) matrix

A Sample Transition MatrixPart A: Personnel Supply

Estimated Personnel Classification in Year T + 1 (%)

Classifications in Year T P M S Sr A Exit

Partner .70 .30Manager .10 .80 .10Supervisor .12 .60 .28Senior .20 .55 .25Accountant .15 .65 .20

Part B. Staffing LevelsEstimated Personnel Availabilities in Year T + 1 (%)

BeginningClassifications in Year T Levels P M S Sr A ExitPartner 10 7 3Manager 30 3 24 3Supervisor 50 6 30 14Senior 100 20 55 25Accountant 200 30 130 40

10 30 50 85 130


3. Are resources available – internally or externally – to fill those needs?

b. External – what do you look at?

- try to determine availability of qualified labor; Surplus? Shortage?

How does HR Planning occur?4. What should we do? - create plan of action to reconcile supply and

demand

a. Set objectives

b. Generate alternatives

Staffing Alternatives to Deal with Employee Surpluses

Source: Compliments of Dan Ward, GTE Corporation

Staffing Alternatives to Deal with Employee Shortages

Source: Compliments of Dan Ward, GTE Corporation

How does HR Planning occur?4. What should we do? - create plan of action to reconcile supply and

demand

a. Set objectives


c. Assess alternatives

Alternative Scheduling OptionsAlternative Percent Using

(N = 427 companies)The following definitions were used in this survey for alternative scheduling strategies:

• Part-time: A regular employee who works fewer than 35 hours per week.

• Flextime: A system than enables employees to vary their schedules: Usually, the flexibility applies to starting and finishing times.

• Compressed workweek: A full-week schedule (usually 40 hours) than occurs in fewer than five days, such as four 10-hour days.

• Job sharing: Two or more employees split a full-time position, diving the responsibilities, and, to some degree, the compensation.

• Work-at-home: A program that enables employees to complete work at home (or at a remote office closer to home) on a regular basis. It is often referred to as “flexplace” or “telecommuting.”

84%

40%

23%

18%

13%


4. What should we do? - create plan of action to reconcile supply and

demand

a. Set objectives


c. Assess alternatives

d. Choose alternative – KEEP PHILOSOPHY IN MIND


5. How did we do?

a. Did company avoid surplus/shortage?

b. Evaluate usefulness of methods used

c. Goals v. Production Levels, etc.

END

Leadership & Management

Strategic HR Planning Report