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Why Companies Fail to Use Market Research Sufficiently

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					HR PLANNING
      7
The strategic role of HR Planning

  1. Developmental planning for strategic
       leadership
    • succession planning
    • leadership development


  2. Assessment of strategic alternatives
    • forecasting
    • sourcing of talents
The strategic role of HR Planning


  3. Adding value to HRM
    • HR planning linked to R & D efforts
    • HR planning linked to financial performance
    • HR planning for CEOs linked to profitability
The strategic role of HR Planning

  4. Contribution to strategic HRM
    • Top 3 reasons for HR planning
       •developing human resources
       •avoiding personnel shortages
       •obtaining information for decisions


  5. Strategic salary planning
       • matching compensation structures with
             business goals
Elements Affecting HR Needs

 • PERSONNEL CHANGES
  – Even if organization’s strategy remains static
  – Promotions, retirement, turnover


 • SUPPLY AND DEMAND
  – Quantity, quality, time, other measures
Elements Affecting HR Needs

• CHANGES IN LEGISLATION
  – factors in the political environment such as new
    wage increases, affirmative action, quotas, etc.


• PRODUCTIVITY CHANGES
  – reduction/increases in productivity
Elements Affecting HR Needs
 • ORGANIZATIONAL CHANGES
  – Changes in organizational goals and strategies create
    new positions and change old ones
     •   upgrading/downgrading of products/services
     •   expanding/reducing markets
     •   technological/administrative changes
     •   financial resources
  – Leads to downsizing, flattening organizational
    structures, diversifying, decentralizing, etc.
  – Can increase/reduce demand for some jobs
STEPS IN HR PLANNING
1. Interfacing with strategic planning and scanning the
   environment
2. Taking an inventory of the company’s human resources
3. Forecasting the demand for HR
4. Forecasting the supply of HR (internal and external)
5. Comparing forecasts of demand and supply
6. Planning the actions needed to deal with anticipated
   shortages or overages
7. Feeding back such information into the strategic
   planning process
FORECASTING TECHNIQUES
TREND ANALYSIS
  • studies a firm’s past employment needs over a
    period of years to predict future needs.

   • requires studying patterns of personnel deployment
     for some years to see what might continue to happen
     for sometime

   • valuable as an exploratory study
FORECASTING TECHNIQUES
RATIO ANALYSIS

  • technique for determining future staff needs by
    using ratios between variables like sales volume
    and number of employees needed

  • arrived at by cross-multiplying
FORECASTING TECHNIQUES
CORRELATION ANALYSIS

  • method of determining statistical relations between
    two variables. It requires determining first whether
    two factors - like a measure of business activity and
    staffing levels - are related.

  • if the variables are related, then we can forecast the
    required staffing level by forecasting business
    activity.

  • if done manually, shown through a scatter plot
FORECASTING INTERNAL SUPPLY OF HR

 How many can be recruited inside? This
  requires compiling and analyzing
  information on qualifications like:

 –   QUALIFICATIONS INVENTORIES
 –   REPLACEMENT CHARTS
 –   POTENTIAL INVENTORIES
 –   PERFORMANCE INVENTORIES
 Forecasting supply of HR
• Quantitative techniques
   –   Markov analysis (ratio analysis, trend analysis)
   –   network flow models
   –   attrition analysis
   –   computer simulations
   –   renewal models
• Qualitative techniques
   – replacement charts (succession planning)
   – supervisory estimates
           Supply Forecasting Techniques
                                               Percentage of Companies
                                                   Using Technique


Succession Planning or Replacement Charts                 66.7
Human Resource Inventories                                66.7
Supervisor Estimates                                      48.5
Rules of Thumb or Non-statistical Formulas                27.3
Computer Simulation                                       12.1
Renewal Models                                             9.1
Regression Analysis                                        7.6
Markov or Network Flow Models                              6.1
Exponential Smoothing or Trend Extrapolation               6.1
Operations Research Techniques                      4.5
           Demand Forecasting Techniques

                                             Percentage of Companies
                                                 Using Technique


Supervisor Estimates                                     69.7
Succession Planning or Replacement Charts                65.2
Rules of Thumb or Non-statistical Formulas               37.9
Computer Simulation                                      18.2
Exponential Smoothing or Trend Extrapolation             12.1
Regression Analysis                                        9.1
Delphi Technique                                           3.0
MANAGERIAL ISSUES IN PLANNING

   • Personal Implications - planning requires
     managerial discipline and processes
   • Changing Receptivity towards Planning - HR
     planning as a shared function between line
     managers and HRM
   • Implications of the European Experience -
     Europe has strict laws about layoffs making HR
     Planning the only alternative to avoiding HR
     surpluses and shortages.
                       PEST ANALYSIS
• Political
   – laws, global and local changes, political
     pressures, political stability, etc.
• Economic
   – exchange rates, inflation levels, income growth,
     debt & saving levels (which impact available
     money) and consumer & business confidence
• Social
   – beliefs, values and attitudes that impact on
     purchasing preferences and trends, etc.
• Technological
                       SWOT ANALYSIS
• Company strengths and weaknesses need to
  be identified in all aspects of the business
  – relative to the rest of the market (i.e. compared to
    competitors)
  – relative to previous performance or expected
    performance
  – relative to customer demand (for example all
    companies in an industry may fail to satisfy a particular
    customer need. This is a weakness - and the first
    company to match this customer need will have a
    strength relative to the other companies in the industry.)
CONDUCTING A SWOT ANALYSIS

• Points to consider:
  – opportunities arise out of weaknesses
  – correcting a weakness presents a marketing
    opportunity
  – failing to maintain a strength is a threat to the company
  – weaknesses must not cancel out company strengths
  – focus on key areas of concern that require action
  – score items in the SWOT analysis (5 is a major strength
    and 1 a major weakness)
CONDUCTING A SWOT ANALYSIS

 • Marketing Aspects
  Market share and market segments addressed ·
  Competitive Structure · Customer base (quality,
  size, loyalty, etc.) · Demand forecasts · Product
  range and quality. · Services provided ·
  Distribution capabilities and costs · Sales
  effectiveness · Promotional effectiveness. Image
  and reputation · Pricing options · Speed to market
  · Customer service · R&D and Innovations / new
  products · Marketing skills and experience ·
  International / export market capabilities
CONDUCTING A SWOT ANALYSIS

 • Operational / Manufacturing Aspects
  · Production / Manufacturing facilities (age,
  quality, speed...) · Economies of scale · Skills
  (Employee, technical, etc.) · Product failure rate ·
  Flexibility · Costs · Supply / raw material
  availability
  CONDUCTING A SWOT ANALYSIS
• Human Resource Aspects
 · Employee skills, motivation, dedication and
 experience · Employee satisfaction · Employee costs ·
 Work environment · Staff turnover rate · Management
 and Organisational Aspects · Management skills and
 experience · Leadership and team skills · Ability to
 respond to market change · Flexibility and adaptability
 Financial Aspects
 · Cost of capital · Profitability / Return on investment ·
 Financial Stability · Sales / Employee · Cash
 availability
KEY STEPS IN CONDUCTING A SWOT ANALYSIS
   1. Brainstorming - use a mind map!
   2. Translate brainstorm into the top five to ten       ideas (per
      category)
   3. Review and discuss each of the top ideas and their potential
      implications to the organization.
   4. Begin with O-T to gain a better understanding of how your
      organization can relate to its external environment. Then move
      to S-W to see how they relate to the opportunities and threats
      external to the organization.
   5. Rank and analyze output:
      Is both a strength of the organization and an opportunity in the
      external environment? This represents a potential area for growth.
      Is both a weaknesses of the organization and threat in the external
      environment? This represents an area that needs to be addressed.
   Why develop a human
     resources plan?
An HR plan can serve as an information base for many
  purposes, such as:
• identifying HR requirements to better meet business
  objectives
• promoting a proactive approach to HR management
  and career planning
• reducing the time and cost of future staffing
• identifying opportunities for synergy, such as
  opportunities for collaborative staffing actions
• identifying employment equity goals and facilitating
  their realization
   Why develop a human
     resources plan?
An HR plan can serve as an information base for many
  purposes, such as:
• identifying official languages/skills requirements
• signaling potential work load and/or work force
  adjustment situations
• predicting potential shortfalls in the labor force
  and market availability
• highlighting projected retirements and resignations
  and developing appropriate succession plans
• identifying seasonal or cyclical hiring patterns
Information requirements for
        HR Planning
 • What are the Company’s strategic objectives for the
   next year; for the next three years; for the next five
   years?
 • What are the capabilities and capacities of the
   organization's current workforce and what are the
   organization's current or existing HR needs?
     Are there existing employees who can do the work at
      this time?
     What are the strengths and weaknesses of existing
      resources?
     Are the positions classified at the appropriate groups
      and levels?
Information requirements for
        HR Planning

    Where are the labor markets in which likely
     candidates are located?
    Is the workforce sufficiently diverse to reflect the
     labor market availability (i.e. employment equity
     considerations)?
    Is the workforce capable of meeting the obligations?
    What are employees' career development needs,
     plans and aspirations?
Information requirements for
        HR Planning
• What is the organization's future supply of,
  and demand for, employees to meet the
  business plans and priorities in a timely
  manner?
         Which functions will need to be performed?
         How will the current functions evolve?
         How should the organization be structured?
         Will the positions be classified at the appropriate
          groups and levels?
         Which type of competencies/qualifications will be
          required?
Information requirements for
        HR Planning
• Will the competencies required to perform the work be the same
  as now? If not, what will be required?
• How many people will be needed to perform the work? At what
  point in time and for how long?
• Are there employees who, with appropriate development, could
  perform the work in the future?
• What attrition will occur, e.g. retirements, deployments or
  promotions out of the organization?
• How will corporate memory be preserved?
• How will specialized skills or knowledge be retained?
Information requirements for
        HR Planning
• What use of extended leave is estimated (e.g., sick leave,
  parental leave, leave-with-income-averaging)?
• How can employees' career development needs, plans and
  aspirations be accommodated?
• Where will the labor market be in which likely candidates will
  be found?
• Will the workforce be or remain sufficiently diverse to reflect
  future labor market availability (i.e. employment equity
  considerations)?
STRATEGIC HR PLANNING TOOLS
• Corporate Head count "Fat" Assessment -
  assessment tools that will let you know in advance where head
  count and overhead costs are excessive.

• Redeployment / Agility Plans
  It is not uncommon for new markets and products to open (and
  close) rapidly. Companies need to have a strategy to remain
  "agile" and to be able to move people, and resources rapidly
  from areas of low return to areas of a higher return.

• "Smoke" Detectors (Predictors)
  If HR is to be proactive it needs to be able to anticipate
  problems. Developing HR systems and metrics that indicate
  potential problems might give us sufficient time to develop plans
  and strategies to either avoid the problem or minimize impact.
STRATEGIC HR PLANNING TOOLS

 • Bench Strength (Back Fill) In this time of high
   turnover, it's increasingly essential to have a strategy of
   identifying and developing individuals that can take over if an
   employee leaves. A bench strength plan differs from traditional
   succession planning in that it only covers replacing key jobs
   within a single department. It is not a company-wide succession
   plan. Individual managers are held responsible for developing at
   least one individual to fill every key job.
STRATEGIC HR PLANNING TOOLS

 • Employee Challenge Plan
  One of the primary reasons employees leave their jobs is due to
  a lack of challenge. HR can dramatically increase retention
  rates if it gets managers to develop individual "Challenge
  Plans" for workers.

 • Retention Plan
  A retention plan is a corporate strategy to lower turnover. The
  first step is to identify key performers and hard to fill positions.
  Individuals that may be "at risk" are identified. Individuals or
  position -wide strategies are then developed to increase their
  retention rates. Additional efforts are made to identify why
  people stay in their jobs and why people leave.
STRATEGIC HR PLANNING TOOLS

 • Quality of Labor Supply Forecasts
   Identifying the "quality" of the future labor supply is a medium
   term strategy based on the assumption that the available labor
   force will not have the competencies and skills that our company
   needs. Accurate forecasting will allow a company to prepare
   training and development plans to upgrade the available talent.
   Adequate preparation will give a competitive talent advantage
   over rivals.
STRATEGIC HR PLANNING TOOLS

 • Horizontal Progression Plan
   Because most companies have de-layered or eliminated many
   management positions there are fewer opportunities for
   promotion to stimulate workers. As a result, companies need to
   develop horizontal transfer and job rotation plans to ensure the
   continued development of both technical and managerial skills
   among our top employees.
STRATEGIC HR PLANNING TOOLS

 • Work/Life Balance Supply/Demand
   Forecasts New hires, as well as current workers are
   demanding an increasing array of benefits and work life
   balance options. HR needs to develop strategies to accurately
   assess what those work life balance demands will be. It must
   also be able to forecast what percentage of our work force will
   choose to participate in work life balance programs like job
   sharing and sabbaticals. This forecast will enable companies to
   be prepared for the decreased amount of hours employees will
   be willing to put in.
STRATEGIC HR PLANNING TOOLS

 • Learning / Knowledge Plan
  Companies are becoming increasingly aware that a major
  competitive advantage occurs when a company can rapidly
  acquire information/solutions and swiftly share them throughout
  the company. HR can help by assisting managers in developing
  individual and corporate wide learning plans and strategies to
  increase speed of learning and the application of that
  knowledge within our company.
STRATEGIC HR PLANNING TOOLS

 • Skills/ Competency Inventories
   In order to rapidly re-deploy resources and fill unexpected
   vacancies HR must develop computerized skill or competency
   inventories. Such inventories allow companies to "throw" talent
   at a problem because we are aware of which individuals in our
   corporation have the needed skill or experience to solve that
   problem. These inventories do not require people to move
   between positions as they can also be used as sources for advice
   and benchmarking.
STRATEGIC HR PLANNING TOOLS

 • Interest Inventories
   In order to retain employees it is essential that we have a
   strategy for identifying and meeting the changing needs of our
   workers. By asking workers What projects they might like to
   work on? What skills they would like to develop? and What
   individuals or teams would they like to work with? managers
   can develop strategies for increasing a worker excitement and
   productivity levels.
STRATEGIC HR PLANNING TOOLS

 • Candidate Expectation (offer acceptance
   criteria) Forecast
   The increased number of job openings and the "unique"
   expectations of the current crop of generation Xer's and college
   hires makes it increasingly more difficult to get candidates to
   accept an offer. By using focus groups and surveys companies
   can identify and forecast the unique offer acceptance demands
   of it's recruits. Accurate forecasts can give the company
   sufficient time to develop the array of programs and benefits
   that are increasingly essential to get a candidate to say yes.
STRATEGIC HR PLANNING TOOLS

 • HR Competitive Analysis
  As CEOs become increasingly aware of the value of strong HR
  programs they're demanding that each and every program we
  offer is superior to that of our direct competitors. This requires
  a side by side and program by program s assessment on how
  every HR program we currently have is superior to our
  competitors. In addition, in order to continually improve, HR
  must show an improvement each year in our "this year to last
  years" comparison.
STRATEGIC HR PLANNING TOOLS

 • Bad Management Identification Program
  One of the primary reasons that employees quit their jobs are
  the bad management practices of their direct supervisor.
  Companies often thrown managers into their jobs with little
  training or preparation Through the use of surveys, 360 degree
  assessments and interviews companies can identify "bad
  managers". The organization can then develop strategies for
  fixing these managers, transferring them back to more technical
  jobs or for releasing them. Because managers are responsible
  for meeting many employee needs that are cited as reasons for
  employee turnover (communicating with the worker,
  challenging them, recognizing their efforts etc.) fixing bad
  managers may be the single most important factor in increasing
  productivity and decreasing turnover.
STRATEGIC HR PLANNING TOOLS

 • Talent Acquisition Through Mergers &
   Acquisition Plan
  There are ways to acquire talent beyond traditional recruiting.
  Acquiring "intact" teams and large numbers of talented people
  (with similar values) rapidly is possible by having HR "scout
  out" target firms and then recommending their acquisition just
  for their employees.
STRATEGIC HR PLANNING TOOLS

 • Targeted Succession plans
  Targeted succession plans are narrowly focused strategies for
  ensuring that individuals are available to fill vacant key
  positions in project teams. Targeted areas often include major
  software implementations, year 2000 efforts and product
  development teams. Most succession plans have often failed
  because they were too broad. Targeted plans allow the focus
  and forecasting to be more narrowly applied with the goal of
  increasing the accuracy of the planning.
STRATEGIC HR PLANNING TOOLS

• Turnover / Exit Forecast
  A strong economy coupled with large swings in the health of
  world economies makes predicting the supply of labor
  increasingly difficult. The other side of this issue is identifying
  where our company is likely to lose key talent through turnover
  and retirements. This turnover forecast is designed to predict
  short term vacancies in the next six months in order to prepare
  the appropriate recruitment or internal promotion strategies

				
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