HR Planning Basics and Challenges

HR Planning Overview

  • Definition of HR Planning

    • Proactive activity to support an organization's objectives.
    • Sophistication can range from simple guesswork to complex data analytics.
    • Core focus: determine labor demand and supply and bridge any identified gaps.

  • Challenges in HR Planning

    • Rapid changes in business environment can render year-long planning optimistic.
    • Example: unexpected events like the pandemic can make plans obsolete.
    • Objective: have the right people with the right skills at the right time and place, noted to be easier said than done.

Forecasting Demand of Labour

  • Causes of Demand Variation
    • Changes in Business Operations:
    • Mergers & Acquisitions (M&A), Joint Ventures, Divestitures.
    • Internal re-organization of business units.
    • Demographics:
    • Retirements lead to changes in workforce composition.
    • Increase in part-time workers.
    • Attrition/Turnover:
    • Actual attrition rate may be higher or lower than expected.
    • Technological Changes:
    • Automation can lead to job elimination.
    • Other roles may require different or more technical skills.
    • Legal Changes:
    • Modifications in employment standards laws and minimum wage regulations.
    • Budget Cuts:
    • Common cause forcing organizations to reevaluate staffing needs.

Forecasting Demand of Labour: Methods

  • Expert Techniques:
    • Nominal Group Technique: structured method for group brainstorming.
    • Delphi Technique: structured communication with expert panels.
  • Trend Projections:
    • Extrapolation: assuming trends will continue into the future.
    • Indexation: correlating data sets.
  • Other Methods:
    • Budget Analysis: assessing based on financial parameters.
    • Predictive Analytics: a sophisticated method likely to grow, emphasizes insights along operational lines but can be subjective in nature.
    • Requires addressing conflicts in assessment methodologies.
    • Noted that predictions often assume constant demand which is rarely the reality, making them more useful for short-term projections.

Forecasting Supply of Labour

  • Internal Factors:

    • Current data can quickly become outdated.
    • Reliance on tools for capturing skills can affect accuracy.
    • Skill Inventories may also become outdated and assume a static organizational structure.
    • Succession Plans/Replacement Charts: useful but require up-to-date data.

  • External Factors:

    • Unemployment rates: critical in framing labor market status.
    • Determining the correct labor market involves assessment of
    • Statistical data from resources like Stat. Canada and the Conference Board.
    • Job Banks and demographic trends.

Forecasting Supply of Labour: Methods

  • Internal Methods:

    • Markov Analysis:
    • Requires reliable transition probabilities.
    • Common occurrence of employee transfers within organizations.
    • Example: Estimating staffing needs from probabilities of attrition, transfers, and promotions.
    • Calculation:
      • Given: 100 employees, 4% attrition, 7% internal transfers, and 1% promotions,
      • Calculation for new employees needed: 12 new employees (assuming no change in demand).

  • External Methods:

    • Identifying the appropriate labor market for different jobs.
    • Employers select relevant markets based on competition, product need, size, and location.
    • Demand context varies with job nature, as skill requirements differ.
    • Important to note: no singular labor market exists for talent supply.

Strategies for Managing Labour Gaps

  • If Demand < Supply:
    • Layoffs and Terminations (permanent solutions).
    • Leaves of Absence without or with reduced pay (temporary solutions).
    • Voluntary Severance Packages (permanent).
    • Retirement Incentive Offers (early or phased retirement; a permanent measure).
    • Hiring freezes; not filling attrition spots (temporary).
    • Job Sharing (temporary or permanent).
    • Replacing full-time employees with part-time roles as a potential strategy.

If Demand < Supply: Cutting Head Counts

  • Terminology Clarification:
    • Be cautious about terms like "being fired":
    • Firing usually denotes termination with cause (e.g. poor performance).
    • Laying off an employee for business reasons should not be labeled as "fired".

If Supply < Demand

  • Hiring Strategies:
    • Full-time Hiring: typically more costly and time-consuming.
    • Part-time Hiring: more cost-effective and contract-based, but comes with potential legal issues.
    • Contracting Out:
    • Using vendors for non-core services (e.g. benefits administration).
    • Outsourcing/Offshoring: requires careful analysis and can incur additional costs for some employees.
    • Overtime: not a sustainable solution due to potential for employee burnout.
    • Delay Retirements: requiring appeals to older employees through attractive work arrangements; ensuring essential skill matches.
    • Internal Deployment: strategic reallocation of current staff to alleviate shortages.

Human Resources Information Systems (HRIS)

  • System Complexity and Fit:
    • Systems vary from simple spreadsheets (e.g., Excel) to sophisticated integrated enterprise solutions (e.g., SAP).
  • Pros of HRIS:
    • Comprehensive relational datasets.
    • Employee and manager self-service functionalities.
    • Extensive reporting capabilities.
    • Data analytics capabilities, providing critical insights for HR strategies.
  • Cons of HRIS:
    • Cybersecurity concerns can jeopardize sensitive data.
    • Integration challenges, especially if multiple systems are used.
    • Necessitates comprehensive access management to mitigate risks.
    • Enhanced training is often required for effective utilization.
    • Data quality and integrity issues could undermine effectiveness.

Conclusion

  • Acknowledgment for attention and participation in HR Planning discussion.
  • Dr. Claudia Wendrich's comprehensive insight on Human Resource Management topics and practices.