Module 2- HR Planning Flashcards
HR Planning
HR Planning: The Basics
Goal is to have the right people with the right skills at the right time in the right place. BUT: That is easier said than done!
The Basics cont
HR Planning is a proactive activity to support the org. achieving its objectives
The sophistication of HR Planning ranges from very simple (guessing?) to complex data analytics
Its essence is to determine the demand and supply of labour and bridge any identified gaps
Challenge in practice: business environment is changing so fast that even planning for just 1 year ahead might turn out to be overambitious
Unexpected events (e.g. the pandemic) can make any planning obsolete
The basics cont
HR planning aims to predict the future research needs of an org.
-can be difficult to do
Want to predict the future demand and supply of labor and identify any gaps and work on closing the gaps
-eg. The business school needs instructors to teach certain courses, some may retire or leave (need new ones to fill)- very predictable (courses offered known ahead of time)
-compare to west jet number and destination of flights is harder to predict (general traveling practice- face changing enviro- hard to predict)
Forecasting Demand of Labour: Causes
Changes in Business Operations:
-M&A, Joint Ventures & divestitures
-Internal re-org. of business units
Demographics
-Retirements
-More part-time workers
Attrition/turnover
-Attrition rate higher/lower than expected
Technological changes
-Automation to eliminate certain jobs
-Other jobs requiring different/tech skills
Legal changes
-Changes in employment standards laws
-Minimum wage
Budget cuts
-One of the most common cause in practice
Causes cont
What causes the number of people to change?
-some occur naturally- like retirement or attrition (leave for another employer)
Legal changes- changes in minimum wage- if goes up some comp. might have to give up some staff
Most prevalent is budget cuts; means may be faced in situation where have to reduce number of people in department or unit
Forecasting Demand of Labour: Methods
Experts:
-Nominal Group Technique
-Delphi technique
Have “front line” insights
Assessments can be subjective
Need to address conflict in assessments
some techniques can be used to gain such insights from managers ; 1 delphi technique – predictions about future needs through surveys ; 2 nominal group ; group disscusiion amosngst managers where different perceptions and ideas are listed – agreement at somepoint what needs are (usually done informally between manager and senior managers)
Methods cont
Trend Projections:
-Extrapolation
-Indexation
Assumes demand remains constant which is rarely the case
Useful only for short-term projections
Trend projections; use data from the past and try to predict the future (2 ways to do this extrapolation and indexation)
1-extrapolation: you look into what you’ve done in the past and you just keep doing it –e.g.
In the past 10 yrs you have hired 100 junior accountants every year b/c you’ve done it the last 10 yrs its what you will do next year again
2-indexation; link resource needs to some index number, usually revenue (e.g. if you know for each additional 1mil in revenue , you need x number of entry level accountants and project on your revenue how many new entry level accountants you will need– disadvantage of this method: is that the needs remain the same, in a fast changing enviro this is not likely the case the needs probably change
Methods cont
Others:
-Budget analysis
-Predictive analytics
Budget constraints are an issue in practice
Predictive analytics most sophisticated and likely to grow in future
Other methods
1-predictive analytics – use algorithms and data- try to predict what future needs are- likely these will grow in the next few years , but not always accurate –tools are only as good as the data that is fed into them
Methods cont
How many people/resources we need in a given business unit or department?
-different methods- most commonly ask the manager (prob. Tend to exaggerate their demand and inflate resource needs) 2 reasons why; 1 fear future budget cut and 2 know even if ask for resoruces may not get them (ask for 5, know only need 3 – know wont get all or have wiggle room if do)
Forecasting Supply of Labour
Internal:
Skill Inventories
-Often out of date
-Accuracy also depending on tool used for capturing skills
Succession Plans/ Replacement Charts
-Often out of date
-Assume static org. structure in the future
External:
Labour Market Analysis
-Unemployment rates
-Determining the “right” labour market
Demographics
-Stat. Canada and Conference Board data
-COPS and Job bank
2 ways to get resources
internally or externally
Internally
– skill – list all work related skills of employees (ideally as organization have one that covers the entire work force) - not updated on regular basis – only as good as the tools used to capture these skills (e.g. a tool for employees sent out so they can describe their 10 core skills –may have skills in labour relations, managing and inquisitions, etc.-problem assume only use 10 skills – ignores skills from other fields/trades-limited useability)
2- succession plans; are plans that define who would take over key role if becomes vacant –who could jump in (“what if CFO is run over) -should have people who could run the division tomorrow (or maybe a couple jobs away-list of people)-usually updated once a year (isually updated more than skill invent.) b/c done with HR partner ad business unit-pressure to have these done
External
1-labor market; if unemployment rate is low –chances are have hard time to find additional resources
-no such thing as one labor market , it differs by position
2- demographics; means long term development of resources available in Canada and recourses needed in Canada
-COPS (Canadian occupational projection system) provided by government and is an outlook of the economy and for resource needs for the next 10 yrs
Forecasting Supply of Labour: Methods
INTERNAL:
Markov analysis
-Need reliable transition probabilities
-Employee transfer common in the org.
-Ideally numerous job incumbents
Example: 100 employees in department of which estimated:
+ 4% attrition
+ 7% internal transfers to other departments
+ 1% promotion
-Next year need to get 12 new employees in this department assuming no change in demand
EXTERNAL:
Determining the “right” labour market:
-Labour markets differ for different jobs
-Employers choose relevant market based on:
—Their competitors – based on product, size, location
—The job – based on required skills and knowledge
-There is no “one” labour market when it comes to supply of talent
Internally
-simple tool called markov analysis; gives rough prediction of the number of resources
-e.x. of 100 emplyees- estimate 4 will leave, 7 will move to different departments and 1 gets promoted = have to replace 12 employees in the next year
-if demand goes up 10%, need additional 10 people for next year so 22 total
External
no one labour market
-need to look into role
-be mindful of competitors
-e.g. airline pilot for west jet, if want to continue to work in that profession there’s a limited number of companies (limited labour market) vs HR business partner or finance for west jet –these skills are more transferable across industries (labour market for HR partner is much larger)
If Demand < Supply
Layoffs & Terminations (permanent)
Leaves of Absence without or with reduced pay (temporary)
Voluntary Severance Packages (permanent)
Retirement Incentive Offers (early/phased retirement) (permanent)
Hiring freezes/ no backfills for attrition (temporary)
Job Sharing (temporary or permanent)
Replace full-time with part-time employees
What do we do if the demand of labor is greater than the supply of labor
means have too many resources (often happen in economic downfall)
Chart has strategies you can apply in HR to address this situation –stars indicate the risk for the employer (more stars= less risk)
1- leave of absence reduced pay/voluntary severance/retirement incentive – all 3 are great strategies and usually carry very little risk for the employer because the employee has to consent to any of these strategies
2- one you often see if hiring freezes –if employee leaves manager prevented from hiring a new one (should not be implemented globally without regard to the specific skills of the employee – might have specific technical skills can cause issues)
3- job sharing ; means take job and split it up so two people are working same job (can cause administrative hassle – not popular in Canada)
4-replace – effective in cutting costs because part time employees are not entitled to benefits unlike full time)
If Demand < Supply: Cutting Head Counts
Positives (+):
-Is very cost effective to cut employment costs
-gives an opportunity to reshape the work force
Negatives (-):
-is full of problems
-legal implications including severance pay obligations
-potential litigation
-increases voluntary attrition rate among top performers
-severely impacts employee morale
-impacts production/service levels and quality
-a short term gain on stock price may lead to long term loss of financial gain
You’re fired
Be careful with the term “being fired”
It usually implies being terminated by the employer for cause, e.g. for poor performance
Someone laid off for business reasons is not “fired”.
Terminations and layoffs
Voluntary –offering severance package and employee accepts ands leaves (usually not big problem because they agreed usually not legal challenges sub consequently) *but have to be careful whom you offer what (e.g. company that offered voluntary severances to entire legal department, if all accepted left without department, could make it subject to the company –but not smart from HR perspective b/c once indicate will accept they have already emotionally checked out from the employer, even if stay on because rejected they will not be the most engaged/productive moving forward)
On the plus side
-cutting heads- effectively cuts costs (quick, effective)- cut all costs related (benefits)– but should always be last resort – involuntary termination (not agreement)—causes legal exposure might be faced with litigation, people could fight in court – hurt company reputation
-still have to pay severance
Problems that might arise
-might have problem with surviving work force –those left behind have problem with-must increase work load (pick up extra work)
-might have survivor syndrome- question why loyal coworker (fam problems) question why they lost job and you didn’t
-survivors- may be fearful because they could be next
-impacts the moral of employees, impact ability to increase production levels/service levels once economy picks up again b/c cant hire people that quickly
-Bottom line; involuntary termination should only be done if absolutely no other way
Another word of caution
people may say they got fired when they actually got laid off (especially if angry)
-fired = done something wrong
-laid off= for business reasons
If Supply < Demand
Hire
⇨ Full-time (expensive, takes time)
⇨ Part-time (less costly)
Contract out
⇨ Based on a contract, not on employment laws
⇨ Can be full of legal problems
Outsource/Offshore
⇨ Vendor to provide “non-core” services (e.g. benefits administration)
⇨ Off-shore abroad requires careful analysis
Overtime
⇨ Requires additional pay for certain employees
⇨ Not a sustainable long-term solution (employee burn-out)
Delay retirements
⇨ Requires attractive work arrangements for older employees
Internal Deployment
⇨ Skill match essential
⇨ Ensure not creating a resource issue from where an employee gets deployed
What if the supply is smaller than demand?
we need employees
-if want to hire have to fine talent- takes time and money, might end up with wrong hire
-contract out- faster/easier than hiring but comes with a lot of legal problems b/c employment laws do not apply to contractors (protection not applicable)
-however may classify someone who is a contractor as an employee, if that happens employer really is in hot water b/c results in huge costs (e.g. for unpaid benefits) also trigger severance upon termination
-outsouce to vendor –enter into a contract with a company to do some work for you (e.g. in HR out sources benefits to a benefit provider)- requires less rescoures but still have to manage that vendor , make sure provides promised services
-Off shore – transfer work across countries (e.g. call centers, customer support) save initial labour costs but can cost you significantly in terms of loss of reputation (e.g. insurance –unintentionally damaged car of another customer with cart – submitted claim with insurance company – sent off shore -women’s representative in another country not properly trained and refused claim “b/c you cant damage another car without your car, or provide license plate of shopping cart” –cant provide insurance claim was rejected , became public –reputation of that insurance company was damaged (ended up brining claims center back to their country Switzerland to make sure wont happen again)- might save cost initially but need to make sure matches what would be expected in your home country
-delay retirement or overtime- both are short term solutions – still need to hire- temporary solutions
Human Resources Information Systems (HRIS)
The complexity, capabilities and costs of an HRIS system are to be aligned with the org. needs and its size/complexity.
They can range from managing simply by spreadsheet (e.g. Excel) to state-of-the-art highly sophisticated systems integrated into enterprise IT solutions (e.g. SAP).
HRIS cont
Pros:
-Comprehensive relational data sets
-Employee/Manager self-service
-Extensive reporting capabilities
-Data analytics capabilities
Cons:
-Everything Cybersecurity
-Integration issues/lack of integration
-Need for comprehensive access management
-Enhanced training needs
-Data quality/integrity
HRIS cont
HRIS- comprehensive data base of employees for wide variety of HR purposes (simple of excel spreadsheet or can be high (global tool based on organizations needs, abilities, willingness to pay, reporting requitements)
Comphrensive- covers all 4 HR disciplines (compensation planning, vacation planning, sick day reporting, performance management profiles
-usually comes in modules- pick which you want
e.g. Ceridian –offer employers to update info on their own (if move, skills, etc.)
Management could see – compensation level of your people, line management reports (attrition rates of departments)
HRIS Come with challenges:
-data quality- if skill inventory out of date –if info bad
-change of banking info and no one realize till pay cycle – now not payed (got redirected to hacker) –now way to manage
-access management – if operate internationally (privacy laws in place in some countries wont allow to share data- e,g, compensation b/c of contraints in some counties
-not cheap
