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McGraw-Hill/Irwin Copyright © 2014 by the McGraw-Hill Companies, Inc. All rights reserved.

Need to Know
1. How to plan for HR needed to carry out organization’s
2. Labor demand for workers in various job categories.
3. Advantages and disadvantages of ways to eliminate a labor
surplus and avoid a labor shortage.
4. Recruitment policies organizations use to make job vacancies
more attractive.
5. Sources of job applicants.
6. Recruiter’s role in recruitment process- limits and

Process of HR

• Organizations should carry out HR planning so as to

meet business objectives and gain a competitive
advantage over competitors.
• HR planning compares the present state of the
organization with its future goals
• Then identifies what changes it must make in its HR to
meet those goals

Figure 5.1: Overview of HR Planning


Forecasting: attempts to Forecasting steps:

determine supply and 1. Forecast labor demand
demand for various types Determine labor supply
of HR to predict areas 2. Determine labor surplus
within the organization or shortage
where there will be labor
shortages or surpluses.

Forecasting Labor Demand
Trend Analysis Leading Indicators

• Constructing and • Objective measures that

applying statistical accurately predict future
models that predict labor demand.
labor demand for next
year, given relatively
objective statistics from
previous year.

Determine Labor Supply

• Transitional matrix: a  It answers two

chart that lists job questions:
categories held in one 1. “Where did people in
period and shows each job category
proportion of go?”
employees in each of 2. “Where did people
those job categories in now in each job
a future period. category come from?”

Table 5.1: Transitional Matrix –
Auto Parts Manufacturer Example

Determine Labor Surplus or Shortage

• Based on forecasts for labor demand and supply,

planner can compare figures to determine
whether there will be a shortage or surplus of
labor for each job category.
• Determining expected shortages and surpluses
allows the organization to plan how to address
these challenges.

Goal Setting and Strategic Planning

• Purpose of setting specific numerical goals is to

focus attention on the problem and provide a basis
for measuring the organization’s success in
addressing labor shortages and surpluses.
• Goals should come directly from analysis of supply
and demand.
• For each goal, organization must choose one or
more HR strategies.
• Organizations should retain and attract employees
who provide a core competency (what makes it
better than competitors)
Options for Reducing a Surplus

As the average age of many workers in skilled trades grows, the coming
demand for workers in many trades is expected to outstrip supply in the
United States. There is a potential for employers in some areas to
experience a labor shortage because of this.
Options for Avoiding a Shortage

Table 5.2: HR Strategies for Addressing
a Labor Shortage or Surplus

Test Your Knowledge

• A public accounting firm of 250 employees

realizes they have a surplus of 15 support
personnel (not auditors). What should they do?
A. Hire temporary workers
B. Offer early retirement
C. Downsize people in those positions
D. Wait for attrition and implement a hiring freeze for
those positions

Implement and Evaluate HR Plan

• When implementing the HR strategy, organizations

must hold individuals accountable for achieving
• They must also have authority and resources needed
to accomplish those goals.
• Regular progress reports should be issued.
• Evaluation of results should look at tactual numbers
and identify which parts of planning process
contributed to success or failure.

Apply HR Planning to Affirmative
• Workforce Utilization • Organization must assess
Review: comparison of current utilization
employees in protected patterns, then forecast
groups with proportion how they are likely to
that each group
represents in relevant change in near future.
labor market. • If analyses forecast

• Steps in a workforce underutilization of

utilization review are certain groups, then
identical to steps in HR goals and a plan will be
planning process. established.
Recruit HR

• Role of HR recruitment is to build a supply of

potential new hires that the organization can
draw on if need arises.
• Recruiting: any activity carried on by the
organization with the primary purpose of
identifying and attracting potential employees.

Figure 5.2: Three Aspects of Recruiting

Several personnel
policies are
relevant to

Image advertising, such
as in this campaign to
recruit nurses, promotes
a whole profession or
organization as
opposed to a specific
job opening.
This ad is designed to
create a positive
impression of the
profession, which is now
facing a shortage of

Recruitment Sources: Internal Sources

Job Posting: process of communicating information

about a job vacancy:
– On company bulletin boards
– In employee publications
– On corporate intranets
– Anywhere else organization communicates with

Advantages of Internal Sources

1. It generates applicants who are well known to

the organization.
2. These applicants are relatively knowledgeable
about the organization’s vacancies, which
minimizes the possibility of unrealistic job
3. Filling vacancies through internal recruiting is
generally cheaper and faster than looking
outside the organization.

4 in 10 Positions Are Filled with Insiders

Recruitment Sources: External Sources

Figure 5.3: External Recruiting Sources –
Percentage of Employees Hired

Evaluating the Quality of a Source

Yield Ratios Cost Per Hire

•A ratio that expresses •Find cost of using a particular

percentage of applicants recruitment source for a
who successfully move from particular type of vacancy.
one stage of the recruitment
and selection process to the •Divide that cost by number of

next. people hired to fill that type

•By comparing yield ratios of of vacancy.
different recruitment sources, •A low cost per hire means the
we can determine which recruitment source is efficient.
source is best or most efficient
for type of vacancy.

Table 5.3: Results of a Hypothetical
Recruiting Effort

Recruiter Traits and Behaviors

Characteristics of Recruiter

Behavior of Recruiter

Enhancing Recruiter’s Impact

Recruiter Characteristics and Behavior

 True = A False = B
• Applicants respond more positively when the recruiter
is an HR specialist than line managers or incumbents.
• Applicants respond positively to recruiters whom are
warm and informative
• Personnel policies are more important than the
recruiter when deciding whether or not to take a job.
• Realistic job previews should highlight the positive
characteristics of the job rather than the negative.

Figure 5.4: Recruits Who Were
Offended by Recruiters

Enhance Recruiter’s Impact

• Recruiters should provide timely feedback and

avoid offensive behavior.
• They should avoid behaving in ways that might
convey the wrong impression about the
• Organization can recruit with teams rather than
individual recruiters.


• First step in HR planning is personnel forecasting.

Through trend analysis and good judgment, planner
determines supply and demand for HR.
• Next step - determine labor demand for workers in
various job categories.
• Analysis of a transitional matrix helps identify which
job categories can be filled internally and where high
turnover is likely.


 To reduce a surplus, downsizing, pay reductions,

and demotions deliver fast results but at a high cost
in human suffering that may hurt surviving
employees’ motivation and future recruiting.
 To avoid a labor shortage, requiring overtime is
easiest and fastest strategy.
 Internal recruiting generally makes job vacancies
more attractive because candidates see
opportunities for growth and advancement.


 Lead-the-market pay strategies make jobs

economically desirable.
 Internal sources are usually not sufficient for

all of an organization’s labor needs.

 Through their behavior and other
characteristics, recruiters influence the
nature of the job vacancy and kinds of
applicants generated.