1. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-1 Human Resource Management Chapter Five Workforce Planning

2. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-2 Importance of Workforce Planning Having the right number of employees with the right skill sets will enable a firm to take advantage of business opportunities Operating in excess of staffing requirements is an inefficient use of financial resources A company’s effectiveness is directly affected by the quality of workforce planning decisions

3. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-3 Definition of Workforce Planning Making sure individuals with the right skills sets are where they need to be at the right time to meet current and future needs Labor demand—number and types of employees the company needs Labor supply—current or potential employees to perform jobs Labor shortage—when demand for labor exceeds available supply Labor surplus—when supply of labor is greater than demand

4. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-4 Framework for Workforce Planning

5. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-5 Internal Factors Turnover: voluntary and involuntary termination of employees Creates stress on co-workers who must pick up the slack Adds costs and time demands associated with filling open positions

6. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-6 Internal Factors (cont’d) Employee Movements: Promotions—moving to higher level positions Transfers—moving to jobs with similar responsibility Demotions—moving to lower-level positions

7. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-7 Tracking Employee Movements Replacement charts—identifying potential replacement employees for positions that could open up within the organization Succession planning—identifying employees who might be viable successors for top managerial positions Transition matrix—model for tracking movement of employees throughout the organization to plan for the future

8. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-8 Replacement Card Sample

9. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-9 Transition Matrix

10. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-10 Employee Productivity Productivity is the level of a firm’s output (products or services) relative to inputs (employees, equipment, materials, etc.) Productivity ratio—the number of employees needed to achieve a certain output level Managers can calculate the number of employees needed once they have productivity ratios

11. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-11 Impacts on workforce planning include: Expansion of operations to gain market share Reduction of operations Mergers or acquisitions Size of local labor market and types of skills Economic conditions and unemployment rates Industry trends Actions of competitors Other Factors and Workforce Planning

12. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-12 Tactics for Labor Shortages Overtime—quick solution for short duration but will be costly and may lead to stress, burnout, turnover Outsourcing—sending work to other companies (payroll, cafeteria, maintenance) Contingent labor—hiring employees on a temporary or contractual basis

13. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-13 Tactics for Labor Shortages (cont’d) Numerical flexibility—adjusting number of employees quickly to meet seasonal demands Functional flexibility—modifying composition of workforce by using workers with different knowledge and skills

14. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-14 Employee Retention Lowering turnover lowers a firm’s costs of recruiting, selecting, and training new employees Employee satisfaction is a key predictor of turnover

15. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-15 Labor Surplus Tactics Layoffs—quickly reducing the number of workers employed Used to quickly adjust the size and composition of the workforce Focused on short-term cost containment Can produce feelings of job insecurity and lead to lower commitment and higher turnover  Attrition—decision not to fill vacant positions

16. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-16 Labor Surplus Tactics (cont’d)  Hiring Freeze—ban on all hiring for a period of time Early Retirement—financial incentive to have employees retire early (can result in mass exodus) Promotions, transfers, demotions—can move people to other areas of the firm facing shortages

17. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-17 Company Strategy/Characteristics and Workforce Planning Companies focused on cost will deal with labor surplus quickly (layoffs) Companies focused on differentiation may have more ability to absorb costs of surplus and will be reluctant to outsource certain positions Smaller companies will feel a greater impact of shortages or surpluses

18. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-18 Who Conducts Workforce Planning Larger companies use HR department and technology to track labor force Smaller companies look to managers and supervisors Companies in early development often require managers to “wear many hats”

19. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-19 Stress and Work/Life Balance Layoffs create stress on employees who lose jobs but also on families and communities where they live Current employees have to work harder, put in more hours or work in new areas

20. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-20 Perceptions of Justice It is important that employees understand the rationale behind the decisions (procedural justice) Even if employees agree with decision, they may disagree with how the practice is implemented (distributive justice) Key is open lines of communication to maximize employee involvement and acceptance

21. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-21 Selecting Tactics to Use Actively retain employees to prepare for labor shortages Modify the nature of the job Actively recruit older employees

22. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-22 Determining Number of Employees Needed Automation—machines performing tasks that could otherwise be performed by people Technological improvements help companies redesign processes and improve productivity ratios Technology also changes types of skills employees need to service customers

23. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-23 Workforce Planning Forecasts Companies can track skill sets of employees and identify potential matches for jobs Succession planning increases ability to identify and track future replacements Globalization has fueled trend toward offshoring and global opportunities for U.S. workers (IT jobs, call centers)

24. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-24 Globalization Benefits include access to a large labor supply Wages are a fraction of what they are in the United States Opportunities to operate a firm “24/7” without any downtime Risks include maintaining product and service quality

25. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-25 Human Resource Management Chapter Six Recruitment 6-1

26. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-26 Purpose of Recruitment Activities that will identify potential employees, communicate job and organizational attributes to them and convince them to apply Key to success is finding qualified individuals who have knowledge, skills and abilities (competencies) to do the job Effective recruiting will free managers to spend more time and effort on other management activities 6-2

27. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-27 Recruitment Process 1. Decide on the objective for the recruiting process 2. Identify the best sources for recruitment 3. Craft the recruitment message 4. Familiarize oneself with the job duties and requirements of the position In small business, managers are involved in all stages. In large businesses, recruiters take the lead 6-3

28. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-28 Internal Recruitment Gives opportunities for promotion to employees Word of mouth is simplest, but not always most effective Job posting is most common formal method: posting note on bulletin board, note in company newsletter, or on company intranet 6-4

29. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-29 Pros and Cons of Internal Recruitment Pros: Most cost-effective Existing employees already familiar with company Employees motivated by opportunities for advancement Managers have access to applicants’ past performance Cons: Sometimes companies want new ideas Need for diversity 6-7

30. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-30 External Recruitment 12 345 Advertising Recruiting via the Internet Employment Agencies Temp Agencies and Alternative Staffing 67 8 Executive Recruiters College Recruiting Referrals and Walk-ins Locating Outside Candidates Sourcing

31. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-31 External Recruitment Source should be dictated by nature of the job, location, and skill level needed Relevant labor market: location in which one can reasonably expect to find a sufficient supply of qualified applicants 6-8

32. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-32 Outside Sources of Candidates (cont’d) Recruiting via the Internet Advantages Cost-effective way to publicize job openings More applicants attracted over a longer period Immediate applicant responses Online prescreening of applicants Links to other job search sites Automation of applicant tracking and evaluation Disadvantages Excessive number of unqualified applicants Personal information privacy concerns of applicants

33. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-33 Advertising The Media Choice Selection of the best medium depends on the positions for which the firm is recruiting. Newspapers: local and specific labor markets Trade and professional journals: specialized employees Internet job sites: global labor markets Effective Ads Create attention, interest, desire, and action (AIDA). Create a positive impression of the firm.

34. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-34 College Recruiting Sending recruiters to college campuses to attract employees right out of college Recruiters usually have multiple openings May speak to student organizations or alumni groups Internships are sometimes offered to evaluate performance and allow student to get to know organization 6-11

35. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-35 Employment Agencies and Search Firms May benefit small HR departments to make recruiting process more efficient Public employment agencies provide career guidance, testing, training, and placement for free Private employment agencies provide job search assistance for a fee Contingency recruiting agencies are paid a fee or percentage of new hire’s salary upon completion of search and placement 6-12

36. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-36 Search Firms (cont’d) Retained agencies paid a retainer by employer to conduct job search (also called executive search firms or headhunters) On-demand recruiting services charge based on time spent recruiting rather than per hire 6-13

37. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-37 Other Recruitment Sources Professional Associations—often provide placement services or job listings as a service to members Career Opportunities at the AICPA Career Opportunities at the AICPA The AICPA has a number of job opportunities available in various locations. One may be right for you 6-14

38. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-38 Other Recruitment Sources (cont’d) Temporary Employees may often become permanent employee (temp to hire) Employee Referrals—employees can receive a bonus if their referral is hired and many referrals tend to have lower turnover and greater job satisfaction 6-15

39. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-39 Sourcing Applicants Sourcing—process of finding passive job candidates (not in the job market) Social networking sites such as LinkedIn.com Resume spidering—process of tracking down passive job applicants by searching the Web for resumes Re-recruiting former employees to return 6-16

40. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-40 Pros and Cons of External Recruitment More costly than internal recruitment May upset existing employees if internal applicants don’t get the job Give firm the opportunity to bring in employees with fresh perspective Allows company to target specific competencies that current employees may not possess 6-17

41. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-41 Preparing Recruitment Advertisements Creating a value proposition and branding will help applicants differentiate one company from another Recruitment value proposition should include: Information about job’s duties, working environment, rewards Company’s corporate image and values Level of compensation and leadership development opportunities Employer branding—how stakeholders perceive the company 6-18

42. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-42 Writing the Recruitment Message Convey the value proposition, brand, and company-related information Include brief description of job and its minimum requirements Individuals are attracted to jobs for which they have more information Gear a high quality message to target audience 6-19

43. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-43 Realistic Job Preview Balanced recruitment message will have the best long-term results Realistic job preview (RJP) will enable applicants to screen themselves out of application process RJP will help decrease turnover and increase satisfaction of new hires 6-21

44. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-44 Recruitment Follow Up Maintaining communication with prospective employees conveys your company’s interest in them Let each applicant know their status by sending a personalized letter Measure effectiveness of recruitment effort with yield ratios, cost-per-hire, time to fill, and managers’ feedback 6-22

45. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-45 Content of Recruitment Message Advantages of working for the organization Competencies sought Positive “story” about why employees would want to work for company Cost leadership strategy: message may focus on efficiencies and cost reductions Differentiation strategy: message may focus on customer experience 6-23

46. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-46 Choice of Recruitment Methods Word-of-mouth (employee referrals) is low- cost Trade publications and Web sources target individuals with specific backgrounds or skills More established firms have more formal recruitment processes Succession planning and replacement charts may help internal recruiting 6-24

47. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-47 Managing Recruitment Smaller companies require managers take lead in recruitment process Larger companies will have staffing departments Companies should focus on specific job information, reputation of company, and compensation and benefits package 6-25

48. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-48 Appeal of the Recruitment Message Not all applicants will focus on same things when seeking a new job: Company’s culture Development of their careers Opportunities to create innovative products Values of work/life balance Tasks of the job itself Benefits and compensation level 6-27

49. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-49 Influences on Recruitment Practices Target for the recruitment message Competencies identified for position Aging of the available workforce Diversity of employee base and availability of diverse applicants Unemployment rates and nature of labor market Technology to automate the process 6-28

50. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-50 Value Proposition Offered Fortune’s list of 100 best companies to work for include those that stress work/life balance and corporate social responsibility 6-31

51. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-51 Challenges to Truth-in-Hiring Employers trying to aggressively attract employees in tight labor market may mislead Employees who are terminated may seek recourse against former employers Job candidates may be lured away from existing job with promises that fail to materialize 6-32

52. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-52 Ways to Reduce Truth-in- Hiring Claims 6-33

53. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall5-53 Ethics and Regulatory Issues Code of ethics should be shared with applicants during recruitment process Poaching (taking employees from competitors) may backfire when new employees leave for the next best offer Recruitment activities cannot discriminate, firms should use multiple sources for applicants Recruiters should be trained on behavior and what questions to ask job applicants Careful attention to recordkeeping of resumes and applications 6-34