1. CHAPTER 5 Planning For and Recruiting Human Resources
fundamentals of Human Resource Management 3rd edition by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright
CHAPTER 5
Planning For and Recruiting
Human Resources
This chapter describes how organizations carry out human resource planning. In addition, it discusses the process of recruiting and role of recruiters.

2. What Do I Need to Know?
Discuss how to plan for human resources needed to carry out the organization’s strategy.
Determine the labor demand for workers in various job categories.
Summarize the advantages and disadvantages of ways to eliminate a labor surplus and avoid a labor shortage.
After reading and discussing this chapter, you should be able to:

3. What Do I Need to Know? (continued)
Describe recruitment policies organizations use to make job vacancies more attractive.
List and compare sources of job applicants.
Describe the recruiter’s role in the recruitment process, including limits and opportunities.
After reading and discussing this chapter, you should be able to:

4. The Process of Human Resource Planning
Organizations should carry out human resource planning so as to meet business objectives and gain a competitive advantage over competitors.
Human resource planning compares the present state of the organization with its goals for the future
Then identifies what changes it must make in its human resources to meet those goals
Trends and events that affect the economy also create opportunities and problems in obtaining human resources.
To prepare for and respond to these challenges, organizations engage in human resource planning – defined in Chapter 1 as identifying the numbers and types of employees the organization will require to meet its objectives.

5. Figure 5.1: Overview of the Human Resource Planning Process
Figure 5.1 shows the human resource planning process.
The process consists of three stages:
Forecasting
Goal setting and strategic planning
Program implementation and evaluation

6. Forecasting
Forecasting: attempts to determine the supply and demand for various types of human resources to predict areas within the organization where there will be labor shortages or surpluses.
There are three major steps to forecasting:
Forecasting the demand for labor
Determining labor supply
Determining labor surplus or shortage
The first step in human resource planning is forecasting.
The primary goal is to predict which areas of the organization will experience labor shortages or surpluses.

7. Forecasting the Demand for Labor
Trend Analysis
Leading Indicators
Constructing and applying statistical models that predict labor demand for the next year, given relatively objective statistics from the previous year.
Objective measures that accurately predict future labor demand.
Usually an organization forecasts demand for specific job categories or skill areas.
After identifying the relevant job categories or skills, the planner investigates the likely demand for each.
The planner must forecast whether the need for people with the necessary skills and experience will increase or decrease.
There are several ways of making such forecasts.

8. Determining Labor Supply
Transitional matrix: a chart that lists job categories held in one period and shows the proportion of employees in each of those job categories in a future period.
It answers two questions:
“Where did people in each job category go?”
“Where did people now in each job category come from?
Once a company has forecast the demand for labor, it needs an indication of the firm’s labor supply.

9. Table 5.1: Transitional Matrix – Example for an Auto Parts Manufacturer
Table 5.1 is an example of a transitional matrix.
Matrices such as this one are extremely useful for charting historical trends in the company’s labor supply.

10. Determining Labor Surplus or Shortage
Based on the forecasts for labor demand and supply, the planner can compare the 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.
Issues related to a labor surplus or shortage can pose serious challenges for the organization.

11. Goal Setting and Strategic Planning
The 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.
The goals should come directly from the analysis of supply and demand.
For each goal, the organization must choose one or more human resource strategies.
This is the second step in human resource planning as shown in the middle of Figure 5.1.

12. Options for Reducing a Surplus
Downsizing
Pay reductions
Demotions
Transfers
Work sharing
Hiring freeze
Natural attrition
Early retirement
Retraining

13. Ask students:
“How can HR prepare itself for this reality?”
“What should be done now to avoid the shortage?”
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.

14. Options for Avoiding a Shortage
Overtime
Temporary employees
Outsourcing
Retrained transfers
Turnover reductions
New external hires
Technological innovation

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

16. 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?
Hire temporary workers
Offer early retirement
Downsize people in those positions
Wait for attrition and implement a hiring freeze for those positions
A public accounting firm realizes they have a surplus of support personnel (not auditors). What should they do?
Hire temporary workers
Offer early retirement
Downsize people in those positions
Wait for attrition and implement a hiring freeze for those positions
There may be more than one good answer depending on the student’s rationale. D would have the least negative impact but may take a long time. “B” Early retirement would likely entice more than just support personnel and perhaps more than just 15 people which could cause a labor shortage. Downsizing would be fast but could create morale problems and a poor public image although with the small numbers this may not be much of a problem.
“A” is not appropriate until the surplus is managed.

17. Implementing and Evaluating the HR Plan
When implementing the HR strategy, the organization must hold some individual accountable for achieving the goals.
That person must also have the authority and resources needed to accomplish those goals.
Regular progress reports should be issued.
The evaluation of results should not only look at the actual numbers, but should also identify which parts of the planning process contributed to success or failure.
For whatever HR strategies are selected, the final stage of human resource planning involves implementing the strategies and evaluating the outcomes.
This stage is represented by the bottom part of Figure 5.1.

18. Applying HR Planning to Affirmative Action
Workforce Utilization Review: a comparison of employees in protected groups with the proportion that each group represents in the relevant labor market.
The steps in a workforce utilization review are identical to the steps in the HR planning process.
The organization must assess current utilization patterns, then forecast how they are likely to change in the near future.
If the analyses forecast underutilization of certain groups, then goals and a plan will be established.
Meeting affirmative action goals requires that employers carry out an additional level of human resource planning aimed at those goals.
The organization looks at the representation of subgroups in its labor force.

19. Recruiting Human Resources
The role of human resource recruitment is to build a supply of potential new hires that the organization can draw on if the need arises.
Recruiting: any activity carried on by the organization with the primary purpose of identifying and attracting potential employees.
The goals of recruiting (encouraging qualified people to apply for jobs) and selection (deciding which candidates would be the best fit) are different enough that they are most effective when performed separately, rather than combined as in a job interview that also involves selling candidates on the company.

20. Figure 5.2: Three Aspects of Recruiting
All companies have to make decisions in three areas of recruiting:
Personnel policies
Recruitment sources
Characteristics and behavior of the recruiter
These aspects of recruiting have different effects on whom the organization ultimately hires.
This is shown in Figure 5.2.

21. Personnel Policies
Internal versus external recruiting
Lead-the-market pay strategies
Employment-at-will policies
Image advertising
Several personnel policies are especially relevant to recruitment:
An organization’s personnel policies are its decisions about how it will carry out human resource management, including how it will fill job vacancies.

22. 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 workers.

23. Recruitment Sources: Internal Sources
Job Posting: the process of communicating information about a job vacancy:
On company bulletin boards
In employee publications
On corporate intranets
Anywhere else the organization communicates with employees
Another critical element of an organization’s recruitment strategy is its decisions about where to look for applicants.
The total labor market is enormous and spread over the entire globe.

24. Advantages of Internal Sources
It generates applicants who are well known to the organization.
These applicants are relatively knowledgeable about the organization’s vacancies, which minimizes the possibility of unrealistic job expectations.
Filling vacancies through internal recruiting is generally cheaper and faster than looking outside the organization.
For the employer, relying on internal sources offers several advantages:

25. One in Three Positions Are Filled with Insiders
In a survey of large, well-known businesses, respondents said about one-third of positions are filled with people who already work for the company and accept a promotion or transfer.

26. Recruitment Sources: External Sources
Direct applicants
Referrals
Advertisements in newspapers and magazines
Electronic recruiting
Public employment agencies
Private employment agencies
Colleges and universities
Despite the advantages of internal recruitment, organizations often have good reasons to recruit externally. For entry-level positions and perhaps for specialized upper-level positions, the organization has no internal recruits from which to draw. Also, bringing in outsiders may expose the organization to new ideas or new ways of doing business.

27. Figure 5.3: External Recruiting Sources – Percentage of Employees Hired
Figure 5.3 shows which of the external sources of recruiting are used most among large companies surveyed.
According to the survey results shown in Figure 5.3, the largest share (about one-fourth) of new employees hired by large companies came from referrals, and the next largest share (almost 21 percent) came from direct applications made at the employer’s Web site.

28. Evaluating the Quality of a Source
Yield Ratios
Cost Per Hire
A ratio that expresses the percentage of applicants who successfully move from one stage of the recruitment and selection process to the next.
By comparing the yield ratios of different recruitment sources, we can determine which source is the best or most efficient for the type of vacancy.
Find the cost of using a particular recruitment source for a particular type of vacancy.
Divide that cost by the number of people hired to fill that type of vacancy.
A low cost per hire means that the recruitment source is efficient.
There are few rules that say what recruitment source is best for a given job vacancy.
Therefore, it is wise for employers to monitor the quality of all their recruitment sources.

29. Table 5.3: Results of a Hypothetical Recruiting Effort
Table 5.3 shows how the yield ratio and cost per hire measures are used by HR professionals.

30. Your Experience
In your last job search, what was your experience with a recruiter or other point of contact before you were offered the job?
Lousy, I didn’t take the job
Lousy, but I took the job anyway
Great, but I didn’t take the job
Great, I took the job
The experience wasn’t memorable.
In your last job search, what was your experience with a recruiter or other point of contact before you were offered the job?
Lousy, I didn’t take the job
Lousy, but I took the job anyway
Great, but I didn’t take the job
Great, I took the job
The experience wasn’t memorable.
Use this question as a starting point to discuss the factors that contributed to taking the job or not and to what extent the recruiter or point of contact had on that decision.
Follow-up with a series of “why” questions for those who responded to each option.

31. Recruiter Traits and Behaviors
Characteristics of the Recruiter
Behavior of the Recruiter
Enhancing the Recruiter’s Impact
The third influence on recruitment outcomes is the recruiter – including this person’s characteristics and the way he or she behaves.
The recruiter affects the nature of both the job vacancy and the applicants generated.

32. 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.
The recruiter affects the nature of both the job vacancy and the applicants generated.
True=A; False=B
Applicants respond more positively when the recruiter is an HR specialist than line managers or incumbents.
False – applicants tend to respond more positively to someone who is currently in the job or a manager.
Applicants respond positively to recruiters whom are warm and informative
True - In general, applicants respond more positively to recruiters whom they perceive as warm and informative.
Personnel policies are more important than the recruiter when deciding whether or not to take a job.
True - For affecting whether people choose to take a job, the recruiter seems less important than an organization’s personnel policies that directly affect the job’s features.
Realistic job previews should highlight the positive characteristics of the job rather than the negative.
False - Realistic job previews provide background information about job’s positive and negative qualities.

33. Figure 5.4: Recruits Who Were Offended by Recruiters
Figure 5.4 quotes applicants who felt they had extremely bad experiences with recruiters. Their statements provide examples of behaviors to avoid.

34. Enhancing the Recruiter’s Impact
Recruiters should provide timely feedback.
Recruiters should avoid offensive behavior.
They should avoid behaving in ways that might convey the wrong impression about the organization.
The organization can recruit with teams rather than individual recruiters.
Researchers have tried to find the conditions in which recruiters do make a difference. Such research suggests that an organization can take several steps to increase the positive impact that recruiters have on job candidates.
Through such positive behavior, recruiters can give organizations a better chance of competing for talented human resources.

35. Recruiting Exercise (1 of 2)
You are the regional HR director of the restaurant chain (e.g., Ruby Tuesday’s or TGI Fridays) and responsible for recruiting all staff for the restaurants in your region.
One of the stores in your region needs to hire servers.
Questions for discussion are on the next slide.

36. Recruiting Exercise (2 of 2)
What knowledge, skills, and abilities are required for the positions you are recruiting?
Will your sources of applicants be internal, external, or both? Explain.
What recruiting strategies will you use?
What metrics will you use to measure your success?
Have them think about this as individuals for a couple of minutes and then work together with a partner to develop an approach.
1. This job should be familiar to them so they should have a good list of KSAs
2. Consider the right source based on the necessary qualifications of the employee. Also, consider promoting hosts to be a server if possible?
Costs should be a consideration as well as reach in terms of diversity.
What will they want to keep track of to measure their success? Job performance, time to hire, cost per hire, yield ratios, etc.

37. Summary
The first step in human resource planning is personnel forecasting. Through trend analysis and good judgment, the planner tries to determine the supply and demand for various human resources.
The next step is to determine the labor demand for workers in various job categories. Analysis of a transitional matrix can help the planner identify which job categories can be filled internally and where high turnover is likely.

38. Summary (continued)
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 the easiest and fastest strategy.
Internal recruiting generally makes job vacancies more attractive because candidates see opportunities for growth and advancement.

39. Summary (continued)
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 the kinds of applicants generated.