Chapter 05 – Planning for and Recruiting Human Resources
Chapter Five: Planning for and Recruiting Human
Resources
Welcome to your guide to teaching Chapter Five, Planning for and
Recruiting Human Resources!
This guide will provide you with a chapter summary, learning objectives, lecture
outlines, solutions to in-chapter case questions and end of chapter discussion questions
and possible responses.
Chapter Five Roadmap
We hope you find each chapter of your Instructor Manual practical and useful, but also,
exciting! You can adapt the chapter text, the PowerPoints, and the video to work in an online
class environment, a guided independent study environment, or a face to face or on-ground
environment.
When presenting Chapter Five, have the students first read the chapter and encourage
them to absorb the “big picture” of Human Resource Planning and Recruiting.
Use the PowerPoint for Chapter Five to frame your lecture.
Have students read and discuss the Cases and their respective Questions.
Have students validate their knowledge of the chapter by working through the
Discussion Questions at the end of the Chapter.
Lastly, have students review, journal, or discuss the Key Vocabulary Terms at the end of
the chapter.
ROADMAP: THE LECTURE
PLANNING FOR AND RECRUITING HUMAN RESOURCES
Chapter Summary
This chapter explores how organizations carry out human resource planning. At the beginning,
the chapter identifies the steps that go into developing and implementing a human resource
plan. Each subsequent section of the chapter has a focus on recent trends and practices, such
as downsizing and outsourcing, which are prevalent to human resource management.
Throughout the remaining sections, an exploration into the recruiting process will be
undertaken. At the end of the chapter, a discussion will be presented on the role of human
resource recruiters.
Learning Objectives
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Chapter 05 – Planning for and Recruiting Human Resources
After studying this chapter, the student should be able to:
1. Discuss how to plan for human resources needed to carry out the organization’s strategy.
2. Determine the labor demand for workers in various job categories.
3. Summarize the advantages and disadvantages of ways to eliminate a labor surplus and
avoid a labor shortage.
4. Describe recruitment policies organizations use to make job vacancies more attractive.
5. List and compare sources of job applicants.
6. Describe the recruiter’s role in the recruitment process, including limits and opportunities.
I. Introduction
The way in which applicants search for a job, and get a first impression of a company,
has changed with the advances in technology. Applicants get a first impression when
they visit the company website, Facebook page, or interact with a recruiter through
LinkedIn or Twitter. Lars Schmidt, National Public Radio director of talent acquisition,
was not happy with the way the organization was portrayed on line to prospective
employees and went about updating their online message. He added links to social
media, video clips of employees telling about NPR’s creative culture, and updated the
webpage design. Schmidt found ways to use social media to speak with the prospective
applicants in real time which increased the number of qualified applicants.
Discussion Question and Suggested Response
1. This vignette provided some insight into issues of recruiting and planning human
resources with the use of social media. Do research on one company you would like
to work possibly work for some day and share your first impression of their “careers”
section on their website and the different ways you can contact the recruiter with
social media.
Answers will vary.
II. The Process of Human Resource Planning
1. Organizations should carry out human resource planning so as to meet business
objectives and gain an advantage over competitors.
2. 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
these goals. The changes may include downsizing, training existing employees in new
skills, or hiring new employees.
3. Figure 5.1, Overview of the Human Resource Planning Process, identifies the stages
of the human resource planning process.
A. Forecasting
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Chapter 05 – Planning for and Recruiting Human Resources
1. The first step in human resource planning is forecasting. This is defined as the
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.
2. Forecasting supply and demand can use statistical methods or judgment.
Statistical methods capture historical trends in a company’s demand for labor. In
situations where statistical methods are of little use, the organizations must rely on
the subjective judgments of experts.
3. Forecasting the Demand for Labor: An organization forecasts demand for
specific job categories or skill areas. There are several ways of making such
forecasts:
a. Trend analysis, which is constructing and applying statistical models that
predict labor demand for the next year, given relatively objective statistics from
the previous year. These statistics are called leading indicators, which are
objective measures that accurately predict future labor demand. They may
include measures of the economy, actions of competitors, changes in
technology, and trends in the composition of the workforce.
b. Statistical planning models are useful when there is a long, stable history that
can be used to reliably detect relationships among variables. These models
almost always have to be complemented with subjective judgments of experts.
4. Determining Labor Supply: Determining the internal labor supply calls for a
detailed analysis of how many people are currently in various job categories or
have specific skills within the organization.
a. One type of statistical procedure that can be used for this purpose is the
analysis of a transitional matrix. This is a chart that lists job categories held
in one period and shows the proportion of employees in each of those job
categories.
b. Table 5.1 provides an example of a transitional matrix. Matrices such as
the one indicated in Table 5.1 are extremely useful for charting historical trends
in the company’s supply of labor. More importantly, if conditions remain
somewhat constant, matrices can be used to plan for the future.
c. Historical data may not always reliably indicate future trends. Thus, planners
need to combine statistical forecasts of labor supply with expert judgments.
d. Besides looking at labor supply within the organization, planners should
examine trends in the external labor market.
5. 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.
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Chapter 05 – Planning for and Recruiting Human Resources
B. Goal Setting and Strategic Planning
1. The second step in human resource planning is goal setting and strategic
planning.
2. The purpose of setting specific numerical goals is to focus attention on the
problems 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 labor supply and demand.
3. For each goal, the organization must choose one or more human resource
strategies.
4. Table 5.2 shows major options for reducing an expected labor surplus and
avoiding an expected labor shortage. The options differ widely in their
expense, speed, and effectiveness.
5. Another consideration in choosing an HR strategy is whether the employees
needed will contribute directly to the organization’s success. Organizations are
most likely to benefit from hiring and retaining employees who provide a core
competency, which is a set of knowledge and skills that make the organization
superior to competitors and create value for customers.
6. Downsizing: This is the planned elimination of large numbers of personnel with
the goal of enhancing the organization’s competitiveness. The primary reason
organizations engage in downsizing is to promote future competitiveness.
According to surveys, organizations do this by meeting four objectives:
a. Reducing costs
b. Replacing labor with technology
c. Mergers and acquisitions
d. Moving to more economical locations
7. Some indications suggest that downsizing efforts have not lived up to
expectations. In one survey, 80 percent of the firms that had downsized later
replaced some of the very people that had laid off. In one Fortune 100 firm, a
bookkeeper making $9 an hour was let go. Later, the hired her back as a
consultant for $42 an hour.
8. There are several reasons why so many downsizing efforts fail to meet
expectations. These reasons include:
a. Negative results
b. Loss of talent
c. Disrupts the social networks
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Chapter 05 – Planning for and Recruiting Human Resources
d. Need to rehire
e. Survivors become self-absorbed and afraid to take risks
f. Negative publicity
9. Many problems with downsizing can be reduced with better planning.
10.Reducing Hours: One way to spread the burden more fairly is cutting work hours,
generally with a corresponding reduction in pay.
11.Early-Retirement Programs: These are another way to reduce a labor surplus.
Such programs are a way to encourage older workers to leave voluntarily by
offering early-retirement incentives.
12.The average age of the U.S. workforce is increasing. There are several forces
that fuel the drawing out of older workers’ careers such as:
a. Improved health
b. Decreased physical requirements of jobs
c. Fear of Social Security being cut
d. Insufficient employer-sponsored pensions
e. Age discrimination laws
f. Outlawing of mandatory retirement ages
13.Many organizations are moving from early-retirement programs to phased-
retirement programs. In these programs, the organization can continue to enjoy
the experience of older workers while reducing the number of hours that these
employees work as well as the cost of those employees.
14. Employing Temporary and Contract Workers: The most widespread methods
for eliminating a labor shortage are hiring temporary workers and outsourcing
work.
15. Temporary Workers: Temporary employment is popular with employers because
it gives them flexibility and lowers costs.
16. If an employer believes a higher level of demand will persist, it often can hire the
temps as permanent workers.
17. Agencies that provide temporary employees may handle some of the tasks
associated with hiring, such as testing and training,
18. Temporary workers may offer benefits not available from permanent workers such
as bringing an objective point of view to the organization’s problems and
procedures and providing a great deal of experience gained while working in other
organizations.
19. To benefit from using contract or temporary workers, organizations must
overcome the disadvantages associated with this type of labor force. One
drawback is that tension often exists between temporary and permanent
employees.
20. Employers can minimize resentment and ensure that all workers feel valued not
by bringing in temporary or contract workers immediately after downsizing and by
hiring temporary workers from agencies that provide benefits.
21. Employee or Contractor?: A company can obtain workers for limited
assignments by entering into contracts with them. Independent contractors do not
receive company benefits such as health insurance and vacations. Using
contractors can result in savings, even if the contractor works at a higher rate of
pay. It is important to verify that the arrangement will meet the legal requirements
and the Internal Revenue Service website (http://www.irs-gov) is a good place to
start.
22. Outsourcing: Contracting with another organization to perform a broad set of
services is called outsourcing.
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Chapter 05 – Planning for and Recruiting Human Resources
23. A major reason for outsourcing can save money is that the outside company
specializes in the services and can benefit from economies of scale.
24. Outsourcing is logical when an organization lacks certain kinds of expertise and
doesn’t want to invest in developing that expertise.
25. Technological advances in computer networks and transmission have speeded up
the outsourcing process and have helped it spread beyond manufacturing areas
and low-skilled jobs.
26. Outsourcing manufacturing may make good sense in the short term, but it may
ultimately hurt U.S. firms’ competitiveness due to a decreased lack of in-house
knowledge and expertise.
27. Organizations that are interested in outsourcing should plan how they will avoid
problems like giving up direct control of a particular operation. Other problems
include quality-control issues, security violations, and poor customer service.
28. Overtime and Expanded Hours: Organizations facing a labor shortage may be
reluctant to hire employees, even temporary ones, or to commit to an outsourcing
arrangement. They may choose to expand working hours and pay overtime to
current employees instead. However, overtime is most suited for short-term labor
shortages.
C. Implementing and Evaluating the HR Plan
1. The final stage of human resource planning involves implementing the strategies
and evaluating the outcomes.
2. When implementing the HR strategy, the organization must hold some individual
accountable for achieving the goals.
3. In evaluating the results, the most obvious step is checking whether the
organization has succeeded in avoiding labor shortages or surpluses. The
evaluation should identify which parts of the planning process contributed to
success or failure.
Did You Know?
The Biggest Hiring Challenges Involve Recruiting
Small business owners state that the biggest challenge in recruiting is finding the right
people. More than 4 out of 10 employers state that finding qualified workers is their
biggest challenge and one-fourth say their biggest challenge is finding employees who
fit their company culture.
Discussion Question with Possible Response
1. Suppose a new local restaurant has brought you in to advise on how it can gain a
competitive advantage over other restaurants in the community. Applying the
results of the survey, what would you suggest the restaurant’s management focus
on doing better?
2. Answers will vary. Managers should start with a job analysis to fully understand
the KSAO’s they are looking for in an applicant. They could survey current
employees and ask what they like about their job and the company. They could
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Chapter 05 – Planning for and Recruiting Human Resources
develop an employee referral reward program to give incentive to current
employees to recommend prospective employees.
D. Applying HR Planning to Affirmative Action
1. Many organizations have an HR strategy that includes affirmative action to
manage diversity or meet government requirements.
2. Affirmative-action plans forecast and monitor the proportion of employees who
are members of various protected groups. The planner can compare the
proportion of employees who are in each group with the proportion each group
represents in the labor market. This type of comparison is called a workforce
utilization review. The organization can use this process to determine whether
there is any subgroup whose proportion in the relevant labor market differs
substantially from the proportion in the job category.
3. The steps in a workforce utilization review are identical to the steps in the HR
planning process shown in Figure 5.1.
III. Recruiting Human Resources
1. The role of human resource recruiting is to build a supply of potential new hires that the
organization can draw on if the need arises.
2. Recruiting consists of any practice or activity carried on by the organization with the
primary purpose of identifying and attracting potential employees.
3. Because of differences in companies’ strategies, they may assign different degrees of
importance to recruiting. In general, all companies have to make decisions in three
areas of recruiting: personnel policies, recruitment sources, and the characteristics
and behavior of the recruiter. Figure 5.2 shows how these aspects of recruiting can
have different effects on whom the organization ultimately hires. Personnel policies
influence characteristics of the positions to be filled. Recruitment sources influence the
kinds of job applicants an organization reaches. And the nature and behavior of the
recruiter affect the characteristics of both the vacancies and the applicants.
IV. Personnel Policies
1. An organization’s personnel policies are its decisions about how it will carry out human
resource management, including how it will fill job vacancies.
2. Several personnel policies are especially relevant to recruitment:
a. Recruiting existing employees to fill vacancies or hiring from outside the
organization
b. Meeting or exceeding the market rate of pay
c. Emphasizing job security or the right to terminate employees
d. Images of the organization conveyed in its advertising
A. Internal versus External Recruiting
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Chapter 05 – Planning for and Recruiting Human Resources
1. Opportunities for advancement make a job more attractive to applicants and
employees.
2. As personnel policies, decisions about internal versus external recruiting affect the
nature of jobs. Promote-from-within policies signal to job applicants that the
company provides opportunities for advancement.
B. Lead-the-Market Pay Strategies
1. Pay is an important job characteristic for almost all applicants. Organizations have
a recruiting advantage if their policy is to pay more than the current market wage for
a job.
2. Increasingly, organizations that compete for applicants based on pay do so using
forms of pay other than wages or salary.
C.Employment-at-Will Policies
1. Within the laws of the state where they are operating, employers have latitude to set
policies about their rights in an employment relationship. A widespread policy
follows the principle of employment at will, which holds that if there is no specific
employment contract saying otherwise, the employer or employee may end an
employment relationship at any time, regardless of cause.
2. An alternative to employment at will is to establish due-process policies. These
policies formally lay out the steps an employee may take to appeal an employer’s
decision to terminate that employee.
3. In decisions about employment-at-will policies, organizations should consider not
only the legal advantages of employment at will but also the effect of such policies
on recruitment.
D. Image Advertising
1. Advertising designed to create a generally favorable impression of the organization
is called image advertising.
2. Image advertising is especially important for organizations in highly competitive
labor markets that perceive themselves as having a bad image.
4. Whether the goal is to influence the perception of the public in general or specific
segments of the labor market, job seekers form beliefs about the nature of the
organization well before they have any direct interviewing with these companies.
V. Recruitment Sources
1. Another critical element of an organization’s recruitment strategy is its decisions about
where to look for applicants.
2. The method and audiences the organization chooses for communicating its labor needs
will determine the size and nature of the labor market the organization taps to fill its
vacant positions.
3. Figure 5.3 summarizes major sources from which organizations draw recruits. Each
source has advantages and disadvantages.
A. Internal Sources
1. An organization may emphasize internal or external sources of job applicants.
2. Internal sources are employees who currently hold other positions in the
organization.
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Chapter 05 – Planning for and Recruiting Human Resources
3. Organizations recruit existing employees through job postings – communicating
information about vacancies on bulletin boards, in employee publications, on
corporate intranets, and anywhere else the organization communicates with
employees.
4. For the employer, relying on internal sources offers several advantages such as:
a. Generates applicants well known to the organization
b. Applicants are relatively knowledgeable about the organization’s vacancies
c. Faster and less expensive than external recruiting
B. External Sources
1. Organizations often have good reasons to recruit externally such as:
a. No internal recruits available
b. Bring in new ideas or new ways of doing business
2. Organizations often recruit through direct applicants and referrals, advertisements,
employment agencies, schools, and Web sites. See Figure 5.3 External
Recruiting Sources.
3. Direct Applicants and Referrals: Direct applicants are people who apply for a
vacancy without prompting from the organization. Referrals are people who apply
because someone in the organization prompted them to do so.
4. One advantage is that many direct applicants are to some extent already “sold” on
the organization. This process is called self-selection. A form of aided self-selection
occurs with referrals.
5. Many job seekers use social networks to help find employment.
6. A benefit of such sources is that they cost less than formal recruiting efforts.
Considering these combined benefits, referrals and direct applicants are among the
best sources of new hires.
7. Some employers offer current employees financial incentives for referring applicants
who are hire and perform acceptably on the job. Other companies play off their
good reputations in the labor market to generate direct applicants.
8. A major downside of referrals is that they limit the likelihood of exposing the
organization to fresh viewpoints.
9. Sometimes referrals contribute to hiring practices that appear unfair such as
nepotism. This is the hiring of relatives.
10.Advertisements in Newspapers and Magazines: Although computer search tools
have made electronic job listings the most popular way to advertise a job opening,
some recruiters still follow the traditional rout and advertise open positions in
newspapers or magazines. When the goal is to find people who know the local
community, advertising in a local newspaper can reac that audience.
11. Electronic Recruiting: Few employers can fill all their vacant positions through
direct applications and referrals, so most need to advertise openings. Most often today, that
means posting information online.
11. Public Employment Agencies: Employers can register their job vacancies with
their local state employment office and the agency will try to find someone suitable,
using its computerized inventory of local unemployed individuals
12.The government also provides funding to a variety of local employment agencies.
HRM Social
Social Networks Can Also Be Career Networks
Litting job openings online is an easy way to let potential employees know about positions.
However, the ease of searching and responding to ads means companies have been swamped
with hundreds or thousands of resumes, often from individuals without the necessary
qualifications. Many are turning to social media. Recruiters are more likely to use the career-
focused LinkedIn network. LinkedIn profiles emphasize work experience, skills, and interests.
Many recruiters purchase LinkedIn’s “talent solutions” services for HR managers and recruiters
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Chapter 05 – Planning for and Recruiting Human Resources
which helps to manage the applicant pool. Recruiters are also using Twitter to have more
regular contact with prospective applicants.
13.Private Employment Agencies: Private employment agencies provide much the
same service as public employment agencies, but primarily serve the white-collar
labor market.
14.Another difference between the two types of agencies is that private agencies
charge employers for providing referrals.
15.For managers or professionals, an employer may use the services of a type of
private agency called an executive search firm (ESF). People often call these
agencies “headhunters”.
16.Colleges and Universities: On campus interviewing is the most important source
of recruits for entry-level professional and managerial vacancies. Participating in
university job fairs is another way of increasing the employer’s presence on
campus.
C.Evaluating the Quality of a Source
1. In general, there are few rules that say what recruitment source is best for a given
job vacancy. It is wise for employers to monitor the quality of all their recruitment
sources. One way to do this is to develop and compare yield ratios for each
source. This ratio expresses the percentage of applicants who successfully move
from one stage of the recruitment and selection process to the next.
2. Another measure of recruitment is the cost per hire.
3. Table 5.3 looks at examples of how HR professionals can use these measures.
VI. Recruiter Traits and Behaviors
The recruiter affects the nature of both the job vacancy and the applicants generated.
Many applicants approach the recruiter with some skepticism and sometimes discount
what the recruiter has to say. The recruiter’s characteristics and behaviors seem to
have limited impact on applicants’ job choices.
A. Characteristics of the Recruiter
In general, applicants respond more positively to recruiters whom they perceive as
warm and informative. The impact of other characteristics of recruiters including their
age, sex, and race, is complex and inconsistent.
B. Behavior of the Recruiter
1. Many studies have looked at how well realistic job previews – background
information about jobs’ positive and negative qualities – can help organizations
minimize turnover among new employees.
2. 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.
C. Enhancing the Recruiter’s Impact
1. Although recruiters may have little influence on job choice, this does not mean
recruiters cannot have an impact. Researchers have tried to find conditions in
which recruiters do make a difference. Based on this research, an organization can
take several steps to increase the impact that recruiters have on the people they
recruit such as:
a. Can provide timely feedback
b. Can avoid behaving in ways that convey the wrong impressions about the
organizatio
c. Can recruit with teams rather than individual recruiters
2. Figure 5.4 provides examples of behaviors for recruiters to avoid.
ROADMAP:
Thinking Ethically
Is Something Wrong with a Mutual Agreement Not to “Steal” Employees?
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Chapter 05 – Planning for and Recruiting Human Resources
There is a talent war in the high-tech industry as tech companies compete for the best and
brightest talent. As with any competitive environment, there is a strategy for getting and keeping
top talent. Many high-tech companies started to offer huge sign on bonuses and also bonuses
and benefits to keep talented employees. The high-tech industry realized that the competition
was only costing the companies a lot of money so many made agreements not to “steal” or
“poach” employees. Google, Apple, Intel, and Adobe Systems are just a few of the companies
who have used these policies. The Justice Department filed a civil law suit stating that these
companies illegally colluded to restrict the free movement of labor and to fix wages. There was
an out of court settlement.
ROADMAP: Chapter Vocabular
Forecasting
Trend Analysis
Leading Indicators
Transitional Matrix
Core Competency
Downsizing
Outsourcing
Workforce Utilization Review
Recruiting
Employment At Will
Due-Process Policies
Job Posting
Direct Applicants
Referrals
Nepotism
Yield Ratio
Realistic Job Previews
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