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Chapter 05 - Human Resource Planning and Recruitment
5-1
CHAPTER 5
HUMAN RESOURCE PLANNING
AND RECRUITMENT
Objectives.
After reading this chapter, you should be able to
1. Understand the importance of human resource planning (HRP) to the organization.
2. Identify the six steps in the HRP process.
3. Explain the methods by which an organization can develop forecasts of anticipated
personnel demand and understand labor markets.
4. Understand how an organization can stay apprised of and evaluate its personnel supply
and, if necessary, implement a downsizing program.
5. Determine which recruitment methods are best for given situations, including the role
of the E-recruiting.
6. Understand the pros and cons of internal versus external recruiting.
7. Know the most important features of recruitment strategy.
8. Know the legal implications of recruitment and planning.
Chapter 05 - Human Resource Planning and Recruitment
CHAPTER 5- SUMMARY
I. Overview
A. HR should be an integral part of the strategic planning process
B. HR planning (HRP) should be an integral part of creating competitive strategy
C. One important element of HRP today is the consideration of outsourcing to reduce
costs
D. Employers’ goals are to keep labor costs low while meeting (or exceeding) customer
demands
E. Two of the most important aspects of staffing
1. HRM planning: forecasting HR needs in the context of strategic business planning.
2. Recruitment: Process of attracting applicants for the positions needed
F. HRM activities are interdependent. For instance changes in compensation will have an
1. External and internal environmental scans identify sources of SWOT and reduce
ambiguity
2. Understanding the Labor Market
a) Number and types of available candidates
i) Whether the market is loose (abundant recruits) or tight
3. The Global Labor Market
a) Technology and communications is revolutionizing the relationship between
geography and labor supply (e.g., Indian call enters)
b) Skilled labor is being off-shored to lower-paid, overseas workers (e.g.. IT,
analysis, tax preparation)
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© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
d) Technology has made workers from all over the world accessible to US firms,
resulting in
Chapter 05 - Human Resource Planning and Recruitment
i) Lower labor costs
f) Greatest growth in future offshoring will be for services requiring higher skill
levels.
g) No effective mechanisms for gauging true economic gains from outsourcing
i) Companies lose customers due to quality issues
ii) Loss of good employees and institutional knowledge due to downsizing
iv) Lower quality output
4. Affirmative Action/Diversity Programs and the Law: A Problem, Threat or
Opportunity?
a) Government regulation considerations
i) Requires companies to pay close attention to decision making with
regard to protected classes
ii) Executive Order 11246 – requires Federal contractors and subcontractors
to take affirmation action to ensure all individuals have an equal
opportunity for employment
iii) Civil Rights Acts Section 706(G) – allows a judge to order an affirmation
action program in the event illegal discrimination is present
b) Hiring to promote a diverse workforce (see Figure 5-5)
i) Complicated because of confusing state of EEO case law
ii) Safest to actively recruit females and minorities for the qualified pool of
candidates, and then ignore the race and gender of the individuals
iii) Despite legal confusion regarding EEO, organizations are continuing their
efforts to promote diversity in their workforces (70% of Fortune 500
companies consider race in hiring decisions)
B. Step Two: Labor Demand Forecast; derived from a projection of how business
needs will affect HR
1. Qualitative Methods.
a) Centralized approaches
i) Examines current business situation and determines staffing
requirements for the rest of the firm
5-5
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
2. Quantitative Methods
a. Trend analysis.
i) Incorporates certain business factors and a productivity ratio
ii) Six steps (see pg 150)
iii) Use of the appropriate factors is critical to success
b. Regression analysis
i) Uses information from the past relationship between the
organizations employment level and some important success criterion
known to be related to employment.
ii) Influenced by the learning curve
iii) Possible to forecast demand under various scenarios
c. Quantitative methods improve accuracy by incorporating operational
constraints
C. Step Three: Labor Supply Forecast
1. Internal Supply
a) Consists of the individuals and jobs currently in the firm.
i) HRIS systems provide data to make projections into the future based
on current trends
ii) Data from skills inventories are used source internal candidates,
control cost, aid employee morale
iii) Succession planning and replacement charts identify qualified
internal candidates
iv) Markov analysis more complicated and is used for long-range
forecasts in large firms
b) Electronic databases come with inherent privacy and security concerns
2. External Supply
a) The skills needed determine the relevant labor market
b) The labor market will drive the choice of recruitment strategy
c) Immigration Reform and Control Act (IRCA) of 1986 requires that every
Chapter 05 - Human Resource Planning and Recruitment
c) Savings in hourly wage, workers’ compensation, social security, and
other benefits.
d) E-Verify is available to determine work eligibility. Free, internet
based program run by the Federal government. Employers with
federal contracts must use E-Verify
e) In Chamber of Commerce v. Whiting the Supreme Court supported
state law sanctioning employers for knowingly hiring illegal workers,
and requiring employers to use E-Verify
f) Criminal prosecutions more common against workers and employers
d) Several legal immigration options for US employers:
a) H-1B visas for highly skilled workers (tight legal limit)
b) L-1 Intra-company Transferee classifications, controversial
D. Step Four: Gap Analysis
1. Used to reconcile the forecasts of labor demand and supply
2. Decision making process:
3. Is There an Optimal Way to Downsize?
a) Effective reengineering can improve competitive advantage through
restructuring, overhead reduction and more effective performance
management with constant focus on the core competencies of the
company and the current and/or future customer base
b) Downsizing needs to be done with a customer focus
c) Strategic planning can minimize downsizing threat
d) Virtue in stability
e) Enhancing the effective of restructuring & downsizing (Figure 5-9 p 155)
f) Outplacement may reduce threat of legal action
4. What Are Some Alternative or Additional Solutions?
a) Brainstorming or a qualitative approach can identify alternatives
b) Some of the factors to consider are
5. What Is the Role of Temporary Employment?
a) Growth rate of 30%
b) Employee leasing can save costs but employers have less control
c) Permanent part-time employees can save costs and may help retain and
5-7
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
d) Independent contractors
i) Considerable cost savings is possible by classifying workers as
independent contractors - low wages and no benefits for some jobs
ii) 4 critical questions determine if an employee should be classified as a
contractor: control or work and benefits, contracts, and continuation
of the relationship
e) Internships typically involve the hiring of college students, either paid, or
unpaid. 60% of internships result in a job offer
6. What is Job Sharing?
a) Divides a single job into two or more workers.
b) Success of the arrangement depends on a good partnership
7. Telecommuting
a. Alternative work arrangement allowing workers to work at home or in some
8. Is There a Conflict between Downsizing and Diversity Goals?
a) Evaluate past performance or even potential performance without even
considering a protected class characteristic
b) Avoid preferential treatment in downsizing
c) Test for adverse impact and evaluate job-relatedness
E. Step Five: Action Programming
1. Plans out a sequence of events to be executed
2. There are two aspects of programming:
a) Internal Programming
i) The HRP solutions for actions inside the firm
ii) Training, career planning, promotions, compensation design
iii) Consider changes to organizational design
b) External Programming
i) Solutions that are related to constituencies in the environment
ii) Necessary when plans require drastically different competences
from what employees currently possess and or the time frame for
change is quite short
F. Step Six: Control and Evaluation
1. Monitor HRP programs over time
2. Deviations from a plan are identified and actions are taken
3. Extent of objectives met identified by feedback resulting from the outcomes
such as performance or productivity data
Chapter 05 - Human Resource Planning and Recruitment
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III. The Recruitment Function: Putting HRP into Action
A. Is demand is greater than supply. Moving from HRP to recruitment is essentially a
process of translating broad strategies into operational tasks
1. Conflict between HR and line managers occur when their priorities diverge, for
example time to hire, versus quality of the hire
B. Recruitment, Other HR Activities, & Organizational Attractiveness
1. Recruitment and other HR Activities are interdependent
2. Technology allows employers many more options for getting job done
a. Geography is not the limiting factor with regard to knowledge-based, service
work
b. Manufacturing options more limited
1. Work Analysis
a. required to create accurate job descriptions, and job specifications
i. Necessary to identify the critical skills needed for recruitment, as well
as determine outsourcing, job sharing, etc.
ii. Directly affects the effectiveness of any recruiting and planning effort
iii. Can determine where the work can be done for maximum efficiency
iv. Critical for web-based recruiting to reduce number of unqualified
candidates
2. Time-Lapse Data (TLD)
a. Average time that elapses between points of decision-making in
recruiting
b. Automated recruiting has reduced some organizations TLD
3. Yield Ratios
a) Ratio of applicants to hires at each step in the selection process
4. Few companies collect data needed for evaluation of TLD and yield ratios
Chapter 05 - Human Resource Planning and Recruitment
D. The Two Source of Recruiting
1. Internal and External
E. Advantages and Disadvantages of Internal and External Recruitment
3. Internal recruiting is one component of high-performance work practice
(HPWP)
4. Succession Planning reduces turnover
5. No solid research supporting the idea that internal recruitment stifles
creativity
6. Possible problems with internal recruitment: escalation bias, Unit raiding,
politics, and peter principle
7. Job posting system enhances the effectiveness of internal recruiting
Figure 5-11 p 164
Recruitment Advantages Disadvantages
Internal Better assessment of candidates Creates vacancies
1. Seek employees from outside the firm.
2. What Methods Are Available for External Recruiting?
a) Walk-ins/Unsolicited Applicant Files-linked to company’s reputation.
Software matching job specs with resumes increases effective use of this
source of candidates
Chapter 05 - Human Resource Planning and Recruitment
5-11
H. Two Philosophies of Recruiting: Flypaper versus Matching.
1. Selection ratio. The proportion of job openings to applicants
a. Lower SRs are better (low SRs for key positions is HPWP characteristic)
2. Realistic Job Preview (RJPs) results in lower turnover, higher job satisfaction but
reduction in the number of job acceptances.
3. JCQ matches preferences and job characteristics
a) Reduces turnover in high turnover jobs
1. Best to rely on research such as that presented in Figure 5-18, p. 178, rather than
1. The relationship between HRP and strategic planning for overseas ventures is
weaker than for domestic ventures
2. Efforts are being made to enhance the recruiting and success of expatriates
3. Major challenges for overseas HRP
a) Identifying managerial talent.
4. Repatriation policies are not adequate to meet the needs of returning
expatriates
5. U.S. firms recruit and select from three sources
6. Policy for selecting executives for overseas assignments
i) Ethnocentrism- using only home country executives for assignments
ii) Geocentric – hire the best regardless of nationality
iii) Balance between expatriates and host or third country nationals
IV. Summary
D. Reengineering and downsizing programs need to be well managed
E. Recruitment is finding and attracting applicants who are interested and qualified
F. The evaluation of recruiting programs should focus on quality over quantity
Chapter 05 - Human Resource Planning and Recruitment
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CHAPTER 5 - IMPORTANT TERMS
Action programming - Final step of HRP model: takes adopted solution and lays out the
sequence of events that need to be executed to realize the plan.
“Acqhiring”- hiring top talent by buying start-ups to acquire the engineers who work there
Centralized approach to projecting labor demand - HR department examines current business
situation and determines staffing requirements for rest of firm.
Computer modeling - uses mathematical formulas to help compute future resource needs.
Decentralized approach to projecting labor demand - Each unit or functional manager
until the intermediary concludes that more than one perspective must be presented.
E-Verify - A voluntary program in which employers can check workers names & work status
against databases kept by the Social Security Administration and Department of Homeland
Security.
Environmental scanning - Helps planners identify and anticipate sources of SWOTs.
recruits of the firm (including those working for other firms).
Gap analysis - Reconciles forecasts of labor demand and supply.
Geocentric - Policy of hiring the best person regardless of nationality for oversea assignments.
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© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
HPWP
Human resource planning - Assures that the right people in the right jobs at the right time and
at the lowest possible cost
HRIS- an electronic data base that serves as a repository of information on employees including
competency or skill inventory
Labor market - what is available in qualified applicants.
Loose vs. tight labor markets - In loose labor market, qualified recruits are abundant.
Markov analysis- A transition model used by large companies to make long-term forecasts. It
uses historical information from personnel movements of the internal labor supply to predict
what will happen in the future.
Outsourcing- is the relocation of a business process from one country to another.
Peter Principle- states that we are promoted to our level of incompetence
Personnel skills inventory - used to determine internal supply of candidates
Realistic job previews - Present the characteristics of the job to applicants so that they can
evaluate the compatibility of this realistic presentation of the job with their own work
Chapter 05 - Human Resource Planning and Recruitment
Important Cases
Chamber of Commerce v. Whiting - Federal law does not prevent Arizona from revoking the
business licenses of state companies that knowingly hire undocumented workers, or from
requiring employers in that state to use a federal electronic system to check that their workers
are authorized to work in the United States.
EEOC v. Detroit Edison – practice of relying on referrals by predominantly white workforce
Immigrations Reform and Control ACT (IRCA) of 1986 - requires the labor pool should be a
legal pool.
Section 706G of the Civil Rights Act – allows a judge to order an affirmative action program if
the employer is found guilty of intentional discrimination.
Worker Adjustment and Retraining Notification Act (WARN) - Provides protection to workers,
Chapter 05 - Human Resource Planning and Recruitment
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CHAPTER 5 - DISCUSSION QUESTIONS
1. How should HR planning involve a comparison to competitors? What critical data are
required?
HRP should survey the external market conditions to safeguard its resources of human capital.
Industry competition has a profound impact on HR planning. A comparison with competitors is
essentially an attempt to determine their competitive advantage. This survey needs to determine
2. Why is planning an important activity? What are some of the advantages of effective
planning?
Planning is the forecasting of HR needs in the context of strategic business planning. With the
major changes and increasing uncertainty in the business environment, many organizations are
adopting a longer-term perspective and integrating HRP with business planning. Effective planning
3. Some organizations do a thorough job analysis first and then human resource planning
as part of a restructuring process. What makes more sense to you?
It makes sense to conduct the job analysis first and then do HRP. A current job analysis can aid in
the recruitment of new employees who have the KASOCs necessary to perform the job. Better
recruitment of qualified individuals will reduce the possibility of having to later recruit additional
Chapter 05 - Human Resource Planning and Recruitment
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4. Discuss the possible pros and cons of the two qualitative methods of forecasting labor
demand presented.
The two qualitative methods of forecasting labor demand are centralized and decentralized. Using
the centralized approach, an HR department determines staffing requirements for the entire firm.
The advantage to this method is that it is straightforward and simple to use. The main
5. If actual performance of the human resources plan differs from desired performance,
what remedial steps might you use?
The specific remedial steps will depend on which aspects of the HR plan are deficient. For
example, if current recruitment practices have resulted in an inadequate number of selected
minorities, efforts can be aimed at targeting minority campuses or utilizing employee referrals
6. Employee referral is a popular method of recruiting candidates. What are its advantages
and disadvantages?
Employee referrals can be a good source, especially when recruiting candidates in occupations
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7. What are the advantages and disadvantages of the various external recruitment sources?
External recruitment sources include walk-ins, referrals, advertising, employment agencies, search
firms, campus visits, professional associations, and computerized services. Each is discussed
below.
Employment agencies can also aid organizations by increasing the pool of possible applicants and
by providing preliminary screening services. This approach may be advantageous when: (1) the
organization has difficulty acquiring a pool of qualified applicants; (2) the organization is not
Professional associations can provide a source of recruits in specialized areas. The network of the
association can reach a large pool of potential applicants. A disadvantage to this method is that
qualified candidates may be overlooked.
Chapter 05 - Human Resource Planning and Recruitment
5-19
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Finally, a new area of recruiting is computerized job listings. Candidates can apply directly through
the computer. Preliminary evaluations of this method are positive. The disadvantages are that
these listings are direct competition with the listings of other companies. Further, there is no
guarantee that a particular position will be filled.
8. How do human resource planning and recruitment complement each other?
Recruitment success affects selection success and the use of certain selection procedures can
9. Suppose a key employee has just resigned and you are the department manager. After
you have sent your request to personnel for a replacement, how could you help the
recruiter to find the best replacement?
The first step would be to review the current job description and provide the recruiter with that
information. If possible, it would be a good idea to get information regarding the job from the
employee who is resigning (exit interview). The current job description may be outdated and the
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10. Discuss the advantages and disadvantages of using Web-based recruitment.
Having electronically submitted résumés may be a competitive advantage for an organization
that has the capability of searching for the skills necessary and then ranking the résumés for call
backs regarding interviews. There is still a risk of not receiving potentially qualified individuals
résumés if particular formats are required, which will limit the pool.
