Chapter 5

PLANNING FOR AND

RECRUITING HR
 What Do I Need to Know?
LO 5-1 Discuss how to plan for human resources needed to carry
out the organization’s strategy.
LO 5-2 Determine the labor demand for workers in various job
categories.
LO 5-3 Summarize the advantages and disadvantages of ways to
eliminate a labor surplus and avoid a labor shortage.
LO 5-4 Describe recruitment policies organizations use to make
job vacancies more attractive.
LO 5-5 List and compare sources of job applicants.
LO 5-6 Describe the recruiter’s role in the recruitment process,
including limits and opportunities.
 The Process of HR Planning 1 of 10

HR planning helps meet business objectives and

gain a competitive advantage over competitors.
– Three stages: forecasting, goal setting and strategic
planning, and program implementation and
evaluation.
Figure 5.1: Overview of the HR Planning Process

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description
 The Process of HR Planning 2 of 10

Forecasting Forecasting steps

Attempts to determine 1. Forecast labor demand
supply and demand for 2. Determine labor supply
various types of HR to 3. Determine labor surplus
predict areas within the or shortage
organization where there
will be labor shortages or
surpluses.
 The Process of HR Planning 3 of 10

Forecasting Labor Demand

Trend Analysis Leading Indicators

Constructing and applying Objective measures that
statistical models that accurately predict future
predict labor demand for labor demand.
next year, given relatively
objective statistics from
previous year.
 The Process of HR Planning 4 of 10

Determine Labor Supply

Transitional matrix
A chart that lists job It answers two questions:
categories held in one 1. “Where did people in
period and shows proportion each job category go?”
of employees in each of 2. “Where did people now
those job categories in a in each job category
future period. come from?”
 Table 5.1 Transitional Matrix:
Example for an Auto Parts Manufacturer
2016
2013 1 2 3 4 5 6 7 8
1. Sales manager .95 .05
2. Sales representative .05 .60 .35
3. Sales apprentice .20 .50 .30
4. Assistant plant .90 .05 .05
manager
5. Production manager .10 .75 .15
6. Production assembler .10 .80 .10
7. Clerical .70 .30
8. Not in organization .00 .20 .50 .00 .10 .20 .30
 The Process of HR Planning 5 of 10

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.
 The Process of HR Planning 6 of 10

Goal Setting and Strategic Planning

• Numerical goals 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).
 The Process of HR Planning 7 of 10
Core Competency
– A set of knowledge and skills that make the
organization superior to competitors and create value
for customers.
– Organizations are most likely to benefit from hiring
and retaining employees who provide a core
competency.
The Process of HR Planning 8 of 10
Downsizing - Four Objectives

1. Reduce Costs

2. Replace Labor with

Technology
3. Mergers and
Acquisitions
4. Move to More
Economical Location
Table 5.2 HR Strategies for Addressing a Labor
Shortage or Surplus (1 of 2)
Options For Reducing a Surplus
Option Speed of Results Amount of Suffering Caused
Downsizing Fast High
Pay reductions Fast High
Demotions Fast High
Transfers Fast Moderate
Work sharing Fast Moderate
Hiring freeze Slow Low
Natural attrition Slow Low
Early retirement Slow Low
Retraining Slow Low
Table 5.2 HR Strategies for Addressing a Labor
Shortage or Surplus (2 of 2)
Options For Avoiding a Shortage
Option Speed of Results Ability To Change Later
Overtime Fast High
Temporary employees Fast High
Outsourcing Fast High
Retrained transfers Slow High
Turnover reductions Slow Moderate
New external hires Slow Low
Technological innovation Slow Low
 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
 Average age is growing

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

Reducing Early- Contract

hours retirement workers

Overtime and
Temporary expanded
workers Outsourcing hours
 The Process of HR Planning 9 of 10

Implementing and Evaluating the HR Plan

• Organizations must hold individuals accountable for
achieving goals.
• They must also have authority and resources needed
to accomplish those goals.
• Regular progress reports should be issued.
• Evaluation of results should look at actual numbers
and identify which parts of planning process
contributed to success or failure.
 The Process of HR Planning 1 of 10

Apply HR Planning to Affirmative Action

Workforce Utilization Review
• Comparison of employees • Organization must assess
in protected groups with current utilization patterns,
proportion that each group then forecast how they
represents in relevant are likely to change in
labor market.
near future.
• Steps in a workforce
utilization review are • If analysis forecast
identical to steps in HR underutilization of certain
planning process. groups, then goals and a
plan will be established.
 Recruiting Human Resources

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

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 Personnel Policies

Internal versus external recruiting

Lead-the-market pay strategies

Employment-at-will policies

Image advertising
 Recruitment Sources 1 of 4

Advantages of Using 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 expectations.
3. Filling vacancies through internal recruiting is generally
cheaper and faster than looking outside the
organization.
 Recruitment Sources 2 of 4

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
employees
 description
Jump to Appendix 3 long image

Source: Based on Gerry Crispin and Chris Hoyt, “Source of Hire 2015: One
Last Time—Because No One ‘Gets It,’” Career Xroads, January 9, 2016,
Figure 5.3: External Recruiting Sources

available on SlideShare, http://www.slideshare.net.

 Recruitment Sources 3 of 4
External Sources

Direct applicants and referrals

Electronic recruiting

Advertisements in newspapers and magazines

Private employment agencies

Colleges and universities

 Recruitment Sources 4 of 4
Evaluating the Quality of a Source
• Yield ratio expresses the • Find cost of using a
percentage of applicants particular recruitment
who successfully move source for a particular
from one stage of the type of vacancy.
recruitment and selection • Divide that cost by
process to the next. number of people hired to
• By comparing yield ratios fill that type of vacancy.
of different recruitment • A low cost per hire means
sources, we can the recruitment source is
determine which source is efficient.
best or most efficient for
type of vacancy.
 Table 5.3 Results of a Hypothetical Recruiting Effort
Recruiting Source
Local Renowned Employee Newspaper Ad Online Job Executive
University University Referrals Board Ad Search Firms
Resumes generated 200 400 50 500 7,000 20

Interview offers 175 100 45 400 500 20

accepted
Yield ratio 87% 25% 90% 80% 7% 100%
Applicants judged 100 95 40 50 350 19
acceptable
Yield ratio 57% 95% 89% 12% 70% 95%
Accept employment 90 10 35 25 200 15
offers

Yield ratio 90% 11% 88% 50% 57% 79%

Cumulative yield 90/200 10/400 35/50 25/500 200/7,000 15/20
ratio
45% 3% 70% 5% 3% 75%
Cost $30,000 $50,000 $15,000 $20,000 $5,000 $90,000
Cost per hire $333 $5,000 $428 $800 $25 $6,000
 Recruiter Traits and Behaviors 1 of 2
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

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description
 Recruiter Traits and Behaviors 2 of 2

Enhancing the 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.
• Organization can recruit with teams rather than
individual recruiters.
 Summary (1 of 3)

• First step in HR planning is personnel forecasting.

Through trend analysis and good judgment, planner
determines supply and demand for HR.
• Next 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.
 Summary (2 of 3)
• 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.
 Summary (3 of 3)
• 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.