CH 5

© 2016 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.. 5-1
Need to Know
1. How to plan for HR needed to carry out organization’s

strategy.
2. Labor demand for workers in various job categories.
3. Advantages and disadvantages of ways to eliminate a labor
surplus and avoid a labor shortage.
4. Recruitment policies organizations use to make job vacancies
more attractive.
5. Sources of job applicants.
6. Recruiter’s role in recruitment process- limits and
opportunities.
© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
5-2
Process of HR
Organizations should carry out HR planning so as to

meet business objectives and gain a competitive
advantage over competitors.
 HR planning compares the present state of the
organization with its future goals
 Then identifies what changes it must make in its HR to
meet those goals
 The process consists of three stages: forecasting, goal
setting and strategic planning, and program
implementation and evaluation.
5-3
Figure 5.1:
Overview of HR Planning Process
5-4
Forecasting
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
predict areas within the surplus or shortage
organization where there
will be labor shortages or
surpluses.
© 2016
© 2016 by McGraw-Hill by McGraw-Hill
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material solely formaterial solely
authorized for authorized
instructor instructor
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authorized forNot authorized
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5-5
Forecasting Labor Demand
Trend Analysis Leading Indicators

Constructing and Objective measures that
applying statistical accurately predict future
models that predict labor labor demand.
demand for next year,
given relatively objective
statistics from previous
year.
5-6
Determine Labor Supply
• Transitional matrix: a It answers two questions:

chart that lists job 1. “Where did people in
categories held in one each job category go?”
period and shows 2. “Where did people
proportion of now in each job
employees in each of category come from?”
those job categories in
a future period.
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5-7
Table 5.1
Transitional Matrix –
Auto Parts Manufacturer Example
5-8
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.
5-9
Goal Setting and Strategic Planning
• 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.
• 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)
5-10
Options for Reducing a Surplus
Pay or hour
Downsizing reductions Demotions
Transfers Work sharing Hiring freeze
Natural Early
Retraining
attrition retirement
5-11
Table 5.2
HR Strategies for Addressing a Labor
Shortage or Surplus
5-12
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
5-13
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.
5-14
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
5-15
Downsizing - Four Objectives
1. Reduce Costs
2. Replace Labor with Technology
3. Mergers and Acquisitions
4. Move to More Economical Location
5-16
Options for Avoiding a Shortage
Temporary
Overtime Outsourcing
employees
Retrained Turnover New external

transfers reductions hires
Technological
innovation
5-17
Employing Temporary and Contract
Workers and Outsourcing
The most widespread methods for eliminating a

labor shortage are hiring temporary and
contract workers and outsourcing work.
• Outsourcing - contracting with another organization
to perform a broad set of services.
5-18
Implement and Evaluate HR Plan
• When implementing the HR strategy, 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 tactual
numbers and identify which parts of planning
process contributed to success or failure.
5-19
Apply HR Planning to Affirmative Action
• Workforce Utilization • Organization must

Review: comparison of assess current
employees in protected utilization patterns,
groups with proportion then forecast how they
that each group are likely to change in
represents in relevant near future.
labor market. • If analysis forecast
• Steps in a workforce underutilization of
utilization review are certain groups, then
identical to steps in HR goals and a plan will be
planning process. established.
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5-20
Recruit HR
• 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.
5-21
Figure 5.2:
Three Aspects of Recruiting
5-22
Internal versus
external recruiting
Several
Lead-the-market pay
Personnel strategies
Policies to
recruitment:
Employment-at-will
policies
Image advertising
McGraw-Hill/Irwin manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part..
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.
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Advantages of 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.
5-25
Recruitment Sources: Internal Sources
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
5-26
Figure 5.3:
External Recruiting Sources
– Percentage of Employees Hired
5-27
Recruitment Sources: External Sources
Direct applicants Public

employment
agencies
Referrals
Private
Advertisements employment
in newspapers agencies
and magazines
Electronic Colleges and

recruiting universities
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5-28
Evaluating the Quality of a Source
• Yield ratio expresses the • Find cost of using a
percentage of applicants particular recruitment
who successfully move
from one stage of the source for a particular
recruitment and
Yield Ratios
type Cost
of vacancy.
Per Hire
selection process to the • Divide that cost by
next. number of people
• By comparing yield ratios hired to fill that type
of different recruitment of vacancy.
sources, we can
determine which source • A low cost per hire
is best or most efficient means the recruitment
for type of vacancy. source is efficient.
5-29
5-30
Recruiter Traits and Behaviors
Characteristics of Recruiter
Behavior of Recruiter
Enhancing Recruiter’s Impact
5-31
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.
5-32
Figure 5.4
Recruits
Who
Were
Offended
by
Recruiters
5-33
Enhance 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.
5-34
Summary
• 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.
5-35
Summary
• 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.
5-36
Summary
• 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.
5-37
Sources of Job Applicants
• Internal sources, promoted through job postings,

generate applicants who are familiar to the
organization and motivate other employees by
demonstrating opportunities for advancement.
• Direct applicants and referrals tend to be
inexpensive and to generate applicants who have
self- selected; this source risks charges of
unfairness, especially in cases of nepotism.
5-38

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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use.

Not authorized for sale or distribution in any

1. How to plan for HR needed to carry out organization’s

Organizations should carry out HR planning so as to

Forecasting: Forecasting steps:

Trend Analysis Leading Indicators

• Transitional matrix: a It answers two questions:

• Purpose of setting specific numerical goals is to focus

Transfers Work sharing Hiring freeze

A public accounting firm of 250 employees realizes they

A set of knowledge and skills that make the

2. Replace Labor with Technology

3. Mergers and Acquisitions

4. Move to More Economical Location

Retrained Turnover New external

The most widespread methods for eliminating a

• When implementing the HR strategy, organizations

• Workforce Utilization • Organization must

• Role of HR recruitment is to build a supply of

1. It generates applicants who are well known to the

Job Posting: process of communicating information

Direct applicants Public

Electronic Colleges and

Enhancing Recruiter’s Impact

• Recruiters should provide timely feedback and

• First step in HR planning is personnel forecasting.

• To reduce a surplus, downsizing, pay reductions,

• Lead-the-market pay strategies make jobs

• Internal sources, promoted through job postings,

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