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Human Resources Planning 11-13 PGDM HR Class Start 191112
Human Resources Planning 11-13 PGDM HR Class Start 191112
Topics
1)The Pre-requisite for manpower planning; Manpower planning as an integrated part of business planning; setting manpower standard; Manpower forecasting for managerial staff, technical labor, Integrated Budget for manpower management, Controlling manpower costs.
Workforce Planning
2) Quantitative and qualitative approaches to manpower economy. Mathematical models and manpower planning; An econometric model for national manpower planning; Demographic and ecological models for manpower planning; Mathematical models for staff structure evaluation; Management Science and manpower analysis; Markov Chain models for manpower system; Network models for training and recruiting decision in manpower planning; A stochastic programming model for manpower planning; A simulation model for manpower planning.
Workforce Planning
3) Planning careers: Managing career structures and evaluating maintainable career policies. 4) Developing manpower strategies.
Topics
1)The Pre-requisite for manpower planning; Manpower planning as an integrated part of business planning; setting manpower standard; Manpower forecasting for managerial staff, technical labor, Integrated Budget for manpower management, Controlling manpower costs.
Projected Median Age: ( years) in the year 2025 India-30 years China-39 years USA- 39 years Britain- 41 years Japan-51 years
Indias supply of educated talent will rise* Workforce*United Nations, Morgan Stanley Research, November 2009
Millions of People: 2008: High School-5.2 2008: College- 3.6 2009:High School- 9.7 2009: College- 5.9 2010:High School-11 2010: College 7
Overview
Manpower Planning involves getting the right number of qualified people into the right jobs at the right time Strategic manpower (workforce) planning is not limited to hiring and retaining talent, but also anticipating future skill needs to ensure growth and stability
Linked to business, the process involves providing for necessary resource skill mix to meet current and future market demands that keeping changing
It is integral to recruiting, retaining, retraining, redeployment and contingency planning (talent attrition) processes
Definition
Manpower Planning (also referred as Workforce Planning or Human Resources Planning) is the process an organization uses to analyze its workforce and determine steps it must take to prepare for future needs.
The process involves forecasting the future composition of the workforce, conducting the gap analysis between the current staff and the future staff, deciding how to close any gaps, and determining how to best meet the needs through redeployment, training, recruiting, or
outsourcing.
*Source: SHRM
Additional Definitions
A Strategy for acquisition, utilisation, improvement and preservation of an enterprises human resources. - Stainer An integrated approach to performing the planning aspects of the personnel function, in order to have sufficient supply of adequate developed and motivated people to perform the duties and tasks to meet organisational objectives and satisfy the needs and goals of organisational members. - Leon. C. Megginson The development of strategies to match the supply of workers to the availability of jobs at organizational, regional, national or international levels. It involves reviewing current manpower resources, forecasting future requirements and availability, and taking steps to ensure that the supply of people and skills meets demand.
Workforce Planning
The development of strategies to match the *supply of workers to the availability of jobs *organizational, regional, or national level Manpower planning involves reviewing current manpower resources, forecasting future requirements and availability, and taking steps to ensure that the supply of people and skills meets demand
Purpose of MPP(WP)
Maintain and improve the organisations ability to attain the goals by developing strategies purporting to magnify the contribution of human resources.
Significance of Strategic WP
Human resources skill gaps in terms of numbers, quality or availability influence and impact an organizations ability to meet its business objectives While resource head count has direct impact on cost, the indirect impact (due to any imbalances) is far more critical for organizations success Apart from determining current adequacy, shortage or surplus, forecasting future resource needs to sustain growth is an imperative Resource planning has a direct link with employee development, multi-skilling and succession planning
The resource pool does not dynamically expand in direct correlation to talent needs (workers affected by layoffs may not meet organizations specific skills)
Growing companies are increasingly challenged to acquire critical talent to achieve long term objectives with specific milestones in the short term
Key Objectives of WP
Assess, forecast and meet the organizations current and future skill needs Analyze resource pool for trends that impact ability to meet requirements Optimize utilization of current human resources employed Provide control measures to ensure necessary resource availability as and when required Support the overall HR Strategy that is aligned to the organizations strategy Help sustain organizational objectives and strategies by enhancing contributions of the human resources
Study the organisations - ethos, vision, mission, values and business strategy
Scan the environment for vital information social demographics, economic, political, technology, customer, industry , competition etc.
Assess current vs. desired skill /competency needs based on business needs
Craft an HR strategy and collaboratively deploy through the line managers Periodically evaluate the process outcomes - direct and indirect
What part of the value chain (function / process) must be retained inside and what can be outsourced?
What critical people competencies do we need to invest in? How should we differentiate our choices to optimize delivery of value?
HR Environmental Scanning
How are our current competitors (and future players) designing their business model / organization? How do we benefit from labour markets that have a demographic advantage? How do we mitigate risk of being present in labour markets that have significant demographic disadvantages? What will impact our ability to source required talent? How will we bridge the talent gap? What people challenges do we anticipate? What managerial and leadership roles are likely to emerge?
In order for organisation to achieve its outcomes on financial and customer measures (inputs), what are the key: - business / learning & development / other functional / people processes that need to be leveraged for accelerated success / and or reducing strategic performance gaps?
To ensure superior organization performance and success, alignment needed between 7 internal aspects:
Hard Elements Strategy Structure Systems Soft Elements Shared Values Skills Style Staff
Industry Background
Growing -rapid space in the last 4 -5 years ( McKinsey Report India Pharma 2015 ) CAGR of 16% - period -2007-2011 Gujarat - 40 % -Indias total pharmaceutical production & 17 % exports Employs-500,000 people -across domestic & global firms
Competitive Advantages
Largest numbers of US FDA approved plants outside USA Favoured destination - Pharmaceutical activities( R&D and Clinical Research -front runners). English Speaking work force & low cost R & D Many CROs -setting up Demand for trained & skilled manpower has increased significantly
Skills in demand
Clinical Research Associates Clinical Research Heads Site Monitoring Officers Regulatory Affairs Specialists Regulatory Affairs Professionals
Demand-Supply Gap
Gap -attributed to 'multiple' factors( migrating abroad for doctoral studies, fundamental 'employability gaps' in graduating students, lack of adequate access to employers) Employability gap attributable to: *inadequate curriculum alignment *insufficient academia - industry Interaction *lack of awareness of -'what constitutes employability'.
Erosion of competitiveness
Higher than acceptable rate of attrition Rising employee costs Global- attrition @ 10 to 12% India- annual employee churn- @30-35 %(Field level) & @8 -10%- Managerial level. Higher in large scale industries (25 %) compared to small scale industries (20.6 %).
Steps
Aligned to organizational goals and objectives:
1.
2.
3.
4.
5.
Projecting Needs
Consult with the line managers to examine skills and time utilization to determine ways the organization can use its existing human resource capabilities more fully. This will help analyze whether: Employees are using their time appropriately Work should be reallocated to optimize skill utilization
Absenteeism
Leave Capability to retain talent
Technology changes
Social and demographic factors New positions or skill sets needed Positions to be changed, eliminated or left unfilled Job design needs, organizational structure changes, job sharing Adjustments in contracted labour and supervision
Understanding Attrition
Lower salaries, lack of growth opportunities & emerging perception of instability of Industry Marketing & Production - highest attrition rate @ 22 %) Highest attrition- employees( age - 20-25 Y-large scale organization) & (age - 26-30 yearsY-SSI) Women employees- lower attrition, but higher absenteeism
Outsource Model Pure Outsource Use of a India-based provider to offshore business processes or IT services Managed Outsource Full-/part-time resources on the ground in India to facilitate transition, relationship mgmt and transfer of organization and domain knowledge to third party providers
44
The Human Resource Advantage in INDIA : very young and dynamic workforce
400
40
30
200
20
100
Source: CLSA
10
Indi Chi Indon US Bra Jap Germ a One na esia zil an any quarter of the worlds youth live in
India By 2013, the net addition to the productive population (aged 25-44 years) will be 91 m, or 33% That is an addition of 1/3rd of USAs current population or five new Australias in the age group 25-44
45
Legacy Maintenance Shift from onsite to offsite Quality Assurance Emergence of ITES such as BPO, call centres Moving towards products and embedded software
46
47
$ 70 Billio n
60 50 40
500
400 300 200 100 0 2004 2005 2006 2007 2008 2009
30
20 10 0
Source: neoIT
BFSI
ICT
Auto
Healthcare
Others
Significantly favorable total transaction cost economics Gross savings on factor cost up to 78% Net realized savings ranging between 25-60%
Source: NASSCOM, E-value serve Analysis Blended rate for voice and non-voice operations
PROCESS
COST ELEMENT
USD / FTE / Year Value
US
Share Value
INDIA
Share
SAVING
On US Cost base
Personnel Costs 42,927 IT/ Telecom Costs 2,400 Office Facility Costs 3,700 6.3% 1,991 15.2% 46% 4.1% 3,770 28.7% -57% 73.3% 6,348 48.4% 85%
IT Services
Finance / Insurance Digital Content Software/ ERP / Analytics
Source: GECIS
25%-50%
40%-60% 30%-50% 40%-60%
50
Total Cost
58,598
100%
20-59 years
47.9%
103,440
82,409
60,914
45,145
0-19 years
45.1%
India China Japan Russia US South Korea
1,045
Favourable demographic profile High annual graduate turnout Attractive employment prospects
beyond monetary compensation Rapid scaling up of employment in the sector
842
800 600
1999-00
2000-01
2001-02
2002-03
2003-04 2004-05 E
Source: NASSCOM
51
Questions to be asked :
Is my recruitment machinery geared up to recruit multiple times the numbers that I am hiring toady? (Sourcing Strategy) Am I developing middle managers of tomorrow today? (Middle Management Development) Am I making a compelling employment promise and delivering it? (Employer Branding) Are all my associates motivated and aligned to organisations goal? (Employee Engagement) Do we communicate effectively and regularly (Employee Communication) Are our associates living and breathing the same promise and commitment? (Culture & Values)
52
53
Small er
Empo wered
Diver se
Globa l
54
Address the complete value chain differently for better employability (slide 1 0f 2)
Parents, Friends, Society
Primary School
Secondary School
College Education
Employment Opportunities
Students
Students
School Education
Employers
Address the complete value chain differently for better employability (slide 2 0f 2)
Parents, Friends, Society
Supplier
Input
Process
Output
Customer
National Council and Nodal Agency for workforce development Various industry departments supporting nodal agency
56
57
Communications
Source
Align
Engagement
The firms able to tackle all the areas would emerge as successful in the long run
Base Pay
Reward
Develop
Promotions
58
Customer Promise
Holistic Package of Goods and Services Some of the benefits are real, other are intangible, and even imaginary
The Customers
Its employees who make brands come alive for their organizations!
The Employees 60 60
2) Quantitative and qualitative approaches to manpower economy. Mathematical models and manpower planning; An econometric model for national manpower planning; Demographic and ecological models for manpower planning; Mathematical models for staff structure evaluation; Management Science and manpower analysis; Markov Chain models for manpower system; Network models for training and recruiting decision in manpower planning; A stochastic programming model for manpower planning; A simulation model for manpower planning.
Workforce Forecasting
Demand side: Process of estimating the future quantity and quality of people required Factors to be considered - both internal and external External factors -refer to economic climate, market trends, competition, law and regulation, Technology changes, social and demographic factors.
Workforce Forecasting
Supply Side: Measures the number of people likely to be available from within and outside an organisation Factoring : *in absenteeism *capability to retain talent *internal movements & promotions *changes in work timings & *other conditions of work & *identifying jobs -likely to be redundant into the future of the Planning horizon.
WP & Scenarios
How flexible , are the people resources, nature of deployment & skill profiles, in responding to favourable and unfavorable developments in the business environment? In an inorganic move, what are the new skills that are strategically important for us to pay attention and enhance retention? what are some of the redundancies that are likely to flow from one roletwo persons ? What is the degree of risk associated with Industrial Relations going awry & dependency on sole manufacturing unit(s)?
WP Models
Technique of using opinion or informed judgment Matrix models- executive and management manpower planning. Quantitative techniques: *three categories: statistical methods, operations research methods, and network techniques. Computer simulation models ( including the Weber model) *10 criteria
Managerial Judgment
Most typical method for smaller organisations Managers simply sit down, think about their future work load and how many people they need Adopts both the bottom-up' and top-down approach Delphi Technique- an example
Work Study..
In work load analysis the manpower expert needs to find out: *sales forecasts, work schedules and thus determine the manpower required per unit of product In work-force analysis:
* Factoring in -margin for absenteeism -labour turn over & -idle time on the basis of past experience
Statistical methods
It is the technique of using high speed computers and new mathematical techniques The main statistical tools are *Ratios and Trend analysis *Regression analysis *Bureks -Smith model
Regression Analysis
The technique is used to estimate the workforce requirement of an organization's at a future point of time Used when dependent and independent variables are functionally related to each other
Delphi
The objective of the Delphi technique is to *predict future situations by integrating the independent opinions of experts A major goal of the Delphi technique is to *avoid direct confrontation of experts *some individuals may be unduly influenced by others because of status differences, resulting in compromise of good ideas
Manplan
MANPLAN was developed by General Electric to overcome human resource modelling problems (such as the overwhelming mathematical complexity that can be brought into such planning efforts). Merit of MANPLAN is that running - computer model is relatively inexpensive
Manplan -GE
This computer program needs for its forecast, asking such questions as: * How many different product lines do you manufacture? * How many months does your forecast cover? Once these questions are answered and fed into the computer, the computer can produce: *forecast estimating average human resource levels required to meet product demand- also provides for ranges of possible human resource needs for any period
Markov Models
The information for forecasting internal supply can often be treated as: * if it were independent of the external environment and * is often available within the firm Matrix representing the probability of transition from one job classification to another can be prepared for the relevant classifications *Markov-chain theory can be used to generate a forecast of internal manpower supply.
Markov Models
Assumption: future employees in any level of the organisation are determined not so much by the numbers that are required BUT by the promotions & recruitment encouraging movement up through the system Hence known as Push model *Young & Almond model- example Employee in a particular rank has a fixed probability of promotion in a given year Employees receiving promotions depend on the number of eligible staff in the rank below
Markov
There is no requirement for a vacancy to exist in the higher rank Central equation: n(t+1)=n(T)P +R(t+1)r n(T)- vector of stocks at time t: number of employees in each rank/level P: matrix of transition probabilities between each pair of ranks r: vector of probabilities of a recruit starting off in each particular rank/level R(t): number of new recruits at time t
Renewal Models
Basic assumption-requirements are made by changes in promotions and recruitment rates Employees are pulled through the system to meet pre determined requirements Hence- known as pull models Useful when future manpower requirements are known within reasonable limits & what flows are required to meet the must be identified
Renewal Models
Push and Pull methods- used independently has limited value Now being used in combination Disadvantages: *Highly mathematical- becoming more complex * Non savvy HR Managers- find challenges * Many mathematically savvy Managers are not in HR
To develop the analytical abilities for understanding the implications of continuous changes in the manpower situation of KEC and so as to advise and assist the authorities concerned in their Manpower planning and development activities.
To enable the employees/HR to acquire the knowledge and skill necessary for preparing the manpower plan of a SBU, or to understand such a plan drawn up by it.
Advantages of Manpower Planning: Checks - corporate plan of the organization. Identifies - Shortages and surpluses Guides - Recruitment and selection programmes Reduces - Labour cost Identifies - changes in technology, marketing, management etc. and the consequent need for new skills and new categories of employees. Identifies - and plan for physical facilities and proper working conditions. Identifies - the available talents - develop those talents. Helps in growth and diversification of business.
External Environment (Macro) Technological Customers Human Resources in the country Social including religious Economic Political Governmental Legal
Challenges of MPP
The future is uncertain Cautious attitude of top management Problem of surplus staff Time consuming activity Expensive process
Project Planning
Steps in project planning: -Defining the milestone -Detailing of activities -Setting timeline- both start and end date -Allocating resources -Monitoring and control
Gantt chart:
A Gantt chart is a type of bar chart that illustrates a project schedule. Gantt charts illustrate the start and finish dates of the terminal elements and summary elements of a project.
Methods of Audit
Interviews Group discussions/workshops Observation Analysis- records and documents Questionnaire
Workforce planning
1) Clarity of objectives: Extent of clarity, existence of documentation, efforts made to clarify, comprehensiveness/coverage of efforts 2) Extent to which the process is well structured : situation analysis, workforce demand analysis, workforce supply, workforce plan 3) Extent to which it is understood: awareness, understanding of the objectives, understanding of the functioning of the system & understanding the benefits of the system 4) How well it is implemented: objectives, design and structure, implementation and functioning & benefits derived
SHRM metrics/templates
Mtrics provide a number of factors that can be measured to show how HR contributes to the business. Measures such as absence rate, health cost per employee, and HR expense factors show that HR has a sense of the importance of human capital measurement in supporting business objectives. The following calculators are basic HR and business metrics to help measure your companys absence rate, cost per hire, the value of your human capital and human capital return on investment. These calculators are not meant to be an all-inclusive listing of HR or general business metrics, only a listing of most commonly used metrics. More comprehensive guides, titled How to Measure Human Resource Management, by Jac Fitz-enz and Barbara Davison, and Investing In People: Financial Impact Of Human Resource Initiatives are available for purchase at the SHRM Store.
Sample- Diversity
Average Employee Age The average age of an organizations total employee population Diversity Hire Ratio The percentage of individuals hired externally who self-identified as a member of a diversity category (i.e. Disabled, minority, etc.) Diversity Percentage The number of employees who self-identified in a diversity category as a percentage of total headcount Percentage Diversity At Executive Level The number of executive level employees who self-identified as belonging to a diversity category (i.e. Disabled, minority, etc.) Percentage Diversity At Management Level The number of management level employees who self-identified as belonging to a diversity category (i.e. Disabled, minority, etc.) Total Females As a Percentage of Headcount The number of executives who are female as a percentage of headcount Percentage Females At Executive Level The number of employees who are female as a percentage of headcount Total Females at Management Level The number of management employees who are female as a percentage of headcount
Published Standards
ANSI/SHRM 06001.2012, Cost-per-Hire Designed as a tool to allow an organization to determine accurate and comparable costs of recruitment through a standard algorithm to calculate the recruiting costs to be incorporated into cost-per-hire. Standard is structured at a high level. Specific consideration and responses are also addressed for consideration by individual organizations based on specific hiring environments and requirements. Errata: On page 16 of the standard, in Table 4, the first column should be labeled "Internal Costs", not "External Cost http://www.shrm.org/HRStandards/PublishedStandards/Pa ges/ANSISHRM060012012,Cost-per-Hire.aspx
Published Standards
ASIS/SHRM WPVI.1-2011, Workplace Violence Prevention and Intervention Standard (In conjunction with ASIS) Provides an overview of general security policies, processes, and protocols that organizations can adopt to help prevent threatening behavior and violence affecting the workplace and better respond to and resolve security incidents involving threats and episodes of actual violence
Published Standards
Provides an overview of general security policies, processes, and protocols that organizations can adopt to help prevent threatening behavior and violence affecting the workplace and better respond to and resolve security incidents involving threats and episodes of actual violence. Standard presents practical definitions of workplace violence that includes a continuum of problematic behavior, and that classifies incidents based on the relationship of perpetrator to victim. It outlines security prevention and intervention strategies as well as the procedures for detecting, investigating, managing and addressing threatening behavior or violent episodes that occur in a workplace or in association with it or its employees. Standard is based on the ASIS International Workplace Violence Prevention and Response Guideline. ww.shrm.org/HRStandards/PublishedStandards/Pages/ASISSHRMWPVI12011.aspx
SHRMs competency model ONE technical competency and eight behavioral competencies
Human Resource Technical Expertise and Practice the ability to apply the principles and practices of human resource management to contribute to the success of the business. The eight behavioral competencies, listed and defined below, allow human resource professionals to leverage their technical competence to contribute to organizational success. Relationship Managementthe ability to manage interactions with and between others with the specific goal of providing service and contributing to organizational success. Consultationthe art of providing direct guidance to organizational stakeholders (e.g., employees and leaders) seeking expert advice on a variety of situations or circumstances. Organizational Leadership and Navigationthe ability to direct initiatives and processes within the organization with agility and to gain buy-in from stakeholders. Communicationthe ability to effectively exchange and create a free flow of information with and among various stakeholders at all levels of the organization to produce impactful outcomes. Global and Cultural Effectivenessthe art of managing human resources both within and across borders and cultures. Ethical Practicethe integration of core values, integrity and accountability throughout all organizational and business practices. Critical Evaluationskill in interpreting information (e.g., data, metrics, literature) to determine return on investment (ROI) and organizational impact in making business decisions and/or recommendations. Business Acumenthe ability to understand business functions and metrics within the organization and industry. .
http://www.shrm.org/HRCompetencies/Pages/Model.aspx
**This competency model is designed for developmental purposes only and is intended as a resource for HR professionals
How to read the full competency model Each competency has five distinct components: Title. A distinct competency title Definition. A one-sentence-long overall definition Sub-Competencies. Competencies related to and/or subsumed by the relevant general competency. Behaviors. A list of defining behaviors that are demonstrated by individuals at the highest level of proficiency on the indicated competency Proficiency Standards. Standards for proficiency at the four career stages (entry, mid, senior, and executive). Each proficiency standard represents a behavioral standard in which an HR professional at the relevant level should engage to be successful.
HR Audit
Audits of business personnel budgeting objectives and need Human resource accounting meaning and definition and recent trends in industry, treatment of people as assets Audit of executive turnover study of attrition rate in industry and across industry, causes and analysis. Auditing of IR settlements and negotiations Auditing of Industrial Committee Management meaning and scope
HR Audit
Costs Involved - budgeting Recruitment, Training & Job evaluation meaning, scope, design, analysis Compensation Planning need, how, why, when in an organization
SHRM 2009
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Historical Perspective
Frederick Taylor (1911) Scientific Management
Replaced rule-of-thumb work methods with scientific study. Scientifically select, train and develop workers. Cooperate with workers to ensure that scientific methods are followed. Divide work such that managers apply scientific principles and workers implement them. Find the one best way to accomplish any task. Utilized time and motion studies to analyze tasks.
SHRM 2009 118
Historical Perspective
Elton Mayo (1927-1932) Hawthorne Studies
Informal organization affects productivity. Work group norms affect productivity. The workplace is a social system. Work is more than tasks and duties.
SHRM 2009
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SHRM 2009
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Employee Relations
JOB ANALYSIS
Training
Performance Management
SHRM 2009
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Foundational
HR planning:
Work design. Skills required.
Training:
Training needs for new employees. Training program content. Training evaluation.
Staffing:
Advertising in labor market. Selection criteria. Selection methods. Succession planning.
Performance management:
Performance standards. Evaluation criteria. Appraisal forms and methods. Feedback and communication with employees.
SHRM 2009
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Foundational
Safety and health:
Training required. Protective equipment needed. Hazard communications. Accommodations for medical impairments.
Employee relations:
Work rules, policies and procedures. Clear lines of authority and responsibility. Union work settings.
Legal compliance:
Recordkeeping. Accommodations. Training. Compensation practices. Equal employment practices and affirmative action.
Rewards:
Value of each job for compensation purposes. FLSA status. Pay adjustments.
SHRM 2009
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Information Collected
Data, people, things. Tasks or job functions:
What gets done on the job. Essential functions.
Scope of responsibility:
Supervision received. Supervision provided.
Information Collected
Work context and environment:
Physical environment (discomfort, hazards). Work schedule (hours, days). Travel required.
Social/relationship factors:
Nature of social contacts. Level of social contact.
Decision-making authority:
Judgment and discretion.
SHRM 2009 125
Information Collected
Personal and physical demands of the job:
Stand, sit, reach, lift, walk.
KSAs
Importance to tasks (1-5)
Arrange schedules with office assistant to ensure that office is staffed. Assign office tasks to office assistant and volunteers. Type/transcribe letters, memos and reports.
Supervision
30%
4.9
Supervision
Word processing
20%
3.1
See Exhibit 4.3 on page 151 of Heneman and Judge, Staffing Organizations, 2009.
SHRM 2009 127
Data Sources
Job incumbent Supervisor or manager Former jobholders Job analyst Subject matter experts (SMEs) Industry resources Professional organizations like SHRM
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SHRM 2009
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O*Net Homepage
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Observation Work sample Work diary Interview Questionnaire Perform the job Background records Multiple methods
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Job specification:
Detailed summary of qualifications needed to perform required job tasks.
Performance standards:
Establishes the level of satisfactory performance.
SHRM 2009 132
Job Description
The job description should include at least the following elements:
Job title. Job code. FLSA status. Job summary. Essential job duty task statements. Job context or any unusual elements. Date created. Revision number and date.
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SHRM 2009
Job Specification
The job specification should include at least the following elements:
Job title. Job code. Job summary. Knowledge required to perform job. Skills required to perform job. Abilities required to perform job. Education required. Experience required. Licensure required or certification desired to perform the job. Date created. Revision number and date.
SHRM 2009 134
Performance Standards
Performance standards define the level of expected quality and quantity of work produced on the job. Line managers input in developing performance standards is essential. Standards must be consistent and reasonable.
Human resource accounting meaning and definition and recent trends in industry, treatment of people as assets
-American The American Accounting Society Committee on Human ResourceAccounting defines it as follows: Human Resource Accounting is the process of identifying andmeasuring data about human resources and communicating this information tointerested parties. In simple terms, it is an extension of the accountingprinciples of matching costs and revenues and of organizing data tocommunicate relevant information in financial terms. Association Committee :
a. To facilitate effective and efficient management within an organisation for human resources. b. To provide information of changes in the structure of manpower to the management. c. To provide basis to the future investors in making better decisions about investment in human resources. d. To provide qualitative information on human resources. (HR) e. To measure the costs incurred on human resources by firms. f. To evaluate the return on investment on human capital. g. To communicate the organisation and the public at large about the worth of human resources of an organisation. h. To know whether the human resources have been properly utilised and allocated. i. To help the persons interested in the human resources are giving a return equivalent to their worth or not. j. To help in development of Management principles by clarifying the financial consequences of the various practices.
http://www.preservearticles.com/2012051932547/10-important-objectives-of-human-resourceaccounting.html
Sir William Petty was the pioneer in this direction. The first attempt tovalue the human beings in monetary terms was made by him in 1691. Pettyconsidered that labour was the father of wealth and it must be included in anyestimate of national wealth without fail. Further efforts were made by WilliamFar in 1853, Earnest Engle in 1883. The real work started only whenbehavioural scientists vehemently criticized the conventional accountingpractice of not valuing the human resources along with other resources. As aresult, accountants and economists realized the fact that an appropriatemethodology has to be developed for finding the cost and value of the people tothe organization. For a long period of time, a number of experts have worked onit and produced certain models for evaluating human resources.
COST APPROACH HISTORICAL COST OPPORTUNITY COST REPLACEMENT COST The historical cost of human resources is the sacrifice that was made to acquire and develop the resource a calculation of what would have been the returns if the money spent on HR was spent on something else the cost that would have to be incurred if present employees are to be replaced. Assumptions Underlying HR Accounting : People are valuable organizational resource Human resource value is influenced by management style HRA information is needed
Monetary value based approaches: i) The Lev and Schwartz Model ii) The Eric Flamholtz Model iii) Morse Model
This is an improvement on present value of future earnings model since it takes into consideration the possibility or probability of an employees movement from one role to another in his career and also of his leaving the firm earlier, that his death or retirement. The model suggests a five steps approach for assessing the value of an individual to the organisation : 1. Forecasting the period will remain in the organisation, i.e., his expected service life; 2. Identifying the services states, i.e., the roles that the might occupy including, of course, the time at which he will leave organisation; 3. Estimating the value derived by the organisation when a person occupies a particular position for a specified time period; 4. Estimation of the probability of occupying each possible mutually exclusive state at specified future times; and 5. Discounting the value at a predetermined rate to get the present value of human resources.
Likert Model ii) Ogan Model LIKERTS MODEL (1960) Rensis Likert in the 1960s was the first to research in HR and emphasized the importance of strong pressures on the HR's qualitative variables and on its benefits in the longrun. According to Likert's model, human variable scan be divided into three categories: (i) causal variables; (ii) intervening variables; and (iii) endresult variables. The interaction between the causal and intervening variables affect the end-result variables by way of job satisfaction,costs, productivity and earnings
OGANS MODEL
Pekin Ogan (1976) has given Net benefit model. This, as a matter of fact, is an extension of net benefit approach as suggested by Morse. According to this approach, the certainty with which the net benefits in future will accrue should also be taken into account, while determining the value of human resources. The approach requires determination of the following: Net benefit from each employee. Certainty factor at which the benefits will be available. The net benefits from all employees multiplied by their certainty factor will give certainty-equivalent net benefits. This will be the value of human resources of the organization.
HRA Model
Discount
Lev & Schwartz model 12 Lev & Schwartz model with 14 Some refinements as suggested by Eric.G. Flamholtz& Jaggi and Lev Lev & Schwartz model 12 Lev & Schwartz 12.25 Lev & Schwartz model 12 Lev & Schwartz model 12.96 Lev & Schwartz model 14.97
Examples- India
Secondary Terminology used: 1) PBT-Profit Before Tax 2) HR- Human Resource 3) TA-Total Assets 4) Turn-Turnover ( or Sales) 5) FA-Fixed Assets 6) VA- Value Added
Limitations :
Not easy to value human asset Results in dehumanizing human resource No evidence Hr is full of measurement problem Employees and unions may not like the ideas Unrealistic Lack of empirical evidence