The intensions of this document are to check the nature of, and to what extent companies are able to manage this complexity. For this document, different firms have been used in order to identify if there are any firm-specific differences regarding HRP traditions. Results from our investigation of the studied firms shows that the degree of stability in their respective firms, in terms of employee turnover and economical fluctuations, clearly affects the way in which they approach HRP. Key-words Human Resource Management, Strategic Planning, Human Resource Planning. 1.
Introduction Organizations are under increasing pressure to find ways to implement their strategies in a fast changing business environment, in which planning lifecycles tend to shrink to reduce the ‘time-to-market’ intervals. At the same time, organizations are putting more and more emphasis on adjusting the organization and employees in their attempt to achieve business goals . “HRP is usually seen as an essential feature of the ideal-type model of human resource management, even if it does not always appear to be given high priority in practice“(Rothwell, 1995).
The issue of efficient planning for people was brought up before the introduction of human resource management. One possible explanation was presented by Storey (1995), who presents that as the developing business environment forces organizations to plan effectively and efficiently for the people resources, the rapid changes in the business environment also makes it difficult for organizations to plan with accuracy. In the light of this we want to investigate to what extent organizations plan for HR in today’s business environment. 2. Human Resource Planning – Concept Clarification
As in many areas of personnel management, there is confusion about the precise meanings of the terms used to describe the human resource planning functions. According to Taylor (1998), “The main distinction is between those who see the term ‘human resource planning’ as having broadly the same meaning as the longer established terms ‘workforce planning’ and ‘manpower planning,’ and those who believe ‘human resource planning’ to represent something rather different. ” According to Bramham (1994), “There is a big distinction between the two terms.
He argues that ‘manpower planning’ is essentially quantitative in nature and is concerned with forecasting the demand and supply of labour, while ‘human resource planning’ has a far wider meaning, including plans made across the whole range of personnel and development activity. These activities include soft issues such as motivation, employee attitudes and organizational culture. ” The opposite opinion is that, the term ‘human resource planning’ is simply a more modern and gender-neutral term with essentially the same meaning as ‘manpower planning. Both are concerned with looking ahead and using systematic techniques to assess the extent to which an organization will be able to meet its requirements for labour in the future (Taylor, 1998). They are thus undertaken in order to assess whether an organization is likely to have ‘the right people, with the right skills, in the right places at the right time’ (Ibid). According to this definition, human resource planning is a relatively specialized sub-discipline within the general activity undertaken by personnel managers. There are different views of the specific meaning of HRP.
We argue that it is more than a quantitative approach, as we believe that issues such as employee retention, attitudes and motivation are essential features for having the right people, with the right skills, in the right places at the right time. Thus, we agree with Bramhams’s view that HRP has a wider meaning, encompassing “soft” HR issues and it is the one that is accepted for the purpose of this text. 3. The Evolution of HRP Since the origins of the modern industrial organization, human resource planning has been a management function (Walker, 1980).
Division of labour, specialization, organization of management into levels, work simplification, and application of standards for selecting employees and measuring their performance were all principles applied early in industrial management (Ibid). Planning for the staffing of work to be done is not something that has become popular in recent years. This is something that has grown to become what it is today. The relatively sophisticated techniques available to management today are outcomes of a long period of evolution in practices, which started decades ago with simple, pragmatic, short term planning.
The techniques used by management tended to fit contemporary conditions and events (Storey, 1995). During the first part of the 20th century, for example, the focus in manpower planning was upon the hourly production worker. The aim of improving efficiency through work engineering and early industrial psychology applications was consistent with the need to improve productivity and introduce greater objectivity to personnel practices (Ling, 1965; Merril, 1959; Yoder; 1952). During the Second World War and the post war years, the focus intensified on employee productivity.
There was also greater concern regarding the availability of competent managerial personnel, as there was a talent shortage in combination with significant demand for goods and services. New technologies and interests in behavioral aspects of work also added complexities to the manpower planning task. In the 1960’s the demand for high talent personnel increased due to high technology programmers, rapid corporate expansion and diversification. In order to handle this increase, manpower planning practices were focused on balancing supply with demand, particularly demand for managerial, professional and technical personnel.
According to textbooks written during the later part of the 1960’s, manpower planning was viewed as a system linking the organization with its environment (Patten, 1969; Vetter, 1967). Walker (1980) argues that the most common view of manpower planning at that time, which also dominated the literature until the 80s, was that “companies forecast their needs for manpower into the future, forecast their internal labour supply for meeting these needs, and identify the gaps between what will be needed and what will be available. Further, manpower planners develop plans for recruiting, selecting and placing new employees, provide for training and development and anticipate necessary promotions and transfers (Burack et al, 1972; Geisler, 1967; Henemann et al, 1968; Wikstrom, 1971). The 70s came with new legislation, court decisions and governmental regulations. Management attention then turned to affirmative action planning and other aspects of compliance. While many companies adopted the techniques that had been introduced by leading companies during the previous decades, ther experimented with new tools such as career planning, activity analysis, and reshaping of work (Walker, 1980). The majority of companies, however, were mainly concerned about the compliance with the significant new regulations governing discrimination, safety and pensions. Generally, it was an unsettled decade, during which managers had to deal with the energy crisis, uncertain costs and profits, the slowing of business expansion and the increased concern regarding women’s liberation and reverse discrimination (Bramham, 1994).
However, according to Bramham, it was during this time or decade that “manpower planning” was broadly being termed “human resource” planning and became widely established as a staff activity in major business and governmental organizations (Ibid). The term “human resource planning” implied a scope broader than just supply-demand balancing or quantitative forecasting. Human resource planning shifted focus from being a quantitative approach, although recognizing its importance, to a more comprehensive view of the process encompassing both needs forecasting and program forecasting (Ibid).
During the 80s and early 90s, human resource management researchers and professionals tended to place greater emphasis on employee attitudes and on the development of personnel strategies to search for the enhancement of positive employee feelings and commitment (Zeffane and Mayo, 1994). Generally, these strategies lacked sufficient concentration on the need to control the flow of personnel within and across organizational boundaries (Walker, 1989). According to Richards-Carpenter (1989), this meant that human resource planning took a backward step in priority placing within the overall human resource management system.
However, due to the increasingly uncertain socio-economic climate during the 90s, it was anticipated that the HRP function was to become the focal activity, as it was increasingly becoming an essential function across the organization (Zeffane and Mayo, 1994). Damm and Tengbland (2000) argue that in the future, the role of the HR personnel is to provide and develop an attractive organizational environment in which the individual feels inspired to grow and develop his/her competence.
Furthermore, they say that individual organizations will not necessarily be responsible for the individuals’ competence development; it is rather the individuals’ responsibility to make sure that they develop their competencies in order to attract future employment relationships. The ultimate situation is when the individual feels that the organization provides the best resources available in order for them to grow and develop their competencies.
Damm and Tengblad also argue that two very important future working areas, for individually focused personnel work, will be guidance consulting and employee brooking. There will be a need for people who work with professional career service to assist the individuals with their career planning if the individual will be responsible for their own careers. In a labour market that is increasingly characterized by time limit employment rather than life long contracts, there will be a constant requirement to link competence demand with competence supply.
The employee brokers can assist in the process of identifying the different potentials and overlapping between demands since they have a better overview than the individuals have. This could mean that it will still be necessary with employees working with personnel-related questions; however, much of the “strategic personnel work” will not be as important since individuals will be responsible for their own competence development (Damm and Tengblad, 2000). 4. The Contemporary Purpose of HRP
The effective HRP can help anticipate potential future difficulties while there is still a choice of action. Forward planning should enable the organization to develop effective personnel strategies related to such activities as recruitment and selection, training and retraining, management development and career progression, transfers and redeployment, early retirements, salary levels, anticipated redundancies, and accommodation requirements. Bramham (1987) presents a more detailed view of six basic objectives, which are quite similar to those mentioned by Mullins (1996) that is thought to onstitute the purpose of HRP. The first objective and a major purpose behind the use of HRP is to give an organization a broad, forward-looking insight into not just the number of employees, but also the type, skills, and attributes of the people that will be needed in the future. HRP provides the information on which recruiters base their activities and it reveals what gaps there are between the demand for and supply of people with particular skills (Bramham, 1987; Storey, 1995; Mullins, 1996).
The second objective aims to reveal what training and development activities need to be undertaken to ensure that existing employees and new recruits possess the required skills at the right time. The longer and more specialized the training is, the more significant accurate HRP is to the organization’s effective operation (Bramham, 1987). Manpower costing is listed as the third objective and explains how HRP assists in cost reduction by aiming to work out in advance how organizational operations can be staffed most efficiently.
This is of even more importance when new ventures or projects are considered because it provides information on which to base vital decisions (Bramham, 1987). The fourth objective presented by Bramham (1987) is redundancy. HRP is an important tool in the anticipation of future redundancies and therefore allows remedial action to be taken, such as recruitment freezes, retraining, and early retirements so as to reduce the numbers involved. Another advantage associated with HRP, presented as the fifth objective, is collective bargaining.
In organizations with a strong trade union presence, HRP provides important information for use in the bargaining process. It is particularly significant when long-term deals are being negotiated to improve productivity and efficiency. In such situations, the information provided by HR forecasts enables calculations to be made concerning how great an increase in pay or how great a reduction in hours might be conceded in exchange for more productive working methods and processes (Bramham, 1987).
The sixth and last objective presented as a purpose of HRP deals with the planning of accommodations, such as future need for office space, car parking, and other workplace facilities. Such considerations are of great importance, especially to organizations expecting fast expansion or contraction of key operations. As with the other five objectives described above, HRP also here aims at controlling costs over the long term by forecasting the future (Bramham, 1987). 5. External and Internal Influences on HRP 5. 1External Influences on HRP
A lot of things have changed from when HRP first gained widespread popularity. The stability of the smooth sailing years, as Champ (1995) refers to the age of US corporate domination between 1948 and 1973 is gone. Today’s dynamic environment, filled with global competition and business discontinuities, define the arena in which HRP must flourish. The need for analysis of changing scenarios, therefore, has to be an integral part of the HRP process (Rothwell 1995). The first step in HRP is usually the “environmental” scan.
If this review has not already been carried out in some depth as part of the formulation of corporate strategy, consideration of critical trends may be a major contribution, which the HRM function can make to the organization (Institute of Personnel Management 1992). The growing internationalization of business in the face of changing patterns of world trade, the emergence of new competitors and new markets and changes in the older industrialized countries, all have some impact on the labour markets of even the smallest firm trading in national market (Taylor, 1998).
Most larger and medium-sized companies are, however, likely to be trading internationally (Rothwell 1995) in some way and will need to understand the labour markets in those countries, if they are to recruit staff abroad or if they expect to send their own staff to work there. The whole issue of international management development has major implications for strategic planning and for human resource forecasting and implementation. Evidence so far suggests that there are many inadequacies in both planning and implementation of management mobility, and that there is a widespread reliance on ad hoc use of expatriate managers (Ibid. 995). International and political issues are clearly closely linked, the move towards greater European unity, the unification of East and West Germany, the opening of Eastern Europe, The World Trade Centre bombings etc. , are just a few examples of events with implications for business planning. The political complexion of a government tends to affect the type of economic policy in place, the attitude to full employment, trade union and employee rights, as well as the level of support for private or public sector enterprises.
External political factors, especially the broader social and regulatory legacies of industrial relations, provide a socio-political context in which managerial strategies have had to develop, and by which they have been conditioned (Lucio and Simpson 1992). At a time of economic recession in particular, the costs of worker protection policies can be very costly for companies. An awareness of population trends is critical in understanding labour markets, and national population statistics are readily available.
Rothwell further states that planning to take account of demographic trends is not often done early enough. Also, a lack of advance planning tends to increase labour costs, as firms have to increase wages and salaries in order to retain staff or poach them from other firms. Public policy emphasis on training, the co-ordination of a plethora of national vocational qualifications, and the setting of national education training targets all mean that some aspects of estimating external competence supply will be improved.
Data on graduate qualifications are readily available, but interpreting likely trends in supply and demand is complex (Pike et al. 1992). Demand-side factors stem mainly from business strategy, but need to take account of other skills that may be needed; for example in physical environmental awareness and the implications for products or processes and energy use; or in marketing, in concepts of relational marketing, customer education and general supply chain management. If mergers or acquisitions are expected, is new expertise needed to handle that?
Or if organization structures are changing to create flatter organizations or new internationalized business market divisions, are there skills available in managing networks, managing projects or managing cross-culturally? Firms that use competence-mapping techniques may be able to provide data relevant to HRP, but where these activities are done by different people and/or at different locations, such linkage cannot be made (Rothwell, 1995). Consumer attitudes tend to be surveyed more regularly than those of employees, but shifts in employee preferences are perceptible, often on a generation basis.
The generation of people born in the 70s and 80s are more individualistic, less likely to accept authority, expecting to have a say and be given a choice, and also to be putting more emphasis on quality of leisure and family life. The priority perks for those in work are those related to health and to education and training. Employees are also less likely to remain with one employer. These attitudes are found particularly among “knowledge-workers”, and may be modified over-time by experience of recession and widespread white-collar unemployment (Rothwell, 1995).
If a major difference between HRP and manpower planning lies in its emphasis on motivating people (Bramham 1989), understanding the starting point and The incorporation of both individual and organizational needs is therefore the major challenge for HR planners and should be reflected in the application of the planning process to the ways in which people are employed (Ferner and Colling 1991) 5. 2Internal Influences on HRP Zeffane and Mayo (1994) argue that in the context of the supply-demand equation, a range of internal factors require consideration for the purpose of evaluating existing (or anticipated) supply from within the organization.
The supply side issues that HRP should address include the organization’s policy on growth from within or by means of outside recruitment; the policy on pay and remuneration, and the organization’s view on employee development. In this context, the conventional human resource plans take into consideration a series of supply side statistics, such as company growth, the age distribution of employees, skill levels, turnover ratios and the overall profile/distribution of employment across job categories.
Zeffane and Mayo (1994) further state that among all these, age and retirement are emerging as important considerations in workforce planning in the current socio-economic climate. These factors (i. e. age and retirement) are strongly related in the sense that retirement takes place on the attainment of a certain age. Catering for age is necessary and is becoming increasingly the subject of a more elaborate mathematical modeling for workforce (Mohapatra et al. 1990). The more contemporary approaches to HRP need to consider current (and anticipated/future) changes in the make-up and aspirations of the workforce.
Long-term macro-level forecasts seem to suggest that people in the future will have even greater desire for self-development and discovery (Taylor, 1998). These aspirations may trigger requirements for changes in existing corporate structures and management systems. As a result, human resource professionals and their organizations may capitalize on the advantage of potential employees who may be creative and self-motivated, but they will also face the problem of developing an environment that will attract and hold such individuals (Taylor 1998). 6.
Different Types of Human Resource Planning 6. 1Succession Planning One adaptation of traditional HRP that takes place mostly in larger organizations is the development of a succession planning function. Storey (1995) argues that chief executives often see this function as the major rational for any form of HRP. While in some organizations it may be focused mainly on the few top positions, the need to consider at least a five-year-period can mean that it becomes a more significant operation, and eventually drives a whole management recruitment and development programme.
According to Taylor (1998), succession planners are mainly interested in ensuring that their employer has enough individuals with the right abilities, skills and experience to promote into key senior jobs, as they become vacant. According to Jackson and Schuler (1990), succession planning differs from traditional HRP in the sense that the succession planning process covers a narrower group of employees but does so with a higher degree of intensity. As succession plans concern relatively few employees, they can be considerably more sophisticated the time span is also longer than that of traditional HRP.
Succession plans often involve forecasting and planning the progress of individuals 20 years ahead or more (Walker, 1992, Storey, 1995). Storey (1995) argues that succession planning is most often associated with hierarchical organizations in which individuals develop careers by moving upwards and sideways over a number of years as they acquire the required skills and experience. The aim of this is to ensure that enough individuals with the potential to succeed to senior positions are available when an appointment needs to be made.
Rothwell (1994) states that three candidates are typically identified for each senior post: one who is ready now and could succeed immediately if necessary; one who will be ready, if needed, in two or three years’ time and one who will be ready in five years’ time. Taylor (1998) comments, in addition, succession planners have an input into decisions about the numbers of graduates that are employed on graduate training programmers’ each year. In technical terms, succession planning involves collecting and manipulating data about individuals and tracking their performance and progress as they move from job to job over a period of time. . 2Career Planning This type of HRP is by some viewed as a more fashionable term to use than succession planning and ostensibly is more individually focused (Storey, 1995). Furthermore, like succession planning, broadly interpreted, it requires an understanding of processes that can integrate an individual’s characteristics and preferences with the implications of: organizational culture, values and style, business strategy and direction, organizational structure and change, reward systems, training and development system, appraisal and promotion systems.
According to Taylor (1998), career planning emphasizes much more on the individual’s responsibility for his/her own career development. ‘Mentoring’ and ‘coaching’ systems, whether formal or informal, may be introduced to assist in this. Storey (1995) argues that common problems associated with this kind of planning are related to key people leaving, or to managers’ lack of broad experience. The requirements of different types of organizations (static; fast growing; international etc. ) for detailed planning clearly vary (Ibid).
Storey further states that the need for creating ‘bridges’ between different occupations and for the identification of ‘development positions’, are both significant techniques in career planning. The predominant influence of this type of planning is that of the organization’s needs, as interpreted by particular managers, at certain phases of its development and it is said that career planning may be interpreted very differently by those who experience it (Storey, 1995). Storey continues to say that the ‘myths’ of the organization in this sense may also be significant: “those who decode them appropriately are those who obtain advancement. 6. 3Contingency Planning Contingency planning is seldom given any attention by authors within the HR field, but according to Taylor (1998), it can be seen as an approach that is almost universally applicable. Contingency planning involves planning possible responses to a variety of potential environmental scenarios, and the result is that HRP effectively switches from being a reactive process undertaken in order to assist the organization in achieving its aims. Taylor further argues that it becomes a proactive process undertaken prior to the formulation of wider organizational objectives and strategies.
The main purpose of contingency planning in the HR field is the provision of information on which decisions about the future directions the organization takes are made (Taylor, 1998). 6. 4Competency Planning Another adaptation of traditional HRP is skills planning and is, according to Speechly (1994), particularly appropriate in situations where there is a variety of different methods by which employee needs can be met. The basic principle of this method is to shift away from a focus on planning for people and instead concentrate mainly on skills.
Taylor (1998) argues that instead of forecasting the future supply of and demand for employees, skills planning involves predicting what competencies will be needed one to five years ahead, hence, leaving open the question of the form in which these will be obtained. Further, skills-based plans incorporate the possibility that skills needs are to be met either wholly or partially through the employment of short-term employees, outside consultants, as well as by permanent members of staff (Taylor, 1998). . 5Soft Human Resource Planning There has been some disagreement in the literature over the term ‘soft human resource planning’ and its perceived meaning (Taylor, 1998). Marchington and Wilkinson (1996) give one broad definition as being ‘synonymous with the whole subject of human resource management. ’ Torrington and Hall (1995) have a narrower definition involving planning to meet ‘soft’ HR goals – particularly cultural and behavioral objectives.
Torrington and Hall also use the label to give meaning to a distinct range of HR activities which are similar to hard HRP in approach, but with a focus on forecasting the likely supply and demand for particular attitudes and behaviors rather than people and skills. According to Taylor (1998) soft HRP can thus be seen as a broadening of the objectives associated with the traditional approaches of HRP. Soft HRP accepts that for organizations to succeed in the current environment they need more than the right people in the right place at the right time.
In order to contribute to the creation of a successful organizational culture, they also need to make sure that people have an appropriate outlook and set of attitudes. Further, even more essentially argued by Taylor, by undertaking systematic soft HRP Organizations will be alert to long-term shifts in attitudes to work among the Labour force in general, allowing them to build these considerations into their general planning processes. Such issues are not taken into account by traditional HRP according to Taylor (1998). . Conclusions Regardless of the organizational size and industry the underlying motive behind HRP is to have the right people, with the right skills, in the right places, at the right time. However, the ways to realize this motive do differ from one organization to another depending on the individual prerequisites. This could be illustrated by breaking down the motive, where finding the right people, with the right skills is the essential condition for having them at the right place, at the right time.
In times of organizational growth or downsizing organizations naturally focus on hiring or retaining the right people with the right skills. However, organizations with a modest employee turnover can focus more on having the people in the right place i. e. concentrating more on making sure that the existing workforce is utilized in the optimal way. While there are different prerequisites between organizations, determining their approach to plan, we can also see a general change affecting the ability for all organizations to plan.
Historically, there has been turbulence in the business environment such as technological developments and erratic economic fluctuations, however it is not these factors per se that has caused the change today, but rather the speeds in which discontinuities occur. This is made evident by the fact that companies no longer plan in the same way as they did ten to fifteen years ago when the more static conditions allowed the organizations to plan with more accuracy.
Today organizations do not plan more than three years ahead and the plans are revised both annually and quarterly. This development has put the organizations in a dilemma; the greater the need for planning the more difficult it becomes to plan. In the light of this, some theorists question planning since it is virtually impossible to foresee changes with any accuracy. However, this view appears to have little, if any relevance among the organizations, where planning is viewed as a less formal process.
The common understanding among the companies is that it is impossible to follow a plan rigorously but they still plan. From this we draw the conclusion that planning is more than just forecasting the future, it is rather the planning process itself that adds value to the organization. By incorporating plans made across the whole range of personnel and development activity the organization becomes more alert to changes and prepares itself for future discontinuities regardless of their nature, thus admitting that change will occur is more important than foreseeing the future.
Organizations that embrace this way of thinking plan to a greater extent than in the past in the way that it involves a broader definition of HRP, incorporating not only quantitative measures but also soft issues. However, the fact is that environments vary across industries, organizations and over time. Some organizations occasionally experience disruption. But at the same time others are experiencing relative stability. Thus, organizations are very much influenced by their individual prerequisites limiting their abilities to plan to the extent as described above.
Two findings concerning HRP seems to distinguish themselves, firstly we can see a general change among all companies in the way they plan for HR, secondly HRP is still very much based on individual prerequisites. 8. Analysis Human resource planning is probably one of the most critical elements in linking the work of the human resources function to the business goals of the company. It is important to recognize that certain aspects of human resource management tend to have potentially high strategic consequences.
Especially in the areas of policy development and implementation it is obvious and difficult to refute advice that effective human resource policies require human resource planning, which in turn, requires effective integration with an organization’s strategic planning process. It is evident that human resources planning are becoming more and more important in business circles. Because business profits are squeezed by inflation and a weakened economy, management is also concerned with personnel costs and is seeking to achieve increased output with the same or fewer staff.
During our research we have found evidence supporting the above statement, where organizations with a high employee turnover tend to focus on the planning for supply and demand of HR, while organizations with low employee turnover lean more towards internal issues of HRP. Logically counting heads becomes more important in times of growth or downsizing, thus the nature of the HRP shifts towards a quantitative approach. Consequently organizations experiencing more stable periods can focus on softer HRP, i. e. concentrating on the creation of an environment that stimulates personal development and motivation among the employees.
Our impression during the research is that all companies have the intention to focus more on internal HRP, thus companies do not decide to be either quantitative or qualitative in their approach, and it is rather a natural selection based on the individual prerequisites. However, we can see a risk with not having a balanced view in terms of external and internal HRP. Among the companies with an explicit internal focus there is a lack of attention for external developments and trends, thus we can see an inherent risk of becoming “fat and happy” which in turn requires reactive actions in times of major change.
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