LECTURE 4

4.1. Workforce planning

4.2. Forecasting HR needs
4.3. Sources for candidates,
4.4. Effective Recruitment
Definitions
 workforce (or employment or personnel) planning
 The process of deciding what positions the firm will have to fill, and how to fill them.
 trend analysis
 Study of a firm’s past employment needs over a period of years to predict future needs.
 ratio analysis
 A forecasting technique for determining future staff needs by using ratios between, for
example, sales volume and number of employees needed.
 scatter plot
 A graphical method used to help identify the relationship between two variables.
 personnel replacement charts
 Company records showing present performance and promotability of inside candidates for the
most important positions.
 position replacement card
 A card prepared for each position in a company to show possible replacement candidates and
their qualifications.
 succession planning
 The ongoing process of systematically identifying, assessing, and developing organizational
leadership to enhance performance.
Definitions
 employee recruiting
 Finding and/or attracting applicants for the employer’s open positions.
 recruiting yield pyramid
 The historical arithmetic relationships between recruitment leads and invitees, invitees
and interviews, interviews and offers made, and offers made and offers accepted.
 job posting
 Publicizing an open job to employees (often by literally posting it on bulletin boards)
and listing its attributes, like qualifications, supervisor, working schedule, and pay rate.
 applicant tracking systems (ATS)
 Online systems that help employers attract, gather, screen, compile, and manage
applicants.
 on-demand recruiting services (odRS)
 Services that provide short-term specialized recruiting to support specific projects
without the expense of retaining traditional search firms.
 college recruiting
 Sending an employer’s representatives to college campuses to prescreen applicants
and create an applicant pool from the graduating class.
Strategy and Workforce Planning
 Practice Ex
Four Seasons
 As noted, Four Seasons builds its strategy around offering superior customer
service, and that requires highly motivated and high-morale employees. How
can Four Seasons use its recruitment practices to encourage such motivation
and morale? One way Four Seasons does this is by filling hotel positions around
the world with internal transfers. In one recent year, for instance, about 280
employees relocated from hotels in one country to another within the Four
Seasons chain. Employees love it. It gives them a chance for adventure and to
see the world, while building a career with a great hotel chain. And it’s great for
Four Seasons too, because the resulting high morale and motivation supports
Four Seasons’ strategic goal of superior customer service. In other words, Four
Seasons uses recruitment practices that produce the excellent service the chain
needs to achieve its strategic goals.
 Question. Can you think of any other benefits Four Seasons may derive from
its policy of transferring employees among its hotels? What are they?
Forecasting Personnel Needs (Labor Demand)

 Longer term, managers will follow industry publications and economic

forecasts closely, to try to get a sense for future demand. Such future
predictions won’t be precise, but should help you address the potential
changes in demand.

 The basic process for forecasting personnel needs is to forecast revenues

first. Then estimate the size of the staff required to support this sales
volume.
 TREND ANALYSIS

 Trend analysis means studying variations in the firm’s employment levels

over the past few years.
 Trend analysis can provide an initial rough estimate of future staffing
needs.
 However, employment levels rarely depend just on the passage of time.
Other factors (like productivity and retirements, for instance), and
changing skill needs will influence impending workforce needs.

RATIO ANALYSIS
 ratio analysis, means making forecasts based on the historical ratio
between (1) some causal factor (like sales volume) and (2) the number of
employees required (such as number of salespeople).
 THE SCATTER PLOT
 A scatter plot shows graphically how two variables—such as sales and your firm’s staffing
levels—are related. If they are, then if you can forecast the business activity (like sales), you
should also be able to estimate your personnel needs.
 Figure 5-2’s graph compares hospital size and number of nurses. If the two are related, then
the points you plot (from the data above) will tend to fall on a straight line, as here.
While simple, tools like scatter plots have drawbacks.

 1. Historical sales/personnel relationships assume that the firm’s existing

activities and skill needs will continue as is.
 2. They tend to reward managers for adding employees, irrespective of
the company’s needs.
 3. They tend to institutionalize existing ways of doing things, even in the
face of change.
Figure 5-2 determining the Relationship Between hospital Size and number of nurses
Note: After fitting the line, you can project how many employees you’ll need, given your projected
volume.
MANAGERIAL JUDGMENT
 Few historical trends, ratios, or relationships will continue unchanged into
the future. Judgment is thus needed to adjust the forecast.

 Important factors that may modify your initial forecast of personnel

requirements include decisions to upgrade quality or enter into new
markets; technological and administrative changes resulting in increased
productivity; and financial resources available, for instance, a projected
budget crunch.
Forecasting the Supply of Inside Candidates
 The personnel demand forecast provides only half the staffing equation,
by answering the question: “How many employees in what positions will
we need?” Next, the manager must forecast the supply (availability) of
inside and outside candidates.
 Department managers or owners of smaller firms can use manual devices
to track employee qualifications (or will simply know who can do what).
For example, you can create your own personnel skills inventory and
development record form.
Personnel replacement charts (Figure 5-3)
 Figure 5-3
Personnel or
Management
Replacement chart
Showing
development
needs of Potential
Future divisional
Vice Presidents
Figure 5-4 keeping data Safe
 MARKOV ANALYSIS
 Employers also use a mathematical process known as Markov analysis (or
“transition analysis”) to forecast availability of internal job candidates.
 Markov analysis involves creating a matrix that shows the probabilities
that employees in the chain of feeder positions for a key job (such as from
junior engineer, to engineer, to senior engineer, to engineering supervisor,
to director of engineering) will move from position to position and
therefore be available to fill the key position.
Forecasting the Supply of Outside Candidates
 If there won’t be enough skilled inside candidates to fill the anticipated
openings (or you want to go outside for another reason), you will turn to
outside candidates.
 Today’s emphasis on technology means many applicants may lack basic
skills such as math, communication, creativity, and teamwork. Such
needs, too, get factored into the employer’s workforce and training plans.
Predictive Workforce Monitoring
 Most employers review their workforce plans every year or so, but this
isn’t always sufficient For instance, having failed to do much formal
workforce planning, Valero Energy almost lacked sufficient time to
implement a plan to address replacing employees who would soon retire.
 Workforce planning therefore often involves paying continuous attention
to workforce planning issues. Managers call this predictive workforce
monitoring. For example, Intel Corporation conducts semiannual
“Organization Capability Assessments.” The staffing department works
with the firm’s business heads twice a year to assess workforce needs—
both immediate and up to 2 years in the future.
Matching Projected Labor Supply and Labor Demand
 Workforce planning should logically culminate in a workforce plan. This
plan lays out the employer’s projected workforce and skills gaps, as well
as staffing plans for filling these gaps. For example, the plan should
identify the positions to be filled; potential internal and external
candidates or sources for these positions; the training and promotions
moving people into the positions will entail; and the resources that
implementing the plan will require, for instance, in recruiter fees,
estimated training costs, relocation costs, and interview expenses.
 Succession Planning
 Succession planning involves developing workforce plans for the
company’s top positions. Succession planning is the ongoing process of
systematically identifying, assessing, and developing organizational
leadership to enhance performance. It entails three steps: identify key
position needs, develop inside candidates, and assess and choose those
who will fill the key positions.
WHY EFFECTIVE RECRUITING IS IMPORTANT
 Assuming the company authorizes you to fill a position, the next step is to build
up, through recruiting, an applicant pool. Employee recruiting means finding
and/or attracting applicants for the employer’s open positions.
The Recruiting Yield Pyramid
Filling a relative handful of positions might require recruiting dozens or hundreds
of candidates. Managers therefore use a staffing or recruiting yield pyramid, as
shown in Figure 5-5, to gauge the staffing issues it needs to address. In Figure 5-5,
the company knows it needs 50 new entry-level accountants next year. From
experience, the firm also knows the following:
 ● The ratio of offers made to actual new hires is 2 to 1.
 ● The ratio of candidates interviewed to offers made is 3 to 2.
 ● The ratio of candidates invited for interviews to candidates interviewed is
about 4 to 3.
 ● Finally, the firm knows that of six leads that come in from all its recruiting
sources, it typically invites only one applicant for an interview—a 6-to-1 ratio.
 Internal Sources of candidates
 Recruiting typically brings to mind LinkedIn, employment agencies, and
classified ads, but internal sources—in other words, current employees or
“hiring from within”—are often the best sources of candidates.
 Filling open positions with inside candidates has advantages. First, there
is really no substitute for knowing a candidate’s strengths and
weaknesses, as you should after working with him or her for some time.
Current employees may also be more committed to the company.
 There are other advantages. External hires tend to come in at higher
salaries than do those promoted internally, and some apparent “stars”
hired from outside may turn out to have excelled more because of the
company they came from than from their own skills.
 Finding Internal Candidates
 Job posting means publicizing the open job to employees (usually by
literally posting it on company intranets or bulletin boards). These
postings list the job’s attributes, like qualifications, supervisor, work
schedule, and pay rate. Qualifications skills inventories also play a role.
 Rehiring someone who left your employ has pros and cons. Former
employees are known quantities (more or less) and are already familiar
with how you do things. On the other hand, employees who you let go
may return with negative attitudes.48 Inquire (before rehiring) about
what they did during the layoff and how they feel about returning.
 After a probationary period, credit them with the years of service they
had accumulated before they left.
EMPLOYEE ENGAGEMENT GUIDE FOR MANAGERS
Promotion from Within
 Many employers encourage internal recruiting, on the reasonable
assumption that doing so improves employee engagement.
 They are then advised as to whether they were chosen as candidates.
 A manager interested in fostering his or her employees’ engagement can
draw several useful guidelines from FedEx’s promotion-from-within
system: show a genuine interest in your employees’ career aspirations;
provide career-oriented appraisals; have a formal job-posting system; see
that your employees have access to the training they need; and balance
your desire to keep good employees with the benefits of helping them
learn of and apply for other positions in your company.
 OUTSIDE SOURCES OF CANDIDATES
Informal Recruiting and the Hidden Job Market
 Recruiting via the Internet
PROS AND CONS Online recruiting generates more responses quicker and
for a longer time at less cost than just about any other method. And,
because they are richer and more comprehensive in describing the jobs,
web-based ads have a stronger effect on applicant attraction than do
printed ads. But, online recruiting has two potential problems.
 First, older people and some minorities are less likely to use the Internet,
so online recruiting may inadvertently exclude more older applicants (and
certain minorities).
 The second problem is Internet overload: Employers end up deluged with
rйsumйs.
IMPROVING PERFORMANCE THROUGH HRIS: USING
APPLICANT TRACKING
Applicant tracking systems (ATS) are online systems that help employers attract,
gather, screen, compile, and manage applicants. They also provide other services,
including requisitions management (for monitoring the firm’s open jobs),
applicant data collection (for scanning applicants’ data into the system), and
reporting (to create various recruiting-related reports such as cost per hire and
hire by source).
 ADVERTISING While Web-based recruiting is replacing traditional help wanted
ads, a glance at almost any paper will confirm that print ads are still popular. To
use such help wanted ads successfully, employers should address two issues:
the advertising medium and the ad’s construction.
 THE MEDIA The best medium—the local paper, The Wall Street Journal, The
Economist, for instance—depends on the positions for which you’re recruiting.
For example, the local newspaper is often a good source for local blue-collar
help, clerical employees, and lower-level administrative employees.
 CONSTRUCTING (WRITING) THE AD
 Experienced advertisers use the guide AIDA (attention, interest, desire,
action) to construct ads. First, you must attract attention to the ad, or
readers may ignore it. The phrase “next key player” helps.
Next, develop interest in the job. For instance, “are you looking to make an
impact?”. Create desire by spotlighting words such as travel or challenge.
Employment Agencies
 There are three main types of employment agencies: (1) public agencies
operated by federal, state, or local governments; (2) agencies associated
with nonprofit organizations; and (3) privately owned agencies.
 PUBLIC AND NONPROFIT AGENCIES Every state has a public, state-run
employment service agency. The U.S. Department of Labor supports
these agencies, through grants and through other assistance such as a
nationwide computerized job bank.
 PRIVATE AGENCIES
 1. Your firm doesn’t have its own human resources department and feels it can’t do a good job
recruiting and screening.
 2. You must fill a job quickly.
 3. There is a perceived need to attract more minority or female applicants.
 4. You want to reach currently employed individuals, who might feel more comfortable dealing
with agencies than with competing companies.
 5. You want to reduce the time you’re devoting to recruiting.
To help avoid problems:
 1. Give the agency an accurate and complete job description.
 2. Make sure tests, application blanks, and interviews are part of the agency’s selection process.
 3. Periodically review equal employment data on candidates accepted or rejected by your firm,
and by the agency.
 4. Screen the agency. Check with other managers to find out which agencies have been the most
effective at filling the sorts of positions you need filled. Review the Internet and classified ads to
discover the agencies that handle the positions you seek to fill.
 5. Supplement the agency’s reference checking by checking at least the final candidate’s references
yourself.
Recruitment Process Outsourcers
 Recruitment process outsourcers are special vendors that handle all or most of an employer’s
recruiting needs. They usually sign short-term contracts with the employer, and receive a monthly
fee that varies with the amount of actual recruiting the employer needs done.
Recruiting a More Diverse Workforce
 Given the rise in minority, older worker, and women candidates, it is a necessity. The recruiting
tools we described to this point are certainly useful for minority and other applicants, too.
However, diversity recruiting requires several special steps, to which we now turn.
Recruiting Women
 Given the progress women have made in getting and excelling in a wide range of professional,
managerial, and military occupations, one might assume that employers need no special
recruitment efforts to recruit women, but that’s not necessarily the case. For example, women still
face headwinds in certain male-dominated occupations such as engineering.
 Women also carry the heavier burden of child-rearing, fill proportionately fewer high-level
managerial posts, and still earn only about 70% of what men earn for similar jobs. Many employers
therefore focus particular efforts on recruiting qualified women.