Human Resource Management

Topic 2
Human resource planning (HRP) is one aspect of strategic HRM. HRP aims to ensure the effective management of human resources, by securing the desired quantity and quality of employees where and when necessary. Definitions of HR planning such as this are fairly common and tend to suggest that HR planning is a straightforward task. In reality, this is far from true. The area of HR planning is very complex and can be fraught with difficulty. A key component of HR planning is forecasting, but anticipating what might happen in the future can be difficult. The world is changing rapidly. While some things such as demographics can be predicted reasonably well, in other areas it is often difficult to predict what will happen in the future. The processes of change are often not linear in nature and the effects of change may set up a chain reaction of events which may be costly and unpredictable. Human resource planning ensures an organisation’s strategic goals are met at the corporate, business and functional levels.

There are three main steps in the HRP process as outlined by Hartel et al. (2007):

Step 1

Demand forecasting involves estimating the quantity and quality of employees required to meet organisational objectives through forecasting techniques, such as sophisticated computer simulations to simple trend models.

Step 2

Supply forecasting is comprised of all employees currently employed with the company. The HR department can use these employees to fill current and future staffing vacancies through promotions or transfers.

Step 3

Filling the gap between demand and supply to ensure skill optimisation. This is the final process of HR planning. To do this, managers need to analyse the supply and demand forecast effectively. For example, by comparing forecasted sales increase and whether the organisation currently has a sufficient amount of skilled employees to meet future demands.

Chapter 2 of your text discusses a wide variety of factors which impact on both planning and strategy, complete with the qualitative and quantitative methods which managers utilise when planning. Emphasis is also placed on the need to evaluate the HR planning to ensure it is meeting the needs of the organisation.


Outsourcing at Yarra Bank

Okay, do we all agree that the best way to get flexibility and reduce costs is to outsource our IT and customer service operations? asked Kelly O Brien, Yarra Bank s managing director.

It makes sense , interrupted Cecelia Vida, CFO. Our back office staff belong to a different era. They are used to tightly defined jobs, uniform pay rates and guaranteed job security. They are a bunch of prima donnas. We need more flexibility and reduced costs. If the back office people would be more flexible, it would give us the opportunity to reduce costs.

Well, we can t just sack them , growled Susan Cortex, HR manager. Some of these people have given more than 20 years of loyal service.

Look Susan, times change. Loyalty is a great word, but it doesn t exist anymore. We are going bankrupt. We need to focus on what employees bring to the table now, not what they did in the past. How do you expect the bank to survive in this economic climate if we don t reduce costs? asked Cecelia.

There is one other thing , said Susan.

What s that? sighed Kelly.

All the back office staff are unionised. The Bank Workers Union would never agree to any restructuring. They are losing members with all the headcount reductions. They are in a worse financial situation than we are. They need every member they can get , said Susan.

Kelly shuffled in her seat and sighed. Terrific. What other good news do you have?

The union will scream bloody murder that we are using the present economic downturn as an excuse to shift Australian jobs offshore. Some of the other banks have taken a lot of heat. Management have been accused of paying themselves obscene salaries and being grossly incompetent. The argument is, Why should workers be made to suffer because of top management s bad decisions? said Susan.

For heaven s sake, don t these people realise what we are up against? We have the competition snapping at our heels and our financial situation is precarious , said Kelly.

Susan shifted nervously in her chair and then spoke. Kelly, I suggest that until we can get our heads around this, we freeze all recruitment and investigate the possibility of an early retirement program to get the immediate numbers down. At the same time, we need to increase the use of part-time or casual staff to give us greater flexibility.

Susan, anything that sheds jobs, increases productivity and makes us more competitive is worth looking at. What do the rest of you think of Susan s proposal?



With reference to topic 2, Yarra Bank is facing a situation where it must cut costs and increase efficiency. What are the staffing strategies that the organisation may adopt, and what are the implications of such strategies on employees and the organisation? (worth 20 marks)
Search the internet or recent media and find an example of an organisation or industry facing a HR Planning challenge, i.e. either a skill shortage, or the need to downsize. Summarise the key issues of the article. Integrate relevant theory from topic 2 as part of your summary. (5 marks)

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