Chapter 3

Staffing

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Human Resource Supply and Demand

1. Labor Supply:
The availability of workers with the required
skills to meet the firm’s labor demand

2. Labor Demand:
How many workers the organization will
need in the future

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Human Resource Planning (HRP)
The process an organization uses to ensure that it has the right amount and the right kind of people
to deliver a particular level of output or services in the future

Product Labor Internal External

Demand productivity Labor market Labor market

Labor demand Labor supply

Conditions and Selected Responses

1. Labor Demand Exceeds Labor Supply
• Training or retraining
• Succession planning
• Promotion from within
• Recruitment from outside
• Subcontracting
• Use of part-timers or temporary workers
• Use of overtime
2. Labor Supply Exceeds Labor Demand
• Pay cuts
• Reduced hours
• Work sharing
• Voluntary early retirements
• Inducements to quit (e.g severance pay)
• Layoffs
3. Labor Demand Equals Labor Supply
• Replacement of quits from inside or outside
• Internal transfers and redeployment
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
 How HRP Relates to Organizational Planning
1. To be effective, any HR plan must be derived from the long-term and operational
plans of the organization
2. The success of HRP depends largely on how closely the human resource
department can integrate effective people planning with the organization’s business
planning process.
3. HRP is often inadequately tied to overall corporate planning
4. HR planning contributes significantly to the strategic management process by
providing the means to accomplish the outcomes desired from the planning process
5. The HR demands and needs are derived from the strategic and operating planning
and then compared with human resource availability
6. A common error occurs when HR planners focus on the short-term plans of the
organization
7. Focusing on short-term replacement needs is a natural consequence of failing to
integrate HR planning with strategic planning.

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Steps in the HRP Process

Determine the impact of Define the skills and

organizational objectives on expertise required to meet
specific organizational units objectives (demand for
human resources)

Determine additional
Develop action plans to meet human resource
the anticipated human requirements in light of
resource needs current human resource (net
human resource
requirement)

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Cascade Approach to Setting Objectives for
Organizational Planning Process
Statement of
organization’s mission Top Management

Long-range objectives
and strategic plans

Short-range performance
objectives

Division or department
objectives

Subunit objectives

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Method of Forecasting HR needs
Managerial Estimates: Judgmental method of forecasting that calls on
managers to make estimates of future staffing needs

Delphi Technique:
• Judgmental methods of forecasting that uses a panel of experts to
make initially independent estimates of future demand
• An intermediary then presents each expert’s forecast and
assumptions to the other members of the panel
• Each expert is then allowed to revise his or her forecast as desired.
• This process continues until some consensus or composite emerges.

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Statistical Modeling Techniques Used to Forecast HR Needs
Technique Description
1 Time series Past staffing levels (instead of workload indicators) are used to project future
analysis human resource requirements. Past staffing levels are examined to isolate
seasonal and cyclical variations, long-term trends, and random movement.
Long-term trends are then extrapolated or projected using a moving average,
exponential smoothing, or regression technique.
2 Personnel Past personnel data are examined to determine historical relationships among
ratios the number of employees in various jobs or job categories. Regression analysis
or productivity ratios are then used to project either total or key group HR
requirements, and personnel ratios are used to allocate total requirements to
various job categories or to estimate requirements for non-key groups
3 Productivity Historical data are used to examine past levels of a productivity index
ratios Workload
P = -----------------------------------
Number of people
Where constant, or systematic, relationships are found, HR requirements can
be computed by dividing predicted workload by P.

4 Regression Past levels of various workload indicators, such as sales, production levels, and
analysis value added, are examined for statistical relationships with staffing levels.
Where sufficiently strong relationships are found, a regression (or multiple
regression) models is derived. Forecasted levels of the related indicator(s) are
entered into the resulting model and used to calculate the associated level of
HR requirements.

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Determining (net) HR requirements
1. Once a manager has determined the types and numbers of employees required,
he or she analyzes these estimates in light of the current and anticipated human
resources of the organization.
2. This process involves a thorough analysis of presently employed personnel and
forecast of expected changes.
3. Skills inventory: Consolidated list of biographical and other information on all
employees in the organization
4. Information that should be included in a skills inventory:
1. Personal data: age, sex, marital status
2. Skills: education, job experience, training
3. Special qualification: membership in professional groups, special achievements
4. Salary and job history: present and past salary, dates of raises, various jobs held
5. Company data: benefit plan data, retirement information, seniority
6. Capacity of individual: test scores on psychological and other tests, health information
7. Special preferences of individual: geographic location, type of job

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Determining (net) HR requirements
5. Furnishes a means to quickly and accurately evaluate the skills available within
the organization
6. Helping determine promotion and transfer decisions
7. Necessary for making other decisions, such as whether to bid on a new contract
or introduce a new product
8. Aids in planning future employee training and management development
programs and in recruiting and selecting new employees
9. Management inventory: Specialized expanded form of skills inventory for an
organization’s current management team; in addition to basic types of information,
it usually includes a brief assessment of past performance and potential for
advancement
10. Anticipating changes in personnel
11. Changes such as retirements can be forecasted with reasonable accuracy from
information in the skills inventory

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Determining (net) HR requirements
12. Transfers and promotions, can be estimated by taking into account such
factors as the ages of individuals in specific jobs and the requirements of
the organization
13. Individuals with potential for promotion can and should be identified
14. Planned training and development experiences should also be
considered when evaluating anticipated changes
15. By combining the forecast for the human resources needed with the
information from the skills inventory and from anticipated changes,
managers can make a reasonable prediction of their net human resource
requirements for a specified time period.

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
 Developing Action Plans
1. If the net requirements indicate a need for additions, plans must be made to recruit, select,
orient, and train the specific numbers and types of personnel needed.
2. If a reduction in human resources is necessary, plans must be made to realize the necessary
adjustments
3. Reducing the total number of employees is referred to as downsizing [There are four basic
ways to downsize: (1) layoffs, (2) terminations, (3) early retirement inducements, and (4)
voluntary resignation inducements]
4. Approaches that do not result in employees leaving the organization:

1. Reclassification involves either a demotion of an employee,

downgrading of job responsibilities, or a combination of the two.
2. A transfer involves moving the employee to another part of the organization
3. Work sharing seeks to limit layoffs and terminations through the proportional
reduction of hours among employees

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Organizational and HR planning

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Tools of HRP
1. Succession planning: Technique that identifies specific people to fill future openings in key positions
throughout the organization
2. Organization replacement chart: Chart that shows both incumbents and potential replacements for given
positions within the organization
3. Commitment manpower planning (CMP): A systematic approach of HR planning designed to get
managers and their subordinates involved in HR planning CPM generates three reports
1. The supply of employees and the promotability and placement status of each;
2. The organization’s demand, arising from new positions and turnover and projected vacancies for
each job title; and
3. The balance or status of supply versus demand, including the name, job and location of all those
suitable for promotions
4. Organizational Vitality Index (OVI): used in HR planning to measure the organization’s HR vitality
as measured by the presence of promotable personnel and existing backups

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Factors Affecting the Time Frame of HRP
Forecast Short Range Intermediate Long Range
Factor (0~2 Years) Rage (2~5 Years) (Beyond 5 Years)
Demand Authorized Operating needs from In some organizations, the
employment including budgets and plans same as “Intermediate”, in
growth, changes, and others, an increased
turnover awareness of changes in
environment and
technology – essentially
judgmental.

Supply Employee census less HR vacancies expected Management expectations

expected losses plus from individual of changing characteristics
expected promotions promotability data of employee and future
from subordinate derived from available human resources
groups development plans
Net needs Numbers and kinds of Numbers, kinds, dates, Management expectations
employees needed and levels of needs of future conditions
affecting immediate
decisions

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
 The Hiring Process

Recruitment

Selection

Socialization

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Relationships among Job Analysis,
HR Planning and Selection

Job analysis Human Resource planning

Job analysis Human Resource planning
Number and requirement Number of specific
of specific jobs jobs to be filled

- Sources ?
Recruitment - How are qualified
Recruitment
candidates to be recruited?
- Recruiters?
Pool of qualified - Inducements?
applicants
Selection
Selection

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Recruitment
1. The aim of recruitment is to attract qualified job
candidates
2. To avoid costs, the recruiting effort should be
targeted solely at applicants who have the right
qualifications for the job
3. The recruitment process is really a sales activity

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Sources of Recruiting
1. Current employees
2. Referrals from current employees
3. Former employees
4. Print and radio advertisements
5. Internet advertising and career sites
6. Employment agencies
7. Temporary workers
8. College recruiting
9. Customers
10. Business Partners
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
 Internal and External Recruiting
Source Advantages Disadvantages
Internal •Company has a better knowledge of •People might be promoted to the point
strengths and weaknesses of job candidates where they cannot successfully perform
•Job candidate has a better knowledge of the job
company •Infighting for promotions can negatively
•Morale and motivation of employees are affect morale
enhanced •Inbreeding can stifle new ideas and
•The return on investment that an innovation
organization has in its present work force is
increased

External • The pool of talent is much larger • Attracting, contracting and evaluating
• New insights and perspectives can be potential employees is more difficult
brought to the organization • Adjustment or orientation time is longer
• Frequently it is cheaper and easier to hire • Morale problems can develop among
technical, skilled, or managerial employees those employees within the organization
from outside who feel qualified to do the job

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Realistic Job Previews (RJP)
1. Provides complete job information, both positive and negative, to
the job applicant
2. Organizations have attempted to sell the organization and the job
to the prospective employee by making both look good
3. These attempts sometimes set the initial job expectations of the
new employees too high and can produce dissatisfaction and high
turnover among employees recruited in this manner

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Typical Consequences of Job Preview Procedure
Set initial job expectation too high Set job expectations realistically

Job may or may not be attractive, depending

Job is typically viewed as attractive
on individual’s need

High rates of job offer acceptance Some accept, some reject job offer

Work experience disconfirms expectations Work experience confirms expectations

Dissatisfaction and realization that job not matched

Satisfaction, needs matched to job
to need

Lower job survival, dissatisfaction, Higher job survival, satisfaction, infrequent

frequent thoughts of quitting thoughts of quitting

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Selection
Completion and screening of The process of choosing from among
the application form available applicants the individuals who are
most likely to successfully perform a job.
Preliminary interview/evaluation

Employment testing

Diagnostic interview

Reference checking

Physical examination:
Required only for individual who is offered
the position. Job offer is contingent on
individual passing the physical examination

Final decision

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
 Tools Used in Selection Process
1. Letters of Recommendations
2. Application Forms
3. Ability Tests
4. Personality Tests
5. The Big Five factors
1. Extroversion: The degree to which someone is talkative, sociable, active, aggressive, and
excitable
2. Agreeableness: The degree to which someone is trusting, amiable, generous, tolerant,
honest, cooperative, and flexible
3. Conscientiousness: The degree to which someone is dependable and organized and
conforms and perseveres on tasks.
4. Emotional stability: The degree to which someone is secure, calm, independent and
autonomous
5. Openness to experience: The degree to which someone is intellectual, philosophical,
insightful, creative, artistic, and curious.

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Making the Final Selection Decision
1. The final step in the selection process is choosing one individual for the job, a
value judgment based on all of the information gathered in the previous steps
2. The responsibility for making the final selection decision is assigned to different
levels of management in different organizations
3. In many organization, the human resource department handles the completion
of application forms, conducts preliminary interviews, testing, and reference
checking, and arranges for physical exams.
4. The diagnostic interview and final selection decision are usually left to the
manager of the department with the job opening
5. Such a system relieves the department manager of the time-consuming
responsibilities of screening out unqualified and uninterested applicants
6. In other organizations, the HR department handles all the steps and gives the
department manager with a job opening a list of three to five qualified applicants.

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Making the Final Selection Decision
7. The manager then chooses the best individual based on the information
provided by the HR department
• Many organizations leave the final choice to the manager with the job opening,
subject to the approval of those at higher levels of management.
9. In some organizations, the owner or MD/CEO often makes the final choice or
gives approval
10. An alternative approach is to involve peers in the final selection decision
primarily in the selection of upper-level managers and professional employees;
this facilitates the acceptance of the new employee by the work group
11. In the selection of managers and supervisors, assessment centers are also
sometimes used.

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
 Validation of Selection Procedures
Job
Jobanalysis
analysis

Job specification Job description

Job specification Job description

Facilitates the development of predictors Facilitates the development of criteria of

Facilitates the development of predictors Facilitates the development of criteria of
job success
Example include:
Example include:
job success
1. Education
1. Education Example include:
2. Previous work experience Example include:
2. Previous work experience 1. Performance appraisals
3. Scores on company-administered tests 1. Performance appraisals
3. Scores on company-administered tests 2. Production data
4. Data from application blanks 2. Production data
4. Data from application blanks 3. Personnel data (rate of tardiness,
5. Performance appraisals 3. Personnel data (rate of tardiness,
5. Performance appraisals absenteeism, and turnover)
6. Results from employment interviews absenteeism, and turnover)
6. Results from employment interviews

Validity refers to how well predictors

Validity refers to how well predictors
actually predict the criteria of job success
actually predict the criteria of job success
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
 Predictive Validation Process
Test Job applicants New employees
Test Job applicants New employees
administered are hired received New employee
Job applicants administered are hired received New employee
Job applicants to all job without regard basic orientation perform the job
to all job without regard basic orientation perform the job
applicants to test scores and training
applicants to test scores and training

Time delay
Time delay

Production records or
Production records or
performance evaluations
Test scores are Correlation performance evaluations
Test scores are Correlation of new employees are
determined analysis of new employees are
determined analysis used as the criterion
used as the criterion
of job success
of job success

Degree of
Degree of
correlation
correlation
HUMAN RESOURCE MANAGEMENT
Shah M Saad Husain
 Concurrent Validation Process
Test
Present Test
Present administered
employees administered Job performance
employees to all present employees Job performance
to all present employees of present
holding a particular job of present
holding a particular job employee
employee

Production records or
Production records or
Test scores are Correlation performance evaluations
Test scores are Correlation performance evaluations
determined analysis of new employees are
determined analysis of new employees are
used as the criterion
used as the criterion
of job success
of job success

Degree of
Degree of
correlation
correlation

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain
 Review of Recruitment
& Selection Process

HUMAN RESOURCE MANAGEMENT

Shah M Saad Husain