Human Resource Management: Gaining a Competitive Advantage Chapter 05 Human Resource Planning and Recruitment McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc All rights reserved Forecasting Stage of HR Planning Determine Labor Demand  derived from product/service demanded  external in nature Determine Labor Supply  Internal movements caused by transfers, promotions, turnover, retirements, etc  transitional matrices identify employee movements in different job categories over time to chart historical trends in company’s labor supply  useful for AA / EEO purposes Determine Labor Surplus or Shortage 5-2 Options for Reducing Expected Labor Surplus Option Downsizing Pay reductions Demotions Transfers Work sharing Hiring freeze Natural attrition Early retirement Retraining Speed Fast Fast Fast Fast Fast Slow Slow Slow Slow Human Suffering High High High Moderate Moderate Low Low Low Low 5-3 Options for Avoiding Expected Labor Surplus Option Speed Revocability Fast Fast Fast Slow Slow Slow Slow 5-4 Downsizing Downsizing -planned elimination of large numbers of personnel to enhance organizational competitiveness Reasons for Downsizing: reduce labor costs technological changes reduce need for labor* mergers and acquisitions reduce bureaucratic overhead organizations change location of where they business * Economy wide, capital spending ratio increased over 300% between 19902010, indicating employers substituting technology for labor 5-5 Possible Negative Effects of Downsizing Long-term effects of an improperly managed downsizing effort can be negative  Lower long-term profit, performance and productivity  Loss of talent  Disrupts social networks needed for creativity and innovation 5-6 Early Retirement Programs  The average age of U.S workforce is increasing  Baby boomers are not retiring early due to:     improved health fear that Social Security will be cut mandatory retirement is outlawed collapse of the financial and housing markets made it economically unviable to retire  Many employers try voluntary attrition among older workers through early retirement incentive programs 5-7 Employing Temporary Workers  Hiring temporary workers helps eliminate a labor shortage and affords flexibility needed to operate efficiently during demand swings  Advantages: Temporary workers free a company from administrative tasks and financial burdens Temporary workers are often times tested by a temporary agency Many temporary agencies train employees before sending them to employers 5-8 Outsourcing and Offshoring Outsourcing uses an outside organization for a broad set of services Offshoring is outsourcing where jobs leave one country and go to another To help ensure the success of outsourcing:  Choose an established, large outsourcing vendor  Jobs that are proprietary or require tight security should not be outsourced  Start small and monitor constantly 5-9 Recruitment Sources JOBS Newspaper Advertising large volume, low quality recruits 5-10 ... eliminate a labor shortage and affords flexibility needed to operate efficiently during demand swings  Advantages: Temporary workers free a company from administrative tasks and financial burdens... boomers are not retiring early due to:     improved health fear that Social Security will be cut mandatory retirement is outlawed collapse of the financial and housing markets made it economically... performance and productivity  Loss of talent  Disrupts social networks needed for creativity and innovation 5- 6 Early Retirement Programs  The average age of U.S workforce is increasing  Baby