Human Resource Planning, Strategic recruitment, Selection procedures & Pay Rates Setting

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1.        Human Resource Planning

 

1.1    Definition of human resource planning

 

Defined by Bulla and Scott (1994) human resource planning is the “process for ensuring that the human resource requirements of an organization are identified and plans are made for satisfying those requirements”. Human resource planning focuses on determining the human resources in such a way that it helps the organizations to achieve the strategic goals. To be more specific, human resource planning at the most time deals with the matching the business demand and the human resources in a long term though it also deals with the short term tasks (Armstrong 2006, p.363). In term of the activities of human resource planning, it is believed that three steps are involved: (1) developing estimates of how many people with which competencies would be needed, (2) forecasting the likely supply of people and skills and (3) implementing plans to ensure that the right number and type of people would be available at the right time and place (Jackson, Schuler & Werner 2009, p.86).

 

1.2    Importance of human resource planning and case analysis

 

1.2.1            Match organizational, HR objectives with people requirements

 

Figure 1 Balancing role of human resource planning

Source: Dransfield, R. 2000, Human resource management, Oxford: Heinemann Educational Publishers. p.42

As just said, because human resource planning deals with the matching the business demand and the human resources, it balance the supply with the demand of labor force in the long run. On the demand side, demand forecasting which is the process of estimating the future quantity and quality of people required (Jain, Grover, Ohri & Khanna 2006, p.104), can be carried out with a fair degree of accuracy up to a period time ahead through market analysis. And actually before a company could forecast the demand of the company in a certain point in the future, the demand forecast needs to be done by a number of ways such as managerial judgment, work study techniques, regression analysis and others. These ways, in particular the managerial judgment, have transmitted the implications of the business strategy to the HR demand side. For example, in XXXX COMPANY in the coming 2012, the company is targeting at increasing the numbers of cooperation retailers from 200 to 400, then the demand forecasting could be done as the table demonstrates.

(1)        Tasks to be carried outWebsite maintenance, 200 new contracts sign up
(2)        Skills requiredProgramming, C++ languages, Sale skills
(3)        Tasks to be grouped into jobsWebsite maintenance engineers, Program staff, sale staffs
(4)        Number of employees in needWebsite maintenance engineers (3 new staffs), Program staff (5 new staffs), sale staffs (20 new staffs)

Table 1 Sample of demand forecasting in XXXX COMPANY

 

In the supply side of the human resource planning which deals with the identification of the number of people available to work and how long they can work and the capability to get the jobs done and also other factors such as the productivity of the staffs, one key task of the human resource planning is to decide the source of labor supply: internal supply and external supply. By knowing the current human resources owned by the company and also based on the forecast of the human resource demand in the future, the HR would figure out how many staffs and what skills of them are needed to be filled through external supply. And by matching organizational, human resource objectives with people requirements, human resource planning plays a balance role between them and to support the company’s strategy.

 

Figure 2 Internal and external labor supply

Source: Dransfield, R. 2000, Human resource management, Oxford: Heinemann Educational Publishers. p.45

 

1.2.2            Control of labor costs

 

By matching the company business need with the right people and right skills, company could control the labor cost. Though employees are seen as the most critical resource and capital of the company, it does not obtained and possessed by the company without cost, pre-work training, coaching, on-job product knowledge teaching, salary, benefit and even retirement management would all bring cost to the company, and even when no one has been recruited finally there could also be cost in term of advertising the jobs, interview arrangement and time consumption of the human resource managers. For example in XXXX COMPANY if there are too many employees in total compared to the need of the business, high labor cost would reduce the profit margin of the business.

 

1.2.3            Improve productivity

 

In two types of scenarios, productivity will be restricted. The first scenario is when there is an excess human supply in the particular position in the company than the quantity in need and the second scenario is when there is a deficiency. For example, in XXXX COMPANY if like what has been supposed, the company needs Website maintenance engineers (3 new staffs), Program staff (5 new staffs), sale staffs (20 new staffs), because in the positions of Website maintenance engineers and Program staff the performance of the two teams could be very good because of the sufficiency of number of employees but the individual work efficiency could be very dissatisfactory and in the position of sale staffs, because the actual new sale staffs are only 15 compared to the needed number of 20, it is for sure that individuals will have to do more work but the total output will be reduced.

 

Job positionsNumber of new staffs (Actual)Impacts
Website maintenance engineers (need 3 new staffs)5Increased output, Lower efficiency
Program staff (need 5 new staffs)8Increased output, Lower efficiency
Sale staffs (need 20 new staffs)15Lowered output, Higher efficiency

Table 2 Mismatch of needed number of talents and actual numbers

 

1.2.4            Talented employee retention

 

Different from the traditional human resource management approach that deals with functions such as recruitment, selection, training, and performance measurement (Hatum 2010, p.10), human resource planning with close link established to the strategic direction of the organization aims at developing a proactive approach to hiring and retention to keep talented employees and attack any possible causes of their dissatisfaction (Hickman 2000). The function of human resource planning in talented employee retention could also be applicable to XXXX COMPANY and in a larger sense, by helping the company to realize the business goals human resource planning also helps the company to attract the talented employees because successful companies tend to be more competitive in recruitment though the salaries offered could be almost the same, and it is the clear career path and promising future that keeps the talented employee around.

 

2.        Strategic recruitment

 

2.1    Definition of strategic recruitment

 

Figure 3 Strategic recruitment process

Source: Simplehrguide.com 2011. Role of Strategic Recruitment Processes. Viewed on 24th July 2011, Link: http://www.simplehrguide.com/role-of-strategic-recruitment-processes.html

 

Strategic recruitment is defined in book “Fundamentals of human resource management (4e)” as the linking of recruiting activities to the organizations strategic business objectives and culture (DeCenzo & Robbins 2004). Seen from this definition, we can observe that strategic recruitment involves the job focus of determining the strategic recruitment goals and keep the recruitment processes and operation processes working in accordance with the strategic recruitment goals as the figure demonstrates rather than just creating an excellent process map.

 

2.2    Importance of strategic recruitment and case analysis

 

2.2.1            Planning for the future

 

Strategic recruitment would in sometimes needs to go beyond the simple and direct empty positions filling, it can focus on discovering talent before it is needed, capitalizing on windfall opportunities when there is an abundance of highly qualified people. Strategy is about the vision of the future and identification of the actions to be done to realize the vision. By planning for the future needs, companies could have located new and talented human resource to match the strategy requirements when the strategy begins. Timing of the implementation of certain strategies could be very critical to the success of the business of the company. For example in the case of XXXX COMPANY, if the correct expansion strategy has been made but implementation of the strategy is delayed because of the lack of the needed human resource, the company could lose the first-step advantage to the competitors because of the delay of the carrying out of the strategy.

 

2.2.2            Long term ties with external source of labor supply

 

Strategic recruitment could also act as the role to enhance the company’s long term ties with external source of labor supply. As pointed out by Rothwell and Kazanas (2003, p.350) that it is more than ever to establish closed cooperation relationship with the external suppliers of talents such as the colleges, universities, professional associations, employment agencies and so on. In the case of XXXX COMPANY, as known to use that two kind of employees are in need in the company’s expansion strategy in our assumptions made above, i.e. the sale staffs and the IT engineers; when it is relatively easy to source the sale staffs in the open labor market, it is not easy to source the needed IT engineers with the particular skills in the labor market due to the scarcity of the specialized talents. So that it would be of great strategic significance for XXXX COMPANY to build up long term ties with external source of labor supply.

 

2.2.3            Drives the satisfaction of managers with Human Resources

 

Strategic recruitment does play part of the role of the strategy in the HR proportion in helping to achieve the company’s business objectives through analyzing and meeting the talent need of the company in the long run, but it also communicates and shares the supply information in the human resource management with managers from other departments on a regular basis and also collect the demand information from them. By doing this, strategic recruitment could be helpful in driving the satisfaction of managers from other departments with human resources. As in the situation of XXXX COMPANY, as the company is about to expand the business size, frictions could have happened between the human resource management department and other departments due to the lack of coordination. And strategic recruitment here could play such a role that it coordinates other departments with the HR department in a strategic perspective.

 

3.        Selection procedures

 

3.1    Definition of selection procedures

 

The selection process includes the various techniques, devices, and procedures used to identify candidates to whom offers of employment may be made (Conser, Russell & Paynich 2005, p.250). To put in a simple way, selection procedures are the steps used by the companies to pick up the talents they need to fill the available positions and also it deals with the consequence of such steps.

 

Figure 4 Sample steps in a typical selection process

Source: Bohlander, G. & Snell, S. Managing Human Resources. 2010, 15th edition, Mason, OH: South-western Cengage Learning. p.256

 

As proposed by Stone (2011, p.241) in the book Human Resource Management, selection procedures vary from organization to organization. And factors such as company goals, culture and size, type of industry, geographic location, the state of the labor market and the types and level of the position all have effect on the type, order and number of steps the company uses in finalizes its selection process.

 

3.2    Case discussion

 

3.2.1            Selection policy

 

3.2.1.1      Equal employment opportunity (EEO)

 

Equal Employment Opportunity or EEO is the concept that individuals should have equal treatment in all employment-related situations (Stellman 1998). EEO requires the companies to eliminate the discrimination toward hiring women, minorities, older employees with disabilities and the application of the EEO is not only the request according to the relative laws and regulations but also meets the needs of the company to act according to the principle of workplace equity.

 

3.2.1.2      Source of people

 

When we talk about the source of people in the employments, it refers to the determination of whether the vacancies will be filled within the company or from external source, or how many of them will be sourced externally while the rest are from internal, or whether the candidates should be preferred from the local labor market or international talents. The source of people is important because it could help the companies to differentiate candidates by groups and choose between different groups will reduce the number of candidates and thus save up time to find out the needed human resource. In XXXX COMPANY, as the company is expanding the core business of the company, the majority of the middle and higher management positions should be filled by the existing staffs who are performing well and are willing to work outside of Kuala Lumpur and for the rest positions, the majority of them should be employed in the local labor market.

 

3.2.2            Basic facts of XXXX COMPANY

Company goalsBusiness expansion from focusing in K. L. to five more other cities in Malaysia, more attract new customers and retailers
Corporate culture typeCompete (Market) Culture with external focus
Size of the company200 employees (including 5 in senior management,15 in operation management and control, 20 in daily office, 5 in HR department, 15 in technical department and 140 in marketing department)
Type of industryInternet, E-commerce & Discount union in retail industry
Geographic locationCurrently Kuala Lumpur only
The state of the labor marketSufficient labor pool, but excellent talents with relative work experiences are mostly take up by other competitors
Types of the positionmiddle management, daily office, HR management, technical and marketing
Level of the position neededSenior and middle management level and executive level

 

Table 3 Basic facts of XXXX COMPANY before setting of the final selection process

 

Different levels of positions due to the difference degree of extent will receive different selection procedures. In the case of XXXX COMPANY, as said in the table the company would basically need new staffs in two levels:  management level and executive level, and the positions are middle management, daily office, human resource management, technical and marketing jobs.

 

3.2.3            Chosen selection procedures

 

To the senior and middle management level vacancies, according to the selection policy, the situation of the company and the company’s strategic objectives, we recommend the following selection procedures:

 

 

 

Hiring decision
Medical exam/drug test×
Supervisor/team interview
Preliminary selection in HR department×
Background investigation
Employment testing (aptitude, achievement)
Initial interview in HR department
Completion of application

Table 4 Selection process to senior and middle management level vacancies

 

When the company interviewing the candidates for the senior and middle management level vacancies, as mentioned above, internal promotion would be the major source of employment, and because the candidates are currently the existing employees of XXXX COMPANY, the Preliminary selection in HR department and Medical exam/drug test will not be needed but the Background investigation could be every effective and comprehensive with the convenience to refer to the direct managers of the candidates. The final decision would be made by supervisor/team interview as the supervisor would have close work relationship with the short listed candidates. Face to face interview by the supervisors is important because when the several candidates all seems to be capable to do the job well with the needed skills, management judgments by experience and distinct usually make a better choice.

 

And the selection process to executive and operation level vacancies will be simpler than the selection process of the management positions because of the less significance to the company so that it does not require the participation of the supervisors and the preliminary selection in HR department could make the final decisions. Besides the general procedures, the company needs to differentiate the selection procedures according to the different job natures. For example, in the procedure of the employment tests, the company could use employment tests such as typing in selecting people for the office jobs and use interest tests for the marketing jobs.

 

Hiring decision
Medical exam/drug test
Supervisor/team interview×
Preliminary selection in HR department
Background investigation×
Employment testing (aptitude, achievement)
Initial interview in HR department
Completion of application

Table 5 Selection process to executive and operation level vacancies

 

4.        Setting pay rates for XXXX COMPANY

 

4.1    Approaches of pay rate setting

 

4.1.1            Seniority-based pay

 

Organizations that utilize seniority-based compensation systems make pay decisions based on the length of time the staffs have been in a position and on years of related experience (Bogardus 2009, p.295). It is believed that the seniority-based pay is the representative of an entitlement compensation philosophy. And it is applicable in the management positions because of the requirements of the related long time working experience in the management of the specific area, but it would discourage the entry of the fresh graduates because it take too long for them the move up the hierarchical ladder.

 

 

4.1.2            Performance-based pay and pay increases

 

Performance-related pay is deciding the money paid to someone relating to how well he or she works at the workplace. As according to the relative psychological and economic theories that provide rationale for the merit pay, by linking the pay to the performance should lead to the improved performance because motivation is increased (Heneman & Werner 2005, p.53). In many firms, performance-based pay and pay increases have been adopted more frequently to encourage a fast moving and efficient business operations.

 

4.1.3            Competence-based or skill-based pay

 

While remuneration decisions are no longer based on defined job duties or relative job values (Risher, 2000), the concept of competence-based or skill-based pay is based on paying for what the job requires rather than what the jobholder possesses (Kamakura 2003, p.39) which is also considered to be able to enhance the performance in the end because the employees learn the needed skills to do a better job.

 

4.2    Pay rates setting in XXXX COMPANY

 

In the scenario to deciding the pay rates to the different positions in the company to speed up the expansion strategy, we will suggest that the company adopts two major ways to set the pay to the two groups of peoples.

 

A pure performance-based pay could be used in the sale and marketing positions, for two major reasons. Firstly, to the sale department, the performance could be appraised daily, weekly and monthly, and the more sale that the sale people do, there will be more customers and retailers know about the existence and features of the XXXX COMPANY and then some of them could become part of the business of XXXX COMPANY and thus enlarge the business. The reasons why we do not use a skill based pay on the sale and marketing positions because skills required in these positions seems to be more easily obtained in the practical working experiences.

 

A mixture of performance based pay and skills based pay will be applied in setting the pay rates for the technical department positions such as the executive technicians and their team leaders, three reasons are given: First of all, technical jobs such as web design require the staffs to have the most updated skills and knowledge that is changing time by time. For example, there could be new operation system managing the customer data but in order for the technician to well master the new operation system, it may request the technician to have certain certificates that could be obtained through progressive and systematic study. By paying more to those who have spent their own holiday to obtain the relative certificates and skills, the company could encourage more technicians to learn the new system which finally will increase the total knowledge level of the technician team. Secondly, by also adopting a performance based pay rate setting, the company could also encourage the technicians to better get their job done. Some key targets could be set to the technicians such as the number of errors made by them in a month, if they make more errors in their respective work than the limits, then they would not offered the bonus and pay increases. Thirdly, by mixing these two methods of pay rate setting, XXXX COMPANY could achieve balance between encouraging learning and work performance and avoid the unreasonable behaviors. For example, if the company only relies on skills based pay, then the technicians could be more willing to spend their energy and time on studying rather than performing the daily job that may not help with the new skill acquiring.

 

 

Reference list

 

Armstrong, M. 2006, A handbook of human resource management practice. 10 edn, Cambridge: Cambridge University Press, p.363

 

Bogardus, A. 2009, PHR / SPHR Professional in Human Resources Certification Study Guide. Indiana: Wiley Publishing, Inc. p.295

 

Bohlander, G. & Snell, S. Managing Human Resources. 2010, 15th edition, Mason, OH: South-western Cengage Learning. p.256

 

Bulla,D. N. & Scott, P. M. (1994) Manpower requirements forecasting: a case example, in (eds) Ward, D., Bechet, T. P. & Tripp, R. Human Resource Forecasting and Modelling, New York: The Human Resource Planning Society

 

Conser, J. A., Russell, G. D. & Paynich, R. 2005, Law enforcement in the United States. 2nd ed, Sudbury, MA: Jones and Bartlett Publishers, p.250

 

DeCenzo, D. A. & Robbins, S. P. 2004. Fundamentals of human resource management. San Francisco: John Wiley & Sons.

 

Dransfield, R. 2000, Human resource management, Oxford: Heinemann Educational Publishers. p.42

 

Hatum, A. 2010, Next Generation Talent Management: Talent Management to Survive Turmoil, New York: Palgrave Macmillan, p.10

 

Heneman, R. L. &Werner, J. M. 2005, Merit pay: linking pay to performance in a changing world. United States: Information Age Publishing, Inc. p.53

 

Hickman, E. S. 2000, Hiring and Retaining Top-Performing Employees. Alexandria, VA: ASTD.

 

Jain, T. R., Grover, M. L., Ohri, V. K. & Khanna, O. P. 2006, Economics for Engineers. New Delhi: V. K. (India) Enterprises, p.104

 

Jackson, S. E., Schuler, R. S. & Werner, S. 2009, Managing Human Resources. Mason: South-Western Cengage Learning, p.86

 

Kamakura, Y. 2003, Best practices in work-flexibility schemes and their impact on the quality of working life in the chemical industries: report for discussion at the Tripartite Meeting on Best Practices in Work-Flexibility Schemes and Their Impact on the Quality of Working Life in the Chemical Industries, Geneva: ILO Publications, p.39

 

Risher, H. 2000. Compensating today’s technical professional, Research. Technology Management, 43(1), 50-56

 

Rothwell, W. J. & Kazanas, H. C. 2003, Planning and managing human resources: strategic planning for human resource: strategic planning for personnel management, 2nd edition, Amherst, Massachusetts: Human Resource Development Press, Inc, p.350

 

Simplehrguide.com 2011. Role of Strategic Recruitment Processes. Viewed on 24th July 2011, Link: http://www.simplehrguide.com/role-of-strategic-recruitment-processes.html

 

Stellman, J. M. 1998. Encyclopedia of occupational health and safety, 4th ed, Geneva: International Labor Organization.

 

Stone, R. 2011, Human Resource Management, 7th edition, Milton Old: John Wiley & Sons Austraila, Ltd, p.241

 

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