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   Definition: According to Gary Dessler (2013) Human Resource Planning is the process of deciding what positions the firm will have to fill, and how to fill them (Dessler & Varkkey,2013). It embraces (holds) all future positions, from maintenance clerk to CEO.     The human resource planning process consists of 1. Forecasting 2. Goal setting and Strategic Planning 3. Program Implementation and Evaluation    The first step in the planning process is forecasting. In personnel forecasting, the HR manager attempts to determine the supply of and demand for various types of human resources. The primary goal is to predict areas within the organization where there will be future labor shortages or surpluses. According to Noe, 2007  Forecasting—The attempts to determine the supply of and demand for various types of human resources to predict areas within the organization where there will be future labor shortages and surpluses (an excess of production or supply).   Forecasting, on both the supply and demand sides, can use either statistical methods or judgmental methods. Statistical methods are excellent for capturing historic trends in a company’s demand for labor, and under the right conditions they give predictions that are much more precise (accurate) than those that could be achieved through subjective judgments of a human forecaster.   Typically, demand forecasts are developed around specific job categories or skill areas relevant to the organization’s current and future state. Once the job categories or skills are identified, the planner needs to seek information that will help predict whether the need for people with those skills or in that job category will increase or decrease in the future. Once a company has projected labor demand, it needs to get an indicator of the firm’s labor supply. Determining the internal labor supply calls for a detailed analysis of how many people are currently in various job categories (or who have specific skills) within the company. This analysis is then modified to reflect changes in the near future caused by retirements, promotions, transfers, voluntary turnover , and terminations.  Turn over in HR: the rate at which employees leave a company and are replaced by new employees    As in the case of labor demand, projections for labor supply can be derived either from historical statistical models or through judgmental techniques. One type of statistical procedure that can be employed for this purpose involves transitional matrices.  Transitional Matrices show the proportion (or number) of employees in different job categories at different times.  Typically these matrices show how people move in one year from one state (outside the organization) or job category to another state or job category.  Once forecasts for labor demand and supply are known, the planner can compare the figures to determine whether there will be a labor shortage or labor surplus for the respective job categories. When this is determined, the organization can determine what it is going to do about these potential problems.    For example: It is relatively easy to predict from historical data that in the future, the United States is likely to experience a shortage of nurses and, perhaps, a shortage of workers with knowledge of nuclear power. It is also easy to predict that the current shortage of skilled craftsmen is likely to get worse in the coming years. That is, jobs like ironworker, mechanist, sheet metal worker, pipe fitter, plumber, and welder are in huge demand (Noe, Hollenbeck, Gerhart & Wright, 2007).  The second step in human resource planning is goal setting and strategic planning.  The purpose of setting specific quantitative goals is to focus attention on the problem and provide a benchmark for determining the relative success of any programs aimed at redressing a pending labor shortage or surplus. The goals should come directly from the analysis of labor supply and demand and should include a specific figure for what should happen with the job category or skill area and a specific timetable for when results should be achieved.  For example:  The auto parts manufacturer might set a goal to reduce the number of individuals in the production assembler job category by 50 % over the next three years.  Similarly, the firm might set a goal to increase the number of individuals in the sales representative job category by 25 % over the next years.   Once these goals are established, the firm needs to choose from the many different strategies available for redressing labor shortages and labor surpluses. Options Speed Human Suffering 1. Downsizing Fast High 2. Pay Reductions Fast High 3. Demotions Fast High 4. Transfers Fast Moderate 5. Work Sharing Fast Moderate 6. Hiring Freeze Slow Low 7. Natural Attrition Slow Low 8. Early Retirement Slow Low 9. Retraining Slow Low Options Speed Revocability 1. Overtime Fast High 2. Temporary Employees Fast High 3. Outsourcing Fast High 4. Retrained Transfers Slow High 5. Turnover reductions Slow Moderate 6. New external hires Slow Low 7. Technological innovation Slow Low Natural attrition refers to the natural reduction of a business's workforce due to employees leaving on their own accord. Examples of natural attrition include retirement, relocation or leaving the company to pursue other opportunities at another company or in another industry.  Unfortunately for many workers, in the past decade the typical organizational response to a surplus of labor has been downsizing, which is fast but high in human suffering.  Beyond this economic impact, the psychological impact spills over and affects families, increasing the rates of divorce, child abuse, and drug and alcohol addiction.   The typical organizational response to a labor shortage has been either hiring temporary employees or outsourcing, responses that are fast and high in revocability (The quality of being revocable; the ability to cancel/ able to be cancelled).  “Downsizing is the planned elimination of large numbers of personnel designed to enhance organizational effectiveness (Noe, 2007)”.  Many organizations adopted this strategic option in the 1990s, especially in the United States. In fact, over 85% of the Fortune 1000 firms downsized between 1987 and 2001, resulting in more than 8 million permanent layoffs—an unprecedented (extra ordinary) figure in U.S. economic history.   The jobs eliminated in these downsizing efforts should not be thought of as temporary losses due to business cycle downturns or a recession but as a permanent losses due to the changing competitive pressures faced by businesses today.    Another popular means of reducing a labor surplus is to offer an early retirement program. On the other hand, many organizations are moving from early retirement programs to phased retirement programs. Phased retirement programs/ Buyouts allow the organization to tap into the experience of older workers while reducing the number of hours they work (and hence reducing costs). This option is often helpful psychologically for the workers, who can ease into retirement rather than being thrust all at once into a markedly different way of life (retirement life).  Finally, many early retirement programs are simply converted into buyouts for specific workers that have nothing to do with age.  For example: in 2006, Ford reduced the size of its workforce by close to 50% using across-theboard buyouts of workers.    Whereas downsizing has been a popular method for reducing a labor surplus, hiring temporary workers and outsourcing has been the most widespread means of eliminating a labor shortage. Temporary employment affords firms the flexibility needed to operate efficiently in the face of swings in the demand for goods and services.   In fact, a surge in temporary employment often precedes a jump in permanent hiring, and is often a leading indicator that the economy is expanding. For example: the number of temporary workers grew from 215 million to 230 million between 2003—2004, signaling to many the end of the recession.   Outsourcing: “an organization’s use of an outside organization for a broad set of services(Noe, 2007)”. Whereas, a temporary employee can be brought into manage a single job, in other cases a firm may be interested in getting a much broader set services performed by an outside organization; this is called outsourcing.  Outsourcing is a logical choice when a firm simply does not have certain expertise and is not willing to invest time and effort into developing it. Offshoring: “A special case of outsourcing where the jobs that move actually leave one country and go to another(Noe, 2007)”.  In other cases, outsourcing is aimed at simply reducing costs by hiring less expensive labor to do the work, and, more often than not, this means moving the work outside the country.  Offshoring is a special case of outsourcing where the jobs that move actually leave one country and go to another.   The third step in human resource planning is program implementation and evaluation.  The programs developed in the strategic-choice stage of the process are put into practice in the programimplementation stage.  A critical aspect of program implementation is to make sure that some individual is held accountable for achieving the stated goals and has the necessary authority and resources to accomplish this goal.  It is also important to have regular progress reports on the implementation to be sure that all programs are in place by specified times and that the early returns from these programs are in line with projections.     The final step in the planning process is to evaluate the results. The most obvious evaluation involves checking whether the company has successfully avoided any potential labor shortages or surpluses. Although this bottom-line evaluation is critical, it is also important to go beyond it to see which specific parts of the planning process contributed to success or failure. BUSINESS PROBLEM 1 The problem Increased competition in the market place is always good for consumers. This is because of the fact that consumers have several brands at their disposal. At the same time, firms are forced to sell their products or services at a low price, something that ends up reducing their revenues and profitability. According to many observers, competition in the market place is not as good as many people tend to think especially to firms. Today, there are many firms which have been forced to close down their operations as a result of the increased competition. For instance, companies such as Enron have been forced to shut down their operations since their products do not have enough buyers (Schiffbauer & Ospina, 2010). Why competition in the market place is a problem for businesses Increased competition in the market place usually makes it very difficult for businesses to effectively conduct its activities. For instance, firms are forced to constantly come up with new ways of conducting their operations such as new marketing strategies. Coming up with ways usually cost business firms a lot of resources (Cseres, 2005). For example, business firms are forced to spend a lot of time in thinking of ways of combating competition in the market place. Competition has a huge impact on companies’ revenues and profitability. Companies that enjoy monopoly powers usually dictate prices on customers. At the same time, these firms usually dictate the quantity of goods to produce in order to earn huge profits. However, this is not the case with companies that are facing stiff competition with others in the industry. For instance, these firms have no control over prices and have to price their goods or services according to the market forces of demand and supply. At the same time, firms operating in BUSINESS PROBLEM 2 competitive market structures have to be very critical in determining the amount of goods to produce. These considerations usually end up affecting the operations of the business and even the quality of goods or services produced. With increased competition, businesses price their goods or services at relatively low prices which end up decreasing the amount of revenue collected. A decrease in revenue reduces profitability margins which end up lowering the stock prices of businesses. When this happens, businesses are unable to attract investors, thereby being unable to expand their operations. Increased market competition has led to some businesses losing their identity and even culture. This happens mainly as a result of merging whereby two or more businesses come together and function as a single firm. Merging denies individual firms to retain their own identities and are instead forced to adopt a common identity. This in turn denies these firms opportunity to retain their own customers (Motta, 2007). What causes increased competition in the market place The increased competition in the market place is brought about by new investments. Today, there are a lot of investments in the business arena which are in turn leading to increased amount of goods and services in the market. Businesses are therefore unable to charge high prices for their goods since customers have opportunity to buy goods which serve similar purposes. As a result of this, firms are forced to lower the prices of their products so that they can acquire customers. Consequences of increased competition in the market place If the current stiff competition in the market place is not combated many firms are going to close down their operations. This is because many businesses will not be in a position to cater BUSINESS PROBLEM for their expenses such as operating costs as their revenues will be very low. This implies that these firms will be making losses, therefore being unable to go on with their operations (James, 2013). 3 BUSINESS PROBLEM 4 References Cseres, K. J. (2005). Competition law and consumer protection. The Hague: Kluwer Law Internat. James, H. S. (2013). The ethics and economics of agrifood competition. Dordrecht: Springer. Motta, M. (2007). Competition policy: Theory and practice. Cambridge [u.a.: Cambridge Univ. Press. Schiffbauer, M., & Ospina, S. (2010). Competition and Firm Productivity: Evidence from FirmLevel Data. Washington: International Monetary Fund.
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