Strategic Human Resource Management Chapter- 4 STRATEGIC HUMAN RESOURCE PLANNING AND INFORMATION SYSTEMS

     Chapter- 4

STRATEGIC HUMAN RESOURCE PLANNING

AND INFORMATION SYSTEMS

Strategic Choices

Mangers must make a number of choices regarding human resource planning and information systems. Some of the most important ones are outlined below:

1. Decision making approach: Managers must decide which decision making approach is appropriate.
2. Linked to strategic decision: Mangers must determine how closely human resource practices should be linked to strategic decision.
3. Impact of employee involvement: Managers should understand the impact of employee involvement in decision making and carefully determine which employee, if any, to include in the process.
4. Cost effectiveness: Management must determine how to calculate the cost effectiveness of a firm’s human resources function.
5. Computerized human resource information systems: Manager must decide whether the company would benefit from a computerized human resource information system. If the answer is yes, then the management must determine who should have access to the system, what information should be stored, and how to keep the information safe.

Definition of Human Resource Planning

Strategic human resource planning is a process of deciding in advance what is to be done in future regarding human resource acquisition to its proper utilization. SHRP is the first stage function of human resource management. Without proper planning, human resource activities cannot be implemented as per desire of the management. For making and acceptable human resource planning, management should depend on some relevant information. Without developing a system these information cannot be collected and human resource planning cannot be formulated. Human resource planning has been defined by many authors.

1. Vetter has said HR planning is the process by which management determines how the organization should move from its current manpower position to its desired manpower position.
2. Bogue has defined HR (Manpower) planning as the process of determining manpower requirements and the means for meeting those requirements in order to carryout the integrated plans of the organization.
3. Patten has defined manpower planning as the process including forecasting, developing and controlling by which a firm ensures that it has the right number of people and the right kind of people at the right places at the right time doing works for which they are economically most useful.
4. According to Casio- “Manpower planning broadly is an effort to anticipate future business and demands on the organization and to meet the manpower requirements dictated by the conditions.”
5. According to P. C. Tripathi- “Manpower planning is a strategy for the procurement, development and utilization of an enterprise’s human resources.”

From the above definitions we can say that human resource planning is obviously a deciding function in advance. Strategic human resource planning incorporates the strategy of collecting efficient human resources so that they can take the responsibility of discharging assigned activities.

Objectives of Strategic Human Resource Planning

Strategic human resource planning has some objectives. For the fulfillment of these objectives human resource management undertakes some activities and programs. If all these activities are properly done and program are undertaken, that can determine the efficiency of HRM. However, the objective of HRP can be mentioned in the following paragraphs:

1. To use human resources: The first objective of HR planning is to ensure optimum use of human resources. It means proper distribution of functions among the employees.
2. To forecast future skills: Second objective of HR planning is to forecast whether required skills may be available or not. If it is seen that HR will not be available in future as per desire necessary steps can be taken just in the planning.
3. To asses HR requirements: Reasonable number of human resources is required for efficient and timely performance or organization activities. HR planning can help the management to assess future HR requirements properly.
4. To provide control measures: Proper control measures can help in ensuring discipline in the organization. HR planning determines the accurate number of human resources and satisfies its demand.
5. To determine recruitment level: HR planner must determine an established recruitment level. Otherwise well-conceived and well accepted recruitment level or policy can not be determined and he will not be able to recruit right people.
6. To anticipate redundancies: Some employees are not effective. With these people we cannot run the organization at the required level. We have to train this redundant human resource to achieve the goal.
7. To determine training levels: Human resource planner must determine the training need. They should know about who needs training and what type there of, for the existing people and future recruits.
8. To arrange management development program: Management is a never-ending development process with the pace of time. HR Planner must arrange programs to fulfill the need of required and appropriate management development.
9. To assess future accommodation: HR planner must visualize well in advance the expansion programs to accumulate people for future. Thus recruitment may take place in time.
10. To indicate about lead time: HR planner, after advertisement to recruitment must have some well-defined time that is lead-time to continue the organization activities without any hindrance. If needed, during this period they solicit cooperation to run the organization even with ad-hoc basis.

Nature of Strategic Human Resource Planning

Human resource planning is the key link between a firm’s strategic plan and its overall human resource management function as shown in Figure 4.1 The strategic human resource plan is a projection of how the firm plans to acquire and utilize its human resources. It affects and is affected by the firm’s overall strategic plan, and it serves as the basis for overall human resource management.

Now we begin to look at how organizations fill the jobs. How do they decide how many people they need? How do they determine the skill/ability mix of these people? What should be the mix of hiring from the outside versus promoting from within? How are vacancies estimated? Would the company benefit from a computerized human resource management information system?

Strategic human resource planning serves as the key link between the overall strategic plan and human resource management

 

Figure 4.1: Link between overall strategic plan & human resource management

Human resource planning is the process of making decisions regarding the acquisition and utilization of human resources. As such, it is part of the strategic decision-making process. The human resource plan focuses on an analysis of the organization’s objectives and the plan for acquiring resources to meet those objectives. The organization’s objectives and the resource acquisition process are analyzed in terms of the role that human resources play in achieving organizational goals.

Human resource planning is the sum total of the plan formulated for the recruiting, screening, compensation, training, job structure, promotion, and work rules of an organization’s human resources, It is a process designed to translate the corporate plans and objectives into future quantitative and qualitative employment requirements, together with plans to fulfill those requirements over both the shorter and longer terms, through human resource utilization, human resource development, employment and recruiting, and the use of information systems?

This definition emphasizes structuring plans to carry out what are considered to be the traditional personnel management functions of hiring, training, compensation, and promotion. Thus, even though the primary focuses of human resource planning is on obtaining people to fill jobs, human resource planning is a pervasive function in that it involves planning for the operation of other areas of human resource management as well.

Importance of Strategic Human Resource Planning

Strategic Human Resource Planning has many importances. Without a proper plan, SHR activities can not be done smoothly. In order to highlight the importance of HRP, we outline its role on the following lines:

1. Future Personnel Needs: Planning is significant as it helps determine future personnel needs. Surplus or deficiency in staff strength is the result of the absence of or defective planning. All public sector enterprises find themselves overstaffed now as they never had any planning of their personnel requirements.

That the government undertakings have too mans employees than they need it is too well known. But what is not widely known is the absence of succession planning in most public sector units. Absence of succession planning has resulted in a situation where many organizations function without chief executives.

2. Part of Strategic Planning: SHR management must become an integral part of strategic management process. All activities of HRM-planning, hiring, training, remunerating and maintaining—must be merged with strategic management.

HR planning can become part of strategic planning at two ends. At the beginning of strategic planning, HRP provides a set of inputs into the strategic formulation process in terms of deciding whether the types and numbers of people are available to pursue a given strategy. At the end of strategic planning process, HRP is relevant in terms of implementation concerns. Once the strategy is set, executives need to make resource allocation decisions, including those pertaining to structure, processes and human resources.

In most successful companies there is virtually no distinction between strategic planning and HRP; the planning cycles are the same and HR issues are seen as inherent in the business management. HR managers are important facilitators of the strategic planning process and are viewed as important contributors to carve the organization’s future.

3. Creating Highly Talented Personnel: Strategic human resource planning helps create highly talented personnel and retain them in the organization. Because for running the public or private organizations, there is no alternative to committed and talented personnel. For facing the global and domestic competition SHR manager must take this plan seriously.

Another facet of the high-talent personnel is management, succession planning. Who will replace the retiring chief executive? From what pool of people will top executives be selected and how will these individuals be groomed for their increased responsibilities? HRP is an answer to these and other related questions.

4. International Strategies: International expansion strategies depend upon HRP. The department’s ability to fill key jobs with foreign nationals and the re-assignment of employees from within or across national borders is a major challenge facing international businesses. With the growing trend towards global operation, the need for HRP will grow, as well as the need to integrate HRP more closely into the organization’s strategic plans. HRP will grow increasingly important as the process of meeting staffing needs from foreign countries and the attendant cultural, language, and developmental considerations grow complex. Without effective HRP and subsequent attention to employee recruitment, selection, placement, development and career planning, the growing competition for foreign executives may lead to expensive and strategically-disruptive turnover among key decision makers.
5. Foundation for Personnel Functions: Manpower planning provides essential information for designing and implementing personnel functions, such as recruitment, selection, personnel movement (transfers, promotions, layoffs) and training and development.
6. Increasing Investments in Human Resources: Another compelling reason for HRP is the investment an organization makes in its human resources. Human assets, as opposed to physical assets, can increase in value. An employee who gradually develops his/her skills and abilities becomes a more valuable resource. Because an organization makes investments in its personnel either through direct training or job assignments, it is important that employees are used effectively throughout their careers. The taka value of a trained, flexible, motivated and productive workforce is difficult to determine, although attempts are being made to do so, as in HR Accounting (HRA). An increasing number of executives are acknowledging that the quality of the workforce can be responsible for significant differences in short-run and long-run performances.
7. Resistance to Change and Move: There is a growing resistance among employees to change and move. There is also a growing emphasis on self-evaluation and on evaluation of loyalty and dedication to the organization. All these changes are making it more difficult for the organization to assume that it can move its employees around anywhere and anytime it wants, thus increasing the importance and necessity of planning ahead.

Benefits of Strategic Human Resource Planning

There are some benefits of SHRP. With a view to gain these benefits the management must try to make a successful HRP and execute it. Following are the potential benefits of HRP:

1. Upper management has a better view of the HR dimensions of business decision;
2. Personnel costs may be less because the management can anticipate imbalances before they become unmanageable and expensive;
3. More time is provided to locate talent;
4. Better opportunities exist to include women and minority groups in future growth plans;
5. Better planning of assignments to develop managers can he done; and.
6. Major and successful demands on local labor markets can be made.

Components of Strategic Human Resource Planning

There are three component elements of HRP. These are discussed below.

1. Economic forces
2. The labor market
3. Skill change and personnel shortage

1.      Economic forces: Human resource planning is influenced by national employment and economic policy planning. National economic planning sets the stage for national policy in training and education and level of economic activity through monetary and fiscal policy.

2.      The labor market: Labor market is the pool of qualified applicants from which a company can line. The relationship between organizations goes requirements and the available pool of skills and abilities is typically viewed by manager is as a sequential process ‘where by the organization first establishes the best goes structure in terms of ob content and task assignment determine each goes worth in the production process and proceed to hire i develop is a resources that retch this requirement.

3.      Skill changes and personal shortage: Changes in the labor market have led in skill shortages as well as over supply. When the human resources educational skill mm differ significantly from one skill required by employers, personnel shortages develop. Employers have to be open but cannot find people with the skill needed many people who want goes are not hired because they do not have skill demanded.

Those are the component of SHRP.

Development of Human Resource Planning Framework

Strategic planning process in an organization is both long and continuous. There exits five stage activities, popularly known as framework for human resource planning as follows:

There components of SHRP framework are shortly discussed in the following points.      

1. Mission: At the beginning of the process, the organization’s main emphasis is to determine what business it is in. This is commonly referred to a developing the mission statement.

 

Figure: 4.2 Human Resources Planning Framework

2. Objectives and Goals: Accordingly, the company specifies clearly why it exists and sets the course for company operation. That is, a sound mission statement facilitates the decision-making process.
3. Strategic: After reaching agreement on what business the company is in and who its consumers are, senior management then begins to set strategic goals. During this phase, these managers define objectives for company for the next period.

4. Structure: For an effective HR Planning a structure should be developed and in this structure position of Human Resources should be glanced. Establishment of the structure in the organization assists in determining the skills, knowledge and abilities required for jobholders.

5. People: For implementation of the HR planning, required number of skilled people should be recruited and placed. Although it is not an easy task, HR planners must try its level best to collect as much as possible the only skilled people.

Factors Affecting Human Resource Planning

SHRP is influenced by several considerations. The more important of them are: (i) type and strategy of organization, (ii) organizational growth cycles and planning. (iii) environmental uncertainties,(iv) outsourcing (v) type and quality of forecasting information, (vi)nature of jobs being filled, and (vii) time horizons  (see Fig.)

Factors influencing the strategic human resource planning are discussed in following paragraphs:

 

Figure: 4.3 Factors Affecting Human Resource Planning

1. Type and Strategy of Organization

The type of organization is an important consideration because it determines the production processes involved, number and type of staff need and the supervisory and managerial personnel required. Manufacturing organizations are more complex in this respect than those that render services.

 

           

Fig.4.4 Continual Strategic Choices in HRP

2. Organizational Growth Cycles and Planning

The stage of an organization’s growth can have considerable influence on HRP. Small organizations in the embryonic stage may not have personnel planning. Need for planning is felt when the organization enters the growth stage. HR forecasting becomes essential. Internal development of people also begins to receive attention in order to keep up with the growth.

3. Environmental Uncertainties

HR managers rarely have the privilege of operating in a stable and predictable environment. Political, social and economic changes if feet all organizations. Personnel planners deal with environmental uncertainties by carefully formulating recruitment, selection, and training and development policies and programs. Balancing mechanisms are built into the HRM program through succession planning, promotion channels, layoffs, and flextime, job sharing, retirement, VRS and other personnel related arrangements

4. Outsourcing

Several organizations outsource part of their work to outside parties either in the form of sub-contracting or ancillarisation. Outsourcing is a regular feature both in the public sector as well as in the private sector. Most organizations have surplus labour and they do not want to worsen the problem by hiring more people. Hence, the need for off-loading.

5. Nature of Jobs being filled

Personnel planners must consider the nature of jobs being filled in the organization. Job vacancies arise because of separations, promotions and expansion strategies.

It is easy to employ shop-floor workers, but a lot of sourcing necessary for hiring managerial personnel. It is, therefore necessary for the personnel department to anticipate vacancies, as far in advance as possible, to provide sufficient lead time to ensure hat suitable candidates are recruited.

6. Type and Quality of Information

The information used to forecast personnel needs originates from a multitude of sources. A major issue in personnel planning is the type of information which should be used in making forecasts. Closely related to the type of information is the quality of data used. The quality and accuracy of information depend upon the clarity with which the organizational decision makers have defined their strategy, organizational structure budgets, production schedules and so forth.

7. Time Horizons

Yet another major factor affecting personnel planning is the time horizon. On one hand, there are short-term plans spanning six months to one rear. On the other hand, there are long-term plans which spread over three to twenty years. The exact time span, however depends on the degree of uncertainty prevailing in an organization’s environment. Plans for companies operating in an unstable environment, computers for example, must be for a short period.

The Human Resource Planning Process

HRP essentially involves forecasting personnel needs, assessing personnel supply and matching demand- supply factors through personnel-related programs. The planning process is influenced by overall organizational objectives and the environment of business. Figure: 4.5 illustrates the planning process

 

Fig. 4.5.The Human Resource Planning Process

1.      Environmental Scanning:

Environmental scanning refers to the systematic monitoring of the external forces influencing the organization. Managers monitor several forces but the following are pertinent for HRP:

·         Economic factors, including general and regional conditions.

·         Technological changes, including robotics and automation.

·         Demographic changes, including age, composition and literacy.

·         Political and legislative issues, including laws and administrative rulings.

·         Social concerns, including child care, and educational facilities and priorities.

By scanning the environment for changes that will affect an organization, managers can anticipate their impact and make adjustments early.

2.      Organizational Objectives and Policies:

HR plans need to be based on organizational objectives. In practice, this implies that the objectives of the HR plan must be derived from organizational objectives. Specific requirements in terms of number and characteristics of employees should be derived from the organizational objectives.

3.      HR Demand Forecast:

Demand forecasting is the process of estimating the future quantity and quality of people required. The basis of the forecast must he the annual budget and long-term corporate plan, translated into activity levels for each function and department. In a manufacturing company, the sales budget would he translated into a production plan giving the number and type of products to be produced in each period. From this information, the number of hours to be worked by each skilled category to make the quota for each period would be computed. Once the hours are available, determining the quality and quantity of personnel will be the logical step.

4.      Human Supply Forecast:

Strategic human resource manager must forecast about the future supply of manpower. This step is also important because accurate supply forecast helps SHRM recount personnel at the right time. In the HR crisis society, supply forecast is more important than human demand forecast.

5.      Human Resources Programming:

After successful completion of demand and supply forecast, the strategic human resource manager chalks out program for the acquisition of human resources. Designing the programs depends on accurate human resource demand and supply forecast. If both the forecasts are flawless, HR program may be designed suitably.

6.      Implementation of SHRP:    

This step is another important phase of SHR planning process. As soon as the programming is finished, the implementation phase starts. Utmost care and control are essential for proper execution of SHR policies and plans. Success of this phase leads the organization to achieve ultimate goal.

7.      Control & Evaluation:

The last stage of SHR planning is control and evaluation. In this stage SHR activities are supervised and controlled. If there is any variation, two steps may be taken as, corrective and/or preventive measures. Through proper evaluation and control, either surplus or shortage of human resources may be seen. SHRM management takes necessary steps to face both the situation what so ever.

Human Resource Planning Model

Human Resource Planning Model a is structure or a framework which includes growth objectives, human resource objectives, job design and structure, occupation of job

category, human resource shortages or surpluses and objectives for FIR functions. These are different steps of the HR Planning Model. As shown and discussed above figure no.4.6.These components are briefly stated below:

1.      Determine growth / Retrenchment objectives: Growth / retrenchment objective, drive the human resource plan. If an organization decides to scale back, retrench structure, people will be let go. Growth / retrenchment objective may be expressed in terms of sales, market share, asset size, and return on investment, development of new products and services or abandonment of market.

2.      Determine Human Resource objective: One organization objective are specified, and understood by affected the human resource unit should specify its objective with reared to human resource utilization in to organization.

3.      Examine job design and structure: An important step in strategic human resource management is the design of job. It is also an important step in

human resource planning. Companies should not take the particular configuration of jobs that exist in a specific point in time as unchangeable.

 

Figure 4.6 Human Resource Planning Model

4.      Estimate future skill requirement by occupation or job category: Occupation skill conge overtime therefore, into important at this sage that an organization have a correct listing important at this stage that an organization have a complete, currant listing of all occupation category’s in the organization with explanatory job description that specify the duties, skill, and qualification required for each job.

5.      Establish specific objective for human resource function: The step in human resource planning is to establish specific objective, for each human resource function. Specific objective should be established for everything from, resurrecting from terminating.

6.      Estimate Human Resource shortage or surpluses for each occupation categories: This takes us to fifth step in the human resource planning model. The resource shortage or surplus should be estimated for each occupation job category. Precision should be made about shortage in view of the organization’s human resource utilization objective.

Forecasting Techniques in Strategic Human Resource Planning

Forecasting techniques vary from simple to sophisticated ones. Before describing ‘each technique, it may be stated that organizations generally follow more than one technique.

The techniques are discussed below and seen in the figure 4.6

1.      Managerial judgment

2.      Ratio—trend analysis

3.      Regression analysis

4.      Work study techniques

5.      Delphi technique

6.      Flow models

7.      Others

 

Fig. 4.7. Forecasting Techniques in Strategic Human Resource Planning

1.      Managerial Judgment: This technique is very simple. In this, managers sit together, discuss and arrive at a figure which would he the future demand for labour. The technique may involve a ‘bottom-up’ or a ‘top-down’ approach. In the first, line managers submit their departmental proposals to top managers who arrive at the company forecasts. In the ‘top-down’ approach, top managers prepare company and departmental forecasts. These forecasts are usually reviewed with departmental heads.

2.      Ratio—trend Analysis: This is the quickest forecasting technique. The technique involves studying past ratios, say, between the number of workers and sales in an organization and forecasting future ratios, making some allowance for change in the organization or its methods.

3.      Regression Analysis: This is similar to ratio-trend analysis in that forecast is based on the relationship between sales volume and employee size. However, regression analysis is more statistically sophisticated. A firm first draws a diagram depicting the relationship between sales and workforce size. It then calculates regression line — a line that cuts right through the center of the points on the diagram. By observing the

regression line, one can find out number of employees required at each volume of sales (see Figure. 4.8)

 

Employee size

Sales (Rs)

Fig. 4.8. Regression line Showing Relationship between Sales and Employee Size

4.      Work—study Techniques: Work—study techniques can be used hen it is possible to apply work measurement to calculate the length of operations and the amount of labour required. The starting point in a manufacturing company is the production budget, prepared in terms of volumes of saleable products for the company as a whole, or volumes of output for individual departments. The budgets of productive hours are then compiled using standard hours for direct labour. The standard hours per unit of output we then multiplied by the planned volume of units to he produced to give the total number of planned hours for the period. This is then divided b the number of actual working hours for an individual operator to show the number of operators required.

5.       Delphi Technique: Named after the ancient Greek oracle at the city of Delphi, the Delphi technique is a method of forecasting personnel needs. It solicits estimates of personnel needs from a group or experts, usually managers. The HRP experts act as intermediaries, summaries the various responses and report the findings back to the experts. The experts are surveyed again after they receive this feedback. Summaries and surveys are repeated until the experts opinions begin to agree. The agreement reached is the forecast of the personnel needs. The distinguishing feature of the Delphi technique is the absence of interaction among experts.

6.      Flow Models: Flow models are ser frequently associated with forecasting personnel needs. The simplest one is called the Markov model. In this technique, the forecasters will:

a)  Determine the time that should be covered. Shorter lengths of time are generally more accurate than longer ones. However, the time horizon depends on the length of the HR plan which, in turn, is determined by the strategic plan of the organization.

b) Establish categories, also called states, to which employees can be assigned. These Categories must not overlap and must take into account every possible category to which an individual can be assigned. The number of states can neither be too large nor too small.

c) Count annual movements (also called flows’) among states for several times period. These states are defined as absorbing (gains or losses to the company) or non-absorbing (change in position levels or employment status). Losses include death or disability, absences, resignations and retirements. Gains include hiring, rehiring, transfer and movement by position level.

d) Estimate the probability of transitions from one state to another based on past trends. Demand is a function of replacing those who make a transition.

There are alternatives to the simple Markov model. One, called the semi-Markov, takes into count not just the category hut also the tenure of individuals in each category. After all, likelihood of movement increases with tenure. Another method is called the vacancy model, which predicts probabilities of movement and number of vacancies. While the semi-Markov model helps estimate movement among those whose situations and tenure are similar, the vacancy mode! Produces the best results for a organization.

7.  Other Forecasting Techniques: New venture analysis will be useful when new ventures contemplate employment a) planning.

a)      This technique requires planners to estimate FIR needs in line with companies that perform similar operations.

b)     Mathematical model are used in human need forecasting too. One such widely used technique is given below:

                 (Lagg +G_n) ^1/2

E_n=

                                y

where, E_n is the estimated level of personnel demand in n planning periods (e.g. years).

Lagg is the overall or aggregate level of current business activity in Taka G_n is the total growth in business activity anticipated through period n in today’s Taka.

x is the average productivity improvement anticipated from today through planning period n (e.g. if x = 1.08. it means an average productivity improvement of 8 percent).

x is a conversion figure relating today’s overall activity to personnel required (total level of today’s business activity divided by the current number of personnel). It reflects the level of business activity per person.

The main purpose of this model is to predict E the level of personnel necessary in periods. Prior to applying this model, estimates of G. x and y must he made. Such estimates may be based on the previous experiences of management, as well as on future strategic choices to witch the organization’s decision makers are committed.

Linking Organizational Strategy to Human Resource Planning

Human Resource Planning ultimately translates the organization’s overall goals the number and types of workers needed to meet those goals. Without clear cut planning, and a direct linkage to the organization’s strategic direction, estimation of an organization’s human resource needs are reduced to mere guesswork. This means that human resource planning cannot exist in isolation. It must be linked to the organization’s overall strategy. The steps involved in linking are as follows: and shown in Figure-4.9.

1. Assessing Current human Resources

Assessing Current human resources begins by developing a profile of organizations current employees. This is an internal analysis that includes information about the workers and the skills they currently possess. From a planning viewpoint, this input is valuable in determining what skills are currently available in the organization. The Profile of the Human resource inventory serves as a guide for supporting new organizational pursuits or in altering the organization’s strategic direction. This report also has value in other HRM activities, such as selecting individuals for training and development, promotion, and transfers.

2. Determining the Demand for Labor

Once an assessment of the organization’s current human resources situation has been made and the future direction of the organization has been considered, a projection of future human resource needs can be developed.

3. Estimating the future supply of labor

Estimating changes in internal supply requires the HR to look at those factors that can either increase or decrease its employee base. An increase in thee supply of any units human resources can come from a combination of four sources: new hires, contingent workers, transfers in, or individuals returning from leaves. Decreases in the internal supply can come about through retirements, dismissals, transfers out of the unit, layoffs, voluntary quits, sabbaticals, prolonged illnesses or deaths. HRM manager should consider these increases and decreases to estimate the future supply of labor.

4. Estimated Changes in Future Supply

There are some factors outside the organization that influence the supply of available workers. We should review these changes outside the organization to estimate changes in the future supply.

5. Matching the demand and supply of labor

The objective of human resource planning is to bring together the forecasts of future demand for workers and the supply for human resources, both current and future. The result of this effort is to pinpoint shortages both in number and in kind; to highlight areas where overstaffing may exist.

 

Figure 4.9. Linking Organization Strategies to Human Resource Planning

Corporate Strategic and human resource planning are two critically linked processes; one cannot survive without the other. Accordingly, to perform both properly requires a blending of activities. We have portrayed these linkages in the above figure.

Definition of Human Resource Information System

HRIS is the system of gathering collection, and helping analyze the data necessary for Human Recourse Department to do its job properly. The HRIS is usually a part of the organization larger Management Information Systems MIS). Distinguishes a manual system from a HSRI is the use of computers information technology. An information technology based HRIS can provide many more DSS (Decision Support System) function than a manually based system can.

HRIS is superior to manual system in many respects.

These are the components HRIS. An SRIS may be made successful on the basis of these components. Therefore SHRM should try to set an HRIS properly.

Components of Human Resource Information Systems

The basis for good human resource decisions is good human resource information. Human resource information should be provided to both human resource and line managers to facilitate decision making. This concept is known as a decision support system (DSS). A decision support system places information for decision making literally at the fingertips of decision makers. Using personal computers or terminals, human resource and line managers can call up information as needed for recruiting, promoting, paying, or developing decisions.

A human resource information system (HRIS) is made up of numerous elements. These elements must function properly for the benefit of the organization. Basically system is a set of activities that takes inputs

(an application for employment in the finance department) transforms them into useful items (a hiring approval from the human resource department) and then outputs the new items to where they can be used (sends the approval to the finance department). Most systems also have some form of control mechanism that enables supervisors to manage the operation of the system. These elements are stated below:

1. Input: For making HRIS a success, some inputs must be made available. On the basis of these inputs HRIS is constituted successfully. These inputs must be accurate simple understandable durable and last of all useable.
2. Transformation: Thus portion of system is most closely associated with the actual computer. It also usually includes the software or the written, or the written instruction that tell the computer what to do.
3. Output: The next element of the HRSJ is the actual use of the newly processed natural. It may involve material produced by printers, terminal script, or nay number of other devices.
4. Feedback: Feedback represents the managerial control element of a system. The feedback elements help to ensure that the outputs are the ones that the system seeks to achieve.          

Systems may be found on a departmental level, a plant level, or even an organization level. In short, a system is any activity that involves inputs, transformations, outputs, and feedbacks, and one system may be a subsystem - or a part—of another system. The HRIS is usually a part of the organization’s larger management information system (MIS), which would include accounting. Production, and marketing functions, to name just a few. The special function of HRIS is to gather, collect, and help analyze the data necessary for the human resource department to do its jobs properly. The opening case on Mrs. Fields Cookies is tin example of how the IIIRJS works.

What distinguishes a manual HRIS is the use of computers or information technology. A big advantage of information technology-based HRIS is that it can provide many more DSS functions man a manually based system can. For the rest of the chapter, we will assume that an HRIS represents a computer-based system unless otherwise noted. With this in mind, we will examine the components of a HRIS in more depth.

Feature of HRIS Design Configuration

Depending on the firm’s structure and philosophy of management concerning centralization of resources and decision, a HRIS can be configured in one of the several different ways. The most typical of HRIS configuration are concentrated, distributed and independent or a hybrid combination of the first there. We will are the feature of various HRIS design configuration in below.

1. Concentrated:

1.      Centralized computer facility

2.      Strong management control

3.      Reduced cost

4.      Limited user flexibility and access

2. Distributed:

1.      Central facility with other sites connected

2.      Strong management control

3.      Increased user flexibility

3. Independent

1.      Multiple systems

2.      Minimal management control

3.      High user access and flexibility

4.      costs and reduction of function

4. Hybrid

1.      A mix of system design

2.      Allows for centralization of certain function and decentralization of other

3.      Level of management control varies

4.      Flexibility level very higher cost than other commiseration.

Steps in Implementing an HRIS

As with any major change, proper planning is an absolute necessity for successful implementation of an HRIS. The steps outlined below describe the specific procedures involved in successfully developing and implementing an HRIS.

Step I Inception of Idea: The idea for having an HRIS must originate somewhere. The originator of the idea should prepare a preliminary report showing the need for an HRIS and what it can do for the organizations.

Step 2 Feasibility Study: Feasibility study evaluates the present system and details the benefits of an HRIS. It evaluates the costs and benefits of an HRIS.

Step 3 Selecting a Project: Team once the feasibility study has been accepted and the resources allocated, a project team should be selected. The project team should consist of an HR representative who is knowledgeable about the organization’s HR functions and activities and about the organization itself and representatives from both management information systems and payroll. As the project progresses, additional clerical people from the HR department will be needed to be added.

Step 4 Defining the Requirements: A statement of requirements specifies in detail exactly what the HRIS ill do. A large part of the statement of requirements normally deals with the details of the reports that will be produced. Naturally, the statement also describes other specific requirements. This typically includes written descriptions of how users collect and prepare data, obtain approvals, complete forms, retrieve data, and perform other non-technical tasks associated with HRIS use. The key here is to make sure that the mission of the HRIS truly matches management’s needs for an RRIS.

Step 5 Vendor Analysis: This step determines what hardware and software are available that will best meet the organization’s needs for the lowest price. This is a difficult task. The best approach is usually not to ask vendors if a particular package can meet the organization’s requirements but how it will meet those requirements. The results of this analysis will determine whether to purchase an off-the-shelf package or develop the system internally.

Step 6 Package contract Negotiation: After a vendor has been selected, the contract must be negotiated. The contract stipulates the vendor’s responsibilities with regard to software, installation, service, maintenance, training, and documentation.

Step 7 Training: Training usually begins as soon as possible after the contract has been signed. First, the members of the project team are trained to use the HIRIS. Towards the

end of the implementation, the HR representative will train managers from other departments in how to submit information to the HRIS and how to request information from it.

Step 8 Tailoring the System: This step invokes making changes to the system to best fit the needs of the organization. A general rule of thumb is not to modify the vendor’s package, because modifications frequently cause problems. An alternative approach is to develop programs that augment the vendor’s program rather than altering it.

Step 9 collecting the Data: Prior to start-up of the system, data must be collected and entered into the system.

Step 10 Testing the System: Once the system has been tailored to the organization’s needs and the data entered, a period of testing follows. The purpose of the testing phase is to verify the output of the HRIS and to make sure it doing what it supposed to do. All reports should be critically analysed for accuracy.

Step 11 Starting Up: Start-up begins when all the current actions are put into the system and reports are produced. It is wise to attempt start-up during a lull period so that maximum possible time can be devoted to the HRIS. Even though the system has been tested, some additional errors often surface during start-up.

Step 12 Running in Parallel: Even after the new HRIS has been tested, it is desirable to run the new system in parallel with the old system for a period of time. This allows for the comparison of outputs of both the system and examination of any inaccuracies.

Step 13 Maintenance: It normally takes several week or even months for the HR people to feel comfortable with the new system. During this stabilization period, any remaining errors and adjustments should be handled.

Step 14 Evaluation: After the HRIS has been in place for a reasonable length of time, the system should be evaluated. Is the HRIS for the organization and is it being properly used?

Following the above steps when implementing an HRIS will not guarantee success, but it will increase the probability.

Human Resource Costing

Some at the more common costing manure include HRM en or human resource department asperses as a percentage of company operating expanse. Human resources manager are increasingly being asked to justify decision and programs on a cost benefit basis. They are being held account ash in a financial sense for a policy and procedure.

Human Resource Accounting

When asked to name their most important resource, many managers will respond “our people.” When asked to put a value on their human resources must managers say they cannot or that their people are invaluable? Yet valuing human resources has been a subject of inquiry since the late 1960, The R. G, Barry Corporation of Columbus, Ohio, made the first major attempt to put a value on their human resources. This model uses historical costs (actual expenses for recruiting, training, development, and so on) to determine the firms investments in its employees and has the asset value for the employee. This is. a traditional way for accountants to value any resource, such as a building.20 the asset value of the human resource staff can also be computed by calculating the human resource expenditure per employee. This calculation includes the cost of all human resource activities and staff Divided by the number of employees covered by human resource services. In 1988, the average per capita expenditure per employee was $629. This value rose to $654 in 1989 and to $730 in 1990.

Besides asset value, replacement costs, present value of future earnings, and value to the organization have been used to place a value on a firms human resources. Howe a major limitation to all of these approaches is that they focus on inputs and outputs. In other words, they do not relate a firm’s investment in people with the output the people produce.

Newer approaches attempt to put a dollar value on the behavioral outcomes produced by working in an organization. Costs are determined for such behaviors as absenteeism, turnover, and poor job performance. This method measures the economic consequences of employee behavior, not the value of the individual.

Integrating Approach to Human Resource Objective

Human resource objective should be properly integrated. The integration should be integrated at different levels. These levels are policy level objectives, mid-level objectives and operational objectives shown in figure. Human resource integration approach have 4.10 elements. These are:

1. Corporate Objectives: Set by top level management.
2. Human Resource Objectives: Set by human resource department
3. Divisional Objectives: Set by all divisions of the organization.
4. Departmental flint Objectives: Set by all functional departments/ units.

This model of integrating human resource objectives can be shown in the following figure:

 

Policy level objectives

	Other functional areas		Other functional areas

 

Mid- level objectives

Operational objectives

Figure 4.10. Integrating approach to human resource objectives

From the above figure it can be seen that Policy level objectives are set both at the corporate office and human resource management level. Mid level objectives are determined at the divisional level and operational objective is set at the department/unit level.

Management Guidelines

The success of decision -making process depends on the effective formulation of decisions properly. There are some management guidelines for effective decision making:

1. Making decisions: The essence in formulating strategy is making decisions.
2. Techniques: Both qualitative an quantitative techniques for making decisions should be used.
3. Retrospective reconstruction: Plays an important role in helping managers understand and justify decision.
4. Individual scripts: Schemas and cognitive maps provide the basis for assimilating and interpreting information.
5. Tacit know1edge: Relying on tacit know1edge or intuition can enhance the decision process if used with rational decision methods.
6. Better sense: The better more accurately that manager make sense of what goes on around them both in and outside of the organization the better their decision will be.
7. Impact on human resources: When a strategic decision has a major impact on human resources, the human resource unit should have a major role to play in the decision.
8. Scan the environment: Human resources should be the major unit used to scan the environment for human resource and labor market issues.
9. Intended and unintended: Human resources should project both intended and unintended consequences of decisions as they might affect human resource.
10.  Organization’s ability: Human resource information systems can significantly. Increase the organization’s ability to achieve its strategic goals.
11. Ethical consideration: Many decisions have significant ethical consideration. Human resource should make the companies policies clear and fair.

Questions

1. What do you understand by strategic human resource planning (SHRP)?
2. Discuss some strategic choices to be made by the manager for making an effective HRP.
3. State the steps of strategic human resource planning.
4. Explain in short the model of SHRP with diagram.
5. Mention the objectives of SHRP.
6. Do you find any importance of SHRP in your organization? Why ?
7. How can you develop a SHR planning framework. Discuss.
8. Describe the factors affecting SHRP.
9. Explain the process of SHRP with figure.
10.  How can you integrate HRP with strategic objective? Discuss the elements of SHRP.
11.  Discuss the management guidelines for making an effective SHRP.
12.  What do you mean by strategic human resource information systems (HRIS)?
13.  Discuss the components of HRIS.
14. Explain the feature of HRIS configuration.
15.  State the steps of  implementing an HRIS.