Human Resources Planning Prof. John Kammeyer-Mueller MGT

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Human Resources Planning

• Prof. John Kammeyer-Mueller
• MGT 6366

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Human Resources Planning Outline

• External influences
• Developing numerical forecasts
• Core vs. flexible workforce decisions
• Affirmative action

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General Economic Conditions,Job Growth, HR
Movement Impacts
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External Influences

• Major types of external influence
• Important sources of information
• The influence of the educational system

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Planning in a Real World Situation

• Imagine you are trying to improve the planning
  process for professors at the University of
  Florida
• What external factors influence labor quality and
  quantity decisions?
• What internal factors influence labor quality and
  quantity decisions?
• See the next pages for a SHRM template for
  planning

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SHRM Guidelines for Preparing a Planning Worksheet

• General environment scan and forecast
• Describe opportunities and threats of the outside
  environment, including the social environment
  (i.e., demographic, technical, legal and
  political, and economic forces) and task
  environment (i.e., labor market, stakeholders,
  competition, and customers/clients).
• Monitor industry trends and consider how these
  trends will impact your organization.
• Customer/Market/Competitor Analysis
• Understand the nature of your business
• Determine how the market is changing and develop
  a profile of how your customers' needs and your
  competition are changing in relation to these
  market trends.
• Strategic Planning Premise
• Develop strategic planning premises that reflect
  the key assumptions about the future of the
  organization. These can cover the business as a
  whole (e.g., diversification or acquisition
  plans) or functional areas of the business (e.g.,
  finance, management, marketing, etc.). Separate
  must do and should do strategies.

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SHRM Guidelines for a Planning Worksheet

• Internal Assessment
• Guide What is the purpose of the organization?
  What activities are performed? What does the
  business offer and how does it make it
  competitive?
• Guide What will the organization look like in
  3-5 years? What would be seen and sensed by
  people?
• Briefly list the major strengths, weaknesses,
  threats, opportunities (SWOTs). Strengths and
  weaknesses are internal to the business while
  opportunities and threats are external. All SWOTs
  should be one-handed (i.e., something is either a
  strength or a weakness but not both).
• Major Goals
• Define the key targets achievable over the next
  3-5 years in terms of business imperatives such
  as sales, market segments, finances, operations,
  technologies, employment, profits, etc. Remember
  that goals are the strategic profile of the
  organization.

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A Practitioners Guide to Performing HR Planning

• Developing and analyzing data that identify HR
  needs
• the organization's mission, values, strategic
  goals and business objectives
• federal and state laws and regulations.
• future gaps and surpluses in the work force
• diversity statistics
• population demographics
• health and safety statistics
• turnover rates and causes
• employee-opinion survey results
• Developing responses to the identified needs
• recruiting plans
• training plans
• developing special programs for specific needs

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Areas Affected by Workforce Planning

• Contributes to strategic goals and business
  objectives
• every strategic goal and business objective has a
  human element
• Enables employees to develop their potential to
  the fullest
• skill-gap and surplus information projected
  during the work-force planning process
  facilitates career counseling, training,
  recruiting, diversity and retraining

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Uses of Gap Analysis in Organizational Contexts
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Strategic Advantages and Goals of Workforce
Planning

• Eliminating surprises
• Rapid talent replacement when needed
• Developing processes that ramp up and down your
  talent inventory
• Identifying problems early
• Preventing problems
• No delays in meeting production goals
• Enhancing capabilities to respond to the future
• Rapidly reduce labor costs without the need for
  large-scale layoffs of permanent employees.
• Gather resources and talent when opportunities
  arise
• HR professionals take advantage of
  talent-sourcing opportunities

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Exh. 3.1 Examples of ExternalInfluences on
Staffing

• Economic conditions
• Economic expansion and contraction
• Job growth and job opportunities
• Internal labor market mobility
• Turnover rates

• Labor markets
• Labor demand
• employment patterns
• KSAOs sought
• Labor supply
• demographic trends
• KSAOs available
• Labor shortages and surpluses
• Employment arrangements

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Labor Supply Forecasts

• Economic conditions
• Economic expansion
• Job opportunities
• Internal labor market mobility
• Turnover rates

• Labor markets
• Labor demand
• Labor supply
• Labor shortages
• Employment arrangements

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• Unemployment Rate of job seeking
• High unemployment
• Many job seekers, low wages, many employer
  choices
• Low unemployment
• Few job seekers, high wages, fewer employer
  choices

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Trends in Employment
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• Unit labor costs Hourly compensation divided by
  productivity
• Increasing ULC
• Wages increasing, productivity decreasing,
  substitute capital for labor
• Decreasing ULC
• Wages decreasing, productivity increasing,
  substitute labor for capital

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• Labor turnover rate separations divided by
  average employment
• Increasing LTR
• Turbulence, lower commitment, contingent labor
• Decreasing LTR
• Stability, commitment, long-term relationships

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Employers React to Immigration Problems

• Squeeze for highly qualified workers
• The cap on H1-B visas for 2008 was reached in
  April, meaning that no new visas would be granted
  for the year
• In 2008 there were 123,000 applications for just
  65,000 available H1-B visas for 2009 there are
  163,000 applications
• This shortfall in highly qualified workers leads
  companies to offshore many professional
  positionssome companies have told congress they
  will have to relocate to countries where they can
  hire more qualified workers easily
• Workforce Management Online, April 2008

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Total Effects of Immigration on National Economy

• Are there downsides to immigration for the host
  country?
• Most directly, wages in occupations that have
  high levels of immigrants should go down because
  a) immigrants have lower reservation wages and b)
  simply supply increases
• Unemployment may also fall in occupations with
  high levels of immigrants
• Downward pressure on wages in one industry or
  occupation can have spillover effects in other
  occupations
• Immigrants may accept working conditions that are
  worse than native-born workers would accept
• Note that these results relax the assumption that
  economists make about perfect mobility of labor
  and homogeneity of the workforce, but those
  assumptions are not realistic in the short run

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Total Effects of Immigration on National Economy

• Are there upsides to immigration for the host
  country?
• Decreased prices for goods and services,
  especially for goods and services that are used
  by the least wealthy Americans
• Capital is mobile immigration may reduce
  offshoring of businesses (i.e. if I can hire
  people living in the U.S., then I can still
  afford to keep my company here), thereby saving
  some domestic jobs in the process
• Those living in the United States will also
  purchase goods and services in the United States
  rather than in their home countries, so they
  increase demand
• Increased competitiveness with foreign firms
• Economists often argue that, in the long run,
  wages will tend to equalize across countries
  through one mechanism or another, and that with
  immigration, the purchasing power of the poorest
  individuals should go up with more immigration
  even if they are falling further behind the
  wealthiest individuals

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Business Owners React to Immigration Crackdowns

• Employers are concerned because of
• a federal enforcement crackdown on employers who
  hire undocumented immigrants
• inaction in Congress on immigration legislation
• a rush of punitive state measures last year that
  created conflicting requirements
• continuing shortages of low-wage labor.
• These employers are now starting to realize that
  nobody is in a better position than they are to
  make the case that they do need the workers and
  they do want to be on the right side of the law,
  said Tamar Jacoby, president of ImmigrationWorks
  USA.
• If we have to terminate 20 people, thats going
  to jeopardize 100 other jobs of people who are
  legal, Americans, people who are making a good
  living, said on anonymous source who runs a
  multi-million dollar electronics parts
  manufacturing firm.
• Source NY Times, July 6, 2008

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Are Employee Concerns about Immigration Justified?

• Example findings
• Extensive reviews typically suggest that a 10
  increase in immigration often leads to about a 1
  or lower decrease in wages for native born
  workers and few or no increases in unemployment
• Friedberg Hunt, The Impact of Immigrants on
  Host Country Wages, Employment, and Growth,
  Journal of Economic Perspectives, 1995
• Immigration from 1980-2000 reduced the wages of
  native workers by around 3.2, with larger
  effects for high school dropouts and smaller
  effects for the educated
• George J. Borjas, The Labor Demand Curve Is
  Downward Sloping, Quarterly Journal of
  Economics, 2003
• The effects of immigration are most negative for
  native born Hispanics, African Americans, and
  those with low levels of education effects can
  be mildly positive or neutral for those with
  higher levels of education

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Are Employee Concerns about Immigration Justified?

• These results should also apply if an appropriate
  high skill group can be found with high
  immigration levels
• Compare fields based on the number of doctorates
  granted to foreign born individuals
• A 10 increase in the supply of doctorates to
  foreign born individuals in a particular field
  leads to a 3 decrease in wages for that field
• Borjas, The Labor Market Impact of High-Skill
  Immigration, American Economic Review, 2005
• However, research shows that for workers in
  information technology, wages do not decrease,
  and unemployment rates do not increase, when the
  number of H1-B visas increase
• Zavodny. The H-1B program and its effects on
  information technology workers, Economic Review -
  Federal Reserve Bank of Atlanta, 2003
• Immigration from Canada and Mexico into
  occupations is actually negatively related to
  long-run unemployment rates at the industry level
• Dorantes Huang, Unemployment, immigration, and
  NAFTA A panel study of ten major U.S.
  industries, Journal of Labor Research, 1997.

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Emerging Trends Baby Boomers Near Retirement Age

• May be a problem
• By 2014, more than 1 in 5 workers will be 55 or
  older, according to the BLS.
• 40 percent of retirees were forced to stop
  working earlier than they had planned, largely
  because of health problems or job loss.
• The annual cap on H-1B visas is 65,000, down from
  a high of 195,000 earlier this decade.
• It can take years before someone has sufficient
  skills to replace an experienced worker who
  retires

• Or perhaps not
• Wages rise, drawing new people into understaffed
  fields.
• Immigration and offshoring can reduce skill
  shortages.
• About 31 percent of those 55 and older were in
  the workforce in 1984. That number climbed to 36
  percent in 2004, and the figure will jump to 41
  percent in 2014, according to the Bureau of Labor
  Statistics.

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Emerging Trends An Aging Workforce

• Experience at the FBI
• More than 40 of FBI agents had five or fewer
  years of work experience after September 11, and
  they needed to add many more in a hurry
• Problem exacerbated by a mandatory retirement age
  of 57
• The FBI turned to retired agents as trainers for
  newcomers, and also encouraged them to act as
  consultants
• Experience at CVS
• CVS doubled its over-55 workforce between 1992
  and 2002
• CVS recruited at senior centers
• Older workers were integrated into general
  training after they realized the skills and
  attitudes of older workers had a positive impact
  on younger trainees
• A few general principles for retaining an older
  workforce
• Need to ensure flexible schedules are available
• Provide health-care coverage onsite
• Find jobs that are less physically intense but
  still critical
• Ensure that they arent locked out of training
  and development issues

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Thinking about the Labor Market of Today

• Increases in technology, medical, and human
  services fields
• Decreases in clerical and manufacturing jobs

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Educational System Effects

• Occupations with formal education
• Healthcare
• Physicians
• Nurses
• Management
• Research
• Scientists
• Engineers

• Occupations with formal training
• Trades
• Electrician
• Plumber
• Welder
• Carpenter
• Arts
• Writer
• Artist
• Musician

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Effects of Educational Requirements for HR
Planning

• Need for external associations
• Campus recruiting offices
• Professional groups
• Trade unions
• High wages and an involved workforce
• Likely to have more occupational commitment
• Able to influence legislation for professional
  qualifications
• May be able to influence workplace practices

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Developing Internal Forecasts

• Markov Analysis and Large Group Action Plans
• Replacement and succession planning

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Developing Internal Labor Shortfall Estimates

• Managerial judgment
• Based on informal estimates
• Probably accurate for individual positions
• Can take complex situations in the environment
  and context into account

• Quantitative techniques
• Based on formal projections
• Accurate in general for large numbers of
  positions
• Can only consider previous trends

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Internal analysis using a Transition matrix
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Internal analysis using a Transition matrix
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Internal analysis using a Transition matrix
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Internal analysis using a Transition matrix
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Internal analysis using a Transition matrix
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So What Do We Do with This Information?

• First, identify likely areas of discrepancy
• Then, create action plans for each position
• How can we address the shortages of entry level
  managers and assistant managers?
• How can we address the excess number of associate
  and general managers?
• How are these strategies interdependent

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The Missing Piece from Markov Analysis Strategy

• Assume that the company we assessed is in the oil
  and gas industry
• What trends might change the number of people we
  have?
• What other types of breakdowns might we want to
  assess?
• Managers by skill specialization?
• Managers by region of the world?
• What strategic pieces of information would also
  contribute to decision making?

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Succession Planning

• Specific individuals for specific jobs
• Usually for upper management
• For promotion from within
• Why would it be done?
• Need to consider KSAO in depth to ensure no
  skills gaps in critical positions
• Develop estimates for future career growth to
  help employees understand career tracks
• Recognize where future training will be needed

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Typical Replacement Chart
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Succession Planning

• Builds specific training areas on top of
  replacement charts
• Sometimes performed with software as a
  developmental aide

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Succession Plan Example
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An Example of HRIS Succession Planning Software
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Core vs. Flexible Workforce

• Legal contracts and employment status
• Psychological contracts and employee commitment
• When core vs. flexible workforce arrangements are
  most beneficial

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Fundamental Principles in the Employment
Relationship

• Legal contracts
• Formal documents
• Binding in court
• Explicit terms
• Psychological contracts
• Informal agreements
• Not binding
• Implicit terms

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Legal Concepts of Contracting and Employment
Relationships

• Four principles of legal contracts
• Mutual assent both parties agree
• Consideration exchange of goods or services
• Legal intention no illegal terms
• Contractual capacity both parties of sound mind

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The Formal Employment Relationship

• The law recognizes employment as a unique
  relationship
• Common law test
• Perform work under the direction of the employer
• Are paid for completion of specific tasks
• A few elements from the IRS test (not legally
  binding)
• Hiring, supervising, paying, or terminating other
  employees
• Continuing relationship between worker and
  employee
• Set hours of work, set mode of completing work
• Payment for hours worked rather than by the job
• Do not realize profit or loss through management
  of resources
• Services are not made available to the general
  public (i.e. the relationship is exclusive)

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Employees or independent contractors?

• Employee
• An agent who is under the principals control
  regarding the physical details of work
• Independent contractor
• An agent who exercises his/her own control
  regarding the physical details of work
• Additional costs associated with employees
• Benefits like health insurance, pensions, etc.
• More legal coverage for EEO law, minimum wages,
  etc.
• Dont have to pay contractors if work is
  inadequate
• Vicarious liability (i.e. employers liable for
  employee actions)

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Progressive standards for involuntary turnover

• Employment at will
• Employers can fire employees for no reason.
• Varies widely from state to state.
• Discharge with recompense
• Discharge for no reason, but employers required
  to provide severance or at least a warning.
• Many western European nations include mandatory
  severance payments to those who are discharged.
• Discharge only for cause
• Must prove employee negligence or economic
  hardship
• In the U.S., this is mostly for unions
• More common in western Europe
• Many western European nations have longer average
  durations of unemployment, which has been
  attributed to job protections

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Erosion of at will comes from two sources

• Labor law
• One initial bar on at will termination is the
  provision in the National Labor Relations Act
  that forbids firing of workers for union
  sentiments.
• Additionally, union contracts also set guidelines
  for when terminations are and are not permissible.

• Discrimination law
• Extending the NLRA protections, Title VII, ADEA,
  and ADA all require non-discrimination in terms,
  conditions, and privileges of employment, which
  encompasses terminations.
• Also incorporates whistleblower provisions for
  these acts.

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Specific reasons for erosion of the at will
standard

• Implied contract
• Cannot terminate after promising long term
  employment or the presence of a contract
• Often in employee handbooks or oral statements
  like, Youve got a long future ahead of you
  here.
• Covenant of good faith and fair dealing
• Cannot terminate employees to deprive
  benefits/commissions, or prevent pension vesting.
  
• Public policy
• Cannot fire employees for refusing to perform
  illegal acts, whistleblowing, or exercising
  rights provided by law or civic duty (e.g., jury
  duty).

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Legal Concepts of Contracting and Employment
Relationships

• Additional principles of psychological contracts
• Incompleteness due to bounded rationality all
  contracts cant spell out all the details so
  people fill them in individually
• Automatic processesmental models prevent people
  from recognizing when contract terms have changed

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Examples of Core vs. Flexible Workforce Decisions

• Tanglewood
• Core employees?
• Flexible employees?
• Hospital chain
• Core employees?
• Flexible employees?
• Think about places youve worked in these terms

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Affirmative Action

• Definitions
• Critical themes underlying the debate over
  affirmative action
• Methods for implementing affirmative action

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Affirmative action Redressing the past or
revisiting it?

• Individually
• For two minutes write down every single word that
  comes to mind when you think of affirmative
  action
• Define what you think an affirmative action plan
  is in a single sentence (be specific)
• Define what you think cannot be part of an
  affirmative action plan
• Small group
• Come up with the three most common free
  association words
• Develop a consensus on the facts of affirmative
  action
• Develop a consensus on what affirmative action
  isnt

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What Do We Know about Perceptions of AA?

• You will find many differences in perspectives
• Minorities are typically more in favor of AA
  programs
• Political ideology is also an important component
• Why might this be the case?
• Self-interest?
• A sense of entitlement?
• Expectations for fair treatment?

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Kravitz Klineberg Reactions to Two Versions of
Affirmative Action

• Major question do different racial/ethnic groups
  have different thought processes that explain
  differences in preference for AA
• Several factors that might influence why there
  are differences in preferences for AA
• Who stands to gain?
• Belief in prejudices
• Political orientation

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Kravitz Klineberg Reactions to Two Versions of
Affirmative Action

• Elements of individual preferences
• Structuralist (vs. individualist) explanations
  for inequality
• Democrat vs. Republican
• Belief in levels of discrimination
• Elements of procedure preferences
• Tiebreaks will be preferred to typical or
  undefined AA types
• Systems that emphasize elimination of past
  discrimination will be preferred

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Kravitz Klineberg Reactions to Two Versions of
Affirmative Action

• Sample and method
• One of the most diverse sets of participants in
  this research field
• Study from the 1998 Houston Area phone survey
• Attitudes assed as
• Evaluation of a companys typical affirmative
  action plan on a 1-7 scale
• Evaluation of a hiring policy where there are two
  candidates with exactly the same qualifications,
  and Blacks are underrepresented in the company

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Kravitz Klineberg Reactions to Two Versions of
Affirmative Action

• Perception that procedures give unfair advantage
  was a primary predictor of preferences
• Those who though there was discrimination against
  African Americans preferred both procedures
• Republicans and Whites disliked the typical
  procedure, but did not object to the tiebreak

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Kravitz Klineberg Reactions to Two Versions of
Affirmative Action

• Focus here is on the typical program
• Different predictors for each group.
• White preferences for typical were easiest to
  model (highest multiple R)
• Results were much weaker for the tiebreak
  procedure

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Kravitz Klineberg Reactions to Two Versions of
Affirmative Action

• Implications
• Belief that AA policies give unfair advantage was
  an important predictor
• Belief that AAP involve preferential treatment
  was also significant
• White reactions were much more related to their
  perceptions of degree of discrimination against
  African Americans
• Hispanics were less concerned about historical
  discrimination

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Why do perspectives differdoes discrimination
exist?

• People who strongly prefer the merit principle
  are more likely to be opposed to affirmative
  action
• However, when they believe discrimination exists,
  these meritocratic individuals like affirmative
  action
• Differences in beliefs about AA between
  racial/ethnic groups may be because of
  differences in beliefs about the existence of
  discrimination

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Affirmative action A question of stigmatization

• Ward Connerly
• Supported Californias Prop. 209
• "The use of race does not get us beyond race."
• Race has become a "social construct" where
  minorities are perceived as being on the outside
  trying to get in.
• Clarence Thomas
• Opposing vote on affirmative action at UMich
• it is an open question today whether their skin
  color played a part in their advancement.

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Research on stigmas and affirmative action

• Scenarios describing a hypothetical
  organizations affirmative action plan were
  provided
• When the company used completely equal
  opportunity, black candidates were described as
  more achievement oriented than whites
• When the company used a preference for
  minorities, black candidates were described as
  less achievement oriented than whites
• Also found in field research

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Summary of the Research Evidence

• Broad areas of agreement
• Most people think consideration of minority
  status is okay when qualifications are equal
• Most people oppose quotas and preferential
  treatment
• Minorities and non-minorities are just as opposed
  to AA if they think it gives unfair advantage
• An explanation for disagreement
• Minorities and non-minorities both are more
  favorably disposed to AA if they think that there
  is a lot of discrimination
• There is division with communities of minorities
  regarding the potential stigmatizing influence of
  AA

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Affirmative action Redressing the past or
revisiting it?

• So what is affirmative action?
• Intentional inclusion of women and minorities in
  the workplace based on a finding of their
  previous exclusion
• Continually keeping statistics on representation
  of various groups across several levels of the
  organization to see if there are problems
• Affirmative action plans are established noting
  the goals for inclusion of individuals and
  timelines
• Sample language
• (Employer's Name) will take Affirmative Action to
  ensure that all employment practices are free of
  such discrimination. Such employment practices
  include, but are not limited to, the following
  hiring, upgrading, demotion, transfer,
  recruitment or recruitment advertising,
  selection, layoff, disciplinary action,
  termination, rates of pay or other forms of
  compensation, and selection for training,
  including apprenticeship.

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What are the Effects of AA Policies?

• Surveys from a large number of employers suggest
  that affirmative action policies
• Increase firms willingness to hire women and
  underrepresented minorities
• Increase the number of women and minority
  applicants as well as the number of women and
  minorities who apply
• Yields applicants who are somewhat less qualified
• Increases employer expenditures on recruiting,
  screening, and training practices, which helps to
  offset the effects of lower applicant
  qualifications on subsequent job performance
• Source Holzer and Neumark, What Does Affirmative
  Action Do? Industrial and Labor Relations Review,
  2000.

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What are the Effects of AA Policies?

• Studies examining EEO-1 reports alongside
  managerial reports of firm policies show
• Efforts to moderate managerial bias through
  diversity training and diversity evaluations are
  least effective at increasing white women, black
  women, and black men in management.
• Efforts to attack social isolation through
  mentoring and networking show modest effects.
• Efforts to establish responsibility for diversity
  through affirmative action policies and standing
  diversity committees and officers lead to the
  broadest increases in managerial diversity.
• Source Kalev, Dobbin, Kelly Best Practices or
  Best Guesses Assessing the Efficacy of Corporate
  Affirmative Action and Diversity Policies.
  American Sociological Review, 2007.

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How Widespread is AA?

• Executive order 11246 mandated that all federal
  contractors must
• take affirmative action to ensure all individuals
  have equal opportunity for employment
• have a formal written plan for affirmative action
• What does it take to be a federal contractor?
• If you receive over 50,000 and over 50 employees
• So what kinds of companies are covered?
• In total, about 22 of the countrys workforce is
  covered by an AAP

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Affirmative action Redressing the past or
revisiting it?

• Affirmative action is sometimes required
• As a remedy for discriminatory behavior
• For anyone getting federal contract money (Ex.
  Order 11246)
• Social services agencies
• Some universities
• Construction companies

71
Recent court decisions The University of Michigan

• Points policy (undergraduate)
• 80 for academic GPA from tenth and eleventh
  grades
• 12 points for standardized test scores.
• Geography 10 points - Michigan resident
• Alumni 4 points - "Legacy" (parents,
  step-parents)
• Essay 3 points - Outstanding essay
• Leadership and service1 point State 3 points
  Regional 5 points National
• Miscellaneous 20 points - Socio-economic
  disadvantage 20 points - Underrepresented
  minority 5 points - Men in nursing 20 points -
  Scholarship athlete
• Totality of the applicant policy (law school)

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Within-Group Norming One Proposed Solution
Scenario 20 applicants for a warehouse
job Top-down hiring Pick the 10 strongest (here,
7 men and 3 women) Within group norming Hire the
5 strongest women and the 5 strongest men
Strength
Within group norming
Top down hiring
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Males
Females
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Affirmative action Policies and Limitations

• What can be done?
• Recruiting
• Advertisement in publications targeted to women
  or minorities
• Recruiting at historically black universities
• Encouraging women and minorities to apply
• Staffing
• Preferring certain groups if qualifications are
  equivalent
• Providing additional training

• What cannot be done?
• Bakke vs. U of California
• No set aside programs
• Similar decision2002 Boston firefighters
• CRA 1991
• No within-group norms
• No quotas
• UMich undergraduate
• Cannot give points