DEVELOPING AN H R PLAN
1 Forecasting Hiring Needs
The daily demands and hectic lifestyle of business owners and
managers often has an unfortunate by-product: human resource
planning gets placed on the bottom of the list of things to get done. Failure to anticipate potential changes in your workforce often leads to last minute or “crisis mode” decision-making. Needless to say, quick fixes are no solution to long-term issues. Taking the time to forecast future hiring needs today will save you time and money in the long-run. HR planning must be tied to the overall business plan. You can start the process by assessing the current conditions and future goals of your company. Perform these assessments regularly. Consider some of the following questions:
a) What are the company’s goals and objectives?
b) Do these goals call for expansion into new markets?
c) Are new product lines planned?
d) Are changes in technology necessary to stay competitive?
e) Will new skills and/or training be required to meet the
company’s goals and objectives?
The following three-step method is designed to help you
determine whether or not you are ready to hire:
1. Identify Business Strategy and Needs
2. Conduct a Job Analysis and Write a Job Description
3. Determine the Feasibility of Hiring
Step 1: Identify Business Strategy and Needs
Identify Pressures and Opportunities
Consider the following internal and external opportunities and
record how they may impact your business:
Competition: Often businesses will feel pressure to
expand and hire more workers in order to
remain competitive in a particular market.
Technology: Technological advancements may
increase the demand for employees in certain
industries or professions.
Increased customer demand: An increased demand
for products or services may require more
resources to help produce or deliver services.
Economics: Growth of the economy or lower interest rates
cause increased spending, and often increased
business opportunities. Changes in the labour market
impact your ability to find and keep employees.
Workforce changes : These include resignations,
terminations, leave of absences, death, change in
employment status, and retirement.
Clarify your business strategy and direction
Describe what your business does in terms of key functions and
tasks and then describe the changes that will come into play and the direction that the business will likely take in the next few years. 3 If you expect to increase sales by 50% over the next five years, consider what impact that will have on your hiring needs. If you are a start-upcompany, consider the different sorts of employees you will need at each stage of development.
The following questions will help you determine how many
people are required, and with what skills, to fulfill your business
needs.
a) What new positions are opening up?
b) What special skills (e.g. computer applications) will
be needed?
c) What work experience (e.g. in a particular area) will
be required?
d) When will new staff be needed?
e) When should hiring be scheduled to ensure a
smooth transition?
f) Does the hiring plan also provide for employee
turnover and attrition?
Step 2: Conduct a Job Analysis
If you decide that you need additional employees to fulfill your
business strategy, it is recommended that you conduct a four-step job analysis:
1. Review your current workforce
Describe the employees you now have in terms of their
knowledge, skills, and experience and describe how they function
together to get work done. Map these onto your strategic plan and
describe the skills and knowledge that you will need for the
anticipated new work or function. At the same time, consider how
the current work could be reorganized to make the best use of current and future employees.
2. Identify any skills and knowledge gaps
Note any gaps between the skills and abilities your current
employees have and the skills and abilities that your workforce needs to meet your business objectives in the future. To ensure that you have considered the full scope of the new position from all different perspectives, ask your current employees what they think this position would involve.
3. Write a Job Description
After completing steps one and two, you can begin to draft a job
description. Although many small businesses do not take the time to draft job descriptions, it is a worthwhile exercise. See Module 2:
Hiring Strategies for a detailed explanation on how to write a job
description.
4. Set an Appropriate Salary
Start by adopting a general salary range to help you determine
what you will need to budget – and whether potential candidates are within your budget. You may want to complete a job evaluation, whereby you rank jobs and their corresponding salaries. Weigh the importance of critical skills and knowledge for each position, compare positions, and rank the new position on the pay scale accordingly.
If you already employ an administrative assistant and plan to hire
another, you will probably pay him/her approximately the same rate, depending on experience. If, on the other hand, you decide to create a new position and recruit an employee with a unique skill set, you will need to do a comparison between the new and existing positions.
a) Is the new position more junior/senior?
b) b) Will the new position require more specialized skills
and knowledge?
c) Will the position have more complex tasks and
different working relationships?
d) Will the new position have more or less
responsibility?
The external market is another useful resource for determining
salary. Look at similar positions in other organizations by checking job postings on the Internet, talking to others in the industry, reading career ads in the newspaper or purchasing salary surveys.
MANAGEMENT MAXIMS
Tips for Conducting a Job Analysis
Ask employees about each position within the
business and how they are (or are not) connected
Ask employees if they think hiring a new employee
or creating a new position would be a good idea.
Observe employees at work and earnestly ask for
their ideas about better ways to operate; be
prepared to put good suggestions into action.
Talk to customers about which employees are
easiest to deal with or provide the best service
Find out and understand why past employees
have left – be truthful with yourself.
Talk to customers about their needs
Understand the needs of people the new
employee will be working with
Differentiate between “nice to have” and “must
have” skills and experiences.
Look at employees who are performing at a
superior level and try to assess the skills and
behaviours that distinguish them; look for
evidence of these behaviours during the interview.
Look at similar positions in other companies and
the requirements they have.
Read books or articles about companies that may
have found themselves in similar situations
Step 3: Determine the Feasibility of Hiring
Before you hire, you must understand (1) the costs of hiring, (2)
the benefits of hiring, and (3) the risks of not hiring.
(1) When calculating the full cost of hiring a new employee you must consider:
Labour costs, such as salary and benefits
Recruiting costs, which may include advertising in
addition to time spent on recruiting activities,
orientation and training.
(2) Weigh the costs of hiring against the value of having an employee contributing to the business. Potential benefits include
Improved morale of other employees, if a departing
employee was a problem or if the area has been
understaffed for some time.
Improved morale of existing staff if the growth
means new business and opportunities.
Improved productivity if a departing employee was
not productive or if employees believed that you
have made the decision to hire as a result of their
input
Increased revenues once a new employee is
performing at an acceptable level.
A new employee who is more qualified than current
employees can help train the existing employees.
Increased customer satisfaction and potentially
saved business
(3) Some of the potential risks associated with choosing not to hire despite the need for additional staff include
Loss of revenues because of an inability to keep up
with demand
Loss of employees because they are unwilling to
continue being overworked or to do the work of a
departed employee
No new ideas or knowledge brought in through
new employees
If you decide that hiring a new employee is feasible, you
are ready to begin the recruitment process .If not, you might
need to revisit your strategic plan or business objectives.
Use the checklist on the following page as you carry out the
human resource planning process.
Human Resource Planning Checklist
Step 1: Identify Business Strategy and Needs
Identify pressures and opportunities
Clarify your business strategy and direction
Identify aspects of the business that need help
Step 2: Conduct a Job Analysis and Write a Job Description
Review your current workforce
Identify any skills and knowledge gaps
Write a job description
Set an appropriate salary
Step 3: Determine the Feasibility of Hiring
Understand the costs of hiring
Understand the benefits of hiring
Understand the risks of not hiring
Remember: There should be a strong relationship
between how many additional employees you hire and
how much of an increase in sales, production, etc. that
you can expect.
The brief scenarios that follow will walk you through different
steps of the human resource planning process. In HR Scenario , the owner executes step one of the process. Identifying
her business strategy and needs helped her determine her hiring
needs.
In HR Scenario, the manager executes steps one through three in order to determine how she should respond to an employee’s resignation – and the possibility of switching to an automated manufacturing process.
