Human Resource Planning
Human Resource Planning and Management. The firm’s position in the particular industry that it operates determines whether the profitability of the firm can be defined to be above or below the average profitability in the entire industry. Making the profit level of any particular company be above the industry average is a long-term goal of any particular company regardless of the industry in which it operates. To gain long-term above-average profitability level, two types of competitive advantages can help the company rise to such levels.
The first one is either cost management or differentiation. When any firm can keep the cost as low as possible, it will be in a position to charge less and have a broad market base, a factor which is important in improving the long-term profitability levels. The course that is taken by any particular company depends on the leadership focus on either of the two kinds of competitive advantage. The two kinds of competitive advantages lead to four generic strategies that are aimed at ensuring the profitability of the organization rises above average in the long-term. Such includes the broad cost leadership, focused cost leadership, broad differentiation, and focused differentiation. The four Porter’s generic business strategies regarding the business focus affect the human resource planning management of any particular organization in some factors, including in the selection process, screening, training, and compensation among many other factors affecting human resource planning in any specific organization.
Leadership of any organization can decide to focus on any of the two factors of competitiveness depending on the environment in which they are operating as well as their goals. As noted by Pfeffer (2007), any of the generic competitive generic styles that are adopted in any particular organization have and influence on the staffing models adopted by the organization. A choice of one particular style will best fit one staff modeling, which may not be suitable for a different strategy. For example, a choice of one style can result in what Pfeffer (2007) describes as “…disengagement and diminished productivity is the pervasive and growing conflict between work and family…” (117). The style adopted, therefore, influences all the stages of the human resource planning from the selection to retention. The reason is that each style of leadership requires a different pool of employees regarding their qualifications, motivations as well as focus as described by Heneman, Judge, and Kammeyer-Mueller (2015).
Humphrey, Morgeson, and Mannor (2009) describe an organization to comprise of physical, financial and human capital. The three compositions are affected by the leadership choices and focus that are made by any particular organization. Mainly, the generic competitive strategy adopted by different organizations depend and what can be described as “workforce quality” as well as the “workforce quantity” (Heneman, Judge, and Kammeyer-Mueller, 2015). The staffing strategy of an organization focuses on HR planning, recruitment, and selection, employment as well as retention of the employees. An organization that mainly focuses on the reduction of the cost will first of all look at the staffing strategy that will cost the organization the least amount of resources. Therefore, apart from just focusing on the operational cost of the organization, broad cost leadership strategy will include in cost of hiring and retention in the costs of the organization. Given that the staff pool of the organization has a major impact on the total cost of the organization, a broad cost leadership will pay attention to the total cost that goes to its human resource department.
Staffing strategies and staffing models of an organization have impacts on market share, environmental sustainability, deployment, customers’ satisfaction among many other determinants of profitability. Specifically, in the development of the organization’s staffing strategy and models, the leadership pays attention to the effects of these factors on the two kinds of competitiveness which are cost as well as differentiation (Terpstra and Rozell, 1997). For example, broad differentiation business strategy won’t pay much attention to compensation of the employees. This strategy will mainly focus on the quality that the employees bring to the organization without paying much attention to their pay demands. However, the broad cost leadership strategy will focus more on the pay demands of the employees and therefore go for the cheapest means through which they can achieve their objectives. The similarity between the two strategies is that the focus on a wide area as opposed to the focus strategy.
The focused cost leadership and the focused differentiation leadership have some unique characteristics that affect the human resource planning strategies that are adopted by an organization. Rather than focusing on the entire industry, this two generic business strategies pays attention to specific segments of the industry and then pay attention to either cost or differentiation in these particular segments. The main idea as noted by Humphrey, Morgeson, and Mannor (2009) is therefore that these two styles of leadership focus on a narrow competitive scope as compared to the “broad-based” leadership styles. Whether the leadership style in the particular segment focuses on cost or differentiation affects the staffing strategies and models just the same way the broad-based leadership affects this factors, but in a narrow scope for this case.
The cost focus strategy seeks to gains cost advantage in a particular segment of the industry. Therefore, in its staffing strategy, the management and the human resource department will look at the cheapest means to compose its employee’s pool. The screening and the selection process will mainly focus on employees that can help the organization reach its cost limits. Also, the training process of the employees will mainly focus on methods of reducing the cost of operations in the organization. Under this strategy, the organization will be willing to retain a small number of employees that will help in the reduction of the total cost that is incurred by the organization.
On the other hand, differentiation focus will seek to achieve differentiation in a particular segment of the industry. The differentiation focus, therefore, tries to make the products of the company look different from those of the competitors and therefore gain market advantage. Differentiation is an important factor in profitability, and therefore any particular organization must pay attention to it. According to Cole et al. (2004), the level at which the organization achieves product differentiation depends on the pool of employees that they have. Therefore, just as it is with the cost focus, the differentiation focus will also influence the staffing strategies and staffing models that are adopted by an organization. The organization will pay much attention to the “quality” of the employees that will help it in achieving the differentiation target rather cost. Since product differentiation can help an organization keep the prices higher but maintain the customers base, the organization using this strategy will therefore not pay much attention to the cost of establishing this strategy.
Human Resource Planning Strategy
The strategy that any business chooses to adopt has far-reaching effects the entire planning process of the organization. More specifically, the cost focus or differentiation focus of any organization will determine the steps and the processes that will be adopted in the human resource planning process. Human resources planning is defined by Clardy (2008) as the process of adjusting the flow of workers in any organization, both in and out of the firm. The goals of the organization will specifically affect the process of human resource planning as well as the aspects that the planning process pays attention to. The role of the human resources planning for this case will ensure that the organization has a workers pool that will help it achieve the kind of competitive advantage that it has chosen to focus on. The planning process will pay attention to the skills that it requires the employees to have, both today and in the future to achieve the competitive advantage that it requires.
The role of human resource planning is ensuring that the organization has the right number of employees as well as employees that have the right skills to drive the agenda of the organization. As defined by Heneman, Judge, and Kammeyer-Mueller (2015), human resource planning aims at ensuring that the right number of employees are at the right place, at the right time and capable of effectively and efficiently delivering the needs of the organization. It ensures that the organization achieves its objectives through having the right composition of employees. Therefore, human resources planning is essential for any particular organization. The process is greatly affected by the strategy that the organization decides to pursue. This includes all the processes of human resource planning ranging from the screening and selection to the retention stage. Whether an organization chooses to focus on cost or differentiation will affect the whole process of human resource planning, staffing planning, and diversity planning.
When an organization decides to pursue the low-cost strategy, the human resource planning will mainly focus or ensure the organization has the right pool of employees that will help the organization keep its costs as low as possible. Under the low-cost strategy, the firm is trying to take advantage of the prices and therefore have to focus on reducing the prices since this will help them in keeping the prices as low as possible. The main objective of this case is to earn a larger market share through specializing in reducing the prices of the goods and services that the organization offers. This is only possible is the human resource planning will be effective in ensuring that the organization a pool of workers that first understands the goal of the organization and secondly have the right skills to pursue this goal. For the cases of the organizations that focus on differentiation, the human resource planning process must understand that the employees in the organization are a key part of achieving the competitive advantage and differentiation that requires. Therefore, the human resources planning for the case of a firm that chooses to specialize in differentiation will focus on accessing the organization with the right pool of employees that will make the products and the services of the organization look different as compared to other competitors in the market.
Succession management is important as the workers in the organization need to have certain competencies and skills that will help an organization in achieving its objectives. The human resource planning focuses on the succession management by ensuring that the organization gets the right pull of workers depending on whether the organization focuses on lowing the cost or making its products and services look different when compared to the services that are offered by their competitors. The human resources management for this particular case focuses on training and job security as well as employees’ loyalty, depending on their focus (Clardy, 2008).
The staff planning process of any particular organization is also affected by the strategy that is adopted by the organization. What the organization decides to pay attention to will affect all stages of the planning process. Heneman, Judge, and Kammeyer-Mueller (2015) define staff planning as the process of ensuring that the organization has the right skills at its disposal. Just as human resources planning, staff planning seeks to ensure that the organization has the right number of employees and at the right time and employees possess the required skills to fulfill the objectives of the organization. The staff planning takes into consideration both the internal and external factors and therefore is important in ensuring that the organization achieves its objectives. The recruitment and selection process in staffing and human resources planning deals with discovering the manpower requirement of the organization depending on what the organization wants to achieve. For this case, the selection and recruitment stage in the human resources and staffing process will pay much focus on cost for the low-cost strategy and differentiation abilities focus on the differentiation focus. The staffing planning will focus on attracting a large pool of workers so that it can have the liberty to select the best from the pool.
As explained by MacKenzie, Klaas, and McClendon (2012), the organizations that focus on low cost will focus less on the selection and recruitment process. The organization will try as much as possible to keep the recruitment budget as low as possible. The recruitment processes will mainly use the mouth to mouth and online application to try and reduce the cost of recruitment and selection. However, when the organization decides to focus on differentiation as its tool of differentiation, the recruitment and the selection process will pay attention to different factors. The process will focus on employees that have a large pool of skills and competencies, a factor that is essential in ensuring that the products and services of the organization are slightly different from those of the competitors.
Diversity planning is also important in an organization. The diversity planning focuses on ensuring that the organization has the right mix employees. The process is vital in ensuring that the organization achieves its current and future objectives. Diversity planning will pay attention to the composition of the workforces on numerous factors including the skills mix, sustainability as well as flexibility of the workforce. The diversity palling process is directly affected by the focus of the organization. Whether the firm decides to either focus on cost or differentiation will affect the mix of the employees that the organization would like to have (Highhouse, 1997). For example, for an organization that chooses to focus on differentiation, it would wish to have a more diversified workforce as compared to an organization that pays attention to cost. The low-cost strategy will focus on a mix that that lowers the cost while the differentiation strategy will focus on developing a diverse workforce that will ensure that the organization achieves either perceived or real differentiation.
Under Porter’s generic business strategies, the firm chooses either to focus on cost or focus on differentiation. Also, the firm chooses whether to focus on the entire market or a specific section of the market. The focus of the organization has major influences on the human resource planning management and staffing policies that are adopted by the organization. More specifically, whether an organization decides to focus on a particular segment of the market or the entire market affects that assessment processes as well as the reliability and validity of the assessment process.
Broad differentiation leadership target a large market area and aims at gaining market advantage through differentiation across the entire industry. The strategy concentrates on one or more criteria in the market, and the strategy is always related to creating a premium price in the market. The differentiation strategy is about creating a premium price and then convincing the customers on why they should prefer such products as compared to the products of the other producers, through their prices may be low. This focus will affect the selections process as well as the reliability and validity of the selection assessment processes (Heneman, Judge, and Kammeyer-Mueller, 2015). The selection assessment process for this case will focus on creating differentiation in a large area, and therefore the selection process will mainly focus on skills and competencies that will enable the organization achieves this objective. The differentiation criteria that can be used include superior products, branding, wide distribution channels as well as constant promotion, specifically focusing on a larger area for the case of broad differentiation leadership.
Under the differentiation focus, the organization divides the market into segments and decides to focus on one segment of the market. Therefore, for this case, the organization would both pick a small area in the market or a single product and then decide to focus on that area or product. The choice of the company will influence the selection assessment methods that will be applied by the firm. The organization will focus on the segment since they have seen an opportunity in the provision of goods and services in such an area and believes focusing on differentiation on the region will help the organization achieve competitive advantage. The difference between the broad differentiation and focus differentiation leadership is the target market, with the broad differentiation focusing on a large market while the focus differentiation pays attention to a segment of the market. Such specialization will have an impact on the employees’ assessments methods in the selection process (Clardy, 2008). The methods are mainly affected by what the methods decide to concentrate on. The concentration of the particular selection assessment methods will dictate how valid or reliable the methods used are.
As noted by Highhouse (1997), the organization is in fierce wars of getting the most talented workers from the labor market. They invest large sums of money with the aim of getting the best employees from the available pool of employees in the labor market. The strategies used include job advertisements and recruiting strategies. This is due to managers understanding that the pool of employees is essential to achieving the objectives of the organization. On this note, depending on the strategy of the organization, the organization will select a selection assessment that they feel is best for identifying employees that best fit what they are looking for. Numerous selection methods can be used by an organization depending on whether the organization has decided to focus on a larger market or specialize in a single segment of the industry. For organizations that mainly focus on differentiation, formal assessment methods are used. This is because the firms are keen on getting the right pool of employees that will push the agenda of the firm forward.
The specialization that the firm chooses to focus on regarding differentiation affects the job analysis in the selection process. There are procedures as noted by MacKenzie, Klaas, and McClendon (2012) that are used in the development of the selection criteria. The procedures are affected by the size of the market that the organization decides to focus on. The competencies and skill that each strategy looks for are different, a factor that affects the selection assessment procedures. One of the most used assessment methods is the Cognitive Ability Tests. The methods mainly focus on measuring the mental ability of the prospective employees.
Other criteria measured under the test includes the reasoning ability, reading comprehension as well as mathematical abilities. The cognitive selection assessment criteria have been used as a predictor of the job performance of the employees. For the case of this test, the broad differentiation leadership will focus on employees with higher mental abilities that can help the organization achieve competitiveness through differentiation in a larger segment of the market. On the other hand, as observed by Heneman, Judge, and Kammeyer-Mueller (2015), the focus differentiation leadership style will focus on abilities that will help the organization focus on a particular segment of the market. Whether the organization focuses on the larger area or a segment of the market will also affect the applicability of this selection assessment method. The broad differentiation strategy mainly relies on this selection criteria since it focuses on the ability of the employees to deliver the competitive criteria of the organization. The reasoning, mathematical and verbal abilities of the employee are essential for this strategy.
Other selection test Personality Tests, Biographical Data test, Integrity Tests, Structured Interviews, and Job Knowledge Tests. The job knowledge test is another selection test that is influenced by the strategy that is used by any particular firm. This selection assessment method measures the knowledge area that is required for a person to perform a certain job effectively. For this case, the broad differentiation technique will be paying attention to employees that can deliver differentiated products focusing on a large area.
For the case of focus selection assessment methods, it will pay much focus on the ability of the employees to focus on a given section of the market. The reliability and validity of this selection criteria are also affected by the strategy that the organization seeks to pursue. This criterion is mainly used by firms that seek to focus on a given region (Kulik, Roberson, and Perry, 2007). The firms under this test look for the best employees that know the particular segment. Therefore, this method is more valid and reliable under the focus differentiation leadership as opposed to broad differentiation leadership. When used under the broad differentiation leadership, the test focuses on employees who know a bigger segment of the market, which the firms seek to sell the differentiated products and services. Therefore, as shown by the analysis of the cognitive selection assessment and the job knowledge test, the focus of the organization regarding differentiation significantly influences the selection assessment methods as well as the reliability and validity of the methods.
Clardy, A. (2008). The strategic role of human resource development in managing core competencies. Human Resource Planning Development International, 11(2), 183-197.
Cole, M., Field, H., Giles, W., & Harris, S. (2004). Job type and recruiters’ inferences of applicant personality drawn from resume biodata: Their relationships with hiring recommendations. International Journal of Selection and Assessment, 12(4), 363-367.
Heneman III, H., Judge, T., & Kammeyer-Mueller, J. (2015). Staffing Organizations (8th Edition). Middleton, WI: Mendota House/McGraw-Hill.
Highhouse, S. (1997). Understanding and improving job-finalist choice: The relevance of behavioral decision research. Human Resource Planning Management Review, 7(4), 449-470.
Humphrey, S., Morgeson, F., & Mannor, M. (2009). Developing a theory of the strategic core of teams: A role composition model of team performance. Journal of Applied Psychology, 94(1), 48-61.
Kulik, C., Roberson, L., & Perry, E. (2007). The multiple-category problem: Category activation and inhibition in the hiring process. Academy of Management Review, 32(2), 529-548.
MacKenzie, Jr., W., Klaas, B., & McClendon, J. (2012). Information use in counter-offer decisions: An examination of factors that influence management counter-offer decisions. Journal of Labor Research, 33, 370-387.
Pfeffer, J. (2007). Human Resource Planning from an organizational behavior perspective: Some paradoxes explained. Journal of Economic Perspectives, 21(4), 115-134.
Terpstra, D., & Rozell, E. (1997). Why some potentially effective staffing practices are seldom used. Public Personnel Management, 26(4), 483-495.
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