CIMA E1 Official Learning System - Enterprise Operations Aug 2009

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Financial ﬂ exibility .The growth of individualised and variable systems of reward has

been noticeable and performance related pay schemes are now widely in use. Fees for

service payments are used for increasing numbers of self-employed sub-contractors.

5.7 HR planning

There are a number of compelling reasons why organisations should plan their human

resourcing, including:

●

a need to establish cost and develop budgeting, especially in new projects to control costs

and numbers employed

●

to rationally plan recruitment

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to provide a smoother means of coping with redeployment, redundancies and

retirements

●

to provide structured education, development and training needed by a future workforce

●

to allow a degree of succession planning

●

to adapt more quickly to ever changing circumstances.

Before beginning a human resource planning exercise a considerable amount of data,

both internal and external, must be collected and analysed (Table 5.18).

Forecasts of people requirement are based on predictions. Most organisations estimate

the demand in the light of:

●

future output/volumes/sales/product projections

●

future methods of production and IT usage

●

likely external inﬂ uences such as competitor action, trade unions, government and other

pressures

●

changes in corporate strategy

●

organisation of work

Table 5.18 Human resource planning: some data requirement

Internal

Employee analysis: numbers, gender, qualiﬁ cation, trade and job, skills, experience, etc.

Categories of staff

Staff suitable for promotion or redeployment

Overtime levels and trends

Labour turnover analysis and reasons

Absence level by category and trends

Productivity ratios and trends

Comparison with national/regional/industry trends

External

Regional employment trends and unemployment levels

Demographic projections

Skill levels and shortages

Education levels and proposals

Transport and planning proposals

Labour mobility

Migration and immigration trends

Growth of competing ﬁ rms in the area

Source: Author

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productivity trends

●

employee (industrial) relations atmosphere.

An analysis of labour supply needs to commence with a positional assessment of the

organisation’s current employees. Staff retention, turnover, wastages, leaves of absence

raises a number of issues such as:

●

historic rates and those expected in similar businesses

●

the rate at which staff are leaving and their reasons for leaving

●

numbers retiring and likely future projections based on age proﬁ les.

If a signiﬁ cant cause of turnover is due to a lack of promotion opportunities, inade-

quate training, low morale or poor management, then these problems need to be addressed

within the strategy. To this end the use of ‘exit interviews’ conducted by those independ-

ent of line management are helpful in identifying problems. Consideration should also be

given to the organisation’s ability to continue to attract suitable recruits into its various

operations. Again if there are difﬁ culties these should be addressed through the HR plan.

Having considered the existing supply of labour, an organisation will need to project a view

of what the workforce will need to be like in the future in order to fulﬁ l its strategic plans.

The difference between the two projections of supply and demand can be made (‘gap analy-

sis’) and plans developed accordingly. This might involve, for example, retraining, part time

workers, use of consultants overtime, computerisation recruitment, redundancy policy, etc.

Since employees are probably the most unpredictable organisational resource, the best

plans will be those that allow the greatest ﬂ exibility. Most HR plans are developed on a

rolling 3-year basis, which means that forecasts for next year and the succeeding years in

the cycle are updated every year in the light of this year’s experience. Detailed plans for

securing sufﬁ cient and suitable employees for current needs are made for a 1-year period,

in line with current budgets. Less detailed plans are made for the 3-year period, prepared

in line with the organisation’s corporate strategy.

Mullins (2007) captures all elements involved in planning (Figure 5.4) and articulates the

HR plan and consequent action programmes as a means of reconciling supply and demand.

HR planning links to other business plans by implementing the resource element so

that necessary numbers and quality of staff are available at the right time to implement the

business’s other plans.

Exercise 5.13

Manchester United is fast becoming more a global brand than a football club. Its ﬁ nancial

performance reﬂ ects fast growth and proﬁ tability. Their impressive ﬁ nancial credentials

made them until recently the world’s largest club (generating well over £100 million rev-

enue per annum ‘before a ball is kicked’). Players enjoy huge salaries and the club is better

placed than most to pay the top dollar in terms of transfer fees and wage demands. This

means they could recruit the best footballers from anywhere in the world. Yet the club

continues to spend heavily on their youth policy. Why should this be the case?

Solution

It partially insulates the club from the transfer market and also importantly brings loy-

alty and commitment to the playing staff. The ﬁ rst team itself represents a combination of

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MANAGING HUMAN CAPITAL

expensive buys and players who have progressed through thanks to the club’s youth pol-

icy. The average age of the talented professional playing staff is a youthful 25 years old.

The youngsters continue to beneﬁ t from the best training facilities money can buy at the

purpose built multi-million pound Trafford Training Centre, Carrington set in 70 acres

(Perry, 2005).

HR planning is a corporate activity across all divisional and departmental boundaries

of an organisation link to behavioural aspects and implementation. It is not the preserve

of any one group of specialist managers (e.g. Personnel), even though such specialists may

well play a key co-coordinating role in the implementation and review.

Exercise 5.14

How can an organisation plan rationally in an unstable environment?

Estimation of

changes by

target date

1 Analysis of

existing resources

Supply

forecast

plan

Demand

forecast

Personnel management action programme

Recruitment

and selection

Training

Reconciliation of supply and demand

Management

development

Target date

Transfers and

redeployment

Anticipated

redundancies

Corporate

objectives

Design of

organisation

structure

Figure 5.4 Main stages in human resources planning

Source: Mullins (2005) © Laurie J Mullins 2002. Reprinted with permission of Pearson.

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Solution

●

by staying ﬂ exible

●

by taking greater account of external factors

●

by more sophisticated monitoring and control mechanisms

●

by planning in shorter time frames.

Problems in achieving plans might to a degree be predictable and in the past have also tra-

ditionally centred on:

●

retention especially when employees are well trained or have specialist skills

●

slow promotion leading to staff turnover

●

difﬁ culties associated with putting succession planning into practice

●

unexpected vacancies arising in very senior positions or in vital skills areas.

5.8 Summary

Human Resourcing is a detailed and complex subject worthy of study in some depth.

Inevitably there is a limitation in coverage within the conﬁ nes of a single chapter in a

Learning System, however, many aspects have been considered here. An understanding of

HRM has been established and the determinants, content and implementation issues of

an HR plan has been discussed in the context of motivation theory. Speciﬁ cally manage-

rial and contextual considerations relating to recruitment selection channels, induction,

appraisals, development and training in particular have been highlighted.

References and further reading

Anon (2005) Brainfood: Crash course in . . . developing future leaders, Management Today,

September 1, p. 24 Haymarket Business Publications Ltd.

Appleyard, B. (2007) Want a job? Let’s play mind games. Sunday Times, 22 July, p. 9.

Armstrong, M. (2006) A Handbook of Personnel Management Practice (10th edn). London:

Kogan Page.

Armstrong, M. and Mulis, H. (2007) Reward Management: A Handbook of remuneration

strategy and practice. London: Kogan Page.

Atkinson, J. (1984) Manpower strategies for ﬂ exible organisations. Personnel Management,

August.

Beaumont, P. B. (1993) Human Resource Management: Key Concepts and Skills. London:

Sage.

Bratton, J. and Gold, J. (2007) Human Resource Management, Theory and Practice (4th

edn). Basingstoke: Macmillan Business.

Brockett, J. (2007) Kent council reviews reward system. People Management, 26 July, Vol.

13, No. 15, p. 16.

Carrington, L. (2004) Just desserts. People Management, 29 January, Vol. 10, No. 2, p. 38.

CIMA (2006) Code of Ethics for Professional Accountants. www.cimaglobal.co.uk

CIPD (2008) The Psychological Contract: Factsheet. www.cipd.co.uk

Cohen, D. (2006) Professional standards: CIMA’s new code of ethics, which is now in

force, is based on principles rather than rules. Financial Management, February.

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Derrick, S. (2005) Incentives: The rewards of work. Marketing, 13 July, p. 37, Haymarket

Business Publications Ltd.

Devanna, M. A., Fombrun, C. J. and Tichy, N. M. (1984) A framework for strategic

human resource management, in Fombrun, C. J. et al. (eds), Strategic Human Resource

Management, Chichester: John Wiley.

Gratton, L. (2004) More than money. People Management, 29 January, Vol. 10, No. 2,

p. 23.

Guest, D. (1997) Human resource management and performance: a review and research

agenda. The International Journal of Human Resource Management, Vol. 8, No. 3,

pp. 263–276.

Guest, D. E. and Conway, N. (2002), Communicating the psychological contract: an

employer perspective, Human Resource Management Journal, Vol. 12 No.2, pp.22–38.

Guest, D. E. and Conway, N. (2002) Pressure at Work and the Psychological Contract.

London: CIPD.

Handy, C. (1999) Inside Organisations: 21 Ideas for Managers (2nd edn). Harmondsworth:

Penguin.

Kirkpatrick, D. L. (1998) Evaluating Training Programs: The Four Levels. New York:

Pfeiffer Wiley.

Kolb, D. A. (1984) Experiential Learning: Experience as the Source of Learning and

Development. London; Englewood Cliffs [NJ]: Prentice-Hall.

Mullins, L. J. (2007) Management and Organisational Behaviour (8th edn). Harlow:

Financial Times Prentice Hall.

Organ, L. (1988) OCB: The Good Soldier Syndrome. Lexington, MA: Lexington.

Otley, D. T. (1987) Accounting Control and Organisational Behaviour. London: Heinemann

in association with CIMA.

Overell, S. (2003) Employee appraisals. Financial Times, 6 March, p. 13.

Pedler, M., Burgoyne, J. and Boydell, T. (2006) A Manager’s Guide to Self-Development

(5th edn). London: McGraw-Hill.

Perry, B. (2005) Manchester United, Brand of Hope and Glory, in Johnson, G. and

Scholes, K. (eds), Exploring Corporate Strategy – Text and Cases (7th edn). Pearson

Education Limited.

Prickett, R. (2006) Pliable and viable. Financial Management, April, Vol. 19, No. 4.

Prithcard, S. (2003) DIY programme suits DIY staff. The Financial Times, 2 April, p. 3.

www.jobs.ac.uk

Schein, E. H. (2004) Organisational Culture and Leadership (3rd edn). San Francisco:

Jossey-Bass.

Sherman, A. P. (2005) Central perks: women use unique beneﬁ ts to show employee appre-

ciation. Entrepreneur, September, Vol. 33, No. 9(1), p. 34.

Also

The Chartered Institute of Personnel and Development (2008) www.cipd.co.uk

237

Question 1

1.1 Attempts to add new, stimulating dimensions to a person’s job is called:

(A) multi-skilling

(B) job enrichment

(D) career scoping. (2 marks)

1.2 ‘Spot rates’ normally refer to a speciﬁ c pay rate determined by reference to:

(A) the market place

(B) incremental progression

(D) experience and qualiﬁ cations of a newly recruited person. (2 marks)

1.3 Roger’s seven-point plan refers to:

(A) quality targets for world class operations

(B) implementation guidelines for introducing new hardware

(D) lean production processes. (2 marks)

1.4 Identify the potential solutions that an organisation in its HR planning might use to

match the future demand for and projected ‘supply’ of human resources. (50 word

limit) (4 marks)

1.5 Identify the advantages and disadvantages of a policy of succession planning for a large

organisation. (50 word limit) (4 marks)

1.6 Identify the advantages and disadvantages of a decentralised Human Resource provision

for an organisation that has many business units and sites. (50 word limit) (4 marks)

1.7 Describe the important documents and information an interviewer should have access

to when conducting a job selection interview. (50 word limit) (4 marks)

Question 2

2.1 Charles Handy’s vision of a ‘shamrock’ organisation suggests a workforce that comprises

of three different types of worker, namely:

(A) strategic, operational and support

(B) qualiﬁ ed, trainee and unskilled

Revision Questions

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238

(D) core, contractual fringe and ﬂ exible labour.

2.2 The set of activities designed to attract a suitable pool of candidates to an organisation is

called:

(A) job analysis

(B) recruitment

(D) induction.

2.3 Three hundred and sixty (360) degree feedback is normally associated with:

(A) exit interviews

(B) quality circle activity

(D) reﬂ ection as part of a cycle of learning.

Question 3

A year ago, the owner-manager of a taxi service also moved into a new business area of

ﬁ tting tyres. This came about as a result of the experience of using unbranded tyres on

the ﬂ eet of ten taxis. Based on several years of use, the owner-manager found that the

unbranded tyres lasted almost as long as the branded tyres, but had the advantage of

being obtainable at half the price. The set-up costs of the tyre-ﬁ tting business were rela-

tively modest and the owner-manager initially ﬁ tted the tyres himself. Demand picked up

quickly, however, and he was forced to employ an experienced ﬁ tter. A few months later,

demand accelerated again and he has just advertised for another ﬁ tter but, unfortunately,

without success.

The tyre-ﬁ tting business has produced additional challenges and the owner-manager is

ﬁ nding it increasingly difﬁ cult to manage both the taxi service and the new business where

he seems to be spending more and more of his time. He already employs one receptionist/

taxi controller, but has realised that he now needs another.

As if this were not enough, he is in the middle of extending his operations still further.

Customers who buy tyres frequently request that he check the wheel alignment on their

car following the ﬁ tting of new tyres. He has started to provide this service, but when done

manually it is a slow process, so he has invested heavily in a new piece of electronic equip-

ment. This new technology will speed the alignment operation considerably, but neither

he nor his tyre-ﬁ tter can operate the equipment. The owner feels that tyre ﬁ tters should be

able to operate the equipment, and an additional member of staff is not required just to

operate the equipment.

To add to all these problems, two of his taxi drivers have resigned unexpectedly. Past

patterns suggest that of the ten drivers, normally one or two leave each year, generally in

the summer months, though now it is winter.

Given all these stafﬁ ng difﬁ culties, the owner-manager has made use of a relative who

happens to have some HR expertise. She has advised the owner-manager on recruitment

and selection, training and development. The relative also suggests that the business needs

a well thought out human resource plan.

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Requirements

(a) Prepare an outline of human resource plan for the business and explain each aspect of

your plan. (12 marks)

(b) Discuss the important human resource activities to which attention should be paid in

order to obtain the maximum contribution from the workforce.

Important: For requirement (b), exclude those areas upon which the relative has

already provided advice to the owner-manager (recruitment and selection, training

and development).

(8 marks)

(Total ⴝ 20 marks)

Question 4

ZnZ is a large government-funded body that employs several hundred staff performing a

wide variety of roles. ZnZ is proud of its commitment to people development and is well

known for providing equal opportunities for all its employees. The organisation invests

heavily in training and development and employs a number of trainees who are studying

for their professional examinations.

ZnZ’s human resource plan is currently being reviewed. As part of this process two sig-

niﬁ cant recommendations have emerged from groups and committees considering future

human resource issues.

Recommendation 1

(From the HR planning group).

The group has recommended that a more systematic approach to the training and devel-

opment of qualiﬁ ed staff should be adopted.

Recommendation 2

(From the Diversity Committee)

The Committee has recommended that every person who is part of a minority or disad-

vantaged group should have an individual career coach. Under such a scheme individuals

from these groups would be paired with an experienced colleague on a higher grade who

would act as their personal individual career coach. The committee has issued the follow-

ing guidelines:

●

The scheme will not be associated with the appraisal process.

●

Coaches should be approachable, suitably experienced and appropriately trained.

●

Coaches will not be the individual’s own line manager.

●

Regular meetings should take place between the two individuals where individuals

should be able to conﬁ dentially discuss any concerns and areas for self-development.

Inevitably individuals will wish to discuss career-related issues and they should receive

appropriate advice from their career coach.

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240

You work for the Director of Human Resourcing who is very sympathetic to the recom-

mendation of the Diversity Committee in particular. (So much so that she feels that the

scheme should include all trainees and those middle managers that have been identiﬁ ed as

having promotion potential.) She has asked you to investigate both recommendations and

brief the management team appropriately.

Requirements

(a) Explain how a more systematic approach to the training and development of qualiﬁ ed

staff might be adopted. (10 marks)

(b) Evaluate the positive role the individual career coach scheme could play within ZnZ.

(You may wish to consider culture, HR initiatives, key groups and cost effectiveness

issues.) (10 marks)

scheme. (10 marks)

(Total ⴝ 30 marks)

241

Solution 1

1.1 (B)

1.2 (A)

1.3 (C)

1.4 HR planning: Satisfying projected demand by adjusting projected ‘supply’

Increasing Reducing

Retraining/re-skilling/multiskilling for potential ‘gaps’ Early retirements

Development for internal promotions (succession

planning)

Redundancy

Overtime Short-time

working

Increased use of IT Job-sharing

Outsourcing

Recruitment and selection (new employees)

Internal transfers/ redeployment to balance

requirements

1.5

Advantages

●

career structures, rewards visible

●

positive motivation

●

reinforces existing culture

●

rational approach.

Disadvantages

●

lack of exposure to other inﬂ uences

●

ignores possible better candidate from outside

●

trend for movement between companies strong

●

vacancies may arise at inconvenient times

●

expensive

●

needs managing

●

only possible within a very large organisation

●

outdated concept?

Solutions to

Revision Questions