Human Resource Planning

Definition

M.Armstrong (1991):

The systematic and continuing process of analysing an organisation’s human resource

needs under changing conditions and developing personnel policies appropriate to the
longer-term effectiveness of the organisation. It is an integral part of corporate planning
and budgeting procedures since human resource costs and forecasts both affect and are
affected by longer-term corporate plans.

McKenna and Beech (1995):

Human resource planning is concerned with matching the organisational demand for
quantity and quality of employees with the available supply … links the management of
human resources to the organisation’s overall strategies for achieving its goals and
objectives.

Manpower Planning v/s HR Planning

Manpower planning HR planning

• Quantitative bias • Both quantitative and qualitative
• Emphasis on people as key resource –
• Deal with ‘hard’ problems and their both ‘hard’ and ‘soft’ problem
solutions approaches
• ‘Soft’ approach – employee
creativity, innovative practices,
flexibility, etc.

Facets of HR Planning

1. Forecasting demand for human resources.

2. Evaluating supply of human resources – Internal and external supply.

3. Utilisation of human resources in a cost-effective and efficient manner through

appropriate action plans.

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Demand for human resources

The number of staff required to match the organisation’s future needs, and the
composition of the workforce in terms of the necessary skills.

Some demand forecasting methods:

• Managerial judgements – Based on managers’ experience.

• Ratio-trend analysis – ratio of direct to indirect workers

• Work study techniques – time and motion study

• Modelling – computer software to simulate situations and develop various scenarios

Human resource supply

Evaluating the supply of labour.

It is made up of two parts:

1. Internal supply

Number of employees already employed by the organisation, compiled according to the

following key characteristics:

• Age
• Grade
• Qualifications
• Experience
• Skills

N.B: Profiling of internal supply should consider policy decisions taken by the
organisation with respect to expansion or contraction.

• Waste or staff turnover

Turnover index:

No. of leavers in a specified period (usually 1 year) x 100

Average no. of employees during the same period

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Stability index:

Number with 1 year’s service or more x 100

Number employed 1 year ago

2. External supply

Some factors to consider when assessing human resources from external labour market:

• Tightness of supply

• Demographic factors

• Social/geographic aspects

• Type of employee required

Action planning

After a detailed analysis of the demand and supply factors, action plans can be made in
the following areas:

• An overall plan as required to deal with shortages arising from demographic pressures

• A human resource development plan

• A recruitment and retention plan

• A plan to achieve greater flexibility

• A productivity plan

• A downsizing plan

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 Recruitment and Selection

Definition

McKenna and Beech (1995):

The planned way in which the organisation interfaces with the external supply of labour.
Recruitment is the process of attracting a pool of candidates for a vacant position, and
selection is the technique of choosing a new member of the organisation from the
available candidates.

Watson, ed. K.Sisson (1994):

Recruitment and selection are conceived as the processes by which organisations solicit,
contact and interest potential appointees, and then establish whether it would be
appropriate to appoint any of them.

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Strategic recruitment and selection

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Stages of Recruitment and Selection process

1. Defining requirements – Using HRP, job analysis, job description and finally
devising a job specification from which advertisement for job vacancy will be built.

2. Attracting candidates – pooling in potential candidates from various sources of

recruitment and deriving a shortlist for selection purposes.

3. Selecting candidates – making use of different selection methods, the right candidate
is chosen and appointed, following which an induction or orientation programme is
held to conclude the process.

Sources of recruitment

1. Internal – advertising for job vacancy within the internal labour market of the
organisation.

2. External – advertising for job vacancy outside the organisation targeting the external
labour market.

• Job centres
• Recruitment agencies
• Executive search agencies
• Casual callers
• Friends or relatives of existing employees
• Schools, colleges, universities
• Advertisements
• Telephone ‘hotlines’
• Open days
• Internet

Which recruitment techniques should an organisation use?

Three types of source analysis can be used to assess effectiveness a recruitment technique
and thus help an organisation decide which recruitment techniques to use:

Yield analysis – Examining recruitment methods on the number and quality of applicants
generated during the course of past recruitment exercises.

Time-lapse analysis – Evaluate the length of time it took from the start of recruitment
process to the offer of the job. Important to undertake this analysis when considering the
speed with which a post needs be filled.

Cost per hire – To what extent a recruitment method is expensive or cheap.

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Shortlisting

Outcome of recruitment process is to produce a shortlist of candidates whose background

and potential are in accordance with the profile contained in the job specification.

Selection

The final stage of the recruitment process when an impartial and objective decision,
drawn on some or all of a number of selection techniques, is going to be made on who the
successful candidate will be.

Selection techniques:

• Interviews

• Psychological tests

• Work-based tests

• Assessment centres

• Biodata

• References

• Graphology

Interviews
• One to one interview
• Interview panel
• Situational interview
• Patterned behaviour description interview (PBDI)
• Competency-based interviewing

Structured v/s unstructured interviews

Recruitment and selection experts argue that unstructured interviews should not be used
to make final selection decisions because of the following inherent subjectivities within
the process:

Expectancy effect – based on prior information the interviewers anticipate a candidate’s

profile and deliberately use interview to confirm their prejudgement.

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Primacy effect – What candidates say at the beginning of interview, rather than later on,
strongly influence interviewers, and thus they make decisions on candidates within the
first few minutes of the interview.

Contrast effect - Assessment of a new candidate is affected by the performance of the

previous one.

Quota effect – Interviewers might have to fill a number of successful candidates. Early
filling of quota would affect success of candidates interviewed later on, irrespective of
their relative performance to early ones.

Similar-to-me effect – Interviewers prefer candidates with same biographical background

and attitudes to themselves.

Personal liking bias – Irrespective of the candidate’s suitability for the job, non relevant
common ground influences positively interviewers’ judgements.

Physical cues - Candidates’ appearances carry hidden messages, e.g. intelligence =

wearing spectacles.

Ability to recall information – Interviewers make decisions on fraction of information

provided, due to the difficulty in memorising the answer of candidates to their previous
questions when they are thinking about and putting in their next ones.

Dysfunctional aspects of selection interviews:

• Untrained interviewers make subjective unsound judgements.

• Jumping to conclusions early in the interview.

• Individual biases - ‘Halo’ and ‘Horn’ effects.

• Impression management tactics.

• Consensus impossible – panel of interviewers.

Improvement to selection interview:

• Training programmes for interviewers.

• Ensure interviewers attend exercise prepared.

• Venue conducive to conducting interviews.

• Provide interviewees with guidelines upon the interview process.

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 • Use open-ended and job-related questions, reinforced by feedback.

• Provide interviewee with opportunity to ask questions at the end of formal

questioning.

• Complement information from interview with other selection techniques.

• Use panel (3-5 interviewers) rather than one-to-one interviews to reduce individual
interviewer bias.

Assessment Centre
Quick facts, CIPD, December 2000

Definition

Assessment centres assist the whole recruitment process by giving candidates experience
of a microcosm of the job while testing them on work-related activities as individuals and
in groups. Interviewers can assess existing performance and predict future job
performance.

Designing AC

A well designed AC with a variety of activities can reach 80% predictive validity in
assessing future performance.

Essential design criteria:

• Duration of Centre (one day might be insufficient for more senior posts)
• Location (reality or ideal surroundings and accessibility for candidates with
disabilities)
• Numbers of candidates brought together (five may be too few for comfort under
observation and more than eight gives problems in sharing the assessed time)
• Gender, age and ethnic mix (for their comfort and in line with organisational ethos)
and comparability of past experiences
• Essential and desired skills or competencies should be matched to techniques and
tasks which can test them
• Include a number of trained senior observers/selectors to ensure greater objectivity
through a range of views

Feedback session for candidates with either an occupational psychologist or someone

trained to deliver professional feedback

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Criteria for choice of recruitment and selection processes

Issues to consider:

• Validity and reliability – the extent to which the recruitment and selection process
accurately predicts, and consistently measures, actual future job performance.

• Cost-effectiveness – how much financial resource an organisation is willing to invest

in the recruitment and selection process.

• Fairness – Extent to which any form of bias is introduced at any particular stage of
the recruitment and selection process.

Induction programmes

Induction – Process of receiving and welcoming employees when they first join a
company and giving them the basic information they need to settle down quickly and
happily and start work. (Armstrong 1991)

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 Mary’s mistake

The chance to join a dynamic computer operation seemed tailor-made for an ambitious
woman with a successful background in management training for major blue-chip
companies.

But it was noon on her first day in the job that Mary realised she had made a mistake. “It
seemed like a fast-moving, energetic company with lots of opportunities from the training
point of view,” she said.

“The interviews seemed fine. But I felt uncomfortable as soon as I arrived. By midday I
realised nothing had been planned for me to do. I put my name down for a one-day
induction course that was quite useful, but I just didn’t feel part of the organisation.”

Mary’s immediate superiors were all out of the office, and her colleagues were either
busy long-standing employees or new staff with particular specialisms who could not
help.

She decided to cut her losses and left the position after only six weeks. Looking back,
Mary says she should have asked more at the interview about the training department and
clarified her role. On arrival, she says, her bosses should have given her the chance to
meet key people to find out more about the organisation and its business objectives.

But she does not regret the experience. If anything, she says, it was a chance to see how
things should not be done. “It’s something I would prefer to forget because it was so
embarrassing. I felt dreadful having to dump the job. But it was the best thing for me and
for the company.”

Question:

Suggest improvements (and give your rationale) to the recruitment and

selection process of this company, to overcome the problems that Mary
encountered?

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 At the cutting edge

Staff turnover at Pret a Manger hit 98 per cent last year. This would result in much
wailing and gnashing of teeth in most industries. But Pret’s head of recruitment Esther
O’Halloran is jumping for joy, because her industry average is 150 per cent.

“Turnover was 130 per cent last year, so that’s a 30 percentage point improvement,”
O’Halloran says. “We are keeping people longer because we are recruiting smarter, and
getting the right people in the first place.”

Pret employs 2,400 staff, of whom 1,900 work as team members in its 118 shops, where
they make and serve coffee and sandwiches from 6.30am to 3.30pm. It’s hard, physical
work that depends on good teamwork – and it does not suit everyone.

Last year Pret received 55,000 applications for fewer than 1,500 vacancies. It’s great to
have a choice but it also leaves a big margin for error. To ensure it gets people with
enthusiasm, Pret uses what is perhaps the ultimate assessment centre – a job experience
day. Unlike other assessment centres, would-be team members are assessed by their peers
who, at the end of the day, vote on whether or not they want to offer the candidate a job.

“It’s important that the team makes the decision because they will be working with that
person, training them and making them a good person for Pret. When the team buys into
a recruit, they take some responsibility for getting them into the team and up to speed,”
O’Halloran says.

Pret has insisted on some sort of on-the-job experience (OJE) for candidates almost since
the day it opened its first shop in 1986. But until last year, when O’Halloran joined the
firm, it was an informal and rather fluid affair.

Over the past 12 months she has sharpened up the process, linking it to competencies,
and training managers and team members to ensure that all candidates are dealt with
consistently and fairly. “They are still our customers, even if they don’t get the job,”
O’Halloran says.

Before reaching the stomach-knotting prospect of OJE, applicants have to go through the
first stage of the recruitment process: a competency-based interview. If they are looking
to work in London, candidates apply through Pret’s recruitment centre, which is about to
move to spanking new premises overlooking Victoria Station. Outside London, people
apply to the manager of their local Pret. Either way they go through the same
competency-based process.

“It’s about getting the right personality. We want people who are outgoing, have a
positive attitude to life, want to work for the company and know a bit about us. We aren’t
necessarily looking for people with experience making coffee and sandwiches,”
O’Halloran says. If they get through the first interview – and most don’t – they are asked
to turn up for OJE at the shop with the vacancy. By 2.30pm they will know if they have

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got the job. But their day begins at the same time as their future colleagues, 6.30am. One
in three potential recruits don’t make it that far. “It’s a good test,” she says. “Can they get
there on time and stay awake?”

A team member will be assigned to act as the candidate’s guide and mentor for the day
but the aim is to get them working with as many other team members and doing as many
different jobs as possible. It’s an organised process with staff asked to take the person
through different tasks. So they might help to make sandwiches, clean the workbench, or
deal with customer queries. “They are simple but relevant things that we get them to do,”
O’Halloran says.

Throughout the process, their future colleagues assess them against core competencies
such as enthusiasm and their ability to follow instructions. They have to be able to justify
their vote for, or against, and Pret has to ensure the process is fair and legal.

Meanwhile, the shop manager takes time out to interview the applicant over a cup of
coffee. The manager doesn’t get a vote but can lobby for or against someone. Towards
the end of the shift, the manager gathers team members’ votes and lets the candidate
know the result.

Half of those who take part in OJE fail to make the grade – but they do go away with
£30, a free lunch and some comprehensive feedback on their performance. New recruits
also receive feedback, which might be fed into a training plan, and they are put straight
on to the payroll.

The system does work, says Matt Blon, general manager of Pret a Manger in Victoria. “I
feel comfortable leaving the team to get on with the Pret experience day and they enjoy it
because it’s someone new who will hopefully join them, and they can show off a bit,” he
says. “All the team take a lot of pride in their role in the Pret experience and they
understand that it’s their responsibility.”

Blon says he rarely disagrees with a team member’s assessment of a candidate. “If I do
disagree, I’ll probe that person a bit more about their decision,” he says. “I’ll outline my
concerns and explain what happens if they vote for someone who isn’t going to stick
around.”

So successful is OJE as a recruitment tool that Pret insists all managerial and head office
recruits also go through a shorter version. But while Pret seems to have made huge
inroads into getting its recruitment right, O’Halloran is well aware that recruitment will
always be a major business activity for the firm. “London has a transient population. We
attract people who only come here for six months, and that will continue,” she says.
L.Carrington (2002), People Management, May, page 30.

Task:
Analyse Pret a Manger’s approach to recruitment and selection.

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 Recruitment and selection at Protection Royale

Protection Royale, a leading player in the composite insurance business, has consolidated
over time to become one of the largest direct insurers in the UK. Its headquarters, based
in Docking, reported a turnover in 1998 of over £2780 million and its future strategy is
directed towards becoming the undisputed market leader in the UK insurance market.
The company is organised division ally around its four core business areas.

This case traces developments in recruitment and selection within one of these divisions -
Financial Consultancy Services -which is acknowledged as having an increasingly
important role to play in pursuit of corporate objectives. This division employs Sales
Consultants whose primary role is to market Protection Royale's insurance products to
insurance brokers. These brokers then consider Protection Royale's products along with
those of other insurance companies when making recommendations to individual
customers purchasing insurance through this medium. The basic job description and
person specification (detailing those attributes associated with effective role
performance) had remained much the same since the early 1990s. Labour turnover
amongst these staff was very low at approximately 4 per cent and when vacancies arose
little difficulty was experienced recruiting replacements as a relatively undemanding
person specification meant that many people in the labour market matched its
requirements. Replacements were found using a well established recruitment and
selection process which, in brief, comprised

• advertising in financial services media

• use of specialist recruitment agencies
• recommendations from existing staff
• short listing from application forms/CVs
• interviews
• role plays
• psychometric testing
• references.

Despite its growing strategic importance, concerns over the division's business
performance began to surface in 1997 eventually leading to a review of its operations.
During the early and mid 1990s the division's product lines marketed by Sales
Consultants had proliferated, partly in response to the growing technical complexity of
the financial services industry. The resultant lack of product specialisation was
undermining customer confidence and contributing towards a deterioration of Protection
Royale's overall standing in the marketplace.

These developments prompted a reappraisal of the division's work and resulted in a major
shake-up of staff and the precipitation of a staffing crisis. This necessitated the
development of improved recruitment, selection and retention strategies designed to
address the immediate crisis and at the same time support longer-term strategic priorities.
What began to emerge was a need for a smaller and more focused product range and
high-performing staff who were able to project their products on to the 'best advice lists'

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of brokers (i.e. where Protection Royale's products are strongly endorsed by brokers to
their customers). Of these the latter was seen as crucial and prompted a detailed
assessment of existing staff against a much more demanding personnel profile. An
emerging person specification for Sales Consultants began to coalesce around: excellence
of product knowledge; interpersonal skills associated with influence and persuasiveness,
and the negotiation skills involved in anticipating and countering broker reservations.

An added complication had been introduced in 1994 by the PIA (Personal Investment
Authority), established following the Financial Services Act 1988, which required
financial sales practitioners to hold Financial Planning Certificate qualifications. This
represented a potential threat to the staffing base as current employees might be either
unwilling or unable to obtain these qualifications. In addition these qualifications needed
to be built into the emerging person specification for new recruits resulting, almost
overnight, in a substantial reduction in the number of people within the external labour
market who could meet the requirements of the revised specification.

The reappraisal of the division involved an assessment of current staff against the
anticipated transformation in the role and profile of Sales Consultants. Assessments
resulted in staff being rated as 'suitable', 'unsuitable' or 'possibles', i.e. those who,
following training and development, might meet the grade. What resulted was a
significant and rapid reduction in the workforce through resignations, redundancies and
transfers that seriously undermined the ability of the division to meet its performance
targets. At first this was not perceived as a crisis because line managers believed they
could personally head-hunt replacements despite a radically altered labour market and
their lack of experience. However, failure to make a single appointment using this
method meant the situation rapidly assumed crisis proportions. Not only was immediate
business performance being undermined but threats to longer-term objectives quickly
became apparent. The reputation of Protection Royale amongst brokers was steadily
deteriorating and this was also making the company less attractive to potential applicants.

At the initiation of the Personnel Department alternative recruitment and selection

strategies were devised and implemented in 1998 with line managers and personnel
specialists working in concert. These comprised the following:
• Identification of recruitment champions charged with developing and driving
through the strategy and reporting back regularly on outcomes.
• Adoption of recruitment objectives as key performance indicators for line
managers and personnel staff. As one ex-employee put it, 'any failure to deliver
would result in those responsible losing their heads'.
• Introduction of a dual recruitment and selection strategy. The first continued the
practice of direct recruitment from the external market but this now involved the
use of a professional search agency. The role of the agency was to identify
suitable candidates who were positively oriented towards joining Protection
Royale. At this stage Protection Royale took over the process and put candidates
through a selection process designed to assess fit with the organisational culture
and job competence. The second, responding to the contraction in the labour
market, involved the recruitment of a cadre of trainees who would follow a 15-to

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 18-month training and induction programme leading, if successful, to their
appointment as Sales Consultants.
• For both strategies recruitment and selection was geared to a revised job
description and person specification of the 'ideal candidate'. The latter was
extrapolated into a series of competencies and became the main driver of the
recruitment and selection process for both direct entrants and trainees following
its adaptation to provide greater emphasis on potential and trainability.
• For direct entrants multiple selection methods were adopted for assessing referrals
from the search agency. Methods were chosen for their relevance to the
competencies being assessed. A matrix was produced identifying which methods
would be used to assess each competence. Selection methods included completion
of a competency-based application form, situational testing (i.e. based on samples
of required job knowledge, skills and attitudes), psychometric testing to assess
aptitudes, competency-based interviews, role-play simulation exercises,
presentations and references.
• Recruitment of trainees driven through national advertising. Advertising invited
respondents to telephone in for a brief interview and lines were staffed all week
including Sunday. Selection began at this stage through assessment of responses
to standardised questions and, for successful and interested parties, led to the
arrangement of a screening interview. Recruitment was supported by a detailed
information pack for candidates.
• Selection of trainees via assessment centres. These employed similar selection
methods to those described earlier for direct entrants.
• Thorough induction of trainees following appointment. A dedicated manager was
appointed to support trainees who were also able to maintain regular contact with
their designate managers to discuss their progress or any other concerns.
• Extensive training for all line managers involved in any aspect of recruitment and
selection. Training was supported by a very detailed (54- page) pack providing
step-by-step guidance on all aspects of the process. There was an emphasis
throughout on standardisation including interview questions.

Following the introduction of these procedures an initial cohort of eight trainees was
recruited and they all successfully completed their training programme during 1999. On
'graduation' from the training programme each trainee was placed in their designated
regional sales office.

Question:

Discuss Protection Royale’s approach to the recruitment and selection

process.

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