Human Resources Management is introduced to manage employee skills, capacity, and knowledge. HRM practices aim to enhance, motivate, and reduce employee turnover so as to ensure the effective implementation and the success of the firm and its employees (Halbast and Tarik, 2019 ). 

The essential factor that will lead an organization to have a competitive advantage is human capital (human resources). Human capital refers to the stock of employee skills that exist within a firm at any given point in time. Human resource and human capital are almost the same, however, human capital concerns more about human talent (Wright et al., 2001).

Intellectual capital is composed of three forms of intellectual capital – human capital, customer capital (or relation capital), and structure capital which can be divided into innovation capital and process capital. Among the elements of intellectual capital, human capital is the most fundamental. Human capital affects innovation capital and process capital. Innovation capital affects process capital, which in turn influences customer capital. Finally, customer capital contributes to performance. When a company has a $1 increase in R&D expenditure, it has a $2 increase in earnings and $5 increase in market value over the next seven years (Wen-Ying Wang and Chingfu Chang, 2005).

Resource is ‘anything which could be thought of as a strength or weakness of a given firm (all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc). In the resource-based view of the firm, resources are the sources of competitive advantage (Wright et al., 2006).

Human Resource Management practices include job analysis/job design, recruitment, selection, training and development, incentive compensation, other compensation, (self-managed) teams, participation/autonomy, (results-oriented) performance appraisal/ management, job security, employee voice/grievance, promotion from within/career development/internal labor market, information sharing/communication, HR planning, flexible work/family-friendly practices, and other practices (Boon et al., 2019). 

REFERENCES

I. HR managers and managers

People at the HR department manage human capital (human resources). Managers manage People’s activities. 

II. HRM’s Functions

B. Human resource management activities

C. Human resource management philosophy

Corporate culture is a powerful determinant of employee attitudes and behaviors in general, as well as their reactions and attitudes toward specific events and practices. Thus, fit between strategies, practices, and culture is critical to success (G. Stoney Alder, 2020).  

Confucius – Chinese legend.

Confucius’ perception

People were good at the time they were born, and education changed people’s behaviour. If we train people, we can change their perception, so we change the way they think and act. Confucius believed that law did not change people’s thoughts. If we use law and punishment, we can prevent people from doing bad things. However, if a person does not know about right and wrong, he is not ashamed of his bad behaviour. If someone does not know about right and wrong, this person may break the law. In summary, if people know about right, they never do wrong.

Confucius management style

First, We should train people, so they will know about right and wrong.

Second, the bosses must follow the rules, so their subordinates will learn from them.

Third, some people are not willing to learn, so we may need to use punishment.

Han Fei – Chinese legend.

Han’s perception

Han Fei had the opposite perception to Confucius. In his opinion, people obey the law because they are afraid of punishment. If we want to manage people, we should use bonuses and punishment.

Han’s management style

First, If we want to manage people, we should use bonuses and punishment. If someone contributes meaningfully to your organisation, we should reward them. If someone breaks the rules, we should punish them. 

Second, If we want to manage people, we should do 3 important activities. We should set up rules. We should empower the managers. We should teach managerial techniques to our managers.

XY theory

This theory also tells us about manager?s perception and management?s style, however, the author does not tell us about his own philosophy. 

The author found that we can divide managers into two groups, which are group X and group Y.

Group X managers

X manager Perception: People are lazy, they do not want to work.

Management style: Managers spy on their employees, they try to manage activities. Workers are not empowered.

Group Y managers

Y manager Perception: People want to work.

Management style: Managers always use MBO. Workers are empowered.

D. Organizational strategy and workers

When we talk about an organizational strategy, we talk about long term orientations. Some popular organizational strategies are Price competitive, Innovation? If you choose a competitive strategy, you may hope that your products are cheaper than your competitors’ products. If you choose an Innovation strategy, you try to bring new values to your customers. Here, I do not talk about organizational strategy, I am going to explain the relationship between organizational strategy and workers.

Normally, a company with a price competitive strategy produces a popular product, and this company does not use special technology. For the reasons above, this company does not really need to hire special workers with special skills. On the other hand,  if a company chooses Innovation strategy, it needs to hire special workers.

In summary, when you choose an organizational strategy, you need workers who fit this strategy. For instance, if you choose ?Price competitive strategy?, your company just needs normal workers. If your company chooses an ?Innovation strategy?, your company needs smart workers…

E Theory

1. Defining human resource management

Human resources is used to describe the people who work for a company or organization.

Human resource management involves overseeing all things related to managing an organization?s human capital. HRM is concerned not only with obtaining and keeping the number and quality of staff required but also with selecting and promoting people who ?fit? the culture and the strategic requirements of the organization.

When we talk about HRM, we talk about all planned and activities of an organization to build and maintain the relation between employees and the organization in order to meet both business objectives and employees expectation.

Human resource management is therefore focused on a number of major areas, including: Job analyses, Human resource planning, Recruitment and Selection, Training and development, Performance appraisal, Reward , etc.

HR functions are concerned with the management and development of people in organizations. They are involved in the development and implementation of HR strategies and policies and some or all of the following people management activities: job analyses, planning personnel needs, recruiting the right people for the job, orienting and training, managing wages and salaries, providing benefits and incentives, evaluating performance, and communicating with all employees at all levels.

2. Job analysis

Job analysis is a process for collecting and analyzing information about a job. It is A process we use to identify tasks of a job and the knowledge, skills, and abilities (can use experience) a person needs to perform the job.

– A task is a piece of work to be done or undertaken. For example, a management job has two tasks, first task is “Contract management”, second task is “Monitoring operating costs”.

– When we talk about abilities a person needs to perform a particular job, we break it down into 3 categories, knowledge, skills, and abilities. For example, if a person needs the management job above, he must have abilities below.

+ Knowledge (we may use education instead): University graduate.

+ Experience (in this case, we use experience instead of ability): At least 3-year experience in logistics.

+ Skills: Excellent Excel skills, Good problem-solving skills, Work well independently and in a team.

From job analysis, we create job description, and job description. Job description is A list of a job’s duties. Job specification is A list of requirements (education, skills, ability) a person needs to perform a particular job.

Application of job analysis:

When we know the nature of the job, we can select appropriate candidates for that job, assess worker contribution, develop training programs, and so on.

Recruitment and selection

With job description, you will know what you are looking for. You know the job responsibilities as well as the skills and other characteristics required of candidates. A part of the job description is presented in the job advert, so candidates will know about the job which they are applying.

In the selection process, we need to know the knowledge, skills, and abilities that are required to each job.

Training

The job description provides the job responsibilities as well as the skills and other characteristics required of workers. We design the training program based on the job description, because the training program must provide the necessary competencies.

Performance appraisal

Job description tells us about job’ contents. We should assess workers based on job’ contents.

…
(to be continued)

3. Recruitment and selection

Recruitment: the process that provides the organization with a pool of qualified job candidates from which to choose.

Selection: the process of picking or choosing the right candidate, who is most suitable for a vacant job position in an organization.

3.1. Recruitment

The process of finding and attracting best-qualified candidate (from within or outside of an organization) for a job opening.

	Advantages	Disadvantages
Internal Candidate	– Rewards contributions of current staff – Can be cost effective, as opposed to using a traditional recruitment strategy – Can improve moraleKnowing the past performance of the candidate can assist in knowing if they meet the criteria	– Can produce inbreeding, which may reduce diversity and difference perspectives – May cause political infighting between people to obtain the promotions – Can create bad feelings if an internal candidate applies for a job and doesn’t get it
External Candidates	– Brings new talent into the company – Can help an organisation obtain diversity goals – New ideas and insight brought into the company	– Implementation of recruitment strategy can be expensive – Can cause morale problems for internal candidates – Can take longer for training and orientation

The recruitment process includes analysing the requirements of a job, attracting employees to that job?. A recruitment aim to attract potential candidates from a pool of candidates. The potential candidates should be qualified to take the job. If you do not want to think too much, in this step, you simply post a job advert.

3.2. Selection

Selection process consists of five distinct aspects: Criteria development, Application and r?sum? review, Interviewing, Test administration, Making the offer.

Criteria development:

Determining which sources of information will be used and how those sources will be scored during the interview. Involves discussing which skills, abilities, and personal characteristics are required to be successful at any given job. In human resources, this is called KSAOs2, or knowledge, skills, abilities, and other personal characteristics that make a person successful on the job.

For example:
1. Two years of experience
2. A bachelor?s degree in business
3. Problem-solving ability
4. Conflict-management ability
5. Score of at least a 7.0 on IELTS test

Application and resume review: Once the criteria have been developed (step one), applications can be reviewed. People have different methods of going through this process, but there are also computer programs that can search for keywords in resumes and narrow down the number of resumes that must be looked at and reviewed.

Interviewing & Test administration:

Interviewing: After the HR manager and/or manager have determined which applications meet the minimum criteria, he or she must select those people to be interviewed. Most people do not have time to review twenty or thirty candidates, so the field is sometimes narrowed even further with a phone interview.

Test administration: A variety of tests may be given upon successful completion of an interview. These employment tests can gauge a person?s KSAOs in relation to another candidate. The major categories of tests include the following: 1. Cognitive ability tests (measure reasoning skills, math skills, and verbal skills) 2. Personality tests 3. Physical ability tests 4. Job knowledge tests 5. Work sample

Making the offer:

The last step in the selection process is to offer a position to the chosen candidate. Development of an offer via email or letter is sometimes a more formal part of this process. Compensation and benefits will be defined in an offer.

4. Compensation and Benefits

Most of us, no matter how much we like our jobs, would not do them without a compensation package. A compensation package can include pay, health-care benefits, and other benefits. “Pay is important both in its effect on employees and on account of its cost, organizations need to plan what they will pay employees in each job”.

4.1. Goals of a Compensation Plan

First, the compensation package should be positive enough to attract the best people for the job. An organization that does not pay as well as others within the same industry will likely not be able to attract the best candidates, resulting in a poorer overall company performance.

Second, once the best employees and talent come to work for your organization, you want the compensation to be competitive enough to motivate people to stay with your organization.

Third, compensation can be used to improve morale, motivation, and satisfaction among employees. If employees are not satisfied, this can result not only in higher turnover but also in poor quality of work for those employees who do stay. A proper compensation plan can also increase loyalty in the organization.

Finally, pay systems can also be used to reward individual or team performance and encourage employees to work at their own peak performance.

4.2. Types of PayWe can divide our total pay system into three categories: pay, incentives, and other types of compensation. Pay is the hourly, weekly, or monthly salary an employee earns. An incentive, often called a pay-for-performance incentive, is given for meeting certain performance standards, such as meeting sales targets.

4.3. Pay Theories: equity theory

Concerned with the relational satisfaction employees get from pay and inputs they provide to the organization. People will evaluate their own compensation by comparing their compensation to others compensation and their inputs to others inputs.

For example:

Your monthly salary is 15 million Dollars (maybe Zimbabwe dollar). You receive this amount because you can make 15 products per hour. When you compare your salary with your coworker, you realize that your coworker salary is 20M. What do you think about your coworker’s salary? Actually, you may face several cases below.

Case 1

You	Your Coworker
15M (your Outcome) Make 15 products per hour (your Input)	20M (coworker Outcome) Make 20 products per hour

Case 2

You	Your Coworker
15M (your Outcome) Make 15 products per hour (your Input)	20M (coworker Outcome) Make 25 products per hour

Case 3

You	Your Coworker
15M (your Outcome)  Make 15 products per hour (your Input)	20M (coworker Outcome) Make 15 products per hour

What do you think about each case?

Normally, people will look at their own compensation packages and at their own inputs (the work performed) and compare that with others. If they perceive this to be unfair, in that another person is paid more but they believe that person is doing less work, motivational issues can occur. In HR, we need to look at two factors related to pay equity: internal pay equity and external pay equity.

Internal equity theory: Internal pay equity focuses on employees within the same organization. Within the same organization, employees may look at higher level jobs, lower-level jobs, and years with the organization to make their decision on pay equity.

People first think  about their own Outcome and Input,  and then they think about their coworkers’ Outcome and Input. Outcome means something you get from your organization, and Input means something you give to your organization. Normally, people are happy if their own ratio between outcome and input is almost the same as the coworker ratio.

External pay equity: External pay equity refers to what other people in similar organizations are being paid for a similar job. From this theory, people compare the ratio between outcome and input with other people in similar organizations.

When we make pay decision, we must do something so we can achieve both Internal equity and External pay equity

4.4. Job Evaluation Systems

The value of the job is a major factor when determining pay. Job evaluation is defined as the process of determining the relative worth of jobs to determine pay structure.

One of the simplest methods, used by smaller companies or within individual departments, is a job ranking system. In this type of evaluation, job titles are listed and ranked in order of importance to the organization.

In a job classification system, every job is classified and grouped based on the knowledge and skills required for the job, years of experience, and amount of authority for that job.

Sometimes we can not directly compare our inputs, we must use Job Evaluation Systems. From this system, we can calculate the value of jobs.

For example: We can calculate a job’s value based on job requirements.

Sale representative	Head of marketing department
Do not need experience            50	Need at least 3 years experience  150
Need BSC                                100	MBA                                     200
Simple job                                100	Complicated job                            200

After conducting job evaluation, we can make a pay decision. Sales representative worth 250 points, head of marketing department worth 550 points. If each point is worth 2 Dollars per month, the sales representative will receive 500 Dollars per month, and the head of the marketing department will receive 1100 Dollars per month.

Play the game below, and you will learn more about Job Evaluation.

4.5. Pay Systems

Once you have performed a job evaluation, you can move to the last step, which we call pay grading. This is the process of setting the pay scale for specific jobs or types of jobs. The popular method to pay grade is to develop a variety of pay grade levels.

5. Training

Any effective company has training in place to make sure employees can perform his or her job.

During the recruitment and selection process, the right person should be hired to begin with. But even the right person may need training in how your company does things.

Lack of training can result in lost productivity, lost customers, and poor relationships between employees and managers. It can also result in dissatisfaction, which means retention problems and high turnover. All these end up being direct costs to the organization.

5.1. Steps to take in training an employee

There are four steps that generally occur: First, the new employee goes through an orientation, And then he or she will receive in-house training on job-specific areas, Next, the employee should be assigned a mentor, And then, as comfort with the job duties grows, he or she may engage in external training.

5.1.1. Orientation

Process used for welcoming a new employee into the organization.

Starting a new job can be stressful. One goal of an orientation is to reduce the stress and anxiety people feel when going into an unknown situation. If employees know from the start what the expectations are, they tend to perform better. Likewise, if employees learn the values and attitudes of the organization from the beginning, there is a higher chance of a successful tenure at the company.

A well-done orientation makes for a better prepared employee, which means less time having to teach the employee.

If an orientation is done right, it can help get the employee up to speed on various policies and procedures, so the employee can start working right away. It can also be a way to ensure all hiring paperwork is filled out correctly, so the employee is paid on time.

Employee turnover tends to be higher when employees don?t feel valued or are not given the tools to perform. An employee orientation can show that the organization values the employee and provides tools necessary for a successful entry.

5.1.2. In-house training

In-house training programs are learning opportunities developed by the organization in which they are used. This is usually the second step in the training process and often is ongoing. In-house training programs can be training related to a specific job, such as how to use a particular kind of software. In a manufacturing setting, in-house training might include an employee learning how to use a particular kind of machinery.

5.1.3. Mentoring

A mentor is a trusted, experienced advisor who has direct investment in the development of an employee. A mentor may be a supervisor, but often a mentor is a colleague who has the experience and personality to help guide someone through processes. While mentoring may occur informally, a mentorship program can help ensure the new employee not only feels welcomed but is paired up with someone who already knows the ropes and can help guide the new employee through any on-the-job challenges.

5.1.4. External training

External training includes any type of training that is not performed in-house. This is usually the last step in training, and it can be ongoing. It can include sending an employee to a seminar to help further develop leadership skills or helping pay tuition for an employee who wants to take a marketing class. To be a Ford automotive technician, for example, you must attend the Ford ASSET Program, which is a partnership between Ford Motor Company, Ford dealers, and select technical schools.

5.2. Types of training

These types are usually used in all steps in a training process (orientation, in-house, mentorship, and external training).

5.2.1. Technical training

Type of training meant to teach the new employee the technological aspects of the job. In a retail environment, technical training might include teaching someone how to use the computer system to ring up customers. In a sales position, it might include showing someone how to use the customer relationship management (CRM) system to find new prospects.

5.2.2. Quality training

Quality training refers to familiarizing employees with the means of preventing, detecting, and eliminating non quality items, usually in an organization that produces a product.
Training employees on quality standards, including ISO standards, can give them a competitive advantage. It can result in cost savings in production as well as provide an edge in marketing of the quality-controlled products.

5.2.3. Skills training

Skills training as the things you actually need to know to perform your job. A cashier needs to know not only the technology to ring someone up but what to do if something is priced wrong. This training includes proficiencies needed to actually perform the job.

For example, an administrative assistant might be trained in how to answer the phone, while a salesperson at Best Buy might be trained in assessment of customer needs and on how to offer the customer information to make a buying decision.

5.2.4. Professional training

In some jobs, professional training must be done on an ongoing basis. Professional training is a type of training required to be up to date in one?s own professional field. For example, tax laws change often, and as a result, an accountant for H&R Block must receive yearly professional training on new tax codes.

5.2.5. Team training

Team training is a process that empowers teams to improve decision making, problem solving, and team-development skills to achieve business results. Often this type of training can occur after an organization has been restructured and new people are working together or perhaps after a merger or acquisition.

5.3. Training delivery methods

5.3.1. On-the-job coaching

Refers to an approved person training an employee on the skills necessary to complete tasks. A manager or someone with experience shows the employee how to perform the actual job. The selection of an on-the-job coach can be done in a variety of ways, but usually the coach is selected based on personality, skills, and knowledge. This type of skills training is normally facilitated in-house. The disadvantage of this training revolves around the person delivering the training. If he or she is not a good communicator, the training may not work. Likewise, if this person has ?other things to do,? he or she may not spend as much time required to train the person and provide guidance.

5.3.2. Mentoring

Mentoring is a process by which an employee can be trained and developed by an experienced person. Normally, mentoring is used as a continuing method to train and develop an employee. One disadvantage of this type of training is possible communication style and personality conflict. It can also create overdependence in the mentee or micromanagement by the mentor. This is more different than on-the-job coaching, which tends to be short term and focuses on the skills needed to perform a particular job.

5.3.3. Web-Based Training Delivery

Web-based training delivery has a number of names. It could be called e-learning or Internet-based, computer-based, or technology-based learning. No matter what it is called, any web-based training involves the use of technology to facilitate training.

5.4. Designing a training program

Designing a training program includes 4 steps. Needs assessment, Make training plans, Deliver training program, Measuring effectiveness of training.

Step 1, Needs assessment and learning objectives:

This part of the framework development asks you to consider what kind of training is needed in your organization. We evaluate the organization, workers, and jobs to determine training need.

Step 2, Make training plans:

+ Consideration of learning styles. Learning styles is important to development of training programs.

+ Training method. What is the best method? Is web-based training more appropriate, or should on the job training be used? Most training programs will include a variety of training methods.

+ Budget. How much money do you have to spend on this training?

+ Audience. Who will be part of this training? Do you have a mix of roles, such as accounting people and marketing people?

+ Content. What needs to be taught? How will you sequence the information?

+ Schedule, facility?

Step 3, Deliver training program:

+ Prepare Internal training: List participates, Choose and invite lecturers, Setup facilities, et cetera.

+ Prepare External training: Choose partner for training, Sign contract, et cetera.

+ Communication. How will employees know the training is available to them?

+ Deliver training program.

+ HR managers may need to follow the training process.

Step 4, Measuring effectiveness of training.

+ How will you know if your training worked?

+ What ways will you use to measure this?

+ Once you have determined the training needed, you can set learning objectives to measure at the end of the training.

6. Performance appraisal

A performance evaluation system is a systematic way to examine how well an employee is performing in his or her job. Performance evaluations can also be called performance appraisals, performance assessments, or employee appraisals.

6.1. Performance appraisal methods

6.1.1. Graphic Rating Scale

The graphic rating scale, a behavioral method, is perhaps the most popular choice for performance evaluations. This type of evaluation lists traits required for the job and asks the source to rate the individual on each attribute.

6.1.2. Essay Appraisal

In an essay appraisal, the source answers a series of questions about the employee?s performance in essay form. This can be a trait method and/or a behavioral method, depending on how the manager writes the essay. These statements may include strengths and weaknesses about the employee or statements about past performance.

6.1.3. Ranking Methods

Employees in a particular department are ranked based on their value to the manager or supervisor. This system is a comparative method for performance evaluations. The manager will have a list of all employees and will first choose the most valuable employee and put that name at the top. Then he or she will choose the least valuable employee and put that name at the bottom of the list. With the remaining employees, this process would be repeated. Obviously, there is room for bias with this method, and it may not work well in a larger organization, where managers may not interact with each employee on a day-to-day basis.

6.1.4. Management by Objectives (MBO)

First, the manager and employee sit down together and develop objectives for the time period. Then when it is time for the performance evaluation, the manager and employee sit down to review the goals that were set and determine whether they were met.

To write objectives, they should be SMART:

Specific. There should be one key result for each MBO. What is the result that should be achieved?

Measurable. At the end of the time period, it should be clear if the goal was met or not. Usually a number can be attached to an objective to make it measurable, for example ?sell $1,000,000 of new business in the third quarter.?

Attainable. The objective should not be impossible to attain. It should be challenging, but not impossible.

Result oriented. The objective should be tied to the company?s mission and values. Once the objective is made, it should make a difference in the organization as a whole.

Time limited. The objective should have a reasonable time to be accomplished, but not too much time.

6.2. Designing a Performance Appraisals program

Step 1: The first step in the process is to determine how often performance appraisals should be given. The advantage to giving an evaluation twice per year, of course, is more feedback and opportunity for employee development. The downside is the time it takes for the manager to write the evaluation and discuss it with the employee. If done well, it could take several hours for just one employee. Depending on your organization?s structure, you may choose one or the other. For example, if most of your managers have five or ten people to manage (this is called span of control), it might be worthwhile to give performance evaluations more than once per year, since the time cost isn?t high.

Step 2: Determining who should evaluate the performance of the employee is the next decision. It could be their direct manager (most common method), subordinates, customers or clients, self, and/or peers.

Step 3: Choice the right method

Step 4: Set the target

6.3. Completing and Conducting the Appraisal

– Best Practices in Performance Appraisals
– Training Managers and Employees
– Organizing the Performance Appraisal Process
– Performance Appraisal Interviews

7. HR Plan

I. Definition

When you make an HR plan, you  predict our workforce demand. Simply, you are going to answer the question “How many workers do we need at a particular time?”. For example, this year you need 10 workers, next year you need 15 workers. Some HR plans may include action plans, for example, we need 10 more workers so we are going to hire 10 workers.

More example: This year we need 44 salesman and 4 managers, next year we need 50 salesman and 5 manager and so on.

	This year	Next year
Salesman	44	50
Manager	4	5

II. Process

If you want to estimate your workforce demands, you may follow the activities below.

1^st, You should know about your company goals. Your company may make goods, or provide services to customers. When you make your HR plan, you should know about the quality and quantity of your company’s product or services.

When you Quality research, you are going to answer the following question. “What kind of products will we make?”, and/or “What kind of services will we provide to your customer?”.

When you do Quantity research, you should know about your production/sale plan, and you are going to answer the following question. “How many products will we make at a particular time?”, and/or “How many customers will we serve at a particular time?”, and/or “What is our expected revenue”. For instance: You are going to make 1.2M products this month. 

2^nd, You should identify the qualifications of every worker. You should know about your workers’ abilities. Simply, you are going to answer the question “How many products a worker can make per time period (day/month/year)?”. For example, after conducting your research, you find that a worker can make 1000 products per day. 

After you conduct two activities, you can predict your workforce demand. You can use a very simple formula, it is Workload/worker’s ability.

For example, You are going to make 40 000 products this month (1.2M products/30 days = 40 000 products). Because one worker can make 1000 products/day, We need 40 workers (40 000/1000).

3rd, GAP analysis. Normally, your company has some workers. For instance, your company has 30 workers. We need 40 workers, we need 10 more workers (We need to hire 10 more workers, it does mean that we will. We may train our workers).

Sometimes, you have more workers than you need. For instance, You already have 50 workers, but you just need 40 workers (from your prediction) . Sometimes you need 40 workers, and you also have 40 workers.

III. Workforce Estimate Methods

There are so many methods to calculate current and future human resources needs. Some people calculate based on worker output and marketing plan. Others calculate based on chronological data. 

a. Calculate based on worker output and marketing plan

We can predict our workforce demand based on our marketing plan. Normally, a marketing plan includes the production (or sale) plan. When we read the marketing plan we can answer the question “How many products will we make?’ or “How many customers will we serve?”.

Examples.

– You work for a production company. This year, your company is going to make 100 products per day. You know that one worker can make 10 products, so you need 100/10 = 10 workers.

– You work for a retail company. This year, your company is going to serve 200 customers per day. You know that one worker can serve 50 customers, so you need 200/50 = 4 workers.

– You work for a service company. This year, your expected revenue is 5B.

You know that revenue per employee is 500M , so you need 5B/0.5B = 10 workers

More example:

– Business demand: This year, we want to sell 660 millions.

– Worker output: Each worker can sale average 15 millions

– The human resource needs equal 660/ 15 = 44.

– The human resource need: 44 workers.

Marketing plan shows us the business demand over the years, so we can calculate the worker demands each year.

From marketing plan, we can predict future human resources needs.

Year	1	2	3	4	5
Business demand	660	759	986	1973	2565
Salesman	44	50	66	132	171

b. Calculate based on chronological data. 

We use regression to predict time series. By using a statistical model, we can estimate worker demand. 

Year	Worker
2012	7210
2013	7287
2014	7291
2015	7312
2016	7348

From the data table above, we can find the association between labor demand and time. The equation (y = 30.1x – 53332) predict the labour demand each year. 

IV. Make HR plan for Big company

From the example above, you should know that you have just made HR plans for very small companies. A small company just has the owner and worker, so the workforce planning process is very simple. If you make a HR plan for a big company, you can make your HR plan for individual departments and then combine them together.

If you make an HR plan for a big organization, you can follow the process below. 

1^st Drawing organization’s structure.

2^nd, Estimated workforce demand for individual departments.

3^rd, Drawing replacement charts.

4^th, Make an HR Plan for individual departments.

5^th, Make an HR plan.

6^th, Make an action plan (if any).