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Human resource planning has traditionally been used by organizations to ensure that the right person is in the right job at the right time. According to past conditions of relative environmental certainty and stability, human resource planning focused on the short term and was dictated largely by line management concerns. Now a days, Increasing environmental instability, demographic shifts, changes in technology, and sharp international competition are changing the need for and the nature of human resource planning in leading organizations. Planning is increasingly the product of the communication between line management and planners. In addition, organizations are realizing that in order to adequately address human resource concerns, they must develop long-term as well as short term solutions. As human resource planners involve themselves in more programs to serve the needs of the business, and even influence the direction of the business, they face new and increased responsibilities and challenges.
Human resource management is one of the most demanding fields facing today's managers. The increased global competitiveness, rapidly changing technologies, ongoing changes to employment legislation, and the changing workforce characteristics have created an unstable business climate. To address these driving forces, managers need to respond speedily by effectively deploying their staff in order to obtain and retain a competitive advantage (De Cieri et al.2008). The new sources of sustainable competitive advantage available to organizations have people at the centre-their creativity and talent, their inspirations and hopes, their dreams and excitement. The companies that flourish in this decade will do so because they are able to provide meaning and purpose, a context and frame that encourages individual potential to flourish and grow. (Gratton 2000, p.3)
During the last decade the traditional sources of competitive advantage have been eroded, due to international competition and the fast diffusion of innovation across the globe. By definition, the organization that has a competitive advantage provides products or services that are preferred by all or part of the market. However, having a competitive advantage does not necessarily reflect long-term viability. The organization must be able to provide these goods or service in an efficient way. Furthermore, the organization must have the means by which it can be competitive in the longer-term and cannot be easily imitated by its competitors. That is, it must seek to gain a sustainable competitive advantage (De Cieri et al.2008).
Global market conditions, and pressures for change and competitiveness, have a considerable and continuing impact on the way in which an organization manages its human resources. The nature of changes in recent times has resulted in organizations acknowledging that their people are the source of competitive advantage (Bartlett & Ghoshal 2002). If all resources, that is, raw materials, plant, technology, hardware and software, are available to competing organizations, than the differences in economic performance between organizations can only be attributable to differences in the performance of people. Therefore, it is argued that the management of human resources is of equal, if not more importance with other functions such as finance, marketing and production in the development of an organization's strategic business plans (De Cieri et al.2008). The concept of 'human resource planning' is not new. In fact, it came from the idea of 'manpower planning' developed in the 1960s. The growth of manpower planning techniques, using information incorporated into comprehensive computer models, was a major factor to develop the human resource, or personnel function, as it was known then (Legge 1995). However, the demand for human resource planning tends to fluctuate according to demographic changes in the past few decades. This fluctuation in demand has also largely been influenced by how organizations see the strategic importance of human resource planning.
Moreover, after reaching agreement on what business the company is in and who its consumers are, senior management then begins to set strategic goals. During this phase, these managers define objectives for the company. These objectives are broad statements the establish targets the organization will achieve. After these goals are set, the next step in the strategic planning process begins to analyse its goals, its current strategies, its external environment, its strength and weakness, and its opportunities and threats, in terms of whether they can be achieved with the current organizational resources. Commonly referred to as a "gap or SWOT (Strengths, Weakness, Opportunities and threats) analysis," the company begins to look at what skills, knowledge, and abilities are available internally, and where shortages in terms of people skills or equipment may exist. This analysis forces management to recognize that every organization, no matter how large and powerful, is controlled in some way is resources and skills it has available. An automobile manufacturer, such as Ferrari, cannot start making minivans simply because its management sees opportunities in that market. Ferrari does not have the resources to successfully compete against the likes of DaimlerChrysler, Ford, Toyota and Nissan. On the other hand, Renault and a Peugeot Fiat partnership can, and they may begin expanding their European markets by selling minivans in North America. (A. Taylor III, 1994, pp. 159-172)
The SWOT analysis should lead to a clear assessment of the organization's internal factors such as capital, worker skills, patents and the like. It should also indicate organizational departmental abilities such as training and development, marketing, accounting, human resources that are available or things that the organization does well are called its strengths. On the other hand, those resources that an organization lacks or activities that the firm does not do well are its weakness. This SWOT analysis phase of the strategic planning process cannot be overstated; it serves as the link between the organization's goals and ensuring that the company can meet its objectives that is, establishes the direction of the company through strategic planning. (Decenzo et al. 2002)
Another integral step in the development of a strategic plan is the analysis of external factors that influence organizational objectives. Threats are features of the external surroundings that may prevent the organization from achieving its strategic goals. It is human resource challenge to prevent firm by threats from new, foreign competitors. Opportunities are aspects of the surroundings that may help the organization to achieve its goals. For any firm preparing a strategic plan, an environmental scan should include an analysis of technology, economic factors, the legal or political environment, international markets, competitors, the labour supply, and its customers. Some features of the environment will have more influence on the organization than others. In any case, a strategic planning process should help managers develop as complete an understanding as possible of all the features of the organization environment and how they come together to affect the enterprise.(Fisher et al. 2003, pp 75)
After an organization has defined its mission and analysed both external opportunities and threats and internal strengths and weaknesses, it can realistically establish goals and objectives that will further its mission, in regard to people, products, marketing, resources, citizenship and profitability. Eventually these goals must be translated into specific planned and operational goals. These general goals have specific implications for the structure of work, the appraisal of performance, rewards, and career progression. The definition of goals has several important benefits to an organization and its employees (Fisher et al. 2003, pp 75-76). Furthermore, there are many factors that account for the increased attention directed to human resource planning, but environmental forces-globalization, new technologies, economic conditions, and a changing work force seem particularly potent (Dumaine, 1989). These create complexity and uncertainty for organizations. Uncertainty can interfere with efficient operations, so organizations typically attempt to reduce its impact; formal planning is one common tactic used by organizations to buffer themselves from environmental uncertainty (Thompson, 1967).
As discussed above, Strategic human resource planning is defined as the development of strategies that will ensure meeting the projected requirements. As such, it needs to be performed within the operational philosophy of the organization and could impact upon a number of areas such as diversity management, training and development plans, and managing psychological contracts. The aim of human resource planning is to identify the current and future staffing requirements, thus meeting the labour and the knowledge, skills and ability (KSAs) needs of the organization. Development of the human resources plan is the first step in the attempt to align the needs of the organization to the availability of the human resource, and to the needs of the employees, which include career pathways and quality of work life. It includes the systematic evaluation of the current and future human resource requirements. For human resource planning to be effective, it must be directly responsive to the organization's business strategies and integral to its strategic planning process (De Cieri et al.2008). The human resource planning must also align with the external environments of the organization. Thus its strategies, including its human resource planning, must be able to accommodate changes and be flexible to respond to the changes. It must comply with the country's laws and regulations, and be able to accommodate the volatility in the economic cycle, the political situations, and the cultural ramifications. (De Cieri et al.2008).
Human resource planners are required to be familiar with the legal system and its labour laws relating to human resource management, particularly in country you are working. It is the obligation of managers, supervisors, and employees to follow these laws and need to be able to identify the sources of employer and employee legal obligations pertaining to all aspects of the employment relationship. Human resource managers have to follow some legal obligations while performing human resource planning such as Employment contracts, legislated statutes, industrial awards and agreements and common law are different legal sources that may influence the rights and obligations of employees and employers. Australian legislation is enacted by different levels of government (federal, state, and local). Besides, international treaties and agreements can also have an impact on staff management practices, for example, the various United Nations and International Labour Organisation (ILO) covenants and agreements adopted by the Australian Government. Significant areas of the law that influence human resource management in Australia includes the common law contract of employment, industrial relations (IR) legislation, Equal Employment Opportunity (EEO) legislation, and Occupational Health and Safety (OHS) laws (De Cieri et al.2008).
In addition De Cieri (2008), point out that too much of government interference in various aspects of business practice could put in danger management effectiveness, efficiency, and overall business performance. However, as history shows, unfettered by government regulation in the past, businesses have been known to use child labour, be unconcerned about the health and safety of workers, pay below subsistence wages, etc. Thus governments, either in response to, or to influence, community values and attitudes, legislate to protect organizations stakeholders.
Furthermore, Ethics plays a very important role in human resource planning. Ethics are 'the set of standards and code of conduct that define what is right, wrong and just in human actions' (Dunham & Pierce 1989, p. 116). Social responsibility is the 'organization's obligation to engage in activities that protect and contribute to the welfare of society' (Dunham & Pierce 1989, p. 97). Barney and Griffin (1992) appropriately identified the difference between ethics and social responsibility when they suggest that 'people have ethics, organizations do not' (p. 199), organizations have social responsibilities. Today, ethics poses a dilemma for most organizations, as, one way or another; they are exposed to cultural diversity. Multinational organizations are especially vulnerable in managing the complex of cultural diversity (Dowling & Welch 2004).
Culture plays a significant part in determining what kind of ethical standard a nation or an organization or an individual upholds. So it is important to understand what 'culture' is. Dowling, Welch and Schuler (1999, p. 10) define culture as a process, 'members of a group of society share a distinct way of life with common values, attitudes, and behaviours that are transmitted over time in a gradual, yet dynamic, process' Culture defines the ways in which people eat, dress, greet one another, teach their children, etc. We are not born with a pre-determined culture, but rather are born into a society that teaches us its culture. The classification of culture include language, buildings, clothing, and art. Beneath the surface, and this is often not directly visible, are the values that influence artefacts. They are invisible rules, the subjective aspects that signify internalised influences that determine the way in which people think and behave. Deeper still, below the values, are the assumptions that cause values and artefacts. Not only are these not visible to the visitor but often not apparent to the inhabitant either, as they are so deeply imbedded. They underlie the value framework that exists in a specific national culture, and are steeped in its history (De Cieri et al.2008).
Coping with cultural differences and recognizing how and when these differences are relevant are a constant challenge for international firms. Helping to prepare staff and their families for working and living in a new cultural environment had become a key activity for human resource planning in those multinationals that appreciate the impact that the cultural environment can have on staff performance and well being (Dowling et al. 2004, pp 15). Furthermore, there are some major challenges in performing human resource planning such as globalisation, sustainability, innovation and retaining people. Global competition is generally recognized that levels of competition are increasing with the spread and diversity of international business and as firms from developing nations and transitional economies become more involved in global activities. As more and more firms from numerous countries become internationalized, concerns have been expressed about the desirability of the globalization of trade and business activity. The recent debate and demonstrations against globalization are perhaps indicative of this. Stakeholder's pressure is seen as a countervailing force. Thus, not only does increased global competition have an impact on a firm's competitive position, but also dealing with issues related to business ethics and social responsibility has now become a priority for multinationals, involving human resource managers (Dowling et al. 2004, pp 19-20).
The changing nature of work and organizations, changes in the labour market, establishment of significant number of contractual relationships at work and changes in labour institutions as well as many changes in work practices means a number of challenges for HR professional in managing the workplace relations for the future. According to Professors Russell Lansbury and Ron Callus from the University of Sydney, A key issue for the future is how to meet the growing challenges of increasing competitiveness while maintaining desirable social standards of living for all. To build labour market and employee relations policies around the realities of work. In this context, a more inclusive model, based on rights and obligations surrounding working life, is needed. This will require a new approach to the status of workers, the regulation of working time, and the pooling of risks and responsibilities. Unless changes are made, we are likely to witness a further deterioration in the quality of jobs and relations at work (Teicher et al. 2006, p. 42).
For an organisation to survive in the long-term, its staff must be able to meet new challenges, and not only react to change, but to create it. This requires employee commitment, adaptability and quality performance. To achieve this, development of core capabilities of employees who are able to provide leading-edge value to a company and its customers via 'expanding intelligence, creativity and innovation, and building integrity in relationships' is essential (Miller 1998, p. 9).
Retention of the employees plays crucial role in human resource planning and human resource development contributes an important role. Human resource development integrates training, development, organizational development, career development, and learning of both employees and the organization (Stone 2005). The integration and alignment of all these human resource management function forms an effective human resource development program for organization. Unfortunately, in practice, many organizations fail to appreciate the value of human resource development and do not take a holistic approach to investment in human capital. This is mainly because organisations tend to be short-term focused, employing staff that would closely meet their short-term performance requirements and providing minimum training to accommodate their immediate needs. Today's organisations have gradually realised that investing in human capital created competitiveness for short term and at the same time, has long term values, that is continuously feeding into the pool of available and quality human resources that are crucial to meet organization's future needs.
Additionally, innovation supports human resource planning in competitive economy, Creativity is the generating of new ideas, whereas innovation is the translating of ideas into new products, services, or methods of production. However, the skills required to generate ideas are not the same as those needed to realise it. Therefore, to make full use of new ideas an organisation needs both creative and innovative people. After all, creativity on its own makes no contribution; it needs to have practical value and usefulness. Thus it must be effectively translated. An organisation needs to do more to make innovation one of its key operating objectives for innovation to occur. Creative and innovative people have particular needs for a flexible environment. The ideal climate for innovation is one of welcoming and accommodating change. After all, innovation is about change. Flexibility of communication, controls and interaction among personnel are vital. It is the current trend for large organisations to attempt to capture the greater structural flexibility of smaller ones. They are striving for stronger lateral communication networks and cross-functional teams and task forces. Organisations are also reorganising to create smaller divisions in which new ventures can be explored within a flexible environment ( De Cieri et al. 2008, pp.197-202).
The motive of human resource planning is to ensure that the right people are in the right place at the right time, it must be linked with the plans of the total organization. Traditionally, there has been a weak one way relation between business planning and human resource planning. On the other hand, nowadays, in the world of globalization, tough competition, demand of innovative products and services and unstable economies, the importance of human resource planning come over as an only solution. Meanwhile, the significance of the understanding strategic human resource management also plays a vital role in growth of particular company and world economy.