By looking out the definitions of HRP from Dessler (1999), Stone (2002), and Schuler (1998), HRP can be defined as the systematic and continuous process to ensure that organization’s human resource needs are fulfilled by ensuring that the right people with the correct skills are available when required. Shortly, HRP is essentially focus on matching the individual and the needs of the organization to gaining a competitive advantage in marketplace.
HRP is important because the HR plan affects all HR activities and acts as the strategic link between organizational and HRM objectives (Stone 2002). It can reduce the human resources cost by helping management to anticipate and correct the shortages and surpluses of employees. An addition, HRP will provide a better basis for planning employee employment in order to make optimum use of workers’ attitudes and to improve their job satisfaction (Nankervis et al. 1999). HRP provide more opportunities of working for women and minority groups in the labour market. Moreover, the HPR provide a tool for evaluating the effect of alternative human resource actions and policies.
Nowadays business environment is multifaceted and complex, thus the changes in business environment will have a great impact on the HRP of the organization. By the definition of HRP, to be a success organization, the organization must achieve the business objectives through the effective utilization of human resources. Therefore, organizations need to forecast the internal and external supplying of human resources through the process of HRP. Usually, the present employees who can be promoted, transferred, demoted or developed will make up the internal supply. When the internal supply of employees cannot meet the demand, organization is needed to look up the external human resources from labour market. This show that labour market is an important factor in determining human resource strategy, therefore the changes of labour market will bring the effects to the HRP of organization.
Normally, business environment can be categorized to 2 which are internal environment and external environment. The internal environment involves those factors that are found within the organization, for example, organizational structure and organizational culture (Stone 2002). By analyzing those factors of the internal environment, HR planner will be able to identify the organization’s strength and weakness in order to achieve the business objectives.
The structure of an organization is referring to the organization’s framework or design which can directly affect employee productivity and behavior (Stone 2002). It refers to how work tasks are assigned, who reports to whom, and how decisions are made (Eadie n.d.). Usually there have 2 forms of the organizational structures, one is hierarchical structure and the other one is flat structure. For the hierarchical structure, organizations have narrow span of controls over their employees. In contrast, organizations have wide span of controls over their employees with the flat structure. Thus, the structure of an organization has a powerful influence the types and numbers of employee in the organization, further the size of the labour market. Therefore, base on the structure of the organization, HR manager can anticipate the number of employees that required by the organization.
The organization culture is the pattern of basic assumptions, values, norms, and artifacts shared by organizational member (Cummings and Worley 1993). It tells employees how things are done, what is important and what kind of behavior is rewarded (Moorhead and Griffin 1995). Thus it has an impact on employee job satisfaction as well as on the level and quality of employee performance. However, each employee may assess the nature of an organization’s culture differently, one of them may view it positively but one of them may view it negatively. Therefore, HR managers will be major players in shaping the cultures of organization in order to enable the long-term success of the organization.
The external environment involves those factors cannot be found within the organization. External environment can be categorized to 2 elements that are societal environment and task environment (Anthony et al. 1999). The factors of external environment include legal and political, economic, social, and demographic, labour market, competition, technological, and industrial relations. Each factor either separately or in combination with others, can place constraints on human resource management. Therefore, HR managers must analyze the external environment to identify any strategic opportunities and threats that may be present in the future, so that the organization can take the advantage of external opportunities and minimize external problems.
The labour market is the geographical area from which employees are recruited for a particular job (Mondy et al. 1999). Changes in the labour market create constraints i.e. societal trends and culture for employers finding applicants with the right levels of skills (Noe et al.). The unemployment rate, education levels, occupation levels, and the mix of the age and sex will be the four key used to examine the measures of labour market (Anthony et al.1999). Those people who are not working and not looking for the job, for example households, retires, and students are considered as being “out of the labour forces”. Therefore this kind of unemployed people will not be the factor of unemployment rate measurement.
Usually, the unemployment rate will be high during the recession of economy because the companies fire many people out. Thus, the demand for the workers of organizations is reducing but the supply of workers from the labour market is increasing. Labour force is an uncontrollable factor by HR planner because they can’t control the number of the workers in the labour market. But employment rate is a controllable factor because HR managers can use the statistical and mathematical technique to predict the available workforce based on the past information.
The economy of the nation, on the whole and its various segment, is a major environmental factor affecting human resource management. There is a case in mid-1997, when economy is booming; recruiting qualified workers is more difficult than less prosperous time. Therefore, HR managers of some organizations had to use incentive scheme to entice needed employees. On the other hand, when economy is experienced downturn, more applicants are typically available. It is because many workers losing job and the high unemployment rate, thus all of them will strive for any opportunity to get a job. Beside that the HR manager also consequently develop staffing strategies to accommodate the downturn economy.
Such strategies my include job entrichment, outsourcing, the development of new product lines or new services, flexible job options (e.g. job-sharing or part-time), or downsizing (Nankervis et al. 1999). Unfortunately, the downsizing is the main option that chose by many organizations in the early 1990s. The people cannot anticipate the crisis of economy, thus economy crisis is considered as an uncontrollable factor for the HR planners. Beside that the issue of SARS is also an uncontrollable factor of economic for the HR planners. Although economy crisis and SARS are unpredictable, HRP still play an important role for the organizations. It is because an organization with HRP can forecast the needed workers quickly than the organization without HRP during the time of economy crisis or SARS.
The changes of the social are came from changes of the lifestyle of people and the changes of the nature of employment in the labour market. Today, more and more young people with a high level of education are not willing to work long time for one organization only because they want to enjoy the higher quality of lifestyle. Therefore, they are keeping on to seek the new job with the better salary and benefit that provided by the other organizations. But not all those seeking work can find a job at prevailing standards, and therefore it creates a shortage of workforce for organization. Hence, HR managers need to provide more fringe benefits to attract employee remaining in organization. Traditionally, the nature of employment is the full-time permanent employment.
During recession of the economy, many organizations decide to downsizing or outsourcing their business to remain the competitive advantage in the market. Thus, this lead the nature of employment is increasingly changed to part-time or casual employment in organizations. According to the Bureau of statistic of labour force in Australia (figure 1), there is a strong evidence to show that the part-time and casual employment is increasing important between the 1973 and 1997 (Nankervis et al.). The nature of employment is a controllable factor by HR planner because they design the recruitment of employees, for example, what type of workers and how many workers that they would like to employ from labour market.
The baby boom that occurred after the Second World War created a substantial increase in population and changes the demographic. Those baby boomers will reach the employment age during the 1960s and they will create a bulge in the workforce. While the population of baby boomers has generally grown at high rate, whereas the population of baby busters, who are the next generation has grown at lower rate. Therefore, the imbalance in the age distribution of the workforce has major impact for employers and HR planners. Beside that, since the occurrence of the Equal Employment Opportunity (EEO) and Affirmative Action (AA), the participation rates of women in the workforce are increased.
The increasing number of women in the workforce is a trend that HR planner needs to recognize and accommodate. Thus, employers are obliged to provide more flexible employment options and childcare assistance to those women workers. The government can control the population in a country, for example the China issue the policy that one family only can have one child Therefore, the demographic can be considered as a controllable factor for the HRP. But sometimes HR managers cannot anticipate the fast increases of the population i.e. population explosion, thus it is an uncontrollable factor for the HRP.
The changes of technology have an effect on business which dealing with human resource management. The improvement of technology advances the improvement of productivity of an organization. Today, the computer field is large and employing millions of people directly and indirectly because the computer allows much quicker access to and processing of information. Thus, more and more organizations have deserted the tradition way and bring in the technique of computer for their business operations. As technological changes occur, certain skills are no longer required, and therefore it lead to major reductions in the number of employees needed. Shoshana Zuboff (1988) was also arguing that the effects of the computer have yet to be felt since work itself will change completely as information becomes more readily available right at the workstation (Anthony et al. 1999).
For example, American Telephone and Telegraph (AT&T) plans to reduce its workforce by 15000 employees as a result of technological changes. AT&T has also used automation to reduce the number of long-distance operators by two-thirds. Most experts do not expect the number of new jobs to match the number of lost through technological changes (Drucker 1993). Recently, there is occurring a computer virus called “So Big. F”. According to the newspaper, this virus has damaged the computer system of many organizations in short time. If the computer system breaks down, the organization may need more employees to do the jobs that were done by the computer before. Since the HR planners cannot anticipate the occurrence of “So Big. F”, this is an uncontrollable factor of technology for the HRP.
As every advanced economy becomes global, a nation’s most important competitive asset becomes the skills and cumulative learning of its workforce. This means that the people make organizations go. Therefore, how the people are selected, trained, and managed determine to a large extent how successful on organization will be (Cascio 1998). But as the changes of the environment, the task of managing people today’s world is particularly challenges. Thus, more and more organizations emphasize on the HRP to forecast the demand for and supply of human resources. That is why the personnel department transforming to human resource department in many organizations.