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CHAPTER 5 PERSONNEL PLANNING AND RECRUITING 139<br />

THE STRATEGIC CONTEXT<br />

IBM<br />

IBM has been transitioning from supplying mostly computers to supplying software and<br />

consulting services. Therefore, in terms of IBMs strategic workforce needs, in three<br />

years, 22 percent of our workforce will have obsolete skills. Of the 22 percent,<br />

85 percent have fundamental competencies that we can build on to get them ready for<br />

skills we ll need years from now. The remaining 15% will either self-select out of IBM<br />

or be let go. 2<br />

As at IBM, workforce and succession planning should entail thinking through the<br />

skills and competencies the firm needs to execute its overall strategy. At IBM, for<br />

instance, human resource executives review with finance and other executives the<br />

personnel ramifications of their company s strategic plans. 3 In other words, What<br />

sorts of skills and competencies will we need to execute our strategic plans?<br />

Figure 5-2 summarizes the link between strategic and personnel planning. Like<br />

all plans, personnel plans require some forecasts or estimates, in this case, of three<br />

things: personnel needs, the supply of inside candidates, and the likely supply of outside<br />

candidates. The basic workforce planning process is to forecast the employer s<br />

demand for labor and supply of labor; then identify supply demand gaps and<br />

develop action plans to fill the projected gaps.<br />

We ll start with forecasting personnel needs.<br />

Forecasting Personnel Needs (Labor Demand)<br />

How many people will we need? Managers consider several factors. 4 For example, when<br />

Dan Hilbert took over staffing at Valero Energy, he reviewed Valero s demographics,<br />

growth plans, and turnover history. He discovered that projected employment shortfalls<br />

FIGURE 5-2 Linking<br />

Employer s Strategy to Plans<br />

Employer s strategic plan<br />

Diversify?<br />

Integrate vertically?<br />

Expand geographically?<br />

On what basis should we compete?<br />

Employer s<br />

functional<br />

plans<br />

Marketing and<br />

sales plans<br />

Production<br />

plans<br />

Financial<br />

plans<br />

HR plans<br />

Personnel<br />

plans<br />

Training and<br />

development<br />

plans<br />

Compensation<br />

plans<br />

Labor<br />

relations<br />

plans<br />

Security and<br />

safety<br />

plans<br />

Personnel<br />

forecasts<br />

Recruitment<br />

plans<br />

Employee<br />

selection<br />

plans<br />

workforce (or employment or personnel)<br />

planning<br />

The process of deciding what positions the<br />

firm will have to fill, and how to fill them.

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