CH 6 - Class

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Chapter 6
Ascertaining HR Supply
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 Understand the relationship between

demand and supply forecasting
techniques in the HR planning process
 Recognize the importance of effectively
managing the supply of human capital
Chapter Learning  Comprehend the importance of
Outcomes segmenting human capital to better
understand where human capital plays
a critical role in implementing strategy
and how to manage the supply of that
human capital
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 Discuss and evaluate the advantages and

disadvantages of the following specific methods of
determining external and internal supply:
1. Skills and
management
inventories
2. Human capital
Chapter Learning segmentation
Outcomes 3. Markov models
4. Linear programming
and simulation
5. Movement analysis
6. Vacancy/renewal
models
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 Recognize when an HR gap may be

filled through substitution strategies
Chapter Learning such as automation, or when the gap
Outcomes may be attributable mostly to the
bullwhip effect
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 Internal supply: Existing

employees who can be
retrained, promoted,
transferred, or otherwise
redeployed to fill anticipated
future HR requirements
 External supply: Members of
Human the workforce not currently
employed by the firm, who are
Resources Supply currently undergoing training,
working for competitors,
members of unions or
professional associations, in a
transitional stage, between
jobs, or unemployed
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Employee
segmentation: The
grouping of employees
based on characteristics
that are relevant to the
Segmenting the employee experience
Internal Supply of such as career
Human Capital preferences,
demographics, work–
life preferences, or
benefits
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 A situation in which the supply of a

particular form of human capital
Skills Gap available to the firm is inadequate to
address the demand
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 Role of employers
 Other labour pools
 Influence of government programs
 HR retention programs
HR Supply  Mass customization of HR
Programs • The ability to customize HR
practices at the employee level
efficiently and at low cost
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 Skills inventory, includes:

• Personal information
• Education, training, skill
Methods for competencies
• Work history
Modelling the • Performance ratings
Supply of Human • Career information
Capital • Hobbies and interests

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 Management inventory includes:

• A history of management or
professional jobs held
• A record of management or
professional training courses
Methods for and dates of completion
Modelling the • Key accountabilities for the

current job
Supply of Human
• Assessment centre and
Capital appraisal data
• Professional and industry
association memberships
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 A model that produces a series of

matrices that detail the various patterns
of movement to and from the various
jobs in the organization, including:
• Remaining in the current job
Markov Models • Promotion to a higher-classified job
• A lateral transfer to a job with a
similar classification level
• Exit from the job
• Demotion
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 Movement patterns are historical

 Depends on stable transition
probabilities, so dynamic and unstable
environmental scenarios may preclude
Markov Model the effective usage of Markov models
Assumptions  Sequence of movements between jobs

are called Markov chains
 Vacancies create a multiplier effect
 Movement is tracked annually
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 The number of employees who move

annually, and over specified time
periods, between various job levels
 The number of external hires that are
required by the organization, and where
the specific jobs are needed
Markov Model  The movement patterns and expected
Utility duration in specified jobs associated

with patterns of career progression for
employees in the organization
 The number and percentage of all
starters at a particular job level who will
successfully attain a future target job
level by a specified time period
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Markov Model
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 Determine the list of mutually exclusive

states (promotion, transfer, termination,
demotion, or status quo)
 Based on the pattern of transitions
between jobs, develop a matrix of jobs
that are linked by career progression or
Markov Model historical movement
Steps  Use historical data to determine the

probability of moving from one state to
another
 Populate the matrix with an initial
distribution of job holders across the
various states of the model
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Linear  A mathematical procedure commonly

Programming used for project analysis in engineering
and Simulation and business applications
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 A technique used to analyze the chain

Movement or ripple effect that promotions or job
losses have on the movements of other
Analysis employees in an organization
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Vacancy Model
 Also known as renewal or

sequencing model
• Analyzes flows of employees
throughout the organization by
examining inputs and outputs at
each hierarchical or
compensation level
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 The effect caused when one promotion

or transfer in the organization causes
Ripple or Chain several other personnel movements in
the organization, as a series of
Effects subordinates are promoted to fill the
sequential openings
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 In the event of a gap, firms must

hire externally in the short term
 Long term strategies include:
• Outsourcing the extra
requirement
• Focusing on retention strategies
Substitution and to reduce voluntary
Other Gap terminations
Strategies • Increasing training and
development efforts to further
develop the internal labour
pool
• Substituting human efforts with
automation
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 Occurs when errors in estimating the

supply of human capital are amplified
The Bullwhip along the supply chain, resulting in
Effect large overestimates of hiring needs

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 Range of methods used in organizations

to determine future HR supply
requirements
 As any forecasting method may lead to
error, it is important for planners to
Summary understand the potential sources of

error in forecasting supply, and to
monitor past forecasts and forecasting
methods in order to continuously
improve forecasting practices

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1

 Understand the relationship between

 Discuss and evaluate the advantages and

 Recognize when an HR gap may be

 Internal supply: Existing

 A situation in which the supply of a

 Skills inventory, includes:

Capital • Hobbies and interests

 Management inventory includes:

Modelling the • Key accountabilities for the

 A model that produces a series of

 Movement patterns are historical

Assumptions  Sequence of movements between jobs

 The number of employees who move

Markov Model  The movement patterns and expected

Utility duration in specified jobs associated

 Determine the list of mutually exclusive

Steps  Use historical data to determine the

Linear  A mathematical procedure commonly

 A technique used to analyze the chain

 Also known as renewal or

 The effect caused when one promotion

 In the event of a gap, firms must

 Occurs when errors in estimating the

Effect large overestimates of hiring needs

 Range of methods used in organizations

Summary understand the potential sources of

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