HR Planning in Dynamic Economic Environment

Introduction The last couple of decades have witnessed unprecedented changes in worldwide economic environment due to a wide spectrum of issues, namely globalization, technological advancements, liberalization, intense global competition, and changes in governance structures.Advertising We will write a custom essay sample on HR Planning in Dynamic Economic Environment specifically for you for only $16.05 $11/page Learn More These new developments have forced organizational managers to acquire new management dispensation in every sector of the organization in the hope of retaining or even increasing their competitive advantage. Due to the dynamic economic environment of the 21st century, organizations all over the world are being forced to actively acquire knowledge and new management techniques as their competitive advantage is, more than ever before, dependent on incessant knowledge development and modern management enhancement (Thames Webster, 2009 p. 12). The Human Resources (HR) function is one of the most domineering frontiers charged with the responsibility of assisting organizations to wade through the turbulences of changing economic environment. Without this function, it would be almost impossible for organizations to acquire the requisite knowledge needed to maintain their competitive advantage. Against this backdrop, this paper purposes to discuss how a modern approach to HR planning is applicable in a changing and dynamic environment. Understanding HR Planning and Dynamic Economic Environment The successful planning and management of human resources (HR) is perhaps one of the most fundamental engines of growth in organizations. It is indeed true that organizations that fail to establish a HR plan for the future run the danger of not having the desired employees on board to take them through the ever changing economic environment (Fountaine, 2005 p. 25). HR planning entails bringing focus, alignment, purpose and energy to the organization’s business strategy through available manpower resources. According to Idris Eldridge (1998), HR planning is a term used to define how organizations ensure that their employees are the right staff to perform the required duties.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Pattanayak (2005) defines effective HR planning as â€Å"†¦a process of analyzing an organization’s human resource needs under changing conditions and developing the activities necessary to satisfy those needs† (p. 34). In essence, the central theme of HR planning should be to capture the employee component of what an entity is hoping to accomplish in both medium and long-term scenarios. As such, an effective HR plan or strategy must always ensure the organization has the right kind of people with the right mix of professional skills and expertise. Such a plan must also en sure that the employees exhibit the right attitudes, organizational values, behaviours and professionalism (Jackson Schuler, 1990 p. 223). In addition, HR planning must be viewed broadly as a management process. It is the duty of managers in liaison with members of staff to establish the strategic bearing and the outcomes of the organizations they serve. In this respective, a comprehensive HR strategy or plan plays a fundamental function in the attainment of a company’s general strategic objectives, and inarguably demonstrates that the HR function fully comprehend and support the bearing taken by the organization in maintaining its status and competitive advantage (Idris Eldridge, 1998 p. 350). A comprehensive HR plan will also extend support to other definite strategic objectives and departments within the organization such as the marketing, operational, and information technology functions. Consequently, HR planning is able to add value to the organization through clear a rticulation of some common themes and underlying issues that lie behind the accomplishment of the organization’s objectives, plans and strategies.Advertising We will write a custom essay sample on HR Planning in Dynamic Economic Environment specifically for you for only $16.05 $11/page Learn More As already mentioned, organizations are increasingly finding themselves operating in an environment that is becoming fast-paced and competitive by the day. In other words, they are operating in a dynamic economic environment, where the pace and extent of change has drastically increased. In brief, a dynamic economic environment comprises of changing economic scenarios in which the organization must navigate safely to remain relevant in today’s business environment (McKenna Breech, 2008 p. 169). Unlike in traditional cases where organizational changes were premeditated and occurred at a calculated pace, today’s organizations must learn to q uickly adapt to new circumstances and overcome possibly irregular obstacles in a dynamic economic environment. In today’s dynamic economic environment, changes in business strategies are much more frequent and capricious, and are often determined by events and global happenings rather than made on a premeditated timeline. As such, HR planning can add value to the organization by making sure that the organization takes account of and comprehensively plan for situations and changes that are bound to occur in the wider environment (Vito, 2008 p. 84). These changes, which are expected to have a far-reaching impact on the organization, may include influences in the general employment market, changes in employee relations, changes in the legal structures surrounding employment, and new flexible work practices, among others. Traditional versus Contemporary Approaches to HR Planning Having discussed HR Planning and the changing economic environment, it is imperative to look at the tr aditional and contemporary approaches towards the process of HR planning. In this day and age, there still remain organizations which are favoured by traditional approaches towards HR planning.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More A traditional approach to HR planning can be defined as â€Å"the use of systematic techniques to forecast supply and demand three to five years ahead† (Taylor, 2005 p.105). Organizations that use this approach share some similar characteristics. First, these organizations must be large enough to actively be able to devote key resources to the enterprise. Second, they must be operating in realistically steady product and labour markets. In other words, these organizations functions well if changes in the external environment happen at a more measured pace (Idris Eldridge, 1998 p. 347). Third, organizations practicing a traditional approach to HR planning are likely to have key members of staff who require lengthy, comprehensive and expensive training. Lastly, such organizations are likely to be competing in sectors in which decisions regarding investments in key equipments and human resources are made some several years ahead. Taylor (2005) is of the opinion that many organi zations in the United Kingdom, namely health and educational institutions, social services, oil corporations, local and central governments, utility companies, major banks, and others, share most of the above distinguishing characteristics. This therefore means that they are engaged in traditional approach to HR planning. In such organizations, change in the economic environment is comparatively predictable over the short-term even if such change occurs quickly. The shutting of departments, strategic expansion into new frontiers, and other organizational changes do not in any way take place overnight. Characteristically, there will be at least several months’ caution of probable organizational changes, allowing time for reputable HR forecasts to be adapted. This forms the general mechanics of the traditional approach to HR planning. Inarguably, it can be said that the non-existence of an active HR planning function in many of these organizations translates to the fact that th ey are unable to maximally exploit their long-term efficiency and effectiveness (Taylor, 2005 p. 105). On the other hand, a contemporary approach towards HR planning institutes a firm link between the broad spectrum of environmental and organizational aspects on the one hand, and particular human resource programmes on the other (Pattanayak, 2005 p. 34). This approach is mostly used by small and large organizations operating in a fast-paced dynamic environment. The HR planning approach is also used by organizations that are â€Å"†¦unable to know from one quarter to the next what turnover is likely to be achieved† (Taylor, 2005 p. 106). For these organizations, the institution of official, methodical planning function to make well informed predictions on the basis of preceding organizational patterns and managerial judgment does not in any way make a cost-effective proposition. In contemporary approach to HR planning, the market, existing resources, and organizational ar rangements are simply too volatile to allow significant forecasts to be made and organizational plans to be instituted relating to staffing requirements a year or more ahead (Taylor, 2005 p. 106). What is required in this approach is an alteration of the standards essential to HR planning, coupled with the advancement of newer approaches and techniques. The contemporary approach operates under the premise that organizations have to adapt to the dynamic economic environment much faster and with enhanced risk since they are operating in a deficient internal and external environment (Briggs, 2001 para. 4). The contemporary approach to HR planning acknowledges that organizations must move towards a knowledge economy, globalization, information administration, and employment of individuals for their creativity and knowledge. The contemporary approach to HR planning features a strong link between employee goals, plans and aspirations on the one hand, and organizational goals and objective s on the other (Pattanayak, 2005, p. 35). Historically, HR programmes have always been developed to satisfy the needs of the organization. However, in the years ahead, HR approaches must strike a balance between organizational requirements and the requirements of workers and society at large. Unlike the traditional approach, the contemporary approach to HR planning takes into account employee careers, personal interests, professional development roadmaps, and relocation preferences. The approach revolves around the premise that what is measured to be good for the employee should inarguably prove to be good for the organization as well. Advantages and Disadvantages of HR Planning Organizations stand to gain from the many benefits related to successful HR planning. One of the advantages is the discovery of sources of manpower which have the capacity to provide adequate number of workers having the suitable levels of knowledge, expertise and work ethos (Pattanayak, 2005, p. 34). In oth er words, HR planning has the capacity to generate the requisite human resource. Inarguably, this is one of the hallmarks of contemporary approach to HR planning. While it is imperative to guarantee a match in the number of employees employed, it is also significant to attain the right mix of expertise among the workforce. Indeed, HR planning remains fundamentally significant in turbulent economic periods, if only to make sure that organizations have employees of the desired quality and quantity, accessible at the right time (Marchington Wilkinson, 2005 p. 158). In this respective, HR planning also offers the advantage of developing â€Å"†¦a system for providing a suitable worker-job-fit† (Pattanayak, 2005 p. 34). This enhances the business strategy and competitive advantage of organizations practicing HR Planning. The Second advantage borders on the fact that HR planning offers the capacity of incorporating significant elements of human resource planning and developme nt into the general corporate planning of the organization (Pattanayak, 2005 p. 34). In other words, it encourages employers to develop detailed and explicit correlations between the nature of their businesses and HR strategies and plans in the hope of incorporating the two more efficiently. For instance, HR planning in the realm of a contemporary approach will see an organization open up to the career and personal development needs of its employees, not mentioning the fact that it will offer more supple work schedules and accountable practices for hiring. In this perspective, HR planning is inarguably viewed as a foremost facilitator of the organization’s business strategy and competitive advantage. Third, HR planning provides a personal profile of current members of staff in terms of age, position, gender, racial orientation and disability status (Marchington Wilkinson, 2005 p. 159). This is fundamentally important for contemporary organizations claiming to practice equal opportunity. Forth, HR planning enables an organization to set up its strategic direction and plan for its total workforce (Badaway, 2007 p. 59). Fifth, effective HR planning necessitates better control of staffing needs and the number of employed workers. In the modern changing economic environment, it is always imperative for employers to make accurate estimations about projected staffing requirements, â€Å"irrespective of whether a growth or decline in numbers is predicted, because this makes it easier for employers to match supply and demand† (Marchington Wilkinson, 2005 p. 159). Also, contemporary HR planning enables employers to control the ever rising labour outlays and safeguard tighter profit margins roped in by the organization. These are important functions that are strongly linked to the organization’s business strategy. In today’s dynamic economic environment, organizations must vehemently be able to chart their own future or risk failure HR plann ing, like any other management strategy, has its own disadvantages. Some organizations who may want to appear flexible view HR planning as a bureaucratic and rigid way of managing people and organizational resources (Marchington Wilkinson, 2005 p. 158). For them, it does not make much business sense to make plans in an uncertain and turbulent economic environment as they will always be unprecedented influences of external outcomes. A case in point is the recent economic meltdown witnessed in nearly all economies in the world. Other critics of HR planning argue that it is time-consuming, expensive and complex. The strategies espoused in HR planning can also turn complicated. Contemporary Approach to HR Planning and Dynamic Changing Environment The contemporary approach to HR planning views the market and other organizational arrangements as being too volatile and uncertain to allow for significant forecasts relating to staffing needs to be made a year or more ahead (Taylor, 2005 p. 106). Not too long ago, organizations were actively able to forecast and plan about the future with greater certainty than it is the case today as local and international economies were normally more stable and predictable (Burack, 1993 p. 1). HR planning was easier since the environment was more certain. But today, the forces of change in the dynamic environment are sweeping across all sectors of organizational life. As such, it is becoming increasingly impossible to apply the traditional approach to HR planning, especially in organizations operating in tight labour markets, where they are obligated to commit significant material and human resources to compete effectively in the dynamic economic environment (Taylor, 2005 p. 106). Consequently, the contemporary approach to HR planning seems much more applicable in today’s ever-changing business environment. Presently, hardly a day passes by without receiving information about some major new business developments in the name o f expansions, downsizing, mergers, acquisitions, takeovers, and business reorganizations (Taylor, 2005 p. 106). In traditional approach to HR planning, such business developments would destroy the lives and employment relationships of the concerned employees, not mentioning the fact that some developments such as downsizing, acquisitions and takeover bids would negatively influence the efficiency of employees due to lack of prior preparation (Burack, 1993 p. 1). It should be noted that in traditional approach to HR planning, systematic procedures are used to anticipate supply and demand of material and human resources some three to five years ahead. Therefore, in the modern-day world where the forces of supply and demand changes at an international level without provocation, contemporary approach to HR planning seems the only valid strategy (McKenna Breech, 2008 p. 157). In today’s business environment, organizations must have the capacity to respond to considerable environm ental developments that keep propping up due to the dynamic nature of the environment. For instance, organizations are increasingly being faced with the prospects of new business opportunities or some aspects of negative publicity (Taylor, 2005, p. 106). As such, the traditional multi-layered top-down approach toward HR planning is inadequately capable of handling such challenges, which may inarguably expose the organization and employees to a lot of suffering and loss of productivity unless immediate remedial measures are taken. Consequently, a flatter and leaner contemporary approach is more applicable in a dynamic changing environment as it enhances faster and more effective communication, information flow and organizational outcomes (Burack, 1993 p. 2). Lastly, the changing work attitudes and ethos only serves to reinforce the fact that the contemporary approach to HR planning is more applicable in a dynamic changing environment. Not so long ago, employment relations assumed a r easonable day’s work for a reasonable day’s pay package under moderately constant business conditions. Employee loyalty and quality work were compensated through varying levels of job security. Presently, continuous change, insecurity and temporariness have inarguably substituted stability, certainty and permanency (Burack, 1993 p.3). According to Burack, â€Å"†¦continuous performance improvement, acquiring new skills, employee flexibility, cost options and adding value have assumed great importance to companies† (p.3). Certainly, the traditional approach is ill equipped to handle such work ethos due to its static nature. However, the contemporary approach to HR planning in a dynamic changing environment has its own fair share of problems. Experts believe that the contemporary approach inflicts new requirements and stipulations on managerial and employee functions, effectively changing the nature of work life for individuals (Burack, 1993 p. 3). The effect iveness of contemporary approach to HR planning is known to exclusively depend on how the existing human resources are utilized and how future requirements are met (Pattanayak, 2005 p. 34). Organizations that fail to balance these fundamental functions have found themselves on the receiving end as far as contemporary approach to HR planning is concerned. The approach is somewhat complex to fathom, and requires a great deal of exercise to perfect. Overall, the contemporary approach to HR planning is definitely more applicable in a dynamic changing environment. Relevance of HR Planning to Contemporary Organization The relevance of HR planning to modern organizations can never be underestimated. The HR planning function â€Å"involves forecasting the organization’s future human resource needs and planning for how those needs will be met† (Jackson Schuler, 1990 p. 223). It is therefore very relevant to contemporary organizations as it engages employers in forecasting the future requirements for manpower resources, thereby enhancing the business strategy and competitive advantage of the respective organizations. Indeed, the HR planning component of organizations is actively engaged in developing and implementing programmes and strategies that necessitate the organization to accomplish its human resource objectives. This is a fundamental role to contemporary organizations in their attempts to retain their competitive advantage and further their business strategy. The modern business environment is overflowing with environmental instabilities, technological shifts, variations in demographic characteristics, and global competition. To survive in such a tumultuous environment, there is need for contemporary business organizations to adapt newer strategies to HR planning (Jackson Schuler, 1990 p. 223). In this regard, it is safe to argue that HR planning is relevant to contemporary organizations as it acts as a facilitator in the process of negotiating a n external business environment that is characteristically dynamic and ever-changing. Presently, major transformations in the business environments are forcing employers to incorporate business planning with HR planning in the hope of remaining on the safe side through the adoption of short-term and long-term business strategies and objectives (Jackson Schuler, 1990 p. 223). This function is better handled by HR planning, especially the contemporary approach. Therefore, it can be argued that for organizations to remain relevant in today’s ever-changing business, political and socio-economic atmosphere, they must be aligned to either one of the approaches to HR planning. In contemporary times where uncertainty and unpredictability is the rule rather than the exemption, it makes more business sense to align organizations to contemporary approach to HR planning. A business entity that fails to lay concrete plans and strategies for the future have minimal opportunities to surviv e the stiff competition (Caruth Hondlogten, 1997 p. 121). In this perspective, the concept of HR planning is extremely relevant to the modern organization as it characterizes a major competitive advantage for the organization. Lastly, the determination of the organization’s long-term human resource requirements understandably stem from its strategic business plan. The strategic business plan is the document that outlines the direction in which the organization purposes to move, both in short-term and long-term. Through premeditated business planning and HR planning, â€Å"the institution clarifies its mission and purpose, sets its goals and objectives, and develops courses of action that it hopes will lead to goal accomplishment and mission fulfilment† (Caruth Hondlogten, 1997 p. 121). In this respective, HR planning is indeed very relevant in today’s ever-changing economic environment as it serves to assist the contemporary organization accomplish its goals a nd mission. From the discussion above, it can be safely concluded that HR planning is indeed very relevant to contemporary organizations. The HR planning component has undoubtedly assisted organizations to match the size and expertise of their manpower resources to the needs and requirements of the organizations (Rothwell Kazanas, 2003 p. 34). In addition, the component continues to assist contemporary organizations to recruit, train, retain, and maximize the deployment of manpower resources needed to fulfil organizational objectives, in addition to responding to dynamic changes in the external environment. HR planning facilitates contemporary organizations to undertake a skills evaluation of the existing employees. The HR function also assists organizations to undertake manpower forecasting, in addition to taking proactive remedies to ensure supply meets demand (Noe et al, 2004 p. 110). The relevancy of HR planning also stems from the fact that it has the capacity to link the busi ness strategy of contemporary organizations with their operational strategy. It decreases the risk of losing There are many examples of contemporary organizations utilizing HR planning to further their business strategy and maintain competitive advantage. For instance, many government-run banking institutions1 practice HR planning. The health2 and education sectors in many countries continue to employ HR planning to cater for the needs of their respective manpower resources (Yambesi, 2009 p. 2). Some individual organizations that have greatly succeeded through the use of HR planning include Nepal Telecom, Marriot Corporation, Sony, and Camden Corporation (Ulrich, 1992). Future Directions for HR Planning The cross-cutting concept of HR planning seems to be gaining steam by the day as organizations attempts to outdo each other in the dynamic and ever-changing business environment of the 21st Century. As already mentioned elsewhere in this paper, organizations that lack an effective HR planning strategy may never gain the capacity to penetrate the uncompromising business environment of contemporary times (Rothwell Kazanas, 2003 p. 4). Judging from existing indications such as the effects of globalization, changes in technology and economic downturns, it is indeed plausible to argue that the business environment of the future requires proactive rather than reactive strategies (Isaacs, 1989; Bramham, 2000 p. 67). HR planning is a proactive approach that can be of great significance in assisting organizations adapt to these forces of change. The future belongs to organizations that will run their operations in an efficient and effective manner. The business environment is becoming much more unstable by the day, pushing some organizations towards the periphery of collapse. As such, it is imperative for organizations to lay emphasis on HR planning as the facilitator of effective and efficient operations aimed at fulfilling their business strategy and enhancing compet itive advantage (Isaacs, 1989). In this respective, HR planning must therefore be applied by all organizations wishing to stay afloat in these turbulent times, with a focus on assisting them adapt to the ever-changing economic environment. Undoubtedly, HR planning will continue to be used in the future to determine the business and staffing needs of organizations (Greer, 2000 p. 128). These functions are critical in ensuring organizations retain their competitive clout in an ever-changing business environment. Indeed, the role of HR planning in informing future workforce planning patterns, organizational best practices and strategic business insights have been well cut by today’s deterministic and unstable business environment. It is therefore safe to assume that the role of HR planning in managing employee and organizational needs in today’s unstable world is bound to increase in the future Conclusion From the discussions above, it is vehemently clear that HR planning is very relevant in today’s changing and dynamic economic environment. The practice of HR planning has not only enabled organizations to have the right mix of workers with the right mix of experiences at the opportune time, but it has also served to align organizational requirements to those of individual employees. Business organizations exist to make profits for their shareholders. As such, it is important that they maintain their competitive advantage in the most unstable of economic environments. Undoubtedly, one of the strategies that can be used to assist organizations to enhance their business strategy and competitive advantage is HR planning. The issue of planning is important in every aspect of our human lives. In equal measure, effective planning lays the groundwork for organizational success and excellence. HR planning also entails gathering of information, outlining of objectives and strategies, and making decisions to allow the enterprise accomplish its objectiv es (Badaway, 2007 p. 60). By any standards, this is a noble undertaking that should be emulated by all HR professionals. In today’s changing and dynamic environment, such an avenue must be utilized by right-thinking organizations in their pursuit for performance, efficiency and stability. Although it may seem rather bureaucratic and rigid to plan ahead, the benefits of HR planning in contemporary times far outweigh its real or perceived disadvantages. List of References Badaway, M. K. (2007) Managing Human Resources. Research Technology Management, Vol. 50, issue 4, pp. 56-74. Bramham, J. (2000) Human Resource Planning. University Press. ISBN: 8173712611642 Briggs, S., Keogh, W. (2001) Integrating Human Resources Strategy and Strategic Planning  to achieve Business Excellence. Web. Burack, E.H. (1993) Strategic Downsizing: Human Resource Planning Approaches. Web. Caruth, N., Hondlogten, G.D. (1997) Staffing the Contemporary Organization: A Guide to  Planning, Recruiting and Selecting for Human Resource Professionals. Greenwood Publishing, Inc. ISBN: 0275955230 Fountaine, D. (2005). Human Resources: What’s your Plan? Public Management, Vol. 87, Issue 1, pp. 25-28. Greer, C.R. (2000) Strategic Human Resource Management: A General Managerial Approach, 2nd Ed. Prentice Hall. ISBN: 0130279501 Idris, A.R., Eldridge, D. (1998) Reconceptualising Human Resource Planning in Response to Institutional Change. International Journal of Manpower, Vol. 19, No. 5, pp. 343-357. Isaacs, H. (1989) Human Resource Management in the Caribbean: Planning for the Future.  Journal of Public Personnel Management, Vol. 18, No. 1. Jackson, S.E., Schuler, R.S. (1990). Human Resource Planning: Challenges for Industrial Psychologists. American Psychologist, Vol. 45, No. 2, pp. 223-239. Web. Marchington, M., Wilkinson, A. (2005) Human Resource Management at Work: People  Management and Development. CIPD Publishing. ISBN: 1843980622 McKenna, E., Breech, N. (2008) Hum an Resource Management: A Concise Analysis, 2nd Ed. Prentice Hall. ISBN: 0273694189 Noe, R.A., Hollenbeck, J.R., Gerhart, B., Wright, P.M. (2004) Fundamentals of Human  Resource Management. The McGraw-Hill Companies, Inc. Pattanayak, B. (2005). Human Resource Management, 3rd Ed. PHI Learning Pvt. Ltd. ISBN: 812032711X Rothwell, W.J., Kazanas, H.C. (2003) Planning and Managing Human Resources: Strategic  Planning for Personnel Management, 2nd Ed. Amherst, Massachusetts: HRD Press, Inc. ISBN: 0874257182 Taylor, S. (2005) People Resourcing. CIPD Publishing. ISBN: 1843980770 Thames, B., Webster, D.W. (2009) Chasing Change: Building Organizational Capacity in  Turbulent Environment. Hoboken, New Jersey: John Wiley and Sons. ISBN: 0470381388 Ulrich, D. (1992) Strategic and Human Resource Planning: Linking Customers and Employees.  Human Resource Planning, Vol. 15, No. 2. Vito, K.W. (2008) The Human Resources Audit. Internal Auditor, Vol. 65, Issue 2, pp. 83-85. Yambesi, G.D. (2 009) Human Resource Planning and Development in the Public Service: The  Case of Tanzania. Web. Footnotes 1 Government-run financial institutions such as the Federal Reserve Bank (US) and the Royal Bank of Scotland are forced to upgrade their own members of staff through the provision of the latest skills and professional knowledge to enable them compete favorably with other rising banking institutions (Noe et al, 2004) 2 The health and education sectors in developing countries have nearly collapsed due to lack of HR planning approaches (Source: Yambesi, 2009) This essay on HR Planning in Dynamic Economic Environment was written and submitted by user Haven F. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.