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THE  OBRSRY  OR  tTHF 

MAY  291986 

UNIVERSITY  OF  ILLINOIS 
URBANA-CHAMPAIGN 


FACULTY  WORKING  PAPER  NO.  750 
College  of  Commerce  and  Business  Administration 
University  of  Illinois  at  Urbana-Champaign 
February  1981 


Human  Resource  Planning  in  the  Private  Sector: 
Discarded  Assumptions  and  New  Priorities 


Kendrith  M.  Rowland,  Professor 
Department  of  Business  Administration 

Scott  L.  Summers,  Graduate  Student 

Department  of  Business  Administration 

Institute  of  Labor  and  Industrial  Relations 


Acknowledgment :   This  study  was  sponsored  by  the  American 
Society  for  Personnel  Administration,  Berea,  Ohio.   The 
views  expressed  are  not  necessarily  those  of  the  Society. 


Abstract 

The  object  of  this  study  was  to  investigate  the  state  of  organiza- 
tion and  practice  of  human  resource  planning  in  the  private  sector. 
Emphasis  was  given  to  investigating  the  extent  to  which  firms  integrate 
their  human  resource  planning  and  strategic  business  planning  practices. 
Tho  results  of  extensive  interviews  with  representatives  of  twenty 
medium  to  large  US  companies  are  summarized.   The  findings  suggest  that 
some  traditional  human  resource  planning  assumptions  and  practices  have 
been  discarded  and  that  many  firms  are  proceeding  to  more  selective 
huni.in  resource  planning  priorities. 


HUMAN  RESOURCE  PLANNING  IN  TOE  PRIVATE  SECTOR: 
DISCARDED  ASSUMPTIONS  AND  NEW  PRIORITIES 

INTRODUCTION 

The  concepts  of  corporate  human  resource  planning  (HRP)  have  been 
well  represented  in  Che  recent  personnel  management  literature.   In  a 
Conference  Board  report,  Janger  (1977)  claimed  that  personnel  manage- 
mp":  was  evolving  toward  more  of  a  planning  and  control  role  in  many 
'■o"ipanies.   The  increasing  importance  of  the  integration  of  HRP  with 
•^ '  -■  i  t  Hgic  planning  has  been,  indeed,  a  popular  concf^pt  In  the  literature 
durink?  the  past  few  years.   Exhortations  that  firms  should  involve  the 
human  resource  management  function  in  the  formulation,  as  well  as  the 
'  -^-^l  .^Tietitation  of  strategic  plans,  have  come  from  both  practitioners 
1  n  I  icaderatcs  . 

A  few  major  companies  have  reported  successes  in  linking  HRP  with 
srrategic  planning  at  both  the  business  unit  and  corporate  levels. 
'How<>ver,  some  analysts  remain  skeptical  of  claims  that  HRP  is  an  estab- 
l-;-;hed  practice  in  most  companies  (Bennett,  1972;  Burack  and  Gutteridge, 
1'^'''^).   Although  there  have  been  many  questionnaire-type  surveys  on 
''  •  1  iV'ients  of  the  HRP  process,  they  have  taken,  for  the  most  part,  fairly 
^'vil 1 iw  views  of  the  process.   Only  a  few  studies  have  attempted  to 
iistinguish  between  various  degrees  of  sophistication  in  the  HRP  pro- 
cess.  In  like  manner,  only  a  few  case  studies  exist  that  have  under- 
t  iken  an  intensive  analysis  of  specific  HRP  programs,  technologies, 
organizational  structures,  and  information  flows.   There  is  a  particular 
dearth  of  case  studies  analyzing  the  process  of  linking  the  ''"^P  function 
to  the  overall  corporate  strategic  function. 


-2- 

Thls  paper  reports  the  results  of  a  series  of  case  studies  of  twenty 
mediara  to  large  U.S.  companies  concerning  the  state-of-the-art  of  HRP 
organization  and  practice. 

RESEARCH  DESIGN 
Our  purpose  was  to  undertake  a  fairly  qualitative,  applied  view  of 
HRP.   A  structured  interview  was  used  to  obtain  information  on  over 
twenty  five  different  aspects  of  HRP.   We  were  able  to  arrange  for  inter- 
views with  executives  and  managers  in  twenty  companies  nation-wide. 
Vlthin  six  of  the  firms,  we  interviewed  the  top  personnel  executive  and 
the  top  strategic  planning  executive,  as  well  as  the  appropriate  managers 
or  staff  members  concerned  with  HRP.   In  the  remaining  firms,  we  inter- 
vi''ved  those  directly  involved  in  HRP  activities.   For  six  of  the  com- 
,,ani.^s,  our  objective  was  to  up-date  an  earlier  investigation  of  HRP 
(\'avas,  Rowland,  and  Williams,  1965). 

OVERVIEW  OF  FINDINGS 

riie  initial  task,  of  course,  was  to  identify  the  existence  of  HRP 
units  and  activities  and  to  determine  whether  they  were  located  at  the 
corporate,  group,  divisional,  or  profit-center  levels.   This  required 
more  than  just  taking  a  rudimentary  look  at  departmental  titles.   Inter- 
vie»7s  with  key  managers  were  necessary  in  order  to  detect  and  verify 
aajor  activities,  mandates,  and  approaches;  i.e.,  to  gain  some  sense  of 
reality  and  purpose. 

Only  six  of  the  twenty  firms  had  a  formally  organized  and  staffed 
HI?  unit.   In  these  firms,  the  HRP  unit  ^as  j^ositioned  In  a  subdivi- 
sions! role  under  tiie  vice-president  of  personnel,  human  resources,  or 


-3- 

employee  relations.   The  major  activities  of  these  units  were  not  always 
consistent  with  those  listed  by  Walker  and  Wolfe  (1978)  and  Walker 
(1980)  as  being  performed  by  a  comprehensive  HRP  unit,  such  as  (1) 
formulating  human  resource  strategies,  (2)  collecting  and  analyzing 
data,  (3)  designing  and  using  forecasting  systems,  and  (4)  managing 
career  development.   On  this  basis,  only  two  firms  had  a  clearly  iden- 
tifiable HRP  unit  engaged  in  a  comprehensive  set  of  HRP  practices.   In 
most  companies,  HRP  activities  and  programs  were  organizationally 
located  within  the  personnel  function.   No  human  resource  planning  of 
significance  was  being  initiated  by  the  corporate  strategic  planning 
function  (although  some  corporate  planning  staffs  collected  numerical 
Tianpower  counts).   None  of  the  firms  used  HRP  as  a  general  framework 
(ir  basis  for  organizing  and  conducting  their  human  resource  management 
Actl vlties. 

All  of  the  firms  had  implemented  the  standard  modules  of  a  com- 
puterized Human  Resource  Information  System  (HRIS),  including  general 
record  keeping  and  skills  Inventories,  but  few  were  considered  any  more 
sophisticated  than  what  Hennessey  (1979)  has  described  as  an  "Inte- 
grated data  processing"  system.   Performance  appraisal  ratings  and  pro- 
motability  information  were  a  common  data  component  in  a  majority  of 
ciie  cases,  but  career  planning  Information  from  the  individual's  per- 
•^p<^iclve  was  rarely  Included  on  the  automated  system.   Only  one  firm 
had  Implemented  a  corporate-level,  on-line  personnel  data  system  that 
could  provide  instantaneous  feedback  to  facilitate  decision  making.   In 
this  system,  terminals  with  interactive  capability  were  available  to 
all  line  managers.   Hennessey  (1979)  would  classify  this  as  a  "decision 


-4- 

support"  system.   One  firm  will  be  implementing  this  type  of  system 
next  year,  after  eight  years  in  development  and  several  failures. 

A  surprising  finding,  in  light  of  the  voluminous  literature  In  the 
area,  was  that  computer-assisted,  position-person  matching  or  candidate 
searching  was  seldom  used.   Most  of  the  companies  had  abandoned  efforts 
in  this  regard  as  they  were  not  considered  cost  effective.   The  tradi- 
tional staffing  methods  at  the  Individual  department,  division,  or 
profit-center  level  were  seen  as  a  more  viable  process.   For  career- 
tracking  purposes,  most  companies  relied  either  upon  line  management 
Involvement  or  increased  personnel  staff  support,  which  enabled  more 
interpersonal  Interaction  In  career  and  promotion  planning. 

Forecasting  and  Modeling 

This  area  of  HRP  was  given  top  priority  in  our  Investigation,  both 
bec.iuse  of  Its  apparent  central  nature  in  human  resource  management  and 
because  of  the  size  and  preeminence  of  the  companies  visited.   The  fln- 
diii;^s  are  limited  and  simple  to  report.   Only  one  firm  was  using  an 
on-goi.ig,  computerized,  corporate-level  demand  and  supply  modeling  pro- 
cess.  This  was  described  as  a  simulation  tool,  which  interfaced  with 
t'ne  annual  departmental  "bottom-up"  six-year  forecast  of  staffing 
requirements  by  job  title  and  pay  grade.   (This  firm  was  one  of  the  two 
tiriiis  considered  to  have  a  comprehensive  HRP  unit.)   The  human  resource 
ini.ii.-IiiK  process  was  integrated  into  the  annual  corporate  planning  pro- 
cess and  was  considered  a  major  staff  responsibility  within  the  opera- 
tion.  Another  firm  was  experimenting  with  the  forecasting  of  internal 
supply  with  the  aid  of  a  stochastic  model,  but  it  was  deemed  a  "side 
project"  and  provided  no  direct  input  to  top  management  planning. 


-5- 

Jadgmental,  "bottom-up"  projections  were  collected  up  to  the  cor- 
porate level  in  ten  additional  firms,  but  the  planning  horizon  was 
generally  only  one  year,  and  rarely  beyond  two  (except  in  the  case  of 
four  of  the  largest  firras,  where  it  was  five  years).   Neither  personnel 
managers  nor  the  corporate  planners  could  see  any  need  for  a  longer 
planning  horizon.   Along  with  total  numbers,  which  were  grouped  into 
occupational  categories,  trainee  estimates  and  affirmative  action  plans 
were  usually  included  in  the  budget-year  projections. 

It  was  learned  that  corporate-level  personnel  departments  had  little 
or  no  input  or  control  in  this  bottom-up  process.   It  was  almost  uni- 
^►'rsally  part  of  the  corporate  planning  cycle,  adminlsterpd  hv  a  dLf- 
f-^rent  department  under  a  different  vice-president  (usually  corf)orate 
i^/.innlng  or  strategic  planning).   In  no  case  could  this  process  be  con- 
strued as  linking  HRP  with  strategic  planning. 

Beyond  the  issues  of  planning  horizons  and  numbers  projections  was 
that  question  for  which  we  repeatedly  found  no  answer — What  uses  were 
the  supervisory  manpower  estimates  being  put  to  by  the  corporate 
"l.TPnlng  staff  and  ultimately  top  management?   Aside  from  a  brief,  low- 
prlirlty  review  by  the  corporate  planning  director,  it  was  extremely 
Joubtful  that  the  manpower  numbers  were  even  considered  in  the  long- 
ran^e   strategy  development.   The  myth  that  top  management  uses  these 
numbers  to  interactively  simulate  various  human  resource  cost  strategies 
tor  five  or  three  years,  or  even  one  year,  seems  a  little  ludicrous  to 
us.   This  myth  has  been  perpetuated  in  the  literature  for  at  least  the 
Its':  decade. 


-6- 

DespiCe  the  continuing  rhetoric  in  the  personnel  management  litera- 
ture, quantitative  human  resource  forecasting,  we  believe,  continues  to 
be  of  low  priority  and  interest  to  the  key  strategy  and  tactical  planners, 
Furthermore,  we  see  no  evidence  based  on  our  extensive  interviews  that 
this  situation  will  change  in  the  near  future.   This  conclusion  does  not 
encompass  two  other  forecasting  areas  that  will  be  discussed  later  in 
this  paper — corporate-level  environmental  scanning,  and  key  management 
succession  or  continuity  planning. 

None  of  commonly  editorialized  techniques  of  demand  and  supply  pro- 
jections were  being  utilized  for  corporate-wide  analysis  by  firms  in 
our  sample  (other  than  the  one  firm  noted  earlier).   There  is  Che  pos-  - 
sihllity,  of  course,  that  these  methodologies  are  being  used  at  the 
division  level,  but  we  found  no  evidence  of  this  in  Interviews  with 
representatives  from  four  divisions.   A  representative  list  of  manpower 
forecasting  techniques  would  include: 

1.  Markov/stochastic  processes 

2.  Renewal  models 

3.  Optimization  models 

a)  linear  programming 

b)  nonlinear  programming 

c)  dynamic  programming 
^.       Goal  programming 

5.  Assignment  models 

6.  Time  series 

7.  Regression  analysis 


-7- 

8.  Computer  simulations  and  multiple  scenarios 

9.  Delphi 

Most  of  the  firms  had  attempted  and  implemented  "top-down,"  aggre- 
gate demand  and  supply  forecasting  in  the  past  fifteen  to  twenty  years, 
but  had  subsequently  abandoned  this  practice  for  lack,  of  top  management 
Interest  or  apparent  need.   Following  are  two  examples  of  the  history 
of  forecasting  in  the  past  two  decades;  they  are  illustrative  of  our 
findings: 

A  major  manufacturer  made  a  seven-year  projection  in 
1960  of  company-wide  managerial  staffing  requirements 
based  on  a  market  forecast  of  sales  for  that  period. 
In  1967,  a  projection  was  made  for  the  following 
three-year  period.   A  "bottom-up"  supervisory  estimate 
was  also  tabulated  annually  for  the  ten-year  period 
and  the  two  projection  results  (top-down  and  bottom- 
up)  were  compared,  and  appropriate  adjustments  made. 
Upon  visiting  this  company  again  in  1980,  it  was  im- 
possible to  find  anyone  who  even  knew  anything  about 
the  previous  forecasting  program.   It  was  later 
learned  that  these  managerial  manpower  projections  had 
been  cancelled  in  the  late  sixties  as  being  a  super- 
fluous paper  exercise. 

In  1962,  another  firm  prepared  a  ten-year  projection 
of  managerial  and  professional  staffing  needs  based 
mainly  on  sales.   The  corporate  personnel  department 


-8- 

collaborated  with  each  division's  president  and  staff 
to  provide  human  resource  plans  for  future  plant  expan- 
sions.  The  firm  expanded  far  beyond  the  market  projec- 
tions during  the  decade  of  the  sixties.   As  a  result, 
the  aggregate  manpower  projections  were  grossly  incor- 
rect, and  manpower  forecasting  beyond  one  year  was 
terminated. 

Kenarkably  similar  histories  were  uncovered  in  at  least  four  other  firms 
in  our  investigation. 

Noteworthy  was  one  major  corporate  headquarter' s  effort  to  provide 
ti'.e  firm's  operating  divisions  with  access  to  a  goal  programming  model. 
The  rnodel  was  developed  by  the  operations  research  staff  under  the 
direction  of  the  manager  of  human  resource  planning.   It  represented  an 
excellent  effort  to  provide  a  valid  mathematical  device  which  would  pro- 
ject the  effects  of  numerous  factors  on  future  staffing  requirements  and 
hiring  policies  for  up  to  fifteen  years.   Three  types  of  goals  were 
addressed  in  the  model:   budget,  affirmative  action,  and  promotability. 
rhH>  oiirput  presented  the  best  possible  solution  (or  the  one  with  the 
lowest  aggregate  total  deviations)  under  the  chosen  constraints,  and 
included  manpower  levels,  hiring  levels,  promotions,  EEO  goal  compari- 
sons, promotability  goal  comparisons,  and  budget  goal  comparisons. 
^It^ough  the  model  was  perceived  as  an  effective,  multiple-scenario 
contingency  planning  tool  for  division  management,  little  interest  was 
shown  in  the  model.   A  computerized  simulation  model  was  also  developed 
to  aid  In  five-year  decision  making  on  staffing  levels  and  promotability 


-9- 

altematives.   It  was  possible  to  interface  this  model  with  one-year 
projections  to  obtain  five-year  overviews  of  such  areas  as  recruitment, 
promotion,  training,  and  development.   In  accordance  with  the  basic 
trend  traced  throughout  the  course  of  our  investigation,  there  was  again 
only  nominal  interest  in  this  activity. 

The  majority  of  the  managers  we  interviewed  felt  that  long-range 
(beyond  one  year),  top-down  human  resource  forecasting  probably  reached 
Irs  apex  several  years  ago  and  may  now  no  longer  be  a  priority  in,  or 
even  an  element  of,  human  resource  management  in  the  private  sector. 

Management  Succession  Planning 

The  one  activity  that  was  found  to  be  pervasive  and  well-accepted 
in  all  twenty  firms  was  managerial  replacement,  succession,  or  con- 
tinuity planning.   This  concept  has  been  discussed  in  the  literature 
^or   well  over  fifteen  years  (Mahler  and  Wrightnour,  1978;  Monroe,  1963; 
Cstrowski,  1963;  Walker  and  Armes,  1979;  Walker,  1980).   We  learned 
r  rom  our  interviews  that  a  significant  percentage  of  human  resource 
'^'inageraent  time  was  spent  in  planning  for,  and  developing,  future  mana- 
ieri.4l  talent;  furthermore,  that  the  range  of  managerial  personnel 
c  >vered  under  succession  planning  was,  except  for  one  large  firm, 
limited  to  a  few  top-level  groups.   These  groups  generally  represented 
less  than  the  top  ten  percent  of  all  managerial  personnel.   A  planning 
horizon  of  up  to  five  years  was  common. 

Extensive  and  detailed  review  meetings  by  management  development 
and  succession  committees  at  the  corporate  level  were  considered  a  top 
priority,  and  were  given  full  support  by  all  top  managements  in  our 


-10- 

investigation.   This  process  had  been  adequately  integrated  into  each 
rnnpanv's  Strategic  business  planning  system  (which  included  organiza- 
tional planning).   This  was  the  only  area  of  HRP  Cas  noted  In  the  next 
section)  that  had  a  proven  record  of  success  in  achieving  the  contem- 
porary "linking"  concept  with  strategic  business  planning. 

This  activity  could  be  construed  by  an  outsider  as  tending  toward 
elitism,  but  the  potential  advantages  are  fairly  apparent.   The  activ- 
icv  includes  choosing  a  planning  horizon,  identifying  replacement  can- 
'lld.it^'s  for  each  key  position,  establishing  promotabill  ty  readiness, 
appraising  performance,  identifying  development  needs,  integrating  indi- 
vidual career  goals  with  company  goals,  and  doing  all  of  this  while 
sr.-^-^ning  and  monitoring  the  five-year  business  plan.   The  bottom-line 
mission,  of  course,  is  to  assure  availability  of  top  executive  talent 
for  t':'^  future. 

F,\'en  though  some  firms  had  abandoned  all  other  HRP  practices,  they 
^tilL  promoted  traditional  managerial  replacement  planning.  In  a  few 
Inst.mces,  divisions  had  rejected  the  replacement  concept  because  of  a 
p-r:eived  lack  of  flexibility  in  line  managerial  decision  making.  For 
ti'.'^  <ame  reason,  another  popular  concept  of  the  past  decade,  career 
p^t^.ine;  (except  at  the  individual  level  and  often  informally),  was  not 
u'^t'd  by  1  number  of  firms. 

HHP  Integration  with  Strategic  Business  Planning 

A   central    theme   of    our    interviews    and,    indeed,    an    important    purpose 
of    the    investigation   was    to    ascertain    the    state-of-the-art    in    the    formal 
nni\    Informal    integration    of   HRP    and    sc  ri  tejji  <■    huslnes.;    jilaiu  ,      •.       Several 


-11- 

relevant  questions  were  asked,  such  as:   How  Is  IIRP  coordinated  witli 
the  company's  strategic  planning  calendar?   Do  human  resource  managers 
liave  any  input  at  the  early  stages  of  alternative  strategy  formulation? 
Is  there  any  type  of  formal  human  resource  impact  statement,  planning 
guide,  or  "situational  analysis"  of  strategic  issues  developed  for  pro- 
active input  into  business  strategy  decisions?   What  is  the  extent  of 
HRP  input  into  the  planning  of  the  following:   new  venture,  plant  site 
selection,  expansion,  diversification,  acquisition,  divestiture,  or 
.ontraction? 

Only  five  of  the  firms  had  well-integrated  systems,  and  just  three 
of  the  four  seemed  to  have  any  significant,  early-stage  human  resource 
input  Into  the  selection  of  company  business  strategips.   These  three 
firms  are  extremely  large,  and  currently  control  massive  markets. 
Therefore,  it  is  doubtful  that  any  substantive  inroads  by  human  resource 
management  into  vital,  long-range  business  planning  have  generally 
occurred  in  the  private  sector.   In  fact,  after  exhaustive  in-depth 
probing,  our  investigation  showed  negligible  amounts  of  interaction 
between  personnel  staffs  and  strategic  planning  committees  and/or  staffs. 
Rarely,  in  terms  of  human  resource  implications,  was  a  personnel  depart- 
ment ever  asked  to  review  new  plant  sites  or  other  expansion  facilities. 
The  reactive,  fire-fighting  role  of  personnel  still  persists  in  most  of 
the  companies  we  visited.   Recent  surveys  of  strategic  planning  activities 
in  U.S.  firms  (Ang  and  Chua,  1979;  Godiwalla,  Meinhart,  and  Warde,  1979; 
Kudla,  1978)  tend  to  corroborate  this  conclusion. 

Ii  1979,  a  corapre'aensiva  survey  of  the  corporate  planner  \nd   i^lan- 
ning  function  was  conducted  by  Stuart  "latlins  Associates,  lac.  (1979) 


with  assistance  from  Che  North  American  Society  of  Corporate  Planners, 
Inc.   The  survey  was  sent  to  approximately  300  of  the  largest  companies 
in  the  U.S.  that  had  a  formal  corporate  planning  function.   The  twenty 
largest  Fortune  Industrials  were  excluded  on  the  basis  of  dispropor- 
tionate size.   The  report  identified  those  corporate  functions  that 
reported  directly  to  the  chief  corporate  planner.   None  of  the  almost 
200  top  companies  that  responded  to  the  survey  reported  communications 
between  the  chief  corporate  planner  and  the  personnel/human  resource 
management  function. 

We  found  in  our  interviews  with  company  strategic  planning  VP's 
and/or  directors  that  planning  staffs  typically  had  one  person  who 
reviewed  a  limited  number  of  human  resource  forecasts  once  a  year. 
Indeed,  a  1979  survey  of  334  najor  corporations  by  Deutsch,  Shea  & 
Evi.is,  Inc.  (1979)  indicated  that  only  four  percent  of  the  334  respon- 
dents to  the  survey  even  projected  their  human  resource  needs  for  over 
a  five-year  period,  and  42  percent  of  the  firms  projected  their  human 
r-source  needs  for  only  one  year  or  less.   Aside  from  this  specific 
planning  activity,  only  a  modicum  of  attention  and  review  is  usually 
s^iven  to  human  resource  numbers. 

■v'='  also  found  that  a  few  firms  had  established  high-status  planning 
and  control  staffs  for  environmental  scanning  and  surveillance  of  key 
strategic  issues  that  impacted  on  human  resources  and  thus  on  the  con- 
tingency planning  of  the  company. 

In  3  1980  update  of  the  earlier  survey  by  Stuart  Matlins  Associates, 
jn^.   n'^'^'^),  the  human  resource  function  was  .i,.;a[n  not  liiL.^iI  .i:^  r.ipcjrLLng 
to  die  chief  planner,  despite  the  fact  that  there  were  aihlLtlons  of  a 


-13- 

broad  range  of  other  functions  Including  legislative  analysis,  federal 
government  affairs,  and  corporate  communications. 

DISCUSSION  AND  CONCLUSIONS 

This  investigation  sought  to  identify  the  determinants  of  effective 
HRP  organization  and  practice  in  twenty  companies  of  different  sizes, 
industry  associations,  and  environments.   In  this  regard^  we  concur 
with  the  critical  assessment  of  HRP  by  Craft  (1980),  who  argues  that 
an  Inadequate  theoretical  framework  has  been  built  for  specifying  and 
understanding  the  concepts  of  corporate  HRP.   After  discovering  such  a 
dearth  of  HRP  implementation  and  sophistication  among  the  companies  we 
visited,  it  may  seem  presumptuous  on  our  part  to  attempt  to  identify  a 
few  of  these  determinants.   We  found,  ho'.;3ver,  that  size  and  market  con- 
centration do  not  seem  to  be  relevant  factors  in  the  level  of  sophisti- 
cation of  human  resource  forecasting,  management  succession  planning 
ind  development,  and  career  planning.   Size  does  seem  to  be  positively 
related  to  the  level  and  amount  of  coordination  and  Integration  of  HRP 
and  business  planning. 

After  encountering  a  great  deal  of  negativism  from  practitioners 
concerning  the  assumptions  Inherent  in  traditional,  top-down,  statisti- 
cal forecasting,  we  tend  to  question  the  viability  of  this  approach. 
Human  resource  projections,  of  course,  are  only  one  part  of  HRP,  but 
beyond  that,  it  is  a  fantasy  in  our  opinion  to  believe  that  HRP  ever 
was  a  systematic  (rational)  process  in  business  decision  making.   Many 
of  the  HRP  concepts  in  the  literature  that  related  to  the  private  sec- 
tor have  stemmed  from  human  resource  scheduling  programs  devf^"  ped  in 


-14- 

the  aerospace  industry.   Because  of  a  reliance  on  government  contracts, 
aerospace  companies  were  forced  to  develop  detailed,  long-range  staffing 
and  occupational-mix  plans  as  part  of  the  contract  proposal  process. 
These  HRP  techniques  were  deemed  by  many  to  be  transferable  and  even 
generalizable  to  all  of  business. 

Regarding  the  linking  of  HRP  and  strategic  business  planning,  there 
again  exists  great  incredulousness  on  the  need  for  formal  integration 
processes.  Most  practitioners  indicate  that  integration  may  be  neces- 
sary only  in  times  of  rapid  expansion  or  contraction,  diversification, 
acqilsition,  divestiture,  or  various  corporate  "crisis"  contingencies. 
It  is  presumed  that  HRP  will  help  alleviate  or  avert  "crisis"  conditions, 
but.  after  fifteen  or  more  years  of  intellectual  bantering  on  the  sub- 
jei^C,  it  is  apparent  that  top  management  gives  little  raore  than  lip 
ser^^lce  to  the  subject. 

The  "new  wave"  in  HRP  that  does  have  a  real  possibility  of  formally 

intei^rating  HRP  and  business  planning  concentrates  around  two  inter- 

r-^lrited  areas,  strategic  issue  management  (Ansoff,  1980;  Brown,  1979; 

Charan  and  Freeman,  1980)  and  environmental  scanning  practice  (Brown, 

ig:":*;  Kleln  and  Newman,  1980;  Smith  and  Druzic,  1976;  Starling,  1980; 

Thomas,  1980).   Simmons  (1979)  relates  a  brief  history  of  this  in 

general  corporate  planning: 

Traditionally,  the  role  of  the  corporate  planner 
has  been  to  project  business  trends,  primarily  on 
the  basis  of  historical  data.   This  perspective  on 
the  future  performance  of  a  business  has  become 
hopelessly  short  with  the  tremendous  growth  in  com- 
munication techniques,  public  information  technology 
and  the  effects  on  a  company's  operating  environment 
of  the  social  unrest  of  the  1960s.   Planners  have 


■15- 


had  Co  adjust  their  sights  to  focus  on  external 
forces;  thus,  the  twin  disciplines  of  trend  analysis 
and  issue  management  carae  into  being.   Initiated  in 
the  '60s,  these  studies  didn't  Segln  to  affect  busi- 
ness operating  policy  until  the  early  '70s.   Unfor- 
tunately, when  the  planners  began  to  cry  "wolf"  in 
the  late  '60s,  "wolf"  was  not  exactly  the  right  cry 
and  management  was  not  ready  to  listen.   Very  few 
planners  translated  the  impact  of  social  and  economic 
trends  into  action  plans  and  even  fewer  could  convince 
management  to  do  so  until  the  '70s.   (p.  16) 

Issue  management  is  rapidly  becoming  recognized  as  the  central  theme  of 
human  resource  management  in  the  '80s.   English  (1980)  sees  that  the 
"two  critical  objectives  [for  human  resource  managers]  are  to  simul- 
taneously optimize  human  resources  and  minimize  liabilities  stemming 
from  social  legislation"  (p.  39).   AT&T  has  recently  released  documents 
describing  the  activities  of  their  "corporate  planning  emergency  issues 
group"  (American  Telephone  &  Telegraph  Co.,  1980).   Human  resource 
Issues  play  a  major  role  in  AT&T's  annual  cycle  of  "Forecasts  and 
Assumptions." 

The  two  other  leading  developments  in  HRP  that  should  be  mentioned 
are  electronically  automated  management  succession  planning,  and  a  new 
generation  of  packaged  computerized  analytical  tools.   Automated  suc- 
cession planning  has  been  highly  successful  for  a  major  New  York-based 
corporation  included  in  our  investigation.   Automated  succession  plan- 
ning enables,  among  other  things,  the  simulation  of  projected  organiza- 
tional charts,  career  pathing,  mobility  analysis  (including  projection 
of  blocked-progression  lines),  identification  of  surplus  or  shortage 
conditions  relating  to  a  particular  position,  as  v;ell  as  replacement 
planning.   Representative  of  another  leading  development  is  Comshare's 
revolutionary  HRP  computer  package  (Frantzreb,  1930). 


-16- 

One  Interpretation  by  Nkomo  (1980)  of  the  history  of  HRP  postulates 
and  outlines  three  stages  of  U.S.  business  practices.   Nkorao  concludes 
that  "It  was  the  cumulative  impact  of  governmental,  economic,  socio- 
cultural,  and  demographic  changes  that  played  a  large  part  in  the  end 
of  'manpower  planning'  and  the  emergence  of  the  third  stage — one  that 
will  .  .  .  focus  attention  on  strategic  human  resources  planning  .  .  ." 
(Nkomo,  1980:  72). 

Our  findings  concur  with  the  notion  that  personnel  management  does 
seem  to  be  moving  into  this  "stage  three"  posture.   This  posture  goes 
beyond  employment  planning;  it  is  marked  by  environmental  scanning 
practices,  issue  management  and,  ultimately,  infusion  into  corporate 
strir^gy  and  tactics.   It  is  interesting  that  formal  business  planning 
svsteras  have  gone  through  a  similar  evolution;  from  Phase  I,  basic 
financial  planning,  to  Phase  II,  forecast-based  planning,  to  Phase  III, 
externally-oriented  planning,  and  finally  to  Phase  IV,  which  encompasses 
strategic  management  and  orchestration  of  resources  to  create  competi- 
tive advantage  (Gluck,  Kaufman,  and  Walleck,  1980). 

The  promise  of  increased  visibility  in  strategic  business  planning 
Is  a  strong  career  motivation  for  a  personnel  manager.   This  may  explain 
s.iine  of  the  resurgence  of  interest  in  human  resource  planning  practices. 
But,  to  reiterate,  at  this  point  it  seems  that  no  significant  integra- 
tion between  human  resource  planning  and  strategic  business  planning  has 
occurred  on  a  wide  scale. 


-17- 


REFERENCES 


American  Telephone  &  Telegraph  Co. 

1980     The  Bell  System  Emerging  Issues  Program  (Internal  Report). 
Basking  Ridge:   AT&T. 

Ang,  James  S.,  and  Jess  H.  Chua 

1979  "Long  range  planning  In  large  United  States  corporations — A 
survey."   Long  Range  Planning,  April:  99-102. 

Ansoff,  H.  Igor 

1980  "Strategic  issue  management."   Strategic  Management  Journal, 

1:  131-148. 

Bennett,  James  E. 

19  72     "What  went  wrong  with  manpower  planning?"   The  Business 
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Brown,  James  K. 

1^79     The  Business  of  Issues:   Coping  with  the  Company's  Environ- 
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"-•irack,  Elmer  H. ,  and  Thomas  C.  Gutteridge 

]'*78  "Institutional  manpower  planning:   Rhetoric  versus  reality." 

California  Management  Review,  Spring:  13-22. 

Charan,  Ram,  and  R.  Edward  Freeman        ' 

l')SO     "Planning  for  the  business  environment  of  the  1980s."   Journal 
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Craft,  James  A. 

1980     "A  critical  perspective  on  human  resource  planning."   Human 
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Mpiitsch,    Shea   &   Evans,    Inc. 

1*^79     "Corporate  human  resources  planning  is  short  range  limited, 
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English,  Jack  W. 

1980     "The  road  ahead  for  the  human  resources  function."   Personnel, 
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Fr.intzreb,  Richard  B. 

;vSO     "Comshare's  applications  library  on  HRP."   Manpower  Planning, 
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Godiwalla,  Yezdi,  Wayne  A.  Meinhart ,  and  William  D.  Warde 
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-18- 


Gluck,  Frederick  W. ,  Stephen  P.  Kaufman,  and  A.  Steven  Walleck 
1980     "Strategic  management  for  competitive  advantage."   Harvard 
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Hennessey,  H.  W. ,  Jr. 

1979  "Computer  applications  in  human  resource  Information  systems." 
Human  Resource  Planning,  2:  205-213. 

Klein,  Harold,  and  William  Newman 

1980  "How  to  use  SPIRE:  A  systematic  procedure  for  identifying 
relevant  environments  for  strategic  planning."  Journal  of 
Business  Strategy,  Summer:  32-45. 

Kudla,  Ronald 

1978  "The  components  of  strategic  planning."   Long  Range  Planning, 
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Mshler,  Walter  R. ,  and  William  F.  Wrightnour 

1973     Executive  Continuity.   Horaewood,  Illinois:   Dow  Jones-Irwin. 

Monroe,  Willys  H. 

1963     "Strategy  in  the  management  of  executives."   Business  Horizons, 
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N'n'is,  Albert  M. ,  Kendrith  M.  Rowland,  and  Edgar  G.  Williams 
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Vkomo,  Stelle  M. 

1980  "Stage  three  in  personnel  administration:  Strategic  human 
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Ostr)>^ski,  Paul  S. 

1968     "Prerequisites  for  effective  succession  planning."  Management 
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Slnmons,  W.  W. 

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Starling,  Grover 

1980     The  Changing  Environment  of  Business.   Boston:   Kent. 

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1979  The  Corporate  Planner — Career  Development,  Compensation  and 
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Smith,  &  Knisely,  Inc. 


-19- 


StuarC  Matlins  Associates,  Inc. 

1980     The  Corporate  Planner — Compensation,  Staffing  and  Activities- 

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Knisely,  Inc. 

Thomas,  Philip  S. 

1980     "Environmental  scanning — The  state  of  the  art."   Long  Range 
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Walker,  James  W. 

1980     Human  Resource  Planning.   New  York:   McGraw-Hill. 

Walker,  James  W. ,  and  Robert  Armes 

1979     "Implementing  management  succession  planning  in  diversified 
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Walker,  James  W. ,  and  Michael  N.  Wolfe 

1978     "Patterns  in  human  resource  planning  practices."   Human 
Resource  Planning,  1:  189-202. 


n/6  3 


HECKMAN       IX 
BINDERY  INC.        |§ 

JUN95 

wa.To.P,.^N^MANCHESTER,