How does planning for staffing needs change as a company evolves? A small business may initially have one person working for it—the person who launched the business. Once the business begins to grow, new people are brought into the organization. Although keeping track of HR needs at small businesses can be fairly simple, companies that add employees and continue to grow require more specific HR planning.

Poor staff planning can be costly. Being overstaffed burdens a company with the unnecessary expense of maintaining salaries, benefits, and training for surplus employees. An understaffed organization can lead to a loss of sales and competitiveness if customer needs are not met. A key part of human resources planning includes the following:

• Determining the optimal number of employees a business needs

• Clearly identifying the exact job positions and the requirements of those positions

How does a company determine whether it has the correct number of employees? The process begins with gathering information on a firm’s current workforce and on the future demand for workers within the company. The current supply of employees is determined by developing a workforce profile. A workforce profile is a personnel inventory that includes information about each employee, such as his or her age, education, training, experience, specialized skills, and current and previous positions held within the company.

The future demand for employees is determined by a process called forecasting. Forecasting is based on several factors, such as the predicted sales of a company’s goods or services, the current skill level of employees, whether a firm plans to contract or expand, how technology is changing or will change a firm’s staffing needs, and available employment alternatives, such as outsourcing, offshoring, or using part-time or temporary employees. In addition, staffing changes that are expected to occur through normal turnover, retirement, and any planned reassignments are also taken into consideration. If the forecast indicates an imbalance between the supply of and the demand for employees, adjustments can be made, for example, by recruiting, training, or retraining employees, making labor force reductions, or changing the extent to which the workforce is used by increasing or decreasing the hours employees work.

How do companies identify the exact jobs they need to staff? The HR department also completes a study of the tasks to be performed within the organization. A job analysis defines in detail the duties and requirements of the tasks an employee is required to perform. A job analysis includes the following:

• A job description—a formal statement that summarizes what the ­employee will do in that role. It includes the responsibilities of that position, the conditions under which the job will be performed, and its ­relationship to other functions in the organization. Job descriptions are important because they define job objectives that are used later in performance appraisals. They also can become a part of the legal contract between the employee and the employer.

• Job specifications—the knowledge, skills, education, experience, personal attributes, and physical requirements a person needs to successfully do the job.

Figure 9.2 shows a job analysis with a sample job description and the job specifications.

Figure 9.2

A Sample Job Analysis

Once a job is well defined, how does HR find the best candidates to interview? Matching the right person for each job depends on a well-devised recruiting plan. Recruitment is the process of finding, screening, and selecting people for a specific job using a variety of methods and resources.

Internal recruiting, or filling job vacancies with existing employees from within a business, is the first choice of many companies. Often, companies post job openings on the company intranet, in in-house newsletters, or bulletin boards in break rooms or announce them at staff meetings. Internal recruitment has several advantages. It tends to be a morale booster for employees because they know that the company has an interest in promoting its own employees. In addition, because employer and employee have established a working relationship, the risk of filling a position with an unsuitable candidate is lessened. Filling jobs internally is also generally quicker and less costly because it reduces the costs associated with outside recruiting and often shortens the length of the training time new hires need.

Internal recruiting has its disadvantages, however. This includes the possibility of not getting the best candidate because of the limited search process. In addition, when a firm hires from within, another internal vacancy is created that must be filled. Moreover, relying on internal employees can result in “inbreeding” and leave a firm with fewer new perspectives and ideas that people coming in from outside a firm often have to offer. As a result, businesses also rely on external recruiting to meet staffing.

External recruiting is the process of searching outside of a firm to fill job vacancies. Posting ads in newspapers, in trade magazines, on Internet job sites, or on social media sites such as LinkedIn, Facebook, and Twitter are methods used to reach a wide audience. Figure 9.3 lists various resources HR staff use when recruiting externally.

Figure 9.3

External Recruitment Resources

Depending on the type of position, employment agencies may be used. Employment agencies often specialize in specific sectors, such as accounting, sales, or clerical services. They provide a pool of screened candidates, which reduces the hiring company’s administrative burden of recruitment. Recruitment consultants, often referred to as “headhunters,” conduct more specialized searches, usually for senior managers or key employees. Using external firms to help with the search is often expensive, but the costs of finding the wrong candidate can be even higher.

How do social networking sites impact recruiting? Social media sites specifically for the professional community include LinkedIn, Data.com, and Spoke. LinkedIn has become a primary source recruiters turn to find candidates. Most people would like to hire or work with someone they know, and LinkedIn can provide helpful colleague and customer recommendations. Using applications such as SlideShare and Google Docs, LinkedIn members can post presentations they have given as well as showcase their portfolios of work. This helps recruiters quickly evaluate and sort prospective candidates. With versions available on mobile devices, LinkedIn is always there when an HR recruiter wants to follow a lead. Additionally, LinkedIn, along with Glassdoor.com, can help job seekers by providing them with “insider” information on companies and employees. For example, before an interview, LinkedIn might be able to provide background information on the person with whom you are meeting. Knowing more about the interviewer and the company can provide good conversation during the interview.

Does technology help or complicate recruiting? There are both opportunities and challenges that come with the use of technology. Compared to older methods of recruiting, candidates can be recruited much more quickly, and different types of candidates—often those who are technologically savvy—are more likely to be recruited. For example, by ensuring all of its jobs were viewable on mobile platforms, UPS has been able to recruit younger employees in inner cities who might not have regular access to computers at home and must go to their schools or libraries to look for jobs. By searching sites like LinkedIn, recruiters can also find talented employees who might not be actively searching for work but who would consider leaving their jobs for the right opportunities.

The drawback of online job postings is that they yield many responses and thus a large pool of candidates, so sifting through these responses to find the right person for the job can be a time-consuming process for HR professionals. The challenge of finding qualified candidates for critical positions is significant. Therefore, HR managers must know how to skillfully use technology. At a basic recruiting level, this means learning how to make a posted job description appeal to the most qualified candidates as well as stand out from competitors in the online environment so the right person can find the open position more readily. In addition, HR departments are using software systems to scan résumés and help screen applicants to weed out those who are unqualified. The software program Unicru is used by many retail stores to screen candidates for dependability, honesty, and other qualities. Some firms have successfully reduced their employee turnover rates using electronic screening methods. Other people argue that electronic screening eliminates strong candidates with interesting backgrounds because they don’t fit job profiles programmed into the software. Strong candidates who simply don’t use words in their résumés that the software is searching for can also get eliminated.

What happens in the hiring process? As Figure 9.4 shows, hiring is a multistep process. The first step is to select a pool of qualified candidates from the original group of applicants. To do this, HR managers compare the applicants’ qualifications to the job specifications. Some firms use applicant-tracking system software to screen résumés and narrow down the pool. The software also tracks applicants’ progress through the hiring process and can notify them and hiring managers about where each person stands in the process.2

Figure 9.4

The Hiring Process

After identifying a small pool of appropriate candidates, department and HR managers generally interview them to gauge their strengths and weaknesses, clarify information in the candidate’s résumé, and determine whether he or she is a good match for the position. Candidates might also need to complete some skills-related tests and be asked how they have handled specific job-related situations in the past. Qualified candidates are then asked to interview with the job’s manager and his or her employees.

Once a candidate is selected, a conditional offer will be made. If the candidate accepts, the company completes thorough background and reference checks and drug and medical tests if the firm requires them. It’s not uncommon to hear stories about companies that failed to conduct background checks and were later sued by their employees and other people because the person became violent on the job and injured them. It’s also not uncommon for someone to falsify his or her educational or professional experiences or to have been in trouble with the law. For example, Dennis O’Riordan, a high-powered lawyer and partner in the London firm Paul Hastings, was disbarred when it was revealed he has falsely claimed he had degrees from Oxford and Harvard.3 After accepting a position, it is typical for the employee to have probationary status for a certain period of time to make sure the hiring is a good fit.

What legalities must be considered when hiring? Several federal laws must be observed during the hiring process:

• Federal equal employment opportunity. Established in 1965, the Federal Equal Employment Opportunity Commission (EEOC) enforces federal legislation prohibiting employment discrimination. This legislation consists of a number of different acts and laws known as equal employment opportunity (EEO) laws. The EEOC investigates discrimination claims made by job applicants and employees and files lawsuits against companies when necessary.

• Civil Rights Act of 1964. The Civil Rights Act of 1964 prohibits discriminating based on a person’s race, color, gender, religion, and national origin. Title VII of the act also established the EEOC to enforce anti-discrimination laws.

• Americans with Disabilities Act. The Americans with Disabilities Act of 1990 (ADA) prohibits discrimination based on disabilities (or perceived disabilities). It also requires employers to make reasonable accommodations to the known disability of a qualified applicant or employee as long as it does not impose an “undue hardship” on the operation of an employer’s business. Reasonable accommodations might include providing wheelchair accessibility, modified equipment, or interpreters.

• Age Discrimination in Employment Act. The Age Discrimination in Employment Act (ADEA) of 1967 makes it unlawful to discriminate against a person because of his or her age with respect to employment. It also prohibits the inclusion of age preferences in job notices or advertisements, except in specific circumstances where age is considered necessary to the job’s function.

• Fair Labor Standards Act. In addition to establishing the minimum wage and how overtime pay must be calculated, the Fair Labor Standards Act (FLSA) governs the use of child labor—what jobs minors are allowed to do and what hours they can work.