2.5 Human Resources Supply

Once HR departments have established the future predictions related to HR demands and developed the staffing tables, the next problem that needs solved is: how do we fill the need for the demand? There are two ways to solve this need internally and externally.

1. Internal supply are the existing employees who can be promoted to new positions, transferred to other departments or satellite offices, and could be demoted.
2. External supply is hiring from outside the company.

Estimating Internal Supply

HR needs to determine the talents of the existing employees. This allows them to plan how many people can fill gaps with these employees. Employees transition throughout companies all the time. Keeping track of these transitions is important. There are several methods HR departments use to track the supply of employees.

• Markov analysis: is often used which is the company’s future human resources needs that uses transitional probability matrices based on past data. (It defines the future based on the current state of numbers. It follows the internal movement of employees. With a population of 50-60 year olds and history suggests 5 retired last year, the company could predict 5 employees will retire this year. Therefore, there would be a need to replace 5 employees.
• Human Resources Inventories: This is completed through HR audits of summaries of employees’ knowledge, skills and abilities (KSAs). This allows HR to make decisions about replacing employees through replacement summaries. The information collected could include years of experience, education, training, successes and accomplishments. They track the employee’s history with the company and HR departments can decide if these employees can fill gaps in the company. These inventories need constant updating to ensure the employee information is up to date.
• Leadership and Management Inventories: These inventories are similar to employee Human Resources Inventories. The KSAs are recorded. In addition, the employee’s potential for promotion to management is monitored. These inventories need constant updating to ensure the employee information is up to date.
• Replacement Charts: are charts that are like a “picture” that help to determine who can replace who when the need arises through a job opening. It is similar to an organizational, hierarchical chart which shows different jobs in the company, status of the employee. As well, it shows if the employee is promotable or has the potential to be promoted. HR may help with promotion decisions by offering employees leadership and management tests, or psychological tests. As well, employees may be interviewed to gather information about their interest in promotions. These charts act as a quick source to make decisions.

Estimating External Supply: Labour Market 

• Labour market analysis studies the companies labour market to assess the present and future availability of employees. In Canada, the unemployment rates are a quick way to determine how many people are actively seeking work, and what types of work they are looking for in their careers. Other ways to find employees is to target those employed in other companies.
• Community Attitudes: The attitude of the local, national and international community affects the labour market. Employers are fickle in the global market. They can move their business to another region or country because of attitudes. Other examples include the social justice shifts of minority groups in hiring practices.
• Demographics: Demographics affect the labour market in planning and trends for the future. Often, the government tracks trends in the labour market years in advance. This is helpful information for HR departments to access. Some of these data sources include Statistics Canada and Employment and Social Development Canada (ESDC) and Conference Board of Canada. These sources publish ongoing reports related to the labour market specifically demographics, occupational variables, income, results of Canada Census, population statistics, and geographic labour market trends.

“2.5 Human Resources Supply” from Human Resources Management – 3rd Edition by Debra Patterson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.