HUMAN RESOURCE PLANNING

It is all about future proofing Vs Firefighting

 Lecture Overview

Human Resource Planning

Importance of HRP
Factors Affecting HRP
The Planning Process
Forecasting Techniques
HR Plan Implementation
Downsizing Plan
Managerial Succession Planning
Requisite for HRP
 HUMAN RESOURCE PLANNING

Human Resource Planning

“HRP is process of forecasting firm's future demand

and supply of the right type of people in the right
numbers”

HRM department should initiate the recruitment and selection

process after HRP
 IMPORTANCE OF HRP

Importance of HRP can be highlighted by following

points

1. Future Personnel Needs

• Planning helps to determine future personnel

needs
• Surplus or shortage in staff is due to poor human
resource planning
• Public sector organizations facing problem of
over staffing
• Public sector organizations offering voluntary
retirement scheme (VRS)
 IMPORTANCE OF HRP

2. PART OF STRATEGIC PLANNING

• All activities of HRM like HRP, hiring, remuneration, training
must be matched with strategic management

• HRP can facilitate strategic planning at two ends

• At the start, it provides information for strategy formulation like

kind of skills, and numbers of people available to organization to
pursue organization strategy

• At the end, it assist in making resource allocation decisions,

creating structure, process and determine human resource need
 IMPORTANCE OF HRP
3 Creating Highly Talented Personnel

• Now a days organizations need knowledge workers

and professionals for intellectual jobs
• Technical and knowledge worker most often switch
their job creating workforce shortages

• Adoption of new technology creates demand for

technical and trained workers at the same time
resulting into excess of non technical staff

• Management succession planning helps to decide who

will replace/substitute the chief executive/top
management?
 IMPORTANCE OF HRP
• 4. International Growth Strategies

• Global expansion strategy relies on HRP. From

where to recruit employees (foreign, local, or
reassignment) to fill key jobs

• HRP integrate HR plan with organization external &

internal situations (cultural consideration, labor and
employment laws)

• HR department often need to fill key jobs with

expatriates, therefore, need to motivate, train, and
compensate them.
 IMPORTANCE OF HRP

• 5. Foundation for Personnel Functions

• HRP provides essential information in development

and implementation of personnel functions like
recruitment, selection, transfer, postings,
promotions, layoff, compensation, and training
 IMPORTANCE OF HRP

• 6. Increasing Investment in Human Resources

• Investment perspective of human resource highlights the need

of proper HRP

• Human Resources Planning help to make right investment

decision in company's human resources
 IMPORTANCE OF HRP

7. Resistance to Change and Move

• Employee resist to change and move

• HRP assists to plan well ahead employees'

transfer/posting and movement from one place to
other in smooth way
• Dedication, commitment and loyalty of employees
can be assured
 IMPORTANCE OF HRP

8. Unite the Perspective of Line and Staff Managers

• HRP identify and harmonize the purpose of HR staff

and line managers
• For HRP, HR staff require input from Line manager
as unit managers knows better the human resource
need of their department
• Effective communication between line and HR
managers critical for successful HRP
 OTHER BENEFITS

• Top management has a better view of influence and

impact of business decisions on HR dimensions
• HR cost can be lessen if human resource needs are
known before time
• Enough time available to locate talent from market
• Inclusion of women and minorities
• Training and Development plans can be made well
before time
 FACTORS AFFECTING HRP

1 Type and strategy of an organization

2 Organizational growth cycle and planning
3 Environmental uncertainties
4 Time horizon
5 Type and quality of forecasting information
6 Nature of job being filled
7 Outsourcing
 FACTORS EFFECTING HRP

1 Type and strategy of an organization

• Global expansion strategy mean hiring of employees
whereas mergers and acquisition strategy means
downsizing/layoff
• The decision whether to be proactive or reactive in
HRP
2 Organizational Growth Cycle
• Small organization at the start of business may not
have HRP
• In growth stage focus is on recruitment
• In declining phase HRP is reactive in nature and focus
is on retirement, and layoff
 FACTORS EFFECTING HRP
3 Environmental Uncertainties
Degree of uncertainty determines focus and time
span of HRP

4 Time Horizon
Short term and long term personnel plans depend
upon level of uncertainty

5 Quality of Information
HRIS and Job analysis information need to be in
place that provide accurate and timely data for
HRP
 FACTORS EFFECTING HRP

6 Nature of Jobs being filled

Job vacancies exist due to retirement, separation,
job hoping, promotion, and growth
Managerial and technical positions are difficult to fill
in
Sufficient lead time is required to hire suitable
candidates of vacant position
7 Outsourcing
Sub contracting or outsourcing critical business
activities limits new hiring in this case HRP is not
much required
 ???
A five year old firm finally broke even in the fifth
year of its existence. For the sixth year business plan,
the management wants to double the firm’s
headcount to meet the business goals. What do you
suggest?
Triple X Ltd. decides to outsource majority of its HR
activities. What to do with the present HR staff?
__________________________________________________
In today’s unpredictable environment, it is difficult to
project HR demands beyond a six month time line.
Debate.
17
 THE PLANNING PROCESS
Environmental scanning

Corporate objectives
and policies

HR needs HR supply
HR Programs
Forecast Forecast

HRP Implementation

Surplus Control and evaluation Shortages

Restricted hiring Of programs Recruitment
Reduced hours
VRS, layoff etc
Recruitment
planning
10/10/12
 THE PLANNING PROCESS

HR Demand Forecast
• The process of estimating organization's quantity and quality
of future workforce
• In manufacturing concern estimated sale volume converted
into production plan that gives idea of working hours/number
of workers
• HR demand forecast must consider both internal (budget
constraints, production level, new products and services,
employment policy etc.) and external factors (local and global
competition, economy, political and legal conditions etc.)
HR demand forecast help to
1) quantify the jobs required to produce number of goods or
offering service 2) identify desirable staff mix 3) determine
appropriate level of staff in each department 4) prevent
shortages 5) monitor compliance
Predicting Labour Demands
Predicting labor demands is essential to avoid labor shortages that
often impede business expansion.
Various methods are employed to forecast how business needs will
influence HR requirements.
Two basic method categories:
Qualitative Methods: Qualitative techniques like the Delphi and
nominal group techniques involve expert collaboration to create
forecast statements and assumptions. These methods, although
time-consuming, allow for in-depth discussions and idea sharing
among experts.
Quantitative Methods: Quantitative techniques, such as trend
analysis, rely on historical data to project future workforce needs.
Crucial steps in trend analysis include selecting appropriate
business factors, plotting historical records, computing productivity
ratios, determining trends, and making necessary adjustments for
future projections.
10/10/12
 Forecasting Techniques
Managerial Judgments
• Managers brainstorm and decide the future demand
• In bottom up approach line managers submit their future
demands
• In top down approach top management decides company's
and departments future workforce demand

Ratio Trend Analysis

• Quick and easy way to forecast demand
• Past ratio between sales volume and number of workers are
reviewed to determine future demands

Regression Analysis
• Statistical analysis technique that depicts the relationship
between sales volume and workforce size
 Forecasting Techniques

Workforce Study Techniques

• Calculation of amount of labor required by determining
length of operations and units of production
Planned output for next year 20,000 unit
Standard hours per unit 5
Planned hours for the year 100,000
Productive hours per man 2,000
(allowing normal overtime, absenteeism and idle time)
Number of direct labor required 50
 Forecasting Techniques

Delphi Technique
• Experts estimated HR needs
• The responses are summarized and then send again to experts
for further processing
• The process continues till consensus reach or opinion begins
to match
New Venture Analysis
• Useful for new business ventures
• Estimating HR needs based on analysis of existing companies
in same business
• For example: Company starting coal mine operation can
predict future personnel needs by analyzing the workforce
demand of companies operating in industry
Assessing Labour Supply
Labour supply assessment focuses on both internal (existing
workforce) and external (potential recruits) resources.
These resources are crucial to determine the supply
required in the present and the future.
Internal and external labor supply can be explained as:
Internal Supply: Internal labor supply refers to the available
individuals and jobs within the organization. Human
Resource Information System (HRIS) data projects future
trends based on current patterns.
External Supply: External supply encompasses individuals in
the broader labor force who are potential recruits. The
relevant labor market varies based on job skills. For highly
skilled positions, it might be a national or global market,
whereas for unskilled jobs, it typically is the local
community.
10/10/12
 HR SUPPLY FORECAST

• 1) prevent shortages of employees

• 2) assess existing staffing level

• 3) clarify staff mixes for future 4) quantify the positions and people
available in future

• HR audit keep records of employee skills and abilities

• HR audit of non management staff are called skill inventories and

those of managerial staff is called management inventories
 HR SUPPLY FORECAST

• Skill inventories provide information about non managers

and used for making transfer and promotion decisions
• The seven categories of information included in skill
inventories are
1) Personal data: Age, gender, marital status
2) Skills: Education level, job experience, training
3) Special Qualification: Professional bodies membership, achievements
4) Salary and Job history: various job held, past and present pay
5) Company date: retirement date and seniority
6) Capacity of individual: health status, scores on psychological, physical
test, and IQ test
7) Special preference of individual: geographic location, type of job
 MANAGEMENT INVENTORIES
• The information on management inventories include following details

• Work history

• Strength

• Weakness

• Promotion potential

• Career goals

• Personal data

• Number and type of employee supervised

• Total budget managed

• Previous management duties

 INTERNAL SUPPLY
• Techniques generally used for forecast internal supply

– Inflows and outflows

current personnel level – outflows + inflows = internal supply

– Turn over rate

turnover = total number of separations during one year x 100
average number of employees during the year

– Conditions of work and absenteeism

– Assessment of change in work conditions such as normal weekly
hours, retirement policy, overtime policy, holidays, policy for
employment of part time workers, and shifts provides fair
assessment of internal supply
– Absenteeism when person supposed to work but does not report
for duty
– absenteeism= number of persons- days lost x 100
average number of persons x number of working days
 INTERNAL SUPPLY

Estimation of Internal Supply of Computer Programmer

Sources of No. of Current Personnel Sources of No. of
Inflows People level Outflows People
Transfer 12 Resignations 13
Promotions 10 Discharges 2
Current Personnel Demotions 4
level 250
Retirements 10
Promotions 13
Total inflow 22 Total outflow 42

250-42+22=230
 EXTERNAL SUPPLY

• External sources important for several reasons such

as
1. New blood and new experience will be available

2. Organization needs to replenish lost personnel

3. Organization growth and diversification

 HR PROGRAMING

After forecasting personnel demand and supply, the

two must be reconciled or balanced in order to fill
vacancies by the right people at the right

HR PLAN IMPLEMENTATION

• Converting HR plan into actions

• A series of actions are taken as HR plan
implementation such as recruitment, promotion,
placement, training and development, retention plan,
downsizing plan, and succession plan
 REQUISITS FOR SUCCESSFUL HRP

 HRP must be recognized as integral part of corporate

planning

 Backing of top management for HRP is absolutely

essential

 HRP responsibilities should be centralized

 Personal record must be complete ,up to date and

available

 The time horizon of the plan must be long enough to

permit any remedial action

 Data collection and analysis techniques and plan needs

to constantly revised and improved
 HR PLAN IMPLEMENTATION
Strategic HR Initiatives

Strategies for Managing Strategies for Managing Surplus

Shortages
Recruitment of new employees Freeze hiring
Offer incentive to postpone Don not replace leaving staff
retirement
Rehire retiree/part time staff Reduce work hours
Attempt to reduce turnover Leave of absence
Work current staff overtime Across the board cut in pays
Subcontract work layoffs
Hire temporary employees Reduce outsource work
Redesign jobs (BPR) Switch to variable pay plan
 HR PLAN IMPLEMENTATION

RECRUITMENT, SLECTION AND PLACEMENT

Training and Development
Retraining and Redeployment
DOWNSIZING PLAN
MANAGERIAL SUCCESSION PLANNING