HRP PROCESS

The Model of HRP Process

ENVIRONMENT

CORPORATE & UNIT LEVEL

STRATEGIES

‘HR’ DEMAND ‘HR’ SUPPLY

FORECAST FORECAST

‘HR’ PROGRAMMING

HRP IMPLEMENTATION

SURPLUS OF ‘HR’ SHORTAGE OF ‘HR’

CONTROL & EVALUATION PROGRAM

Corporate &Unit Level Strategies

•EXPANSION
• THE PRODUCTION
•DIVERSIFICATION
STRATEGIC IMPLEMENTATION
•MERGERS
IMPLEMENT • TECHNOLOGICAL
•ACQUISITIONN
ATION IMPLEMENTATION
•REDUCTIONS IN
REQUIRS • MARKETING
OPERATION
IMPLEMENTATION
•LOW COST &
• HUMAN RESOURCE
DIFFERENTIATION
IMPLEMENTATION
 Human resource implementation requires
possessing the required number and kind of
employees that need a human resources plan
Human resource plan segregated into two
parts .They are :-
(A)‘HR’ Demand Forecasting and
(B) ‘HR’ Supply Forecasting
 (A) HR Demand Forecasting
HR demand forecasting calculates overall ‘HR’
requirements & there are basically four
demand forecasting techniques :-
1) Managerial Judgment
2) Statistical Techniques
3) Work study Techniques
4) Delphi Techniques
 (1) Managerial Judgment
MANAGERIAL
JUDGEMENT
TOP-DOWN BOTTOM-UP
APPROACH APPROACH

TOP LEVEL LINE MANAGERS

MANAGERS PREPARE SUBMIT THEIR
COMPANY & BOTH OF THESE FPRECASTS ARE DEPARTMENTAL
DEPARTMENTAL REVIEWED WITH PROPOSALS TO TOP
FORECASTS DEPARTMENTAL HEADS IN MANAGERS
CONSULTATION WITH THE ‘HRP’
SECTION TO ARRIVE AT A
UNANIMITY,WHICH WILL BE
PRESENTAED TO TOP
MANAGEMENT FOR APPROVAL
 Staff Forecast Form
Category of Staff------------Year-------------------------
STAFF MEMBERS & THEIR NUMBERS NO OF STAFF TO REMARKS
MOVEMENTS BE PROVIDED
1- No of staff at date-01-01-2010 75 ------- Age Groups under-25 30
(excluding known resignation) 25 To 34 20
2- (A) Expected retirements, transfers 35 To 44 15
out & promotions during the year. 08 45 & over 10
(B) Less expected transfers in,
promotions, new appointments. 03 05
3- (A) Number of staff required on 1 st
January next year. 80
(B) Less present staff. 75 05
4 – Expected staff losses due to normal By age groups
wastage of existing staff – 15. 15 15 Under 25 12
25- 34 02
35- 44 01
45 & over ----

5 – Expected losses of staff to be 05 05 Short service staff turnover at 20 % of 25

recruited in the period. (events 2+3+4 above)

6 – Total staff to be provided during the 30 ‘5’ to be recruited by 1st February – others
period later on.
 (2) Statistical Techniques

The above include :-Ratio Trend Analysis &

Regression Analysis
(A)Ratio Trend Analysis :-Ratios are calculated
for the past data & are used for estimating
future HR requirements.
Present Level of production (01-01- 2002) 2000 Units

Present number of foreman (01-01-2002) 04

Ratio is 2000/4 500

Estimated production as on (01-01-2005) 5000 Units

Foreman required as on (01-01-2005) 5000/500 = 10

(B) Regression Analysis :- is used to forecast the
demand of human resources when dependent
& independent variables are functionally
related to each other. This analysis includes :-
Simple Linear Regression Analysis :-The
demand for human resources depends upon
the past relationship between the dependent
variable and independent variable (single
variable)
Multiple Linear Regression Analysis :- involves
two or more independent variables forming
the basis for estimating the values of a
dependent variable. Variables affecting
manpower requirement may be identified as
sales volume, production volume or
investment etc.
 (3) Work study Techniques

This technique is applicable when it is possible

to know how long operations continue (in
terms of hours) & the amount of labor
required (in terms of number).This technique
constitutes of :-

a) Work-load Analysis
b) Work-force Analysis
 a) Work- Load analysis

 It determines how many employees of

various types are required to achieve total
production targets.
 Total production in terms of units are
estimated in a year. Man-hours required to
produce each unit is calculated. Later, the
required number of employees is calculated.
For example :-
OPERATION UNITS

Planned operation during 2003 = 1,60,000 units

Standard man-hours needed to perform 04 hours

each unit in 2003 =

Planned man-hours needed per year in 1,60,000 X 04 = 6,40,000

2003

Productive hours per man/year is 2000

Number of employees required in 2003 6,40,000/2000 =320

 b) Work Force Analysis

 This analysis is done on work-load of each

plant during the forth coming years,
considering the rate of absenteeism and labor
turnover.
 In work-load analysis (above) we concluded
that 320 workers are required to make
1,60,000 units in a year.
 But the conclusion is illusory because 320
workers will not be available on all working
days due to absenteeism, labor turnover and
idle time.
 A margin of 20 % of the manpower i.e. 64
(past experience) needs to be added with the
required manpower.
 So the real required manpower is 320 + 64
=384
 (4) Delphi Technique

 It is a structured approach for reaching a

consensus judgment among the experts
regarding the number of employees required
in the future.
Experts presenting their forecasts to other
experts, without meeting them physically and
the process of sharing and revising goes on till
a consensus emerged.
 (B) HR Supply Forecasting
 It measures the number of people likely to be
available from within and outside an organization.
Clarifies likely staff mixes that will exist in future.
Assess existing staff levels in different parts of the
organization.
It prevents shortage of people where and when
they are most needed.
Monitors expected future compliance with legal
requirements of job reservations.
 The Supply Analysis covers

1. Existing Human Resources

2. Internal Sources of supply
3. External sources of supply
1- Existing Human Resources
HR audit summarizes each and every employees
skills and abilities and give planners a
comprehensive understanding of the
capabilities lies with in the workforce.
 HR Audit

NON-MANAGERS MANAGERS
Skill Inventories Management Inventories
 Personal data  Work history
 Skills  Strengths
 Special qualifications  Weaknesses
 Salary and job history  Promotion potential
 Company data  Career goals
 Capacity of the individual  Personal data
 Special preference of individual.  Number and type of employees
supervise
 Total budget managed
 Previous management duties
 (2) Internal Sources of Supply

Internal supply techniques include :-

A. Inflows and Outflows Method

B. Turnover Rate
C. Conditions of Work and Absenteeism
D. Productivity Level
E. Movement among jobs
 A. Inflows and Outflows Method

SOURCES OF NO OF SOURCES OF NO OF
INFLOWS PEOPLE OUTFLOWS PEOPLE
-Resignations 13
Transfers in - 12 :- -Discharges 02
CURRENT
Promotions in – 10 :- PERSONNEL LEVEL -Demotions 04
IS 250 OPERATORS
--Retirements 10
-Promotions 13
Total Inflows :- 22 Total Out flows 42
Current Personnel Level + Inflows – Out flows = Internal
supply of operators (250 + 22 – 42 =230)
 B. Turnover Rate

It is one of the traditional method of forecasting

internal supply of human resources.

Number of separations during one year X 100

Average number of employees during the year
 C. Conditions of work and Absenteeism

Absenteeism reduces the number of employees

available for work
Absenteeism Rate =
Number of persons – days lost X100
Average no of persons X number of working days

If absenteeism rate is 4 % ,96 out of 100 people are

available for work
 D. Productivity Level

 Average sales per person in a year is Rs 500,000

 Productivity level says that, sales per person is
increasing at the rate of 10 % per year.
 If the next years targeted sales are
Rs .500,00,000, there would be no need of for
100 sales persons.
 Only 91 sales persons are required because we
expect an increase of Rs 550,000 in productivity
per person.
 E. Movement Among Jobs

Some jobs are sources of personnel for other

jobs.
If we anticipate a need of ‘5’ area supervisors
for coming ‘8’ years from now, more than ‘5’
potential area supervisors should have
entered the marketing area this year,
assuming that ‘8’ years is the average
development time.
 (3) External Sources of Supply

Causes of External Supply

 New blood and new experience will be
available.
Organization needs to replenish lost personnel.
Growth and diversification needs to use
additional number and type of employees from
external sources.
Sources are colleges, universities, consultants;
competitors or unsolicited applications.
 HR Programming
 HRP process estimates the net ‘HR’
requirements in terms of number &
components by knowing the difference
between demand forecast and supply forecast
of human resources.
The difference may either leads to surplus or
shortage of human resources.
 HRP Implementation
DIFFERENCE BETWEEN
DEMAND & SUPPLY
FORECAST

SURPLUS SHORTAGE

Out sourcing
REDEPLOYMENT REDUNDANCY/RETRENCHMENT Employment
PROGRAMS T & D
Reduced Work Hours Productivity Plan
Out Placements Work Sharing Retention Plan
Right Sizing etc Leave of Absence without pay Internal Mobility etc
VRS/Early Retirement
Attrition
Compulsory Retirement
Creation of Ad -hoc Projects
 Control and Evaluation Program
 The HR plan should include – budgets,
targets, and standards.
Clarifying responsibility for implementation
and control and establish reporting
procedures which will enable achievements to
be monitored against the plan.
 Evaluating HRP Effectiveness
A survey of HRP practices in 45 companies
covering a cross –section of the manufacturing
industry has indicated that scant attention is
being paid to HRP.
HR specialists have pointed out the fact that
most Indian organizations do not have adequate
records and information on human resources.
Proper retrieval systems are not available in
most cases.
The computerized HRIS unlike their western
counterparts do not play an important role in
India.
Current technologies and knowledge in respect of
HR planning is not put to use optimally.
 Unpredictable external influences like changes in
labor market conditions, technology, market
conditions, economic cycles, changes in economic
and social values, political changes etc further
added to the problem.
Besides vacancies caused by retirements other
factors like resignations, turnover, deaths, and
competitive attractions are difficult to
forecast.
• The above mentioned practices, inevitably,
leads to ineffective HR planning.
• The above problems could be avoided if
certain guide lines are followed.
 Guidelines to be followed
Objectives-The HR plan must fit in with the
overall objectives of the organization. Aspects
like – people working in the organization,
working conditions, human relationship, etc
must be kept in mind.
Top management Support – The plan must
meet the changing needs of the organization
and should enjoy consistent support from top
management.
Employee skills inventory- The organization
must have an updated employee skills
inventory showing previous jobs held, tenure
on current job, educational and training
qualifications, specific knowledge and skills,
prior work experience, past & current
compensation ,mobility factors etc.
HRIS- To manage employee skill inventories,
organizations should maintain computerized
HRIS containing data on – individual
demographics, career progression, appraisals,
skills ,interests, training, target positions,
performance ratings, geographic preferences,
promotability ratings etc.
Coordination- A separate HR planning division
must be created, in case of large organization, to
coordinate HR planning exercises at various
levels. The various plans for procurement,
promotion, and retention of human resources
must be integrated properly.
The ultimate objective must be to make use of the
human resources in an optimal manner by filling
future vacancies with the right type of people.