Chapter 2- The Acquisition of

Human Resource

Teramaje W.(PhD)
 Outline
1. Human Resource Planning (HRP)
2. Job Analysis and Job Design
3. Recruitment and Selection
4. Placement, induction and socialization
 Outline
1. Human Resource Planning (HRP)
• What is Human Resource Planning?
• Concepts behind HRP
• Drivers for and importance of HRP
• Steps in HRP
• Methods of forecasting HR requirements
 What is Human Resource
Planning?-Defining HRP
 HRP Defined
• It is a specific area of management planning (dealing with people
aspect of an organization)

• Other names include manpower planning, workforce planning

• It determines the movement of the organization from the current

human resource position to the anticipated/desired one.

• It is ‘the process for ensuring that the human resource

requirements of an organization are identified and plans are made
for satisfying those requirements’ (Bulla and Scott, 1984).
 What is Human Resource
Planning?-Defining HRP
 It is the process of systematically reviewing human resource
requirements to ensure that the required number of employees with the
required skills are available when and where they are needed (Mondy,
Noe & Premeaux, 2002).

 The process by which managers ensure that they have the right number
and kinds of people in the right places, and at the right times, who are
capable of effectively and efficiently performing assigned tasks.

 According to Armstrong (2006), HRP is concerned with forecasting the

future needs of the organization in terms of:
• skills, expertise and competences,
• analyzing the availability and supply of people, and
• drawing up plans to match supply to demand
 Defining HRP (Cont’d…)
 According to Geisler, “Manpower planning is the process – including
forecasting, developing and controlling by which a firm ensures that it
has-
• The right number of people,
• The right kind of people,
• At the right places,
• At the right time, doing work for which they are economically most useful”

 According to Quinnmills & associates, HRP is a decision making process

that combines the f/g important activities, viz.,
 [Link] the right number of people with the proper skills;; and
 [Link] interactive links between business objectives and
resource planning activities.
 Defining HRP (Cont’d…)
 HRP does three things:
• Helps forecast the future human resource requirements of a given
organization
• Helps acquire/release the required/surplus human resource
• Determines as to how the existing human resource capacity of the
organization is utilized

 It is an integrated part/subset of organizational planning

 It is comparable to and integrated with other functional planning
(marketing planning, financial planning,…)
 It is the first step in the HRM process
 It is a foundation for other HRM functions
 Concepts behind HRP
 HRP is shaped by several concepts from other disciplines.

 These include
• The economic concept of demand and supply
• The ‘right’ principles in procurement/purchasing
• The concept of (strategic) planning
 Concepts behind HRP
Concept Description Implications for HRP
Demand and -Estimates the size and -Considers human resources as
supply nature of demand for a acquirable/procurable resource
(Economics) commodity -Estimates demand for human resources
-Inventories existing and -Inventories existing human resources,
potential supply of the forecasts supply in the labor market
commodity -Makes adjustment to maintain optimal
-Matches the two matching between the two

‘Right’ principles - Purchasing is guided by - The right people (knowledge, skill,

(Purchasing) ‘right’ principles such as expertise, competence)
right product, right -The right quantity (number/size)
quantity, right source, right -At the right time
time, right price etc. -For the right place
-‘getting the size of the organization right’

(Strategic) -Entails a move from a - HRP follows the basics of (strategic)

planning simple ‘personnel planning
activities’ to ‘strategic
thinking’ and alignment
of ‘organizational
strategies’ and ‘HR
strategies
 Drivers for and importance of HRP
Drivers Importance
Organizational growth (expansion, - bring in additional human resource to meet
diversification, investment) the demand=>Demand forecasts for HR are
based on the objectives and strategies
People leave the organization - Replace out going people
(employee turnover)
Getting right size - Avoid surplus or shortage=>Effective and
Efficient Utilization of Human Resources
Government laws and guidelines - Comply with government requirements
Changes (old human resource stock -Bring new blood to the organization
may not meet the changes) -Ensure right demographic composition
-Coping up with changes in the
environment=>Environmental Adaptation
Other functions of HRM - Lays foundation for the rest HRM functions
(recruitment, selection, training,
compensation)
Leaving/retiring people from - Succession planning to fill void left in
management/leadership managerial/leadership position
Technological changes - Add or release workforce depending on it
 Importance of HRP
(Cont’d…)

 In short, if HRP is used properly, it offers the

following benefits:

• Creates reservoir of talent;

• Prepares people for future;
• Expand or reduce;
• Cut cost; and
• Facilitates succession planning.
 The HRP Process-Steps in HRP
 On average the following activities are performed in HRP
 Analysis of organizational plans and objectives
• HRP process is influenced by the overall organizational objectives & the
environment of business.
• Thus, strategic planning must precede HRP.
HRP translates the organization’s objectives & plans into the number
of workers needed to meet objectives.
• HRP has two components: requirements & availability.
• In determining HR requirement, we need to undertake
• Analysis of the current requirement (demand)
• Forecasting HR requirements – which involves determining the number &
type of employees needed, by skill level & location.
• These forecasts will reflect various factors, such as
service/production plans & changes in productivity.
• In determining HR availability, we need to
• Inventorying the current (existing) human resources
• Forecasting future labor supply
• In order to forecast availability, the HR manager looks to both internal
sources (present employees) & external sources (the labor mrkt).
 The HRP Process (Cont’d…)

Compare HR requirements & availability and identify gaps(Shortage,

Surplus or no gap)
• When employee requirements & availability have been analyzed, the firm
can determine whether it will have a surplus(If Availability >
Requirement) or shortage(If Requirement > Availability) of
employees.

Adjustment Decisions
• If a worker shortage is forecast, the firm must obtain the proper quantity &
quality of workers from outside the organization.
• In this case, external recruitment & selection are required.

• Ways must be found to reduce the no. of employees if a surplus is projected.

• Some of these methods/programs include: restricted hiring, reduced
hours, early retirements, layoffs….
 The HRP Process
 External Environment
 Internal Environment
Strategic planning

HR planning

Forecasting Comparing Forecasting

HR requiremnts requirements & HR availability
availability
Shortage of
Demand = Surplus of workers
Supply workers
Restricted hiring, Recruitment
Reduced hr,
No action Early retirement,
Layoffs, Downsizing Selection
 How to Forecast HR Needs?
 Important issues considered in forecasting HR needs?
• Projected revenues / production first, and then estimate the size of the staff
required to achieve it
• Staffing plans also must reflect:
• Projected turnover (as a result of resignations or terminations)
• Quality and skills of your employees (in relation to what you see as
the changing needs of your organization)
• Strategic decisions - to upgrade the quality of products or services
or enter into new markets
• Technological and other changes resulting in increased productivity
• Financial resources available to a given department
 Methods of Demand Forecasting
• Qualitative methods- Judgmental methods
• Quantitative methods- Statistical approaches
Methods of forecasting HR requirements:
qualitative methods
Methods Description
General - These methods are judgmental-Managerial /Expert
judgment plays a big role
- These are soft methods
-It needs group brain storming
- Subjectivity, bias and inaccuracy may be high
- Commonly used
Managerial estimates - Based on previous experience on workload, efficiency
and ability of employees
- Can be ‘top-down’ or ‘bottom-up’ approach
- Easy and time saving
Delphi method - Forecasts of experts are gathered and revised through
non face- to – face interactions
- A facilitator collects estimates of each expert and
consolidates the final one
Historical analysis - studying major events of employment in the
organization
Benchmarking - learning and taking experience of comparable
organizations
 Methods of forecasting HR requirements:
quantitative methods
Methods Description
General - These methods are mathematical or statistical
- These are hard methods
- Objectivity and accuracy is high
Work-study techniques - uses time and motion study to analyze and measure work
(try exercise on next slide) - more suitable where the volume of work is easily measurable
Trend Analysis - Means studying variations in your firm’s employment levels over the
(Time series analysis, last few years to predict future needs.
extrapolation) - depends on the availability of past records and environmental
changes
- Trend projection, Moving averages and exponential smoothing
can help for projections
Ratio analysis - making forecasts based on the ratio between (1) some causal factor
(like sales volume) and (2) the number of employees required (for
instance, number of salespeople).
- carried out by studying the past ratios and the forecasting ratios for
the future
Regression - Use dependent and independent variables to investigate human
analysis/Scatter plot resource requirements
-shows graphically how two variables. such as a measure of business
activity and your firm’s staffing levels. are related. If they are, then if you
can forecast the level of business activity, you should also be able to
estimate your personnel requirements.
Exercise1

 Work-study method (hypothetical company)

• Annual output for the next three years is planned to
be 80,000 units
• Standard time per unit is 3 hours
• Productive hours per worker per year is 2,400 hours
• What is the total number of hours to produce the 80,000
units?
• What is the total number of workers required to produce the
80,000 units in a year?
Methods of forecasting HR
requirements: quantitative methods
• i)Trend Projection method- Involves a) determining the trend of demand of HR by analyzing
past demand data and then, b)projecting future demand of HR by extrapolating the trend.
This is given by the following expression:
Yt=a + bT where, Y is the demand for year t , T is time variable
Slope=

Y intercept=
• ii) Exponential Smoothing method
• Forecasts are modified in light of observed error, as in the following equation
=> Ft+1= Ft + ( Actual –Forecast)

• iii) Moving Average Method

• Forecast for next period is equal to the average of demand of HR for several
preceding periods, as in the f/g equation:-
....Cont’d

• Moving Average Method(Cont’d)

•This moving average method may be also classified as simple moving
average and weighted moving average method depending the degree
emphasis given to the observation
Simple Moving average method:-Uses an average of a specified number
of the most recent observations, with each observation receiving the same
emphasis (weight)
The forecast for next period (period t+1) will be equal to the average
of a specified number of the most recent observations, with each
observation receiving the same emphasis (weight).
Weighted Moving Average method- Uses an average of a specified
number of the most recent observations, with each observation receiving a
different emphasis (weight)
The forecast for next period (period t+1) will be equal to a weighted
average of a specified number of the most recent observations
Example-Trend Analysis
1. Given the demand of HR a certain company during a 12-year as below, find
the least square regression for trend projection
Year Demand(‘00) Year Demand(‘00)
2001 12 2007 17.5
2002 13 2008 15.8
2003 12.5 2009 15.9
2004 15 2010 18.3
2005 18.2 2011 19.2
2006 16.7 2012 20
2. For the data given in Qn1, assume the forecast for period 1 was 13.0. If
is equal to 0.3 , derive the forecast for the periods 2 to 12 using the exponential
smoothing method

3. For the data given in Qn1, set n equal to 4 and develop forecasts for the period
5 to 12 using the (Simple) moving averages method. Besides, develop forecast for
the period 4 to 12 using the 3 year weighted moving average method with weight
of 5,3,2 from recent to old)
1. Trend Projection
T Y TY T2
0 12 0 0
1 13 13 1
2 12.5 25 4 b=1158.8- (12X5.5X16.18)
506 - (12X5.5X5.5)
3 15 45 9 b= 90.92 =0.636
4 18.2 72.8 16 143

5 16.7 83.5 25
6 17.5 105 36
7 15.8 110.6 49
8 15.9 127.2 64 a=16.18- (0.636X5.5)
9 18.3 164.7 81 a= 12.68

10 19.2 192 100

11 20 220 121
Sum=66 Sum=194.1 Sum=1158.8 Sum=506
Average=5.5 Average=16.175
Trend Projection(Cont’d)
 Given the slope(0.636) and y-intercept(12.68), forecast for
the coming five years would be computed as:-

Yr. 12= 12.68+ 0.636 X 12= 20.31

Yr. 13= 12.68+ 0.636 X 13= 20.95
Yr. 14= 12.68+ 0.636 X 14= 21.58
Yr. 15= 12.68+ 0.636 X 15= 22.22
Yr. 16= 12.68+ 0.636 X 16= 22.86
.
.
.
2. Exponential Smoothing
t Data(At) Forecast(Ft) Error(At-Ft) Ft+1= Ft + ( (At –Ft)
1 12 13.0 -1.0 F2=13.0 + 0.3(-1.0)=12.7
2 13 12.7 0.3 F3= 12.7 + 0.3(0.3)=12.8
3 12.5 12.8 -0.3 F4 =12.8 +0.3(-0.3)=12.7
4 15 12.7 2.3 F5 =12.7 + 0.3(2.3)=13.4
5 18.2 13.4 4.8 F6=13.4 + 0.3(4.8)=14.8
6 16.7 14.8 1.9 F7=14.8 + 0.3(1.9)=15.4
7 17.5 15.4 2.1 F8= 15.4 + 0.3(2.1)=16.0
8 15.8 16.0 -0.2 F9= 16.0 +0.3(-0.2)=15.9
9 15.9 15.9 0.0 F10=15.9 +0.3(0.0)=15.9
10 18.3 15.9 2.4 F11=15.9+0.3(2.4)=16.6
11 19.2 16.6 2.6 F12=16.6 +0.3(2.6)=17.4
12 20 17.4 2.6 F13= 17.4 +0.3(2.6)=18.2
3. a) Moving Average(Simple)
t Data(St) Forecast(Ft)
1 12
2 13
3 12.5
4 15 F5=(12.0+13.0+12.5+15.0)/4=13.1

5 18.2 13.1 F6=(13.0+12.5+15.0+18.2)/4=14.7

6 16.7 14.7 F7=(12.5+15.0+18.2+16.7)/4=15.6

7 17.5 15.6 F8=(15.0+18.2+16.7+17.5)/4=16.9

8 15.8 16.9 F9=(18.2+16.7+17.5+15.8)/4=17.1

9 15.9 17.1 F10=(16.7+17.5+15.8 +15.9)/4=16.5

10 18.3 16.5 F11=(17.5+15.8 +15.9+18.3)/4=16.9

11 19.2 16.9 F12=(15.8 +15.9+18.3+19.2)/4=17.3

12 20 17.3 F13=(15.9+18.3+19.2+20.0)/4=18.4
3. b)Moving Average(Weighted)
t Data(St) Forecast(Ft)
1 12
2 13
3 12.5 F4=(0.2*12.0)+(0.3*13.0)+(0.5*12.5)=12.6

4 15 12.6 F5=(0.2*13.0)+(0.3*12.5)+(0.5*15.0)=13.9

5 18.2 13.9 F6=(0.2*12.5)+(0.3*15.0)+(0.5*18.2)=16.1

6 16.7 16.1 F7=(0.2*15.0)+(0.3*18.2)+(0.5*16.7)=16.8

7 17.5 16.8 F8=(0.2*18.2)+(0.3*16.7)+(0.5*17.5)=17.4

8 15.8 17.4 F9=(0.2*16.7)+(0.3*17.5)+(0.5*15.8)=16.5

9 15.9 16.5 F10=(0.2*17.5)+(0.3*15.8)+(0.5*15.9)=16.2

10 18.3 16.2 F11=(0.2*15.8)+(0.3*15.9)+(0.5*18.3)=17.1

11 19.2 17.1 F12=(0.2*15.9)+(0.3*18.3)+(0.5*19.2)=18.3

12 20 18.3 F12=(0.2*18.3)+(0.3*19.2)+(0.5*20.0)=19.4
 Methods of forecasting HR
requirements: quantitative
methods
 When Are Statistical Approaches to Demand
Forecasting Appropriate?
• Stable environment
• Business factor can be predicted with some
accuracy
• The relationship between workforce size and
business factor remains constant over time
 Methods of HR supply
forecasting
 Obtaining the data and information about the
present human resource inventory
 Conducting Human resource audits (knowledge,

skills, competences, number)

 Accounting employee wastage (absenteeism,

health problems, turnover)

 Tracing internal promotions

 Tracking labor supply in the market

 Exercise2
 Employee turnover
• Company X had 250 workers at the beginning of 2019
and 300 workers at the end of the same year. In 12
months, 60 workers left the company.
• What is the turnover rate?
• Employees turnover rate=No. of leavers in a specified period (usually 1 year) X100%
Average number of employees during the same period
= 60 X 100% = 21.8%
275
 Methods of HR supply
forecasting
 In forecasting the Supply of Inside Candidates:-
o Personnel inventory & development record help track employee
qualifications
o Qualifications inventories- Manual or computerized records listing
employees’ education, career and development interests, languages,
special skills, and so on, to be used in selecting inside candidates for
promotion
o Personnel replacement charts-Company records showing present
performance and promotability of inside candidates for the most
important positions
o Position replacement card- A card prepared for each position in a
company to show possible replacement candidates and their
qualifications
Management Replacement Chart
 Dealing with an Oversupply of
Personnel
 Freeze hiring  Use a shorter
 Restrict overtime workweek
 Retrain/redeploy  Use pay reductions

 Switch to part-time  Use sabbaticals

employees  Encourage early

 Use unpaid vacations retirements
Dealing with an Oversupply of
Personnel….
Decruitment-The process of reducing a surplus of employees in
the workforce of an organization

Decruitment Options
 Dealing with an Undersupply of
Personnel

 Hire additional  Reassign jobs

workers  Use temporary
 Improve productivity workers
through training  Improve retention
 Use overtime

 Add additional shifts

 Barriers to HRP
 Planners face significant barriers while formulating an HRP.
 The major ones are:
 1) People question the importance or making HR practices future
oriented and the role assigned to HR practitioners in formulation
of organizational strategies.
 2) HR information often is incompatible with other information
used in strategy formulation.
 Strategic planning efforts have long been oriented towards financial forecasting,
often to the exclusion of other types of information. Financial forecasting takes
precedence over HRP.
 3) There is conflict between quantitative and qualitative
approaches to HRP.
 Some people view HRP as a number game designed to track the
flow of people across the department.
 Barriers to HRP (Cont’d…)
 4) Conflict may exist between short term and long term HR
needs.
 For example, there arises a conflict between the pressure to get the work done
on time and long term needs, such as preparing people for assuming greater
responsibilities.
 Many managers are of the belief that HR needs can be met immediately
because skills are available on the market as long as wages and salaries are
competitive. Therefore, long time plans are not required, short planning are only
needed.
 5) Non-involvement of operating managers renders HRP
ineffective.
 HRP is not strictly an HR department function. Successful planning
needs a coordinated effort on the part of operating managers and
HR Personnel.