Human Resource Planning

&Development (HRPD)
Human Resource & People- Difference?
People become Human Resource when they
have/acquire the capacity to do work to
produce goods and/or services.
Human Resource have the qualities such as
competency (Knowledge, skill &attitude),
culture and commitment to do work and
create productive results.
HRPD continued
Performance &Potential at work are the
criteria to distinguish Human Resource from
People. Four categories of people:
Stars- High performance & high Potential
Workhorses- High performance & less
potential
Problem children- Less performance & high
potential
Deadwoods- Both performance & potential
very poor

Human Resource Planning (HRP)
It is Planning of Human Resources.
It may be at Macro or Micro level.
It includes both Quantity as well as Quality
It is concerned with the future-Planning for
the future-
It has correlation with the economic growth
of a country, and growth &success of all
organizations.
HRP at Macro level
HRP at macro level is to ensure optimal
production , economic growth and
development of human resources themselves
Rate of growth of HR at micro level is
determined by two factors- Quantity and
Quality- They determine the supply of HR.
Quantity is determined by Population policy,
population structure, migration and labour
force participation
HRP at macro level
Quality is determined by
Education and training
Health and nutrition, and
Equality of opportunity (social &economic
equity)
Of the above, Education &training is most
important to improve quality of HR. Hence,
HRP and Educational planning are
synonymous in general.
HRP at macro level
Labour market behaviour is a critical factor to
decide on the demand &utilisation of HR. For
effective HRP, a comprehensive labour market
information is required.
Population, labour force &work force, Hr
requirements by occupation, education
&experience, wages &salary structure, formal
and informal sectors of economy, job search
patterns, work environment &industrial
relations, stability of Government etc affect
labour market.
Approaches to HRP at macro level
There are three approaches to HRP (Educational
planning)
Social demand approach: This relies on an
assessment of societys requirement for
education. It is an aggregate of individuals
demand for education and usually assessed
based on projections of past trends. Projections
may be based on income of educated people,
tastes &preferences for education, cost of
education, demand in the labour market,
demographic features such as fertility
&mortality.

Approaches to HRP continued
Rate of return approach: This looks upon
education as a contributor to productivity
and thus it is expected to facilitate
investment decisions in education. Rate of
return depends on cost of education, returns
to education and discount rate.
Returns to education may be direct monetary
benefits, indirect monetary benefits and
Non-monetary benefits.
Approaches to HRP continued
Man-power requirement approach: This
assumes that there is a definite relation
between education and economic growth, and
hence, lack of educated &skilled people (HR) will
impede growth.
In this approach, future requirement of HR
(educated people) to fulfill a targeted
GNP/industrial production is forecast over a
given period. It may be noted that all the
approaches have both limitations and benefits.
Hence, an integrated approach is sometimes
resorted to in educational planning &HRP.
HRP at Micro level
HRP (at micro level) may de defined as a
strategy for the acquisition, utilization,
improvement and preservation of the human
resources of an enterprise. This involves
ensuring that the organization has always
enough of the right kind of human resource
at the right time and also adjusting the
requirements to the available supply.
HRP continued
The major activities of HRP are:
Forecasting future demand (Requirements) of human
resource through different techniques &methods.
Inventorying /estimating present human resource
(Availability) from HRIS and other sources.
Determining the gap between demand and
availability- adequacy both quantity and quality
Planning the activities such as recruitment, selection,
training &development activities so as to ensure
proper utilization &development of all human
resources in the organization. Finally, evaluate plan
effectiveness through audit &adjustments.

HRP continued
HRP is an integral part of corporate planning. It
may be short term, medium term or long term.
It is synonymous with Educational planning,
especially at the macro level.
HRP forecasts demand, estimates supply and
determine and adjust the gap between them in
respect of HR so as to ensure that HR supply and
demand are always equal, both in quantity and
quality.
HRP continued
HRP is a process by which an organization
ensures that it has the right number and kinds
of HR, at the right place, at the right time,
capable of effectively and efficiently achieving
the organizational objectives.
It is the process of forecasting HR needs of an
organization so that steps can be taken to
ensure that these needs are met. It may be short
term, medium term or long term HR planning.
HRP continued
It is a process of analyzing an organization's HR
needs under changing conditions and
developing the activities necessary to satisfy
these needs.
It is an integrated approach to performing the
planning aspects of HR function in order to have
a sufficient supply of adequately developed and
motivated HR to perform the duties and tasks
required to meet organizational objectives and
satisfy individual goals and needs.
The terms- HRP, MPP, HRPD etc are used
synonymously and interchangeably in practice.
HRP Objectives
Ensure optimum use of HR currently
employed
Forecast future skill requirements and
quantity of HR
Provide control measures to ensure that
necessary resources are available as and
when required
Make available HR in quantity and quality to
achieve organizational objectives
HRP objectives continued
Other reasons for HRP include:
Link HR planning with organizational
planning
Determine recruitment levels
Anticipate redundancies
Determine training levels
Basis for MDPs
Cost manpower for new projects
Assist productivity bargaining

HRP objectives continued
Study cost of overheads and value of service
functions
Decide on subcontracting etc
Optimum development of all HR in the
organizations
Ensure to achieve organizational and
individual objectives simultaneously
HR Planning Process at micro level
HRP process involves 5 steps:
Goals and plans of the organization: This
includes strategic planning, market
conditions, technology, SWOT analysis and
projected outputs for planning periods.
Current HR situation analysis: Skills
inventory, analysis of HR information- both
quantity &quality and job/dept wise etc
HRP process contd
HR forecast: Demand forecast and comparison
with supply of HR. Identify gap or surplus both
in quantity &quality dept/job wise.
Implementation programme: Recruitment
&selection, appraisals, career planning, training
& development, compensation ,motivation ,
retrenchment policy etc
Audit and adjustment: Evaluate and take
corrective/adjustment measures, updating data
etc
Demand forecasting
Demand forecasting may be macro/micro
level. It may be short term, medium term or
long term.
Macro forecast is done at the
national/industry/regional/state levels.
Micro forecast is done at the enterprise level
Short term-up to 2 years, Medium term-2 to
5 years and long term-5 years and above

Macro forecasting methods
Employers opinion method
Normative method- Using norms for manpower to
produce goods &services
Component method- Norms for individual
components, professions etc are worked out.
International studies method- Comparing norms
among different countries
MRP method- Forecast manpower requirements by
educational categories based on projected GDP.
Major sector wise contributions to GDP and demands
for HR are assessed here to arrive at the final figure.
Demand forecasting at micro level
Micro forecasting involves:
Evolving manning norms based on an analysis
of work load structure
Forecasting work loads
Relating work loads to manning norms
Effect of technological Changes, better
manpower utilization etc may be taken into
account while arriving norms.
Forecasting Demand (work loads)
Subjective methods- Estimates based on the
opinion of experts, departmental heads, surveys
among employees, Delphi method etc
Statistical methods- Trend projections,
Regression- correlation analysis, Planned
productivity method, Planned output/target
method , Factor analysis (Principal component
analysis) etc
Work study, work sampling/activity sampling
etc. No method is error- free. Hence, a
combination of different methods are used to
arrive at a fairly accurate forecast of HR.
Estimation of Supply of HR
Supply forecasting may be at macro or micro
level.
Macro forecasting may be by direct method
or Indirect method at the national level.
Direct method involves census count of
people in each category. Indirect method is
by estimating active life span, attrition rates
through death, retirement, migration etc.
Supply forecasting
At Micro level, man power supply is estimated in
an organization. This is done by
Analysis of wastages/retirements
Analysis of internal movements through
promotions, transfers etc.
Cohort analysis where a group of homogenous
employees who joined at the same time are
identified and their leaving pattern is analysed
graphically and other wise.
Markov Chain model
This is a method to analyze internal
movements in an organization. If systematic
personnel records are maintained, the
transition probabilities ( percentages of
employees moving from one grade /post to
another based on length of service,
performance etc) can be determined through
this model. Thus, an accurate forecasting of
supply of HR can be made.
Markov chain model
0-3 years 3-10 Above 10
A

B

C

Transition probabilities are estimated for each movement, thereby the
employees in each level at any point of time is estimated accurately.
Data base for supply forecasting
A well defined HRIS is essential for accurate
forecasting. HRIS should have :
Personnel data module, Recruitment module,
Job experience module, Performance
appraisal module, training &development
modules, Compensation & promotion
module, retirement & wastages module,
career planning module etc. A well
developed computerized HR inventory
system is a prerequisite for HRP.