Master of Business Administration-MBA Semester 3 MU0001 Manpower Planning and Resourcing - 2 Credits

(Book ID: B0816)

Assignment Set- 1 (30 Marks)

Q.1 Discuss the components and ranges of Manpower Planning

Manpower Plan Components The manpower plan can be broken down into three components: (i) Forecasting-estimating future needs and stock taking of available resources in the organization; (ii) Recruitment plan- to meet the gap between the internal resource and estimated need by external recruitment ; (iii) Training and development plan to utilize fully the human resources of the organization and to develop the potential resources. In practice, it has been found that short-term (less than 2 years) and medium-range plans (2 to 5 years) are easier to formulate with greater degree of certainty. The following table summarizes the factors related to two major forms of human resource planning. Three Ranges of Manpower Forecasting: Short Range 1. 2 years) Demand for Authorized expression Labour Technological changes new legislation ; employee turnover; lay offs, restriction Intermediate Range (2 to 5 years) Operating needs from budget or plans. Expansion or contraction or adjustments Long Range (Beyond 5 years) Geographical capacity; size of the organization and system; product lines; services offered; load anticipated. Changes in environment and technology essentially judgmental.

Departmental, divisional rosters; promotions.

Labour-saving equipment,

efficiencies, productivity, etc. Expected losses; quits, death. Merger or acquisition plans; managerial and supervisory development programmers. Management expectations of changing characteristics of employees and future available manpower.

Supply of labourinternal

Supply of labourexternal

Labour market projection Area employment levels; business development number of employees plans, general institutional needed. plans to hire.

Management expectations of future conditions affecting immediate decisions.

Short- Range Analysis It usually grows out of normal budgetary processes. The parameters of short range forecasting are fairly well-defined. They are handled in the normal course of budget preparation and require simple arithmetic calculations. Long Range Analysis The parameters of short-range forecasting usually are fairly well-defined. They are handled in the normal course of budget preparation and require simple arithmetic calculations. Long -range planning is more complex and is dependent upon mathematical and statistical models, as knowledge of demand variables and appropriate measurement techniques. Two general kinds of forecasting techniques are used: indirect and direct methods. Indirect methods involve the forecasting of general rules production figures, for example that must be translated into specific requirements or measures. Direct techniques involve the use of methods of estimate (directly) labour hours, number of supervisors or particular occupational needs. Aggregate models are based on several key variables that are known to directly affect the organizations overall human resources needs. Every organization has special characteristics or problems, and a planner can use an aggregate model to get the big picture. These models may apply to a geographic region or to the overall system. Estimates techniques models are used for situations where circumstances make it difficult to use mathematical or statistical approaches. Here expert opinion and experience are used. The volume of future activity of business conditions, including legislation, change, innovation, or competition-situations that are almost impossible to qualify can provide workable answers to problems. At the end, it may be noted that all organizations-those that have a high labour turnover must systematically plan their short-term, medium-term and long-term manpower needs. These requirements need periodical reviews and adjustments to meet changing conditions.

Q.2 Write a note on Human Resource Value Accounting

Another important approach to the evaluation of human resource assets is to calculate their economic values. This concept is based on the view that difference in present and future earnings of two similar firms is due to the difference in their human organization. The economic value of the firm can be determined by obtaining the present value of future earnings. A number of valuation models have been developed for determining the present value of future earnings. Some of the important models have been discussed below: The LEV And Schwartz Model Lev and Schwartz developed an economic model in 1971 for determining the value of human resources in a firm. According to them, the value of human capital embodies in a person of age t is the present value of his remaining future earnings from employment in the form of salaries, wages, etc. The value of human capital of a person t years old is given symbolically in the model as:

Where, Vt I(t) x T = The value of human capital of a person t years old. = The annual earnings of the person up to retirement. = The discount rate of the cost of capital. = The age of retirement.

Lev and Schwartz have taken a hypothetical example to show the computation of value of human capital of firm. The hypothetical example taken relates to the persons of different age groups and degrees of skill and average annul earnings for each age group and skill group have been ascertained. The present values of future earnings for each group have been determined and the total of such present values has been shown as the firms values of human resources. However, the Lev and Schwrtz model has the following limitations: The model does not consider the possibility of leaving a firm by an employee. The model ignores the possibilities of promotion of employees. It does not consider the contribution of the firm in developing the value of human capital.

In spite of the above limitations, the Lev and Schwartz model is the most popular economic model for determining the value of human resources of a firm. Flamholtz Model (1971) According to this model, an individuals value to an organization is determined by the services he is expected to render to the organization during the period he is likely to remain with the organization in various position or service states. The present value of human resources may be derived by discounting the realizable value of expected future service at a specified rate. This model involves the following steps: Estimation of period for which an individual is expected to render service to the organization. Identification of various positions or services states that the employee might hold during his service with the organization. Estimation of probable period for which he is expected to hold each possible position or service state. Calculation of expected service to be derived from the individual by:

Where Si represents the quantity of services expected to be derived in each state and p (Si) is the probability that the same will be obtained. Determination of the monetary equivalent value of the expected future services by multiplying the quantity of services with price and calculation of the income expected to be derived from their use. Calculation of present value of expected future services at a pre-determined rate. The Flamholtz model is an improvement over the Lev and schawartz model in the sense that it takes into consideration the possibility of an employee leaving the service as well as the possibilities of promotion of employees. However, the major drawback of this model is that it is very difficult to estimate the likely service states of each employee. The model also suffers from the fact that individuals working in a group have higher value for the organization as compared to the sum of their individual values. Giles And Robinsons Human Asset Multiplier Method In 1972, the institute of Cost and Management accountants and the Institute of Personnel Management sponsored Giles and Robinson to produce a report on human asset accounting. They suggested a human asset measurement method known as human asset multiplier.

According to this method, the valuation of human resources should be made in the same way as other business assets on a going concern basis. The calculation of human asset value, under this method is based on the notion that an individuals remuneration, or the remuneration of group persons in the same grade, may be multiplied by a factor determined on the basis of his contribution to the success of the business. The total value of human assets employed in the business can be calculated by simply adding together all the individual values so calculated. For instance, let us assume that a firm has four types of grades, i.e. A, B, C and D and the total remuneration of these grades is Rs.5 lacs to Rs.7 lacs, Rs.10 lacs and Rs. 30 lacs respectively. Further, if we assume that the relevant factors are 4, 3, 2, and 1. The value of human asset shall be Rs.20 lacs for grade A; Rs.21 lacs for grade B, Rs. 20 lacs for grade C and Rs. 30 lacs for grade D. The total value of the human asset shall be Rs. 91 lacs. Hermansons Unpurchased Goodwill and Adjusted Discounted Future Wage Model Roger H. Hermanson has suggested two models for the measurement of human resources. According to unpurchased goodwill model, the value of human resources of an organization may be calculated by capitalizing earnings in excess of normal earnings for the industry or the group of companies of which the firm is a part. For instance, the capital investment of a firm is say Rs. 10 lakhs, the rate of normal earnings is 10%. The actual rate of earnings of the firm is 15%. In this case the normal earnings are Rs. One lakh (10% of 10 lakhs) and the actual earnings are Rs. 1.5 lakhs (i.e., 15%of 10 lakhs). Thus, the super profits or the excess earnings are Rs. 50,000. The value of human asset shall be the capitalized value of these excess earnings, i.e. Rs. 50,000x 50,000x 1000/15 or say Rs. 3, 33,333. Hermanson assumes that the excess profits of a firm are due to the extra ability of its employees. The adjusted discounted future wage model uses compensation as a surrogate measure of a persons value to the firm. Compensation means the present value of future stream of wages and salaries to employees of the firm. The discounted future wages stream is adjusted by an efficiency ratio which is the weighted average of the ratio of return on investment of the given firm to all the firms in the economy for a specified period, usually five years. The weight are assigned in the reverse order, i.e., 5 to the current year and 1 to the proceeding 4th year. Hermonson has used the following formula for calculating efficiency ratio:

Efficiency ratio = Where, RF is the rate of accounting income on owned assets for the firm for a period of 5 years. And, RE is the rate of accounting income on owned assets for all the firms in an economy for the same period. The efficiency ratio has been criticized as being subjective because of arbitrary weights and restricting period of 5 years. Jaggi And Lau Model

This model suggests valuation of human assets on a group basis rather than on individual basis. Group, in this model, means a homogeneous group of employees who may not be necessarily working in the same department. It might be difficult to predict an individuals future period, stay and chances of promotion, but on a group basis, it is easier to ascertain the future period of service, chances of promotion and those who are likely to leave the firm during each of the forthcoming period. It has been assumed in this model that the pattern of movement is likely to remain constant overtime and the probabilities determined for one period can be extended to future periods. The computation of human resources of an organization is done below: TV= (N) rn (T) n (V) Where, TV represents the current value of all employees in each rank. N represents the number of employees in each rank. n represents the time period. R is the discount rate. T represents the probability, V represents the economic value of an employee. This model tries to simplify the measurement of the value of human resources by taking group of employees as the base. Morse Net Benefit Model (1973) According to this model, the value of human capital is determined on the basis of the present value of net benefits derived by the organization from the expected future services of its employees. It involves the following steps: Determination of the gross value of future services to be rendered by employees in their individual capacities as well as operating in groups. Determination of the Cost, i.e. the total future payment to be made to the employees. Calculation of net benefit to the organization on account of human resources by subtracting (i) from (ii). Calculation of the present value of the net benefits by discounting at pre-determined rate of discount.
Q.3 Write a note on Individual and Organizational knowledge conversion process.

Individual knowledge Conversion Process Individual knowledge conversion takes place between tactic knowledge and explicit knowledge. According to Nonaka and Takeuchi (1995), knowledge conversion is based on four modes: Socialization: Knowledge is converted from tactic to tactic through sharing and exchanging experiences and technical skills. Externalization: Tactic knowledge is converted into explicit concept like analogies, models generalization etc. Combination: Knowledge is converted from explicit to explicit by reconfiguration of existing information by infusing modifications, additions, deletions, sorting combinations and categorization. This effort results on the creation of new or improved knowledge. Internalization: Knowledge is converted from explicit to tactic. This is related to learning by reading, listening and doing. This stage helps the individual to conceptualize the knowledge from his own perspective through the interaction of his own cognition. Thus, the individual internalizes the explicit knowledge and converts it into tactic knowledge. Organizational Knowledge Creation Process Organizational knowledge creation involves five phases. These five phases include: Sharing tactic knowledge: Interaction among individual employees in the form of meetings, discussions and conflict over ideas, provides for exchange and sharing of tactic knowledge. Thus, tactic knowledge held by most of the employees becomes the organizational knowledge. Creating concepts: The cognitive process of each employee crystallizes the shared tactic knowledge into models, concepts and words. Justifying concepts: The new concepts generated by individual need to be tested in practice and justified for further validity and practical implementation. This stage justifies whether the new concepts/ideas are worthwhile for the organization and the society. Building an Arch type: The tested concepts are converted into tangible or concrete (arch type) or prototype operating mechanism. Cross-leveling Knowledge Knowledge created, developed and modeled is further cycled by another organization or department. Other departments and organizations should have the autonomy to develop the knowledge further for the benefits of the organization, society and humanity at large. The knowledge conversion process both individual and organizational, can be synchronized into the following stages:

Sharing of the ideas/ opinions through tactic conversion Developing new knowledge by tactic tactic and cognitive interaction of team of employees. Creating concepts and justifying them by tactic explicit conversion. Securing new and existing knowledge. Building an arch type. Distribution of arch type models. Combine available knowledge. Cross- leveling knowledge for further explicit- tactic- explicit conversion

Master of Business Administration-MBA Semester 3 MU0001 Manpower Planning and Resourcing - 2 Credits
(Book ID: B0816)

Assignment Set- 1 (30 Marks)

Q.1

Explain demand forecasting in detail.

The human resource forecast is a determination of the demand for different categories of employees with appropriate skills for specified periods in the future, say one, three and five years hence. The forecast also requires preparation of an estimate of the availability of employees during the selected time periods. The supply is composed of two parts. The first is an estimate of the numbers and types of employees currently on the payroll and available for future, and the second part of the supply is that portion which must be recruited externally. Generally, human resource planners make use of a variety of techniques to project future personnel needs. These techniques range from judgment to rather sophisticated quantitative models. However, major forecasting techniques include: Demand Forecast: Demand forecast is the process of estimating the future quantity and quality of people required. The basis of the forecast must be the annual budget and long term corporate plan, translated into activity levels for each function and department. Demand forecasting must consider several factors-both external as well as internal. The external factors are economic- climate, competition, laws and regulatory bodies, changes in technology, social factors, and demographic factors. Internal factors include budget constraints, production levels, new products and services, organization structure, and employee separations.
Q.2 Discuss the attraction strategies

The overall strategy should be to become an employer of choice. As Scarborough and Elias (2002) put it, The recruitment of key individual who will contribute significantly to the valuecreating capacity of the firm is crucial to success. The aims are to establish the brand image of the organization how others perceive it (employee branding), to become an employer of choice and to target recruitment and selection to obtain the sort of people the organization needs. Employer branding: Employer branding is the creation of a brand image of the organization for prospective employees. It will be influenced by the reputation of the organization as a business or provider of services as well as its reputation as an employer. As described by Alan Reed, Founder and Chief Executive plc, in 2001: Employer branding is the concept of applying to the recruitment process the same marketing coherence used in the management of customers. He suggests that the approaches required to develop an employer brand are: Analyses what ideal candidates need and want and take this into account in deciding what should be offered and how it should be offered;

Establish how far the core values of the organization support the creation of an attractive brand and ensure that these are incorporated in the presentation of the brand as long as they are values in use (lived by members of the organization) rather than simply espoused; Define the features of the brand on the basis of an examination and review of each of the areas that affect the perceptions of people about the organization as a great place to work- the way people are treated, the provision of a fair deal, opportunities for growth, life balance, leadership the quality of management, involvement with colleagues and how and why the organization is successful; Benchmark the approaches of other organizations (the Sunday Times list of the 100 best companies to work for is useful) to obtain ideas about what can be done to be honest and realistic. Employer of choice: The aim is to become an employer of choice, a place where people prefer to work. This means developing what Sears (2003) calls a value proposition, which communicates what the organization can offer its employees as a great place to work. The factors that contribute to being an employer of choice are the provision of: Interesting and rewarding work; Opportunities for learning, A reasonable degree of security; development and career progression;

Enhance future employability because of reputation of the organization as one that employs and develops high quality people, as well as the learning opportunities it provides; Better facilities and scope for knowledge workers .e.g. research and development scientists or engineers and IT specialists; Employment conditions that satisfy work-life balance needs; A reward system that recognizes and values contribution and provides competitive pay and benefits. This all adds up to an employee value proposition which, as a means of attracting and retaining high potential employees, recognizes that they will be looking for strong values and expecting to be well managed, to have freedom and autonomy, high job challenge and career opportunities. A powerful method of retention is simply to ensure that people feel they are valued.
Q.3 Explain the types of validity

There are five types of validity:

Predicative validity the extent to which the test correctly predicts further behaviour. To establish predictive validity, it is necessary to conduct extensive research over a period of time. It is also necessary to have accurate measures of performance so that the prediction can be compared with actual behaviour. Concurrent validity the extent to which tests score differentiates individuals in relation to a criterion or standard of performance external to the test. This means comparing the test scores of high and low performances as indicated by the criteria and establishing the degree to which the test indicates who should fit into the high or low performance groups. Content validity the extent to which the test is clearly related to the characteristics of the job or role for which it is being used as a measuring instrument. Face validity the extent to which it is felt that test looks right, i.e., is measuring what it is supposed to measure. Construct validity the extent to which the test measures a particular construct or characteristic. As Edenborough (1994) suggests, construct validity is, in effect, concerned with looking at the test itself. If it is meant to measure numerical reasoning, is that what it measures? Measuring validity A criterion-related approach is used to assess validity. This means selecting criteria against which the validity of the test can be measured. These criteria must reflect true performance at work as accurately as possible. This may be difficult. Smith and Robertson (1986) emphasize that a single criterion is inadequate and that multiple criteria should be used. The extent to which criteria can be contaminated by other factors should also be considered and it should be remembered that criteria are dynamic they will change over time. Validity can be expressed as a coefficient of correlation in which 1.0 would equal perfect correlation between test results and subsequent behaviour, while 0.0 would equal no relationship between the test and performance. The following rule of thumb which guides on whether a validity coefficient is big enough was produced by Smith (1984): Over 0.5 excellent 0.40-0.49 good 0.30-0.39 acceptable Less than 0.30 poor On this basis, only ability tests, bio data and (according to Smiths figures) personality questionnaires reach acceptable levels of validity.