Chapter – 2 Manpower Meaning & objective of MANPOWER PLANNING Planning: Benefits of MANPOWER PLANNING Factors affecting MANPOWER PLANNING Process


1. Meaning and Concept of Manpower Planning
1.1 What is Planning? A plan is usually a statement of the things to be done and the sequence and timing in which they should be done in order to achieve a given end. Planning involves developing goals and objectives, selecting correct strategies and programmes to achieve the goals, determining and allocating the limited resources of organization to the activities for achieving goals and objectives. It is also required that plans are communicated to all concerned. According to Stoner, “Planning means that managers think their actions in advance. Their actions are usually based on some method or logic rather than on a hunch.” In the context of the formal organizations, the concept of planning has a specific connotation. It means deciding in advance what is to be done in future for a determined period (called planning period) and then considering necessary steps to do the things decided upon. Planning means visioning ahead into the far and near future and trying to anticipate the appropriate course of action. Formally, planning may be defined as the process by which managers set objectives, make an overall assessment of the future and develop various courses of action to achieve the short as well, as the long term objectives of the organizations. From the definition, it follows that the planning process simply involves: i) the determination of appropriate goals and objectives and ii) the optimum period of tome to achieve them. 1.2 Manpower Planning In the light of the concept of planning Manpower Planning (MANPOWER PLANNING) may be defined as the process by which managers set objectives regarding human resource in the organization, undertake an overall estimate of human resource for the future and develop various courses of action to achieve long term as well as the shortterm objectives of the organizations. In other words, MANPOWER PLANNING is the process of ensuring the right amount of skills, knowledge, and attitude, in the right job, at the right time to deliver the optimum result for the organization. It is the human resource system of matching the available resources with the demand that the organization expects to have over a period of time. In short, MANPOWER PLANNING is a process of analyzing & identifying the need for & availability of human resources (HR) so that organization can meet its objectives. As defined by Bulla and Scott (1994) it is “the process of ensuring that the human resource requirements of an organization are identified and plans are made for satisfying those requirements.” 1.3 Hard MANPOWER PLANNING and Soft MANPOWER PLANNING: A very clear boundary must be drawn between ‘Hard MANPOWER PLANNING’ and ‘Soft MANPOWER PLANNING’. Hard Manpower Planning is based on complex 1

quantitative methods and analyses. These are used for projection of future skills requirement, knowledge requirement, forecasting human resource demand, and forecasting human resource supply. The emphasis of hard MANPOWER PLANNING is on numbers or quantities. On the other hand, Soft MANPOWER PLANNING is more explicitly focused on the integration of organization’s objectives with the values, beliefs, assumptions, and norms of the employees and thereby the creation of an organizational culture congruent with the organizational mission and objectives. 1.4 Strategic and Process oriented Concept of MANPOWER PLANNING: – “A strategy for the acquisition, utilization, improvement & retention of an organization’s human resources” – AIMS of MANPOWER PLANNING: 1. to ensure the optimum use of the people currently employed 2. to provide for the future staffing needs of the organization in terms of skills, number, & ages of people – MANPOWER PLANNING establish control: planner work as a “policeman” who checks whether staffing levels are optimum – MANPOWER PLANNING is as a continuous process of analyzing an organization’s HR needs under the changing conditions & developing the activities necessary to satisfy these needs like staffing, recruitment, selection, training, etc. – Process aimed at assisting management to determine how the organization should move from its current staffing position to its desired staffing position 1.5 Perspective of MANPOWER PLANNING:  MACRO MANPOWER PLANNING –  Assessing & forecasting demand for & availability of skills at national / global level  Predict the kinds of skills that will be required in future & compare these with what is / will be available in the country  Eg.  Gillette merger with P&G whereby decided to restructure & move from business units based on geographic regions to global business units based on product lines which resulted in redundancy of some employees (Relocation to Singapore & VRS for others)  MICRO MANPOWER PLANNING –  Process of forecasting demand for & supply of HR for specific organization  Eg.  Wipro (a software giant in India) raising wages / short-listing students in their 2nd year of college for future employment in India  Genpact (an IT solution company in India) launching an associate trainee program with Osmania University in India


1.6 Relationship between Business Strategy, Human Resource Strategy, & MANPOWER PLANNING: Business strategy focus HR strategy MANPOWER (Porter) PLANNING activities Cost leadership  Cost control  Job & employee specialization  Stable business environment  Employee efficiency  Efficiency & quality  Long HR planning scope Differentiation  Long term focus  Shorter HR planning scope  Growth  Creativity in job  Hire HR capabilities required behaviour  Flexible jobs &  Decentralization employees Defender  Finds change  Bureaucratic approach threatening  Planned & regularly  Favors strategies which maintained policies to encourage continuity & provide for lean HR security Prospector  Succeed on change  Creative & flexible management style  Favors strategies of product & / or market  Have high quality HR development  Emphasize redeployment & flexibility of HR  Little opportunity for long-term MANPOWER PLANNING

 Internal promotions  Emphasis on training  Hiring & training for specific capabilities

 External staffing  Hire & train for broad competencies

 Build HR  Likely to emphasize training programs & internal promotion

 Acquire HR  Likely to emphasize recruitment, selection & performance base compensation

1.7 Objectives of Manpower Planning: The objectives of Manpower Planning in any organization depend largely on the context but in general terms the typical objectives may be the followings: I. Procurement & Retention: To attract and retain the number of people required with appropriate sets of skills, knowledge, competences, and attitude. II. Anticipation of Surplus and deficits: To anticipate the problems of potential surpluses and deficits of skills, knowledge, and competences. III. Forecasting: To forecast the demand and supply of human resource for the shortterm and the long-term needs of the organization. 3

IV. Foreseeing the various changes and their effect on human resource: To foresee the effects of various changes such as technological changes, business environment changes, economic changes, socio-cultural and socio-political changes on the human resource of the organization and developing effective strategies to cope those changes. V. Developing a Workforce: to develop a well-trained and flexible workforce, thus contributing to organization’s capability to adapt to an uncertain and changing environment. VI. Improving Utilization: To improve the utilization of human resource by introducing more flexible systems of work. VII. MANPOWER PLANNING as a Part of Strategic Planning: To plan human resource in such a manner that it integrates with the mainframe corporate strategic planning of the organization. 1.8 Benefits of Manpower Planning: The definitions of Manpower Planning are sufficient to understand the benefits and significance of it in organizational context. However, some very crucial points are required to be highlighted for the sake of better understanding: 1. Determining Future Requirement of People: MANPOWER PLANNING plays the most significant role in estimating the future requirement of personnel by the organization. Surplus or deficiency of the employees in the organization is the direct outcome of the deficient HR planning or the absence of planning. MANPOWER PLANNING also determines the requirement of appropriate skills, knowledge, and competences in right quantity. It also maintains the human resource inventories of the organization updating and modifying them with the changing technological and business environment. 2. Integrating with Strategic Corporate Planning: As evident from the modern concept of human resource management, all of its activities viz. planning, procuring, training, compensating and maintaining must be congruent and harmonized with the corporate planning process of the organization. All the above activities of HRM revolve round the Manpower Planning process. MANPOWER PLANNING is therefore must be an integral part of the strategic corporate planning process. The strategic planning of the organization decides on the optimal utilization of the organizational resources and the procurement and maintenance of such resources anticipating the future activities of the organization. In the uncertain business environment and rapidly changing technology, the skills, knowledge, and competences of people are proved to be the only reliable resource to the organization. Manpower Planning takes care of this crucial resource and thereby provides reliability to the mainframe strategic planning of the organization. 3. Creating the Knowledge, Skills, and Competency Pool: As discussed in the previous paragraph, the human resource is the only resources that provides reliability to the organization and form its core competency. Manpower Planning is the process, which is responsible for procuring human resource and thereby constructing the pools of knowledge, skills, and competences. Moreover, MANPOWER 4

PLANNING also takes the responsibility of marinating, modifying, updating, and developing these pools thereby keeping the human resource of the organization ready for any contingencies. Through the process Manpower Planning creates the valuable pools of knowledge, sills, and competences. 4. Starting of Human Resource Functions: All the functions of human resource management functions start from the planning of human resource. MANPOWER PLANNING provides the basis for the recruitment & selection, training & development, performance appraisal, preparing job descriptions, job specifications, job evaluations, developing compensation plans, and formulating rules and policies for maintaining the employees of the organization. It also provides necessary information for functions such as transfers, promotions, and layoffs. 5. International Management: MANPOWER PLANNING helps the top management of the organization to formulate strategies for competing in the international or the global markets. The expansion of the organization in the foreign markets largely depends on the estimation of the skill, potential, and competences of the foreign people and also ability of the domestic employees to operate in the foreign countries. Planning for human resource helps to determine the above requirements of the organization. 6. Other Benefits: The other benefits of MANPOWER PLANNING include, estimation of the future cost of the organization for human resources, developing relationships with the labour markets and related institutions, refinement of quantitative tools and techniques for better projection, integrating the strategic plan of the organization with the economic progress of the country, providing a sound basis for the national human resource development. The other micro benefits include better view of the HR dimensions of business decisions, lower HR costs through better HR management, more timely recruitment for anticipate HR needs, more inclusion of protected groups through planned increases in workforce diversity, better development of managerial talent.


1.9 Factors affecting MANPOWER PLANNING

Type of the Technology used by the Organization Quality & Quantity of the Human Resource Available

Type & Strategy of the Organization

Organizational Growth Cycle

Human Resource Planning

Organizational Culture

Financial Resources Type & Quality of Forecasting Information

Economic & Business Environment

Time Horizons

I. Type & Strategy of the Organization: The process of Manpower Planning largely depends on the type of the organization as well as the mainframe strategies of the organization developed for its existence and growth. The type of the organization determines the mode of operation of the organization, which in turn influences the decision regarding human resource of the organization. The strategic plan of the organization also influences the very decision of the requirement of the human resource in future. The types of skills, knowledge, and competences required are determined by the corporate strategies of the organization. MANPOWER PLANNING is therefore largely dependant on the above factors. II. Organizational Growth Cycle: Every organization has its projected growth cycle. This cycle determines the requirement of various resources by the organization in future. Appropriate forecasting of all the resources is a necessary step in projecting the organizational growth. Forecasting of human resources as an integral part of MANPOWER PLANNING is also included in that process. Hence, the organizational growth cycle may influence the Manpower Planning process. III. Organizational Culture: Every organization in the long run develops its own culture. This organizational culture is developed through the interaction of the culture of the society, culture of the founder members & leaders, and the culture of the people 6

working in the organization. The choice of people in the organization is strongly influenced by the organizational culture. However, formally the people procured through the MANPOWER PLANNING process of the organization. Manpower Planning therefore is influenced by the organizational culture. IV. Economic & Business Environment: The economic and business environment of the country has a direct influence on the present and future activities and operations of the organization. The strategies are developed by the organization accordingly. The decisions for human resource procurement for the organization is apart of that strategic decision. MANPOWER PLANNING, is therefore depends on the trend of economic and business environment of the country. V. Time Horizons: Time of the projected period of planning is an important factor for MANPOWER PLANNING. Depending on the span of the projection the forecasting for HR demand and supply is done. The other influencing variables also vary in intensity and accuracy depending upon the length of the time period. In MANPOWER PLANNING, time is therefore an important influencing factor. VI. Type & Quality of Forecasting Information: The information required to forecast human resource demand and supply originates from a multitude of sources. This information is available in three levels of the organization, a) strategic level, b) general organizational level, and c) specific human resource management level. The type of information available, such as whether the information is general or specific, whether it is subjective or objective, whether it is qualitative in nature or quantitative influences Manpower Planning. The contribution of the human resource plan towards the strategic management of the organization depends on the accuracy of the projection and forecasting. The quality of the information determines the accuracy of MANPOWER PLANNING. VII. Financial Resources: One important aspect of Manpower Planning is that whether the organization can afford the decisions. This depends on the financial resource of the organization. If the human resource actions suggested by MANPOWER PLANNING proves cannot be afforded by the available financial resources then the firm has no option but to abandon it. VIII. Quality & Quantity of the Human Resource: The planning for human resource also depends on the quality and the quantity of the skills, competences available. The planning can only be realistic if it is based on the available resource from the internal and the external sources. IX. Type of the Technology used by the Organization: Skills, knowledge, and competences planned by MANPOWER PLANNING largely depend on the technology and the processes used by the organization. If the technology is rapidly changing in nature then MANPOWER PLANNING must anticipate the nature of the change and produce the plan accordingly. Even the factor like period of planning is also influenced by technology. Apart from the above-mentioned factors, there exists a number of others that bear strong influence on Manpower Planning. The main reason is that MANPOWER PLANNING is not an independent and isolated process. It is integrated with the strategic plan of the organizations and all the macro or micro factors that may influence the present and future activities of the organization can also influence Manpower Planning.


1.10 Manpower Planning Process: The process of Manpower Planning generally involves three basic functions, that is forecasting human resource demand, forecasting human resource supply, matching demand with supply, and deciding appropriate human resource action. The planning process is influenced by organizational objectives and strategies and the environment of business. The planning process is represented diagrammatically below:


1. Scanning the environment 2. Determining and aligning with organizational objectives and strategies 3. Human Resource Demand Forecasting 4. Human Resource Supply Forecasting

5. Matching the Demand with Supply

6. Human Resource Actions

Recruitment & selection

Training & development

Retraining & redeployment

Retention & downsizing

Managerial succession & Career planning

Job redesigning & Job reengineering

Step-1 Systematic Scanning of the Environment: This is a systematic process of studying & monitoring the external and the internal environment of the organization in order to pinpoint opportunities & threats. External environment scanning involves long range analysis of employment and the factors include economic factors, competitive trends, technological changes, sociocultural changes, politico-legal considerations, labour force composition & supply, & demographic trends. The scanning of the environment makes the organization aware of the opportunities and threats ahead and plan accordingly. Internal scanning involves: 9

 Informal discussions with key managers  Conducting employee attitude surveys  Monitoring key indicators  Employee performance  Absenteeism  Turnover  Accidents  Identifying nagging personnel problems  Assessing managerial attitudes regarding HR Step-2 Determining and aligning with organizational objectives and strategies:
Manpower Planning is based on mainframe organizational objectives and strategies. The objectives and the actions of human resource plan must be derived from the objectives and strategies of the organization. The specific human resource requirements are determined from the future business objectives and strategies of the organization. MANPOWER PLANNING proceeds to forecasting the demand according to the specified requirements. Step-3 Demand forecasting: Demand forecasting is the process of estimating the quantity and quality of people required to meet future needs of the organization. Demand forecasting considers several factors – both external as well as internal. The external factors are i) competition, ii) economic climate, iii) laws and regulations, iv) technology, and v) social factors The internal factors are i) budgets ii) production levels iii) new products and services iv) organization structure v) employee separation. FORECASTING ‘makes use of information from the past & present to identify expected future conditions’. Forecasts are not perfectly accurate & as the planning scope becomes shorter the accuracy of forecasts increases. HR demand forecasts may be internal / external. The various forecasting techniques are: a. Managerial judgment b. Ratio-trend & time series analysis c. Regression analysis d. Simulation models e. Workload analysis

Step-4 Supply forecasting:
Supply forecast determines whether the HR department will be able to procure the required number of personnel. Specifically supply forecast measures the number of people likely to be available from within and outside an organization. Supply forecast analysis covers: a. Existing human resource b. Internal sources of supply c. External sources of supply HR supply forecasts may be of two categories i) internal & ii) external. Internal supply forecasts relate to conditions inside the org. such as age distribution of workforce, terminations, retirements, etc. External supply forecasts relate to external labour market conditions & estimates of supply of labour to be available to the firm in the future in different categories. Various supply-forecasting techniques are; a. Skills inventory b. Management inventories


c. d. e. f.

Inflows and outflows Turnover rate Job movement Productivity level Step-5 Matching Demand & Supply: Once the estimates of human resource demand and human resource supply can be determined from forecasting these figures are matched and the result of the analysis is recorded. The matching of the demand and supply also considers several factors like time, technology, business condition etc. Step-6 Human Resource Actions:

Various actions are suggested according to the result of the matching of demand and supply. Human resource management system suggests a number of actions to be taken that may satisfy the criteria set by the matching process. These are:  Recruitment & selection  Training & development  Retraining & redeployment  Retention  Downsizing  Managerial succession  Career planning  Job redesigning  Job reengineering