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MU 0001
Set I

1. Discuss the components and ranges of Manpower Planning

The man power 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
The following table summarizes the factors related to two major forms of
human resource planning.

Short Range Intermediate Long Range

(0-2 years) Range (beyond 5 years)
(2 to 5 years)
Demand for Authorized Operating needs Geographical capacity,
labour expression from budget or size of the organization
Technological plans, Expansion and system; product lines;
changes new or contraction or services offered; load
legislation; employee adjustments anticipated. Changes in
turnover; lay offs, environment and
restriction. technology essentially

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judgmental. Labour
saving equipment,
efficiencies, productivity,

Supply of Departmental, Merger or Management expectations

labour- divisional rosters; acquisition plans; of changing characteristics
internal promotions. Expected managerial and of employees and future
losses; quits, death. supervisory available manpower.

Supply of Area employment Labour market Management expectations

labour- levels; number of projection of future conditions
external employees needed. business affecting immediate
development plans decisions.
institutional plans
to hire.

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 calculation.

Long Range Analysis:

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

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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 organization’s 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.

2. Write a note on Human Resource Value Accounting

An 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

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be determined by obtaining the present value of future earnings. Some of the
important valuation models discussed below:

The LEV and Schwartz Model:

According to this model 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:
Vt = I(t)
Vt=The value of human capital of a person ‘t’ years old.
L(t)= The annual earnings of the person up to retirement
X= The discount rate of the cost of capital
T= The age of retirement.
Limitations: The model does not consider the possibility of leaving a firm
by and 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

Flamholtz Model(1971)
According to this model an individuals value to an organization is
determined by a services he is expected to render to the organization during
the period he is likely to remain with the organization in various position or

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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 or 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:
E(s) = Si P(Si)
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.

This model 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.

Giles and Robinson’s Human Asset Multiplier Method:

According to this method, the calculation of human asset value, under this
method is based on the notion that an individual’s 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.

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Hermanson’s Unpurchased Goodwill and Adjusted Discounted Future
Wage Model:
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 ompanies of which the firm
is a part.

The adjusted discounted future wage model used compensation as a

surrogate measure of a person’s 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.

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 individual’s 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.

Morse Net Benefit Model(1973):

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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

Determination of the gross value of future services to be rendered by

employees in their individual capacities as well as perating in groups.
Determination of the cost, ie. 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 predetermined rate of discount.

3. Write a note on Individual and Organizational knowledge conversion

Individual knowledge conversion process:
Individual knowledge conversion takes place between tactic knowledge and
explicit knowledge. According to Nonaka and Takeuchi, knowledge
conversion is based on four modes:

Socialization: Knowledge is converted from tactic to tactic through sharing

and exchanging experiences and technical skils.

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,

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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


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.

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Building an Arch type: The tested concepts are converted into tangible or
concrete (arch type) or prototype operating mechanism.

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MU 0001
Set II

1. Explain demand forecasting in detail.

Demand Forecasting:
Demand forecasting is the process of estimating the future numbers of
people required and the likely skills and competences they will need. The
ideal basis of the forecast is an annual budget and longer term business plan,
translated into activity levels for each function and department, or decisions
on downsizing’. In a manufacturing company the sales budget would be
translated into a manufacturing plan giving the numbers and types of
products to be made in each period. From this information the number of
hours to be worked by each skill category to make the quota for each period
would be computed.

Details are required of any plans or projects that would result in demands for
additional employees or different skills. As for as possible, plans should
also be reviewed that could result in rationalization, and possibly
downsizing, as a result of a cost reduction drive, a business process re-
engineering exercise, new technology leading to increased productivity, or
merger or acquisition. The demand forecasting techniques that can be used
to produce quantitative estimates of future requirements are described

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Managerial or expert judgment:
This is the most typical method of forecasting and may be linked to some
form of scenario planning. It simply requires managers or specialists to sit
down, think about future workloads, and decide how many people are
needed. This can be no more than guesswork unless there is reliable
evidence available of forecast increases in activity levels or new demands
for skills.

Ratio trend analysis:

This is carried out by studying past ratios between, say, the number of direct
(production) workers and indirect (support) workers in a manufacturing
plant, and forecasting future ratios, having made some allowance for
changes in organization or methods. Activity level forecasts are then used to
determine (in this example) direct labour requirements, and the forecasts
ratio of indirect to direct would be used to calculate the number of indirect
workers needed.

Work study techniques:

Work study techniques can be used when it is possible to apply work
measurement to calculate how long operations should take and the number
of people required. Work study techniques for direct workers can be
combined with ratio trend analysis to calculate the number of indirect
workers needed.

Forecasting skill and competence requirements:

Forecasting skill requirements is largely a matter of managerical judgment.
This judgment should, however, be exercised on the basis of a careful

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analysis of the impact of projected product market development and the
introduction of new technology either information technology or
computerized manufacturing.

2. Discuss the attraction strategies

Overall strategy should be to become ‘an employer of choice. 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;

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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;

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, development and career progression; A
reasonable degree of security; 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

This all adds up to an employee value proposition which, as a means of

attracting and retaining high potential employees, recognizes that they will

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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

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 test’s score differentials

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

Face validity: The extent to which it is felt that test ‘looks’ right, ie., is
measuring what it is supposed to measure.

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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?

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