Unit 3

Human Resource Planning (HRP)

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Detailed Structure
3.0 Overview
3.1 Learning Outcomes
3.2 Terminology and Vocabulary
3.3 Introducing Human Resource Planning (HRP)

 Manpower planning or HRP planning

 HRP: definitions
 Objectives of Human Resource Planning

3.5 Steps Human Resources Planning (HRP)

 Forecasting
 Estimating net supply and demand
 Reconciliation and adjustments

 HR programming and Implementation

Control and Evaluation

3.5 Nature and importance of HRP

 Characteristics of HR Planning
 ‘Hard’ workforce planning
 ‘Soft’ workforce planning

 The Need / Importance of Human Resources Planning (HRP)

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3.6 Forecasting tools and techniques

 A few problems in an HRP process

3.0 Overview
This unit is an introduction to Human Resource Planning (HRP), its
nature and importance, and the steps involved. It also deals with the
implementation and the monitoring of the HR plan.
3.1 Learning Outcomes
After completing this Unit, you will be able to:

 Understand the place of planning in human resource management

(HRM)
 Explain the difference between manpower planning and human
resource planning (HRP)
 Understand key steps in the HRP process
 Explain some of the emerging concerns in the context of HRP

3.2 Terminology/Vocabulary
Manpower Planning, Human Resource Planning(HRP),Work-force
planning, proactive approach .
3.3 Introducing Human Resource Planning(HRP)
Let us start this introduction with a question. Can an organisation succeed
in the implementation of its business plans without having taken into
consideration all the Human Resource implications? Alternatively, how
different will the situation be, if at the planning phase, business and
human resource needs are taken into consideration in a co-ordinated and
integrated perspective?
If the organisation business plan has been elaborated without due
consideration being given to all the Human Resource implications, HR
related problems will have to be addressed downstream, on a reactive
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basis and invariably, a lot of time will be spent in crisis management and
fire-fighting which could compromise and jeopardise the organisation’s
prospects.
By integrating Business Planning and Human Resource Planning,
upstream, organisations are in a far better position to deal with Human
Resource considerations in a more proactive and effective manner.
This approach is in conformity with the very idea of planning which is
defined as the process of establishing objectives and courses of action
prior to taking action.
Human Resources are the costliest as well as the most valuable resources
of an organisation. They are also an important source of competitive
advantage for any organisation. Barney (1991) has suggested that:

“ in order for a resource to qualify as a source of sustained competitive

advantage, the resource must add value to the firm, it must be rare, it
must be inimitable and it must be non-substitutable”.

Coff (1994) has argued that human assets are a key source of sustainable
advantage as sources of competitive advantage have shifted from
financial resources to technology resources and now to human capital.

In managing Human Resources, organisations should, therefore, always

aim at optimising these resources, and cut down on inefficiencies and
wastages. By engaging in HRP and adopting a proactive approach, these
risks can be minimised significantly as the organisation will aim to
mobilise the right size and the right quality of human resources and make
the most productive and the most optimal utilisation of Human
Resources at all times.

Activity Discuss the likely consequences of an absence of planning

for an organisation.

 Manpower planning or HRP planning

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Are these two concepts distinct or synonymous?
Up to the 1980s, it was the concept of Manpower Planning which was
commonly adopted and applied by most organisations. With the advent
and progress of the Human Resource Management movement, many
organisations turned to Human Resource planning as a better and more
effective way of addressing the human resource needs of organisations.
Manpower Planning is a traditional way of defining human resource
needs , driven by top-down planning based on quantitative tools and
techniques and the emphasis is on numbers, flows and mathematical
modelling, which appeared to be the main concern of manpower planning
in the 1960s and 70s.
According to Beardwell and Holden(1995):
“Traditionally, manpower planning has attempted to reconcile an
organisation’s need for human resources with the available supply of
labour in the local and national labour market. In essence, manpower
planners initially seek to estimate their current and future employment
needs”.
To Bowey(1974) :
" Manpower planning ,strictly defined, is the activity which is aimed at
coordinating the requirements for ,and the availability of, different types
of employees. Usually this involves ensuring that the firm has enough of
the right kind of labour at such times as it is needed. It may also involve
adjusting the requirements with the available supply".
The focus of this approach to Manpower planning is mainly quantitative,
reactive and administrative. It does not take into account and provide for
the future competencies, skills and mindsets that organisations will need
form their employees. It is focussed on the short term requirements and
adjustments and is not an on-going exercise.
According to CIPD(2013):
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The original concept of workforce planning fell out of favour around the
early 1980s, as some commentators deemed it to be an inflexible process
that failed to predict or allow for downturns in economic growth.  One of
the perceived failures of previous approaches to workforce planning was
that of forecast targets being too narrow and therefore being missed”.
Is the new approach-Human Resource Planning- a case of old wine in
new bottle?
HRP does not abandon Manpower Planning altogether. It goes far
beyond mere headcounts and takes a more proactive, integrated and
developmental perspective, which is complemented by and integrated
with a qualitative view of people whose performance, lies at the core of
business strategy. More than just being an administrative chore, HRP is
more entrepreneurial, more diagnostic and more strategic.
“Workforce planning is a core HR process and it presents an important
opportunity for HR to ‘raise the bar’ and be more closely involved in
building and supporting strategic planning to achieve business objectives.
While HR practitioners appear to recognise the importance of workforce
planning in principle, for many there is a ‘knowing–doing’ gap and many
practitioners are actively seeking better solutions to the challenges of
workforce planning.  In a volatile, fast-changing economy, workforce
planning can be seen as a way to enable sustainable performance by
providing the basis for better decision-making about the future needs of
the business in terms of its people resources”(CIPD,2013).
Bratton and Gold (2007) observed that:
“The emphasis on quantities, flows and mathematical modelling, which
appeared to be the main concern of manpower planning in the 1960s and
70s, is at least complemented by and integrated with a qualitative view of
people whose performance lies at the core of business strategy”.
By its very nature, it has to be undertaken as a process and on an on-
going basis so that there is always the least possible gap between Human
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Resource requirements and availability, both in terms of quality and
quantity. It also involves stakeholders from all parts of the organisation
and it is considered important that they understand the data and what it
means for both the short and long term resourcing needs.

 HRP: definitions:
According to Beach (1980):

 "Human resource planning is a process of determining and assuring that

the organisation will have an adequate number of qualified persons,
available at the proper times, performing jobs which meet the needs of
the enterprise and which provide satisfaction for the individuals
involved".

Megginson (1985) provides the following definition for HRP:-

“an integration approach to performing the planning aspects of the
personnel function in order to have a sufficient supply of adequately
developed and motivated people to perform the duties and tasks
required to meet organisational objectives and satisfy the individual’s
needs and goals of organisational members.”

Robbins and Coulter(2005) define HRP as follows:

“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 their tasks”.

CIPD (2013) uses the terminology work-force planning and defines it as:
“Workforce planning is a core process of human resource management
that is shaped by organisational strategy and ensures the right number of
people with the right skills is in the right place at the right time to deliver
short- and long-term organisational objectives”.
And

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 “tends to embrace a diverse and extensive range of activities, which may
vary between organisations and situations”.
The Human Resource Plan is expected to provide answers to the
following concerns:
 Quantity: How many employees do we need, now and in the
future?
 Quality: Which skills, knowledge and abilities will be needed?
 Time: When will these skills, knowledge and abilities be needed?
 Space: Where will these skills, knowledge and abilities be needed
and how will they be acquired or developed?

Activity Reflect on the advantages of engaging in a HRP exercise

Human Resource Planning Process

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The diagram illustrates the different stages of the Human Resource
Planning process.

 Objectives of Human Resource Planning

 Guarantee ample supply of resources, whenever there is a need for
it.
 Make sure that the current manpower in the company is being used
properly.
 To foresee the potential requirements of manpower at various skill
levels.
 Evaluate excess or scarcity of resources that are available at a given
point of time.
 Predict the impact of technological changes on the resources as well
as on the kind of jobs they do.

 Ensure that there is a lead time available to pick and train any
supplementary human resource.

3.4 Steps in HRP

According to Noe et al., (2003), there are three keys to effectively
utilising labour markets to one’s competitive advantage. Organisations
need to have a clear idea of:
1. Their current configuration of human resources(internal labour
market conditions and the strengths and weaknesses of the present
stock of employees)
2. Their intended strategic business goals as well as the fit between
current human resource configuration and the needed configuration
3. The discrepancies between the present and the needed configuration
and the programs that need to be put in place to fill the gaps.

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Such an exercise will enable organisations to identify the shortages and
the surpluses and the various initiatives that need to be envisaged in order
to align the Human Resource requirements with the availability.
Noe et al.,(2003) consider the Human Resource Planning process as
being made up of several components:

“the process consists of forecasting, goal setting and strategic planning,

and program implementation and evaluation.

 Forecasting

Forecasting is an elaborate and in-depth exercise to enable organisations

to ascertain supply and the demand for various types of human
resources. Many factors-internal and external – have to be taken into
consideration when making forecasts.
Internal factors
According to Beardwell and Holden(1995),it is fairly easy to predict the
availability of current staff.
“This arises because manpower flows tend typically to follow a fairly
predictable pattern. Thus a good manpower planner is able to locate
which employees are likely to leave, where they are likely to leave form,
the rate at which they leave, and the training implications arising from the
need to keep a constant flow of suitably qualified employees to fill vacant
positions. Any change in this pattern should also be able to be predicted
by the manpower planner because at this stage they should have a fairly
comprehensive understanding of the variables which impact on these
patterns of employment”.
Internal factors that need to be considered include:

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(a)Wastage analysis-computing the non-availability, over a given period
of time, of employees due to such factors like turnover, sickness,
accidents, absences, sabbaticals and resignations.
(b) Efficiency and productivity changes- through the introduction and
application of new technology and training programs
(d)Re-organisation and restructuring plans –which may involve
outsourcing, downsizing, early retirement schemes(like the Voluntary
Retirement Schemes-VRS),employment of temporary or Part Time
workers, shift workers or contract workers, use of overtime or extending
the hours of work.
Valuable information can also be garnered from “transitional matrices”.
This is one type of statistical procedure which “show the proportion (or
number) of employees in different job categories at different times.”(Noe
et al., (2003).They are very useful in tracking historical trends.
Other sources of information which can be very useful in assessing the
supply of manpower are succession plans, career development plans,
capability inventories, human resource accounting , promotions and
transfers. Such information helps in a more effective allocation and
distribution of available resources in line with expected changes.
The analysis of various aspects of the current human resource situation
generates considerable information which can be classified and stored,
and can be for retrieved for decision making purposes. In this context,
organisations can set up Human Resource Information Systems(HRIS) to
support HRP.
External factors
These are factors that relate to the external labour market conditions that
organisations need to analyse in the context of human resource
forecasting.

 Economic and Labour market conditions such as:

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investment trends, inflation, competition, rise in knowledge and service
jobs, unemployment, labour participation rates, age and gender
composition of the workforce, alternative work arrangements(24/7),
impact of migrant workers

 Social and Demographic changes such as:

Life-style changes, attitudes to work work-life balance, levels of
education, demand for knowledge workers, aging population,

 Technological developments such as:

Growth of Internet and e-business, quest for quality, design and value,

 Legislation on issues such as:

discrimination, human rights, ethical practices, corruption and
environmental protection and transparency.

 Flexibility relating to:

Innovative labour practices and alternative work arrangements, involving
flexible employment practices like part-time work, job-sharing

 Estimating net supply and demand

Forecasting the current human resource situation and taking into
consideration the prevailing external conditions that can potentially
impact on organisations’ human resource situation sets the scene for the
analysis of the net demand and net supply of new and current employees.
This is the second part of the forecasting process which takes into
account new workload estimates based on the business decisions that
have been agreed upon.
This is the phase when organizational strategy, objectives and policies are
formulated and finalised and Human Resource implications are analysed.
The interactions between top management and the HR department during
this phase are crucial for the elaboration of HR plans.
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Beardwell and Holden(1995) comment on what can be termed as the
‘crux’ of the HRP process as follows:
“..the HR department should be an integral part and member of the
business-strategy-making body. By integrating the HR department with
the corporate strategy department many problems associated with
manpower planning can be overcome. Rather than decide upon the
business strategy i.e. new product market ambitions, growth and
diversification plans, restructuring and relocation design, and then inform
the manpower planners at a later date to ‘pick up the pieces’ and alter the
employee resource patterns accordingly, strategic human resource
planning seeks to integrate the employee resource function at the board
level”.
CIPD(2013) comments on this aspect of the HRP process as follows:
“HRP starts with the business plan and it is essential to make sure that the
HR function is involved in the business planning process Workforce
planning is a core HR process and presents an important opportunity for
HR to ‘raise the bar’ and be more closely involved in building and
supporting strategic planning to achieve business objectives. While HR
practitioners appear to recognise the importance of workforce planning in
principle, for many there is a ‘knowing–doing’ gap and many
practitioners are actively seeking better solutions to the challenges of
workforce planning.  In a volatile, fast-changing economy, workforce
planning can be seen as a way to enable sustainable performance by
providing the basis for better decision-making about the future needs of
the business in terms of its people resources”.
It is through this process that the alignment of organisational and
employee goals become possible and Human Resource planning is able to
address two fundamental questions:
(a)What characteristics do we require of our workforce, both in the
immediate future and in the long term?

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(b)What policies and manpower planning practices are we going to have
to introduce in order to attract, retain and develop these kinds of
employees?
Activity “...the HR department should be an integral part and member

of the business-strategy-making body.”

Are you in favour of this statement? Explain your stand.

 Reconciliation and adjustments

At this stage, the estimated demand in terms of quantity and quality are
compared with the current projections of availability, and imbalances are
identified and addressed in the most cost effective and practical way
possible. For example, as suggested by Beardwell and Holden(1995):
“The most obvious ways in which an organisation adjusts its manpower
in response to increasing demand are to increase the use of overtime, to
temporarily the hours of the employed, to draw on subcontract labour,
and to recruit short-term labour form temporary agencies. Of course if
manpower planning was integrated with business strategy and planning in
a more human resource planning mould the launch of a new product and
the projections for sales would have allowed manpower planners more
time to make resourcing adjustments”.
Some of the adjustments could involve outsourcing, early retirements
programs (VRS),restructuring, reorganisation and downsizing,
productivity improvement agreements and introduction of new and
innovative technologies.
Activity What is the VRS system? Where has it been applied in the

Mauritian context and why?

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Noe et al(2003) consider this as a “ critical stage because many of
options available to the planner differ widely in their expense, speed,
amount of human suffering, and revocability(how easily the change can
be undone).

 HR programming and Implementation

Once an organization human resources demand and supply are forecast,

both in terms of quantity and quality, the best HR plan options/scenarios
must be examined before final decisions are arrived at. At this stage,
budgetary implications, cost-benefit considerations, scheduling and
implementation of decisions have to be addressed.

The agreed HR plan can further be divided into the following resultant
operational plans.
• Recruitment plan to show how many and what type of people is
required and when they are needed
• Redeployment plan to help chart out the future movement in terms of
training and transfers.
• Redundancy plan will indicate who is redundant, when and where; the
plans for retraining, where this is possible; and plans for golden
handshake, retrenchment and lay-off.
• Training plan to chart out if training is required. If yes, when and to
which level; whether it will be done in-house, done in phases or included
as part of a formal induction program. This includes the cost and benefit
analysis of all the options available.
• Productivity plan: Will indicate reasons for employee productivity or
reducing employees’ costs through work simplification studies,
mechanization, productivity bargaining, incentives and profit sharing
schemes and job redesign.

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• Retention plan: Will indicate reasons for employee turnover and show
strategies to avoid wastage through compensation policies, changes in
work requirements and improvement in working conditions.

The HR plan should include budgets, targets and standards. It should also
clarify responsibilities for implementation and control, and establish
reporting procedure, which will enable achievements to be monitored
against the plan, for example the number recruited against the
recruitment target, employment costs against total budget, and trends in
wastage and employment ratios.

Implementation requires converting an HR plan into action. A series of

action programmes are initiated as part of HR plan implementation. Some
such programmes are recruitment, selection, placement , training and
development and succession plan.

 Control and Evaluation

This represents the final phase and critical phase of the HRP process.
The most obvious criterion involves checking how far organisations have
been able to avoid surpluses and shortages and prevent disruptions in the
smooth flow of organisational processes, operations and activities.

The final test of a successful HRP is for organisations to have the right
number of people, with the right skills at the right time, in the right
places, making an effective contribution to the goals and objectives of the
organisations concerned.
According to CIPD (2013),HRP can be viewed from two angles:

 ‘Hard’ workforce planning

‘Hard’ workforce planning is about numbers: predicting how many

people with what skills are likely to be needed. In recent years, the use of
basic numerical or statistical data forms has become embedded in
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management information systems that can help understand cause and
effect of certain phenomena, together with an understanding that metrics
alone are not enough, but rather they need to be analysed and understood
in context.
 ‘Soft’ workforce planning

‘Soft’ workforce planning is about defining a strategy or developing a

strategic framework within which information can be considered. With an
increased emphasis on agility and responsiveness, there is a growing
realisation that good-quality management information set within such a
framework is the key to identifying and maximising the drivers of
performance. This approach to planning gives managers the opportunity
to consider a range of possibilities before reaching a stage where they are
forced into action by circumstance.

3.5 Nature and importance of HRP

 Characteristics  of HR Planning

HRP is a comprehensive and complex exercise and is characterised by

the following attributes:

1. Integral part of the corporate planning: Without a corporate plan,

there can be no manpower plan, whether or not the manpower plans
meet the organization requirements and are in tune with the reality
depends on how clearly the strategic goals are defined.
2. Forward looking or future oriented: Like all planning is, it
involves forecasts  of the manpower needs in a future time period so
that adequate and timely provisions may  be made to meet the needs.
3. Ongoing and continuous process: The demands for the supply of
human resources undergo frequent changes and are subject to review
and revision in accordance with the needs of the organization and the
changing environment.

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4. Optimum utilization of Human Resources: The basic purpose of
the Human Resources Planning is to enable an organization to make
optimal utilisation of current and future human resources, in order to
maximize the return of investment.
5. Both quantitative and qualitative aspects: The former implies the
right number of employees while the later means the right
competencies/ talents required in the organization.
6. Primary responsibility of management: Human Resources
Planning is the primary responsibility of management. It is the
foundation of all other HR functions.
7. Systems approach to Human Resources management: Human
Recourse Planning  provides the information about the demand and
supply of human resources. It constitutes a valuable to enable
comparison and evaluation of demand and supply so as to identify the
gap between the two.The outputs of human resources planning are the
strategy and programme formulated to bridge the gap.

 The Need / Importance of Human Resources Planning (HRP)

Human Resource Planning (HRP) is important for the following reasons:

To forecast future human resource requirements

Advance planning ensures a continuous supply of people with requisite

skills who can handle challenging jobs easily. In the absence of such a
plan, it would be difficult to have the services of the right kind of people
at the right time. Employee turnover can be monitored and control
measures about availability can be initiated If, for example the
organization wants to expand its scale of operations, it can decide on the
basis of the HR plan. To ensure optimum use of manpower and capitalize
on the strength of HR.

 The organization can have a reservoir of talent at any point of time.

People skills are readily available to carry out the assigned tasks, if
the information is collected and arranged beforehand with the help
of effective HR Planning.

To manage change effectively

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 Proper planning is required to cope with changes in market conditions,
technology products, and government regulations in an effective way.
These changes call for continuous allocation or reallocation of skills and
in the absence of planning there might be under-utilization of human
resource. Although planning has always been an essential process of
management, increased emphasis on HRP becomes especially critical
when organizations consider mergers, relocation of plants, downsizing, or
the closing of operating facilities. The myriad changes in production
technologies, marketing methods and management techniques have been
extensive and rapid. Their effect has been profound on job contents and
job contexts. In a turbulent environment marked by cyclical fluctuations
and discontinuities, the nature and pace of changes in organizational
environment, activities and structures affect manpower requirements and
require strategic considerations means perfect HR Planning. These
changes cause problems relating to redundancies, retraining and
redeployment. All these suggest the need to plan manpower needs
intensively and systematically. as business is facing due to turbulent and
hostile environmental forces (e.g. technology, social, economic and
political upheaval) impinging on single one of them.

To determine recruitment/induction levels.

If we have a ready HR plan, we will have fairly good idea what kind of
people are being recruited and at what position. This will facilitate the
planning of induction programmes.

To determine training levels and management development programmes

The HR plan will provide useful information for Human Resource

development activities, and bridge possible gaps in knowledge and skills
and meet the needs of expansion programs and growth strategies-of the
organizations . Succession planning, career development initiatives can
be envisaged without much difficulty. The HR database available
provides a comprehensive skill repertoire, which facilitates decision
making as to the promotional opportunities.

To forecast the cost of manpower

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An HR plan will help to make budgetary allocation in advance for any
upcoming corporate strategic move.

To assist in productivity bargaining

For example, if a firm is going fully automated, it can negotiate for lesser
workers as required for the same amount of the job by using the
manpower predictions regarding the same. It can offer higher incentives
to smoothen the process of voluntary layoffs.

To assess accommodation requirements.

We may have a question, how that can be related to HRP? A good HRP
can assist in solving many problems of the firm, from day to day ones to
very strategic ones, too. For example: an organization decides to establish
its production center in a remote area, an accurate HR plan can help it to
decide how many people will be required there, and thus start the process
of establishing a township for them in advance. The physical facilities
such as canteen, school, medical help, etc., can also be planned in
advance.

To ensure the effective utilization of Human Resources

This database is also useful for identifying surplus and unutilized human
resource and resources. In times of downsizing or in estimating the cost-
benefit analysis of human resources would add value to the process.

To contribute to overall Economic Development

 If organisations adopt and implement HRP, the overall impact can be felt
at the national level. An organization may incur several intangible costs
as a result of inadequate HRP or, for that matter, the lack of HRP. For
example, inadequate HRP can cause vacancies to remain unfilled. The
resulting loss in efficiency can be costly, particularly when the lead-time
is required to train replacements. Situations also may occur in which
employees are laid off in one department while applicants are hired for
similar jobs in another department. This may cause over hiring and result
in the need to lay off those employees to make effective plans for career
or personal development. As a result, some of the more competent and

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ambitious ones may seek other employment where they feel they will
have better career opportunities.

Manpower planning can contribute to economic development. It is

particularly helpful in dealing with underemployment, unemployment in
and mobility of talent.

Activity Try to recapitulate and state the reasons for undertaking

HRP?

3.6 Forecasting tools and techniques

In carrying out forecasting,organisations can use both statistical and
judgmental methods. Some of the commonly used methods will be
reviewed briefly.

 Workforce analysis is used to determine the rate of influx and

outflow of employee. It is through this analysis one can calculate
the labour turnover rate, absenteeism rate, etc.

 Workload analysis is used to calculate the numbers of persons

required for various jobs with reference to a planned output. This
takes into consideration factors such as absenteeism, and idle time,
etc

 Human Resource inventory and regular manpower audits are also

useful They are the best options to keep track of the available talent
in terms of skills, performance and potential.

 Staffing tables/manning charts, are pictorial representations of all

organizational jobs, along with the numbers of employees currently
occupying those jobs and future employment requirements.

 The Human Resource Information System (HRIS) is a systematic

procedure for collecting, storing, maintaining retrieving and

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 validation data needed by an organization about its human
resources. The HRIS is usually a part of the organization’s larger
management information system (MIS) and is a useful date base to
support HRP

 Job analysis helps in finding out the abilities or skills required to do

the jobs efficiently. A detailed study of jobs is usually made to
identify the qualifications and experience required for them. Job
analysis includes two things: job description and job specification.

 Job description is a factual statement of the duties and

responsibilities of a specific job. It gives an indication of what is to
be done, how it is to be done and why it is to be done.

 Job specification provides information on the human attributes in

terms of education, skills, aptitudes and experience necessary to
perform a job effectively.
Activity Define an HRIS? What types of information can be obtained

from an HRIS?

Quantitative approaches to forecasting involve the use of statistical or

mathematical techniques The most commonly used statistical approaches
to manpower forecasting, range from methods of simple extrapolation,
through regression or correlation analysis, to econometric models. All of
these methods depend for their validity, on the assumption that
developments in the future will exhibit some continuity with the past.
Simple extrapolation assumes that past trends will continue, regression
analysis assumes that particular relationships will hold firm and
econometric models assume that the basic inter-relationships between a
whole range of variables will be carried on into the future

 Trend analysis is used to forecast employment requirements on the

basis of some organizational index and is one of the most
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 commonly used approaches for projecting HR demand. First, select
an appropriate business factor. This should be the best available
predictor of human resources needs. Frequently, sales or value
added (selling price minus costs of materials and supplies) is used
as a predictor in trend analysis. Second, plot a historical trend of the
business factor in relation to number of employees. The ratio of
employees to the business factor will provide a labour productivity
ratio (for example, sales per employee). Third, compare the
productivity ratio for at least the past five years. Fourth, calculate
human resources demand by dividing the business factor by the
productivity ratio. Finally, project the human resources demand for
the target year.

 Regression and Correlation

This method seek to provide a measure of the extent to which
movements in the values of two or more variables - as for example
labour input and sales are related (or correlated) with each other. The
aim is to predict changes in one variable by reference to changes in the
other or others, where the future value of these other (or explanatory)
variables is already postulated. Thus, if a company finds that the
number of hours put in by a group of workers bears a strong
relationship to the amount of output from the department, or sales,
knowledge of future output or sales levels should make possible a
forecast of future manpower requirements. Where only two variables
are concerned the analysis is known as simple regression or
correlation. Where more than two variables are considered together,
the analysis is known as multiple regression.

 Markov analysis, which shows the percentage (and actual number)

of employees who remain in each job from one year to the next,
thus keeping track of the pattern of employee movements through
various jobs. Thus this analysis results in a composite matrix of
supply.

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  More sophisticated statistical planning methods include modelling
or multiple predictive techniques. Several mathematical models,
with the aid of computers are also used to forecast HR needs, e.g.,
optimization models, budget and planning analysis. Whereas trend
analysis relies on a single factor (e.g., sales) to predict employment
needs, the more advanced methods combine several factors, such as
interest rates, gross national product, disposable income, and sales,
to predict employment levels.
Qualitative Approaches, in contrast to quantitative approaches, are less
statistical, attempting to reconcile the interests, abilities, and
aspirations of individual employees with the current and future staffing
needs of an organization. In both large and small organizations, HR
planners may rely on experts who assist in preparing forecasts to
anticipate staffing requirements, for example, Expert Forecasts by
Managers. In this method, managers estimate future human resource
requirements by putting their experiences and judgments to good
effect. These Management forecasts are the opinions (judgments) of
supervisors, department managers, experts, or others knowledgeable
about the organizations future employment needs.
Another qualitative forecasting method is the Delphi technique which
attempts to decrease the subjectivity of forecasts by involving a group of
pre-selected ‘experts’ and soliciting and summarizing the judgments.
Thus a group decision-making process is invoked which in turn, requires
a great deal of process orientation to enhance coordination and
cooperation for satisfactory forecasts. This method works best in situation
where dynamic technological changes affect staffing levels.
Ideally, HRP should include the use of both quantitative and qualitative
approaches. In combination, the two approaches serve to complement
each other, thus providing a more complete forecast by bringing together
the contributions of both theoreticians and practitioners. While the costs
of developing these forecasting methods used to be quite high, advances

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in technology and computer software have made rather sophisticated
forecasting more affordable to even small businesses.

 A few problems in an HRP process

The main problems in the process of HRP are as follows:

 Lack of competence: many organisations subscribe to HRP but do

not have the competencies to undertake the exercise
 Conflict between quantitative and qualitative approach to HRP.
Some people view HRP as a number game designed to track the
flow of people across the departments. These people a strictly
quantitative approach to planning. Others take a qualitative
approach and focus on individual employee concerns such as
promotabilty and career development. Best results would accrue if
there is a balance between the quantitative and qualitative
approaches.
 Time and expense: Human Resource Planning is time consuming
and expensive exercise, so industries avoid.
 Inaccuracy: Human Resource Planning is entirely dependent on the
HR forecasting and supply, which cannot be a cent per cent
accurate process. 
 Uncertainties: Labour absenteeism, labour turnover, seasonal
employment, technological changes and market fluctuations are the
uncertainties which Human Resource Planning process might have
to face. 
 Employee resistance: Employees and their unions feel that by
Human Resource Planning, their workload increases so they resist
the process.
 Inefficient HRIS: In many organisations, there is no HRIS in place.
In the absence of reliable data it is not possible to develop effective
Human Resource Planning. 
CIPD 2013 has proposed the following guidelines for the successful
implementation of HR plan:

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  Attain consensus on the plan – a collaborative approach is vital
and will involve wide-ranging consultation with stakeholders to
enable all parties to agree and understand the rationale for the
actions being taken.
 Ensure clear allocation and understanding of responsibilities – 
a variety of people participate in the planning process but it is
essential that all those involved are clear about what they are
responsible for and what actions they need to take to ensure that the
outcomes of the planning process are successfully implemented.
 Provide support for managers – line managers will need support
from HR and others to fulfil their responsibilities and ensure they
have the skills and understanding to fully participate in the planning
process and act on the outcomes.  For example, the skills to
interpret data and to input good quality information and analysis are
essential.
 Review and capture learning – The process needs to incorporate
clear and robust mechanisms to review and capture learning and
feed this back into the planning process.  The evaluation criteria
that will be useful will depend on the objectives of planning. 
Essentially workforce planning is about trying to predict the future
to inform decision-making so evaluation needs to relate to the the
outcomes of those decisions and their consequences.  Evaluation is
iterative and the more proficient organisations become at planning
the more likely they are to be able to identify relevant evaluation
criteria to demonstrate their ability to make more accurate future
predictions.
As the environment becomes more competitive, more complex and more
uncertain, HRP will gain in importance. Failing to plan is said to be
equivalent to planning to fail. Since effective HRP is at the heart of the
HR process and is the foundation of all other HR functions, with
systematic HRP, organisations are able to ensure that they have the right
number of people, at the right time, in the right places, with the right
skills, performing as per the expectations of the organisation. There is,
therefore, a strong link between effective HRP and successful strategy
implementation. As human resources are the costliest of all resources and

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also the most valuable if well managed, the contribution of HRP in
helping organisations achieve competitive advantage cannot be
minimised.

Activity Having studied this Unit, compare the traditional Manpower

planning exercise with modern HRP exercise. Is HRP an

improvement on Manpower planning? Explain your stand.

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