Human Resource

Planning
Session – 6
 Defining Human Resource Planning

‘the process for ensuring that the human resource requirements of an

organization are identified and plans are made for satisfying those
requirements’.

HRP addresses human resource needs both in quantitative and

qualitative terms
 Human Resource Planning
A decision-making process that combines three important activities:

• Identifying and acquiring the right number of people with the proper skills,
• Motivating them to achieve high performance, and
• Creating interactive links between business objectives and people-planning
activities’.
Aims of human resource planning
• Attract and retain - people with the appropriate skills,
expertise and competencies;

• Anticipate the problems of potential surpluses or deficits of

people;

• Develop a well trained and flexible workforce;

• Reduces dependence.
HR Planning Process
 Forecasting
• Given the uncertainty of forecasts, construct estimates as a
range, providing low, probable, and high estimates.
 Forecasting Business Activity
• An organization’s product demand directly affects its need for
labor
• Locate reliable, high-quality information sources within and outside
of the organization to forecast business activity
• Types of business activity forecasts:
• Seasonal
• Interest rate
• Competitors
• Industry and economic
• Others
 Forecasting Labor Demand
• It is a good idea to identify minimal as well as optimal staffing levels when
analyzing labor demand.
 Scenario Planning
• Scenario Planning, originally used by Shell more than 40 years
ago, is a qualitative planning technique.

• In scenario planning with the help of critical uncertain

dimensions some likely scenarios are built up.

• While theoretically the dimensions can be many, but for ease of

understanding generally two critical dimensions are used to
develop four likely scenarios.
Expansion of projects in ‘X’ Scenario 1 Scenario 2
Region <Title> <Title>
___________ ___________
___________ ___________
Business __________ __________
Growth

Scenario 3 Scenario 4

Withdrawal from certain <Title> <Title>

businesses ___________ ___________

___________ ___________
__________ __________

Adequate Skill Shortage

Skill Adequacy of Skill
 Trend Analysis
• Study of a firm’s past employment needs over a period of years to
predict future needs.

• Any employment trends that are likely to continue can be useful

in forecasting labor demand.
 Ratio Analysis
• Assumes that there is a relatively fixed ratio between the
number of employees needed and certain business metrics.

• Using historical patterns within the firm helps to establish a reasonable

range for these ratios.
• Need consistent historical trends to calculate ratios.
 Scatter Plots
• Show graphically how two different variables are related.

Source: GD, BV, HRM

Judgmental Forecasting
• Relies on the experience and insights of people in the organization to predict future
needs.

• Top-down
• Bottom-up
 Why Judgmental Forecasting
• Because historical trends and relationships can change;
• best to supplement the more mechanical methods with
managerial judgment;
• The more mechanical methods can be used as a starting point
and managerial input then used to modify the estimates.
 Forecasting Labor Supply
• Combining current staffing levels with anticipated staffing gains and
losses results in an estimate of the supply of labor for the target position at
a certain point in the future.
• Anticipated gains and losses can be based on historical data combined
with managerial estimates of future changes.
• External labor market
• Internal labor market
 Transition Analysis
• A quantitative technique used to analyze internal labor markets and forecast
internal labor supply.
• Can also forecast the number of people who currently work for the organization
likely to still be employed in various positions at some point in the future.
• The analysis is best performed for a limited number of jobs at a time to keep it
easily interpretable.

• In how many ways an existing position can fall vacant in an organization?

Transition Analysis Process

Source: Phillip and Gully, Strategic Staffing

Transition Analysis

Source: Phillip and Gully, Strategic Staffing

Using the Transition Probability Matrix

Source: Phillip and Gully, Strategic Staffing

 Internal Labor Market Forecasting Methods

• Judgment

• Talent inventories: summarize each employee’s skills, competencies, and

qualifications

• Replacement charts: visually shows each of the possible successors for a job and
summarizes their present performance, promotion readiness, and development
needs

• Employee surveys to identify the potential for increased turnover in the future

Copyright © 2011
Pearson Education, Inc.
Publishing as Prentice Hall
Replacement Chart
 Forecasting the External Labor Market

• Organizations monitor the external labor market in two ways.

• 1. Through their own observations and experiences.

• 2. By monitoring labor market statistics generated by others.

• U.S. Bureau of Labor Statistics (BLS) and others (Monster Employer Index India)
 HR Planning
The three questions that need to be answered are:

1. How many people should we recruit?

• Staffing yields
• Hiring yields: (also called selection ratios)
2. What resources do we need?
• Workload-driven forecasting: based on historical data on the average
number of hires typically made per recruiter
• Staffing efficiency driven forecasting: the total cost associated with the
compensation of the newly hired employee
3. How much time will it take to hire?
• Continuous recruiting can shorten the hiring timeline
• Batch recruiting: recruiting a new applicant pool each time
Class Exercise
• Human Resource in State Bank of India, Anantpur Branch