Strategic Human Resource

Planning
(SHRP)

Dr. Vaneeta Aggarwal

 HRP: An Overview

• HRP is a process of analyzing & identifying

the need for & availability of human
resources (HR) so that organization can meet
its objectives.

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 HR Planning
Strategy Oriented
– “A strategy for the acquisition, utilization, improvement & retention of an
organization’s human resources”
– AIMS of HRP:
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 and number
– HRP establish control: planner work as a “policeman” who checks whether staffing
levels are optimum

Process Oriented
– HRP 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

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 Business Strategy & HRP
Business strategy
focus (Porter)
Cost leadership
Cost control
Stable business
environment
Efficiency & quality
Differentiation
Long term focus
Growth
Creativity in job behaviour
Decentralization
HR strategy
Job & employee
specialization
Employee efficiency
Long HR planning scope
Shorter HR planning scope
Hire HR capabilities
required
Flexible jobs & employees
HRP activities
Internal promotions
Emphasis on training
Hiring & training for
specific capabilities
External staffing
Hire & train for broad
competencies
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 Business Strategy & HRP
Business strategy HR strategy HRP activities
focus (Miles &
Snow)
Defender
Finds change threatening Bureaucratic approach Build HR
Favors strategies which Planned & regularly Likely to emphasize
encourage continuity & maintained policies to training programs & internal
security provide for lean HR promotion
Prospector
Succeed on change Creative & flexible Acquire HR
Favors strategies of management style Likely to emphasize
product & / or market Have high quality HR recruitment, selection &
development Emphasize redeployment performance base
& flexibility of HR compensation
Little opportunity for long-
term HRP

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 Perspectives of HRP
• MACRO HRP –

– 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 after merger with P&G 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 HRP –

– Process of forecasting demand for & supply of HR for specific organization

– Eg.
• Wipro (a software giant in India) short-listing students in their 2nd yr. of college for
future employment in India
• Genpact (an IT solution company in India) launching an associate trainee program
with Osmania University

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JOB ANALYSIS

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 Terminology commonly used in JA literature
• JOB – group of positions that have similar duties, tasks, &
responsibilities

• POSITION – set of duties & responsibilities performed by one

person
– A job is a general term, a position is more specific.

• JOB FAMILY – group of 2 / more jobs that have similar duties /

characteristics

• TASK – separate, distinct & identifiable work activity

• DUTY – several tasks that are performed by an individual

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 Information obtained from JA
• What is to be done? How is to be done?
(CONTENT)

• Under what conditions is the job to be done

(CONTEXT)

• What KSA & other characteristics are required

to perform the job (HUMAN REQUIREMENTS)

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 Information obtained from JA
• JOB CONTENT
– Duties & responsibilities
– Job demands
– Machines, tools, & equipment
– Performance standards

• JOB CONTEXT
– Physical, organizational & social context
– Work conditions, & work schedule

• HUMAN REQUIREMENTS
– KSA,
– Education, Experience & personal attributes (personality, interests,
etc.)

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 Components of a JA
• JOB DESCRIPTION
– Statement of tasks, duties, responsibilities, & context of
the job

• JOB SPECIFICATION
– KSA required to perform the job satisfactorily

• JOB EVALUATION
– Comparison of relative value of jobs in organization for
making compensation decisions

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 Process Of JA
• Strategic choices
• The extent of employee involvement
• The level of details of analysis
• Timing and frequency of analysis
• Past- oriented vs. future oriented
• Sources of job-data

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Methods of collecting information for JA

• Number of ways – may be used in

combination or in isolation
• METHODS:
– Interviews
– Questionnaires
– Observations
– Participant diary
– Checklist
– Technical conference
– Quantitative techniques like PAQ, MPDQ
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 Collecting the data
• Trained Job analyst
• Supervisors
• Job incumbents

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 JA Process
• Determine purpose of JA
• Review organization chart
– OC shows the division of work in organization, how the job
in question related to other jobs, how the job fits into the
overall organization, who reports to whom, & whom the
incumbent reports to
• Select representative jobs for analysis
• Analyze jobs using data gathering methods
• Check information for accuracy
• Write JD & JS for use in HR activities

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 Writing JDs
• Job title & identification
• Job summary
• Relationships
• Responsibilities & duties
• Authority limits
• Standards of performance
• Equipment & tools
• Working conditions

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 SHRP Process
• SHRP PROCESS:

1. Environmental scanning
2. Forecasting & analyzing demand for HR
3. Forecasting & analyzing supply of HR
4. Developing action plans to match HR demand &
supply

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 Environmental Scanning
• Systematic process of studying & monitoring the
external environment of the organization in order to
pinpoint opportunities & threats

• Involves long range analysis of employment

• Factors include economic factors, competitive trends,

technological changes, socio-cultural changes,
politico-legal considerations, labour force
composition & supply, & demographic trends

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 Environmental Scanning
• Eg., competitive pressures are likely to increase resulting in enhanced
productivity requirements & HRP objective may be ‘to increase employee
productivity by 5% in 2 yrs.’ which will require the firm to determine
current employee productivity (output / employees)

• Attempts to answer 2 questions:

– Which jobs need to be filled (or vacated) during the next 12 months?
– How & where will we get people to fill (or vacate) these jobs?

• Demand & supply of labour in loose & tight labour market

– Major impact of the shortage of skilled workforce (tight labour market) in

India has been on staff cost (increased by 35% in 2005)
– Fast growing sectors like retail, ITeS, telecom are new & do not have historical
talent to bank on & hence they are hiring from other sectors with skill sets
that are relevant to their industries

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 Forecasting HR Demand
• 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

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 Qualitative Methods of Demand Forecasting
Method Advantages Disadvantages

Estimation People in position estimate the Incorporates knowledge of May be subjective

number of people the firm will corporate plans in making
require in the next yr. estimates

Expert Panel of experts forecast HR requirements for particular future business scenarios.
opinion For this method, there may be a single expert, or estimates of several experts may be
pooled together

Delphi Experts go through several Incorporates future plans Subjective, time

rounds of estimates with no & knowledge of experts consuming & may
face-to-face meeting related to mkt., industry & ignore data
technical development

Group Face-to-face discussion based Generates lot of ideas Does not lead to
brainstor on multiple assumptions about conclusion
ming future business direction

Nominal Face-to-face discussion Group exchanges facilitate Subjective which may

group plans ignore data
technique

Simple Simple averaging of viewpoints Diverse view points taken Extremes views are
averaging masked when
averaged
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 Quantitative Methods of Demand Forecasting
Method Advantages Disadvantages

Trend Based on past relationship between a business factor related to

analysis employment & employment level itself
&
projectio
n
Simple Extrapolates past Recognizes linkage Assumes that
long-run relationship between between employment volume of business
trend volume of business activity & business activity activity of firm for
analysis & employment levels into forecast period will
the future continue at same
rate as previous yrs
Ignores multiplicity
of factors
influencing
employment levels
Regressi Regresses employment Data driven Difficult to use &
on needs onto key variables Uses multiple business apply
analysis factors

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 Quantitative Methods of Demand Forecasting
Method Advantages Disadvantages

Simulati Uses probabilities of future Makes several Costly &

on events to estimate future assumptions about the complicated
models employment levels future regarding
external & internal
environment
Simultaneously
examines several
factors
Workloa Based on actual content of HR requirements based Job analysis may
d work on expected output of not be accurate
analysis the firm Difficult to apply
Productivity changes
taken into account

Markov Probabilistic Data driven Assumes that

analysis Based on past relationship nature of jobs has
between business factor not changed over
related to employment & time
employment level itself Applicable to stable
environment
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 Causes of Demand
EXTERNAL CHALLENGES:
– Economic developments – noticeable effect but are difficult
to estimate (Inflation, unemployment, & changing workforce
patterns)
– Social, political & legal challenges – easier to predict, but
their implications are not very clear (Implication of
abolishing mandatory retirement age in US may not be
known until a generation has lived without “65 & out”
tradition)
– Technology changes – difficult to predict & assess but may
radically alter strategic & HR plans (PC would cause mass
unemployment vis-à-vis IT field as a large one employing
millions of people directly / indirectly – complicates HR,
because it tends to reduce employment in one dept. while
increasing it in another)

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 Causes of Demand
ORGANIZATIONAL DECISIONS:
– As orgs. respond to changes in their environment, decisions are made to
modify the strategic plan, which commits firm to long-range objectives –
growth rates & new products, markets / services & these objectives
dictate number & types of employees needed in future
– To achieve long-term objectives, HR specialists must develop long-range
HR plans that accommodate strategic plan
– In short run, planners find strategic plans become operational in form of
budgets
– Sales & production forecasts are less exact than budgets but may
provide even quicker notice of short-run changes in demand for HR
– New ventures means changing HR demands – when a new venture is
begun internally from scratch, lead time may allow planners to develop
short-run & long-run employment plans – merging HR group with
Corporate Planning staff

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 Causes of Demand

WORKFORCE FACTORS (ATTRITION):

– Demand is modified by employee actions such as
– retirements,
– resignations,
– terminations,
– death, &
– leaves of absence

– Analysis Technique – Markov Analysis of Attrition Rates

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 Forecasting Techniques
Trend Projection Forecasts:
– Quickest forecasting techniques
– Two simplest methods –
1. Extrapolation: involves extending past rates of change into future (if an
avg of 20 production workers was hired each month for past 2 yrs,
extrapolating that trend into future means that 240 production
workers will be added during upcoming yr.)
2. Indexation: a method of estimating future employment needs by
matching employment growth with an index, such as ratio of
production employees to sales (eg., for each million $ increase in sales,
production deptt. requires 10 new assemblers)
– Both are crude approximations in short run because they
assume that causes of demand remain constant which is
seldom the case – making it very inaccurate for long-range HR
projections

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 Methods of Demand Estimation
TREND ANALYSIS & PROJECTION
• Study of firm’s past employment needs over a period of yrs. to predict future
needs
• Appropriate business factor that relates significantly to employment levels
differs across industries (University – student enrollment, Sales firm – sales
volume, Manufacturing firm – total units produced)
• Steps:
1. Determine & identify a business factor that relates to the number & type of people
employed
2. Identify historical trend of the relationship between this business factor & the number
of people employed
3. Determine the ratio of employees to the business factor, that is, the average output
per individual employee per year – labour productivity
4. Determine the labour productivity ratio for the past 5 yrs at least & calculate the
average annual rate of change in productivity
5. Calculate the human resource demand by dividing the business factor by the
productivity ratio
6. Project human resource demand for the target year.

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 Methods of Demand Estimation
SIMPLE LONG-RANGE TREND ANALYSIS
• Extrapolates the volume of current business
activity for the years for which the forecast is
being made
• Since there is a correlation between volume
of business activity & employment level,
linear extrapolation would also indicate HR
demand by job & skill category

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 Methods of Demand Estimation
RATIO ANALYSIS
• RATIO between output & manpower deployed to
achieve that output is established at a given point
of time
• Eg., revenue per employee, sales vol. per salesperson,
service contract per engineer, units produced per
employee, etc.,

• Historical ratio between:

• Some causal factor (sales volume)
• No. of employees required (number of salesperson)
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 Methods of Demand Estimation
REGRESSION ANALYSIS
• Drawing a statistical comparison of past
relationship among variables
• Statistical relationship between no. of patients
(business factor) & employment level of nurses
in a nursing home may be useful in forecasting
the no. of employees that will be needed if the
no. of patients increases by say 20%

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 Methods of Demand Estimation
LINEAR REGRESSION ANALYSIS
• Relationship between two
variables which is directly &
precisely proportional
• Production output & x
manpower are the two X
variables & the relationship x
x
between these two is
plotted on a graph by
drawing a “line of best fit” a x x

Manpower
• Analysis aims at providing a x
x
measure of the extent to
which changes in the values
of two variables are
correlated with one another

b Y
Production level
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 Methods of Demand Estimation
MARKOV ANALYSIS
• Shows the percentage (& actual no.) of employee who remain in each
job from one yr. to the next, as also the proportion of those who are
promoted or transferred or who exit the organization
• Internal mobility among different job classifications can be forecast
based upon past movement patterns – past patterns of employee
movements (transitions) used to project future patterns
• Pattern is used to establish transitional probabilities & to develop a
transition matrix
• Transitional probabilities:
• Indicate what will happen to the initial staffing levels in each job category /
probability that employee from one job category will move into another job
category
• Determine the forecasted employee levels at the end of the yr

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 Forecasting & Analyzing HR Supply

– 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

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 Methods of Forecasting External HR Supply
INTERRELATED FACTORS THAT MUST BE CONSIDERED IN PROJECTING EXTERNAL HR
SUPPLY
• Government estimates of population available for work
• Net migration into and out of the area
• Numbers entering the workplace
• Numbers leaving the workplace
• Numbers graduating from schools / colleges
• Changing workforce composition
• Technological shifts
• Industrial shifts
• Trends in the industry (actions of competing employers)
• Economic forecasts
• Government regulations & pressures such as job reservations for certain groups

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 Methods of Forecasting Internal HR Supply

HR INVENTORY
• Obtains & stores information about each employee of the org. in a manner that
is easily accessible because it is necessary for HRP
• Employee information stored in the inventory relates to KSA, experience, &
career aspirations of the present workforce of the firm
• Contents of HR Inventory
• Personal identification information
• Biographical information
• Educational achievements
• Employment history
• Information about present job
• Present skills, abilities, & competencies
• Future focused data
• Specific actions (like training needed for achieving career goals)

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 Methods of Forecasting Internal HR Supply

HR INVENTORY
• 2 types –
• Skills inventory: describes the skills & knowledge
of non-managerial employees & is used primarily
for making placement & promotion decisions
• Management inventory: contains the same
information as in skills inventory, but only for
managerial employees which describes the work
history, strengths, weaknesses, promotion
potential, career goals
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 Methods of Forecasting Internal HR Supply
HR INVENTORY
• Can be used to develop employee replacement
charts
• Replacement charts – lists current jobholders & identifies
possible replacements should there be a vacancy for
reasons such as resignations, transfers, promotions, etc.
• Replacement charts include the following information on
possible replacements like current job performance,
potential for promotion, training experience required by
replacement to be ready for the key position
• Chart also details ‘when’ a replacement is needed for a
‘job’ – short term forecasts in nature

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 Methods of Forecasting Internal HR Supply
SUCCESSION ANALYSIS & PLANNING
• A systematic & deliberate process of identifying, developing
& tracking key individuals within the firm to prepare them
for assuming senior & top-level positions in future.
• Eg., SAIL poaching from global players & preparing a
‘defence system’ wherein 2nd & 3rd line of command is being
prepared,
• Eg., Godrej, Marico (fly. owned business) in India have ‘drop
dead’ succession plan which keeps the wheel moving where
a promoter of the fly-owned firm may always be around to
guide the company

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 Methods of Forecasting Internal HR Supply
LABOUR WASTAGE ANALYSIS
• Traditionally LW is measured by the employee
turnover index (% wastage index)
• (No. of empls leave in mth / avg. empls) x 100

• Turnover classified into:

• Avoidable separations (resignations & dismissal)
• Unavoidable separations (retirement, death, & marriage)

• Turnover rate = [(S-US) / M] x 100

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 Methods of Forecasting Internal HR Supply
ABSENTEEISM RATE

No. of man-days lost due to absence

from work during the period
AR = --------------------------------------- x 100
Avg. number of Total number
empls. during this pd. of days

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Thank You

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 Terminology commonly used in JA literature
• RESPONSIBILITIES – obligations to perform certain tasks & duties
– DUTY**BEHAVIOR SHOWING A PROPER REGARD / SENSE OF OBLIGATION,
JUSTICE MORALITY, OCCUPATION OR POSITION.
– RESPONSIBILITY**OBLIGATION TO DO WHAT IS EXPECTED,IF YOU SAY YOU
ARE GOING TO DO SOMEHTHING- DO IT,TRUST,HONESTY, TO CARE FOR
OTHERS

• JOB DESIGN – process to ensure that individuals have meaningful

work & one that fits in effectively with other jobs

• JOB DESCRIPTION – written summary of the content & context of

the job, outlining the tasks, duties, & responsibilities of a job, as
well as performance standards of each job

• JOB SPECIFICATION – written statement of the KSA & other

characteristics (human requirements) that are necessary for
performing the job effectively & satisfactorily

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