Manpower

UNIT 12 MANPOWER PLANNING Planning

Structure
12.1 Introduction
Objectives
12.2 Need for Manpower Planning
12.3 Objective of Manpower Planning
12.4 Process of Manpower Planning
Manpower Demand Forecasting
12.5 Manpower Demand Forecasting Techniques
Employees Opinion Method
Normative Method
Component Method
International Comparison Method
MRP Method
12.6 Techniques of Micro Forecasting
Evolving Manning Norms
Forecasting Workload
Relating Workload to Manning Norms
12.7 Database Manpower Forecasting
Database for Macro Forecasting
Database for Micro Forecasting
12.8 Manpower Supply Forecasting
Concept of Manpower Supply
Macro Forecasting
Micro Forecasting
12.9 Analysis of Wastage
Stability Index
Modified Stability Index
12.10 Reconciling Demand and Supply
12.11 Summary
12.12 Terminal Questions
12.13 Answers
12.14 Further Readings

12.1 INTRODUCTION

Planning is the foundation of attainment of goal of an enterprise. Manpower

plans are selected courses along which the management desires to coordinate
group action. Manpower planning or human resource planning is the process
by which a management determines how an organization should more from its
current. Human resource position to its desired human resource position. In
other words Manpower Planning may be interpreted as process of preparing a
set of decisions on human resources development for action by human
resources in future. 223
Introduction to According to Eric, “It is process it management strives to have the right kind of
Management people at the right place, at the right time, to do the things at the right place, at
the right time to do the things which results in both the organization and the
individual receiving the maximum long range benefit”.

Manpower planning and human resource planning are synonymous. Coleman

has defined manpower or human resource planning as “the process of
determining human resource requirements and the means for meeting those
requirements in order to carryout the integrate plan of the organization.

Gordon McBeath has divided Manpower Planning into two stages. The first
stage involving with the detailed planning of human resource requirements for
all types and levels of employees throughout the period of plan and second
stage is concerned with, ‘Planning of Human Resource of Manpower Supplies
to provide the organization with the right types of people from all sources to
meet the planning requirements”.

Thus it is clear from the above definitions that Manpower Planning consists of
projecting future human resource requirements and developing. Human
Resource plans/Manpower plans for the implementation of the projections.

In other words we can say that Manpower Planning is admittedly an essential

tool for proper acquiring, utilization and development of the human
resource/Manpower resource of an organization. In the corporate field, the tool
is still quite new as compared to some other techniques of scientific
management and its usefulness has been well tested in several organizations –
foreign as well as India. However, Manpower planning has been neglected in
most of the Indian Industries. This aspect is used only for estimating the total
requirements of the workers and not with the object of developing the human
resource.

The action required of human resources/Manpower Resources are primarily of

two types:-

• Availing the employment opportunities generated by the technologies in

vogue in the process of economic development, and

• Evolving new technologies to aid the process of economic development.

Investment in health and nutrition, social and economic equity and education
have the potential to contribute to Manpower resource/human resource
development.

SAQ 1

What do you mean by manpower planning?

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Planning
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Objectives

After reading this unit, you should be able to understand:

• the concept and introduction of manpower planning;

• need for manpower planning;
• objectives of manpower planning;
• the concept of manpower demand;
• the need for manpower demand;
• the methodologies of manpower demand forecasting at macro and micro
levels;
• the data base required for manpower demand forecasting at macro and
micro levels;
• the concept and dimension of manpower supply;
• the methods of manpower supply forecasting at the macro level; and
• the significance of wastage rate and internal flows in the context of micro
supply.

12.2 NEED FOR MANPOWER PLANNING

The planning for manpower resources is a major managerial responsibility in

today’s industrial economies. In modern era of industrial nations, with rapid
technological change and persistent demands for higher and higher levels of
skill manpower planning has achieved a high priority. In other words for
achieving the objective o the organization it is necessary to have a skilled
manpower rather than unskilled and manpower planning is indispensable and
the reasons are listed below:

• To function and survive an organization needs the manpower with the

necessary qualifications, skills, experience and aptitude.

• To identify losses in terms of requirements, resignation, deaths, dismissals,

transfers, promotion etc.

• To anticipate the quantum and size of labour turnover and to initiate well in
advance necessary corrective steps.

• To cope up with technological changes taking place at a very fast speed in

an around an organization and,

• To ascertain the pockets of surplus manpower or areas of shortages and re-

deploy the available labour force to correct the imbalance. 225
Introduction to We further point out the importance of manpower planning which can be also
Management termed as need of Manpower Planning, such as:

• It serves the purpose of a planning and control technique.

• It accurately estimates the number of personnel required.
• It provides information about the manner in which the existing personnel
are deployed and kind of skills required for different jobs.
• It helps utilizing the existing Manpower more productivity in relation to the
job requirements.
• It determines the recruitment level.
• It assesses future accommodation requirements.
• It gives an indication of the lead time available to select and retain the
required additional manpower.

SAQ 2

Give two reasons for need of manpower planning.

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12.3 OBJECTIVE OF MANPOWER PLANNING

The main objectives of Manpower Planning are as follows:

• To ensure optimum use of existing manpower.

• To forecast future requirements for manpower.
• To provide control measure to ensure that necessary manpower are
available as and when required.
• To link manpower planning with organizational planning.
• To assess the surplus and shortage of manpower.
• To anticipate the impact of technology on jobs and manpower.
• To determine levels of recruitment and training.
• To estimate the cost of manpower and housing needs of employees.
• To provide a basis for management development programmes.
• To facilitate productivity bargaining.
226 • To meet the needs of expansion and diversification programmes.
SAQ 3 Manpower
Planning
What are the main two purposes of manpower planning?
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12.4 PROCESS OF MANPOWER PLANNING

The process of Manpower Resource comprises of:

• Anticipating the manpower needs.

• Planning job requirements and descriptions.
• Analysing skills to determine the nature of manpower, needed and
• Choosing adequate sources of recruitment.

The following four methods are generally used in determining the personnel
requirements.

• Fixed minimum man specification requirements.

• Annual estimation of vacancies.
• Long-range estimates of the vacancies, and
• Specific position estimates.

Manpower planning requires an in-depth knowledge of how the human

resource system / manpower system operates, with emphasis on the flow
(supply and demand) of people into, through and out of the organization.

On the supply side, manpower planning requires accurate and current

information regarding the qualitative and quantitative factors such as, skills
invention and public policy towards manpower resource. On the demand side,
attention is paid to such factors as productivity, technological changes, and
sales forecast. Supply and demand are continuously balanced within the
framework of organizational goals and priorities. A step wise manpower
planning process is given below:

• Manpower Demand Forecasting

• Manpower supply forecasting
• Manpower inventory
• Forecasting the Wastage
• Reconciling Demand and Supply 227
Introduction to 12.4.1 Manpower Demand Forecasting
Management
The process of human resource planning /manpower planning begins with the
forecasting of manpower demand. This forecasting must be in line with the
organizational plan or objectives. The manpower demand forecasting is done in
terms of (I) the additional number of employees required (II) category to which
the additional employees will belong, and (III) education, knowledge aptitudes,
and experience of the employees required additionally.

Under this techniques, there are some conceptual issues which need elaboration
which are:

• Manpower Forecast
• Need for Manpower Forecast
• Types of Forecasts, and
• Data Base for Manpower Forecasting

Manpower Forecast

Under the manpower forecasting, there is a need to make a distinction between

‘projection’ and forecasts.

‘Projection’ may be defined as the outcome of spontaneous forces or occurring

without external causes or we can say that outcome which is expected in the
normal course of events without external stimulus. On the other hand forecast
refer to a prediction of the outcome when normal course of events are
influenced and altered by external forces.

Need for Manpower Forecast

The basic fundamental reason for making manpower forecast is the long
gestation lags in the production of skilled professional people. Manpower
forecast made in advance, that facilitate planning of education/ training in
effort to ensure that skilled manpower required are available at the time when
they are needed.

The second major reason for adopting this method in imperfections in labour
market, due to markets for manpower with long lead time for production are
characterized by cobweb cycles because of long lags in the supply side and
short lags on the demand size or we can say that due to this the labour market
may ultimate lead to distortion in occupation, education correspondence, which
could either result in huge educated unemployment or people taking those
occupations for which they are not adequate prepared. Manpower forecasts,
would facilitate corrections of labour market distortions. The third reason for
adopting this techniques are production of goods and services require various
categories of skilled manpower in fixed proportions. If there is any shortage of
skilled category of manpower that would adversely affected the production of
goods and services within economy. And the manpower forecasts would help
to avoid such type of situation by facilitating anticipation of skill shortages and
planning skill supplies accordingly.
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Types of Manpower Forecast Manpower
Planning
Types of manpower forecast depending on the purpose for which forecasts are
made. Some major types of forecast are briefly described as follows:

1. Short-term forecasts: This forecast are made for a period not exceeding two
years. This forecast are made for facilitate estimation of financial
provisions for wages/salaries in the projects initiated or likely to be
initiated in the immediate future. It is useful in resource allocation among
competing programme which is to be implemented in the not too distant
future. It is very useful at the Micro level or say company level.
2. Medium-term forecasts: This forecast are made for a two to five years in
most countries. It is useful in those offices which are concerned with
advising ministers or preparing contingency plans to meet the ‘twist and
turns’ or economic circumstances or international events.
3. Long-term forecasts: Forecasts for a period more than five years are
considered as long-term-forecasts. This type of forecasts are very useful in
educational planning relating to the high skilled professional categories of
manpower. They are also useful in the preparation of corporate plans,
incorporating productive changes. Technological changes and major
organizational developments.
4. Policy conditional forecasts: This forecasts are determined by the policy
towards the factors which influence the demand for manpower and may be
based on a rule of thumb, or on professional judgment or on explicitly
specified model or any combination of the three.
5. Onlookers forecasts: This forecast derived by assuming that the factors
influencing manpower demand behave in the future as they influence in the
past. Onlooker forecasts are also obtained with the help of rule of thumb,
professional judgment, explicitly specified model or combination of any
three.
6. Optimizing forecasts: Under this forecasts the numbers demanded of
various categories of manpower are so determine that either the end
benefits are maximized or cost of resources for achieving pre-determined
end objective is minimized.
7. Macro and micro forecasts: Macro and Micro forecasts are two other types
of manpower forecasts and it is important to make distinction between
them because the end purposes of these forecast are different and the
methodologies employed and data base used are different.

Macro forecast are done usually at the national, industry/sector and region/state
levels. They are used in:

• Planning education and training facilities.

• Decision making for the choice of industry for development.
• Choice of location, technology and size of organization among industries
selected; and 229
Introduction to • Determining order of priorities for creating and or for expending economic
Management and social infrastructure.

On other hand Micro forecast are made at enterprise level or department level.
This forecast are needed for:

• Planning recruitment.

• Promotion and training accordance with the plans for the development of
enterprise or department concerned.

Under this level of forecast, there is requirement of greater details as well as

precise. This forecast are usually expressed in terms of number required for
each occupation, source and stage of recruitment and schedule of training.

SAQ 4

Which statement is True or False?

a) Short term forecasts made for a period not exceeding two years.

b) Forecasting the wastage is not a manpower planning process.

c) Long term forecasts are very useful in education planning.

12.5 MANPOWER DEMAND FORECASTING

TECHNIQUES

Manpower demand forecasting techniques used at the macro level are as

follows:

• Employees Opinion Method

• Normative Method
• Component Method
• International Comparisons Method
• Mediterranean Regional Project (MRP) Method

12.5.1 Employees Opinion Method

Under this method employees are asked to give their assessment of future
manpower needs in different categories in their respective establishment.
Aggregating over all employees and making allowance for death, retirement,
migration and occupational mobility. It is then possible to arrive at future
manpower demand by skill category. This method has been widely used in
United States, United Kingdom, Canada, Sweden and France. This method
particularly useful in the case of highly skilled professional categories of
manpower and it has also seen observed that the method has been very useful
in making short term manpower forecasts than medium term and long term
forecasts.
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12.5.2 Normative Method Manpower
Planning
Normative method uses norms for employing manpower to produce goods and
services. The norms are usually expressed as ratios between manpower
employed and the volumes (or value) of goods and services produced. These
ratios are based on either the existing situation or the desirable situation some
examples of ratios are output ratio, employment-fixed capital ratio, teacher-
student ratio and engineer technician ratio.

12.5.3 Component Method

In the component method requirement of any category of manpower are further

sub-divided into various components and then a separate norm appropriate to
each component is used in arriving at a forecast of manpower requirements for
each component. Forecasts for all the components are then aggregated to arrive
at an estimate of future manpower requirements for the manpower category
concerned.

The component approach is basically the normative approach. The difference

lies basically in using different norms for different components.

12.5.4 International Comparison Method

International comparison sometimes facilitate use of stable norms. There is a

considerable subjective evaluation of international experiences in using the
international comparisons method which is not always easy to justify an
objective consideration. This method has, therefore, been not very popular.

12.5.5 MRP Method

The MRP method is designed to forecast manpower requirement by

educational category so that the forecasts are rendered directly relevant to
educational planning exercise.

Five steps involved in forecasting manpower requirement by education.

The first step is to arrive at the target year projections of GDP determined by
an economic plan in case of planned economics.

The second step involves the estimation of sectoral contributions of GDP in the
target year by major sector such as agriculture, manufacturing, transport and
communication, trade and commerce and services.

At the third step, sector specific average employment output ratios are applies
to sectoral composition of GDP in the target year to arrive at estimates of
employment in the target year by sector.

In fourth step, sectoral forecasts of employment, thus obtained for the target
year are then distributed among a number of mutually exclusive occupational
categories using either the base year or any desirable sector – occupation
distribution. At the final step occupational structure of manpower forecasts
relating to the target year are translated into educational structure by applying a 231
Introduction to standard measure of the level of formal education training required to
Management successfully perform the tasks specified under each occupational title. This
procedure gives the net manpower needs – not of replacement needs.

SAQ 5

What are the main techniques include in manpower demand forecasting at

macro level?
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12.6 TECHNIQUES OF MICRO FORECASTING

There are three techniques/steps regarding micro forecasting in demand

forecasting and they are as follows:

• Evolving manning norms based on an analysis of workload structure.

• Forecasting workload
• Relating workload to manning norms

12.6.1 Evolving Manning Norms

It starts with taking a comprehensive view of the work of an organization

which is first divided into functions. The functions are then sub-divided into
tasks and work groups associated with each task are then identified. In respect
of each group:

• The levels and number of position at each level.

• The job descriptions of each position by level, and
• Performance of incumbents to each position by level vis-à-vis job
expectations.

are analysed, based on this analysis, number of levels and number of positions
required at each level, skill gaps of each position, and their education/training
and experience requirement are worked out. Manpower forecasting process at
the micro-level, therefore, calls for a forecast and analysis of future workload
patterns to arrive at appropriate norms.
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12.6.2 Forecasting Workload Manpower
Planning
If ‘work’ consists of a single type of activity, then the total output is a measure
of the amount of work. In areas such as provision of health care, work load
after is a function of population. Population forecasts obtained by demographic
technique, in the provision of health care can be treated as workload forecasts.
Under this we predict workload of each task separately and aggregate the
workloads of all tasks to arrive at a forecast of total workload (work consists of
variety of task). If task is many then procedure is very tedious. Hence it may be
possible to reduce the dimension of the problem, in this case, where all the
tasks are perfectly correlated among themselves. It would adequate to take just
one tasks or an average of all tasks for projection purpose but if the tasks are
not perfectly correlated, it is still possible to reduce the dimension through the
use of these two statistical techniques.

• Principal Component Analysis

• Factor Analysis

Principal Component Analysis

It is a descriptive technique which finds linear transformation of numerous

tasks into a smaller number of indices (principal components) such that:

• the indices are all uncorrelated among themselves, and

• all the indices together summarise the information contained among the
numerous task.

Principal components are then projected to arrive at forecasts of workload.

Factor Analysis

Under it some small number of factors are identified which have the potential
to explain the behaviour of numerous tasks then predicting the behaviour of
individual factors, it is possible to arrive at forecast of workload under each
task and hence the forecast of total workload.

12.6.3 Relating Workload to Manning Norms

If workload is ‘w’ and productivity of workers ‘p’ given as the ratio of

workload workers can be estimated based on historical data and information on
factor affecting productivity, then manpower forecasts in terms of numbers:
w
Numbers required in future = .
p

SAQ 6

Under the factor analysis, how we calculate the manpower required in future.
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Introduction to ……………………………………………………………………………………
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12.7 DATABASE FOR MANPOWER FORECASTING

Database has a crucial role to play in manpower forecasting as it determines

the methodologies that can be adopted. There is a different database for macro
and micro that are as follows:

12.7.1 Database for Macro Forecasting

For macro forecasting, it would be ideal to have comparable data on the

following items over a period of years in the past.

• Population Statistics
Under it population of country by age, sex, education, economic activities,
status, migration, martial status, region and rural-urban distribution are
needed.
• Data on Economic Parameters
Under it data are required on time series basis are inputs, output, capital,
investment, wages, productivity, value added, depreciation by industry,
consumption, savings and expenditure on health by income starta of
population in rural-urban areas of each region.
• Information on Technologies
Details about existing technologies are needed by industry specifying the
implications of each technology for employment, generation and
investment. Similar information is also needed on emerging technologies
by industry.

12.7.2 Data Base for Micro Forecasting

Under this, a well defined Manpower Information System (MIS) is needed at

the enterprise or company level. MIS have the following module.

• Personal Data Module

Identification particulars, educational particulars, educational
qualifications.
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• Recruitment Module Manpower
Planning
Date of recruitment, grading in aptitude tests, grading in leadership tests,
overall grading, job preference and choice etc.

• Job Experience Module

Placement history, grade promotions, tasks performed grade-wise,
significant contributions etc.

• Performance Appraisal Module

Performance appraisal at each job held, job evaluation on the basis of job
description, communication rating, rating of interpersonal relationships,
rating of behaviour in group commitment of corporate goals etc.

• Training and Development Module

Nature of training received at each level, individuals evaluation of
effectiveness of training, individual assessment of training needs vis-à-vis
currently being performed etc.

• Miscellaneous Module
Record of compensation and benefits received health status information
relating personal problems which calls for the attention by the authorities,
security needs etc.

MIS is developed on the basis of personnel history records of each individuals

employee within the enterprise or company and is updated every year.

SAQ 7

i) Which data is needed for macro forecasting?

a) Population statistics
b) Economic parameters
c) Information on technologies
d) All of these
e) None of these

ii) MIS needed for:

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Introduction to
Management
12.8 MANPOWER SUPPLY FORECASTING

The next step in the process of manpower planning involved is to find out that
how much demand of manpower can be met from within. This can be possible
through the manpower supply forecasting. The manpower supply forecasting
will involve following steps:

a) Manpower inventory: Manpower Inventory helps in determining and

evaluating the quantity and quality of the present manpower of an
organization. Therefore, through inventory organization comes to know
that what exists in the stock in terms of analysis (I) number of employees,
(II) the categories to which they belong (III) employees’ skills, abilities,
potentials, age etc.

b) Forecasting the wastage: After having analysed the above facts as a part of
manpower supply forecast it is necessary to know the possible wastage in
the existing stock in the future. These wastages may includes, retirements,
deaths, terminations, resignations, deputations etc. The total wastage
worked out in the above terms must be deducted out of the existing
inventories in order to get the net manpower supply forecast.

12.8.1 Concept of Manpower Supply

Manpower and labour force are treated often as synonymous, while labour
force includes all persons in population who are economically active,
manpower refers to all persons in the labour force – other than the purely
unskilled, manpower is thus the skilled component of labour force –
irrespective of the level of skill attained. Manpower supply is then the totally of
manpower employed and manpower unemployed but are seeking jobs.

Dimensions of Manpower Supply

There are four dimension of manpower supply, that are as follows:

i) Stock and Flow

ii) Quantity and Quality
iii) Occupation and Education
iv) Macro and Micro

i) Stock and flow

Flow dimension refers to manpower supply over a period of time say, over
a five year plan period. Stock dimension denotes manpower supply at a
particular point of time like a target date of an economic plan.

ii) Quantity and quality

Quantitative dimension of manpower supply indicates the number of

persons available with the requisite qualification/skills both employed as
well as unemployed and seeking jobs. On the other hand qualitative
dimension of manpower supply refers the characteristics of manpower
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 supply such as specialization, level, duration and quality of training length Manpower
of job related experience and aptitude and motivation are being considered. Planning

iii) Occupation and education

Occupation is a description of the function role to be played. An occupation

does not always indicate education/training/skill requirement to perform the
expected. Functional roles where an occupational group is uniquely related
to an educational programme, to that all entrants to the occupation must
come from the educational programme concerned. Manpower supply for
that occupation, therefore, consists of all graduates of the educational
programme.

iv) Macro and micro

Macro level manpower supply at any further date consists of

• current stock of manpower

• additions to current stock from new entrants to be entrants; and
• subtraction due to death, retirement, migration, mobility and
withdrawal from labour force.

Micro level manpower supply comprises

• external supply caused by recruitment; and

• internal supply relating from transfers, promotions and rebundancies.

12.8.2 Macro Forecasting

There are two methods of estimation of manpower supply in macro forecasting

that are as follows:

Direct Method
Direct method relies on a census count of person belonging to the category of
manpower for which supply is being estimated. It can be usually obtained from
the population census. The primary limitation of this method is that the census
count are infrequent and because census are infrequent they can be used in any
meaningful trend forecasting exercise. Apart from this censuses are known to
be subject to enumeration biases such as under count misreporting, and
classification biases. In view of these limitations, researcher in the field of
manpower have been resorting for direct method.

Indirect Method

Under this method institutional out turn over the active life span – starting from
the base period upto the target – date is cumulated making adjustments for
factors of attrition and labour force participation to obtain on estimate of
manpower stock at the target date.

Estimation of manpower by the indirect method thus involves the following

steps:
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Introduction to i) Estimating active life span
Management ii) Determining base period
iii) Forecasting annual institutional out turn
iv) Estimating attrition rate
v) Obtaining cumulated out-turn adjusted for attrition
vi) Estimating manpower supply

i) Estimating active life span

Active life span is defined as the span of life over which an individual is
active in any given profession or occupation. Active life span varies with
the occupation and it may also vary from individual to individual within an
occupation. Hence, active life span is estimated for an average individual in
each occupation.

For estimating average active life span of any occupation estimates of two
parameters namely

− average age at entry into the occupation; and

− average age at retirement from the occupation.

are required. The span of life from the average age at entry to average age
at retirement is then the average active life span.

ii) Determining base period

Manpower stock as of a target date comprises of manpower of all vintages

starting from the persons who have just entered to those who are on the
verge of retirement. Hence, base period can be determined by subtracting
the number of years in the active life span from the target year.

For example assuming an active life span of 34 year for accountants (from
21 years to 65 years of age) and target date as 2000 A.D., the base year will
be 1966 (i.e. 2000-34)

iii) Forecasting annual institutional out-turn

To start with, past trends in enrolments are extraported to cover the target
date, using suitable trend forecasting methods, the forecasts of enrolments
thus obtained are then converted into forecasts of out-turn, with the help of
observed trends in annual rates of completion of the educational level
concerned.

iv) Estimating attrition rate

Attrition in the manpower supply relevant to any category of education

may be caused by the following four factors:-

− Death
− Retirement
− Migration
− Occupation Mobility
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 The joint effect of these four factors is termed as the attrition rate. Among Manpower
these four factors, impact of occupational mobility is very difficult to Planning
estimate. In view of this attrition rate is usually taken to mean, the joint
effect of death, retirement and migration only impact of death is estimated,
using age specific death rates, effect of retirement is obtained by using a cut
off age for retirement. The influence of migration factor is quantified,
through detailed education specific migration studies.

v) Obtaining cumulated out-turn adjusted for attrition

Given the base year manpower supply (S0), manpower supply in the first
year after the base year (S1) is determined as:

S1 = S0
(1 − a ) + Y
1
100
where a = attrition rate
y1 = Institutional out-turn in the first year after the base year manpower
supply in the second year (S2) after the base year will be:
S1 (1 − a)
S2 = + Y2
100
where Y2 is the institutional out-turn in the second year after base year,
using the cumulation process, manpower supply in the target year (which is
say ‘t’ years after the base year) will be

St = St – 1
(1 − a ) + Y
t
100
where St – 1 is the manpower supply in the year prior to the target year.
vi) Estimation manpower supply
After calculating cumulated out-turn adjusted for attrition the labour force
component of the cumulated and adjusted out-turn calculated. Further
adjustment to cumulated and adjusted out-turn is therefore, warranted to
account for withdrawals from the labour force in respect of persons with
the requisite education/training as outline below:
Manpower supply in the Cumulated out-turn Labour force
target year = adjusted for attrition × participation rate

12.8.3 Micro Forecasting

Micro level manpower supply includes external and internal supplies.

• External Supply Forecasting
It arise primarily through recruitment which is necessarily meant to
augment internal supply. Another source of external supply is through
seconding (or deputing) personnel from other organization which take 239
Introduction to place largely among government department and parastatals. Hence, given
Management the recruitment policy it is easy to predict the external supply.
• Internal Supply Forecasting
Internal supply within an organization is governed by following factors:
− Wastage the out movement from the organizational caused by voluntary
resignation, death or retirement.
− Transfer and promotions (Internal movement)
− Forecasting internal supply is therefore, crucially dependent on analysis
of wastage and internal movement.
SAQ 8

True/False
a) Macro level manpower supply consists of current stock of manpower.
b) There are three methods of estimations of manpower supply in macro
forecasting.

12.9 ANALYSIS OF WASTAGE

As per the British Institute of Management (BIM) under, which express

wastage as a percentage of staff in position i.e.

Manpower learning in a year

Annual manpower wastage = × 100
Average manpower in position

Disadvantages

• Difficult to access the operational and financial implications of given rate

of wastage on this formula.
• Does not provide any meaningful indication for manpower planning.

12.9.1 Stability Index

An alternative method which takes into account the length of service of the
persons leaving the organization termed as stability index “Measures the
complement of wastage rate as

Manpower with one year service at time

× 100
Manpower in position at time t − 1

Disadvantages

• This methods indicates only the percentage of manpower who stayed with
the organization for one year.
240 • It does not directly measure the extent of wastages.
• Give equal weightage to those who left organization less than one year or Manpower
more than one year. Planning

Thus, this method is not very useful for manpower supply forecasting.

12.9.2 Modified Stability Index

This method is also referred as Bowey’s stability index includes everybody

employed in the organization and give due weightage to varying lengths of
service.
The length of service of manpower employed at the time of analysis
Bowey's stability index = × 100
Total possible length of service had there been no manpower wastage

This method is useful in analyzing the extent of wastage in terms of length of

service. However, as in the case of stability index it is not very helpful in
manpower supply forecasting.
SAQ 9

How we calculate annual manpower wastage under the British Institute of

Management?
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12.10 RECONCILING DEMAND AND SUPPLY

Another technique in manpower planning by matching the information of

demand and supply (after netting the losses) future resources unbalanced can
be predicted the entire process of working out the net additional manpower
requirement is shown in figure. The process of manpower planning must
ultimately result in the formulation of a manpower plan. A typical human
resource planning system is as follows:
241
Introduction to
Management Human Resource
Planning System

Human Resource Inventory

• Number
Human Resource • Category/level
Organizational Demand Forecast • Specialization
Norms
Plan • Number • Performance/potential
• Category/level • Appraisal Data
• Specialization • Age etc.

Human Resource Supply

Forecast
• Number
• Category/level
• Specialization
• Age etc.

Matching
Process
Human Resource Wastage
Forecast

Net Manpower Supply

Net Human resource Forecast
requirement Forecast

Resource Gaps (No.

Skilled Shortage/
Net Manpower Supply
Supplies Forecast

Implementation

Feed Back

12.11 SUMMARY

Manpower planning is the process by which management determines how an

organization should move from its current manpower position to its desired
manpower position or we can say that Manpower planning is the process of
determining the number and kind of human resources required in and
242
organization for a specific time period in future. It serves as a guide to the Manpower
management of human resource. In recent years interest in manpower planning Planning
has increased due to shortage of certain skills, technological changes
organizational change, legislation, union pressure, system concepts and lead
time. The main steps in human resource planning include analysis of
organizational plans, demand forecasting, supply forecasting, identifying
manpower gaps and action planning. The objectives and methodologies of
manpower demand forecasting as well as supply forecasting are different at
macro and micro level. Under the demand forecasting at the micro level are
needed as a basis for educational planning, choice of location of industries, size
of industries and technology and determining priorities for creating and/or
expanding economic and social infrastructure. The methodologies of macro
manpower demand forecasting are often expansive of the nature of techniques
and database required. Micro level manpower demand forecasts are made at the
enterprise or company level. At this level, the forecasts are needed for planning
recruitment, promotion and training. A well defined Manpower information
system built upon the basis of personnel history record of each individual
employee is a pre-requisite for making detailed and precise forecasts at the
enterprise or company level.
Manpower supply has four distinct dimensions: stock and flow, quantity and
quality, occupation and education and macro and micro dimension, methods
and techniques, and data source may with the dimension considered manpower
supply estimation.
At the macro level there are two methods of making manpower forecasting:
direct and indirect method. While the direct method depends on census count
of all persons, indirect method estimates manpower supply by cumulating
economically active component of institutional out-turn over the relevant
period after making adjustment of all factors causing manpower attrition.
Manpower supply at the micro level consists of external supply and internal
supply. External supply is determined by factors of external origin to the
company or enterprise level at which micro manpower supply forecasts are
made internal supply over which a company or enterprise has control is
governed by wastage rate and the internal flows caused by transfer and
promotions. Methods of analysis and forecasting of wastage rate and internal
flows are different. Database for micro forecasting is however, a well defined
MIS based on personnel history of each individual employee.

12.12 TERMINAL QUESTIONS

1. What do you understand by Manpower Planning? Describe its

characteristics.
2. Explain the need and importance of manpower planning.
3. Explain the types of Manpower Forecast.
4. How the organization will improve the effectiveness of manpower
planning. 243
Introduction to
Management
12.13 ANSWERS

Self Assessment Questions

1. Manpower planning is a process of analyzing and organizations human

resource needs under changing conditions and developing the activities
necessary to satisfy these needs.
2. The two main reasons behind manpower planning are:
a) To anticipate the quantum and size of labour turnover in the
organization for further needs due to resignation, transfer, promotion
etc.
b) The other is to identify the losses in terms of requirements resignation,
death, dismissals, promotion etc.
3. The purpose of manpower planning are:
i) To forecast future requirement of the manpower in the organization.
ii) To assess shortage and surplus of the manpower and ensure optimum
use of existing manpower.
4. (a) True (b) False (c) True
5. The techniques include in manpower planning forecasting at macro level
are:
a) Employees option method
b) Normative method
c) Component method
d) International comparisons method, and
e) Mediterranean Regional Project (MRP) method.
6. Under the factor analysis, we calculate the manpower required in future
through this formula.
Number required in future = W/P
Where W = Workload
P = Productivity of Workers
7. i) d) All of these
ii) Micro forecasting
8. a) True
b) False

Manpower learning in a year

9. Annual manpower wastage = × 100
Average manpower in position

Terminal Questions
1. Manpower planning has been defined as “the process by which
management determines how an organization should move from its current
244
manpower position to its desired manpower position. Through it Manpower
management strives to have the right number and the right kind of people at Planning
the right places, at the right time, doing things which results in both the
organization and the individual receiving.
According to Beach “Manpower planning is a process of determining and
assuming that the organization 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.
According to Stainer “Manpower planning is the strategy for the
acquisition, utilization, improvement and preservation of an organization’s
human resources.
In other words we can say that manpower planning is the process of
determining manpower needs and formulating plan to meet these needs.
After analyzing the above definitions, there is following characteristics of
manpower planning:
a) Manpower planning like all planning is forward looking or future
oriented. It involves forecasts of the manpower needs in a future time
period so that adequate and timely provision may be made to meet the
needs.
b) Manpower planning is an ongoing continuous process because the
demand for and the supply of manpower undergo frequent changes.
c) Manpower planning is an integral part of corporate planning without a
corporate plan, there can be no manpower plan. Whether or the
manpower plants meets the organization requirements and are in tune
with the really depends on how clearly the goals are defined.
d) The basic objective of manpower planning is to make optimum
utilization of an organization’s current and future human resources. In
order to maximize the return in investment in manpower resources. It is
necessary to relate future human resources to future needs of the
organization.
e) Manpower planning has both quantitative and qualitative aspects means
the right number of employees while the other means the right latent
required in the organization.
f) Manpower planning is a two phased process involving calculation
about the demand for and supply of manpower, so as to secure an
equilibrium between the two. A manpower plan consists of two sub-
plans (a) manpower demand, and (b) a manpower supply plan.
g) Manpower planning involves study of the manpower environment
which influences the demand for manpower and its supply. It also
involves study of manpower utilization.
245
Introduction to h) Manpower planning is the primary responsibility of management so as
Management to ensure effective utilization of the organization’s manpower.
2. Effective manpower planning offers the following benefits:

a) To carry out its work and to achieve its objectives, every organization
requires employees with adequate knowledge, experience and aptitudes.
Manpower planning is helpful in selection and trained well in advance
ensures that adequate number of persons are selected and trained well
in advance to fill future job vacancies with organization. Manpower
planning provides the required number and quality of manpower at all
times.

b) Manpower planning identifies gaps in existing manpower in terms of

their quantity and talent. Suitable training and other steps can be taken
in time to fill these gaps. Existing manpower can be developed to fill
future vacancies.

c) There is need to replace employees who retire die, resign and become
incapacitated due to injury. Provision for replacement of personnel can
be made through Manpower planning.

d) Manpower planning facilitates the expansion and diversification of an

organization. In the absence of manpower plans, the required
manpower will not be available to execute expansion and
diversification plans at the right time.

e) It helps to reduce wastage of manpower.

f) It also helps in judging the effectiveness of manpower policies and

programme of management.

g) Manpower planning is helpful in effective utilization of technological

progress. To meet the challenge of new technology existing employees
need to be retrained and new employees may be recruited.

h) Manpower planning is useful in anticipating the cost of manpower

which facilitates the budgeting process. It also helps in controlling
manpower costs through effective utilization. Through proper
Manpower planning management can avoid both shortage and surplus
of manpower and thereby control labour costs.

i) Manpower planning helps in planning for physical facilities like

canteen, staff quarters, dispensary and school for the staff and their
children.

j) At the national level, Manpower planning facilitates educational

reforms, geographical mobility of talent and employment generation.
Need for Manpower Planning
There are following reason for adopting manpower planning:
246
 i) Employment situation: Due to increasing number of educated Manpower
unemployment and acute shortage for a variety of skills requires more Planning
effective recruitment and retraining of people.
ii) Technological changes: Rapid changes in technology having profound
effects on the content and context of jobs. These changes create
problems concerning rebundancies, retraining and reployment of
personnel. Systematic human resource planning can help to solve these
problems.
iii) Organizational changes: Rapid changes in environment require
changes in organization structure and activities which affect
requirement for manpower. Manpower plans are needed to meet these
new requirements.
iv) Shortage of skills: Organizations have become increasing complex and
require a wide range of specialized skills. These skills are scarce and
problem arise when employees with these skills leave an organization.
v) Lead time: Longer lead time is required for selection and training of
employees to handle new jobs and technology successfully. This
requires long-term manpower planning.
vi) Hiring costs: Recruitment and training costs are increasing. Increase in
hiring costs encourages upgrading from within the organization, and
planned retention through manpower planning.
vii) Increased mobility: Investment in manpower belongs to the employee
who takes his skills wherever he goes. With increasing mobility,
organization find it difficult to retain talented personnel. Effective
manpower planning helps to reduce employee turnover.
These are reasons for Manpower planning.
3. Types of Manpower Forecasts
Types of manpower forecasts depending on the purpose for which forecast
are made. Some major types of forecasts are:
i) Short-term forecasts: It is made for a period not more than two years.
This forecast are made for facilitate estimation of financial provision
for wages/ salaries in the projects initiated or likely to be initiated in
future.
ii) Long-term forecasts: This forecasts are made for more than five years.
It is very useful in educational planning relating to high skilled
professional categories of manpower and also useful in preparation of
corporate plants technological changes and major organizational
development.
iii) Policy conditional forecasts: This forecasts are determined by the
policy towards the factors which influence the demand for manpower
247
Introduction to and may be based on a rule of thumb or on professional judgement or
Management on explicitly specified model or any combination of three.
iv) On lookers forecasts: Under this forecast assumes that factors
influencing manpower demand and behave in the future as they
influence in the past. It is obtained through rule of thumb professional
judgement, explicitly specified model or combination of any three.
v) Optimizing forecasts: Under these forecasts the numbers demanded of
various categories of manpower are so determine that either the end
benefits are maximized and cost of resources for achieving pre-
determined and objective is minimized.
vi) Macro and micro forecasts: Macro forecasts are done usually at the
national industry/sector and region/state levels. They are used in
planning education and training facilities, decision making for the
choice of industry for development etc. (see details)
Micro forecasts are made at enterprise level or department level. It is
needed for planning recruitment and promotion and training accordance
with the plans for the development of enterprise or department concerned.
4. There are some steps that may be taken to improve the effectiveness of
manpower planning are given below:
i) Tailormade: Manpower plans should be balanced with the corporate
plans of the enterprise the methods and techniques used should fit the
objectives, strategies and environment of the particular organization.
ii) Appropriate time horizon: The period of manpower plans should be
appropriate to the needs and circumstances of specific enterprise. The
size and structure of the enterprise as well as changing aspiration of the
people should be taken into consideration.
iii) Adequate organization: Manpower planning function should be
properly organized. A separate section or committee may be properly
constituted within the human resource department to provide adequate
focus and to coordinate the planning forecasts at various levels.
iv) Top management support: Before starting the planning process, the
support and commitment of top management should be ensured. The
exercise should be carried out within the limits of a budget. There is no
use formulating plans which cannot be implemented due to financial
constituents.
v) Participation: To be successful manpower planning requires active
participation and coordinated efforts on the part of operating
executives. Such participation will help to improve understanding of the
process and thereby reduce resistance.
vi) Information system: Adequate data base should be developed for
manpower to facilitate manpower planning.
248
 vii) Balanced focus: The quantity and quality of manpower should be Manpower
stressed in a balanced manner. The emphasis should be on filling future Planning
vacancies with right people rather than merely matching existing people
with existing jobs.

12.14 FURTHER READINGS

Allen, L.A., Management and Organization, McGraw Hill book company, New
York.
Bartholomer, D.J., Forbes A.F. (1979) Statistical Techniques for Manpower
Planning, John Wiley & Sons, New York.
Beach, D.S. (1975) Personnel – The Management of People at Work,
McMillan Publishing Co., Inc, New York.
Breach, E.F.L. (1985) The principles and Practices of Management, Longmans
Green & Co., London.
Dayal, I. (1970) New Concepts in Management, Lalvani Publishing House,
Bombay.
Diwedi, R.S. (1980) Manpower Management, Prentice Hall of India, New
Delhi.
Drucker, P.F. (1954) Practice of Management, Harper & Brothers, New York.
Ganguli, H.C. (1982) Structure and Process of Organization, New Delhi, Allied
Publishers.

249