CHAPTER 5

HUMAN RESOURCE PLANNING

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 1. HRP
 Human resource planning is the process of
analyzing and identifying the need for and
availability of human resources so that the
organization can meet its objectives.
 Human Resource Planning (HRP) is process of
forecasting organization's future demand and
supply of the right type of people in the right
numbers at the right time”
 The HRP process examines the implications of
business strategies and goals on human
requirements.
 1. HRP
 The number and type of people required, the training
they will require and whether the organization will
have to employ additional employees.
 Today, HRP is a Proactive process.
 It anticipates changes in the industry, marketplace,
economy, society and technology to ensure that the
organization is well prepared to meet these changes
when they occur.
 Earlier, HRP used to be a reactive process. Business
needs defined HR needs. Strategic business decisions
were taken in isolation without appreciating the HR
implications of those decisions.
 Human Resource Planning (HRP)

 HRP is the process of forecasting a firm’s

future demand for and supply of, the right type
of people in the right number.

 Is the first component of HRM strategy. All

other functional HR activities are derived from
and flow out of the HRP process.

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HRP
 HRP is proactive in anticipating and preparing
flexible responses to changing HR requirements.

 Has both an internal and external focus.

 Goes beyond simple hiring & firing.

 Involves planning for deployment of human

capital in line with organization &/or business
unit strategy.
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 Five Major Objectives of HRP
I. Prevent overstaffing & understaffing
II. Ensure organization has right employees with right
skills in right places at right times
III. Ensure organization is responsive to changes in
environment
IV. Provide direction & coherence to all HR activities &
systems
V. Unite perspectives of line & staff managers

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Types of Planning
 Aggregate Planning
◦ Anticipating needs for groups of employees in specific,
usually lower level jobs & general skills employees will
need to ensure sustained high performance

 Succession Planning
◦ Focuses on ensuring key critical management positions
in organization remain filled with individuals who
provide best fit

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Aggregate Planning
Forecasting demand

◦ Considers firm’s strategic plan’s effects on

increases or decreases in demand for products or
services

◦ Assumptions on which forecast is predicated

should be written down & revisited when
conditions change

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Cont’d

Forecasting demand

◦ Unit forecasting (bottom-up planning) involves “point of

contact” estimation of future demand for employees

◦ Top-down forecasting involves senior managers allocating

a fixed payroll budget across organizational hierarchy

◦ Demand for employee skills requirements must also be

considered

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Aggregate Planning
 Forecasting supply
◦ The level and quantities of abilities, skills &
experiences can be determined using Skills
Inventory.
◦ Annually updated human resource information
system (HRIS) is dynamic source of HR
information
◦ Markov analysis can be used to create transition
probability matrix that predicts mobility of
employees within organization

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Strategies for Managing Shortages

 Recruit new permanent  Work current staff

employees overtime
 Offer incentives to  Subcontract work out
postpone retirement  Hire temporary
 Rehire retirees part- employees
time  Redesign job processes
 Attempt to reduce so fewer employees are
turnover needed

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Strategies for Managing Surpluses

 Hiring freezes  Across-the-board pay

 Do not replace those cuts
who leave  Layoffs
 Offer early  Reduce outsourced
retirement incentives work
 Reduce work hours  Employee training
 Voluntary severance  Switch to variable pay
leaves of absence plan
 Expand operations

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Succession Planning
 Involves identifying key management positions
the organization cannot afford to have vacant
 Purposes of succession planning
◦ Facilitates transition when employee leaves
◦ Identifies development needs of high-potential
employees & assists in career planning
 Many organizations fail to implement
succession planning effectively
◦ Qualified successors may seek external career
advancement opportunities if succession is not
forthcoming
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Exhibit 5-4
Sample Replacement Chart

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Exhibit 5-5
Pros & Cons of Disclosing Succession Planning

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