HUMAN RESOURCE MANAGEMENT

(HRM)

Definition 1 – Integration
“HRM is a series of integrated decisions that form the
employment relationships; their quality contributes to
the ability of the organizations and the employees to
achieve their objectives.”
Definition 2 – Influencing

 “HRM is concerned with the people dimensions in management.

Since every organization is made up of people, acquiring their
services, developing their skills, motivating them to higher levels
of performance and ensuring that they continue to maintain
their commitment to the organization; are essential to achieve
organizational objectives.
 This is true, regardless of the type of the organization –
government, business, education, health, recreational, or social
action.”
Definition 3 – Applicability

“HRM planning, organizing, directing and controlling of

the procurement, development, compensation,
integration, maintenance and separation of human
resources to the end that individual, organizational and
social objectives are accomplished.”
HRM Activities
• HR Planning • Job Evaluation

• Job Analysis • Employee and Executive

• Job Design Remuneration

• Recruitment & Selection • Motivation

• Orientation & Placement • Communication

• Training & Development • Welfare

• Performance Appraisals • Safety & Health

• Industrial Relations
Operational Functions of HRM

• Procurement: Planning, Recruitment and Selection, Induction

and Placement.
• Development: Training, Development, Career planning and
counseling.
• Compensation: Wage and Salary determination and
administration
• Integration: Integration of human resources with organization.
• Maintenance: Sustaining and improving working conditions,
retentions, employee communication.
• Separations: Managing separations caused by resignations,
terminations, lay offs, death, medical sickness etc.
SOME STRAY THOUGHTS …

 Today work is a kind of nine-to-five death.

 The secret of a successful organization is its ability to
attract exceptionally able men and treat them with so much
respect that they will never leave.
 The key to good management is choosing and training the
right staff.
 People will quit planting seeds if they cannot participate in
the harvest.
 An happy employee is blessing on the society, a unhappy
employee is a curse.
 In simple terms, an organization's human resource
management strategy should maximize return on
investment in the organization's human capital and
minimize financial risk.
 Human Resources seeks to achieve this by aligning the
supply of skilled and qualified individuals and the
capabilities of the current workforce, with the
organization's ongoing and future business plans and
requirements to maximize return on investment and
secure future survival and success.
 No organization can be successful in the long run
without having the right number and right kind of
people doing the right jobs at the right time.

 To summarize, Human Resource Planning is of

tremendous importance.
Human Resource Planning
 Human resource planning is based on the belief that
people are an organization’s most important strategic
resource.

 It is the process by which an organization ensures that it

has the right number and kinds of people, at the right
places, at the right time, capable of effectively and
efficiently completing those tasks that will help the
organization achieve its overall objectives.
Human resource planning is concerned with
answering the following two questions:

 How many people?

 What kind of people?

is concerned with
 forecasting the future manpower needs of the
organization so that adequate and timely provisions
may be made to meet those needs.

 After the human resource needs of the organization

are identified through human resource planning, the
next step is that of recruitment and selection.

 The process of acquiring human resources begins with

recruitment, continues with selection and ceases with
placement.
Definition
 Definition 1: - Need, Availability, Supply=Demand

 “HRP includes estimation of how many qualified

people are necessary to carry out the assigned
activities, how many people will be available, and
what, if anything, must be done to ensure personnel
supply equals personnel demand at the appropriate
point in the future.”
 Definition 2: - Right numbers, Capability,
Organization Objectives

 “HRP is a Process, by which an organization ensures

that it has the right number and kind of people at the
right place, at the right time, capable of effectively and
efficiently completing those tasks that will help the
organization achieve its overall objectives.”
 Definition 3: - Translation of objectives into HR
numbers

 “HRP is a process of translating organizational

objectives and plans into the number of workers
needed to meet those objectives.”
MEANING / PURPOSE OF HRP
 In simple words HRP is understood as the process of
forecasting an organization’s future demand for and
supply of the right type of people in the right numbers.

 It is only after HRP is done, that the company can

initiate and plan the recruitment and selection
process.

 HRP is a sub-system in the total organizational

planning.
• It facilitates the realization of the company’s objectives

• HRP is usually called manpower planning, personnel

planning or employment planning.

• HRP is important because without a clear-cut

manpower planning, estimation of a organization’s
human resource need is reduced to mere guesswork.
Integration of Business Planning and
Human Resource Planning

 HRP like marketing planning, financial planning

should be a unified, comprehensive and integrated
part of the total corporation.

 Top management formulates corporate level plan

based on corporate philosophy, policy, vision and
mission.
 The HRM role is to raise the broad and policy issues
relating to human resources; the issues related to
employment policy, HRD policies, remuneration
policies etc.
 The HR department prepares HR strategies , objectives
and policies consistent with company strategy.
 Linking Business Planning and HRP

Strategy Implementation
Strategic Analysis Strategy Formulation
Implementation process
Mission Clarify performance
to get desired results
and management
Goals Expectations Business Goals
Opportunities/Thre Goals Company Strength
ats Value /weaknesses

Sources of External
Objectives
Competitive Opportunities/Threats
Priorities
Advantage Sources of Competitive
Resource Allocation Advantage

Define HR strategies,
Identify people related Implement HR processes,
objectives and action plan
business issues policies and practices
Linking HRP and strategic HRM

 "Best fit" and "best performance" at “best cost”

 meaning that there is correlation between HRP and
the strategic HRM strategy and the overall corporate
strategy.
 As HRM as a field seeks to manage human resources in
order to achieve properly organizational goals,
 an organization's HRM strategy seeks to accomplish
such management by applying a firm's personnel
needs with the goals/objectives of the organization.
 As an example, a firm selling cars could have a
corporate strategy of increasing car sales by 10% over a
five year period. Accordingly, the HRM strategy would
seek to facilitate how exactly to manage personnel in
order to achieve the 10% figure for that HRP can
provide required skill at right time in right numbers.
NEED & IMPORTANCE OF HRP
Forecast future personnel needs:

 Surplus or deficiency in staff strength

 excess staff resorting to VRS.
 important to plan the manpower in advance.
 So a proper forecasting of futures business needs
helps to ascertain future manpower needs.

 From this angle, HRP plays an important role to

predict the right size of manpower in the organization.
Cope with change:

 changes in competitive forces, markets, technology,

products and government regulations.
 Such changes generate changes in job content, skills
demands and number of human resources required.
 Shortage of people may be noticed in some areas while
surplus in other areas may occur.
 HRP enables an enterprise to cope with such changes
Creating highly talented personnel:

 Since jobs are becoming highly intellectual and

incumbents getting vastly professionalized.
 Further technology changes would further upgrade or
degrade jobs and create manpower shortages.
 In these situations only accurate human resource
planning can help to meet the resource requirements.
 Further HRP is also an answer to the problems of
succession planning.
Protection of weaker sections:

 A well-conceived personnel planning would also help

to protect the interests of the SC/ST, physically
handicapped, children of socially oppressed and
backward classes who enjoy a certain percentage of
employments notwithstanding the constitutional
provisions of equal opportunity for all.
International strategies:
 International expansion strategies largely depend
upon effective HRP.
 With growing trends towards global operations, the
need for HRP will grow and
 as well as the need to integrate HRP more closely into
the organization’s strategic plans.
 HRP will grow increasingly more important as the
process of meeting staffing needs from foreign
countries grows in a complex manner
Foundation of personnel functions:

 HRP provides essential information for designing and

implementing personnel functions such as
recruitment, selection, personnel development,
training and development etc.
Increasing investments in HR:

 Another importance is the investment that an

organization makes in human capital.
 It is important that employees are used effectively
throughout their careers.
 Because human assets can increase the organization
value tremendously as opposed to physical assets
Resistance to change & move:

 The growing resistance towards change and move,

self evaluation, loyalty and dedication making it
more difficult to assume that organization can
move its employees everywhere.
 Here HRP becomes very important and needs the
resources to be planned carefully.
Other benefits:

 Upper management has a better view of HR dimensions of

business
 Management can anticipate imbalances before they
become unmanageable and expensive.
 More time is provided to locate talent
 Better opportunities exists to include women and
minorities in future growth plans
 Better planning of assignments to develop managers
 Major and successful demands on local labor markets can
be made.
HRP SYSTEM
 Business Environment

Organization Objectives & Goals

Manpower Forecast Manpower Supply Assessment

Surplus Manpower Shortage of Manpower

Manpower Programming

Control & Manpower

Evaluation

Surplus Manpower Shortage of Manpower

Based on these elements we can draw “HRP System Architecture” as under.

HRP PROCESS
HRP is a multistep process including various issues such
as

 Overall Organizational Goals and Objectives

 Environmental Analysis
 Estimating future organizational structure
 Forecasting Manpower Demand and Assessing
Manpower Supply
 Auditing human resources
 Planning job requirements and job descriptions
 Developing a human resource plan
 Organizational Objectives & Policies: -

 The ultimate mission and the purpose of HRP

 to relate future human resources to future enterprise

needs so as to maximize the future return on
investment in Human Resource.
In effect the main purpose is of

 matching,
 fitting

employee abilities to enterprise requirements.

 So the objectives of HR plan must be derived from
organizational objectives like

 specific requirements of numbers and

 characteristics of employees etc.

 HRP needs to sub-serve the overall objectives by

ensuring availability and utilization of human
resources.
 Specific policies need to be formulated to address the
following decisions.

 Internal Hiring or External Hiring?

 Training & Development plans
 Union Constraints
 Job enrichment issues
 Rightsizing organization
 Automation needs
 Continuous availability of adaptive and flexible
workforce
Environmental Analysis
 System perspective of organizations

 Quick response to the environmental changes if they

are to survive in a competitive environment.
 ability to detect changes as they are occurring and
initiate adaptive responses to these changes on a
timely basis.

 In general organizations must regularly conduct an

environmental analysis to stay abreast of significant
changes.
The company will conduct a three tier analysis

 General Environment Scanning

 Operating Environment Scanning

 Internal Environment scanning

 General Environment Scanning: Economic, legal and
political factors

 Operating Environment Scanning: factors unique to a

particular firm’s mission like labor availability,
customers, suppliers, competitors.

 Internal Environment scanning: Organizational

strategy and corporate culture
Forecasting The manpower Requirements

 estimation the structure of the organization at a given

point of time.

 For this the number and the type of employee needed

have to be determined.
Factors which affect this determination are

 business forecast,
 expansion and growth,
 design and structural changes,
 management philosophy,
 government policy etc.
Forecasting is necessary for following reasons such as:

 The eventualities and contingencies of general

economic business cycles( inflation, wages, prices,
costs)have an influence on short range and long range
plans of the organization.

 Any expansion following growth and enlargement in

business involves use of additional machinery and
personnel and a reallocation of facilities all of which
call for advance planning of human resources.
 Changes in management philosophy and leadership
styles
 Use of new technologies demands change in the skills
and number of workers.
 Very often changes in quality/quantity of
product/services require a change in organization
structure
After estimating the future organization structure ,

 next is to draw up the requirement of human resources

both for existing department and for new vacancies.

 Vacancies occurring in any department should be

notified in written by the department head to the
personnel department stating clearly the numbers of
vacancies, job category wise personnel needed, level ,
technical qualification, statement of duties, pay scales,
age, pervious experience if needed.
Here the expected losses which are likely to occur through

 quits,
 retirement,
 transfer,
 promotions, demotions,
 disability ,
 lay offs and other separations

should be taken into account.

Additional human resource gained through

 training achieved,
 new employment,
 transfers,
 promotions

has to be considered.
 This way the real shortage may be found out , if
shortage is there ,

 efforts are made to meet it either by new recruitment,

developing HR or promotion from within.

 If there is surplus then it is to be decided how it will be

dealt by transfer, lay off, reduction of hours etc.
For the purpose of manpower planning , the main
dimensions to be taken into consideration are:

 The total no. of personnel available,

Which can be taken from the pay rolls, personnel
records and can be classified into
 manual workers,
 clerical employees,
 skilled-unskilled workers,
 managers, executives,
 sex wise Etc.
 The job family i.e detailed job description of each
position
 Age distribution
 Qualification and experience required
 The salary range
Manpower Demand Forecasting: -

 It is the process of estimating the future quantity and

quality of people required.

 The basis should be annual budget and long term

corporate plans
Demand forecasting should be based on following
factors.

 Internal Factors

 External Factors
Internal Factors: -

 Budget constraints
 Production levels
 New products and services
 Organizational structure
 Employee separation
External Factors

 Competition environment
 Economic climate
 Laws and regulatory bodies
 Technology changes
 Social Factors
Reasons for Manpower Demand Forecasting: -

 To quantify jobs
 To determine the Staff-mix
 To assess staffing levels and avoid unnecessary costs
 Prevent shortages of people
 Monitor compliances of legal requirements with
regards to reservations
 Manpower Forecasting Techniques: -

 Management Judgment:

 In this techniques managers across all the levels

decide the forecast on their own judgment.
 This can be bottom-up or top-down approach and
judgments can be reviewed across departments,
divisions and top management can conclude on final
numbers of manpower required.
 Statistical Technique:

 Ratio-Trend Analysis: This technique involves

studying past ratios, and forecasting future ratios
making some allowance for changes in the
organization or its methods.
 Econometric Models: build up by analyzing the
statistical data and by bringing the relationship among
variables.
 These variables includes those factors which affect
manpower requirement directly or indirectly like
investment, production, sales, work load etc.
 This model is used to forecast manpower needs based
on movements in various variables.
 Work Study Techniques: It is possible when work
measurement to calculate the length of operations and
the amount of manpower required.

 The starting point can be production budget, followed

by standard hours, output per hour; man-hours
required etc could be computed.
 Delphi Techniques: This technique solicits estimates
from a group of experts, and HRP experts normally act
as intermediaries, summarizes various responses and
report the findings back to experts.
 Flow Models: This technique involves the flow of
following components.
 Determine the time required, Establish categories,
Count annual movements, Estimate probable
transitions.
 Here demand is a function of replacing those who
make a transition.
Human Resource requirements are determined both
qualitatively and Quantitatively.

 Qualitative Determination:

 It involves job analysis to critically examine each and

every job present within the organization
 to know the duties and responsibilities of the job as
well as the requirements of the job demands from the
individual in terms of the qualification, experience etc.
 With the help of various data collection methods, job
description and job specifications are known to the
human resource planner from which the qualitative
requirements are determined.
 Quantitative Determination:

 This calculates the number of human resource

required in different categories during the future plan
period.
 According to Steiner this determination of Human
resource forecasting involves two methods:

 Forecast of workload or workload analysis

 Forecast of Work force utilization or work force analysis
Workload Analysis

 tells us the quantity of work expected in each job

during the plan period.
 It intends to integrate human resource scheduling
with sales, purchasing and production forecast and
schedules.
 Such analysis in first starts with the sales forecasting
then translated into a work program for the various
parts of the organization.
 Workforce Analysis tells us the human resource
required from each category during the plan period to
implement the workload analysis i.e. to accomplish the
expected work load of the plan period.
 Work force analysis is must to assist workload analysis
in forecasting future human resource requirement.

 Thus by integrating the forecasts of workload with

forecast of workforce future demand for human
Resource can be forecasted.
 Productivity can be thought of as relationship
between manpower(M) and Work Load (W). For
forecasting purpose the convenient form is M/W i.e.
Manpower Utilization (U).

 So at point of time (t) a manpower forecast can be

derived from forecast values of W (workload) and U
(Manpower utilization).

 i.e., Mt = Ut * Wt.
 Markov Chain:

 This model is used to analyze the promotion patterns

of the existing staffs of the organization that has some
role to play in forecasting future human resource
supply.
Employee Replacement charts

 These are graphical chart by comparing which the

human resource specialist can determine a pattern of
human resource needs in future.

 Replacement Charts help accomplish both

replacement planning and succession planning.
 For replacement planning, the diagram chart likely
replacements before the incumbent leaves the present
job .

 In succession planning the chart map out feasible

paths for individual employees and assist in employee
developing.
Sr No. Organizational Unit No of yrs/Months
1 Position
a Incumbents Age Yr
Employment yr

b Promotable to When Yr/Month

c Replacement No 1 Age Yr
Employment Yr
d Present Position When Yr/Month
e Replacement no 2 Age Yr
employment Yr
f Present Position When Yr/Month
Manpower Supply Forecasting

 This process measures the number of people likely to

be available from within and outside the organization
after making allowance for absenteeism, internal
movements and promotions, wastages, changes in
hours and other conditions of work.
Reasons for Manpower Supply Forecasting

 Clarify Staff-mixes exist in the future

 Assess existing staff levels
 Prevent shortages
 Monitor expected future compliance of legal
requirements of job reservations
Supply Analysis covers:
Existing Human Resources: HR Audits facilitate
analysis of existing employees with skills and abilities.

• The existing employees can be categorized as skills

inventories (non-managers) and managerial
inventories (managers)
 Skills inventories is used as input into transfer and
promotion decisions.
Skill inventory would include the following;

 Personal data – age, sex. Marital status

 Skills – education, job experience, training
 Special Qualifications – special achievements
 Salary – present and past salary, dates of pay rises
 Job History – various jobs held
 Company data – retirement information, seniority
 Capabilities – scores on psychological and other tests, health
information
 Special preferences – geographic location, type of job.
Management inventories would include the
following

 Work History
 Strengths
 Weaknesses
 Promotion Potential
 Career Goals
 Personal Data
 Number and Types of Subordinates
 Total Budget Managed
 Previous Management Duties
Human resource Information System

 Traditionally, most of the desired information was

available from individual personnel files but now
computers are available for collecting data, storing,
maintaining, retrieving and validating HR data which
is called as Human resource Information System
(HRIS).
 This is not just useful in human resource planning but
to the whole gamut of HRM.
Supply

• Potential losses to existing resources through

employee wastages
• Potential changes to existing resources through
internal promotions
• Effect of changing conditions of work and absenteeism
• Sources of supply from within the organization
• Sources of supply from outside the organization in the
national and local labor markets.
 Internal Supply: -

Internal supply techniques help to assess

 Inflows and outflows (transfers,

promotions, separations, resignations,
retirements etc.)
 Employee turn Over :
Turnover rate (No. Of separations p.a. / Average
employees p.a. X 100)

 Conditions of work (working hours, overtime

policies, length and timing of holidays, retirement
policies, shift systems etc.)
 Absenteeism: when the employee is scheduled to
the work but fails to report to the duty. [(no.
persons-days lost/Avg. no. of persons* no. of
working days)*100]

 Productivity level

 Job movements (Job rotations or cross functional

utilizations)
 External Supply: -

 External sources are required for following reasons

 New blood,
 New experiences
 Replenish lost personnel
 Organizational growth
 Diversification
 External sources can be colleges and universities,
consultants, competitors and unsolicited applications.
HR Plan Implementation: -

 Recruitment & Selection:

 After the job vacancies are known efforts must be made
to indentify sources for suitable candidates.
 Employees are hired against the job vacancies. Based on
the manpower demand and supply forecasts made,
hiring of employees is initiated based on supply
forecasts.
 For this internal and external sources of manpower are
utilized.
 in large number and train them for future manpower
needs.
 A formal selection board is established to interview
and select the best of the candidates for the required
vacancies.
 Finally the selected employees also need to be placed
on proper jobs.
 Here some companies recruit employees for specific
jobs while others recruit fresh trainee
 Training and Development:

 The training and development program is charted out to

cover the number of trainees, existing staff etc.

 The programs also cover the identification of resource

personnel for conducting development program,
frequency of training and development programs and
budget allocation.
 Retraining and Redeployment:

 New skills are to be imparted to existing staff when

technology changes or product line discontinued.
 Employees need to be redeployed to other departments
where they could be gainfully employed.
 Retention Plan:

 Retention plans cover actions, which would reduce

avoidable separations of employees.

 Using compensation plans, performance appraisals,

avoiding conflicts, providing green pastures, the
induction crises, shortages, unstable recruits etc. can
be retained.
 Downsizing plans:

 Where there is surplus workforce trimming of labor

force will be necessary. For these identifying and
managing redundancies is very essential.
 Managerial Succession Planning;

 Notwithstanding the expansion or contraction of the

total workforce in an organization, the need for good
managers is critical and perpetual.

 More and more organizations are planning for

managerial succession and development because it
takes year of systematic grooming to produce effective
managers.
 Methods of managerial succession plans may vary.

 Most successful programs seem to include top

managements involvement and commitment, high-
level review of succession plans, formal performance
assessment and potential assessment and written
development plans for individuals.
A typical succession planning involves following
activities.

 Analysis of demand for managers and professionals by

company level, function, and skill

 Audit of existing executives and projection of likely

future supply from internal and external sources.

 Individual career path planning

 Career counseling undertaken in context of a realistic
understanding of future needs of the firm as well as those
of the individual

 Accelerated promotions

 Performance related training and development

 Planned Strategic recruitment

 The actual activities by which openings are filled.

Control & Evaluation of HRP
 HR Plan must also clarify responsibilities for control
and establish reporting procedures, which will enable
achievements to be monitored against the plan.

 The HR Plan should include budgets, targets and

standards.

 These plans may simply be reports on the numbers

employed, recruited against targets etc.