Human Resource Planning

MID Term - 2

Once the corporate and business unit strategies have been developed then the human resource
strategy can begin to be developed. The senior HR professional as a vital member of top
management team should also be heavily involved in corporate or business unit strategic
planning so that the top management team can include human resource management concerns in
its overall planning. HR needs to inform the top management team of the skills and capabilities
of the organization’s workforce and how they impact strategic plans.

Human Resource Planning

Human resource planning (workforce planning) is the systematic process of matching the
internal and external supply of people with job openings anticipated in the organization over a
specific period of time.

Objectives of Human Resource Planning

• Prevent overstaffing and understaffing

• Ensure the organization has the right employees with the right skills in the right places at
the right time.

• Ensure the organization is responsive to changes in its environment.

• Provide direction to all HR activities and system.

• Unite the perspectives of line and HR managers.

Benefits of Human Resource Planning (HRP) –

Human resource planning or manpower planning is necessary for all organizations because of
following reasons:

• To meet up future manpower needs of the organization: Every organization needs

personnel of desired skill, knowledge and experience. This human resources requirement of
organization can be effectively fulfilled through proper human resource planning. It helps in

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 defining the number of personnel as well as kind of personnel required to satisfy its needs. It
ensures the reservoir of desired human resources as and when required.

• To cope with the change: There must be proper utilization of human and non-human
resources (machines, materials and money) in the organization. Human resource planning
helps to balance uncertainties and changes as far as possible and enables the organization to
ensure availability of human resource of the right kind, at right time and at right place.

• To ensure proper utilization of resources: Human resource planning helps to anticipate

shortages and/or surpluses of manpower in the organization. In case of shortage of human
resources, physical resources of the organization cannot be properly utilized. In case of
surplus of human resources, this resource may remain under-utilized. Human resource
planning helps in correcting this imbalance before it become unmanageable and expensive.

• Training and Development of employees: There is constant need of training and

development of employees as a result of changing requirements of the organization. It
provides scope for advancement and development of employees through training and
development. Thus, it helps in meeting the future needs of highly skilled employees.

• Fulfill individual needs of the employees: It helps to satisfy the individual needs of the
employees for promotions, transfer, salary encashment, better benefits etc.

• Helps formulation of budgets: It helps in anticipating the cost of human resources e.g.
salary and other benefits etc. It facilitates the formulation of human resource budget for
various departments/divisions of the organization.

Human Resource Forecasting:

HR planning has two components: requirements forecast and availability forecast.

A requirements forecast involves determining the number, skill, and location of employees the
organization will need at future dates to meet its goals.

Techniques for forecasting HR requirements-

Several techniques for forecasting HR requirements are currently used.

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  Zero-Base Forecast The zero-base forecast uses the organization’s current level of
employment as the starting point for determining future staffing needs. If an employee
retires, is fired, or leaves the firm for any reason, the position is not automatically filled.
Instead, an analysis is made to determine whether the firm can justify filling it. Equal
concern is shown for creating new positions when they appear to be needed. The key to
zero-base forecasting is a thorough analysis of HR needs. Frequently, the position is not
filled and the work is spread out among remaining employees, as often is the case with
firms that downsize or remain stable. Plans may also involve outsourcing or other
approaches as an alternative to hiring.
 Bottom-Up Forecast In the bottom-up forecast, each successive level in the
organization, starting with the lowest, forecasts its requirements, ultimately providing an
aggregate forecast of employees needed. It is based on the reasoning that the manager in
each unit is most knowledgeable about employment requirements. Beginning with the
lowest-level work units in the organization, each unit manager makes an estimate of
personnel needs for the period of time encompassed by the planning cycle. As the process
moves upward in the company, each successively higher level of management in turn
makes its own estimates of needs, incorporating the input from each of the immediately
preceding levels. The interactive aspect of managerial estimating is one of the advantages
of this procedure because it forces managers to justify their anticipated staffing needs.

 Relationship between Volume of Sales and Number of Workers Required

Historically, one of the most useful predictors of employment levels is sales volume. The
relationship between demand and the number of employees needed is a positive one.
Using this method, managers can approximate the number of employees required at
different demand levels.

An availability forecast is the determination of whether the firm will be able to secure
employees with the necessary skills, and from what sources (internal, or external, or from both
sources).

When employee requirements and availability have been analyzed, the firm can determine
whether it will have a surplus or shortage of employees. After identifying this gap, the end result

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of HRP is development of HR strategy regarding recruitment, succession planning, employee
development & retention and any kind of change in organization like restructuring, expansion
etc.

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