Human Resource Planning

Pallavi Tyagi
Definition

• HRP offers an accurate estimate of the number of employees

required with matching skill requirements to meet organizational
objectives. HRP is a forward looking function as human resource
estimates are made well in advance. It is, of course, subject to
revision.
• Systematic process of matching internal and external supply of
people with job openings anticipated in the organization over a
specified period of time.
Objective

• The basic purpose of HRP is to decide what positions the organization

will have to fill and how to fill them.
• Forecast personnel requirements
• Cope with changes
• Use existing manpower productively
• Promote employees in a systematic way
Importance

• Organizations use HRP to meet future challenges, cut costs, and

achieve greater effectiveness
• Create a talent pool
• Prepare people for future
• Cope with organizational changes
• Cut costs
• Help succession planning
 Human Resource Planning Process
External Environment
Internal Environment

Human Resource Planning

Forecasting Comparing Forecasting

Human Requirements Human
Resource Resource
Requirements and Availability Availability

Demand = Surplus of Shortage of

Supply Workers Workers

No Action Restricted Hiring, Recruitment

Reduced Hours, Early
Retirement, Layoffs, Selection
Downsizing
4-5
Some Meanings

• Requirements forecast - Determining number, skill, and location of

employees organization will need at future dates in order to meet
goals
• Availability forecast - Determination of whether firm will be able to
secure employees with necessary skills, and from what sources.
5-7

Forecasting Techniques

HR forecasts are an attempt to find out an organization's future demand

for employees

Forecasting techniques
Expert forecasts/ Delphi Technique
Trend analysis
Workforce analysis
Managerial Judgement
5-8

Forecasting Techniques

• Expert Forecasts: These are based on the judgments of those who

possess good knowledge of future human resource needs

• Trend Analysis: This is based on the assumption that the future is an

extrapolation from the past. Human resource needs, as such, can be
estimated by examining pas trends.
5-9

Forecasting Technique

• Workforce Analysis: All relevant factors in planning

manpower flows in a firm such as transfers,
promotions, new recruitments, retirement,
resignation, dismissal etc. are taken into account
while estimating HR needs.
• Managerial Judgement: in this technique,
managers sit together, discuss and arrive at the
figure which would be the future demand for
labour. The technique may involve a bottom-up or a
top-down approach
5-11

Supply Forecasting

Supply forecast determines whether the HR department will be able to

procure the required number of personnel. Specifically, supply forecast
measures the number of people likely to be available from within or
outside the organization
The supply analysis covers:
• Existing human resources
• Internal sources of supply, and
• External sources of supply
5-12

Present employees

Analysis of present employees is greatly facilitated by HR audits, HR Audits

summarizes each employees’s skills and abilities. The audits of non-
managers are called skill inventories and those of the management are
called management inventories. This summary gives planners a
comprehensive understanding of the capabilities found in the
organization's workforce.

Skill inventories consolidates information about non-managers in the

organization. Because the information from skill inventories is used as
input for transfer and promotion decisions, they should contain
information about each employee’s current job.

Management Inventories includes data such as:

Work history, strengths, weaknesses, promotion potential, career goals,
personal data, job preferences etc.
5-16

Skills inventory: an example

Name : A.K. Sen Date printed : 1-4-2004
Number : 429 Department : 41

Key words Work ex perienc e

Word Description Activity F ro m To
Accounting Tax Supervision 1998 2000 Tax clerk ABC Company
and analysis
Book Keeping Ledger Supervision 2000 2002 Accountant XYZ Co.
Auditing Computer Analysis 2002 2003 Chief Accounts TT Bank
records Officer

Education Special Qualifications M em be rsh ips

Degree Major Year Course Date 1. AIMA

MBA Finance 1998 DBF 1996 2. ISTD

B.Com Accounts 1995 Risk Management 1999 3. ICA

C omputer La ng uag es Position Location Hobbies

Literacy preference choice

 Tally French Accounting Kolkata Chess

 Banking Auditing Delhi Football
Software Bangalore Boating

Employees Signature __________ HR Department________

Date _______________________ Date ________________
5-12

Internal supply

Armed with HR audits, planners can proceed with the analysis of internal
supply. The inflows and outflows method is generally used for this
purpose.it is the simplest way to forecast internal supply and provides an
analysis of gains and losses of personnel for a particular job.
5-12

External supply

External hires need to be contacted when suitable internal

replacements are not available. A growing number of firms are now
using computerized human resource information systems to track the
qualifications of hundreds or thousands of employees. HRIS can provide
managers with a listing of candidates with required qualifications
after scanning the data base.
5-20

Important barometers of
labor supply

1. Net migration into and out of the area

2. Education levels of workforce
3. Demographic changes in population
4. Technological developments and shifts
5. Population Mobility
6. Demand for specific skills
7. National, regional unemployment rates
8. Actions of competing employers
9. Government policies, regulations, pressures
10. Economic Forecasts for the next few years
11. The attractiveness of an area
12. The attractiveness of an industry in a particular place
5-21

Manpower Gap Analysis

This is used to reconcile the forecasts of labour demand and supply. This
process identifies potential skill shortages or surpluses of employees, skills
and jobs

Estimating manpower requirements

Year
1 2 3

1. Number required at the beginning of the year

2. Changes to requirements forecast during the year DEMAND
3. Total requirements at the end of the year (1+2) ------- ------
4. Number available at the beginning of the year
5. Additions (transfers, promotions) SUPPLY
6. Separations (retirement, wastage, promotions out and other losses)
7. Total available at the end of year (4+5+6) --------------------
8. Deficit or surplus (3-7) RECONCILIATION
9. Losses of those recruited during the year OF THE ABOVE
10. Additional numbers needed during the year (8+9) MANPOWER NEEDED
Why conduct a job analysis

• Staffing - Haphazard if recruiter does not know

qualifications needed for job.
• Training and Development - If specification lists
particular knowledge, skill, or ability, and person filling
position does not possess all necessary qualifications,
training and/or development is needed.
• Performance Appraisal - Employees should be evaluated
in terms of how well they accomplish the duties
specified in their job descriptions and any other specific
goals that may have been established.
Why conduct a job analysis

• Compensation – Value of job must be known before dollar value can be

placed on it.
• Safety and Health – Helps identify safety and health considerations.
• Employee and Labor Relations – Lead to more objective human resource
decisions.
• Legal Considerations – Having done job analysis important for supporting
legality of employment practices.
Factors Affecting HRP Pallavi Tyagi
HRP influenced 1. Type and strategy of organization

by several 2. Organizational Growth cycles and planning

3. Environmental uncertainties
considerations. 4. Type and quality of forecasting information
The more 5. Labor market conditions
important of
them are:
1. Type and
strategy of • The type of organization is an important consideration
because it determines the production process
organization involved, number and types of staff needed, and the
supervisory and managerial personnel required.
Manufacturing organizations are more complex in this
respect than those that render services.

• The strategic plan of the organization defines the

organizations HR needs. For example, a strategy of
organic growth means that additional employees must
be hired. Acquisitions or mergers, on the other hand,
probably mean that the organization will need to plan
for layoffs, since mergers tend to create, duplicate or
overlapping positions that can be handled more
efficiently with fewer employees.
 The stage of an organization’s growth can have
Organizational considerable influence on HRP. Small
organizations in the embryonic stage may not
Growth Cycles have personnel planning.
and Planning Need for plaaning is felt when the organization
enters the growth stage.
 HR managers rarely have a privilege of operating
in stable and predictable environment. Political,
3. Environmental social and economic changes affect all
organizations. Personnel planners deal with
Uncertainties environmental uncertainties by carefully
formulating recruitment, selection, training and
development policies and Programmes.
 There are 3 types of information available in an
organization:
a. Strategic information(product mix, customer
mix…)
b. General organizational information(
4. Type and production schedule, distribution
Quality of channels….)
c. Specific information available for HRP(job
Information analysis, skill inventories…)
A major issue in personnel planning is the type of
information which should be used in making
forecast.
 Labor market comprises people with skills and
abilities that can be tapped as and when need arises.
Thanks to the mushrooming of educational and
professional institutions adequately trained human
resource is always available in the market.
5. Labor Nevertheless, shortage do occur.

Market
market
When one talks about labor supply,the following
deserve due consideration:

The size, age, sex The demand for

The nature of
and educational goods and Employability of
production
composition of services in the the people.
technology.
the population. country.