Presentation on

HUMAN RESOURCE DEMAND AND SUPPLY

INTRODUCTION OF HUMAN RESOURCE PLANNING

The process used by an organisation to assess the demand for and supply of future human resources. It is the process used to determine the numbers and kinds of employees an organisation will recruit or retrench, consistent with the business strategy or strategic plan. Is performed by both line managers and HR managers.

Definition: Definition:

According to Geisler, ³Manpower planning is the process ± including forecasting, developing and controlling by which a firm ensures that it has‡ The right number of people, ‡ The right kind of people, ‡ At the right places, ‡ At the right time, doing work for which they are economically most useful´.

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Situational Analysis/Environmental Scanning Forecasting HR demand . 4. 2. 3.Assessment of current HR Action planning or programme of action to fulfil future HR needs .Assessment future HR needs HR supply analysis .The Four Phases of the HR Planning 1.

and Balancing supply and demand considerations. the three key elements of the process are Forecasting the demand for labor. . Performing a supply analysis. Thus. ‡ Provide proper research base for effective manpower and organizational planning.Key Elements of HRP Process in Prof. ‡ Collect and summaries manpower data keeping long-run objectives and broad organizational interests in mind. Geisler outlined the responsibilities of Human Resource Department respect of manpower planning thus: ‡ Assist and counsel operating managers to plan and set objectives. ‡ Monitor and measure performance against the plan and keep top management informed about it.

. the difference between them is determined. Markov analysis. and finally.The approach of how the estimation are to be based.When each projection is formulated. b. work study analysis. c. work load analysis. job analysis etc. Basic factors to be considered. whether we are projecting wastage or redundancy or labor costs or absenteeism or labor turnover. Specific techniques to be adopted (this depends upon the approach adopted) such as time series analysis.qualitative or qualitative. probability techniques.The whole purpose behind human resources planning is to close this gap!! One thing. This difference is termed as known as Manpower gap. dealing with: rate of changes and matching estimations). which we should consider before beginning the process of forecasting: Always decide on a. d. estimates of demand and supply can be made with the help of certain approaches and methods.Once the corporate strategy and objectives are clear. Frequency of the forecasting exercise (that is.

Labour Demand equals Supply« RESPONSE: y Replacement of quits form inside or outside y Internal transfers and redeployment .

and productivity can influence the demand for labor. including competitive strategy. ‡Forecasting ‡A key component of HRP is forecasting the number and type of people needed to meet organizational objectives. a variety of organizational factors. ‡The .Forecasting the demand for labour ‡Forecasting a company¶s future demand in human resources is a necessary procedure in light of organizational objectives and strategies. is based on information from the past and the present to identify expected future conditions. utilization of advanced technology is generally accompanied by less demand for low-skilled workers and more demand for knowledge workers. HR expert or an experienced manager who handles the forecasting process needs to consider specific openings that are likely to occur and to use such data as the basis for planning. transfers. structure. Such information may come from external environmental scanning and/or the assessment of internal strengths and weakness. For example. and terminations. Since it¶s an open system that we exist in. technology. Openings are created when employees leave a position because of promotions.

there are many factors. the organization is able to know if there are employees to cover future demand from within its resources. In a manufacturing company. . due to promotion. the availability must be checked. succession plans developed to identify potential personnel changes. giving the numbers and types of products to be made in each period. to set the target for production. technological developments. From this information the number of man-hours. resignation. the sales budget would be translated into a manufacturing plan. The forecast of the availability of human resources is considering both internal and external supplies. By the end of this analysis. ‡Externally. translated into activity levels for each function and department. etc for each department in an organization are examined.‡Once human resources needs have been identified. would start from the production plan setting out a programme. retirement. ‡Internally. trends in the industry. by skill categories. ‡The basis of the manpower forecast should be the annual budget and long term corporate plan. such as the labor-force population estimates. The organization must take such factors into consideration to be able to know if ideal candidates can be located.

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. opening up of banking sector. have greatly enhanced the worth of technicians and engineers during the last couple of years. providing inexact approximations rather than absolute results. the on-line trading systems have created huge demand for finance professionals during 19901995 in India. For example. Likewise. social and technical changes. ‡The demand for certain categories of employees and skill is also influenced by changes in political. and the Competition. liberalization. The ever-changing environment in which an organization operates contributes to this problem . External environmental challenges: ‡These challenges arise from three important sources Economic developments.Let us consider few of the main factors.. capital market reforms. Political. power. legal. firms employing latest technology in construction. software etc. which can help us forecast demand of human resources in an organization : Forecasting is frequently viewed more as an art than a science. automobiles. legal and social structure in an economy.

for example. Employment planning under such situations becomes complicated ‡External factors such as business cycles-economic and seasonal trends-can also play a role. relies heavily on temporary employees between January and April when tax returns are received for processing. is a double-edged weapon and hence.) ‡ High technology with all its attendant benefits may compel organizations to go lean and downsize workforce suddenly. however. . The Internal Revenue Service. For example. Railways. computerization programs in Banks. for example) while increasing it in another (such as computer operations. Post and Telegraph Departments may reduce demand in one department (book keeping. its impact on HR plans is difficult to predict.‡Technology.

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There are several techniques use for forecasting 1. . 6. 5. 9. 2. 3. 4. 8. 7. Managerial Judgment Trend Analysis Ratio Analysis Scatter Plot Computerized Forecast Work Study Technique Delphi technique Regression Analysis Econometric Models cont«..

11. Nominal Group Technique H R Budget and Planning Analysis Scenario Forecasting Workforce Analysis Workload Analysis Job Analysis . 15. 14. 13. 12.10.

manager sit together. In this. discuss and arrive at a figure which would be the future demand for labour. .Managerial Judgment This techniques is very simple. The technique may involve a bottom-to-top or top-to-bottom approach.

Business Factor Annual Volume of Sales. 2. 5. Total Number of Employees. 3. Compare the Productivity Ratio.Trend Analysis Method which forecast employments requirements on the basis of some organizational index and is one of the most commonly used approaches for projecting HR demand. Calculate Human Resources demand. . 4. 1. Forecasted Human Resource Requirements.

1.Ratio Analysis Another approach . The number of employees required . Ratio analysis . means making forecasts based on the ratio between. Some causal factor (like sales volume) 2.

. A scatter plot is another option. HR planner can use scatter plots to determine whether two factors measure of business activity and staffing levels are related.Scatter Plot A graphical method used to help identify the relationship between two variables.

Employers also used computerized system to personnel requirements . . using computers and software packages. volume of production. and personnel required to maintain this required volume of output.Computerized Forecast The determination of future staff needs by projecting a firm s sales.

Planned output Standard output per hour x standard hours per person . Volume of operation is derived from the organizational plan documents and increase/decrease in operation can be measured.Work Study Technique Work study technique is based on the volume operation and work efficiency of personnel.

expert opinion on labor forecast.Delphi Technique This technique calls for a facilitator to solicit and collate written. After answer are received. but rather communicate through the facilitator. a summary of the information is developed and distributed to the expert. Expert never meet face-to-face. who are than requested to submit revised forecast. .

. It is used to measure the changes in a variable as a result of changes in other variables. Use of the method begins with a series of observation each costing of a value for the Y variable plus a value for each X variable.Regression Analysis Regression analysis identifies the movement of two or more inter-related series. Regression analysis determines the relationship between Y variables such as the number of employees and X variables such as service delivery by actually measuring the relationship that existed in the past.

I. as by a vote. Introduction and Explanation II. but want everyone·s opinions taken into traditional voting. who want to make their decision quickly. Silent Generation of Ideas III. Sharing Ideas IV. Voting and Ranking .Nominal Group Technique The nominal group technique is a decision making method for use among groups of many sizes.Group Discussion V.

to determine the rate of influx and out flow of employee. It is through this analysis one can calculate the labor turnover rate. . absenteeism rate etc.Workforce Analysis It means.

Both the number of employees and the kind of employees required to achieve organizational goals are identified.Workload Analysis It is a method that uses information about the actual content of work based on a job analysis of the work. Workload analysis involves use of ratios to determine HR requirement. .

. A detailed study of jobs is usually made to identify the qualification and experience required for them.Job Analysis Job analysis helps in finding out the abilities or skills required to do the jobs efficiently.

can create labour demand The Internal and External Labour Markets are the sources of Labour Supply y .SUPPLY AND DEMAND: ´ORGANISATIONAL IMPACTSµ y Product demand and need for increased productivity.

Supply analysis thus. it then goes on to the next search that is from where can it fulfill its requirements. how and when of recruitment. involves planning for procurement: who. there are two source of supply‡Internal ‡External. from where. Thus. . It scans the internal and external environment for the best-fit candidate for the positions in question. It therefore needs to determine if there are sufficient numbers and types of employees and how many are eligible for the plausible positions.FORECASTING SUPPLY Once an organization has forecast its future requirements for employees.

The secretarial group might include secretarial clerk. job level.) are determined in advance then the data can be very useful. HR manager. ‡Thus. and the cost of training may be working out to be high. etc. internal movements of employees (transfer. retirement.Internal sources: most popular approach to be followed by all managers is to look within the organization among its cadre first. . principal secretary. past performance and future potential is continuously maintained for use whenever required. senior secretary. experience. Because it is cost saving in many ways to utilize what is already available to the organization. education. training. and administrative assistant. promotions. For instance. Until and unless the opening is not related to immensely diversified field of which the existing workforce might not possess requisite skills. ‡A ‡The profile of employee in terms of age. it is easier to go in for an internal source for recruitment. sex. and HR director. the HRM group might include the job titles of HR assistant. if the requirements in terms of growth/diversification.

a company in the present scenario wanting to start its BPO operations in India may not have problem which a company 10 years back would have faced. HR planners need to keep themselves abreast of the Labour market conditions such as local employment. ‡Thus. competition for such skills. availability of part time labour. etc external market. ‡It . as there are ample requisite skills available in the market. the company can refer to the regularly on what is available now. trends of relevant categories of employees. ‡For example. migration trends of labor. what will be available later.External sources is only when the cost of procuring the labour from internal sources is more and also the present staff cannot be spared for the future assignment. Not only skilled labor but also they are motivated to join such company for fast earnings.

Overcoming employee shortages ‡Overtime ‡Part time workers ‡Temporaray employment agencies ‡Transfers ‡Contract workers ‡Promotions ‡Full time employees .

Managing Oversupply ‡Hiring freeze ‡Early retirement offers ‡Job sharing ‡Use of part time workers ‡Internal transfers .

replacement. retirement. ) . recruitment. and competitive action are some of the important things that need special attention. A reconciliation of demand and supply forecasts will give us the number of people to be recruited or made redundant as the case may be. This forms the basis for preparing the manpower plan Changes in product mix. The closer the gap the better it is for the company when it actually goes into procuring. This exercise helps us have an idea of the quantitative and qualitative gaps in the workforce. selection. The human resource requirements thus identified are translated into a concrete manpower plan.. promotion. union agreements. etc. and other human resources instruments and strategies (for example. training. BALANCE OUT THE DEMAND AND SUPPLY GAP The final stage is to balance out the demand and supply gap. A comparison chart can be developed to find what is available and to what extent it can fulfill the demand forecast. backed up by detailed policies.

promotions and transfers. which may induce such changes. image/preference of the existing labor for the company. potential trainability and current and potential productivity level of the existing work force. hours of work. 4. The availability of the relevant skills in the external labor market for present and future use. absenteeism and other external factors (economic and cultural). The HR planner will have to assess and monitor factors such as: market value. 3. 1. The structure of the existing workforce in terms of age distribution. rates of pay and so on. skills. . The skill base. motivation of the prospective candidates to join the company. The possible changes in the productivity.Summarizing information that should be available for a comprehensive supply forecast and analysis. size and structure of the workforce due to resignations and retirements. 2.

External sources are important for specific reasons: (i) new blood and new experience will be available (ii) organization needs to replenish lost personnel. (ii) conditions of work and absenteeism. organization to organization.SOURCES OF SUPPLY OF MANPOWER Internal supply: Armed with HR audits. the organization needs to look out for prospective employees from external sources. and (iii) organizational growth and diversification create the needs to use external sources to obtain additional number and type of employees. and (iv) movement among jobs. Sources of external supply vary from industry to industry. . competitors or unsolicited applications . Some organizations have found that their best source of further employees is colleges and universities. and also from one geographical location to another. Planners can proceed with the analysis of internal supply. The techniques generally used for the purpose are (i) inflows and outflows. while others achieve excellent results from consultants. (iii) productivity level. External Supply: In addition to internal supply.

Future Manpower requirements Forecast has to be based on some estimate of the future demand for y y y y y Final products or service produced Changing in technology and financial resources The probable condition of the external labour market Internal manpower capabilities Total staffing requirements to achieve the organisational goals .

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