Human Resource Planning (HRP)

Chapter 03
 Human Resource Planning
 Definition:
• The Human Resource Planning is a process of:
– forecasting the organization’s demand for
– and supply of manpower needs in the near future.
• HRP is also called---- “employment planning” or “Workforce
Planning”.
• HRP is a process by which an organization ensures :
– It has right number of people
– At the right place
– At the right time,
– Capable of effectively and efficiently completing those tasks
that will help an organization achieve its overall objectives.
 Human Resource Planning Process
• HRP is the process for:
– identifying an organizations current and future HR requirements
– Developing and implementing plans to meet those requirements and
monitoring their overall effectiveness.
• HRP is about developing plan of action to ensure:
– that the appropriate workforce will be available to provide quality
services
Plan Of Action
• MISSION Determining What Business the Organization Will Be
• GOALS AND OBJECTIVES Setting Goals and Objectives

• STRATEGY Determining How Goals and Objectives Will Be Attained

• STRUCTURE Determining What Jobs Need To Be Done and By Whom
• PEOPLE Matching Skills, Knowledge, Abilities To Required Jobs
 Importance of HRP

i. Create A Talent Pool:

 Helps maintain/retain or recruit a diversified competent workforce.
ii. Prepare people for future:
 Helps identify the gaps between current job skills and future job skills---
required to perform the work on the basis of that people are either trained
or developed.
 Helps for expansion (T& D), Restructuring (redesigning of jobs), Reduction
of workforce (decruitment).
iii. Cope With Organizational Changes
Provides an orderly way to address new external /internal environmental
changes that could change the workforce.
iv. Cut costs
Helps prepare for the growing no. Of decruitment (under the condition of
surplus workforce).
v. Helps succession planning
Helps in deciding which competent personnel will take up higher positions
in the organizations. (promote employees in a systematic way)
 HRP PROCESS
 STEP 1: Forecasting HR Availability/supply analysis
• Forecasting: the use of information from the past and present to
identify expected future conditions.
• Supply analysis (determining what is available) specifies the
quantity and quality of the available workforce.
• Matching people and positions:
– many positions are filled internally for smaller firms but as
organizations grow---- the matching process becomes difficult.
• So for this purpose databases are used.
• Databases include information on all managerial and non-
managerial employees.
Information needed for non managerial
employees includes the following:
 Background and biographical data
 Work experience
 Specific skills an knowledge
 Licenses or certification held
 In-house training programs completed
 Previous performance appraisal
evaluations
 Career goals
Information provided for managerial employees
includes the following:
 Work history and experience
 Educational background
 Assessment of strengths and weaknesses
 Developmental needs
 Promotion potential at present, with
further development
 Current job performance
 Field of specializations
 Job preferences
 Geographic preferences
 Career goals and aspirations
 Anticipated retirement date
 Personal history including psychological
assessments
 Step 2: Forecasting HR Requirements /Demand Analysis
• Forecasting HR Requirements involvers determining:
– The number of employees needed and the types (kinds) of
employees needed –by skill level and location at future dates
to realize its stated objectives.
• Requirement/demand analysis (determining what the entity
needs) specifies the:
• K= Knowledge; S = Skills; A= Abilities ; O = Other Characteristics
—required for each position within an organization.
• Requirement /demand analysis deals with forecasting of:
– future activities,
– workloads,
– and describing the competency--- needed by the workforce of
the future.(w.r.t changing technology; changing work
processes; changing workloads)
 Step 3: Comparing Requirements & Availability (GAP Analysis)
• When employee requirements and availability have been
analyzed –the firm can determine whether it will have a:
– surplus
– Or shortage of employees.
• Comparison may show the following results:
– shortage of employees
– the surplus
• It is also called “A GAP”.
• When projected supply is less than forecasted demand –it shows
future shortage of employees or skills.
– Demand is greater than supply (supply is less than demand).
– Availability Forecast is less than Forecasted Requirement.
(a) NO action
When demand is equal to supply, no action is taken
(b) Shortage of employees
Strategies to deal with shortage of employees or skills:
i. Recruitment and selection strategy
ii. Overtime
iii. Temporary employees
iv. Outsourcing
v. Training and development
vi. Succession planning
vii. Knowledge transfer
(c) Surplus of workers
When projected supply is greater than forecasted demand-- it indicates a future
excess in some categories of workers and requires some action.
• Strategies to deal with surplus of workers:
i. Restricted hiring
ii. Reduced hours
iii. Early retirements
iv. Layoffs
v. Downsizing
Shortage of Employees

i. Recruitment & selection strategy: To find and hire fresh graduates with fresh
talent/ideas/KSAOs from outside the organization.
ii. Overtime: Bring in overtime strategy for present staff with financial incentive
(To meet the employee shortage –orgs bring in overtime policy— that is, employee
will be paid for extra hours work i.e. financial incentive given—to fulfill the shortage of
workers. It s also called “expanded hours”.)
iii. Temporary employees: Hire temporary employees.
–Employment agencies provide temporary employees to orgs who demand it and thus
save costs—as they don’t have to pay like they pay to permanent employees.
–Temporary employees are used for those jobs that clearly supplement—do not
replace permanent employees.
–Benefits of permanent employees:

Health care

Pensions

Life insurance

Unemployment insurance etc.
–As agencies cover the cost of temporary employees so orgs do not have to pay that.
Shortage of employee (cont’d)
iv. Outsourcing: contracting with other org. to perform a broad set of services.
– It is used to operate efficiently and save money (costs).
– Those firms are chosen (for outsourcing) who promise to deliver the same quality or
better quality at a lower cost.
– Outsourcing firms (for manufacturing and services) are located in a part of the world
where wages are relatively low.
– Outsourcing is mainly done in manufacturing firms and low skilled jobs where specialized
skills are not required. E.g. Call centres.
v. Training and Development: This strategy includes:
– Providing staff with training to take on new roles.
– Providing current staff with development opportunities to prepare them for future jobs
in your organizations.
– T & D needs can be met in a variety of ways –one approach is for the employer to pay for
employees –to upgrade their skills.
vi. Succession planning:
– It is tied to leadership development
– It is a process whereby Company/firm leaders and HR Professionals identify key positions
within the firm and develop plans to fill those positions either with internal or external
staff.
– Process of providing training and on the job experiences to prepare internal staff to step
into positions that may become vacant.
vii. Knowledge transfers:
– Knowledge transfer seeks to:
• Organize,
• create,
• Capture
• Or distribute knowledge
• And ensure its availability for future users.
Surplus of employees

i. Restricted hiring (Hiring freeze):

–An organization reduces the workforce by--- not replacing employees who leave.
–e.g. 4 operators of machine –if 1 leaves, he/she is not replaced.
ii.Reduced Hours:
–Working hours are reduced—to reduce the workload.
–(I.e. 40 Hrs./week is cut down to 30 hrs./week)
–Reaction to a declining demand –can also be made by reducing ---total no of hours worked.
–Instead of having to downsize (in order to make the workforce smaller) orgs can reduce the
overall working hours of employees.----- This means they get paid a smaller salary but do not
need to leave their jobs permanently.
–(When conditions go back to normal they can perform on the same old no. of working hours)
–This is applicable to employees hired on hourly basis –managerial employees are exempted
from this.
iii. Early Retirements:
–It may reduce the no. of employees. Some will be delighted to retire-- if total retirement
package is attractive (such employees experience this as positive)
–While those who want to stay on job--- will experience this as negative.
vi. Layoffs:
– A firm has no choice but to lay off workers due to down-turn in
economic system of the country (recession)
v. Downsizing:
– Based on performance –people are laid off without any incentives—
making logical based on performance level for past years.