HUMAN RESOURCE

PLANNING (HRP)

Feleke S.(Ast. Professor)

1
LEARNING OBJECTIVES

After completing this session, you will be able to:

 Define human resource planning
 Describe the human resource planning process

 Explain the importance of HRP in efficient utilization of

organizations workforce
 Identify what an organization can do when a surpluses
shortages of employees exists.
 Describe the major HR forecasting techniques.

2
 CONCEPT OF HR PLANNING

Defining Human Resource Planning (HRP)

 HRP is a process by which an organization ensures that:

 it has the right number and kinds 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
strategic objectives.
3
 CONT’D

 Theprocess of predetermining future human resource

needs and courses of actions needed to satisfy those
needs to achieve organizational objectives.
 Involvesestimating the size and composition of future
work force to ensure survival and growth of an
organization.
 Systematically
forecasts an organization's future supply
of, and demand for, employees.

4
 HUMAN RESOURCE PLANNING PROCESS

Demand for labor Outcomes

Demand Recruitment
Assess current exceeds
Define Establish HRs Compare demand supply
organizati -- - - - - - - - - - - - - for and supply of
on corporate HRMS: human resources
mission goals Job analysis
and supply exceeds
objectives demand Decruitment

Supply of
human resources

5
 DEFINE ORGANIZATION MISSION

HR planning must be:

 linked
to the organization’s overall strategy to
compete domestically and globally
 translated into the number and types of workers
needed
 SeniorHRM staff need to lead top management in
planning for HRM issues.

6
 CONT’D
• A mission statement defines what business the
organization is in, including:
• why it exists

H
• who its customers are
• strategic goals set by senior management to
establish targets for the organization to achieve
• Goals are generally defined for the next 5-10 years.

7
 CONT’D
During a corporate assessment:
• SWOT-(Strengths-Weaknesses- Opportunities-
Threats) analysis determines what is needed to
meet objectives
• Strengths, weaknesses and core competencies
are identified
• Opportunities and potential threats will be
identified
• HRM determines what KSA are needed by the
organization’s HRs through a job analysis.
8
 CONT’D

STRATEGIC DIRECTION HR LINKAGE

Determining organization’s
Mission business

Goals and Setting goals and

Objectives objectives

Determining how to attain

Strategy
goals and objectives

Determining what jobs need to

Structure be done and by whom

Matching skills, knowledge,

People
and abilities to required 9
jobs
ASSESSING CURRENT HRS

 This step looks at jobs currently being done and the

people doing those jobs. It is based on:
a. HR Inventory
 Describes skills currently available in the organization.

 Human resource information system (HRIS) serves as

the database for skills information.
b. Job Analysis
 Provides information about jobs currently being done

10
 a. HR Inventory

 Skillsinventory of human resources currently

employed in the organization.

HR
 Tells management what individual employees
can do.
 Computers are generally used to generate such
inventory.
Contents of HR Inventory
 Forms completed by employees serve as the source
of information for developing HR Inventory. 11
 CONT’D

The main information included in the inventory are :

Name of the employee/age/gender/marital status
Qualifications of the employee
Training undertaken by the employee
Prior employment experience of the employee Current
position held by the employee Performance ratings of
the employee
Salary level of the employee Capabilities of
the employee Specialized skills of the
employee
Job and location preferences. 12
 CONT’D

Benefits of HR Inventory
 Enables management to assess what skills are currently
available in the organization.
 Useful for planning the selection, training, promotion
and transfer of employees.
 Serves as a decision making tool for deploying and
effectively utilizing existing HRs.
 Serves as a guide for considering opportunities for
diversification and expansion of operations.
 Provides crucial information for identifying HR-related
threats to the organization. 13
HUMAN RESOURCE INFORMATION SYSTEM (HRIS)

 HRIS
is a database device/ system for tracking Human
Resource Inventory Information.
 Designedto store information about employees and
about jobs.
CONTENTS OF HRIS
 HRIS contains the following data about employees:
 Personal Data: name,address, date of birth, marital
status, children, , etc.
14
 CONT’D

 Skills Data:Educational qualifications, training received,

languages spoken, capabilities, special skills, etc
 Position Data: Current position, occupational history,
various jobs held in the organization, work location,
etc.
 Compensation Data: Current salary, salary history,
bonus, overtime payments, deductions from salary, tax
information etc.

15
 CONT’D
BENEFITS OF HRIS
 Analysis of HRIS data facilitates preparation of HR Inventory by
providing the following information:
 Number of current employees by departments, service,
skills level, age, etc.
 Number of employees joining and leaving, including reasons for
leaving.
 Staff turnover rates (labor wastage rate) including its trend
 Sickness and absenteeism rates
 Salary bill, including overtime payments etc.
 HRIS data is useful for forecasting future HR requirements.

 It can be used for training, promotion or transfer planning. 16

 b. Job Analysis

 The systematic investigation of a job's content

 Provides information about jobs currently being

HR
done.

 Defines the jobs and the behavior necessary to

perform those jobs.
 Job analysis consists of defining:

 Tasks that make up the

job
 KSA needed to accomplish the job.
17
 CONT’D

Job analysis information is used to develop:

 Job Description
 A profile of what the jobholder does.
 Job specification

 A profile of the qualifications needed by the person

performing the job.
 Job Evaluation

 Used in developing a compensation package.

 JA is used for recruitment, selection, T&D, PA and
compensation management purposes. 18
 DEMAND FORECASTING
 Estimates future human resource needs in terms of
quality and quantity based on:
1. Organization's objectives and strategies
 Provide future direction to the organization.

2. Revenue forecasts
 Based on demand forecasts for theproducts/services
 Translated into a forecast of demand for
human resources.
 The demand is expressed in terms of number
peopleofrequired and the skills needed. 19
Factors that affect demand forecasting include: CONT’D
 External Environmental Forces: Economic, political,
technological, legal, social and cultural forces.
 Overall Organizational Objectives: Indicate the courses
that the organization plans to take in future.
 Expansion or contraction of activities; new ventures.
 Planned technological changes, for example
computerization.
 Planned organizational changes, e.g.
restructuring.
 New product lines

Budgetary ceilings etc.

20
 DEMAND FORECASTING TECHNIQUES

A. Management Judgment (Executive Judgment)

 HR demand forecast is based on managers’ judgment.
 The estimates of HR needs can be based on:

 Top-down approach: top management prepares the

estimates of requirements and sends the information to
lower level managers.
 Bottom-up approach: sectoral managers prepare the
estimates of requirements and send the information to
top management.
 Participative approach: management & supervisors
22

estimate requirements through joint consultation.

 CONT’D
B. Statistical Analysis
 Trend Analysis: technique projects past trends into the
future.
 The methods can be:
Extrapolation: Past rates of change are extended into
the future.
Indexation: A particular index is used to forecast
future needs
 Econometric Models: Based on analysis of
variables such as sales, production, workload
23
 CONT’D
C. Work Study Techniques
 Based on work measurement.
 Indicates how much time an operation should take to complete
work.
 Standards are laid down which are used to calculate human
resource needs for a given volume of work.
For example:
 Planned production units 40,000 units
 Standard hours per unit 2 hours
 Yearly standard hours 80,000 hours
 Productive hours per man year
 Number of workers required 2,000 hours 24
40
 SUPPLY FORECASTING
 Estimates future sources of supply of human resources
from inside and outside the organization
 Internal sources

 that increase supply can be promotion, transfer

 that decrease supply can be resignation, retirement,
dismissal, prolonged illness or death.
 External sources

 can be graduates from schools and colleges, people

entering job market, and other job seekers in the
labor market. 25
 CONT’D
Potential additions to HR inventory
 Promotion,
 Transfers,
 Demotions
 HR returning from leave of absence and study leaves.
 Succession planning
Potential losses to HR inventory
 Retirement,
 Resignation,
 Termination,
 Death,

26
 Labor Turnover
 HR Audit(Internal): CONT’D
 an important technique to estimate
internal supply of human resources
 It summarizes each employee's skills and abilities.
 External Sources Forecasts:

 External sources consist of hum resources

who currently do not work for the organization.
 The sources can be:
⁻ Educational and training Institutes

⁻ Labor market

⁻ Employment exchanges 27
 MATCHING DEMAND AND SUPPLY

 Thisstep matches demand and supply forecasts to

determine future shortages or surpluses of HRs in
terms of quality and quantity.
 Additional staff will be needed to meet the
shortages
 Retrenchment/cut down will be needed for surplus
staff.
 Early retirement, lay-offs, leave of absence (paid
leave), work sharing, reduced work hours, etc. can
be used here. 28
 ACTION PLANS

 Action plans should be prepared to dealwith

shortages and surpluses of human resources.

 They can be:

 Recruitment plan,
 Development plan
 Retention plan
 Redeployment plan

29
IMPORTANCE OF HUMAN RESOURCE PLANNING

1. Uncertainty Reduction
Offsets uncertainty by predetermining future HR
requirements
 Demand and supply forecasts to determine
future shortages and surpluses of HRs in terms of
quantity and quality.
 Action plans are developed to deal with
the problems arising from shortages and
surpluses.
30
 CONT’D

2. Objectives achievement
 Focuses on the achievement of goals.
 Demand forecasts for HRs are based on the
objectives, strategies and revenue plans of the
organization.

3. Environmental adaptation
 Assesses current HRs through HR Inventory and JA.
 Existing HRs can be quickly adapted to changing
technology, markets, political, legal, economic,
31
social and cultural forces.
 CONT’D
4. Effective and Efficient Utilization of HRs
 Ensures that the organization acquires and retains the
quality and quantity of HRs it requires.
 Existing HRs can be properly placed and deployed to
ensure their effective utilization.
 HR costs can be controlled to achieve efficiency
through planning.
 Ensures the availability of the right number and
type of HRs at the right time doing the right job.
32
 CONT’D

5. HR development
 Anticipates skill requirements for various levels of
human resources
 Provides adequate lead-time for planning of T&D
⁻ T&D often leads to greater employee
satisfaction, lower turnover and lower absenteeism.

33
34