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HUMAN RESOURCE PLANNING (H R P)

Human Resource Planning, as the name suggests, is the process of identification/ forecasting a
firm’s future requirement of type and number of people in order to meet the organisational goals and
objectives. It is a continuous process either due to fresh requirement of manpower owing to
change/growth/diversification of business or due to attrition of manpower due to retirement,
termination, death, disability or resignations.

Definition 1:

“HRP includes estimation of how many qualified people are necessary to meet the future business
requirement, how many people will be available, and what, if anything, must be done to ensure
availability of personnel equals the demand at all times in the future.”

Definition 2:

“HRP is a Process, by which an organization ensures that it has the right number of right kind 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 objectives.”

Advantages of HRP/need/importance/role/benefits

Human resource planning can be defined as the process of identifying the number of people required
by an organization in terms of quantity and quality. All human resource management activities start
with human resource planning. So we can say that human resource planning is the principle/primary
activity of human resource management.

The process of HRP plays a very important role in the organization. The importance of HRP can be
explained as follows.
1. Anticipating future requirement :-
Through this process of HRP, the company is able to find out how many people will be
required in future. Based on this requirement the company could take further actions. This
method also helps the company to identify the number of jobs which will become vacant
in the near future.
2. Recruitment and selection process :-
The recruitment and selection process is a very costly affair for a company. Many companies
spend lakhs of rupees on this process. Therefore recruitment and selection must be carried out
only if it is extremely necessary. HRP process helps to identify whether recruitment and
selection are necessary or not.
3. Placement of personnel :-
Since the HRP process is conducted for the entire organization, we can identify the
requirements for each and every department. Based on the requirement, we can identify
existing employees and place them on those jobs which are vacant.
4. Performance appraisal :-
HRP make performance appraisal more meaningful. Since feedback is provided in
performance appraisal and employee is informed about his future chances in same company,
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the employee is motivated to work better. Information for all this is collected from HRP
process.
5. Promotion opportunity :-
HRP identifies vacancies in the entire organization including all the branches of all the
company. Therefore when the company implements promotion policy it can undertake its
activities in a very smooth manner.

Limitations of human resource planning

Although HRP is a very advantageous method it has some limitations which can be explained as
follows
1. The future is uncertain :-
The future in any country is uncertain i.e. there are political, cultural, technological changes
taking place every day. This effects the employment situation. Accordingly the company
may have to appoint or remove people. Therefore HRP can only be a guiding factor. We
cannot rely too much on it and do every action according to it.
2. Conservative attitude of top management :-
Much top management adopts a conservative attitude and is not ready to make changes. The
process of HRP involves either appointing. Therefore it becomes very difficult to implement
HRP in organization because top management does not support the decisions of other
department.
3. Problem of surplus staff :-
HRP gives a clear out solution for excess staff i.e. Termination, layoff, VRS,. However when
certain employees are removed from company it mostly affects the psyche of the existing
employee, and they start feeling insecure, stressed out and do not believe in the company.
This is a limitation of HRP i.e. it does not provide alternative solution like re-training so that
employee need not be removed from the company.
4. Time consuming activity :-
HRP collects information from all departments, regarding demand and supply of
personnel. This information is collected in detail and each and every job is considered.
Therefore the activity takes up a lot of time.
5. Expensive process :-
The solution provided by process of HRP incurs expense E.g. VRS, overtime, etc. company
has to spend a lot of money in carrying out the activity. Hence we can say the process is
expensive.

Factors affecting HRP in the organization.

1. Employment :-
HRP is affected by the employment situation in the country i.e. in countries where there is
greater unemployment; there may be more pressure on the company, from government to
appoint more people. Similarly some company may force shortage of skilled labor and
they may have to appoint people from other countries.
2. Technical changes in the society :-
Technology changes at a very fast speed and new people having the required knowledge are
required for the company. In some cases, company may retain existing employees and teach
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them the new technology and in some cases, the company has to remove existing people and
appoint new people.
3. Organizational changes :-
Changes take place within the organization from time to time i.e. the company diversify into
new products or close down business in some areas etc. in such cases the HRP process i.e.
appointing or removing people will change according to situation.
4. Demographic changes :-
Demographic changes refer to things referring to age, population, composition of work force
etc. A number of people retire every year. A new batch of graduates with specialization turns
out every year. This can change the appointment or the removal in the company.
5. Shortage of skill due to labor turnover :-
Industries having high labor turnover rate, the HRP will change constantly i.e. many new
appointments will take place. This also affects the way HRP is implemented.
6. Multicultural workforce:-Workers from different countries travel to other countries in
search of job. When a company plans its HRP it needs to take into account this factor also.
7. Pressure groups :-
Company has to keep in mind certain pleasure. Groups like human rights activist,
woman activist, media etc. as they are very capable for creating problems for the
company, when issues concerning these groups arise, appointment or retrenchment
becomes difficult.

Steps in the Human Resource Planning Process

Steps in the Human Resource Planning Process

1. Designing the Management System

o A crosscutting issue in human resource planning is to ensure that a proper system is
in place to handle the process. The overall aim of this system is to manage human
resources in line with organizational goals. The system is in charge of human
resource plans, policies, procedures and best practices. For example, the system
should track emerging human resource management trends, such as outsourcing
certain non-core functions, adopting flexible work practices and the increased use of
information technology, and, if appropriate, implement them.
2. Environmental Analysis
o The first step in the human resource planning process is to understand the context of
human resource management. Human resource mangers should understand both
internal and external environments. Data on external environments includes the
following: the general status of the economy, industry, technology and competition;
labor market regulations and trends; unemployment rate; skills available; and the age
and sex distribution of the labor force. Internal data required include short- and long-
term organizational plans and strategies and the current status of the organization's
human resources.
3. Forecasting Human Resource Demand
o The aim of forecasting is to determine the number and type of employees needed in
the future. Forecasting should consider the past and the present requirements as well
as future organizational directions. Bottom-up forecasting is one of the methods used
to estimate future human resource needs by gathering human resource needs of
various organizational units.
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4. Analyzing Supply
o Organizations can hire personnel from internal and external sources. The skill
inventories method is one of the techniques used to keep track of internal supply.
Skill inventories are manual or computerized systems that keep records of employee
experience, education and special skills. A forecast of the supply of employees
projected to join the organization from outside sources, given current recruitment
activities, is also necessary.
5. Reconciliation and Planning
o The final step in human resource planning is developing action plans based on the
gathered data, analysis and available alternatives. The key issue is that the plans
should be acceptable to both top management and employees. Plans should be
prioritized and their key players and barriers to success identified. Some of these
plans include employee utilization plan, appraisal plan, training and management
development plan and human resource supply plan.

NEED & IMPORTANCE OF HRP

Human Resource comes at a cost and generates profits. While excess of human resource will lead to
unproductive costs, shortages of same will lead to idling of other resources and impede profit
generation. Having the people is not enough. Each job needs specific skills and experience and only a
certain trained personnel can do it effectively. Therefore, it is necessary that right kinds of people are
hired for each job.

Personnel requirement is never static. Manpower wastages in the organisation keep taking place
regularly due to retirement, injury, resignations, termination, etc. In addition, changes in the business
environment, business model and plan, capacity/product changes, diversifications, etc, also generate
need to review the human resource requirement of the organisation.

Changes in the Business Environment in the past one and half decade have led to relative scarcity of
talented people. Right kinds of people are no more available at short notice. There is considerable
time gap between identifying the need for manpower and filling the vacancy, sometimes stretching
between 6 months to one year. Thus, it will help the company if the requirement is forecasted
adequately in advance to enable hiring of right kind of personnel just in time so that neither the
machines/other resource idle for want of manpower nor do the people idle. At the same time, there
could be situations when there is spare manpower in the company. Company may have changed over
to a new technology production and therefore all personnel trained in old machines may have become
redundant and surplus. The “Exit Policy” for workers is not easy and they cannot be released at short
notice. Re-training or retrenchment of personnel has to be planned in advance.

HRP SYSTEM

HRP System as such includes following elements or sets for planning.

 Business Environment
 Overall Organization Objectives
 Forecasting Manpower Needs
 Assessing Manpower Supply
 Matching Manpower Demand-Supply factors
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Based on these elements we can draw “HRP System Architecture” as under.

Business Environment
Manpower Programming

Organization Objectives & Goals

Manpower Forecast Manpower Supply Assessment

Surplus Manpower Shortage of Manpower

Manpower Implementation

Control & Manpower Evaluation

Human resource planning

These processes are summarized below.

● Business strategic plans: defining future activity levels and initiatives demanding new skills.
● Resourcing strategy: planning to achieve competitive advantage by developing intellectual capital
employing more capable people than rivals, ensuring that they develop organization specific
knowledge and skills, and taking steps to become an ‘employer of choice’.
● Scenario planning: assessing in broad terms where the organization is going in its environment and
the implications for human resource requirements.
● Demand/supply forecasting: estimating the future demand for people (numbers and skills), and
assessing the number of people likely to be available from within and outside the organization.
● Labor turnover analysis: analyzing actual labor turnover figures and trends as an input to supply
forecasts.
● Work environment analysis: analyzing the environment in which people work in terms of the scope
it provides for them to use and develop their skills and achieve job satisfaction.
● Operational effectiveness analysis: analyzing productivity, the utilization of people and the scope
for increasing flexibility to respond to new and changing demands.