Master of Business Administration-MBA Semester 3 MU0010 Manpower Planning and Resourcing - 4 Credits

(Book ID: B1228) Assignment Set- 1 (60 Marks) Note: Each question carries 10 Marks. Answer all the questions.

Q.1 Write a detailed note on competency mapping system and its components. [10]
5.6.1 Competency Mapping System The four essential components of competency mapping system are: Classification system Measurement unit Process of measurement Accessible Data, Information and Knowledge 5.6.2 Classification System For any meaningful competency mapping or skills inventory management program, a clear, well defined and detailed system of classification is important to have in place. Without a clear classification system, any inventory management program will tend to fail. Competency mapping or skills inventory cannot be assigned numbers as easily as numbers are assigned to any physical products. A soft skill is particularly hard to define and therefore it is important that a good classification system is in place, so that everyone is referring to the same behaviors, skills and level of the competency. When it comes to creating the grading system for building a skills inventory, the problem often arises from a lack of standardized definitions for skills. There are no defined standards acceptable worldwide. Internally in the organization we dont want a comparison between apples and oranges. We want a fair comparison and hence a good classification system is essential. If the skills are defined earlier by the HR team leading the competency mapping or skill inventory exercise then the managers do not have to repeat the time consuming process of defining skills. They focus on evaluation of the skills critical for the success of the organization. They focus on identifying the high performing employees to participate in a skills inventory initiative and decide which skills are important to the organizations success. An objective system is important. An established list of predefined skills and an agreed-upon set of rules by which to measure them enable competency mapping or skills inventory. Initially an organization should focus on a few critical skills. As the ability of the organization to map competencies or skills improves, in the future additional skills can be inventoried and managed. As a foundation for establishing a skills program, many organizations begin by agreeing on the main objectives and identifying the skills that most closely impact these goals. An objective skills classification system frees decision-makers to focus on the exact skills and organizations objectives, and hence helps to fairly establish the parameters for a successful initiative. 5.6.3 Measurement unit

While companies have some difficulty tracking their inventory of office supplies or other physical resources which can be measured by number of units, weight, or volume calculating employee competencies or skills is a different matter. Organization A & B have 4 customer service executives and 1 customer service manager respectively. Refer Table 5.4 and analyze if the team and individuals are equal in terms of competencies? Of course, they are not at all equal in terms of their competencies. clip_image010 Table 5.4: Measurement Unit Many organizations can rely on subjective forms of assessments for the answer. For example, employees are asked to self-asses their own skills. Self-assessment is a subjective form of evaluation. Self-assessments are inaccurate, with inexperienced employees overrating their skills or experts underrating their ability. Personal verification is subject to individual influence and may not be a question of a manager being just, but more influenced by familiarity with certain employees. How do you measure an employees level of skill? Clear definitions help managers identify employees level of skill or skills. A well planned measurement system enables decision makers to rely on objective data and they are not forced to rely largely on unreliable, subjective skills data. Online skills measurement tools are now available and give managers the unit of measure they require to account for skills levels on a regular basis. Unlike subjective measures, these metrics will not differ from one department to another. The whole system is evaluated, delivered, and reported online. The objective measurement system calculates changes in skills levels over a period of time. That is, with a constant and well detailed unit of measure to track skills, employees and managers may document skills improvement. The management and managers should track skills inventories, identify shortfalls (skills gaps) and surpluses (skills strengths). They should also differentiate between the skills levels of different employees, information that is vital to meeting the demands of each client or project. A constant unit of measure enables decision makers i.e. managers to analyze skill levels within the organization. 5.6.4 Process of Measurement The requirement for an easily-administered measurement procedure is probably the most neglected need of a skills inventory plan. An organizations ability to evaluate skills on a regular basis and arrive at a suitable measurement can determine program success. How can organizations develop a practical skills measurement system one that can be continued to be used long after implementation? Ease of use and meaningful feedback are important characteristics of an effective measurement system. While the organization may not have to re-measure or re-evaluate its skills inventory with the same frequency as it tracks other items, repeat measurement is essential. Without the ability to deliver repeat evaluation, a skills inventory management initiative becomes nothing more but at one-time employee test, with unstable data that cannot track changes in an organizations supply of skills. Many organizations have made unsuccessful attempts at tracking skills in the past, and often they still apply the same wrong strategies till today. Employees can be asked to complete and submit self-rating forms, or they can be asked to take a test associated with a career milestone such as a training event or a periodic review. Unfortunately, the results of such assessments often disappear into a records system without re-emerging as actionable information for the organization or for the employee. As results fail to show action, the usefulness of this initiative is compromised, and participation declines.

The secret for a successful skills inventory management lies in the ability to automate test administration and provide quick, actionable feedback. Through an online testing system, employees can take a skill evaluation in their own time without the requirement for supervision. Results are calculated and delivered immediately. The online system addresses two issues which have negatively impacted skills inventory management efforts: Ease of Testing It makes it easy for the employees to undertake the skills assessment at their own time and when they are ready. It also allows repeat testing 3 months later or at some point in the future. Online tests ask questions from a questions bank, so different questions are presented to the employee. Fast, Meaningful Feedback An effective online skills inventory management provides quick or immediate feedback. Armed with this knowledge managers constitute a team with complementary skill sets. It also enables to send the employee to the right training programs or take good performance-related decisions. Performance evaluation in most organizations is not objective and tends to remain subjective. For employees, the quick feedback stimulates self improvement and is provided at the time when motivation for improvement is strongest immediately after an evaluation. A repeatable evaluation system enables employees and managers to track skills improvement over a period of time. 5.6.5 Accessible Data, Information and Knowledge The success of any inventory management initiative is based on its ability to deliver constant, actionable results. Skills inventory management is also no exception. The immediate accessibility of objective metrics helps managers to take action such as what training an employee needs, provide assignments that leverage existing skills and provide assignments that develop skills that need to be improved (such assignments require the employee to be mentored) and identifying the right employees to be part of project teams. With an online skills inventory management system, exact and relevant data is just easily accessible. No one needs to manage large amounts of data. If a manager is to manage large amounts of data, his/her initiative in the exercise declines. But if the data is automatically managed by the online system, then his/her inclination is not dented. Using the data and information, managers gain more knowledge about their team members competencies. Over a sustained period of knowledge of the proficiency levels of different skills, help managers take wise decisions and enable them to demonstrate greater wisdom in decision making. The need for skills inventory management is the highest today in the post recessionary period. 5.6.6 Motivating Employees

Motivating and educating employees about the advantages of the Competency mapping system is important. It is not only the job of the HR department, but also the management, to motivate them constantly. Today skills are the only currency that carries a lot of value in the present knowledge-driven economy. An employees value is determined by the depth of skills he possesses. Any procedure that enhances skills becomes important to the employee as well as to the organization. This is the basic assumption in educating employees about working towards enhancing their skills.

Q.2 Explain demand forecasting techniques. ANS: Demand Forecasting Techniques

Forecasting is an expensive way to help a company plan and prepare for the future years. Forecasting is not fortune telling; it is but an educated guess of how much manpower will be required and utilized by a firm or organization. It is a tool used to help in budgeting and allocating finances or hiring employees as perfectly as possible. One of the important features of forecasting is the quality of manpower resources (knowledge, skill, values and competency, capacity etc) as well as the quantity of manpower resources. There is no right way of forecasting, but there are many different types of forecasting methods. Each one is specifically planned and designed to help different retail organization and it is up to each of them to choose the model which is best and most appropriate for them. Manpower planning is done based on the manpower forecasts. The common manpower forecasting techniques are:

(1) Expert Forecasts

This is a group forecasting method in which experts present their independently developed forecasts to the group. However, the experts do not meet each other. The group keeps refining their forecasts until a group consensus is reached. This is called as the Delphi technique. In this method managers estimate future manpower requirements based on their experience and judgment.

(2) Trend Analysis

This technique requires studying the past data of an organization. Based on the past forecast, utilization and requirement actually experienced in the business, the future forecast is made. For example, if an organization had 12 secretaries in the firm and this number were increasing by 1 secretary every year for the last 4 years. Then the trend analysis would forecast a requirement of 13 secretaries for the following year. That is one additional secretary for the year. Past data is used to make future predictions. Known or Independent variables are used for predicting unknown or dependent variables, using the trend equation called Predictive analysis. Based on trend equation, we find Line of Best Fit and then it is projected in a scatter diagram, dividing points equally on both sides. The time series analysis has three goals: (i) Forecasting (also called predicting), (ii) Modeling (iii) Characterization. The logical order in which to tackle these three goals depends on the key objective. The idea of deciding the order is to ensure that one task leads to another and /or justifies the other tasks. Sometimes the objective is getting better forecasts. Then the order is forecasting, modeling and characterization. Sometimes the objective is to understand and explain what is going on. Then modeling is the key, though out-of-sample forecasting may be used to test any model. Often modeling and forecasting proceed in an iterative way and there is no logical order in the broader sense. You may model to get forecasts, which enable better control, but iteration is again likely to be present. The trend equation is: Y^ = a + b X + E

Y^ = Estimated value of Y a = Constant or Intercept b = slope of trend line X = independent variable E = Error term Explained variation means the extent to which the independent variable explains the relative change in the dependent variable. Higher the explained variation, lower the error value leading to accurate forecast. R2 = Explained Variation 1- R2 = Unexplained Variation

Trend Analysis Line of Best Fit

This process may be followed at the organization level as a whole or for parts of the organization based on department, location etc. Doing this at a granular with assumptions being documented and shared with the approving authority increases the forecast accuracy. The drawback is that you follow practices that you followed in the past. If the organization is experiencing the same rate of growth then this may work. But for extraordinary circumstances either good or bad for the organization, the trend analysis forecasting method often fails. Also this may build in turn the organization teeth to tail ratio unfavorable for making profits or enhancing profits. Teeth are the no. of employees who are directly into revenue earning jobs. E.g.: production employees, operations employees and sales staff. Tail is the no. of employees who are enabling the employees involved in directly revenue earning jobs. E.g.: secretaries, finance, administration & human resources.

(3) Work Study Technique

It is a technique that can be used when it is possible to apply work measurements to know how long operations should take and the amount of labor required. It is calculated in two ways.

 Work-Load Analysis Work-Force Analysis

i) Work-Load Analysis One more method of forecasting is by evaluating the work load in a department or job role. This then enables deciding the no. of employees required for doing the job. This depends on the nature of the work load in a branch, department, or a division in a firm or organization.

Example: In BPOs, if an agent can handle 18 calls in a day of about 25 minute duration. If 2
lakh calls are received in a month, then the workload is evaluated on a per day basis. Calls receivable per hour are plotted. Then the no. of employees required to service those number of calls is calculated. Also the service level is considered. Some clients do not want to keep their customers on hold for more than 1 minute, in such cases the service level may be taken as 100%. This requires for staffing additionally such that the customers are not on hold for more than 1 minute. Staffing is decided to ensure per hour manpower adequacy to support the service level required by the client. The client understands the cost involved and is willing to pay for a higher service level. Based on all the above inputs the workload evaluation technique allows forecasting manpower demand.

ii) Work-Force Analysis

In workforce analysis a sufficient margin for absenteeism, labor turnover and idle time on the basis of past experience is made. This allows for completing the total job at hand undertaken by an organization despite the challenges of labor turnover or absenteeism. The organization needs to make reasonable prediction of labor turnover or absenteeism. However, if the actual labor turnover or absenteeism exceeds the predicted value, then it puts the business under loss. This could mean the profits of the company reducing or the company experiencing a loss. As we all know that a business organization with high overheads cannot sustain losses for more than a certain number of weeks or months depending on the business. This would mean many people go jobless if the company happens to shut down. Therefore the workforce analysis has to be done with caution and by an experienced person with data validated for the past periods. Also the forecasting person, needs to be able to keep in mind any seasonal variations and special events that are likely to occur for the predicted period. Demand forecasting is a very responsible job. The entire organizations future depends on this. The organization leaders get involved to ensure that the demand forecasts are realistic and there is a reasonable buffer built in, so as to be able to sustain any deviations without a severe compromise in profitability or credibility with the client.

(4) Managerial Judgment Technique

This is a simple technique. In this the managers of different departments sit together, discuss and arrive at conclusions as to the number employees required for future operations based on their past experiences. This technique involves a top-down or bottom-up approach. In Top-down approach the managers prepare departmental forecasts. These are viewed by department heads and a decision is taken. In Bottom-up approach the managers submit their departmental proposals to top managers who arrive at forecast. Neither of these forecasts is accurate but both when combined could achieve effective results. This technique is used in smaller retail organizations or where there is not enough data available.

(5) Cost-Benefit Analysis

This is a term that refers both to: (i) Helping to appraise, or assess, the case for a project or proposal, which itself is a process known as project appraisal; and (ii) An informal approach to making economic decisions of any kind. Under both definitions the process involves, whether explicitly or implicitly, weighing the total expected costs against the total expected benefits of one or more actions in order to choose the best or most profitable option. The formal process is often referred to as either CBA (CostBenefit Analysis) or BCA (Benefit-Cost Analysis). Benefits and costs are often expressed in money terms, and are adjusted for the time value of money, so that all flows of benefits and flows of project costs over time (which tend to occur at different points in time) are expressed on a common basis in terms of their present value. Closely related, but slightly different, formal techniques include cost-effectiveness analysis, economic impact analysis, fiscal impact analysis and Social Return On Investment (SROI) analysis. The latter builds upon the logic of cost-benefit analysis, but differs in that it is explicitly designed to inform the practical decision-making of enterprise managers and investors focused on optimizing their social and environmental impacts. Work that is done by hand can be done faster by machines. It is also uniformly done. Number of employees is also less, hence you save up every month on their salary but it has gone into the purchase of a machine which is a onetime investment. So it does prove to be beneficial to the firm or organization. E.g. tagging or stamping an item or product for sale.

(6) Markov Analysis

This is a mathematical technique. It forecasts the availability of internal job candidates. In this analysis, various job classifications can be predicted based on past movements (transfers, promotions, attrition, new joiners, resignations, and retirement).

(7) Statistical Judgment Technique

This technique concentrates on using the past to predict the future by identifying trends, patterns and business drives within the data to develop a forecast. This forecast is referred to as a statistical forecast because it uses mathematical formulas to identify the patterns and trends while testing the results for mathematical reasonableness and confidence. These include ratio-trend analysis and econometric models. In ratio trend analysis the ratios are calculated for the past data and these are used to calculate future manpower requirements. Example:

These models are built up by analyzing past statistical data

Q.3 What are the inputs provided by HR for Manpower planning Ans: Inputs Provided by HR for Manpower Planning

Some of the relevant inputs provided by HR for manpower planning are: (1) Specific business goals of the organization drawn from the vision and mission statement for the period for which manpower planning is to be done. (2) The controllable variables such as the productivity data, productivity incentives, cost of training and cost of benching (if any). Benching here refers to a state of having excess staff, mostly as a result of preparation for anticipated business requirements and occasionally as a result of business process reengineering or some reduction in planned business. (3) Which departments will grow and by what percentage? (4) Which are the new confirmed clients likely to be added or withdrawing during the course of the year? (5) Which are the unconfirmed clients likely to be added or withdrawing the business during the course of the year? (6) The uncontrollable variables modifying the scenario for the year under consideration (PESTLE). PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental Scenario. (7) The maturity level of the organization in terms of people capability between 1-5 wherein: - Level 1 is Initial (inconsistent management) - Level 2 is Managed (people management) - Level 3 is Defined (competency management) - Level 4 is Predictable (capability management) - Level 5 is Optimizing (change management) (8) The changed organization structure at a high level in terms of the business verticals and the support horizontals if any. Apart from providing inputs for the orientation program, the HR function provides the requisite inputs in each of the 5 steps of manpower planning.

Therefore it is safe to say that HR plays an important role in the manpower planning process. Human resource management is the strategic and coherent approach to the management of an organizations most valued assets the people working there who individually and collectively contribute to the achievement of the objectives of the business according to Michael Armstrong. Human resource management (HRM) means employing people, developing their capacities, utilizing, maintaining and compensating their services in tune with the job and organizational requirements.

Q.4 What are the obstacles in Manpower Planning [10]

1.6 Obstacles in Manpower Planning The major obstacles in manpower planning are as follows: Non Optimal Utilization of Manpower The biggest obstacle for manpower planning is the fact that organizations cannot optimally use their manpower once manpower planning begins. During man power planning, the number of resources required for a job is decided based on the total work load, the process to be followed and the criticality of the job. Once the analysis is done, it is decided that one person can only handle a certain portion of the workload and hence for any additional workload, additional resources need to be hired proportionately. Over a period of time, the total workload may change, the processes may change, the criticality of the job may change and new technological innovations may make the job far easier to accomplish. However when the same employees are asked to step up the productivity, they resist accepting any additional workload and resist even deployment of new technology, hence making it hard for the management to maximize the use of their manpower. This makes the organizational processes ineffective or inefficient and hence the organization as a whole become ineffective or inefficient and loses out to competition which may be able to remain lean in terms of number of resources and highly effective and efficient. Absenteeism Every organization has witnessed an increase in absenteeism. This has lead to errors creeping in the manpower planning exercise. If the plan stated that 4 employees are required to manage the total workload, increased degree of absenteeism leads to the partial failure of the manpower planning exercise. Lack of Employable Labor People are not employable. The slow pace of acquiring business required competencies by people at large also result in low employee productivity. All manpower planning is done basis a certain productivity level considered as a benchmark. And low productivity has negative implications for manpower planning. Modern Manpower Control and Review Processes Any increase in manpower is to be approved by the top most levels of the management today. Manpower budgets created on the basis of manpower planning act as control mechanisms to keep the manpower cost and headcount under certain defined limits.

 Usually the productivity of any organization is calculated using the formula: Productivity = Output / Input. Example: 5 products are sold during the day/ 8 hours of effort put in during the day. i.e., the sales productivity of the employee is 5 products per day. But a rough guide of employee productivity used today is: Employee Productivity = Total Production / Total no. of employees Example: 50 products are sold during the day/12 employees were responsible for selling 50 products during the day. i.e., the sales productivity of each employee is 4.17 products per day. The rate of manpower turnover, exit interviews and absenteeism are sources of measuring dissatisfaction level of manpower. To eliminate employee dissatisfaction and to ensure better utilization of resources a study of the reasons causing the dissatisfaction level is required. Overtime is paid to employees due to real shortage of manpower, inefficient management or improper utilization of manpower. Manpower planning requires a study of the overtime statistics. The current pace at which business is done today is very fast. Many organizations either do not have data or are overwhelmed with data. Non availability and non utilization of the data are also reasons for complicating the situation. In some organization even the existing technologies available for manpower planning are not optimally used. This also creates obstacles in manpower planning. Example: Business Scenario for Obstacles in Manpower Planning (Lack of employable labor) The entire BPO industry is suffering with this scenario of lack of employable labor. In a dynamic business scenario, manpower planning is critical to organizational growth and stability. It is integral to recruiting, retaining, retraining and redeployment of talent. Linked to business needs of the organization, the process of manpower planning is much more complicated than it seems. Manpower planning involves developing skills and competencies of existing employees to meet market demands which can change with time. Manpower planning also requires having a contingent plan in place in case of any eventuality (talent shortage).

Out of every 100 candidates interviewed only 10 of them are employable. Majority of them are unemployable by the BPO industry. Its a known fact in the BPO industry. The manpower planning exercise requires BPO companies to budget for travel to the interiors of the state, travel to other states. It also needs to budget for providing new joiners with relocation allowance. It has to make provision for some joining bonuses as well when the hiring by all companies was at its peak. It decided to lower the level of hiring and spend additional time on training candidates. It needed to engage external organizations to evaluate the voice and accent capability or the potential of the candidate in order to validate its own findings with that of an independent agency, so that no potential candidate was rejected and no candidate who was not trainable was hired.
Q.5 Discuss external sourcing in detail. ANS: External Sourcing

When you hire staff or contract staff who has never worked with your organization earlier, then it is called as external recruitment. Examples are: Advertisements in Media: Advertisements of the job openings in newspaper and journals magazines are generally used as a source of external recruitment. Campus Selections in Institutions: Various colleges and institutions are a good source of recruiting well qualified executives, engineers, medical staff etc. Employee Referrals: Organizations encourage internal employees by providing benefits for referring friends and relatives for some position in their organization. Consultants: They identify candidates matching the job profile and charge a fee for providing candidates till you find the right candidate who accepts the offer.

Data Banks: Organizations collect CVs of candidates from different sources like employment exchange, training institutes etc. and screen and shortlist the candidates. When the business grows and if the business is manpower intensive, then additional resources are required. Therefore external recruitment is done. This is the only way to scale up the business. Also it brings in a freshness of thought and perspective. Capable people from the worlds best organizations bring best practices with them. They bring the culture of performance and meritocracy. External recruitment has many advantages. If the job role requires tremendous experience (e.g. 15 years), it is better to hire someone externally than to wait for people in your own organization with 4 years experience to gain 11 more years of experience.

Q.6 List the strategies for managing redundancy. ANS: Resourcing Strategy
Large organizations today employ human resource specialists to manage, coordinate or lead employee resourcing. This may have been seen as a passive role of a HR person, but in a dynamic business context with globalization, this is no longer a passive area, it is in fact the most active area and is a burning issue in companies present in the BPO space in India. It has been extremely hard for them to scale-up operations as and when required. Growth is stunted not on account of infrastructure or leadership, but due to the lack of resources or the inability to identify, attract and engage them. In fact, successful recruitment must be proactive. Organizations can take one of three actions to fulfill their employee resourcing: (i) Reassign job responsibilities and tasks between employees such that employees get exposure in newer areas and are able to take on larger set of responsibilities. It requires organizations to multi-skill resources and use sophisticated assessment and development programs. (ii) Reallocate people within the organization. By allowing high performing employees to take different roles or leadership roles, the challenge of hiring staff for those different roles or leadership is resolved. (iii) Recruit new staff from the market. Organizations have usually followed the last option of hiring externally without leveraging internal capability and developing internal capability.

Strategy for Redundancy The global recession that set-in, in 2008, has forced organizations to consider strategies for managing redundancy. The challenges of having to give up a large workforce or having to issue pink-slips (an American term that refers to being fired or laid off from ones job) have been daunting. Some of the strategies used are: Strategy 1: Organizations only consider undertaking projects where the risks are minimal, the natural attrition can address the challenge of redundancies and no undue costs or strain on the business is experienced for laying-off the workforce. Strategy 2: Hire very cautiously and work with vendors till the requirement is really seen to stay. Strategy 3: To review performance very critically, so as to ensure only the high performing employees continue, the rest can find employment elsewhere. Strategy 4: Pay the lowest and attract workforce to join, lay-off if required by providing few months pay in lieu of a notice. Strategy 5: Ensure the contracts are drafted such that it gives them enough levers to recover the cost of any sudden fluctuations in manpower requirements. Strategy 5: This is extremely difficult, but another strategy is to work with advance payments, to minimize the impact of such redundancy situations. For smaller entities, this seems to apply when specially working Strategy 6: Moving business to a low cost destination where the labor-arbitrage can make the business profitable, effective and efficient. Strategy 7: Leveraging technology to reduce operational costs, manpower costs, automating or moving to more niche areas of business allows the business to remain profitable. Strategy 8: Acquiring inorganically businesses to benefit from the scale of operations or ramping up the business such that the scale of operations benefits the organization exponentially. Strategy 8: Entering into associated businesses. Sometimes diversifying into newer areas to deploy workforce productively or minimize the need for the same type of workforce. Strategy 9: Or use a combination of the above as the situation demands or any other innovative strategies developed.