Human Resource Planning

What Is Human Resource Planning?

The process of forecasting the supply
and demand for human resources within
an organization and developing action
plans for aligning the two.

2014 Cengage Learning India Pvt Ltd. All rights reserved.

HR Information Systems

Human Resource Information System

An integrated and increasingly automated
system for maintaining a database regarding
the employees in an organization.

2014 Cengage Learning India Pvt Ltd. All rights reserved.

WHAT IS A HRP PROCESS

MEANS MATCHING THE INTERNAL &

EXTERNAL SUPPLY OF PEOPLE WITH
ORGANIZATION DEMAND OVER A
SPECIFIED PERIOD OF TIME

HUMAN RESOURCE PLANNING

What is it ???
According to Geisler, Manpower 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.

HUMAN RESOURCE PLANNING

HRP is essentially the process of getting the right
number of qualified people into the right job at the right
time so that an organization can meet its objective.
It is the process of determining and assuming that
organization will have an adequate number of qualified
persons available at proper times, performing jobs which
meet the needs of entire enterprise and which provides
satisfaction for the individuals involved.

HUMAN RESOURCE PLANNING

Human resource planning is the process of anticipating and carrying

out the movement of people into,within,and out of the organization.
Human resources planning is done to achieve the optimum use of
human resources and to have the correct number and types of
employees needed to meet organizational goals.

INVOLVES FOLLOWING STEPS

1.
2.
3.
4.
5.
6.

Stating HR Objectives
Forecasting
Inventorying
Anticipating
Action Plan
Control & Evaluation
However environmental scanning both internal and external is most
essential

Factors That Determine HR Plans

OBJECTIVES

The ultimate mission or purpose is to relate HR to future

enterprise needs so as to maximize the future return on
investment in HR.

HUMAN RESOURCE FORECASTING

FIGURE 5Linking Employers Strategy to Plans

512

Methods for Forecasting the Demand for Human

Resources
1.Quantitative Techniques: Usually involve some type of
regression analysis in which human resource demand is
correlated with key business indicators.

2. Qualitative Techniques: Variety of group decision

making techniques, including Nominal Group.

Analyze the demand on the basis of the following:

Workforce analysis is to determine the rate of influx and
outflow of employee. It is through this analysis one can calculate
the labor turnover rate, absenteeism rate, etc. Qualitative
methods go a long way in analyzing the internal flow created
by promotions, transfers etc.
Workload analysis, with which one can calculate the number
of persons required for various jobs with reference to a
planned output. This takes into consideration factors such as
absenteeism, and idle time, etc. Both quantitative and
qualitative techniques are utilized for accurate results

Forecasting Personnel Needs

Forecasting
Tools

Trend Analysis

515

Ratio Analysis

Scatter Plotting

DERIVING A QUANTITATIVE ANALYSIS OF HR

Prepare an analysis of the demand for people over the life of the
organizational strategy
Trend Analysis is the study of a firms employment
trends over the last 5 years or so in order to predict
future trends.
Ratio Analysis depends on the ratio between some
causal factor (like sales volume) and the number of
employees required to deal with it.
The Scatter Plot involves determining whether two
organizational factors a measure of business activity
and the staffing levels are related. If they are, and it is
possible to forecast the measure of business activity, it
should be possible also to estimate personnel
requirements.

FIGURE 53
Determining the
Relationship Between
Hospital Size and
Number of Nurses
Note: After fitting the line,
you can project how many
employees youll need,
given your projected
volume.
Size of Hospital
(Number
of Beds)

Number of
Registered
Nurses

200

240

300

260

400

470

500

500

600

620

700

660

800

820

900

860

517

Workforce anlaysis
Transfers in

Job Hopping
Transfers out
Retirement

Recruits in

VRS
Terminations
Resignations

Promotions In

Sabbaticals etc

DEMAND FORECASTING
METHODS(Qualitative)

ESTIMATION
EXPERT OPINION
1. Delphi
No face to face meeting
2. Group Brain storming
Face to face discussions
3. Nominal group technique
Face to face discussion
Based on consensus of group
4. Simple averaging
5. SALES FORCE ESTIMATES

DEMAND FORECASTING
METHODS(Quantitative)
1.
2.
3.
4.

TREND ANALYSIS & PROJECTION

SIMULATION MODELS-Uses probabilities of future events
WORK LOAD ANALYSIS Based on actual content of work
MARKOV ANALYSIS
-Probabilistic
-Data driven
-Transitional probabilities determine the forecasted
employee levels at the end of year

FORECASTING & ANALYSING HR

SUPPLY
1.
2.
3.

INTERNAL SUPPLY FORECASTS

EXTERNAL SUPPLY FORECASTS
METHODOLOGY OF FORECASTING EXTERNAL HR SUPPLY
-Govt. estimates of population available for work
-Nos. graduating from schools and colleges
-Changing work force composition
-Technological shifts

METHODS OF FORECASTING
INTERNAL HR SUPPLY
1.

CURRENT HR SUPPLY GOVERNED BY:

-Promotions, Lateral transfers
-Movement out of company
-Changes in productivity levels

2.

METHODS
-HUMAN RESOURCE INVENTORY
-SUCCESSIONAL ANALYSIS & PLANNING
-MARKOV ANALYSIS
-LABOR WASTAGE ANALYSIS

MATCHING DEMAND AND SUPPLY

FORECAST
WHEN DEMAND AND SUPPLY COMPARED:
:HR SUPPLY=DEMAND
:HR SUPPLY<HR DEMAND
:HR SUPPLY>HR DEMAND

Each of the three conditions need a matching strategic approach

Human Resource Planning Process

External Environment
Internal Environment

Strategic Planning

Human Resource Planning

Forecasting Human
Resource
Requirements

Comparing
Requirements
and Availability

Demand =
Supply

Surplus of
Workers

No Action

Restricted Hiring,
Reduced Hours, Early
Retirement, Layoff,
Downsizing

Forecasting Human
Resource
Availability
Shortage of
Workers
Recruitment
Selection

Dealing with surplus manpower

1.
2.
3.
4.
5.
6.
7.
8.

Outplacement
Downsizing/Rightsizing
Leave of absence without pay (Sabbaticals)
Loaning
Work sharing
Reduced Work hours
Early/voluntary retirements
Benching

http://economictimes.indiati
mes.com/articleshow/1181
5471.cms?prtpage=1

MANAGING HR SHORTAGES

1.
2.
3.
4.
5.
6.

OVERTIME
TRAINING OF USW/SSW
INVITING PREVIOUS LAID OFF WORKERS
HIRING OF CONTRACTUAL,TEMPORARY,PART TIME
WORKERS
HIRING FROM EXTERNAL SOURCES
MAINTAINING BENCH STRENGTH OF EMPLOYEES

OPTIONS FOR MATCHING DEMAND & SUPPLY

INCREASE
SUPPLY (externally)
Recruit differently
Attract people of
different age, sex, race,
nationality, skill,
qualifications
advertise in different
places
assess and select in
different ways
improve terms and
conditions
offer assistance in
relocate, transport,
childcare
Internally
promote differently
train existing staff
redeploy existing staff

LABOR
SHORTAGE

DECREASE
DEMAND
redesign work
redesign job
specification
use existing staff
differently
subcontract work
relocate work
automate

IMPROVE
RETENTION
improve terms &
conditions
improve
management style
and
communications
improve
promotion and
recognition
improve training
improve
inducements,
bonus, etc.
improve
selection,
placement &

OPTIONS FOR MATCHING DEMAND & SUPPLY

LABOR
SURPLUS

DISCOURAGE
RETENTION

INCREASE
DEMAND
Increase markets
for products and
services

short-term
contracts
flexible working

DECREASE
SUPPLY
early retirement
assisted career
change
sabbaticals
voluntary
redundancy
compulsory

FORECASTING GONE WRONG

Forecasting gone wrong
SIL, Music and Entertainment Company faced a major crisis when the
cassette market started shrinking with the availability of CDs at the
cheaper rates in 2000-2001.The manufacturing unit of SIL at DUM
DUM had a workforce of 730 employees and manufactured only
cassettes. The market for cassettes was badly affected by piracy and
a fast growing CD market. So, the management at SIL, which had
already downsized by 1700 employees over two years ago through
VRS, was again considering the idea of manpower reduction. The
union however opposed this idea strongly. The management at the
plant was in a fix as to how can it reduce the costs.
What was the problem?

FORECASTING GONE WRONG

SIL could not forecast the demand for its products in the
market. It failed to foresee the technological changes in the
market and the influence of such changes on their product.
The music industry itself was fast becoming stagnant. Had
the management at SIL prepared itself to face these
challenges, it would have averted the current crisis .At this
stage, it can neither relocate the employees nor lay-off, nor
can it bear the burden and run into red.

Questions answered by HRP

How many people will we need over the next
three to five years?
In which divisions or functions do we need
them?
What skills do we expect them to have?
How will we manage succession?
How much will the labor force cost?

END

Delphi Method
In Delphi Technique experts give their opinions about what the future entails.
These experts never meet face to face.
A facilitator circulates open ended questions amongst the experts and the
experts send their opinions to the facilitator.
The facilitator then checks the amount of divergence and convergence of
opinions and may circulate another round of much focused specific
questions to the experts who will send their opinions once again to the
facilitator.
Various iterative rounds can go on like this while gathering the opinions of
the experts.
2014

Delphi Method
One of the advantages of this method is that no expert colors each
others opinion in this process and every expert can give their free
and fair opinion on the subject.
However numbers of iterative rounds make it costly and a
cumbersome process.
Much of the success of this technique depends on experts
knowledge level and commitment of both expert and the facilitator.

2014

Nominal Group Technique

Nominal Group Technique (NGT) is also a qualitative technique like Delphi
Method.
The major difference between Delphi Method and NGT is that here experts
meet face to face.
Before such face to face meetings experts go through various documents
and make adequate preparations so that they can give their informed
opinions.
All the ideas from the experts get documented and are shown on flip charts.
Then through secret voting it gets determined which is the most pertinent
idea or opinion of the group with respect to future planning.
2014

Time Study

The objective of time study is to establish standard time for jobs.

Once standard time gets set workers can no more change the time
standard till through another time study a new time standard gets set.
This standard time can further be linked to the workers pay.
For setting standard time HR professionals need to collaborate with
industrial engineers who have considerable exposure of time study
and motion study.

2014

Markov Chain Analysis

Markov Chain analysis uses transition probability matrix to make

future predictions.
For preparing the transition probability matrix two time periods need
to be chosen.
These chosen time periods should be such where business runs in
an usual way, and there are not such external disturbances which
can make the business situation unstable.
The time gap between these two periods should not be too long,
since we are interested to note the changes that took place in
between these two periods, which will serve as a template for
2014changes.
modeling future

Succession Planning

Through performance appraisal system companies generally identify

who are the key performers.
Coaching and Mentoring play a vital role in developing the
successors.
Special assignments are given to managers so that they can quickly
pick up key responsibilities.
Identification of successor is made part of the key result area (KRA)
of some of the managers.

2014

Succession Planning
For companies like Colgate Palmolive high performers are put in
different countries so that they can get adequate exposure of overall
customer demographic and enhance their relevant skill.
Creating forum so that juniors can debate, discuss, put forth their
viewpoints go a long way in developing worthy successors.

2014

Succession Planning

Generally companies do not declare the

successor much beforehand since:
The declaration may kill healthy competitions amongst
key performers.
Second, the successor will be subject to poaching where
competitors may lure the successor with a better
offering.
Third, the future is always uncertain.
Lastly there is a fear that internal political dynamics of
the organization may create unnecessary pressure for
the declared crown prince, which will not let the
announced successor to perform at his/her best.
2014

Strategy as a Source of Information

Implications of a growth strategy:
Need to hire new employees

Implications of a stability strategy:

Implement training to upgrade employee skills
Implement programs to help reduce turnover

Implications of a reduction strategy:

Find ways to reduce workforce
Normal attrition processes
Retirement (including early retirement)
Layoffs

2014 Cengage Learning India Pvt Ltd. All rights reserved.

Human Capital Investments

Human Capital Investments

Are investments people makes in themselves
to increase their value in the workplace.
Can take the form of
additional education
or training.

2014 Cengage Learning India Pvt Ltd. All rights reserved.