Human Resource Planning

HRP defined According to Coleman “it is the process of determining manpower requirements and the means for meeting those requirements in order to carry out the integrated plan of the organization” Strainer defines it as “a strategy for the acquisition, utilization, improvement, and presentation of an enterprise’s human resources”

Objectives of HRP To ensure adequate supply of manpower Ensure proper use of existing human resources Forecast future requirements of human resources with different levels of skills Assess surplus or shortage, if any, of human resources available over a period of time Anticipate the impact of technology on jobs Control the human resources already deployed in the organization Provide lead time available to select and train the required additional human resources

Need for HRP Despite unemployment, there has been a shortage of human resources with required skills, qualifications and capabilities Employees who retire, die, leave organizations or become incapacitated, need to be replaced by new employees It is also essential in the force of marked rise in workforce turnover which is unavoidable It is needed in order to meet the needs of expansion and diversification programmes Technological changes and globalization usher in change in method of production which may require a change in the skills of the employees

HRP Process Organizational environment scanning Formulation of HR objectives and policies Demand forecasting Supply forecasting HR programming HRP implementation HRP controlling and evaluation

Demand forecasting techniques Ratio Trend Analysis Refers to the technique under which ratios are calculated (e.g., total output/total number of workers, total sales volume/ number of sales persons) Example, Units produced in 2005-06 = 10,000 Number of workers in2005-06 = 500 Ratio = 500 : 10,000 = 1:20 Estimated production in 2007-08 = 25,000 Number of workers required in 2007-08 = Estimated production x Ratio Number of workers required in 2007- 08 = 25000 x 1/20 = 1250

Demand forecasting techniques Regression Analysis In this technique, regression equations are formed and solves with the help of different software It is used to forecast the future workforce demand based on factors such as sales, output, profit, productivity and existing number of employees Bureks – Smith Model Mathematical model based on selected key variables that influence the overall workforce needs En = [(Lagg + G) 1/X] Y Where, En = Estimated human resource demand n = Planning period Lagg = Overall turnover or aggregate level of business activity in Rupees G = Total growth in business activity during period n X = Average improvement in productivity Y = Conversion figure that relates the present overall activity to the human resource needed

Demand forecasting techniques Work Study Technique It is used in cases where it is possible to measure the work to determine the duration of the operations and the number of employees required It estimates the required number of employees possessing desirable skill sets to accomplish the total production targets Example, Planned output for the next year = 25,000 units Standard hours per unit = 4 hours Planned hours required for the work = 25,000 X 4 = 1,00,000 Productive hours per worker per year = 2,000 Number of workers required = 1,00,000/2,000 = 50

Demand forecasting techniques Management Judgment or Managerial Judgment Managers sit together and discuss their future work assignments and tasks, and estimates how many people they need It can be either ‘bottom-up’ or ‘top-down’ In case of bottom-up approach, line managers prepare departmental requirements for human resource and submit it to top managers for their review In the top-down approach, the top managers prepare the departmental forecasts which are reviewed with the departmental heads or managers Expert opinion Refers to the technique based on the executive or expert decisions provided by the different departmental heads or other knowledgeable persons The judgmental views of experts are collected to produce a forecast about the future manpower demand

Demand forecasting techniques Group Brainstorming Involves face-to-face discussion on various issues by experts who make some assumptions about the future course of action for the business Experts first examine the strategic plans of the organization and then try to predict the future demand of employees Nominal Group Technique (NGT) A problem or issue is presented to the group and each member of the group individually produces as many solutions as possible All generated answers are presented to the group for clarification The group proposes the most feasible and realistic solutions based on the clarifications

Demand forecasting techniques Delphi Technique A series of questions is individually asked to a jury of experts about their perceptions of future events. In this technique, the direct interaction among the members is avoided It involves the use of questionnaires and the results are fed back to the group members so that they can come to a consensus This method is however, very time consuming

Supply forecasting techniques Markov Analysis or Flow Models Uses historical flow rates of workforce to predict future rates The flow of workforce over years within the organization is shown by means of probabilities The probability of how many existing employees would be retained, transferred, promoted, terminated, resigned and demoted is estimated Thereafter, future workforce flows are estimated based on the present data Turnover Analysis Examines the attrition rate and its historical trends in detail The information for the analysis is gathered from exit interviews and labour turnover rates are calculated from the past data The turnover rates are estimated for each job category, department and division

Supply forecasting techniques Goal Programming The desirable employment pattern is estimated considering various potential constraints, such as total salary budget and limit of the new employees that can be recruited Skill Inventory Refers to the technique in which skills, knowledge, abilities, expertise and career aspirations of present pool of human resource is assessed The existing skill inventory should be updated every two years to incorporate the changes

Supply forecasting techniques Succession Planning Involves the preparation of an inventory report of executives representing which candidates are prepared to be promoted to the higher managerial level positions in the organization Replacement Chart Refers to the short-term replacement schedules that map the possible substitution of the employees within the hierarchy of the organization Can be used in predicting internal supply, especially for the managerial positions

HR programming This step deals with the reconciliation of demand and supply It is also termed as Human Resource Gap Analysis It provides the basis for preparing Human Resource plans by eliminating the gap between the demand and supply of human resource

If shortage of employees is expected Hire new full time employees Offer incentives for postponing retirement Re-hire retired employees on part-time basis Attempt to reduce turnover Overtime for present staff Sub-contract work to another company Hire temporary employees

If a surplus of employees is expected Incentives for early retirement Transfer/ redeployment by placing employees in another branch or department Retrenchment /Lay-off Do not replace employees who leave the organization with new ones’ Outplacement Use slack time for employee training

HRP Implementation and Controlling and Evaluation HRP implementation involves the execution of HR plans The last step involves monitoring and controlling of HR plans to ensure their proper execution HR plans should be developed considering the budget, time limits, targets and established standards