1. 1

2. WELCOME TO MBA PROGRAMME 2

3. 3 DR. MD. SHAHADAT HOSSAIN

4. 4 LECTURE-TWO

5. 5 WELCOME LECTURE – ONE HUMAN RESOURCE PLANNING PROCESS

6. 6 CONTENTS HR PLANNING PROCESS 1.INTRODUCTION 2. TIME FRAME TABLE OF MAN POWER FORECAST 3. WORKLOAD ANALYSIS FACTORS 4.TIME SERIES ANALYSIS METHOD 5. ANALYSIS MANPOWER SUPPLY

7. 7 1. INTRODUCTION: Forecasting of manpower at the organizational level is necessary keep importance in demand and supply analysis which are available internally or externally.

8. 8 Determination of time is the most important task of human resource forecast which further related with the following factors:

9. 9 1.Demand and supply analysis 2.Internal availability 3.External availability 4.Employment practice

10. 10 Depending on the timeframe which again depends on 1. the basis of requirements, 2. nature of analysis of above factors keeps on changing.

11. 11 Thus, it is evident that depending on the timescale, human resource manpower forecast pattern also changes. However, these practices are done by the observation of annual operating result.

12. Forecasting Methods 12

13. 13 HUMAN RESOURCE FORECASTING HR Forecasting attempts to determine the supply and demand for various types of human resources, and to predict areas within the organization where there will be labor shortages or surpluses. There are three major steps to forecasting: 1.Forecasting the demand for labor 2.Determining labor supply 3.Determining labor surpluses and shortages

14. 14 1.FORECASTING HR REQUIREMENTS (DEMAND ANALYSIS) (Trying to predict future staffing needs) Managerial Estimates Sales Projections Simulations Vacancy Analysis (projected turnover) 2. FORECASTING HR AVAILABILITY (SUPPLY ANALYSIS) (Predicting worker flows and availabilities) Succession or Replacement Charts Skills Inventories (use of HRIS) Labor Market Analysis Personnel Ratios

15. 15 1. Forecasting the Demand for Labor MANAGERIAL ESTIMATES : Trend Analysis Constructing and applying statistical models that predict labor demand for the next year, given relatively objective statistics from the previous year. Leading Indicators Objective measures that accurately predict future labor demand.

16. 16 2.CORRELATIONS/PROJECTIONS SIZE OF HOSPITALNUMBER OF NURSES 200240 300260 400470500 600620 700660 800820 900860

17. 17 3.SIMULATION MODEL/REGRESSION FORECAST TARGET STORES STAFFING FORECAST MODEL Y = 8 +.0011(X1) +.00004(X2) +.02(X3) Y = Number of employees needed to staff the store X1 = Square feet of sales space X2 = Population of metropolitan area X3 = Projected annual disposable income in millions of dollars Y = 8 +.0011(50,000sq ft) +.00004(150,000popul) +.00000002($850 million) Y = 8 + 55 + 6 + 17 Y = 86 employees needed at this store

18. 18 4.VACANCY ANALYSIS Historic departures used to project turnover LEVEL# EMPLTURN %Expected VacanciesExpected to Remain TOP MGMT10020 % 20 80 MID MGMT20024 % 48152 LOW MGMT60022 %132468 SKILLED W60016% 96504 ASSY WKRS200012 %2401760 TOTALS35005362964 AVERAGE TURNOVER PERCENTAGE = 536 / 3500 =.1531

19. 19 2.DETERMINING LABOR SUPPLY Predicting Worker Flows and Availabilities Succession or Replacement Charts Who has been groomed/developed and is ready for promotion right NOW? Human Resource Information Systems (HRIS) An employee database that can be searched when vacancies occur. Transition Matrices (Markov Analysis) A chart that lists job categories held in one period and shows the proportion of employees in each of those job categories in a future period. It answers two questions: 1.“Where did people in each job category go?” 2.“Where did people now in each job category come from? Personnel / Yield Ratios How much work will it take to recruit one new accountant?

20. 20 1.SUCCESSION PLANNING REPLACEMENT CHART FOR EXECUTIVE POSITIONS POSITION REPLACEMENT CARDS FOR EACH INDIVIDUAL POSITION - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - POSITION WESTERN DIVISION SALES MANAGER DANIEL BEALERWestern Division Sales Mgr Outstanding Ready Now PRESENTPROMOTION POSSIBLE CANDIDATES CURRENT POSITIONPERFORMANCE POTENTIAL SHARON GREEN Western Oregon Sales ManagerOutstandingReady Now GEORGE WEIN. California Sales Manager Outstanding Needs Training HARRY SHOW Idaho/Utah Sales Manager Satisfactory Needs Training TRAVIS WOOD Seattle Area Sales ManagerSatisfactoryQuestionable - - - - - - - - - - - - - - - - - - - - - - - - -

21. 21 2.HUMAN RESOURCE INFORMATION SYSTEMS (HRIS) PERSONAL DATA Age, Gender, Dependents, Marital status, etc EDUCATION & SKILLS Degrees earned, Licenses, Certifications Languages spoken, Specialty skills Ability/knowledge to operate specific machines/equipment/software JOB HISTORY Job Titles held, Location in Company, Time in each position, etc. Performance appraisals, Promotions received, Training & Development MEMBERSHIPS & ACHIEVEMENTS Professional Associations, Recognition and Notable accomplishments PREFERENCES & INTERESTS Career goals, Types of positions sought Geographic preferences CAPACITY FOR GROWTH Potential for advancement, upward mobility and growth in the company

22. 22 3.Determining Labor Surplus or Shortage Based on the forecasts for labor demand and supply, the planner can compare the figures to determine whether there will be a shortage or surplus of labor for each job category. Determining expected shortages and surpluses allows the organization to plan how to address these challenges.

23. 23 4.PERSONNEL / YIELD RATIOS Past experience has developed these yield ratios for recruiting a Cost Accountant: FOR EVERY 12 APPLICATIONS RECEIVED, ONLY 1 LOOKS PROMISING ENOUGH TO INVITE FOR AN INTERVIEW OF EVERY 5 PERSONS INTERVIEWED, ONLY 1 IS ACTUALLY OFFERED A POSITION IN THE ORGANIZATION OF EVERY 3 JOB OFFERS MADE, ONLY 2 ACCEPT THE POSITION OF EVERY 10 NEW WORKERS WHO BEGIN THE TRAINING PROGRAM, ONLY 9 SUCCESSFULLY COMPLETE THE PROGRAM THUS:100 APPLICATIONS MUST BE RECEIVED, so that 8.33 JOB INTERVIEWS CAN BE HELD, so that 1.67 JOB OFFERS CAN BE MADE, and 1.11 PEOPLE MUST BE TRAINED, so that we get ONE NEW COST ACCOUNTANT!!!

24. 24 Time- Frame Requirement Basis Where Shown) Availability Where will get) Possible Action Plan to meet up the requirement Actions can be ensured) Less than one year Annual budget Existing manpower + contingent staff Recruiting contingent staffs, Overtime, Recruitment, Layoff. 1-2 years Business Plans Current Manpower Transfer, promotion, new recruit, training. Redundancy. 2-5 years Long term plans Projected Manpower (Including those trainees who will be included during period) Succession Plan, Recruitment, Training and development, Restructuring, Redundancy. More than 5 years Perspective plans Labour Market, Educational Institution Succession plan, Management development, restructuring of Job, Organizational development. 2.TENTATIVE TIME FRAME TABLE OF MANPOWER FORECAST

25. 25 To forecast the manpower requirements at different points of time workload analysis is important. 3. ANALYSIS OF WORKLOAD FACTORS

26. 26 Analysis of present and future workload depends on the possibility of quantifying the content of work in every area of an organization.

27. 27 Step -1:CLASSIFICATION OF WORK : Step-2.FORECASTING THE NUMBER OF JOBS : Step-3. CONVERTING THE PROJECTING JOBS IN A MAN HOURS : Step-4;Converting the man hour into manpower requirement

28. 28 1. Classification of work Job category Hours per job Related to meters 0.75 Related to installation 2.50 Related to maintenance 1.50 Related to emergency calls 1.50

29. 29 2. Forecast of jobs in a day for different years Job category Year 2002200320042005 Meters1513118 Installation8595110125 Maintenance27354145 Emergency10864

30. 30 3. Converting forecast into man hours required per day Job category Year 2002200320042005 Meters11.259.758.256 Installation212.5237.5275312.5 Maintenance40.552.561.567.5 Emergency118.86.64.4 Total man hours required per day 275.25308.55351.35390.4

31. 31 3.Converting man hours into manpower requirement per day This is done considering skill interchangeability of maintenance of staff for the identified job categories with 20% fatigue allowance and 20% leave reserve. Therefore, in a given day of 8 man hours per employee, net available time for attending customer complaints get reduced by 40%per employee, i.e. only 4.8%man hour per day,per employee is available to attend customer complaints. The manpower forecasting has to be done,considering 4.8 manpower's per employee per day No of maintenance staff required Year 2002200320042005 Employee 57 (275.25/4.8) 647384

32. 32 4. TIME SERIES ANALYSIS METHOD Employment data over a time period are used as a basis of manpower forecasting. However, mere projecting the past into future without considering the percentage of changes will increase the forecasting errors resulting under forecasting or over forecasting of the manpower.

33. 33 For observing the employment records the following elements should be considered. 1.Trends: Fluctuation in the level of employment over a time period. 2. Cyclical effects: Change of employment relation to some particular event like economic or policy liberalization of a country.

34. 34 3. Seasonality: Seasonal fluctuation occurs more than a one time in a year like in the end events or in any other festive events. 4. Step: This is a sudden change in the employment level due to the economic environment. This may be for increasing market share or procuring new machines.

35. 35 5. Random Fluctuation: Which occur randomly in a natural way without following any obvious pattern. problem 1.In the agricultural sector this problem are seen often. 2. This may be due to political or leadership problem.

36. 36 5. Moving Average Method: This method is useful to guard against the random fluctuation. Here period selection is more important. If time period are chosen too few the result may show wide variability in the result. Therefore considering more periods we will get better result.

37. 37 For example a company needs the manpower in the following way YearManpower needed 2000400 2001450 2002500 2003650 2004700 2005600

38. 38 Than, it is necessary to forecast the manpower needs in 2006. We will solve the problem in the following way: (400+450+500+650+700+60 0)/6 = 550 manpower.

39. 39 If we make average for 4 years (from 2002) it will shown as follows; (500+650+700+600)/ 4= 612. Thus we need more time periods for accurate forecasting.

40. 40 For achieving better result we can follow weight assigned to different time periods at the discretion of the analyst. For 400, 450 and 500 we consider weight 1, for 600 weight 2 for 650 weight 3, and for 700 weight 4.

41. 41 Thus the average would be 1(400)+1(450)+1(500)+2(600)+ 3(650)+4 (700)+/ ∑ w i.e. 12 = 400+450+500+1200+1950+2800= 7300/12= 608 Thus there is a substantial difference in forecasting the demand in this system from those in before.

42. 42 6. Exponential smoothing: In moving the average method a wide range of previous data is necessary to analyze. We can avoid such method by adapting Exponential smoothing method. This method smoothen random errors by giving exponentially decreasing weights in historical data.

43. 43 This weight factor is indicated by alpha (ά) which is a smoothing constant, a non linear decimal value which lies between 0 and 1.

44. 44 The formula for exponential value is Fm= Ft+ ά(A t- 1 – F t- 1 ) Where Fm= Forecasted Manpower ά= Smoothing Constant F t-1 = Forecasted demand for the previous period A t-1 = Actual manpower required for the previous period

45. 45 Assume that the forecasted requirement of a company for previous was 500 and the actual requirement was 480.

46. 46 Considering alpha value a 0.4 which company feels will give good result. Compute the manpower requirement for the current period.

47. 47 Here ά= 0.4 Ft-1= 500 At-1= 480 Fm= ? Thus Fm= 500+0.4(-20) = 500-8 = 492.

48. 48 Assignment : 1.Assume that the forecasted requirement of a company for previous was 800 and the actual requirement was 750. Consider alpha value a 0.5 which company feels will give good result. Compute the manpower requirement for the current period.

49. 49 2. Assume that the forecasted requirement of a company for previous was 1200 and the actual requirement was 1350. Consider alpha value a 0.6 which company feels will give good result. Compute the manpower requirement for the current period.

50. 50 Leader identifies judgment issues and develops questionnaire. Prospective participants are identified and asked to cooperate. Leaders send questionnaire to willing participants, who record their judgments and recommendations and return the questionnaire. Leaders compiles summaries and reproduces participants’ responses. Leader sends the compiled list of judgment to all participants. Participants comment on each other’s ideas and propose a final judgment. Leader looks for consensus Leader accepts consensus judgment as group’s choice. 1.THE DELPHI TECHNIQUE Qualitative models for better managerial judgment 1.THE DELPHI TECHNIQUE

51. 51 It depends on : 1.Experts should be chosen that they have requisite knowledge and skills to give the best answer. 2.Qustions should be relevant to the objective. 3. criteria for evaluating responses should be consistent,unbiased and befitting with objective

52. 2.The Nominal Group Technique 52 A small group of 4-5 people gathers around a table. Leader identifies judgment issue and gives participants procedural instructions. Participants write down all ideas that occur to them, keeping their lists private at this point. Creativity is encouraged during this phase. Leader asks each participant to present ideas and writes them on a blackboard or flipchart, continuing until all ideas have been recorded. Participants discuss each other’s ideas, clarifying, expanding, and evaluating them as a group. Participants rank ideas privately in their own personal order and preference. The idea that ranks highest among the participants is adopted as the group’s judgment.

53. 53 The coordinator assumes the role of a facilitator,allowing the experts to sit together to discuss their ideas and records of such discussions are made on flip chart.after that round table discussions on ideas,experts are asked to rank their ideas according to their perceived priority. The group consensus is then derived mathematically in terms of individual ranking. the coordinator ultimately decides the best course of action

54. 54 5. ANALYSIS MANPOWER SUPPLY Analysis of manpower supply at the enterprise level is also done- using some quantitative techniques for accurate Human Resource Requirement. Some of the important techniques are discussed below:

55. 55 1. Wastage analysis Manpower wastage is an element of labour turnover. Therefore, it is not labour turnover; per se. Wastage is severance from the organisation, which includes voluntary retirement, normal retirement, resignations, and deaths dismissals.

56. 56 Marginal recruitment decisions, without wastage analysis may lead to inaccuracies in HRP- Tavistock Institute of Human Relations, U K suggested wastage analysis using the following curve.

57. 57 Induction Crisis Differential Transit Settled Connection Months/Years Time Weeks

58. 58 The above curve identifies three different phases. 1. During introduction phase, marginal employees leave. 2. During differential transit period, an employee learns about the organisation and identifies his role in it.

59. 59 3.While during the period of settled connection, an employee settles down and decides to stay long. Wastage decreases with the increase of length of service. Wastage also decreases with the increased skill exercises and age of employees. Characteristically wastage of manpower is more in female than male employees.

60. 60 It varies with the level of employment and also exhibits seasonal variations. Working conditions and size of the firm are also important variables of manpower wastage.

61. 61 2. Labour turnover index This index indicates the number of levers as percentage to average number of employees. Average number of employees employed in a given time period is decided by adding the employees at the beginning and end and then dividing the same by two.

62. 62 Example At the beginning of a year, a firm has 250 employees, while at the end it has 230. Assume no recruitment has been made in between. Compute the labour turn over index.

63. 63 Solution Number of employees leaving=250-230-20 Average number of employees employed = 250-230 =240 2 Labour Turnover = Number of employees leaving  100 Average number of employees employed 20  100=8.33% 240 =

64. 64 Suppose 5 people have been recruited in between during the year, then labour turnover would be: Number leaving= (250 + 5 - 230) = 25 Average number employees employed Labour turnover = 25  100=10% 243

65. 65 3. Stability Index Number with more than year service now  100Total Employed one year ago This index indicates stable workforce percentage for a given period and can be computed as under: Number with more than year service now  100 Total Employed one year ago

66. 66 4. Cohort analysis: Cohort means homogeneous groups. Cohort analysis takes into account the length of service, which is an important variable of wastage analysis. This, therefore, eliminates the defect of labour turnover index. Cohort analysis is more accurate for a small homogenous group.

67. 67 However, changing social and economic conditions can invalidate this analysis. In the table below, we have illustrated a cohort analysis, assuming number of people engaged in the beginning of a year as 500 and number of leavers for different length of service as under:

68. 68 1 st Year50 2 nd Year45 3 rd Year40 4 th Year35 5 th Year30

69. 69 Length of Service ( in years) No. Leaving Cumul ative Leaver s Remain ing Survival as percentage of leaving 1.2.3.4.5. 000500100.00 150 45090.00 2459540581.00 34013536573.00 43517033066.00 53020030060.00

70. 70 The percentage remaining in column 5 can be presented on a graph paper, which is known as the survival curve. This 'was obtained using the following formula Number remaining at a given time X 100 Number engaged at the start. Number remaining at a given time  100 Number engaged at the start

71. 71 5. Census Analysis Census analysis can eliminate this problem, taking into account a cross- section of the organisation, i.e., all the age specific wastage rates at a given time and applying a smoothing algorithm to the resulting data to identify a general pattern.

72. 72 Census analysis requires three sets of data : 1. The number of employees at the beginning of the census 2. The number of employees at the end of the census, and 3. The number of leavers during the census period.

73. 73 ?

74. 74