5 Human Resource Planning

Rajeev Jain

1. Learning Outcome

After completing this module the students will be able to:

• Understand the meaning and definition of human resource planning.

• Having the knowledge of the process of human resource planning.

• Factors affecting human resource planning.

• What is the importance of human resource planning?

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2. Definition

Human resource planning is the business process for ensuring that an organisation has suitable access to talent to ensure future business success. Human Resource planning is the process by which a management determines how an organisation should move from its current manpower position to its desired manpower position. Through planning a management strives to have the right number and the right kinds of people at the right places, at the right time and to do things which will result in receiving the long range benefit for both the organisation and the individual.

All other activities of HR like hiring, training, remuneration and labour relations are derived from Human resource planning (HRP). Human resource planning is also called manpower planning.

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In the words of E.W. Vetter, “A process by which an organisation should move from its current manpower position to the desired manpower position. Through planning the management strives to have the right number, right kind of people at right place and at right time, doing things which results in both organisation and individual receiving maximum long-run benefits.”

According to Robbins and Coulter, “HR Planning is the process by which manager ensures that they have the right number and right kind of capable people in the right places and at right times.”

In the words of K Aswathappa, “HR Planning is the process of forecasting a firm’s future demand for, and supply of, the right type of people in the right number.”

3. Human Resource Planning Process

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Environment scanning

This helps HR planners identify and anticipate sources of problems, threats and opportunities that should drive the organization’s strategic planning. Both external (competitors, labour markets, legal environment) and internal (strategy, technology, culture) environmental scanning is necessary for effective HR planning.

For example: Amazon closed a large and costly customer service centre in Seattle despite good growth projections as their study and research said that they could meet their growth projections with a far less costly customer centre in India.

Labour demand forecast

It projects how business needs will affect HR needs using qualitative methods (e.g. Delphi, nominal) and quantitative methods (trend analysis, simple and multiple regression analysis). The labour shortages are preventing entrepreneurs from expanding their businesses and such shortages makes the planning more difficult.

Qualitative Methods

In these methods, the Delphi technique is very popular. The experts go through various rounds of forecast estimates but no face to face meeting of the experts takes place as an intermediary is involved. Experts take turns at presenting a forecast statement and assumptions. The intermediary passes on the forecasts and assumptions to others. Revisions are then made independently and anonymously by the experts. The intermediary then pools and summarizes the judgments and gives them to the experts. This process continues till a final conclusion on the forecast is reached.

Another technique of the same type is the nominal group technique in which experts discuss and share their ideas and list them in writing. The experts then share their ideas with the group in turn. As the ideas are presented, a master list of the ideas is compiled so that everyone can refer back to them. The ideas are discussed and ranked by member votes. In this method, no intermediary is involved so a face to face discussion is held amongst the experts. Both these techniques are of subjective type and time consuming.

Quantitative Methods

These techniques are based on the assumptions that the future is an extrapolation from the past. Trend analysis is one the techniques which incorporates certain business factors (units produced, revenues) and a productivity ratio (employees per unit produced). Following six steps are important to trend analysis.

• Find the appropriate business factor that relates to the size of the workforce.

• Plot the historical record of that factor in relation to the size of the workforce.

• Compute the productivity ratio (average output per worker per year).

• Determine the trend.

• Make necessary adjustments in the trend past and future.

• Project to the target year.

The use of appropriate business factor is critical to the success of trend analysis.

Labour supply forecast

Whereas the labour demand forecast projects HR needs, the labour supply forecast projects resource availability. Through this forecast one can come to know the firms current and projected competencies. Supply forecasts are typically broken down into two categories: external supply and internal supply.

Internal supply

Internal labour supply consists of those individuals and jobs currently available within the firm. Information on personnel is maintained in Human Resource Information System (HRIS). Data from this system are used to make projections into the future based on the current trends.

External supply

External supply consists of those individuals in the labour force who are potential recruits of the firm. The whole country or even the world may be the relevant labour market for highly skilled jobs whereas for unskilled jobs the labour market is the local community.

Gap analysis

Gap analysis is used to merge the forecasts of labour demand and supply. This process identifies the potential shortages or surplus of skills, employees and competencies. In addition to this, the HR planners can analyse the environmental forecasts with supply and demand forecasts for evaluating the firm’s preparation in pursuing the different business scenarios in the context of business objectives.

Action Programming

It is the final step of HR Planning. It takes the adopted solution and lays down the sequence of events that need to be executed to realize the plan. The purpose of this step is to make certain that the decisions taken in the previous four steps are brought into action.

Control and Evaluation

Control and evaluation monitor the effectiveness of human resource plans over times. Deviations from the plans are identified and actions are taken. The extent to which human resource objectives have been attained is measured by the feedback from various outcomes.

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4. Factors affecting Human Resource Planning

Type and strategy of organization

It determines the production process involved and the number and type of staff needed. In addition, the strategic plan of the organisation defines its HR needs. Manufacturing organizations are more complex than the service organizations.

For example, a strategy of organic growth means that additional employees must be hired. Aquisitions and mergers mean that the organisation will plan for the layoff since mergers create duplicate positions that can be handled more efficiently with fewer employees.

Organisational growth cycle and planning

Need for planning is felt when an organisation enters the growth stage. Mature organisation experiences less flexibility and variability. At this stage retirement and retrenchment are focused upon and growth slows down. Finally in the declining stage, planning is also done for layoffs and retrenchment.

Outsourcing

Several organizations outsource part of their work to outside parties in case sufficient labour is not available. Out sourcing of noncritical activities through subcontracting determines HR Planning.

Environmental uncertainties

HR managers work in a very unstable and unpredictable environment. Flexi-timing, job sharing, layoffs, retirement are some of the programs carried out by organizations for facing the uncertainties.

Nature of jobs being filled

HR planners must consider the nature of jobs being filled. It is easy to recruit shop floor workers but for hiring at higher positions a great deal of efforts and sourcing is required.

Type and quality of forecasting information

The information used to forecast personnel needs originates from many sources. A population census is the primary source of information for any manpower planning. It gives the total count of the country’s population along with valuable statistics on the personal and economic characteristics of the present, thus enabling future projections.

Other sources are job analysis, labour force sample surveys, establishment surveys, household surveys, industrial and agricultural surveys, labour market surveys, national economic development and educational plans.

Time horizons

Companies operating in unstable environment (For example, in computers and software industry), planning must be for a shorter period. Whereas for organizations where environment is stable (For example, universities and colleges), planning is done for a longer duration.

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5. Significance of Human Resource Planning

Human resource planning aims at fulfilling the objectives of manpower requirement. It helps to mobilize the recruited resources for the productive activities. The human resource planning is an important process aiming to link business strategy and its operation.

Future Manpower Needs

Human resource planning ensures that people are available to provide the continued smooth operation of an organization. It means, human resource planning is regarded as a tool to assure the future availability of manpower to carry on the organizational activities. It determines the future needs of manpower in terms of number and kind.

Coping With Change

Human resource planning is important to cope with the change associated with the external environmental factors. It helps assess the current human resources through HR inventory and adapts it to changing technological, political, socio-cultural, and economic forces.

Recruitment of Talented Personnel

Another purpose of HR planning is to hire and select the most capable personnel to fill job vacancies. It determines human resource needs, assesses the available HR inventory level and finally recruits the personnel needed to perform the job.

Development of Human Resources

Human resource planning identifies the skill requirements for various levels of jobs. Then it organizes various training and development campaigns to impart the required skill and ability in employees to perform the task efficiently and effectively.

Proper Utilization of Human Resources

Human resource planning measures that the organization acquires and utilizes the manpower effectively to achieve objectives. Human resource planning helps in assessing and recruiting skilled human resource. It focuses on the optimum utilization of human resource to minimize the overall cost of production.

Uncertainty Reduction

This is associated with reducing the impact of uncertainty which are brought by unforeseen changes in processes and procedures of human resource management in the organization.

Other potential benefits

• Upper management has a better view of the HR dimensions of business decisions.

• Personal costs may be less because the management can anticipate imbalances before they become unmanageable and expensive.

• More time is provided to locate talent.

• Major and successful demands on labour markets can be made.

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6. Requisites for successful Human Resource Planning

• HR Planning must be recognized as an integral part of corporate planning. The planner must be aware of the corporate objectives.

• The support of top management is very essential

• HR Planning responsibilities should be centralized so that coordination is there between different management levels.

• All the records of HR department must be complete, updated and readily available.

• The time horizon of the plan must be long enough to allow for any solution.

• Data collection, analysis, techniques of planning and the plans themselves need to be constantly revised and improved in the light of experience.

7. Summary

Human resource planning is the process of forecasting a firm’s future demand for, and supply of the right type of people in the right number. Human resource planning is also called manpower planning.

The process of HR Planning comprises of the following steps: Environmental scanning, labour demand forecast, labour supply forecast, gap analysis, action programming, and control and evaluation.

The factors which affect HR Planning are type and strategy of organisation, organisation growth cycles and planning, environmental uncertainties, time horizons, type and quality of information, nature of jobs being filled and outsourcing.

you can view video on Human Resource Planning

Books and References

Aswathappa, K. Human Resource Management. Tata McGraw-Hill
David A. DeCenzo and Stephen P. Robbins. Fundamentals of Human

Resource management
http://www.slideshare.net/PranavKumarOjha/17819725-

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