HUMAN RESOURCE

PLANNING
.
“HRP” is a process by which an organization
move from its current manpower position
to its desired manpower position. It strives
to have the right number and right kind of
people at the right place at the right time,
doing things which result in both the
organization and the individual receiving
maximum long run benefit
 Importance of HRP
• Future Personnel needs
• Coping with change
• Creating highly talented personnel
• Protection of weaker sections
• International strategies
• Foundations for personnel functions
• Increasing investments in human resources
• Resistance to change and move
 Other Benefits
• Top management has a better view of the
‘HR’ dimensions of business decisions.
• Personnel costs could be downsized.
• Availing more time for talent search
• Opportunities exist to include women and
minority groups in future growth plans.
• Better planning of assignments to develop
mangers can be done.
 Objectives of ‘HRP’
• Recruit and retain the human resources of
required quantity and quality.
• To foresee the employee turnover and
make the arrangements for minimizing
turnover and filling up consequent
vacancies.
• To meet the programs of expansion,
diversification etc.
• To foresee the impact of technology on
work, existing employees and future
human resource requirements.
• To improve the standards, skill,
knowledge,ability,discipline etc.
• To assess the surplus or shortage of
human resources and take measures
accordingly.
• To maintain congenial industrial relations by
maintaining structure and optimum level of
human resources.
• To minimize imbalances caused due to non
availability of human resources of the right
kind ,right number, in right time and right place.
• To make the best use of its human resources.
• To estimate the cost of human resources.
 Types Of ‘HRP’
Corporate philosophy, policy, vision and
mission
The Corporate Level Plan
Integrated Corporate Strategic planning

Financial Human Marketing

Production Resource
Planning Planning
Planning Planning
• HR planning like other plans should be
an unified, comprehensive and integrated
part of the total corporation.
• HR manager provides varieties of inputs
to the corporate strategists like :-
1. Key ‘HR’ areas
2. ‘HR’ environmental constraints
3. Internal ‘HR’ capabilities
4. ‘HR’ capability constraints
• The corporate strategists in return
communicate their needs and constraints
to the human resource manager.

• The corporate strategic plan incorporates

both ‘HR ‘and other functional plans.
 Types of HR Plans
Planning Business Link HRP
Level Planning Process
Process
Strategic Corporate Issues Analysis of
Planning(5 philosophy, Analysis issues
or more value raised by
years) system and external
policies, factors,
goals and employmen
objectives, t demand
key projections,
success manpower
 Types of HR Plan

Recruitment Plan
Redeployment Plan
Redundancy Plan
Training Plan
Productivity Plan
Retention Plan
 Short term Plan :-To find a temporary
match between the existing individuals
and existing jobs.
 Long-term plan :- To find a proper match
between the future jobs and their future
incumbents.
 Corporate Planning & HRP
Labor Cost Cost of Production Total cost

Marketability of the product

Overall Profitability of the Organization

Achievement of Organization Goal

 DIMENSIONS OF HRP
• ‘Human resources’ act as participants as well as
beneficiaries of economic development.
• ‘HR’ stand on the demand as well as the supply
side of production of goods and services in the
economy.
• On the supply side ‘HR’ and ‘capital’ form the
essential ingredients of production system.
Optimal economic growth is not possible through
increases in one of them.
• As an living entity ‘HR’ could really accelerate
growth process besides capital and material
resources. Disproportionate growth in ‘HR’
against capital and other material resources
could hinder development.
• Rate of growth in ‘HR’ is determined by two
dimensions like:-
1. Quantity
2. Quality
 Quantity aspect of ‘HR’ is determined by
variables like:-

• Population policy
• Population structure
• Migration and
• Labor force participation.
Quality of human resources is influenced by
variables like:-

• Education and training

• Health and Nutrition
• Equality of opportunity
 Quantitative Dimensions of ‘HR’
Planning
• Population may be categorized into ‘de-
facto’ and ‘de-jure’.
• De-facto (present in area) involves
complete count of all persons both
residents and non-residents.
• De-jure involves complete count of all
normal residents irrespective of where
they located at the time of census.
• None of the concepts are fully authentic
because of difficulties in counting
,administrative difficulties, and the
greater number.
• Growth of ‘HR’ depends on the growth of
population which ultimately determined
by three factors like:- population policies,
population structure and migration.
 Population Policy
• Population policies include :influencing
policies and reactive policies and are
complimentary in nature.
Population Structure
• Composition of population reveals two
things :factors causing population growth
in the past reveals the potential for future
growth in population.
• There are two aspects of population
composition : sex and age.
• Sex ratio=
Number of male in the population X100
Number of female in the population
• Sex ratio generally vary between 95 to
102.
• Ratios outside the range 90-105 to be
viewed with suspicion.
• Age composition projects distribution of
population by age groups (usually ‘5’
years) and it is the result of past trends in
demography and could be the basis for
future.
• Age composition also helps in calculation
the labor supply (15 to 65 years is
economically active group).
 Migration
• It causes changes in natural growth in
population and are of two types :international
and internal.
• Rate of net migration =
Total immigrants -Total emigrants X 100
Mid year population
• Rate of population increase at point of time =the
rate of natural increase + the rate of net
migration.
• Positive net migration occurs where
population grows faster than indicated by
natural growth.
• Negative net migration occurs where
population growth declines than indicated
by the natural growth.
• Internal migration =out migration and in-
migration movement between regions.
• Internal migration data helps in knowing:-
1. Population changes at provincial level
2. Population changes at administrative
level
3. Inter-regional and inter-sector rates of
growth and wage differentials.
 Labor force Participation
• How many involved in economically productive work by
their mental and physical presence.
• So, the worker and non-worker category of either sex
together formed the labor force in the productive age
group (15-65 years) like:-
1. Employers and employees
2. Self-employed persons
3. Those employed in family enterprises without pay
4. Unemployed but available for work.
• Labor force participation rate =labor force X 100
total population
 Qualitative Dimensions of HR
Planning
• It facilitates assessment of productive
power in human resources in three
areas.
1. Education and training
2. Health and nutrition
3. Equality of opportunity
 Education and training
• It is classified into formal and informal. It serves both
individual and social ends. As a means of HRP it
identified priorities like :
 Choice between levels of education
 Choice between quality and quantity
 Choice between science, technology , humanities and
liberal arts.
 Choice between market forces and incentives to attract
people into some occupation.
 Choice between the aspiration of individuals and needs
of the society.
 Health and nutrition
• It is one of the important indicators that build and
maintain a productive HR which improves the
average expectation of life and quality of life.
There are three determinants of health status :-
 Purchasing power of people
 Public sanitation, climate and availability of
medical facilities.
 People’s knowledge and understanding of health
hygiene and nutrition.
 Equality of Opportunity
Discriminations arise irrespective of
investments in HRD. Three forms of
discriminations generally found :-
• Social discrimination
• Economic discrimination
• Regional discrimination
 The above discriminations leads to inequality of
opportunity like:-
• It causes differential access to education &
training, health & nutrition.
• It brought differences in quality and productivity
of human resources.
• Opportunity cost of discrimination are very high.

Appropriate & deliberate socio-economic policy

interventions can decrease the degree of
inequality and hence improves productivity.
 Labor Market Behavior

Quantitative & qualitative dimensions of HR

only deals with the supply part, where as
the demand or utilization part of HR
depends on the flexibility of labor markets,
which in turn determines the level of
employment/unemployment.
• In an extreme rigid form, where employers
are dominating may result in involuntary
unemployment & reduced demand for
human resources.

• If employees are dominating, it may result

in disguised unemployment that increases
demand for HR.
The structure of labor market is determined
by:-
• Internal & external economic environment.
• Technological progress & technology
absorption.
• Degree of labor mobility (sectorial, spatial,
& occupations).
• Wage structure with reference to
productivity differentials.
 In developing countries labor markets are segmented due
to labor market imperfections. Important forms of
segmentations are :-

 Agricultural and non-agricultural

 Formal and informal
 Male and female
 Skilled and unskilled

Labor market analysis is the principal instrument of ‘HRP’,

but is not becoming effective due to lack of information's
on labor markets.
 APPROACHES TO ‘HRP’
‘HRP’ as a process of HRD involves investment
decisions on three aspects which are
complimentary to each other. These are :-

 Health and nutrition

 Social and economic equity
 Education and training

HRP is considered as synonymous with

educational planning because of it’s dominancy
over the other two.
 Three Approaches to Educational
Planning

Social demand approach

Rate of return approach

Manpower requirement approach

 Social Demand Approach

It deals with assessment of society’s

demand for education and is based upon
the projection of past trends in
demographic aspects of population and
the enrolment at different level of
education.
Projection of social demand for education depends
on the following aspects :-
 Income of educated people
 Tastes and preferences of house holds for
education
 Demographic characteristics such as fertility and
mortality
 Direct costs of education
 Student’s grants
 Existing standards of admissions to various
levels of education.
 Besides the above following perennial problems
are also associated with the data base :-

 Demographic aspects at district, block, and

village level.
 Data on wastage and stagnation in education,
and intensity of utilization of existing educational
facilities.

This approach suffers from difficulties associated

with any futurological exercise.
 Rate of Return Approach
• ‘Social demand approach’ has been criticized
because aggregate of individuals demand for
education should be based on aggregate of
individuals assessment of benefit of education
(the social benefit).
• But this approach looks upon education as a
contributor to productivity and must facilitate
investment decisions in education irrespective of
whether state should invest more and expand
educational facilities or not.
 Role of return on investment in education
will expand its educational facilities until
schooling equalizes :-
Yield of investment in different type of
education
Yield of investment in education compared
to other sectors of the economy.
 Three parameters are involved in estimating the
rate of return like :-
1. Cost of education
2. Return to education
3. Discount rate
1- Cost of education includes :-
 Direct cost + indirect cost
 Direct cost=private expenditure on education +
public expenditure on education.
 Public expenditure =recurring + non-recurring
expenditure
Indirect cost may be viewed from two angles
Private view of indirect cost - All
possible avenues of employment and
possible earnings and an assessment of
money value of fore gone leisure.
Social view of indirect cost – involves
estimation of opportunity cost of public
expenditure on education.
 2-Return to Education includes :-
Direct monetary benefits
Indirect monetary benefits
Non-monetary benefits
Direct monetary benefits –is the extra life –
time earnings received. Total life-time
monetary gain of an individual is
measured by his disposable income.
Indirect monetary benefits include :-
Earnings from subsequent jobs may not
always depends on initial education.
Human capital in an educated worker
often enhance the productivity of co-
workers.
Benefits received by the recipient's family
Non-monetary benefits include :-
Many alluring psychological returns other
than monetary returns of white collar jobs
put them under special category.
‘Externalities’ also provides non-monetary
benefits.
Education causes quality improvement in
labor.
 3- Discount rate
 To compute internal rate of return, there is need
to discount future returns from the total life time
earnings to arrive at their present value.
 For computing private returns the discount rate
could be- either the rate of interest at which an
individual borrows for financing education or the
rate of return from the best possible alternatives
to investment in education.
 For computing social returns choosing a
discount rate is more complicated.
 Limitations of rate of return approach
 Difficult to make decision on how much to invest
at each level purely based on rate of return
analysis without any reference to backward and
forward linkages of the level of education.
 This analysis does not consider supply and
demand of skills in the labor market.
 It is doubtful that this analysis could be an
effective tool in making investment decisions
with in education sector.
 Limitations
Lack of substitution among the various
categories of educated manpower.
It projects a definite link between an
industrial task and an educational level.
Assumption about the distant unknown
future.
Man Power Requirement Approach
• This approach deals with forecasting future
requirement of educated manpower to meet the
future target of gross national Product (GNP) or
specific target of industrial production.
Steps involved in manpower requirement approach
 Anticipate the directions and magnitude of
development in each sectors of the economy.
 Designing norms of employing manpower in
each sector considering the technological
options - present as well as future.
 Translating the physical targets of development
in each sector into manpower requirements
having sector specific manpower norms.
 Estimating the educational equivalents of the
manpower requirements.
 Analyze the implication of estimates of educated
manpower requirements for educational
development based on the assumptions
regarding : enrolment rates, transition
probabilities, wastage and stagnation rates at
each level of education.