Human Resource Planning 123

2
HUMAN RESOURCE
PLANNING

A.

HUMAN RESOURCE PLANNING :

CONCEPT CHARACTERISTICS &
IMPORTANCE

Human Resource Planning (HRP) is one of the most important

tasks in successful human resource management program. It is also
the complex task of identifying human resource needs and the
actions to be taken to satisfy these needs.
HRP is the process by which an organization ensures that it
has the right number and kind of people, at the right place, at
the right time, capable of effectively and efficiently completing
the tasks that will help organization achieve its overall
objectives. Hence, HRP translates the organizations objectives and
plans into the number of workers needed to meet those objectives.

124 Foundations of HRM

French has defined human resource management "as the

process of assessing the organization's human resources needs in the
light of organizational goals and making plans to ensure that a
competent, stable workforce is employed". 1 According to Stone,
"Human resource planning is the process by which an organization
attempts to ensure that it has the right number of qualified people in
the right jobs at the right time".2 As defined by Decenzo and
Robbins, Human resource planning is the process of determining an
organizations human resource needs.3 Briefly HRP is the process of
forecasting, developing, and controlling human resources in an
organization.
From the above definitions of HRP, following activities of
HRP can be identified:
(1) Preparation of personnel inventory
(2) Forecasting future personnel requirements
(3) Anticipating shortages or surpluses of human resources
(4) Laying down HR Policies
(5) Planning HR programs for acquisition, development,
motivation, and maintenance of human resources.
To be successful, an organization needs human resources.
They are the most important assets an organization has and their
effective management is key to its success. Therefore, every
organization needs HRP to meet its future human resource
requirements. Specifically, it (HRP) is a systematic approach to
ensure that the right people will be in right place at the right time so
that organization can achieve its overall objectives. It provides
information about the existing strength and weaknesses of the people
in the organization as well as the kinds of skills to be developed. It
involves estimating the size and composition of the future workforce.
It does this by comparing the present supply of people with the
organization's projected demand for human resources. It would also
provide an indication of the lead-time that is available to evolve new
strategies in selecting and training the required additional manpower
or reducing the strength of work force. Thus, HRP is used to
achieve:
- more effective and efficient use of human resources,

Human Resource Planning 125

- more satisfied and better developed employees,

- more effective equal opportunity planning.4

Characteristics of HRP
The characteristics of human resource planning (HRP) are as
follows:
(1) Assessing Current Human Resources: Human resource
planning assesses the current status of the organization's resources.
Basically, this is an internal analysis that includes an inventory of the
employees or workers and skills already available within the
organization.
(2) Human Resource Needs: Human resource planning may
be regarded as the quantitative and qualitative estimation of human
resources required in an organization. It estimates right number of
employees needed with right skills and competencies. Hence, it is
future oriented.
(3) Matching Demand and Supply: It matches the forecasts
of future human resources demand and supply. The result pinpoints
shortages or overstaffing both in number and in kind. Action plans
are prepared to match HR demand and supply.
(4) Acquisition Function: HRP is a continuous process that
tries to keep the organization supplied with the right people when
they are needed. It is concerned with the acquisition function of
human resource management.
(5) Time Horizon: HRP can be both short or long term
planning. Thus, it has time horizon.
(6) Goal Directed: HRP is a part of corporate planning. It is
directed towards achieving HR goals as well as overall
organizational goals.

Objectives of Human Resource Planning

Human resource planning may be regarded as the quantitative
and qualitative estimation of human resources required in an
organization. The important objectives of HRP are:

126 Foundations of HRM

(1)

To estimate the number of employees required and their

skills, and the time frame over which vacancies will
occur;

(2)

To recruit, develop, and retain the human resource of

required quantity and quality;

(3)

To meet the needs of expansion and diversification

programs;

(4)

To foresee the employee turnover

arrangements for minimizing turnover;

(5)

To foresee the impact of technology on job, existing

employees and future human resource requirements;

(6)

To appraise the present situation of human resources in

the organization and determine the surplus or shortages
of human resources;

(7)

To maintain the optimum level and structure of human

resources;

(8)

To make the best use of its human resources;

(9)

To estimate the cost of human resources; and

and

make

(10) To provide facilities of personal growth and career

prospects which will make them fully satisfied and
motivated.

Importance of HRP
The importance of systematic Human resource planning has
been recognized only in recent years. To be successful, an
organization needs human resources. They are the most important
assets an organization has and their effective management is the key
to its success. Therefore, every organization needs HRP to meet its
future human resource requirements. It provides information about
the existing strength and weaknesses of the people in the
organization as well as the kinds of skills to be developed. Its
importance will be clear from the following point:

(1) Future Personnel Needs

Planning is vital for determining future personnel needs.
Surplus or shortage of personnel is the result of the absence or

Human Resource Planning 127

defective planning. The problem of excess staff in public sector

enterprises has become so heavy that many units are resorting to
voluntary retirement schemes to remove the excess staff. Such
surplus (even shortage) would not have been there if there were
proper HRP. HRP maintains balance between demand and supply of
human resources in the dynamic environment. It fulfills the
organization need for right type of people in right numbers at right
time.

(2) Coping with Change

HRP enables an organization to cope with changes in
competitive forces, markets, technology, products, and government
regulations. Such changes often generate changes in job content,
skill demands, number and type of personnel. The pace and direction
in which an organization is growing also dictates the need for a HRP.
Shortage of people may be induced in some areas while surplus in
other areas may occur. 5

(3) Foundation For Personnel Functions

HRP provides essential information for designing and
implementing human resource functions such as recruitment,
selection, training and development, and personnel movement
(transfer, promotions, layoffs, etc.). It provides better means for
managing human resources.
(4) Acquisition of Human Resources
Human resource planning determines future human resource
needs. It facilitates recruitment and selection of employees to fill job
vacancies. It also facilitates succession planning, career planning,
and employee development.

(5) High Talent Personnel

Organizations employ high talented managerial and
professional personnel. There is often a scarcity of such personnel.
The lead-time required to hire and develop such personnel is long.
Hence, planning is necessary to prevent shortages. The problem may
arise in replacing the retiring chief executive of the organization.
HRP helps the organization in succession planning for high talent
personnel. It provides enough lead time for internal succession of
employees to higher positions through promotions.

128 Foundations of HRM

(6) Utilization of Human Resources

Human resource planning ensures that the organization
acquires and retains the quality and quantity of human resources it
requires.
Existing human resources can be properly placed and
deployed for their effective utilization.

(7) Human Resource Development

Human resource planning anticipates skill requirements for
various levels of human resources. HRP provides adequate lead time
for training and development programs. This often leads to greater
employee satisfaction and its consequences are lower absenteeism,
lower turnover, fewer accidents and higher quality of work. Thus
they are likely to feel their talents are important to the employer, and
they have a better chance to utilize those talents.

(8) Investment in Human Resources

The cost of acquiring, developing, and retaining efficient
personnel is increasing year by year.
Organizations make
investments in their personnel either through training and
development. To be competitive, it must plan for and develop
appropriate human resources. The high investment in developing
human resources has forced many organizations to relook at their
HRP. The investment can be controlled to achieve efficiency
through planning.
Human resource planning, therefore, assumes a crucial role in
the future success or failure of an organization. To dramatize the
value of the human resource, consider what would happen to the
organization, if all the employees quit at once ? The answer : the
organization's survival would immediately be in jeopardy.

B.

CONCEPT OF HUMAN RESOURCE

STRATEGY

If a firm's competitiveness depends on its employees, then the

business firm is responsible for acquiring, training, appraising, and
compensating those employees. The notion of employees as

Human Resource Planning 129

competitive advantage has therefore led to a new field of study

known as strategic human resource management.
Human resource strategy is concerned with the long-term
direction and scope of human resources of the organization. HR
strategies are the courses of action HR uses to help the company
achieve its strategic aims.
According to Gary Dessler, human
resource strategy refers to the specific human resource course of
action the company plans to pursue to achieve its aims. 6 It is the
means used to aid the organization in anticipating and managing the
supply and demand for human resources. These HR strategies
provide overall direction for how HR activities will be developed
and managed. Specific HR plans are developed to provide more
specific direction for the management of HR activities.
HR plans must be guided by longer term plans. This requires
knowledge of any foreseen expansions or reductions in operations
and any technological changes that may affect the organization. HR
plan provides a road map for the future, identifying where employees
are likely to be obtained, when employees will be needed, and what
training and development employees must have.
Human resource strategy has the following characteristics:
(1)

Goal Oriented: Human resource strategy is always goal oriented.

It is based on overall goals of an organization. It provides future
direction for human resource management.

(2) Long Term Perspective: Usually strategy is concerned with long

term direction. Similarly human resource strategy is formulated for
long term.
(3) Environmental Adaptation: An effective human resource strategy
considers environmental elements. It adapts the human resource
activities to changing environment. This facilitates in fulfilling the
expectations of employees , customers and society at large.

Relationship
Planning

Between

HRP

and

Strategic

The relationship of human resource planning to Strategic

planning can be described in the following way.

130 Foundations of HRM

No organization can afford to travel in a haphazard manner. It

has to travel with the support of some route map. Strategic planning
provides the route map for the organization. Strategic planning can
be defined as the process of identifying organizational objectives and
the actions needed to achieve those objectives.
Managers engage in three levels of strategic planning for their
organizations.7 Organizations may have several businesses. So, they
need a corporate level strategy. A corporate level strategy identifies
the portfolio of businesses and their relationship with one another.
At the next level down, each of these businesses needs a business
level competitive strategy. This strategy identifies how its managers
will build and strengthen that business's long term competitive
position in the market place.8 Finally, each business is comprised of
departments, such as sales, manufacturing, and human resource
management. Functional strategies identify the basic courses of
action that each of the departments will pursue in order to help
business attain its competitive goals.
The heart of strategic planning is based on SWOT analysis,
which examines the strengths and weaknesses of the organization
internally, and the opportunities and threats externally. The purpose
of the SWOT analysis is to develop strategies that align
organizational strength with opportunities externally, to identify
internal weaknesses to be addressed, and to acknowledge threats that
could affect organizational success.
Specific plans are developed to identify how strategies will be
implemented.
Details of the plans become the basis for
implementation. Thus, strategic planning must include planning for
human resources to carry out the overall plan. Top managers are
responsible for overall strategic planning, and they usually ask HR
unit to project the human resources need to implement overall
organizational goals.
HRP is a process by which an organization ensures that it has
the right number and kinds of people at the right time and at the right
place that will help the organization achieve its overall strategic
objectives. This means that HRP cannot exist in isolation. It must be
linked to the organization's overall strategic planning.
Strategic planning affects the HR plans and activities. For
example, a large bank began planning to become one of the top

Human Resource Planning 131

financial institutions in the country. Two parts of its strategic plan

were (1) to adopt global focus and (2) to improve service. HR plans
to support global goals included integrating compensation and
benefits systems and hiring policies for domestic and international
operations. Service improvement plans hinged on well trained,
capable first-level employees. But HR diagnosis turned up basic
skills deficiencies in employees. As a result of strategic HR
planning, a series of programs designed to remedy basic skills
problems in the workforce was developed. The coordination of
strategic planning and HR planning was successful because HR plans
supported corporate strategic plans.
To ensure that appropriate personnel are available to meet the
requirements set during strategic planning, human resource managers
engage in HRP. Thus, HRP operates within the strategic planning
process and interlinked.

C.

APPROACHES
TO
RESOURCE PLANNING

HUMAN

Human resource planning involves estimating the size and

composition of the future work force. The approaches to HRP can be
broadly classified into:
(1) Quantitative Approach
(2) Qualitative Approach
(3) Mixed Approach

(1) Quantitative Approach

This approach is based on the assumptions that the future is an
extrapolation from the past. It views HRP as a number game
designed to forecast the future needs of the organization. The focus
of this approach is to forecast human resource shortages and
surpluses.
It includes statistical techniques and work study
techniques.
(a) Statistical Techniques: Theoreticians and professional
human resource planners in large organizations primarily use

132 Foundations of HRM

statistical techniques.
Statistical analysis can establish the
quantitative relationship between manpower and other factors of
production. These can be tabulated and projected into the future
forecast. There are two types statistical techniques useful for human
resource planning. They are:
(1) Ratio-Trend Analysis : This method makes predictions by
projecting trends of the past and present into the future.
Thus, ratios are calculated, for the past data relating to
number of employees of each category and production
level, sales level, activity level/workload level, and direct
and indirect employees. Future production level, sales
level, activity level/workload are estimated with an
allowance for changes in organization, methods and jobs.
Then future human resource is calculated on the basis of
established ratios.
This analysis is based on the
assumption that the future will be a continuation of the
past. It is relatively simple provided that historical data
are available.
(2) Econometric Models : Econometric models for human
resource are built up by analyzing the past statistical data
and by bringing the relationship among variables.
Predictions are based on the statistical relationship
discovered among the variables included in the model.
Forecast generally become more accurate when additional
variables are considered.
Management science has
concentrated on model formulation in terms of
mathematical optimization techniques, which are gradually
shortening the gap between projections and actual
situations. No matter, how sophisticated the technique,
forecasts of human resource needs are only estimates.
(b) Work-Study Techniques: These techniques are more
suitable where the volume of work is easily measurable. Broadly
speaking, total production and activities in terms of clear units are
estimated in a year. The number of man-hours required to
perform/produce each unit is carefully calculated. The ability of
each employee to work is estimated in terms of man-hours after
giving due weightage to absenteeism, rest, etc. Then the required
number of employees is calculated. Work-study is particularly
suitable for production line work and short term estimates. Firms

Human Resource Planning 133

which already posses well-established systems of cost and work

assessment find this techniques convenient. However, complications
arise in dealing with 'indirect workers' whose work cannot be so
easily measured, or where new technology and work methods are
needed. Following is highly simplified example of this procedure.
1.
2.
3.
4.

5.

Planned output for next year

Standard hours per unit
Planned hours for the year
Productive hours per man/year
(allowing
normal
overtime,
absenteeism and idle time)
Number of direct workers
required

----

20,000
5
100,000

--

2,000

--

50

Units
Hours
Hours

(2) Qualitative Approach:

This approach is also known as judgmental approach. Most
small scale and unorganized industries who do not have systematic
data banks adopt this approach. This approach uses expert opinion to
predict the future. Thus, under this approach the managers who are
well acquainted with the workload, efficiency and ability of
employees, think about their future workload, future capabilities of
employees and decide on the number and type of human resources to
be required. Three approaches can be adopted here.
In the bottom-up approach, each unit or department estimates
its own future need for employees. Concerned supervisor sends
their proposal to the top officials who compares these with the
organizational plans, make necessary adjustments and finalize them.
In the top-down approach, management prepares the requirements
and sends that information down. But the best approach is
participative approach, where both the management at the top and
supervisors at the bottom meet and decide on the human resource
needs.
One highly structured qualitative (judgmental) approach of
forecasting utilizes Delphi Technique to achieve group consensus on
a forecast. Originally developed as a technique to facilitate group
decision making, it has also been used in HRP. It can improve the

134 Foundations of HRM

quality of decision making by minimizing personality conflicts and

preventing the group member from dominating the decision process.
This approach is not as sophisticated as statistical techniques.
It is popular among smaller firms because of its simplicity and
speed. However, the chief-weakness of this approach is that a major
plan is built up on nothing better well-informed "guesstimates".
(3)

Mixed Approach

In practice, most organizations use some combination of the

two approaches for human resource planning. For example expert
judges might estimate the values of some variables and then use
these values in prediction equation, or experts might integrate the
results of quantitative approaches with less quantifiable information
into a final forecast.

D.

HUMAN
RESOURCE
PROCESS

PLANNING

The process of human resource planning involves the

following five steps:9

Assessing
Current Human
Resources

Analyzing the
Organizational
Plans

Analyzing
Human
Resource
Supply

Forecasting
Human
Resource
Demand

Fig. 2.1: Human Resource Planning Process

Human Resource Planning 135

Matching
Demand and
Supply of
Human
Resources

(1)

(1)

Assessing current human resources

(2)

Analyzing the organizational plans

(3)

Forecasting human resource demand

(4)

Analyzing human resource supply

(5)

Matching demand and supply of human resources

ASSESSING CURRENT HUMAN

RESOURCES

The first step in the human resource planning process requires

assessing the current status of the organization's resources.
Basically, this is an internal analysis that includes an inventory of the
employees or workers and skills already available within the
organization. Thus, the assessment of current human resource
situation is based on (1) human resource inventory, and (2) job
analysis.

(1)

Human Resource Inventory

Human resource inventory is the common method used to

assess the internal supply of employees. It is prepared on the basis
of forms completed by employees and then checked by supervisors
and the personnel department. They serve as the source of
information for developing Human Resource Inventory. Such report
would include a list of employees, education, training, prior
employment, current position, performance ratings, salary level,
language spoken, capabilities and specialized skills for every
employee in the organization.10 In the present era of computer

136 Foundations of HRM

systems, it is not difficult for organizations to generate a human

resource inventory report.
From a human resource planning viewpoint, this inventory is
valuable in determining what skills are currently available in the
organization. It provides a mechanism for filling positions internally
ensuring that existing employees are not overlooked and selecting for
training and development programs.
The two newer devices of human resource inventory are
Human Resource Information System (HRIS) and Succession
Planning.
Human Resource Information System (HRIS) : One of the
newer devices for providing human resource inventory information
is the HRIS. A HRIS is the method by which an organization
collects, maintains, analyses and reports information on people and
jobs. It combines all the information that organizations typically
keep on employees and on positions. HRIS is designed to quickly
fulfill the human resource management informational needs of the
organization.
It is a database system that keeps important
information about employees in a central and accessible location.
When such information is required the data can be retrieved and used
to facilitate employment planning decisions.
Some of the major uses of HRIS include the management of
basic records, benefits administration and planning, skills
inventories, training and development data, performance appraisal,
and job evaluation information. This system is designed to quickly
fulfill the personnel information needs of the organization with
almost no additional expenditure of resources. It permits an
organization to track most information about an employee and about
jobs, and retrieve that information when it is needed. It facilitates
both planning and identifying persons for current transfer or
promotion.
Succession Planning : Succession planning is the process of
anticipating future managerial staffing needs and making plans for
the development of managers to meet those needs. 11 At higher levels
of the organization, managers plan for specific people and position.
It stresses the development of high potential employees and takes a
long-term view of the organization's human resource needs. Figure
2.2 is a form used in succession planning.

Human Resource Planning 137

Succession planning makes use of human resource inventory

but generally expands to include the additional information on
current performance, promotability, developmental needs and long
term growth potential. It adds new dimension to the planning
activity by highlighting those positions that may become vacant in
the near future due to retirement, promotions, transfers or
resignations. Against this list of positions, individual manager's
inventory can be placed to determine if there is sufficient managerial
talent to cover both expected and unexpected vacancies. It also
allows ample time to plan developmental experiences for persons
identified as potential successors to critical managerial job.

(2) Job Analysis

Job analysis is the process of determining the tasks that make
up the job and the skills, abilities, and responsibilities that are
required of an individual to successfully accomplish the job. It is
just an accurate recording of the activities involved in the job and the
qualification needed to carry out job responsibilities. This will also
assist arranging jobs in a hierarchical order in relation with each
other (job evaluation) for the purpose of fixing compensation.

MANAGEMENT SUCCESSION PLAN

Organization :

Date :

Probability of Vacancy
Within 1 year ......................... A
1 to 3 years ........................... B
Beyond 3 years ..................... C

Position
Incumbent

(A)
Ready
Now

(B)
Ready
1-3 Years

(C)
Ready
Beyond
3 Years

Contingency
Plan

138 Foundations of HRM

Fig. 2.2 : Management Succession Plan Form

Job analysis obtains information about jobs, and it uses that

information to develop job description and job specifications and to
conduct job evaluations.12
Job Description: A job description is derived from the job
analysis. It is a recorded statement of facts about the activities of the
jobholder. Job description reveals duties, responsibilities, and
accountabilities of a specific job. It should accurately portray job
content, environment, and conditions of employment.
Job Specification: Another immediate outcome job analysis is
job specification. It is a statement of the minimum acceptable
competencies necessary to perform a job satisfactorily. Job
specification states that the jobholder should posses the required
educational qualification, training, experience, talent, abilities, etc to
perform the job successfully. It gives the desired attributes of the
person who can be most successful in performing the job.
Job Evaluation: Job evaluation is a systematic process for
establishing the relative worth of jobs within an organization. Jobs
are evaluated on the basis of their content and are placed in the order
of their importance. In this way, a job hierarchy is established in the
organization for fixation of satisfactory wage differentials among
various jobs. Thus, job evaluation involves determination of relative
worth of each job for the purpose of establishing wage and salary
differentials.
It should be noted that in a job evaluation, the jobs are ranked
whereas jobholders are rated through performance appraisal.
Following table 2.1 brings the difference between job evaluation and
performance appraisal.

Human Resource Planning 139

Table 2.1: Difference Between Job Evaluation and

Performance Appraisal

Job Evaluation
1.

2.

3.

4.

5.

Performance Appraisal

The job is rated keeping in 1.

view such factors as
qualification,
experience,
responsibility, etc. required
for performance of the job.
A job is rated before the 2.
employee is appointed to
occupy it.
The purpose is to establish 3.
satisfactory wage or salary
differentials

It is not very compulsory.

Many organizations carry on
without it also.
Job evaluation committee
comprising internal and
external
experts
is
constituted for the purpose
of evaluation.

4.

5.

Employee is rated on the

basis of his or her
performance.

Evaluation takes place after

the employee has been hired
and placed in the job.
The purpose is to effect
promotions, offer rewards,
award punishments, assess
training needs, resort to layoff, transfers, etc.
It is compulsory. It is done
regularly for all jobs.
Appraisal is done by
employees
themselves,
peers,
superiors,
combinations of these.

These information job description, job specification, and job

evaluation are necessary to match qualified personnel with job
requirements. They help managers to identify the kinds of
individuals the organization should recruit, select, and develop as
well as provide guidance for decisions about training and career
development,
performance
appraisal
and
compensation
administration.

(2)

Analyzing the Organizational Plans

The organization's plans and strategies for the future determine

future human resource needs. Specifically, demand for human

140 Foundations of HRM

resources is a result of demand for the organization's products or

services. Based on its estimate of total revenue, the organization can
attempt to establish the number and mix of human resources needed
to reach this revenue.
However, various components of
organizational plans such as production plan, marketing plan, sales
plan, plans for expansion, diversification, etc. can be used as the
basis for developing human resource planning model. Analysis of
the organizational plans helps in estimating the demand for human
resources since it provides clear indications as the quantum of future
work activity. However, in most cases, the overall organizational
goals and the resulting revenue forecast will provide the major input
determining the organization's human resource requirement.
Before we estimate the future human resource needs, it is
essential to define the organization's plans in terms of sales or
revenue forecast. The product or services that management expects
to provide will be important inputs in the determination of the
employee mix necessary for the organization in future.

(3)

Forecasting Human Resource Demand

Once an assessment of the organization's current human

resources situation has been made and organizational plans have
been analyzed, future human resource needs can be forecasted. In
the process of forecasting the human resource demand, the jobs
should be redesigned and analyzed reflecting the future human
resources based on future organizational plans. Job analysis and
forecasts about the human resource mix facilitate demand
forecasting. One of important aspects of demand forecasting is the
forecasting of the quality of human resources (skill, knowledge
values, capabilities, etc.) in addition to quantity of human resources.
Today, there is a wide range of options in the methods to be
adopted for forecasting human resource demand.
Important
forecasting approaches have been described above. Each approach of
forecasting the demand for employees requires different
assumptions. Some of the more common assumptions are that past
trends and relationships among variables will hold up in the future,
that the productivity ratio is constant as the number of units produced
increases, and sales forecasts and so on are descriptive of what will
actually happen.

Human Resource Planning 141

(4)

Analyzing Human Resource Supply

After forecasting human resource needs, sources of supply

should be analyzed with a view to ensure the availability. Thus, net
human resource requirements in terms of number and components
are to be determined for a future date and supply forecast for that
date. The difference between the potential loss and potential
addition is to be added or subtracted as the case may be to the
present inventory of human resources in order to forecast the supply
of human resources.
If surplus is estimated in some jobs/departments, the
organization has to plan for redeployment. Redeployment takes
place in the form of transfer. If surplus is estimated for the entire
organization, the organization, in consultation with trade unions, has
to plan for redundancy or retrenchment.
If deficit is estimated in the organization, management has to
forecast the future supply of human resources from various sources.
The human resource demand of an organization can be fulfilled from
two sources of supply : (a) Internal supply, which comprises of
promotion, transfer and demotion, and (b) External supply, which
consists of personnel who do not currently work for the organization.
Most experts agree that the search for human resource needs
must always begin from within the organization. The organization
itself is a captive source and when the qualification, experiences and
capacities of employees is known, offering the new responsibilities
and openings can act as powerful incentives. It can stimulate all
other employees of the organization to work hard.
After considering the internal availability, the human resource
planner will have to survey the external market. Recruiting and
selecting new employees from the open labor market can be
expensive and uncertain process. Thus, it needs careful planning as
well as handling.

(5)

Matching Demand and Supply of

Human Resources

142 Foundations of HRM

The final step in human resource planning process consists of

matching the forecasts of future demand and supply. The result of
this effort pinpoints shortages or overstaffing both in number and in
kind. If shortfall is predicted and demand for human resources is
increasing, then the organization will have to transfer employees
within it or hire additional employees or both to balance the
numbers, skills and quality of human resources. The human resource
manager must plan how to recruit based on the type of person needed
and availability within the organization or outside.
If over-staffing is expected, the main options are transferring
the extra employees, not replacing individuals who quit, encouraging
early retirements and layoffs. Downsizing should be done in
consultation with the employees union to avoid employees resistance
for change in job size.
Though there is the problem of unemployment, organizations
usually experience shortage of some categories of employees.
Hence, the organizations have to plan for retention of the existing
employees by improving the quality of worklife.

E.

HUMAN RESOURCE PLANNING

NEPALESE ORGNIZATIONS13

IN

Nepal has a poor tradition of human resource planning (HRP).

The family owned and managed small and medium organizations do
not brother much about human resource planning. They prefer to
hire their relatives, friends, and 'near and dear ones". Even the large
organizations in the private sector lack proper human resource
planning. HRP is neglected by 'politically appointed' managers in
public enterprises. Strategic planning is lacking in organizations.
HRP is also not linked to strategic planning.
Most Nepalese organizations lack human resource planning
and managers give low priority to human resource planning. Thus,
Nepalese organizations lack right number and kinds of people at the
right places. Most organizations in Nepal suffer from over staffing.

Human Resource Planning 143

Most Nepalese organizations lack effective human resource

information system (HRIS). Effective job analysis is also lacking.
This has constrained proper assessment of current human resources.
Nepalese managers do not do succession planning. Nepalese
organizations also lack proper human resource demand forecasting.
Hence, no proper attention is paid towards matching demand and
supply forecasts to determine future shortages and surpluses.
In the above scenario Nepalese organizations need effective
HRP. The ad-hoc approach to human resource planning should be
replaced by combination of effective qualitative and quantitative
approaches. Top management should fully support human resource
planning. The number of global organizations is increasing who do
HRP in Nepal. This will have positive impact in those organizations
in the coming years.

BOX : BENEFITS OF HUMAN RESOURCE PLANNING

More effective and efficient use of people at work
Human resource planning should precede all other human resource
management activities. For example, how could the human resource
managers schedule recruiting if they did not know how many people
were needed ? How could they select effectively if they did not know the
kinds of applicants needed for job openings ? Careful analysis of all
human resource management activities shows that their effectiveness
and efficiency, which result in increased productivity, depend on human
resource planning.
More satisfied and better developed employees
Employees who work for organizations that use good human resource
planning systems have a better chance to participate in planning their
own careers, and to share in training and development experiences.
Thus they are likely to feel their talents are important to the employer,
and they have a better chance to utilize those talents. This often leads
to greater employee satisfaction and its consequences; lower

144 Foundations of HRM

absenteeism, lower turnover, fewer accidents and higher quality of work.

More effective EEO planning
Governments have increased their demands for equal employment
opportunities (EEO). Information systems that focus on human resource
planning help organizations formally plan employment distribution.
Therefore, it is easier to complete the required government reports and
respond satisfactorily to EEO demands using human resource planning.
(Source: J.M. Ivancevich and W.F. Glueck: "Foundation of
Personnel", Business Publication, Texas, 1983, p. 133.

IMPORTANT QUESTIONS
1. What is Human resource Planning? Describe the importance of
Human Resource Planning to the organizations?
2. What is human resource strategy ? Discuss the relationship
between human resource planning and human resource strategy.
3. Discuss the steps involved in the Human Resource Planning
process.
4. What are the approaches of forecasting human resources demand
of the organization ? Explain.
5. What is human resource planning ? Describe the problems
associated with human resource planning in Nepalese
organizations.

REFERENCES
1.

Wendell French, Human Resources Management, (U.S.A.:

Houghton Mifflin Co., 1994), p. 129.

Human Resource Planning 145

2.

Raymond J. Stone, Human Resources Management, (Australia:

John Wiley & Sons, 1991), p. 9.

3.

David A. DeCenzo and Stephen P. Robbins, Personnel/Human

Resource Management, 3rd ed., (New Delhi: Prentice-Hall of
India Pvt. Ltd., 1997).

4.

J.M. Ivancevich and W.F. Glueck, Foundations of Personnel,

(Texas: Business Publications, 1983), p. 133.

5.

Dale S. Beach, Personnel: The Management of People at

Work, 4th Ed., (New York: Macmillan, 1980), p. 185.

6.

Gary Dessler, Human Resource Management, 9th ed., (New

Delhi : Pearson Education, 2003).

7.

Ibid., p.6.

8.

Arthur Thompson and A. J. Strickland, Strategic Management,

(Burr Ridge, IL: Mc.Graw-Hill 2001), pp. 16-18.

9.

David A. DeCenzo and Stephen P. Robbins, Personnel/Human

Resource Management, 3rd ed., (New Delhi: Prentice-Hall of
India Pvt. Ltd., 1997), pp. 79-93.

10.

Ibid., p. 80.

11.

James E. McElwain, Succession Plans Designed to Manage

Change, HR Magazine 36 (Feb. 1991), p. 67.

12.

David A. DeCenzo, p. 81.

13.

Based on Dr. Govind Ram Agrawal, Foundation of Human

Resource Management in Nepal, (Kathmandu : M. K. Publishers
and Distributors, 2004).