Chapter 2

HUMAN RESOURCE PLANNING

Rigorous HR planning links people management to the organization's mission, vision, goals and
objectives, as well as its strategic plan and budgetary resources. A key goal of HR planning is to
get the right number of people with the right skills, experience and competencies in the right jobs
at the right time at the right cost.
HRP is the process by which management ensures that it has the right personnel, who are
capable of completing those tasks that help the organization reach its objectives.

DEFINITION:
According to Mr. Breach defines HRP as, “A process of determining & assuring
that the organization will have an adequate number of qualified persons available at proper time
performing jobs which meet the needs of the enterprise and which provides satisfaction for the
individual involved.

According to Leon C. Meggison, “HRP is an integrated approach to performing the planning

aspect s of the personnel function in order to have sufficient supply of adequately developed and
motivated people to perform the duties and tasks required to meet organizational objectives and
satisfy the individual needs and goals of organizational members.”

FEATURES OF HRP

1. Well-defined objective: HRP has the objective of developing human resource, updating
technical expertise, career planning and ensuring better commitment of employees towards
work and attaining the objective of organization.
2. Determining personnel needs of organization: HRP process determines & assures that
the organization will have an adequate number of qualified persons available at proper time
performing jobs which meet the needs of the enterprise and which provides satisfaction for
the individual involved.
3. Having manpower inventory: It includes the inventory of present manpower in the
organization. The manager should know the persons available to him for undertaking higher
responsibilities in the future.
4. Adjusting demand & Supply: Manpower requirement have to be planned will in
advance as suitable persons are not available immediately incase required persons are not
available in future, then efforts should be made to start the requirement process well in
advance. Thus, fulfilling the supply of people for the work in demand

5. Creating proper work environment: To improve the quality of work, the HRD should
work towards providing proper working facilities such as better lighting, ventilation,
canteen, etc, to encourage workers to work more.

IMPORTANCE
 1. Future personnel needs: a process of determining & assuring that the organization will
have an adequate number of qualified persons available at proper time performing jobs
which meet the needs of the enterprise and which provides satisfaction for the individual
involved.
2. Coping with change: The HRP enables the organization to cope with the changes in the
competitive forces, market, technology and government regulations. Such changes
generate change in the job content, skill demand, number and type of persons, for this the
HRP takes up the responsibility to recruit right type of people.

3. Creation highly talented personnel: It decides in selecting, training and development of

people, resulting in highly talented personnel.

4. Protection of weaker sections: At the employment and promotion sufficient

opportunities are given to the weaker section of the society ie., the backward class,
backward class, physically handicapped etc., The HRP decides a program to protect
interests of such groups.

5. International strategies: The international expansion strategy depends on HRP and its
ability to fill the key jobs with the foreign national and the assignment of employees from
within to shoulder the challenges of the international business.

6. Foundation for personnel functions: Manpower planning provides essential

information for designing and implanting personnel functions such as recruitment,
selection, transfer, promotion, layoffs, training and development and hence form a base
for the personnel functions.

7. Increasing investment in the HR: The HRP helps in increasing investments in HR by

providing handsome remunerations, good incentives, good work environment, facilitating
with proper training and development to the employees.

8. Resistance to change:

9. Other Benefits:

a) The personnel cost may came down because the HRP anticipates requirement
properly.
b) More time is provided through the HRP to locate sources of talent.
c) Better opportunities for growth and expansion.
d) Better planning to develop managers.
e) Replacement of persons is made possible.
f) Reduces the labour turnover.

OBJECTIVES / PURPOSES OF HRP: (Why it is required)

1. Assessing the manpower needs for future and making plans for recruitment and selection.
2. Assessing the skills required in future.
 3. Determining the training and development needs for the organization.
4. Anticipating surplus of shortage of staff and avoiding unnecessary detentions and
dismissals.
5. Controlling wage and salary cost.
6. Ensuring optimum use of human resource in the organization.
7. Help the organization to cope up with technological and other developments.
8. Ensuring higher labor productivity. (Performance)
9. Ensuring career planning of all the employees.

THE PROCESS OF HUMAN RESOURCE PLANNING

The process of human resource planning consists of following steps

1. Analyzing the corporate and unit level strategies :

The HRP should start with analyzing corporate level and unit level
strategies. These strategies include expansions, diversification, mergers,
acquisitions, reductions in operations, low costs and differentiation
.Strategic implementation requires the production implementation,
technological implementation, marketing implementation and HR
implementation.

2. Demand forecasting :
It is concerned with forecasting the overall human resources requirements
in accordance with organizational plans .The important aspects of demand
forecasting is the forecasting of quality of human resource ( skill,
knowledge, values , capabilities e.t.c) in addition to the quantity of human
resources. The forecasting method includes Managerial Judgment,
Statistical techniques, Work study techniques e.t.c.
3. Supply forecasting:
It refers to obtaining the data and information about the present inventory
of HR and forecast the future changes in the human resource inventory.
4. Estimating the net human resource requirements:
Net human resources requirements in terms of number and components
are to be determined in relation to the overall human resources
requirements for a future dates and supply forecast for that date.

5. Action plan for redeployment, redundancy /retrenchment :

If future surplus is estimated organization has to plan for redeployment,

redundancy e.t.c . If surplus is estimated in some jobs employees can be
redeployed in other jobs where the deficit of employee is estimated. The
organization should even plan for training or re-orientation before
redeployment, redundancy of employees.

Redeployment/Redundancy programs include the following:

 i. Reduced Work Hours.
ii. Work Sharing.
iii. Layoffs.
iv. Leave of Absence without Pay.
v. Voluntary/ Earlier Retirement (VRS)/Golden Handshake.
vi. Attrition.
vii. Compulsory Retirement /Iron Handshake (CRS).
viii. Creation of Ad-hoc Projects etc.

6. Action plan for outsourcing, recruitment etc :

If suitable candidates are not available from internal sources of the

organization then the forecasts relating the future supply from external
sources indicate the availability of required human resources, and then
plan for outsourcing, recruitment and selection.
7. Training and Development Plans:

It covers the areas to be developed, training techniques programs, training

time, availability of trainers, in plant training or institute training, cost
benefit analysis of training, development of the employees and matching
of their improved skills with future job requirements.
8. Modify the Organizational Plan and Strategies:

If feature supply of human resources from all the external sources is

estimated to be inadequate than the requirements, the manpower planner
has to suggest to the management to alter of modify the organizational
plan.
RECRUITMENT

Recruitment is a continuous process whereby the firm attempts to develop a pool of qualified
applicants for the future human resources needs even though specific vacancies do not exist.
Usually, the recruitment process starts when a manger initiates an employee requisition for a
specific vacancy or an anticipated vacancy.

Edwin. B. Flippo has defined recruitment as “The process of searching for prospective
employees and stimulating them to apply for the job”.

There are two sources of recruitment.

I. Internal source
II. External source

I. INTERNAL SOURCE:
 The internal source is recruitment from within the organization i.e., filling the vacancies with
the present number of employees. The various ways of internal recruitment -
1. Transfer: It is shifting of a person from one job to another without any change in
responsibility, functions and power.

2. Promotion: It is shifting of a person from higher job to a higher one with increase in
responsibility, remuneration, functions and power.

3. Demotion: It is shifting of a person from higher job to a lower job with decrease in
power, responsibility, remuneration and functions. It is in the form of punishment,
penalties etc.

4. Laid of Employees: This source enables the organization to recall the laid off employees
to the organization.

Merits of Internal Source:

1. It keeps the employees happy and at good morale.
2. It motivates the worker to work better.
3. It creates a sense of security in the minds of the employees.
4. It increases employee participation in works.
5. It helps the management to have updated information regarding the employees working
in the organization.
6. It helps the organization to have loyal employees.
7. It reduces the employee turnover.
8. It reduces the employer – employee relationship that promotes industrial peace.
9. It is economical since it saves time and money spent on advertisement and recruitment
tests for the employees.
10. It helps the organization to know whether they require original or initiative people

Demerits of Internal Source:

1. It leads to inbreeding of ideas.
2. Outsiders are not given opportunities to prove their talents.
3. The existing employee might not be capable to handle higher and new jobs.
4. It might encourage partiality in the organization.

II. EXTERNAL SOURCE:

In this type of recruitment vacancies are filled from out with new people for new and
higher jobs.

Sources of external recruitment:

1. Advertising: Organization may advertise and it invites the prospective employees to

apply for the vacancies and give an interview.
 2. Employment exchange: The employment seekers register their names in such agencies
showing their willingness to work in any organization. These agencies collect
information and provides to those organizations who are in need of employees.

3. Placement agencies: These are the private job-consulting firms advertising for the past on
their own. Through advertising they invite application, scrutinize and select the right
applicant for the job.
4. Labour contractors: Whenever the organization is in need of skilled group of people
working with him. After providing the necessary personnel, the labour contractor charges
commission paid by the organization.

5. Remuneration of present employees: Employees of an organization may request people

worth qualification to apply for the job and invite them for interview.

6. Waiting list: Maintaining of solicited and unsolicited applications is called together as a

waiting list. These are maintained in record and are used as when the company requires
them to their needs.

7. Notice and the factory gate: Notices are put up in the premises of the organization and
outside the factory gate so as to inform the visiting people of vacancies and invite them
for application.

8. College, Universities and Tech Institution: Campus interviews are conducted in

educational institutes, Collecting information of interested students, etc., help an
organization to attain the required employees.

Merits of External Source:

1. It gives an opportunity to employ a new and talented person.
2. It changes the outlook of the organization.
3. It gives a wide scope to the organization.
4. Existing employees work better.

Demerits of External source:

1. It creates a sense of fear in the employees mind regarding losing the job.
2. A newly employed person might not get adjusted to the new environment.
3. No co-operation from the present employees.
4. Present employees are de- motivated.
5. No participation in the working of the organization.

SELECTION
The selection process is the system of functions and devices adopted in a given company to
ascertain whether the candidate’s specifications are matched with the job specifications and
requirements or not.
 According to Koontz & O Donnel, “Selection is choosing from among candidates from
within organization or from outside the most suitable person for the current or future positions.”

MEANING:
It is a process of discovering the most suitable and promising candidate to fill up
the position, which is vacant.

Selection Process / Procedure :

Preliminary Interview

Selection Lists

Employment Interview

Reference & Background Analysis

Selection Decision

Physical Examination

Job offer

Employment

Evaluation

1. A preliminary interview is conducted before accepting the application from the

candidate. Those applicants not found eligible in the first step itself are rejected.

2. Selection Tests: After passing the preliminary interview the candidate is subjected to
various selection tests
 a. Ability test: This test helps the manager to determine how well the individual can
perform the task related the job.
b. Personality tests: This test is to measure the prospective employees motivation
level to perform a particular activity and how tell the person adjusts to the new
environment.
c. Aptitude tests: It is a measure to check the individual ability or fitness to perform
a special activity.
d. Interest Tests: This test is to measure the individual’s activity preference.
e. Medical Tests: This test reveals the physical fitness resistance upon exposure to
hazardous substance.

3. Employment Interviews: Interview is a formal conversation conducted between the

authority (interview panel) and the candidate. In an interview, the candidate is exposed to
various problems and questions. On the basis of solutions and their answers given by the
candidate, the interview panel decides whether the person is capable or not.

4. Reference and Background Analysis: Many employees ask the applicants to provide
names for reference. Reference is the name of the individuals and institutions who can
provide information about the candidate. In this step, the references are contacted and
enquiry is conducted to collect more information regarding the candidate.

5. Selection decision: In this step, the selection panel will have a decision about all those
candidates passed in the above 4 steps and the most promising and eligible candidates are
selected.
6. Physical Examination: The result of medical fitness test is recorded in a statement and is
maintained as a record. The main intention behind conducting physical examination is
that to find out whether the individual carries any infectious disease and also to determine
whether the candidate is physically capable of performing the job.

7. Job Offer: A person who has successfully passed all the above steps will be offered the
job. A letter of selection will be sent to him with a date on which he is supposed to report
in case he accepts the offer.

8. Employment Contract: This is a written contract of employment to be given to those

candidates who accept the job offer. The information in this contract varies with the job.
Following are few details included in the contract of employment.
a) Job Title
b) Duties
c) Salary, Allowance, Overtime Rates, Shift rates and method of payment.
d) Hours of Work including lunch break, coffee break, overtime and shift
arrangement
e) Leave arrangements, Holidays.
f) Medical facilities.
g) Grevience procedure.
h) Displinary measures
i) Work rules.
 j) Arrangement of termination.
k) Arrangement of union membership.
l) Terms relating to rights of employees.

9. Evaluation of selection procedure: The organization should have a committee to find

out whether the adopted selection procedure is helping to the organization to get
competent and talented employees.

SELECTION TESTS

MEANING:
Tests are used for the purpose of selection of candidate for an organization for placing or
assigning a person to the job for which he is most suitable.
 FEATURES OF TESTS:

1. Assumption: The assumption behind conducting a test is ‘no two people are alike’.

2. Validity: Validity means the ability of a test to actually measure the quality of the candidates.

3. Reliability: Reliability referes to the consistency of the score obtained by the same person
when re-listed with identical tests or with un equivalent form of test.

TYPES OF TESTS:
I. Aptitude Tests
 Intelligence Test
 Emotional Quotient
 Skill Tests
 Mechanical Aptitude
 Psychomotor Tests
 Clerrical Aptitude
Tests

II. Achievement Tests

 Job Evaluation Test
 Work Sample Tests
Types of Tests

III. Interest Tests

 Group Discussion
 In Basket


IV. Interest Tests

V. Personality Tests
 Objective Tests
 Projective Tests

VI. Multi-Dimensional Tests

1. Intelligence Test
2. Aptitude Test
3. Personality Test
 4. Interest Test
5. Achievement Test
6. Multi-dimensional Test.

1) Intelligence Test:
The mental abilities of the person are tested. The intelligence test
includes memory, vocabulary, verbal fluency, numerical ability perception etc. The basic
objective of the intelligence test is to pick up employees who are alert and quick at
learning things. Intelligence test are used in competitive examination while recruiting
graduates.

2) Aptitude Test:
It is to measure this specific mental abilities such as inductive reasoning,
verbal comprehension, memory and numerical ability. These tests indicate whether or not
an individual has a ability to learn a given job quickly and efficiently.
a. Mechanical Aptitude Test: It is to measure a persons capacity to learn a particular
type of mechanical work.

b. Skill Test: It is to measure a persons ability to perform a specific job

3) Personality Test:
It measures basic aspects of an applicant personality such as
introversion, stability and motivation.

4) Interest Test:
These test discover a person area of interest and to identify the kind of work that
will satisfy him.

5) Achievement Test:
It is to measure what a person has learned in school and colleges.
6) Multi-dimensional Test:
Organizations have to develop multi-dimensional testing in order
to find out whether the candidates possess a variety of skills or not,
candidate’s ability to integrate multi skills and potentiality to apply
them based on situational and functional requirements.

Uses of Tests in Selection

The following are the uses of tests in selection process:

• Tests help the managers in evaluating the candidate’s suitability to the job.
 • Tests measure the nature and degree of candidate, psychological potentialities, based on
psychological factors, essential to perform a given job situation.
• Tests help in judging the ability of a candidate in a given job situation.
• Tests help in ranking the candidates applied for a job.
• Tests are valuable in determining subsequent success on the job.
• Test results are more valuable in determining subsequent success on the job.
• Test results are more valuable in determining candidate’s weaknesses.
• Tests are useful when other devices of selection fail in providing valuable information.
• Test examine the candidate’s intelligence, mechanical aptitude, clerical aptitude, job
knowledge, interest in the job, individual and group decision-making skills and
personality.

PLACEMENT

According to Pigors & Myers, “Placement is the determination of the job to which an
accepted candidate is to assigned and his assignment to the job. It is a matching what he imposes
and to what he offers”.

MEANING:
It is a process where the person selected gets the right job in the organization.
(Placing the right man in to a right job.)

PROBLEMS INVOLVED IN PLACEMENT:

1) Employee Expectation:
If the employee expects high salary, independent and
challenging and the job offers low salary dependent and routine work, the employee finds
himself misfit to the job.

2) Job Expectation / Description:

The expectation from the job is more than the
employee’s ability or skill.

3) Change in Technology:
Technological changes bring radical changes in the job description and
specification. These changes result in the mismatch in the employee and the job.

4) Changes in the organization structure:

Business grand strategies like mergers,
acquisition etc., results in the misfit between employee and job.
 Placement can be made effective with the help of following steps:

• Job Rotation
• Teamwork
• Training and Development
• Job Enrichment
• Empowerment
• Relocating the employees

Two marks questions:

1. What is HRP?
2. State any two objectives of HRP.
3. What is recruitment?
4. State any four sources of external recruitment.
5. State any four internal sources of recruitment.
6. What are placement agencies?
7. What is professional association?
8. Give the meaning of data banks.
9. What are trade unions?
10. What do you mean by body shopping?
11. What is outsourcing?
12. What is employment exchange?
13. What is selection?
14. What is job description?
15. What is job specification?
16. State job analysis.
17. What are psychomotor tests?
18. Give the meaning of in basket.
19. What are personality tests?
20. What is placement?
21. State any two problems in statement.
22. State any two measures to make placement more effective.

Five marks questions:

1. Briefly explain the objectives of HRP.

2. Briefly explain the features of HRP.
3. What are the various benefits of HRP?
4. Briefly explain the modern sources of recruitment.
5. Briefly explain the traditional sources of recruitment.
6. Explain any five types of tests in selection procedure.
7. What are the various uses of tests?
 8. Briefly explain the employee placement process.
9. What are the various problems faced by the HR manager during placement.
10. How a HR manager can make placement more effective.

Fourteen marks questions:

1. What are the steps in the process of human resource planning?

2. Explain the methods or sources of recruitment.
3. Briefly explain the steps in scientific selection process.
4. Briefly explain the different types of interviews.
5. What are the various problems in placement and how it can be made more effective?