Master of Business Administration-MBA Semester 3

MU0001 – Manpower Planning and Resourcing - 2 Credits

Set- 1

Note: Each question carries 10 Marks. Answer all the questions.

Q.1 Discuss the components and ranges of Manpower Planning [10]
Q.2 Write a note on Human Resource Value accounting [10]
Q.3 Write a note on Individual and Organizational knowledge conversion process.
[10]

1. Discuss the components and ranges of Manpower Planning

Ans:
The man power plan can be broken down into three components:
(i) Forecasting-estimating future needs and stock taking of available resour
ces in the organization;
(ii) Recruitment plan- to meet the gap between the internal resource and esti
mated need by external recruitment;
(iii) Training and development plan to utilize fully the human resources of th
e organization and to develop the potential resources. In practice, it has been
found that short-term (less than 2 years and medium- range plans (2 to 5 years)
are easier to formulate with greater degree of certainty.
The following table summarizes the factors related to two major forms of human r
esource planning. Short Range (0-2 years) Intermediate
Range (2 to 5 years)
Long Range (beyond 5 years) Demand for labor Authorized expression technological
changes new legislation; employee turnover; lay offs, restriction. Operating ne
eds from budget or plans, Expansion or contraction or adjustments geographical c
apacity, size of the organization and system; product lines; services offered; l
oad anticipated. Changes in environment and technology essentially. Supply of la
bor- internal Supply of labour- external Departmental, divisional rosters; promo
tions. Expected losses; quits, death. Area employment levels; number of employee
s needed. Merger or acquisition plans; managerial and supervisory development pr
ogrammers. Labour market projection business development plans general instituti
onal plans to hire. Judgmental labour saving equipment, efficiencies, productivi
ty, etc. Management expectations of changing characteristics of employees and fu
ture available manpower. Management expectations of future conditions affecting
immediate decisions. Short Range Analysis: It usually grows out of normal budget
ary processes. The parameters of short range forecasting are fairly well-defined
. They are handled in the normal course of budget preparation and require simple
arithmetic calculation.
Long Range Analysis: Long range planning is more complex and is dependent upon m
athematical and statistical models, as knowledge of demand variables and appropr
iate measurement techniques. Two general kinds of forecasting techniques are use
d: indirect and direct methods. Indirect methods involve the forecasting of gene
ral rules- production figures, for example – that must be translated into specific
requirements or measures. Direct techniques involve the use of methods of estim
ate (directly) labour hours, number of supervisors or particular occupational ne
eds. Aggregate models are based on several key variables that are known to direc
tly affect the organization’s overall human resources needs. Every organization ha
s special characteristics or problems, and a planner can use an aggregate model
to get the big picture. These models may apply to a geographic region or to the
overall system. Estimates techniques models are used for situations where circum
stances make it difficult to use mathematical or statistical approaches. Here ex
pert opinion and experience are used. The volume of future activity of business
conditions, including legislation, change, innovation, or competition-situations
that are almost impossible to qualify- can provide workable answers to problems
.
At the end, it may be noted that all organizations-those that have a high labour
turnover – must systematically plan their short-term, medium-term and long-term m
anpower needs. These requirements need periodical reviews and adjustments to mee
t changing conditions.

2. Write a note on Human Resource Value Accounting.

Ans:
An important approach to the evaluation of human resource assets is to calculat
e their economic values. This concept is based on the view that difference in pr
esent and future earnings of two similar firms is due to the difference in their
human organization. The economic value of the firm can be determined by obtai
ning the present value of future earnings. Some of the important valuation model
s discussed below: The LEV and Schwartz Model: According to this model the value
of human capital embodies in a person of age ‘t’ is the present value of his remain
ing future earnings from employment in the form of salaries, wages, etc. The val
ue of human capital of a person‘t’ years old is given symbolically in the model as:
Vt = I(t) (1+r)t-t
Where
VT=the value of human capital of a person‘t’ years old.
L (t)= The annual earnings of the person up to retirement
X= the discount rate of the cost of capital
T= the age of retirement.
Limitations: The model does not consider the possibility of leaving a firm by an
d employee. The model ignores the possibilities of promotion of employees. It do
es not consider the contribution of the firm in developing the value of human ca
pital.
In spite of the above limitations, the Lev and Schwartz model is the most popula
r economic model for determining the value of human resources of a firm.
Flamholtz Model(1971) According to this model an individuals value to an organiz
ation is determined by a services he is expected to render to the organization d
uring the period he is likely to remain with the organization in various positio
n or
MU 0001 - 4- service states. The present value of human resources may be derived
by discounting the realizable value of expected future service at a specified r
ate. This model involves the following steps:
Estimation of period for which an individual is expected to render service to th
e organization. Identification of various positions or services states that the
employee might hold during his service with the organization. Estimation or prob
able period for which he is expected to hold each possible position or service s
tate. Calculation of expected service to be derived from the individual by:
Giles and Robinson’s Human Asset Multiplier Method: According to this method, the
calculation of human asset value, under this method is based on the notion that
an individual’s remuneration, or the remuneration of group persons in the same gra
de, may be multiplied by a factor determined on the basis of his contribution to
the success of the business. The total value of human assets employed in the bu
siness can be calculated by simply adding together all the individual values so
calculated.
Herman son’s Uppercased Goodwill and Adjusted Discounted Future Wage Model: Accord
ing to uppercased goodwill model, the value of human resources of an organizatio
n may be calculated by capitalizing earnings in excess of normal earnings for th
e industry or the group of companies of which the firm is a part.
The adjusted discounted future wage model used compensation as a surrogate measu
re of a person’s value to the firm. Compensation means the present value of future
stream of wages and salaries to employees of the firm. The discounted future wa
ges stream is adjusted by an ‘efficiency ratio’ which is the weighted average of the
ratio of return on investment of the given firm to all the firms in the economy
for a specified period, usually five years.
Jaggi and Lau Model: This model suggests valuation of human assets on a group ba
sis rather than on individual basis. Group, in this model, means a homogeneous g
roup of employees who may not be necessarily working in the same department. It
might be difficult to predict an individual’s future period, stay and chances of p
romotion, but on a group basis, it is easier to ascertain the future period of s
ervice, chances of promotion and those who are likely to leave the firm during e
ach of the forthcoming period. It has been assumed in this model that the patter
n of movement is likely to remain constant overtime and the probabilities determ
ined for one period can be extended to future periods.
Morse Net Benefit Model (1973): MU 0001 - 6- According to this model, the value
of human capital is determined on the basis of the present value of net benefits
derived by the organization from the expected future services of its employees.
It involves the following steps.
Determination of the gross value of future services to be rendered by employees
in their individual capacities as well as pirating in groups. Determination of t
he cost, i.e. the total future payment to be made to the employees. Calculation
of ‘net benefit’ to the organization on account of human resources by subtracting (i
) from, (ii). Calculation of the present value of the net benefits by discountin
g at predetermined rate of discount.
3. Write a note on Individual and Organizational knowledge conversion process.
Ans:
Individual knowledge conversion process: Individual knowledge conversion takes p
lace between tactic knowledge and explicit knowledge. According to Nonaka and Ta
keuchi, knowledge conversion is based on four modes:
Socialization: Knowledge is converted from tactic to tactic through sharing and
exchanging experiences and technical skills. Externalization: Tactic knowledge i
s converted into explicit concept like analogies, models generalization etc. Com
bination: Knowledge is converted from explicit to explicit by reconfiguration of
existing information by infusing modifications, additions, MU 0001 - 7- deleti
ons, sorting combinations and categorization. This effort results on the creatio
n of new or improved knowledge. Internalization: Knowledge is converted from exp
licit to tactic. This is related to learning by reading, listening and doing. Th
is stage helps the individual to conceptualize the knowledge from his own perspe
ctive through the interaction of his own cognition. Thus, the individual interna
lizes the explicit knowledge and converts it into tactic knowledge.
Organizational knowledge creation process: Organizational knowledge creation inv
olves five phases. These five phases include: Sharing tactic knowledge: Interact
ion among individual employees in the form of meetings, discussions and conflict
over ideas, provides for exchange and sharing of tactic knowledge. Thus, tactic
knowledge held by most of the employees becomes the organizational knowledge.
Creating concepts: The cognitive process of each employee crystallizes the share
d tactic knowledge into models, concepts and words. Justifying concepts: The new
concepts generated by individual need to be tested in practice and justified fo
r further validity and practical implementation. This stage justifies whether th
e new concepts/ideas are worthwhile for the organization and the society.