Human Resource Planning

Human Resource Planning

Process of anticipating and making provision
for the movement (flow) of people into,
within, and out of an organization.

Planning so that the organization has the

right number of people, right kind of
people, at the right time, in the right place.
Is the first component of HRM strategy
All other functional HR activities are derived from and
flow out of the HRP process.
Has its basis in considerations of future HR
requirements in light of present HR capabilities and
capacities.
Is proactive in anticipating and preparing flexible
responses to changing HR requirements.
Has both an internal and external focus.
 HR Planning Issues
Staffing Questions:
How do we manage staffing in times of recession or
expansion?
What impact does technology change, mergers or
relocation have on staffing issues?
Do we always have the right people in the right jobs
at the right time?
How do we get our human resources: buy them or
make them or both?
 Why is HRP important?
 Helps in organisational expansion & diversification
 Prevent overstaffing and understaffing
 Ensure responsiveness to change
 Lead time in Training & Development
 Ensures that right skills & right number of people are
in place
 Reduces HR costs
External Environment Strategic Planning
Internal Environment

Human Resource
Planning

Forecasting Comparing Forecasting

Human Reqts and Human Resource
Resource Availability
Requirements Availability

Demand = Shortage of
Supply Surplus of Workers
Workers

No Action Recruitment
Restricted Hiring,
Reduced Hours,
Selection
Early Retirement,
Layoffs,
Downsizing
 HRP and Strategic Planning
Strategic Analysis
 What human resources are needed and what are
available?
Strategic Formulation
 What is required and necessary in support of human
resources?
Strategic Implementation
 How will the human resources be allocated?

Human
Human Resource
Resource Strategic
Strategic
Planning
Planning Planning
Planning
HRP and External Environment
Environmental Scanning
 The systematic monitoring of the major
external forces influencing the organization.
 Economic factors
 Competitive trends
 Technological changes
 Political and legislative issues
 Social concerns
 Demographic trends
Scanning the Internal Environment
Cultural Audits
 Audits of the culture and quality of work life in an
organization.
 How do employees spend their time?
 How do they interact with each other?
 Are employees empowered?
 What is the predominant leadership style of
managers?
Benchmarking
 The process of comparing the organization’s
processes and practices with those of other
companies.
 Human Resource Planning Model
FORECASTING
FORECASTINGDEMAND
DEMAND BALANCING
BALANCING
Considerations Techniques SUPPLY
SUPPLYAND
AND
Considerations Techniques DEMAND
••Technology •• Trend DEMAND
Technology Trendanalysis
analysis
••Financial resources •• Managerial
Financialresources Managerial
(Shortage)
(Shortage)
••Organizational
Organizationalgrowth
estimates
growth estimates
Recruitment
Recruitment
••Mgmt. •• Delphi
Delphitechnique Full-time
Full-time//Part-time
Mgmt.philosophy
philosophy technique Part-time
Techniques
Techniques External
External (Surplus)
••HR Considerations (Surplus)
HRinventories
inventories Considerations Reductions
••Markov ••Wkforce
Reductions
Markovanalysis
analysis Wkforcechanges
changes ••Layoffs
••Skill ••Mobility Layoffs
Skillinventories
inventories Mobility ••Terminations
••Replacement ••Govt Terminations
Replacementcharts
charts Govtpolicies
policies ••Demotions
••Unemployment Demotions
••Succession
SuccessionPlanning
Planning Unemployment ••Retirements
Retirements
FORECASTING
FORECASTINGSUPPLY
SUPPLY
Forecasting Demand for
Employees

Quantitative
Quantitative
Methods
Methods

Forecasting
Forecasting Demand
Demand

Qualitative
Qualitative Methods
Methods
Quantitative Approach: Trend Analysis
Forecasting labor demand based on an organizational
index:
 Select a business factor, e.g. sales, that best predicts
human resources needs.
 Plot the business factor in relation to the number of
employees to determine average labor productivity.
 Compute labor productivity for the past five years.

 Project human resources demand out to the target

year(s).
 Example of Trend Analysis of HR Demand
BUSINESS LABOR HR
FACTOR ÷ PRODTY = DEMAND
YEAR (SALES IN ‘000) (SALES/EMPLOYEE) (NO. OF EMPLOYEES)

1999 Rs. 2,935 8.34 352

2000 Rs. 3,306 10.02 330
2001 Rs. 3,613 11.12 325
2002 Rs. 3,748 11.12 337
2003 Rs. 3,880 12.52 310
2004 Rs. 4,095 12.52 327
2005* Rs. 4,283 12.52 342
2006* Rs. 4,446 12.52 355 *Projected figures
Qualitative Approaches to Demand
Forecasting
Management Forecasts
 The opinions (judgments) of supervisors, department
managers, experts, or others knowledgeable about the
organization’s future employment needs.
Delphi Technique
 An attempt to decrease the subjectivity of forecasts by
soliciting and summarizing the judgments of a
preselected group of individuals.
 The final forecast represents a composite group
judgment.
Forecasting Supply of Employees:
Internal Labor Supply
Staffing Tables
Markov Analysis
Skill Inventories
Replacement Charts
Succession Planning
Forecasting Internal Labor Supply
Staffing Tables
 Graphic representations of all organizational jobs,
along with the numbers of employees currently
occupying those jobs and future (monthly or yearly)
employment requirements.
Markov Analysis
 A method for tracking the pattern of employee
movements through various jobs. Shows the % &
actual no of employees who remain in each job
from one year to the next and also the proportions
of those who are promoted, demoted, transferred or
leave the organization.
Hypothetical Markov Analysis for a
Retail Company
Internal Supply Forecasting Tools
Skill Inventories
 Files of personnel education, experience, interests,
skills, etc., that allow managers to quickly match job
openings with employee backgrounds.
Replacement Charts
 Listings of current jobholders and persons who are
potential replacements if an opening occurs.
Succession Planning
 The process of identifying, developing, and tracking
key individuals for executive positions.
An Executive Replacement Chart
Forecasting Supply of Employees:
External Labor Supply
Factors Influencing the External Labor Supply:
 Demographic changes in the population

 National and regional economics

 Education level of the workforce

 Demand for specific employee skills

 Population mobility

 Governmental policies
 Sources of Information About
External Labor Markets
Department of Labor publications
State and local planning and development
agencies
Chambers of Commerce
Industry and trade group publications
State and local employment agencies
 HRP Considerations
Balancing supply and
demand
 Elements of The HR Plan
Acquisition of personnel
Effective Utilization
 redeployment

 methods improvement

 training to prevent obsolescence

Development and Improvement

 broad-based training and development

 performance management systems

Retention
 proper remuneration

 long-term career planning

 healthy employee relations

 good working environment

 Requisites for Successful HRP
HRP must be seen as equally vital as business planning
Top-management support
Periodic review and revision of the forecasting
techniques and the forecasts
Without long range planning concentration becomes
focussed on short-term needs resulting in “crisis
management” reactions
An excellent and up-to-date HRIS
Active involvement of line managers and co-ordination
between line mgrs and HR function