HUMAN RESOURCE

PLANNING

Ankita Sood
Dept of MBA
 HUMAN RESOURCE PLANNING
Human resource is the most important
asset of an organization.

HRP ensures adequate supply, proper

quantity & quality as well as effective
utilization of human resources.

Human resource planning is the process

by which a management determines how an
organization should move from its current
manpower position to its desired manpower
position.
 DEFINITION OF HRP

According to Geister, “Manpower planning is

the process including forecasting, developing
and controlling by which a firm ensures that it
has-
• The right number of people,
• The right kind of people,
• At the right places,
• At the right time, doing work for which they
are economically most useful”.
 Definitions:

E. W. Vetter, “Human resource planning is the

process by which the management determines
how an organization should move from its
current manpower position to its desired
manpower position.
Through planning the management strives to
have the right number and the right kinds of
people at the right places, at the right time, to do
things which result in both the organization and
the individual receiving the maximum long-range
benefit”.
Nature/Features/Characteristics of HRP
 Well Defined Objectives- HR needs are planned on
the basis of organization goal, Own objectives also.
 Ascertaining manpower needs in number and
kind.
 It presents an inventory of existing manpower
of the organization.
 Adjusting Demand and Supply- Helps in
determining the shortfall or surplus of manpower.
 Acquisition, utilization, improvement and
retention of human resources.
Need/Importance/Advantages/Role of HRP
 Checks the corporate plan of the
organization(Hire or fire)
 Determining the future Personnel Needs-
handle Surplus (underutilized) staff and Shortage
(overstretched staff) and dealing with business start
up, relocation or expansion
 Retaining the highly skilled staff- monitor
turnover, discover reasons
 Managing effective downsizing Programme-
how to cut workforce, retraining, transfers
Need/Importance/Advantages/Role of HRP
 Creating Highly Talented Personnel- avoid
shortages, upgrade/degrade jobs due to technology,
develop succession planning
 International Strategies- hire foreign nationals,
reassignment of employees from within or across
borders
 Foundation for all HR functions- recruitment,
selection, transfers, promotions, layoffs , T&D
 Resistance to change and move- can not move
anyone, anywhere anytime. Need to plan ahead.
Need/Importance/Advantages/Role of HRP

 The demographic changes like the changing

profile of workforce in terms of age, sex,
education etc. need to be managed and
planned.
 The government policies in respect to
reservation, child labor, working conditions
etc.
 Pressure from trade unions, politicians, sons
of soil etc.
Need/Importance/Advantages/Role of HRP

 Introduction of computers, robots and other

tech make skills obsolete.
 It offsets uncertainty and change and helps to
have right men at right time and in right place.
 it provides scope for advancement and
development of employees through training,
development etc.
 It helps to anticipate the cost of salary
enhancement, benefits etc.
Need/Importance/Advantages/Role of HRP

 To foresee the changes in values, aptitude and

attitude of human resources and to change the
techniques of interpersonal management etc.
 To foresee the need for redundancy and plan
to check it or to provide alternative
employment in consultation with trade unions,
other organizations and government through
remodeling organizational, industrial and
economic plans.
Need/Importance/Advantages/Role of HRP

 It helps to take steps to improve human

resource contributions in the form of
increased productivity, sales, turnover etc.
 It facilitates the control of all the functions,
operations, contribution and cost of human
resources.
 Objectives Of HRP
 Assessing manpower needs for future and
making plans for recruitment and selection.
 Assessing skill requirement in future.
 Determining Training and development needs of
an organization.
 Anticipating surplus and shortage of staff
 Controlling wage and salary cost
 Ensuring optimum use of HR in organization.
 Helping organization to cope up with
technological change
 Career planning and succession planning.
 Factors Affecting HRP
 Type and strategy of Organization-
determines production process, no and type of
staff needed and retained, supervisory and
managerial people required. Manufacturing sector
is complex then service sector.
 Growth strategy- additional employees may be
required
 Acquisition/ Mergers- Means Layoff required
 Organization can be proactive or reactive in HRP
 Narrow / broad focus of Planning
 Flexibility of HRP to deal with uncertainty
 Factors Affecting HRP
 Organization Growth cycle and planning –
 Small organization at introductory stage do not require
HR Planning, Planning is required at growth stage
(forecasting becomes essential), at maturity stage
workforce becomes old (retirement), at decline phase
planning is done for layoffs and retirement (reactive).
 Environmental Uncertainties-
 No stable predictable envt. so uncertainities are dealt
with by formulating recruitment , selection, T&D
policies Carefully.
 Political, Social & economic changes affect
organizations
 Factors Affecting HRP
 Time Horizons-
 Short term plan – 6 months to 1 year
 Long term plans- 3yrs to 20 years
 Greater the uncertainty, shorter the time span for
planning. Companies operating in unstable envt. go
for short term plans, & those in stabe envt. go for long
term plan
 Type and quality of information-
 Quality and accuracy of info used for forecast depend
on clarity with which decision makers specify
strategies, organization structure, budgets…
 Job analysis info & HRIS must be used for accuracy
 Factors Affecting HRP
 Nature of Jobs being filled-
 Vacancies should be anticipated in advance to ensure
suitable candidates are recruited. Vacancies arise due
to separation, promotion, expansion strategies
 Easy to employ shop floor people but difficult to fill
managerial positions
 Outsourcing-
 Outsourcing part of work through subcontracting.
Sometimes workers sit idle
 HRP PROCESS

ORGANISATIONAL
OBJECTIVES&POLICIES

HR NEEDS HR SUPPLY
FORECAST FORECAST

HR PROGRAMMING

HRP
IMPLEMENTATION

CONTROL&EVALUATI
ON OF PROGRAMME
SURPLUS- SHORTAGE-
RES.HIRING,REDUC. RECRUITMENT
LAYOFF SELECTION
 Process/Steps/Stages in HRP
1. Environmental Scanning-
analyzing external forces influencing an
organization. (economic factors,
technological, demographic changes,
political issues, social concerns
2. Analyzing organizational plans,
policies and objectives
no. and characteristics of employees should be
based on objectives(whether vacancies are to
be filled by promotions or outside hiring, training
needs, downsize organization, automation
The mission & vision of the organization
 The organization should be clear about it‟s
mission & objectives.
 The manpower planning must be integrated with
other business policies such as profitability,
production, sales & development. Any change in
the business objectives would certainly affect the
manpower planning.
 SWOT analysis
 After organisation has fixed the goals & objectives, the next
step is the corporate assessment. The company now begins to
analyze its goals, current strategies, external environment,
strengths & weaknesses, opportunities & threat, to know
whether they can be able to achieved with the current human
resource.

 The SWOT (Strengths, weakness, opportunities,& threats)

analysis will give the clear picture about the organization
resources such as capital & worker it will also indicate
departmental abilities such as training & development,
marketing, accounting, research and development &
management information system. This SWOT analysis serves
as the link between the organization goals & the way or
direction in which the organization should go to meet its
objectives.
THE PROCESS OF HUMAN
RESOURCE PLANNING
 2. Man power Forecasting :-Forecasting of
future manpower requirement is the most
important part of manpower planning. It is done
on the basis of production & sales budgets, work
loads analysis, work force analysis, estimated
absenteeism & turnover. The future manpower
requirements should be forecasted quantitatively
& qualitatively. Their are several factors which
need to be look upon before forecasting.
Process/Procedure/Steps/Stages in
Human Resource Planning:

2.1 Demand forecasting

 Managerial Judgement
 Statistical Techniques – ratio analysis and
econometric models
 Work study techniques
 Employment trends
 Replacement needs
 Growth and expansion
 Productivity
 MANAGERIAL JUDGEMENT

•Experienced managers estimate manpower

requirements
•In this technique the managers sit together, discuss
and arrive at a figure which would be the future
demand for labor.
•May involve top down or bottom up approach
•Simple and time saving method
•Suitable for smaller firms
 RATIO TREND ANALYSIS
 Ratio‟s are calculated on the basis of past data
 Future ratio‟s are calculated e.g.
Example-:
Level of production in present year = 50000 unit
Present no. of employees = 50
Ratio is 1:1000
Estimated production for next year = 60000 unit
Employees required relative to present ratio
= 60000 * 1/ 1000
No. of employees = 60
 Work study Technique

 This technique can be used when it is possible to apply

work measurement to calculate the length of operations
and the amount of labor required.
 Budget for productive hours are prepared. And std
hours reqd for per unit output is estimated
 Planned output for Next year = 50,000 Units
 Standard hours per unit = 2
 Planned hours required 50,000*2 = 1,00,000
 Productive hours per worker in the year = 2,000
 Number of workers required 1,00,000/2,000 = 50
 If span of control is 10, 5 (50/10) supervisors will be required
 Regression Analysis- Forecast is based on
relation between sales volume and employee
size. Regression line is formed and estimates
are done on basis of that
 Delphi technique- estimates based on groups
of experts. HR experts summarize response of
experts and reports the findings back to experts.
Experts are surveyed again until experts opinion
is agreed.
 Quantitative Aspect:
 Determining the number of employees required in the future. It
can be assessed through WORK LOAD ANALYSIS and
WORK FORCE ANALYSIS

WORK LOAD ANALYSIS: Analyzing on the basis

of work load for each department on the basis of sales
forecast, work schedules, Expansion plans etc. Work
Study technique is used here

WORK FORCE ANALYSIS: All existing workers

may not be available through out the year due to
absenteeism and turnover. E.g. 5% absent, 5% leave then
if forecasted man force is 200 then, required will be
200+200/10=220 during the year.
Qualitative Aspect: Skill Analysis:

The quality of manpower required varies from job

to job.
The need is of the hour is JOB ANALYSIS. It is the
process of analyzing the job so as to collect all
pertinent facts about the job in terms of duties and
responsibilities involved in it and the
qualifications needed for successful performance
of the job.
Then JOB DESCRIPTION(Job factor) and JOB
SPECIFICATION (Human factor) is prepared.
 Markov Analysis-
 Select an appropriate Time Horizon
 divide manpower into categories(States)

 2.2 HR SUPPLY FORECAST
Supply forecasting measures the number of people
likely to be available from within and outside an
organization, after making allowance for absenteeism,
internal movements and promotions, wastage and
change in hours and other conditions of work.
Advantages of Supply Forecast:
helps to quantify no. of people and positions expected
to be available in future
assess existing staff level in different parts of
organization
clarify likely staff mixes in future
prevents shortage of staff
The supply analysis covers:
(1) Existing Human Resources

(2) Internal sources of supply

(3) External sources of supply

 Existing Human Resources

Analysis of present employees is greatly

facilitated by HR audits. HR audits
summarizes each employee’s skills and
abilities.
The audits of non-managers are called skill
Inventories and those of the management
(managers) are called management
Inventories.
 a) Skills Inventories- HRIS
 Contains full information about each employees
current job. These are used for transfer and
promotion decisions. They are :
 Personal Data- Age, gender, marital status
 Skills-Education, job experience, training
 Special Qualifications- membership in professional
bodies, special achievements.
 Company Data- Benefit plan data, retirement
information, seniority
 Capacity of an individual- psychological test score,
health info
 Salary and job history
 Individual preference like geographical location
b) Management Inventories

These include:
 Personal data
 Work History
 Strengths
 Weaknesses
 Promotion potential
 Career goals
 Number and types of employees supervised
 total budget managed
 Previous management duties
 INTERNAL SOURCES OF SUPPLY
 Inflows and outflows- we analyze gain and loss of
people on a particular job. Total losses are subtracted
from current personnel level and total gains are added
to determine expected level at end of each planning
year.
losses- transfer, resignation, promotion, retirement,
layoff, death etc
Gains- promotions, transfers, new recruits
 Turnover rate
(No of separations during yr / avg no of employees during that yr)
*100
 Conditions of work and Absenteeism-
change in Working hours, overtime policy,
retirement policy, timing of holidays, shift system,
part timers etc
Absenteeism – unauthorized absence from work
(emp is scheduled to work but fails to report at
duty)
= (no of persons- days lost) / (avg no of person * no of
working days)*100
Productivity level-
any change in productivity would affect the
number of persons required per unit of
output
(inc in PL reduce requirement,
Dec in PL increase requirement)
 Movement among jobs
 EXTERNAL SOURCES OF SUPPLY
 Colleges and Universities
 Consultants
 Advertisements-applications
 IMPORTANCE
 New blood and new experience is available.
 Organization needs to replenish lost personnel.
 Organization growth and diversification creates
a need to obtain a new type of employees.
Process/Procedure/Steps/Stages in
Human Resource Planning:

4. Estimating the net human

resource requirement
THE PROCESS OF HUMAN
RECOURCE PLANNING
 (a) Employment Trend :-The manpower
planning committee should compare & analyze
the trend of last five year to forecast the
manpower requirements.
 (b) Productivity:- Manpower requirements are
also influenced by improvement in productivity.
The important three aspects are
 Better utilization of existing manpower.
 Improvement in technology.
 Matching of skills with job requirement.
THE PROCESS OF HUMAN
RESOURCE PLANNING
 (c ) Absenteeism:-Absenteeism is a situation
when a person fails to came for work when he is
scheduled to work. while estimating demand for
manpower the prevailing rate of absenteeism in
the organisation should be considered.
 (d) Expansion & Growth:- Expansion & growth
plans of the organisation should be carefully
analyzed to judge their impact on manpower
requirement in future.
Process/Procedure/Steps/Stages in
Human Resource Planning:

5. In case of future surplus –

plan for redeployment,
retrenchment and lay-off
Process/Procedure/Steps/Stages in
Human Resource Planning:

6. In case of future deficit –

forecast the future supply of
human resources from all
sources with reference to
plans of other companies
Process/Procedure/Steps/Stages in
Human Resource Planning:

7. Plan for recruitment,

development and internal
mobility if future supply is
more than or equal to net
human resource requirements
Process/Procedure/Steps/Stages in
Human Resource Planning:

8. Plan to modify or adjust the

organizational plan if future
supply will be inadequate with
reference to future net
requirements.
SHORTAGE SURPLUS
 Recruit new  Freeze hiring
 Offer incentives to old  Offer VRS
 Re-hire retirees for part  Reduce working hours
time  Layoffs
 Attempt to reduce turnover  Employee training
 Current staff works  Reduce outsourced
overtime work
 Hire temporary employees  Expand operations
 Redesign job process so  Don‟t replace those
that fewer employees are who leave
needed
 The Benefits of HR Planning
 A systematic and integrated approach to HR policies
and programmes
 An improved framework for communicating clearly
defined goals and strategies
 Optimum utilization of workforce
 Improved employee relations and higher productivity
 Higher quality products or services
 Reduced labour cost
 Greater security and stability of employment
 Lower turnover
The Benefits of HR Planning
 Improved succession planning
 Improved competitiveness and „survivability‟
 Growth of organization by facilitating expansion
and diversification.
 Beneficial to the country as it facilitates
educational reforms, geographical mobility of
talent and employment generation
Problems in manpower planning

 Accuracy of forecasts:-If the forecast are not

accurate, planning will not be accurate.
Inaccuracy increases when departmental
forecasts are merely prepared without critical
review.
 Identity Crisis:- Many human resource
specialists & the managers do not understand
the whole manpower planning process. Because
of this there is generally an identity crisis (Role
Confusion).
 Problems in manpower planning
 Support of Top Management:-Manpower planning
requires full & wholehearted support from the top
management. In the absence of this support &
commitment, it would not be possible to ensure the
necessary resources & cooperation for the success
of the manpower planning.

 Resistance from Employees:- Employees & trade

unions resist manpower planning. They feel that this
planning increases their overall workload &
regulates them through productivity bargaining.
They also feel that it would lead to wide spread
unemployment, especially of unskilled labour.
 Problems in manpower planning
 Insufficient initial efforts:- Successful human resource
planning flourish slowly & gradually. Sometimes
sophisticated technologies are forcefully introduced just
because competitors have adopted them. These may
not be successful Unless matched with the need &
environment of the particular enterprise.

 Management information system:- Effectiveness of

the planning depends upon the reliability of the
information system. In most of the Indian industries,
human resource information system has not fully
developed. In the absence of reliable data it would not
be possible to have effective planning
Problems in manpower planning
 Expensive & Time consuming:-Manpower
planning is an expensive & time consuming
process .Employers may resist manpower
planning feeling that it will increase the cost of
manpower.

 Coordination with other managerial

Functions:- To be effective manpower planning
must be integrated with other management
functions. It can not be carried out by remaining
aloof
Problems in manpower planning
 Unbalanced Approach:- Many human resource
person gives more importance on the
quantitative aspects of manpower to ensure that
there is adequate flow of people in & out of the
organisation. They overlook the qualitative
aspects like career development & planning ,skill
levels, morale .
 Uncertainities – fast changing environment
affects HRP
 LEVELS of HRP
 Plant Level - can be conducted by operating
committee on basis of past data and future
projections. Committee prepare a plan for next
year including no. of employees required.
These plans are evaluated with the help of
manpower planning experts.
 Departmental/ divisional level- plant level plan
is submitted to departmental level. The
divisional committee would integrate all the
plans for its plants and with plans of divisional
section to prepare divisional manpower
planning report.
 Top Level- At the top level, divisional
reports are reviewed and integrated with
manpower plans for head office staff.
Organization manpower plans are
integrated with their plans
 Approaches to HRP
Quantitative Approach (Top down approach)-
It is a management-driven approach under which the HR
planning is regarded as a number's game
It is based on the analysis of Human Resource
Information System and HR Inventory Level. On the
basis of information provided by HRIS, the demand of
manpower is forecasted using different quantitative
tools and techniques such as trend analysis,
mathematical models, economic models etc. The
focus of this approach is to forecast human resource
surplus and shortages in an organization
 Qualitative Approach (Bottom Up)
 It is Employee Driven Approach /subordinate-driven
approach
 The subordinates make an effort to prepare the draft
of HR planning. It focuses on individual employee
concerns. It is concerned with matching organizational
needs with employee needs. Moreover, it focuses on
employee's training, development and creativity.
Similarly, compensation, incentives, employee safety,
welfare, motivation and promotion etc. are the primary
concerns of this approach
 Mixed Approach

 It combines both top-down and bottom-up

approaches of HR planning. In fact, the effort is
made to maintain balance between employees and
the management. Hence, it tends to produce the
best results. It is also regarded as an Management
By Objective(MBO) approach of HR planning. There
is a equal participation of each level of employees of
the organization.
 Evaluating effectiveness of HRP

 Determining weather there was surplus or

shortage or sufficient staff
 Rating the success – did performance improve?
Positive impact or not?
ŐMeasure the impact- Track productivity, output,
revenue, improved process time etc.
ŐTranslate gains from projects into value for the
company
Thank You
Problems in Human Resource Planning

 Resistance by employer
 Resistance by employees
 Resistance by trade unions
 Uncertainties
 Inadequacies of Information system
 Identity crisis
 Slow and gradual process
 Co-ordination with other management
functions
 Integration with organizational plans