UNIT III

LESSON

5
INTRODUCTION TO
HUMAN RESOURCE PLANNING

CONTENTS
5.0 Aims and Objectives
5.1 Introduction
5.2 Need of HRP
5.3 Benefits of HRP
5.4 Process of Human Resource Planning
5.4.1 Forecasting the Demand for Human Resources
5.4.2 Preparing Manpower Inventory (Supply Forecasting)
5.4.3 Determination of the Quality of Personnel
5.4.4 Formulating HR Plans
5.5 Job Diagnostic Survey
5.6 Responsibility for HRP
5.7 Effective Human Resource Planning
5.8 Let us Sum up
5.9 Lesson End Activity
5.10 Keywords
5.11 Questions for Discussion
5.12 Suggested Readings

5.0 AIMS AND OBJECTIVES

The purpose of this lesson is to enable the students to have a clear view of the process
of human resource planning, as it is correctly practised in most organisations. After
studying this lesson, you will be able to:
 Understand the meaning, objectives and importance of HRP
 Outline the HRP process
 Describe why an internal assessment of current jobs and skills is important to HRP
 Understand the factors to be taken into account while forecasting the supply and
demand for human resources in an organisation
66
Personnel Management Concepts 5.1 INTRODUCTION
Human resource is an important corporate asset and the overall performance of
companies depends upon the way it is put to use. In order to realise company objectives,
it is essential to have a human resource plan. Human Resource Planning (also called
employment or personnel planning) is essentially the process of getting the right number
of qualified people into the right job at the right time so that an organisation can meet its
objectives. It is a system of matching the supply of people (existing employees and those
to be hired or searched for) with openings the organisation expects over a given time
frame.
Human Resource Planning (HRP) is a forward looking function. It tries to assess human
resource requirements in advance keeping the production schedules, market fluctuations,
demand forecasts, etc., in the background. The human resource plan is subject to revision,
of course, and is tuned to the requirements of an organisation from time to time. It is an
integral part of the overall corporate plan and reflects the broad thinking of management
about manpower needs within the organisation. The focus of the plan is always on
getting right number of qualified people into the organisation at the right time. To this end,
human resource plans are prepared for varying time periods, i.e., short term plans covering
a time frame of 2 years and long term plans encompassing a period of 5 or more years.

5.2 NEED OF HRP

The basic purpose of having a human resource plan is to have an accurate estimate of
the number of employees required, with matching skill requirements to meet organisational
objectives. It provides information about the manner in which existing personnel are
employed, the kind of skills required for different categories of jobs and human resource
requirements over a period of time in relation to organisational objectives. It would also
give an indication of the lead time that is available to select and train the required number
of additional manpower.
More specifically, HR planning is required to meet the following objectives:
 Forecast personnel requirements: HR planning is essential to determine the future
manpower needs in an organisation. In the absence of such a plan, it would be
difficult to have the services of right kind of people at the right time.
 Cope with changes: HR planning is required to cope with changes in market
conditions, technology, products and government regulations in an effective way.
These changes may often require the services of people with the requisite technical
knowledge and training. In the absence of an HR plan, we may not be in a position
to enlist their services in time.
 Use existing manpower productively: By keeping an inventory of existing
personnel in an enterprise by skill, level, training, educational qualifications, work
experience, it will be possible to utilise the existing resources more usefully in
relation to the job requirements. This also helps in decreasing wage and salary
costs in the long run.
 Promote employees in a systematic manner: HR planning provides useful
information on the basis of which management decides on the promotion of eligible
personnel in the organisation. In the absence of an HR plan, it may be difficult to
ensure regular promotions to competent people on a justifiable basis.
 67
5.3 BENEFITS OF HRP Introduction to
Human Resource Planning
Human Resource Planning is a highly important and useful activity. If used properly, it
offers a number of benefits:
 Reservoir of talent: The organisation can have a reservoir of talent at any point of
time. People with requisite skills are readily available to carry out the assigned
tasks.
 Prepare people for future: People can be trained, motivated and developed in
advance and this helps in meeting future needs for high-quality employees quite
easily. Likewise, human resource shortages can also be met comfortably (when
people quit the organisation for various reasons) through proper human resource
planning.
 Expand or contract: If the organisation wants to expand its scale of operations, it
can go ahead easily. Advance planning ensures a continuous supply of people with
requisite skills who can handle challenging jobs easily.
 Cut costs: Planning facilitates the preparation of an appropriate HR budget for
each department or division. This, in turn, helps in controlling manpower costs by
avoiding shortages/excesses in manpower supply. The physical facilities such as
canteen, quarters, school, medical help, etc., can also be planned in advance.
 Succession planning: Human Resource Planning, as pointed out previously,
prepares people for future challenges. The ‘stars’ can be picked up and kept ready
for further promotions whenever they arise. All multinational companies for example,
have this policy of having a ‘hot list’ of promising candidates prepared in advance
e.g., HLL, Proctor & Gamble, Godrej consumer products etc. Such candidates are
rolled over various jobs and assessed and assisted continuously. When the time
comes, such people ‘switch hats’ quickly and replace their respective bosses without
any problem.

5.4 PROCESS OF HUMAN RESOURCE PLANNING

The process of HRP usually followed in a large organisation, consists of the following
steps:

5.4.1 Forecasting the Demand for Human Resources

Most firms estimate how many employees they require in future. The demand for human
talent at various levels is primarily due to the following factors:
a. External challenges: These challenges arise from three important sources:
 Economic developments: Liberalisation, opening up of banking sector, capital
market reforms, the on-line trading systems have created huge demand for
finance professionals during 1990-1995 in India. The late 90s saw the rise of
manufacturing, FMCG, Pharmaceuticals, Auto-components, Healthcare and
Chemical Industries in a steady manner. Consequently, the demand for
Engineering and Management graduates, Scientists and Healthcare
professionals has picked up in recent times.
 Political, legal, social and technical changes: The demand for certain
categories of employees and skills is also influenced by changes in political,
legal and social structure in an economy. Likewise, firms employing latest
68 technology in construction, power, automobiles, software, etc., have greatly
Personnel Management Concepts
enhanced the worth of technicians and engineers during the last couple of
years. Technology, however, is a double-edged weapon and hence, its impact
on HR plans is difficult to predict. For example, computerisation programme
in Banks, Railways, Post and Telegraph Departments may reduce demand in
one department (book keeping, for example) while increasing it in another
(such as computer operations). High technology with all its attendant benefits
may compel organisations to go lean and downsize workforce suddenly.
Employment planning under such situations becomes complicated.
 Competition: Companies operating in fields where a large number of players
are bent upon cutting each other’s throat (with a view to enhance their market
shares) often reduce their workforce. Competition is beneficial to customers
but suicidal for companies operating on thin margins. Such companies have
to necessarily go ‘lean’ by reducing their workforce. On the other hand,
companies that are doing well and progressing smoothly will always look for
people with critical skills.
b. Organisational decisions: The organisation’s strategic plan, sales and production
forecasts and new ventures must all be taken into account in employment planning.
If Britannia Industries Ltd expects higher demand for biscuits and bread, the long-
term HR plan must take this into consideration. Likewise, if it tries to venture into
other lucrative fields such as milk based products and confectionery items, the
demand for people possessing requisite skills in those areas in the next couple of
years should be looked into carefully.
c. Workforce factors: Demand is modified by retirements, terminations, resignations,
deaths and leaves of absence. Past experience, however, makes the rate of
occurrence of these actions by employees fairly predictable.
d. Forecasting techniques: The manpower forecasting techniques commonly
employed by modern organisations are given below:
 Expert forecasts: In this method, managers estimate future human resource
requirements, using their experiences and judgements to good effect.
 Trend analysis: HR needs can be estimated by examining past trends. Past
rates of change can be projected into the future or employment growth can
be estimated by its relationship with a particular index.
Box 5.1: Trend Analysis (An Example)

2001-02 Production of Units : 5,000

2002-03 No. of Workers : 100
Ratio : 100:5000
2003-04 Estimated Production : 8,000

100
No. of Workers required : 8000 × = 160
5000

If supervisors have a span of 20 workers, 8 supervisors are also needed in 2003-04.

e. Other methods: Several mathematical models, with the aid of computers are also
used to forecast HR needs, e.g., regression, optimisation models, budget and planning
analysis.
To proceed systematically, human resource professionals generally follow three steps. 69
Introduction to
Let’s examine these steps as applied in respect of, say a commercial bank. Human Resource Planning
 Workforce analysis: The average loss of manpower due to leave, retirement,
death, transfer, discharge, etc., during the last 5 years may be taken into account.
The rate of absenteeism and labour turnover should also be taken into account.
The nature of competition say from foreign banks, other non-banking financial
institutions may also be considered here to find out actual requirements in a year
(Box 5.2).
Box 5.2: Manpower Flows in a Bank

Promotions out
Transfers In > > Job Hopping
> Transfers Out
> Retirement
> VRS Scheme (Golden handshake)
Recruits In > > Discharge or Dismissal
> Terminations
> Resignations
Promotions In > > Retrenchment
> Attractions in Other Banks, etc.

While some of the interchanges and external supply could be predicted (growth
opportunities, promotions, transfers, retirements, etc.) others are not so easy to
predict. Past experience and historical data may help bank managers in this regard.
 Work load analysis: The need for manpower is also determined on the basis of
work-load analysis, wherein the company tries to calculate the number of persons
required for various jobs with reference to a planned output – after giving weightage
to factors such as absenteeism, idle time, etc. The following example would throw
light on this:
Box 5.3: Work Load Analysis (An Example)

Planned output for the year 10,000 pieces

Standard hours per piece 3 hours
Planned hours required 30,000 hours
Productive hours per person per year 1,000 hours (estimated on annual basis)
(allowing for absenteeism, turnover, idle time etc.)
No. of workers required 30
If span of control in the unit is 10 per officer, then 3 officers are also required.

While determining manpower requirements through work load analysis, commercial

banks may have to take the following factors into consideration: (i) the number of
transactions to be handled by an employee; (ii) the amount of deposits and advances
per employee; (iii) special requirements in respect of managing extension counters,
currency chests, mobile branches, etc.; (iv) future expansion plans of the bank
concerned. Managerial judgement – a study of the past trends – may serve as a
useful guide in this regard. Statistical and econometric models may also be pressed
into service, sometimes, depending on the requirement(s).
 Job analysis: Job analysis helps in finding out the abilities or skills required to do
the jobs efficiently. A detailed study of jobs is usually made to identify the qualifications
70 and experience required for them. Job analysis includes two things: Job description
Personnel Management Concepts
and job specification. Job description is a factual statement of the duties and
responsibilities of a specific job. It gives an indication of what is to be done, how it
is to be done and why it is to be done. Job specification provides information on the
human attributes in terms of education, skills, aptitudes and experience necessary
to perform a job effectively.

5.4.2 Preparing Manpower Inventory (Supply Forecasting)

The basic purpose of preparing manpower inventory is to find out the size and quality of
personnel available within the organisation to man various positions. Every organisation
will have two major sources of supply of manpower: internal and external.
(a) Internal labour supply: A profile of employees in terms of age, sex, education,
training, experience, job level, past performance and future potential should be kept
ready for use whenever required. Requirements in terms of growth/diversification,
internal movement of employees (transfer, promotions, retirement, etc.) must also
be assessed in advance. The possibilities of absenteeism and turnover should be
kept in mind while preparing the workforce analysis. Through replacement charts
or succession plans, the organisation can even find out the approximate date(s) by
which important positions may fall vacant. Frequent manpower audits may be carried
out to find out the available talent in terms of skills, performance and potential.
(see Figure 5.1)
Some of the important forecasting techniques may be summarised thus:
Staffing table: It shows the number of employees in each job. It tries to classify
employees on the basis of age, sex, position, category, experience, qualifications,
skills, etc. A study of the table indicates whether current employees are properly
utilised or not.

Sources of Inflows The Firm Projected Outflows

 Promotions

 Transfers  Quits

 Promotions  Terminations
Employees In Current Staffing Employees Out
 New Recruits Level  Retirements

 Recalls  Deaths

 Layoffs

Current Projected Projected Firm’s internal

staffing – outflows + inflows = supply for this
level this year this year time next year

Figure 5.1: Estimated Internal Labour Supply for a given Firm

Markov analysis: This techniques uses historical rates of promotions, transfer
and turnover to estimate future availabilities in the workforce. Based on past
probabilities, one can estimate the number of employees who will be in various
positions with the organisation in future.
 71
2003-2004 Store Asst. Store Section Dept. Sales Exit Introduction to
Managers Managers Heads Heads Executives Human Resource Planning
Store Managers 80% 20%
(n = 15)
12 3

Asst. Store 11% 83% 6%

Managers
4 30 2
(n = 36)
Section
11% 66% 8% 15%
Heads
(n = 94) 11 63 8 14

Departmental
Heads 10% 72% 2% 16%
(n = 288) 29 207 6 46

Sales
Executives 6% 74% 20%
(n = 1440) 86 1066 288
Forecasted
Supply 16 41 92 301 1072 353

Figures in circles show the transition percentages

Figure 5.2: Marcov Analysis for a Hypothetical Retail Company

Skills inventory: A skills inventory is an assessment of the knowledge, skills, abilities,
experience and career aspirations of each of the current employees. This record
should be updated at least every 2 years and should include changes such as new
skills, additional qualifications, changed job duties etc. Of course, confidentiality is
an important issue in setting up such an inventory. Once established, such a record
helps an organisation to quickly match forthcoming job openings with employee
backgrounds.
Name : A. K. Sen Date printed : 1-4-2004
Number : 429 Department : 41

Keywords Work experience

Word Description Activity From To
Accounting Tax Supervision 1998 2000 Tax clerk ABC Company
and analysis
Book Keeping Ledger Supervision 2000 2002 Accountant XYZ Co.
Auditing Computer Analysis 2002 2003 Chief Accounts TT Bank
records Officer

Education Special Qualifications Memberships

Degree Major Year Course Date 1. AIMA

MBA Finance 1998  DBF 1996 2. ISTD

B.Com Accounts 1995  Risk Management 1999 3. ICA

Computer Languages Position Location Hobbies

Literacy preference choice

 Tally  French Accounting  Kolkata  Chess

 Banking Auditing  Delhi  Football
Software  Bangalore  Boating

Employees Signature __________ HR Department________

Date _______________________ Date ________________

Figure 5.3: An Example of a Skills Inventory

72 Replacement chart: It shows the profile of job holders department-wise and offers
Personnel Management Concepts
a snapshot of who will replace whom if there is a job opening. (See Figure 5.4).

General Manager Key

V. K. Garg
Names given are replacement
A/2
candidates
P A to A. Promotable now
General Manager B. Needing development
L. Mathews C. Not suitable to position
B/1 1. Superior performance
Assistant General Manager 2. Average performance
R.K. Arora A/2 3. Acceptable performance
4. Poor performance

Division: Division:
Division: Technical Advisor
Accounting & Planning Manager
HR Manager N. R. Murthy B/3
Taxation Manager A.N. Gupta A/1
C. P. Thakur A/1
A.T. Roy C/2 K. P. Rao B/1

Northern Region Central Region Southern Region Manager Eastern Region

Manager Manager A. Subramanyam B/2 Manager
L. C. Srivastava A/2 S. P. Kumar A/1 B. K. Menon B/1 R. Krishna B/3
A. Thapar C/4 R. Pandey B/3

Figure 5.4: An Executive Replacement Chart

(b) External labour supply: When the organisation grows rapidly, diversifies into
newer areas of operations (merchant banking, capital market operations, mutual
funds, etc. in the case of a bank) or when it is not able to find the people internally
to fill the vacancies, it has to look into outside sources. To the extent an organisation
is able to anticipate its outside recruitment needs and looks into the possible sources
of supply keeping the market trends in mind, its problem in finding the right personnel
with appropriate skills at the required time would become easier. (see Box 5.4)
Organisations, nowadays, do not generally track the qualifications of thousands of
employees manually. Details of employees in terms of knowledge, skills, experience,
abilities etc., are computerised, using various packaged software systems. [There are
over 300 computerised human resource informations systems now available].
Box 5.4: Important Barometers of Labour Supply

1. Net migration into and out of the area

2. Education levels of workforce
3. Demographic changes in population
4. Technological developments and shifts
5. Population Mobility
6. Demand for specific skills
7. National, regional unemployment rates
8. Actions of competing employers
9. Government policies, regulations, pressures
10. Economic Forecasts for the next few years
11. The attractiveness of an area
12. The attractiveness of an industry in a particular place
 73
Check Your Progress 1 Introduction to
Human Resource Planning
Mention the two major of supply of manpower.
................................................................................................................
................................................................................................................

5.4.3 Determination of the Quality of Personnel

The existing number of personnel and their skills (from human resource inventory) are
compared with the forecasted manpower needs (demand forecasting) to determine the
quantitative and qualitative gaps in the workforce. A reconciliation of demand and supply
forecasts will give us the number of people to be recruited or made redundant as the
case may be. This forms the basis for preparing the HR plan. Box 5.5 shows how
demand and supply forecasts can be related over a period of three years.
Box 5.5: Determining Human Resource Requirements

Year
1 2 3
1. Number required at the beginning of the year
2. Changes to requirements forecast during the year DEMAND
3. Total requirements at the end of the year (1+2) -------------
4. Number available at the beginning of the year
5. Additions (transfers, promotions) SUPPLY
6. Separations (retirement, wastage, promotions out and other losses)
7. Total available at the end of year (4+5+6) --------------------
8. Deficit or surplus (3-7) RECONCILIATION
9. Losses of those recruited during the year OF THE ABOVE
10. Additional numbers needed during the year (8+9) MANPOWER NEEDED

5.4.4 Formulating HR Plans

Organisations operate in a changing environment. Consequently, Human resource
requirements also change continually. Changes in product mix, union agreements,
competitive actions are some of the important things that need special attention. The
human resource requirements identified along the procedure outlined in the above box
need to be translated into a concrete HR plan, backed up by detailed policies, programmes
and strategies (for recruitment, selection, training, promotion, retirement, replacement,
etc.).
 Recruitment plan: Will indicate the number and type of people required and when
they are needed; special plans to recruit right people and how they are to be dealt
with via the recruitment programme.
 Redeployment plan: Will indicate the programmes for transferring or retraining
existing employees for new jobs.
 Redundancy plan: Will indicate who is redundant, when and where; the plans for
retraining, where this is possible; and plans for golden handshake, retrenchment,
lay-off, etc.
74  Training plan: Will indicate the number of trainees or apprentices required and
Personnel Management Concepts
the programme for recruiting or training them; existing staff requiring training or
retraining; new courses to be developed or changes to be effected in existing courses.
 Productivity plan: Will indicate reasons for employee productivity or reducing
employee costs through work simplification studies, mechanisation, productivity
bargaining; incentives and profit sharing schemes, job redesign, etc.
 Retention plan: Will indicate reasons for employee turnover and show strategies
to avoid wastage through compensation policies; changes in work requirements
and improvement in working conditions.
 Control points: The entire manpower plan be subjected to close monitoring from
time to time. Control points be set up to find out deficiencies, periodic updating of
manpower inventory, in the light of changing circumstances, be undertaken to remove
deficiencies and develop future plans.

5.5 JOB DIAGNOSTIC SURVEY

Job Diagnostic Survey (JDS) is intended to: (a) diagnose existing jobs to determine
whether (and how) they might be redesigned to improve employee motivation and
productivity, and (b) evaluate the effects of job changes on employees. The instrument is
based on a specific theory of how job design affects work motivation, and provides
measures of (a) objective job dimensions, (b) individual psychological states resulting
from these dimensions, (c) affective reactions of employees to the job and work setting,
and (d) individual growth need strength (interpreted as the readiness of individuals to
respond to "enriched" jobs).

5.6 RESPONSIBILITY FOR HRP

Top level executives are responsible for HR planning as it is one of the important factors
influencing the success of an organisation. The plans are usually prepared by the Human
Resource Division in consultation with other corporate heads. The responsibility and
accountability for manpower aspects of various divisions is on their respective heads.
They should undertake their own appraisals of future needs in such a way as to provide
a concrete basis for organisation-wide forecasting and planning. The Human Resource
Division must offer counsel and advice to various divisional heads and coordinate the
various manpower estimates from time to time. Prof. Geisler outlined the responsibilities
of Human Resource Department in respect of HR planning thus:
 Assist and counsel operating managers to plan and set objectives.
 Collect and summarise manpower data keeping long-run objectives and broad
organisational interests in mind.
 Monitor and measure performance against the plan and keep top management
informed about it.
 Provide proper research base for effective manpower and organisational planning.

Check Your Progress 2

Outline four responsibilities of human resource department in respect of HR

planning.
..............................................................................................................
................................................................................................................
Limitations 75
Introduction to
The problems faced by human resource professionals while preparing or administering Human Resource Planning
HR Plans may be summarised thus:
Box 5.6: Problems in HRP
 Accuracy: Projecting manpower needs over a period of time is a risky one. It’s not
possible to track the current and future trends correctly and convert the same into
meaningful action guidelines. Factors such as absenteeism, labour turnover, seasonal
trends in demand, competitive pressures, technological changes and a host of other
factors may turn the best of manpower plans into fashionable, decorative pieces.
 Support: Planning is generally undertaken to improve overall efficiency. In the name
of cost cutting, this may ultimately help management weed out unwanted labour at
various levels. The few efficient ones that survive such frequent onslaughts complain
about increased workload. Support from management is equally missing on more
than one occasion. They are unwilling to commit funds for building an appropriate
human resource information system. The time and effort involved - with no tangible,
immediate gains - often force them to look the ‘other way’.
 Numbers game: HRP, in the final analysis, may suffer due to an excessive focus on
the quantitative aspects. The quality side of the coin (consisting of employee
motivation, morale, career prospects, training avenues etc.) may be discounted
thoroughly.

5.7 EFFECTIVE HUMAN RESOURCE PLANNING

A comprehensive survey of human resource planning practices in 45 companies covering
a cross-section of the manufacturing industry has indicated the scant attention that is
being paid to human resource planning.
Human resource specialists have pointed out the fact that most Indian organisations do
not have adequate records and information on human resources. Proper retrieval systems
also are not available in most cases. The computerised personnel information systems
unlike their counterparts in the Western world, do not play an important role in India.
Even the current technologies and knowledge in respect of HR planning is not put to use
optimally. Such practices, inevitably, lead to ineffective HR planning.
To compound the problem further, there are unpredictable external influences on
manpower planning such as changes in labour market conditions, technology, market
conditions, economic cycles, changes in social and economic values, political changes,
etc. In such a scenario, it becomes difficult to forecast the personnel available with an
organisation at a future date. While vacancies caused by retirements can be predicted
accurately, other factors like resignations, turnover, deaths, and competitive attractions
are difficult to forecast. This problem becomes mainly acute in respect of important
personnel (especially at the middle and top level) because their replacements cannot be
arranged in a short span of time. At times, top management support may not be available
to the HR planning efforts. These problems could be avoided, if certain guidelines are
followed:
a. Objectives: The HR plan must fit in with the overall objectives of the organisation.
Important aspects such as people working in the organisation, working conditions,
human relationships, etc., must be kept in mind while developing the plan.
b. Top management support: The plan must meet the changing needs of the
organisation and should enjoy consistent support from top management.
76 c. Employee skills inventory: The organisation must have an up-to-date employee
Personnel Management Concepts
skills inventory showing previous jobs held, tenure on current job, educational and
training qualifications, specific knowledge and skills, prior work performance, past
and current compensation, mobility factors. Markov Analysis (an approach to
forecast the internal supply of manpower, tracking past patterns of personnel
movements) may be pressed into service while preparing the manpower inventory.
d. Human resource information system: To manage employee skills inventories,
organisations should maintain computerised human resource information systems
containing data on: individual demographics, career progression, appraisals, skills,
interests, training, target positions, performance ratings, geographic preferences,
promotability ratings, etc.
e. Coordination: A separate HR planning division must be created, especially in large
organisations, to coordinate HR planning exercises at various levels. The various
plans for procurement, promotion and retention of human resources must be
integrated properly. The ultimate objective must be to make use of the human
resources in an optimal manner by filling future vacancies with the right type of
people.
The dotcom meltdown in the late 90s has taught many bitter lessons to knowledge based
industries all over the globe. Subsequently, the services and manufacturing sectors have
also taken a big hit. Many Indian Companies had to resort to 4-day or 5-day work
weeks (Tata Motors, Ashoka Leyland), reduce excess staff (Public Sector Banks),
consider demotions and or terminations in order to strike a proper balance between
demand for and supply of labour force. Early retirements have become the order of the
day. Big expansion plans have been put on hold in many cases and companies had to
declare hiring freezes openly (of course, companies like Infosys Technologies did not
declare any layoffs even when things were pretty bad) to ward off such serious imbalances
in demand for and supply of labour force especially when recessionary trends set in.
Many Indian Companies have invested heavy amounts in computerising most HR
functions. The employee data banks and skill inventories are built up to fill vacant positions
in a systematic way.

Check Your Progress 3

Fill in the blanks:

1. ................................ is a forward looking function.
2. ................................ is beneficial to customers but suicidal for companies
operating on this margins.
3. HR needs can be estimated by examining ................................
4. ................................ helps in finding out the abilities or skills required to do
the jobs efficiently.
5. A ................................ is an assessment of the knowledge, skills, abilities,
experience and career aspirations of each of the current employees.
6. ................................ is intended to evaluate the effects of job changes on
employees.
 77
5.8 LET US SUM UP Introduction to
Human Resource Planning
HR Planning is essentially the process of getting the right number of qualified people into
the right job at the right time so that an organisation can meet its objectives.
Organisations use HRP as a means of achieving greater effectiveness.
HRP systematically attempts to forecast personnel demand, assess supply and reconcile
the two.
The HR Planning process, it must be remembered, should be tuned to organisational
objectives and strategies.
While developing HR Plans, managers should scan the external environment carefully to
identify the effects of economic, social, competitive and governmental influences.
To overcome problems such as lopsided focus on quantitative aspects, lack of support at
the top level, inaccurate estimates due to poor search efforts, planners should install
HRIS and implement the same sincerely.

5.9 LESSON END ACTIVITY

Working individually or in groups, develop a forecast for the next three years of
occupational market conditions for five occupations such as accountant, engineer, doctor,
journalist and lawyer.

5.10 KEYWORDS
Human resource planning: It tries to assess human resource requirements in advance
keeping the production schedules, market fluctuations, demand forecasts, etc., in the
background.
Staffing table: A chart showing future employment needs for each type of job.
Skills inventories: Summaries of the skills and abilities of non-managerial employees
used in forecasting supply.
Replacement charts: A portrayal of who will replace whom in the event of a job opening.
Succession planning: An executive inventory report showing which individuals are
ready to move into higher positions in the company.
Human resource inventory: Describes the skills that are available within the company.
Outplacement: The process of helping unwanted present employees find new jobs with
other firms.
HR audits: HR audits summarise each employee’s skills, knowledge and abilities. Audits
of non-managers are called skills inventories; audits of managers are known as
management inventories.
Job analysis: A systematic exploration of the activities surrounding – and within – a job.
Human resource informations system: A computerised system that helps in the
processing of HRM information.

5.11 QUESTIONS FOR DISCUSSION

1. Outline the steps involved in the Human Resource Planning process.
2. Why is HR Planning more common among large organisations than among small
ones? What are the advantages of HR planning for large organisations?
78 3. Discuss the problems in HRP. How can you plan for human resources in an effective
Personnel Management Concepts
manner?
4. Define HRP. Describe its characteristics and objectives. Explain the reasons for
the growing interest in HRP in recent years.
5. Write short notes on:
a. Markov Analysis
b. Staffing Tables
c. Skill Inventory
d. Replacement charts
6. Discuss the various factors that affect the supply of human resources.
7. Distinguish between the quantitative and qualitative approaches to forecasting the
need for human resources.
8. Assume you have to develop an HR plan for a new-generation private sector bank
having branches in major towns in India: What specific external factors would be
important for you to consider. Why?
9. How can organisations develop accurate HR plans which, in turn, are impacted by
a number of environmental factors over which managers have little or no control?
10. When employees possess transferable skills and indulge in job hopping, developing
effective human resource plans proves to be a tough exercise? Do you agree?
Why or Why not?

Check Your Progress: Model Answers

CYP 1
The two major of supply of manpower are
1. Internal labour supply
2. External labour supply
CYP 2
Prof. Geisler outlined the responsibilities of Human Resource Department in respect
of HR planning thus:
 Assist and counsel operating managers to plan and set objectives.
 Collect and summarise manpower data keeping long-run objectives and broad
organisational interests in mind.
 Monitor and measure performance against the plan and keep top management
informed about it.
 Provide proper research base for effective manpower and organisational
planning.
CYP 3
1. Human Resource Planning (HRP)
2. Competition
Contd....
 79
3. Past trends Introduction to
Human Resource Planning
4. Job analysis
5. Skill inventory
6. Job Diagnostic Survey (JDS)

5.12 SUGGESTED READINGS

V S P Rao, Human Resource Management, Excel Books, New Delhi, 2005
P. L. Rao, Comprehensive Human Resource Management, Excel Books, New Delhi, 2004
D. K. Bhattacharyya, Human Resource Management, Excel Books, New Delhi, 2006
Robert L. Mathis and John H. Jackson, Human Resource Management, Thomson, 2007
K. Aswathappa, Human Resource and Personnel Management, Tata McGraw Hill, 2007