IM Lesson 2 - Human Resource Planning
IM Lesson 2 - Human Resource Planning
IM Lesson 2 - Human Resource Planning
Balanga Campus
INSTRUCTIONAL MATERIALS
IST SEMESTER 2020 – 2021
LESSON 2
HUMAN RESOURCE PLANNING
I. LEARNING OUTCOMES
II. INTRODUCTION:
As told in the last chapter Human resource management has started to play a significant
role in the overall strategic development of the organization. At present HR strategies are designed
in tune with the overall business strategy of the organization. HR strategy should sub serve the
interest of the organization, translating firm’s goals and objectives into a consistent, integrated and
complimentary set of programs and policies for managing people.
First part of Human resource strategy is HRP – Human Resource Planning. All other HR
activities like employee hiring, training and development, remuneration, appraisal and labor
relations are derived from HRP. HR planning is important in a wide variety of industries and firms.
HR planning affects what employers do when recruiting, selecting, and retaining people, and of
course these actions affect organizational results and success. The challenges caused by changing
economic conditions during recent year’ show why HR workforce planning should occur.
Staffing an organization is an HR activity that is both strategic and operational in nature.
As the HR Headline indicates, HR planning is important in a wide variety of industries and firms.
HR planning affects what employers do when recruiting, selecting, and retaining people, and, of
course these actions affect organizational results and success. Human Resources planning mean
different means to different organizations. To some companies, human resources planning mean
management development. It involve helping executives to make better decisions, communicate
more effectively, and know more about the firm. The purpose of HRP is to make the manager a
better equipped for facing the present and future.
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III. CONTENT:
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NATURE OF HRP
Human resource planning is the process of analyzing and identifying the availability and
the need for human resources so that the organization can meet its objectives. The focus of HR
planning is to ensure that the organization has the right number of human resources, with the
right capabilities, at the right times, and in the right places. In HR planning, an organization must
consider the availability and allocation of people to jobs over long periods of time, not just for
the next month or the next year1.
HRP is a sub system in the total organizational planning. Actions may include shifting
employees to other jobs in the organization, laying off employees or otherwise cutting back the
number of employees, developing present employees, and/or increasing the number of employees
in certain areas. Factors to consider include the current employees’ knowledge, skills, and
abilities and the expected vacancies resulting from retirements, promotions, transfers, and
discharges. To do this, HR planning requires efforts by HR professionals working with executives
and managers.
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HR needs are computed by subtracting HR supplies or number of the employees available
from expected.
HR demands or number of people required to produce a desired level of outcome. The
objective of HR is to provide right personnel for the right work and optimum utilization of the
existing human resources.
The objectives of human resource planning may be summarized as below:
Forecasting Human Resources Requirements:
HRP is essential to determine the future needs of HR in an organization. In the absence of
this plan it is very difficult to provide the right kind of people at the right time.
Effective Management of Change:
Proper planning is required to cope with changes in the different aspects which affect the
organization. These changes need continuation of allocation/ reallocation and effective
utilization of HR in organization.
Realizing the Organizational Goals:
In order to meet the expansion and other organizational activities the organizational HR
planning is essential.
Promoting Employees:
HRP gives the feedback in the form of employee data which can be used in decision-
making in promotional opportunities to be made available for the organization.
Effective Utilization of HR:
The data base will provide the useful information in identifying surplus and deficiency in
human resources. The objective of HRP is to maintain and improve the organizational
capacity to reach its goals by developing appropriate strategies that will result in the
maximum contribution of HR.
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4) Skill Shortage:
Unemployment does not mean that the labor market is a buyer’s market. Organizations
generally become more complex and require a wide range of specialist skills that are rare
and scare. A problem arises in an organization when employees with such specialized
skills leave.
5) Governmental Influences:
Government control and changes in legislation with regard to affirmative action for
disadvantages groups, working conditions and hours of work, restrictions on women and
child employment, causal and contract labor, etc. have stimulated the organizations to be
become involved in systematic HRP.
6) Legislative Control:
The policies of “hire and fire” have gone. Now the legislation makes it difficult to reduce
the size of an organization quickly and cheaply. It is easy to increase but difficult to shed
the fat in terms of the numbers employed because of recent changes in labor law relating
to lay-offs and closures. Those responsible for managing manpower must look far ahead
and thus attempt to foresee manpower problems.
7) Impact of the Pressure Group:
Pressure groups such as unions, politicians and persons displaced from land by location of
giant enterprises have been raising contradictory pressure on enterprise management such
as internal recruitment and promotion, preference to employees’ children, displace person,
sons of soil etc.
8) Systems Approach:
The spread of system thinking and advent of the macro computer as the part of the on-
going revolution in information technology which emphasis planning and newer ways of
handling voluminous personnel records.
9) Lead Time:
The log lead time is necessary in the selection process and training and deployment of the
employee to handle new knowledge and skills successfully.
IMPORTANCE OF HRP
HRP is the subsystem in the total organizational planning. Organizational planning
includes managerial activities that set the company’s objective for the future and determines
the appropriate means for achieving those objectives. The importance of HRP is elaborated on
the basis of the key roles that it is playing in the organization.
1. Future Personnel Needs:
Human resource planning is significant because it helps to determine the future personnel
needs of the organization. If an organization is facing the problem of either surplus or
deficiency in staff strength, then it is the result of the absence of effecting HR planning.
All public sector enterprises find themselves overstaffed now as they never had any
planning for personnel requirement and went of recruitment spree till late 1980’s. The
problem of excess staff has become such a prominent problem that many private sector
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units are resorting to VRS ‘voluntary retirement scheme’. The excess of labor problem
would have been there if the organization had good HRP system. Effective HRP system
will also enable the organization to have good succession planning.
2. Part of Strategic Planning:
HRP has become an integral part of strategic planning of strategic planning. HRP provides
inputs in strategy formulation process in terms of deciding whether the organization has
got the right kind of human resources to carry out the given strategy. HRP is also necessary
during the implementation stage in the form of deciding to make resource allocation
decisions related to organization structure, process and human resources. In some
organizations. HRP play as significant role as strategic planning and HR issues are
perceived as inherent in business management.
3. Creating Highly Talented Personnel:
Even though India has a great pool of educated unemployed, it is the discretion of HR
manager that will enable the company to recruit the right person with right skills to the
organization. Even the existing staff hope the job so frequently that organization face
frequent shortage of manpower. Manpower planning in the form of skill development is
required to help the organization in dealing with this problem of skilled manpower
shortage
4. International Strategies:
An international expansion strategy of an organization is facilitated to a great extent by
HR planning. The HR department’s ability to fill key jobs with foreign nationals and
reassignment of employees from within or across national borders is a major challenge
that is being faced by international business. With the growing trend towards global
operation, the need for HRP will as well will be the need to integrate HRP more closely
with the organizations strategic plans. Without effective HRP and subsequent attention to
employee recruitment, selection, placement, development, and career planning, the
growing competition for foreign executives may lead to expensive and strategically
descriptive turnover among key decision makers.
5. Foundation for Personnel Functions:
HRP provides essential information for designing and implementing personnel functions,
such as recruitment, selection, training and development, personnel movement like
transfers, promotions and layoffs.
6. Increasing Investments in Human Resources:
Organizations are making increasing investments in human resource development
compelling the increased need for HRP. Organizations are realizing that human assets can
increase in value more than the physical assets. An employee who gradually develops his/
her skills and abilities become a valuable asset for the organization. Organizations can
make investments in its personnel either through direct training or job assignment and the
rupee value of such a trained, flexible, motivated productive workforce is difficult to
determine. Top officials have started acknowledging that quality of work force is
responsible for both short term and long term performance of the organization.
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7. Resistance to Change:
Employees are always reluctant whenever they hear about change and even about job
rotation. Organizations cannot shift one employee from one department to another without
any specific planning. Even for carrying out job rotation (shifting one employee from one
department to another) there is a need to plan well ahead and match the skills required and
existing skills of the employees.
8. Uniting the Viewpoint of Line and Staff Managers:
HRP helps to unite the viewpoints of line and staff managers. Though HRP is initiated and
executed by the corporate staff, it requires the input and cooperation of all managers within
an organization. Each department manager knows about the issues faced by his department
more than anyone else. So communication between HR staff and line managers is essential
for the success of HR Planning and development.
9. Succession Planning:
Human Resource Planning prepares people for future challenges. The ‘stars’ are picked
up, trained, assessed and assisted continuously so that when the time comes such trained
employees can quickly take the responsibilities and position of their boss or seniors as and
when situation arrives.
10. Other Benefits:
(a) HRP helps in judging the effectiveness of manpower policies and programs of
management. (b) It develops awareness on effective utilization of human resources for the
overall development of organization. (c) It facilitates selection and training of employees
with adequate knowledge, experience and aptitudes so as to carry on and achieve the
organizational objectives (d) HRP encourages the company to review and modify its
human resource policies and practices and to examine the way of utilizing the human
resources for better utilization.
HRP is influenced by several factors. The most important of the factors that affect HRP are
(1) type and strategy of organization (2) organizational growth cycles and planning (3)
environmental uncertainties (4) time horizons (5) type and quality of forecasting information
(6) nature of jobs being filled and (7) off loading the work.
Figure 2.1 Summarizes the five factors that influence an organization while framing its
strategic HRP
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Figure 2.1 : Factors Affecting HRP.
Environment
al
Uncertaintie
Organization s
al Growth
Cycle and
Planning
Outsourcing
HUMAN
RESOURCE
Type and PLANNING
Strategy of
Organization
Nature of
jobs being
filled
Type and
Time Horizons quality of
forecasting
information
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frame HRP in such a way that it can contain many contingencies, which reflect different
scenarios thereby assuring that the plan is flexible and adaptable.
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5. Type and Quality of information:
The information used to forecast personnel needs originates from a multitude of sources.
The forecast depends to a large extent upon the type of information and the quality of data that
is available to personnel planners. The quality and accuracy of information depend upon the
clarity with which the organizational decision makers have defined their strategy, structure,
budgets, production schedule and so on.
6. Nature of Jobs Being Filled:
Personnel planners need to be really careful with respect to the nature of the jobs being
filled in the organization. Employees belonging to lower level who need very limited skills can
be recruited hastily but, while hiring employees for higher posts, selection and recruitment need
to be carried out with high discretion. Organization need to anticipate vacancies far in advance
as possible, to provide sufficient time to recruit suitable candidate.
7. Outsourcing:
Several organizations outsource part of their work to outside parties in the form of
subcontract. Outsourcing is a regular feature both in the public sector as well as in the private
sector companies. Many of the organizations have surplus labor and hence instead of hiring
more people they go for outsourcing. Outsourcing is usually done for non-critical activities.
Outsourcing of non- critical activities through subcontracting determines HRP.
HRP PROCESS
HRP effectively involves forecasting personnel needs, assessing personnel supply and
matching demand – supply factors through personnel related programs. The HR planning
process is influenced by overall organizational objectives and environment of business.
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ENVIRONMENTAL SCANNING:
It refers to the systematic monitoring of the external forces influencing the
organization. The following forces are essential for pertinent HRP.
Economic factors, including general and regional conditions.
Technological changes
Demographic changes including age, composition and literacy,
Political and legislative issues, including laws and administrative rulings
Social concerns, including child care, educational facilities and priorities.
By scanning the environment for changes that will affect an organization, managers
can anticipate their impact and make adjustments early.
HR DEMAND FORECAST:
Demand forecasting is the process of estimating the future quantity and quality of
people required to meet the future needs of the organization. Annual budget and long-term
corporate plan when translated into activity into activity form the basis for HR forecast.
For eg: in the case of a manufacturing company, the sales budget will form the basis
for production plan giving the number and type of products to be produced in each period. This
will form the basis upon which the organization will decide the number of hours to be worked
by each skilled category of workers. Once the number hours required is available organization
can determine the quality and quantity of personnel required for the task.
Demand forecasting is influenced by both internal factors and external factors: external
factors include competition, economic climate, laws and regulatory bodies, changes in
technology and social factors whereas internal factors are budget constraints, production level,
new products and services, organizational structure and employee separations.
Demand forecasting is essential because it helps the organization to 1. Quantify the
jobs, necessary for producing a given number of goods, 2. To determine the nature of staff mix
required in the future, 3. To assess appropriate levels in different parts of organization so as to
avoid unnecessary costs to the organization, 4. To prevent shortages of personnel where and
when, they are needed by the organization. 5. To monitor compliances with legal requirements
with regard to reservation of jobs.
Techniques like managerial judgment, ratio- trend analysis, regression analysis, work
study techniques, Delphi techniques are some of the major methods used by the organization
for demand forecasting.
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Demand forecasting is essential because it helps the organization to:
1. Quantify the jobs, necessary for producing a given number of goods,
2. Determine the nature of staff mix required in the future,
3. Assess appropriate levels in different parts of organization so as to avoid unnecessary
costs to the organization,
4. Prevent shortages of personnel where and when, they are needed by the organization.
5. Monitor compliances with legal requirements with regard to reservation of jobs.
Techniques like managerial judgment, ratio- trend analysis, regression analysis, work
study techniques,
Delphi techniques are some of the major methods used by the organization for demand
forecasting.
HR SUPPLY FORECAST:
Supply forecast determines whether the HR department will be able to procure the
required number of workers. Supply forecast 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 changes in hours, and other conditions of
work.
Supply forecast is required because it is needed as it:
1. Helps to quantify the number of people and positions expected to be available in future to
help the organization realize its plans and meet its objectives
2. Helps to clarify the staff mixes that will arise in future
3. It assesses existing staffing in different parts of the organization.
4. It will enable the organization to prevent shortage of people where and when they are most
needed.
5. It also helps to monitor future compliance with legal requirements of job reservations.
Supply analysis covers the existing human resources, internal sources of supply and
external sources of supply.
HR PROGRAMMING:
Once an organization’s personnel demand and supply are forecasted the demand and
supply need to be balanced in order that the vacancies can be filled by the right employees at
the right time.
HR PLAN IMPLEMENTATION:
HR implementation requires converting an HR plan into action. A series of action are
initiated as a part of
HR plan implementation. Programs such as recruitment, selection and placement,
training and development, retraining and redeployment, retention plan, succession plan etc
when clubbed together form the implementation part of the HR plan.
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CONTROL AND EVALUATION:
Control and evaluation represent the final phase of the HRP process. All HR plan
include budgets, targets and standards. The achievement of the organization will be evaluated
and monitored against the plan.
During this final phase organization will be evaluating on the number of people
employed against the established (both those who are in the post and those who are in pipe line)
and on the number recruited against the recruitment targets. Evaluation is also done with respect
to employment cost against the budget and wastage accrued so that corrective action can be
taken in future.
BARRIERS TO HRP
Human Resource Planners face significant barriers while formulating an HRP. The
major barriers are elaborated below:
1) HR practitioners are perceived as experts in handling personnel matters, but are not experts
in managing business. The personnel plan conceived and formulated by the HR
practitioners when enmeshed with organizational plan, might make the overall strategic
plan of the organization ineffective.
2) HR information often is incompatible with other information used in strategy formulation.
Strategic planning efforts have long been oriented towards financial forecasting, often to
the exclusion of other types of information. Financial forecasting takes precedence over
HRP.
3) Conflict may exist between short term and long term HR needs. For example, there can be
a conflict between the pressure to get the work done on time and long term needs, such as
preparing people for assuming greater responsibilities. Many managers are of the belief
that HR needs can be met immediately because skills are available on the market as long
as wages and salaries are competitive. Therefore, long times plans are not required, short
planning are only needed.
4) There is conflict between quantitative and qualitative approaches to HRP. Some people
view HRP as a number game designed to track the flow of people across the department.
Others take a qualitative approach and focus on individual employee concerns such as
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promotion and career development. Best result can be achieved if there is a balance
between the quantitative and qualitative approaches.
5) Non-involvement of operating managers renders HRP ineffective. HRP is not strictly an
HR department function. Successful planning needs a coordinated effort on the part of
operating managers and HR personnel
IV. SUMMARY
Today, human resource planning is viewed as the way management comes to grasp the
ill-defined and tough-to-solve human resource problems facing an organization. Human
resource planning is the process of determining the human resources required by the
organization to achieve its goals. Human resource planning also looks at broader issues relating
to the ways in which people are employed and developed, in order to improve organizational
effectiveness. HRP is a decision making process that combines activities such as identifying
and acquiring the right number of people with the proper skills, motivating them to achieve
high performance and creating interactive links between business objectives are resource
planning activities. HRP sets out requirements in both quantitative and qualitative terms.
Accurate manpower plan is a dream. A common error of many managers is to focus on the
organization’s short term replacement needs. Any human resource plan, if it is to be effective,
must be derived from the long term plans and strategies of the organization. The various
approaches to human resource planning under which a number of major issues and trends in
today’s work plan that will affect organization and employees are (1) Examine external and
internal issues, (2) Determining future organizations capabilities, (3) Determining future
organizational needs, and (4) Implementing human resources programs to address anticipated
problems.
Although change is occurring very rapidly in the work world it is important for both
organizations and employees to monitor issues and events continuously and consider their
potential effects.
V. SELF-ASSESSMENT QUESTIONS:
1. Explain the role of HR professional in human resource planning process in organizations.
2. Describe the various forecasting techniques and how these techniques are being used in
human resource planning.
3. Explain the barriers to HRP. Bring out the requisites for effective planning.
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