HUMAN RESOURCE PLANNING

Human Resource Planning and Its Importance

HR Planning is both a process and a set of plans. It is how organizations assess the
future supply and demand for human resources. In addition, an effective HR plan also provides
mechanisms to eliminate any gap that exists between supply and demand. Thus, HR planning
determines the numbers and types of employees to be recruited into the organizations.

HR planning also involves linking a firm's HRM practices to its strategic business
needs, which have been identified by the strategic planning process. 126 HR planning may be
done on both short-term and long-term (three or more years) basis. Its aim is to ensure that
people will be available with the appropriate characteristics and skills when the organization
needs them.

It is a process by which a company ensures that it has the right number and kind of
people, in the right places at the right time, doing the things for which they ate economically
most useful. It is a method for determining future HR requirements and developing action plans
to meet them. It is defined as a strategy for the requisition, utilization, improvement, and
retention of an enterprise's HR and it encompasses the subject concerned with the developing
range of manpower policies, including those for recruitment, development, and retention.

Why Conduct HR Planning?

HR planning must be conducted for more effective and efficient use of HR. HR
planning helps in scheduling recruitment and selecting effectively by providing information that
determine how many people are needed and the kinds of people needed for job openings.

In a rapidly changing business such as computer programming, the company must be

able to respond quickly to changing needs of its employees. Careful planning is central to this
process. HR planning is a major building block of HRM. That is, the successful implementation
of many of the HRM functions discussed throughout this book depends on careful HR planning.

Through the HR planning process, the organization can identify the mix of skills it will
need in the future. The output of HR planning is required before the head of HR can plan for its
recruitment, selection, and training of employees.

More satisfied and better developed employees have better chances of developing and
utilizing their talents. This situation often leads to greater employee satisfaction. Through a
systematic planning of HR, a company can be better assisted in attaining its goals and objectives.
It can also be an effective means of planning the development and growth of its employees.
Human Resource Planning Process

Six Distinct Phases or Stages

1. Situation Analysis and Environmental Scanning/Analysis of the Current

Situation/Forecasting Supply of Manpower.

The strategic plan must adapt to environmental circumstances, and HRM is one of the
primary mechanisms that an organization can use during the adaptation process. For example,
rapid technological changes in the environment can force an organization to quickly identify and
hire employees with new skills that previously were not needed by the organization. This stage
will reveal data of the current HR situation and its position to the national economy. HR
problems may surface in the light of desired corporate goals and a clear understanding of it is
fundamental in the planning process.

2. Forecasting Demand for Employees

This is estimating not only how many but also what kind of employees will be needed.
This involves making a projection in terms of the number of employees the firm should have to
make productive and competitive as well as determining their specific qualifications. It is
necessary to have an indication of future development in order to plan out necessary steps.

There are two considerations:

a. What is the manpower demand for specific types of position at any given point of
time to perform various roles?
b. What is the best employment profile to be used for future trends?

The most important step in forecasting HR requirements is to identify what is to be

forecasted. This requires the drawing of a forecasting model which would attempt to do three
things:

a. Define categories of skills in terms of Kind or amount.

b. Identify each type and level of job.
c. Identify self-contained units which require separate quantitative HR forecasts.

There should be definitions of skill categories:

a. Managerial
b. Technical
c. Professional and administrative
d. Manual/operative supervisory
e. Clerical and office
3. Analyzing the Current Supply of Employees/Inventory of Manpower

This is to determine how many and what kind of employees the company currently
have in terms of skills and training necessary for the future.

Useful tools in analyzing current HR situation in the company include:

a. HR Inventory-stock taking of firm's employees ; head count of employees.
b. Skills Inventory T analyzing the individual skills and abilities of all kind of
employees at all levels.
c. Human Resource Audit-seeks to answer the question "what has been and is
happening to our HR?"

The major tool used is the skills inventory which is done after determining the kind of
skills, abilities, experiences, and training the employees currently have. By keeping track of
these, the organization earn quickly determine whether a particular skill is available when it is
needed. A skills inventory in its simplest form is a list of names, characteristics, and skills of the
people working for the organization.

4. Forecasting HR Supply

The total stock of HR at any given time is the population count. Past trends, patterns,
and expected developments give us a picture of future manpower supply. An important element
in the forecasting of labor supply concerns how many will leave. The length of service is an
important indicator of leaving. Availability of training resources will also affect the future supply
of labor as well as union attitudes and payment policies.

5. Reconciling HR Requirements and Supply Forecasts

Both HR requirements and supply forecasts may reveal gaps which exist between
employment and labor force; between occupations employed and occupations not employed;
between employees educated and/or trained and those not educated and/or trained. The main
processes include:

a. Assessment of performance of present workforce

b. Identification of possible discrepancies and imbalances compared with production
targets
c. Identification of possible causes for such imbalances and deviations

6. Action Plan Development

After analyzing both the supply and demand for future workers, these two forecasts and
compared to determine what, if any, action should be taken. Whenever there is a discrepancy
between these two estimates, the organization needs to choose a course of action to eliminate the
gap.
 a. Action decisions with a shortage of employees/planning for growth or expansion

 Recruitment-when HR plans indicate an undersupply of employees, firms can

recruit personnel to staff jobs with anticipated vacancies.
 Training and promotion-instead of hiring new workers to meet increasing
demands, an organization may decide to improve the productivity of the
existing workforce through additional training.
 Other options would be the use of overtime, additional shifts, job re-
assignments, outsourcing, or hiring temporary workers.
This situation would be indicative of growing sales, increasing demand for
the product and expanding operations for the organization.

b. Action decisions in surplus condition/planning for reductions

The current trend toward organization restructuring usually results in a

smaller workforce. Therefore, when an organization's strategic plan calls for
restructuring, the HRM response is usually one of downsizing. Downsizing usually
means layoffs. Because of the negative outcomes that are often associated with layoffs,
employers are encouraged to seek alternatives such as the following
 Attrition
 Early retirement
 Demotion
 Freeze Hiring
 Termination
 Restricted overtime
This is the case when the company is experiencing cutbacks.

Evaluating the HR Planning Program

Like other HR functions, it is important for managers to evaluate the HR planning

process oh a regular and ongoing basis. An ideal HR planning process would enable an
organization to always hire exactly the right number of people at exactly the right time. Such
perfection is seldom achieved. However, the planning process can be assessed in terms of
relative accuracy and ability to provide the right mix of HR.

That is, if the organization is usually able to hire the right kind of employees at around
the time they are needed and the organization seldom has a surprise or a shortage of qualified
workers, then its planning process may be deemed to be working effectively. On the other hand,
if the organization is often scrambling to hire people on short notice, if it is often hiring the
wrong kind of people, or if it ends up having too many people in the payroll, then the planning
process might be flawed or defective.

HR planning involves every phase of the company. It must translate company plane
into HR requirements and evaluate the current performance levels of individuals and predict their
potential. It provides career management or charting and provides systems, forms, guides, and
charts for matching job requirements with skills available. It encompasses everything that
concerns people-its cost, morale, leadership, productivity, forms of compensation, and
conservation of the resource. It provides for the total human input required by the company and
assures a planned return for its cost.

Long-range Planning - To survive more than the next year or two, organizations must engage in
long-range strategic plans. This entails preparing the mission and vision statement as well as
formulating strategies to achieve them.

All these should be involve a long-range analysis of employment. Each of these

changes mentioned could have a significant influence on the availability and preparation of
personnel. An organization cannot achieve its long-range strategic goals without the necessary
personnel.

Middle-range Planning - The plans may be stated in terms of sales, number of units produced, or
some other-index of business activity. Achieving these goals and objectives requires the proper
mix of people. This includes projecting the number of employees needed for each job created to
achieve identified business goals.

Short-range planning - Budgets and economic forecasts are frequently developed without a
careful analysis of whether the HR will be available to achieve them. Supervisors and managers
should anticipate the number of employees and the specific training that would help employees
acquire the skills needed to make them productive.

Succession planning - ensuring that another individual is ready to move into a position of higher
responsibility.

Replacement Chart – an HRM organizational chart indicating positions that may become vacant
in the near future and the individuals who may fill the vacancies. 126