MU0010 – Manpower Planning and Resourcing

Set 1

Q.1 What are the obstacles in Manpower Planning [10]

The major obstacles in manpower planning are as follows:

Non Optimal Utilization of Manpower
The biggest obstacle for manpower planning is the fact that organizations cannot
optimally use their manpower once manpower planning begins. During manpower
planning, the number of resources required for a job is decided based on the total work
load, the process to be followed and the criticality of the job. Once the analysis is done, it
is decided that one person can only handle a certain portion of the workload and hence
for any additional workload, additional resources need to be hired proportionately.
Over a period of time, the total workload may change, the processes may change, the
criticality of the job may change and new technological innovations may make the job far
easier to accomplish. However when the same employees are asked to step up the
productivity, they resist accepting any additional workload and resist even deployment of
new technology, hence making it hard for the management to maximize the use of their
manpower. This makes the organizational processes ineffective or inefficient and hence
the organization as a whole becomes ineffective or inefficient and loses out to
competition which may be able to remain lean in terms of number of resources and
highly effective and efficient.

Absenteeism
Every organization has witnessed an increase in absenteeism. This has lead to errors
creeping in the manpower planning exercise. If the plan stated that 4 employees are
required to manage the total workload, increased degree of absenteeism leads to the
partial failure of the manpower planning exercise.

Lack of Employable Labor

People are not employable. The slow pace of acquiring business required competencies
by people at large also result in low employee productivity. All manpower planning is
done basis a certain productivity level considered as a benchmark. And low productivity
has negative implications for manpower planning.

Modern Manpower Control and Review Processes

• Any increase in manpower is to be approved by the top most levels of the
management today.
• Manpower budgets created on the basis of manpower planning act as control
mechanisms to keep the manpower cost and headcount under certain defined limits.
• Usually the productivity of any organization is calculated using the formula:
Productivity = Output / Input.
Example: 5 products are sold during the day/ 8 hours of effort put in during the
day. i.e., the sales productivity of the employee is 5 products per day.
But a rough guide of employee productivity used today is: Employee Productivity
= Total Production / Total no. of employees
• Example: 50 products are sold during the day/12 employees were responsible for
selling 50 products during the day. i.e., the sales productivity of each employee is
4.17 products per day.
• The rate of manpower turnover, exit interviews and absenteeism are sources of
measuring dissatisfaction level of manpower. To eliminate employee dissatisfaction
and to ensure better utilization of resources a study of the reasons causing the
dissatisfaction level is required.
• Overtime is paid to employees due to real shortage of manpower, inefficient
management or improper utilization of manpower. Manpower planning requires a
study of the overtime statistics.

The current pace at which business is done today is very fast. Many organizations either
do not have data or are overwhelmed with data. Non availability and non utilization of
the data are also reasons for complicating the situation. In some organization even the
existing technologies available for manpower planning are not optimally used. This also
creates obstacles in manpower planning.

Q.2 Explain demand forecasting techniques. [10]

Demand Forecasting Techniques

Forecasting is an expensive way to help a company plan and prepare for the future years.
Forecasting is not fortune telling; it is but an educated guess of how much manpower will
be required and utilized by a firm or organization. It is a tool used to help in budgeting
and allocating finances or hiring employees as perfectly as possible. One of the important
features of forecasting is the quality of manpower resources (knowledge, skill, values and
competency, capacity etc) as well as the quantity of manpower resources.
There is no right way of forecasting, but there are many different types of forecasting
methods. Each one is specifically planned and designed to help different retail
organization and it is up to each of them to choose the model which is best and most
appropriate for them.
Manpower planning is done based on the manpower forecasts. The common manpower
forecasting techniques are:
Expert Forecasts
This is a group forecasting method in which experts present their independently
developed forecasts to the group. However, the experts do not meet each other. The
group keeps refining their forecasts until a group consensus is reached. This is called as
the Delphi technique. In this method managers estimate future manpower requirements
based on their experience and judgment.
Trend Analysis
This technique requires studying the past data of an organization. Based on the past
forecast, utilization and requirement actually experienced in the business, the future
forecast is made. For example, if an organization had 12 secretaries in the firm and this
number were increasing by 1 secretary every year for the last 4 years. Then the trend
analysis would forecast a requirement of 13 secretaries for the following year. That is one
additional secretary for the year.
Past data is used to make future predictions. Known or Independent variables are used for
predicting unknown or dependent variables, using the trend equation called “Predictive
analysis”. Based on trend equation, we find „Line of Best Fit‟ and then it is projected in
a scatter diagram, dividing points equally on both sides.
The time series analysis has three goals: forecasting (also called predicting), modeling,
and characterization. The logical order in which to tackle these three goals depends on
the key objective. The idea of deciding the order is to ensure that one task leads to
another and /or justifies the other tasks. Sometimes the objective is getting better
forecasts. Then the order is forecasting, modeling and characterization. Sometimes the
objective is to understand and explain what is going on. Then modeling is the key, though
out-of-sample forecasting may be used to test any model. Often modeling and forecasting
proceed in an iterative way and there is no 'logical order' in the broader sense. You may
model to get forecasts, which enable better control, but iteration is again likely to be
present.
The trend equation is:
Y^ = a + bX + E
Y^ = Estimated value of Y
a = Constant or Intercept
b = slope of trend line
X = independent variable
E = Error term
Explained variation - means the extent to which the independent variable explains the
relative change in the dependent variable. Higher the explained variation, lower the error
value leading to accurate forecast.
R2 = Explained Variation
1- R2 = Unexplained Variation

Fig. 2.1: Trend Analysis – Line of Best Fit

This process may be followed at the organization level as a whole or for parts of the
organization based on department, location etc. Doing this at a granular with assumptions
being documented and shared with the approving authority increases the forecast
accuracy. The drawback is that you follow practices that you followed in the past. If the
organization is experiencing the same rate of growth then this may work. But for
extraordinary circumstances either good or bad for the organization, the trend analysis
forecasting method often fails. Also this may build in turn the organization teeth to tail
ratio unfavorable for making profits or enhancing profits. Teeth are the no. of employees
who are directly into revenue earning jobs. E.g.: production employees, operations
employees and sales staff. Tail is the no. of employees who are enabling the employees
involved in directly revenue earning jobs. E.g.: secretaries, finance, administration &
human resources.
Work Study Technique
It is a technique that can be used when it is possible to apply work measurements to know
how long operations should take and the amount of labor required. It is calculated in two
ways.
• Work-Load Analysis
• Work-Force Analysis
Managerial Judgment Technique
This is a simple technique. In this the managers of different departments sit together,
discuss and arrive at conclusions as to the number employees required for future
operations based on their past experiences. This technique involves a “top-down” or
“bottom-up approach.”
• In “top-down” approach the managers prepare departmental forecasts. These are
viewed by department heads and a decision is taken.
• In “bottom-up” approach the managers submit their departmental proposals to top
managers who arrive at forecast.
Neither of these forecasts is accurate but both when combined could achieve effective
results. This technique is used in smaller retail organizations or where there is not enough
data available.
Cost-Benefit Analysis
This is a term that refers both to:
• helping to appraise, or assess, the case for a project or proposal, which itself is a
process known as project appraisal; and
• An informal approach to making economic decisions of any kind.
Under both definitions the process involves, whether explicitly or implicitly, weighing
the total expected costs against the total expected benefits of one or more actions in order
to choose the best or most profitable option. The formal process is often referred to as
either CBA (Cost-Benefit Analysis) or BCA (Benefit-Cost Analysis).
Benefits and costs are often expressed in money terms, and are adjusted for the time
value of money, so that all flows of benefits and flows of project costs over time (which
tend to occur at different points in time) are expressed on a common basis in terms of
their “present value.” Closely related, but slightly different, formal techniques include
cost-effectiveness analysis, economic impact analysis, fiscal impact analysis and social
return on investment (SROI) analysis. The latter builds upon the logic of cost-benefit
analysis, but differs in that it is explicitly designed to inform the practical decision-
making of enterprise managers and investors focused on optimizing their social and
environmental impacts.
Work that is done by hand can be done faster by machines. It is also uniformly done.
Number of employees is also less, hence you save up every month on their salary but it
has gone into the purchase of a machine which is a onetime investment. So it does prove
to be beneficial to the firm or organization. E.g. tagging or stamping an item or product
for sale.
Markov Analysis
This is a mathematical technique. It forecasts the availability of internal job candidates.
In this analysis, various job classifications can be predicted based on past movements
(transfers, promotions, attrition, new joiners, resignations, and retirement).
Statistical Judgment Technique
This technique concentrates on using the past to predict the future by identifying trends,
patterns and business drives within the data to develop a forecast. This forecast is referred
to as a statistical forecast because it uses mathematical formulas to identify the patterns
and trends while testing the results for mathematical reasonableness and confidence.
These include ratio-trend analysis and econometric models. In ratio trend analysis the
ratios are calculated for the past data and these are used to calculate future manpower
requirements. Example:

Present level of sales (1st Jan 2003) = 2000 units

Present number of men (1st Jan 2003) = 4
Ratio = 2000/4 = 500
Estimated sales as on (1st Jan 2006) = 5000 units
Men required as on (1st Jan 2006) = 5000/500 = 10

These models are built up by analyzing past statistical data.

Q.3 What are the inputs provided by HR for Manpower planning [10]

Inputs Provided by HR for Manpower Planning

Some of the relevant inputs provided by HR for manpower planning are:
• Specific business goals of the organization drawn from the vision and mission
statement for the period for which manpower planning is to be done.
• The controllable variables such as the productivity data, productivity incentives, cost
of training and cost of benching (if any). Benching here refers to a state of having
excess staff, mostly as a result of preparation for anticipated business requirements
and occasionally as a result of business process reengineering or some reduction in
planned business.
• Which departments will grow and by what percentage?
• Which are the new confirmed clients likely to be added or withdrawing during the
course of the year?
• Which are the unconfirmed clients likely to be added or withdrawing the business
during the course of the year?
• The uncontrollable variables modifying the scenario for the year under consideration
(PESTLE). PESTLE stands for Political, Economic, Social, Technological, Legal and
Environmental Scenario.
• The maturity level of the organization in terms of people capability between 1-5
wherein:
o level 1 is Initial (inconsistent management)
o level 2 is Managed (people management)
o level 3 is Defined (competency management)
o level 4 is Predictable (capability management)
o level 5 is Optimizing (change management)
• The changed organization structure at a high level in terms of the business verticals
and the support horizontals if any.
Apart from providing inputs for the orientation program, the HR function provides the
requisite inputs in each of the 5 steps of manpower planning.

Table: Inputs provided by HR

Step Manpower Planning Steps Inputs provided by HR

1 Evaluate present manpower Current inventory levels and inputs for orientation of representatives
inventory involved in manpower planning at the departmental level.

2 Manpower forecasting Goals, controllable variables, uncontrollable variables, business

projections, uncontrollable variables, maturity level of the
organization, changed organization structure if any.
3 Develop a manpower Previous years plan versus actual, inputs regarding offers to joining
sourcing plan or ratios, target resource pool, challenges of recruitment and challenges
retrenchment plan of retrenchment.

4 Manpower allocation Meeting headcount target based on budgets by allocation techniques

used previously.
5 Building requisite Manpower training and development processes, challenges and
competencies costs.

Q.4 Write a detailed note on competency mapping system and its componenents. [10]

Competency Mapping (Skills Inventory)

A competency mapping evaluates all aspects of the person with respect to the job role to
be performed by the person. It evaluates knowledge, skills, attitude, reflection of attitude
that is behavior and possibly values where as skill mapping is restricted to just that skill.
We are using the terms here interchangeably only so that some companies would like to
start with skill and then increase the scope to evaluate the entire set of competencies. But
in true life these cannot be interchangeably used as their scope varies.
A competency mapping exercise results in a report which contains information on
knowledge, skills, abilities, and experiences of current employees. It aims to identify the
skills an employee has demonstrated or has not demonstrated. If the job role requires the
employee to demonstrate skills which the employee has not demonstrated, then that
becomes a development area for the employee. Skills can be developed through paid and
unpaid work experiences, volunteerism, hobbies, work experiences, and through
everyday experience in life. A skills inventory report shows an employee which skills he
or she possesses and at what proficiency level.

Competency Mapping System

The four essential components of competency mapping system are:
• Classification system
• Measurement unit
• Process of measurement
• Accessible Data, Information and Knowledge
Classification System
For any meaningful competency mapping or skills inventory management program, a
clear, well defined and detailed system of classification is important to have in place.
Without a clear classification system, any inventory management program will tend to
fail. Competency mapping or skills inventory cannot be assigned numbers as easily as
numbers are assigned to any physical products. A soft skill is particularly hard to define
and therefore it is important that a good classification system is in place, so that everyone
is referring to the same behaviors, skills and level of the competency. When it comes to
creating the grading system for building a skills inventory, the problem often arises from
a lack of standardized definitions for skills. There are no defined standards acceptable
worldwide.
Internally in the organization we don’t want a comparison between apples and oranges.
We want a fair comparison and hence a good classification system is essential.
If the skills are defined earlier by the HR team leading the competency mapping or skill
inventory exercise then the managers do not have to repeat the time consuming process of
defining skills. They focus on evaluation of the skills critical for the success of the
organization. They focus on identifying the high performing employees to participate in a
skills inventory initiative and decide which skills are important to the organization’s
success.
An objective system is important. An established list of predefined skills and an agreed-
upon set of rules by which to measure them enable competency mapping or skills
inventory. Initially an organization should focus on a few critical skills. As the ability of
the organization to map competencies or skills improves, in the future additional skills
can be inventoried and managed. As a foundation for establishing a skills program, many
organizations begin by agreeing on the main objectives and identifying the skills that
most closely impact these goals. An objective skills classification system frees decision-
makers to focus on the exact skills and organization’s objectives, and hence helps to
fairly establish the parameters for a successful initiative.
Measurement unit
While companies have some difficulty tracking their inventory of office supplies or other
physical resources – which can be measured by number of units, weight, or volume –
calculating employee competencies or skills is a different matter.
Organization A & B have 4 customer service executives and 1 customer service manager
respectively. Refer Table 5.4 and analyze if the team and individuals are equal in terms of
competencies? Of course, they are not at all equal in terms of their competencies.
Table: Measurement Unit
Critical Business Skills
Organization Job Role Skill 1 Skill 2 Skill 3 Skill 4 Skill 5 Skill 6

A CSE1 Level 3 Level 3 Level 3 - - -

A CSE2 Level 3 Level 3 Level 3 - - -
A CSE3 Level 3 Level 3 Level 3 - - -
A CSE4 Level 3 Level 3 Level 3 - - -
A Mgr 1 Level 4 Level 4 Level 4 Level 4 Level 4 Level 4
B CSE1 Level 3 Level 2 Level 2 - - -
B CSE2 Level 3 Level 2 Level 2 - - -
B CSE3 Level 3 Level 2 Level 2 - - -
B CSE4 Level 3 Level 2 Level 2 - - -
B Mgr 1 Level 4 Level 2 Level 2 Level 2 Level 2 Level 2

Many organizations can rely on subjective forms of assessments for the answer. For
example, employees are asked to self-asses their own skills. Self-assessment is a
subjective form of evaluation. Self-assessments are inaccurate, with inexperienced
employees overrating their skills or experts underrating their ability. Personal verification
is subject to individual influence and may not be a question of a manager being just, but
more influenced by familiarity with certain employees. How do you measure an
employee’s level of skill? Clear definitions help managers identify employee’s level of
skill or skills. A well planned measurement system enables decision-makers to rely on
objective data and they are not forced to rely largely on unreliable, subjective skills data.
Online skills measurement tools are now available and give managers the unit of measure
they require to account for skills levels on a regular basis. Unlike subjective measures,
these metrics will not differ from one department to another. The whole system is
evaluated, delivered, and reported online.
The objective measurement system calculates changes in skills levels over a period of
time. That is, with a constant and well detailed unit of measure to track skills, employees
and managers may document skills improvement. The management and managers should
track skills inventories, identify shortfalls (skills gaps) and surpluses (skills strengths).
They should also differentiate between the skills levels of different employees,
information that is vital to meeting the demands of each client or project.
A constant unit of measure enables decision makers i.e. managers to analyze skill levels
within the organization.
Process of Measurement
The requirement for an easily-administered measurement procedure is probably the most
neglected need of a skills inventory plan. An organization’s ability to evaluate skills on a
regular basis and arrive at a suitable measurement can determine program success. How
can organizations develop a practical skills measurement system one that can be
continued to be used long after implementation?
Ease of use and meaningful feedback are important characteristics of an effective
measurement system.
While the organization may not have to re-measure or re-evaluate its skills inventory with
the same frequency as it tracks other items, repeat measurement is essential. Without the
ability to deliver repeat evaluation, a skills inventory management initiative becomes
nothing more but a one-time employee test, with unstable data that cannot track changes
in an organization’s supply of skills. Many organizations have made unsuccessful
attempts at tracking skills in the past, and often they still apply the same wrong strategies
till today. Employees can be asked to complete and submit self-rating forms, or they can
be asked to take a test associated with a career milestone such as a training event or a
periodic review. Unfortunately, the results of such assessments often “disappear” into a
records system without re-emerging as actionable information for the organization or for
the employee. As results fail to show action, the usefulness of this initiative is
compromised, and participation declines.
The secret for a successful skills inventory management lies in the ability to automate test
administration and provide quick, actionable feedback. Through an online testing system,
employees can take a skill evaluation in their own time without the requirement for
supervision. Results are calculated and delivered immediately. The online system
addresses two issues which have negatively impacted skills inventory management
efforts:
• Ease of Testing
It makes it easy for the employees to undertake the skills assessment at their own time
and when they are ready. It also allows repeat testing 3 months later or at some point in
the future. Online tests ask questions from a questions bank, so different questions are
presented to the employee.
• Fast, Meaningful Feedback
An effective online skills inventory management provides quick or immediate feedback.
Armed with this knowledge managers constitute a team with complementary skill sets. It
also enables to send the employee to the right training programs or take good
performance-related decisions. Performance evaluation in most organizations is not
objective and tends to remain subjective. For employees, the quick feedback stimulates
self improvement and is provided at the time when motivation for improvement is
strongest immediately after an evaluation.
A repeatable evaluation system enables employees and managers to track skills
improvement over a period of time.
Accessible Data, Information and Knowledge
The success of any inventory management initiative is based on its ability to deliver
constant, actionable results. Skills inventory management is also no exception. The
immediate accessibility of objective metrics helps managers to take action such as what
training an employee needs, provide assignments that leverage existing skills and provide
assignments that develop skills that need to be improved (such assignments require the
employee to be mentored) and identifying the right employees to be part of project teams.
With an online skills inventory management system, exact and relevant data is just easily
accessible. No one needs to manage large amounts of data. If a manager is to manage
large amounts of data, his/her initiative in the exercise declines. But if the data is
automatically managed by the online system, then his/her inclination is not dented. Using
the data and information, managers gain more knowledge about their team member‟s
competencies. Over a sustained period of knowledge of the proficiency levels of different
skills, help managers take wise decisions and enable them to demonstrate greater wisdom
in decision making. The need for skills inventory management is the highest today in the
post recessionary period.
Motivating Employees
Motivating and educating employees about the advantages of the Competency mapping
system is important. It is not only the job of the HR department, but also the
management, to motivate them constantly. Today skills are the only currency that carries
a lot of value in the present knowledge-driven economy. An employee‟s value is
determined by the depth of skills he possesses. Any procedure that enhances skills
becomes important to the employee as well as to the organization. This is the basic
assumption in educating employees about working towards enhancing their skills.
For an organization, building a skills inventory has many advantages from improving
operational efficiency and productivity to competitive advantage in the marketplace. It
creates a learning environment and is a great internal employee building strategy that an
organization is able to retain employees as well as successfully attract new employees.

Q.5 Discuss External sourcing in detail [10]

External Sourcing
When you hire staff or contract staff who has never worked with your organization
earlier, then it is called as external recruitment. Examples are:
Advertisements in Media
Advertisements of the job openings in newspaper and journals magazines are generally
used as a source of external recruitment.
Campus Selections in Institutions
Various colleges and institutions are a good source of recruiting well qualified
executives, engineers, medical staff etc.
Employee Referrals
Organizations encourage internal employees by providing benefits for referring friends
and relatives for some position in their organization.
Consultants
They identify candidates matching the job profile and charge a fee for providing
candidates till you find the right candidate who accepts the offer.
Data Banks
Organizations collect CVs of candidates from different sources like employment
exchange, training institutes etc. and screen and shortlist the candidates.
When the business grows and if the business is manpower intensive, then additional
resources are required. Therefore external recruitment is done. This is the only way to
scale up the business. Also it brings in a freshness of thought and perspective. Capable
people from the world’s best organizations bring best practices with them. They bring
the culture of performance and meritocracy. External recruitment has many advantages.
If the job role requires tremendous experience (e.g. 15 years), it is better to hire someone
externally than to wait for people in your own organization with 4 years experience to
gain 11 more years of experience.

Q.6 List the strategies for managing redundancy. [10]

Strategy for Redundancy

The global recession that set-in, in 2008, has forced organizations to consider strategies
for managing redundancy. The challenges of having to give up a large workforce or
having to issue pink-slips (an American term that refers to being fired or laid off from
one's job) have been daunting.
Some of the strategies used are:
Strategy 1: Organizations only consider undertaking projects where the risks are minimal,
the natural attrition can address the challenge of redundancies and no undue costs or
strain on the business is experienced for laying-off the workforce.
Strategy 2: Hire very cautiously and work with vendors till the requirement is really seen
to stay.
Strategy 3: To review performance very critically, so as to ensure only the high
performing employees continue, the rest can find employment elsewhere.
Strategy 4: Pay the lowest and attract workforce to join, lay-off if required by providing
few months pay in lieu of a notice.
Strategy 5: Ensure the contracts are drafted such that it gives them enough levers to
recover the cost of any sudden fluctuations in manpower requirements.
Strategy 5: This is extremely difficult, but another strategy is to work with advance
payments, to minimize the impact of such redundancy situations. For smaller entities, this
seems to apply when specially working
Strategy 6: Moving business to a low cost destination where the labor-arbitrage can make
the business profitable, effective and efficient.
Strategy 7: Leveraging technology to reduce operational costs, manpower costs,
automating or moving to more niche areas of business allows the business to remain
profitable.
Strategy 8: Acquiring inorganically businesses to benefit from the scale of operations or
ramping up the business such that the scale of operations benefits the organization
exponentially.
Strategy 8: Entering into associated businesses. Sometimes diversifying into newer areas
to deploy workforce productively or minimize the need for the same type of workforce.
Strategy 9: Or use a combination of the above as the situation demands or any other
innovative strategies developed.