Module 2: Human Resource Planning

Human Resource Management

Course Code: XBB2002
 HUMAN RESOURCE PLANNING

Definition:
HRP is an ongoing function involving the acquisition, utilization, improvement
& preservation of Human Resources in an organization aimed so as to assess
the manpower requirements in advance keeping the production schedules,
market fluctuations, demand forecasts etc in the background.
 HUMAN RESOURCE PLANNING
Objectives of HRP

• To have an accurate estimate of employee requirement along with matching skill or

competency so as to efficiently meet organizational needs & objectives
• To provide information about how existing manpower are to be employed & what
types of skills and or competencies are to be developed for having desired levels of
performance
• To indicate the requirement of additional manpower
• To cope immediate changes or fluctuations regarding the requirement of a particular
skills and or competency in the workforce
• To ensure productive & efficient utilization of human resources & reduce Manpower
wastage
• To assess & forecast future skills requirements.
 HUMAN RESOURCE PLANNING

Objectives of HRP (Contd.):

• To provide control measures so as to ensure that necessary resources are
being made available as & when required.
• To provide a guideline to enable employees to train & develop
themselves for higher pursuits & effective Performances.
• To form the basis of career planning & succession planning activities in an
organization
 Components of the HRP Process

Components of HRP

Forecasting Demand of Human Resources Manpower Inventory (Supply) Management

1Factors: External Challenges: Economic factors, Competition, Politico-legal, Social & Technical
factors
Organizational decisions
Workforce Factors
Internal Labor supply: External Labor Supply:
2Techniques: Expert Forecasts, Trend Analysis, Quantitative Analysis (Regression Analysis, Manning tables Labor market
Optimization Models, Budgeting etc) Replacement Charts Govt. Employment Exchanges
Skill Inventory Private Consultants
HRIS BPOs

Determination of Manpower Gaps

Formulation of a Human Resource Plan

Recruitment & Selection Strategy

Training & Development Strategy
Appraisal & Compensation Strategy
IR & ER
Employee Welfare & Benefits
 Forecasting the Demand for Human Resources

a) External Challenges:
• Economic Developments: Liberalization, opening up of the banking sector, capital
market reforms, on-line trading systems etc have created a huge demand for finance
professionals.
• Political, Legal, Social & Technical Changes:
• Competition in the market:
b) Organizational Decisions: The organization’s strategic plans, sales & production
forecasts & new ventures are taken into account for employment planning.
c) Workforce factors: Demand is modified by retirements, termination of services,
resignations, deaths & leaves of absence.
 Forecasting as a Part of Human Resource Planning
DEMAND Choose human SUPPLY
FORECASTING resource programs FORECASTING

Determine
Internal programs External programs
organizational
objectives •Promotion •Recruiting
•Transfer •External selection
•Career planning •Executive
Demand exchange
•Training
forecast for
•Turnover control
each objective

Aggregate Internal supply forecast External supply forecast

demand Does aggregate
forecast supply meet Aggregate supply
aggregate forecast
demand? No

Yes

Go to feasibility analysis steps

Manpower Inflow Manpower Outflow

Job Transfers • Job Hopping

• Transfers (Out)
ManpowerPool
Manpower Pool • Retirement
Inthe
In the • VRS Scheme
New Recruits Organization (Golden hand shake)
Organization
• Discharge or
Dismissal
• Termination of Services
Job Relocations • Resignations
d) Forecasting techniques: The manpower forecasting techniques commonly employed
by modern organizations are as follows:
• Expert Forecasts: Here, managers estimate future human resource requirements,
their experiences & judgments to good effect.
• Demand Forecast: Demand forecast is the process of estimating the future quantity &
quality of manpower required.
• Supply Forecast: The next logical step is to determine whether it will be able to
procure the required number of personnel & the sources of such procurement are
also to be considered.
• Ratio-Trend Analysis: It involves studying past ratios, say, between the number of
workers & sales in an organization& forecasting future ratios, making some allowance
for changes in the organization or its methods.
• Work Standards Data: Many organizations have established comprehensive sets of
data for man-hours or unit times to perform a great many production tasks. For each
department the projected units of output are converted into ma-hours, man-days &
number of employees by applying the established time standards.
Year Business Factor ÷ Employee productivity = Demand of HR
(Sales in (Sales/Employee) (Number of
thousands) employees)

1999 Rs 3412 8.1 421

2000 Rs 3892 10.4 374
2001 Rs 4230 13.1 322
2002 Rs 4500 15 300
2003 Rs 4900 17.5 280
2004 Rs 5000 16.7 299
2005 Rs 5345 16.8 318
2006 Rs 5767 17.3 333
2007 Rs 5986 17.6 340
 Trend Analysis

2006-07 Production of Units : 4,000

2006-07 No. of workers : 100
Ratio : 100:4000
2007-2008 Estimated Production : 5,000
No. of workers required : 5,000 x 100/4,000 = 125

If supervisors have a span of 10 workers, 12 supervisors would be required in 2007-2008

 Work Load Analysis

• Workload Analysis is a method used to determine the time, effort, and

resources needed by an organization in identifying the actual needs of Human
Resources (HR) in quality and quantity in accordance with the goals and
strategies of the organization.
• Workload analysis is a way used to determine the time, effort, and resources
that an organization needs to identify the actual need of human resources in
quality and quantity according to organizational objectives and strategies
• While the workload has the meaning of a number of job targets or outcomes
to be achieved in a single specific time unit.
 Work Load Analysis

• The reasons for the workload analysis are:

– Identifying the actual needs of human resources for quality and quality of human
resources in the short or long term.
–Identifying training needs for now and in the future.
–Manage the number of employees in accordance with the established work
system to increase employee productivity.
Variables that affect human performance and workload
 Illustration of Work-Load Analysis

Planned output for the year : 15,000 units

Standard hours per piece 5 Hours
Planned Hours required 75,000 Hours
Productive hours per person per year 1,000 Hours
(allowing for absenteeism, turnover, idle time etc)
Number of workers required 75

If span of control in the unit is 15/team leader, then 5 team leaders would be needed for the production
 Human Resource Planning

• Key Predictive Factors: The essence of key predictive technique is to locate key
indicators with which total manpower correlates highly. To identify such a factor, the
HRP department must examine several business factors such as sales volume units
produced, clients served, & so on.
• Delphi Technique: It is a method of forecasting HR needs. It solicits estimates of
personnel needs from a group of experts, usually managers.
• Trend Analysis: HR needs can be forecast through projecting 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.
 Human Resource Planning

Other Methods: Several mathematical models, with the aid of computers are also used
to forecast HR needs in an organization. These include: Regression Analysis,
Optimization models, Budget & planning analysis.

e) Workforce Analysis: The average loss of manpower due to leaves, retirement,

death, transfer, discharge etc during the last 5 years are taken into account. The rate of
absenteeism & labor turnover are also taken into account.
f) Work-load Analysis: The need for manpower is also determined on the basis of
work-load analysis, wherein the organization 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 spent etc.
g) 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 so as to identify the
qualifications & experience required for them.
 Human Resource Planning

Preparing Manpower Inventory (Supply Forecasting):

Any organization has 2 major sources of supply of manpower, namely: Internal &
External Sources.
Internal Sources: A profile of employees in terms of age, sex, education, training,
experience, job levels, past performances & future potential are kept ready for this
purpose. Requirements in terms of growth, internal movement of employees
(transfer, promotions, retirement etc) must also be assessed in advance. Replacement
charts &/ Succession plans are also utilized for this purpose. Frequent Manpower
Audits are carried out so as to find out the available Talent in terms of skills,
performance levels & potentials.
External Sources: When an organization grows rapidly, diversifies into newer areas of
operations, it needs to fill its vacancies or meet its manpower requirement through
outside sources like Manpower supply through consultant firms or by outsourcing.
 Mr. A.K. Sinha
Manager HR Manning Norms/Table
Qualification codes for Mr. K. Agarwal: 0
Readiness:
0: Ready to move up now Mr. Anil Prabhu: 0
1: Ready in a year
2: Ready in two years Ms. Jaya P: 2

Mr. Sujit S. Ms. Anitha Mr. Amar K.

Manager Mgt Dev Manager T&D Manager IR

Mr. T.K. Sahu: 1 Mr. S. Das: 0 Mr. A. Khan: 0

Mr. D’Souza: 2 Ms. R. Bose: 0 Ms. Olga J.: 2
Mr. Rajiv M: 1
 Table: Factors influencing Internal & External Manpower Supply Forecast

Internal Supply Forecast External Supply Forecast

Manning Tables: Labor market conditions such as local employment

It shows the number of employees in each job & trends of relevant categories of employees,
tries to classify employee on the basis of age, sex, competition for such skills, availability of part-time
position, category, experience, qualifications, skill labor, migration trends of labor, housing facilities
etc. The study of this table indicates whether available, transport needs etc.
current employees are properly utilized or not.

Replacement Charts: Macro level factors such as availability of a certain

It shows the profile of job-holders, department- category of jobs to “outsiders”, cultural factors,
wise & reveals those who could be used as customs & social norms, training schemes of the
replacements whenever the need arises. Govt. etc.

Skill Inventory:
It indicates the routine & strategic skills of an
employee before or since joining the organization.
 HR Policy

• Human resources policies are guidelines for hiring, work processes,

compensation, leave, training, promotion, work environments, termination
and other important functions.
• HR policies also outline how an organization will treat its people and property.
• Human resource (HR) policies are rules and processes that govern the
employment relationship between the organizations and its members.
• HR policies describe the rights, responsibilities, and expected behaviors of
both the HR function and the employees when it comes to working together.
•
 Functions of HR Policies
• Outlining the organization's opportunities for career growth
• Fostering a healthy work environment
• Aligning organization policies with legal requirements
• Establishing the proper application of policies at all levels of the company
• Providing context for various organizational programs, like orientation,
onboarding and training programs
• Communicating the company's mission, values and goals
• Setting a foundation for organizational accountability during the decision-
making process
• Creating a basis for the employee handbook
• Establishing the conditions of employment
• Providing guidelines for employees and supervisors
HR Policy Types
HR Policy Types