Job Analysis

BLOCK 2
METHODS OF HUMAN RESOURCE
PLANNING

51
Foundations of
Human Resource
Planning

52
 Human Resource
UNIT 4 HUMAN RESOURCE DEMAND Demand Analysis

ANALYSIS

Objectives
After reading this unit, you will be able to:
• Understand the concept of demand forecasting in the HR planning
process.
• Understand the linkages between the HR plan and labour demand
forecasting.
• Apply the different techniques of HR demand forecasting i.e.,
quantitative, and qualitative.
• Evaluate the advantages and disadvantages of various demand
forecasting techniques.

Structure
4.1 Introduction
4.2 Determining HR Demand
4.3 Case- Elimination Jobs at Google
4.4 Quantitative Methods of Demand Forecasting
4.5 Qualitative Methods of Demand Forecasting
4.6 Case- Succession Planning at Microsoft
4.7 Summary
4.8 Self-Assessment Questions
4.9 Further Readings/ References

4.1 INTRODUCTION
Human Resource (HR) forecasting constitutes the fulcrum of the HR
planning process and can be understood as determining the net requirement
for personnel by understanding the demand for and supply of human
resources in the current and future scenario. Determining HR demand and
supply will help the organization develop adequate strategies to reconcile the
differences between the requirement of employees and their availability. HR
forecasting is intricately linked with other important HR verticals such as
training and development, succession planning, talent acquisition and
managerial appraisal. The remainder of the unit is focused on understanding a
variety of methods to forecast HR demand i.e., both quantitative and
qualitative. The unit will also help gauge advantages and disadvantages of
these techniques.

4.2 DETERMINING HR DEMAND

In determining HR demand, obligatory requirements of manpower for every
vertical of an organization are addressed. In the process of ascertaining HR
53
Methods of Human demand, three important factors need consideration. Firstly, each subunit
Resource
Planning must submit its estimate for manpower requirements to the corporate
forecasting unit based on future need of labour required to meet the
organizational and subunit objectives. HR demand estimate must incorporate
manpower required to maintain or replace the current employees who quit,
retire, get transferred, terminated, go on long term leaves or in the final
eventuality -death. Hence, voluntary, and involuntary attritions need to be
inculcated in the calculation of subunit HR demand. Secondly, HR demand
forecasts also need to incorporate future changes in organization design or in
restructuring (i.e., expansion in departments, downsizing, elimination of jobs
and departments etc.). These changes will either increase or decrease staffing
levels and reflect in HR demand forecasts. Furthermore, HR demand forecast
needs careful examination of non-productive paid time (e.g., vacation, sick
days) either by employment of temporary and gig workforce1 or by
increasing overtime of existing workers. Finally, consideration of all these
issues leads us to the to the net HR demand comprising of 1) the number of
employees required by each subunit and the organization in total and 2)
employee skill sets, competencies or specifications required for the positions
to be filled.

4.3 CASE- ELIMINATION OF JOBS AT

GOOGLE
HR demand forecasts are often vulnerable to business cycles downturns. At
the onset of 2023, Google, the tech giant, eliminated 12,000 jobs (amounting
to 6 per cent of the workforce). CEO, Sundar Pichai took full responsibility
of these layoffs and its impact on people. During a townhall meeting
survivors/existing employees were concerned about their job security and
displayed typical symptoms of the ‘survival syndrome’. Google employees
expressed their displeasure over the decisions leading to the layoffs stating
that most of them were random and not based on performance. While Pichai
disagreed with these versions, he also mentioned that Google would provide
full support to the laid off employees. Google layoffs have begun in the
United States and will be followed through in other countries including India.
Pichai also stated that to maintain the current manpower requirements, the
senior management at Google will undertake a significant decrease in their
annual bonuses. This includes Pichai as well who received a massive hike in
salary keeping in mind his contributions.

As per a report by Bloomberg, Pichai told employees that the layoffs

happened in the context of the slow pace of growth experienced by the tech
giant. He also mentioned that the process of layoffs in countries other than

1
The gig economy is used in the context of prominent online platforms such as Uber and
TaskRabbit. These platforms connect clients in need of personal services and those who will
provide them. A gig worker goes by many names such as flexible worker, contingent worker,
free agent, freelancer etc. In about 40 per cent companies, one in four workers is a gig
54 worker (Yildirmaz, Goldar & Klein, 2020).
the United States would be lengthy depending on the laws and processes of Human Resource
Demand Analysis
the respective nation. Google mentioned the withdrawal of numerous
investors in the light of the impending recession as one among the reasons for
its huge layoffs. Customers have also reduced their spending owing to
inflation and pandemic related job cuts. Hence, with fluctuations in customer
demand, the tech giant is also making significant adjustments to its HR
demand forecasts and making diverse attempts to sustain its current
manpower levels.

Major reasons why information technology (IT) businesses are laying off
thousands of employees can be attributed to the predicted recession to strike
the United States and Europe in 2023. Other reasons include weak consumer
demands, rapid rate hike, pressure from investors, and cost cutting from the
company. But layoffs are not confined to the IT industry only, but financials,
retail, energy and healthcare are also affected.

Source:

1. Layoffs 2023: Why are tech superpowers laying off workers all around
the world? Retrieved 3rd February, 2023 from https:// economictimes.
indiatimes.com/news/
2. Google employees who survived layoffs are worried, ask top bosses if
their job is safe. Retrieved on 3rd February, 2023 from https://www.
indiatoday.in/technology/news/

4.4 QUANTITATIVE METHODS OF

FORECASTING
HR professionals combine several methods to generate predictions about the
future manpower requirements. These methods can be both quantitative and
qualitative. Quantitative methods include ratio analysis, trend analysis,
regression analysis, and cohort analysis.

1. Trend/Ratio Analysis

Trend analysis is a quantitative approach that attempts to forecast future

personnel needs by extrapolating from historical changes in more than
one organizational index. Common indices include sales, sales per
employee. Table 4.1 provides an illustration:

Table 4.1: Trend Analysis

Year Sales ($ Number of Ratio

Thousands) Employees (Sales/Employee)
2019 2800 155 18.06
2020 3050 171 17.83
2021 3195 166 19.25

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Methods of Human
Resource 2022 3300 177 18.64
Planning
2023 3500a 188b 18.64c
2024 3600a 193b 18.64c
2025 3850a 207b 18.64c
Notes:
1. aCurrent time is 2022 and future estimates for manpower are proposed for 2023, 2024 and
2025. Sales estimates of those years are also futuristic in nature.
2. b Employee number has been forecasted for 2023, 2024, and 2025.
3. The index used to calculate the future HR demand can be the most recent figure in 2022
i.e., 18.64 or and average of the fours years from 2019-2022 which is 18.44. In this trend
analysis the most recent figure/ratio i.e., 18.64 was used for forecasting.

Adapted from Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013).

Strategic Human resource Planning, Cengage learning, India.

The five steps used to conduct trend analysis include:

• Selection of proper operational index: Normally forecasters use a readily

available business index such as the sales level that has a direct impact
on HR demand forecasts.

• Track the progress of the business index selected over time: Once the
appropriate index is selected, it is necessary to collect historical data on
the same to make accurate forecasts both for the index and for estimated
manpower.

• Track the workforce progress over time: It is important to track the

progress of the workforce (both direct and indirect) to understand
fluctuations in manpower.

• Calculation of average ratio of the business index to the workforce size:

This ratio retains importance as it describes the relationship between the
two variables i.e., sales and number of employees over a certain period.

• Calculate the forecasted demand for labour: Divide the business index
selected by the average ratio for each future year to arrive at the forecast
for the number of employees.

2. Ratio Analysis

Ratio analysis is a straightforward quantitative demand forecasting technique

commonly used by many organizations. Sales level is probably the
commonest index used by organizations in ratio analysis. Other operational
indices include: 1) Number of units produced 2) Number of customers
catered to and 3) Number of manhours worked. An illustration of ratio
analysis is provided for a better understanding.

56
Problem Illustration: Human Resource
Demand Analysis

A company manufactures 50,000 desktop computers/year. The price of a

desktop is Rs. 25,000. The company spends Rs. 5000/desktop in materials
and 2,00,000 man-hours to make the desktops. Compute the following ratios
to assess productivity:

• Output/Labour Ratio (in terms of manhours)

=50,000 desktops/2,00,000 manhours=0.25 desktop/manhour.

• Output value/Labour Ratio= Output Value = 50,000 desktops * Rs.

25,000/2,00,000 manhours=Rs 6250/manhour

• Value added/labour ratio= Value added=Net gains=Output Value-

Material Cost=(50,000* Rs. 25,000) – (50,000*Rs. 5,000)
=1,000,000/2,00,000 manhours=Rs. 5/manhour.

Source: Bhattacharya, D.K. (2008). Human Resource Research Methods,

Oxford University Press, India

This above illustration is short term and cannot be utilized in a generic

manner for all categories of employees in organizations. For e.g., the
productivity of knowledge workers is difficult to compute through ratios
illustrated above as much of their work is linked to direct and indirect
outcomes. They also extend services to other units in an organization which
have an effect on final outcomes but can be difficult to quantify.

3. Regression

A useful quantitative technique to forecast for short-, medium- and long-term

time horizons is regression analysis. Regression purports a linear relationship
between independent variables or antecedents and the dependent variable or
the outcome. For e.g., an increase or decrease in sales revenues (i.e.,
independent variable) may also result a corresponding increase or decrease in
HR demand (i.e., dependent variable). Akin to trend analysis, regression also
uses historical data to predict into the future. However if the relationship
between the independent and the dependent variable is random or non-linear
then using linear regression will not generate valid results for forecasting HR
demand. If the number of independent variables are more than one, the
analysis will use a multivariate regression. These regressions are normally
conducted on numerous data points using software packages such as SPSS
(Statistical Programme for Social Sciences). To understandthe use of
regression better a simple illustration of a linear regression equation
considering only one independent variable has been provided.

The simple regression equation is as follows:

• Y=A+BX
• Y=the dependent variable (HR demand/number of employees required).
• A=Constant (intercept)
57
Methods of Human • B=the slope of the linear relationship between independent and
Resource
Planning dependent variable
• X=the independent variable (Level of sales)
• B= [∑XY- N (X_) (Y_)]/ ∑ (X2) – N (X_)2
• A= Y_ - BX_

Problem Illustration:

Book Mart is a fast-growing dynamic company with an acceleration in sales

and sales revenue. As a HR planner, one needs to forecast the requirement of
marketing employees required for $ 8 million and $ 10 million of sales. The
following historical information is available to guide the regression analysis:

Table 4.2: Historical Data

Sales Level ($ Million) Number of Marketing Personnel

2.0 20
3.5 32
4.5 42
6.0 55
7.0 66

Note: From the records of the company

The above information represents five sets of observations between the

independent variable (X) i.e., sales level and the dependent variable (Y). N
represents the total number of observations i.e., 5 as per the data in the above
table.

The five steps involved in regression analysis are:

• Calculation of XY, X2, average of X i.e., X_ and average of Y i.e., Y_:

Consider the following table:

Table 4.3: Calculation of X, Y, XY and X2

X (Sales Level Y (Number of XY X2

in million $) Marketing
Personnel)
2.0 20 40 4.00
3.5 32 112 12.25
4.5 42 189 20.25
6.0 55 330 36.00
7.0 66 462 49.00
∑=23.0 ∑=215 ∑=1133 ∑=121.50
58
 Human Resource
Demand Analysis

Average of X i.e., X_= 23/5=4.6

Average of Y i.e., Y_=215/5=43.0
• Calculate the value of B:
B= [∑XY- N (X_) (Y_)]/ ∑ (X2) – N (X_)2
[1133-5(4.6) (43)]/ [121.50 – (5) (4.6)2] =9.17
Note that N is the total number of observations. In this example N=5.
• Calculate A:
A= Y_ - BX_
A= 43 – (9.17) (4.6) =0.82
• Determine the regression equation:
The regression equation = Y=A+BX
Y= 0.82 + (9.17) (X)

The interpretation of this equation is critical for our analysis. The

equation indicates that even when the level of sales (i.e., the independent
variable or X) is at zero, there is a requirement of a single marketing
personnel (A=0.82 and can be rounded to 1). The model also indicates
that for every one unit ($1 million) increase in sales level (X) there is a
predicted increase of 9.17 marketing personnel (Y).

• Calculated the forecasted HR demand (Y) by using the values of X:

The problem in this illustration pertains to the forecast of number of

marketing personnel when sales level forecasts are $8 million and $10
million respectively.
Hence the number of personnel required when sales level is $8 million are:
Y= 0.82 + 9.17 (8) = 74.18 or 74 marketing personnel.
The number of personnel required when sales level is $10 million are:
Y= 0.82 + 9.17 (10) = 92.52 or 93 marketing personnel.
Regression has proven itself to be a valuable tool for manpower planning,
recruitment, and selection in the long run.
Source: Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013). Strategic
Human resource Planning, Cengage learning, India.

4. Cohort Analysis

Another approach to forecasting HR demand is cohort analysis. This analysis

is based on predicting demand estimates due to changes in a cohort or group.
This analysis also uses manpower wastage to make predictions of HR
demand. Wastage refers to termination/attrition of an employee from an
organization due to retirement, resignations, deaths and dismissals. Cohort
59
Methods of Human analysis considers the length of service as a critical variable in wastage
Resource
Planning analysis.

Problem Illustration:

The manpower wastage in an organization is provided in the following table.

Table 4.4: Data on Manpower Wastage

Year Manpower Wastage

1 50
2 45
3 40
4 35
5 30

Note: From the records of the company

Table 4.5: Illustration of Cohort Analysis

Length of Manpower Cumulative Employees Survival

Service Wastage wastage remaining % or
(Years) churn rate
0 0 0 500 100%
1 50 50 450 90%
2 45 95 405 81%
3 40 135 365 73%
4 35 170 330 66%
5 30 200 300 60%
Source: Bhattacharya, D.K. (2008). Human Resource Research Methods, Oxford University
Press, India

The fifth column represents the survival curve or the churn rate of an
organization and can be calculated through the following formula:

(Number of employees remaining at a given time/Number of employees in

the beginning) *100

This analysis has limited use and is good for small homogenous groups. It
also failed to capture many dynamic factors that impact HR movement in
many industries.

4.5 QUALITATIVE METHODS OF

FORECASTING
Apart from quantitative methods of forecasting, direct inputs from a variety
of stakeholders also improve the possibilities of HR demand forecasting.
60
These inputs fall under the broad purview of qualitative methods in demand Human Resource
Demand Analysis
forecasting as it entails a detailed process of stating assumptions, considering
dynamic organizational scenarios, and deriving a rationale to support
numerical estimates. Stakeholders who provide information for forecasting
are varied. Firstly, the organizational line managers who have a detailed
knowledge of workload, responsibilities can provide valuable inputs for any
future forecast for HR demand. Secondly, the organization’s HR specialists
may possess critical information and competencies to help the line managers
in predicting the future HR demand of their respective units with greater
accuracy. Thirdly, business consultants, financial analysts, university
researchers, and other experts possess in-depth knowledge about specific
industries and can help provide an impartial estimate of manpower and
competencies required for in future. Finally governmental agencies also help
in providing projects of HR demand as they possess knowledge of future
environmental changes in business and legislation that can not only change
the labour requirements for a specific organization but the entire industry in
general.2The primary qualitative methods used in the HR demand forecasting
are detailed:

1. Delphi Technique

The Delhi technique named after the Greek oracle at Delphi and further
scientifically developed by the Rand Corporation in 1950 is a primary
qualitative technique in providing projections of long-term HR demand.
Delphi is based on expert views and their predictions though a carefully
designed programme of sequential and individual interrogations. The
unique feature of this technique is that the experts never meet face-to-
face but are connected individually to a project coordinator. The prime
stages of this technique are:

• Define the issue/question of HR demand

The first stage entails the appointment of a project coordinator who

works with the HR specialists to define the specific unit/vertical/
personnel category targeted for forecast. This scoping is vastly
critical to the success of the Delphi technique.

• Identification and Orientation of Experts

The project coordinator in consultation with the HR and the

unit/vertical head targeted for the Delphi selects a team of experts
best suited for the required HR demand forecast. This is the most
critical stage as selection of experts should match the requirements
of HR demand forecast as identified in the first stage. As many

2
In a recent report by Niti Aayog (2022), Government of India, there were several
predictions relating to the growth of the gig economy. As per their projections, the gig
workforce is likely to expand from 7.7 million in 2020-21 to about 23.5 million in 2029-
2030. The report also predicted that highly skilled gig workers would increase from the
present level of 21.9% to 27.5% by 2030. 61
Methods of Human experts are external to the organization in question, they should be
Resource
Planning clearly made aware of the terms and conditions of participation.
Organizational context and the nature of work for which the forecast
of manpower would be made. Similarly, the time horizons for
forecasting also need to be specified to the experts by the project
coordinator. The experts should be clarified on the process that
would be followed in the execution of this technique.

• First Round Questionnaire

The project coordinator sends the experts identified the

questionnaire for post, fax or email with a time frame for
completion. This round entails the experts to provide their explicit
assumptions and detailed rationale for the demand estimate/
projection that they provide.

• Summarize and Second Round Questionnaire

Following the completion of the first round, the project coordinator

summarizes the findings of all experts and shares it amongst them.
The subsequent iterative rounds of questionnaire aim to help the
experts revisit their initial estimates and revise their assumptions and
rationales post the summary of every round. Areas of similarity and
differences are identified by the coordinator at the end of each round
and provided to the experts to examine and refine their estimates.

• Iterative Rounds of Questionnaire and Conclusion

The project coordinator can either issue predetermined rounds of

questionnaire or till the group reaches a majority decision. In either
case, the majority round summarizes and concludes the future HR
demand estimates as provided by the experts.

Delphi is useful and has several advantages. Given its unique feature
of experts not meeting face-to-face the technique helps members
overcome issues of:

• Shyness

• Communication deficiencies

• Issues of individual dominance and predominance of groupthink

Expert members can also be geographically dispersed and can

provide valid feedback without the pressure to confirm.

Despite these obvious advantages, there exist disadvantages too:

• Given the iterative rounds of questionnaire administration, the time

and costs associated with the method can be more.

• The results are not subject to statistical verification. Hence, their

62
 accuracy vastly depends on the knowledge and commitment of the Human Resource
Demand Analysis
experts. Moreover, if experts are chosen from a single professional
domain or industry then their results may be biased to a single line
of enquiry. Therefore, Delphi as a technique derives its success from
the careful selection of experts. These experts need to be selected on
the basis of predetermined criteria necessary for the HR demand
forecast at hand.

2. Nominal Group Technique

Nominal group technique (NGT) is an effective qualitative technique for

HR demand forecasting useful for small homogenous groups. It refers to
an organized method in which group members listen to one and other’s
views and take swift decisions on critical issues. The members note
down their opinions and select the best fit for the problem at hand. NGT
differs from Delphi technique in several ways. Firstly, the group interacts
in a face-to-face mode with one another but only after individual demand
estimates have provided and displayed int eh group without any
discussion. Secondly all estimates are automatically transferred to the
group and do not remain the property of an individual. This helps in
minimizing personal attacks on members and opportunities for individual
dominance. Thirdly, the forecast selected ultimately is derived through a
secret ballot of all members on their choice of individual forecasts
provided. The major steps involved in this method are detailed:

• Refining the issue and time horizon of forecast

The first stage is like that of the Delphi technique. Firstly, the
coordinator will define the problem and verify the assumptions made for
any redundancy. Secondly, the timelines of forecast also need to be
specified to the experts who will participate.

• Selection of Experts and issue of the demand statement

As was in the case of the Delphi technique, the experts needed to be

selected with caution and predetermined criteria. Once, the experts have
consented to be a part of the process, they are issued the demand forecast
statement along with the assumptions and time horizon.

• Preparation of initial demand estimates

Experts are now ready to submit their initial estimates prior to the face-
to-face meeting. Each estimate is accompanied by assumptions and
sources of information that may be unknown to the other members.

• Face-to-Face Meeting

The next step is unique to NGT and takes place only after the initial
estimates of the selected experts are summarized by the coordinator.
Each estimate is presented individually along with associated
63
Methods of Human assumptions. Ice breakers are normally introduced at this stage by the
Resource
Planning coordinator to facilitate the group process. But individual interactions are
not encouraged at this stage to enable creativity of all participants.

• Discussion of demand estimates

Once the coordinator provides the cues to all the participant experts, the
process of detailed analysis of demand estimates through group
discussions begin. A standing rule of NGT entails forbidding any
personal attacks on participant experts. NGT believes that all initial
estimates of demand are the property of the group and group discussions
will focus on clarifications from the experts on their estimates and
associated assumptions. To avoid groupthink and conformity pressures,
NGT encourages divergence in expert views.

• Secret ballot and determination of final demand estimate

A secret ballot is taken in the last stage for all individual estimates to
determine the majority approval or the highest-ranking demand estimate
in terms of the number of votes.

Most of the disadvantages of the Delphi technique are taken care of in

the NGT. As experts meet face-to-face, an overall clarity of the estimate
and underlying assumptions are provided. Moreover, the format of the
NGT is helpful for introverted people who may not be well disposed to
speak in a larger group. As the NGT precludes any personal discussions
and takes the final decision through a secret ballot, it is easier for all
experts to present their views without any bias. NGT may run into a
disadvantage as it is difficult to coordinate a physical meeting with
experts who may be geographically dispersed.

3. Scenario Forecasting

Scenario forecasting, unlike the prior two methods relies on qualitative

inputs from the line managers and HR managers in developing future
demand forecasts. Scenarios are developed through brainstorming
sessions with internal experts and a cause and effect relationship is
established between likely scenarios and their resultant outcomes.
Scenario forecasting is a flexible and dynamic approach much more
likely to embed change in the HR demand forecast vis-à-vis the Delphi
and NGT as it factors in the effect of future uncertainties. The major
steps involved here are:

• Identification of likely scenarios over the next five years. These

scenarios can be optimistic i.e., an estimate in the increase of sales
or pessimistic i.e., constant sales or a decrease in sales.
• Assessment of the organization’s preparedness for any scenario i.e.,
assessment of manpower shortages, requirement of competencies,
talent management, manpower requirement etc.
64
 • Assessment of the strengths, weaknesses, opportunities, and threats Human Resource
Demand Analysis
from rivals over a five-year time horizon.
• Assessment of the changes in the quality and quantity of manpower.
• For each scenario developed, assessment of HR requirements to
meet the threats and opportunities.

These steps help in understanding not only the future demand forecasts in
likely organizational scenarios, they also help in planning for prudent talent
management and succession planning. Given the assessment of the industry
trends, competitor strategies as well as organizational opportunities in future,
scenario forecasting helps in preparing organizations recognize the type of
manpower they would require in the future. It also helps organizations
prepare their internal talent for leadership positions in the future.

4.6 CASE- SUCCESSION PLANNING AT

MICROSOFT
In the August of 2013, Steve Ballmer abruptly announced that he would be
stepping down as CEO of Microsoft as soon as his replacement could be
found. This announcement was the prelude to the one of the greatest
headhunting campaigns during the past decade. At the time of this
announcement, Microsoft was the third most profitable company in the USA.
Surprisingly enough, the global tech giant had no lucid plans for a
succession. Ballmer had underperformed for years in the light of a slow move
into sectors such as mobile and social media coupled with a string of ill-fated
acquisitions. Microsoft had also suffered the attrition of high-profile
executives such as Windows Chief, Steven Sinofsky and Xbox Head, Don
Mattrick during Ballmer’s tenure. For its succession planning, instead of
looking at promising candidates from within the organization, Microsoft
started to look for external candidates. The search for the top post was intense
spanning numerous industry domains, and about 100 candidates. Post the
discussion with the board, the final list of probable candidates was 20. Two
clear favourites had emerged now-Steve Mollenkopf, COO of Qualcomm and
Alan Mulally, the turnround expert at Ford. Mollenkopf dropped out of the
competition once he became CEO of his own organization while Mulally
struck his own name from the list.

As the search had run into a stalemate, Microsoft now began to look for
candidates from within the organization. Finally, six months post Ballmer’s
announcement, Microsoft selected an insider Satya Nadella to become its
third CEO in its history. The decision was a runaway success as time would
indicate. Nadella was responsible for developing an inclusive learning culture
at Microsoft. Among his notable achievements as CEO are the development
of the cloud computing business, making Office user friendly and available
on all smartphones and lucrative acquisitions such as the purchase of
LinkedIn. In his first nine months of becoming CEO, Microsoft’s stock rose
by 30%. In the next seven years under his leadership, it became the world’s 65
Methods of Human second most valuable company.
Resource
Planning
This succession raises important questions for both Microsoft and other
companies poised at the brink of change. With Microsoft’s disastrous
headhunt, one of the most pertinent questions that arose was that why the
board had not groomed the 21-year-old veteran Nadella with clear leadership
skills, expertise, and cultural fit with the organization to taking over as CEO
one day. While, the company did make the right decision at the end, its lack
of planning could have led to an expensive disaster.

Large companies’ bias towards external hiring is one of the chief reasons for
failure of succession planning initiatives. In a seminal study by Prof Rakesh
Khurana and Prof Nitin Nohria of Harvard Business School, an impact study
on the organization operating returns was conducted in 200 organizations
over a 15-year period. The study developed four scenarios-1) insider
promoted in an organization doing reasonably well 2) insider promoted in a
firm doing poorly 3) outsider hired into an organization doing well and 4)
outsider hired into an organization doing poorly. The study found that
insiders did not bring about extreme change in an organization doing well or
poorly as they were steeped in the organization’s culture. On the other hand,
outsiders could be a blessing or bane for an organization. Their study
indicated that when firms were doing poorly or on the verge of bankruptcy,
an outsider added great value. But hiring outsiders in firms doing reasonably
well often led to the destruction of its tradition and legacy. Hence, their study
indicated that external candidates should be hired in exigencies where a
cultural change or a major turnaround is called for. The key to success in
succession planning is often in developing internal candidates to step into
leadership positions seamlessly.

Source: Araoz, C.F. Nagel, G. and Green, C. (2021). The High Cost of Poor
Succession Planning. Retrieved 20th February from https://hbr.org/
2021/05/the-high-cost-of-poor-succession-planning.

4.7 SUMMARY
Determining manpower requirements is critical to the success of every
organization. Manpower requirements can be mapped by ascertaining HR
demand and supply. The unit explains the concept of forecasting HR demand.
It goes on to describe the wide variety of methods available for forecasting
HR demand. Trend/ratio analysis, regression and cohort analysis were among
the quantitative methods discussed while prominent qualitative methods
focused on Delphi, NGT and scenario forecasting. The advantages and
disadvantages of these methodologies were also discussed. The unit with the
aid of two practical cases also connects the criticality of HR demand to
succession planning, talent management and organizational survival in
difficult times.

66
 Human Resource
4.8 SELF ASSESSMENT QUESTIONS Demand Analysis

1. Why are qualitative methods of HR demand forecasting important?

Explain the prominent qualitative methods of HR demand forecasting
along with their advantages and disadvantages.
2. Why is regression an important technique of HR demand forecast? How
can regression be used to forecast HR demand taking multiple variables.
Illustrate.
3. Scenario forecasting can help organizations predict manpower demand
requirements in uncertain times. Illustrate using an example.

4.9 FURTHER READINGS/ REFERENCES

1. Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013). Strategic Human
resource Planning, Cengage learning, India.
2. Bhattacharya, D.K. (2008). Human Resource Research Methods, Oxford
University Press, India.
3. Niti Aayog (2022). India’s Booming Gig and Platform Economy:
Perspectives and Recommendations on the Future of Work.
4. Yildirmaz, A., Goldar, M., and Klein, S. (2020). Illuminating the
Shadow Workforce: Insights into the Gig Economy for the Enterprise.
ADP Research Institute.

67
Methods of Human
Resource UNIT 5 HUMAN RESOURCE SUPPLY
Planning
ANALYSIS

Objectives

After reading this unit, you will be able to:

• Understand the concept of supply forecasting in the HR planning

process.
• Understand the linkages between the HR plan and labour supply
forecasting.
• Understand the relationship between supply forecasting and succession
planning.
• Applying the various supply forecasting techniques for determining both
internal and external supply of manpower in real time scenarios.

Structure

5.1 Introduction
5.2 Determining HR Supply
5.3 Case- The legendery CEO of continental Airlines
5.4 Supply forecasting techniques -qualitative
5.5 Supply forecasting techniques-quantitative
5.6 Forecasting external supply of manpower
5.7 Summary
5.8 Self-Assessment Questions
5.9 Further Readings/ References

5.1 INTRODUCTION
Given the centrality of HR forecasting process to organizational effectiveness
as explained in Unit 4, the present unit covers the details of the human
resources (HR) supply forecasting process. The unit introduces the concept of
determining manpower requirements through HR supply forecasting. It
explains in detail the supply forecasting techniques (both qualitative and
quantitative) to gauge internal and external supply requirements. HR supply
forecasting has a unique relationship with succession planning and these
linkages will be explored by the unit in-depth through practical illustrations.

5.2 DETERMINING HR SUPPLY

HR supply forecasting of manpower entails two major options:

• Internal supply refers to the recruitment of members from within the

68 organization through promotions, training, and transfer.
• External supply or recruitment of potential employees from outside the Human Resource
Supply Analysis
organization through job fairs, campus recruitments, hiring of talent
working with competitors and those otherwise unemployed seeking
employment.

In bulk scenarios organizations use an amalgamation of both internal and

external supply by rewarding talented employees through promotions and
advancement possibilities and recruiting potential employees externally who
possess competencies not held by the present workforce. Many organizations
turn to external supply procedures when the internal supply fails to match the
required demand in terms of numbers and competencies. There may exist
several other reasons for recruiting externally. Firstly, any expansion in the
current activities of the organization will require sufficient manpower and
open up possibilities for external recruitment. Secondly, massive internal
recruitments preclude the tendency to bring innovation and change within an
organization. Thirdly, internal candidates are often more expensive to the
organization in terms of compensation and benefits due to seniority mainly.
Fourthly, head-hunters with detailed knowledge about the industry and a
wealth of contacts can help get extremely talent external recruits especially
for leadership positions. Finally, in the case of an impending organizational
change hiring external candidates is desirable to gradually enforce a cultural
shift within the organization.

5.3 CASE-THE LEGENDARY CEO OF

CONTINENTAL AIRLINES
Gordon Bethune was the legendary CEO that turned Continental Airlines
from the brink of collapse. Bethune is considered one the greatest leaders in
the history of the company. He left his operations executive position at
Boeing in 1994 and joined Continental when it was at its unprofitable worst
and ranked the highest on customer complaints. Prior to Bethune coming on
board, Continental had had 10 CEOs during a two period who resigned or
were terminated from their positions. The popular management strategy
entailed union busting and paying employees substandard salaries.

One of the most difficult times during the company’s history arose in 1981
when Texas International Airlines (TIA) made a bid to acquire Continental.
TIA’s CEO Francisco Lorenzo was controversial and feared by employees.
He was known for masterminding cost cuts, requiring pilots to fly
excessively long hours, delaying aircraft repairs and outsourcing aircraft
maintenance to cheaper and less experienced external contractors. Lorenzo
also employed union busting tactics to further decrease employee morale.
Despite several legal battles, Lorenzo ultimately became the CEO of
Continental. Under Lorenzo’s regime, Continental filed for bankruptcy in
1983 and laid off nearly 65% of its workforce. The filing of bankruptcy
nullified all existing union contracts. In 1984, the company began operating
profitably again but the bankruptcy protections remained in place till 1986
69
Methods of Human and agreements had to be worked out with creditors to pay off the debts over
Resource
Planning a decade long period. Going forward a series of hasty mergers and Lorenzo’s
outmoded management tactics led to massive debts of $2.2 billion in 1990.

When Gordon Bethune assumed control of Continental in 1994, the company

was on the verge of filing a bankruptcy for the third time. He laid out a plan
with Continental consultant Greg Brenneman that called for a complete
culture change led by a permanent new leader. The plan labelled as the Go
Forward Plan called for critical changes in product, finance, people, and
marketing. Bethune’s first objective was to create an inclusive organization
where employees were encouraged to take decisions to solve problems. He
took control of cutting costs, pricing and new marketing programmes. The
‘Fly to Win’ marketing programme entailed apologizing to travel agents for
past regressions and encouraging them to book passengers on the airline
again for a fair commission. The programme also identified unprofitable air
routes which were then dropped. Under ‘Fund the Future’ Plan, Bethune
updated the financial system so created awareness of daily income and
expenses. He improved Continental’s pricing structure and refinanced debt to
prevent bankruptcy. The ‘Make Reliability a Reality’ programme provided a
thrust on improvement of services such as on-time-arrivals. At a very basic
level Bethune treated his employees fairly and followed a principle of
complete financial transparencies to indicate why there may be layoffs in the
times to come.

Under the Go Forward Plan the company began to turnaround. Customer

service complaints turned into glowing reviews. All the 200 planes in the
fleet go a new makeover that was professional. Continental’s stock price rose
from $2/share to $50/share under Bethune’s leadership. Fortune Magazine
named Continental Airlines among the 100 best places to work for six years
consecutively in a row. Gordon Bethune retired from Continental Airlines in
2004. But his legacy continues in the organization even today. By making
day-to-day changes in operations and corporate culture, he was able to create
an organization where employees were happy to work. He placed real
emphasis on customer service, streamlined the carrier’s image and took
difficult decisions in reducing unprofitable air routes. In the annals of
legendary CEO’s Bethune continues to be exemplified by the turnaround
strategies that he employed at Continental.
Source:
Clark, K. (2017). Gordon Bethune: The Man who turned Continental Around.
Retrieved on 23rd February from https://avgeekery.com/avgeek-spotlight-
gordon-bethune-former-ceo-continental-airlines

5.4 SUPPLY FORECASTING TECHNQUES-

QUALITATIVE
Internal supply forecasting techniques can range from qualitative to
quantitative. The chief qualitative techniques of forecasting HR supply are:
70
 Human Resource
1. Skills and Management Inventories Supply Analysis

Forecasting internal supply of manpower begins with skill and

management inventories. A skill inventory is an individualized personal
account on every employee except those in management or professional
positions. The information contained in a skill inventory is:

• Personal information
• Education, training, and skill competencies
• Work history
• Performance ratings
• Career information pertaining to desired jobs in future and those
recommended by superiors.
• Hobbies

Skill inventories are normally stored in the organization’s employee

database and provide important repositories of information on the current
skill sets of employees and its fitment with jobs in the organization. To
be of use and relevance to the organization, skill inventories must
constantly be updated with recent data from the employees themselves.

Management inventories are more comprehensive than the skill

inventories as they contain all of the information contained in the skill
inventories and the following:

• Trajectory of managerial jobs held.

• Professional training courses/certifications undertaken and their
dates of completion.
• Key accountabilities for the current job
• Appraisal data
• Professional and industry memberships.

With updated and relevant skill and management inventories,

organizations will be able to assess the current level of skill and
competencies of both managerial and non-managerial employees. These
inventories are critical for succession planning and also indicate the skill
gap if any between the current jobs and the current employees.

2. Succession Planning and Replacement Charts

Succession planning is critical for organizational success. The case in

section 5.3 clearly indicates the importance of a proper succession plan
in an organization either for the top positions or for other managerial
positions. In an ever-changing environment with the COVID19
pandemic creating tremendous disruptions in business, it is essential that
organizations manage their talent and reward them appropriately. Long
term succession planning provides sufficient training and mentoring to 71
Methods of Human potential employees for assuming leadership positions in organizations.
Resource
Planning Short term succession planning pertains to immediate replacement of
individuals who have quit, been terminated, transferred died and so on.
The benefits of succession planning are:

• Helps the organization respond appropriately to drastic changes and

upheavals.
• Helps people develop for new experiences and jobs.
• Rewards employees appropriately.
• Provides a ready talent pipeline to be used in context.
• Enables smooth internal employment movement and continuity.

Skill and management inventories discussed above provide a wealth of

information for succession planning. They provide a ready reference to
match employee competencies with the requirements of a specific job.
Hence, succession planning experts in consultation with the HR team
must prepare succession/replacement charts for executive, managerial
and professional roles in the organization. These documents carry a
wealth of personal information, career progress and trajectories and
appraisal data. Given the sensitivity of the data, the documents are kept
confidential accessible to a few in the organization.

The first type of document to be made use of is the replacement chart

(Figure 1). It refers to an organizational chart with reporting
relationships. But it also provides data on the present job incumbent and
a shortlist of the top internal candidates who might be able to replace the
incumbent if he/she leaves the job. An important aspect of these charts is
the succession readiness code which is listed next to the names of all the
employees. The code contains two critical elements:

• The employees’ current level of performance typically on a scale of

1-5 (1=unacceptable and 5=outstanding)
• The employees’ readiness for movement or promotion.

While no replacement chart is full proof and can carry all information, the
succession readiness code is useful in providing a quick and accurate picture
of succession readiness for each department/vertical and also for the entire
organization.

72
 Human Resource
Supply Analysis

Figure 1: Replacement Chart

Source: https://quizlet.com/ca/271633938/mhr-523-replacement-chart-3-diagram/

The second document is the replacement table that compliments the

information provided in the replacement charts by documenting additional
information on each specific job, the incumbent job holder and all potential
internal successors. By referring to these tables, one gets a picture of all
possible internal candidates and not just the shortlist of two to three top
individuals for a specific job as is in the case of the replacement chart.

5.5 SUPPLY FORECASTING TECHNQUES-

QUANTITATIVE
Apart from qualitative techniques as outlined in the section above,
quantitative techniques are also popularly used to forecast the internal supply
of manpower in organizations. They are detailed with practical illustrations.

1. Markov Models

Markov models are popularly used in supply planning operations. They are
the best used in stable organizational environments where career trajectories
of employees are more or less defined. A Markov model is largely
probabilistic using probabilities of various employee movement options to
determine the overall movement pattern across the organization and provide
and estimate of supply of manpower. When considering the employee
movement patterns, an employee largely has five options:

• Remaining in the current job

• Promotion to a higher grade
• Lateral transfer to a job with a similar classification level
• Exit from the job.
• Demotion (Which is rare)
73
Methods of Human It may be noted that Markov models do not examine individual employee
Resource
Planning movements but rather examine macro-overall rates of movement across
various job levels based on historical patterns (taking into count typically the
past five years data). These models assume that employee movement is
comparatively stable over time. With incremental changes, internal
adjustments to historical data need to be made prior to using it for analysis.
However, if organizations face dramatic changes (as was noted during the
times of the COVID19 pandemic), Markov models are of limited use. Hence,
these models are used during typical business cycles or maximum for slow
incremental changes in the requirement of manpower in organizations. There
exist three major steps to conducting a Markov analysis:

• Firstly, historical data on mobility rates between jobs in the organization

needs to be recorded.
• Secondly, based on this data we develop matrices to forecast the future
personnel movement between jobs.
• Thirdly and finally, we use the forecasts of the model to analyse our HR
policies and programs and instigate the necessary adaptive measures.

By using employee movement data from the past five years, we can calculate
transitional probabilities or the likelihood that an individual in any job will
display any of the five movement options as noted above. By multiplying the
total number of current employees in different positions by the associated
probabilities in the five different scenarios, HR planners will be able to
derive numerical data on employee flow patterns at an organizational level
and between various jobs/positions. These sequences of movements between
various jobs are called Markov Chains. Detailed examination of a Markov
model helps us understand the external supply requirements of manpower.
Table 1 provides a practical illustration of a Markov model.

Table 1: Illustration of Markov Model

Projections for the Year 2023

Current Positions Chief Outfitter Guide Exit
Year 2022 Outfitter
Chief Outfitter 3 (0.75) - - 1(0.25)
(N=4)
Outfitter 1(0.08) 9 (0.75) - 2 (0.17)
(N=12)
Guide (N=16) - 3 (0.19) 9 (0.56) 4 (0.25)
Supply 4 12 9 7
(N=32)

Adapted from Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013).

Strategic Human resource Planning, Cengage learning, India.
74
Table 1 provides an illustration of the Markov model. N denotes the total Human Resource
Supply Analysis
number of employees in the three positions in the year 2022. The projections
for every position are made for the year 2023. At the level of the Chief
Outfitter, historical data predicts an attrition of 25% which amounts to one
employee (i.e., 4*0.25=1). Hence, in the year 2023 the number of Chief
Outfitters would be 3 and to maintain the required number of 4 a single
promotion is called for from the next hierarchically lower position i.e.,
Outfitter. Similarly, at the level of the Outfitter the number of employees in
2022 are 12. Given the historical trend of 17% attrition, nearly 2 employees
will leave from this position (12*0.17=2.04 rounded off to 2 employees). At
this position three employees would be required to maintain the replacement
threshold of 12 (i.e., -1 employee to be promoted to the level of Chef
Outfitter and 2 employees attiring). Hence, three employees would be
promoted from the level of Guide to Outfitter to maintain the balance of
employees. Thus, the calculation indicates that the forecast of internal supply
stands at 32 (i.e., 4 at the level of Chief Outfitter, 12 at the level of Outfitter,
and 9 at the level of Guide).

Markov models have tremendous utility for examining:

• The number of personnel who move annually and over specified time
periods between various job levels.
• The number of external hires required.
• The movement patterns and expected duration of stay for employees at
every position.
• The number and percentage of all the employees who will start in a
particular position and will complete their stay in that position over a
specified time period.

2. Movement Analysis

Movement analysis is a technique used to analyse the ripple movements or

effects that voluntary or involuntary attritions may have on personnel in any
organization. This technique helps to identify the vacant positions in a
department/organization and the total number of personnel movements
caused by filling up these vacant positions. The technique helps in
understanding that personnel movements are always more than the total
number of vacant positions to be filled. An increasing reliance on external
hires to fill up the vacant positions will result in depleting chances of internal
employees for promotion and succession to higher positions. Similarly, a
skew towards internal replacements to fill up vacant positions will result in
tremendous amount of employee movements for any replacement (due to
voluntary or involuntary attrition). Hence, movement analysis helps HR
planners to maintain the balance between internal and external supply of
manpower forecasts. This analysis can be performed for the organization and
more specifically for a team/department or functional area. The major steps
involved are:
75
Methods of Human • The planning horizon is one year and the number of employees currently
Resource
Planning serving in each position are taken as a reference point.
• Secondly, considerations of expansion or downsizing of manpower are
considered for every department.
• Thirdly, losses requiring replacements for each authority level/position
need to be calculated.

Practical Illustration

As a HR planner for an organization named Book Mart you wish to

determine the total number of positions requiring replacements over the next
one-year time and the impact that these replacements would have on the
employee movement in one department -Finance Department. Book Mart by
policy promotes from within for all positions except the basic entry position
(i.e., Level 9). The department does not have any personnel currently in the
three senior positions i.e., Level 1, 2 and 3. The historical information of the
department is contained in Table 5.1. Table 5.1 provides an overview of the
positions, the current level of staffing, increase of manpower required,
retirements if any and turnover probabilities. Based on this data provided, the
HR planner can create Table 5.2 containing data on the number of positions
to be filled. With reference to Table 5.2 at Level 5 -Manager, total number of
positions at the beginning of the planning period are 6 and the increase
required is also 6. The total employees losses are 2 owing to retirements
(information contained in Table 5.1) and 0.6 rounded off to 1 owing to
resignations (information contained in Table 5.1). Hence, the total number of
personnel losses at this level are 3 as shown in Table 5.2. The total number of
positions to be filled are 9 taking into count the expansion required and the
replacement for the personnel losses. A similar calculation is done at the
levels in the department to arrive at the total figure of 68. Based on Table 2,
the last and final table -5.3 is created illustrating employee movements to fill
the 68 positions that require replacement. With reference to Table .3 the total
number of positions to be filled at Level 4 is 1 and hence, the corresponding
employee movement is only 1. But at Level 5, the number of positions to be
filled is 9. Bu the cumulative employee movement till Level 5 is 10.
Similarly, the cumulative movement at level 6 is 16 and so on. So, to fill 68
positions within a department the total number of employee movements
amount to 167 as demonstrated in Table 5.3. So an extensive promotion from
within policy as is evident in Book Mart can lead to tremendous employee
movements or ripple effects for replacements. This analysis can help the
organization balance the proportion of internal and external hires at every
level in every department.

Adapted from Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013).

Strategic Human resource Planning, Cengage learning, India.

76
 Human Resource
Table1: Movement Analysis Exercise Supply Analysis

Levels Designations Current Increase retirements Turnover

staffing needed (Resignations+
level terminations)
(positions
at start)

4 Senior 1 +1 - -
Manager

5 Manager 6 +6 2 10% of positions at

start

6 Senior 20 +5% 15% of 10%

Analyst positions at
start

7 Analyst 32 +5% 15% 15%

8 Clerk 40 +5% 15% 20%

9 Clerical 50 +5% 15% 25%

assistant

Source: Organizational Records

Table 2: Number of Positions to be filled

Levels Designations Positions Increase Personnel losses Positions to be filled

at start needed (retirements + (increase needed +
turnover) losses)

4 Senior 1 +1 0 1
Manager

5 Manager 6 +6 2+0.6=2.6~3 6+3 = 9

6 Senior 20 +5% (1) 5 6

Analyst

7 Analyst 32 +5% 10 12
(1.7~2)

8 Clerk 40 +5% (2) 14 16

9 Clerical 50 +5% 21 24
assistant (2.5~3)

Total 149 15 53 68

Source: Organizational Records

77
Methods of Human
Resource
Table 3: Personnel Movement
Planning
Levels Designations Positions Total ripple or chain movement Total
to be personnel
filled movement

4 Senior 1 - 1
Manager

5 Manager 9 + 1 10

6 Senior 6 +1 + 9 16
Analyst

7 Analyst 12 +1 + 9 + 6 28

8 Clerk 16 + 1+ 9+ 6+ 12 44

9 Clerical 24 +1 + 9 + 6+ 12+16 68
assistant

Total 68 167

3. Vacancy Model

This model is also referred to as a renewal or sequencing model and is useful

in analysing employee flow throughout the organization by examining inputs
and outputs at every position. These models are used more than Markov
models which help in predicting known and stable personnel movements over
a period. Vacancy models can be used over short- and long-term time
horizons spanning from three to ten years. The normal planning time horizon
for the use of the model is only one year. When a senior level position is
vacant and is filled through internal promotion, that gap actually trickles
down to the lowest level because at each level people will move up to fill up
vacancy created due to promotion(s) at various levels. But vacancy model
differs from movement analysis as it also provides an estimate of how many
vacancies were filled through external hiring and how many promotions were
doled out internally. Hence, the utility of this method is far more than the
traditional Markov models or movement analysis predicting ripple chain
effects. The vacancy model also utilizes historical data and identifies the
number of internal and external personnel required at each level and for the
organization.

Practical Illustration

In organization, Alpha Consultants Pvt. Ltd. the following information are

available to build a vacancy model.

Staffing Changes: None

Personnel Losses during the year

• Level 1 (President): 100% (through compulsory retirement)

78
• Level 2 (Vice President): 15% Human Resource
Supply Analysis
• Level 3 (Managers): 17%
• Level 4 (Team Leads): 20%
• Level 5 (Associates): 25%
• Level 6 (Trainees): 50%

It may be noted that maximum attritions in the organization are happening at

the lower levels.

Personnel Replacement Policy: This depicts the proportion of percentage of

external to internal hiring at every level in the organization.

• Level 1: 0:100
• Level 2: 10: 90
• Level 3: 20: 80
• Level 4: 30: 70
• Level 5: 55: 45
• Level 6: 100: 0

It may be noted that at the topmost level there is no policy of any external
hire while the lowest level hires candidates externally only.

Hence, based on these data points the HR planner is able to create a vacancy
model at every level as depicted in Table 4.

Table 4: Vacancy Model

Level Current Annual Promotions Level External

Employees Losses (Internal) Outflows Hiring

1 1 1 1 1 0

2 6 1 2 2 0

3 18 3 4 5 1

4 45 9 9 13 4

5 88 22 14 31 17

6 156 78 0 92 92

Total 314 114 30 144 114

79
Methods of Human If we look at Table 4 then at level 1 there is a single outflow based on the
Resource
Planning information provided and the replacement policy is purely internal
promotions. Hence the number of promotions is 1 and external hiring is nil.
At Level 2, the annual losses are 1 (i.e., Number of current employees
*percentage of personnel losses during the year=6*0.15=0.9 rounded off to
1). The total level outflows are 2 (1 to be promoted to Level 1 and 1 through
annual personnel loss). Based on the preplacement policy at Level 2, the total
number of internal promotions are 2 (i.e., 2*0.9=1.8 rounded off to 2). As the
number of internal promotions match the level outflows i.e., 2, the external
hiring at this level was nil. At Level 3, the annual losses are 3 (18*0.17=3.06
rounded off to 3). The total level outflows are 5 (3 from personnel losses at
Level 3 and 2 from internal promotions to Level 2). As per the replacement
policy, a total of 4 promotions can be done (i.e., 5*0.8=4) and hence the
external hiring at this Level is 1 to meet the level outflows of 5. A similar
calculation is done at every to arrive at the sum totals of annual losses of
manpower, promotion requirements, level outflows and the number of
external hiring.

As per the indicative model in Table 5.4, there is stability in the organization
as the total number of annual losses -114 are met by the external hires -114.
The scenario may change if there is a prediction for a staffing increase or
decrease at every level or specified levels in the organization. The changed
figure (number of current employees*increase/decrease percentage) will then
be used to as a reference point to calculate annual losses, promotion forecast,
level outflows and requirement for external hiring. The vacancy model also
provides a wealth of information on the internal promotion rate also known
as the upward mobility rate at every level. For e.g., the upward mobility at
Level 3 is 11.11% which is calculated by dividing the total number of people
promoted to Level 2 i.e., 2 by the total number of employees at Level 3 i.e.,
18. Hence, vacancy models provide a comprehensive picture about the
replacements, promotions, external hires and potential for succession
planning at every level in the organization.

Adapted from Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013).

Strategic Human resource Planning, Cengage learning, India.

4. Linear Programming

This method has utility for HR planners as it helps determine the forecast of
supply of manpower based on achieving the best staffing outcome taking into
consideration constraints such as labour costs. Conditions such as the desired
staffing ratios (proportion of internal vis-à-vis external manpower) or
maintaining the optimum level of staffing with respect to diverse groups
based on age, ethnic minorities, gender can be filtered into the equation.
Linear programming can help in creating ‘what if’ scenarios by changing the
various assumptions to determine the impact of these changes on the
numerical requirements of supply both internal and external. Linear
80 programming also functions on similar assumptions as with regression
model. In other cases, a non-linear or quadratic programming approach may Human Resource
Supply Analysis
be used.

5.6 FORECASTING EXTERNAL SUPPLY OF

MANPOWER
Apart from forecasting internal supply of manpower through qualitative and
quantitative techniques, a discussion on primary factors influencing external
supply of manpower also is also of importance. The prime factors are
detailed herewith:

• Demographic Change: Demographic studies involve understanding the

size, growth, age and distribution of population. Hence, changes such as
increase in world population, ageing workforce, increasing migration
from rural to urban areas, changes in the birth and death rates can
influence the external supply of manpower.

• Socio-Cultural Trends: Trends such as increased participation of

women in the workforce, desire for a better work life balance, flexible
work hours, increase in temporary employees also influence the supply
of manpower in labour markets.

• Technology: Tremendous technological upgradation, rapid digital

adoption specifically post the pandemic COVID19 has helped employees
work remotely to a great extent. The adoption of artificial intelligence
(AI) is also likely to have a great impact on external labour forecasts.

• Labour Mobility: Mobility in terms of occupation due to education and

training and geography due to attractiveness of certain regions also
influences external supply of manpower.

• State of Economy: This has a significant impact on the demand and

supply of manpower. In times of recession, wages fall and labour
availability increases. In upward economic cycles, higher wages increase
the willingness of employees/potential employees to work.

5.7 SUMMARY
HR forecasting either through demand or supply is critical for HR planning in
the organization. While Unit 4 detailed the process and techniques of
forecasting of HR demand, Unit 5 focused on supply forecasting techniques.
This unit explains the concept of supply forecasting, internal and external
bases of supply of manpower and the techniques utilized in supply
forecasting of manpower. The live case contained in the unit focuses on the
requirement of external succession to top level positions in an organization.
External succession planning is important in an organization desirous of a
complete culture change and turnaround in work processes. The case of
Continental Airlines lucidly depicts the reasons and the context of the success
of its CEO Gordon Bethune in pulling the company from bankruptcy to
81
Methods of Human success. The techniques to forecast internal manpower supply requirements
Resource
Planning range from qualitative (such as skill inventories, succession planning and
replacement charts) to quantitative (such as Markov models, movement
analysis, vacancy model and linear programming). Each of the techniques
have been explained in detail with the aid of practical illustrations. The unit
also summarizes the major factors influencing external supply of manpower
in labour markets.

5.8 SELF ASSESSMENT QUESTIONS

1. How do Markov Models help HR planners in forecasting internal supply
of manpower? What can be the advantages and limitations of this
technique?
2. Aqua International offers high quality bottled mineral water. The
company has retained your services to calculate a vacancy model for the
forthcoming year’s HR forecast based on the following assumptions:
Workforce at the beginning of the planning period (prior to any staffing
changes):
Level 1=1
Level 2= 4
Level 3= 18
Level 4= 40
Level 5= 75
Level 6= 136
Organizational growth: 5% increase in manpower at every level except
for Level 1 which remains unchanged.
HR Losses during the current year:
Level 1=100%
Level 2= 20%
Level 3= 22%
Level 4= 25%
Level 5= 30%
Level 6= 50%
HR Replacement Policy
The proportion percentage of external to internal hiring at each Level is
detailed:
Level 1= 0:100
Level 2=10: 90
Level 3= 20:80

82 Level 4= 30: 70
 Level 5= 50: 50 Human Resource
Supply Analysis
Level 6= 100:0
Adapted from Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013).
Strategic Human resource Planning, Cengage learning, India.
3. How can replacement charts help in succession planning in
organizations?
4. Imagine you are the HR head of a moderate size bank. Your bank has
business in all the states of India. Your boss has asked you to prepare a
skill inventory of all the officers at the bank. What will you do? How
could such an inventory help the bank in its strategic plan?

5.9 FURTHER READINGS/ REFERENCES

1. Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013). Strategic Human
resource Planning, Cengage learning, India.
2. Bhattacharya, D.K. (2008). Human Resource Research Methods, Oxford
University Press, India.

83
Methods of Human
Resource UNIT 6 HUMAN RESOURCE MAPPING
Planning
AND STOCK TAKING

Objectives

After completing his unit, you will be able to:

• appraise human resource stock-taking;

• understand the factors that need to be reviewed before stock-taking;
• comprehend human resources mapping;
• highlight the assessment of human resource inventorying;
• understand the mapping of the coordinates for efficient HR mapping; and
• understand the factors affecting employee relations.

Structure

6.1 Introduction
6.2 Concept Of Stock-Taking
6.3 Human Resource Mapping
6.4 Importance Of Industrial Relation
6.5 Factors Affecting Hr Stock Taking
6.6 Importance Of Manpower Mapping
6.7 Summary
6.8 Self Assessment Questions
6.9 Further Readings/ References

6.1 INTRODUCTION
Stock-taking and human resource mapping are crucial steps while planning
an effective utilization of available manpower. Counting human resources in
qualitative or quantitative terms is strongly tied to the financial estimation of
an entire process. An organization’s stability, adaptability, and profitability
depend upon correctly evaluating the right kind of people at a designated job.
Hence, this unit is designed to give the readers an understanding of the need
for stock-taking and the various factors that must beconsidered before
it.Additionally, the unit will outline the importance of human resource
mapping with a brief explanation of its evolution, the steps to be followed,
and the determination of coordinates.

6.2 CONCEPT OF STOCK-TAKING

Taking human resources to facilitate various organizational functions by
evaluating their potential in qualitative, quantitative, or both ways may be
84 understood as human resource stock-taking. Auditing the strength,
weaknesses, opportunities, and threats (SWOT) of the human resource Human Resource
Mapping and Stock
management system is prescribed before finalizing the stock-taking. The Taking
effectiveness-efficiency mapping is an integral part of it. It enables the HR
personnel to foresee the strategic contribution ofselecting HR stock toachieve
organizational goals.

The concerns to be addressed with the stock-taking are as follows:

• What strategic contribution does HR render to accomplishing

organizational goals?
• How well-articulated and agreed-upon are HR strategies aligned with the
company strategy and integrated into one another?
• What role does the HRM department currently play? Is it effective in the
organization's context?
• What HR concerns are delegated by the management to the HR
professionals?
• What isHR's ethical, legal, and organizational expertise to settle a
delegated task?
• How the innovative HR initiatives can add to the business and people’s
needs to obtain organizational benchmarking?
• What is HR’s strategy to compare the workforce performance vis-à-vis
their absenteeism, turnover, and procrastination?
• What is the standard of HR in delivering the service in the fields of
recruitment, development and training, management of reward, provision
of health and safety, ensuring civility at the workplace, availability of
legal advice, employee development initiatives, and use of human
resource information systems?
• How sensitive are HR professionals towards the legitimate concerns of
all the stakeholders: management and employees?
• What is the role of HR professionals in ensuring work-life integration
and job engagement of the workforce?
• What initiatives are taken by HR professionals to build a robust
employee-employer and inter-employee ecosystem?
• Are any formal evaluations, opinion surveys, or assessments of HR
recorded?
• Is the HR functionary well-structured with qualified professionals?
• Is the staffing of the HR professionals adequate?

Addressing the concern acts as a diagnostic tool. It helps the organization in

developing an elaborate SWOT profiling. Initiatives taken here help in the
alignment of organizational processes in line with its vision, mission, and
objectives.

85
Methods of Human
Resource
Forecasting the staff requirement
Planning
The following points need to be considered before forecasting the staff
requirement:

• The influence of technological advancement on the task needs

• Possible changes concerning productivity, efficiency, the flexibility of
the workforce, the impact of training on workers, work-related
organizational change, etc.
• Variations in employment practices (For example subcontracting,
outsourcing, safety-related requirements etc)
• Change in policies enforced by the government (For example,tariffs and
taxes)
• The demand and supply of labour
• Availability of skill levels

Answering the aforementioned concerns allows HR managers to draw a

comparative analysis of the situation. It indicates the next course of action,
i.e., the steps to strike a balance. The steps are as follows:

• Selection and recruitment plan

• Plan for conducting the training
• Plan for retaining the workforce
• Plan for offering an early retirement
• Plan to deal with the redundancy
• Plan to handle the changes in the utilization of the workforce
• Plan for succession
• Personal plans and their alignment with the career goals

Effective execution of these plans proves to help bring demand-supply

balance. Continuous workforce planning uses inputs that later emerge as a
factor helping in achieving a situation where the predicted demand-supply
matches the actual.

Importance of forecasting

Forecasting benefits businesses by allowing them to take better-informed

business choices and formulate data-powered strategies. Economic and
operation-related choices are based on real-time and predicted future market
conditions. Past information is compiled and critically evaluated to highlight
patterns that can be further utilised to predict future trends and changes.
Forecasting or predicting the future enables a company to be proactive in
receiving the change instead of reactive.

86
 Human Resource
How can forecasting make organizations excel? Mapping and Stock
Taking
Below are the three ways forecasting adds to organizational excellence:

(i) Helps in goal setting and planning

(ii) Help in budgeting
(iii) Helps in anticipating the changes within different markets

Check Your Progress

1. What points need to be considered before forecasting staff requirement?

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2. What is the importance of goal setting in achieving organizational

excellence? Explain the answer by taking a real-time example.

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3. How can HR managers draw a comparative analysis of an organizational

situation?

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4. Describe the importance of budgeting in forecasting staff requirement.

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…………………………………………………………………………….. 87
Methods of Human 5. Write your view on Succession planning.
Resource
Planning
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6.3 HUMAN RESOURCE MAPPING

“A map does not just chart, it unlocks and formulates meaning; it forms
bridges between here and there, between disparate ideas that we did not
know, were previously connected.” Reif Larsen

Human resource mapping can be understood as identifying, allocating, and

diagramming the available human resource in terms of their strengths and
expertise to maximize organizational gain and benefits to its users.
Understanding a mapping approach increases the chances of its future
crafting. The process serves as beneficial to all the stakeholders: strategic
decision-makers and available human resources. It improves the
circumstantial awareness of the organization, adding to its preparedness
towards the competitive environment.

Understanding of the human resource inventory

Toensure the smooth functioning of business organizations, effective and

strategic inventory allocation is pertinent. Allocation of the right talent and
skill set at the right place is crucial, making human resource inventory
management an important task.

Skill assessment in inventorying

Not all labour is created equal. To ensure that a company's key objectives are
met, each manager and employee's competencies and areas of strengths and
flaws must be evaluated. An organisation's deployable and mechanical skills
may be used differently than the people management skillset of working with
produce. Organizations will vary considerably on the categories that should
appear after completing the skills assessment. To ensure that all key areas are
adequately covered in their operation, business strategy decision-making
teams should take the time to outline skill assessment categories.

Steps in human resource mapping

The complete human resource mapping follows a set of ten steps. First, it
evaluates the vision and mission statement of the targeted organisation;
second, developing an understanding of HR frameworks and policies; third,
planning the available resources; fourth, acquisition of the right talent; fifth,
88 planning the HR succession; sixth, acknowledging the learning and relatable
development; seventh, management of the performances; eighth, taking care Human Resource
Mapping and Stock
of the statutory compliances; ninth, designing a human resource management Taking
system; and tenth, management of the exit process.

Let us know about them in detail

(i) Evaluate Objectives

The human resource planning process begins with identifying the goals
of the different departments inside the organisation. Every department,
such as marketing, sales, production, finance, and management, may
have different human resources goals, objectives, agendas, and
expectations. The goals may incorporate recruiting new employees for
the process, reducing the workforce via automation, or improving
existing employees' knowledge and acquired skill levels.

(ii) Developing an understanding

People and processes are the foundation of any successful business,

which is why developing a human resources (HR) plan is critical. This
strategic document propels your company forward by assessing your
workforce and comparing it to future requirements.

(iii) Planning the available resources

Resources can be the limiting factor, an inexpensive investment a

company can make. We witness market volatility causing skilled
resource constraints, it is critical to conduct resource planning and
maximise workforce utilisation. For a healthy business environment,
effective resource management incorporates ‘ intelligent resource
management and planning, appropriate scrutinizing and scheduling, and
securing employee engagement and superior satisfaction levels. Often
resource managers adhere to the best management and planning
standards, and practices. It positively impacts the productivity, the
performance of projects, hence improving profitability. However, the
organisation's business objective will suffer if they take a myopic
visioned decision and fail to make a timely move.

(iv) right talent acquisition

This implies that talent acquisition is based on a futuristic and longer-
term view of staffing. Its long-term objective is to find highly talented
employees who can not only fill the immediate needs but also have the
drive, guide, take the initiative, and add potential to add value to the
company's competitiveness and future.
(v) HR succession planning
Succession planning programmes typically include pragmatic, tailored
professional experience that is relevant for future senior or key roles, in
addition to activities for training and development. Setting clear
objectives is essential for effective succession planning.
89
Methods of Human (vi) acknowledging the learning
Resource
Planning
Employees are encouraged to evaluate their efforts in their work
through acknowledgement, whereas praise helps them to understand
that their work meets the required standards. Acknowledgement does
not evaluate employees’ work in the same way that praise does. On the
other hand, the former can be accompanied by managerial opinion.

(vii) statutory compliances

Statutory compliance is a legislative basis within which the Company

must carry out its responsibilities. First, every organisation must treat
its employees following all federal and state labour laws. All of these
laws protect the interests of the company, the employee, and the
employer.

(viii) designing a human resource management system

Designing a Human Resource Management System (HRMS) offers a

framework for developing and integrating HRMS in various
organisations, including those with fewer or limited resources. The
range of concepts and relevant theoretical underpinningsabout each
sub-system and system is comprehensive but brief—job analysis,
human resource planning, recruitment and selection, performance
management, training and development, 360-degree feedback,
mentoring and executive coaching, and reward management.

(ix) managing the exit process

Exit Management, also known as employee offboarding, manages an

employee's final and comprehensive settlement when they leave an
organisation. When an employee resigns, retires, or is fired, the
necessary paperwork and documentation associated with employee exit
must be completed systematically.

6.4 IMPORTANCE OF INDUSTRIAL RELATION

(IR)
Since their inception, Industrial Relations (IR) and human resource
management (HRM) have been the subject of intense intellectual research.
Management-related literature is rich in varying interpretations and a wide
range of subjectivities about the focus and coverage of these two intellectual
and academic fields. As stated by the British Universities Industrial
Relations Association (BUIRA), the primary focus of industrial relations is
the employment relationship's regulation, control, and governance. (BUIRA,
2008). The field of IR takes a more pluralistic standpoint, focusing not only
on workers and management but also on the other parties involved: state and
other institutional bodies that impact the employment relationship.

90
The primary goal of HRM, on the other hand is to accomplish viability and Human Resource
Mapping and Stock
profit maximisation. The management team wishes to propound a labour Taking
management system that is both cost-effective and efficient. It aims to
achieve a competitive advantage, that is sustainable and flexibile, enabling
the management to function autonomously. As a result, it also aims to
improve organisational productivity and performance. While the stream of IR
is concerned with improving organisational performance, it also
prioritisesachieving highest employee welfare, acknowledging that labour is
not commodity mere but a potentially valuable asset of production. Human
resource management establishes a direct connection between organisational
growth and the well-being of employees, where the former leads to the latter.
As a result, it aims on the former, believing that the latter will automatically
be taken care of.

Hence, it is pertinent to understand IR briefly to develop a better HR stock-

taking exercise via human resource mapping.

Approaches to industrial relations

Before we progress to the following topics, it is pertinent to understand the

various industrial relations (IR) approaches. The goals and strategies of a
company vary over time. Each strategy is an outcome which helps in meeting
the organizational objectives. IR professionals do the decision-making.
Hence, a prior understanding of various IR approaches may help bridge the
gap between the employer and employee. Here we will be briefly talking
about six IR approaches.

i) Economic approach

Industrial relations revolve primarily around economic concerns.

Workers and their organisations have been primarily concerned with
protecting and promoting their members' economic interests through
higher wages and other monetary gains since the beginning of trade
unionism. These incur costs for the employer, whose primary goal has
been to maximise profit while minimising costs. If these competing
interests are not resolved amicably, they give rise to major industrial
differences, labor disputes, strikes, company lock-outs, and other
manifestations of industrial reaction. Most eminent trade unionist
pioneers, such as Sidney and Beatrice Webb,John R. Commons, G. D. H.
Cole, and Karl Marx, expressed this approach to industrial relations in
their writings. Others, such as guild socialists and syndicalists, have
proposed replacing capitalism with other arrangements to arrang a cure-
all to the ill effects of free economies. It is worth noting that financial
aspects of industrial relations are either directly or otherwise related to
social tangibles, and both influence one another.

91
Methods of Human ii) Sociological approach
Resource
Planning
According to the sociological viewpoint, IR are a product of any
industrial society, which is a sub-set of the larger society. The several
societal factors, such as social organizations, societal bodies,
associations, cultural values and standards, ethnic customs and traditions,
and beliefs, all influence labour relations. These sociological factors
significantly impact several behaviour patterns of the different parties
involved in IR and their inter-relationships. Industrial relations tend to be
smooth when the parties' perspectives on sociological factors are in
harmony or adjustable. If the approach of the parties to these influencers
varies, strainedindustrial relations may surface. Workers and worker
unions, for example, may anticipatebetterment in their status, recognition
of their role by management, substantial participation in decision-
making, and rational supervision. If these requirements are not met,
workers and worker unionswill likely develop an antagonistic feeling
toward management, potentially leading to strained relations in the
industry.

iii) Psychological approach

The psychological approach, psychodynamic in nature, to labour

relations revolves primarily around the perceptions of various parties
involved in same or similar problems. These perceptions are highly
likely related to specific situations, people, or concerns. Industrial
relations tend to be smooth when the parties’ perceptions ofa specific
subject are similar or equally reconcilable. Situations of conflict arise
when they are opposed or contradictory. Workers' perceptions can be
impacted by various factors, including their academic credentials, wage
and other financial gains, job security, social foundation, desire for
acknowledgement, recognition and higher status, and supervision mode.
Likewise, employers' and managers' perceptions may be impacted by
their social status, the economic stability of the organization, government
policies, and the behaviour of worker union heads and leaders.
Psychological approach to labour relations revolves primarily around the
perceptions of the several parties involved in the same concern. These
perceptions are likely to be related to specific situations, people, or
issues.

iv) Political approach

The political approach is a special approach to IR and can be viewed in

two ways: one from a broader political standpoint and another from the
narrower perspective of the formation of government combinedly by the
employer and the worker union or trade union through mutually agreed
terms and conditions of the workers' employment. Since the advent of
modern trade unions, it is well known that the state has intervened in IR
to moderate the inter-relationships between the parties, predominantly to
92
 protect the interests of a community or the nation. Many salient features Human Resource
Mapping and Stock
of industrial relations, like bargaining agent selection, industrial Taking
differences, disputes, strikes, lockouts, the status of collective
agreements, and unfair and biased labour practices, are increasingly
being highlighted under the purview of the law. As a result, both parties’
freedom to decide issues completely freely has been limited. They must
operate inside the parameters established by the government or
governmentbodies and agencies. Furthermore, unions' political deeds and
affiliation with political parties are essential factors to consider. In a
broader sense, the power map of the union-management linkage is an
essential aspect to consider in labour relations. It may be connected to
the internal power dynamics within management, the worker’s trade
union,and the power distribution between them. Furthermore, collective
agreements attained between the employer and worker unions may be
interpreted as embodiments of rules and regulations governing the
different terms and conditions of workers' employment. This is equitable
to the binding nature of rules formulated by governmental bodies.
Indeed, approaches to IR can be viewed from broad and narrow
perspectives. The broader perspective is easily discernible from scholarly
writings and assessments of concrete policies and programmes of trade
unions, employers, and government. However, objective case studies are
required to understand the approaches of specific firms or organisations
thoroughly.

v) ‘Industrial Relations System’: The Dunlop’s Model

In the form of a general theory, John T. Dunlop has devised a 'system'

approach towards industrial relations. As per him, the main challenge of
IR is 'to entail why specific rules are formulated through specific IR
systems and how and for what reason they start changing in reaction to
alterations that affect the system'. Dunlop's primary purpose has been to
develop rules governing the place of work and the larger society
involved in the work. He believes these norms are enforced as an
outcome of the interaction of several factors, including actors,
environmental set-up, and ideology.

It can be expressed as
R= f (A,E,I)
Where R stands for Rules
A stands for Actors
E stands for Environmental contexts
I stands for Ideology

Rules: Rules in IR can take several forms. Some of them are, policies,
instructions, and regulations of management, rules formulated by workers
and their organisations, collective arrangements, labour laws by
governments, regulations by governmental agencies, industrial rewards, 93
Methods of Human decrees and courtdecisions, governmental orders, decisions of agencies
Resource
Planning mutually created by the management and workers' organisations, and
traditions and customs. The three main rules Dunlop gives are substantive,
procedural, and rules relating to their administration and enforcement.

Actors: In an IR system, the actors are (a) management and hierarchical

position of managers, (ii) the workforce and the hierarchical position of their
firms, and (iii) special governmental and non-governmental agencies
(mutually accepted) concerned with the workforce, enterprises and their
relationships. Trade unions and labour legislations emerge as influential
actors. Although they operate within a specific territory, they often override
the top management hierarchy.

Environmental factors: Dunlop has mentioned three prime environmental

contexts from the perspective of an IR system. They are: (a) the technological
capability of a workplace or work community, (b) the budgetary constraints
and the market scenario, (c) the boundary points and decentralization of
power in society.

Ideology: In industrial relations, ideology refers to a group of ideas and

beliefs shared by the system's actors. It is a set of ideas that define each
actor's role and their perception of the place and functional role of others in
the system. Ideological differences are not conducive to establishing a stable
industrial relations system. Only when the ideologies of the actors are
compatible can the system be stable. Thus, Dunlop has conceptualised a
broad theory of the industrial relations system based on the combination of
various factors that contribute to the establishment of workplace and work
community rules. These factors include the system's actors—workers and the
hierarchies of one‘s organisations, managerial hierarchical structures,
environmental contexts, and the actors' ideology.

6.5 FACTORS AFFECTING HR STOCK TAKING

1. Assessment of the current manpower profile: The requirement of HR
stock-taking requires the estimation of the skills possessed by the
workforce. The stock and its potential can be gauged when the manager
has information about their age, gender, prior experience, and character.
Knowledge of these information pieces makes measuring an employee’s
potential easier. The other factors that prove to be beneficial are planning
staff movement, turnover, retirement plans, and succession planning.

2. Budget Planning: Because an organization's human capital is a crucial

decision, the HR financial plan or budget covers everything. Hiring,
salaries, economic advantages, talent management, training,
development, succession planning, workforce satisfaction, employee
engagement, and employee wellbeing planning are all part of this. It's a
difficult task, but it's not impossible if you know what your top priorities
are. When done correctly, an HR budget will help prevent over-hiring
94
 and under-staffing, provide a picture of an organization's staffing Human Resource
Mapping and Stock
requirements, attract the best talent, and lower turnover. Taking

After basic knowledge of the projected requirements, the organization

can choose between incremental or zero-based budgeting.

Incremental budgeting: Companies adjust their budget by category based

on the previous fiscal season's budget to account for changes made or
projected in the new year.

Zero-based budgeting: In this budget, everything is taken into account

for and substantiated, implying that the company begin from the very
beginning with a blank slate. This method may be the best possible for
newer companies, mini businesses, or organisations undergoing
significant strategic changes.

3. Corporate strategy: The three major strategies a market generally follows

are either related to their growth, retrenchment, or stability.

A significant challenge for HR managers in firms pursuing a growth

strategy is recruiting and training a large number of qualified employees
to assist in the operation of expanding operations. As a result, the top
management officials would consult with the HR department to ascertain
that it could engage and train a large number of new employees.

Layoffs, downsizing, and renewed labour contracts are all HR's response
to the organization's resizing move. Employees' job insecurity improves
as a result of downsizing. At this point, HR managers must boost
employee morale so that employees remain committed to the
organisation. Human resource managers must assist in assuring that
decision-making about who will be allowed topartis made for work-
related reasons rather than responces that may reflect or suggest
subjectivity, judgement, or bias. Similarly, HR personnel can help
displaced workers optimize their transition by implementing practices
such as comparable compensation packages and placement counselling.

A stability strategy is the third single market strategy that some firms
may pursue. A company that implements this strategy intends to stay in
its current business and manage it at the same pace as before. The firm's
mission statement is to safeguard itself against environmental threats. A
stability strategy is frequently used following a period of retrenchment or
rapid growth. HR managers display a significant role in determining how
to maintain the firm's current employees when the it can offer little in the
way of opportunities for growth, development, salary increases, and so
on.

6.6 IMPORTANCE OF MANPOWER MAPPING

Manpower Planning entails putting the right number of people, the right kind
of people, in the right place, at the right time, doing the right things for which 95
Methods of Human they are suited in order to achieve the organization's goals.
Resource
Planning
i) Vital to managerial decision making: The managerial functions, namely
plan, organise, direct, and control, are all dependent on manpower. The
above-mentioned managerial activities are supported by human
resources. Resultantly, manpower mapping becomes crucial to all
managerial functionalities.

ii) Efficient optimization of resources: Personnel management isan

essential function in the industrialization world of the present time. The
commencement of large enterprises necessitates the management of
huge manpower. It is possible to accomplish this effectively through
the mapping function.

iii) Motivation: Manpower mapping functions include putting the right

person in the right job role, but also motivational curriculum, i.e.,
incentive plans to be devised for further participation and employment
of efficient employees in anorganization. Resultantly, all types of
incentive plans become a must-have component of the staffing
function.

iv) Better relation between employees: A company can sometimes be

stabilised if human relations advance and become intense. Human
relations in the workplace improve as a result of effective regulation,
constructive dialogue, effective supervision, and statesmanship.
Employee training, growth, and development are also handled by the
staffing function, that promotes cooperation and stronger human
relations.

v) Higher productivity: When resources are used as efficiently as possible,

productivity rises. Higher productivity results from wasting less time,
money, effort, and energy. This is made possible by staffing and related
activities ( Performance appraisal, training and development,
remuneration)

Need for manpower planning while mapping

Manpower planning is a process that has two prominent stages because it

evaluates not only available human resources but also forecasts future
requirements and thus creates employment programmes. Manpower planning
benefits the firm in the following ways:

i) Shortages and oversupply can be identified so that appropriate action can

be taken as soon as possible.
ii) Manpower planning underpins all recruitment and selection programmes.
iii) It also aids in reducing labour costs by identifying excess personnel and
avoiding overstaffing.
iv) It also aids in identifying available talents in a company so that training
96 programmes can be devised to develop those talents.
v) It aids in business growth and diversification. Human resources can be Human Resource
Mapping and Stock
made more readily available and used more effectively through Taking
manpower planning.

vi) It assists the organisation in realising the importance of human resource

management, which ultimately aids in the stability of a company.

Case study

Human resource management was transformed by computer technology a

few years ago. Organizations tested computer skills inventories, benefits and
compensation administration, and monitoring systems. The revolution
continues to this day, but it is experiencing preliminary modification as
digital technology and the World wide web advance at breakneck speed.
Because of the Internet, HRM is shifting from database server technology to
augmented reality. Although many factors influence this shift, business
globalisation is the most important. The need for a genuinely international,
integrated HR information system has become critical as organisations'
operations and personnel are becoming more global. The most apparent
solution is digital human resource management via the Internet.

A 2006 survey of HR decision-makers from 325 major North American

organisations shows that 9 out of 10 firms use the Web for HR-related
activities such as benefits enrollment. This contrasts with survey findings
from 1977, which indicated that only 27% of surveyed organisations used the
Web for HR systems. Over the last decade, the number of US companies
using the web for their HR system has skyrocketed.

In human resource planning, cloud computing and internet are most

commonly used for corporate deliberations, applicant and resume monitoring,
and benefits and retirement planning. Humana Inc. has created one of the
most sophisticated applicant identification and monitoring systems in the
world. Humana is a health care program (HMO) with about 430 million
employees and 6 million subscribers. Their HR are capable of quickly
identifying, contacting, and locating suitable individuals for almost any job
opening in their organisation. Their success is based on Softshoe Select, a
specialised software application provided by and linked to Hotjobs.com.This
software searches large numbers of Web browsers for resumes that match any
criteria set by Humana. While the initial setup costs are relatively high (a
$50,000 single-time fee for licencing and set - up plus a $2,000 per month
lease), organisations like Humana find the costs to be well worth the effort.
Humana, for example, estimates that it previously spent $128 on advertising
to identify a single qualified applicant's curriculum vitae. They estimate the
expense today to be around $.0.7. This will save Humana $8.5 million per
year.

The Internet is also assisting many organisations in revolutionising other

manpower planning activities.For example, Citibank, uses a single world-
wide HRIS to manage a detailed skill inventory, compensation-related data 97
Methods of Human repository, and HR practices across 98 widely spread countries and 10,000
Resource
Planning managerial staff. Many employers across the globehave developed employee
self-service compensation, rewards, and benefits systems that enable
Petrolium Company, Shell employees to manage their timeline for
retirement, maintain and/or change health care coverage, and track other
personally requisite information through an automated, self-services system.

However, using internet for these types of manpower planning involved high
risk. The swiftness of access to a large amount of data and information
always has the anticipation to lead to legal and ethical misuse and abuse, both
by the employees and by hackers or unauthorised system users. Organisations
need to take all requisite precautions to protect the privacy and honor of these
virtual HR systems. The challenging situations are enormous, but the
organisational benefits can be invaluable.

Answer the following by critically analysing the case

1. How has internet impacted the way businesses plan for and fulfill their
HR needs?
2. What types of prospective HR functions might emerge in the coming
years?
3. What are the moral and legal implications of employees using the
Internet for HR purposes? Are you thoughtful about violating your
privacy due to these web-based applications?
4. What specialist knowledge will the forthcoming HRIS personnel require
to effectively manage a firm's virtual HR function?
5. What is manpower mapping? How does it relate to other HRM
activities?
6. Describe HRIS in your own terms. How a firmcan use it to improve
efficacy and decrease the costs within the ambit of theHR activities,
especially manpower planning?

6.7 SUMMARY
HR stock-taking determines the extent to which a job holder possesses
various job-related competencies. Thus, it is a process used by an HR expert
to identify and list the competencies that are most significant for performing
a job effectively. Mapping individual competencies provide individuals with
a clear sense of actual marketability in today's job market because someone
familiar with their competencies can compare them to those required for a
position of interest.In today's complex world, where resources are scarce, it
has become the first and foremost goal of every businessperson to use the
available resources efficiently and effectively. To maximise returns and
minimise waste, all resources, including manpower, material machinery, and
money, must be properly synchronised. The most imported resource of an
organisation is manpower, both technical and managerial. Without
98
manpower, no other factor can be used effectively. As a result, any mismatch Human Resource
Mapping and Stock
with any of the factors will save time, money, and effort, resulting in a loss of Taking
efficiency.

6.8 SELF-ASSESSMENT QUESTIONS

1. What is HR stock-taking?
2. What concerns need to be addressed before finalizing the stock-taking?
3. Why forecasting the staff requirement is essential?
4. Display an understanding of HR mapping.
5. How is inventorying extended to human resources? Give an example.
6. Describe the importance of HR mapping.
7. Explain the coordinates of HR mapping.
8. Write a note on your understanding of HRM scholarship concerning HR
mapping.

6.9 FURTHER READINGS/ REFERENCES

Bhattacharyya, D. K. (2009), Human Resource Planning, Excel Books, India,
ISBN: 8174462961
Dietz, J., Joshi, C., Esses, V. M., Hamilton, L. K., &Gabarrot, F. (2015). The
skill paradox: Explaining and reducing employment discrimination against
skilled immigrants. The International Journal of Human Resource
Management, 26, 1318–1334.
Gaur, A. S., Delios, A., & Singh, K. (2007). Institutional environments,
staffing strategies, and subsidiary performance. Journal of Management, 33,
611–636.
Kulikov, A. (2020), HR Value Mapping How to assess as-is HR value chains
and identify potential improvements, https://varkalos.com/pdf/HR%
20Value%20Mapping%20v1.1.pdf.
Markoulli, M., Lee, C.I.S.G., Byington, E., and Felps, W. A. (2016),
Mapping Human Resource Management: Reviewing the field and charting
future directions, Human Resource Management Review,
http://dx.doi.org/10.1016/j.hrmr.2016.10.001.
Wood, S. J., & de Menezes, L. M. (2011). High involvement management,
high-performance work systems and well-being. International Journal of
Human Resource Management, 22, 1586–1610.
https://www.freshbooks.com/hub/accounting/human-resource-budgeting
UKEssays. (November 2018). Industrial Relations and Human Resource
Management. Retrieved from https://www.ukessays.com/essays/business/the-
academic-fields-industrial-relations-and-human-resource-management-
business-essay.php?vref=1

99
Methods of Human
Resource UNIT 7 FORMULATING HUMAN
Planning
RESOURCE PLAN

Objectives

After going through this unit, you will be able to understand:

• Importance of Formulation of an HR plan

• Portfolio analysis of HR plans
• HR grand strategy
• Various HR forecasting approaches
• Different optimisation techniques
• List of related terms
• An understanding of implementing the HR strategy through carefully
crafted case studies

Structure

7.1 Introduction
7.2 Human Resource Planning (HRP)
7.3 Hr Grand Strategy
7.4 Portfolio Analysis
7.5 HR Forecasting Approaches
7.6 Predictor Selection
7.7 Summary
7.8 Self-Assessment Questions
7.9 Further Readings/ References

7.1 INTRODUCTION
What kind of task do people do? What types of people do it? How is the
human resources (HR) department doing? What variables and future
projections will have an impact on people, jobs, and the Hr team? How many
people could be required in the future? In this unit, we will look at the
procedure of bringing these concerns together in order to choose a solitary,
long-term, and consolidated HR strategy to dictate the HR department's
initiatives. The Human resource planning (HRP) developer is in charge of
this step. As involvement incumbents responding in this capacity, HRP
practitioners focus their attention on the following question: What long-term
Strategic alignment should be chosen?

As the unit progresses, we will become more acquainted with far more
refined aspects of HRP.
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 Formulating
7.2 HUMAN RESOURCE PLANNING (HRP) Human Resource
Plan
HRP is a systematic process of predicting the future demand for and supply
of manpower and the employment of skills per the organization's objectives.
It is also known as the method of reviewing human resources requirements to
ensure that the right kind of skills is available to the organisation.

Formulation of an HR process

The planning of human resources may fall into the trap of two extremes.
They are: (a) falling into the shortcoming of short-term decision making, or
(b) the extreme ambition of looking from too long-term decisions. The
former problem is evident when organizational panic occurs due to the loss of
an essential performer at some level,making people restlessly look around
fora befitting replacement. However, the latter is crucial when people depend
on HR initiatives and forecasts for making life decisions. Figure 1 depicts a
basic model describing the process of HR formulation in a typical
organisation. It suggests four steps to be followed in formulating an HR plan.

Step 1: Triangulation of work-related information, prior knowledge of the

workforce, and cooperation of the HR department. Analysis of the
possibilities for obtaining the best possible result.

Step 2: Selection of HR strategy. This being

Step 3: Profiling of the strengths and flaws of every possible strategic

decision

Step 4: Finalizing the best possible HR strategy that has the highest future
potential

Figure 1: Basic model of the process of HR formulation

Triangulation of work-related information, prior

knowledge of the workforce, and cooperation of HR
department

Selection of HR strategy

Profiling of the strengths and flaws of every

possible strategic decision

Finalizing the best possible HR strategy that

has the highest future potential

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Methods of Human
Resource
Four-factor criteria analysis
Planning
The comparison of ideal and real is a norm of the HR professional’s prior
finalization of a strategic choice. Hence, the development of a conceptual
model is evident to allow the solutions to be both subjective and creative in
nature. An understanding of the current happening when paired with the
HR’s expectation gives rise to the future possibilities and also set targets to
be achieved in future. The model of Four-criterion will depict the above key
points (Refer Figure 2).
Figure 2 Four-criterion model

Quadrant ‘What is’

It denotes the existing conditions from three different perspectives: work,

workforce, and HR department. From the perspective of work, it analyses the
set of works people are currently pursuing in their jobs. The second
perspective of workforce, critically compares the expertise of the members
associated to a designation in terms of their academic credentials,
professional exposure, and personal traits. The third perspective takes care of
the HR department, the first quadrant deals with the existing set of strengths
and flaws. This approach refrains from any value biased judgements with
102 regard to the work, workforce, and HR functionary.
Quadrant ‘What should be’ Formulating
Human Resource
Plan
This quadrant involves subjectivity and judgement by comparing the real to
an expected result. We may recall that the description of job, the job
description (JD) sets the expectations from a work, workforce, and a HR
department. The basis of value-judgements are set to meet the desirable
expectation so as to be able to do the good making the organization
beneficial.

Quadrant ‘What will probably be’

This quadrant looks to the future prospect by carefully studying the

competitors, technological advancements, and the trend of human
expectations. It attempts to foresee the workplace climate if the suggested
changes are incorporated to the workplace. Hence, it talks about the jobs, its
positions, and the set of closely related jobs: job relatives. It not only brings
in new job roles and expectation, also brings the future possibility of
workforce upgradation and HR department enrichment.

Quadrant ‘What should be’

It describes the future conditions by imagining a possible outcome having its

strong hold in the present. The impact of this quadrant on the three groups
work, workforce, and HR department are described as follows:

a) Work: How the future jobs will be shaped when we find consistency
among organization’s objectives and organizational strategy?

b) Workforce: what will be the new set of academic, professional, and

personal requisites from a job seeker which will be in consonance with
the changed job requirements?

c) HR department: How the HR department will be perceived when the

organizational objectives are streamlined and met post evaluation of the
external and internal conditions?

The analysis of the four quadrants leads us to compare the deviations to find
out the possibility of discrepancy. It takes into consideration the strength-
weakness-opportunity-threat (SWOT) analysis and assesses the preparedness
of an organization to the long-range HR planning. The discrepancies can be
positive or negative.

A positive discrepancy indicates that the organization’s future preparedness

is more than the expectation. Hence, it is the ideal expectation, requiring no
corrective measures. It indicates the significant motivation and strength of the
core HR staff. For example, a training program designed for one department
can be extended to the others decreasing the operational cost and manifolding
its efficacy.

A negative discrepancy on the other hand is a reason of concern. It required

further initiatives to find the reasons behind and arrest them.
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Methods of Human • What is the cause of the discrepancy?
Resource
Planning
• How significant it is from a future perspective?
• What measures can rectify the discrepancy?
• What may be the impact of the corrective measures on the existing?
• How the counterproductive aspects of the corrective measures can be
reversed?

The strategic choice made by the organization enables the HR cater worthy
long-term oriented solutions.

Check Your Progress

1. What are the steps to be followed to devise an effective HR plan?

…………………………………………………………………………….
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2. Compare the Four factor analysis with the SWOT analysis.
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3. What are the different types of discrepancies that can be expected after
the analysis of the quadrants of Four factor analysis?
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4. How can the negative discrepancies be addressed?
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104
5. Think of a real-time example to draw the quadrants and briefly describe Formulating
Human Resource
it in relation to the organizational situation you have thought of. Plan

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6. Write a brief note on your understanding of the formulation of HR
process.
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Case study

Albanian motor Ltd, an automobile spare part company with the market
presence of 6 decades was known for its quality product supply and efficient
product delivery time. The company’s forte is backed by its loyal employee
base. It was noted that when one joins the organization, leaves it only upon
reaching the retirement age. The low turnover ratio was a result of job
satisfaction and job security extended by the management team of Albanian
motor ltd.

Till the previous year Albanian motors was enjoying hold on a market
segment. The scenario has reversed with entry of competitors. The new
competitors entered the market with a well-equipped technological edge.

Suggest a Four-factor criteria analysis for Albanian motor Ltd, preparing it

towards the discrepancy observed.

7.3 HR GRAND STRATEGY

HR grand strategy is a futuristic, long-term strategic alternative devised or
proposed by the HR department. Several conceptual tools are used to finalize
one grand strategy. In the next sections we will be discussing about three
more analysis to formulate a grand HR strategy. They are: Weakness-
opportunity-threat-strength (WOTS analysis), portfolio analysis, and the
Boston Consultancy Group (BCG) matrix for human resources.

Weakness-opportunity-threat-strength (WOTS analysis)

WOTS analysis works on three key assumptions. First, identifying core

competency is possible with a practical WOTS analysis. Second, finding the
105
Methods of Human best-possible area, a niche is dependent on the efficacy of the core
Resource
Planning competency. Third, an effective strategy is a triangulation of competencies
and niches.

An example of a set of W-O-T-S is given below to find out the grand strategy
of the proposed organization.

Weakness: Reported job dissatisfaction can be termed as a weakness.

Opportunity: Flexi-timing may add to job satisfaction and hence can be

visualized as an opportunity.

Threat: An increase in gig mentality may pose a threat, as people would like
to associate based on tenured projects vis-s-vis a full-time association with
the company.

Strength: High social commitment of the organization reflects its outlook

towards its employees may be seen as its strength.

7.4 PORTFOLIO ANALYSIS

A collection of assets or proposals may be termed as a portfolio. The major
attraction of it is to mitigate or diversify the risk so as to earn maximum
benefits. The portfolio analysis can be done in two ways: the product life
cycle way, and the BCG matrix way.

Product life cycle (PLC)analysis

The lifecycle shows existence of four clearly identified stages: introduction,

growth, maturity, and decline. An HR strategy like wise passes through the
four stages of development. Introduction phase registers the entry of an HR
planning formulation. With the passage of time it is explained to the various
departments and workforce of the organization. The acceptance of the
strategy by the various departments makes the proposed strategy enter into a
phase of rapid growth and after some time it registers negligibly less growth
or stagnancy, which we call as phase of maturity. With the advancements of
technology, and human expectations the proposed HR plan receives feedback
of being less effective. This we call as the phase of decline.

Completion of the four phases calls for a brainstorming and a possible

inclusion of another PLC.

The Boston Consultancy Group (BCG) matrix of HR

Workers can be classified into four categories as suggested by Odiorne

(1984). They are: work-horses, workers who show high performance despite
of having a low potential; star performers, workers who show high
performance and also posses high potential; problem employers, workers
who register low performance despite having a high potential; and dead
wood, workers who show low performance and also has low potential.
106
The high performance – low potential quadrant indicates the enthusiasm Formulating
Human Resource
among employees. It gradually moves into the next quadrant of high Plan
performance – high potential as a result of training, organizational learning,
and experience. The next quadrant comes into existence with the gradual
dipping performance of the earlier high performers despite possessing a high
potential. This group leads to the next quadrant of low performance and low
potential, draining the organizational resources. The four stages are
comparable with the original BCG matrix’s cash cows, stars, question marks,
and dogs as workhorses, stars, problem employees, and dead wood. The BCG
matrix of HR is widely popularized by Rothwell (2000) in planning the
successor.
Figure 3: Boston Consultancy Group (BCG) matrix of HR

Case study

“Bitter it may taste, shrill it may sound, and sleepless nights it may cause, but
it is true. In a major shakeup Airbus. The European aircraft manufacturers
has thrown a big shock to its employees.”

Before reaching to the understanding of the shock, company’s details may be

studied.
The company, Airbus, was created in the year 1970. It having an employee
base of 57000. The closest competitor Boeing has raised the concerns for
Airbus.
On 27 February, 2007 Airbus announced near-future plans of shedding
10,000 jobs as it will be dissolving six of its units. This will impact four
European countries. Soon staged protests by the helpless workers drowned
the offices. Airbus management chose to enter into meeting the union before
the employees actually face the said formalized job loss. However, the
attempt went futile. The talks could not pacify the agitation of the to-be
affected workers.
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Methods of Human
Resource 1. Can you suggest some alternative strategy to the concern?
Planning
2. Is job shedding the only option to address to the competition?
3. Can you suggest a WOTS analysis for the situation?
4. What is the learning from this organizational concern?

7.5 HR FORECASTING APPROACHES

HR forecasting encompasses predicting workload and the consequences for a
company. A HR department forecasts both short- and long-term staffing
requirements based on anticipated sales, office expansion, attrition, and other
variables that impact a company's labour requirements.HR planning includes
analysing the various costs and administrative work that come with adding or
downsizing workers, furthermore, to forecasting the number and type of
workers you'll need.

Delphi technique

The Delphi method gathers the viewpoints of specialists to analyse a

problem. It makes use of an intermediary to facilitate idea exchange without
the use of personal opinions or ineffective debate. In companies with large
HR departments, the Delphi technique can efficiently reconcile competing
perspectives on staffing needs. To use this method, the company for which
you work can choose the HR managers best suited to forecasting how factors,
both external and internal, will affect your team. Every person discreetly
submits to the intermediate layer their ideas for future preparation.

After each individual has presented their thoughts, the intermediary expresses
each one whilst still keeping the contributor's identity hidden, and the process
is repeated. Evey HR manager rethinks their proposal in light of fresh data to
make it more accurate. The facilitator highlights any significant points of
disagreement, and the team addresses them until an implementable consensus
is reached.

Trend analysis

A trend analysis systematic decision forecasts future workforce requirements

by using statistical data from the company's past staffing. It compares its
number of staff at different points in time to key business model metrics. For
example, a car dealership might examine the past to see how many sales
representatives corresponded with the highest average number of cars sold
per employee. While such trend lines are not always accurate, recognising
them allows organizations to pay just the labour they need while still offering
great service and selling inventory.

108
 Formulating
Ratio analysis Human Resource
Plan
Ratio analysis, like trend analysis, draws a link between key metrics and
overall staffing. It prioritises determining the precise ratio required for an
organization to function properly and then adapting it to the coming years.

As a retreat prepares for a long and busy summer, it might look at how many
servers it had on personnel in past years and compare to the number of guests
it served. If the ratio were one server for every 16 guests, the HR department
would hire as many servers as were required to maintain that ratio into the
next busy season.

Supply forecasting

The supply forecasting strategy examines a business's internal and external

access to competent candidates. Companies organizationally evaluate their
workgroups to see whom they can encourage or laterally transfer into open
roles. They look at employees' qualifications and performance reviews to see
how they can replace somebody about to depart or resign.

Human resources departments conduct external research on the current labour

market and related provisions to determine how these aspects impact hiring.
They then reevaluate their cost estimate for hiring new employees. For
example, if research shows that entry-level marketers are making more
profits in recent decades, the company may hire one fewer new marketing
executive than planned.

HR Forecasting Optimization Techniques

• Take advantage of available hiring opportunities.

• HR forecasting prepares you to make sound hiring decisions. It's also an

opportunity to bolster your team by finding candidates with skills that no
one else in the organisation has. Gather information and make future
projections with other managers in an organization to better understand
which abilities and competencies they believe are suffering from a lack
in their teams. Rather than simply being a replacement process, HR
forecasting can be an opportunity to revitalise the organisation and
improve its innovation capabilities.

• Consider a variety of employee types.

Companies can create habits that lead to hiring decisions being made too
soon. As you generate your HR forecast, investigate which employment
types would be best for your workforce needs. A company may discover
that it can meet the same production targets or serve the same number of
clients by using part-time workers instead of paid interns rather than
salaried employees.

A well-thought-out hiring strategy that accommodates various employee

types can help the company save money on benefits and other payroll-
109
Methods of Human related expenses. As you experiment with new hiring arrangements, you
Resource
Planning may gain insights that fundamentally alter your vision of the
organization's future and the development of your team.

• Reviewing the organogram

Determine whether the company delegated responsibilities as wisely as

possible before committing to a hiring plan. The organisational chart
reflects the business's workflows and reporting relationships, but as the
company grows, those systems may need to be reconsidered. Your HR
department may suggest combining positions rather than hiring
separately or adding an entirely new position to relieve the workload that
one department needs help to handle.

• Survey employees

Each company handles HR forecasting differently, but even if you only

do it occasionally, you can still improve your preparedness. Consider
conducting an employee survey to gather the information that could
significantly impact your HR forecasts. It isn’t easy to keep apprised of
all important personnel advancements and account for them when
making plans, especially in larger institutions. For example, an employed
person may openly share his intention to step down, but data gathering
allows you to take responsibility once the employee's formal request is
received two weeks before departure.

Whether you undertake a formal survey or talk to your workforce about their
plans regularly, try to comprehend the identifiers that can have a nuanced
impact on your projections. For example, if job satisfaction or productivity is
unusually high, improved employee retention may imply that you necessitate
fewer hires throughout a busy season than regular.

7.6 PREDICTOR SELECTION

We need a strategic plan for selecting the best indicators to use in a
regression model when there are numerous possible predictors.

A common but not recommended approach is to plot the forecast variable

against a specific predictor and, if there is no discernible relationship, remove
that predictor from the model. This is incorrect because a scatterplot only
sometimes shows the relationship, especially when the effects of other
predictors are not considered.

Let us discuss the approaches one by one.

Adjusted R2
Computer output will always provide the R2 value for a regression. However,
this is not a good indicator of a model's predictive ability. It assesses how
well the model fits historical data but not how well it forecasts future data. It
does not accommodate degrees of freedom, hence adding an irrelevant
110
variable also inflates R2. Formulating
Human Resource
Plan
Sum of squared errors (SSE) is seen as a better model as compared to R2.

R-bar-squared another method that can be used to overcome the problems of

adjusted R2.

Note: T= total number of data points or observations

k = Total number of predictors
Maximizing R-bar-squared minimise the standard error, hence giving a better
predictor.

Human resource measurements and audit

To guarantee that the planning of human resources process is sufficient and

pertinent to the organisation, a framework of timely review in the manner of
an independent review and the monitoring of business economics, in form of
measures of appropriate assessment of critical processes and systems is
considered necessary.

It’s crucial to establish the scope and position of the human resource
functioning before characterising audit measures and systems. The core
managerial philosophies set up the human resource function's aspirations.

Table 1 depicts some metrics usable to assess the performance of the HR

department.

Table 1: Metrics to assess performance

Some measures and business fundamentals that can be used to evaluate the
performance of the function in organisations include:
1. Recruitment and Selection:
 Cost of recruitment
 Time to hire
 Hires from the internal reference
 New hiree’s performance
2. Career planning and Succession strategy
 Percentage of qualified people
 What is the percentage of internal placement as compared to external
111
Methods of Human
Resource
hires
Planning  Relocation cost
3. Training and development
 Number of days of training (training days) required per employee
 Total training cost incurred per employee
 Effectiveness of training in terms of relevance, timeliness, and
applicability

The following points are critical for periodic reviews and audits.

• Orientation of HR department objectives with organisational objectives,

critical enterprise issues, and key success factors (KSF).
• The presence of well-documented core aspects that confront the
requirements of the firm, particularly critical issues. Such practises
should have performance metrics and action plans.
• Points the auditors need to take into consideration are:
• Orientation of inter-departmental vision and mission, with the strategic
value propositions, the objective, and value of the organisation
• Describe the critical success factors for meeting departmental targets,
and how will they be remedied?
• Are the key strategic elements, such as the mission, vision, and value
propositions, geared toward meeting the needs of customers?
• Have the critical processes of the department been identified? Is there a
link between the process owners and the procedure performance metrics?
• How is the department organogram formed? Is the hierarchy designed
with the institution's important processes and departmental goals in
mind?
• What strategies and practises are in place to assess customer
requirements? What steps are taken to solicit, provide, and incorporate
feedback and corrective measures?
• How often are future developments determined? What measures are
being adopted to address new needs?
• What current tactics are available to gather market data, competitive
data, environmental best practises, and so on? How are remedial action
undertaken based on such data?
• How does the branch make short- and long-term plans? How frequently
is the progress assessed? What are the strategies for modification and
contingency?
• Is the department's cross-organizational communication efficacious? Do
the customers of the department feel engaged in its development and
planning?

112 • Is the entity management committed to the activities of the department of

 HR and do they provide resources? Formulating
Human Resource
Plan
7.7 SUMMARY
Traditionally, staffing planning must have attempted to balance an
organization's need for human capital with the readily accessible labour
supply in regional and national job markets. Many organisations may
establish specialist units within personnel departments to concentrate
exclusively on staffing planning. In their prevailing pursuit of HRM,
numerous organisations are substituting staffing with workforce planning.
HRM is the personnel process that strives to provide sufficient human
resources to accomplish future organisational goals.

All organisations, whether formally or colloquially, engage in HR or

employment planning. The primary causes for formal human resource
planning are to achieve happier and more evolved employees, as well as more
efficacious equal opportunity for employment planning resources to
accomplish future organisational objectives.

As per HRM theory, the HR department ought to be an integrated part of and

a representative of the business strategy-making body. Over time, the
workplace environment emerges both internally and externally. HR plans
must include forecasts, expectations, and anticipation of future events.
Creating options and contingency plans is part of planning.

Several factors will influence the level of forecasting required to guarantee

adequate future staffing. Planners can use various levels of sophistication in
employment forecasting techniques to concentrate on internal and external
variables that influence the staffing plan's outcome. Only a few organisations,
however, use the most conceivably and statistically nuanced employee
planning, forecasting, and monitoring techniques.

In staffing planning, the manager is associated with the quantitative elements

of predicting, supply-demand aligning, and control. Long-term, strategic
HR planning that is more involved with skill development, quality, and
culture change than statistical numerical forecasting, succession planning,
and hierarchical structure is defined as HR planning. The term labour market
refers to a broad range of evolving influences and activities that involve
labour demand and supply that are strongly influenced by market situation.
The number and kind of employees required by the organisation throughout a
given period represent the relative demand for labour. The age at which
people are considered to be fully involved in the labour force differs from
country to country.

113
Methods of Human
Resource 7.8 SELF-ASSESSMENT QUESTIONS
Planning
1. Write a short note on the Delphi technique.
2. Draw a BCG matrix for HR in your dream organisation.

3. Case-study

A brief outline of the case:

Genny and Maverik are both postgraduates in management from the same B-
School but in different streams.They have known each other since college,
and their friendship has continued in the organisation as the same company,
La Sera technology solutions,employs them. Genny was assigned to the HR
department as an employee counsellor, while Maverik was assigned to the
finance department as a key finance executive. Both grades are at the same
level, but Maverik has more responsibility due to his position in core finance.
Genny is friendly and always willing to help those in need. Maverik is a quiet
man who is always ready to help if approached personally. He is also a bit
egoistic. They have completed four years of service with the organisation.
And management is pleased with both because they are equally talented and
consistent performers.
Genny believes that Maverik is not the same person he used to be. She
noticed some changes in his behaviour. During casual conversations, she
believes Maverik is mocking her because she is well-known among the
organisation’s employees, whereas he is not even recognised by his
coworkers.
Mr Ali, General Manager of La Sera Technology Solutions, was shocked one
morning while going through the mail from Maverik regarding his
resignation. Mr Ali immediately called Genny and discussed the situation
because she was close to Maverik. Genny was taken aback by the news and
said she had no idea. She also revealed her current relationship with him. Mr
Ali, who does not want to lose both of them, promised her that he would
handle the situation and that Maverik would not be allowed to resign.
MrMetha took Maverik to Canteen in the afternoon to make him feel at ease
before he began working on the issue. Maverik opened his thoughts in front
of Mr Ali after some hesitation.
Maverikhad some concerns:
(i) When he happens to come to the canteen singly, no one recognises him,
but when Genny accompanies him, everyone treats him well.
(ii) When they entered the company together one day, the security at the gate
wished them, but when he came alone the next day, the same security did
not.
(iii) Even in-office meetings, Genny's points will be given more weight, no
matter how long he remains silent.

114 Maverik is subjected to such degradation daily at work, which completely

 Formulating
dissatisfies him. Maverik also questioned that " Genny and myself have the Human Resource
same qualification, from the same institute, passed out in the same year both Plan
with first class. We both have the same number of years of experience in this
organisation. Furthermore, my responsibilities are more valuable than
Genny's. After all this, my ego will not allow me to stay if my coworkers
ignore or ignore me ".
After hearing this statement, MrMetha concluded that reversing his
resignation would not be difficult. Mr Ali explained to Maverik the reasons
for the employees' partial behaviour.
After listening to Mr Ali, Maverik apologised for his reaction and said he
would resign. And he dialled Genny's number and spoke with him as before.
Questions

Question1. Find out what Mr Ali would have told Maverik.

Question 2. Make a SWOT analysis of Genny and Maverik.

7.9 FURTHER READINGS/ REFERENCES

Gomathy, C.K. 2022. The impact of human resource planning on
productivity, 10.55041/IJSREM12034
Martínez-Vivar, R. 2022. Identification of variables and their influence on
the human resources planning at the territorial level, Journal of Industrial
Engineering and Management, Vol 9 No. 2, 10.3926/jiem.1904
Odiorne, G. 1984. Strategic management of human resources: A portfolio
approach. San Francisco: Jossey-Bass
Rothwell, W. 2000. Effective succession planning: Ensuring leadership
continuity and building talent from within (2nd ed.). New York: Amacom.
https://indiaclass.com/hrm-case-studies/
https://www.questionpro.com/features/predictive-questions.html
https://www.cutehr.io/human-resource-planning/

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