CHAPTER IV

HUMAN
RESOURCE
PLANNING
HUMAN RESOURCE PLANNING (HRP) AND STRATEGIC PLANNING

Human Resource Planning is also defined as an HR undertaking that

ascertains the company's present and subsequent HR needs. It
serves as a link between human resource management and the entire
strategic plan of the organization. Strategic planning is an
organization's process of formulating and implementing its
strategies and assessing their effects on the internal and external
environment of the firm. The main objective of this relationship is to
make sure that Human Resource Management activities are taken
into consideration prior to formulating the corporate plan. The list
on the next page shows the activities that serve as the link between
human resource planning and the company's strategic plan.
Corporate Strategic Plan Human Resource Planning
KNOW THE PURPOSE OF YOUR EXISTENCE
SPECIFY LONG-TERM GOALS FORMULATE MANAGEMENT PHILOSOPHY
DEFINE YOUR VALUES AND PRINCIPLES CREATE A HEALTHY COMPANY CULTURE
OPPORTUNITIES AND THREATS OUTLINE CODE OF CONDUCT
ENVIRONMENTAL SCANNING DEMOGRAPHIC TRENDS
INDUSTRY/COMPETITOR ANALYSIS OUTSIDE SUPPLY OF LABOR
STRENGTHS AND WEAKNESSES COMPETITOR BENCHMARKING
FORECAST DEMAND FOR EMPLOYEES PERSONALITY AND COMPETENCIES
RESOURCES, PEOPLE, PROCESS, SYSTEMS PREDICT HR DEMAND
COMPETITIVE STRATEGY PREDICT HR AVAILABILITY AND SUITABILITY
ACTION PLAN EFFECTIVENESS AND EFFICIENCY
STRATEGY ALIGNMENT PRODUCTIVITY IMPROVEMENT PROGRAMS
DESIGN, STRUCTURE, AND SYSTEMS, AMONG EXTERNAL FIT/ALIGNMENT/INTERNAL FIT ANALYZE
OTHERS DEMAND AND SUPPLY GAP
ALLOCATE RESOURCES TERMINATION AND SEPARATION
LEADERSHIP, COMMUNICATION/CHANGE ENHANCEMENT PROGRAMS
ASSESSMENT OF GOALS MEASURE EFFECTIVENESS OF INITIATIVES
ALIGNMENT OF STRATEGIES TO GOALS PROVIDING KEEPING TRACK OF ACTIVITIES
FEEDBACK
PROVIDING FEEDBACK
Companies do not take off by themselves. Practically every strategic planning decision has to
take into consideration the people issues related to it. In other words, once the company has
formulated its strategies, top-level management should make a decision as to the number
and type of people who will implement the strategy. Obviously then, strategic planning and
human resource planning jointly set objectives in relation to the firm's processes and human
resources.

THE PROCESS OF HUMAN RESOURCE PLANNING

Organizational mission,
Current manpower Forecasting demand and
goals, objectives, and
inventory supply
strategic requirements

Manpower gaps
Decide action Employee plan
1. Understand the organizational mission, goals, objectives, and strategic requirements.
2. Conduct a head count of present employees.
3. Know the future demand for employees. Conduct a skills inventory each year to
approximate the need for manpower for existing positions. Investigate the sources of
supply of human resources. The sources can come from academic institutions, and
people from other organizations seeking employment.
4. Determine the number of employees you currently have and how many you actually
need. Study the gap between demand and supply.
5. Estimate the possible increase or decrease in human resources. The increase may
come from new hires, contingent workers, transfers, re-instated employees.
Decreases may come from resignation, retirement, study leaves, dismissal, lay-off, job
abandonment, death, and other factors.
6. Decide whether to hire or to downsize. If the number of employees is more than what
is needed, then there is an oversupply of personnel. The action will be to downsize. If
the number of employees is less than what is needed, then there is an undersupply of
manpower. The action will be to recruit additional manpower.
FACTORS THAT AFFECT HUMAN RESOURCE PLANNING

1. Company's goals, objectives, and strategies

2. Time spent for planning HR needs
3. Uncertainties of business activities
4. Exactness of forecasting manpower needs
5. Structural design of the company
6. Internal and external availability of manpower
7. Preparation period of positioning talents

The abovementioned consequences are essential requirements

for human resource planning to be effective; otherwise, plans
will become useless and meaningless.
 Forecasting: A Key Component to Successful Human Resource Planning

In the present-day competition, firms do not have the luxury of avoiding human
resource forecasting if they want to improve organizational efficiency.
Forecasting involves predicting the company's future human resource needs. This
process could be challenging and complex, but definitely vital to the long-term
performance of an organization. Doing this requires a serious study of the
strengths and deficiencies of the HR team so they won't end up experiencing
surpluses or shortages of people. Managers need to regularly predict their HR
needs and the core competencies of the firm as part of their strategic planning
activity. They should focus on these three major considerations: (a) predicting
demand for labor; (b) predicting supply of labor; and (c) reconciling the gap
between demand and supply of labor. Being deliberately mindful to each will help
managers attain their human resource needs, thus improving organizational
effectiveness and increasing profitability.
Predicting a Firm's Demand for Employees

Predicting the need for labor has been an essential indicator of a company's progress. No matter
the size, the company will need to conduct a forecast of its labor needs. A complete forecast
should append recent data, previous experiences, and other probabilities to be able to come up
with a sensible and responsive HR plan. There are two methods of predicting HR needs:
quantitative and qualitative. Organizational needs will eventually determine which method to use;
however, no matter which method is selected, predicting HR needs should never be ignored, even
by small companies.

QUANTITATIVE APPROACHES. The quantitative prediction method covers the use of numerical
information or mathematical procedures in analyzing data. The most commonly used
approaches are trend analysis, ratio analysis, and regression analysis.
Trend analysis is based on the concept that what has happened in the past will
give the HR officer an idea what will take place in the future. Trend analysis ties
past employment flows to subsequent labor needs. Managers chart trends that
affect the number of employees based on certain variables such as sales volume
and employee count during a certain business period. Table 4 shows the
connection between sales volume and number of employees as basis in
determining the future HR needs.
Table 4. Sample Trend Analysis

Year 2009 2010 2011 2012 2013

Business Factor
Sales Volume (P)
10,500,000 8,800,000 7,900,000 9,600,000 10,200,000

Number of Employees 240 200 165 215 ?

Ratio analysis is the process of anticipating future HR demands by calculating the
precise ratio between certain variables. This method is considered more accurate than
trend analysis.
In determining a student-teacher ratio, let's assume that a university has 12,000
students and 400 professors; thus, the student-teacher ratio is computed as
12,000/400 or 30:1. This ratio indicates that for every 30 students, the institution needs
1 professor. If the university anticipates student enrollment to increase by 1,500
students next year it would need to hire 50 (1500/30) additional professors (assuming
that none of the 500 current professors leave prior to next year).

Regression analysis is identical to both trend and ratio analyses in such a way that
forecasts are based upon the relation between certain predictors like sales volume and
number of employees. In this method, the organization draws lines and marks called a
scatter diagram. It then calculates a regression line which goes through the middle of the
marks on the scatter diagram. Proper interpretation of the regression line will enable the
company to determine the number of employees needed for each predictor or variable.
QUALITATIVE APPROACHES. Unlike the quantitative methods that predict the workforce size
through numerical information, qualitative methods predict future HR needs based on the
opinions or gut feel of some selected members of the organization outside experts or others
concerned with the future labor needs of the company. This method is often seen as
subjective and judgmental hence, biases are most likely to occur. The Delphi Technique is a
type of qualitative forecasting method that aims to minimize biases of forecast by seeking
expert opinions and summing up their decisions. This is done by presenting a certain
business scenario to experts. A set of questions will be asked from these experts and the
reasons behind their opinions. The final forecast is obtained once the panel of experts have
converged toward the right decision.
two complement each other and no doubt will result in a more accurate forecast of
Preferably, companies should use both quantitative and qualitative methods. These
manpower needs.
Predicting the Supply of Employees
If the demand projection has been made, the company gets a better picture of the will then be
finalized on which positions will be filled on a certain future time. This process number and type of
positions it will need to execute the work at a specific time. Decisions is known as supply
forecasting.

First, the organization forms a cluster showing the line of positions from which employees can
anticipate growth. The cluster may include job title, function, and degree of autonomy. For example,
the Marketing group may include job titles such as Marketing Manager, Advertising Head, and Sales
and Promo Officer. The Information Technology (IT) group may be clustered as Creative and
Animation Officer, Software and Network Engineer, and Web Analytics Engineer.

Second, within each work group, state which of the incumbents will stay in their current positions,
how may are listed for possible transfer, promotion, and retirement. Above all, the organization
should also pay attention to possible mergers, buy-outs, and acquisitions.
Outcomes of the HR Planning Process
Once the HR planning activity is accomplished, the company should set and carry out HRM
practices that will aid the managers in handling the possibility of occurrence of either an
undersupply or oversupply of personnel.

Dealing with Workforce Oversupply

If there are more workers than jobs, the first action is to downsize, which typically
refers to lay-off. However, due to some undesirable effects of lay-offs, managers may
consider options such as:

Suspend hiring Reduce pay

Set limits to overtime Job sharing
Avoid contingent workers Offer career breaks like study
Early retirement leave
Dealing with Workforce Undersupply
An undersupply of personnel indicates that there are more jobs than workers.
If this happens, the first move of the company should be to hire additional
employees. However, the company may consider the following alternatives:

Encourage overtime
Create another work shift
Job re-assignment
Strengthen retention program
THANK YOU!