Dr.

Soni Agrawal
HR Planning
 Move from its current manpower position to its
desired manpower position.
Time frame of HRP
 Short term : (0-2) years

 Intermediate : (2-5) years

 Long Range :(beyond 5 years)

How does HR Planning occur?

a. Set objectives
b. Generate alternatives
c. Assess alternatives
d. Choose alternative – KEEP
PHILOSOPHY IN MIND
 Organizational Life-Cycle Stages and HR
Activities
LIFE- TRAINING LABOR /
CYCLE STAFFING COMPENSATION AND EMPLOYEE
STAGE DEVELOPMENT RELATIONS
Introduction Attract best Meet or exceed Define future Set basic
technical and labor market rates skill employee-
professional to attract needed requirements relations
talent. talent. and begin philosophy of
establishing organization.
career ladders.
Growth Recruit adequate Meet external Mold effective Maintain labor
numbers and mix market but consider management peace,
of qualifies internal equity team through employee
workers. Plan effects. Establish management motivation,
management formal development and morale.
succession. Mange compensation and
rapid internal labor structures. organizational
market development.
movements
 Organizational Life-Cycle Stages and
HR Activities (cont’d)
LIFE-CYCLE TRAINING AND LABOR /
STAGE STAFFING COMPENSATION DEVELOPMENT EMPLOYEE
RELATIONS

Maturity Encourage sufficient Control Maintain flexibility Control labor costs

turnover to minimize compensation and skills of an and maintain labor
layoffs and provide costs. aging workforce. peace. Improve
new openings. productivity.
Encourage mobility
as reorganizations
shift jobs around.
Decline Plan and implement Implement tighter Implement Improve
workforce cost control. retraining and productivity and
reductions and career consulting achieve flexibility
reallocations, services. in work rules.
downsizing and Negotiate job
outplacement may security and
occur during this employment-
stage. adjustment
policies
Factors affecting planning
1. Organisation HR policies on recruitment, promotion,
succession management and career planning,
retirement, workforce mix etc
2. organizational values and strategies
 values - If it values longevity of employees, then the HR
plan might adopt that a strategy to recruit and promote
from within.
Factors affecting planning (Cont..)
 The type of people employed and the task they
perform.
 An organisation may not need to plan very far in
advance for unskilled labour, since they will usually be
in abundant supply

 Certain high skill jobs require planning activities that

project a year or two into the future

 Planning for senior executive replacement may need

even 5 years ahead
Forecasting Future Human
Resource Needs

I. Forecast Staff demand

II. Forecast Staff supply
Review the current human Resource situation

 This is done by studying HR records to determine:

 How many do we have in what category? Quality and
quantity
 Who is leaving the organization and when ( project
turnover as result of resignation and termination)
Forecasting demand (cont…)
 Consider:
 Customer requirements
 Projected staff turnover ( as a result of resignation or
termination or retirement)
 Strategic decisions to upgrade the quality of products or
services or enter new markets
 Technological and other changes resulting in increased
productivity
Action decisions in surplus conditions
 Attrition and Hiring Freeze – through attrition, individuals
who quit, die, or retire are not replaced. Those who remain
must handle the same workload with fewer people.
 Early Retirement/ Buy Outs –a means of encouraging more
workers to leave the organisation early with some incentives .
 Lay offs – can be temporary or permanent. A temporary lay
off occurs during slack periods when the workforce. As soon
as the work resumes to its normal level, workers are called..
Companies have no legal obligation to provide a financial
cushion to laid-off employees
 Leave of Absence without Pay – this gives workers the
opportunity to take leaves of absence without pay.
Individuals offered this leave are usually employees whose
jobs may be eliminated in the future.
 Demotions – to reduce the number of employees where
there is a surplus at a senior level and there is a shortage at
a lower level
 Transfers – employees can be transferred from
areas/departments with surpluses to department with
shortages
 Creation of more work – the organisation can
expand its operations by going into other locations or
producing additional products
 Note: As an approach to dealing with a surplus, most
organisations avoid lay offs and rely more on attrition,
early retirements and creation of work
The Nominal Group Technique
A small group of 4-5 people gathers around a table. Leader
identifies judgment issue and gives participants procedural
instructions.

Participants write down all ideas that occur to them, keeping

their lists private at this point. Creativity is encouraged during
this phase.

Leader asks each participant to present ideas and writes them

on a blackboard or flipchart, continuing until all ideas have been
recorded.

Participants discuss each other’s ideas, clarifying, expanding,

and evaluating them as a group.

Participants rank ideas privately in their own personal order and

preference.

The idea that ranks highest among the participants is adopted

as the group’s judgment.
 The Delphi Technique
Leader identifies judgment issues and develops questionnaire.

Prospective participants are identified and asked to cooperate.

Leaders send questionnaire to willing participants, who record

their judgments and recommendations and return the
questionnaire.

Leaders compiles summaries and reproduces participants’

responses.

Leader sends the compiled list of judgment to all participants.

Participants comment on each other’s ideas and propose a final

judgment.

Leader looks
for consensus

Leader accepts consensus judgment as group’s choice.

How does HR Planning (Quantitative
techniques) occur?
Are resources available – internally or
externally – to fill those needs?
a. Internal
 Replacement charts
 Promotability
 Succession planning
 Skills inventory
 Transition (Markov) matrix
Statistical Techniques Used to Project
Staffing Demand Needs (cont’d)
Name Description
Personnel ratios Past personnel data are examined to determine historical
relationships among the employees in various jobs or job
categories. Regression analysis or productivity ratios
are then used to project either total or key-group human
resource requirements, and personnel ratios are used to
allocated total requirements to various job categories or to
estimate for non-key groups.

Time series analysis Past staffing levels (instead of work load indicators) are
used to project future human resource requirements. Past
staffing levels are examined to isolate and cyclical
variation, long-tem terms, and random movement. Long-
term trends are then extrapolated or projected using a
moving average, exponential smoothing, or regression
technique.
Statistical Techniques Used to Project
Staffing Demand Needs
Name Description
Regression analysis Past levels of various work load indicators, such as sales,
production levels, and value added, are examined for
statistical relationships with staffing levels. Where
sufficiently strong relationships are found, a regression (or
multiple regression) model is derived. Forecasted levels of
the retained indicator(s) are entered into the resulting
model and used to calculate the associated level of
human resource requirements.

Historical data are used to examine past levels of a

Productivity ratios
productivity index (P):

P = Work load / Number of People

Where constant, or systematic, relationships are found,

human resource requirements can be computed by diving
predicted work loads by P.
Determining the Relationship Between
Hospital Size and Number of Nurses
 Regression Analysis
1. Statically identify historical predictor of workforce size
Example: FTEs = a + b1 sales + b2 new customers

2. Only use equations with predictors found to be

statistically significant

3. Predict future HR requirements, using equation

Example: (a) FTEs = 7 + .0004 sales + .02 new
customers
(b) Projected sales = $1,000,000
Projected new customers = 300
(c) HR requirements = 7 + 400 + 6 = 413
 A Sample Transition Matrix
Part A: Personnel Supply
Estimated Personnel Classification in Year T + 1 (%)
Classifications in Year T P M S Sr A Exit
Partner .70 .30
Manager .10 .80 .10
Supervisor .12 .60 .28
Senior .20 .55 .25
Accountant .15 .65 .20

Part B. Staffing Levels

Estimated Personnel Availabilities in Year T + 1 (%)
Beginning
Classifications in Year T Levels P M S Sr A Exit
Partner 10 7 3
Manager 30 3 24 3
Supervisor 50 6 30 14
Senior 100 20 55 25
Accountant 200 30 130 40
10 30 50 85 130
Markov Analysis
Existing Job A Job B Job C Job D Job E Exit

Job A 50 .60 .15 .20 .05

Job B 75 .10 .80 .05 .05

Job C 100 .05 .05 .60 .10 .10 .10

Job D 200 .80 .20

Job E 300 .20 .60 .20

Markov Analysis
Existing Job A Job B Job C Job D Job E Exit

Job A 50 .60 (30) .15 (7.5) .20 (10) .05 (2.5)

Job B 75 .10 (7.5) .80 (60) .05(3.75) .05(3.75)

Job C 100 .05(5) .05(5) .60(60) .10(10) .10(10) .10(10)

Job D 200 .80(160) .20(40)

Job E 300 .20(60) .60(180) .20(600)

Markov Analysis
Existing Job A Job B Job C Job D Job E Exit

Job A 50 .60 (30) .15 (7.5) .20 (10) .05 (2.5)

Job B 75 .10 (7.5) .80 (60) .05(3.75) .05(3.75)

Job C 100 .05(5) .05(5) .60(60) .10(10) .10(10) .10(10)

Job D 200 .80(160) .20(40)

Job E 300 .20(60) .60(180) .20(60)

Total 725 42.5 72.5 73.75 230 190 116.25

Employee Replacement Chart for
Succession Planning
 Alternative Scheduling Options
Percent Using
Alternative (N = 427 companies)

The following definitions were used in this survey

for alternative scheduling strategies:

• Part-time: A regular employee who works fewer than 35 hours per 84%
week.
• Flextime: A system than enables employees to vary their schedules:
40%
Usually, the flexibility applies to starting and finishing times.
• Compressed workweek: A full-week schedule (usually 40 hours) than
23%
occurs in fewer than five days, such as four 10-hour days.
• Job sharing: Two or more employees split a full-time position, diving
18%
the responsibilities, and, to some degree, the compensation.
• Work-at-home: A program that enables employees to complete work at
home (or at a remote office closer to home) on a regular basis. It is often 13%
referred to as “flexplace” or “telecommuting.”
Staffing Alternatives to Deal with Employee
Surpluses

Source: Compliments of Dan Ward, GTE Corporation

Staffing Alternatives to Deal with Employee
Shortages

Source: Compliments of Dan Ward, GTE Corporation

Forecasting demand
 How many, what levels when
 The demand is closely tied to the strategic
direction that the organization has decided to
take. – are we engaged in reengineering?,
technological changes? that will shrink/change the
workforce in the coming years
Forecasting supply
 Internal supply
 The main task is to determining which current employees
might be qualified for the projected openings
 This determines how many, and what kind of employees
are currently available in terms of skills and training
necessary for the future.
 The major tool used to assess the current supply of
employees is the skills inventory
 In some organisations, there will be a separate inventory
just for managers called a management inventory
Skills inventory
 Purpose: to note what kind of skills, abilities,
experiences, and training the employees currently
have.
 By keeping track of these, the organisation can
quickly determine whether a particular skill is
available and when it will be needed
 Skills inventory are also useful in career planning,
management development and related activities
Contents of a skills inventory
 Once a decision has been made to create a skills
inventory, the HR manager must determine what
information will be contained in the system.
Contents of a skills inventory (cont..)
 The list of data that can be coded into the skills
inventories is endless and it must be tailored
to the needs of each organisation.
 Some of the most common items include:
 Name and Employees number
 Present location
 Date of birth, date of employment
 Job classification
Contents of a skills inventory (cont..)
 Specific skills and knowledge
 Education and field of education( formal
education and course taken since leaving school)
 Professional qualification
 A supervisors evaluation of the employees
capabilities
 Salary range,
 Employees stated career goals and objectives,
including geographical preferences and intended
retirement date
Components of a skills inventory
Content can be put into three components of as follows:
1. Data summarizing the employees past:
2. Data summarizing status of present skills
3. Data that focus on the future
Data summarizing the employees past
 a) Title and brief job description highlighting
positions held in the over the years either in the
organisation or previous organisations
 b) Critical skills developed in these positions –
manual, cognitive, creative
Data summarizing the employees past (cont..)
 C) Educational achievements – high school, job
relevant classes, college (major minor)
 D) significant special project accomplished during the
last five years ( within this organisation or the previous
organisation)
Data summarizing the status of the present
skills
 A) skill related highlights last three performance
appraisals
 B) Employee perception of what is done well on
present job e.g. skill competencies, perception of how
skills could be improved
 C) Employees supervisor perception of the same
3. Data that focus on the future
 A) personal career goals – one year, three years,
identify specific positions and aspiration. Avoid
global generalities like “higher up”
 B) view of the individuals present supervisors as to
what he or she could be prepared to become. List
specific position
 C) specify training and development efforts that
the individual is motivated to undertake – on the
job, off the job, classroom or experiential
 The above three components are just a sample and
some organisations may have a skill inventory
cataloguing different job classification
Maintaining the skills inventory
 The skill inventory is maintained by continuous gathering,
handling and updating data. Decisions to be made include:
1. Method of data gathering: The two principle method
of gathering data are interviewing and questionnaire
2. When to update: Updating must be planned – e.g.
annual update, or where changes are frequent,
monthly update
3. Manual or computerizes: A decision will also have to
be made on whether to store data manually or to
computerize it
Forecasting external supply
 From the labour market
 Consider: economic indicators – competition and
wage levels, cost of living, education levels,
unemployment levels
 Forecast on the availability of potential job candidates
in specific occupation e.g. IT, HR, Finance etc - is
there an under or over supply.
Action decisions on a shortage of employees
 Use of overtime - if the shortage is small and the
employees are willing to work overtime, it can be filled with
present employees
 Recruitment for skills where there are gaps.
 recalling employees who were laid off
 Use of part time workers, subcontracting,
 Training and development staff to meet the resource gaps
 Promoting employees from lower level to higher levels
where there are gaps
Plan to meet Human Resource
need
Develop operational plans for each of the above actions:
e.g.
I. Training and development plans
II. Recruitment and selection plans
III. Retirement/right sizing plans
IV. Transfer plans
Succession planning
 Identifies specific people to fill key positions
 Organizational replacement chart is used
- Shows incumbents
- Shows potential replacements
- Replacement charts needs to be updated from time to
time
 Director -Marketing

Mr. X
Incumbent

Backup Mr. Y

Sr Manager(Marketing)/Marketing Manager
Position

Potential/ Promotability PN HP
HR Planning Methods
 Scenario Planning/Critical Incident: Business growth
and Skill adequacy
 Delphi Technique
 Nominal Group Technique
 Time Study/Work Sampling
 Ratio Analysis
Year Sales No. of Emp. Sales per Emp.
2001 10000 102o 9.8
2002 12000 1170 10.26

 Markov Chain Analysis

2011/ Level 4 Level 3 Losses Total
2012
Level 4 45 14 8 67
Level 3 2 22 2 26
Level 2 0 0 1 1
Total 47 36 11
 Estimated transition probability matrix
2011/12 Level 4 Level 3 Losses
Level 4 .67 .21 .12
Level 3 .09 .85 .08
Level 2 0 0 0

2011/12 Level 4 Level 3 Losses Total

Level 4
Level 3
Level 2
Total
 2011/12
 Level 4
 Level 3
 Losses
 Total
 Level 4
 45
 14
 8
 67
 Level 3
 2
 22
 2
 26
 Level 2
 0
 0
 1
 1
 Total
 47
 36
 11
 Regression Analysis
Y= a+X1+X2….
Y= Intention to quit
X1=Salary
X2=Supervisory support

 Succession Planning
You can dream, create, design and build the
most wonderful place in the world, but it
requires people to make the dream a reality. ..
Walt Disney
A Strategic, Accountable
Cost-Effective Management Center
Value Creation

HR HR Perform. Mgmt
Policies/Practices HR Competencies
systems

Leadership/Employee Employee Culture/ Employee

Behaviors Mind Set Competencies

Financial Success Employee Success Operational Success

HR Metrics & benchmarking
 Revenue
 Revenue per FTE
 Net Income
 Total HR staff
 HR to employee ratio
 % of HR staff to supervisory roles
 % of HR staff on administrative roles
 Types of HR positions expect to hire
 HR expenses
 HR expenses to FTE ratio
 Annual salary increases
 Salaries as a % of operating expenses
 Target bonus for executives
HR Audit
 Employee Head Count
 Employees’ roles: JD, employees categories
 Compliance with laws
 Mandated benefits
 Documentation and record keeping
 Employee communication
 Training & development
Overview of Strategic Management
 A SWOT Chart
SWOT Analysis
The use of a SWOT chart to
compile and organize the
process of identifying
company

Strengths,
Weaknesses,
Opportunities, and
Threats.
 Strategies in Brief
Company Strategic Principle

Dell Be direct
eBay Focus on trading communities
General Electric Be number one or number two in every
industry in which we compete, or get out
Southwest Airlines Meet customers’ short-haul travel needs
at fares competitive with the cost of
automobile travel
Vanguard Unmatchable value for the investor-owner
Wal-Mart Low prices, every day
The Southwest Airlines’
Activity System

Source: Reprinted by permission of Harvard Business Review. From “What is Strategy?” by Michael E. Porter, November–
December 1996. Copyright © 1996 by the President and Fellows of Harvard College, all rights reserved.
Types of Strategic Planning
 Corporate-level strategy
 Identifies the portfolio of businesses that, in total,
comprise the company and the ways in which these
businesses relate to each other.
 Diversification strategy
 Vertical integration strategy
 Consolidation strategy
 Geographic expansion strategy
Types of Strategic Planning (cont’d)
 Business-level/competitive strategy
 Identifies how to build and strengthen the
business’s long-term competitive position in the
marketplace.
 Cost leadership: Wal Mart, Big Bazar
 Differentiation: Apple computers, Mecedes benz
Types of Strategic Planning (cont’d)
 Functional strategies
 Identify the basic courses of action that each
department will pursue in order to help the business
attain its competitive goals.
Achieving Strategic Fit
 Michael Porter
 Emphasizes the “fit” point of view that all of the firm’s
activities must be tailored to or fit its strategy, by
ensuring that the firm’s functional strategies support its
corporate and competitive strategies.
 Gary Hamel and C. K. Prahalad
 Argue for “stretch” in leveraging resources—
supplementing what you have and doing more with
what you have—can be more important than just fitting
the strategic plan to current resources.
HR and Competitive Advantage
 Competitive advantage
 Any factors that allow an organization to differentiate its
product or service from those of its competitors to
increase market share.
 Superior human resources are an important source of
competitive advantage
Strategic Human Resource
Management
 Strategic Human Resource Management
 The linking of HRM with strategic goals and objectives
in order to improve business performance and develop
organizational cultures that foster innovation and
flexibility.
 Formulating and executing HR systems—HR policies
and activities—that produce the employee competencies
and behaviors the company needs to achieve its strategic
aims.
 Linking Corporate and HR Strategies

Source: © 2003, Gary Dessler, Ph.D.

HR’S Strategic Roles
 HR professionals should be part of the firm’s strategic
planning executive team.
 Identify the human issues that are vital to business
strategy.
 Help establish and execute strategy.
 Provide alternative insights.
 Are centrally involved in creating responsive and
market-driven organizations.
 Conceptualize and execute organizational change.
HR Involvement in Mergers
HR’s Strategy Formulation Role
 HR helps top management formulate strategy in a
variety of ways by.
 Supplying competitive intelligence that may be useful in
the strategic planning process.
 Supplying information regarding the company’s internal
human strengths and weaknesses.
 Build a persuasive case that shows how—in specific and
measurable terms—the firm’s HR activities can and do
contribute to creating value for the company.
Creating a Strategy-oriented HR
System
 Components of the HR process
 HR professionals who have strategic and other skills
 HR policies and activities that comprise the HR system
itself
 Employee behaviors and competencies that the
company’s strategy requires.
 The Basic Architecture of HR

Source: Adapted from Brian Becker et al., The HR Scorecard: Linking People, Strategy,
and Performance (Boston: Harvard Business School Press, 2001), p. 12.
The High-Performance Work
System
 High-performance work system (HPWS) practices.
 High-involvement employee practices (such as job
enrichment and team-based organizations),
 High commitment work practices (such as improved
employee development, communications, and
disciplinary practices)
 Flexible work assignments.
 Other practices include those that foster skilled
workforces and expanded opportunities to use those
skills.
 Strategic HR Relationships

Strategically
Emergent
HR Relevant Organizational Achieve
Employee
Activities Organizational Performance Strategic Goals
Behaviors
Outcomes