Human Resources Planning

Module 2
Topics
 Concept & Objectives

 Levels & Importance

 Process of HRP

 Techniques

 Short-Term and Long-Term Planning

 HUMAN RESOURCE PLANNING (HRP)

 HRP is a process of ensuring right number of

people with right skills at right place at right time
to implement organizational strategies in order to
achieve organizational objectives
 In light of the organization’s objectives, corporate
and business level strategies, HRP is the
process of analyzing an organization’s human
resource needs and developing plans, policies,
and systems to satisfy those needs
 Human Resource Planning Characteristics

 It is concerned with the flow of people into, through,

and out of an organization.

 It involves forecasting an organization's future

demand for and supply of the right type of people in
the right number.

 HRP is a forward looking function

 It is the step before initiating recruitments and

selection process
 It facilitates the realization of the company’s
objectives

 It’s a process by which an organization moves

from its current workforce position to its desired
workforce position.

 HRP is subject to revision, of course and is tuned

to the requirement of organization from time to
time
 Objectives
 Forecast Workforce Requirements – to have right kind of
people at the right time

 Cope with Changes – in market condition, technology,

products and government regulations

 Use existing manpower productively- matching skills with

the jobs

 Promote employee in a systematic manner- provides

information for promotions
 Importance of HRP

 Creates Pool of Talent – readily available

 Prepare people for future- trained, motivated and
developed in advance
 Expand or Contract- helps in expansion of business
 Cut Costs – appropriate HR Budget
 Succession Planning- since the employees are trained
and developed in advance can replace their seniors
 Short-Term and Long-Term Planning

Short Planning Period Long Planning Period

(Uncertainty/Instability) (Certainty/ Stability)
Upto 1 year 3 years to 5 years
 Many new competitors  Strong Competitive Position
 Rapid changes in social and  Evolutionary, Social, political and

economic conditions technological changes

 Unstable product/service demand  Stable Demand patterns

patterns  Strong Management Practices

 Small Organisation size, poor

management practices
1. Collect Information
From External Environment From Inside the Organisation
• Economy-general and specific Industry • Strategy
• Technology • Business Plan (Operation Plan)
• Business Environment/Competition • Current Human Resources
• Labour Market • Job Analysis
• Demographic & Social Market • Time Horizon
• Government Regulation • Type & Quality of Information
• International Factors • Trade Union

2. Forecasting the Demand of Human Resources

Short Term and Long Term Aggregate and Individual Positions

3. Determining Supply forecasting

a. Internal Supply b. External Supply

4. Plan and Conduct Needed Program

Increase or reduce work force Develop Managerial Succession Plan
Change Skill Mix Develop Career Plan

5. Feedback on Planning Process

Were Forecast Accurate ? Did Programs meet needs?
 Process of HRP (Contd.)
Step 1 : Analysis of Objective Strategic Plan-SWOT,PEST

Step 2: Forecasting the Demand of Human Resources - managerial judgment

and statistical techniques, Delphi method, ratio trend analysis
(staffing ratio), work study method .

Step 3: Determining Supply Forecasting- Existing Inventory (Head Count),

Job Family Inventories, Age wise Inventory

Step 4: Determining Gap = Existing + Potential Addition- Losses

Step 5: Formulation HR Plans- Recruitment, Retrenchment, Training,

Transfers, Outsourcing, Retention, Redeployment
Step 6: Feedback on Planning Process
 Techniques for Forecasting the Demand
of Human Resources
Judgmental Method Mathematical Method

 Managerial Judgment  Ratio Trend Analysis

 Delphi Technique  Work Study Method
 Statistical Method

 Managerial Judgment – Make use of knowledgeable people to

forecast the future with intuition and expertise. Simplest judgmental
method is bottom up or unit level forecasting done by each unit head.
Another judgmental method is Top-down forecasting done by Top
management and Senior Managers.
 Techniques for Forecasting the
Demand of Human Resources
 Delphi Technique - structured judgmental method
of expert to achieve group consensus on a forecast
using several rounds of anonymous questionnaires.
 The experts answer questionnaires in two or more
rounds. After each round, a facilitator provides an
anonymous summary of the experts’ forecasts from
the previous round as well as the reasons they
provided for their judgments. Thus, experts are
encouraged to revise their earlier answers in light of
the replies of other members of their panel.
 Techniques for Forecasting the Demand
of Human Resources (Contd)
 Ratio Trend Analysis – Past rate of change can be projected into
the future or employment growth can be estimated by its
relationship with a particular index

Present Level of Production (in 2016) : 5000

Present No of workers (in 2016) : 100
Ratio : 5000/100= 50 Units / worker
20016-17 Estimated Production : 8000
No of workers required : 8000/50 = 160 workers

If a supervisors have a span of 20 workers, 8 supervisors are also

needed in 2016-17
 Techniques for Forecasting the Demand
of Human Resources (Contd.)
 Work –Study Techniques: Calculate the number of persons
required for various jobs with reference to a planned output after
giving weightage to factors such as absenteeism, idle time etc.

Planned output for the year 10,000 pieces

Standard hours per piece 3 hours
Planned hours required 30,000 hours
Productive hrs per worker per year 1000 hrs
(allowing absenteeism, turnover and idle time)

No of workers required 30
 Statistical Methods – For very large
organization with a long history of HR
Planning can use:
Multiple Regression correlating several
factors with labour demand.
Linear Programming to determine optimal
staffing levels given the set of
constraints.
 Techniques for Determining Supply
Forecasting
Current Staffing + Potential – Potential = Internal
Level Additions Losses Supply
(Inflows) (Outflows) Sources of Outflow

Resignation (12)
Sources of Inflow
Terminations (2)
Transfers (4)
Current Staffing
Level Promotion (8)
Promotion (3)
300
Retirements (12)
Demotion (1)
Death (1)
New Recruits (12)
Layoff (10)
•Existing Inventory at a future date = 300 + 20-45 = 275
 Techniques for Determining Supply Forecasting
(Contd)
 Job Family Inventories – It includes number and
category of employees in each job family i.e. all jobs
related to same category like cashier, accountants,
customer care executives, sales executives etc. All job
having common characteristic (skill, qualification,
similar operations)

 Age wise Inventory – age wise number and categories

of employees. It indicates age-wise imbalance in
present inventory which can be correlated in future
selections and promotions
 Action Plan- if shortages

 Outsourcing Plan: company ask an external agency

to operate a function which is non core to the
business.

 Recruitment Plan: hiring people from internal or

external sources

 Promotion Plan: includes establishing of the ratio

of internal promotion to external recruits & basis for
promotion
 Action Plan- if shortages
 Retention Plan : by offering competitive
salaries, opportunities for career
development, training, challenging
assignments, promotion , fringe benefits,
participation in decision making.

 Succession Plan
 Formulation HR Plans – If Surplus
1. Re deployment : form of transfer where in
employees deployed in some other jobs/department
or units of the organisation.

 Employment in sister organization: surplus

employees are offered employment either at same
level or lower level.
 Employment in other organizations: If the
vacancies are available in other companies, the HR
manager helps the surplus employees in getting
employment .
 Formulation HR Plans – If Surplus

2. Redundancy/Retrenchment :
Permanent removal of employee due to economic reasons of the
company

 Layoffs:
Temporary Layoff: are due to slackness in business, machinery
breakage, power failure etc. Workers are called back as soon as
work resumes to the normal position
Permanent Layoff: is due to liquidation of the company
 Formulation HR Plans – If Surplus
 3 . Voluntary Retirement Scheme (VRS)/Early
Retirement: It is also known as Golden Handshake.
Managements provide cash reward to those
employees who opt for VRS in addition to normal
retirement benefits.
 4. Compulsory Retirement / Iron Handshake:
Management do not provide any cash or non-cash
benefits to the employees other than normal
retirement benefits at the time of discharging or
firing.
 Problems in HRP
 Resistance by employers and
employees
 Uncertainties
 Inaccuracy
 Unrealistic
 Unbalanced focus
 Inadequacies of Information system