HUMAN RESOURCE

PLANNING
MEANING AND DEFINITION
In simple words, HRP is understood as the process of
forecasting an organization's future demand for, and supply of,
the right type of people in the right number.
After this only the HRM department can initiate the
recruitment and selection process
Its called by manpower planning, personal planning or
employment planning
DEFINITION OF HRP
• It includes the estimation of how many qualified people are
necessary to carry out the assigned activities, how many people
will be available, and
• Basically it’s the process by which an organization ensures that
it has the right number & kind of people, at the right place, at
the right time, capable of effectively & efficiently completeing
those tasks that will help the organisation achieve its overall
objectives.
 Definition
According to Beach:- “Human Resource Planning is the
process of determining & assuming that the organization will
have an adequate number of qualified persons available at the
proper lines, performing jobs which meet the needs of the
enterprise & which provide satisfaction for the individuals
involved.
According to Stainer:- “Human Resource Planning is the
strategy for the acquisition movement & preservation of an
organiation’s Human Resource.
Objectives of Human Resource Planning
To ensure optimum use of Human Resources currently
employed;
 To assess or forecast future skill requirements of the
organisation‘s overall objectives;
To provide control measure to ensure availability of
necessary resources when required;
To control the cost aspect of Human Resources;
To formulate transfer and promotion policies.
IMPORTANCE OF HRP
1. FUTURE PERSONNEL NEEDS
• Surplus or deficiency in staff strength
2. COPING WITH CHANGE
• Enables an enterprise to cope with changes in
competitive forces, markets, technology, products &
government regulations
3. CREATING HIGHLY TALENTED PERSONNEL
• HR manager must use his/her ingenuity to attract &
retain qualified & skilled personnel
• Succession planning
. 4. INTERNATIONAL STRATEGIES
• Fill key jobs with foreign nationals and re-assignment of
employees from within or across national borders
IMPORTANCE OF HRP
5. FOUNDATION FOR PERSONNEL FUNCTIONS
• Provides information for designing & implementing
recruiting, selection, personnel movement(transfers,
promotions, layoffs) & training & development
6. Protection of weaker section of society
7.Resistance to change
FACTORS AFFECTING HRP
I. ORGANIZATIONAL GROWTH CYCLES &
PLANNING
• Embryonic stage – No personnel planning
• Growth stage – HR forecasting is essential
• Maturity stage – Planning more formalized & less
flexible
• Declining stage – Planning for layoff, retrenchment &
retirement
II. ENVIRONMENTAL UNCERTAINITIES
• Political, social & economic changes
FACTORS AFFECTING HRP
III. TIME HORIZONS
• Short-term & Long-term plans
IV. TYPE & QUALITY OF FORECASTING
INFORMATION
• Type of information which should be used in making
forecasts
 ENVIRONMENT

ORGANISATIONAL
OBJECTIVES AND POLICIES

HR NEEDS FORECAST HR SUPPLY FORECAST

HR PROGRAMMING

HRP IMPLEMENTATATION

CONTROL AND
EVALUATION OF PROGRAMME

SURPLUS SHORTAGE
RESTRICTED HIRING RECRUITMENT
REDUCED HOURS AND SELECTION
VRS, LAY OFF, etc

THE HRP PROCESS

Organizational Objectives and Policies
 HR plans need to be based on Organizational Objectives.
 The role of HRP is to subserve the overall objectives by ensuring
availability and utilization of Human Resources.
 In developing these objectives, specific policies need to be formulated
to address the following questions:
 Are vacancies to be filled from promotions from within or hiring from
outside?
 How do training and development objectives interfere with the HRP
objectives?
 What union constraints are encountered in HRP and what policies are
needed to handle these constraints?
 How to enrich employees job? Should the routine and boring jobs continue
or be eliminated?
 How to downsize the organization to make it more competitive?
HR Demand Forecast
Demand forecasting is the process of estimating the future
quantity and quality of people required.
The basis of the forecast must be the annual budget and long-
term corporate plan, translated into activity levels for each
function and department
HR SUPPLY FORECAST
Supply forecasting measures the no of people likely to be
available from within and outside an organisation,after making
allowance for absenteeism, internal movements and
promotions, wastage and changes in hours and other conditions
of work.
HR programming
After personal demand and supply are forecast the
vacancies should be filled at right time with right
employees.
HR Plan implementation
Converting HR plan into action.
Action programmes are..
 Recruitment
 Selection & placement
 Training and development
 Retraining & redeployment
 The retention plan
 The redundance plan
 The succession plan
Control and evaluation
Establish the reporting procedures
Identifying who are in post and those who are in pipe
line
It should report employment costs against budget and
trends in wastage and employment ratios
 to determine and to identify present and prospective
needs of Human Resource,
 to discover and recruit the required number of persons.
 to select the right number and type from the available
people.
 to hire and place in the positions for which they are
qualified,
 to provide information to the selected people about the
nature of work assigned to them,
 to Promote or to transfer as per the needs and the
performance of employees,
 to denote if the employees are disinterested or their
performance is not up to the mark,
 to terminate if they are not needed or their performance
is below standard and shows no hopes of improvement.
Problems of Human Resource Planning
Improper linkage between HRP and corporate strategy
Inadequate appreciation of human resource
management
Rigidity of attitudes
Conflict between short term and long term plan
inappropriate human resource information system
Forecasting Human Resource Demand
Demand analysis identifies the future human resource
requirements needed to maintain the organization’s
mission and goals.
The end result of a demand analysis is the
identification of the required number of employees in
an organization and the necessary functions that the
employee must perform to meet organizational
objectives.
 Quantitative Techniques for Forecasting
Human Resource Demand
Trend Analysis
past trends and ratios can also be used to forecast
Human Resource demand.
Trend analysis predicts the demand for labour based on
projections of past relationship patterns over a number
of years.
As one of the simpler methods of forecasting Human
Resource demand, trend analysis assumes that an
organization’s past employment needs are indicative of
future needs when linked with an operational index.
Ratio Analysis
Ratio analysis estimates future Human Resource
demand based on ratios between assumed casual factors
and the number of employees needed.

 Regression Analysis
 Projects the future demand based on the past relationship
with the work force level and the basic factor on whom the
demand is assumed to depend.
 Qualitative Techniques for Forecasting Human Resource
Demand
 Delphi Method
 Delphi method process involves a panel of experts using their judgments to
make estimates of short-term future demands.
 Experts use a variety of factors to make their judgements, including
economical, demographical, technological, legal, and social conditions
outside of the organization,
 During the process, experts are not permitted to engage in direct face-to-face
contact or communication.
 First, experts must be identified to participate in this task. Second, each
expert is asked to submit Human Resource demand forecasts, including
specification of sources of information and assumptions used to estimate
demand.
 Next stage , each submission is gathered by Human Resource Planning and
Development Page 11 Human Resource planning group, which then
summarizes the results. T
 he aggregated results are sent back to the experts, who are given an
opportunity to adjust their forecasts based on the information provided in
Nominal Group Technique
This process involves multiple experts (usually line and
department managers) meeting face to face to discuss
independently formulated positions of an organizational
issue, with the ultimate aim of securing an accurate
assessment of a given situation.
 It can be used to help forecast Human Resource
demand for an organization or can be used to solve other
organizational issues.
 Scenario Analysis
Scenario analysis provides multiple estimates of future
Human Resource demand, contingent on a unique set of
assumptions and circumstances for each scenario.
This method involves recognizing uncertainties about the
future.
An organization can create Human resource estimates
accordingly, one for a constant economic situation (e.g., zero
growth),
a second for some anticipated economic growth (e.g., five
percent growth),
and a third for the possibility of economic decline (e.g., five
percent reduction).
 Forecasting Human Resource Supply
The objective of identifying future Human Resource supply
requirements is to determine the number of employees in each
job and their knowledge, skills, abilities, and other
characteristics .
In addition, forecasting Human Resource supply is essential in
determining the characteristics of hiring sources within the
predetermined planning horizon in order to establish whether
future Human Resource supply is sufficient to match future
Human Resource demands.
Forecasting External Human Resource
Supply
Information that will help to develop an understanding
of external Human Resource supply includes:
Supply and demand of jobs or skills
Educational attainment levels within a region
 Compensation patterns based on experience,
education, or occupation
 Immigration and emigration patterns within an area
 Forecasts of economic growth or decline
 Competition for talent
 Industry or occupational expected growth levels.
Wastage analysis
Manpower wastage is an element of labour turnover.
 It includes voluntary retirement, normal retirement
resignations, deaths and dismissals.
Marginal recruitment decisions without wastage
analysis may lead to inaccuracies in HRP.
Different Methods
Labour Turnover Index
Stability Index
Skills Inventories
Labour Turnover Index
 Indicates number of leavers as percentage to average number
of employees.
 Average number of employees employed in a given time

period is decided by adding the employees at the beginning

and end and then dividing the same by two.
 Labour Turnover Index Labour Turnover= Number of

employees leaving/ Average no. of employees employed.

 Stability Index
 Indicates stable work force percentage for a given period
 Stability Index =No. with more than 1 year service now * 100

Total employed one year ago

Replacement Charts
 A replacement chart is used to estimate vacancies in higher level
jobs and identify how potential Human Resource supply can fill
these vacancies via internal movements from lower levels jobs.
 A comprehensive replacement chart will include information
regarding possible replacements for vertical or horizontal
movement.
 Generally, a replacement chart includes information about
employees’ performance, readiness to fill the position, and
education.
Staffing Tables
 A staffing table provides a clear graphical view of all organizational
jobs and the current number of employees at each job.
 It presents a simple visual understanding of an organization’s
staffing level within each department and the organization as a
whole, in an effort to help understand the combination of
employees that make up an organization’s internal workforce.
Stock Taking

taking counts human resources in quantitative / qualitative

terms, in an organization.
Also called human resource inventorry.
Skill Inventory
A skills inventory is a system designed to take stock of
information about current employees’ experience, education,
compensation history, and/or unique abilities.
 A skills inventory can be useful in revealing what skills are
immediately available in an organization by providing a
snapshot view of the existing talent in an organization.
Identifying current workforce dynamics is a critical step in the
development of a Human Resource
• Skill inventories
1. Personal data
2. Skills
3. Special qualifications
4. Salary and job history
5. Company data
6. Capacity of individual
7. Special preference of individual
• Management inventories
1. Work history
2. Strengths
3. Weakness
4. Promotion potential
5. Career goals
6. Personal data
7. Number and types of employees supervised
8. Total budget managed
9. Previous management duties.
workforce flow mapping

A human resources diagnostic tool involving analyzing the

stages and dynamics of labor performed by employees that is
generally used to make a company’s staff more productive.
The workforce flow map would ideally begin by choosing an
area to improve.
A team is then assembled and problems are identified. The
team brainstorms solutions and steps are then taken to develop
and implement a plan.
Markov analysis

Analysis that helps to predict internal employee

movement from one year to another by identifying
percentages of employees who remain in their jobs, get
promoted or demoted, transfer, and exit out of the
organization
Succession Planning

Succession planning is a longer-term process of

grooming a successor (selected from a pool of
candidates on the basis of perceived competency) for
management or critical positions.
Managerial succession planning
Analysis of demand
Audit of existing executives
Planning of individual career path
Career counseling
 Accelerated promotions
Performance related training and development
Planned strategic recruitment
Filling the openings
Employee Retention
You go to considerable trouble and expense to identify,
interview, and hire great employees for your organization.
So retaining them should also be a top priority. Luckily, most
good retention practices are inexpensive to implement.
Key strategies
 Recruitment and hiring.
 Orientation and on boarding.
 Training and development.
 Performance evaluation. .
 Pay and benefits.
 Internal communication.
 Engage employees to increase retention
Redundancy
Termination of employees for business reasons, such as poor
economic conditions.
 Redundancies can be forced or voluntary
 in the case of voluntary redundancies there are usually
incentives offered to outgoing employees, such as extended
garden leave or more valuable severance packages
Redundancies can be controversial, particularly if businesses
must select who is to be made redundant.
 A commonly-used technique is Last In, First Out (LIFO),
whereby the employees who have joined most recently are
considered first for redundancy.
MACRO-level HRP
HRP focuses on aligning human resources
administration with the organization's mission and
overall strategic plan.
Examines employee-management policies and
procedures and their effect on human resources
management.
Labor market analysis
is the process of Identifying the appropriate labor market for
various types of positions.
Surveying the market to determine the salaries that are being
paid for like positions. Identifying market trends such as:
ancillary pay, and merit and pay practices.
Labor market analysis is a five part process to:
 Identify the area within which employers are competing for labor.
 Conduct or participate in market surveys within the labor market to
determine the salaries being paid for specific positions.
 Identify market trends such as: ancillary pay, merit and pay
practices.
 Establish, adjust, and/or recommend salary structures that will
allow the company to effectively compete for staff within specific
classification levels or grades.