UNIT 1 – HUMAN RESOURCE PLANNING

Human resource planning is a process that identifies current and future human resources needs
for an organization to achieve its goals. Human resource planning should serve as a link
between human resource management and the overall strategic plan of an organization.
Human resource (HR) planning or manpower planning is the process by which the organization
ensures that it has the right kind of people, at right time, at right place and they are working
effectively and efficiently and help the organization in achieving the overall objective. It is a
continuous process. Of developing and determining objectives, policies that will procure, develop
and utilize human resources to achieve the goal of the organization.
It is very important to study and evaluate human resources planning process in order to understand
the overall status of human resources system in an organization. This is a forward looking process
which decides future requirement and quality of manpower to achieve organizational goals. This
process is a helps the organization decide and achieve the human resources for future needs. The
process involves planning and forecasting of human resources on the basis of organizational needs
and how to arrange the human resources. It is very important to have right kind of people at the
right time and right place in order to meet the individual and organizational goals completely.
Human resources plan is part of the overall business or corporate plan of the organization. In order
to make an optimal human resources plan it is necessary to study the organization’s objectives for
the given period. The human resources planning involveS all the steps of planning i.e. anticipating,
looking at present available human resources, forecasting of human resources, and planning for
future requirements on the basis of business plans of the organization
Walker (1980) defined Human resource planning as analyzing organization’s human resource
needs under changing conditions and developing the activities necessary to satisfy these needs
Dale S. Beach has defined it as “a process of determining and assuring that the organisation will
have an adequate number of qualified persons available at the proper times, performing jobs which
meet the needs of the enterprise and which provide satisfaction for the individuals involved.”

In the words of Leon C. Megginson, human resource planning is “an integration approach to
performing the planning aspects of the personnel function in order to have a sufficient supply of
adequately developed and motivated people to perform the duties and tasks required to meet
organisational objectives and satisfy the individual’s needs and goals of organisational members.”

On the analysis of above definitions, human resource planning may be viewed as foreseeing the
human resource requirements of an organisation and the future supply of human resources and
making necessary adjustments between these two and organisation plans, and foreseeing the
possibility of developing the supply of human resources in order to match it with requirements by
introducing necessary changes in the functions of human resource management.

Features of Human Resource Planning:

From the study of various definitions, the following features of human resource planning can be
derived:

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1. Well Defined Objectives:
Enterprise’s objectives and goals in its strategic planning and operating planning may form the
objectives of human resource planning. Human resource needs are planned on the basis of
company’s goals. Besides, human resource planning has its own objectives like developing
hu0man resources, updating technical expertise, career planning of individual executives and
people, ensuring better commitment of people and so on.

2. Determining Human Resource Needs:

Human resource plan must incorporate the human resource needs of the enterprise. The thinking
will have to be done in advance so that the persons are available at a time when they are required.
For this purpose, an enterprise will have to undertake recruiting, selecting and training process
also.

3. Keeping Manpower Inventory:

It includes the inventory of present manpower in the organisation. The executive should know the
persons who will be available to him for undertaking higher responsibilities in the near future.

4. Adjusting Demand and Supply:

Manpower needs have to be planned well in advance as suitable persons are available in future. If
sufficient persons will not be available in future then efforts should be made to start recruitment
process well in advance. The demand and supply of personnel should be planned in advance.

5. Creating Proper Work Environment:

Besides estimating and employing personnel, human resource planning also ensures that working
conditions are created. Employees should like to work in the organisation and they should get
proper job satisfaction.

Objectives of HRP:
The main purpose of HRP is to set the goals and objectives of the company. In other words, it is to
have the precise number of employees, with their skills matching the requirements of the
organization, so that the organization can move towards its goals
1. Ensure adequate supply of manpower as and when required.

2. Ensure proper use of existing human resources in the organisation.

3. Forecast future requirements of human resources with different levels of skills.

4. Assess surplus or shortage, if any, of human resources available over a specified period of

5. Anticipate the impact of technology on jobs and requirements for human resources.

6. Control the human resources already deployed in the organisation.

7. Provide lead time available to select and train the required additional human resource over a
specified time period.

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According to Sikula “the ultimate purpose/objective of human resource planning is to relate future
human resources to future enterprise need so as to maximise the future return on investment in
human resources”.

Need for HRP:

The need for human resource planning in organisation is realised for the following reasons:

1. Despite growing unemployment, there has been shortage of human resources with required
skills, qualification and capabilities to carry on works. Hence the need for human resource
planning.

2 Large numbers of employees, who retire, die, leave organisations, or become incapacitated
because of physical or mental ailments, need to be replaced by the new employees. Human
resource planning ensures smooth supply of workers without interruption.

3. Human resource planning is also essential in the face of marked rise in workforce turnover
which is unavoidable and even beneficial. Voluntary quits, discharges, marriages, promotions and
seasonal fluctuations in business are the examples of factors leading to workforce turnover in
organisations. These cause constant ebb and flow in the work force in many organisations.

4. Technological changes and globalisation usher in change in the method of products and
distribution of production and services and in management techniques. These changes may also
require a change in the skills of employees, as well as change in the number of employees required.
It is human resource planning that enables organisations to cope with such changes.

5. Human resource planning is also needed in order to meet the needs of expansion and
diversification programmes of an organisation.

6. The need for human resource planning is also felt in order to identify areas of surplus personnel
or areas in which there is shortage of personnel. Then, in case of surplus personnel, it can be
redeployed in other areas of organisation. Conversely, in case of shortage of personnel, it can be
made good by downsizing the work force.

Importance of HRP:

Human resource planning is important to organisation because it benefits the organisation in

several ways.

1. Human resource planning meets the organisation need for right type of people in right
number at right times.

2. By maintaining a balance between demand for and supply of human resources, human
resource planning makes optimum use of human resources, on the one hand, and reduces
labour cost substantially, on the other.

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3. Careful consideration of likely future events, through human resource planning might lead to
the discovery of better means for managing human resources. Thus, foreseeable pitfalls might
be avoided.

4. Manpower shortfalls and surpluses may be avoided, to a large extent.

5. Human resource planning helps the organisation create and develop training and
succession planning for employees and managers. Thus, it provides enough lead time for
internal succession of employees to higher positions through promotions.

6. It also provides multiple gains to the employees by way of promotions, increase in

emoluments and other perquisites and fringe benefits.

7. Some of the problems of managing change may be foreseen and their consequences mitigated.
Consultations with affected groups and individuals can take place at an early stage in the
change process. This may avoid resistance for change.

8. Human resource planning compels management to asses critically the strength and
weaknesses of its employees and personnel policies on continuous basis and, in turn, take
corrective measures to improve the situation.

9. Through human resource planning, duplication of efforts and conflict among efforts can be
avoided, on the one hand, and coordination of worker’s efforts can be improved, on the other.

10. Last but no means the least, with increase in skill, knowledge, potentialities, productivity and
job satisfaction, organisation becomes the main beneficiary. Organisation is benefitted in terms
of increase in prosperity/production, growth, development, profit and, thus, an edge over its
competitors in the market.

Benefits of Human Resource Planning:

1. The human resource planning helps in forecasting the future needs of the manpower and not
only this, but it also helps in anticipating the vacancies arising in the near future.
2. It is cost effective, i.e. the enterprise can anticipate the shortage and surplus of manpower and
can control the imbalance, that may become unmanageable or expensive.
3. Better planning for the employee development. Through human resource planning, the skills
of the existing employees can be improved by giving them timely training and development
opportunities.
4. Training programs become more effective since the manpower gaps, arising out of shortage or
surplus, can be determined through the manpower planning and the training can be imparted
accordingly.
5. It helps to make the strategic decisions related to the hiring and training of the manpower, in
the case of shortage and layoff, termination or replacement of the manpower, in a case of
surplus.
6. Through Human Resource planning, the idle arising out of vacancy can be reduced and thus
the overall performance of the business remains unaffected.
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Thus, through human resource planning the firms can effectively manage the manpower
requirements (both current and future) and also helps in reducing the lead time spent on searching
the prospective candidate for the vacant position.

HUMAN RESOURCE PLANNING PROCESS:

1. Determining the Objectives of Human Resource Planning: The foremost step in every
process is the determination of the objectives for which the process is to be carried on. The
objective for which the manpower planning is to be done should be defined precisely, so as to
ensure that a right number of people for the right kind of job are selected.
The objectives can vary across the several departments in the organization such as the
personnel demand may differ in marketing, finance, production, HR department, based on their
roles or functions.

2. Analysing Current Manpower Inventory: The next step is to analyse the current manpower
supply in the organization through the stored information about the employees in terms of their
experience, proficiency, skills, etc. required to perform a particular job.
Also, the future vacancies can be estimated, so as to plan for the manpower from both the
internal (within the current employees) and the external (hiring candidates from outside)
sources. Thus, it is to be ensured that reservoir of talent is maintained to meet any vacancy
arising in the near future.

3. Forecasting Demand and Supply of Human Resources: Once the inventory of talented
manpower is maintained; the next step is to match the demand for the manpower arising in the
future with the supply or available resources with the organization.
Here, the required skills of personnel for a particular job are matched with the job description
and specification.

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4. Analysing the Manpower Gaps: After forecasting the demand and supply, the manpower
gaps can be easily evaluated. In case the demand is more than the supply of human resources,
that means there is a deficit, and thus, new candidates are to be hired.
Whereas, if the Demand is less than supply, there arises a surplus in the human resources, and
hence, the employees have to be removed either in the form of termination, retirement, layoff,
transfer, etc.

5. Employment Plan/Action Plan: Once the manpower gaps are evaluated, the action plan is to
be formulated accordingly. In a case of a deficit, the firm may go either for recruitment,
training, interdepartmental transfer plans whereas in the case of a surplus, the voluntary
retirement schemes, redeployment, transfer, layoff, could be followed.

6. Training and Development: The training is not only for the new joinees but also for the
existing employees who are required to update their skills from time to time.
After the employment plan, the training programmes are conducted to equip the new employees
as well as the old ones with the requisite skills to be performed on a particular job.

7. Appraisal of Manpower Planning: Finally, the effectiveness of the manpower planning

process is to be evaluated. Here the human resource plan is compared with its actual
implementation to ensure the availability of a number of employees for several jobs.
At this stage, the firm has to decide the success of the plan and control the deficiencies, if any.
Thus, human resource planning is a continuous process that begins with the objectives of
Human Resource planning and ends with the appraisal or feedback and control of the planning
process.

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Limitations of Human Resource Planning:

In spite of its benefit of keeping the organization’s manpower position balanced, there are a few
limitations of Human Resource Planning, which are discussed below.

1. The future is uncertain. There are several external factors viz. Technological, political, cultural,
etc. that affects the employment opportunities. Therefore, the management can consider the
human resource planning as a guiding factor and cannot rely completely on it.
2. With the surplus manpower, the companies try to remove this imbalance using termination,
layoff, removal of the existing employees. This could create a sense of insecurity among them,
and that would result in the loss of their faith in the company.
3. The human resource planning is time-consuming since it collects the complete information
regarding the personnel requirements of each department and then finds the suitable sources to
satisfy the needs.
4. The human resource planning is an expensive process. All the activities carried out from the
time the manpower need arises till the final placement of employees, consumes lot of time and
is very expensive.

Thus, the firm must carry out the human resource planning cautiously since it is accorded with
several limitations that can adversely affect the overall functioning of the firm.

Influencing Factors in Human Resource Planning:

Human resource planning is a dynamic and on-going process. This is because organisation
operates in unstable and unpredictable environment. HRP needs constant updating to effectively
meet the changing strategies and objectives. The process of updating is not very simple, since
HRP is influenced by many factors. These are:

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Type of organization: The type of organization determines the production process and number
and type of staff needed. Manufacturing organizations have a more complex structure compared to
service organization. It goes without saying that the HRP differs according to the nature of the
organization.

Strategy of organization: The human resource needs of an organization depend on the strategic
plan adopted by it. For example, growth of the business calls for hiring of additional labour, while
mergers will need a plan for layoffs.

Environmental Uncertainties: HR managers rarely have the privilege in a stable and predictable
environment. Political, social and economic changes affect all organizations. Personnel planners
deal with environmental uncertainties by carefully formulating recruitment, selection, and training
and development policies and programmes. Balancing mechanisms are built into the HRM
programme through succession planning, promotion channels, layoffs, flexitime, job sharing,
retirement, VRS and other personnel related arrangements.

Time period: Yet another major factor affecting personnel planning is the horizon. On one hand,
there are short-term plans spanning six months to one year. On the other hand, there are long-term
plans which spread over three to twenty years. The exact time span, however, depends on the
degree of certainty prevailing in an organization’s environment. Plans for companies operating in
an unstable environment, computers for example, must be for a short period. Plans for others
where environment is fairly stable, for example a university plans, may be long-term. In general,
the grater the uncertainty, the shorter the plan’s time horizon and vice versa.

Information: The type and quality of information used in making forecast is an important factor
influencing Human Resource Planning. In the absence of a well-developed information
mechanism Human Resource Planning is just impossible. Accurate and timely human resource
information system helps in getting better quality personnel.

Nature of jobs being filled: Job vacancies are very common and arise due to promotions,
retirements, termination of services, growth, expansion, etc. HRP is required to ensure that
suitable candidates are recruited.

Off-loading: This implies giving part of the organizations work to outside parties. If an
organization prefers off-loading to recruitment of more people. Human Resource Planning is not
required.

Pressure groups: Company has to keep in mind certain Pressure Groups like human rights
activist, woman activist, media etc. as they are very capable for creating problems for the
company, when issues concerning these groups arise, appointment or retrenchment becomes
difficult.

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Human resource planning is integrated with strategic planning through the acquisition of
employees to achieve future organizational goals. This includes an analysis of the current
workforce and how it can be improved to best achieve these goals. Through the objectives of
strategic planning, human resources can prepare the organization's future workforce. Strategic
planning supports the direction a company wants to take. This relates to the organization's vision,
mission and its strategic objectives. Goals can be loosely or narrowly defined, but more defined
company goals usually lead to better planning and attainment. Human resource planning analyses
the competencies or abilities of the current workforce and compares them to future requirements.
It attempts to meet future demands by attracting, retaining and training quality employees.
HRP like production planning, financial planning and marketing planning needs to be
comprehensive, unified and integrated for the total corporation. HR manager provides inputs
Human Resource Management like key HR areas, HR environmental constraints, HR capabilities
and HR capability constraints to the corporate strategists. Corporate strategists further
communicate their needs and constraints to HR manager. The corporate strategic plan and HR
plan, thus incorporates both HR and other functional plans
Strategic planning is a step-by-step process of determining how to pursue the organization's
long-term goals with the resources expected to be available. It is a systematic approach of
analysing the opportunities and threats in the environment to enhance the efficiency and
organizational productivity. It is the name given to the sense making activity which includes the
function of goal setting and strategy formulation.

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On the other hand, Human resource planning is the estimation of future demand for and supply
of human resources for the accomplishment of stated organizational goals. HR planning consists
all the activities of human resource management such as forecasting of HR, collecting information,
policy making, recruitment, training and development, motivation and development of human
resource in the organization. These activities help prepare and HR plan whereby right number and
kind of people are being forecasted.

These terms establish a close relationship as one cannot be separated from another. They are
correlated with each other because HR planning is an integral part of the overall corporate plan.

Labor /
Life Cycle Training and Employee
Stage Staffing Compensation Development Relations

Define future
Set basic
Meet or exceed skill
Attract best employee-
labor market rates requirements and
Introduction technical and relations
to attract needed begin
professional talent. philosophy of
talent. establishing
organization.
career ladders.

Recruit adequate Meet external Mold effective

numbers and mix of market but management
Maintain labor
qualifying workers. consider internal team through
peace, employee
Growth Plan management equity effects. management
motivation, and
succession. Manage Establish formal development and
morale.
rapid internal labor compensation organizational
market movements. structures. development.

Encourage
sufficient turnover
Control labor
to minimize layoffs Maintain
Control costs and
and provide new flexibility and
Maturity compensation maintain labor
openings. skills of an aging
costs. peace. Improve
Encourage mobility workforce.
productivity.
as reorganizations
shift jobs around.

Improve
Plan and implement productivity and
workforce achieve
reductions and Implement flexibility in
reallocations; Implement tighter retraining and work rules.
Decline
downsizing and cost control. career consulting Negotiate job
outplacement may services. security and
occur during this employment-
stage. adjustment
policies

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HR strategy adds value in the following ways: articulates more clearly some of the common
themes which lie behind the achievement of other plans and strategies, which have not been fully
identified before; and Identifies fundamental underlying issues which must be addressed by any
organization or business if its people are to be motivated, committed and operate effectively.
The first of these areas will entail a careful consideration of existing or developing plans and
strategies to identify and draw attention to common themes and implications, which have not been
made explicit previously.
The second area should be about identifying which of these plans and strategies are so
fundamental that there must be clear plans to address them before the organization can achieve on
any of its goals. These are likely to include:

 workforce planning issues

 succession planning
 workforce skills plans
 employment equity plans
 black economic empowerment initiatives motivation and fair treatment issues
 pay levels designed to recruit, retain and motivate people
 the co-ordination of approaches to pay and grading across the organization to create
alignment and potential unequal pay claims
 a grading and remuneration system which is seen as fair and giving proper reward for
contributions made
 Wider employment issues which impact on staff recruitment, retention, motivation etc.
 a consistent performance management framework which is designed to meet the needs of
all sectors of the organization including its people
 career development frameworks which look at development within the organization at
equipping employees with "employability" so that they can cope with increasingly frequent
changes in employer and employment patterns
 policies and frameworks to ensure that people development issues are addressed
systematically: competence frameworks, self- managed learning etc.
The HR strategy will need to show that careful planning of the people issues will
make it substantially easier for the organization to achieve its wider strategic and
operational goals.
In addition, the HR strategy can add value is by ensuring that, in all its other
plans, the organization takes account of and plans for changes in the wider
environment, which are likely to have a major impact on the organization, such
as:
 changes in the overall employment market - demographic or remuneration levels
 cultural changes which will impact on future employment patterns
 changes in the employee relations climate
 changes in the legal framework surrounding employment
 HR and employment practice being developed in other organizations, such as new flexible
work practices.
Finding the right opportunity to present a case for developing an HR Strategy is critical to
ensuring that there will be support for the initiative, and that its initial value will be recognized by
the organization.

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