HRM

Unit 2

HUMAN RESOURCE PLANNINGINTRODUCTION

Human Resource Management is very important for the survival and prosperity of an organisation. HR is an important corporate asset and the overall performance of companies depends upon the way it is put to use. Procurement of right kind and right number of employees is the first operative function of Human Resource Management. Before selecting the right man for the right job, it becomes necessary to determine the quality and quantity of people required in the organisation. This is the primary function of Human Resource Planning.

Human Resource Planning

Human Resource Planning is also called manpower planning/ personnel planning/ employment planning. It is only after Human Resource Planning that the Human Resource department can initiate the recruitment and selection process. Therefore Human Resource Planning is a subsystem of organizational planning. All human resource management activities start with human resource planning. So we can say that human resource planning is the principle/primary activity of human resource management. HRP is a forward looking function. It tries to assess HR requirements in advance, keeping the production schedules, market fluctuations, demand forecasts etc. in the background.

Human Resource Planning

Human Resource Planning is a strategy for the acquisition, utilization, improvement and preservation of an organization's human resource Human Resource Planning is a process of forecasting an organization's future demand for human resource and supply of right type of people in right numbers It is a process by which an organisation ensures that it has the right number & kind of people at the right place and at the right time , capable of effectively and efficiently completing those tasks that help the organisation achieve its overall objectives.

FEATURES OF HRP
It is future oriented It is a continuous process Integral part of Corporate Planning (because without a corporate plan there can be no manpower planning.) Involves study of manpower requirement Optimum utilization of resources (specifically current and future human resources) Considers both Qualitative and Quantitative aspect of HRM Applicable to both long term and Short term

Objectives of Human Resource Planning

Forecast personnel requirements Preventing understaffing and overstaffing Ensure the organisation has the right employees with the right skills at the right place at the right time Ensure that the organisation is responsive to changes in its environment Provide direction and coherence to all HR activities and systems Optimum and productive utilization of human resources currently employed in the organisation. Promote employees in a systematic manner. To control cost of Human Resources employed, used and maintained in the organisation.

Need for Human Resource Planning

Shortage of Skills Frequent Labour Turnover (Labour turnover arises because of discharges, marriages, promotion, transfer etc) Changing needs of technology Identify areas of surplus or shortage of personnel Changes in organisation design and structure (Due to changes in organisation structure and design we need to plan the required human resources right from the beginning)

Importance of HRP
Reservoir of talent Prepare people for future Helps an organization in expanding or contracting scale of operations Cuts costs (by avoiding shortages and surpluses in manpower supply) Succession Planning (stars can be picked up and kept ready for future challenges and promotions)

Process of HRP
Personnel requirement forecast Personnel supply forecast Determining Manpower Gaps Formulating HR Plans

Personnel requirement forecast

This is the very first step in HRP process. Here the HR department finds out department wise requirements of people for the company. The requirement consists of number of people required as well as qualification they must possess. Done systematically through: Workforce analysis (average loss of manpower due to leave, retirement, death, transfer, etc. , rate of absenteeism and labour turnover etc. are taken into account. Workload analysis (determining the number of persons required for various jobs with reference to a planned output) Job analysis (finding out the abilities or skills required to do the job efficiently)

Personnel supply forecast or Preparing Manpower Inventory

In this step, HR department finds out how many people are actually available in the departments of the company. Basic purpose is to find out the size and quality of personnel available with the organization to man various positions

Determining Manpower Gaps

This is used to reconcile the forecasts of labour demand and supply. This process identifies potential skill shortages or surpluses of employees, skills and jobs Based on the information collected in the 1st and 2nd step, the HR department makes a comparison and finds out the difference. Two possibilities arise from this comparison: a) No difference It is possible that personnel requirement = personnel supplied. In this case there is no difference. Hence no change is required. b) Yes, there is a difference There may be difference between supply and requirement. The difference may be: I. Personnel surplus II. Personnel shortage

Personnel surplus
When the supply of personnel is more than the requirement, we have personnel surplus. We require 100 people, but have 125 people. That is we have a surplus of 25 people. Since extra employees increase expenditure of company the company must try to remove excess staff by methods of: Layoff Termination VRS/CRS

Personnel shortage
When supply is less than the requirement, we have personnel shortage. We require 100 people; we have only 75 i.e. we are short of 25 people. In such case the HR department can adopt following methods to obtain new employees. Overtime, Recruitment, Sub-contracting

Formulating HR Plans
The HR requirements identified need to be translated into concrete HR plans backed up by detailed policies programmes and strategies Once supply and demand for labour is known adjustments can be made formulating requisite HR plans

A variety of HR plans
Recruitment plan Redeployment plan Redundancy plan Training plan Productivity plan

Retention plan

Factors affecting Human Resource Plans

External factors Government policies Level of economic development Information Technology Level of Technology Business Environment International factors Internal factors Company Strategies Human Resource policies Job analysis Organisational Growth Cycles Trade Unions Companys production and operational policy

Responsibility For Human Resource Planning

HRP is a top management job. HR plans are usually made by the HR division in consultation with other corporate heads. Any deviations from the formulated plans and their causes must be looked into, from time to time in order to assess whether the plans require revision or modification.

Job Analysis
A formal and detailed examination of the job. Job analysis is the process of gathering information about a job. It is, to be more specific, a systematic investigation of the tasks, duties and responsibilities necessary to do a job.

Nature of job analysis

Job Tasks

Job Analysis

Job Duties

Job Responsibilities

USES OF JOB ANALYSIS

Human Resource Planning- Job analysis helps in forecasting human resource requirements in terms of knowledge and skills Recruitment- Job analysis is used to find when and how to hire people for future job openings Selection- Proper understanding of what is to be done on a job, helps in selection of candidate for job. Placement and orientation- People are to be placed on the most suitable jobs; Job analysis lets us know what has to be done in a job. Training- when it is known that what has to be done on a job, training can be imparted to fill the competency gaps. Counselling- Counselling can be done if job is known well Employee Safety- Job analysis reveals unsafe conditions associated with a job. Performance Appraisal Job design and redesign Job evaluation- identifying the worth of a job.

Who should conduct job analysis?

Job incumbents themselves Supervisors External analysts

The process of Job analysis

The major steps involved in job analysis are: Organizational analysis- Identifying various job in the organization and finding how the jobs are related to the organizational objectives and to each other. Selection of representative positions to be analyzed- All jobs could not be analysed due to time and cost constraints, so a representative sample of jobs to be analysed is decided.

Collection of job analysis data- collecting data on characteristics of job, required behaviour and personal qualifications required for carrying the job.
Preparation of job description(JD)- describing the contents of the job in terms of functions, duties, responsibilities, operations, etc. The job holder is requied to discharge the duties and responsibilities and perform the operations listed in JD. Preparation of job specification (JS)- Producing written statements of personal attributes required to carry out the job.

Job Description And Job Specification

The end products of job analysis are: Job description Job specification

Job description
This is a written statement of what the job holder does, how it is done, under what conditions it is done and why it is done. Once a vacancy arises the human resource manager will first identify and record the responsibilities and tasks which are related to the job. After analyzing the responsibilities and tasks they are noted down which becomes the Job description for the job. It includes: A job title Department of the business in which the new employee would work Details of the tasks to be performed Responsibilities involved Place in the hierarchical structure Methods of assessing the performance

Job specification
On the basis of Job description, a job specification is made. It is a document which outlines the requirements, qualifications and qualities, skills and knowledge required for the job. It is also known as person specification. It offers a profile of human characteristics (knowledge, skills and abilities) needed by a person doing a job.

Recruitment
Recruitment is the process of locating and encouraging potential applicants to apply for existing or anticipated job openings. Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organizations. In simple terms, recruitment is understood as the process of searching for & obtaining applicants for jobs, from among whom the right people can be selected.

Recruitment
Definition: It is the process of finding & attracting capable applicants for employment. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applicants form which new employees are selected. Selection starts where recruitment ends.

Constraints and challenges in Recruitment

Poor image of the firm Unattractive job Conservative internal policies Limited budgetary support Restrictive policies of government

Sources of Recruitment
The sources of recruitment may broadly be divided into two categories: internal sources and external sources. Both have their merits and demerits.

Internal Sources of Recruitment

Persons who are already working in an organization constitute the internal sources. It includes the existing employees, the retrenched & retired employees & dependents of deceased employees. The way of internal recruitment is generally through transfers, promotions, & other job changes.

Merits and demerits of hiring people from within

Merits (i) Economical: The cost of recruiting internal candidates is minimal. No expenses are incurred on advertising. (ii) Suitable: The organisation can pick the right candidates having the requisite skills. The candidates can choose a right vacancy where their talents can be fully utilised. Demerits (i) Limited choice: The organisation is forced to select candidates from a limited pool. It may have to sacrifice quality and settle for less qualified candidates. (ii) Inbreeding: It discourages entry of talented people, available outside an organisation. Existing employees may fail to behave in innovative ways and inject necessary dynamism to enterprise activities. (iii) Inefficiency: Promotions based on length of service rather than merit, may prove to be a blessing for inefficient candidates. They do not work hard and prove their worth. (iv) Bone of contention: Recruitment from within may lead to infighting among employees aspiring for limited, higherlevel positions in an organisation. As years roll by, the race for premium positions may end up on a bitter note.

(iii) Reliable: The organisation has knowledge about the suitability of a candidate for a position. Known devils are better than unknown angels!. (iv) Satisfying: A policy of preferring people from within offers regular promotional avenues for employees. It motivates them to work hard and earn promotions. They will work with loyalty, commitment and enthusiasm.

External Sources of Recruitment

These include employees working in other organizations, job aspirants registered with employment exchanges, students from reputed educational institutions, candidates forwarded by search firms & contractors, candidates responding to advertisements issued by the organizations, unsolicited applications/walkins.

Merits and demerits of hiring people from outside

Merits Wide choice: The organisation has the freedom to select candidates from a large pool. Persons with requisite qualifications could be picked up. Injection of fresh blood: People with special skills and knowledge could be hired to stir up the existing employees and pave the way for innovative ways of working. Motivational force: It helps in motivating internal employees to work hard and compete with external candidates while seeking career growth. Such a competitive atmosphere would help an employee to work to the best of his abilities. Long term benefits: Talented people could join the ranks, new ideas could find meaningful expression, a competitive atmosphere would compel people to give of their best and earn rewards, etc. Demerits Expensive: Hiring costs could go up substantially. Tapping multifarious sources of recruitment is not an easy task, either. Time consuming: It takes time to advertise, screen, to test and to select suitable employees. Where suitable ones are not available, the process has to be repeated. Demotivating: Existing employees who have put in considerable service may resist the process of filling up vacancies from outside. The feeling that their services have not been recognised by the organisation, forces them to work with less enthusiasm and motivation. Uncertainty: There is no guarantee that the organisation, ultimately, will be able to hire the services of suitable candidates. It may end up hiring someone who does not fit and who may not be able to adjust in the new set-up.

Methods Of Recruitment
Internal Methods (Promotions and Transfers, Job Posting, Employee Referrals) Direct Methods (Campus Recruitments) Indirect Methods (Advertisements) Third Party methods (Employment Exchanges, Private employment search firms, Unsolicited applicants/ walk-ins, Internet recruiting)

Internal methods
Promotions and transfers: Promotion is the movement of an employee from a lower level position to a higher level position with changes in duties, responsibilities, status & value including an increase in salary Transfer, on the other hand, is a lateral movement within the same grade, from one job to another. It might lead to changes in duties & responsibilities sometimes the working conditions but the status & salary are not affected. &

Job posting: It means notifying the vacant positions, circulating publications, or announcing at staff meetings inviting the employees to apply for the positions available within the organization. It offers a chance to highly qualified candidates working with the organization to look for growth opportunities within the organization itself.

Employee referrals: It means making use of recommendations from a current employee regarding a job applicant. The logic is that they serve as a reliable source. Companies offer rich rewards to employees whose recommendations are accepted.

Direct Methods- Campus Recruitments

It is a way of recruitment by visiting & participating in college campuses & their placement centers to pick up job aspirants having the requisite technical & professional skills. A preliminary screening is done within the campus & the short listed candidates are then subjected to the remainder of the selection process. For Instance: Companies like Asian Paints, TCS, LG, Google are nowadays following this type of method where they select students from reputed educational institutions like IIT's & IIM's.

Indirect Methods- Advertisements

This source includes advertisements in newspapers; trade, professional & technical journals; radio & television etc. This method is appropriate when: a. organization intends to reach a large target group b. organization wants a fairly good number of talented people who are geographically spread out.

Private employment search firms

Private employment search firms are private employment agencies that maintain computerized lists of qualified applicants and supplies these to employers willing to hire people from the list for a fee. They have many contacts and are good at contacting qualified candidates. Fees charged could be very high.

Employment Exchanges
As a statutory requirement, companies (wherever the Employment Exchanges Act, 1950, applies) are expected to notify their vacancies through the respective employment exchanges, created all over India, for helping unemployed youth, displaced persons, physically handicapped, etc.

Unsolicited Applicants/ Walk-ins

Companies receive unsolicited applications from job seekers, from time to time. Such applications are kept in a data bank and whenever a suitable vacancy arises, the company would intimate the candidate to apply formally. Problem with this method is that job seekers apply to a number of organizations and when they are actually required by the organization, either they are already employed or not interested in the position.

Internet Recruiting
Companies develop their own websites and list job openings on it. Offers a fast, convenient and cost effective means for job applicants to submit their resumes. Resumes are then converted into a standard format for short listing candidates .

Alternatives to recruiting
Overtime: Short term fluctuations in work volume could best be solved through overtime. The employer benefits because the costs of recruitment, selection and training could be avoided. The employee benefits in the form of higher pay. However, an overworked employee may prove to be less productive and turn out less than optimal performance. Employees may slow down their pace of work during normal working hours in order to earn overtime daily. In course of time, overtime payments become quite routine and if, for any reason, these payments do not accrue regularly, employees become resentful and disgruntled.

Subcontracting: To meet a sudden increase in demand for its products and services, the firm may sometimes go for subcontracting instead of expanding capacities immediately. Expansion becomes a reality only when the firm experiences increased demand for its products for a specified period of time. Meanwhile, the firm can meet increased demand by allowing an outside specialist agency to undertake part of the work, to mutual advantage.

Cont

Alternatives to recruiting
Temporary employees: Employees hired for a limited time to perform a specific job are called temporary employees. They are particularly useful in meeting short term human resource needs. A short term increase in demand could be met by hiring temporary hands from agencies specialising in providing such services. In this case the firm can avoid the expenses of recruitment and the painful effects of absenteeism, labour turnover, etc. It can also avoid fringe benefits associated with regular employment. However, temporary workers do not remain loyal to the company; they may take more time to adjust and their inexperience may come in the way of maintaining high quality. Employee leasing: Hiring permanent employees of another company who possess certain specialised skills on lease basis to meet short-term requirements although not popular in India is another recruiting practice followed by firms in developed countries. In this case, individuals work for the leasing firm as per the leasing agreement/arrangement. Such an arrangement is beneficial to small firms because it avoids expense and problems of personnel administration.
Cont

Alternatives to recruiting
Outsourcing: Any activity in which a firm lacks internal expertise and requires on unbiased opinion can be outsourced. Many businesses have started looking at outsourcing activities relating to recruitment, training, payroll processing, surveys, benchmark studies, statutory compliance etc., more closely, because they do not have the time or expertise to deal with the situation. HR heads are no longer keeping activities like resume management and candidate sourcing in their daily scrutiny. This function is more commonly outsourced when firms are in seasonal business and have cyclical stuffing needs.

RECRUITMENT - PROCESS
Recruitment Planning Strategy Development Searching Screening Evaluation and Control

Recruitment Planning
The first stage in the Recruitment Process is planning. Planning involves the translation of likely job vacancies and information about the nature of these jobs into a set of objectives or targets that specify the number and type of applicants to be planned.

Strategy Development
Make or Buy Employees Technological Sophistication of Recruitment and Selection Devices Geographic distribution of labour markets comprising job seekers Sources Of Recruitment: Internal sources External sources

Searching
Source Activation: Source Activation takes place when a job vacancy exists in the organization. If the organization has planned well and done a good job of developing its source and search methods, activation soon results in a flood of application. Selling: In selling, both the Message and Media deserve attention in the organization. Message refers to the employment advertisements. Media refers to the source of any recruiting message. For example, Employment Exchanges, Advertises in Business magazines

Screening
The purpose of screening is to remove from the recruitment process at an early stage, those applicants who are visibly unqualified for the job. Effective screening can save a great deal of time and money. Care must be exercised to assure that potentially good employees are not lost.

Evaluation and Control

It is necessary as considerable costs are incurred in the recruitment process. Statistical information should be gathered and evaluated to know the suitability of the recruitment process.

Selection-Introduction
Selection is the process of picking individuals who have relevant qualifications to fill jobs in an organization. Selection is much more than just choosing the best candidate.

It is an attempt to strike a happy balance between what the applicant can and wants to do and what the organization requires.

Selection Introduction
Selection involves screening or evaluation of applicants to identify those who are best suited to perform the jobs which have fallen vacant in an organization The candidates are divided into 2 categories namely those who will be employed and those who will not be employed It is the process of rejecting unsuitable candidates Basic purpose is to choose right type of candidates to fill up vacancies in the organization Selection is described as a negative process as compared to the positive process of recruitment

Significance of Selection
Procurement of Qualified and Skilled WorkersScientific selection facilitates the procurement of well qualified and skilled workers in the organization. It is in the interest of the organization in order to maintain the supremacy over the other competitive firms. Selection of skilled personnel reduces the labor cost and increases the production. Selection of skilled personnel also facilitate the expansion in the size of the business. Reduced Cost of Training and DevelopmentProper selection of candidates reduces the cost of training because qualified personnel have better grasping power. They can understand the technique of the work better and in no time. Further, the organization can develop different training programmes for different persons on the basis of their individual differences, thus reducing the lime and cost of training considerably. Absence of Personnel ProblemsProper selection of personnel reduces personnel problems in the organization. Many problems like labor turnover, absenteeism and monotony shall not be experienced in their severity in the organization. Labor relations will be better because workers will be fully satisfied by the work. Skilled workers help the management to expand the business and to earn more profits and management in turn compensates the workers with high wages, benefits etc.

Selection Procedure
Selection is usually a series of hurdles or steps. Each one must be successfully cleared before the applicant proceeds to the next The process of selection involves the following steps
Reception Screening Interview Application blank Selection Tests Selection Interview Medical or physical Examination Reference Checks Hiring Decision

Reception
Company is known by the people it employs . A warm, friendly and courteous reception is extended to candidates with a view to create a favorable impression. Employment possibilities are also communicated honestly and clearly .

Screening interview
Also known as preliminary interview . It is generally brief and is conducted to cut the cost of selection by allowing only the eligible candidates to go through further stages of selection. The HR department tries to screen out the obvious misfits or totally unsuitable candidates through this courtesy interview. It involves a short exchange of information relating to the organization and the candidate . A prescribed application form is given to candidates who are found to be suitable. This stage is beneficial to both the organization and the candidate.

Application blank
It is a printed form completed by job aspirants detailing their educational background, previous work history and certain personal data in his or her own hand writing. It provides a written record of the qualifications, experience etc of the candidate which is helpful at the time of the interview. Tentative inferences regarding candidates suitability for the job can be drawn from the application blank . An application blank should be simple and elicit information that is relevant to the job or the vacancy .

Selection Tests
Different types of tests are administered depending on the job and the company. Generally, tests are used to determine the applicant's ability, aptitude and personality Selection tests are designed to measure selected aspects of the candidates personality and to predict how well the applicant is likely to perform on the job. A test is a standardized , objective measure of a persons behavior, ability, performance or attitude. Several types of tests are used in the selection of personnel.

SELECTION TESTS
A. Intelligence tests: They measure a candidates learning ability and also the ability to understand instructions and make judgements. They do not measure any single trait but several mental abilities (memory, vocabulary, fluency, numerical ability, perception etc) B. Aptitude tests: They measure a candidates potential to learn clerical, mechanical and mathematical skills. Since they do not measure a candidates on the job motivation, they are generally administered in combination with other tests. C. Achievement tests: These are designed to measure what the applicant can do on the job currently, i.e., whether the testee actually knows what he or she claims to know.

SELECTION TESTING
D. Graphology tests: Here a trained evaluator tries to examine the lines, loops, hooks, strokes, curves etc in a person's handwriting to assess the person's personality and emotional make-up. E. Polygraph : It is a lie detection test. During the test, the operator records the respiration, blood pressure and perspiration of the subject as he or she responds to a series of questions posed to elicit the truth. F. Integrity tests: These are designed to measure employee's honesty to predict those who are more likely to indulge in unacceptable behaviour.

Selection

SELECTION TESTING
G. Personality tests: They measure basic aspects of a candidates personality
such as motivation, emotional balance, self confidence, interpersonal behaviour, introversion etc.

Projective tests: These tests expect the candidates to interpret problems

or situations based on their own motives, attitudes, values etc (interpreting a picture, reacting to a situation etc)

Interest tests: These are meant to find how a persons interests compare
with the interests of successful people in a specific job. These tests show the areas of work in which a person is most interested. The basic idea behind these test is that people are most likely to be successful in jobs they like.

Preference tests: These tests try to compare employee preferences with

the job and organisational requirements. In these tests, a person indicates his or her preferences among large groups of activities, ideas, and circumstances. For Example, it might be asked, "Would you rather fix a broken clock, keep a set of accounts, or paint a picture?" Most individuals prefer certain types of activities over others. The pattern of answers reveals the strength of a person's interest in various fields.

H. Simulation tests: Simulation exercise is a test which duplicates

many of the activities and problems an employee faces while at work.

SELECTION TESTING
I. Assessment centre: It is a standardized form of employee appraisal that uses multiple assessment exercises such as in basket, games, role play etc and multiple raters. These exercises simulate the type of work which the candidate will be expected to do. It evaluates a candidates potential for management.

The in-basket: From out of reports, memos, letters etc placed in the in-basket, a candidate is supposed to initiate relevant actions within a limited period of time. Measures oral ands written communication skills, planning, decisiveness, initiative and organization skills. The leaderless group discussion(LGD): This exercise involves groups of managerial candidates working together on a job related problem so as to measure skills such as oral communication, tolerance for stress, self-confidence, adaptability, persuasive ability, etc.
Business games: Here participants try to solve a problem, usually as members of two or more simulated companies that are competing in the market place. Participants exhibit planning and organizational abilities, interpersonal skills and leadership abilities. Individual presentations: In this case the participants are given a limited amount of time to plan, organise and prepare a presentation on a given topic. Oral comm.skills, self confidence etc. are judged.

Selection Interview
Interview is an important source of information about job applicants and is an excellent selection device It is a formal and in depth conversation conducted to evaluate candidates acceptability. It allows a two way exchange of information It involves a personal, observational and face to face appraisal of candidates for employment. Several types of interviews are used , depending on the nature and importance of the position to be filled within an organization.

Types of Selection Interviews

The nondirective interview: the recruiter asks questions as they come to mind The directive or structured interview: the recruiter uses a predetermined set of Questions that are clearly job-related The situational interview: the recruiter presents a hypothetical incident and asks the candidate to respond . The response is evaluated relative to pre established bench mark standards The behavioural interview: the focus here is on actual work related incidents and The applicant is supposed to reveal what he or she did in a given situation Stress interview: the recruiter attempts to find how applicants would respond to Aggressive, embarrassing, rude and insulting (at times) questions The panel interview: three or four interviewers pose questions to the applicant and examine the suitability of the candidate by pooling their observations to arrive at a consensus

Medical Examination
Applicants who have crossed the above stages are sent for a physical examination either to the companys physician or to a medical officer approved for the purpose. A job offer is often contingent upon the candidate passing the physical examination.

Reference Checking
The applicant is asked to mention in his application form the names and addresses of two or three persons who know him well. Reference checks and background checks are conducted to verify the information provided by the candidates. Done to investigate into candidates background , personal reputation , character and past employment. A referee is an important source of information about candidates personality and character. Reference checks can be through formal letters, telephone conversations.

Hiring Decision
To be taken by concerned managers after carefully considering the economic, behavioral and social implications of the selection decision. A careless decision may impair morale of the people and cause them to suspect the selection procedure. True understanding between HR and line managers needs to be established to facilitate good selection decisions.

DIFFERENCE BETWEEN RECRUITMENT AND SELECTION

Recruitment 1. Recruitment refers to the process of identifying and encouraging prospective employees to apply for jobs. 2. Recruitment is said to be positive in its approach as it seeks to attract as many candidates as possible. Selection 1. Selection is concerned with picking up the right candidates from a pool of applicants. 2. Selection on the other hand is negative in its application in as much as it seeks to eliminate as many unqualified applicants as possible in order to identify the right candidates.