5-1 EXCEL

BOOKS

ter
5
Chap

HUMAN RESOURCE
PLANNING
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ANNOTATED OUTLINE

INTRODUCTION
HRP offers an accurate estimate of the number of employees
required with matching skill requirements to meet
organisational objectives. HRP is a forward looking function as
human resource estimates are made well in advance. It is, of
course, subject to revision.

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Objective
The basic purpose of HRP is to decide what positions the
organisation will have to fill and how to fill them.

Objectives of human resource planning

Forecast personnel requirements Cope with
changes
Use existing manpower productively
Promote employees in a systematic way

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Importance
Organisations use HRP to meet future challenges, cut costs, and
achieve greater effectiveness

Importance of human resource

planning
Create a talent pool Prepare people
for future
Cope with organisational changes
Cut costs

Help succession planning

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The Process Of HRP

The HRP is a four step process: demand forecasting, supply

forecasting, estimating manpower gaps and formulating HR plans.
The demand for human resources is influenced by several factors

Forecasting the demand for human

resources
External challenges
Economic developments
Political, legal, social, technological changes
Competition
Organisational decisions Workforce factors

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The Process Of HRP

External Challenges: Liberalisation, privatisation and globalisation

(LPG era) have created huge demand for people in
software, finance marketing, and manufacturing fields.
Organisational Decisions: Decisions such as
expansion, diversification, and relocation leading to demand
for people Possessing requisite skills
Workforce Factors: Such as resignation, and
retirement, termination etc creating
manpower gaps.

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Forecasting Techniques

HR forecasts are an attempt to find out an organisation's

future demand for employees

Forecasting techniques
Expert forecasts Trend
analysis Workforce
analysis Workload
analysis

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Forecasting techniques
Expert Forecasts: These are based on the judgements of those who
possess good knowledge of future human resource needs

Trend Analysis: This is based on the assumption that the future

is an extrapolation from the past. Human resource needs, as such,
can be estimated by examining pas trends.

An example of trend analysis

2001-02 Production of Units : 5,000
2002-03 No. of Workers : 100
Ratio : 100:5000
2003-04 Estimated Production : 8,000
No. of Workers required : 8000 × 100 = 160
5000
If supervisors have a span of 20 workers, 8 supervisors are also needed in
2003-04.

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Forecasting techniques

Workforce Analysis: All relevant factors in planning manpower flows

in a firm such as transfers, promotions, new recruitments, retirement,
resignation, dismissal etc are taken into account while estimating HR
needs
Manpower flows in a bank
Prom otions out
Transfers In > > Job H opping
> Transfers O utR etirem e

> nt

> VR S Schem e (G olden h

Recruits In > andshake)D ischarge or

>
D ism issal
>
> Term inationsR esignati

Promotions In > > ons

R etrenchm ent
>
Attractions in O ther B a
nks, etc.

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Forecasting techniques
Workload analysis: Based on the planned output, a firm tires to
calculate the number of persons required for various jobs.

An example of workload analysis

Planned output for the year Standard hours per 10,000 pieces

piece Planned hours required 3 hours

30,000 hours
Productive hours per person per year
(allowing for absenteeism, turnover, idle time etc.) 1,000 hours (estimated on annual
basis)
No. of workers required
3
0
If span of control in the unit is 10 per officer, then 3 officers are also required.

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Supply Forecasting

A) Internal labour supply: a manpower inventory in terms

of the size and
quality of personnel available (their age, sex, education, training,
experience,
prepared byjob
HRperformance,
departments. Several techniques etc)are
is usually
used
while ascertaining the internal supply of manpower (a supply of
employees to fill projected vacancies can come from within the
firm or from new hires )

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Estimated internal labour supply

for a given firm
Sources of Inflows The Firm Projected Outflows

 Promotions

 Transfers  Quits
Current Staffing
 Promotions Level  Terminations
Employees In Employees Out
 New Recruits  Retirements

 Recalls  Deaths

 Layoffs

Current Projected Projected Firm’s internal

staffing – ou t f l ow s + inflows = suppl y for this
level this year this year time next year

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Supply Forecasting

Staffing table: Shows the number of employees in each job,

how they are utilised and the future employment needs for each
type of job.

Marcov analysis: Uses historical information from personnel

movements of the internal labour supply to predict what will happen in
the future

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Marcov analysis for a hypothetical

retail company
2003-2004 M S tre A s s t S t o r e Se c t n Dep t . S ales Exit
o g e r . g e rs io ds He d s E xecutive
a s M a H e s
n n a a
a
Store M ana 80% 20%
gers
(n = 15) 12 3

A sst. S tore 11 % 83 % 6%

M anagers(n 4 30 2
= 36)
SectionH ea 11% 66 8% 15%
ds %

(n = 94) 11 63 8 14

D epartm ent 10 7 2% 2% 1 %
alH eads % 6

(n = 288) 29 207 6 46
S ales 6% 74 % 2 %
E xecutives 0

(n = 1440) 86 1066 288

Forecasted 16 41 92 301 1072 353
S u p pinl circles
Figures y show the transition percentages

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Supply Forecasting

Skills inventory: It is a summary of the skills and abilities of non

managerial employees used in forecasting supply.

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Skills inventory: an example

N am e : A.K . Sen D ate printed : 1-4-
2004
N um ber : 429 D epartm ent : 41
K ey w ords W ork experience
W ord D escriptio F ro m To
n A ctivity
19 9 8 2000 Tax
A.c c o u n t i n g clerk ABC C om pany
Tax
S upervisi 20 0 0 2002 A cc
on and analysis ountant XYZ C o.

B.o o k K e e p i n g 2002 2003

Ledger C hief Accounts TT BankO

S upervisi fficer

onAuditing
C om puter
A nalysis
records
E ducation Special Q ualifications M e m b e rsh
ip s
D egree M C ourse Date
ajor Year 1. A I M A
D B F 1996
M BA Finance 19 2. I S T D
R isk M anagem ent 1999
98 3. I C A
B.C om A c
counts 19
95
C o m p u te r La ng uag es P osition Locationch H obbies
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Literacy p re fe re n oice
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Supply Forecasting

Replacement chart: It is a visual representation of who will replace

whom in the event of a job opening.

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Replacement chart
G eneral M anag K ey
erV. K . G arg
N am es given are re
A /2
placem entcandidat
P A to es
G eneral M anager A.. P r o m o t a b l e n o w
L. M athew s B.. N e e d i n g d e v e l o p
B/1 m entC . N ot suitabl
e to position
Assistant General Manager 1. Acceptable
3. S u p e r i o rperformance
perform an
R .K. A A./2 4.c ePoor performance
roraB. B./3 2. A bove Avera
K. N eh ge perform ance
ru
D ivisi D ivision Division:
: Accountin Planning Manager Technical A
on:H R M
g & dvisorN .R .
anager A/1 A.N. Gupta A/1
Taxation K.P. Rao B/1 M urthy B /
C .P. T 3
hakur M anager A.
T. R oy C /2
N orthern R C entral R S outhern R egion E astern R
egionM a egionM a M anagerA . S ub egionM a
L.C n
. a
S gr ei vr a t s S.P.nKumar
a g e r A/1 ram anyam B/ nager
av A R. Pandey B/3 2 B .K. M enon R . Krishna
/2A. Thapar B/1 B/
C / 3
4

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Supply Forecasting

B) External Labour supply: External hires need to be contacted

when suitable internal replacements are not available. A growing
number of firms are now using computerised human resource
information systems to track the qualifications of hundreds or
thousands of employees. HRIS can provide managers with a
listing of candidates with required qualifications after scanning
the data base.

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Important barometers of labour

supply
1. Net migration into and out of the area
2. Education levels of workforce
3. Demographic changes in population
4. Technological developments and shifts
5. Population Mobility
6. Demand for specific skills
7. National, regional unemployment rates
8. Actions of competing employers
9. Government policies, regulations, pressures
10. Economic Forecasts for the next few years
11. The attractiveness of an area
12. The attractiveness of an industry in a particular place

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Manpower Gap Analysis

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

Estimating manpower requirements

Ye
1 ar 3
2
1. N um ber required at the beginning o
2. f the year DEMAND
3. C hanges to requirem ents forecast ------- ------
during the yearTotal requirem ents a
4.
t the end of the year (1+2)
5. SUPPLY
6. N
S eupma rbaetri oa nv sa i (l ar eb tl ier eamt tehnet , bwe ga isnt n
a ign g
out and other losses)
o
e , p r o m o t i o n s T o t a l a v a i l a b l e a t ,t p r o
f t h e y e a r A d d i t i o n s ( t r a n s f e r s --------------
7.
m
h eo et i no dn so)f y e a r ( 4 + 5 + 6 ) ------RECO
8.
9. D eficit or surplus (3-7) NCILIATIO N
10. L o s s e s numbers
Additional o f t h o s needed
e r e c rduring
u i t e dthe
d uyear
r i n (8+9)
g O F TH E AB
the year O VE
M ANPO W E
R NEEDED

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Formulating HR Plans

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

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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.

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Limitations Of Human Resource

Planning
HR professionals are basically confronted with three problems
while preparing and administering HR plans: accuracy,
inadequate top management support, lopsided focus on quantitative
aspects.

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Effective Human Resource Planning

HR plans must fit in with overall objectives of a firm. They must get
consistent support from top management. Computerised human resource
information systems must be used for applicant tracking, succession
planning, building skills inventories etc. The whole exercise must be
carried out in coordination with operating managers.

Human Resource Planning