Chapter # 6 Manpower Planning

Prepared By Kokab Manzoor 1

Outlines
Definition of Manpower planning Need for Manpower planning Overview of HR planning Process Forecast demand for labor
Factors determining Demand for Labor

Forecast supply labor

Factors determining Supply for Labor

Managing shortage/surplus of labor

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Human Resource Planning

Introduction Manpower Planning which is also called as Human Resource Planning has now been recognized as an important part of overall planning of any organization. Without procurement and adequate number of personnel it is not possible to realize the goals of an organization. Human Resource Planning has got an important place in the arena of industrialization.
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Human Resource Planning (HRP)

Definition HRP is process including forecasting, developing and controlling by which a firm ensures that it has the right number of people, right kind of people at the right place, at the right places at the right time doing work for which they are economically more useful. (by E. Geisler)
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Need of Manpower Planning

Manpower Planning is a two-phased process because manpower planning not only analyses the current human resources but also makes manpower forecasts and thereby draw employment programs.
Manpower Planning is advantageous to firm in following manner:
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Need of Manpower Planning

1. Shortages and surpluses can be identified so that quick action can be taken wherever required. 2. All the recruitment and selection programs are based on manpower planning. 3. It also helps to reduce the labor cost as excess staff can be identified and thereby overstaffing can be avoided

Need of Manpower Planning

4 It also helps to identify the available talents in a concern and accordingly training programs can be chalked out to develop those talents. 5 It helps in growth and diversification of business. Through manpower planning, human resources can be readily available and they can be utilized in best manner. 6 It helps the organization to realize the importance of manpower management which ultimately helps in the stability of a concern.
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Overview of the Human Resource Planning Process

Human Resource Forecasting

HR Forecasting attempts to determine the supply and demand for various types of human resources, and to predict areas within the organization where there will be labor shortages or surpluses. There are three major steps to forecasting: 1. Forecasting the demand for labor 2. Determining labor supply 3. Determining labor surpluses and shortages

HUMAN RESOURCE PLANNING FORECASTING HR REQUIREMENTS (DEMAND ANALYSIS) (Trying to predict future staffing needs) Managerial Estimates Sales Projections Vacancy Analysis (projected turnover) FORECASTING HR AVAILABILITY (SUPPLY ANALYSIS) (Predicting worker flows and availabilities) Succession or Replacement Charts Skills Inventories (use of HRIS) Transition Matrix (Markov analysis ) Personnel Ratios
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Forecasting the Demand for Labor

Trend Analysis Constructing and applying statistical models that predict labor demand for the next year, given relatively objective statistics from the previous year. Leading Indicators Objective measures that accurately predict future labor demand. E.g. Projections Vacancy analysis etc
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Forecasting the Demand for Labor

VACANCY ANALYSIS
Historic departures used to project turnover
LEVEL # EMPL TURN % Expected Vacancies Expected to Remain

TOP MGMT MID MGMT LOW MGMT SKILLED W ASSY WKRS

100 200 600 600 2000

20 % 24 % 22 % 16% 12 %

20 48 132 96 240

80 152 468 504 1760

TOTALS

3500

536

2964

AVERAGE TURNOVER PERCENTAGE = 536 / 3500 =

0.15 or 15%
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Determining Labor Surplus or Shortage

Based on the forecasts for labor demand and supply, the planner can compare the figures to determine whether there will be a shortage or surplus of labor for each job category. Determining expected shortages and surpluses allows the organization to plan how to address these challenges.

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Determining Labor Supply

Predicting Worker Flows and Availabilities

following are the techniques an organization can use to estimate the supply of labor;

1 Succession or Replacement Charts

Who has been groomed/developed and is ready for promotion right NOW?

2 Human Resource Information Systems (HRIS) An employee database that can be searched when vacancies occur.
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Determining Labor Supply

Predicting Worker Flows and Availabilities

3 Transition Matrices (Markov Analysis)

A chart that lists job categories held in one period and shows the proportion of employees in each of those job categories in a future period. It answers two questions: 1. Where did people in each job category go? 2. Where did people now in each job category come from?

4 Personnel / Yield Ratios

How much work will it take to recruit one new accountant?
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Determining Labor Supply

Predicting Worker Flows and Availabilities

SUCCESSION PLANNING

REPLACEMENT CHART
FOR EXECUTIVE POSITIONS

POSITION REPLACEMENT CARDS

FOR EACH INDIVIDUAL POSITION

------------------------------------------------------------------------

POSITION
DANIEL BEALER
Possible Candidates

WESTERN DIVISION SALES MANAGER

Western Division Sales Mgr
Current Position

Outstanding
Present Performance

Ready Now
Promotion Potential

SHARON GREEN GEORGE WEI HARRY SHOW

W/Oregon Sales Manager N. California Sales Manager Utah Sales Manager

Outstanding Outstanding Satisfactory

Ready Now Needs Training Needs Training

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HUMAN RESOURCE INFORMATION SYSTEMS (HRIS)

PERSONAL DATA Age, Gender, Dependents, Marital status, etc EDUCATION & SKILLS Degrees earned, Licenses, Certifications Languages spoken, Specialty skills Ability/knowledge to operate specific machines/equipment/software JOB HISTORY Job Titles held, Location in Company, Time in each position, etc. Performance appraisals, Promotions received, Training & Development MEMBERSHIPS & ACHIEVEMENTS Professional Associations, Recognition and Notable accomplishments PREFERENCES & INTERESTS Career goals, Types of positions sought, Geographic preferences CAPACITY FOR GROWTH Potential for advancement, upward mobility and growth in the company

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Determining Labor Supply

Predicting Worker Flows and Availabilities

Transition Matrix (Markov Analysis)

Example for an Auto Parts Manufacturer

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MARKOV ANALYSIS
(Captures effects of internal transfers)

(Start = 3500) FROM/ TO: TOP 100 MID LOW 200 600

TOP .80 .10

A TRANSITION MATRIX MID LOW SKILLED ASSY .02 .76 .06 .04 .78 .01 .01 .84

EXIT .18 .10 .15 .15

SKILL 600

ASSY 2000 .05 .88 .07 ---------------------------------------------------------

END YR WITH: 100

NEED RECRUITS ? NEED LAYOFFS ? 0

190
10

482
118

610
(10)*

1760
240*

[358 left]
368 tot (10) tot
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KEEP STABLE 100

200

600

600

2000 = 3500 Tot

MARKOV ANALYSIS
(Anticipates Changes in Employment Levels)

Employment needs are changing. We need a 10% increase in skilled workers (660), and a 15% decrease in assembly workers (1700) by years end. ------------------------------------------------------(Start = 3500) A TRANSITION MATRIX FROM/ TO: TOP MID LOW SKILLED ASSY EXIT TOP 100 .80 .02 .18 MID 200 .10 .76 .04 .10 LOW 600 .06 .78 .01 .15 SKILL 600 .01 .84 .15 ASSY 2000 .05 .88 .07 --------------------------------------------------------END YR WITH:
NEED RECRUITS ? NEED LAYOFFS ?

100
0

190
10

482
118

610
50*

1760
(60)*

[358 left]

NEW LEVELS 100

200

600

600

1700 = 3260 tot

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Determining Labor Supply

Predicting Worker Flows and Availabilities

4 PERSONNEL / YIELD RATIOS Past experience has developed these yield ratios for recruiting a Cost Accountant: for every 12 applications received, only 1 looks promising enough to invite for an interview of every 5 persons interviewed, only 1 is actually offered a position in the organization of every 3 job offers made, only 2 accept the position of every 10 new workers who begin the training program, only 9 successfully complete the program Thus: 100 applications must be received, so that 8.33 job interviews can be held, so that 1.67 job offers can be made, and 1.11 people must be trained, so that we get 21 one new cost accountant!!!

Problems in HRP
Resistance by employer Resistance by employee Resistance by trade unions Inadequate information system Uncertainties Integration with organizational Plans
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