HUMAN RESOURCE

PLANNING AND AUDITING

Human Resource Planning
(HRP)
Forward looking functions

Assess Human Resource requirements in advance
keeping the production schedule, market
fluctuations, demand forecasts etc

Right number of qualified people into right job at the
right time so that an organisation can meet its
objectives.

Subjected to revision

Short term ( 2 Year)/ Long term (5 or more years)
Importance Of HRP
People bank
Creating High Talented Personnel
Foundation of personnel function
Expand and contract
Cut Cost
Succession Planning
Resistance to change

Factors affecting HRP
Type and strategy of organisation.
Organisational growth cycle and planning
Environmental uncertainties
Type and quality of Information
Nature of jobs being field
Outsourcing.
Planning process
1. Environmental Scanning
1. Economic
2. Technological changes
3. Demographic Changes
4. Political Changes
5. Social Concern

Organisational objective and policies
Vacancies filled by promotion/ external recruitment.
Training and Development objectives
Job Enrichment
Creative and new jobs
Ensure continuous availability and flexible workforce.
3. HR Needs forecast
Estimating future quantity and quality of people require .
Basis of forecast: Annual Budget, Long term corporate plans, activities of
different deptt.

4. HR supply Forecast

5. HR programming

6. HRP implementation

7. Control & Evaluation

8. Surplus
1. Restricted hiring
2. Reduce hours
3. VRS, Lay off etc.

9. Shortage
1. Recruitment and Selection
2. Outsourcing
Target for next lecture
Case study : Toto Company
Tentative Lecture Schedule
Lecture
No.
Topics to be covered Case studies
1.

2.


3.

4.


5.
Introduction to HRP

HRP as integral part of
business planning,
Forecasting
Supply of manpower and
Integrated budget for
manpower planning
System and analysis
approach, Controlling
manpower of manpower
HR Forum
Fueling the process.

Toto company


Tutorials

Case studie


Presentation by
groups
HUMAN RESOURCE
PLANNING AND AUDITING
Session 2
Semester 3
Batch 2009-2010
Lecture Map
HRP as integrated part of business planning
Setting man power standards
Manpower forecasting for managerial staff,
technical staff, office staff, skilled and
unskilled labour.
Role of HRP Professionals
Strategic role
Formulating the strategies
Managing relationship with managers
Administrative role
Managing the organisational resources
Employees welfare activities
Specialized role
Collecting and analyzing data
Designing and analyzing forecasting system
Managing the career development
Ways to make HRP more effective
Vertical integration
Serve stakeholders
Understand organisation thoroughly
Structure
Management/ worker
Mission
Issues etc.
Understand demography
Data
Projection
Profile
Measurable outcomes
Element of system & their integration
Stakeholder
Interest
______________
Stakeholder
Management
Employee Group
Govt.
Community
Union

Situational
Factor
______________
Work force
Business strategy
Labour Mkt
Union
Task technology
Laws and societal
values
HRM Policies
-----------
Employee Influences
HR Flow
Reward System
Work System
HRM Outcome
-----------
Commitment
Competencies
Congruency
Cost-effectiveness
Long Term
Consequences
------------
Industrial wellbeing
Organisational
Effectiveness
Societal Welbeing
Harvard Analytical Framework of HRM
HR & Business Planning Process
Strategic Planning
-------------------------------------
1. Define corporate Philosophy
2. Scan environmental conditions
3. Evaluate corporate strategy
Link Corporate and Staff Planning
Strategic
____________
Long
(5 Years)

Issue Analysis
Operational
____________
Middle
(1-5 Year)

Forecasting
require
Budget
____________
Annual


Action Plan
Sources of information
Social
Census information,HR Journals, News, media, Social trends, Employment
sections in papers

Demographics
Census information, Local committees

Political and Legislative
News, media, Labour Relations Commission, Parliament Proceedings.

Industrial and Technological
Journals specific to each industry, Trade associations, Employers
associations.

Competitors
Annual reports, Market research, News, MediaNetworking
Strategic Direction- HR Linkages
Mission Determines business of
organisation
Obj & Goals Setting Goals and Objective
Strategies Determine how goals and
objectives will be attain
Structure Determine what jobs need to
be done by whom
People Matching Skills, Knowledge
and ability to required job
Levels of Planning
Strategic Level Capabilities required to meet organisations long term objectives
term objective
Location Level Best required location qualification & labour cost
Group behavior / Unit Level Capabilities of employees to meet Units objectives
Personal Level Specific requirement for specific job
HRP Model
Strategic Human Resource planning
Designed to insure consistency between
organisations Strategic Planning process
and HRP.
Objectives of HR Planning are feasible
HR programmes are designed around
organisational Objectives and strategies require in
terms of human resource goals.

Basic Human Resource Planning Model
Organisational
Objectives
Human Resource
Programme
Feasibility Analysis HR Requirement
1
1
3 2
4
5
Link 1 & 5: SHRP: HR Objectives are linked to organisational objectives
Example
Open New
Prdt line

Open new
factory and
distribution
system
Develop new
Objectives
And Plan
Developing new
staff for new
Installation

Prdtn Worker
Supervisor
Technical Staff
Other managers
Recruit
Skilled
Workers

Develop
technical
trang prg
Recruiting
and trng

Feasible
Transfer infeasible
because of
managers with
right skills
2
Recruit Managers
from outside
Too costly to
hire from outside
3 1
4
3
5
Link 1: Determine Demand ( labour
requirement)
How many people are working and in what
jobs to implement organisational strategies
and attain organisational goals.
Involve forecasting HR needs based on
organisational objectives
Involve consideration of alternative ways of
organizing jobs (Job design, organisational
design or staffing jobs)
Example : Peak production
Link 2: Determine HR Supply (availability)
Choose HRM programmes (supply)
Involves forecasting or predicting effect of
various HR programmes through various job
classification.
Determine how well existing programme is
doing , then forecast additional programme or
combine the programmes.
Needs to know various HR programmes and
their combinations.
Link 3 & 4: Determine Feasibility
Capable of being done
Requires knowledge of programmes
Synchronization of programmes with business
environment
Do the benefits outweigh the costs???
Difficulty in quantifying cost & benefits.
Link 5: Revise organisational objectives
and strategies.
If no feasible programme is devised,
organisation should revise the strategic
plans.
Practical shortcomings of HRP Model
Oversimplification
Less rational
May omit one step because of:
Lack of knowledge
Incorrect assumptions
Poor strategic planning
Resistance to change
ANALYSIS OF THE WORKFORCE
INVENTORIES OF THE EXISTING WORKFORCE

SUCCESSION PLANS-to determine the type and calibre of
managers available to succeed senior or middle managers who
retire or leave

MOVEMENT OF EMPLOYEES-promotions and transfers

USE OF STAFF-overtime working, Absenteeism, ineffective or
wasted time or efficiency in the use of labour

LABOUR TURNOVER-an analysis of the rates at which staff are
leaving employment 7 of trends of such turnover

COSTS-to know at which point recruitment becomes most cost-
effective than increased overtime working.
Forecasting of Human
Resources
Forecasting Demand for Employees
Consider the firms strategic plans likely impact on the
demand for the firms products or services.

Assumptions on which the forecast is predicated should
be written down and revisited when conditions change.

Unit forecasting (bottom-up planning) involves point of
contact estimation of the future demand for employees.

Top-down forecasting involves senior managers
allocating a fixed payroll budget across the
organizational hierarchy.

Time Scale of HRP forecast
Time -
Frame
Requirement
basis
Manpower
Availability
Possible action plan to
meet requirement
Less than
a year
Annual budget
(Operational Plans)
Existing +
Contractual
Contractors, Overtime,
retirement on contractual
basis, restructuring and
layoffs
1- 2 Years Forecasted budgets
(business Plans)
Current projected
attrition
Transfers, Promotion,
recruitment, restructuring,
redundancy, Trg & Devpt
2- 5 Years Long term plans Projected
(includes Trainees)
Succession plans,
recruitment, restructuring,
redundancy, Trg & Devpt
More than
5 Years
Perspective plans Labour mkt,
education system
Succession Plans, MDP, OD,
redeployment, job
restructuring
Forecasting Demand for Employees
Budgeting
Statistical Techniques
Trend analysis
Regression
Probability models
Qualitative Techniques
Ask the experts / Delphi Technique
Needs are then compared to current workforce to identify gaps
and decide staffing actions.
Take into account:
Productivity and FTE employees
Scheduling and shifts
High volume / traffic times

Statistical methods for forecasting
manpower
Quantitative techniques
Workload analysis
Time series analysis
Exponential smoothing
Analysis of productivity and other ratios
Managerial judgment
Qualitative techniques
Delphi technique
Nominal group technique
Workload analysis
Classification of work
Forecasting the no. of Job
Converting projected jobs in man-hour
Converting man-hour requirement into
manpower requirement.
Tutorial 1
Planned operation during year 2008 = 2,00,000 units
Standard man-hour needed to perform each unit in 2008= 0.25
Working ability of employee = 4%
Calculate manpower needed for year 2008.
Ans: 25 person
Tutorial 2 : Workload analysis
Job
catagory
Hrs. Per
job
Year
forecast
2002
Year
forecast
2003
Year
forecast
2004
Year
forecast
2005
Related to
meter
0.75 15 13 11 8
Related to
installation
2.50 85 95 110 125
Related to
maintenance
1.50 27 35 41 45
Related to
emergency
calls
1.10 10 8 6 4
Assumptions:
1. 20% fatigue allowance
2. 20% leave reserve
Time series analysis
Components
Trend
Cyclic variation
Seasonality
Random fluctuations
Trend Analysis
Study of firmss past employment needs over
a period of years to predict future needs.
Initial estimate of future staffing need
Scatter diagram

Tutorial : HRP of an hospital
No.of beds : 200, 300, 400, 500, 600, 700, 800, 900
No. of nurses
require: 240 260 470 500 620 660 820 860

Trend Analysis of HR Demand
1997 $2,351 14.33 164
1998 $2,613 11.12 235
1999 $2,935 8.34 352
2000 $3,306 10.02 330
2001 $3,613 11.12 325
2002 $3,748 11.12 337
2003 $3,880 12.52 310
2004* $4,095 12.52 327
2005* $4,283 12.52 342
2006* $4,446 12.52 355
BUSINESS LABOR = HUMAN RESOURCES
FACTOR PRODUCTIVITY DEMAND
YEAR (SALES IN THOUSANDS) (SALES/EMPLOYEE) (NUMBER OF EMPLOYEES)
*Projected figures
Moving average method
Tutorial
Godrej has following
manpower data form
their health care
division for past 6
years.
Forecast their manpower
for year 2006, using 6
period and 4 period
moving average
method
Year Manpower
level (in Nos.)
2001
2002
2003
2004
2005
2006
500
600
800
1000
1100
1300
Exponential Smoothing
Weighted factor () is used to avoid random
errors
F
m
=F
t
- (A
t-1
-F
t-1
)
F
m
= Forecasted Manpower
F
t
= Forecasted Demand for previous period
= Smoothing constant

A
t-1
= Actual manpower required for the previous year

Tutorial:
Forecasted manpower requirement for an organisation was 500,
while their actual requirement was 480. Considering the alpha value of 0.4,
Compute the manpower requirement for the current period
Ratio Analysis
Productivity ratio
Average number of unit produced per direct labor
employee per year.
Staffing ratio
Number of individual required in other jobs.


Tutorial: Cafeteria
Assumptions: 1) Guest /day = 200 2)Guest/table = 3
3) Hours/day = 15 4)Drink/guest = 2
5) Indirect tasks
Breaks =5 %
Administration = 10 %
Miscellaneous = 20 %


Judgmental methods
Suitable
Quantitative methods
Small organizations without database
State of transition.


Methods
Bottom-up / unit forecasting
Each unit/ branch estimates own need
Combine overall needs (current and estimated)
Top-bottom forecasting
Experiences of top management and executives
Delphi Technique
Achieve group consensus for forecast
Steps
1. develop questionnaire
2. Complilation of views
3. Return to expert with another questionnaire
4. Repeat until one consensus is achieved.
Supply of Human Resources
What is Supply forecasting?
Measures the number of people likely to be available form
within and outside the organization , after making
allowance for absenteeism internal movements and
promotions, wastage and changes in hour and other
conditions of work.
Reasons for supply forecasting:
Estimates no. of people and positions in future for plan
execution
Clarify staff mix
Assess existing staff level
Prevents shortage of personnel
Monitor expected future compliances with legal
requirement.
Forecasting Internal Labor Supply
Staffing Tables
Graphic representations of the number of
employees currently occupying certain jobs and
future (monthly or yearly) employment
requirements.

Markov Analysis
A method for tracking the pattern of employee
promotions up through and organization.
Markov Analysis for a Retail Company
Forecasting Internal Labor Supply
Skill Inventories
Databases of employee KSAs, education, and used to
match job openings with employee backgrounds.

Succession Planning
The process of identifying, developing, and tracking key
individuals for executive positions.
Listings of current jobholders and persons who are potential
replacements if an opening occurs.

Succession Planning
Forecasting External Labor Supply
1. The external labour market
2. Demographic change
3. Labour immobility
4. Early retirement
5. Changing employment patterns (e.g robotics
in car manufacture, computer aided
design/manufacture,JIT, e-commerce)
6. Changing patterns of work (e.g part-time
workers, flexible workforce etc)

Planning Human Resources
Programmes
Staff/skill shortages
promoting existing staff, Redeployment of staff, training
getting more from existing staff, Job design
External recruitment

Staff surpluses
stopping recruitment
Natural wastage, transfer, early retirements, Reducing
overtime
Short-time working, redundancy, reducing subcontracted
work
Managerial succession planning
Career planning
Organisation and structure plans
Performance planning
IMPLEMENTATION OF THE PLAN
ACQUISITION STRATEGIES:
Which define how the resources required to meet forecast needs will
be obtained
RETANTION STRATEGIES:
Which indicate how the organisation intends to keep the people it
wants.
DEVELOPMENT STRATEGIES:
Training and development programmes
UTILISATION STRATEGIES:
which indicate intentions to improve productivity and cost-
effectiveness.
FLEXIBILITY STRATEGIES:
` How the organisation can develop more flexible work arrangements.
DOWNSIZING STRATEGIES:
Which define what needs to be done to reduce the numbers
employed
Staffing Actions
Recruiting new employees
Developing existing employees
Retaining key employees
Restructuring or redeployment
Outsourcing functions
Using contingent employees
Reassigning shifts