Human Resources

planning
The head of a business must assure himself that his managers ,
clerks & foremen are the right men for their work & are doing well
Views of Economist Alfred Marshall in 1890
 Human resources planning
It is the process-including forecasting,
developing, and controlling by which a firm
ensures that it has the right number of
people and the right kind of people at the
right places at the right time doing work for
which they are economically most useful.

It is a process by which an organization

should move from its current manpower
position to its desired manpower position
 HRP and manpower planning
Manpower planning quantitative approach which is concerned forecasting demand &
supply of labor.

In Indian power sector, state level plants are manned by simplest manpower planning
models, where as in organization like NTPC and others in the central sector, manpower
planning integrates with business plan and strategic considerations to ensure that optimum
man power is provided for achieving competitiveness nationally and internationally.

HR planning is how to achieve that match of skills, knowledge and behaviours.

HRP comprises of :
A. Forecasting future demand for HR

B. Forecasting future internal supply of HR

C. Forecasting future external supply of HR

D. Formulating responses to the forecasts

 Need & importance of HRP
The paradox often is that even with the
growing unemployment ,there has been a
shortage of HR with the required skills &
capabilities
Large numbers of employees who retire, die

leave org, or become incapacitated because

of physical or mental ailment ,need to be
replaced by new employees .HRP ensures
smooth supply of workers without
interruption
 NEEDS OF HRP

Employment-Unemployment Situation
Technological Change
Organizational Change
Demographic Change
Skill Shortage
Governmental Influences
Legislative Control
Impact of the Pressure Group
Systems Approach
Lead Time
 Importance to manpower planning
To link manpower planning with the organizational planning
To determine recruitment levels.
To anticipate redundancies.
To determine optimum training levels.
To provide a basis for management development programs.
To cost the manpower.
To assist productivity bargaining.
To assess future accommodation requirement.
To study the cost of overheads and value of service functions.
To decide whether certain activity needs to be subcontracted, etc.
 HR Plan
Both a process and a set of plans

Provides mechanisms to eliminate any gaps

that may exist between supply and demand

Process very dynamic by nature

Requires periodic readjustments as labour

market conditions change
 HRP Objectives
To recruit & retain the HR of required quantity & quality
To foresee the employee turnover & filling up consequent
vacancies
To meet the needs of the programmes of expansion ,
diversification
To foresee the impact of technology on work , existing
employees & future HR requirements
To asses surplus or shortage of HR & take measures
accordingly
To maintain congenial IR by maintaining optimum level &
structure of HR
To minimize imbalances due to non availability of HR
To estimate the cost of HR
 HRP at different levels
Corporate level planning (changing market
situation)

Intermediate level planning (SBU strategy)

Operations Planning

Planning short term activities (day to day)

 The great pyramid of Giza (145
meters tall)
Labor was organized into hierarchy
Slave labor to skilled one
Total projected workforce requirement was 40000
1st stage 4000 -quarry workers , haulers and masons
16 K -20k secondary workers- ramp builders , tool makers ,
people supplying food clothing and fuel.
HRP included:
No of blocks delivered and installed
No of trips to the quarry
Length of work day and work week
Food and housing need
Number of salaries
Five Phases for Human Resources Planning

1. Analyzing: What are the key human

resources information needed?
2. Forecasting: mathematical projections

Demand versus supply analysis.

3. Planning: Identification of strategy
4. Implementing: Executing the new strategy
5. Evaluating: Feedback on effective of

outcomes.
Factors - HRP/Manpower Planning
External environment (Agencies)

Suppliers of plant and machineries,

Government policies and labour market ,
level of technology,
level of economic development
International Factors
Outsourcing Facilities
Internal environment (Agencies)

Company Policy and Strategy

Personnel Department
Job Analysis
HR Policies
Trade Unions
Type & quality of information
Company s production /operations policy
Identifies the organizations staffing needs
1 projected turnover as a result of resignations or terminations

2. quality and nature of employees in relation to what management sees

as the changing needs of the organization

3. decisions to upgrade the quality of products or services or enter into

new markets, which might change the required employee skill mix

4. planned technological and administrative changes aimed at increasing

productivity and reducing employee head count, such as the installation
of new equipment or introduction of a financial incentive plan
5. the financial resources available to each department; for example, a
budget increase may enable managers to pay higher wages or hire more
people; conversely, a budget crunch might result in wage freezes or
layoffs
A model of manpower planning
Department chart Work study of the
Skill matrix department (input ,
Quality of work output, supplier)
Current manpower
Competency gap
Planning work flow
Performance indicator Standard operating
KRA procedures
Business Matrix

Matching individual Organizational context

External sources of supply
Labour Market Condition
migration trends
Part time labour

Macro level factors

Unemployment rate
Government policies
Demographic factors
 Process of HRP
Analyzing the organizational plans(both corporate & unit level)
Forecasting the overall HR Requirement(Demand/supply)mathematical
projections or judgmental estimates considering economic trends &
industry development.
Determination of manpower gaps
Formulating HR plans
Balancing supply & Demand
In case of surplus , plan for redeployment ,lay off
Plan to modify the org plan
Managerial Judgment approach in small sector and unorganized
industries
 Forecasting the overall HR
Requirement(Demand/supply)
It refers to the interaction between the decision
makers perceptual and cognitive processes and the
objective characteristics of the environment.

HR forecasting refers to the predictions that the

mgrs need to make for demand & supply of workers
at organizational, regional or national levels.

Demand analysis identifies the future workforce

requirements needed to maintain the organizations
mission and goals.
Demand forecasting
Influenced by two factors :
The volume of output
The level of productivity

In terms of forecasting need refers to the

number of people required to provide an
ideal level of contribution
Requirement are the functional composition

of employment adequate enough to produce

goods & services.
Supply forecasting
Four dimensions of HR supply are :

Flow (over a period of time ) & Stock (at a

particular time)

Quantity & qualitative

Occupation & education

Micro and macro

 Approaches of HRP
1.Social demand Approach-assessment of the societys requirement of
education .
Demand for education in respect to all individuals within the society.

2.Manpower requirement approach project the demand for manpower at

the macro level

3.Rate of return Approach- net returns on educational expenditure.

After crossing school leaning age people attach positive values & future
benefits of education.

Educational programs which have positive returns are promoted while

others showing negative value are discontinued.
 Steps in manpower requirement
approach

It is based on the belief that a definite link exists between education & economic
growth.

Anticipating the direction & magnitude of development of each individual sector

in the economy.

Evolving norms for engaging manpower in each individual sector in the economy.

Translating the physical targets for the development into manpower requirements
using specific manpower norms.

Estimating the educational equivalents of manpower requirements.

Analyzing the propositions of estimates of educated manpower requirements for

educational developments : based on assumption rates at each level of education.
 Quantity of HR /quality
Four dimensions :

Population Policy
Population structure
Migration
Labor force participation

Quality of HR
Education & training
Health & Nutrition
Equality of opportunity

Quantitative dimensions of HRP considers Human beings

A)with productive power
B) without productive power
 Type of forecasts
Short term/medium and long term
Policy conditional forecasts
Onlookers forecasts
Macro forecasts
Micro forecasts
Sample Questions from a Unit Forecasting
Questionnaire
List any jobs that have changed since the last forecasting
period and any that will change in the next forecasting
period.

If vacancy can be filled with present employees, note

whether training will be required. Specify nature of training
needs.

What percentage of employees are performing jobs up to

standard?

How many employees will be absent in the next forecasting

period because of disability, educational, or other leaves?
Techniques of forecasting Demand
Expert (management) forecasts
Market Prediction Method
Ratio Trend Analysis
Key Predictive Factors - business factors
Delphi Technique - decrease subjectivity of opinion
Structured Analogies (outcome of similar situation from
the past)
Work standards data (projected unit of output converted
into established time standards)
Work force analysis
Work load analysis
Job Analysis
 Structured Analogies
1. Manager prepares a description of the
target situation.
2. Selects experts who have knowledge
3. Rate their similarity to the target situation
4. Match the outcomes their analogies with
potential outcomes.
5. Better than unaided judgment.
 Trend Analysis
Selecting a business factor that best predicts
HR needs
Plotting the business factor in relation to the

number of employees to determine the labour

Productivity Ratio
Computing the productivity ratio for the past

5 years
calculating HR demand by multiplying the

business factor by the productivity ratio

Projecting HR demand out to the target years
 Five Steps in the Delphi Method

1 An issue, question, or problem is identified.

2. A small group or panel of ten or fewer experts is
identified.
3. Independent judgements about the issue are obtained from
each expert through a questionnaire or structured interview.
4. An intermediary or facilitator collects, analyzes, and feeds
back information from the first questionnaire or interview
to each expert.
5. Steps 3 and 4 are repeated until there is a consensus on the
issue or problem.

4.10
5-9

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
P r o m o t io n s o u t
T ra n s fe rs In > > J o b H o p p in g
> T ra n s fe r s O u t
> R e t ir e m e n t
> V R S S c h e m e ( G o ld e n h a n d s h a k e )
R e c r u it s I n > > D is c h a r g e o r D is m is s a l
> Te r m in a tio n s
> R e s ig n a tio n s
P r o m o tio n s In > > R e tre n c h m e n t
> A t t r a c t i o n s in O t h e r B a n k s , e t c .
5-10

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 10,000 pieces
Standard hours per piece 3 hours
Planned hours required 30,000 hours
Productive hours per person per year 1,000 hours (estimated on annual basis)
(allowing for absenteeism, turnover, idle time etc.)
No. of workers required 30
If span of control in the unit is 10 per officer, then 3 officers are also required.
 Preparing manpower inventory (supply
forecasting)
Skill inventory( Head count , job family ,Age , Local
& non local, inventory of past performance &
present)
Replacement charts

Succession planning

Analysis of staffing tables

Markov Analysis

Turnover analysis (data from exit interviews)

Wastage analysis and its methods :

1. labor turnover index

2. stability index

3. Cohort Analysis
Details of the techniques
Markov Analysis
Also known as A transition matrix, can be used to model

the internal flow of human resources. These matrices

simply show as probabilities the average rate of historical
movement from one job to another.

Labor Turnover Rate = Number of Employees left specified

period (Say one year)/ Average Number of Employees
during the same period x 100

Labor Stability Index = Number of Employees with one

years service or more / Number of Employees one year
ago x 100
5-16

Skills inventory: an example

N a m e : A .K . S e n D a te p r in t e d : 1 -4 -2 0 0 4
N u m be r : 4 2 9 D e p a r tm e n t : 4 1

K e y w o rd s W o rk e x p e rie n c e
W o rd D e s c r ip tio n A c t iv ity F ro m To
A c c o u n t in g Ta x S u p e r v is io n 1 9 9 8 2 0 00 Ta x c le r k A B C C om p an y
a nd a n a ly s is
B o o k K e e p in g L e d g e r S u p e r v is io n 2 0 0 0 2 0 0 2 A c c o u n ta n t X Y Z C o .
A u d itin g C o m p u te r A n a ly s is 2 0 0 2 2 0 0 3 C h ie f A c c o u n ts T T B an k
re c o rd s O ffic e r

E d u c a t io n S p e c ia l Q u a li f ic a t i o n s M e m b e r s h ip s

D e g re e M a jo r Ye a r C o u rs e D a te 1 . A IM A

M B A F in a n c e 1 9 98 D B F 1 99 6 2 . IS T D
B .C o m A c c o u n ts 1 9 9 5 R is k M a n a g e m e n t 1 9 99 3 . IC A

C o m p u te r L a n g u a g e s P o s it io n L o c a tio n H o b b ie s
L ite r a c y p re fe re n c e c h o ic e

Ta ll y F re n c h A c c o u n tin g K o lk a t a C h ess
B a n k in g A u d it in g D e lh i F o o t b a ll
S o ftw a re B a n g a lo r e B o a t in g

E m p lo y e e s S ig n a tu re _ _ _ _ _ _ _ _ _ _ H R D e p a rtm e n t_ _ _ _ _ _ _ _
D a te _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ D a te _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
5-18

Replacement chart
G e n e ra l M a n a g e r K ey
V. K . G a rg N a m e s g i v e n a r e r e p la c e m e n t
A /2 c a n d id a te s
P A to A . P r o m o t a b le n o w
G e n e ra l M a n a g e r B . N e e d in g d e v e lo p m e n t
L . M a th e w s C . N o t s u it a b le t o p o s it io n
B /1 1 . S u p e rio r p e rfo rm a n c e
2 . A b o v e A v e ra g e p e r fo rm a n c e
A s s is t a n t G e n e r a l M a n a g e r 3 . A c c e p ta b le p e rfo r m a n c e
R .K . A ro ra A /2 4 . P o o r p e rfo r m a n c e
B .K . N e h ru B /3

D iv i s i o n : D iv is io n : D iv is io n :
A c c o u n t in g & P la n n i n g M a n a g e r Te c h n ic a l A d v is o r
H R M anager
Ta x a t io n M a n a g e r A .N . G u p ta A /1 N .R . M u rth y B /3
C . P. T h a k u r A /1
A .T. R o y C /2 K . P. R a o B /1

N o r t h e r n R e g io n C e n t r a l R e g io n S o u t h e r n R e g io n M a n a g e r E a s te r n R e g io n
M anager M anager A . S u b ra m a n y a m B /2 M anager
L . C . S r iv a t s a v A / 2 S .P. K u m a r A /1 B .K . M e n o n B /1 R . K r is h n a B /3
A. Thapar C /4 R . P andey B /3
5-20

Important barometers of labor 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
 Problems in HRP
Resistance by employers & employees
Uncertainties absenteeism, seasonal employment , labor turnover
Inadequacies of information system
Internal Communication
Forecasting techniques -deficiency
Time lag between communication of strategic information
accuracy
inadequate top management support
lopsided focus on quantitative aspects.
 Implementation
Recruitment Plans
Selection & Promotion plans
Training Plans
Appraisal Plans
Redeployment plans (outplacement, work sharing
,reduced work hours , voluntary retirement, creation
of adhoc projects, employment in sister organization
Downsizing plans
 Recent implications of HRP
Overstaffing

VRS /Golden Handshake

De - layering and downsizing

Recent trends

Outsourcing

Contingency clause in HRP