Human Resource

Planning

1
 Competitive
Company Challenges Achieving
Values
Strategic Fit
Business
Strategy
Environ- HR HR
Policy
ment EXTERNALPhilosophy
FIT
INTERNAL
FIT

HR HR
Practices System

PGP 2007-09
 Ensuring the Fit between HR
and Organisation Strategy
 External Fit (or External Alignment)
 Focuses on the connection between the
business objectives and the major
initiatives in HR.
 Internal Fit (or Internal Alignment)
 Aligning HR practices with one another
to establish a configuration that is
mutually reinforcing.

PGP 2007-09
 Strategic Flexibility
 Organizational Capability
 Capacity of the organization to act and
change in pursuit of sustainable competitive
advantage.
 Coordination flexibility
 The ability to rapidly reallocate resources to new
or changing needs.
 Resource flexibility
 Having human resources who can do many
different things in different ways.

PGP 2007-09
 Human Resource Planning (HRP)

 Is the first component of HRM strategy

 All other functional HR activities are derived
from and flow out of the HRP process.
 Has its basis in considerations of future HR
requirements in light of present HR
capabilities and capacities.
 Is proactive in anticipating and preparing
flexible responses to changing HR
requirements.
 Has both an internal and external focus.

PGP 2007-09
 HRP and Strategic Planning
 Strategic Analysis
 What human resources are needed and what are
available?
 Strategic Formulation
 What is required and necessary in support of
human resources?
 Strategic Implementation
 How will the human resources be allocated?

Human Resource Strategic

Planning Planning

PGP 2007-09
 HR Planning Issues
Staffing Questions:
 How do we manage staffing in times of
recession or expansion?
 What impact does technology change,
mergers or relocation have on staffing
issues?
 Do we always have the right people in the
right jobs at the right time?
 How do we get our human resources: buy
them or make them or both?

PGP 2007-09
 Major Objectives of HRP

 Preventing understaffing and overstaffing

 Ensure the organisation has the right
employees with the right skills at the right
place at the right time
 Ensure the organisation is responsive to
changes in its environment
 Provide direction and coherence to all HR
activities and systems

PGP 2007-09
 Types of Planning
Aggregate Planning
 Anticipating the needs for groups of
employees in specific, usually lower level
jobs and the general skills employees will
need to ensure sustained high performance.
Succession Planning
 Focuses on ensuring that key individual
management positions in the organization
remain filled with individuals who provide
the best fit for these critical positions.

PGP 2007-09
 HRP and Environmental
Scanning
 Environmental Scanning
 The systematic monitoring of the
major external forces influencing the
organization.
 Economic factors
 Competitive trends
 Technological changes
 Political and legislative issues
 Social concerns
 Demographic trends
PGP 2007-09
 Scanning the Internal
Environment
 Cultural Audits
 Audits of the culture and quality of work
life in an organization.
 How do employees spend their time?
 How do they interact with each other?
 Are employees empowered?
 What is the predominant leadership style of
managers?
 Benchmarking
 The process of comparing the organization’s
processes and practices with those of other
companies.
PGP 2007-09
 Human Resource Planning Model
FORECASTING DEMAND BALANCING
Considerations Techniques SUPPLY AND
DEMAND
• Technology • Trend analysis
• Financial resources • Managerial (Shortage)
• Organizational growth estimates Recruitment
• Mgmt. philosophy • Delphi technique Full-time / Part-time

Techniques External (Surplus)

• HR inventories Considerations Reductions
• Markov analysis • Wkforce changes
• Layoffs
• Skill inventories • Mobility
• Terminations
• Replacement charts • Govt policies
• Demotions
• Succession Planning • Unemployment
• Retirements
FORECASTING SUPPLY

PGP 2007-09
 Forecasting Demand for
Employees

Quantitative
Methods

Forecasting Demand

Qualitative Methods

PGP 2007-09
 Quantitative Approach: Trend
Analysis
 Forecasting labor demand based on an
organizational index:
 Select a business factor, e.g. sales, that
best predicts human resources needs.
 Plot the business factor in relation to the
number of employees to determine average
labor productivity.
 Compute labor productivity for the past five
years.
 Project human resources demand out to the
target year(s).
PGP 2007-09
 Example of Trend Analysis of HR
Demand
BUSINESS LABOR HR
FACTOR ÷ PRODTY = DEMAND
YEAR (SALES IN ‘000) (SALES/EMPLOYEE) (NO. OF EMPLOYEES)

1999 Rs. 2,935 8.34 352

2000 Rs. 3,306 10.02 330
2001 Rs. 3,613 11.12 325
2002 Rs. 3,748 11.12 337
2003 Rs. 3,880 12.52 310
2004 Rs. 4,095 12.52 327
2005* Rs. 4,283 12.52 342
2006* Rs. 4,446 12.52 355 *Projected figures

PGP 2007-09
 Qualitative Approaches to
Demand Forecasting
 Management Forecasts
 The opinions (judgments) of supervisors,
department managers, experts, or others
knowledgeable about the organization’s future
employment needs.
 Delphi Technique
 An attempt to decrease the subjectivity of
forecasts by soliciting and summarizing the
judgments of a preselected group of individuals.
 The final forecast represents a composite group
judgment.

PGP 2007-09
 Forecasting Supply of Employees:
Internal Labor Supply
 Staffing Tables
 Markov Analysis

 Skill Inventories

 Replacement Charts

 Succession Planning

PGP 2007-09
 Forecasting Internal Labor
Supply
 Staffing Tables
 Graphic representations of all organizational
jobs, along with the numbers of employees
currently occupying those jobs and future
(monthly or yearly) employment
requirements.
 Markov Analysis
 A method for tracking the pattern of
employee movements through various jobs.

PGP 2007-09
 Hypothetical Markov Analysis for a
Retail Company

PGP 2007-09
 Internal Supply Forecasting Tools
 Skill Inventories
 Files of personnel education, experience,
interests, skills, etc., that allow
managers to quickly match job openings
with employee backgrounds.
 Replacement Charts
 Listings of current jobholders and
persons who are potential replacements
if an opening occurs.

PGP 2007-09
 An Executive Replacement Chart

PGP 2007-09
 Forecasting Supply of Employees:
External Labor Supply
 Factors Influencing the External Labor
Supply:
 Demographic changes in the population
 National and regional economics

 Education level of the workforce

 Demand for specific employee skills

 Population mobility

 Governmental policies

PGP 2007-09
 Sources of Information About
External Labor Markets
 Department of Labor publications
 State and local planning and
development agencies
 Chambers of Commerce

 Industry and trade group publications

 State and local employment agencies

PGP 2007-09
 HRP Considerations

Balancing supply
and demand

PGP 2007-09
 Elements of The HR Plan
 Acquisition of personnel
 Effective Utilization
 redeployment
 methods improvement
 training to prevent obsolescence
 Development and Improvement
 broad-based training and development
 performance management systems
 Retention
 proper remuneration
 long-term career planning
 healthy employee relations
 good working environment
PGP 2007-09
 Requisites for Successful HRP
 HRP must be seen as equally vital as business
planning
 Top-management support
 Periodic review and revision of the forecasting
techniques and the forecasts
 Without long range planning concentration becomes
focussed on short-term needs resulting in “crisis
management” reactions
 An excellent and up-to-date HRIS
 Active involvement of line managers and co-
ordination between line mgrs and HR function

PGP 2007-09