Human resource planning

Chapter
Copyright© 2004 Thomson Learning All rights reserved
Human Resource Planning
Prof. Preeti Bhaskar
Symbiosis Centre for Management Studies
( Constituent of Symbiosis International University, Pune )

Copyright© 2005 South-Western/Thomson Learning All rights reserved
Chapter Outline
• Introduction
• Meaning & Definition
• Objectives& Benefits
• Problems
• Forecasting Demand & Supply, Quantitative & Qualitative
determination
• Work Study and its application
• Methods Study; The approach to Methods Study
• Work Measurement, Work Sampling and Time Study

• How many number of staff does the Organization
have?
• What type of employees as far as skills and
abilities does the organization have?
• How should the Organization best utilize the
available human resources?
• How can the organization keep its employees?

HRP is a process by which the management of an
organization determines its future human resource
requirement and how the existing human resource
can be effectively utilized to fulfill the
requirements.

According to Wickstron,
"Human resource planning consists of a
series of activities viz.:
• Forecasting future manpower requirement either in term of mathematical
projection of trends in the economic environment and development in industry or
in term of judgmental estimates based upon the specific future plans of a
company.
• Making an inventory of present manpower resources and assessing the extent to
which these resources are employed optimally.
• Anticipating manpower problems by projecting present resources into the future
and comparing them with the forecast of requirements to determine their
adequacy, both quantitatively and qualitatively; and
• Planning the necessary programs of recruitment, selection, training,
development, transfer, promotion, motivation and compensation to ensure that
future manpower requirements are properly met.

WHY IS HUMAN RESOURCE
PLANNING IS NEEDED ?
• Employment-Unemployment Situation
• Technological Change
• Demographic Change
• Skill Shortage
• Governmental Influences
• Legislative Control
• Impact of the Pressure Group(unions, politician etc.)
• Lead Time

Importance
• Organizational Objectives & Policies (expansion, downsizing, acquisition, merger )
• Forecast HR requirement (Prevent shortage / excess of staff )
• Determine future staff-mix
• Cope-up with the change — in market conditions, technologies, products,
government regulations and policies, etc.
• Helps in succession planning
• Use existing HR productivity.
• Promote employees in a systematic manner.
• Cut cost
HUMAN RESOURCE PLANNING

HRP at Different Planning levels
• Identify the broad policies
• Align HR objective with
organization objective
• Determining recruitment
• layoff strategy
• retention strategy,
• selection process
• Planning for T& D
• Employee welfare activities
• Grievance handling
• Employee engagement
activities
Corporate level
planning
Business level planning
Operational level planning
Planning short term activities

Human Resource Planning
Process

Chapter
Copyright© 2004 Thomson Learning All rights reserved
ENVIRONMENT
ORGANISATION OBJECTIVE AND POLICIES
HR DEMAND FORCASTING HR SUPPLY FORCASTING
HR PROGRAMMING
HR IMPLEMENTATION
CONTROL AND EVALUTION OF PROGRAMMING
HR SURPLUS
Restricted Hiring Reduced Hours and VRS, Lay
Off, etc.
HR DEFICIT/ SHORTAGE
(Recruitment and Selection)
ANALYSIS OF HR REQUIREMENT

The Basic Elements of Human Resource
Planning
3-11

ENVIRONMENT of HRM
“Our assets walks out of the door each evening .
We have to make sure that they come back next
morning”
Human Resource Management
- N. R. NARAYANA MURTHY

EXTERNAL
FACTORS
INTERNAL
FACTORS
ENVIRONMENT
of
HRM
• Mission
• Policies
• Organization culture
• Organization structure
• HR system
• Workforce diversity
• Unions
• Employee demands and
expectation
• PESTEL
P - political factors
E – economical factors
S – social factors
T – technical factors
E – environmental factors
L – legal factors

Examples of External Influences on Staffing
3-14
ity, Demographic trend s
ment

Demand forecasting techniquesQuantitativetechnique
• Estimation
• Ratio Analysis
• Trend analysis & projection
• Computerized Forecast
• Regression Analysis
• H R Budget and Planning
Analysis
• Scenario Forecasting
• Work Study Analysis
• Simple averaging
• Markov analysis
• Indexation
• Extrapolation
Qualitativetechnique
• Managerial Judgment
• Estimation
• Expert Advice
• Delphi technique
• Nominal Group Technique
• Job Analysis
• Group brainstorming
• Simulation models

FACTORS AFFECTING HR DEMAND
FORECASTING
• Employment trends;
• Replacement needs;
• Productivity;
• Absenteeism; and
• Expansion and growth.

Factors affecting supply of human resource
• Supply and demand of jobs.
• literacy rate of nation.
• rate of population
• industry and expected growth rate and levels
• technological development.
• compensation system based on education, experience,
skill and age.

Estimated internal labor supply for a given
firm
The FirmSources of Inflows
 Transfers
 Promotions
 New Recruits
 Recalls
 Promotions
 Quits
 Terminations
 Retirements
 Deaths
 Layoffs
Employees In Employees Out
Current
staffing
level
Projected
outflows
this year
Projected
inflows
this year
Firm’s internal
supply for this
time next year
– + =
Projected Outflows
Current Staffing
Level

Supply Forecasting Methods
• Trend analysis
• Competency model
• Replacement Charts
• Staffing table
• Succession Planning
• Flow Modeling/Markov Analysis

Trend analysis
• Trend analysis involves collecting and evaluating data to
identify patterns of information that might impact the future.
• By examining the trends of the past, the HR department can
predict the effect of the same activity on the future of the
organization, because it is assumed that these patterns will
remain stable.

Trend analysis
• For example, an organization reviewing historical data
may realize that every year, approximately five percent
of their staff retire, six percent resign, and three percent
are dismissed.
• Using a simple trend analysis, future HR supply
forecasts can be established by assuming an average
reduction in internal HR supply of 14 percent per year.

Replacement chart
• A chart used to estimate vacancies in higher level jobs
and identify how potential HR supply can fill these
vacancies via internal movements from lower levels jobs
• Replacement charts provide identification of potential
replacements for vacancies within an organization

Replacement chart
• A comprehensive replacement chart will include
information regarding possible replacements for vertical
or horizontal movement.
• Generally, a replacement chart includes information
about employees’ performance, readiness to fill the
position, and education.

General Manager
V. K. Garg
A/2
Key
Names given are replacement
candidates
A. Promotable now
B. Needing development
C. Not suitable to position
1. Superior performance
2. Above Average performance
3. Acceptable performance
4. Poor performance
P A to
General Manager
L. Mathews
B/1
Assistant General Manager
R.K. Arora A/2
B.K. Nehru B/3
Division:
HR Manager
C.P. Thakur A/1
Division:
Accounting &
Taxation Manager
A.T. Roy C/2
Division:
Planning Manager
A.N. Gupta A/1
K.P. Rao B/1
Technical Advisor
N.R. Murthy B/3
Northern Region
Manager
L.C. Srivatsav A/2
A. Thapar C/4
Central Region
Manager
S.P. Kumar A/1
R. Pandey B/3
Southern Region Manager
A. Subramanyam B/2
B.K. Menon B/1
Eastern Region
Manager
R. Krishna B/3

Staffing table
Staffing tables are graphic representations of all organizational
jobs, along with the numbers of employees currently occupying
those jobs and future (monthly or yearly) employment
requirements, which can be derived from demand forecasts.

Staffing table
For a line worker, for example, there is a 20% probability of being gone in 12 months, a 0% probability
of promotion to manager, a 15% probability of promotion to supervisor, and a 65% probability of
being a line worker this time next year. Such transition matrices form the bases for computer
simulations of the internal flow of people through a large organization over time.

Competency model
• Competencies are behaviours that encompass the
knowledge, skills, and attitudes(KSA) required for
successful performance.
• Competency modelling is the activity of determining the
specific competencies that are characteristic of high
performance and success in a given job.

Competency model
• A future-oriented model that first reviews competencies that
are aligned with an organization’s mission, vision, and
strategy, and then aims to identify an ideal workforce in terms
of these competencies .
• Skills/competency models focus on matching the right skills or
competencies needed for each job with the skills available
within the organization

Competency model

Succession Planning
Succession planning is a longer-term process of
grooming a successor (selected from a pool of
candidates on the basis of perceived competency)
for management or critical positions.

Markov analysis
• Analysis that helps to predict internal employee
movement from one year to another by identifying
percentages of employees who remain in their jobs,
get promoted or demoted, transfer, and exit out of
the organization
• By tracking and predicting employment movement
within an organization, the Markov analysis allows
for the development of a transition matrix to forecast
internal labour supply.

Internal Versus External Staffing
3-32

Control and Evaluation of HRP
Control and Evaluation
of
HRP
HR DEFICIT HR SURPLUS

3-34
EmployeeShortage
Temporary Hires
Sub Contract
Recruitment and
selection
Compensation
schemes
Hiring part time
employees
Recalling existing
employees
Poaching
Retention Plan

Transfers
Lay off
Reduce Overtime or Part time
Temporary Assignment
Freeze New Hires
Attrition
Job sharing
Retrenchment
Outplacement
Layoffs
Voluntary retirement
Downsizing Plan
Relocation
EmployeeSurplus

BARRIERS TO HRP
• Time Consuming
• Expensive
• Probability of inaccuracy /Uncertainties
• Financial forecasting takes precedence over HRP
• Non-involvement of operating managers
• Inadequate Information system
• Trade unions
• Employers and employee resistance

Human Resource Planning at
Different Levels
National Level Sectoral Level (Agriculture ,
Industrial and Service Sector)
Industry Level (Engineering,,
Paper , Consumer Goods
,Textile, Cement/Chemical
Industries )
Departmental Level
(Marketing , Production ,
Finance Department)
Job Level ( sales executes ,
HR Executive)

• 1. National Level: Generally, central government plans for human
resources for the entire nation. It anticipates the demand for and
supply of human requirements at the national level.
• 2. Sectoral Level: Central and state governments also plan human
resource requirements at sectoral level. It tries to satisfy needs of some
particular sectors like Agriculture
• Sector, Industrial Sector and Service Sector.
• 3. Industry Level: This level of planning is done to suit manpower
needs of a particular industry such as Engineering, Heavy Industries,
Paper Industry, Consumer Goods Industries. Public Utility Industries,
Textile, Cement/Chemical Industries etc.

• 4. Departmental Level: This level of planning is done to
suit the manpower needs of a particular department in a
company e.g. Marketing Department, Production
Department. Finance Department, etc.
• 5. Job Level: This level of planning fulfills the human
resource needs of a particular job family within
department. For example, the requirement of number of
saes executes in the marketing department

Forecasting Demand &
Supply, Quantitative &
Qualitative determination
• Work Study and its application
• Methods Study and its
approaches
• Work Measurement
• Work Sampling
• Time Study

 With increasing complexities of the
technological world, need to simplify the
work system has been increasing day by day.
 Work study is an area of knowledge that
addresses the problem of work simplification
with the basic objectives of
PRODUCTIVITY ENHANCEMENT,
HUMAN COMFORT & SAFETY
INTRODUCTION

“Work study is defined as that body of
knowledge concerned with the analysis of
the work methods and the equipment used
in performing a job, the design of an
optimum work method and the
standardization of proposed work
methods.”
DEFINITION

Objectives of Work Study
1. To analyze the present method of doing a job,
systematically in order to develop a new and better
method.
2. To measure the work content of a job by measuring
the time required to do the job for a qualified worker
and hence to establish standard time.
3. To increase the productivity by ensuring the best
possible use of human, machine and material
resources and to achieve best quality product/service
at minimum possible cost.
4. To improve operational efficiency.

Benefits of work study
• Increased productivity and operational efficiency
• Reduced manufacturing costs
• Improved work place layout
• Better manpower planning and capacity planning
• Fair wages to employees
• Better working conditions to employees
• Improved work flow
• Reduced material handling costs
• Provides a standard of performance to measure labour efficiency
• Better industrial relations and employee morale
• Basis for sound incentive scheme
• Provides better job satisfaction to employees
the purpose of work study is to determine the best or most effective method of
accomplishing a necessary operation or function

WORK STUDY
METHOD STUDY
• Motion Study : Examine the job
and finding more efficient
method to perform it
WORK MEASUREMENT
• Time Study : Determine the
time necessary to perform a
job and its elements

METHOD STUDY
(MOTION STUDY)
“Work methods analysis or Method Study is a
scientific technique of observing, recording and
critically examining the present method of
performing a task or job or operation with the
aim of improving the present method and
developing a new and cheaper method.”

Maintain the new method for the job/process/operation
Install the new method as standard practice.
Define the new method
Develop the new method.
Examine critically all the recorded facts, questioning
the purpose, place, sequence, person
Record all relevant facts about the job or process or
operation using suitable charting techniques.
Select the job or process or the operation to be
studied.
METHOD STUDY
PROCEDURE

“ It is defined as the application of
techniques designed to establish the work
content of a specified task by determining
the time required for carrying out the task
at a defined standard of performance by a
qualified worker”
WORK MEASUREMENT
(TIME STUDY)

DETERMINE standard time
PROVIDE time allowance for fatigue etc..
DETERMINE the basic time
MEASURE the performance of operator
BREAK the job into elements
DESCRIBE the given work for measurement
WORK MEASUREMENT
PROCEDURE

Human resource planning

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