Human Resource Planning (HRP)

Man is the key to our problems, not money. Competent people can work miracles even with small resources and draw wealth out of barren land.What is HRP?•Human resource planning is a systematic approach to ensure that the right people will be in the right place at the right time.•It is a process of deciding what positions the firm will have to fill, and how to fill them. •It is a process of determining HR needs of the organization in the context of its strategic planning.The Need for HRPTo ensure that HR is available: provide the information and data to an organization on when, where and how many employees need to be recruited.To assess the future supplies of and demands for HR: reduce shocks and disturbances within the employment patterns of large organizations.To match supplies and demands, making them compatible with the achievement of the organization’s future goals.

Needs determined by• Assessing current human resources• Analyzing corporate plans• Forecasting staffing level and categories in the light

of corporate objectives• Assessing availability of HR• Determining HR needs• Formulating HR programs to address the needs.Steps in HRP

1. Assessing Current Human Resources2. Demand Forecasting 3. Supply Forecasting4. Matching demand and supply5. Action Plan

Step 1: Assessing Current HRHR Inventory (details of workforce: something like CV

or personal history form)1. Job Analysis (details of jobs, resulting in JD and JS)

Step 2: Demand Forecasting• Estimates the number of people required in future

and their capacity.

To forecast personnel needs: – Project the demand for the product or service– Project sales and revenues– Plan the volume of production or activity level to

meet the planned sales, revenue or activity requirements

– Estimate the size of the staff required to achieve it

How to forecast personnel needs?• Staffing plans also must reflect:

Projected turnover of staff Quality and skills of employees in relation to

the changing needs of the organization Strategic decisions (eg. Upgrade quality,

enhance productivity, enter into new markets) Technological and other changes resulting in

increased productivity Financial resources

HR Forecasting Methods• Trend analysis

– Study the past staffing needs over a period of years to predict future needs.

• Ratio analysis– Use of ratios between one or more business

factors and staffing level as well as between different staff categories if the current year to forecast future needs.

• Ratio trend analysis– Use of ratios of the past years to predict

needs• Managerial judgment

– A big role– Trends, ratios and relationships unlikely to continue

unchanged– Judgment needed to modify the forecast based on

the factors that are likely or should be changed• Important modifying factors

– Strategic decisions about quality or market– Technological/managerial changes for productivity

increase

Step 3: Supply Forecasting• Internal supply forecasts2. External supply forecasts • Forecasting Internal Supply• Qualifications inventories

– Manual or computerized records listing employees’ education, career and development interests, languages, special skills etc to be used in selecting inside candidates for promotion

• Personnel inventory and development– Information is complied about each

employee manually and recorded.Forecasting Internal Supply

• Personnel replacement charts– Company records showing present

performance and profitability of inside candidates for the most important positions

• Position replacement card– A card prepared for each position in a

company to show possible replacement candidates and their qualifications

Forecasting External Supply• Monitoring general economic conditions• Local market conditions• Occupational market conditionsStep 4: Matching demand & supply• To determine future shortages or surpluses

– Additional staff will be needed to meet the shortage– Retrenchment will be needed for surplus staff

Step 5: Action PlanConcerned with the preparation of action plans to deal with

shortages and surpluses of human resource• Recruitment plan• Training and Development plan• Retention plan• Promotion plan• Redeployment plan• Redundancy plan• Transfer plan• Succession plan

• In summary• HR planning is concerned with the demand and supply of

labor and problems arising from the process of reconciling these factors.

• The need for HR planning lies with the long-term and short-term operational and growth needs of the organization but also with needs and aspirations of individuals within the organization.

• Issues to be addressed in HR Planning• How many employees does the organization currently

employ?• What is the age profile, by department, of employees?• Where in the organization are these employees to be found?• Which are the biggest departments in the organization?• What skills do the employees possess?• How many employees, on average, leave the organization

every year?• In which areas of expertise do the organization tend to loose

more employees?• HRP in Nepal• Analysis is in its infancy / Fire-fighting tendencies / Kowledge

base (ad-hoc, guess work) / Short term planning / Overstaffing (govt. & public organizations)/ Nepotism/ favouritism (private org.)

Recruitment- Review• What should we know about HR so that we can make

effective decision? “HRIS”2. What should we expect our employees to do?“JA:JD/JS”3. How many and what type of staff do we need to achieve

our organizational goals? “HRP”4. How are we going to acquire them? “RECRUITMENT”5. Whom to acquire and how to select? “SELECTION”Recruitment• Process of attracting eligible candidates.• Process of generating a pool of suitable candidates for

available jobs.• The process begins when the new recruits are sought and

ends when applications are received.Purpose of recruitment• Attract suitable candidates to apply.• Discourage unsuitable ones.• Provide job information.• Project organization image.

Alternatives to recruitment• Reorganization / Employee leasing / Outsourcing /

Internal redeployment / Technology

Recruitment process Recruitment Philosophy- Internal vs external- Job vs career- Short vs long term- Other considerations

Recruitment Evaluation- Number of jobs filled- Timeliness of jobs filled- Cost per job filled- AA goals met

Recruitment Activities- Job posting- Advertisements- Campus visits- Other methods-Follow up actions-Record keeping

Recruitment Planning- Numbers needed- JS- AA goal

Recruitment Strategy Development- Where/whom to recruit- How to recruit- Choice of recruiters- What information to share

Screening/ selecting employees

Sources & Methods of Recruitment

Internal source(within the organization)

HR Planning

Job Analysis

Legal consideration

How many?Where?What?

Internal methodJob posting

Employee referralsHR inventory

External source(outside the organization)

External methodWalk-ins

Advertisement (media)Campus visits

AgenciesTrade unions

Internal vs External Recruitment

Internal Recruitment

Advantages• Better selection (foreknowledge of candidates’ strengths and weaknesses)• Increases employee morale • Adaptability (less training & orientation required)• Cost effective

Disadvantages• Limited choice• Failed applicants become discontented• Time wasted interviewing inside candidates who will not be considered• In-breeding of status quo• Favoritism/nepotism

External Recruitment

Advantages• Greater choice for selection• Balanced HR mix • Fairness• Environmental adaptability

Disadvantages• High cost• Adaptability problems• Wrong selection

Ad Construction - The Media: selection of the best medium depends on the positions for which the firm is recruiting.

• Newspapers • Trade and professional journals• Internet job sites• Marketing programs

Constructing an effective ad• Wording related to job interest factors should evoke the

applicant’s attention, interest, desire, and action (AIDA) and create a positive impression of the firm.

• Be creative: use of ad agencies might help develop & promote company’s image.

• Executive recruiters : Headhunters

• Special employment agencies retained by employers to seek out top-management talent for their clients.

a. Contingent-based recruiters collect a fee for their services when a successful hire is completed.

b. Retained executive searchers are paid regardless of the outcome of the recruitment process.

• Internet technology and specialization trends are changing how candidates are attracted and how searches are conducted.

Recruiting Yield Pyramid

Recruiting yield pyramid– The historical arithmetic relationships between

recruitment leads and invitees, invitees and interviews, interviews and offers made, and offers made and offers accepted.

Significance of YP• YR will help to estimate the suitable candidate number

required in future.• Saves time and resource.

SelectionA process of choosing from a pool of candidates the

persons who are most likely to meet the criteria of the job.

All selection activities, from the initial screening interview to the physical examination are directed toward making effective selection decision.

Effective selection involves finding the match between organizational needs for qualified individuals & individuals’ needs jobs in which they are interested.

• Selection Decision Outcomes

Correct Decision

Reject Error

Accept Error

Correct Decision

Accept Reject

Successful

Unsuccessful

•Importance of Selection

Why careful selection is important?

Evaluate, hire, and place job applicants in the best interests of both organization & individual

High performance of employees from the beginningHigh costs for hiring (selection cost, induction and

training/development cost, labor turnover cost)Costly legal implications of incompetent hiring (negligent

hiring litigation)• How to avoid litigationCarefully scrutinizeAsk about gaps in employmentGet written authorization for reference checksSave recordsReject applicantsBalance privacy right with “need to know”Take immediate action• Key Selection MethodsApplication blankReferencesPsychometric tests (ability, aptitude, achievement,

personality, motivation)Performance/ work sample testInterview (structured, unstructured, individual, group,

situational)Assessment centre

• Choice of Selection MethodsIn choosing the right selection methods, several technical

factors need to be considered like predictors and criteria to use.

Usefulness of methods used depends on their reliability and validity.

• Test ValidityTest validity checks whether or not a test measures what it

is supposed to measure.Does the test actually measure what we need for it to

measure?2 main ways to demonstrate test’s validity:Criterion validity: positive correlations between predictor

(test scores) and criterion (performance)Content: identify task & behaviour critical to performance

and select a sample of the tasks and behaviour to be tested. If content of test correlates highly with job content then the test is content valid.

• Test ReliabilityTest reliability tests consistency or accuracy of scores

obtained by the same person when retested with the same or equivalent methods.

Are the test results stable over time?Causes of test unreliability :Focus of test / Errors on testing

•Validation of Selection MethodsJob Analysis

Identification of Predictors Identification of Criteria

Measurement of PredictorsMeasurement of Criteria

+VE Correlation Validated : Continue, Review

-VE Correlation Invalidated: Change Predictors

Correlation of Scores

• Selection Approaches

Single predictor approach :Using one piece of information

Multiple predictor approach: More than one methods being used

Multiple hurdle/ discrete: Screening of candidates at each step, Useful: large number and long selection process

Compensatory/ Comprehensive: Selection based on aggregate performance on selection tests, Useful: small number and few tests

Hybrid: Combination of both

•Effectiveness of Selection Predictors

Predictor Validity

Cost Legality

Reaction

Application blank Low Low ? Neutral

Weighted application High High High Neutral

Biographical/interest blanks

High High High Negative

Recommendation letters Low Low ? Positive

Cognitive ability tests High Low Low Negative

Job knowledge tests High High High Positive

Work sample tests High High High Positive

Assessment centers High High High Positive

Interviews (unstructured)

Low Low Low ?

Interviews (situational) High High High Positive