EMBA, LECTURE-3EMBA, LECTURE-3HUMAN RESOURCE PLANNINGHUMAN RESOURCE PLANNING

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IntroductionIntroduction

Human Resource Planning is Human Resource Planning is concerned with the flow of concerned with the flow of people into, through, and out of people into, through, and out of an organisation. HR planning an organisation. HR planning necessarily involves a focus on necessarily involves a focus on employees, changing skill levels employees, changing skill levels and the way in which those skills and the way in which those skills match organisational needsmatch organisational needs

Definition:Definition:The systematic and continuing The systematic and continuing process of analysing an organisation's process of analysing an organisation's human resource needs under human resource needs under changing conditions and developing changing conditions and developing personnel policies appropriate to the personnel policies appropriate to the long term effectiveness of the long term effectiveness of the organisation. It is an integral part of organisation. It is an integral part of corporate planning and budgeting corporate planning and budgeting procedures since HR costs and procedures since HR costs and forecasts both affect and affected by forecasts both affect and affected by long-term corporate planslong-term corporate plans

ROLE OF HUMAN RESOURCE PLANNINGROLE OF HUMAN RESOURCE PLANNING

To determine and facilitate the levels To determine and facilitate the levels and types of recruitment that may be and types of recruitment that may be requiredrequiredTo assess current levels and attributes To assess current levels and attributes of staffing and determine whether of staffing and determine whether reductions are necessaryreductions are necessaryTo assess whether redeployment can To assess whether redeployment can be used as an alternative to downsizingbe used as an alternative to downsizingTo identify the need for training and To identify the need for training and developmentdevelopmentTo assess current employment costs in To assess current employment costs in relation to other organisational costsrelation to other organisational costs..

HARD AND SOFT HR PLANNINGHARD AND SOFT HR PLANNING

HARD HRPHARD HRP SOFT HRPSOFT HRP

ForecastingForecasting Define where the Define where the company is nowcompany is now

AnalysisAnalysis

Monitoring and Monitoring and reviewreview

Define where it wants to Define where it wants to be in the futurebe in the future

Analysing the external Analysing the external environment, influences environment, influences and trendsand trends

Formulating plans to Formulating plans to implement necessary implement necessary changeschanges

HUMAN RESOURCE PLANNINGHUMAN RESOURCE PLANNING

Right number of people with right skills Right number of people with right skills at right place at right time to implement at right place at right time to implement organizational strategies in order to organizational strategies in order to achieve organizational objectivesachieve organizational objectivesIn light of the organization’s objectives, In light of the organization’s objectives, corporate and business level strategies, corporate and business level strategies, HRP is the process of analyzing an HRP is the process of analyzing an organization’s human resource needs organization’s human resource needs and developing plans, policies, and and developing plans, policies, and systems to satisfy those needssystems to satisfy those needs

HUMAN RESOURCE PLANNINGHUMAN RESOURCE PLANNING

Setting human resource Setting human resource objectives and deciding how to objectives and deciding how to meet themmeet them

Ensuring HR resource supply Ensuring HR resource supply meets human resource demands meets human resource demands

HRP ProcessHRP ProcessInterfacing with strategic planning Interfacing with strategic planning and scanning the environmentand scanning the environment

Taking an inventory of the Taking an inventory of the company’s current human resourcescompany’s current human resources

Forecasting demand for human Forecasting demand for human resourcesresources

Forecasting the supply of HR from Forecasting the supply of HR from within the organization and in the within the organization and in the external labor marketexternal labor market

HRP Process Cont.HRP Process Cont.

Comparing forecasts of demand Comparing forecasts of demand and supplyand supply

Planning the actions needed to Planning the actions needed to deal with anticipated shortage or deal with anticipated shortage or overagesoverages

Feeding back such information Feeding back such information into the strategic planning into the strategic planning process.process.

THE PROCESS OF HRPTHE PROCESS OF HRP1.1. COLLECT INFORMATION & ANALYSIS OF EXISTING COLLECT INFORMATION & ANALYSIS OF EXISTING

RESOURCESRESOURCES2.2. FORECAST DEMAND FOR HUMAN RESOURCESFORECAST DEMAND FOR HUMAN RESOURCES

-SHORT AND LONG TERM-SHORT AND LONG TERM-AGGREGATE OR INDIVIDUAL POSITIONS-AGGREGATE OR INDIVIDUAL POSITIONS

3.3. FORECAST SUPPLY OF HUMAN RESOURCESFORECAST SUPPLY OF HUMAN RESOURCES-INTERNAL SUPPLY-INTERNAL SUPPLY-EXTERNAL SUPPLY-EXTERNAL SUPPLY

4.4. PLAN AND CONDUCT NEEDED PROGRAMSPLAN AND CONDUCT NEEDED PROGRAMS-Increase or reduce workforce size-Increase or reduce workforce size-change skill mix-change skill mix-develop managerial succession plans-develop managerial succession plans-develop career plans-develop career plans

5.5. MONITORING THE IMPLEMENTATION OF THE PLANMONITORING THE IMPLEMENTATION OF THE PLAN-Where the forecasts accurate?-Where the forecasts accurate?-Did the programs meet the needs?-Did the programs meet the needs?

1. ANALYSIS OF THE WORKFORCE1. ANALYSIS OF THE WORKFORCE

INVENTORIES OF THE EXISTING WORKFORCEINVENTORIES OF THE EXISTING WORKFORCE

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

MOVEMENT OF EMPLOYEES-promotions and transfersMOVEMENT OF EMPLOYEES-promotions and transfers

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

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

COSTS-to know at which point recruitment becomes COSTS-to know at which point recruitment becomes most cost-effective than increased overtime working.most cost-effective than increased overtime working.

2. FORECASTING THE DEMAND FOR HR2. FORECASTING THE DEMAND FOR HR

Demand forecasting methods can be divided Demand forecasting methods can be divided into two categoriesinto two categories

1.1. JUDGEMENTAL METHODJUDGEMENTAL METHOD

2.2. MATHMATICAL METHODSMATHMATICAL METHODS

JUDGEMENTAL METHODSJUDGEMENTAL METHODS

-Bottom up or Unit Forecasting-Bottom up or Unit Forecasting

-Top down Forecasting-Top down Forecasting

-Delphi technique-Delphi technique

MATHEMATICAL METHODSMATHEMATICAL METHODS

-Productivity ratio:-Productivity ratio:

-Direct to Indirect staffing ratio-Direct to Indirect staffing ratio

3.FORECAST SUPPLY OF HR3.FORECAST SUPPLY OF HR

1.1. THE INTERNAL SUPPLY OF LABOURTHE INTERNAL SUPPLY OF LABOUR

2.2. THE EXTERNAL SUPPLY OF LABOURTHE EXTERNAL SUPPLY OF LABOUR

-The external labour market-The external labour market

-demographic change-demographic change

-labour immobility-labour immobility

-early retirement-early retirement

-Changing employment patterns(e.g robotics -Changing employment patterns(e.g robotics in car manufacture, computer aided in car manufacture, computer aided design/manufacture,JIT, e-commerce)design/manufacture,JIT, e-commerce)

-Changing patterns of work (e.g part-time -Changing patterns of work (e.g part-time workers, flexible workforce etc)workers, flexible workforce etc)

4. PLANNINH HR PROGRAMS4. PLANNINH HR PROGRAMS

1.1. Staff/skill shortagesStaff/skill shortages-promoting existing staff, Redeployment of staff, -promoting existing staff, Redeployment of staff, trainingtraining-getting more from existing staff, Job design-getting more from existing staff, Job design-External recruitment-External recruitment

2.2. Staff surplusesStaff surpluses-stopping recruitment-stopping recruitment-Natural wastage, transfer, early retirements, -Natural wastage, transfer, early retirements, Reducing overtimeReducing overtime-Short-time working, redundancy, reducing -Short-time working, redundancy, reducing subcontracted worksubcontracted work

3. Managerial succession planning3. Managerial succession planning4.4. Career planningCareer planning5.5. Organisation and structure plansOrganisation and structure plans6.6. Performance planningPerformance planning

5. 5. IMPLEMENTATION OF THE PLANIMPLEMENTATION OF THE PLAN1.1. ACQUISITION STRATEGIES: Which define how ACQUISITION STRATEGIES: Which define how

the resources required to meet forecast the resources required to meet forecast needs will be obtainedneeds will be obtained

2.2. RETANTION STRATEGIES: Which indicate how RETANTION STRATEGIES: Which indicate how the organisation intends to keep the people it the organisation intends to keep the people it wants.wants.

3.3. DEVELOPMENT STRATEGIES:Training and DEVELOPMENT STRATEGIES:Training and development programmesdevelopment programmes

4.4. UTILISATION STRATEGIES: which indicate UTILISATION STRATEGIES: which indicate intentions to improve productivity and cost-intentions to improve productivity and cost-effectiveness.effectiveness.

5.5. FLEXIBILITY STRATEGIES: How the FLEXIBILITY STRATEGIES: How the organisation can develop more flexible work organisation can develop more flexible work arrangements.arrangements.

6.6. DOWNSIZING STRATEGIES: Which define what DOWNSIZING STRATEGIES: Which define what needs to be done to reduce the numbers needs to be done to reduce the numbers employedemployed

Example of the Basic Human Resource Planning ModelExample of the Basic Human Resource Planning Model

Open new product line

Open new factory and distribution

system

Develop staffing for new installation

•Production workers

•Supervisors

•Technical staff

•Other managers

Recruiting and training programs feasible

Transfers infeasible because of lack of managers with right skills

Recruit skilled workers

Develop technical training programs

Transfer managers from other facilities

Develop new objectives and plans

Recruit managers from outside

Too costly to hire from outside

1 2 3

4

3

5

Link 1:Link 1: Determine Demand Determine Demand (labor requirements) (labor requirements)

How many people need to be working and in How many people need to be working and in what jobs to implement organizational what jobs to implement organizational strategies and attain organizational strategies and attain organizational objectives.objectives.Involves forecasting HR needs based on Involves forecasting HR needs based on organizational objectivesorganizational objectivesInvolves consideration of alternative Involves consideration of alternative ways of organizing jobs (job design, ways of organizing jobs (job design, organizational design or staffing jobs)organizational design or staffing jobs)Example - Peak production could be handled by temporary Example - Peak production could be handled by temporary workers or assigning overtime. Machine breakdowns assigned workers or assigning overtime. Machine breakdowns assigned to maintenance department or handled by machine operatorsto maintenance department or handled by machine operators

Link 2:Link 2: Determine HR SupplyDetermine HR Supply (availability)(availability)

Choose HRM programs (supply)Choose HRM programs (supply)

Involves forecasting or predicting effect of Involves forecasting or predicting effect of various HR programs on employee flowing into, various HR programs on employee flowing into, through and out various job classifications.through and out various job classifications.

First determine how well existing programs are First determine how well existing programs are doing then forecast what additional programs or doing then forecast what additional programs or combination of programs will docombination of programs will do

Need to know capabilities of various Need to know capabilities of various programs and program combinationsprograms and program combinations

Determine FeasibilityDetermine Feasibility Links 3 & 4Links 3 & 4

Capable of being done Capable of being done – Requires knowledge of programs, how Requires knowledge of programs, how

programs fit together and external programs fit together and external environmental constraints (e.g., labor environmental constraints (e.g., labor force, labor unions, technology created force, labor unions, technology created skill shortages) and internal skill shortages) and internal environmental constraints (skill shortages environmental constraints (skill shortages within the organization, financial within the organization, financial resources, managerial attitudes, culture)resources, managerial attitudes, culture)

Do the benefits outweigh the costsDo the benefits outweigh the costs– Difficulty in quantifying costs and benefitsDifficulty in quantifying costs and benefits

Revise Organizational Revise Organizational Objectives and Strategies Objectives and Strategies

Link 5Link 5If no feasible HR program can be If no feasible HR program can be

devised, the organization must revise devised, the organization must revise strategic plans.strategic plans.

Human Resource Human Resource ForecastingForecasting

Process of projecting the organization’s Process of projecting the organization’s future HR needs (demand) and how it will future HR needs (demand) and how it will meet those needs (supply) under a given meet those needs (supply) under a given set of set of assumptionsassumptions about the organization’s about the organization’s policies and the environmental conditions policies and the environmental conditions in which it operates.in which it operates.

Without forecasting cannot assess the Without forecasting cannot assess the disparity between supply and demand nor disparity between supply and demand nor how effective an HR program is in reducing how effective an HR program is in reducing the disparity. the disparity.

Shortcomings of the model - Shortcomings of the model - HRP in PracticeHRP in Practice

Oversimplification of the benefit of Oversimplification of the benefit of planning is the specific plans that resultplanning is the specific plans that result– Planning process has value in and of itselfPlanning process has value in and of itself

HRP in practice is usually less rational and HRP in practice is usually less rational and may omit one or more of the stepsmay omit one or more of the steps– May lack knowledge required for forecastingMay lack knowledge required for forecasting– Incorrect assumptions about effectiveness of Incorrect assumptions about effectiveness of

HR programsHR programs– Does not engage in strategic planningDoes not engage in strategic planning– Resistance to change present HR systemsResistance to change present HR systems

HRP should be:HRP should be:Done to guide and coordinate all HR Done to guide and coordinate all HR activities so they work together to support activities so they work together to support the overall strategythe overall strategy

Responsive to internal and external Responsive to internal and external environmentenvironment

Planning - done in advancePlanning - done in advance

Strategic - linked with higher level planning Strategic - linked with higher level planning

Human Resource Human Resource ForecastingForecasting

Process of projecting the organization’s Process of projecting the organization’s future HR needs (demand) and how it will future HR needs (demand) and how it will meet those needs (supply) under a given meet those needs (supply) under a given set of set of assumptionsassumptions about the organization’s about the organization’s policies and the environmental conditions policies and the environmental conditions in which it operates.in which it operates.

Without forecasting cannot assess the Without forecasting cannot assess the disparity between supply and demand nor disparity between supply and demand nor how effective an HR program is in reducing how effective an HR program is in reducing the disparity. the disparity.

Forecasting as a Part of Human Resource Forecasting as a Part of Human Resource PlanningPlanning

DEMAND FORECASTING

SUPPLY FORECASTING

Determine organizational

objectives

Demand forecast for

each objective

Aggregate demand forecast

Does aggregate supply meetaggregatedemand?

Go to feasibility analysis steps

Choose human resource programs

External programs

•Recruiting

•External selection

•Executive exchange

Internal programs

•Promotion

•Transfer

•Career planning

•Training

•Turnover control

Internal supply forecast External supply forecast

Aggregate supply forecast

No

Yes

Internal Supply Forecasting Internal Supply Forecasting InformationInformation

Organizational features (e.g., Organizational features (e.g., staffing capabilities)staffing capabilities)

Productivity - rates of productivity, Productivity - rates of productivity, productivity changesproductivity changes

Rates of promotion, demotion, Rates of promotion, demotion, transfer and turnovertransfer and turnover

External Supply ForecastingExternal Supply ForecastingInformationInformation

External labor market factors External labor market factors (retirements, mobility, education, (retirements, mobility, education, unemployment)unemployment)

Controllable company factors on Controllable company factors on external factors (entry-level external factors (entry-level openings, recruiting, openings, recruiting, compensation)compensation)

Demand ForecastingDemand ForecastingInformationInformation

Organizational and unit Organizational and unit strategic plansstrategic plans

Size of organizationSize of organization

Staff and Managerial SupportStaff and Managerial Support

Organizational designOrganizational design

Considerations in Considerations in Establishing a Forecasting Establishing a Forecasting

SystemSystem

How sophisticatedHow sophisticated

Appropriate time frameAppropriate time frame

Subjective versus objective Subjective versus objective forecasting methodsforecasting methods

System SophisticationSystem SophisticationOrganizational sizeOrganizational size– large organizations require more complex large organizations require more complex

forecasting systems and likely to have the required forecasting systems and likely to have the required skilled staffskilled staff

Organizational complexity Organizational complexity – complex career paths and diverse skill requirements complex career paths and diverse skill requirements

lead to more complex forecasting systemslead to more complex forecasting systems

Organizational objectivesOrganizational objectives– the greater the gap between current HR situation the greater the gap between current HR situation

and desired HR situation the more sophisticated the and desired HR situation the more sophisticated the systemsystem

Organizational plans and strategiesOrganizational plans and strategies– the complex the plans are the more complex the the complex the plans are the more complex the

forecasting systemforecasting system

Forecasting Time FrameForecasting Time FrameDepends on degree of environmental Depends on degree of environmental

uncertaintyuncertainty

Factors creating uncertainty Factors creating uncertainty (shortening time frame)(shortening time frame)– many new competitors, changes in many new competitors, changes in

technology, changes in social, political and technology, changes in social, political and economic climate, unstable product demandeconomic climate, unstable product demand

Factors promoting stability (longer Factors promoting stability (longer time frame)time frame)– strong competitive position, slowly developing strong competitive position, slowly developing

technology, stable product demand. technology, stable product demand.

Supply Forecasting MethodsSupply Forecasting Methods

Skills InventorySkills InventoryReplacement ChartsReplacement ChartsSuccession PlanningSuccession PlanningComputer SimulationsComputer Simulations