Human Resource Planning &Development (HRPD)

• Human Resource & People- Difference?• People become Human Resource when they

have/acquire the capacity to do work to produce goods and/or services.

• Human Resource have the qualities such as competency (Knowledge, skill &attitude), culture and commitment to do work and create productive results.

HRPD continued• Performance &Potential at work are the

criteria to distinguish Human Resource from People. Four categories of people:

• Stars- High performance & high Potential• Workhorses- High performance & less potential• Problem children- Less performance & high

potential• Deadwoods- Both performance & potential

very poor

Human Resource Planning (HRP)

• It is Planning of Human Resources.• It may be at Macro or Micro level.• It includes both Quantity as well as Quality• It is concerned with the future-Planning for

the future-• It has correlation with the economic growth

of a country, and growth &success of all organizations.

HRP at Macro level• HRP at macro level is to ensure optimal

production , economic growth and development of human resources themselves

• Rate of growth of HR at micro level is determined by two factors- Quantity and Quality- They determine the supply of HR.

• Quantity is determined by Population policy, population structure, migration and labour force participation

HRP at macro level

• Quality is determined by • Education and training• Health and nutrition, and • Equality of opportunity (social &economic

equity)• Of the above, Education &training is most

important to improve quality of HR. Hence, HRP and Educational planning are synonymous in general.

HRP at macro level• Labour market behaviour is a critical factor to

decide on the demand &utilisation of HR. For effective HRP, a comprehensive labour market information is required.

• Population, labour force &work force, Hr requirements by occupation, education &experience, wages &salary structure, formal and informal sectors of economy, job search patterns, work environment &industrial relations, stability of Government etc affect labour market.

Approaches to HRP at macro level• There are three approaches to HRP (Educational

planning)• Social demand approach: This relies on an

assessment of society’s requirement for education. It is an aggregate of individuals’ demand for education and usually assessed based on projections of past trends. Projections may be based on income of educated people, tastes &preferences for education, cost of education, demand in the labour market, demographic features such as fertility &mortality.

Approaches to HRP continued• Rate of return approach: This looks upon

education as a contributor to productivity and thus it is expected to facilitate investment decisions in education. Rate of return depends on cost of education, returns to education and discount rate.

• Returns to education may be direct monetary benefits, indirect monetary benefits and Non-monetary benefits.

Approaches to HRP continued• Man-power requirement approach: This assumes

that there is a definite relation between education and economic growth, and hence, lack of educated &skilled people (HR) will impede growth.

• In this approach, future requirement of HR (educated people) to fulfill a targeted GNP/industrial production is forecast over a given period. It may be noted that all the approaches have both limitations and benefits. Hence, an integrated approach is sometimes resorted to in educational planning &HRP.

HRP at Micro level

• HRP (at micro level) may de defined as a strategy for the acquisition, utilization, improvement and preservation of the human resources of an enterprise. This involves ensuring that the organization has always enough of the right kind of human resource at the right time and also adjusting the requirements to the available supply.

HRP continued• The major activities of HRP are:• Forecasting future demand (Requirements) of human

resource through different techniques &methods.• Inventorying /estimating present human resource

(Availability) from HRIS and other sources.• Determining the gap between demand and availability-

adequacy both quantity and quality• Planning the activities such as recruitment, selection,

training &development activities so as to ensure proper utilization &development of all human resources in the organization. Finally, evaluate plan effectiveness through audit &adjustments.

HRP continued

• HRP is an integral part of corporate planning. It may be short term, medium term or long term.

• It is synonymous with Educational planning, especially at the macro level.

• HRP forecasts demand, estimates supply and determine and adjust the gap between them in respect of HR so as to ensure that HR supply and demand are always equal, both in quantity and quality.

HRP continued

• HRP is a process by which an organization ensures that it has the right number and kinds of HR, at the right place, at the right time, capable of effectively and efficiently achieving the organizational objectives.

• It is the process of forecasting HR needs of an organization so that steps can be taken to ensure that these needs are met. It may be short term, medium term or long term HR planning.

HRP continued• It is a process of analyzing an organization's HR

needs under changing conditions and developing the activities necessary to satisfy these needs.

• It is an integrated approach to performing the planning aspects of HR function in order to have a sufficient supply of adequately developed and motivated HR to perform the duties and tasks required to meet organizational objectives and satisfy individual goals and needs.

• The terms- HRP, MPP, HRPD etc are used synonymously and interchangeably in practice.

HRP Objectives• Ensure optimum use of HR currently

employed• Forecast future skill requirements and

quantity of HR• Provide control measures to ensure that

necessary resources are available as and when required

• Make available HR in quantity and quality to achieve organizational objectives

HRP objectives continued• Other reasons for HRP include:• Link HR planning with organizational

planning• Determine recruitment levels• Anticipate redundancies• Determine training levels• Basis for MDPs• Cost manpower for new projects• Assist productivity bargaining

HRP objectives continued

• Study cost of overheads and value of service functions

• Decide on subcontracting etc• Optimum development of all HR in the

organizations• Ensure to achieve organizational and

individual objectives simultaneously

HR Planning Process at micro level• HRP process involves 5 steps:• Goals and plans of the organization: This

includes strategic planning, market conditions, technology, SWOT analysis and projected outputs for planning periods.

• Current HR situation analysis: Skills inventory, analysis of HR information- both quantity &quality and job/dept wise etc

HRP process contd• HR forecast: Demand forecast and comparison

with supply of HR. Identify gap or surplus both in quantity &quality dept/job wise.

• Implementation programme: Recruitment &selection, appraisals, career planning, training & development, compensation ,motivation , retrenchment policy etc

• Audit and adjustment: Evaluate and take corrective/adjustment measures, updating data etc

Demand forecasting• Demand forecasting may be macro/micro

level. It may be short term, medium term or long term.

• Macro forecast is done at the national/industry/regional/state levels.

• Micro forecast is done at the enterprise level• Short term-up to 2 years, Medium term-2 to

5 years and long term-5 years and above

Macro forecasting methods• Employers’ opinion method• Normative method- Using norms for manpower to

produce goods &services• Component method- Norms for individual components,

professions etc are worked out.• International studies method- Comparing norms among

different countries• MRP method- Forecast manpower requirements by

educational categories based on projected GDP. Major sector wise contributions to GDP and demands for HR are assessed here to arrive at the final figure.

Demand forecasting at micro level• Micro forecasting involves:• Evolving manning norms based on an

analysis of work load structure• Forecasting work loads• Relating work loads to manning norms• Effect of technological Changes, better

manpower utilization etc may be taken into account while arriving norms.

Forecasting Demand (work loads)• Subjective methods- Estimates based on the opinion

of experts, departmental heads, surveys among employees, Delphi method etc

• Statistical methods- Trend projections, Regression- correlation analysis, Planned productivity method, Planned output/target method , Factor analysis (Principal component analysis) etc

• Work study, work sampling/activity sampling etc. No method is error- free. Hence, a combination of different methods are used to arrive at a fairly accurate forecast of HR.

Estimation of Supply of HR

• Supply forecasting may be at macro or micro level.

• Macro forecasting may be by direct method or Indirect method at the national level. Direct method involves census count of people in each category. Indirect method is by estimating active life span, attrition rates through death, retirement, migration etc.

Supply forecasting

• At Micro level, man power supply is estimated in an organization. This is done by

• Analysis of wastages/retirements• Analysis of internal movements through

promotions, transfers etc.• Cohort analysis where a group of homogenous

employees who joined at the same time are identified and their leaving pattern is analysed graphically and other wise.

Markov Chain model

• This is a method to analyze internal movements in an organization. If systematic personnel records are maintained, the transition probabilities ( percentages of employees moving from one grade /post to another based on length of service, performance etc) can be determined through this model. Thus, an accurate forecasting of supply of HR can be made.

Markov chain model• 0-3 years 3-10 Above 10 • A

• B

• C

• Transition probabilities are estimated for each movement, thereby the employees in each level at any point of time is estimated accurately.

Data base for supply forecasting• A well defined HRIS is essential for accurate

forecasting. HRIS should have :• Personnel data module, Recruitment module,

Job experience module, Performance appraisal module, training &development modules, Compensation & promotion module, retirement & wastages module, career planning module etc. A well developed computerized HR inventory system is a prerequisite for HRP.