Unit 1 hrp

UNIT –I

INTRODUCTIONMacro and micro level manpower planning, significance, process, factors influencing.

INTRODUCTION:The success of an organization largely depends upon the

quantity and quality of Human Resources that it is able to attract &

retain. Human resources are one of the most vital assets of an

organization. It is the people who make other resources moving. The

placement of right kind of people in right numbers, at the right place

and right time is the basic function of Human Resources

management. Human Resource Planning (H RP) is a step in Human

Resource Management. The process of identifying how many people

to select, at what job and at what time is called Human Resource

planning. Human Resource Planning is to get the right number of

employees with the right skills, experience, and competencies in the

right jobs at the right time and at the minimum cost. This Human

Resource part of an organization ensures that the business

production requirements are met in an efficient and effective

manner. Having too many employees is challenging due to the risk

of high labour expenses, downsizing, or layoffs. Having too few

employees is also difficult due to high overtime costs, the risk of

unmet production requirements. Human Resource Planning is also

called as Manpower planning.

DEFINITIONS OF HUMAN RESOURCE PLANNING

According to Beach: “Human Resource Planning is the

process of determining & assuming that the organization will have

an adequate number of qualified persons available at the proper

lines, performing jobs which meet the needs of the enterprise &

which provide satisfaction for the individuals involved.

According to Stainer: “Human Resource Planning is the

strategy for the acquisition movement & preservation of an

organiation’s Human Resource.

Coleman defines Human Resource Planning as ―the process

of determining manpower requirements and the means for meeting

those requirements in order to carry out the integrated plan of the

organization.

E.W. Vetter has visualized resources planning as "a process

Prepared by M. Umrez & N. Ramanjaneyulu

by which an organisation should move from its current manpower

position to its desired manpower position. Through planning,

management strive to have the right number and right kind of people

at the right places, at the right time, doing things which result in

both the organization and the individuals receiving maximum long-

run benefit."

OBJECTIVES OF HUMAN RESOURCE PLANNING

The following are the major objectives of Human Resource Planning

in an organization are as follows:

(i) To recruit and maintain the HR of required quantity and

quality.

(ii) To predict the employee turnover and make the

arrangements for minimizing turnover and filling up of

consequent vacancies.

(iii) To meet the requirements of the programmes of expansion,

diversification etc.

(iv) To anticipate the impact of technology on work, existing

employees and future human resources requirements.

(v) To ensure optimum use of Human Resources currently

employed;

(vi) To avoid imbalances in the distribution and allocation of

Human Resources;

(vii) To provide control measure to ensure availability of

necessary resources when required;

(viii) To control the cost aspect of Human Resources;

(ix) To formulate transfer and promotion policies.

(x) To estimate the cost of HR.

Therefore, the basic idea of the function of Human Resource

Planning is to coordinate the requirements for & the availability of

different types of employees.

ACTIVITIES OF HRP:

It consists of a series of activities, listed as following ways.

1. Forecasting future manpower requirements:

Forecasting future manpower requirement is the first function of

Manpower planning. Future forecasting is based on future

requirement of people in the organization.

2. Preparing an inventory of present manpower:

The next important task in Human Resource Management is to

prepare an inventory of present Human Resources. Such inventory

contains data about each employee’s skills, abilities, work

preferences and other items of information.

3. Anticipating manpower resources:

This can done by projecting present resources into the future and

comparing the same with the forecast of manpower requirements.


This helps to determine the quantitative and qualitative adequacy of

manpower in future.

4. Meeting Manpower requirements:

This can be achieved through planning, Recruitment and selection,

training & development, introduction and placement Promotion and

transfer, motivation and compensation to ensure that future

manpower requirements are correctly met. Human Resource P is the

process of forecasting an organization’s future demand for and

supply of the right type of people in the right number. It is only after

this that the Human Resource Management department can initiate a

recruitment and selection process. In simple, Human Resource

Planning is a sub-system in the total Organizational planning.

SIGNIFICANCE OF HUMAN RESOURCE PLANNING

Human Resource Planning is considered as the way by

which management can overcome problems relating to Human

Resource by identifying the future requirements of Human Resource

of an organization and the estimates of Human Resource supply.

Organization can ensure the smooth functioning through placing the

right individual at the right time at the right job. Human Resource

Planning is important as it helps to determine future personal needs.

Surplus or deficiency in manpower strength is the result of the

absence of an effective planning mechanism working in an

organization. The following are the significances of Human

Resource Management:

i. Forecast future personnel needs:

To avoid the situations of surplus or deficiency of manpower in

future, it is important to plan manpower in advance. For this purpose

a proper forecasting of future business needs helps to ascertain

future manpower needs. Thus, HRP plays an important role to

predict the right size of manpower in the organization.

ii. Recruitment Of Talented Personnel

Another purpose of HR planning is to recruit and select the most

capable personnel to fill job vacancies. It determines human

resource needs, assesses the available HR inventory level and finally

recruits the personnel needed to perform the job.

iii. Coping with Change

Human Resource Planning enables an enterprise to cope with

changes in competitive Human Resource market place, technology

and government regulations. Such Changes generate changes in job

content, skill demands and number and type of personnel.

iv. Providing base for developing talents

Jobs are becoming highly intellectual all over the world and

individuals are getting vastly professionalized. The Human

Resource manager must use skill to attract and retain qualified


personnel within the organization.

v. Protection of weaker section of society

In employment sector sufficient representation need to be given to

SC/ST candidates, physically handicap and backward class citizen.

A well conceived personnel planning Programme would protect the

interests of such groups.

vi. Proper Utilization Of Human Resources

Human resource planning measures that the organization acquires

and utilizes the manpower effectively to achieve objectives. Human

resource planning helps in assessing and recruiting skilled human

resource. It focuses on the optimum utilization of human resource to

minimize the overall cost of production.

vii. To Meet expansion and diversification needs of the

organization:

Through the HRP the managers ensure that they have right number

and right kind of employees available for the organization

expansion, diversification and modernization

viii. Fulfill individual needs of the employees:

It helps the individual employees to satisfy their needs like

promotions, transfer, salary encashment, better benefits etc.

ix. Helps to formulate the budget:

It supports the HR to estimate the cost of human resources like

salary, and other benefits for various departments of an organization.

x. To check joblessness:

In the process of right-sizing of employees by the organization,

some of the employees may become surplus. It tries to foresee the

need for redundancy. It plans to check job loss or to provide for

alternative employment in consultation with various concerned

parties and authorities.

xi. Resistance to change

There is chance of increasing resistance among employees to

change. There is also a growing emphasis on self – evolution of

loyalty and dedication to the Organisation. A sound Human

Resource management can predict the possible resistance from

employees and to develop suitable strategies for Human Resource

development.

CHARACTERISTICS OF HRP:

i. Future Oriented

Human resource planning is prepared to assess the future

requirement of manpower in the organization. It helps identify the

size and composition of resources for future purpose.

ii. Continuous Process


Human resource planning is a continuous process. The human

resource planning prepared today may not be applicable for future

due to ever changing external forces of the environment. Hence, to

address such changing factors, the human resource planning needs

to be revised and updated continuously.

iii. Optimum Utilization Of Human Resources

Human resource planning focuses on optimum utilization of

resources in the organization. It checks how the employees are

utilized in a productive manner.

iv. Right Kinds And Numbers

Human resource planning determines the right number and kind of

people at the right time and right place who are capable of

performing the required jobs. It also assesses the future requirement

of manpower for organizational objective.

v. Determination Of Demand And Supply

Human resource planning is a process of determining demand for

and supply of human resources in the organization. Then a match

between demand and supply estimates the optimum level of

manpower.

vi. Environmental Influence

Human resource planning is influenced by environmental changes,

hence, it is to be updated as per the change occupied in the external

environment.

vii. A Part Of Human Resource Management System

As a part of total human resource management system, human

resource planning is regarded as a component or element of HRM

which is concerned with acquisition anD assessment of manpower.

It serves as a foundation for the management of human resource in

an effective and efficient manner.

LEVELS OF HRP:

Human Resource planning is required at different levels. Such as:

National level

Sectoral level

Industry level

Unit level

Department level.

Job level

National Level: It anticipates the demand and supply of human

resources at national level, generally done by central government.

Sectoral level: Central and state governments also plan human

resource requirements at sectoral level. It tries to satisfy needs of


different sectors like agriculture sector, Industrial sector and service

sector.

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,

cement industry, chemical industry etc.

Unit Level: It estimates the need of human resources of an

organization or company.

Departmental Level: It represents the needs of a particular

department in a company. Ex: production department, marketing

department, Finance department, HR department etc.

Job Level: This level of planning fulfills the human resource needs

of a particular job family within department. For example, the

requirements of number of HRs in the HR department.

These levels can be broadly classified into two levels. Macro and

micro level

MICRO LEVEL MANPOWER PLANNING:

It is the process of manpower planning at the organization or

department level i.e, at unit level. Develops and implements the

tactics needed to help the organization achieve its strategic

objectives. Micro HRP tactics ensure that the business has the

appropriate number of employees with the appropriate mix of

knowledge, skills and abilities in the proper areas or departments.

Stages in Micro level HRP:

i. Investigation stage

ii. Forecasting stage

iii. Planning and control of Manpower

iv. Utilization

i. Investigation: It is the primary stage of HRP in any

organization try to develop their awareness about the detailed

manpower scenario with a holistic view looking at their current

manpower. In investigation SWOT analysis plays a very important

role.

ii. Forecasting: The next process is forecasting based on

manpower analysis of demand and supply. In forecasting Internal

and External factors include – In Internal factors is career planning,

development, training and succession plan, policies procedure etc. In

external factor – Political, Technical, Economic, Social etc.

Forecasting means what is to be done.

iii. Planning and Control of Manpower: Third stage is very

important. HRP related issues like recruitment, training and

development. While going for recruitment it is necessary to

understand the job description, which proceed job analysis & job


role under planning important in skills, knowledge etc. under

controlling include Important judgment technique – Delphi,

Nominal etc.

iv. Utilization: HRP process success is measured in terms of

achievement trend, both quantitatively and qualitatively. While

quantitative achievement is visible from productivity trend,

manpower cost etc. Qualitative achievement is a subjective appraisal

on achievement of organizational objectives.

MACRO LEVEL MANPOWER PLANNING:

It is a manpower planning conducted at the aggregate level like

national or state level. Manpower planning at this level is influenced

by various uncontrollable factors like demographical changes, legal,

political, economical etc. Macro manpower planning is required for

the economical development of a country for a long term.

Need for HRP at Macro Level:

i. Employment-Unemployment Situation: In the present

economy the number of educated unemployed is increasing and

on the other hand there are acute shortages for a variety of

required skills. Therefore an intensive macro level manpower

planning can help in this direction in order to bridge the gap

between employments –unemployment Scenario.

ii. Technological Changes: The rate of change of technologies

in production, marketing methods and management techniques

has been extensive and rapid in outside world. In order to adopt

the change of technology in accordance with global trend,

necessitate high degree of extensive Macro level Manpower

Planning.

iii. Organizational Changes: The turbulent business

environment affected by global economic cycle and

discontinuities, the nature and pace of changes in organizational

environment in terms of its activities and structures affect

manpower requirements that require strategic considerations at

Macro level.

iv. Demographic Changes: The changing profile of the work

forces in the economy, in terms of age, sex, literacy level,

technical competency and social background have implications

for macro level HRP.

v. Skill Shortages: There are acute skill shortages in labour

market. Unemployment does not mean that the labour market is

a buyer’s market. Organizations have generally become more

complex and require a wide range of specialist skills that are

rare and scarce. These skill gaps can be bridged by proper

Macro level Manpower Planning.


vi. Government legislation: Macro level manpower planning

must go hand in hand in a very systematic way in accordance

with Government control and changes in legislation.

vii. Lead Time: The long lead time is the gestation period

required to provide education and training and deployment of

the employees to handle new knowledge and skills successfully

can be avoided by Macro level Manpower Planning.

The development at this level will takes place through population

planning and control, literacy and education, health and medical care

and housing etc.,

A. Population planning and control:

To enforce control over population explosion to avert economic

imbalances, population planning and control measures have been

initiated at macro level. Unless such control is enforced in a planned

manner, no amount of institutional support can sustain this resulting

in generation of unproductive population which will remain a drain

on the national resource.

Ex: Government of India has adopted National Population Policy

(2000) to stabilize population.

B. Literacy and education:

The development of human resources will takes place when the

illiteracy rate is reduced and the all the individuals should have

minimum education. This level of education can be possible with the

support of public and private sectors. This can be achieved by right

direction i.e, from focusing from primary education (standard V) to

secondary education, higher education and university level,

technological, vocational education, adult education. The

educational development of human resources reflects the

development at aggregate level.

Ex: Government of India adopted the National policy of education,

1986.

C. Health and medical care:

The quality of work life of individuals of a society depends on

health and medical facilities. The individuals at macro level should

get the health related activities such as water supply, sanitation etc.

The provision of medical facilities should be increased to avoid the

dangerous diseases like malaria, leprosy, blindness, AIDS, cancer

etc.

D. Housing:

The infrastructure of a society will shows the development of human

resources. The basic objective of this is to provide sustainable

development to the human resources with public and private

participation.


Ex: Government of India adopted National Housing and Habitat

Policy, 1998, Housing and Urban Development Corporation

(HUDCO) . Jawahar Gram Samridhi Yojana(JGSY), Nehru Rozgar

Yojana (NRY), Prime Minister’s Rozgar Yojana etc.

FACTORS INFLUENCING HRP:

i. Type and strategy of organization:

Based on the type of organization and its strategies the HR planner

will decide the take the decision regarding the type of manpower

required, timing to conduct HRP, decision about the number of

employees etc.

Strategy Decision

Manufacturing unit complex manpower

service oriented unit customer supportive

Internal growth Additional employees required

External growth Layoff

(M& A)

Proactive Advance planning

Reactive Emergency placement

ii. Organizational growth cycles and planning:

The effectiveness of manpower planning and its associate decisions

will be influenced by the stage of organization.

Stage HRP decision

Introduction No need to have effective plan

Growth More manpower required

Maturity Retirements, retrenchment

Decline layoffs, VRS, Retirements,

retrenchment

iii. Environmental uncertainties:

Uncertainties due to political, economical, social, cultural ,

technological factors etc., HR planner can reduces these

uncertainties through recruitment, selection, training and

development, layoffs, retirement, VRS, succession planning

iv. Time Horizons:

Manpower planning can be done for different time periods. i.e, short

run and long run.

HR planner makes short run (6 months or 1 yr) planning

when there are more uncertainties in a business. Such as

Many new competitors enter into the market

Rapid changes in social and economical conditions

Changes in demand for the goods/services

Small organizations, poor management

Manpower planning can also be made for a long period of time(3-25

yrs) when the business is stable and it has

Strong competitive position


Evolutionary social, political and technological changes

Stable demand

Strong management practices

v. Type and quality of information:

Hr planner collects the information from various sources to know

the uncertainties and to forecast the need of manpower according to

that. The quality and accurate data gives clarity to the decision

maker to understand the strategy (uncertainty) and helps to prepare

plans.

For example, vacancy for a position by the retirement of an

employee. The HR should predict it in advance. The HR may collect

this information from the employee records, HRIS, other employees.

The information from the other employees may not be reliable

always. Thus, the HR should select a reliable source to get the

information about internal organization and external market.

vi. Nature of job:

A job vacancy in different levels of an organization may arises

because of promotion, demotion, transfer, separation of an

employee. Depending upon the level and nature of the job the

planner puts his efforts. If the job is in the higher level then the HR

planner should anticipate it in advance and for lower level no need

to have any type of planning about the manpower and vacancies.

vii. Outsourcing:

Outsourcing is process by which an organization will assign or

involve a third party to perform some of their business operations.

The need of manpower planning depends upon the extend to which

the organization outsourcing its operations.

PROCESS OF HUMAN RESOURCE PLANNING

The following are the major steps involved in Human Resource

Planning.

1. Analysis of Organizational Plans and Objectives

Human Resource planning is a part of overall plan of a business

organisation. Plans relating to technology, production, marketing,

finance, expansion and diversification give an idea about the volume

of future work activity. Each plan can further be analyzed into sub-

plans and detailed programmes. It is also important to decide the

time horizon for which Human Resource plans are to be prepared.

The future organization structure and job design should be made

clear and changes in the organization structure should be examined

so as to anticipate its Human Resource requirements in future.

2. Forecasting Demand for Human Resources

Demand analysis identifies the future human resource requirements

needed to maintain the organization’s mission and goals. The end

result of a demand analysis is the identification of the required


number of employees in an organization and the necessary functions

that the employee must perform to meet organizational objectives.

Due to the high number of factors that influence demand, demand is

often more difficult to predict than supply.

HR demand forecasting techniques:

i. Managerial Judgment

ii. Ratio Trend Analysis

iii. Work load analysis

iv. Econometric Models

v. Delphi technique

i. Managerial Judgment:

Managerial judgment technique is very common technique of

demand forecasting. This approach is applied by small as well as

large scale organisations. This technique involves two types of

approaches i.e. 'bottom-up approach' and 'top-down approach'.

Bottom-up approach, line mangers send their departmental

requirement of human resources to top management. Top

management ultimately forecasts the human resource requirement

for the overall organisation on the basis of proposals of departmental

heads.

Top-down approach, top management forecasts the human

resource requirement for the entire organisation and various

departments. This information is supplied to various departmental

heads for their review and approval.

However, a combination of both the approaches i.e. 'Participative

Approach' should be applied for demand forecasting. Under this

approach, top management and departmental heads meet and decide

about the future human resource requirement. So, demand of human

resources can be forecasted with unanimity under this approach.

ii. Ratio Trends Analysis:

Under this method the ratios are calculated for the past data related

to number of employees of each category i.e. production, sales and

marketing levels, work load levels. Future production and sales

levels, work load, activity levels are estimated with an allowance of

changes in organization, methods and jobs. The future ratios are

estimated. Then future human resources requirement is calculated on

the basis of established ratios. This method is easy to understand.

iii. Workload analysis:

Under this method the staff workload and the continuity of

operations are determined. Accordingly the labour requirement is

determined. The workload becomes the base for workforce analysis

for the forthcoming years. Here due consideration is given to

absenteeism and labour turnover. This method is also known as

work study technique. Here working capacity of each employee is


calculated in terms of man-hours. Man-hours required for each unit

is calculated and then number of required employees is calculated.

The example is given below:

Planned annual production = 2, 00,000 units

Standard man-hours required for each unit = 2 Hours

Planned man-hour needed for the year (a x b) = 4, 00,000 hrs.

Planned annual contribution of an employee = 2000 hrs.

No. of employees required ————- (c/d) = 4, 00,000/2000 = 200

This method is useful for long term forecasting.

iv. Econometric Models:

Econometric models are built on the basis of analysis of past

statistical data establishing the relationship between variables in a

mathematical formula. The variables are those factors such as

production, sales, finance and other activities affecting human

resource requirement. Econometric model is used to forecast human

resource requirements based on various variables.

v. Delphi Technique:

Delphi technique is also very important technique used for

estimating demand of human resources. This technique takes into

consideration human resources requirements given by a group of

experts i.e. mangers. The human resource experts collect the

manpower needs, summarises the various responses and prepare a

report. This process is continued until all experts agree on estimated

human resources requirement.

Factors influencing demand forecasting:

Environmental scanning, including economic, legislative,

and competitive pressures.

The organization’s future strategic goals and plans

Expected demand for products or services, including

expected sales (across the organization or at the business

unit level)

Estimated productivity measures of workforce (can be

stable, increase, or decrease)

Organizational design or job design, including technological

advancements and administrative changes

Projected budgets or financial resource availability

New products/processes/ventures that the organization will

be launching in the future.

3. Forecasting Supply of Human Resources:

By reviewing the data in the Human Resource audits, projections

can be made for future Human Resource supply. The internal labor

force may be affected by temporary absences such as leaves,

permanent absences or turnover etc.

Trend Analysis


Trend analysis is considered one of the simplest methods of

forecasting future Human Resource supply. It assumes that past

trends and ratios in employee movement are stable and indicative of

future trends and ratios in employee movement. The information

collected in the Human Resource audit is used to identify labor

patterns—hiring patterns, retirement patterns, productivity patterns,

and turnover patterns. By examining the trends of the past, the

Human Resource 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.

Skills/Competency Models

Competency models focus on matching the right skills or

competencies needed for each job with the skills available within the

organization. The competency models focus on identifying the

skills/competency supply within the organization, and helping focus

future recruitment, selection, retention, and training activity in core

areas of key competencies needed for the organization to succeed.

A competency is a set of behaviours that encompass skills,

knowledge, abilities,

and personal attributes, that taken together, are critical to successful

work accomplishment.

The competency model is 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 those competencies.

Replacement Charts

A replacement chart is used to estimate vacancies in higher

level jobs and identify how potential Human Resource supply can

fill these vacancies via internal movements from lower levels jobs.

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.

Staffing Tables

A staffing table provides a clear graphical view of all

organizational jobs and the current number of employees at each

job. It presents a simple visual understanding of an organization’s

staffing level within each department and the organization as a

whole, in an effort to help understand the combination of employees

that make up an organization’s internal workforce. This information

is useful in evaluating staffing levels by department, branch, the

types of staff at each level and the combination of staff in all

categories.


4. Estimating Manpower Gaps

Net Human Resource requirements gaps can be identified by

comparing demand and supply forecasts.

5. Matching Demand and Supply

It is one of the objectives of Human Resource planning

to assess the demand for and supply of Human Resources and

match both to know shortages and surpluses on both the side in

kind and in number. This will enable the Human Resource

department to know overstaffing or understaffing. Once the

manpower gaps are identified, plans are prepared to bridge

these gaps. Plans to meet the surplus manpower may be

redeployment in other departments and retrenchment in

consultation, with the trade unions. People may be persuaded to

quit voluntarily retirement. Deficit can be met through Human

Resource planning ,recruitment, selection, transfer, promotion,

and training plans. Realistic plans for the procurement and

development of manpower should be made after considering

the macro and micro environment which affect the manpower

objectives of the organization.


Unit 1 hrp

Business

Transcript of Unit 1 hrp