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Human Human Resource Resource PlanningPlanning

PGP 2007-09

Human Resource Planning (HRP)

Is the first component of HRM strategyAll other functional HR activities are derived

from and flow out of the HRP process.Has its basis in considerations of future HR

requirements in light of present HR capabilities and capacities.

Is proactive in anticipating and preparing flexible responses to changing HR requirements.

Has both an internal and external focus.

PGP 2007-09

Human Resource PlanningDefinition: Acc to Stainer “Strategy for acquisition, utilization

improvement and preservation of enterprises human resources”

Beatty And Schneier defines it as a sequential process embodying the following five elements-

1.Imputs into HRP 2. Analysis of existing HR 3. Forecast of future HR needs 4. Implementing HR plan 5. Evaluation and redesign of the HR Plan

PGP 2007-09

HRP and Strategic Planning

Strategic Analysis What human resources are needed and

what are available? Strategic Formulation

What is required and necessary in support of human resources?

Strategic Implementation How will the human resources be allocated?

Human Human Resource Resource PlanningPlanning

Human Human Resource Resource PlanningPlanning

StrategicStrategicPlanningPlanning

StrategicStrategicPlanningPlanning

PGP 2007-09

HR Planning Issues

Staffing Questions: How do we manage staffing in times of

recession or expansion? What impact does technology change,

mergers or relocation have on staffing issues?

Do we always have the right people in the right jobs at the right time?

How do we get our human resources: buy them or make them or both?

PGP 2007-09

Major Objectives of HRP Preventing understaffing and overstaffing Ensure the organisation has the right

employees with the right skills at the right place at the right time

Ensure the organisation is responsive to changes in its environment

Provide direction and coherence to all HR activities and systems

PGP 2007-09

Types of Planning

Aggregate Planning Anticipating the needs for groups of

employees in specific, usually lower level jobs and the general skills employees will need to ensure sustained high performance.

Succession Planning Focuses on ensuring that key individual

management positions in the organization remain filled with individuals who provide the best fit for these critical positions.

PGP 2007-09

HRP and Environmental Scanning

Environmental Scanning The systematic monitoring of the

major external forces influencing the organization. Economic factors Competitive trends Technological changes Political and legislative issues Social concerns Demographic trends

PGP 2007-09

Scanning the Internal Environment Cultural Audits

Audits of the culture and quality of work life in an organization. How do employees spend their time? How do they interact with each other? Are employees empowered? What is the predominant leadership style of

managers? Benchmarking

The process of comparing the organization’s processes and practices with those of other companies.

PGP 2007-09

FORECASTING DEMANDFORECASTING DEMANDFORECASTING DEMANDFORECASTING DEMAND

Human Resource Planning Model

ConsiderationsConsiderations• TechnologyTechnology• Financial resourcesFinancial resources• Organizational growthOrganizational growth• Mgmt. philosophyMgmt. philosophy

ConsiderationsConsiderations• TechnologyTechnology• Financial resourcesFinancial resources• Organizational growthOrganizational growth• Mgmt. philosophyMgmt. philosophy

TechniquesTechniques• Trend analysisTrend analysis• Managerial Managerial

estimatesestimates• Delphi techniqueDelphi technique

TechniquesTechniques• Trend analysisTrend analysis• Managerial Managerial

estimatesestimates• Delphi techniqueDelphi technique

TechniquesTechniques• HR inventoriesHR inventories• Markov analysisMarkov analysis• Skill inventoriesSkill inventories• Replacement chartsReplacement charts• Succession PlanningSuccession Planning

TechniquesTechniques• HR inventoriesHR inventories• Markov analysisMarkov analysis• Skill inventoriesSkill inventories• Replacement chartsReplacement charts• Succession PlanningSuccession Planning

External External ConsiderationsConsiderations• Wkforce changesWkforce changes• MobilityMobility• Govt policiesGovt policies• UnemploymentUnemployment

External External ConsiderationsConsiderations• Wkforce changesWkforce changes• MobilityMobility• Govt policiesGovt policies• UnemploymentUnemployment

FORECASTING SUPPLYFORECASTING SUPPLYFORECASTING SUPPLYFORECASTING SUPPLY

BALANCING BALANCING SUPPLY AND SUPPLY AND

DEMANDDEMAND

BALANCING BALANCING SUPPLY AND SUPPLY AND

DEMANDDEMAND

(Shortage) (Shortage) RecruitmentRecruitment

Full-time / Part-timeFull-time / Part-time

(Shortage) (Shortage) RecruitmentRecruitment

Full-time / Part-timeFull-time / Part-time

(Surplus) (Surplus) ReductionsReductions

• LayoffsLayoffs• TerminationsTerminations• DemotionsDemotions• RetirementsRetirements

(Surplus) (Surplus) ReductionsReductions

• LayoffsLayoffs• TerminationsTerminations• DemotionsDemotions• RetirementsRetirements

PGP 2007-09

Quantitative Approach: Trend Analysis

Forecasting labor demand based on an organizational index: Select a business factor, e.g. sales, that

best predicts human resources needs. Plot the business factor in relation to the

number of employees to determine average labor productivity.

Compute labor productivity for the past five years.

Project human resources demand out to the target year(s).

PGP 2007-09

Example of Trend Analysis of HR Demand

1999 Rs. 2,935 8.34 352

2000 Rs. 3,306 10.02 330

2001 Rs. 3,613 11.12 325

2002 Rs. 3,748 11.12 337

2003 Rs. 3,880 12.52 310

2004 Rs. 4,095 12.52 327

2005* Rs. 4,283 12.52 342

2006* Rs. 4,446 12.52 355

BUSINESS LABOR HR FACTOR PRODTY DEMAND

YEAR (SALES IN ‘000) (SALES/EMPLOYEE) (NO. OF EMPLOYEES)

*Projected figures

÷ =

PGP 2007-09

Qualitative Approaches to Demand Forecasting

Management Forecasts The opinions (judgments) of supervisors,

department managers, experts, or others knowledgeable about the organization’s future employment needs.

Delphi Technique An attempt to decrease the subjectivity of

forecasts by soliciting and summarizing the judgments of a preselected group of individuals.

The final forecast represents a composite group judgment.

PGP 2007-09

Forecasting Supply of Employees: Internal Labor Supply Staffing Tables Markov Analysis Skill Inventories Replacement Charts Succession Planning

PGP 2007-09

Forecasting Internal Labor Supply

Staffing Tables Graphic representations of all

organizational jobs, along with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements.

Markov Analysis A method for tracking the pattern of

employee movements through various jobs.

PGP 2007-09

Hypothetical Markov Analysis for a Retail Company

PGP 2007-09

Internal Supply Forecasting Tools

Skill Inventories Files of personnel education,

experience, interests, skills, etc., that allow managers to quickly match job openings with employee backgrounds.

Replacement Charts Listings of current jobholders and

persons who are potential replacements if an opening occurs.

PGP 2007-09

An Executive Replacement Chart

PGP 2007-09

Forecasting Supply of Employees: External Labor Supply

Factors Influencing the External Labor Supply: Demographic changes in the population National and regional economics Education level of the workforce Demand for specific employee skills Population mobility Governmental policies

PGP 2007-09

Sources of Information About External Labor Markets

Department of Labor publications State and local planning and

development agencies Chambers of Commerce Industry and trade group publications State and local employment agencies

PGP 2007-09

HRP Considerations

Balancing supply and demand

PGP 2007-09

Elements of The HR Plan Acquisition of personnel Effective Utilization

redeployment methods improvement training to prevent obsolescence

Development and Improvement broad-based training and development performance management systems

Retention proper remuneration long-term career planning healthy employee relations good working environment

PGP 2007-09

Requisites for Successful HRP

HRP must be seen as equally vital as business planning

Top-management support Periodic review and revision of the forecasting

techniques and the forecasts Without long range planning concentration

becomes focussed on short-term needs resulting in “crisis management” reactions

An excellent and up-to-date HRIS Active involvement of line managers and co-

ordination between line mgrs and HR function