manpower planning

Manpower Planning It is a process- includes forecasting, developing and controlling by which a firm ensures that it has the right number of people and the right kind of people at the right places at the right time doing work for which they are economically most useful

- Geisler

Human Resource Planning

• The process an organization uses to ensure that it has the right amount and the right kind of people to deliver a particular level of out put or services in the future.

• Gomez-Mejia, Balki and Cardy, 2001

Macro Level Manpower Planning

• National Population Trends• Economic Growth Rates

• Educational Plans• Overall Supply and Demand for various

categories of manpower

Surplus Labour - Large number of Trained Manpower Availability of Specific Skill Requirement Mislead the Manpower Planners The ideal objective of the planners could be the fulfillment of expansion, diversification or technical change

Misconception

Purpose of Manpower Planning : Macro LevelSegments Area of concern

National Level Population Projection Programme for economic development Educational facilities Occupational distribution and growthIndustrial and geographical mobility of personnel

Sector wise Primary, Secondary, Tertiary Sectors in GeneralAgriculture, Industry and Service Sector in particular

Industry wise Specific IndustryFor Example; Plantation, Engineering and Textile

Individual Unit Based Particular Organization/ Unit ss

Need for Manpower Planning: Micro Level

• To avoid the sudden disruption in production• Enabling management to adopt suitable

strategies to cope with situation• To get prepared for fresh demands in terms of

numbers, skills and occupation groups• To meet increasing demands either due to

business growth or expansion• To meet the attrition due to wastage, turnover,

separations and mobility• Anticipating need for various types of skill

requirements and level of personnel

Manpower Planning Objectives Micro Level

• Obtains and retains the quantity and quality of human resources it needs at the right time and right place

• Makes optimum utilization of these resources

Pressing Concerns

• Lead time for getting personnel • Skills that one may need are not always

available• Non-availability of suitable manpower• Delays in executing new projects and

expansion programmes• Changing job requirements due to

technological change• Growing complexity of business operations

Lead to inefficiency and low productivity

Leveling Field

• Surplus could be deployed• Shortages can be provided for• Under utilization throng over manning

leads to high labour and low profit marginCost Estimation

• Labour cost 25% of the production cost + 40% of the selling cost

1.Environmental Scanning

Identify and anticipate sources of threats, and opportunities; scanning the external environment (competitors, regulation) and internal environment (strategy, technology, culture)

2. Labor Demand Forecast

Project how business needs will affect HR needs, using qualitative methods (example, Delphi, nominal) and quantitative methods (trend analysis, simple and multiple linear regression analysis)

3. Labor supply forecast Project resource availability from internal and external sources

4. Gap analysis Reconcile the forecast of labor supply and demand

5. Action Programming Implement the recommended solution from the step 4

6. Control and Evaluation

Monitor the effects of the HRP by defining and measuring critical criteria (example, turnover costs, breakeven costs of new hires, recruitment costs, performance outcomes)

Six steps in the HRP process

Objectives of Manpower Planning

• Utility as a planning and control technique (systematic approach)o Prediction of manpower requirements and control will

be easier (manpower deployed) o This could be because of the more precise matching

of manpower needs to the firm's business plans, control the wage and salary cost.

• It has an accurate estimate of the number of employees required with matching skill requirements to accomplish organizational goals

• The existing personnel deployment information• The kinds of skills required for the various

categories of jobs and manpower requirements over a specified time period in relation to the organizational goals.

• Capitalize on the strength of the organization's human resources

• Determine recruitment levels• Anticipate redundancies• Determine optimum training levels• Serve as a basis for management development

programme• Cost manpower for new projects• Assist future requirements• Study the cost of overheads and value of service

functions• Decide whether certain activities need to be

subcontracted

Corporate Plan and Manpower Planning Process

Forecasting

• HRP is more of an art rather than science because it can only indicate broad trends and the likelihood of action when the future is more assured.

• Demand forecasting is affected by any corporate plans which may result in increases /decreases in the demand for employees. These might include

• Setting up a new organization, • Introducing a new product or service, • Rationalizing production or distribution, and • Plans ‘to drive cost out of the business’.• Expected changes in productivity arising from new working

methods or the introduction of new technology may also affect demand.

• There are four methods of doing the forecasting activity, they are as follows

Managerial Judgment• Thinking about the future workloads, and decide

how many people you need. It needs guesswork. It works in a short-term basis, it doesn’t create problem in recruitment, overtime, sub-contracting or outsourcing. Though it may not be a easy thing. Unforeseen decreases in activity (continuous) levels may create more problems. Constant attempt to forecast requirements as far as ahead as you can see by monitoring trends, finding out how business plans are progressing, checking on sales forecasts and results and so on. One must get data from other people rather than relying on ones own resources.

Ratio Trend analysisStudying the past ratio between the number of direct (production) workers and indirect (support) workers in a manufacturing unit.Forecast activity levels can then give you a good idea of how many direct workers you will need (so many people to make so many widgets) and the ratio of indirect to directs will tell you how many support workers you are likely to need.Trend analysis incorporates certain business factors (example, units produced, revenues). And a productivity ratio (example, employees per units produced). There are six steps in trend analysis,• Find the appropriate business factor that relates to the size of the workforce• Plot the historical record of that factor in relation to the size of the workforce• Compute the productivity ratio (average output per worker per year)• Determine the trend• Make necessary adjustments in the trend, past and future• Project to the target year

The use of appropriate business factor is critical to the success of trend analysis

Work Study Techniques• Work measurement to calculate how long

operations should take and the number of planned hours, and therefore people, required.

• Planned output for year = 2,000• Standard hours per unit = 5 hours• Planned hours for year = 100,000 hours• Net productive hours per person year = 2,000

hours• Number of direct workers required • Planned hours / Productive hours per person =

50

Forecasting Skill Requirements• It starts from an analysis of the current range of skills

required.• Analyze the impact of forecast product market

developments• The acquisition of new or different types of business• Projected changes in work methods• The effect of the introduction of new technology includes:• Information Technology, • Computerized production methods such as• Manufacturing Planning (MRP), • Computer integrated manufacturing (CIM), or• Form of automation or robotics.• Skill forecasting is a matter of judgment based on

experience and a thorough analysis of likely trends in the type of work to be carried out and working methods.

Supply Forecasting• It estimates the number of people likely to be available from within

and outside the organization (Internal & External Labor Market). The supply analysis covers,

• Existing people available – how many have you got and what skills do they posses?

• Potential losses to existing resources through employee wastage-what are the present and forecast employee turnover figures?

• Effect of absenteeism- what is the present rate and what will it be in the future?

• Sources of supply from within the organization-who have we got now with the right skills? Who is going to be available in the future, and when?

• Sources of supply from outside the organization- what are the chances of being able to recruit the sort of people we need?

• Defining sources of future supply and reaching satisfactory conclusions on availability may be difficult. It depends on the university output and the specified disciplines graduates number etc.

Mathematical projections of trends in economy and developments, It's a judgmental estimates based upon specific future plans of the company

Elements of Organization

Activities

Size Large companiesMore job categoriesMore employeesLarger geographical area of activityNeed more complex forecastingFor example: Compu facilities and skilled staff - necessary to make a sophisticated system

Complexity Complex career path and Diverse skill mixtures

Goals Identify and bridge the Gap between organization's Current HR situation & Desired future HR situation

Plan and Strategies

Those who plan for future- need to implement plans

Organizational information

Organization can profit from a complex forecasting system

Determining Human Resource Requirements Demand Supply

1. Number required at the Beginning of the year

4. Number available at the beginning of the year

2. Changes to requirement and Forecast during the year

5. Accession from transfers and promotion

3. Total requirement at the end of year (1+3)

6. Separation through retirements, wastageSeparation and promotions

7. Total losses (4+5+6)

Requirements

8. Deficit / surplus (3-7)

9. Losses of those recruited last year

10. Additional Number required during the year (8+9)

Internal Supply Forecasting(ISF)Organizational Features (Staffing and Capabilities) Losses and Changes Productivity, rates of productivity change Rates of Promotion, Demotion, Transfer and Turnover control Training External Supply Forecasting(ESF)

External Labour Market Factors(Retirements, Mobility, Education and Unemployment)

Controllable Company Factors Entry Level Openings, Recruiting Compensation External Selection Executive Exchange

ISF+ESF HR Supply

Demand Forecasting Organization and unit Strategic Plans Size of the Organization Use of Managerial Resources, Other Human Resources Staff Support Organization Design > HR Demand

HR Demand + HR Supply

Net HR Requirements

Learning Curves: Predict the average number of units produced per employee will increase as more units are produced. Thus workers will learn to perform their tasks more efficiently over time.Simple linear regression: Uses information from the past relationship between the organization’s employment level and some criterion known to be related to employment.For example Sale or work out put & the level of employment – Learning curve can be used for more accurate projection of future employment levels.Multiple linear regression: More complicated quantitative methods involving multiple regression and linear programming further this process by incorporating operational constraints (example: budgets, mix of labor) into the mathematical models. It is possible to forecast demand under varying business scenarios. This may use several factors that correlate with labor needs.For example, Preparation for its collective bargaining negotiations, GM used several different sales figures, gross national product, gross domestic product, capital investments, and other factors to forecast labor needs for the next 6 years.

Screen 1 Current employee data

NameSS #DepartmentPositionSuperiorDate in PositionDate of hireScreen 2

Education data

School attended Degree Major GPA Year(s)

High SchoolUndergradGraduateDoctorateAdditional course workCertifications/licensesAdditional trainingCompany trainingAdditional training recommendedScreen 3 Company employment data

Title Date in job Performance Ratings/Dates

Present positionPrevious positionPositions in company qualified forScreen 4 Previous employment data

Company Title From To Reference Quality

Prev.EmplPrev.EmplScreen 5 Express Interests/Goals

Areas of CompanyPositionsAdditional training/ education

Quantitative Method of forecasting HR Demand

• Moving average• Exponential Smoothing• Trends Projections• Regression• Linear Programming• Actuarial Models• Simulations• Probability Matrix• First order Markov Model• Semi Markov Model

Method Description Advantage Disadvantage

Moving Average

Averages data about HR demand from recent periods and projects them in to future

• Simplicity, • Data easily

available

• Seasonal or cyclical patterns may be ignored

• Relies on past data

Exponential Smoothing

Forecasters can vary weights for HR demand assigned to different past time periods used to project future HR demand

Cyclical pattern in addition to moving average method

• Mathematical complexity

• Choice of weights may be arbitrary

• Relies on past data


Regression Mathematical formula used to relate staffing to several variables(output, product mix and per capita productivity)

• Can include many variables

• Efficient use of all available data

• Mathematical complexity

• Requires large sample sizes

Linear Programming

Assesses required staffing level that matches desired output levels, subject to certain constraints (budget, cost)

• Assesses what should be in the future, not what probably will be.

• Managers are skeptical of highly sophisticated methodology

• Numerous assumptions must be made


Actuarial Models

Relate turnover to such factors as age and seniority

• Reflect past • May not be accurate in individual cases

Simulations Use scenarios to test the effect of various personnel policies

• Useful for considering alternative HR programs

• Accuracy varies

Probability matrixes

• Define ‘states’ in the organization-such as strategy levels, performance ratings

• Identify time period

• Help identify career patterns

• Help perform turnover analysis

• Require some mathematical sophistication

• Accuracy varies


First Order Markov Model

Multiply number of people in each job category by the probability of movement between job/position categories. Model assumes that current job/position category is the chief determinant of movement

• Adequate for considering alternative effects of various Hr strategies

• Not adequate for long term forecasts

• Requires mathematical sophistication

Semi Markov Model

Probability of movement is determined by job/position category and the individual’s length of stay in the job class

• More inclusive than a first order Markov Model

• Not very useful for considering alternative effects of various HR strategies

• Requires mathematical sophistication