The Human Resource Planning includes managerial activities that contribute to set the company’s future objectives. It also determines appropriate means and ways for achieving those objectives. Where as organizational planning facilitates the realization of the company’s future objectives and determines appropriate means for achieving those objectives.
Human resource planning determines the determinants of changing job requirement. Technological advancement that requires introduction of new equipment, product, and process and invariably resulting in changes in jobs and job structure in an organization can be dealt with proper manpower planning. It is therefore, manpower planning is essential for the organization to meet the demands of future job requirements in order to survive and remain competitive. Otherwise, the organizations experiencing the effect of rapid technological change will face the shortages of skilled employees in the absence of effective human resource planning.
Activities in Human Resource Planning
Forecasting future human resource needs/ Demand forecasting:
Demand forecasting is the process of estimation of the quantity and quality of people required for future. The basis of the forecast must be the long term corporate plan and annual budget, translated into activity levels for each department and function. Demand forecasting takes into account several factors both external as well as internal.
The external factors are economic climate, competition, laws and regulatory bodies, changes in technology and social factors. Internal factors include budget constraints, production levels, new products and services, organizational structure and employee separations. Organizational goals and objectives serve as a starting point for forecasting human resource needs. The demand for labor is derived from the demand for an organization’s goods and services. If other factors are held constant, the increased demand for goods and services leads to an increased demand for labor. Inversely, a decreased demand for goods and services leads to decreased demand for labor. Forecasts of the demand for Human Resources can be short-range, mid-range, or long-range, depending on how far the future goals are set. Some methods or approaches are more appropriate to short-range forecasting while others are designed for long-range forecasting. However, any human resource plan to be effective must be derived from the long-range plans of the organization.
Once the factors affecting the future manpower forecasts are known, planning can be done for the future manpower requirements in concerned work units or departments. The Manpower forecasting techniques commonly employed by most of the organizations are as follows:
- Expert Forecasts: This method of manpower forecast includes informal decisions, formal expert surveys and Delphi technique.
- Trend Analysis: Manpower needs of any organisation can be projected through extrapolation (projecting past trends into the future), indexation (using base year as basis), and statistical analysis (central tendency measure).
- Work Load Analysis: Work-load Analysis is a suitable technique when the estimated work-load of a department, in a branch or in a division is easily measureable.
- Work Force Analysis: It determines the rate of influx and outflow of employees.
- Job Analysis: Job Analysis is done to differentiate one job from other. Therefore it provides requisite information about the job and hence helps in determining future manpower need.
- Other methods: Other Mathematical Models are used with the help of computers to forecast manpower needs. It includes budget and planning analysis, regression model and new venture analysis etc.
Making inventory of present manpower resources / Supply Forecasting:
After future manpower requirements are estimated, the next step is to determine whether the organisation will be able to procure the required number of personnel and the sources for such procurement. Supply Forecasting provides such information. Supply Forecasting try to measures the number of people likely to be available from within and outside an organisation, after making provisions for wastage, internal movements and promotions, absenteeism and changes in hours and other conditions of work.
It is basically refers to projecting human resource supply that estimates the number and kinds of employees that can be expected to constitute an organization’s workforce at some future point in time. These projections are based on a careful assessment of an organization’s current supply, with due consideration of employees movement into, through, and out of organization. Procuring competent personnel demands positive recruitment efforts along with the development of a variety of recruitment sources. These sources not only consider the nature and conditions of the external labor market, but also the presence of qualified available personnel to fill up the vacancies through internal promotions or transfers. For analysis of current manpower inventory, the following factors have to be noted;
- Types of organization
- Number of departments
- Number and quantity of such departments
- Employees in these work units
A well-designed skills inventory comprises of lot of information though all these are not directly related to on-the-job skills and performance. It includes many kinds of information for the start-up of Personnel Planning. Skills inventory include name, address, telephone number, date of birth, current position ,skill level ,years with the company ,education ,marital status, dependents and their ages, salary history ,seminars and training completed, disciplinary actions ,date of retirement ,company planned future assignments, employee preferences, future assignments, willingness to relocate, language abilities, restrictions on assignments, hobbies, published works, patents obtained , special qualifications, high-level skills and so on. For each group of employees as much of information is gathered. The information gathered from the employment application can also be supplemented by asking the employees to provide comprehensive personal history files after they have been on the job for a while. New items can also be added as they seem necessary. It is therefore very much necessary to keep up- to date inventory incorporating all sorts of changes.
Anticipating manpower problems by projecting existing Human resources into the future:
This step involves comparing forecasted needs with projected supply to determine manpower adequacy both quantitatively and qualitatively. By subtracting the projected supply from the forecasted needs, planners can determine an organization’s employee requirements for a future point in time. Number of employees’ requirements should be determined for each job in an organization as well as for the organization as a whole.
- Demand > Supply = Shortages
- Demand < Supply-=Surplus
- Demand = Supply = No action
Planning and implementing necessary HR policies and programmes: Implementation is all about converting an HR plan into action. After net requirements of employees are determined, planners generate and evaluate alternative Human resource policies and programmes to handle anticipated shortages and surplus. A series of action programmes are initiated and evaluated as a part of HR plan implementation. Such programmes include recruitment, selection and placement, training and development, retraining and redeployment, the retention plan and the redundancies plan. It also considers the activities such as utilization, transfer, promotion, motivation and compensation etc in order to ensure that future manpower requirements are properly met.
Evaluating human resources effectiveness:
Organizations should evaluate their Human Resources Planning efforts to determine their effectiveness in the context of achieving organization’s goals and objectives. The HR plan should be done with due consideration to budgets, targets and standards. An effective HR plan always seek to clarify responsibilities for implementation and control by establishing reporting procedures which will enable to monitor the achievements against the plan. These may simply report on the numbers recruited against the recruitment targets. HR plan should also report employment costs against budget, and trends in wastage and employment ratios and so on and so forth. Evaluating in terms of costs and benefit though difficult is an obvious measure of planning effectiveness which depict clearly and concisely how well human resources needs are anticipated and met.
Human Resource Planning Stages
Human resource planning process can be broadly delineated to four different stages as follows:
It is the primary stage of HRP in any organization. In this stage, organizations develop a sense of awareness about the detailed manpower scenario with a holistic view, looking at their current manpower. A SWOT analysis can reveal a better picture with due consideration of the external environment, performance and productivity trends, working practices, operational and strategic plans. Scientific homework at this stage can help in identifying the gaps between present and required skills. For a better result, SWOT analysis can proceed a cause effect diagram (fish bone diagram), which is simple to comprehend. While doing external manpower review, micro level issues need to be understood with due cognizance to the relevant literature’s like, Annual Economic Survey, Year Book on Indian Labor, various reports on planning commission on manpower etc. Internal manpower review has to be done with enterprise wide current marketing, finance, performance data, current employment practices and methods etc, with a futuristic view with due cognizance to strategic plans and objectives.
After adequate investigation, the next phase of Human resource planning process involves analysis of demand and supply of manpower. There are different models of demands forecasting. Manpower supply analysis is done considering both internal and external supply. While doing internal supply analysis, career planning and development, training and development, aspects of succession plan are taken into account along with corporate policies and procedures. For example ‘promotion from within’ as a corporate policy may or may not exist in a particular organization. If exist, it needs to find out whether it is time scale (seniority) promotion, or based upon merit. Many organizations have their documented promotional policy in order to avoid personal biasness. External supply analysis is done considering macro level issues to understand their availability. Employment status (permanent, temporary, part time, contractual, hourly paid) also needs to be assessed in terms of availability. Demand forecasting helps in identifying requirements of manpower for various positions at different points of time.
3. Planning and Control of Manpower
At this stage forecasts of manpower are translated into HR policies, which encompass all Human resource planning related issues like recruitment, training and development. While going for recruitment, it is necessary to understand the job descriptions, which precede job analysis and job roles. Also it is necessary to document the time period for which recruitment has to be made. Most of the organizations have their documented recruitment system decided by the HR managers. There are organizations, besieged with the problem of restructuring. Hence extent and scope of internal hiring, i.e redeploying in restructured jobs also need to be understood. Similar efforts should also be made in planning and documenting the training and development policies of the organization to address to the problems of knowledge and skill obsolescence in the context of changing technology. Hence the scope for redeployment through retraining also needs to be explored at this stage. While doing Human resource planning, flexibility and interrelationship of all other policies also need to be considered. It is also obvious that, manpower redundancy in India and abroad is not only for inadequate business planning but also or inadequate human resource planning, which among others can be attributed to inflexible policies on redundancy, inflexible job description, inflexible employment conditions, absence of retraining and redeployment programmes. Mere planning and documenting the policies will not help. Control must be there to rectify any observed deficiency of such plans. For example offering VRS with additional benefits may be a costly decision than skill renewal of manpower through training and re-training. Similarly outsourcing manpower through a body shopper may be costly than direct recruitment on contractual terms. Giving overtime to employees to meet seasonal overload may be cheaper than recruiting extra people. Hence need for control is inevitable to optimize manpower cost.
This is final stage of Human resource planning process. Success of HRP is measured in terms of achievement trend, both quantitatively and qualitatively. Quantitative achievement is achieved from increased in productivity trend, reduced manpower cost, qualitative achievement can also be studied in the context of prevailing industrial relations, level of motivation and morale, grievance pattern, rate of absenteeism, rate of turnover etc.