HUMAN RESOURCE PLANNING

Definition:
HRP is an ongoing function involving the acquisition,
utilization, improvement & preservation of Human
Resources in an organization aimed so as to assess
the manpower requirements in advance keeping the
production schedules, market fluctuations, demand
forecasts etc in the background.

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 HUMAN RESOURCE PLANNING

Objectives:

 To have an accurate estimate of employee requirement

along with matching skill or competency so as to efficiently
meet organizational needs & objectives
 To provide information about how existing manpower are to
be employed & what types of skills and or competencies are to
be developed for having desired levels of performance
 To indicate the requirement of additional manpower
 To cope immediate changes or fluctuations regarding the
requirement of a particular skills and or competency in the
workforce
 To ensure productive & efficient utilization of human
resources & reduce Manpower wastage
 To assess & forecast future skills requirements.

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 HUMAN RESOURCE PLANNING
Objectives (Contd.):

 To provide control measures so as to ensure that necessary

resources are being made available as & when required.
 To provide a guideline to enable employees to train &
develop themselves for higher pursuits & effective
Performances.
 To form the basis of career planning & succession planning
activities in an organization

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 HUMAN RESOURCE PLANNING
Importance:

 To determine recruitment levels

 To anticipate redundancies & avoid unnecessary dismissals.
 To determine optimum training needs & levels
 To provide a basis for management development programs
 To deploy the manpower in new projects
 To assist in productivity bargaining
 To study the cost of overheads & value of service functions &
effectively control costs.
 To decide whether certain activities need to be subcontracted.
 To form the basis for effective Talent management
 Enabling the organization to expand or contract its business activity
 Providing a basis for Career & Succession planning

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 HUMAN RESOURCE PLANNING

Benefits:

 Reducing labor costs associated with attrition

 Reducing recruiting & replacement costs
 Focus training resources appropriately
 Increase the ability to take advantage of new business
opportunities.
 Improve employee morale & satisfaction
 Control rapid expansion or reduction of the workforce
 Monitor staffing & retention policies of the organization.

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 Components of the HRP Process:

Components of HRP
Components of HRP

Forecasting Demand of Human Resources Manpower Inventory (Supply)

Forecasting Demand of Human Resources Manpower Inventory (Supply)
Management
Management
1Factors: External Challenges: Economic factors,
1Factors: External Challenges: Economic factors,
Competition, Politico-legal, Social & Technical factors
Competition, Politico-legal, Social & Technical factors
Organizational decisions
Organizational decisions
Workforce Factors
Workforce Factors Internal Labor supply: External Labor
Internal Labor supply: External Labor
2Techniques: Expert Forecasts, Trend Analysis, Quantitative Manning tables Supply:
2Techniques: Expert Forecasts, Trend Analysis, Quantitative Manning tables Supply:
Analysis (Regression Analysis, Optimization Models, Budgeting Replacement Charts Labor market
Analysis (Regression Analysis, Optimization Models, Budgeting Replacement Charts Labor market
etc) Skill Inventory Govt. Employment
etc) Skill Inventory Govt. Employment
HRIS Exchanges
HRIS Exchanges
Private Consultants
Private Consultants
BPOs
BPOs

DeterminationofofManpower
ManpowerGaps
Gaps
Determination

FormulationofofaaHuman
HumanResource
Resource
Formulation
Plan
Plan
Recruitment&&Selection
SelectionStrategy
Strategy
Recruitment
Training & Development Strategy
Training & Development Strategy
Appraisal&&Compensation
CompensationStrategy
Strategy
Appraisal
IR & ER
IR & ER
EmployeeWelfare
Welfare&&Benefits
Benefits
Employee

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 Forecasting the Demand for Human Resources:

a) External Challenges:
 Economic Developments: Liberalization, opening up of the
banking sector, capital market reforms, on-line trading
systems etc have created a huge demand for finance
professionals.
 Political, Legal, Social & Technical Changes:
 Competition in the market:
b) Organizational Decisions: The organization’s strategic plans,
sales & production forecasts & new ventures are taken into
account for employment planning.
c) Workforce factors: Demand is modified by retirements,
termination of services, resignations, deaths & leaves of
absence.

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 d) Forecasting techniques: The manpower forecasting techniques
commonly employed by modern organizations are as follows:
 Expert Forecasts: Here, managers estimate future human resource
requirements, their experiences & judgments to good effect.
Demand Forecast: Demand forecast is the process of estimating the
future quantity & quality of manpower required.
Supply Forecast: The next logical step is to determine whether it will
be able to procure the required number of personnel & the sources of
such procurement are also to be considered.
 Ratio-Trend Analysis: It involves studying past ratios, say, between
the number of workers & sales in an organization& forecasting future
ratios, making some allowance for changes in the organization or its
methods.
 Work Standards Data: Many organizations have established
comprehensive sets of data for man-hours or unit times to perform a
great many production tasks. For each department the projected
units of output are converted into man-hours, man-days & number of
employees by applying the established time standards.

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 Human Resource Planning

 Key Predictive Factors: The essence of key predictive

technique is to locate key indicators with which total
manpower correlates highly. To identify such a factor, the HRP
department must examine several business factors such as
sales volume units produced, clients served, & so on.
 Delphi Technique: It is a method of forecasting HR needs.
It solicits estimates of personnel needs from a group of
experts, usually managers.
 Trend Analysis: HR needs can be forecast through
projecting past trends. Past rates of change can be projected
into the future or employment growth can be estimated by its
relationship with a particular index.

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 Human Resource Planning

 Other Methods: Several mathematical models, with the aid of

computers are also used to forecast HR needs in an organization.
These include: Regression Analysis, Optimization models, Budget &
planning analysis.
e) Workforce Analysis: The average loss of manpower due to leaves,
retirement, death, transfer, discharge etc during the last 5 years are
taken into account. The rate of absenteeism & labor turnover are also
taken into account.

f) Work-load Analysis: The need for manpower is also determined on the

basis of work-load analysis, wherein the organization tries to
calculate the number of persons required for various jobs with
reference to a planned output- after giving weightage to factors such
as absenteeism, idle time spent etc.

g) Job Analysis: Job analysis helps in finding out the abilities or skills
required to do the jobs efficiently. A detailed study of jobs is usually
made so as to identify the qualifications & experience required for
them.

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 Human Resource Planning
Preparing Manpower Inventory (Supply Forecasting):
Any organization has 2 major sources of supply of manpower, namely:
Internal & External Sources.

a) Internal Sources: A profile of employees in terms of age, sex,

education, training, experience, job levels, past performances &
future potential are kept ready for this purpose. Requirements in
terms of growth, internal movement of employees (transfer,
promotions, retirement etc) must also be assessed in advance.
Replacement charts &/ Succession plans are also utilized for this
purpose. Frequent Manpower Audits are carried out so as to find out
the available Talent in terms of skills, performance levels &
potentials.
b) External Sources: When an organization grows rapidly,
diversifies into newer areas of operations, it needs to fill its vacancies
or meet its manpower requirement through outside sources like
Manpower supply through consultant firms or by outsourcing.

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 Table: Factors influencing Internal & External Manpower Supply
Forecast
Internal Supply Forecast External Supply Forecast

 Manning Tables:  Labor market conditions such as

It shows the number of employees in
each job & tries to classify employee on
the basis of age, sex, position, category,
experience, qualifications, skill etc. The
study of this table indicates whether
current employees are properly utilized
or not.
 Replacement Charts:
It shows the profile of job-holders,
department-wise & reveals those who
could be used as replacements
whenever the need arises.
local employment trends of relevant
categories of employees, competition
for such skills, availability of part-time
labor, migration trends of labor, housing
facilities available, transport needs etc.
 Macro level factors such as
availability of a certain category of jobs
to “outsiders”, cultural factors, customs
& social norms, training schemes of the
Govt etc.

 Skill Inventory:
It indicates the routine & strategic
skills of an employee before or since
joining the organization.

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 Human Resource Planning

Determining Manpower Gaps:

The existing number of personnel & their skills (from

manpower inventory) are compared with the forecasted
manpower needs (demand forecasting) so as to determine the
quantitative & qualitative gaps in the workforce.

Reconciliation of demand & supply forecasts will give the

number of people to be recruited or made redundant as the
case might be.

This forms the basis for preparing the manpower plan.

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