Professional Documents
Culture Documents
II
Planning
I
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Nevertheless, a plan can be extremely useful in identifying factors and trends that need
to be reckoned with for early warning of possible problems. The long lead time
provides the opportunity and resilience to meet exigencies and make necessary
adjustments. More complete plans can be had as time slowly brings the long-range into
short-range.
Activity 1
As part of this activity you are required to identify and tabulate the number of
personnel ;it various levels and departments in your organisation. Compare your
tabulation with the levels of personnel mentioned in the manpower plan of your
organisation. Are there any major differences? Please find the reasons.
To carry on its work, each organisation needs personnel with the necessary
qualifications, skills, knowledge, work experience and aptitude for work. These are
provided through effective manpower planning.
ii) Since a large number of persons have to be replaced who have grown old, or who
retire, die or become incapacitated because of physical or mental ailments, there is
a constant need for replacing such personnel. Otherwise, the work would suffer.
iii) Human resource planning is essential because of frequent labour turnover which is
unavoidable and even beneficial because it arises from factors which are socially
and economically sound such as voluntary quits, discharges, marriage, promotions;
or factors such as seasonal and cyclical fluctuations i n business which cause a
constant ebb and flow in the work force in many organisations.
iv) In order to meet the needs of expansion programmes (which become necessary
because of increase in the demand for goods and services by a growing population,
a rising standard of living-which calls for larger quantities of the same goods and
services as also for new goods; the competitive position of firm which brings it
more business arising from improvements effected in the slump period; and the rate
of growth of the organisation), human resource planning is unavoidable.
v) The nature of the present work force in relation to its changing needs also
necessitates the recruitment of new labour. To meet the challenge of a new and
changing technology and new techniques of production, existing employees need to
be trained or new blood injected in an organisation.
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vi) Manpower planning is also needed in order to identify areas of surplus personnel
or areas in which there is a shortage of personnel. If there is a surplus, it can be
redeployed; and if there is shortage, it may be made good.
The objective of human resource planning is to maintain and improve the organisation's
ability to achieve its goal by developing strategies that will result in optimum
contribution of human resources.
The objectives of manpower planning are mainly:
a) To ensure optimum use of human resources currently employed
We shall now attempt to look at the aspect of.forecasting future requirements. This can
be done through various techniques.
The process of estimating manpower demand consists of four steps:
an approach
a basic factor
a method
a technique
Human R g o u m Planning
Company Objectives and Smegic Plms
Forecasts
1 Manpower
Production
Objectives/Processes
Capital/
Finance Plans
AniiJySlS
(Current
Situation)
Inventory
Eqloyment
Prdductivity
Organisation
Manpower Forecasts
(Future Situation)
Overall
Manpower
Forecast
Unit
Manpower
Forecast
Budget
Agreement
Management
Manpower
Estimates
uManpower Objectives
and Policies
Phase I1
Phase In
Approach
There are eight possible approaches:
1) Subjective
2)
3) Global
5) Techno-economic
7) Deterministic
4) Component
6) Non-economic
8) Probabilistic
Objective
The order in which they are mentioned suggests the formation of four groups, each of
which comprises two mutually exclusive approaches e.g. (i) Subective or Objective,
(ii) Global or Component etc.
The groups, between themselves, are not quite mutually exclusive.
A subjective approach to manpower demand estimation uses intuition, impression or
judgement. Opposed to this, the objective approach tries to justify the estimate of
demand on the basis of certain factors or logical explanations.
A basic factor means a variable to which manpower demand can be related. The choice
depends upon the number of considerations which together constitute the multidimensional framework of the particular problem facing us.
Methods
According to Gareth Steiner, statements about the future can be made in two senses:
What will occur?
What should occur?
C+
According to Steiner, what is more significant than the time element is the way in
which the change in one phenomenon i.e. manpower, is associated with change in
another (basic factor, which was mentioned earlier).
The rate at which the change takes place exerts an influence on the frequency of
measurement and forecasting required and affects the need for different kinds of
feedback. Ln practice, what managers see as desirable will be influenced by past
experiences. All these assessments involve making assumptions about managerial
capacity, manpower utilisation or the rate of change in manpower.
According to Steiner, the major advantages of manpower forecating are:
a) It corresponds to the way managers commonly think and talk about manpower.
b) It encourages the recognition that, even where output is not readily measurable, we
can still make good forecasts of manpower, provided we can quantify work done in
some way.
c) It highlights the way in which we have to control the effect by other inputs such as
capital on manpower requirements.
Techniques
In this context therefore, one can outline a few specific techniques of manpower
demand forecasting.
Subjective
The forecast here is made on the basis of estimates by experienced people whose
experience has taught them what types of changes are important and the rates of change
involved. Implicitly however, subjective techniques involve subjective estimation of
workload and manpower utilisation and their rate of change.
The advantage lies in that the data collection is required and intangible factors like
social opinion, fashion, etc. can be built in. However, the disadvantage lies in the errors
of the human mind which can be perpetuated while carrying out the exercise of demand
of estimation for manpower. Forecasts based entirely on subjective assessment are
unlikely to give very good results. However, supplementing objective techniques with
subjective estiamtes can be useful e.g. through using subjective probabilities.
Random effect
R)
Accuracy of Techniques
No method of forecasting can be entirely without error. Some changes are unique (such
as new legislation or a decision to close down an establishment) and hence are more or
less unpredictable as to timing. Such errors as are due to these unique changes are
unavoidable. There are also errors that are partly avoidable since they stem from
inaccurate information or inappropriate techniques. Even where errors are theoretically
avoidable, it unrealistic to expect more than a proportion of error to be actually
avoidable.
However, a forecast, or any resulting objective, must be modified as soon as it seems
that it no longer represents the most likely occurrence. Unfortunately, the poeple
become emotionally attached to forecasts. We must remember, however, that errors have
a cumulative effect over time.
Taking the above factors into consideration, a corporate approach to manpower planning
is to be developed. In doing so certain key considerations such as the following
emerge:
a) What positions and individuals are to be included in the planning effort? A simple
rule of thumb is to include all positions which are critical to corporate performance
and profits and/or pose recruitment poroblerns.
b) What is the appropriate manpower planning horizon? Experience shows that it can
extend up to 4 to 5 years. Beyond 5 years, technical manpower forecasts have
doubtful value due to pervasive imponderables and unpredictables in the
environment. Within the planning period, there should be a formal method of
review and assessment at least once every year.
c) With what business factors will manpower needs be related? For a company
producing fertiliser, it could be tons of fertiliser, for an automobile unit, it could be
the number of cars and trucks. For a retailer, it could be the rupee value fo sales.
To be useful, the predictor should meet at least two requirements: (a) it should be/
directly related to the essential nature of the business; and (b) changes in the
selected factor be proportional to changes in the manpower required.
Selecting a Proper Predictor
For instance, while relating manpower needs with rupee value of turnover, appropriate.
indexation for inflation is called for. Multi-product firms need to evolve appropriate
conversion factors to have a common base. Alternatively, they can have separate
forecasts for each of the products, particularly if the products differ not only in terms
of numbers required, but also in the types of skills needed. Some firms find it
necessary to select several factors, one for each of different segments of the work force.
In a refinery, for instance, production workers may be related to one factor, the sales
force to another, management to a third, and the professional work force to still a
fourth.
Firms which build up complete sets of historical records on various rela.ted aspects can
make quite accurate projections against those which lack adequate data base. Now firms
rely on the existing norms in the industry and make adjustment for the unique features
of the f m s vis-a-vis the other firms in the industry on such aspects as technologies,
management culture, compensation, etc.
Human Resotme ~ l d n g
Manpower projections emphasise the number of employees. But firms are interested in
the labour costs also. The share of labour costs to total costs range from about two per
cent in process industries to around 60 per cent in the nationalised coal industry. The
labour costs can be projected by examining the trends in labour productivity, proposed
change in work technology, union wage agreements, inflation, government rules, etc.
Some companies have been able to maintain the labour cost component in total cost
static over a period of say, five years, even though in the intervening period the
average emoluments of the employees have gone up by onethird. C o m p a n i ~like ITC
Ltd. and Premier Automobiles Ltd. could do this through productivity bargaining as part
of wagenegotiations whereby workers will not only get more than what they were
earning before, but also turn out higher levels of performance. In such companies, it
becomes possible to produce more output than before with the existing manpower.
Projecting the Source of Supply
Projecting the number, type and level of employees tells only half the story in
manpower planning. Every organisation will have two major sources of supply: internal
and external. In unionised firms, up to a level, agreements determine the ratio of
external and internal sources of supply.
Internal Sources: Proper manpower planning and information system enables the
organisation to know the profile of the employeesage, sex, education, training
experience, job level. performance, and potential.
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experience and historical data may be of some help. The companies which have
. systematised personnel records and information systems and which have well
established career and succession plans find it easier to project internal sources of
supply relatively accurately.
External Sources: When the company grows rapidly, diversifies into newer areas of
operations or when it is not able to find the people internally to fill the vacancies, it
has to resort to outside recruitment. To the extent a firm is able to anticipate its outside
recruitment needs and scans the possible sources of supply with a feel for the labour
market conditions, its problems in recruiting the right number with right skills in the
right time would become easier.
If both supply and demand projections are made in time or if there are any problems
such as shortage of skills, appropriate steps can be taken to overcome them. For
example, several companies started apprentice training programmes when they predicted
a shortage for certain types of skills. When major manufacturing projects are planned tp
be located in hitherto backward areas, such problems are felt more acurately. For
instance, there is the case of paper mill in the eastern region not being able to reach
even 10 per cent capacity utilisation, several years after it was commissioned, because
of shortage of people with appropriate skills to run the paper mill.
Accuracy of Projections
The accuracy of the projections is based on the following factors:
a) The predictability of the industry, i.e., whether the business conditions are generally
stable or not.
b) The degree of integration on manpower planning with other company planning
efforts, and the amount of experience that the company has with all types of
planning. If a company plans very far into the future, it may be sacrificing
accuracy and flexibility.
c) Historical data about manpower levels and about the selected business factors with
which manpower projections are related. Even the experience of operating
managers is not useful in making projects and estimates in the absence of good
manpower records. The projections, at best, can be as good as the data base.
d) The knowledge, experience and outlook of the operating managers. When
manpower projections are made as part of the total planning process, even when
the forecasts are not accurate, they atleast succeed in providing warning of possible
problems.
e) The framework for manpower utilisation for the forecast period.
Activity 2
Visit a hospital, you have known or access to and do the following:
a)
b)
Identify the critical areas and the extent of manpower shortages and the reasons
for such shortages.
c)
d)
e)
Identify the major manpower problems and their causes and interrelationship.
Approach
While assessing future requirements, the estimates depend mostly upon the nature of
manpower assumptions in the organisation. Corporate strategy can influence manpower
strategy and vice-versa. Here we may consider three approaches: the zero budgeting
approach, the ideal, and the realistic.
Zero budgeting, as the name implies, is an approach in which one forces unitldivision
managers to justify their total operation iiom zero. The objective is to encourage
managers to seriously think about their current activities. Given the restrictions posed
by law and unions, the practicability of this approach for ongoing organisations in
manpower planning is doubtful.
It is only new units that can start thinking about manpower planning in terms of what
might constitute an 'ideal' approach. Arry decisions on sub-contracting, off-loading
some functions like maintenance produc:tion-tr:chnology, etc., may depend on the
perceived notions of what constitutes arb ideal for the organisation.
Organisations can proceed on a realistic approach using existing information. A
company which operates on a three-year planining cycle may record manpower levels
in subunits or division in such a way that it i s easy to monitor and hold managers
responsible (see Fig. 1.2). Organisations whic h choose to supplement manpower plans
with different business parameters and manpc Iwer ratios. (e.g. gross value added per
employee, capital employed per employee) hi nve to be varied about the fact that the
future may not follow the past and ajustment s may have to be made for variations.
Item
Current yea a
Year 1
Forecast
Forecast
Year 2 ,
Manpower increases
Business Activity
Capital Expenditure
Takeoverlmerger
Manpower decreases
Business activity
Capital expenditure
Disinvestment
Productivity improvement
Fig. 1.2: Mon:itoning Manpower Levels
Promotions out
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Transfers in
Transfers out
-p
Retirement
Voluntary Retirement
Discharge/Dismissal/
Termination
Resignations
Redundancy1
Retrenchment
Activity 3
Managing a largelmedium size hospital with special setting of the environ'mental
factors of developing countries and the great demands placed on the hospitals by the
public, make it essential for the hospitals to take whatever measures possible to see
that its effectiveness is demonstrated to the greatest possible extent. This involves
careful planning of various activities of the hospital.
Based on the contents discussed in this unit do the survey of hospital to understand
manpower planning and prepare brief, notes broadly on the lines given below:
1)
2)
3)'
4)
5)
Solving mismatches
6)
7)
8)
Detailed plan
9)
10) Monitoring