Unit 1 Introduction to Manpower Planning Introduction Manpower or human resource may be thought of as the total knowledge, skills, creative

abilities, talents and aptitudes of an organizations work force as well as the values, attitudes and benefits of an individual involved. It is the sum total of inherent abilities, acquired knowledge and skill represented by the talents and aptitudes of the employed persons. Of all the Ms in management (i.e., the management of materials, machines, methods, money, motive power etc.), the most important is M representing men or human resources. It is the human resource which is the most valuable asset of an organization and not the money or physical equipment. It is an important economic resource covering all human resources- organized or unorganized, employed or capable of being employed, working at all levels supervisors, executives, Government employees, blue and white collar workers, managerial, scientific, engineering, technical, skilled or unskilled persons, who are employed in creating, designing, developing , managing and operating productive and service enterprises and other economic activities. Human resources are utilized to the maximum possible extent in order to achieve individual and organizational goals. An organizations performance and resultant productivity are directly proportional to the quantity and quality of its human resources. Hence, a great deal of importance has been attached to human resource in organizations. This unit deals with the meaning, need, benefits and components of manpower planning. Objectives: After studying this unit you will be able to:
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Define manpower planning. Justify the need for manpower planning in organizations. Explain the benefits of manpower planning. Describe the process of manpower planning. Mention the components of manpower plan. Distinguish between short range analysis and long range analysis.

Manpower Planning Defined Manpower planning and human resource planning are synonymous. In the past, the phrase manpower planning was widely used; but now the emphasis is on human resource planning which is broader in scope. Human resource planning or manpower planning is the process by which a management determines how an organization should move from its current manpower position to its desired manpower position. Through planning, a management strives to have the right number and the right kind of people at the right places, at the right time, to do things which result in both the organization and the individual receiving the maximum long-range benefits. Coleman defines human resources or manpower planning as the process of determining manpower requirements and the means for meeting those requirements in order to carry out the integrated plan of the organization. Stainer defines manpower planning as strategy for the acquisition, utilization, improvement, and preservation of an enterprises human resources. It relates to establishing job specifications or the quantitative requirements of jobs determining the number of personnel required and developing sources of manpower. According to Wickstrom, human resource planning consists of a series of activities, viz.,

(a) Forecasting future manpower requirements, either in terms of mathematical projections of trends in the economic environment and development in industry, or in terms of judgemental estimates based upon the specific future plans of a company; (b) Making an inventory of present manpower resources and assessing the extent to which these resources are employed optimally; (c) Anticipating manpower problems by projecting present resources into the future and comparing them with the forecast of requirements to determine their adequacy , both quantitatively and qualitatively; and (d) Planning the necessary programmes of requirement, selection, training, development, utilization, transfer, promotion, motivation and compensation to ensure that future manpower requirements are properly met. Thus, it will be noted that manpower planning consists in projecting future manpower requirements and development of manpower plans for the implementation of the projections. This planning cannot be rigid or static; it is amenable to modification, review and adjustments in accordance with the needs of an organization or the changing circumstances. Human resource planning is a double-edged weapon. If used properly, it leads to the maximum utilization of human resources, reduces excessive labour turnover and high absenteeism; improves productivity and aids in achieving objectives of an organization. Faultily used, it leads to disruption in the flow of work, lower production, less job satisfaction, high cost of production and constant headaches for the management personnel. Therefore, for the success of an enterprise, human resources planning is an essential function, which can be neglected only at its own peril. It is a necessary part of planning for production, marketing or capital investment. For an individual, it is important because it helps him to improve his skills and utilize his capabilities and potential to the utmost. For an organization, it is important because it improves its efficiency and productivity. It is only through initial human manpower planning that capable hands are available for promotion in the future.

Need for Manpower Planning Human resource planning is deemed necessary for all organizations for one or the other of the following reasons: (i) To carry on its work, each organization 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 in business which cause a constant ebb and flow in the work force in many organizations. (iv) In order to meet the needs of expansion programmes, human resource planning is unavoidable. It becomes necessary due to increase in the demand for goods and services with growing population and rising standard of living. (v) The nature of the present workforce 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 must be injected into an organization. (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 organizations ability to achieve its goal by developing strategies that will result in optimum contribution of human resources. For this purpose, Stainer recommended the following nine strategies for the manpower planners: (a) They should collect, maintain and interpret relevant information regarding human resources; (b) They should report periodically manpower objectives, requirements and existing employment and allied features of manpower; (c) They should develop procedures and techniques to determine the requirements of different types of manpower over a period time from the standpoint of organizations goals; (d) They should develop measures of manpower utilization as a component of forecasts of manpower requirements along with independent validation; (e) They should employ suitable techniques leading to effective allocation of work with a view to improving manpower utilization; (f) They should conduct research to determine factors hampering, modifying or removing these handicaps; (g) They should develop and employ methods of economic assessment of human resources reflecting its features as income- generator and cost and accordingly improving the quality of decisions affecting the manpower; (h) They should evaluate the procurement, production and retention of the effective human resources; and (i) They should analyze the dynamic process of recruitment, promotion and loss to the organization and control these processes with a view to maximize individual and group performance without involving high cost.

Human resource planning is the responsibility of both the line and the staff managers. The line manager is responsible for estimating manpower requirements. For this purpose, he provides the necessary information on the basis of the estimates of the operating levels. The staff manager provides the supplementary information in the form of records and estimates. The staff manager is expected to: (i) Report about manpower utilization in the present and the past; (ii) Provide help and advise managers on the assessment of manpower utilization and to develop sources of information and techniques for the purposes of comparison; (iii) Administer the procedure of forecasting or objective setting; (iv) Present the overall forecasts of departmental managers; and (v) Advise line managers on forecasting techniques.

Benefits of Human Resource Planning (Manpower Planning) (i) Enables the upper management to have a better view of the human resources dimensions of business decisions; (ii) Personnel costs may be less because management can anticipate imbalances before they become unmanageable and expensive; (iii) More time is provided to locate source talent; (iv) Better opportunities exist to include women and minority groups in future growth plans; (v) Better planning of assignment to develop managers can be done; (vi) Major and successful demands on local labour markets can be made. Human resource planning is practically useful at different levels, as stated by Narayan Rao. According to him: (i) At the national level, it is generally done by the Government and covers items like population projections, programs of economic development, educational facilities, occupational distribution and growth, industrial and geographical mobility of personnel. (ii) At the sector level, it may be done by the Government Central or State and may cover manpower needs of agricultural, industrial and service sector. (iii) At the industry level, it may cover manpower forecast for specific industries, such as engineering, heavy industries, consumer goods industries, public utility industries, etc. (iv) At the level of the individual unit, it may relate to its manpower need for various departments and types of personnel.

Process of Manpower Planning The process of human resource planning is one of the most crucial, complex and continuing managerial functions which, according to the Tata Electrical Locomotive Company embraces organization development, management development, career planning and succession planning. The process has gained importance in India with the increase in the size of business enterprises, complex production technology and the adoption of professional management technique. It may be rightly regarded as a multi-step process, including various issues, such as: a) Deciding goals or objectives b) Estimating future organizational structure and manpower requirements c) Auditing human resources d) Planning job requirement and job descriptions and e) Developing a human resource plan. a) Deciding goals or objectives: Human resource planning fulfils individual, organizational and national goals; but, according to Sikula, The ultimate mission or purpose is to relate future human resource to future enterprise needs so as to maximize the future return on investment in human resources. In effect, the main purpose is one of matching or fitting employee abilities to enterprise requirements, with an emphasis on the future instead of present arrangements. The objectives may be laid down for a short-term (i,e, for one year). For example, the short-term objective may be to hire 25 persons from schedule tribes or backward class for the purposes of training. The long- term objective may be to start a new industry, to expand the market, to produce a new product, to develop its own sales force rather than depend on distributors, or to have minority group members eventually in position of middle and upper management cadres. b) Estimating the future organizational structure or forecasting the manpower Requirements: The management must estimate the structure of the organization at a given point in time. For this estimate the number and type of employees needed must be determined. Many environment factors affect this determination. They include business forecasts expansion and growth, design and structural changes, management philosophy, government policy, product and human skills mix and competition. Forecasting provides the basic premises on which the manpower planning is built. Forecasting is necessary for various reasons which have been stated below: (a) The eventualities and contingencies of general economic business cycle (such as inflation, wages, prices, costs and raw materials supplies ) have an influence on the short- range and long-run plans of all organizations. (b) An expansion following enlargement and growth in business involves the use of additional machinery and personnel, and a re-allocation of facilities, all of which call for advance planning of human resources. (c) Changes in management philosophies and leadership styles.

(d) The use of mechanical technology (such as the introduction of automatic controls, or the mechanization of materials handling functions) necessitate changes in the skills of workers, as well as a change in the number of employees needed. (e) Very often, changes in the quantity or quality of products or services require changes in the organization structure. Plans have to be made for this purpose as well. After estimating what the future organization structure should be, the next step is to draw up the requirements of human resources, both for the existing department and for new vacancies. For this purpose, a forecast of labour force is needed, and requisition should be obtained from different departments, i,e., forecast has to be made in returns of functional category; the members needed; and the levels at which they are required. Vacancies, occurring in any department, should be notified in writing by different department heads to the personnel department, stating clearly the number of vacancies to be filled, job or category-wise types of personnel needed, their technical qualification and experience and the reasons for acquisition (I.e., whether for replacement or addition); a statement of duties, type of jobs pay scales, age, and previous experience should also be made. Requisitions should be based on accurate job specifications by first line supervisor. They should, as for as possible, state the exact demands of a job. In determining the requirements of human resources, the expected losses which are likely to occur through labour turnover- quits, retirements, death, transfers, promotions, demotions, dismissals, disability, resignations, lay-off and other separations- should be taken into account. Changes in the human quality resulting from the experience gained in the jobs during the period and the training achieved also need to be considered. The addition of new lines of production and new projects also influence the demand estimates of human resources. The basic fact to remember is that the human resource in an organization constantly changes in terms of its present and future size. Additional human resources are gained through new employment of personnel, promotions, through transfers and demotions; but personnel is lost through voluntary quits, death dismissals, termination and retirements. After making adjustments for wastage, anticipated and expected losses and separations, the real shortage or surplus may be found out. If a shortage is there, efforts are made to meet it either by new recruitments or promotion from within, or by developing the existing staff. If there is a surplus, it is to be decided how it will be dealt with, i.e., whether there should be transfers, lay-offs, retrenchment or reduction in the hours of work of all. Underestimation of the quality and number of the employees required would lead to shortfalls in performance, while overestimation would result in avoidable cost to the organization. According to Dr. Ram Tarneja, Management can ensure control of labour costs by avoiding both shortages and surpluses of manpower through proper manpower planning. It may be noted that for purposes of manpower planning, the main dimensions to be taken into consideration are: (i) The total number of personnel available: This could be obtained from the pay-rolls and other personnel records, such as the applications for employment. The total number has to be classified on some basis, such as manual workers (i.e., daily-rated, weeklyrated or monthly-rated); clerical employees, ministerial staff, managers and other executives; specialists and skilled and unskilled workers; sex-wise distribution, etc.

(ii) The job-family: A detailed job-description for each position such as stenographers who may belong to various departments, e.g. finance, marketing, personnel, public relation, general administration, etc. (iii) Age distribution of the employees, available in the present departments, say in the age-group 20-29 years; 30-45 years, 46 years and above. (iv) Qualification and experience desire, such as a person with 5 years or 10 years experience in a particular branch/ job; and whether under-graduate, post- graduate or MBAs or gradates in Science, Commerce, Arts, Engineering, Professional Diplomaholders, etc; or with specialized knowledge in the field of marketing, finance, computer programming or engineering work. (v) The salary range etc. c) Auditing Human Resources: Once the future human resource needs are estimated, the next step is to determine the present supply of manpower resources. This is done through what is called Skills inventory. A skills inventory contains data about each employees skill abilities, work preference and other items of information which indicate his overall value to the company. A sample skill inventory proforma is been below: Skill Inventory Proforma Personnel factors Name Birth Place.... Age Sex Dependants Marital status Occupation of parents.. Present address Permanent address.. Telephone number (if any) .

Education and Training School .. Degrees/Diplomas obtained. Training undergone

Experience and Skills Job areas Special skill (such as ability to speak write foreign languages).. Job titles. Reasons for leaving

Supervisory responsibility.. Job dates Additional Information Test results . Performance ratings . Location of relatives .. Appraisal data Any other information .

Salary Grade

Absenteeism record Disciplinary record . Career plans

The above facts are usably recorded by an employee in some forms from which the information is fed into a computer. Other data pertaining to his performance ratings and his superiors evaluation of his potential for promotion may also be fed into the computer. The result may either be kept in a file (on tape or otherwise stored) containing information as to the number of employees in the organization, and other data about each employee, and an indication of his fitness for promotion. A specimen employee information card is given below: Employee Information Card Employee No. Address Town Dept.. ` Code. .

Position.. Exp. Date Employee status Shift : 1/2/3 Marital status Separated/Divorced No. of dependent children Relatives in company Union membership Experience of skill others Special training Accidents : : Departmental/on-the /vestibule : : : : 1/2/3/4/5 : Married/Single/Widowed/ : Regular/ Part-time/Co-operative

Yes/No. If yes, who? (which one)

Clerical/mechanical/sales/supervisory/

Loss time

Hospitalization

Yes/No : Yes/No

Member of the credit union Absenteeism Date Operator.. Days.

Some organizations do not compile a skills inventory but prepare organization charts to determine how many people, at what level, in what position and what kind of experience and training would be required to meet the objectives. These charts show a persons age, the number of years he has been in a particular position, and his fitness for promotion. These charts or skill inventories help in determining and evaluating the quantity and quality of the present human resources of an organization. They tell us what exist in stock and what is needed to be added to that stock, taking into account the capability qualification, experience a Manning table which into account the employees. Some companies maintain a manning table which lists all the jobs in the unit and the number of workers holding each job. Other companies also use Replacement charts, which show the present performance of each position holder and the promotional potential of possible replacements. d) Planning job requirement and job descriptions Once the present manpower resources are determined, the personnel department can estimate what changes will occur in the present labour force in the next few years, say 5 years. Job Analysis: After having decided how many persons would be needed, it is necessary to prepare a job analysis, which records details of training, skills, qualification, abilities, experience and responsibility, etc. which are needed for a job. Job analysis includes the preparation of job descriptions and job specifications. e) Developing a Human Resource Plan: This step refers to the development and implementation of the human resource plan which consists in finding out the sources of labour supply with a view to making an effective use of these sources. The first thing, therefore, to decide on the policy is- whether the personnel should be hired from within through promotional channels or should it be obtained from an outside source. The best policy which is followed by most organizations is to fill up higher vacancies by promotion and lower level position by recruitment from the labour market. The labour market is a geographic area from which employers recruit their work force and labour seeks employment. Here the force of demand and supply interact. A labour market generally has the following characteristics: (a) It highly unstructured and unorganized, for a majority of workers are illiterate and ignorant and do not have any information about available job opportunities. (b) The procedures by which companies recruit workers and the methods by which workers go about getting jobs are highly variable. (c) A great range of wage rates for the same occupation exits in the labour market depending upon the attitude of the management towards wage levels, the employers ability to pay and the productivity of labour.

(d) Labour is mostly not mobile either because it has incomplete or inaccurate knowledge of job opportunities and available wages or because of lack of job security. (e) The supply of labour fluctuates and is influenced by the population in the labour market the attractiveness of job (benefits, service wage, rates, and the reputation of a company), the extent of unemployment and the particular skills that are in demand. (f) Manual labour for unskilled jobs has been replaced by activities that require skills, scientific knowledge, technical acumen and professional training. Various external factors influence the outflow and inflow of manpower resources. A few such factors that operate at local level are: (i) population density at various distance from the factory or work place: (ii) local unemployment level, particularly of the categories which are relevant for the operation of the organizations (iii) availability of part time labour (iv) current competition for similar categories of manpower from other organizations: (v) output from the educational system (general as well as technical); (vi) Pattern of in-migration and out-migration within the area and between it and (vii) transport facilities and communication pattern. At the corporate level, other factors operate, viz., (i) trends in the growth of the working population; (ii) Government training schemes and system of technical, vocational, professional, and general education, and their out-turn; (iii) impact of social security measures on manpower supply; (iv) mobility of the products of the technical, professional and vocational institutions; (v) cultural factors and customs, social norms, affecting school leaving age, labour force participation of women, children and young persons. The personnel manager should have a thorough knowledge of the labour market. Which particular source in the labour market will be tapped depends upon the policy of a firm, the position of labour supply, the arrangement with labour unions, and Government regulations. However, it is always safe for the personnel manager to be in close liaison with these different sources and use them as and when the need arises.

The Personnel Departments Responsibility for Human Resources Planning Human resource planning is the responsibility of the Personnel Department. In this task, it is aided by the Industrial Engineering Department, the top management and the team of directors of different departments. It is mostly a staffing or personnel function. The overall responsibility lies with the Board of Directors because as the manpower planning scheme of Hindustan Lever indicates, these members are in a position to direct the future course of business, set appropriate goals for the management concerned in the formulation of personnel policies. The Personnel Departments responsibility is to recommend relevant personnel policies in respect of manpower planning, devise methods of procedure, and determine the quantitative aspects of manpower planning. The responsibilities of the Personnel Department in regard to manpower planning have been stated by Geisler in the following words: (i) To assist, counsel and pressurize the operating management to plan and establish objectives; (ii) To collect and summarize data in total organization terms and to ensure consistency with long-range objectives and other elements of the total business plan; (iii) To monitor and measure performance against the plan and keep the top management informed about it; and (iv) To provide the research necessary for effective manpower and organizational planning. Points to Consider: The Personnel Department /Director must first decide on a plan period i.e., the time span for which the plan is to be made. A plan period of less than three years or more than five years would be unrealistic. The process of recruitment training and placement often takes three or more years. Having decided on the time span (say five years), it should be seen that it runs a span of five years and in blocks. Only then the plan can be kept realistic and functioning. The plan should be worked out in sufficient detail. Its implementation should be evaluated and controlled properly. This requires a great deal of tenacity, persistence and vigilance on the part personnel managers. Every component of the plan has to be compatible with policies regarding recruitment, promotion, termination, inter-department transfer, retirement and training. Policy formulation is an essential pre-requisite for manpower planning. Whatever plan is made, it has to be realistic. A plan has to be put into operation and, therefore whatever is not feasible should be excluded. For every part of the plan, allowance should be, made for lead time, otherwise the result will be adversely affected. A balance between conflicting requirements of standards and time available has to be achieved. In other words; practicability has to be given precedence over perfection.

Finally, the paramount consideration should be to make the plan an integral part of the corporate plan it has to mesh with plans in other functional areas.

Manpower Plan Components The manpower plan can be broken down into three components: (i) Forecasting-estimating future needs and stock taking of available resources in the organization; (ii) Recruitment plan- to meet the gap between the internal resource and estimated need by external recruitment ; (iii) Training and development plan to utilize fully the human resources of the organization and to develop the potential resources. In practice, it has been found that short-term (less than 2 years) and medium-range plans (2 to 5 years) are easier to formulate with greater degree of certainty. The following table summarizes the factors related to two major forms of human resource planning. Three Ranges of Manpower Forecasting: Intermediate Range Short Range (2 to 5 years) 1. 2 years) Demand for Labour

Long Range (Beyond 5 years) Geographical capacity; size of the organization and system; product lines; services offered; load anticipated. Changes in environment and technology essentially judgmental.

Authorized expression Operating needs from budget Technological changes new or plans. Expansion or legislation ; employee contraction or adjustments turnover; lay offs, restriction

Labour-saving equipment, efficiencies, productivity, etc. Departmental, divisional rosters; promotions. Expected losses; quits, Merger or acquisition plans; death. managerial and supervisory development programmers. Labour market projection Area employment levels; business development plans, number of employees general institutional plans to hire. needed. Management expectations of Management expectations of changing characteristics of employees and future available manpower.

Supply of labourinternal

Supply labour-

of

external

future conditions immediate decisions.

affecting

Short- Range Analysis It usually grows out of normal budgetary processes. The parameters of short range forecasting are fairly well-defined. They are handled in the normal course of budget preparation and require simple arithmetic calculations. Long Range Analysis The parameters of short-range forecasting usually are fairly well-defined. They are handled in the normal course of budget preparation and require simple arithmetic calculations. Long -range planning is more complex and is dependent upon mathematical and statistical models, as knowledge of demand variables and appropriate measurement techniques. Two general kinds of forecasting techniques are used: indirect and direct methods. Indirect methods involve the forecasting of general rules production figures, for example that must be translated into specific requirements or measures. Direct techniques involve the use of methods of estimate (directly) labour hours, number of supervisors or particular occupational needs. Aggregate models are based on several key variables that are known to directly affect the organizations overall human resources needs. Every organization has special characteristics or problems, and a planner can use an aggregate model to get the big picture. These models may apply to a geographic region or to the overall system. Estimates techniques models are used for situations where circumstances make it difficult to use mathematical or statistical approaches. Here expert opinion and experience are used. The volume of future activity of business conditions, including legislation, change, innovation, or competition-situations that are almost impossible to qualify can provide workable answers to problems. At the end, it may be noted that all organizations-those that have a high labour turnover must systematically plan their short-term, medium-term and long-term manpower needs. These requirements need periodical reviews and adjustments to meet changing conditions. Summary An organizations performance and resultant productivity are directly proportional to the quantity and quality of its human resources. Human resource planning or manpower planning is the process by which a management determines how an organization should move from its current manpower position to its desired manpower position. The objective of human resource planning is to maintain and improve the organizations ability to achieve its goal by developing strategies that will result in optimum contribution of human resources. Developing personnel plans require three types of forecasts: -Personnel requirements -Supply of outside candidates -Supply of inside candidates To predict the future needs of personnel, one has to project the demand for product or service. This gives the volume of production required and finally these relate to the need for personnel to meet these requirements. The plan can be prepared from the data such as forecasts, inventories, turnover of employees, changes in the methods of work, processes, market conditions, availability

of required personnel. The plan has to be updated periodically along with the estimated plan of the organization.