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Master of Management Studies (SEM-II) Assignment on the topic of,

HUMAN RESCOURCE PLANNING AND FORECASTING


For the subject of

HUMAN RESOURCE MANAGEMENT


Submitted to: Prof. Anusha Patil

2011-12
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Team Members

Deepa Jaisinghani Jatin Jaisinghani Harish Jangir Ameya Mukkadum Tarun Panchmia Rachita Patnaik

61 62 64 102 108 113

ACKNOWLEDGEMENT We are grateful to our professor Anusha Patil for giving us an opportunity to work on the subject of Human Resource Management which has enhanced and enriched our knowledge in the field of Human Resource Management. We would also like to thank our friends and colleagues at LLIM for their support and help.

Table of Content
Introduction to Human Resource Planning 4 Objectives of Human Resource Planning.5 Types of Planning..6 Forecasting Technique in Human Resource Planning.9 The Questionnaire10 The Case study( BPCL & Intelent)..11 Examples.18 Conclusion..20

Introduction to Human Resource Planning

comprehensive Human Resource Strategy plays a vital role in the achievement of an organisation's overall strategic objectives and visibly illustrates that the human resources function fully understands and supports the direction in which the organisation is moving. A comprehensive HR Strategy will also support other specific strategic objectives undertaken by the marketing, financial, operational and technology departments. In essence, an HR strategy should aim to capture "the people element" of what an organisation is hoping to achieve in the medium to long term, ensuring that: It has the right people in place It has the right mix of skills Employees display the right attitudes and behaviours, and Employees are developed in the right way.

Objectives of Human Resource Planning

ive Major Objectives of HR Planning :

Prevent Over / Understaffing Too Many = Added labor cost, surplus inventory Too Few = Lost Sales, stockouts, Provide Right Employees, With the Right Skills, in the Right Place, and at the Right Time Adapt to change Anticipate scenarios in advance Technology stagnation, improvement, disruption Industry, Competition Economy: growth, stagnation, shrink Regulation Assess and Speculate Provide Direction Aligns Staffing, training, development, performance measurement, and compensation Systemic Vision: shows how all the parts of the business fit together, and affect one another Unite Line and Staff Managers HR should take input from all managers in the organization HR Staff needs to understand the responsibilities of line managers

Types of Planning

ggregate Planning: Fills the need for groups of (lower-level) employees

Forecasting demand for employees Examine Factors: Strategy, Growth Rate, Market Demand, Technology, Competition Write down assumptions that affect need for employees Use Statistical Regression / Experience to Make Forecasts

Bottom-up (Unit) Forecasting: Each business unit produces forecast based on local goals Local goals are passed up the chain and aggregated Less Efficient, but makes business responsive to market needs Needs a system of accountability to avoid units"hogging" resources, resulting in sub-optimization. Top-down Forecasting Senior Management produces forecasts based on company goals Company goals are passed down the chain More efficient, but less responsive to market needs Mixed forecasting Senior Management and Local Business Units Produce Forecasts Middle-Management Negotiates Forecasting Workforce Demographics

STRATEGIES FOR HANDLING EMPLOYEE SURPLUSES AND SHORTAGES Surplus Hiring Freeze Do not replace those who leave Offer early retirement incentives Reduce work hours Voluntary Severence, Leave of Absence Across-the-Board Pay-cuts Layoffs Reduce Outsourced Work Employee Training Switch to Variable Pay Plan Expand Operations Shortages Recruit New Permanent Employees Offer Incentives to Postpone Retirement Rehire Retirees Part-Time Attempt to Reduce Turnover Work Current Staff Overtime Subcontract Work Out Hire Temporary Employees Redesign Job Processes so that Fewer Employees are Needed

Succession Planning: Focuses on filling specific upper-level management Identify Key positions that cannot be left vacant Senior Management Low-Demand Skilled Positions Two Purposes: Facilitates transition when an employee leaves Departing employee trains his successor Prepares Candidates in advance Identifies High-Potential Employees Determines Their Development Needs Assists in Career Planning

PROS AND CONS OF SHARING SUCCESSION PLANNING

Tell Pros: Could motivate employee to stay with the company and work harder Cons: Could create expectations for the employee, and a sense of obligation for the employer Don't Tell Pros: Greater Flexibility, easier to change mind later Cons: High performers may leave for opportunities elsewhere

Forecasting Technique in Human Resource Planning


Determining the human resources required by an organization involves identifying the jobs, skills and knowledge required by those jobs and the performance level of the current workforce. Using this data, you can forecast hiring or reorganizing needs for both the short and long term. Forecasting methods typically includes using past data to predict future staffing. Additionally, organizations can use survey, benchmarking and modeling techniques to estimate workforce staffing numbers. Use several methods and cross-check your findings to obtain the most accurate results. Step 1 Analyze your work operations. Conduct a detailed job analysis for each function in your company and list the policies and procedures required to complete each task. Document the standard output per hour per person. Determine the desired level of output in order to calculate the number of people you need to produce that volume of operations. Step 2 Conduct a series of online surveys using the Delphi technique--asking several experts in your organization their opinion on forecasting needs based on their experience managing the employees in your organization who directly contribute to the creation of products or services. Experts typically do not share their opinions with each other. Create and distribute your survey using a tool such as Zoomerang, SurveyMonkey or Qualtrics to gather your data. Examine the input and prepare a forecast. Send the forecast to the original participants to get their new input. Repeat the survey process until all participants reach consensus that the forecast appears accurate. Step 3 Use calculators available from the Society of Human Resource Management website (see Resources) to calculate metrics such as the average length of service and 90-day turnover rates based on your current human resources data. Use this information to help predict future staffing needs. Step 4 Read reports available from the Department of Commerce on workforce planning needs to help you learn about trends and forecast your budget for hiring, training and paying staff required to compete in a global marketplace. For example, the Department of Defense estimates it spends about $250 annually to support workforce foreign language needs. Step 5 Document your forecasting process and follow it consistently throughout your company so that all managers align their forecast to your strategic direction, identify skill gaps, create action plans to address shortages, implement plans to hire and retain skilled personnel and evaluate forecasts on an ongoing basis. Using this model, you can more accurately guide workforce planning efforts for all skill areas such as information technology and knowledge management.

The Questions

1. In what way Human Resource Planning is applied in your organisation? 2. How is the aggregate manpower planning (junior level employees) carried out? 3. What are the main challenges you face for aggregate capacity planning? 4. How do you overcome them? 5. How do you carry out forecasting of requirement of labour? 6. What tools are used to identify attrition? 7. Are there any measures taken to retain the expected attrite?

8. What strategies do you follow for managing shortages and surpluses of labour? 9. How is succession planning charted? 10.What is the ratio of succession for external sources to internal sources? 11.What are the main challenges you face for succession planning? 12.What are the Developmental strategies used to internally groom candidates? 13.What's your perspective on downsizing?

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The Study
For the purpose of the study, we have analysed the HR planning, Forecasting and Succession Planning practices at a Public Sector Unit and a Private Sector Unit and below are the findings.

In what way Human Resource Planning is applied in your organisation?


At BPCL Human resource manpower planning at BPCL is carried out for a span of 10years at one go. The last one was done in 2001, and there was a major restructuring carried out at that point of time. An external agency was hired to analyze job profile, number of position, roles and responsibilities, the scale of performance, etc. The next manpower planning is currently under process, however this time around it is being carried out internally. Minor changes based on the business requirement, if any are internally accommodated. There is no permanent change made to the roles and position in the interim. The current Manpower planning being conducted internally, that has representatives from all the walks of life, all the various departments, back office, non-management officers etc. the idea behind this exercise was to standardize the procedures across location and rework the resources required for optimum utilization. The basis of all these should be of forecasting of business requirements. At Intelenet Global Services Human Resource Planning is deeply involved in every aspect. Top that effect, there is a yearly Summit that is conducted which invites representatives from all departments and the overall organization goals are discussed and each department representative is asked to share their plans of how they can contribute to the over goals. Periodic reviews are carried out for the same. Human Resource and manpower Planning is carried out Annually, however it is revisited every month (sometimes even on a weekly basis) to check for variations and take timely measures to rectify it.

How is the aggregate manpower planning (junior level employees) carried out?
At BPCL Manpower planning at BPCL ideally carried out by estimating the man hours required, based on the estimated business, in house team called NITI that estimates the no. of workman required, by conducting time and motion study, work quantum and such techniques. This
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team also estimates the requirement of in-house jobs, and the need for outsourcing some jobs. At Intelenet Global Services To understand the manpower planning and forecasting its important for us to understand that how the revenue is generated in this industry

BPO industry broadly generates revenue in 2 types of billing 1. Full Time Equivalent (FTE) Pricing 2. Transaction Pricing In FTE based pricing, the client has an agreement with the vendor, to have 50 associates available at given point of time. Revenue is obtained on the basis of X amount/hour per person therefore its absolutely imperative that the manpower planning is tight to avoid any shortage, as any shortage would have direct impact on the revenue. On the other hand in a transaction pricing, the client has an agreement with the vendor, to be paid on the basis of per transaction processed. For eg. If the volume is of 80,000 transactions, revenue is as per the 80,000 transaction, if its 20000, revenue is as per 20000 transaction. This type of pricing is characterized by a sudden spike in the volumes and a sudden drop in the volume, therefore manpower planning, forecasting of volumes and manpower requirements and scheduling, is of a critical importance. In a FTE based pricing, the planner surely knows the number that is to be maintained. A buffer percentage is maintained, which no more than 15%, the reason for this restriction is to avoid surplus manpower as theres a cost attached to it. The buffer is maintained primarily to account for planned absenteeism, emergency and sick leaves, late comers, abscondings high number of unplanned leaves at the time of festive occasion. In a transaction based pricing the vendor has agreement to process as many volumes, be it 20,000 or 80,000 transactions. The biggest challenge is, in spite of forecasting the volumes of transaction, there still might be variation, in the actual volume received to process. Forecasting under the normal circumstances is carried out on the basis of historic data and trend analysis of the previous years. There is also situation, where certain month might see Huge volumes, where the occupancy level is high. Whereas in certain months, there might be slack period therefore the occupancy would be low, however the labour cost incurred will, still be the same. Manpower requirement is derived from the forecasted volumes. Below mentioned is a typical calculation carried out to estimate the manpower requirement Volume/SUT = MAN HRS Required.
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MAN HRS/8 = Raw FTE Required. Add : 14% shrinkage (industry average) Add : 80% occupancy This gives you net FTE Required. This number of man power is considered as budgeted FTE. The reason this is called budgeted FTE is any additional FTE would increase the cost; thereby reduce the revenue. Avg. SUT per transaction is calculated by time and motion studies. Shrinkage is an accumulation of planned and unplanned leave and absconding. Occupancy is the total productive time off the 8 hrs shift. So how is the Current number of people required identified??? Opening balance (existing staff) Add : head count in training and OJT Less : Attritions Less : Promotions This gives you the closing balance. Less : Estimated man power required This gives you manpower surplus and/or deficient. While planning for manpower, a quarterly plan is developed and revisited every week to monitor it on a real time basis.

What are the main challenges you face for aggregate capacity planning and how do you overcome them?
At BPCL The major challenges faced are that, people are not change ready; they become too comfortable in their comfort zone. So its important that you break the comfort zone and its important that its done seamless way. Communication, discussion, debates are carried put to get people ready for the job. The second challenge is skill set creation. So sometimes there are less people, hence more number of people require skill enhancement and training a big number involves its own complicity and huge cost implications. And the third challenge is dealing with unions.
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At Intelenet Global Services The major challenge is to forecast the right level of volumes and according have the right number of employees. For this purpose we have skilled Workforce Management team and the Real time Adherence team that only looks into the FSS activities (Forecasting, Staffing and Scheduling) The second challenge is managing people issues since its a very people sensitive industry. People can come up with last moment requests, latecomings or just plain monotony. It is important to be friendly with your people and yet control them. Will issue or skill issue needs to be tackled before it passes on to others.

How do you carry out forecasting of requirement of labour?


While sending the required numbers to the recruitment team, 2 factors are considered: 1. LEAD time: It includes time required, source the right candidate and provide him ample training and on the job learning to make him a skilled resource. 2. Trending of training yield :- This means the historic data of conversion ratio of number that was hired and number that was released to production.

Scheduling is another important aspect. Volumes throughout the day can also be volatile. There can be peaks and troughs and they are bound to change. Hence scheduling for breaks, resting time etc is carried out in such a way that maximum staffing is available at the peak time so as to maintain the grade of service as that is also the part of original agreement. Peaks and troughs are also observed on particular days in a week. Eg. Monday is supposed to be a busy day.

Hence planning for leaves etc is done keeping these factors in mind. At the times when volumes spike abnormally, that is the time when acute shortage of labour is observed. At such times, support staff (quality assurance, trainers, escalation team) are also utilized for production. In addition to this, overtime is instated. Scheduling is primarily done to manage aberrations in the volumes.

What tools are used to identify attrition?


At BPCL Attrition rate is very low, almost nil. So there have no major issue in term of attrition, in past 5years.
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At Intelenet Global Services Attrition trending is observed on basis that the attrition is estimated. Another tool utilized to identify prospective attrition is a tracker called as (early warning signal)EWS tracker. This tracker rates an employee on parameters of attitude, skill and performance. It has a coding of red, amber and green (RAG).

Are there any measures taken to retain the expected attrite?


At BPCL No Attrition issues At Intelenet Global Services When a possible attrition is identified, there is a one-on-one conversion and an attempt is made to identify the actual reasons for attrition. For Eg if the students have come in for a stop gap arrangement, then flexible timings, permissions are given to the employees to log off during the non peak hours and utilize that time to study whilst being at work Counselling is carried out for tenured and skilled resources and the successions plans, if any, for them are discussed. Offer them a developmental trainings for self development.

What strategies do you follow for managing shortages and surpluses of labour?
At BPCL Transfers and redeployments however there has not been an instance of this At Intelenet Global Services If there is a surplus, employees are redeployed, transferred etc. If there is a short-term surplus, the employees are developed, trained, utilized as floor walkers and SMEs. This brings about a sense of motivation for the employess and they look forward. If there is a deficit, then, there are 2 options : 1. Internal hiring :- If there is any surplus labour available in the orgsanisation. 2. External hiring :- This activity is carried out by the recruitment team.
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How is succession planning charted?


At BPCL Promotion is usually based on seniority and merit. Theres a talent pipeline thats created to prepare people for new roles and responsibilities, adequate training is given and 360 degree appraisal is carried down. The corporate HR evaluates and identifies gaps and accordingly provides exposure and training to the employee. Downsizing, the perspective it is rightsizing. The methodologies used are transfers, within location, reskilling and VRS. The HR issues here are slightly different as the junior level employees are higher in numbers, so if theres a labor surplus in certain regions, then they are redeployed to the region where there is labour shortage. This surely causes issues and unrest If there is no performance and promotion are not considered, internal leadership pool is generated and maintained for any available position at any location. At Intelenet Global Services A clearly charted Succession Planning is charted for the employees. Customised and tailor made training programs are developed internally by the organization to develop an internal pool of talent. The Succession is based on 2 prime factors i.e Attitude and Performance

What is the ratio of succession for external sources to internal sources?


At BPCL Almost 100% At intelenet Global Services Approximately 95%

What are the main challenges you face for succession planning? At BPCL
Communication Familiarising people to the change in the role Availability of skillset as its not practically possible to training a large number of employees At Intelenet Global Services

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Identifying right person with the right skills to match the job. Skills development trainings are carried out with minimum skills requirements and competency based interviewing

What are the Developmental strategies used to internally groom candidates?


At BPCL There are a few Leadership trainings carried out to develop resources internally

At Intelenet Global Services As a manager, what you should do is identify and plot competencies of your team. This helps to identify gaps, be it skill or behavioral. There are STEP programs to mentor and groom associates to Team Leader level and LEAD program to mentor and groom team leader to Team Manager Competency based interviewing is carried out at each of these programs to test the readiness of the candidate.

What's your perspective on downsizing?


At BPCL It is termed as Right sizing and this is done through Reskilling, Job Rotations, Redeployments, and finally VRS At Intelenet global Services
The company looks at attrition in any form as a cost. The reason being that the company is losing a skilled manpower and to replace, it will have to incur additional cost. Therefore the business unit has a monthly attrition target of no more than 6%. Most employees are either redeployed or transferred to other departments where there is a requirement.

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EXAMPLES OF HR PLANNING AND FORECASTING

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DELL COMPUTERS For the past decade, Dell computer has remained one of the worlds fastest growing companies. Founded in 1984, the organization now has over 35,000 employees , does business in more than 170 countries, and has over$27 billion in annual revenues. One share of Dell stock purchased in its initial public offering in June 1988 at $8.50 was worth $4,812 as of April 2000. In 1998 alone, Dells workforce increased by 56 % over the previous year . Dell executives attribute much of this success to Dells approach to managing human resources. Dell business unit and the vice president of HR. They attend business unit management team meetings as internal consultants and are involved with developing the business units each particular business line. Clearly, such phenomenal growth and performance can only be achieved through a well-designed system for recruiting new hires. A key to Dells success has been its organizational Human Resource Plan toward recruiting and training during peak period (OHRP) process. The OHRP process helps Dell to anticipate its demand for workers to facilitate its growth. The process involves mapping a set of key job openings that are used to forecast and source inside and outside talent in advance. Dell also requires its HR function to spot the competencies and sills its new employees will need by analyzing its existing highest performing employees and determining the keys to their success. Steve Price, vice president of HR at Dell, notes, We look at people who have been given the biggest merit increases, the best appraisals, and so forth, and then we interview against these companies. Dell also utilizes flexible deployment of its HR staff to facilitate its OHRP process. Line managers in assisting HR with staffing, orientation, and training during peak periods. These individuals lend keen insights toward recruiting and training as they are the individuals who actually do and oversee the functional areas . Conversely, during slower recruiting periods such as the Christmas holidays, HR recruiting staff move over to sales and customer service to assist with peak customer demand experienced during that time. After the holidays, they return to their HR functions.

II
Human capital management at the United States Postal Service
With more than 8000,000 employees, the U.S Postal Service (USPS) has the second largest workforce in the country. The 23 year old post service has an operating budget of $65 billion and has been under increased competitive pressure from organisation such as Federal Express, United parcel Service, and Internet service providers, all of whom have eroded market share and offered alternatives to the traditional enjoyed by the USPS. Current

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projections are that 85% of its executives, 74% of its managers and supervisors, and 50% of its career workforce will be eligible to retire by 2010. The postal service has developed a strategy to ensure that it attracts the right people and then deploys them efficiently to where they are most needed. To ensure that the best employees are retained, performance management and leadership development programs have been created to motivate and reward them. At the centre of its human capital management plan are four key strategies: 1) Aggressive recruitment of future leader 2) Building of an effective, motivated workforce in which individuals and teams are recognised through a performance based pay system 3) Establishment and maintenance of a good work environment , based on cooperative working relationship between unionizes employees and management; and 4) Creation of flexible workforce that can be readily adjusted as conditions change and new need arise. To facilitate these goals, back office functions have been recognised and consolidated into 85 separate performance clusters. Each cluster has its own HR staff that applied reengineering principle principles and technology tools to repetitive transactional services work to create more self service transactions for employees and managers. Performance management is being integrated into virtually every organisational initiative to ensure that rewards are commensurate with productivity. Succession planning and corresponding training and development initiatives have been established to ensure that vital skills are identified and transferred to up-and-coming employees. The advanced leadership programme has been developed

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CONCLUSION
After studying the manpower planning and forecasting at BPCL and Intelenet we conclude the following. In a PSU like BPCL the human resource planning was carried for a period of 5-10 years which leads to inaccurate estimation of manpower as the business scenario and economic condition are volatile which may make this process over expensive and futile. Whereas as in Intelenet the human planning and forecasting roster was updated weekly giving scope for adapting to the business changes . Thus we observed that in Intelenet the planning and forecasting is far superior than that at BPCL. in a private sector importance is given to the customer rather that the system. Employees being the single most important asset to a company having the manpower requirement reviews regularly gives Intelenet a better change as handling the needs of the customer. HR Planning not only can be strategic tools, it can also help establish an organizations sustainability competitive advantage. Retaining good workers has become even more important as it is projected that there will be a shortage of workers in the future. Achieving competitive success through people requires a fundamental change in how managers think about their employees and how they view the work relation. It involves seeing employees as PARTNERS not just as costs to be minimized avoided.

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Bibliography

The data in the assignment has been collected from,

BOOKS Human Resource Management B.B. Mahapatro Human Resource Management- V.S. Rao Strategic Human Resource Management -Jeffrey Mellow Website
www.wikipedia.com
www.smallbusiness.chron.com

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