HR Planning

Human Resource Forecasting

Process of projecting the organizations future HR needs (demand) and how it will meet those needs (supply) under a given set of assumptions about the organizations policies and the environmental conditions in which it operates.

Without forecasting cannot assess the disparity between supply and demand nor how effective an HR program is in reducing the disparity.

Human Resource Planning

Human Resource Planning (HR Planning) is both a process and a set of plans. It is how organizations assess the future supply of and demand for human resources. An effective HR plan also provides mechanisms to eliminate any gaps that may exist between supply and demand. Thus, HR planning determines the members and types of employees to be recruited into the organization or phased out of it. Dynamic by nature, the HR planning process often requires periodic readjustments as labor market conditions change.

HRP Process
Strategic Planning Technological forecasts Economic forecasts Market forecasts Organizational planning Investment planning Annual operating plans Human Resource Demand Annual employment requirements Numbers Skills Occupational categories Human Resource Supply Existing employment inventory After application of expected loss and attrition rates

Compared
with

Variances

If none

End

If surplus

If shortage

Decisions

Decisions Overtime, recruitment, etc.

Action Decisions

Layoff, retirement, etc.

End

End

The HRP Process

All effective HR planning shares certain features. It is generally agreed that HR planning involves four distinct phases or stages:

Situation analysis or environmental scanning

Forecasting demand for human resources

Analysis of the supply of human resources

Development of plans for action

Why is HRP important ?

Even an imperfect forecast is better than none at all Anticipating needs prepare for the future gives you an edge Address potential problems avoid skill deficiencies

What is HRP?
HRP is a sub-system of total organizational planning. HRP facilitates the realization of the companys objectives for the future by providing the right type and number of personnel HRP is also called Manpower planning, Personnel planning or Employment planning

 HRP ensures that the organization has:

Right Number Right Kind Right Place Right Time

Benefits of HRP
Create reservoir of talent Prepares people for future Expand or Contract Cut Costs Succession Planning

Forecasting Techniques
Managerial Judgment Ratio trend analysis Work Study Techniques Delphi Technique Flow Models Others

Factors in Demand forecasting

Social factors Working conditions, Govt. regulations, environmental conditions, religious, cultural. Technological Factors Political Factors Trade restrictions, War etc. Economic Factors Demand generation Growth Employee Turnover

Forecasting as a Part of Human Resource Planning

DEMAND FORECASTING

Choose human resource programs

Internal programs

SUPPLY FORECASTING

Determine organizational objectives

External programs

Promotion
Transfer Career planning

Recruiting
External selection Executive exchange

Demand forecast for each objective Aggregate demand forecast

Training

Turnover control
Internal supply forecast External supply forecast

Does aggregate supply meet aggregate No demand? Yes

Aggregate supply forecast

Go to feasibility analysis steps

Internal Supply Forecasting Information

Organizational features (e.g., staffing capabilities)
Productivity - rates of productivity, productivity changes Rates of promotion, demotion, transfer and turnover

External Supply Forecasting Information

External labor market factors (retirements, mobility, education, unemployment)
Controllable company factors on external factors (entry-level openings, recruiting, compensation)

Demand Forecasting Information Organizational and unit strategic plans Size of organization Staff and Managerial Support Organizational design

Considerations in Establishing a Forecasting System

How sophisticated Appropriate time frame Subjective versus objective forecasting methods

System Sophistication
Organizational size
large organizations require more complex forecasting systems and likely to have the required skilled staff
complex career paths and diverse skill requirements lead to more complex forecasting systems the greater the gap between current HR situation and desired HR situation the more sophisticated the system the complex the plans are the more complex the forecasting system

Organizational complexity Organizational objectives

Organizational plans and strategies

Forecasting Time Frame

Depends on degree of environmental uncertainty Factors creating uncertainty (shortening time frame) Factors promoting stability (longer time frame)
strong competitive position, slowly developing technology, stable product demand.

many new competitors, changes in technology, changes in social, political and economic climate, unstable product demand

Subjective VS. Objective Forecasting

Objective is inappropriate when: Lack expertise to use objective methods Lack the historical data or HR data base is inadequate Forecasting horizon is too long for the available objective method

Linking Employers Strategy to Plans

Linking the Companys Strategic Plan to the HR Plan

Forecasting HR Needs
First step in HR planning
Forecast revenue Estimate the number of persons needed to achieve this volume

Forecast Techniques in HR Planning

Forecasting HR Needs
Trend analysis
The study of a firms past employment needs over a period of years to predict future needs.

Ratio analysis
A forecasting technique for determining future staff needs by using ratios between a causal factor and the number of employees needed. Assumes that the relationship between the causal factor and staffing needs is constant.

Forecasting HR Needs
Scatter plot
A graphical method used to help identify the relationship between two variables.
Size of Hospital (Number of Beds) 200 300 400 500 600 700 800 900 Number of Registered Nurses 240 260 470 500 620 660 820 860

Forecasting HR Needs
Scatter plot
Determining the Relationship Between Hospital Size and Number of Nurses

Forecasting HR Needs
Computerized forecasts
The use of software packages to determine of future staff needs by projecting sales, volume of production, and personnel required to maintain a volume of output.
Generates figures on average staff levels required to meet product demands, as well as forecasts for direct labor, indirect staff, and exempt staff. Typical metrics: direct labor hours required to produce one unit of product (a measure of productivity), and three sales projectionsminimum, maximum, and probable.

Forecasting HR Needs
Managerial Judgment
To modify forecast based on factors e.g. entering into a new market
Difficult to take a long-term perspective when market conditions change dramatically

Supply Forecasting Methods

Skills Inventory Replacement Charts Succession Planning Computer Simulations

 Qualifications inventories

Forecasting the Supply of Inside Candidates

Manual or computerized records listing employees education, career and development interests, languages, special skills, and so on, to be used in selecting inside candidates for promotion.

 Manual System and Replacement Chart

Personnel replacement chart
Company records showing present performance and promotability of inside candidates for the most important positions.

Forecasting the Supply of Inside Candidates

Position replacement card

A card prepared for each position in a company to show possible replacement candidates and their qualifications.

Forecasting the Supply of Inside Candidates

Manual System and Replacement Chart (contd)

Management Replacement Chart Showing Development Needs of Future Divisional Vice President

 Computerized Information Systems

Forecasting the Supply of Inside Candidates

Human Resource Information System (HRIS)

Computerized inventory of information that can be accessed to determine employees background, experience, and skills that may include:

Work experience codes Product or service knowledge Industry experience Formal education

 Matter of Privacy

Forecasting the Supply of Inside Candidates

Need to ensure the security of HR information

There is a lot of HR information to keep secure. Control of HR information can be established through the use of access matrices that limit users. Legal considerations: The Federal Privacy Act of 1974 gives employees rights regarding who has access to information about their work history and job performance.

Recruiting

RECRUITING IS PERFORMED.
After employment planning Assuming people are available with right skills, knowledge, and abilities To discover potential job candidates

RECRUITING GOALS
ATTRACT POTENTIAL
Communicate the position so that they respond The more, the better

NOT UNQUALIFIED
Self select out Saves time, money The less, the better

WHO RECRUITS?
IT DEPENDS ON.. Company size (large) Wage, skill level (low) Regional employment conditions Past recruiting success/failure High growth High change

STEGES OF RECRUITMENT

Planning Strategy Development Searching Screening Evaluation and Control

PLANNING
Number of Contacts
Type of Contacts

STRATEGIES
Make or Buy Where to Look How to Look- Internal & External

Internal Recruitment
Present Employees Employee Referrals Former Employees
Previous Applicants

RECRUITING SOURCES INTERNAL SEARCH

Advantages
Public relations Builds morale Encourages ambitious employees Cheaper Know candidate better Already socialized Training

INTERNAL SEARCH
Disadvantages
Miss good outside talent Cause infighting Inbreeding - no new ideas Have to train for technology, skill upgrades

RECRUITING SOURCES EMPLOYEE REFERRALS

ADVANTAGES
Reputation at stake Realistic job preview More acceptable candidate More likely to accept offer More likely to stay with the firm

External Recruitment

Advertisements Employee Exchanges Campus Recruitment Walk-ins Consultants Contractors Acquisitions and Mergers

EXTERNAL RECRUITING SOURCES

Advertisements Employment agencies Schools, colleges and universities Professional organizations

EXTERNAL SEARCH ADVERTISEMENTS

Placed in local newspapers, placards on gates, trade journals, Internet Distribution wider if
Specialized skills Higher level in organization Short supply in market

ADVERTISEMENT RESPONSE RATES VARY

Organization identification Labor market conditions Specifics in ad

Advertisement with General Information

Advertisement with Specific Information

EXTERNAL SEARCH EMPLOYMENT AGENCIES

Public/state Private Management consulting firms

PRIVATE EMPLOYMENT AGENCIES

Fees - paid or split Better image Advertisements Higher skills Some screening Training Guarantee for placements

MANAGEMENT CONSULTING FIRMS

Executive search Headhunter Specialized high skill
Senior managers Hard to fill technical specialists

Large fee paid by company AND.

RECRUITMENT ALTERNATIVES
Temporary help Employee leasing Independent contractors

TEMPORARY HELP SERVICES

Short-term labor fluctuation needs Broad skill ranges (Accounting, clerical, administrative, drafting, CEOs, programmers) AND.

MORE TEMPORARY OPTIONS

Retirees, older workers
Flexible scheduling Low absenteeism High motivation Mentoring for younger workers

EMPLOYEE LEASING
Longer than temp Good for employer Work for leasing firm
Salary, benefits

Well-trained Guaranteed

INDEPENDENT CONTRACTORS
Consultants Offsite specific tasks Good for the company
Recruiting No retirement No workmans compensation AND.