Human Resource Planning (HRP)

HRP: An Overview

HRP is a process of analyzing & identifying the need for & availability of human resources (HR) so that organization can meet its objectives

Defining HR Planning
Strategy Oriented DEFINITION

1. 2.

A strategy for the acquisition, utilization, improvement & retention of an organizations human resources AIMS of HRP:
to ensure the optimum use of the people currently employed to provide for the future staffing needs of the organization in terms of skills, number, & ages of people

HRP establish control: planner work as a policeman who checks whether staffing levels are optimum

Process Oriented DEFINITION

HRP is as a continuous process of analyzing an organizations HR needs under the changing conditions & developing the activities necessary to satisfy these needs like staffing, recruitment, selection, training, etc. Process aimed at assisting management to determine how the organization should move from its current staffing position to its desired staffing position
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Business Strategy & HRP

Business strategy focus (Porter)
Cost leadership
Cost

HR strategy

HRP activities

control Stable business environment Efficiency & quality

Job

& employee specialization Employee efficiency Long HR planning scope

Shorter

Internal

promotions Emphasis on training Hiring & training for specific capabilities

External

Differentiation
Long

term focus Growth Creativity in job behaviour Decentralization

HR planning scope Hire HR capabilities required Flexible jobs & employees

staffing Hire & train for broad competencies

Business Strategy & HRP

Business strategy focus (Miles & Snow)
Defender
Finds

HR strategy

HRP activities

change threatening Favors strategies which encourage continuity & security

Bureaucratic

approach Planned & regularly maintained policies to provide for lean HR

Creative

Build

HR Likely to emphasize training programs & internal promotion

Acquire

Prospector
Succeed

on change Favors strategies of product & / or market development

& flexible management style Have high quality HR Emphasize redeployment & flexibility of HR Little opportunity for longterm HRP

HR Likely to emphasize recruitment, selection & performance base compensation

Perspectives of HRP

MACRO HRP
Assessing & forecasting demand for & availability of skills at national / global level Predict the kinds of skills that will be required in future & compare these with what is / will be available in the country Eg.

Gillette merger with P&G whereby decided to restructure & move from business units based on geographic regions to global business units based on product lines which resulted in redundancy of some employees (Relocation to Singapore & VRS for others)

MICRO HRP
Process of forecasting demand for & supply of HR for specific organization Eg.

Wipro (a software giant in India) raising wages / short-listing students in their 2nd yr. of college for future employment in India Genpact (an IT solution company in India) launching an associate trainee program with Osmania University in India
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JOB ANALYSIS

Terminology commonly used in JA literature

JOB group of positions that have similar duties, tasks, & responsibilities POSITION set of duties & responsibilities performed by one person

A job is a general term, a position is more specific. Eg. as my job, I am a teacher. But to be specific, my position is Elementary Gifted Specialist. Eg. someone might work at the grocery store as their job, but specifically, their position is produce assistant.

JOB FAMILY group of 2 / more jobs that have similar duties / characteristics TASK separate, distinct & identifiable work activity DUTY several tasks that are performed by an individual 8

Terminology commonly used in JA literature

RESPONSIBILITIES obligations to perform certain tasks & duties

DUTY**BEHAVIOR SHOWING A PROPER REGARD / SENSE OF OBLIGATION, JUSTICE MORALITY, OCCUPATION OR POSITION. RESPONSIBILITY**OBLIGATION,TO DO WHAT IS ASK,IF YOU SAY YOUR GOING TO DO SOMEHTHING DO IT,TRUST,HONEST, TO CARE FOR ANOTHER WHEN ONE

JOB DESIGN process to ensure that individuals have meaningful work & one that fits in effectively with other jobs JOB DESCRIPTION written summary of the content & context of the job, outlining the tasks, duties, & responsibilities of a job, as well as performance standards of each job JOB SPECIFICATION written statement of the KSA & other characteristics (human requirements) that are necessary for performing the job effectively & satisfactorily 9

Information obtained from JA

What is to be done? How is to be done? (CONTENT) Under what conditions is the job to be done (CONTEXT) What KSA & other characteristics are required to perform the job (HUMAN REQUIREMENTS)
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Information obtained from JA

JOB CONTENT

Duties & responsibilities Job demands Machines, tools, & equipment Performance standards

JOB CONTEXT

Physical, organizational & social context Work conditions, & work schedule

HUMAN REQUIREMENTS

KSA, Education, Experience & personal attributes (personality, interests, etc.)

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Components of a JA

JOB DESCRIPTION

Statement of tasks, duties, responsibilities, & context of the job

JOB SPECIFICATION

KSA required to perform the job satisfactorily

JOB EVALUATION

Comparison of relative value of jobs in organization for making compensation decisions

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Methods of collecting information for JA

Number of ways may be used in combination or in isolation METHODS:

Interviews Questionnaires

Observations
Participant

diary
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JA Process
Determine purpose of JA Review organization chart

OC shows the division of work in organization, how the job in question related to other jobs, how the job fits into the overall organization, who reports to whom, & whom the incumbent reports to

Select representative jobs for analysis Analyze jobs using data gathering methods Check information for accuracy Write JD & JS for use in HR activities

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Writing JDs
Job title & identification Job summary Relationships Responsibilities & duties Standards of performance & working conditions Equipment & tools Working conditions

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HRP Process

1.

HRP PROCESS:
Environmental scanning 2. Forecasting & analyzing demand for HR 3. Forecasting & analyzing supply of HR 4. Developing action plans to match HR demand & supply

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Environmental Scanning

Systematic process of studying & monitoring the external environment of the organization in order to pinpoint opportunities & threats Involves long range analysis of employment Factors include economic factors, competitive trends, technological changes, socio-cultural changes, politico-legal considerations, labour force composition & supply, & demographic trends
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Environmental Scanning

Eg., competitive pressures are likely to increase resulting in enhanced productivity requirements & HRP objective may be to increase employee productivity by 5% in 2 yrs. which will require the firm to determine current employee productivity (output / employees) Attempts to answer 2 questions:

Which jobs need to be filled (or vacated) during the next 12 months? How & where will we get people to fill (or vacate) these jobs?

Demand & supply of labour in loose & tight labour market

Major impact of the shortage of skilled workforce (tight labour market) in India has been on staff cost (increased by 35% in 2005) Fast growing sectors like retail, ITeS, telecom are new & do not have historical talent to bank on & hence they are hiring from other sectors with skill sets that are relevant to their industries
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Forecasting HR Demand

FORECASTING makes use of information from the past & present to identify expected future conditions.

Forecasts are not perfectly accurate & as the planning scope becomes shorter the accuracy of forecasts increases
HR demand forecasts may be internal / external
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Qualitative Methods of Demand Forecasting

Method
Estimation People in position estimate the number of people the firm will require in the next yr.

Advantages
Incorporates knowledge of corporate plans in making estimates

Disadvantages
May be subjective

Expert opinion Delphi

Panel of experts forecast HR requirements for particular future business scenarios. For this method, there may be a single expert, or estimates of several experts may be pooled together Experts go through several rounds of estimates with no face-to-face meeting Incorporates future plans & knowledge of experts related to mkt., industry & technical development Subjective, time consuming & may ignore data

Group brainstor ming

Nominal group technique Simple averaging

Face-to-face discussion based on multiple assumptions about future business direction

Face-to-face discussion

Generates lot of ideas

Does not lead to conclusion

Subjective which may ignore data Extremes views are masked when 20 averaged

Group exchanges facilitate plans Diverse view points taken

Simple averaging of viewpoints

Quantitative Methods of Demand Forecasting

Method
Trend analysis & projectio n Simple long-run trend analysis

Advantages

Disadvantages

Based on past relationship between a business factor related to employment & employment level itself

Extrapolates past relationship between volume of business activity & employment levels into the future

Recognizes linkage between employment & business activity

Assumes that volume of business activity of firm for forecast period will continue at same rate as previous yrs Ignores multiplicity of factors influencing employment levels Difficult to use & apply
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Regressi on analysis

Regresses employment needs onto key variables

Data driven Uses multiple business factors

Quantitative Methods of Demand Forecasting

Method
Simulati on models Uses probabilities of future events to estimate future employment levels

Advantages
Makes several assumptions about the future regarding external & internal environment Simultaneously examines several factors
HR requirements based on expected output of the firm Productivity changes taken into account Data driven

Disadvantages
Costly & complicated

Workloa d analysis

Based on actual content of work

Job analysis may not be accurate Difficult to apply

Markov analysis

Probabilistic Based on past relationship between business factor related to employment & employment level itself

Assumes that nature of jobs has not changed over time Applicable to stable environment 22

Causes of Demand
EXTERNAL CHALLENGES:

Economic developments noticeable effect but are

difficult to estimate (Inflation, unemployment, & changing workforce patterns)

Social, political & legal challenges easier to

predict, but their implications are not very clear (Implication of abolishing mandatory retirement age in US may not be known until a generation has lived without 65 & out tradition)

Technology changes difficult to predict & assess

but may radically alter strategic & HR plans (PC would cause mass unemployment vis--vis IT field as a large one employing millions of people directly / indirectly complicates HR, because it tends to reduce 23 employment in one dept. while increasing it in another)

Causes of Demand
ORGANIZATIONAL DECISIONS:

As orgs. respond to changes in their environment, decisions are made to modify the strategic plan, which commits firm to longrange objectives growth rates & new products, markets / services & these objectives dictate number & types of employees needed in future To achieve long-term objectives, HR specialists must develop longrange HR plans that accommodate strategic plan In short run, planners find strategic plans become operational in form of budgets

Sales & production forecasts are less exact than budgets but New ventures means changing HR demands when a new

may provide even quicker notice of short-run changes in demand for HR venture is begun internally from scratch, lead time may allow planners to develop short-run & long-run employment plans merging HR group with Corporate Planning staff

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Causes of Demand
WORKFORCE FACTORS (ATTRITION):

Demand is modified by employee actions such as

retirements, resignations, terminations, death, & leaves of absence

Analysis Technique Markov Analysis of

Attrition Rates

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Forecasting Techniques
Trend Projection Forecasts:

Quickest forecasting techniques

Two simplest methods

1.

Extrapolation: involves extending past rates of change into future (if an avg of 20 production workers was hired each month for past 2 yrs, extrapolating that trend into future means that 240 production workers will be added during upcoming yr.)

2.

Indexation: a method of estimating future employment needs by matching employment growth with an index, such as ratio of production employees to sales (eg., for each million $ increase in sales, production deptt. requires 10 new assemblers)

Both are crude approximations in short run because they assume that causes of demand remain constant which is seldom the case making it very inaccurate for longrange HR projections
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Methods of Demand Estimation

TREND ANALYSIS & PROJECTION

Study of firms past employment needs over a period of yrs. to predict future needs Appropriate business factor that relates significantly to employment levels differs across industries (University student enrollment, Sales firm sales volume, Manufacturing firm total units produced) Steps:
1. 2. 3. 4. 5. 6.

Determine & identify a business factor that relates to the number & type of people employed Identify historical trend of the relationship between this business factor & the number of people employed Determine the ratio of employees to the business factor, that is, the average output per individual employee per year labour productivity Determine the labour productivity ratio for the past 5 yrs at least & calculate the average annual rate of change in productivity Calculate the human resource demand by dividing the business factor by the productivity ratio Project human resource demand for the target year.
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Methods of Demand Estimation

SIMPLE LONG-RANGE TREND ANALYSIS

Extrapolates the volume of current business activity for the years for which the forecast is being made

Since there is a correlation between volume of business activity & employment level, linear extrapolation would also indicate HR demand by job & skill category
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Methods of Demand Estimation

RATIO ANALYSIS

RATIO between output & manpower deployed to achieve that output is established at a given point of time

Eg., revenue per employee, sales vol. per salesperson, service contract per engineer, units produced per employee, etc.,

Historical ratio between:

Some causal factor (sales volume)
No. of employees required (number of salesperson)
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Methods of Demand Estimation

REGRESSION ANALYSIS

Drawing a statistical comparison of past relationship among variables

Statistical relationship between no. of patients (business factor) & employment level of nurses in a nursing home may be useful in forecasting the no. of employees that will be needed if the no. of patients increases by say 20%
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Methods of Demand Estimation

LINEAR REGRESSION ANALYSIS

Relationship between two variables which is directly & precisely proportional

Manpower

Production output & manpower are the two variables & the relationship between these two is plotted on a graph by drawing a line of best fit

X
x x

a
x x

Analysis aims at providing a measure of the extent to which changes in the values of two variables are correlated with one another

b Production level

Y
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Methods of Demand Estimation

MARKOV ANALYSIS

Shows the percentage (& actual no.) of employee who remain in each job from one yr. to the next, as also the proportion of those who are promoted or transferred or who exit the organization Internal mobility among different job classifications can be forecast based upon past movement patterns past patterns of employee movements (transitions) used to project future patterns Pattern is used to establish transitional probabilities & to develop a transition matrix Transitional probabilities:

Indicate what will happen to the initial staffing levels in each job category / probability that employee from one job category will move into another job category Determine the forecasted employee levels at the end of the yr

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Forecasting & Analyzing HR Supply

Internal supply forecasts relate to conditions inside the org. such as age distribution of workforce, terminations, retirements, etc. External supply forecasts relate to external labour market conditions & estimates of supply of labour to be available to the firm in the future in different categories
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Methods of Forecasting External HR Supply

INTERRELATED FACTORS THAT MUST BE CONSIDERED IN PROJECTING EXTERNAL HR SUPPLY

Government estimates of population available for work Net migration into and out of the area Numbers entering the workplace Numbers leaving the workplace Numbers graduating from schools / colleges Changing workforce composition Technological shifts Industrial shifts Trends in the industry (actions of competing employers) Economic forecasts Government regulations & pressures such as job reservations for certain groups
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Methods of Forecasting Internal HR Supply

HR INVENTORY

Obtains & stores information about each employee of the org. in a manner that is easily accessible because it is necessary for HRP

Employee information stored in the inventory relates to KSA, experience, & career aspirations of the present workforce of the firm
Contents of HR Inventory
Personal identification information

Biographical information
Educational achievements Employment history Information about present job Present skills, abilities, & competencies Future focused data Specific actions (like training needed for achieving career goals)
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Methods of Forecasting Internal HR Supply

HR INVENTORY

2 types
Skills inventory: describes the skills & knowledge of non-managerial employees & is used primarily for making placement & promotion decisions Management inventory: contains the same information as in skills inventory, but only for managerial employees which describes the work history, strengths, weaknesses, promotion potential, career goals

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Methods of Forecasting Internal HR Supply

HR INVENTORY

Can be used to develop employee replacement charts

Replacement charts lists current jobholders & identifies possible replacements should there be a vacancy for reasons such as resignations, transfers, promotions, etc.

Replacement charts include the following information on possible replacements like current job performance, potential for promotion, training experience required by replacement to be ready for the key position
Chart also details when a replacement is needed for a job short term forecasts in nature
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Methods of Forecasting Internal HR Supply

SUCCESSION ANALYSIS & PLANNING

A systematic & deliberate process of identifying, developing & tracking key individuals within the firm to prepare them for assuming senior & top-level positions in future. Eg., SAIL poaching from global players & preparing a defence system wherein 2nd & 3rd line of command is being prepared; IBM, ExxonMobil, GE, etc., have already hired its CEO for 2010 Eg., Godrej, Marico (fly. owned business) in India have drop dead succession plan which keeps the wheel moving where a promoter of the fly-owned firm may always be around to guide the company
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Methods of Forecasting Internal HR Supply

LABOUR WASTAGE ANALYSIS

Traditionally LW is measured by the employee turnover index (% wastage index)

(No. of empls leave in mth / avg. empls) x 100

Turnover classified into:

Avoidable separations (resignations & dismissal) Unavoidable separations (retirement, death, & marriage)

Turnover rate = [(S-US) / M] x 100

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Methods of Forecasting Internal HR Supply

ABSENTEEISM RATE No. of man-days lost due to absence from work during the period AR = --------------------------------------- x 100 Avg. number of Total number empls. during this pd. of days

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Thank You

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