HUMAN RESOURCE PLANNING

• Right number of people with right skills at right

place at right time to implement organizational
strategies in order to achieve organizational
objectives
• In light of the organization’s objectives, corporate
and business level strategies, HRP is the process
of analyzing an organization’s human resource
needs and developing plans, policies, and systems
to satisfy those needs
 HUMAN RESOURCE PLANNING

• Setting human resource objectives

and deciding how to meet them

• Ensuring HR resource supply meets

human resource demands
 HRP Process
• Interfacing with strategic planning and
scanning the environment
• Taking an inventory of the company’s
current human resources
• Forecasting demand for human resources
• Forecasting the supply of HR from within
the organization and in the external labor
market
 HRP Process Cont.
• Comparing forecasts of demand and
supply
• Planning the actions needed to deal
with anticipated shortage or
overages
• Feeding back such information into
the strategic planning process.
 Example of the Basic Human
Resources Planning Model
1 2 3
Organizational Human Resource Human Resource Feasibility
Objectives Requirements Programs Analysis

5
 HRP Model
• Strategic Human Resource Planning
– Links 1 & 5: HR objectives are linked to
organizational objectives and planning
• Designed to insure consistency between
organization's strategic planning process and
HRP.
– So objectives of strategic plan are feasible and
– HR programs are designed around what
organizational objectives and strategies require in
terms of human resource goals
 Example of the Basic Human
Resources Planning Model
1 2 3
Organizational Human Resource Human Resource Feasibility
Objectives Requirements Programs Analysis

5
 HRP Model Cont.
• Operational Human Resource Planning
– Steps 2,3, & 4

• Ensure HRP programs are coordinated

and allows the organization to meet its
human resource requirements.
 Example of the Basic Human
Resource Planning Model
Open new Develop staffing Recruit skilled Recruiting and
product line for new installation workers training
1 2 3 programs
•Production Develop technical
Open new feasible
workers training programs
factory and
Transfers
distribution •Supervisors Transfer managers infeasible
system •Technical staff from other because of lack
facilities of managers
•Other managers
with right skills
4
Develop new
objectives Recruit managers 3 Too costly to hire
and plans from outside from outside
5
 Link 1: Determine Demand
(labor
requirements)
• How many people need to be working and in what
jobs to implement organizational strategies and
attain organizational objectives.
• Involves forecasting HR needs based on
organizational objectives
• Involves consideration of alternative ways
of organizing jobs (job design,
organizational design or staffing jobs)
• Example - Peak production could be handled by temporary workers or
assigning overtime. Machine breakdowns assigned to maintenance
department or handled by machine operators
 Link 2: Determine HR Supply
(availability)
• Choose HRM programs (supply)

• Involves forecasting or predicting effect of various

HR programs on employee flowing into, through
and out various job classifications.

• First determine how well existing programs are

doing then forecast what additional programs or
combination of programs will do
• Need to know capabilities of various
programs and program combinations
 Determine Feasibility
Links 3 & 4
• Capable of being done
– Requires knowledge of programs, how programs fit
together and external environmental constraints
(e.g., labor force, labor unions, technology created
skill shortages) and internal environmental
constraints (skill shortages within the organization,
financial resources, managerial attitudes, culture)
• Do the benefits outweigh the costs
– Difficulty in quantifying costs and benefits
 Revise Organizational
Objectives and Strategies
Link 5
If no feasible HR program can be
devised, the organization must
revise strategic plans.
 Shortcomings of the model -
HRP in Practice
• Oversimplification of planning process
-Planning does not normally proceeds till
find first acceptable plan
• More than one set of HR goals to satisfy link
1 and more that one acceptable plan to
satisfy link 2 so:

• Typically choose the best HR goal for the

strategic plan and the best program to
satisfy that HR goal
Shortcomings of the model
- HRP in Practice
• Oversimplification of the benefit of planning
is the specific plans that result
– Planning process has value in and of itself
• HRP in practice is usually less rational and
may omit one or more of the steps
– May lack knowledge required for forecasting
– Incorrect assumptions about effectiveness of HR
programs
– Does not engage in strategic planning
– Resistance to change present HR systems
 HRP should be:
• Done to guide and coordinate all HR activities so
they work together to support the overall
strategy

• Responsive to internal and external environment

• Planning - done in advance

• Strategic - linked with higher level planning

 Human Resource
Forecasting
• Process of projecting the organization’s future
HR needs (demand) and how it will meet those
needs (supply) under a given set of
assumptions about the organization’s 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.
 Forecasting as a Part of Human Resource Planning
DEMAND Choose human SUPPLY
FORECASTING resource programs FORECASTING

Determine
Internal programs External programs
organizational
objectives •Promotion •Recruiting
•Transfer •External selection
•Career planning •Executive
Demand exchange
•Training
forecast for
•Turnover control
each objective

Aggregate Internal supply forecast External supply forecast

demand Does aggregate
forecast supply meet Aggregate supply
aggregate forecast
demand? No

Yes

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
• Organizational complexity
– complex career paths and diverse skill requirements lead
to more complex forecasting systems
• Organizational objectives
– the greater the gap between current HR situation and
desired HR situation the more sophisticated the system
• Organizational plans and strategies
– the complex the plans are the more complex the
forecasting system
 Forecasting Time Frame
Depends on degree of environmental
uncertainty

Factors creating uncertainty

(shortening time frame)
– many new competitors, changes in technology,
changes in social, political and economic
climate, unstable product demand
Factors promoting stability (longer time
frame)
– strong competitive position, slowly developing
technology, stable 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
 Demand Forecasting
Methods

• Delphi Method
• Staffing Table Approach
• Regression Analysis
• Time Series Analysis
• Linear Programming
 Supply Forecasting
Methods

• Skills Inventory
• Replacement Charts
• Succession Planning
• Flow Modeling/Markov
Analysis
• Computer Simulations