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
A strategy for the acquisition, utilization, improvement &
retention of an organizations human resources
AIMS of HRP:
1.
2.
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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IMPORTANCE OF HRP
Helps to determine the future personnel needs
It is a part of strategic planning
Creating highly talented personnel
International strategies depend upon HRP
HRP provides foundation for personnel functions
Increasing investments made in human resources is
another compelling reason for HRP
Helps in uniting the perspectives of line and staff
managers
Better clarity and direction is possible in all departments
Attracting and retaining qualified outsiders
Management succession between generations of owners
Family relationships and HR policies
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.
Microsoft going to cut 18000 jobs by June 2015
Recent budget allocations
MICRO HRP
Process of forecasting demand for & supply of HR for specific
organization
Eg.
Genpact (an IT solution company in India) has launched a Train the
trainer program to address the skills gap of students for members of the
faculty at Management departments
INFOSYS going to rehire performer ex employees + also plans to tackle
its increasing attrition rates
Quarterly promotion cycle , fast track career for performers
HR PLANNING PROCESS
BUSINESS STRATEGY & HRP
Business
strategy focus
(Porter)
HR strategy
HRP activities
Cost leadership
Cost
control
Stable business
environment
Efficiency & quality
Job
& employee
specialization
Employee efficiency
Long HR planning
scope
Internal
promotions
Emphasis on training
Hiring & training for
specific capabilities
Shorter
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
HR strategy
HRP activities
Defender
Finds
change
threatening
Favors strategies
which encourage
continuity & security
Bureaucratic
approach
Planned & regularly
maintained policies to
provide for lean HR
Build
HR
Likely to emphasize
training programs &
internal promotion
Prospector
Highly
innovative
Favors strategies of
product & / or market
development
Creative
& flexible
management style
Have high quality HR
Emphasize
redeployment &
flexibility of HR
Little opportunity for
long-term HRP
Acquire
HR
Likely to emphasize
recruitment, selection
& performance base
compensation
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)
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?
What are skill sets required to increase the productivity
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 40%)
Fast growing sectors like retail, ITeS, telecom 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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HR Forecasting .
Mathematical models
Trend analysis
Regression analysis
Simulation models
Productivity factors
Staffing ratios.
HR demand
and
forecasting
Judgmental methods
Rule of thumb
Delphi technique
Estimate
Nominal groups
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QUALITATIVE METHODS OF DEMAND FORECASTING
Method
Advantages
Disadvantages
Estimation
People in position estimate
the number of people the
firm will require in the
next yr.
Incorporates
knowledge of
corporate plans in
making estimates
May be subjective
Expert
opinion
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
Delphi
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
Face-to-face discussion
based on multiple
assumptions about future
business direction
Generates lot of ideas
Does not lead to
conclusion
Nominal
group
technique
Face-to-face discussion
Group exchanges
facilitate plans
Subjective which
may ignore data
Simple
averaging
Simple averaging of
viewpoints
Diverse view points
taken
Extremes views are
masked when
averaged
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QUANTITATIVE METHODS OF DEMAND FORECASTING
Method
Advantages
Disadvantages
Trend
analysis
&
projectio
n
Based on past relationship between a business factor related to employment
& employment level itself
Simple
long-run
trend
analysis
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
Regressi
on
analysis
Regresses employment
needs onto key variables
Data driven
Uses multiple business
factors
Difficult to use &
apply
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QUANTITATIVE METHODS OF DEMAND
FORECASTING
Method
Advantages
Disadvantage
s
Simulati Uses probabilities of
on
future events to
models
estimate future
employment levels
Makes several
assumptions about
the future regarding
external & internal
environment
Simultaneously
examines several
factors
Workloa
d
analysis
Based on actual content
of work
HR requirements
Job analysis may
based on expected
not be accurate
output of the firm
Difficult to apply
Productivity changes
taken into account
Markov
analysis
Probabilistic
Based on past
relationship between
business factor related
to employment &
employment level itself
Data driven
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Costly &
complicated
Assumes that
nature of jobs has
not changed over
time
Applicable to
stable
environment
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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FORECASTING TECHNIQUES
Trend Projection Forecasts:
Quickest forecasting techniques
Two simplest methods
1.
2.
Extrapolation: involves extending past rates of change
into future (if an avg of 200 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.)
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 long-range HR projections
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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
proportional
Production output &
manpower are the two
variables & the
relationship between
these two is plotted on a
graph by drawing a line
of best fit
Analysis aims at providing
a measure of the extent to
which changes in the
values of two variables are
correlated with one
another
X
x
Manpower
a
x
b
Production
level
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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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A TRANSITION MATRIX /
MARKOV MATRIX
Named after the Russian mathematician Andrei Andreyevich
Markov
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Forecasting
&
Analyzing
HR Supply
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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- 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.
They include 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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REPLACEMENT CHARTS
List the critical jobs in a company , the
employees currently positioned in those roles
, their competencies , the current vacancies
and facilitates in future planning.
groups employees into four
Employees
ready for promotion
Employees who would be ready for
promotion, but with training
Employees performing satisfactorily but
needs motivation and further improvements
Employees who are not fit to be on
employment and need to be replaced.
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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 & toplevel 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
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)
Turnover classified into:
(No. of empls leave in mth / avg. empls) x 100
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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