Human Resources Planning

HR planning is both a process and a set of plans. It is how organizations access the future
supply and demand for human resources. In addition, an effective HR plan also provides
mechanisms to eliminate any gap that exists between supply and demand. Thus, HR planning
determines the numbers and types of employed to be recruited into the organizations.

HR planning also involves linking a firm’s HRM practices to its strategic business needs,
which have been identified by the strategic planning process. HR planning may be done on both
short-term and long-term (three or more years) basis. Its aim is to ensure that people will be
available with the appropriate characteristics and skills when the organization needs them.

It is a process by which a company ensures that it has the right number and kind of
people, in the right places at the right time, doing the things for which they are economically
most useful. It is a method for determining future HR requirements and developing action plans
to meet them. It is defined as a strategy for the requisition, utilization, improvement, and
retention of an enterprise’s HR and it encompasses the subject concerned with the developing
range of manpower policies, including those for recruitment, development, and retention.

Why Conduct HR Planning?

HR planning must be conducted for more effective and efficient use of HR. HR planning
helps in scheduling recruitment and selecting effectively by providing information that determine
how people are needed and the kinds of people needed for openings.

In a rapidly changing business such as computer programming, the company must be able
to respond quickly to changing needs of its employees. Careful planning is central to this
process. HR planning is a major building block of discussed throughout this book depends on
careful HR planning.

Through the HR planning process, the organization can identify the mix of skills it will
need in the future. The output of HR planning is required before the head of HR can plan for its
recruitment, selection, and training of employees.

More satisfied and better developed employees have better chances of developing and
utilizing their talents. This situation often leads to greater employee satisfaction. Through a
systematic planning of HR, a company can be better assisted in attaining its goals and objectives.
It can also be an effective means of planning the development and growth of its employees.
Human Resource Planning Process.

Six Distinct Phases or Stages

1. Situation Analysis and environmental Scanning / Analysis of the Current Situation /

Forecasting Supply of Manpower
The strategic plan must adapt to environmental circumstances, and HRM is one of the
primary mechanisms that an organization can use during the adaption process. For example,
 rapid technological changes in the environment can force an organization to quickly identify
and hire employees with new skills that previously were not needed by the organization. This
stage will reveal data of the current HR situation and its position to the national economy.
HR problems may surface in the light of desired corporate goals and a clear understanding of
its fundamental in the planning process.
2. Forecasting Demand for Employees
This is estimating not only how many but also what kind of employees will be needed.
This involves making a projection in terms of the number of employees the firm should have
to make productive and competitive as well as determining their specific qualifications. It is
necessary to have an indication of future development in order to plan out necessary steps.
There are two considerations:
a. What is the manpower demand for specific types of position at any given point of
time to perform various roles?
b. What is the best employment profile to be used for future trends?
The most important step in forecasting HR requirements is to identify what is to be
forecasted. This requires the drawing of a forecasting model which would attempt to do three
things.
a. Define categories
3. Analyzing the Current Supply of Employees/Inventory of Manpower
This is to determine how many and what kind of employees the company currently have in
terms of skills and training necessary for the future.
Useful tools in analyzing current HR situation in the necessary for the future.
a. HR Inventory – stock taking of firm’s employees; head count of employees.
b. Skills Inventory – analyzing the individual skills and abilities of all kind of employees at
all levels.
c. Human Resource Audit – seeks to answer the question “what has been and is happening
to our HR”?
The major tool used is the skills inventory which is done after determining the kind of skills,
abilities, experiences and training the employees currently have. By keeping track of these,
the organization can quickly determine whether a particular skills is available when it is
needed. A skill inventory in its simplest form is a list of names, characteristics, and skills of
the people working for the organization.

4. Forecasting HR Supply
The total stock of HR at any given time is the population count. Past trends, patterns and
expected developments give us a picture of future manpower supply. An important elements in
the forecasting of labor supply concerns how any will leave. The length of service is an
important indicator or leaving. Availability of training resources will also affect the future supply
of labor as well as union attitudes and payment policies.
5. Reconciling HR Requirements and Supply Forecasts
Both HR requirements and supply forecasts may gaps which exist between employments and
labor force; between occupations employed and occupations employed; between employees
educated and /or trained and those not educated and / or trained. The main processes include:
a. Assessment of performance of present workforce
b. Identification of possible discrepancies and imbalances compared with production targets
c. Identification of possible causes for such imbalances and deviations
6. Action Plan Development
After analyzing both the supply and demand for future workers, these forecasts are compared
to determine what, if any, action should be taken. Whenever there is a discrepancy between these
two estimates, the organization needs to choose a course of action to eliminate the gap.
a. Action decisions with a shortage of employees / planning for growth or expansion
 Recruitment – when HR plans indicate an undersupply of employees firms can recruit
personnel to staff jobs with anticipated vacancies.
 Training and promotion – instead of hiring new workers to meet new increasing
demands, an organization may decide to improve the productivity of the existing
workforce through additional training.
 Other opinions would the use of overtime, additional shifts, job reassignments,
outsourcing, or hiring temporary workers.
This situation would be indicative of growing sales, increasing demand for the
organization.
b. Action decisions in surplus condition/planning for reductions
The current trend toward organization restricting usually results in a smaller
workforce. Therefore, when an organization’s strategic plan calls for restricting, the HRM
response is usually one of downsizing. Downsizing usually means layoffs. Because of the
negative outcomes that are often associated with layoffs, employers are encouraged to seek
alternatives such as the following:
 Attrition
 Early retirement
 Demotion
 Freeze hiring
 Termination
 Restricted overtime
This is the case when the company is experiencing cutbacks.

Evaluating the HR Planning Program

Like other HR functions, it is important for managers to evaluate the HR planning
process on a regular and ongoing basis. An ideal HR planning process would enable an
organization to always hire exactly the right number of people at exactly right time. Such
perfection is seldom achieved. However, the planning process can be assessed in terms of
relative accuracy and ability to provide the right mix of HR.

That is, if the organization is usually able to hire the right kind of employees at around
the time they are needed and the organization seldom has a surprise or a shortage of qualified
workers, then its planning process may be deemed to be working effectively. On the other hand,
if the organization if often scrambling to hire people on short notice, it is often hiring the wrong
kind people, or if it end up having too many people in the payroll, then the planning process
might be flawed or defective.

Alignment of Business Planning and HR Planning

HR planning should not occur in isolation. The size of an organization’s workforce,

including its occupational mix, should be based upon business plans. See Figure 15.
 Environmental Scanning
Labor Supply Analysis
Long - range Labor Force Composition
Planning Social/cultural Changes
Demographic Changes
Legal and Regulatory Changes

Forecasting
Projected Personnel Needs by Job
Middle – range Category
Attrition
Planning Productivity

Projected Staffing Requirements

Short – range Surplus or Deficit of Personnel
Planning Succession Planning
Promotions and Transfers
Training and Development

Business Planning HR Planning

Figure 15. Business Planning and HR
HR Planning involves every phase of the company. It must translate company plans into
HR requirements and evaluate the current performance levels of individuals and predict their
potential. It provides career management or charting: and provides systems, forms, guides, and
charts for matching job requirements with skills available. It encompasses everything that
concerns people – its cost, morale, leadership, productivity, forms of compensation, ad
conversation of the assures as a planned return for its cost.
Long-range Planning – To survive more than the next year or two, organizations must engage
in long-range strategic plans. This entails preparing the mission and vision statement as well as
formulating strategies to achieve them.
All these should involve a long-range analysis of employment. Each of these changes
mentioned could have a significant influence on the availability and preparation of personnel. An
organization cannot achieve its long range strategic goals without the necessary personnel.
Middle – range Planning – The plans may be stated in terms of sales, number if nits produced,
or some other index of business activity. Achieving these goals and objectives requires the
proper mix people. This includes projecting the number of employees needed for each job
created to achieve identified business plans.
Short – range Planning – Budgets and economic forecasts are frequently developed without a
careful analysis of whether the HR will be available to achieve them. Supervisors and managers
should anticipate the number of employees and the specific training that would help employee
acquire the skills needed to make them productive.
Succession Planning – ensuring that another individual is ready to move into a position of
higher responsibility.
Replacement chart – an HRM organizational chart indicating positions that may become vacant
in the near future and the individuals who may fill the vacancies.