CHAPTER 2: STRATEGIC HUMAN RESOURCE PLANNING

OVERVIEW:
Strategic HR planning is an important component of strategic HR management. It links HR
management directly to the strategic plan of your organization. Most mid- to large sized
organizations have a strategic plan that guides the organization in successfully meeting its
mission. Organizations routinely complete financial plans to ensure they achieve
organizational goals and while workforce plans are not as common, they are just as
important.

Even a small organization with as few as 10 staff can develop a strategic plan to guide
decisions about the future. Based on the strategic plan, an organization can develop a
strategic HR plan that will allow making HR management decisions to support the future
direction of the organization. Strategic HR planning is also important from a budgetary point
of view so that you can factor the costs of recruitment, training, etc. into your organizational
budget.

OBJECTIVES:
After this lesson, you should able to:

 Discuss the role of the human resource in strategic planning;

 Explain the two important components in human resource planning;
 Determine the different kinds of human resource planning and the important
Elements in Strategic Human Resource Planning;
 Know the advantages in using the elements of human resource planning;
 Enumerate the five steps in human resource planning; and
 Discuss the different kinds of planning techniques in human resource management.
Human Resource Planning (HRP)
Human Resource Planning (HRP) is the process of systematically reviewing human
resource requirements to ensure that the number of employees matches the required skills.
It is the process of matching the internal and external supplies of people with job openings
anticipated in the organization over a specific period of time.
What is Strategic Planning?
Strategic Planning is the determination of the overall organizational purpose and goals
and how they are to be achieved. Human resource is the integral component of a strategic
plan, which greatly affects productivity and organization performance. After the strategic
plans have been formulated, human resource strategic planning is to be undertaken.

Two Important Components of the Human Resource Planning

1. Requirement
Forecasting human requirements involves determining the number and types of
employees needed. The level of skills has to be determined and matched with the plan
operations. The analysis will reflect various factors such as production plans, and
changes in productivity together with the introduction of new technology if there is any.
2. Availability
When employee requirements have been analyzed, the firm determines whether
there is a surplus or shortage of manpower. If there is a surplus, ways must be instituted
to reduce the number of employees. Some of these methods include restricted hiring,
reduced work hours early retirement of old employees, and the worst is to layoff some
employees.
Aspects of Human Resource Planning
1. Systematic Forecasting of Manpower Needs
On the basis of the business conditions and forecasts, manpower needs are planned
and monitored closely.

2. Performance Management
 Analyzing, improving and monitoring the performance of each employee and of the
organization as a whole.

3. Career Management
Determining, planning and monitoring the career aspiration each individual in the
organization and developing them for improved productivity.

4. Management Development
Assessing and determining the developmental needs managers for future succession
requirements.
Five Steps to Human Resource Planning
1. Determining the workload inputs based in the corporate goals and objectives
Several factors that should be considered in determining work inputs:
a. Business Development and Assumptions
b. Corporate planning
c. Economic Forecasts
d. Changes in Plans and Products
e. New Product Lines
f. Mergers and Consolidations
2. Studying the jobs in the company and writing the job description and job
specifications

3. Forecasting of manpower needs

a. Determination of the number and skills of people required for the work.
b. Forecasting manpower needs comes next after determining the work input, and
is known as the planned and logical method of determining both quantitatively
and qualitatively the employees needed to man the work inputs to enable the
company to attain its goals.
4. Inventory of Manpower
a. An analysis of the present manpower complements of the company to determine
whether it has enough or less or more personnel (both qualitatively and
quantitatively) than required.
b. This fourth step in the planning process is the inventory (audit) of available
current manpower. What happens in this step is the assessment of the skills,
career aspirations, strengths and weaknesses of each of the current employees
and their potentials for promotion.
5. Improvement Plans
Determination of the appropriate steps to implement the HRP in order to ensure
that the company has the right number and right quality of people, properly
assigned to jobs for which they are most useful.
Planning Techniques in HR Management
1. Skills Inventory
This approach involves the listing of all the skills possessed by the workforce and
they are made to relate to the requirements of the organization. This technique
requires detailed information of the experience and training of every individual in
the organization.

2. Ratio Analysis
This is a technique wherein the personnel who are promotable to the higher
positions are identified together with their backup or understudy. There should be a
ratio that will ensure that promotions will not create any void. To accomplish this,
recruitment must support the backup requirements. At the same time, training must be
done to develop the backup ratio.

3. Cascade Approach
Under this approach the setting of objectives flows from the top to bottom in the
organization so that everyone gets a chance to make his contribution. This approach
results in the formulation of a plan wherein the objectives of the rank and file get
included in the blueprint for action. The plan is then a participatory planning output.

4. Replacement Approach
Under this approach, HRP is done to have a body of manpower in the
organization that is ready to take over existing jobs on a one-to-one basis within the
organization. This approach calls for year-round acceptance of applications for possible
replacements.
 5. Commitment Planning Approach
This technique involves the supervisors and personnel in every component of the
organization on the identification of manpower needs in terms, skills, replacements,
policy, working conditions and promotion so that human resource in the organization
may be up to the challenge of current and future operations. The units thus become
conscious of their needs and aware of the ways the human resource requirements can
be met.

6. Successor Planning Approach

The approach known as successor planning takes into consideration the different
components of the old plan and increase them. Proportionately by the desired expansion
rate stated by management as to the total manpower needs.

Human Resource Forecasting Techniques

1. The Zero-Base Forecasting Approach – It uses the organizations’ current level of
employment as the starting point for determining future staffing needs. The usual
references point is the organizational structure pattern based on company
production forecast on market and customer demands.
2. The Bottom-Up Approach – This forecast uses the progression upward methods
from the lower organization units to ultimately provide the aggregate forecast of
employment needs. The starting point is the number of current employees and the
progress in operation requirements as the company improves its operation to meet
increasing customer demand.
3. Use of Predictor Variables – This method uses the past employment levels to predict
future requirements. Predictor variables are known factors that have an impact on
employment. Sales volume determines employment levels. As production increases,
demand for manpower increases. It uses regression analyses to predict one item,
 which is known as the independent variable (current employment level) through the
other item (sales volume) that is dependent variables.
4. Simulation – It is a technique for the testing of alternatives on mathematical models
representing the real-world situation. The purpose of this model is to permit the
human resource manager to gain considerable insights into a particular problem
before making actual decisions.

The Important Elements in Strategic Human Resource Planning

1. Organizational Goals – The human resource planning process should be tied up with
the organizational strategic goals. It must rest on solid foundation of information
about sales forecasts, market trends, technological advances, and major change in
processes and productivity.
2. Human Resource Forecast – The second element in the planning process is the
forecasting of human resource needs based on business strategies, production plans
and the various indicators of change in technology and the organizations’ operating
methods.
3. Employee Information – The third element in the planning process is maintaining
accurate information concerning the composition, assignments and capabilities of
the current workforce.
4. Human Resource Availability Projections – The fourth element of the human
resource planning process is estimating the number of current employees and those
that could be available in the future.
5. Analyzing and Evaluating Human Resource Gaps – The fifth element in the human
resource planning process sis comparing what is needed with what is available in
terms of numbers, mix, skills and technologies. The comparison permits the human
resource manager to determine gaps and evaluate where the most serious
mismatches likely appear.
Human Resource Information System (HRIS)
HRIS is any organized approach to obtaining relevant and timely information on which
to base human resource decisions. An effective HRIS is crucial to sound human resource
decision-making. It is designed to provide information that is – SMART.

SYSTEMATIC

MANAGEMENT ORIENTED

APPLICABLE

RESULT ORIENTED
 TIME BOUND

1. Systematic – Information must be systematically arranged and contain the needed

data.
2. Management Oriented – The information are essential tools for effective manpower
planning, retention, development, and separation of employees.
3. Applicable – The data and information stored in file must be applicable in making
human resource decisions. Irrelevant data must be discarded. Information must be
updated from time to time to be relevant to the current manpower needs
requirements. A manager must be able to rely on the accuracy of the information
provided.
4. Result-Oriented – The results from the information and the decisions derived
thereat must be both acceptable to management and the employees’ concern. The
end results must contribute to greater company productivity and employees’
satisfaction.
5. Time Bound – Relevant human resource information are necessary for effective
decision-making. The need for timely decisions is crucial to the effective
management of human resources.
Software Application for HRM
The advent of the different HRM software application has made the human resource
managers’ functions for decision-making just a click on the computer programs. The major
human resource functions are:
1. Staffing Applications – Common applications used in the area of staffing include the
following:
a. Applicant recruiting and tracking
b. DOLE reporting requirements
c. Developing a master employee data base
d. Staffing applications for decision-making
2. Human Resource Planning Applications – This involves company specific
applications in determining future employee turnover, growth rate and promotion
patterns and other personnel movements. This includes the following applications:
a. Work-Force Profile Analysis – It refers to work-force labor supply and
demand analysis or work-force profile analysis review.
b. Work-Force Dynamic Analysis – Number of new hires, transfer and
promotions, Number still needed in the future and those employees who are
available to fill up job openings in the future.
c. Human Resource Planning for Decision-Making – This application pertains to
information about employees who are about to retire, job classification of
employees for promotions and those departments that lack basic skills for
the job.
d. Performance Management Applications – employee performance ratings,
disciplinary actions, work-rule violations and the daily productivity index
could now be stored in the computer database as bases for management
decisions.
e. Training and Development Applications – These are used primarily to track
down the need for employees training programs, courses to attend, certified
skills and educational qualifications. Career applications assess the
employees’ career interests, work values and career goals.
f. Compensation and Benefits Applications – These includes payroll, job
evaluation, salary planning and analysis of executive compensation planning
and management benefits.