Methods of Human

Resource UNIT 5 HUMAN RESOURCE SUPPLY

Planning
ANALYSIS

Objectives

After reading this unit, you will be able to:

• Understand the concept of supply forecasting in the HR planning

process.
• Understand the linkages between the HR plan and labour supply
forecasting.
• Understand the relationship between supply forecasting and succession
planning.
• Applying the various supply forecasting techniques for determining both
internal and external supply of manpower in real time scenarios.

Structure

5.1 Introduction
5.2 Determining HR Supply
5.3 Case- The legendery CEO of continental Airlines
5.4 Supply forecasting techniques -qualitative
5.5 Supply forecasting techniques-quantitative
5.6 Forecasting external supply of manpower
5.7 Summary
5.8 Self-Assessment Questions
5.9 Further Readings/ References

5.1 INTRODUCTION
Given the centrality of HR forecasting process to organizational effectiveness
as explained in Unit 4, the present unit covers the details of the human
resources (HR) supply forecasting process. The unit introduces the concept of
determining manpower requirements through HR supply forecasting. It
explains in detail the supply forecasting techniques (both qualitative and
quantitative) to gauge internal and external supply requirements. HR supply
forecasting has a unique relationship with succession planning and these
linkages will be explored by the unit in-depth through practical illustrations.

5.2 DETERMINING HR SUPPLY

HR supply forecasting of manpower entails two major options:

• Internal supply refers to the recruitment of members from within the

68 organization through promotions, training, and transfer.
• External supply or recruitment of potential employees from outside the Human Resource
Supply Analysis
organization through job fairs, campus recruitments, hiring of talent
working with competitors and those otherwise unemployed seeking
employment.

In bulk scenarios organizations use an amalgamation of both internal and

external supply by rewarding talented employees through promotions and
advancement possibilities and recruiting potential employees externally who
possess competencies not held by the present workforce. Many organizations
turn to external supply procedures when the internal supply fails to match the
required demand in terms of numbers and competencies. There may exist
several other reasons for recruiting externally. Firstly, any expansion in the
current activities of the organization will require sufficient manpower and
open up possibilities for external recruitment. Secondly, massive internal
recruitments preclude the tendency to bring innovation and change within an
organization. Thirdly, internal candidates are often more expensive to the
organization in terms of compensation and benefits due to seniority mainly.
Fourthly, head-hunters with detailed knowledge about the industry and a
wealth of contacts can help get extremely talent external recruits especially
for leadership positions. Finally, in the case of an impending organizational
change hiring external candidates is desirable to gradually enforce a cultural
shift within the organization.

5.3 CASE-THE LEGENDARY CEO OF

CONTINENTAL AIRLINES
Gordon Bethune was the legendary CEO that turned Continental Airlines
from the brink of collapse. Bethune is considered one the greatest leaders in
the history of the company. He left his operations executive position at
Boeing in 1994 and joined Continental when it was at its unprofitable worst
and ranked the highest on customer complaints. Prior to Bethune coming on
board, Continental had had 10 CEOs during a two period who resigned or
were terminated from their positions. The popular management strategy
entailed union busting and paying employees substandard salaries.

One of the most difficult times during the company’s history arose in 1981
when Texas International Airlines (TIA) made a bid to acquire Continental.
TIA’s CEO Francisco Lorenzo was controversial and feared by employees.
He was known for masterminding cost cuts, requiring pilots to fly
excessively long hours, delaying aircraft repairs and outsourcing aircraft
maintenance to cheaper and less experienced external contractors. Lorenzo
also employed union busting tactics to further decrease employee morale.
Despite several legal battles, Lorenzo ultimately became the CEO of
Continental. Under Lorenzo’s regime, Continental filed for bankruptcy in
1983 and laid off nearly 65% of its workforce. The filing of bankruptcy
nullified all existing union contracts. In 1984, the company began operating
profitably again but the bankruptcy protections remained in place till 1986
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Methods of Human and agreements had to be worked out with creditors to pay off the debts over
Resource
Planning a decade long period. Going forward a series of hasty mergers and Lorenzo’s
outmoded management tactics led to massive debts of $2.2 billion in 1990.

When Gordon Bethune assumed control of Continental in 1994, the company

was on the verge of filing a bankruptcy for the third time. He laid out a plan
with Continental consultant Greg Brenneman that called for a complete
culture change led by a permanent new leader. The plan labelled as the Go
Forward Plan called for critical changes in product, finance, people, and
marketing. Bethune’s first objective was to create an inclusive organization
where employees were encouraged to take decisions to solve problems. He
took control of cutting costs, pricing and new marketing programmes. The
‘Fly to Win’ marketing programme entailed apologizing to travel agents for
past regressions and encouraging them to book passengers on the airline
again for a fair commission. The programme also identified unprofitable air
routes which were then dropped. Under ‘Fund the Future’ Plan, Bethune
updated the financial system so created awareness of daily income and
expenses. He improved Continental’s pricing structure and refinanced debt to
prevent bankruptcy. The ‘Make Reliability a Reality’ programme provided a
thrust on improvement of services such as on-time-arrivals. At a very basic
level Bethune treated his employees fairly and followed a principle of
complete financial transparencies to indicate why there may be layoffs in the
times to come.

Under the Go Forward Plan the company began to turnaround. Customer

service complaints turned into glowing reviews. All the 200 planes in the
fleet go a new makeover that was professional. Continental’s stock price rose
from $2/share to $50/share under Bethune’s leadership. Fortune Magazine
named Continental Airlines among the 100 best places to work for six years
consecutively in a row. Gordon Bethune retired from Continental Airlines in
2004. But his legacy continues in the organization even today. By making
day-to-day changes in operations and corporate culture, he was able to create
an organization where employees were happy to work. He placed real
emphasis on customer service, streamlined the carrier’s image and took
difficult decisions in reducing unprofitable air routes. In the annals of
legendary CEO’s Bethune continues to be exemplified by the turnaround
strategies that he employed at Continental.
Source:
Clark, K. (2017). Gordon Bethune: The Man who turned Continental Around.
Retrieved on 23rd February from https://avgeekery.com/avgeek-spotlight-
gordon-bethune-former-ceo-continental-airlines

5.4 SUPPLY FORECASTING TECHNQUES-

QUALITATIVE
Internal supply forecasting techniques can range from qualitative to
quantitative. The chief qualitative techniques of forecasting HR supply are:
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 Human Resource
1. Skills and Management Inventories Supply Analysis

Forecasting internal supply of manpower begins with skill and

management inventories. A skill inventory is an individualized personal
account on every employee except those in management or professional
positions. The information contained in a skill inventory is:

• Personal information
• Education, training, and skill competencies
• Work history
• Performance ratings
• Career information pertaining to desired jobs in future and those
recommended by superiors.
• Hobbies

Skill inventories are normally stored in the organization’s employee

database and provide important repositories of information on the current
skill sets of employees and its fitment with jobs in the organization. To
be of use and relevance to the organization, skill inventories must
constantly be updated with recent data from the employees themselves.

Management inventories are more comprehensive than the skill

inventories as they contain all of the information contained in the skill
inventories and the following:

• Trajectory of managerial jobs held.

• Professional training courses/certifications undertaken and their
dates of completion.
• Key accountabilities for the current job
• Appraisal data
• Professional and industry memberships.

With updated and relevant skill and management inventories,

organizations will be able to assess the current level of skill and
competencies of both managerial and non-managerial employees. These
inventories are critical for succession planning and also indicate the skill
gap if any between the current jobs and the current employees.

2. Succession Planning and Replacement Charts

Succession planning is critical for organizational success. The case in

section 5.3 clearly indicates the importance of a proper succession plan
in an organization either for the top positions or for other managerial
positions. In an ever-changing environment with the COVID19
pandemic creating tremendous disruptions in business, it is essential that
organizations manage their talent and reward them appropriately. Long
term succession planning provides sufficient training and mentoring to 71
Methods of Human potential employees for assuming leadership positions in organizations.
Resource
Planning Short term succession planning pertains to immediate replacement of
individuals who have quit, been terminated, transferred died and so on.
The benefits of succession planning are:

• Helps the organization respond appropriately to drastic changes and

upheavals.
• Helps people develop for new experiences and jobs.
• Rewards employees appropriately.
• Provides a ready talent pipeline to be used in context.
• Enables smooth internal employment movement and continuity.

Skill and management inventories discussed above provide a wealth of

information for succession planning. They provide a ready reference to
match employee competencies with the requirements of a specific job.
Hence, succession planning experts in consultation with the HR team
must prepare succession/replacement charts for executive, managerial
and professional roles in the organization. These documents carry a
wealth of personal information, career progress and trajectories and
appraisal data. Given the sensitivity of the data, the documents are kept
confidential accessible to a few in the organization.

The first type of document to be made use of is the replacement chart

(Figure 1). It refers to an organizational chart with reporting
relationships. But it also provides data on the present job incumbent and
a shortlist of the top internal candidates who might be able to replace the
incumbent if he/she leaves the job. An important aspect of these charts is
the succession readiness code which is listed next to the names of all the
employees. The code contains two critical elements:

• The employees’ current level of performance typically on a scale of

1-5 (1=unacceptable and 5=outstanding)
• The employees’ readiness for movement or promotion.

While no replacement chart is full proof and can carry all information, the
succession readiness code is useful in providing a quick and accurate picture
of succession readiness for each department/vertical and also for the entire
organization.

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 Human Resource
Supply Analysis

Figure 1: Replacement Chart

Source: https://quizlet.com/ca/271633938/mhr-523-replacement-chart-3-diagram/

The second document is the replacement table that compliments the

information provided in the replacement charts by documenting additional
information on each specific job, the incumbent job holder and all potential
internal successors. By referring to these tables, one gets a picture of all
possible internal candidates and not just the shortlist of two to three top
individuals for a specific job as is in the case of the replacement chart.

5.5 SUPPLY FORECASTING TECHNQUES-

QUANTITATIVE
Apart from qualitative techniques as outlined in the section above,
quantitative techniques are also popularly used to forecast the internal supply
of manpower in organizations. They are detailed with practical illustrations.

1. Markov Models

Markov models are popularly used in supply planning operations. They are
the best used in stable organizational environments where career trajectories
of employees are more or less defined. A Markov model is largely
probabilistic using probabilities of various employee movement options to
determine the overall movement pattern across the organization and provide
and estimate of supply of manpower. When considering the employee
movement patterns, an employee largely has five options:

• Remaining in the current job

• Promotion to a higher grade
• Lateral transfer to a job with a similar classification level
• Exit from the job.
• Demotion (Which is rare)
73
Methods of Human It may be noted that Markov models do not examine individual employee
Resource
Planning movements but rather examine macro-overall rates of movement across
various job levels based on historical patterns (taking into count typically the
past five years data). These models assume that employee movement is
comparatively stable over time. With incremental changes, internal
adjustments to historical data need to be made prior to using it for analysis.
However, if organizations face dramatic changes (as was noted during the
times of the COVID19 pandemic), Markov models are of limited use. Hence,
these models are used during typical business cycles or maximum for slow
incremental changes in the requirement of manpower in organizations. There
exist three major steps to conducting a Markov analysis:

• Firstly, historical data on mobility rates between jobs in the organization

needs to be recorded.
• Secondly, based on this data we develop matrices to forecast the future
personnel movement between jobs.
• Thirdly and finally, we use the forecasts of the model to analyse our HR
policies and programs and instigate the necessary adaptive measures.

By using employee movement data from the past five years, we can calculate
transitional probabilities or the likelihood that an individual in any job will
display any of the five movement options as noted above. By multiplying the
total number of current employees in different positions by the associated
probabilities in the five different scenarios, HR planners will be able to
derive numerical data on employee flow patterns at an organizational level
and between various jobs/positions. These sequences of movements between
various jobs are called Markov Chains. Detailed examination of a Markov
model helps us understand the external supply requirements of manpower.
Table 1 provides a practical illustration of a Markov model.

Table 1: Illustration of Markov Model

Projections for the Year 2023

Current Positions Chief Outfitter Guide Exit
Year 2022 Outfitter
Chief Outfitter 3 (0.75) - - 1(0.25)
(N=4)
Outfitter 1(0.08) 9 (0.75) - 2 (0.17)
(N=12)
Guide (N=16) - 3 (0.19) 9 (0.56) 4 (0.25)
Supply 4 12 9 7
(N=32)

Adapted from Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013).

Strategic Human resource Planning, Cengage learning, India.
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Table 1 provides an illustration of the Markov model. N denotes the total Human Resource
Supply Analysis
number of employees in the three positions in the year 2022. The projections
for every position are made for the year 2023. At the level of the Chief
Outfitter, historical data predicts an attrition of 25% which amounts to one
employee (i.e., 4*0.25=1). Hence, in the year 2023 the number of Chief
Outfitters would be 3 and to maintain the required number of 4 a single
promotion is called for from the next hierarchically lower position i.e.,
Outfitter. Similarly, at the level of the Outfitter the number of employees in
2022 are 12. Given the historical trend of 17% attrition, nearly 2 employees
will leave from this position (12*0.17=2.04 rounded off to 2 employees). At
this position three employees would be required to maintain the replacement
threshold of 12 (i.e., -1 employee to be promoted to the level of Chef
Outfitter and 2 employees attiring). Hence, three employees would be
promoted from the level of Guide to Outfitter to maintain the balance of
employees. Thus, the calculation indicates that the forecast of internal supply
stands at 32 (i.e., 4 at the level of Chief Outfitter, 12 at the level of Outfitter,
and 9 at the level of Guide).

Markov models have tremendous utility for examining:

• The number of personnel who move annually and over specified time
periods between various job levels.
• The number of external hires required.
• The movement patterns and expected duration of stay for employees at
every position.
• The number and percentage of all the employees who will start in a
particular position and will complete their stay in that position over a
specified time period.

2. Movement Analysis

Movement analysis is a technique used to analyse the ripple movements or

effects that voluntary or involuntary attritions may have on personnel in any
organization. This technique helps to identify the vacant positions in a
department/organization and the total number of personnel movements
caused by filling up these vacant positions. The technique helps in
understanding that personnel movements are always more than the total
number of vacant positions to be filled. An increasing reliance on external
hires to fill up the vacant positions will result in depleting chances of internal
employees for promotion and succession to higher positions. Similarly, a
skew towards internal replacements to fill up vacant positions will result in
tremendous amount of employee movements for any replacement (due to
voluntary or involuntary attrition). Hence, movement analysis helps HR
planners to maintain the balance between internal and external supply of
manpower forecasts. This analysis can be performed for the organization and
more specifically for a team/department or functional area. The major steps
involved are:
75
Methods of Human • The planning horizon is one year and the number of employees currently
Resource
Planning serving in each position are taken as a reference point.
• Secondly, considerations of expansion or downsizing of manpower are
considered for every department.
• Thirdly, losses requiring replacements for each authority level/position
need to be calculated.

Practical Illustration

As a HR planner for an organization named Book Mart you wish to

determine the total number of positions requiring replacements over the next
one-year time and the impact that these replacements would have on the
employee movement in one department -Finance Department. Book Mart by
policy promotes from within for all positions except the basic entry position
(i.e., Level 9). The department does not have any personnel currently in the
three senior positions i.e., Level 1, 2 and 3. The historical information of the
department is contained in Table 5.1. Table 5.1 provides an overview of the
positions, the current level of staffing, increase of manpower required,
retirements if any and turnover probabilities. Based on this data provided, the
HR planner can create Table 5.2 containing data on the number of positions
to be filled. With reference to Table 5.2 at Level 5 -Manager, total number of
positions at the beginning of the planning period are 6 and the increase
required is also 6. The total employees losses are 2 owing to retirements
(information contained in Table 5.1) and 0.6 rounded off to 1 owing to
resignations (information contained in Table 5.1). Hence, the total number of
personnel losses at this level are 3 as shown in Table 5.2. The total number of
positions to be filled are 9 taking into count the expansion required and the
replacement for the personnel losses. A similar calculation is done at the
levels in the department to arrive at the total figure of 68. Based on Table 2,
the last and final table -5.3 is created illustrating employee movements to fill
the 68 positions that require replacement. With reference to Table .3 the total
number of positions to be filled at Level 4 is 1 and hence, the corresponding
employee movement is only 1. But at Level 5, the number of positions to be
filled is 9. Bu the cumulative employee movement till Level 5 is 10.
Similarly, the cumulative movement at level 6 is 16 and so on. So, to fill 68
positions within a department the total number of employee movements
amount to 167 as demonstrated in Table 5.3. So an extensive promotion from
within policy as is evident in Book Mart can lead to tremendous employee
movements or ripple effects for replacements. This analysis can help the
organization balance the proportion of internal and external hires at every
level in every department.

Adapted from Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013).

Strategic Human resource Planning, Cengage learning, India.

76
 Human Resource
Table1: Movement Analysis Exercise Supply Analysis

Levels Designations Current Increase retirements Turnover

staffing needed (Resignations+
level terminations)
(positions
at start)

4 Senior 1 +1 - -
Manager

5 Manager 6 +6 2 10% of positions at

start

6 Senior 20 +5% 15% of 10%

Analyst positions at
start

7 Analyst 32 +5% 15% 15%

8 Clerk 40 +5% 15% 20%

9 Clerical 50 +5% 15% 25%

assistant

Source: Organizational Records

Table 2: Number of Positions to be filled

Levels Designations Positions Increase Personnel losses Positions to be filled

at start needed (retirements + (increase needed +
turnover) losses)

4 Senior 1 +1 0 1
Manager

5 Manager 6 +6 2+0.6=2.6~3 6+3 = 9

6 Senior 20 +5% (1) 5 6

Analyst

7 Analyst 32 +5% 10 12
(1.7~2)

8 Clerk 40 +5% (2) 14 16

9 Clerical 50 +5% 21 24
assistant (2.5~3)

Total 149 15 53 68

Source: Organizational Records

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Methods of Human
Resource
Table 3: Personnel Movement
Planning
Levels Designations Positions Total ripple or chain movement Total
to be personnel
filled movement

4 Senior 1 - 1
Manager

5 Manager 9 + 1 10

6 Senior 6 +1 + 9 16
Analyst

7 Analyst 12 +1 + 9 + 6 28

8 Clerk 16 + 1+ 9+ 6+ 12 44

9 Clerical 24 +1 + 9 + 6+ 12+16 68
assistant

Total 68 167

3. Vacancy Model

This model is also referred to as a renewal or sequencing model and is useful

in analysing employee flow throughout the organization by examining inputs
and outputs at every position. These models are used more than Markov
models which help in predicting known and stable personnel movements over
a period. Vacancy models can be used over short- and long-term time
horizons spanning from three to ten years. The normal planning time horizon
for the use of the model is only one year. When a senior level position is
vacant and is filled through internal promotion, that gap actually trickles
down to the lowest level because at each level people will move up to fill up
vacancy created due to promotion(s) at various levels. But vacancy model
differs from movement analysis as it also provides an estimate of how many
vacancies were filled through external hiring and how many promotions were
doled out internally. Hence, the utility of this method is far more than the
traditional Markov models or movement analysis predicting ripple chain
effects. The vacancy model also utilizes historical data and identifies the
number of internal and external personnel required at each level and for the
organization.

Practical Illustration

In organization, Alpha Consultants Pvt. Ltd. the following information are

available to build a vacancy model.

Staffing Changes: None

Personnel Losses during the year

• Level 1 (President): 100% (through compulsory retirement)

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• Level 2 (Vice President): 15% Human Resource
Supply Analysis
• Level 3 (Managers): 17%
• Level 4 (Team Leads): 20%
• Level 5 (Associates): 25%
• Level 6 (Trainees): 50%

It may be noted that maximum attritions in the organization are happening at

the lower levels.

Personnel Replacement Policy: This depicts the proportion of percentage of

external to internal hiring at every level in the organization.

• Level 1: 0:100
• Level 2: 10: 90
• Level 3: 20: 80
• Level 4: 30: 70
• Level 5: 55: 45
• Level 6: 100: 0

It may be noted that at the topmost level there is no policy of any external
hire while the lowest level hires candidates externally only.

Hence, based on these data points the HR planner is able to create a vacancy
model at every level as depicted in Table 4.

Table 4: Vacancy Model

Level Current Annual Promotions Level External

Employees Losses (Internal) Outflows Hiring

1 1 1 1 1 0

2 6 1 2 2 0

3 18 3 4 5 1

4 45 9 9 13 4

5 88 22 14 31 17

6 156 78 0 92 92

Total 314 114 30 144 114

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Methods of Human If we look at Table 4 then at level 1 there is a single outflow based on the
Resource
Planning information provided and the replacement policy is purely internal
promotions. Hence the number of promotions is 1 and external hiring is nil.
At Level 2, the annual losses are 1 (i.e., Number of current employees
*percentage of personnel losses during the year=6*0.15=0.9 rounded off to
1). The total level outflows are 2 (1 to be promoted to Level 1 and 1 through
annual personnel loss). Based on the preplacement policy at Level 2, the total
number of internal promotions are 2 (i.e., 2*0.9=1.8 rounded off to 2). As the
number of internal promotions match the level outflows i.e., 2, the external
hiring at this level was nil. At Level 3, the annual losses are 3 (18*0.17=3.06
rounded off to 3). The total level outflows are 5 (3 from personnel losses at
Level 3 and 2 from internal promotions to Level 2). As per the replacement
policy, a total of 4 promotions can be done (i.e., 5*0.8=4) and hence the
external hiring at this Level is 1 to meet the level outflows of 5. A similar
calculation is done at every to arrive at the sum totals of annual losses of
manpower, promotion requirements, level outflows and the number of
external hiring.

As per the indicative model in Table 5.4, there is stability in the organization
as the total number of annual losses -114 are met by the external hires -114.
The scenario may change if there is a prediction for a staffing increase or
decrease at every level or specified levels in the organization. The changed
figure (number of current employees*increase/decrease percentage) will then
be used to as a reference point to calculate annual losses, promotion forecast,
level outflows and requirement for external hiring. The vacancy model also
provides a wealth of information on the internal promotion rate also known
as the upward mobility rate at every level. For e.g., the upward mobility at
Level 3 is 11.11% which is calculated by dividing the total number of people
promoted to Level 2 i.e., 2 by the total number of employees at Level 3 i.e.,
18. Hence, vacancy models provide a comprehensive picture about the
replacements, promotions, external hires and potential for succession
planning at every level in the organization.

Adapted from Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013).

Strategic Human resource Planning, Cengage learning, India.

4. Linear Programming

This method has utility for HR planners as it helps determine the forecast of
supply of manpower based on achieving the best staffing outcome taking into
consideration constraints such as labour costs. Conditions such as the desired
staffing ratios (proportion of internal vis-à-vis external manpower) or
maintaining the optimum level of staffing with respect to diverse groups
based on age, ethnic minorities, gender can be filtered into the equation.
Linear programming can help in creating ‘what if’ scenarios by changing the
various assumptions to determine the impact of these changes on the
numerical requirements of supply both internal and external. Linear
80 programming also functions on similar assumptions as with regression
model. In other cases, a non-linear or quadratic programming approach may Human Resource
Supply Analysis
be used.

5.6 FORECASTING EXTERNAL SUPPLY OF

MANPOWER
Apart from forecasting internal supply of manpower through qualitative and
quantitative techniques, a discussion on primary factors influencing external
supply of manpower also is also of importance. The prime factors are
detailed herewith:

• Demographic Change: Demographic studies involve understanding the

size, growth, age and distribution of population. Hence, changes such as
increase in world population, ageing workforce, increasing migration
from rural to urban areas, changes in the birth and death rates can
influence the external supply of manpower.

• Socio-Cultural Trends: Trends such as increased participation of

women in the workforce, desire for a better work life balance, flexible
work hours, increase in temporary employees also influence the supply
of manpower in labour markets.

• Technology: Tremendous technological upgradation, rapid digital

adoption specifically post the pandemic COVID19 has helped employees
work remotely to a great extent. The adoption of artificial intelligence
(AI) is also likely to have a great impact on external labour forecasts.

• Labour Mobility: Mobility in terms of occupation due to education and

training and geography due to attractiveness of certain regions also
influences external supply of manpower.

• State of Economy: This has a significant impact on the demand and

supply of manpower. In times of recession, wages fall and labour
availability increases. In upward economic cycles, higher wages increase
the willingness of employees/potential employees to work.

5.7 SUMMARY
HR forecasting either through demand or supply is critical for HR planning in
the organization. While Unit 4 detailed the process and techniques of
forecasting of HR demand, Unit 5 focused on supply forecasting techniques.
This unit explains the concept of supply forecasting, internal and external
bases of supply of manpower and the techniques utilized in supply
forecasting of manpower. The live case contained in the unit focuses on the
requirement of external succession to top level positions in an organization.
External succession planning is important in an organization desirous of a
complete culture change and turnaround in work processes. The case of
Continental Airlines lucidly depicts the reasons and the context of the success
of its CEO Gordon Bethune in pulling the company from bankruptcy to
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Methods of Human success. The techniques to forecast internal manpower supply requirements
Resource
Planning range from qualitative (such as skill inventories, succession planning and
replacement charts) to quantitative (such as Markov models, movement
analysis, vacancy model and linear programming). Each of the techniques
have been explained in detail with the aid of practical illustrations. The unit
also summarizes the major factors influencing external supply of manpower
in labour markets.

5.8 SELF ASSESSMENT QUESTIONS

1. How do Markov Models help HR planners in forecasting internal supply
of manpower? What can be the advantages and limitations of this
technique?
2. Aqua International offers high quality bottled mineral water. The
company has retained your services to calculate a vacancy model for the
forthcoming year’s HR forecast based on the following assumptions:
Workforce at the beginning of the planning period (prior to any staffing
changes):
Level 1=1
Level 2= 4
Level 3= 18
Level 4= 40
Level 5= 75
Level 6= 136
Organizational growth: 5% increase in manpower at every level except
for Level 1 which remains unchanged.
HR Losses during the current year:
Level 1=100%
Level 2= 20%
Level 3= 22%
Level 4= 25%
Level 5= 30%
Level 6= 50%
HR Replacement Policy
The proportion percentage of external to internal hiring at each Level is
detailed:
Level 1= 0:100
Level 2=10: 90
Level 3= 20:80

82 Level 4= 30: 70
 Level 5= 50: 50 Human Resource
Supply Analysis
Level 6= 100:0
Adapted from Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013).
Strategic Human resource Planning, Cengage learning, India.
3. How can replacement charts help in succession planning in
organizations?
4. Imagine you are the HR head of a moderate size bank. Your bank has
business in all the states of India. Your boss has asked you to prepare a
skill inventory of all the officers at the bank. What will you do? How
could such an inventory help the bank in its strategic plan?

5.9 FURTHER READINGS/ REFERENCES

1. Belcourt, M. McBey, K., Hong, Y. and Yap, M. (2013). Strategic Human
resource Planning, Cengage learning, India.
2. Bhattacharya, D.K. (2008). Human Resource Research Methods, Oxford
University Press, India.

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