5-1 EXCEL

BOOKS
Chapter

HUMAN RESOURCE
PLANNING
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ANNOTATED OUTLINE

INTRODUCTION
HRP offers an accurate estimate of the number of employees
required with matching skill requirements to meet organisational
objectives. HRP is a forward looking function as human resource
estimates are made well in advance. It is, of course, subject to
revision.

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Objective
The basic purpose of HRP is to decide what positions the
organisation will have to fill and how to fill them.

Objectives of human resource planning

Forecast personnel requirements
Cope with changes
Use existing manpower productively
Promote employees in a systematic way

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Importance

Organisations use HRP to meet future challenges, cut costs, and

achieve greater effectiveness

Importance of human resource planning

Create a talent pool

Prepare people for future
Cope with organisational changes
Cut costs
Help in anticipation of surplus manpower
Helps in planning for physical activities

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The Process Of HRP

The HRP is a six step process: analysing organisational plans, demand
forecasting, supply forecasting, estimating manpower gaps, formulating
HR plans and Monitoring & Control.
1. Analysing Organisational Plan
Objectives, strategic plans, sub plans are analysed
2. Forecasting Demand for Human Resource
a) Job Analysis and forecast of future activity
b) covers two aspects: Quantitative ( determining no. of employees),
Qualitative ( quality of manpower)

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The Process Of HRP

Forecasting the demand for human

resources (Factors)
External challenges
Economic developments
Political, legal, social, technological changes
Competition
Organisational decisions
Workforce factors

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The Process Of HRP

External Challenges: Liberalisation, privatisation and globalisation

(LPG era) have created huge demand for people in software,
finance marketing, and manufacturing fields.
Organisational Decisions: Decisions such as expansion,
diversification, and relocation leading to demand for people
possessing requisite skills
Workforce Factors: Such as retirement, resignation, and
termination etc creating manpower gaps.

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Forecasting Techniques

HR forecasts are an attempt to find out an organisation's future

demand for employees

Forecasting techniques
Expert forecasts
Trend analysis
Workforce analysis
Workload analysis

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Forecasting techniques
Expert Forecasts: These are based on the judgements of those who
possess good knowledge of future human resource needs

Trend Analysis: This is based on the assumption that the future is

an extrapolation from the past. Human resource needs, as such, can
be estimated by examining pas trends.

An example of trend analysis

2001-02 Production of Units : 5,000
2002-03 No. of Workers : 100
Ratio : 100:5000
2003-04 Estimated Production : 8,000
No. of Workers required : 8000 × 1 0 0 = 160
5000
If supervisors have a span of 20 workers, 8 supervisors are also needed in
2003-04.

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Forecasting techniques

Workforce Analysis: All relevant factors in planning manpower flows

in a firm such as transfers, promotions, new recruitments, retirement,
resignation, dismissal etc are taken into account while estimating HR
needs
Manpower flows in a bank
P r o m o t io n s o u t
T ra n s fe rs In > > J o b H o p p in g
> T ra n s fe r s O u t
> R e tir e m e n t
> V R S S c h e m e (G o ld e n h a n d s h a k e )
R e c r u it s In > > D is c h a r g e o r D is m is s a l
> Te r m in a t io n s
> R e s ig n a tio n s
P r o m o tio n s In > > R e tre n c h m e n t
> A t t r a c tio n s in O t h e r B a n k s , e t c .

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Forecasting techniques
Workload analysis: Based on the planned output, a firm tires to
calculate the number of persons required for various jobs.

An example of workload analysis

Planned output for the year 10,000 pieces
Standard hours per piece 3 hours
Planned hours required 30,000 hours
Productive hours per person per year 1,000 hours (estimated on annual basis)
(allowing for absenteeism, turnover, idle time etc.)
No. of workers required 30
If span of control in the unit is 10 per officer, then 3 officers are also required.

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Supply Forecasting

A) Internal labour supply: a manpower inventory in terms of

the size and quality of personnel available (their age, sex,
education, training, experience, job performance, etc) is usually
prepared by HR departments. Several techniques are used
while ascertaining the internal supply of manpower (a supply of
employees to fill projected vacancies can come from within the
firm or from new hires )

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Estimated internal labour supply

for a given firm
S o u r c e s o f In flo w s T h e F ir m P r o je c te d O u t f lo w s

 P r o m o t io n s

 T r a n s fe rs  Q u its
C u r r e n t S ta ffin g
 P r o m o t io n s Level  Te r m in a t io n s
E m p lo y e e s I n E m p lo y e e s O u t
 N e w R e c ru its  R e t ir e m e n t s

 R e c a lls  D e a th s

 L a y o ffs

C u rre n t P r o je c t e d P r o je c t e d F ir m ’s in t e r n a l
s ta ffin g – o u tflo w s + in f lo w s = s u p p ly fo r th is
le v e l th is y e a r t h is y e a r tim e n e x t y e a r

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Supply Forecasting

Staffing table: Shows the number of employees in each job, how

they are utilised and the future employment needs for each type of
job.

Marcov analysis: Uses historical information from personnel

movements of the internal labour supply to predict what will happen
in the future

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Marcov analysis for a hypothetical

retail company
2 0 0 3 -2 0 0 4 S to re A s s t. S to re S e c tio n D e p t. S a le s E x it
M a n a g e rs M a n a g e rs H eads H eds E x e c u tiv e s

S to re M a n a g e rs 80% 20%
(n = 1 5 )
12 3

A s s t. S to re 11 % 83% 6%
M a n a g e rs
4 30 2
(n = 3 6 )
S e c t io n 15%
11 % 66% 8%
H eads
(n = 9 4 ) 11 63 8 14

D e p a r tm e n ta l
10% 72% 2% 16%
H eads
(n = 2 8 8 ) 29 207 6 46

S a le s
E x e c u tiv e s 6% 74% 20%
(n = 1 4 4 0 ) 86 1066 288

F o re c a s te d
S u p p ly 16 41 92 301 1072 353

F ig u r e s in c ir c le s s h o w t h e t r a n s it i o n p e r c e n t a g e s

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Supply Forecasting

Skills inventory: It is a summary of the skills and abilities of non

managerial employees used in forecasting supply.

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Skills inventory: an example

N a m e : A .K . S e n D a te p r in t e d : 1 -4 -2 0 0 4
N um ber : 429 D e p a r tm e n t : 41

K e y w o rd s W o rk e x p e rie n c e
W o rd D e s c r ip tio n A c t iv ity F ro m To
A c c o u n t in g Ta x S u p e r v is io n 1998 2000 Ta x c le r k ABC C om pany
a n d a n a ly s is
B o o k K e e p in g Ledger S u p e r v is io n 2000 2002 A c c o u n ta n t XYZ Co.
A u d itin g C o m p u te r A n a ly s is 2002 2003 C h ie f A c c o u n t s T T B a n k
re c o rd s O ffic e r

E d u c a tio n S p e c ia l Q u a lific a tio n s M e m b e rs h ip s

D e g re e M a jo r Ye a r C o u rse D a te 1 . A IM A

M BA F in a n c e 1998 D BF 1996 2 . IS T D
B .C o m A c c o u n ts 1995 R is k M a n a g e m e n t 1999 3 . IC A

C o m p u te r Languages P o s it io n L o c a tio n H o b b ie s
L ite r a c y p re fe re n c e c h o ic e

 Ta ll y F re n c h A c c o u n tin g K o lk a t a C hess
 B a n k in g A u d it in g D e lh i F o o t b a ll
S o ftw a re B a n g a lo r e B o a t in g

E m p lo y e e s S ig n a tu re _ _ _ _ _ _ _ _ _ _ H R D e p a rtm e n t_ _ _ _ _ _ _ _
D a te _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ D a te _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

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Supply Forecasting

Replacement chart: It is a visual representation of who will replace

whom in the event of a job opening.

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Replacement chart
G e n e ra l M a n a g e r Key
V. K . G a rg N a m e s g i v e n a r e r e p la c e m e n t
A /2 c a n d id a te s
P A to A . P r o m o t a b le n o w
G e n e ra l M a n a g e r B . N e e d in g d e v e l o p m e n t
L . M a th e w s C . N o t s u it a b l e t o p o s it io n
B /1 1 . S u p e rio r p e rfo rm a n c e
2 . A b o v e A v e ra g e p e rfo rm a n c e
A s s is t a n t G e n e r a l M a n a g e r 3 . A c c e p ta b le p e r f o rm a n c e
R .K . A ro ra A /2 4 . P o o r p e rfo rm a n c e
B .K . N e h ru B /3

D iv is io n : D iv is io n : D iv is io n :
A c c o u n t in g & P la n n i n g M a n a g e r Te c h n ic a l A d v is o r
H R M anager
Ta x a t io n M a n a g e r A .N . G u p ta A /1 N .R . M u rth y B /3
C .P. T h a k u r A /1
A .T. R o y C /2 K . P. R a o B /1

N o r t h e r n R e g io n C e n t r a l R e g io n S o u t h e r n R e g io n M a n a g e r E a s te rn R e g io n
M anager M anager A . S u b ra m a n y a m B /2 M anager
L . C . S r iv a t s a v A / 2 S .P. K u m a r A /1 B .K . M e n o n B /1 R . K r is h n a B /3
A. Thapar C /4 R . P andey B /3

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Supply Forecasting

B) External Labour supply: External hires need to be contacted

when suitable internal replacements are not available. A growing
number of firms are now using computerised human resource
information systems to track the qualifications of hundreds or
thousands of employees. HRIS can provide managers with a
listing of candidates with required qualifications after scanning the
data base.

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Important barometers of labour

supply
1. Net migration into and out of the area
2. Education levels of workforce
3. Demographic changes in population
4. Technological developments and shifts
5. Population Mobility
6. Demand for specific skills
7. National, regional unemployment rates
8. Actions of competing employers
9. Government policies, regulations, pressures
10. Economic Forecasts for the next few years
11. The attractiveness of an area
12. The attractiveness of an industry in a particular place

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Manpower Gap Analysis

This is used to reconcile the forecasts of labour demand and supply.

This process identifies potential skill shortages or surpluses of
employees, skills and jobs

Estimating manpower requirements

Ye a r
1 2 3

1. N u m b e r r e q u ir e d a t th e b e g i n n in g o f t h e y e a r
2. C h a n g e s to r e q u ir e m e n ts f o r e c a s t d u r in g t h e y e a r DEM AND
3. To ta l r e q u ir e m e n t s a t t h e e n d o f t h e y e a r ( 1 + 2 ) ------- ------
4. N u m b e r a v a ila b le a t t h e b e g in n in g o f t h e y e a r
5. A d d i t io n s ( t r a n s f e r s , p r o m o t io n s ) S U P P LY
6. S e p a r a t io n s ( r e t ir e m e n t , w a s t a g e , p r o m o t io n s o u t a n d o t h e r lo s s e s )
7. T o ta l a v a ila b le a t t h e e n d o f y e a r ( 4 + 5 + 6 ) --------------------
8. D e f ic it o r s u r p lu s ( 3 - 7 ) R E C O N C IL IA T IO N
9. L o s s e s o f t h o s e r e c r u ite d d u r in g th e y e a r O F THE ABO VE
10. A d d it io n a l n u m b e r s n e e d e d d u r in g t h e y e a r ( 8 + 9 ) M ANPOW ER NEEDED

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Formulating HR Plans

Once supply and demand for labour is known adjustments can be

made formulating requisite HR plans

A variety of HR plans
 Recruitment plan
 Redeployment plan
 Redundancy plan
 Training plan
 Productivity plan
 Retention plan

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Responsibility For Human Resource

Planning
HRP is a top management job. HR plans are usually made by the
HR division in consultation with other corporate heads. Any
deviations from the formulated plans and their causes must be
looked into, from time to time in order to assess whether the plans
require revision or modification.

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Limitations Of Human Resource

Planning
HR professionals are basically confronted with three problems while
preparing and administering HR plans: accuracy, inadequate top
management support, lopsided focus on quantitative aspects.

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Effective Human Resource Planning

HR plans must fit in with overall objectives of a firm. They must get
consistent support from top management. Computerised human resource
information systems must be used for applicant tracking, succession
planning, building skills inventories etc. The whole exercise must be
carried out in coordination with operating managers.

Human Resource Planning