Module:2-3 HRP &D

DR. A. HANS*
*CONTENT MAY CHANGE AS I UPDATE THE
PEDAGOGY
HRP Environment
Internal
Environment(Organizational
Environment)

Industry
Environment

Remote
External
Environment
 Remote External Environment

Remote External Environmental factors affect HRP

indirectly.
1. Political
2. Economic
3. Social
4. Technological
5. Legal
 1.Political Factors

Political factor is one of the important external

remote factors which indirectly affect the decisions
and process of manpower planning. There are
possibly being two political conditions which could
prevail.
1. Political stability(Evaluate it from the perspective of
HRP)
2. Political instability (Evaluate it from the perspective
of HRP)
 Self-Learning

Q. How Political factors affect the functioning of HRP

department in a large organization? Justify.
 There are other conditions which may also be observed.
Organizations operate in following political system
1. Monarchy (Evaluate it from the perspective of HRP)
2. Democracy (Evaluate it from the perspective of HRP)
 Political System: Which is better?

Both types of political system have its own effect

on manpower planning.
1. Since monarchy system does not have
many layers of communication and
decision making is with few or with only
one individual. It is looks better in terms of
manpower planning.
2. Democracy is more dynamic from its root ,
manpower planning at industry and
organizational level may suffer a setback.
 Self Learning

Q. How Democracy and Monarchy affect the

functioning of HRP department in a large
organization? Justify.
 2. Economic Factors:

Economic environment give rise to economic activities

(production, distribution, and consumption of
commodities).
There are two extremes in such activities either increase in
economic activities or decrease in economic activities due
to the market force (demand and supply).
There are following probable economic conditions based on
the pace of economic activities:
1. Economic Recession
2. Fast Economic Growth
3. Stagnation
1. Economic Recession (Evaluate it from the
perspective of HRP)
2. Fast Economic Growth (Evaluate it from the
perspective of HRP)
3. Stagnation (Evaluate it from the perspective of
HRP)
 Self -Learning

Q. How Economic factors affect the functioning of

HRP department in a multinational firm? Justify.
 3. Social factors

Social factors also affect HRP of a country, industry

and an organization. Social factors can be identified
as following
1. Family & Culture (Individualistic & Collectivist)
2. Population (Large & Small, Young and old)
3. Education (Education policy & Institutions, and
industry interface)
 Self-Learning

1. Family & Culture (Individualistic & Collectivist)

(Evaluate it from the perspective of HRP)
2. Population (Large & Small, Young and old)
(Evaluate it from the perspective of HRP)
3. Education (Education policy and industry interface)
(Evaluate it from the perspective of HRP)
 Self Learning

Q. How social factors affect the functioning of HRP

department in a large manufacturing organization?
Critically evaluate.
 4. Technological Factors

Technology development has been exponential for

the last three decade.

1. Technology is considered as two edged sword

because if new technology has generated /created
brand new jobs and brand new industries, its has
also phased out many traditional jobs from the job
market.
(Evaluate it )
 Self-Learning

Q. How technological factors affect the functioning of

HRP department in a large organization? Justify.
 5.Legal Factors

5. Legal Factors:
1. Since, different countries have different labor laws they
influence the composition of the manpower differently.
2. When law of the land pass any laws/regulations related to
compositions of the workforce in the organization,
organization need to abide by the laws and maintain the
right numbers and kinds of employees.
3. Legal factors mainly act as constraints to manpower
planning process, but some of the planners see it as a
blessing in disguise
 Self-Learning

Q. How legal factors affect the functioning of HRP

department in a large organization? Justify.
 B. Internal Factors affecting HRP

Internal Factors: There are following internal

factors which may influence manpower planning
1. Strategy & Policy
2. Organizational Growth Cycle
3. Leadership
4. Organizational structure
5. Reward
6. Process
7. Time Horizon
 1.Strategy & Policy & goals

 Strategies of the organization are the systematic

plan of action to overcome threats from the
environment and weakness of the organization and
capitalizing in strength and opportunities to achieve
organizational goals efficiently by gaining
competitive advantage.
Example:
1. If strategy of an organization is to go for expansion
because of favourable economic condition,
manpower requirements of the organization
automatically increases.
2. But when organizations opt for retrenchment
strategies, they tend to wind up some part of
business and may close their operations because of
loss in economic transactions.
 Self- learning

Q1. How Expansion strategy affects decision of HRP

in an organization? Evaluate with an example.
Q2. How retrenchment strategy affects the
composition of HR in the context of HRP?
 2. Organizational Cycle

1. All organizations pass through different stages of

growth from the day of its inception.
2. Small organizations in the earlier stages of growth
may not have well defined personnel planning.
3. But as the organization enters the growth stage
they feel the need to plan its human resource. At
this stage organization gives emphasis upon
employee development and external hire.
 Organizational Cycle

4. As the organization reaches the mature stage it

experience less flexibility and variability resulting
in low growth rate.
5. HR planning becomes more formalized and less
flexible and less innovative( What could be
expected from HRP point of view?)
6. During the declining stage of the organization HRP
takes a different focus like planning to do the
layoff, retrenchment and retirement. (Reactive
HRP)
 Self-Learning

Q1. How organizational cycle affect the number &

composition of HR in an organization?
Q2. Which business cycle may be more challenging for
HRP professional to maintain optimum numbers
and kinds of people? Justify.
 3.Leadership

Leadership is a guiding force by which people and

organizations strive to achieve its objective
enthusiastically and efficiently.
Leadership is very important in manpower panning
initiatives and processes.
1. Autocratic
2. Democratic
3. Free Rein
 Self-Learning

Q: How Leadership affect the functions of HRP in an

organization?
 4.Organizational Structure

Organizational structure can be understood as a unique

pattern of authority-responsibilities relationship within
the organization to have effective and efficient work flow
to achieve organizational objectives.

There are two major categories of organizational

structure:
1. Mechanistic (related to older/ bigger organizations)
2. Organic (related to newer and smaller organizations)
 Self-Learning

Q. How different Structures influence HRP functions

in an organization? Justify.
 5.Reward Policy

1. Good : Fairness & equity

2. Poor: Biased with favoritism , Based on political
and power games.
No reward policy…..?

Self – Learning:
Q> How Reward policy of an organization affects HRP
functions within the same organization?
 6. Process

Organizational Process: The way I/P is converted into

O/P
1. Process:(No change):….?
2. Process (Changed): Due to ……?

Self-Learning:

Q1.How change in organizational process affect HRP

functions of that organization?
 Human Resource Planning Process

1. Establishing corporate goals and objectives

2. Forecasting Human resource need/Demand
3. Projecting human resources Supply
4. Compare the forecast need with supply projection.
5. Evaluation human resource Planning effectiveness
 1. Establishing corporate goals and objectives

Objectives and strategic plans of the company are

analyzed. Plans concerning technology,
production, marketing, finance, expansion and
diversification gives an idea about the volume of
future work activity (basis for ……….?)
Usually senior managers define broader goals for
the organization for the next 1-5 years. These goals
are broad statements that establish specific
objectives to be achieved by the organization.
 2. Forecasting Human Resource Need/Demand

1. A process of estimating the future quantity and

quality of people required …….
2. The basis of forecasting is annual budget, long term
corporate plan, translated into activities at all levels
for each function and department.
3. It should consider both external (PESTEL &
industry Competition) and internal factors (Budget
constraints, production level, organizational
structure)
 Demand forecast help in the following

1. Quantify the jobs necessary for producing a given

number of products/services (…..JA)
2. Determine what staff-mix is desirable in the future
to undertake those jobs.
3. Assess appropriate staffing levels at different
functions in the organizations
4. Prevent shortages of people where and when they
needed the most.
5. Monitor compliance with legal requirements with
regard to reservation of jobs
 HR demand forecasting Techniques

1. The managerial judgment

2. Ratio trend analysis
3. Work study technique
4. Delphi technique
5. Flow models
6. Others
 1.The managerial Judgment method

1. The technique may involve bottom –up or a top –

down approaches.
2. Managers sit together, discuss and arrive at a
conclusion that what would be the future demand
for HR.
3. A committee comprising departmental managers
and HR manager will review the two sets of
forecast and arrive at a unanimity, which is
presented to the top managers for their approval.
Q. As a HR manager , critically evaluate managerial
judgment method as one of the HR demand
forecasting techniques for your organization.
 2. Ratio-trend analysis

1. This quickest forecasting technique.

2. Involves studying past ratios between the number
of personnel and production/sales in an
organization and forecasting future ratios based on
that.
Year production Supervisor/eng Ratio(Sup:Prd)
-2 (2018) 1500 150 1:10
-1 (2019) 1800 180 1:10
actual 2020 2000 200 1:10

+1 (2021) 2500 250 1:10

forecast +2 3000 300 ?
+3 3500 ? ?
Q. Evaluate the significance of ratio trend analysis in
forecasting HR need.
Q. In which types of organizations ratio trend analysis
is more suitable? Explain with examples.
 3.Work study Technique
This techniques can be used when it is possible to
apply work measurement to calculate the length of
operations and the amount/number of labor
required.
The starting point in a manufacturing company is
the production budget, prepared in terms of
volumes of saleable products for the company as a
whole, or volumes of output for individual
departments.
1 Planned output for next year (2021) 100,000 units
2 Standard hours per unit 6 hours
3 Planned hours for the year (1X2) 600,000
4 Productive hrs per man/year
5 Number of direct employee needed(3/4)
 Self-Learning

Q. Evaluate the significance and use of work study

technique in forecasting HR need.
Q. In which type of organizations work study
technique would be more appropriate? Give
examples.
 4. Delphi Technique

Expert-1

HR-
Expert-2 Expert-4
Facilitator

Expert-3
 4. Delphi Technique

1. HR- Manager act as a facilitator

2. He sends the problems related to HRP to each
experts .
3. Each experts send their respective solutions to HR
4. HR summarize the various response and report the
finding back to the experts
5. This continues till they reached to a common
consensus.
 Self- Learning

Q. Critically evaluate Delphi technique in forecasting

HR need in an organization.
Q. In which circumstances work study Delphi
technique would be more appropriate? Give
examples.
 5. Flow Model: Markov Model

1. Determine the time horizon( time horizon

depends on length of hr plans)
2. Establish categories (states) to which
employees can be assigned
3. Count annual movement (flow) among states
for several time periods
4. Identify gain or loss or non absorbing
5. Estimate the probability of transition from
one state to another based on past trends
 Assumptions: Flow Model

1. The transition probability for a given for a given

beginning state of the system equals one.
2. The probability apply to all system participants.
3. The transition probabilities are constant over time.
4. The states are independent over time (fixed).
Example: Markov Model
Source: Copyrigyt@2014,South western
 Scenario Planning

(Self- Learning Exercise)

1. Scenario Planning are based on the assumption
that future is uncertain so does the future course of
action.
2. It is better to develop several possible set of
outcomes (Minimum Three) based on variety of
different assumptions how future of the HR
demand forecasting would unfold.
 NGT,(Self-Learning)

A qualitative decision making technique

1. Define problem
2. Select experts
3. Seek their expertise
4. Generate solutions on a flip chart by each
5. Discuss(Explain)
6. Rank each solution
7. Select the best
 3. Projecting human resources Supply

To determine whether organization will be able to

procure(Hire) the required number of personnel and the
sources for such procurement.
Supply forecasting measures the number of people likely
to be available from within and outside as organization,
after making allowances for absenteeism, internal
movements and promotions, wastage and changes in
hours, and other conditions of work.
The supply analysis include:
1. Existing human resources
2. Internal sources of supply
3. External sources of supply
 HR supplies estimation helps in following

1. It helps quantify number of people and positions

expected to be available in future to help the
organization realize its goals
2. Help clarify likely staff-mixes that will exist in the
future.
3. Assess existing staffing levels in different parts of the
organization
4. Prevents shortage of people where and when they are
most needed.
5. Monitors expected future compliance with legal
requirements of job reservations
 Methods of HR Supply forecast

A. Existing HR:
1. Skill inventories
2. Management inventories
B. Internal source of supply
3. Inflows and outflows
4. Turnover rate
5. Conditions of work and absenteeism
6. Productivity level
7. Movement along jobs
C. External source of Supply:
1. Colleges
2. Universities
3. Industry
4. Independent consultants
5. Unsolicited applications
 A. Existing HR: Skill Inventory

1. A skills inventory is the collection of skills, education,

and experiences of employees.
2. Skills inventories capture the professional expertise,
attributes, and abilities of your workforce.
3. A centralized skills inventory provides a point-in-
time view of the skills (and skills gaps) of a
workforce.
4. But the inventory should be a dynamic system,
regularly updated to reflect changes in team
members, skills, and professional credentials. 
 Example

Skill Inventories: Skill inventories consolidate

information about non managers in the organization in
follow ways:
1. Personal data: AGM
2. Skills: Job experience, education, certification
3. Special Qualifications: special achievement
4. Salary and Job history:
5. Company data: seniority
6. Capacity of individual: Psychological information
7. Special preference of individual-(Types of job geographic)
8. Computer skills(e-skills): MS office, DMBS software
Sample:
 Managerial Inventories

Management Inventories: Management inventories consolidate information

about managers in the organization
1. Work history
2. Strength
3. Weakness
4. Promotion potential
5. Career goals
6. Personal data
7. Number and types of employees supervised
8. Total budget managed
9. Previous management duties
10. e-skills: Computer utility (MS office), Software, DBMS
11. Research Skills: Data collection and analysis tools
Inventories of HR are generally computerized and updated periodically
by HRIS.
 Self-Learning

Q1. Prepare basic Skill inventories of yours and your

colleagues who are willing to share you the details.
Q2. Prepare basic management inventories of your
superiors willing to share you the details.
Q3. Prepare Skill inventories and Management
inventories of the organization where you have
already worked or familiar with its workforce.(***)
Q4. Explore various free HR inventory making tools
and software based on your interest. Get a hands on
with one.(***)
 B. Internal Source of Supply

1. Inflows and outflows

2. Turnover rate
3. Conditions of work and absenteeism
4. Productivity level
5. Movement along jobs
 1. Inflow and outflow

Source of
outflow:
Source of inflow:
1) Resignation
1) Transfer in Current
personnel 2) Discharge
2) Promotion in level(HR 3) Demotion
=Total Inventory): 100
4) Retirement
inflow:5+5= 10
5) Promotion=20
 Inflow and outflow

1. The inflow and outflow must be viewed in conjunction

with the demand forecasting in order to determine the
adjustment to ensure that supply is equal to demand.
2. Estimates of losses due to resignations, discharges or
demotions must be made through individual or group
judgments or by examining past turnover ratio.
3. Voluntary turnover is affected by labor-market
conditions, the organization policy & job vacancies
within the organization.
4. If those conditions changes the previous indicators may
not be reliable.
 Self-Learning

Q. “Voluntary turnover is affected by labor-market

conditions, the organization policy & job vacancies
within the organization.” Evaluate this statement in
the light of HRP.
 2. Turnover rate

Turnover Rate= (Number of separation during one

year/ Average number of employees during the
year)*100

Turnover Rate= 30/150*100= 20%

It is a traditional and simple method of forecasting

internal supply
 3. Conditions of work and absenteeism

Absenteeism rate= (Number absent days/(Average

number of available working days)*100
**Changes in work conditions such as weekly
working hours, overtime policies & length and
timing of holidays , retirement policy , shift system
and other HR factors leads to absenteeism.

*Trends in absenteeism should be analyzed to

prescribe some remedial action for maintaining
optimum supply
 Self- Learning

Q. How Changes in work conditions such as weekly

working hours, overtime policies & length and
timing of holidays , retirement policy , shift system
and other HR factors leads to absenteeism?
Critically examine.
 4. Productivity Level

1. Productivity levels of employees: Any change

in productivity would affect the number of persons
required per unit output.
2. Increase in productivity level shall ……??…………the
HR requirement and vice-versa.
 5.Movement among Jobs

1. Internal Mobility(Upward and downward

movement within the organization)
Example: Promotion , Retirement,
 C: External Source of Supply

1. Colleges
2. Universities
3. Industry
4. Independent consultants
5. Unsolicited applications

**(Self – Learning & Discussion)

 4.HR Programming

1. Compare HR demand & Supply

2. At this stage HR department combines data of
future demand for workers and supply for human
resources, both current and future.
3. The result (Three outcomes) of this effort is to
match shortages both in number and kinds to
highlight areas where over- staffing may exist.
 5. HR Implementation

1. Recruitment , selection & placement

2. Training & Development
3. Retraining & Redeployment
4. Retention Plan
5. Downsizing Plan
6. Managerial Succession planning

** Self –Learning (Additional Reading on above HR

functions)
6. Evaluation & Control: HRP Effectiveness

Organization should evaluate their human

resource planning efforts to determine their
effectiveness helping to achieve organizational
goals and objectives.
 6. Evaluation & Control: HRP Effectiveness

1. Monitor Employed Against Expected

2. Recruited against Recruitment targets
3. Employment cost against budget
4. Monitor Wastage & Employment ratio
 Important

The given slides provides you the conceptual

information about the course content in HRP&D.

**Please refer other related books & e-resources for in-

depth knowledge and further understanding.

Slides are not a replacement for Books

/Journals/other e- resources available.