Human Resource Planning

Dr. Jayalaxmi Samal

Assistant Professor,
School of Humanities,
KIIT DU
 Nature of HRP
HRP: Meaning
• In simple words, Human resource planning is understood as the
process of forecasting an organizations future demand for, and
supply of, the right type of people in the right number.
• HRP is the process of deciding what positions the firm will have to
fill, and how to fill them. It embraces all future positions, from
maintenance clerk to CEO.
• After this only the HRM department can initiate the recruitment and
selection process.
• Its called by manpower planning, personnel planning or employment
planning.
 HRP: Definition
• According to E.W. Vetter, human resource planning is “the process by
which a management determines how an organization should make
from its current manpower position to its desired manpower position.
• Dale S. Beach has defined it as “a process of determining and assuring
that the organization will have an adequate number of qualified
persons available at the proper times, performing jobs which meet the
needs of the enterprise and which provide satisfaction for the
individuals involved.”
 Five Key Questions in HRP
• How many employees do we need- in terms of numbers?
• What are we looking for in terms of skills, knowledge, experience,
abilities etc.- in terms of quality?
• Where do we need the employees- the location, the division, the
department?
• When do we need the employees- immediately, in the next three
months, six months etc.?
• How long do we need them- for a limited period or for a long period?
 Features of HRP
• Forward looking
• In sync with organizational needs
• In tune with corporate plan
• Proactive
• Get qualified people at a right time
 Objectives of HRP
• Forecast personnel requirements
• Cope with change
• Use existing manpower productivity
• Promote employees in a systematic manner
Factors affecting HRP
HRP Process
 The Importance of Environmental Scanning
• Environment scanning involves assessing factors that affect the
external labour market as well as an organization’s ability to find and
secure talent from outside of the organization.
• The external environmental factors most frequently monitored include
economic conditions (local, regional, national, international), market
and competitive trends; new or revised laws and the decisions of
courts and quasi-judicial bodies;
• Social concerns such as healthcare, childcare, and educational
priorities, technological changes affecting processes, products, and
people, demographic trends of an internal and external labour force.
HRP Model
 Forecasting the availability of
candidates (supply)
• There are two sources of supply:
• Internal—present employees who can be trained, transferred, or
promoted to meet anticipated needs
• External—people in the labour market not currently working for the
organization, including those who are employed elsewhere and those
who are unemployed who can be expected to join the organization to
meet anticipated needs
 Forecasting the supply of internal candidates
• Skills Inventories
• Skills inventories contain comprehensive information about the
capabilities of current employees. Data gathered for each employee
include name, age, date of employment, current position, present
duties and responsibilities, educational background, previous work
history, skills, abilities, and interests. Information about current
performance and readiness for promotion is generally included as
well.
 Forecasting the supply of internal candidates
contd…
• Management Inventories
• Data pertaining to managerial staff are compiled in management
inventories. Records summarizing the background, qualifications,
interests, and skills of management employees, as well as information
about managerial responsibilities and management training, are used
to identify internal candidates eligible for promotion or transfer
opportunities.
 Forecasting the supply of internal candidates
contd…
• Replacement charts are typically used to keep track of potential
internal candidates for the firm’s most critical positions. Such charts
typically indicate:
• the age of potential internal candidates(to project retirement dates),
• the current performance level of the employee, and
• his or her promotion potential.
Management Replacement Chart
 Forecasting the supply of internal candidates
Contd…
• Replacement Summaries
• Replacement summaries: It is based on the employee’s future career
aspirations and a supervisory assessment of readiness for promotion.
• It is typically a lists of likely replacements for each position and their
relative strengths and weaknesses, as well as information about current
position, performance, promotability, age, and experience.
 Forecasting the supply of internal candidates
Contd…
• Succession Plans
• Succession Planning is the process of identifying and tracking high-
potential employees who will be able to fill top management positions
when they become vacant.
• It is process of developing pool of internal candidates to fill key business
leader positions of the company in future.
Vishal Sikka’s Successor at Infosys
After NR Narayana Murthy stepped down as CEO in 2002, three co-
founders succeeded him -- mostly unsuccessfully in maintaining the
company's growth trajectory.
Nandan Nilekani: March 2002-April 2007 (5 years)
Senapathy Gopalakrishnan: From 2007 to 2012 (5 years)
SD Shibulal: From 2012 to 2014
• In June, 2014, Infosys appointed Vishal Sikka- the first non-founder
managing director & CEO
• The dramatic departure of Vishal Sikka as chief executive of Infosys in
August, 2017, following a months-long public battle with the tech
giant’s founders, has left the company with another messy problem:
how to find someone willing to replace him.
• The company declared that those who will be considered for the CEO’s
post will include senior executives who had left the company.
• Salil S. Parekh is the current chief
executive officer and managing
director of Infosys. He is the second
non-founder executive of Infosys.
Parekh took over from interim CEO U
B Pravin Rao on January 2, 2018.
• The full-time CEO post has been vacant
since Sikka had quit.
 Forecasting the supply of internal candidates
Contd…
• Markov Analysis
• Estimating internal supply involves much more than simply calculating
the number of employees.
• Some firms use the Markov analysis technique to track the employee
movements through various jobs and develop a transitional
probability matrix for forecasting internal supply by specific
categories, such as position and gender.
Hypothetical Markov Analysis for Manufacturing
Operation
 Forecasting the Supply of External Candidates
• General Economic Conditions
• General economic conditions refer to the impact of natural
fluctuations in economic activity, which impacts all businesses. These
include factors such as interest rates, wage rates, rate of inflation, and
unemployment rates. In general terms, the lower the rate of
unemployment, the smaller the labour supply and the more difficult
it will be to recruit employees.
 Forecasting the Supply of External Candidates
Contd…
• Labour Market Conditions
• Labour market conditions refer to the demographics of those in the
population, such as education levels, age, gender, marital status, and
so on. Demographic conditions remain stable and can be forecast with
a relatively high degree of accuracy.
 Forecasting the Supply of External Candidates
Contd…
• Occupational Market Conditions
• In addition to looking at the overall labour market, organizations also
generally want to forecast the availability of potential candidates in
specific occupations (engineers, drill press operators, accountants, and
so on) for which they will be recruiting.
• In recent years, the information, communication, and technology
sectors (ICT) have suffered from a significant skills shortage, where the
demand for ICT workers exceeds the supply.
 Forecasting Future Human Resources
Needs (Demand)
• Quantitative Approaches
• Trend Analysis: Trend analysis links historic employment patterns to
future labor demand. Managers plot trends that affected employee
numbers, such as the company's performance or developments in the
industry sector, across a given period.
• For example, if a business has grown by five percent each year for six
years, managers may anticipate that this trend will continue. Any
increase in employee numbers across the previous six years will be
projected to continue in the future.
 Forecasting Future Human Resources
Needs (Demand) contd…
• Ratio Analysis: A forecasting technique for determining future staff
needs by using ratios between some causal factor (such as sales volume)
and the number of employees needed.
• Educational and related institutions often use demand ratios to help
determine their human resource needs. A demand ratio in this case
illustrates the number of one group required to oversee another group.
• For example, you operate an International school which requires a
maximum of 25 students for every teacher. A new apartment and
townhouse complex opens nearby bringing 100 new students to the
school. Your school must hire four more teacher to meet demand.
 Forecasting Future Human Resources
Needs (Demand)Contd…
• The Scatter Plot: It can be used to determine whether two factors—a
measure of business activity and staffing levels—are related. If they
are, then when the measure of business activity is forecast, HR
requirements can also be estimated.
• It represents the correlation between variables. Data are correlated
when the result of one item depends on another value.
 Forecasting Future Human Resources
Needs (Demand)Contd…
• Scatter plot Example
• A large retail store is considering a major expansion in many towns and
is preparing a hiring plan. The human resources manager wants to
know what strategy to use, considering that the corporation will
require that the new stores become profitable within a few months
after opening. Based on past experience and knowledge, management
wants to hire sales people experienced with similar merchandise rather
than young people without experience.
 Forecasting Future Human Resources
Needs (Demand)Contd…
• Average sales based on Years of experience
Forecasting Future Human Resources
Needs (Demand)Contd…
• The scatter plot shows a very strong correlation
between the years of experience and the level of sales.
But it also indicates that beyond 13 years, the level of
sales does not increase much.
 Forecasting Future Human Resources
Needs (Demand)Contd…
• Regression Analysis: A statistical technique involving the use of a
mathematical formula to project future demands based on an
established relationship between an organization’s employment
level (dependent variable) and some measurable factor of output
(independent variable).
 Qualitative Approaches
• Nominal Group Technique: A decision-making technique that
involves a group of experts meeting face to face. Steps include
independent idea generation, clarification and open discussion,
and private assessment.
• Delphi Technique: A judgmental forecasting method used to arrive
at a group decision, typically involving outside experts as well as
organizational employees. Ideas are exchanged without face-to-
face interaction and feedback is provided and used to fine-tune
independent judgments until a consensus is reached.
 Gap Analysis: Summarizing Human Resources
Requirements
• The end result of the forecasting process is an estimate of short-term
and long range HR requirements.
• Long-range plans are general statements of potential staffing needs
and may not include specific numbers.
• Short-term plans—although still approximations—are more specific
and are often depicted in a staffing table.
• Staffing tables are graphic representations of all organizational jobs,
along with the numbers of employees currently occupying those jobs
and future (monthly or yearly) employment requirements, which can
be derived from demand forecasts.
A sample Staffing Table
Planning and implementing HR programs
to balance supply and demand
 Barriers to HRP
• HR practitioners are perceived as experts in handling personnel
matters, but are not experts in managing business.
• HR information often is incompatible with other information used in
strategy formulation.
• Conflict may exist between short term and long term HR needs.
• There is conflict between quantitative and qualitative approaches to
HRP.
• Non-involvement of operating managers renders HRP ineffective.
Thank You