DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

MASTER OF BUSINESS ADMINISTRATION

SEMESTER 3

DHRM301
MANPOWER PLANNING &
SOURCING

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

Unit 5
Developing A Manpower Plan
Table of Contents

SL Fig No / Table SAQ /

Topic Page No
No / Graph Activity
1 Introduction - -
3-4
1.1 Objectives - -
2 Developing a Manpower Plan 1, 2 , 3 1 5-7
3 Qualitative Side of Manpower Planning - - 8
4 Behavioral Event Interview - - 9
5 Standard Interviews - 2 10
6 Competency Mapping (Skills Inventory) - 3

6.1 Competency Mapping System - -

6.2 Classification System 4 -

6.3 Ease of Testing - - 11 - 14

6.4 Fast, Meaningful Feedback - -

Accessible Data, Information and - -

6.5
Knowledge
6.6 Motivating Employees - -
7 Problems in Manpower Planning - -

7.1 Future uncertainly - - 15

7.2 Inadequacies of Information System - -

8 Sample Manpower Plan 5 4 16
9 Running Enterprises - - 17 - 25
10 Summary - - 25
11 Glossary - - 26
12 Terminal Questions - - 26
13 Answers - 5 27
14 Case Study - - 28 - 31

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

1. INTRODUCTION
Businesses suffer huge financial losses and lose credibility with customers when the
organizations do not have proper man power planning

Manpower planning visualizes how it can use its employees in the best possible manner.

if the the industry and the economy take a downturn what would happen to company ‘X’
which is caught unaware. Company ‘X’ consists of 20000 employees. It had hired 1000
people in excess. The excess hiring was done keeping in mind the previous growth
momentum as company ‘X’ did not anticipate the economic down turn. To add to this expense
on 1000 excess staff, business dropped to 50% of its previous levels. . Due to the slow down
another 10000 jobs need to be cut . That is a total of 11,000 employees need to be laid off.
The average salary is 15000 INR. Every month the company delays reducing its manpower,
company ‘X’ loses 15000 x 11000 i.e., 165,000,000 or 165 million INR. If the company decides
not to lay-off people for 6 months hoping that the down turn will go away, in 6 months the
company would have experienced a loss of 990 million INR. Therefore, proper manpower
planning is important. In the absence of proper manpower plan the business will suffer
losses.

Company B needs to grow to twice its size and there is opportunity and required financial
resources at the disposal of the company . It is unable to grow to twice its size due to
inadequate manpower availability. The company made a profit of 5 Crores in the first year
with 1000 employees. It wanted to double its business and make a profit of 10-11 Crores.
But company ‘B’ is unable to add the right number of employees with the right skill sets at
the right positionss Instead of 1000 additional employees, it manages to hire only 150
employees in the year. This sends the profit estimates down from 10-11 crores INR to
roughly about 5.5 crores INR. Customers want to do business with the company, and they
are turned away or not attended to in time. This creates a bad impression in the mind of the
customer about the company. Inability to hire and estimate the manpower required leads to
a major loss of face or credibility with customers. Therefore, organizationshave to do r
proper manpower planning.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

1.1 Objectives:
This unit describes the importance of developing a manpower plan. After studying this unit, you
will be able to:
❖ Explain the steps in developing a manpower plan
❖ Describe the qualitative side of manpower planning
❖ Explain the competency mapping components
❖ Discuss the problems in manpower planning

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

2. DEVELOPING A MANPOWER PLAN

An organization which is understaffed loses on account of economies of scale, loses out on
orders, customers and profits. An organization which is overstaffed wastes its money on
people who are not productive. To lay-off people , the company ahs to shell out severance
pay or notice period pay of 3 months, face legal challenges and also political challenges. One
of the pitfalls of overstaffing is that when you lay off employees, these employees know a lot
about your business and could be absorbed by your competitors. Your competitors may
leverage the business practices you utilized, your client details and other valuable
confidential information from these laid-off employees. Also overstaffing can reduce
business profits.

Planning for the total number of employees that need to be recruited requires understanding
the quantityand quality of employees for the current month and the next 2 years. Once this
information is available, it needs to be compared with the supply side i.e., the available
quantity and quality of employees and the future candidate quantities and quality the
organization may hire. Steps are taken to bring demand and supply into balance. Manpower
planning requires creating an inventory of skills, competencies and potential that is available
in the organization. It involves planning, allocation and control of its manpower resources in
a better manner. Manpower planning enables the management to take good decisions based
on the data collated. Manpower planning has five essential elements or process steps. Figure
5.1 illustrates the steps in manpower planning.

Fig. 5.1: Manpower Planning Steps

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

The tasks under each planning step are given below:

Process Step Tasks
1 Analyzing current Assess exact no. of available resources
manpower resources
2 Reviewing employee Assess total workload of the organization Assess total workload the
utilization resources arecurrently managing
Assess total workload the current resources can potentially manage
without additional training
Assess what part of the workload can be reducedbecause it is non
value adding.
Assess total workload the current resources can potentially manage
post training and developmentinterventions; and any other HR
interventions.
Take steps to enhance the workload handlingcapacity of the existing
workforce.

3 Forecasting the demand Evaluate the current requirement for resources based on the total
for employees workload currently notmet.
Evaluate the potential for new business, the workload that will be
generated and therefore themanpower that will be required.

4 Forecasting supply Evaluate the ability of the hiring team to hiredifferent profiles of
employees on a monthly, quarterly and annual basis.

5 Developing a manpower Sample Manpower Plan is provided below. Always initiate hiring
plan activity for the next quarter inthe present quarter.
Plan to achieve next quarter targets on the firstday of the next
quarter.

-Table 5.2: Manpower Planning Tasks

Example:
In company A there are 85 resources. The current workload is of 120 resources (capacity
required). The current resources are managing the workload of 81 people. There are 4
people who are not performing. The potential of the 85 resources is to manage the workload
of 92 people. The workload can be reduced from 120 units to 110 units by eliminating non
value adding processes. Post training the workload that the 85 resources can manage is of
100 people.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

Manpower Arithmetic
Planning Resources
Resource Calculation
Calculation
A Required based on workload 120 120
B Demonstrated Capability or capacity (beforetraining and HR 81 81
intervention)
C Potential Capability or capacity (beforetraining and HR 92
intervention)
D Potential Capability or capacity (post trainingand HR 100
intervention)
E Workload rationalized by eliminating non valueadding 110
processes
F Shortfall of resources (E-D) 10
G Perceived shortfall of resources (A-B) 39
I Potential for new business in financial year 50 50
J Hiring Target (F+I) and (G+I) 60 89
K Avg. Salary Cost or Cost to Company per year 2.25 Lakhs 2.25 Lakhs
L Total Cost to Company per year 1.35 Crores 2.00 Crores
M Saving on account of manpower planning inone year = 2.00 0.65 Crores
Crores - 1.35 Crores
N Saving on account of manpower planning intwo years 1.30 Crores
Table 5.3: Savings on Account of Manpower Planning

Activity 1
On April 1, 2012 an Indian BPO has 10,000 employees in India. It has a sales organization in
the US and their sales force bags an order for BPO work worth 5,000 more employees on April
1, 2012. The Indian BPO experiences an attrition of 50% a year. So how many employees does
the Indian BPO need to hire by Jan 31, 2013 such that it would have 15,000 employees by
March 31, 2013?

Self-Assessment Questions - 1
1. Businesses suffer huge losses and lose credibility with
customers when the organization does not plan its manpower or staff correctly.
2. Manpower planning how it can use its manpower or
employees in the best possible manner.
3. Manpower planning balances demand and of manpower.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

3. QUALITATIVE SIDE OF MANPOWER PLANNING

In this section, you will learn about the qualitative side of manpower planning. Faced with
the ever-increasing changes, organizations need to develop a more focused and logical
approach to manpower planning. An important question to be answered while I developing
the manpower plan “What kind of employees’ does your organization need to manage and
run the business, to meet your strategic goals and objectives?” Answer to the above question
has been provided in three parts below:

I)Culture
Culture refers to the values, beliefs, adherence to rules and regulations, management style
demonstrated consistently and values the organization needs to exhibit.
Do existing and prospective employees hold the same values? Stemming from the values an
organization’s beliefs and approaches to work are defined.
Based on those beliefs, rules and regulations and the management style of the organization
are defined.
Do existing and prospective employees have the same beliefs? Will they be able to respect
the rules and regulations? Can they demonstrate a management style that is inclusive and
result oriented?
Solution: Behavioral Event Interviewing

II) Organization
Organization refers to the organizational structure (flat, hierarchical), the organizations
environment (fun, meritocracy, result oriented, open to feedback and learning), team player,
job roles and reporting lines of the organization.
Solution: Standard interviews

III)People
The knowledge, skill levels, behavior and attitude required or demonstrated consistently,
competency level of the employee, potential of the employee as individual contributor,
people developer and a smooth business operator.
Solution: Competency Mapping (Skill Inventory included)

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

4. BEHAVIORAL EVENT INTERVIEWING

This is a special technique that helps to evaluate an individual from the cultural perspective
i.e., their values, beliefs, ability to follow rules and regulations, and management style
demonstrated. . It also believes that the individuals’ future behaviors, beliefs and values will
be a reflection of his/her past behaviors, beliefs and values. Therefore, when interviewing
the focus is on asking questions about the candidates past response to different situations
experienced by the candidate. It does not focus on the future by asking questions such as
your ambitions, your goals, but focuses on the past. It goes much beyond. It tries to get an in-
depth understanding of the values of the person, the beliefs of the person, the rules that the
person has set for himself or herself that the person will never break.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

5. STANDARD INTERVIEWS
Here the focus is on asking a list of related questions in a given area, before moving on to
another area. The importance is given to understanding the candidates’ responses in each
area. You may ask the candidates questions about their education and work experience,
nature of duties performed and goals the candidate has set for himself or herself. What were
the goals set by others for him or her? How many times did the candidate actually achieve
the goals? You may ask about the reasons for considering this organization and reasons for
quitting the previous organizations. You may ask the candidate about the domain area, to
understand fully their knowledge, skills and competencies. You may assess whether the
candidate has accounted for every month of his life in the resume or has deliberately avoided
talking about certain aspects of his life.

You evaluate the candidate’s honesty, and ability to deal with negative events of life with a
strong positive mind. Using the events to learn and better ones’ self as an individual.

You may evaluate if candidate’s language, people , team skills, leadership, communication
and computer skills. Check if the candidate is result oriented, an individual contributor,
people developer and or a smooth business operator.

Self-Assessment Questions - 2
4. ___________refers to the values, beliefs, adherence to rules and regulations,
management style demonstrated consistently.
5. According to behavioral event interviewing the individuals’ future behaviors,
beliefs and values will be a reflection of his/her past behaviors, beliefs and values.
– True/False.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

6. COMPETENCY MAPPING (SKILLS INVENTORY)

Competency mapping evaluates all aspects of the person with respect to the job role to be
performed by the person. It evaluates knowledge, skills, attitude, reflection of attitude that
is behavior and possibly values whereas skill mapping is restricted to just that skill. We are
using the terms here interchangeably so that some companies would like to start with skill
and then increase the scope to evaluate the entire set of competencies. . A competency
mapping exercise results in a report which contains information on knowledge, skills,
abilities, and experiences of current employees. It aims to identify the skills an employee has
or has not demonstrated. If the job role requires the employee to demonstrate skills which
the employee has not done, , then that becomes a development area for the employee. Skills
can be developed through paid and unpaid work experiences, volunteerism, hobbies, work
experiences, and through everyday experience in life. A skills inventory report shows skills
an employee possesses and at what proficiency level.

Example An employee Rahul thinks he possesses the same level of skills as Vijay. He also
believes his compensation of INR 3 lakhs per annum is far lower than Vijay’s compensation
of INR 6 lakhs per annum. Therefore, Rahul feels that he is being unfairly compensated by
the company and starts looking out for another job. If the company had done a competency
mapping exercise or skills inventory exercise, Rahul would have known that he possesses
only 4 of the 10 critical competencies and is at proficiency level 2 whereas Vijay possesses 8
of the 10 critical competencies and is at proficiency level 4. Rahul if he has a positive attitude
, e would start focusing on enhancing his competencies to Vijay’s level and beyond so that
he could get the same level or higher level of compensation, designation and recognition.
Rahul would realize that it is not the company which is being unfair to him, but his own
limitations that are restraining him from getting higher compensation, growth and
recognition. His focus then becomes building competencies rather than looking out for jobs.

6.1 Competency Mapping System

The four essential components of competency mapping system are:
• Classification system
• Measurement unit
• Process of measurement
• Accessible Data, Information and Knowledge

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

6.2 Classification System

For any meaningful competency mapping or skills inventory management program, a clear,
well defined and detailed system of classification is important. . . It is difficult to assign
numbers to Competencies or skills A soft skill is particularly hard to define. Therefore it is
important to have a good classification system is in place, so that everyone is referring to
the same behaviors, skills and level of competency. When it comes to creating a grading
system for building a skills inventory, the problem often arises from a lack of standardized
definitions for skills. There are no defined standards acceptable worldwide. However, in
every organization for fair comparison and hence a good classification system is essential. If
the skills are defined earlier by the HR team leading the competency mapping or skill
inventory exercise then the managers do not have to repeat the time-consuming process of
defining skills. They focus on evaluation of the skills critical for the success of the
organization. They focus on identifying the high performing employees to participate in a
skills inventory initiative and decide on the skills important to the organization’s success.

An objective classification system is important. An established list of predefined skills and

an agreed-upon set of rules h to measure them enable competency mapping or skills
inventory. Initially an organization should focus on a few critical skills. As the ability of the
organization to map competencies or skills improves, additional skills can be inventoried
and managed. As a foundation for establishing a skills program, many organizations begin
by agreeing on the main objectives and identifying the skills that most closely impact these
goals. An objective skills classification system frees decision-makers to focus on the exact
skills and organization’s objectives, and hence helps to fairly establish the parameters for a
successful initiative. Measurement unit

While companies have some difficulty tracking their inventory of office supplies or other
physical resources – which can be measured by number of units, weight, or volume –
calculating employee competencies or skills is a different matter. Example: Organization A &
B have 4 customer service executives and 1 customer service manager respectively. Refer
Table 5.4 and analyze if the team and individuals are equal in terms of competencies? Of
course, they are not at all equal in terms of their competencies.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

Table 5.4: Measurement Unit

The secret for successful skills inventory management lies in the ability to automate test
administration and provide quick, actionable feedback. Through an online testing system,
employees can take a skill evaluation in their own time without supervision. Results are
calculated and delivered immediately. The online system addresses two earlier issues which
negatively impacted skills inventory management efforts.

6.3 Ease of Testing

The online method makes it easy for employees to undertake the skills assessment at their
own time and when they are ready. It also allows repeat testing 3 months later or at some
point in the future. Online tests ask questions from a questions bank, so different questions
are presented to the employee.

6.4 Fast, Meaningful Feedback

An effective online skills inventory management provides quick or immediate feedback.
Armed with this knowledge managers constitute a team with complementary skill sets. It
also enables to send the employee to the right training programs or take good performance-
related decisions. Performance evaluation in most organizations is not objective and tends
to remain subjective. Feedback provided immediately after evaluation quick f stimulates
self-improvement and works as a strong motivator for employees. . A repeatable evaluation
system enables employees and managers to track skills improvement over a period of time.

6.5 Accessible Data, Information and Knowledge

The success of all inventory management initiatives including skills I inventory is based on
its ability to deliver constant, actionable results. S. The immediate accessibility of objective

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

metrics helps managers to take action such as what training an employee needs, provide
assignments that leverage existing skills and provide assignments that develop skills that
need to be improved assignments where rthe employee needs to be mentored) and
identifying the right employees to be part of project teams. With an online skills inventory
management system, exact and relevant data is easily accessible. Using the data and
information, managers gain more knowledge about their team members’ competencies. Over
a sustained period of knowledge of the proficiency levels of different skills, help managers
take wise decisions and enable them to demonstrate greater wisdom in decision making. The
need for skills inventory management is the highest today, in the post recessionary period.
6.6 Motivating Employees
Motivating and educating employees about the advantages of the Competency mapping
system is important. It is not only the job of the HR department, but also the management, to
motivate them constantly. Skills are the only currency that carrry a lot of value in today’s
knowledge-driven economy. An employee’s value is determined by the depth of skills he
possesses. Any procedure that enhances skills are are important to the employee as well as
to the organization. For an organization, building a skills inventory has many advantages
from improving operational efficiency and productivity to competitive advantage in the
marketplace. It creates a learning environment and is a great internal employee building
strategy that an organization is able to retain employees as well as successfully attract new
employees.

Self-Assessment Questions - 3
6. A___________inventory is used in employee evaluation. Measurement unit is one of
the components of the ___________ mapping system.
7. In__________ interviews, the focus is on asking a list of related questions in a given
area, before moving on to another area.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

7. PROBLEMS IN MANPOWER PLANNING

Although many organizations have shown a keen interest in the implementation of
Manpower planning still, they faced few critical problems.
These problems that affect the success of Manpower planning are as follows:
Insufficient realization of the importance of HR Plans: In several organizations, the top
management has failed to have a cohesive approach towards manpower planning. It
continues to follow outdated HR practices in human resource management. Excess supply in
labor market: The surplus of labor in India have not helped the cause of HR planning. Due
to an excess supply in the labor market, many organizations prefer to adopt a short-term,
necessity – based approach towards human resource management rather than a long term,
strategic approach.
Union resistance: Employees and their unions often view manpower planning as an anti-
labor measure. They perceive manpower planning as an attempt by the management to
overburden them with increased workload. They often look at HR plans as a prelude to
subsequent undesirable actions like lay-offs and downsizing.
Absence of coordination: lack of support from line managers can also affect the efficacy of
manpower planning process. It includes a wide range of activities and , requires complete
coordination and involvement of all line managers.
7.1 Future Uncertainly
U Since HR plans are made for the future, their accuracy is often affected by changes in the
environment. Many HR activities are decided on the basis of HR plans; a flawed HR plan can
cause serious problems for the organization.
7.2 Inadequacies of Information System
HRIS (Human Resource Information System) not deployed in organizations and Non
availability of reliable data about economy, other industries, labor markets and trends in
HR.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

8. SAMPLE MANPOWER PLAN

Understand the demand for resources from operations and other functions. Given below is
the demand for just 1 level (customer support executives) in one process of a BPO operations
function. This process is repeated for all levels across different processes of the operations
and other functions, to achieve the right staffing level . This only addresses the quantitative
side of manpower planning. Therefore, the hiring target in column E is the goal for the
recruitment team.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

9. RUNNING ENTERPRISES
Manpower planning is done on the basis of growth plans which provide information
about expansion, modernization, diversification of business and new projects to be
commissioned, with likely commissioning dates and details about manpower requirements.
It is the responsibility of HR department to prepare a scien-tific manpower planning for the
firm.

The following factors are to be considered for working out the manpower planning:

1. A decision regarding the fields in which the organization will concentrate its main effort.
2. Views of all stakeholders on what and how the organization can plan to achieve success
for the new line of business, products or services.
3. An estimate of the resources and the production / sales capacity which would be needed
by the firm to take full advantage of the market potential.
4. A detailed assessment of the stage of socio-economic devel-opment
5. A complete survey of Government Policies pertaining to the area of production or
services and employment acts to deter-mine the prospective plans of manpower.

Running an enterprise with no major expansion plan

Walker (1992) opined that; effective manpower planning is a process of analyzing an
organization’s human resource needs under changing conditions and the development of the
activities necessary to satisfy those needs.

A business expansion plan outlines steps the top-level managers have to take, to facilitate
and support the growth of the business, from securing capital to an updated marketing
strategy in a new territory. Some entrepreneurs make a conscious decision not to expand
their companies. They do not wish to or feel they do not want to do it.

Three primary reasons that small business owners decided not to grow or expand.

1. To avoid risk and maintain their personal lifestyle: The owner is able to pull enough
cash out from the company, has time for personal life and pursue some hobbies. Growing the
business would mean longer working hours, buying more equipment, hiring more
employees, and delegating significant decision-making authority to new managers. The
owner decides not to take that path.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

2. To avoid regulation: Countries/States have different employment laws. If there are more
than x number of workers, government demands compliance with their employee medical,
welfare and compensations acts. The complexity of complying with these Acts, and the cost
involved in maintaining the records makes the entrepreneurs take a conscious decision to
avoid expansion.

3. To avoid having to delegate responsibilities – No formal organizational structure. All

employees report to just one person. The entrepreneur is unwilling to let go of decision-
making authority and wouldn’t delegate. Once the founder’s capacity to perform the tasks is
exhausted, growth stops. Reasons for not delegating may be

a. Lack of the infrastructure necessary for successful delegation,

b. Not having the right managers in place or
c. Not having well documented processes to communicate to employees

The owner/founder becomes the constraint to the business growth. Many small business
owners implicitly or explicitly make a decision not to expand their businesses. Though some
experts say that in business you have to grow or die, many entrepreneurs debunk this myth
every day. It’s reasonable for business owners to make an explicit decision not to grow
because they are satisfied with the current size of their enterprise.

Manpower planning is the process by which management determines how an organization

should move from its current manpower position to its desired manpower position through
planning and management. There should be a proper linkage between HR plan and
organizational plan.

Once an organization is clear it wants no major expansion – then the focus should be to
maintain the quality of products /services and retain existing customers. Manpower
Planning should include skill inventories, continuous training and overall development of
existing human resources and keeping them motivated. Employee retention and job rotation
should be a priority as every employee should have knowledge of the other functions and
processes.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

Running an enterprise with major expansion plans- for expansion, modernization and
Diversification

Expanding the business to new markets is an important step for every company.
Manpower Planning should meet rapid changes in society and demands of customer, scale
up the workforce and plan the manpower needs to support the expansion. HR has to be
connected to the overall business strategy. When the company has major expansion plans,
the manpower planning must be integrated with other business policies such as profitability;
production etc. The ultimate aim of manpower planning should be to relate future human
resources to future enterprise need to maximize the future return investment.

Key Considerations on How to Plan Manpower Needs for Business Expansion

HR managers should be proactive, plan for technological and social changes, help companies
prepare for the changes and train employees to keep pace with the changes. Manpower
planning should be to strategically hire people who will help the company boost operations,
consider the organization’s goals and have an integral solution.

Running an enterprise with major expansion plans - Factors to be considered for

working out the manpower planning:

1. Growth plans which provide information about expansion, modernization,

diversification, new project commissioning dates and details about manpower and skill
requirements.
2. Decision regarding the fields where the organization will concentrate its main effort.
3. Views of all stakeholders to achieve success in the overall market assessed for the line
or products.
4. Estimate of the resources and the production / sales capacity needed by the firm to take
full advantage of the market potential.
5. Preparing general production, marketing plans and targets for the period when planning
is proposed to be undertaken.
6. A detailed assessment of the stage of socio-economic development to understand
demand & supply of manpower.
7. Survey of Government Policy pertaining to the area of production should be undertaken
to deter-mine the prospective plans of Manpower.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

To put the company ahead of competitors, and for smooth operations, forecast future HR
needs and have the right number of employees for continuous production. As a business
facing an expansion, anticipate employees and competencies they may need for upcoming
projects or tasks. Take into consideration the latest skill sets, market requirements and
project pipeline (a visual representation of all the stages a project through from start to
finish). Achieve an effective planning of the expansion by hiring the right people for each job
category

Ensuring Fit and Flexibility: Alignment between strategic planning and programs, policies
and practices of HR is vital to achieve two types of fit viz., external fit and internal fit.

A. External Fit - brings alignment between the business objectives/goals and major HR
initiatives/practices. Growth strategy of the company is to be aligned with recruiting people
with creative and innovative skills, providing them freedom to innovate and function and
investing on training for developing such skills. Low-cost strategy is to be aligned with
employing performance/productivity-oriented employees.

B. Internal Fit- brings alignment among various HR policies and practices to establish
configuration that is mutually reinforcing. Efficiency and creativity come from integrated
effort of job design, Manpower Plan, recruitment and selection, training, performance
management, compensation and motivation.

Successful external and internal strategy and HRM alignment helps the organization to
increase organizational capability and competitive advantage. The HR team's work will
impact the ability to execute expansion plans, attract the best people, equip them with the
skills they need to thrive in the organization, and retain the invaluable resources.

The role of HR in business growth and expansion Decades of research shows that robust
manpower planning, management and practices lead to higher business growth rates,
contribute to the expansion and success of the business. HR department should take all
precautions to reduce unwanted employee turnover and support expansion and promote
business growth.

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DHRM301: Manpower Planning & Sourcing Manipal University Jaipur (MUJ)

Vince Molinaro a leadership expert says “Growth can be heavily impacted by the talent you
have,”

An organization's plans to enter new markets, introduce new products and incorporate new
technology into its operation can change its labor requirements. If a business plans to expand
internationally, the staffing plan would have to accommodate multicultural and diversity
awareness training, explore recruitment options and evaluate needed competencies.

Period of manpower Planning. Period of the planning should be appropriate to the needs
and circumstances of the enterprise in question. The size and structure of the enterprise as
well as the anticipated changes must be taken into consideration

Outline the human resource needs.

If the company is planning to expand, take time to outline the human resource capabilities
that will be required. This will help avoid major HR headaches that could derail expansion.
Cover the following areas.

Job descriptions – Outline the job roles and responsibilities of each position. In smaller
companies these are broad as employees often wear many hats. As the company grows, job
descriptions should be more specific to avoid duplication of efforts.

Organizational chart—Draw a chart of the organizational structure, showing who reports

to whom. Ensure one leader/manager isn’t overwhelmed with too many people directly
reporting to him or her.

A hiring schedule— Hiring can be done in phases based on expansion plans. Determine a
schedule for when the organization needs to make new hires as it may hit various growth
milestones and what kind of expertise the company needs.

Create a manpower plan that integrates how the company will recruit, develop and retain
employees as the company expands. To minimize hiring mistakes – have several rounds of
interviews to check candidate’s attitude and fit to the organizational culture. Plan to increase
formal training as the company expands. A positive, inspiring work climate is vital for
retention of employees.

Expansion and Diversification Plans: Diversification is a strategy for growth through

branching out into a new market segment, allowing the business to expand its presence and
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occupy a totally new space. This is achieved through expanding (or diversifying) the product
or service offering to target new customers and grow profits. Diversifying the business,
rather than investing in a single product or market, lowers the company’s risks.
Diversification allows business to remain profitable during industry ups and downs.

There are two main types of diversification – Related and Unrelated Diversification.

Related Diversification involves diversifying into products or services where the company
already operates or into the businesses with some commonalities. This diversification is
achieved to generate economies of scale and benefit from shared resources and skills. Such
diversification results in higher ROI, as revenues increase, and the companies are expected
to achieve cost efficiency due to shared resources. Horizontal and Concentric diversification
are examples of Related Diversification

Horizontal diversification - When a company creates a new product or service, for its
existing customers. Company sticks to its original customer base and tries to increase its
revenue per customer.

Concentric diversification - When a company introduces new and correlated products in a

new market. An example would be a television cable company acquiring an internet
company (both are related services).

Man power planning - The existing human resources and Fresh hires can be trained to
handle all functions of this kind of diversification.

Unrelated Diversification - When a company merges or acquires another company without

any commonalities. There is no overlap in markets, distribution channels, or production
technology. Typically, companies with extremely high cash flows go for unrelated
diversification to hedge the risk of the industry the company operates in.

Conglomerates are examples of unrelated diversification. Conglomerate diversification is a

riskier strategy. Example Amazon entering the grocery store business with its purchase of
Whole Foods.

Manpower planning – In unrelated diversification Manpower requirement is very high.

Company needs to hire experts for leadership positions and people with experience for mid
and lower-level jobs. To understand future human resource needs, HR managers have to be
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connected to the overall business strategy, know the type and amount of work that will need
to be undertaken to meet these future goals.

Modernization is bridging an organization’s past, present and future. Business

modernization is reviewing old processes and making them fit into the current practices that
pervade the present day-to-day business transactions. Modernization is about changes to
processes, technology and profound organizational and talent-related changes.

Modernization is really a people problem. The changes that modernization brings are
broader and more systemic.HR executives should understand how modernization reshapes
the organization’s talent agenda, influences priorities, and changes how HR invests in
services that enable the transformation.

Modernization creates many new jobs and manpower shortages at the same time makes
certain jobs and people redundant.

Manpower Planning and Modernization - Each upgrade requires people with the
knowledge, ability and experience to execute strategic plans while maintaining day-to-day
operations.

Modernization efforts hinge on an organization’s ability to attract and retain people who
have the skills to drive transformational change. Changes in organizational structure,
governance and decision rights may be necessary to strengthen accountability for
modernization goals and objectives.

Modernization requires shift in key talent management strategies (to address gaps in
leadership and technical capabilities), recruitment, career development and succession
planning. The modernized organization will require talent with new and enhanced skills.
Planning should include motivational training for cultural change and employee engagement
initiatives that promote modernization vision and goals.

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Fresh
Require- Actual Actual
Hiring
1 Planned ments (3 Hiring Buffer before Attrition after Extras
Target
mths attrition attrition
ahead)
2 No. %
3 A B C D E F G H I
I9=
B6=A9- E6=C6 F9=G6+ G9= H9=
4 C6=F6*A9 H9-
A8 +B6 A8 12%*F9 F9-G9
A9
5 Jan-10 200
6 Feb-10 200 100 42 14% 142
Mar-
7 200 100 56 14% 156
10
8 Apr-10 200 100 70 14% 170
May-
9 300 100 84 14% 184 342 41 301 1
10
10 Jun-10 400 100 98 14% 198 456 55 401 1
11 Jul-10 500 100 112 14% 212 570 68 502 2
Aug-
12 600 100 126 14% 226 684 82 602 2
10
13 Sep-10 700 100 140 14% 240 798 96 702 2
14 Oct-10 800 100 154 14% 254 912 109 803 3
Nov-
15 900 100 168 14% 268 1026 123 903 3
10
16 Dec-10 1000 100 182 14% 282 1140 137 1003 3
17 Jan-11 1100 1254 150 1104 4
18 Feb-11 1200 1368 164 1204 4
Mar-
19 1300 1482 178 1304 4
11

Table 5.5: Sample Manpower Planning

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Self-Assessment Questions - 4
8. Many employers resist manpower planning as they think that it increases cost of
manpower as trade unions demand employee based plans and procedures, more
facilities and benefits which include training and development. – True/False
9. Uncertainties are quite prominent in human resource practices due to
absenteeism,__________employment, labor turnover, technologies,_____ market
conditions making manpower planning less reliable.

10. SUMMARY
• Business suffers huge financial losses and lose credibility with customers when the
organization does not plan its manpower or staff itself appropriately. . An organization
which is understaffed loses on account of economies of scale, loses out on orders,
customers and profits. An organization which is overstaffed wastes its money on people
who are not productive.
• Planning for the total number of employees that need to be recruited requires
understanding the quantitative and qualitative demand of employees for the current
month and the next 2 years. t This information needs to be compared with the supply
side i.e., the available quantity and quality of employees and the likely candidate
quantities and quality the organization may hire in future.
• The manpower planning process involves the five steps of analyzing the current
manpower resource, reviewing employee utilization, forecasting the demand for
employees, forecasting supply, and developing a manpower plan.
• Four essential components of competency mapping system are having classification
system; having a measurement unit; defining the process of measurement; and
accessible data, information and knowledge.

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11. GLOSSARY

Term Description
Behavioral Event Behavioral event interviewing is a technique which considers the
Interviewing best way for an organization to predict an individual's future
behavior and performance is to have the individual talk about their
past
behavior and performance.
Cultural T Training e Employee’s interests, tastes, skills, values etc. and
Training in organizational culture, values, attitude, standards,
expectation and behavior. , i
Entrepreneurial To take initiative by starting a business and create employment,
Manpower Plan Estimating or projecting the number of personnel withdifferent
skills required over time or for a project, and
detailing how and when they will be acquired.
Volunteerism Volunteerism here refers to employees coming forwardto attend
programs on weekends to enhance their job skills. This is done
without the company paying c for the overtime as it is of mutual
benefit.

12. TERMINAL QUESTIONS

1. What is manpower planning?

2. Mention five essential elements in manpower planning?hat is competency mapping?
3. What are the problems in manpower planning?

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13. ANSWERS

Self-Assessment Questions
1. Financial
2. Visualizes
3. Supply
4. Culture
5. False
6. True
7. Skills
8. Competency
9. Standard
10. True
11. Seasonal, Changing

Terminal Questions
1. Manpower planning visualizes how it can use its manpower or employees in the best
possible manner.
2. F Five essential elements in manpower planning are analyzing the current manpower
resource, reviewing employee utilization, forecasting the demand for employees,
forecasting supply by developing manpower plan. (Refer section 1 & 2)
3. A competency mapping evaluates all aspects of the person with respect to the job role
to be performed by the person. It evaluates knowledge, skills, attitude, reflection of
attitude that is behavior and possibly values whereas skill mapping is restricted to just
that skills. (Refer section 6)
4. The problems in manpower planning are resistance by employers and employees,
uncertainties, inadequacies of information system. ( Refer section 7)

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14. CASE STUDY – COMPETENCY EVALUATION: A CASE STUDY

By: Maj. Gen. BK Bhatia

Abstract
Developing employees entail proper observation of their behaviors at work place by their
respective Managers. Mapping these observations on the relevant competencies helps in
evaluating the current level of employees in each competency, which leads to the creation
of a 'Development Plan' for each employee. This case study illustrates, with the help of an
example, how an EmpXtrack client utilized the system for effectively deploying their
competency framework.

Problem Areas
A company highly focused on employee development had identified a set of competencies
which were uniformly applicable to all levels of employees: Junior Executives, Managers &
Senior Managers. They needed a process (preferably automated) to evaluate competencies.
This was a PCMM

(People Capability Maturity Model) requirement from their Quality Department. HR

Consultancy
Linking 'observed behaviors' at work place with one or more of the competencies chosen by
the organization, and assigning appropriate weights to each behavior at different employee
levels, was the approach followed by our business analysts to create a competency
evaluation model. A scale was then evolved to estimate the current 'Proficiency level' of each
employee.

An Example
'Focus on Results' was one of the nine (9) competencies on which each employee was to be
evaluated.
(i) Competency Definition: Ability to manage available resources to produce desired
results.

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(ii) Positive Behaviors Observed: weights

JE Mgr SM OB
Knowledge of available resources 5 10 20
Good people manager 5 15 15
Work-Planning skills 10 20 20
Fire fighter 20 10 5 Yes

Hands on approach 25 10 5 Yes

Proactive elimination of bottle-necks 5 10 20

Domain knowledge/Functional 15 10 5 Yes
expertise
Focus on work floor problems 15 10 5

(iii) Negative Behaviors Observed:

JE Mgr SM OB
Lack of knowledge about ground realities 20 15 10
Too much or too less control 5 15 20
Too theoretical in approach 5 15 15 Yes
Poor interpersonal relationships 10 20 20 Yes
Uses short-cuts to achieve goals 5 15
Stress - Physical & mental 5 10 15 Yes

JE - Junior executive Mgr - Manager

SM - Senior Manager OB - Observed Behavior
(iv) Recording of Observations:
The Manager/supervisor to whom the employee is reporting fills the OB column. Any
behavior (Positive or Negative) which the employee has mostly exhibited at the work place
will be marked Yes. All other behaviors which were seldom observed are to be left blank.
Weights allocated in the above table to various attributes (i.e., behaviors) were not kept
visible to the Manager/ Supervisor filling-in the OB column.

(v) Evaluation Process:

Refer to the OB column filled-in for an employee by his manager.

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System ascertains from the database that the employee for whom the OB column is
completed is a 'Junior Executive'.

Exhibited positive & negative behaviors, as per the weights assigned at JE level, were
computed as 60 & 20 respectively.

* Current score of the employee in this competency was thus 40 (60-20), which in terms of
'Proficiency. Level' was interpreted as under:
Proficiency
Score Meaning
Level
<20 1 Unclear about issues & situations
20-30 2 Inadequate drive for results
31-50 3 Can focus on vitals & manage results
51-75 4 Can solve complex issues & produce results
Creates an environment which is fully focused on
>75 5
results.
For the case under examination, employee's Proficiency Level is
mapped at '3'.

Employee Counseling & Development

Based on the above analysis, the employee receives counseling from his manager to:
(a) Improve his domain knowledge.
(b) Acquire work planning skills.
(c) Improve his relationship with other team members.
For the other eight (8) competencies the observed vital behaviors were captured in the same
manner and included in the Manager's counseling notes.

The gap between the desired and current proficiency levels for each competency lead to the
training needs identification of the employee and was reflected in the 'Employee
Development Plan' (for the case in view, the desired proficiency level for 'Focus on Results'
was 3. The gap being 0, this competency did not feature in his Development Plan.

However, as per their succession planning logic, which is based on the overall performance
& potential profile of an employee, he was considered fit for induction into the succession
pipe-line.

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Since for succession to the Manager's position, this competency: 'Focus on Results' carried
a 'desired level' of 4, the succession-based Development Plan' for this employee did reflect
this competency indicating a time frame of 2 – 3 years to enhance the level from 3 to 4.

Lessons Learned
Employee development planning requires detailed evaluation of the competency profiles.
Competency management has a deep process orientation. It is a difficult to manage this
process manually in mid-size & large organizations. Performance Appraisal, Employee
Counseling, Training & Development plans and succession planning are co-related with
competencies evaluation. Automation of the above activities requires an integrated & holistic
approach.
Source: www.empXtrack.com

Case Study Questions

1. How valuable is the employee development planning process?
2. What are the key challenges in implementing this process?
3. If an opportunity is provided , would you implement this in an organization and why?

Hint:
1. Very valuable. Employee’s value employers who help enhance competencies.
Employees in turn contribute more to the organization as a result of enhanced
competencies.
2. Getting the buy-in of all stakeholders

Recommended Reading
• Turner, P. (2007). HR Forecasting & Planning. Published by Jaico Publishing, India

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References:
Books
• Koontz, H., C. O'Donnell, and H. Weihrich. (1980). Management (7th edition). Published
by McGraw-Hill, New York.
• Cleland, D.I. and W.R. King. (1972). Management: A Systems Approach. Published by
McGraw-Hill, New York
• Blanchard, B.S. and W.J. Fabrycky. (1990). System Engineering and Analysis, 2nd
edition. Published by Prentice Hall, New Jersey.
• Kerzner, H., (1989). Project Management: A Systems Approach to Planning, Scheduling,
and Controlling (3rd edition). Published by Van Nostrand Reinhold, New York.
• Fayol, H. (1949). General and Industrial Administration. Published by Sir Isaac Pitman
& Sons, London
• Weihrich, H. and H. Koontz. (1993). Management: A Global Perspective (10th edition).
Published by McGraw-Hill, New York.
• Pravin Durai, Human Resource Management, Pearson Publication, New Delhi .2010.

E-References:
• www.managementstudyguide.com/management_art.htm (Retrieved on 17 May 2010)
• www.enotes.com/management-encyclopedia/management-levels (Retrieved on 17
May 2010)
• www.managementhelp.org/mgmnt/defntion.htm#anchor809032 (Retrieved on 17
May 2010)
• http://ezinearticles.com/?The-Nature-of-Management&id=1782768 (Retrieved on 17
May 2010)
• www.helium.com/items/1370398-the-role-of-management (Retrieved on 17 May
2010)
• www.blurtit.com/q375590.html (Retrieved on 17 May 2010)
• www.coach4growth.com/good-leadership- skills/leadershipvmanagement.html
(Retrieved on 17 May 2010)

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