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HUMAN RESOURCE PLANNING

“Throughout history it is the quality of the country’s manpower that has distinguished or

disgraced it in the comity of nations.” Anonymous

Definitions

• HRP is the process by which an org ensures that it has the right number and kind of people, at the right place, at the right time, capable of effectively and efficiently completing those tasks that will help the org achieve its overall obj.

• HRP translates the org’s objectives and plans of workers needed to meet those objectives. Without a clear-cut planning, estimation of an org’s human resource need is reduced to mere guess work.

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AIM OF HRP

• Attract and retain people with appropriate skills, expertise and competencies

• Anticipate the problems of potential surpluses and deficits of people

• Develop a well trained and flexible work force

• Have an appropriate retention policy

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Potential benefits

• Upper management better aware of the HR current configuration.

• Personnel cost is controlled.

• More time provided to locate talent.

• Affirmative Action Plan implemented

• Time to develop employees

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Sequencing-Human resource planning

• Planning Process related to Strategy• Resourcing strategy as employer of

choice.• Scenario planning-Trends• Demand/ Supply forecasting-Techniques. Advertisement• Recruiting Documentation

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HUMAN RESOURCE PLANNING PROCESSHUMAN RESOURCE PLANNING PROCESS

Forecast of Forecast of labour labour

demandsdemandsForecasts of Forecasts of

labour supplylabour supply

Forecasts of Forecasts of labour surplus labour surplus

or shortageor shortage

Goal setting Goal setting and strategic and strategic

planningplanning

Program Program implementation implementation and evaluationand evaluation

A procedure for estimating Human Resource shortage or surplus for a job or Occupation category

Start with

Current CensusThe number of people now in the group being studied

Current CensusThe number of people now in the group being studied

Expected LossesThe number of people expected to leave the group

between now and the planning horizon due to retirements, quits, promotions, and deaths

Expected LossesThe number of people expected to leave the group

between now and the planning horizon due to retirements, quits, promotions, and deaths

Replacement NeedsReplacement Needs

To the remaining number add

Expected promotions. In light of human resource

objective.

Expected promotions. In light of human resource

objective.

To the resulting number add

Growth NeedsAs determined by

organizational objectives.

Growth NeedsAs determined by

organizational objectives.

The resulting number is

The resulting number is

Replacement NeedsReplacement Needs

Predicted DemandsPredicted DemandsSurplusSurplus

ShortageShortage

To be met by external supplyTo be met by external supply

1.1. Number currently employedNumber currently employed 70702.2. Annual wastage rate based on past records Annual wastage rate based on past records 10 10

percentpercent3.3. Expected losses during the yearExpected losses during the year 07074.4. Balance at end yearBalance at end year 63635.5. Number required at end yearNumber required at end year 75756.6. Number to be obtained during year (5-4)Number to be obtained during year (5-4) 1212

Human Resourse Management

FACTORS AFFECTING HRP

• Strategy to be followed.

• Growth cycle of firm.

• Environmental Uncertainties.

• Time Horizons

• Type and Quality of Forecasting.

• Nature of Jobs to be filled.

• Off-Loading of Jobs.

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REASONS FOR DEMAND FORCASTING:

1. Quantify the jobs necessary for producing goods.

2. Determine staff-mix desirable in the future.

3. Assess appropriate staffing levels in different parts organisation to avoid unnecessary costs.

4. Prevent shortage of people when they are needed most.

5. Monitor compliance with legal requirements.

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ENVIRONMENTAL SCAN

• Tight Labor Market• Recession• Skill shortage• High Turnovers• High Tech Positions• Stable Environs• Expanding Environs

• Employee choice wide• Employer choice wide• Employee choice wide• Buy not make

• Buy not Make• Attrition made up• Aggressive Recruiting

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Peripheral group I Secondary labour markets Flexibility

through quantitative adjustment

Short term contracts Public

subsidy trainees

Delayed recruitment

Job sharing

Part timers

Peripheral group II

Core group

Primary labour markets

Flexibility through utilization

Age

ncy

tem

pora

ries

Sub

cont

ract

ing

Out-sourcing

Self-employment

The flexible firm

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OPTIONS

• Category A- Directly employed– Full time– Part time workers– Job sharers– Flexitime– Annual hour contracts

Category B- Self employed- Free lance

Category C- Agency workers- Subcontracts

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Average core combined with Category A overtime and Category B own-pool temporaries

Small core workforce (inc. Category A home workers and part-timers) and Category C workers

Large core combined with Category A part-time

Average core combined with Category A part-timers, shift workers, home workers and Category C agency and/or subcontracts

HUMAN RESOURCING:Planning and performanceFluctuations in demand

High

High

Low

Low

Labour costs

Risk assessment model of flexible working patterns

FORECASTING METHODS

QUALITATIVE QUANTITATIVE OTHERS

Managerial Judgment Extrapolation/ Trend Budget Analysis

Delphi Technique Indexation Transitional Analysis

Nominal Group Technique

Markov Analysis Computerized

Expert Survey Regression

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PROGRAMME PLANNING OPTIONSPROGRAMME PLANNING OPTIONS

Do not replace employees who leave Do not replace employees who leave Offer incentives for early retirementOffer incentives for early retirementTransfer or re-assign excess employeesTransfer or re-assign excess employeesUse slack time for employees training or Use slack time for employees training or equipment maintenanceequipment maintenanceReduce work hoursReduce work hoursLay-off employeesLay-off employees

If a surplus of employees If a surplus of employees is expected ….is expected ….

Hire new full-time employeesHire new full-time employeesOffer incentives for postponing retirementOffer incentives for postponing retirementRe-hire retired employees on part-time basisRe-hire retired employees on part-time basisAttempt to reduce turnoverAttempt to reduce turnoverBring in overtime for present staffBring in overtime for present staffSubcontract work to another companySubcontract work to another companyHire temporary employeesHire temporary employeesRe-engineer to reduce needs.Re-engineer to reduce needs.

If a shortage of If a shortage of employees is expected employees is expected ….….

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OPTIONS FOR REDUCING AN OPTIONS FOR REDUCING AN EXPECTED LABOR SURPLUSEXPECTED LABOR SURPLUS

Option SpeedHuman

SufferingDownsizing Fast High

Pay reductions Fast High

Demotions Fast High

Transfers Fast Moderate

Work sharing Fast Moderate

Retirement Slow Low

Natural attrition Slow Low

Retraining Slow Low

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OPTIONS FOR AVOIDING AN OPTIONS FOR AVOIDING AN EXPECTED LABOR SHORTAGEEXPECTED LABOR SHORTAGE

Option Speed Human Suffering

Overtime Fast High

Temporary employees

Fast High

Outsourcing Fast High

Retrained Transfers Slow High

Turnover reductions Slow Moderate

New external hires Slow Low

Technological innovation

Slow Low

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DOWNSIZINGDOWNSIZING

• Planned elimination of large number of personnel with goal of enhancing the organisational’s competitiveness

• Does this option destroy the firm’s reputation in the labor market?

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DOWNSIZING

• Reducing costs• Replacing Labor by

Tech• Mergers &

Acquisitions• Moving to more

economical locations

• Loss of talent• Social network

effected• Drop of motivation• Hurt image building• Only as a last resort• Improve forecasting

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TELE WORKINGTRADE OFFS

• ADVANTAGES– Gains in productivity– Reduction of overhead– Retention of rare skills– Penetration of unusual

labor markets

• DISADVANTAGES– Lack of commitment– Problems in

communication– Problems in

supervision

RETENTION PLANS

• Compensation plans made attractive.

• Fair Appraisal management

• Advancement opportunities

• Congenial working climate.

• Compatibility job and person

• HR Audit.

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BARRIERS TO HRP

• Principle of “Employment at Will”• HR taking a back seat on “Strat partner” role.• Financial forecasting takes precedence.• Conflict between short and long term goals.• Conflict between Qualitative and Quantitative

methods of forecasting.• Mis-coord between operations and HR

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Cost of Labor Turnover

• Leaving cost

• Direct costs: Ad, Selection cost/time, Orientation/training costs

The Labour turnover index

Human Resourse Management

Stability index

Number of leavers in a specified period (usually 1 year) X 100Average number of employees during the same period

Number 1 year’s service or more X 100Number employed 1 year ago

04/10/23 2604/10/2304/10/23 13:0113:01 IBP PRESENTATIONIBP PRESENTATION 2626

A HYPOTHETICAL TRANSITIONAL A HYPOTHETICAL TRANSITIONAL MATRIX FOR AN AUTO PARTS MATRIX FOR AN AUTO PARTS

MANUFACTURERMANUFACTURER

2005200520092009

(1) (2) (3) (4) (5) (6) (7) (1) (2) (3) (4) (5) (6) (7) (8) (8)

1. Sales manager1. Sales manager .95 .05.95 .05

2. Sales 2. Sales representativerepresentative

.05 .60 .35.05 .60 .35

3. Sales apprentice3. Sales apprentice .20 .50 .30.20 .50 .30

4. Assistant plant 4. Assistant plant managermanager

.90 .05 .05.90 .05 .05

5. Production 5. Production managermanager

.10 .75 .15.10 .75 .15

6. Production 6. Production assemblerassembler

.10 .80 .10.10 .80 .10

7. Clerical7. Clerical .70 .30.70 .30

8..Not in 8..Not in organizationorganization

.00 .20 .50 .00 .10 .20 .30.00 .20 .50 .00 .10 .20 .30

Survival rate analysis

Human Resourse Management

Entry Cohort

Original Strength

Number surviving to end of year after engagement

Year 1 Year 2 Year 3 Year 4 Year 5

A 40 35 28 26 22 20

B 32 25 24 19 18 17

C 48 39 33 30 25 23

D 38 32 27 24 22 19

E 42 36 30 26 23 21

Total 200 167 142 125 110 100

Average survival

rate100 % 83 % 71% 62% 55% 50%

Leavers by length of service

Human Resourse Management

Occupation

Leavers by length of service Total number leaving

Average number

employed

Index of labour

turnover %

Less than 3 months

3-6 months

6 month

s

1-2 years

3-5 years

5 or more years

A 5 4 3 3 2 3 20 220 10

B 15 12 10 6 3 4 50 250 20

C 8 6 5 4 3 4 30 100 30

Totals 28 22 18 13 8 11 100 550 18