Human Resource Planning (HRP)
Man is the key to our problems, not money. Competent
people can work miracles even with small resources and
draw wealth out of barren land.
What is HRP?
•Human resource planning is a systematic approach to
ensure that the right people will be in the right place at the
•It is a process of deciding what positions the firm will have
to fill, and how to fill them.
•It is a process of determining HR needs of the organization
in the context of its strategic planning.
The Need for HRP
To ensure that HR is available: provide the information and
data to an organization on when, where and how many
employees need to be recruited.
To assess the future supplies of and demands for HR:
reduce shocks and disturbances within the employment
patterns of large organizations.
To match supplies and demands, making them compatible
with the achievement of the organization’s future goals.
Needs determined by
• Assessing current human resources
• Analyzing corporate plans
• Forecasting staffing level and categories in the light
of corporate objectives
• Assessing availability of HR
• Determining HR needs
• Formulating HR programs to address the needs.
Steps in HRP
1. Assessing Current Human Resources
2. Demand Forecasting
3. Supply Forecasting
4. Matching demand and supply
5. Action Plan
Step 1: Assessing Current HR
HR Inventory (details of workforce: something like CV
or personal history form)
1. Job Analysis (details of jobs, resulting in JD and JS)
Step 2: Demand Forecasting
• Estimates the number of people required in future
and their capacity.
To forecast personnel needs:
– Project the demand for the product or service
– Project sales and revenues
– Plan the volume of production or activity level to
meet the planned sales, revenue or activity
– Estimate the size of the staff required to achieve it
How to forecast personnel needs?
• Staffing plans also must reflect:
Projected turnover of staff
Quality and skills of employees in relation to
the changing needs of the organization
Strategic decisions (eg. Upgrade quality,
enhance productivity, enter into new markets)
Technological and other changes resulting in
HR Forecasting Methods
• Trend analysis
– Study the past staffing needs over a period of
years to predict future needs.
• Ratio analysis
– Use of ratios between one or more business
factors and staffing level as well as between
different staff categories if the current year to
forecast future needs.
• Ratio trend analysis
– Use of ratios of the past years to predict needs
• Managerial judgment
– A big role
– Trends, ratios and relationships unlikely to continue
– Judgment needed to modify the forecast based on
the factors that are likely or should be changed
• Important modifying factors
– Strategic decisions about quality or market
– Technological/managerial changes for productivity
Step 3: Supply Forecasting
• Internal supply forecasts
2. External supply forecasts
• Forecasting Internal Supply
• Qualifications inventories
– Manual or computerized records listing
employees’ education, career and development
interests, languages, special skills etc to be used
in selecting inside candidates for promotion
• Personnel inventory and development
– Information is complied about each
employee manually and recorded.
Forecasting Internal Supply
• Personnel replacement charts
– Company records showing present
performance and profitability of inside
candidates for the most important positions
• Position replacement card
– A card prepared for each position in a
company to show possible replacement
candidates and their qualifications
Forecasting External Supply
• Monitoring general economic conditions
• Local market conditions
• Occupational market conditions
Step 4: Matching demand & supply
• To determine future shortages or surpluses
– Additional staff will be needed to meet the shortage
– Retrenchment will be needed for surplus staff
Step 5: Action Plan
Concerned with the preparation of action plans to deal with
shortages and surpluses of human resource
• Recruitment plan
• Training and Development plan
• Retention plan
• Promotion plan
• Redeployment plan
• Redundancy plan
• Transfer plan
• Succession plan
• In summary
• HR planning is concerned with the demand and supply of labor
and problems arising from the process of reconciling these
• The need for HR planning lies with the long-term and short-
term operational and growth needs of the organization but
also with needs and aspirations of individuals within the
• Issues to be addressed in HR Planning
• How many employees does the organization currently
• What is the age profile, by department, of employees?
• Where in the organization are these employees to be found?
• Which are the biggest departments in the organization?
• What skills do the employees possess?
• How many employees, on average, leave the organization
• In which areas of expertise do the organization tend to loose
• HRP in Nepal
• Analysis is in its infancy / Fire-fighting tendencies / Kowledge
base (ad-hoc, guess work) / Short term planning /
Overstaffing (govt. & public organizations)/ Nepotism/
favouritism (private org.)
• What should we know about HR so that we can make
effective decision? “HRIS”
2. What should we expect our employees to do?“JA:JD/JS”
3. How many and what type of staff do we need to achieve
our organizational goals? “HRP”
4. How are we going to acquire them? “RECRUITMENT”
5. Whom to acquire and how to select? “SELECTION”
• Process of attracting eligible candidates.
• Process of generating a pool of suitable candidates for
• The process begins when the new recruits are sought and
ends when applications are received.
Purpose of recruitment
• Attract suitable candidates to apply.
• Discourage unsuitable ones.
• Provide job information.
• Project organization image.
Alternatives to recruitment
• Reorganization / Employee leasing / Outsourcing /
Internal redeployment / Technology
- Internal vs external
- Job vs career
- Short vs long term
- Other considerations
- Number of jobs filled
- Timeliness of jobs filled
- Cost per job filled
- AA goals met
- Job posting
- Campus visits
- Other methods
-Follow up actions
- Numbers needed
- AA goal
- Where/whom to recruit
- How to recruit
- Choice of recruiters
- What information to share
Internal vs External Recruitment
• Better selection
(foreknowledge of candidates’
strengths and weaknesses)
• Increases employee morale
• Adaptability (less training &
• Cost effective
• Limited choice
• Failed applicants become
• Time wasted interviewing
inside candidates who will not
• In-breeding of status quo
• Greater choice for selection
• Balanced HR mix
• Environmental adaptability
• High cost
• Adaptability problems
• Wrong selection
Ad Construction - The Media: selection of the best medium
depends on the positions for which the firm is recruiting.
• Trade and professional journals
• Internet job sites
• Marketing programs
Constructing an effective ad
• Wording related to job interest factors should evoke the
applicant’s attention, interest, desire, and action (AIDA)
and create a positive impression of the firm.
• Be creative: use of ad agencies might help develop &
promote company’s image.
• Executive recruiters : Headhunters
• Special employment agencies retained by employers to
seek out top-management talent for their clients.
a. Contingent-based recruiters collect a fee for their services
when a successful hire is completed.
b. Retained executive searchers are paid regardless of the
outcome of the recruitment process.
• Internet technology and specialization trends are changing
how candidates are attracted and how searches are
Recruiting Yield Pyramid
Recruiting yield pyramid
– The historical arithmetic relationships between recruitment
leads and invitees, invitees and interviews, interviews and
offers made, and offers made and offers accepted.
Significance of YP
• YR will help to estimate the suitable candidate number
required in future.
• Saves time and resource.
A process of choosing from a pool of candidates the
persons who are most likely to meet the criteria of the
All selection activities, from the initial screening
interview to the physical examination are directed
toward making effective selection decision.
Effective selection involves finding the match between
organizational needs for qualified individuals &
individuals’ needs jobs in which they are interested.
• Selection Decision Outcomes
•Importance of Selection
Why careful selection is important?
Evaluate, hire, and place job applicants in the best
interests of both organization & individual
High performance of employees from the beginning
High costs for hiring (selection cost, induction and
training/development cost, labor turnover cost)
Costly legal implications of incompetent hiring (negligent
• How to avoid litigation
Ask about gaps in employment
Get written authorization for reference checks
Balance privacy right with “need to know”
Take immediate action
• Key Selection Methods
Psychometric tests (ability, aptitude, achievement,
Performance/ work sample test
Interview (structured, unstructured, individual, group,
• Choice of Selection Methods
In choosing the right selection methods, several technical
factors need to be considered like predictors and
criteria to use.
Usefulness of methods used depends on their reliability and
• Test Validity
Test validity checks whether or not a test measures what it
is supposed to measure.
Does the test actually measure what we need for it to
2 main ways to demonstrate test’s validity:
Criterion validity: positive correlations between predictor
(test scores) and criterion (performance)
Content: identify task & behaviour critical to performance
and select a sample of the tasks and behaviour to be
tested. If content of test correlates highly with job
content then the test is content valid.
• Test Reliability
Test reliability tests consistency or accuracy of scores
obtained by the same person when retested with the
same or equivalent methods.
Are the test results stable over time?
Causes of test unreliability :Focus of test / Errors on testing
•Validation of Selection Methods
Identification of Predictors Identification of Criteria
Measurement of Predictors
Measurement of Criteria
+VE Correlation Validated :
-VE Correlation Invalidated:
Correlation of Scores
• Selection Approaches
Single predictor approach :Using one piece of information
Multiple predictor approach: More than one methods being used
Multiple hurdle/ discrete: Screening of candidates at each step, Useful:
large number and long selection process
Compensatory/ Comprehensive: Selection based on aggregate
performance on selection tests, Useful: small number and few tests
Hybrid: Combination of both
•Effectiveness of Selection Predictors
Predictor Validity Cost Legality Reaction
Application blank Low Low ? Neutral
Weighted application High High High Neutral
High High High Negative
Recommendation letters Low Low ? Positive
Cognitive ability tests High Low Low Negative
Job knowledge tests High High High Positive
Work sample tests High High High Positive
Assessment centers High High High Positive
Low Low Low ?
Interviews (situational) High High High Positive