The human resource process begins with a sound Human resource planning. Forecasting the Human Resource Demand and appropriately balancing the deficiency or surplus either from the internal environment or from the external environment lays down the foundation of a sound human resource planning. Explore More!

1. Ms. Anubha Rastogi
Astt. Prof, Vidya School Of Business
2015-16

2. Introduction
Human resource planning is a process by which an organization ensures that
◦ it has the right number and kinds of people
◦ at the right place
◦ at the right time
◦ capable of effectively and efficiently completing those tasks that will help the
organization achieve its overall strategic objectives
HR Planning includes all activities managers do to forecast current and future
HR needs.
• Must be done prior to recruitment and selection
• Demand forecasts made by managers estimate the number &
qualifications the firm will need.
• Supply forecasts estimate the availability and qualifications of current
workers and those in the labor market.

3. Linking Organizational Strategy to HR Planning
mission
objectives and goals
strategy
structure
people
STRATEGIC DIRECTION HR LINKAGE
determining organization’s
business
setting goals and objectives
determining how to attain
goals and objectives
determining what jobs need to be
done and by whom
matching skills, knowledge, and
abilities to required jobs

4. Purpose of Human Resource Planning
1. Setting goals and objectives
2. Examining the effects of alternative human resource policies and programs
3. Helps avoid sudden disruption in an Enterprise’s Production Run
4. Helps management adopt suitable strategies beforehand
5. Labor costs range from 25% of production cost to 40% of selling cost and this
could be controlled effectively with maximum ROI.
6.Helps in formulating Managerial Succession Plans.
7.Help Managers firm up their Long term supply and demand expectations.

5. The Process of Human Resource Planning
Organizations need to do human resource planning so they can meet
business objectives and gain a competitive advantage over
competitors.
◦ Human resource planning compares the present state of the organization
with its goals for the future
◦ Then identifies what changes it must make in its human resources to meet
those goals

6. The Human Resource Planning Process
Involves activities to
◦ Forecast an organization’s
◦ Labor demand -- Requirements
◦ Internal labor supply -- Availabilities
◦ Compare projections to determine employment gaps ie. Compare
Forecast Needs with projected supply
◦ Develop action plans to addressing the gaps
◦ Staffing planning
◦ Evaluate Human Resource Planning Effectiveness

7. Overview of the Human Resource Planning
Process

8. The Basic Elements of Human Resource Planning
(5) Develop
Action PlansCompare
(1) Forecast Labor
Requirements
(2) Forecast Labor
Availabilities
(Predict)
(3) Conduct
Environmental Scans
(4) Determine
Gaps

9. Employment Planning And The Strategic Planning Process
demand for labor
compare demand
for and supply of
human resources
recruitment
decruitment
define
organization
mission
establish
corporate goals
and objectives
demand exceeds
supply
supply exceeds
demand
assess current
human resources
-- - - - - - - - - - - - -
HRMS:
job analysis
Outcomes
supply of
human resources

10. Human Resource Planning Process
External Environment
Internal Environment
Strategic Planning
Human Resource Planning
Forecasting
Human
Resource
Requirements
Comparing
Requirements
and Availability
Forecasting
Human Resource
Availability
Surplus of
Workers
Demand =
Supply
No Action Restricted Hiring,
Reduced Hours,
Early Retirement,
Layoff, Downsizing
Shortage of
Workers
Recruitment
Selection

11. Forecasting as a Part of HRP
DEMAND
FORECASTING
SUPPLY
FORECASTING
Determine
organizational
objectives
Demand
forecast for
each objective
Aggregate
demand
forecast Does aggregate
supply meet
aggregate
demand?
Go to feasibility analysis steps
Choose human
resource programs
External programs
• Recruiting
• External selection
•Executive exchange
Internal programs
•Promotion
•Transfer
•Career planning
•Training
•Turnover control
Internal supply forecast External supply forecast
Aggregate supply
forecast
No
Yes

12. Forecasting HR Supply and Demand
Forecasting
◦ The use of information from the past and present to identify expected future conditions.
Forecasting Methods
◦ Judgmental
◦ Estimates—asking managers’ opinions, top-down or bottom-up
◦ Rules of thumb—using general guidelines
◦ Delphi technique—asking a group of experts
◦ Nominal groups(NGT)—reaching a group consensus in open discussion
◦ Brainstorming
◦ Mathematical
◦ Statistical regression analysis— Simple Linear & Multiple Linear Analysis
◦ Simulation models: Stochastic Models
◦ Productivity ratios—units produced per employee
◦ Staffing ratios—estimates of indirect labor needs
Forecasting Periods
Short-term:
less than one year
Intermediate:
up to five years
Long-range:
more than five years

13. The Delphi Technique
Leader identifies judgment issues and develops questionnaire.
Prospective participants are identified and asked to cooperate.
Leaders compiles summaries and reproduces participants’ responses.
Leaders send questionnaire to willing participants, who record their
judgments and recommendations and return the questionnaire.
Leader sends the compiled list of judgment to all participants.
Participants comment on each other’s ideas and propose a final judgment.
Leader looks
for consensus
Leader accepts consensus judgment as group’s choice.

14. The Nominal Group Technique
A small group of 4-5 people gathers around a table. Leader identifies judgment
issue and gives participants procedural instructions.
Participants write down all ideas that occur to them, keeping their lists private at
this point. Creativity is encouraged during this phase.
Leader asks each participant to present ideas and writes them on a blackboard or
flipchart, continuing until all ideas have been recorded.
Participants discuss each other’s ideas, clarifying, expanding, and evaluating them
as a group.
Participants rank ideas privately in their own personal order and preference.
The idea that ranks highest among the participants is adopted as the group’s
judgment.

15. Statistical Techniques Used to Project Staffing
Demand Needs
Name
Regression analysis
Description
Past levels of various work load indicators, such as sales,
production levels, and value added, are examined for statistical
relationships with staffing levels. Where sufficiently strong
relationships are found, a regression (or multiple regression)
model is derived. Forecasted levels of the retained indicator(s)
are entered into the resulting model and used to calculate the
associated level of human resource requirements.
1. Statically identify historical predictor of workforce size
Example: FTEs = a + b1 sales + b2 new customers
2. Only use equations with predictors found to be statistically significant
3. Predict future HR requirements, using equation
Example: (a) FTEs = 7 + .0004 sales + .02 new customers
(b) Projected sales = $1,000,000 & Projected new customers = 300
(c) HR requirements = 7 + 400 + 6 = 413
FTE is Full time Equivalent

16. Productivity ratios Historical data are used to examine past levels of a
productivity index (P):
P = Work load / Number of People
Where constant, or systematic, relationships are found,
human resource requirements can be computed by diving
predicted work loads by P.
Personnel ratios Past personnel data are examined to determine historical
relationships among the employees in various jobs or job
categories. Regression analysis or productivity ratios are
then used to project either total or key-group human
resource requirements, and personnel ratios are used to
allocated total requirements to various job categories or to
estimate for non-key groups.

17. Time series analysis
Past staffing levels (instead of work load indicators) are used to
project future human resource requirements. Past staffing levels
are examined to isolate and cyclical variation, long-tem terms,
and random movement. Long-term trends are then extrapolated
or projected using a moving average, exponential smoothing, or
regression technique.
Programs for Human Resource Planning
Linear programming, e.g. to minimize total labour costs within certain
constraints
Goal programming, e.g. setting multiple goals such as increasing profits by 10%
and hiring bilingual salespeople
Computer simulation, e.g. to examine the effects of various programs to reduce
surpluses or shortages

18. 1. Forecast Labour Demand
HR must forecast staff requirements.
◦ HR creates an inventory of future staffing needs for job level and type, broken down by year
◦ forecasts must detail the specific knowledge, skills, and abilities needed, not just “we need 25
new employees”
2. Predict Labour Supply
HR predicts the future labor supply.
◦ a unit’s supply of human resources comes from:
◦ new hires
◦ contingent workers
◦ transfers-in
◦ individuals returning from leaves
◦ predicting these can range from simple to complex
◦ transfers are more difficult to predict since they depend on actions in other units
How does HR Planning occur?

19. Decreases in internal supply come about through:
 Retirements Easiest To Forecast
 Dismissals Possible To Forecast
 Transfers Possible To Forecast
 Layoffs Possible To Forecast
 Sabbaticals Possible To Forecast
 Voluntary Quits Difficult To Forecast
 Prolonged Illnesses Difficult To Forecast
 Deaths Hardest To Forecast
Candidates come from:
◦ Migration into a community
◦ Recent graduates
◦ Individuals returning from military service
◦ Increases in the number of unemployed and employed individuals seeking other
opportunities, either part-time or full-time
The potential labor supply can be expanded by formal or
on-the-job training.

20. Projecting Human Resource Supply
Examples of Human Resource Flows
- Assessment Of Current Supply
- Skill Inventories
- Analysis of Human Resource Flows
- Stochastic Models
Employees may
- Stay in the same job
- Move across to another, but not a higher-level job (Transfer or lateral move)
- Move up to a higher-level job (promotion)
- Move out of the organization through voluntary termination (resignation) or involuntary
termination (lay-off, dismissal)
- Move down (demotion)

21. 3.Are resources available – internally or externally – to fill those
needs?
a. Internal
 Replacement charts
 Promotability
 Succession planning
 Skills inventory
 Transition (Markov) matrix
How does HR Planning occur?
b. External: Recruitment

23. Employee Replacement Chart for
Succession Planning

24. A Sample Transition Matrix
Part A: Personnel Supply
Estimated Personnel Classification in Year T + 1 (%)
Classifications in Year T P M S Sr A Exit
Partner .70 .30
Manager .10 .80 .10
Supervisor .12 .60 .28
Senior .20 .55 .25
Accountant .15 .65 .20
Part B. Staffing Levels
Estimated Personnel Availabilities in Year T + 1 (%)
Beginning
Classifications in Year T Levels P M S Sr A Exit
Partner 10 7 3
Manager 30 3 24 3
Supervisor 50 6 30 14
Senior 100 20 55 25
Accountant 200 30 130 40
10 30 50 85 130

25. Planning for Anticipated Shortages
Transfer employees to jobs in which shortages exist
Train employees to move up to jobs in which shortages exist
Have employees work overtime
Increase employee productivity
Hire part-time employees
Hire temporary full-time employees
Hire permanent full-time employees
Subcontract work to other firms
Forgo increases in production
Install equipment to perform some of the tasks that would be done by
workers (capital substitution)

26. Planning for Anticipated Labour Surpluses
Close plants
Lay off some workers permanently
Give incentives for early retirement
Let the workforce shrink by attrition
Retrain and transfer workers
Shut down plants (or parts of them) temporarily
Lay off workers temporarily
Reduce the work week
Use work sharing
Cut or freeze pay and/or benefits

27. Staffing Alternatives
to Deal
with Employee
Shortages and
Surpluses

28. Ways to Increase Employee Productivity
Offer monetary incentives, e.g. bonuses, for higher productivity or
performance levels
Improve employees’ job skills to produce more in less time or at lower cost
Re-design work processes and methods so greater outputs are achieved
Use more efficient equipment so greater outputs are achieved

29. Alternative Scheduling Options
Alternative
Percent Using
(N = 427 companies)
The following definitions were used in this survey
for alternative scheduling strategies:
• Part-time: A regular employee who works fewer than 35 hours per
week.
• Flextime: A system than enables employees to vary their schedules:
Usually, the flexibility applies to starting and finishing times.
• Compressed workweek: A full-week schedule (usually 40 hours) than
occurs in fewer than five days, such as four 10-hour days.
• Job sharing: Two or more employees split a full-time position, diving
the responsibilities, and, to some degree, the compensation.
• Work-at-home: A program that enables employees to complete work at
home (or at a remote office closer to home) on a regular basis. It is often
referred to as “flexplace” or “telecommuting.”
84%
40%
23%
18%
13%

30. LIFE-
CYCLE
STAGE
STAFFING COMPENSATION
TRAINING AND
DEVELOPMENT
LABOR / EMPLOYEE
RELATIONS
Introduc
tion
Attract best technical and
professional talent.
Meet or exceed
labor market rates
to attract needed
talent.
Define future skill
requirements and
begin establishing
career ladders.
Set basic employee-
relations philosophy of
organization.
Growth Recruit adequate
numbers and mix of
qualifies workers. Plan
management succession.
Mange rapid internal
labor market movements
Meet external
market but consider
internal equity
effects. Establish
formal
compensation
structures.
Mold effective
management team
through management
development and
organizational
development.
Maintain labor peace,
employee motivation,
and morale.
Maturity Encourage sufficient
turnover to minimize
layoffs and provide new
openings. Encourage
mobility as
reorganizations shift jobs
around.
Control
compensation
costs.
Maintain flexibility and
skills of an aging
workforce.
Control labor costs
and maintain labor
peace. Improve
productivity.
Decline Plan and implement
workforce reductions and
reallocations, downsizing
and outplacement may
occur during this stage.
Implement tighter
cost control.
Implement retraining
and career consulting
services.
Improve productivity
and achieve flexibility
in work rules.
Negotiate job security
and employment-
adjustment policies
Organizational Life-Cycle Stages and HR Planning Activities

31. 1. Identify Crisis : Lack Of Understanding Of The Man Power Planning Process
2. Support only Of Top Management: Employees & Trade Unions Resist HRP
3. Insufficient Initial Efforts: Takes Time
4. Management Information System: missing & lack of data is detrimental
5. Uncertainties: Absenteeism, turnover, seasonal employment etc though are
discounted yet they make the system inefficient.
6. Expensive And Time Consuming
7. Coordination With Other Managerial Functions
8. Unbalanced Approach: looks mainly on quantitative aspect as in the number
of people in and out of the organization and not the quantitative aspects as in
the morale etc.
Limiting Factors Of HRP/MPP (Man Power Planning)