The document discusses human resource planning (HRP), including defining HRP, its aims and processes, how it relates to business strategy, different perspectives of HRP (macro and micro), job analysis, and the HRP process. HRP involves analyzing current and future human resource needs and developing plans to meet those needs. It aims to ensure optimal use of current employees and provide for future staffing needs. The HRP process includes environmental scanning, forecasting HR demand and supply, and developing action plans to match demand and supply.

1. Human Resource Planning (HRP)

2. HRP: An Overview HRP is a process of analyzing & identifying the need for & availability of human resources (HR) so that organization can meet its objectives

3. Defining HR Planning Strategy Oriented DEFINITION “ A strategy for the acquisition, utilization, improvement & retention of an organization’s human resources” AIMS of HRP : to ensure the optimum use of the people currently employed to provide for the future staffing needs of the organization in terms of skills, number, & ages of people HRP establish control : planner work as a “policeman” who checks whether staffing levels are optimum Process Oriented DEFINITION HRP is as a continuous process of analyzing an organization’s HR needs under the changing conditions & developing the activities necessary to satisfy these needs like staffing, recruitment, selection, training, etc. Process aimed at assisting management to determine how the organization should move from its current staffing position to its desired staffing position

4. Business Strategy & HRP Business strategy focus (Porter) HR strategy HRP activities Cost leadership Cost control Stable business environment Efficiency & quality Job & employee specialization Employee efficiency Long HR planning scope Internal promotions Emphasis on training Hiring & training for specific capabilities Differentiation Long term focus Growth Creativity in job behaviour Decentralization Shorter HR planning scope Hire HR capabilities required Flexible jobs & employees External staffing Hire & train for broad competencies

5. Business Strategy & HRP Business strategy focus (Miles & Snow) HR strategy HRP activities Defender Finds change threatening Favors strategies which encourage continuity & security Bureaucratic approach Planned & regularly maintained policies to provide for lean HR Build HR Likely to emphasize training programs & internal promotion Prospector Succeed on change Favors strategies of product & / or market development Creative & flexible management style Have high quality HR Emphasize redeployment & flexibility of HR Little opportunity for long-term HRP Acquire HR Likely to emphasize recruitment, selection & performance base compensation

6. Perspectives of HRP MACRO HRP – Assessing & forecasting demand for & availability of skills at national / global level Predict the kinds of skills that will be required in future & compare these with what is / will be available in the country Eg. Gillette merger with P&G whereby decided to restructure & move from business units based on geographic regions to global business units based on product lines which resulted in redundancy of some employees (Relocation to Singapore & VRS for others) MICRO HRP – Process of forecasting demand for & supply of HR for specific organization Eg. Wipro (a software giant in India) raising wages / short-listing students in their 2 nd yr. of college for future employment in India Genpact (an IT solution company in India) launching an associate trainee program with Osmania University in India

7. JOB ANALYSIS

8. Terminology commonly used in JA literature JOB – group of positions that have similar duties, tasks, & responsibilities POSITION – set of duties & responsibilities performed by one person A job is a general term, a position is more specific. Eg. as my job , I am a teacher. But to be specific, my position is Elementary Gifted Specialist. Eg. someone might work at the grocery store as their job , but specifically, their position is produce assistant. JOB FAMILY – group of 2 / more jobs that have similar duties / characteristics TASK – separate, distinct & identifiable work activity DUTY – several tasks that are performed by an individual

9. Terminology commonly used in JA literature RESPONSIBILITIES – obligations to perform certain tasks & duties DUTY **BEHAVIOR SHOWING A PROPER REGARD / SENSE OF OBLIGATION, JUSTICE MORALITY, OCCUPATION OR POSITION. RESPONSIBILITY **OBLIGATION,TO DO WHAT IS ASK,IF YOU SAY YOUR GOING TO DO SOMEHTHING DO IT,TRUST,HONEST, TO CARE FOR ANOTHER WHEN ONE JOB DESIGN – process to ensure that individuals have meaningful work & one that fits in effectively with other jobs JOB DESCRIPTION – written summary of the content & context of the job, outlining the tasks, duties, & responsibilities of a job, as well as performance standards of each job JOB SPECIFICATION – written statement of the KSA & other characteristics (human requirements) that are necessary for performing the job effectively & satisfactorily

10. Information obtained from JA What is to be done? How is to be done? (CONTENT) Under what conditions is the job to be done (CONTEXT) What KSA & other characteristics are required to perform the job (HUMAN REQUIREMENTS)

11. Information obtained from JA JOB CONTENT Duties & responsibilities Job demands Machines, tools, & equipment Performance standards JOB CONTEXT Physical, organizational & social context Work conditions, & work schedule HUMAN REQUIREMENTS KSA, Education, Experience & personal attributes (personality, interests, etc.)

12. Components of a JA JOB DESCRIPTION Statement of tasks, duties, responsibilities, & context of the job JOB SPECIFICATION KSA required to perform the job satisfactorily JOB EVALUATION Comparison of relative value of jobs in organization for making compensation decisions

13. Methods of collecting information for JA Number of ways – may be used in combination or in isolation METHODS: Interviews Questionnaires Observations Participant diary

14. JA Process Determine purpose of JA Review organization chart OC shows the division of work in organization, how the job in question related to other jobs, how the job fits into the overall organization, who reports to whom, & whom the incumbent reports to Select representative jobs for analysis Analyze jobs using data gathering methods Check information for accuracy Write JD & JS for use in HR activities

15. Writing JDs Job title & identification Job summary Relationships Responsibilities & duties Standards of performance & working conditions Equipment & tools Working conditions

16. HRP Process HRP PROCESS: Environmental scanning Forecasting & analyzing demand for HR Forecasting & analyzing supply of HR Developing action plans to match HR demand & supply

17. Environmental Scanning Systematic process of studying & monitoring the external environment of the organization in order to pinpoint opportunities & threats Involves long range analysis of employment Factors include economic factors, competitive trends, technological changes, socio-cultural changes, politico-legal considerations, labour force composition & supply, & demographic trends

18. Environmental Scanning Eg., competitive pressures are likely to increase resulting in enhanced productivity requirements & HRP objective may be ‘to increase employee productivity by 5% in 2 yrs.’ which will require the firm to determine current employee productivity (output / employees) Attempts to answer 2 questions: Which jobs need to be filled (or vacated) during the next 12 months? How & where will we get people to fill (or vacate) these jobs? Demand & supply of labour in loose & tight labour market Major impact of the shortage of skilled workforce (tight labour market) in India has been on staff cost (increased by 35% in 2005) Fast growing sectors like retail, ITeS, telecom are new & do not have historical talent to bank on & hence they are hiring from other sectors with skill sets that are relevant to their industries

19. Forecasting HR Demand FORECASTING ‘makes use of information from the past & present to identify expected future conditions’. Forecasts are not perfectly accurate & as the planning scope becomes shorter the accuracy of forecasts increases HR demand forecasts may be internal / external

20. Qualitative Methods of Demand Forecasting Method Advantages Disadvantages Estimation People in position estimate the number of people the firm will require in the next yr. Incorporates knowledge of corporate plans in making estimates May be subjective Expert opinion Panel of experts forecast HR requirements for particular future business scenarios. For this method, there may be a single expert, or estimates of several experts may be pooled together Delphi Experts go through several rounds of estimates with no face-to-face meeting Incorporates future plans & knowledge of experts related to mkt., industry & technical development Subjective, time consuming & may ignore data Group brainstorming Face-to-face discussion based on multiple assumptions about future business direction Generates lot of ideas Does not lead to conclusion Nominal group technique Face-to-face discussion Group exchanges facilitate plans Subjective which may ignore data Simple averaging Simple averaging of viewpoints Diverse view points taken Extremes views are masked when averaged

21. Quantitative Methods of Demand Forecasting Method Advantages Disadvantages Trend analysis & projection Based on past relationship between a business factor related to employment & employment level itself Simple long-run trend analysis Extrapolates past relationship between volume of business activity & employment levels into the future Recognizes linkage between employment & business activity Assumes that volume of business activity of firm for forecast period will continue at same rate as previous yrs Ignores multiplicity of factors influencing employment levels Regression analysis Regresses employment needs onto key variables Data driven Uses multiple business factors Difficult to use & apply

22. Quantitative Methods of Demand Forecasting Method Advantages Disadvantages Simulation models Uses probabilities of future events to estimate future employment levels Makes several assumptions about the future regarding external & internal environment Simultaneously examines several factors Costly & complicated Workload analysis Based on actual content of work HR requirements based on expected output of the firm Productivity changes taken into account Job analysis may not be accurate Difficult to apply Markov analysis Probabilistic Based on past relationship between business factor related to employment & employment level itself Data driven Assumes that nature of jobs has not changed over time Applicable to stable environment

23. Causes of Demand EXTERNAL CHALLENGES: Economic developments – noticeable effect but are difficult to estimate (Inflation, unemployment, & changing workforce patterns) Social, political & legal challenges – easier to predict, but their implications are not very clear (Implication of abolishing mandatory retirement age in US may not be known until a generation has lived without “65 & out” tradition) Technology changes – difficult to predict & assess but may radically alter strategic & HR plans (PC would cause mass unemployment vis-à-vis IT field as a large one employing millions of people directly / indirectly – complicates HR, because it tends to reduce employment in one dept. while increasing it in another)

24. Causes of Demand ORGANIZATIONAL DECISIONS: As orgs. respond to changes in their environment, decisions are made to modify the strategic plan , which commits firm to long-range objectives – growth rates & new products, markets / services & these objectives dictate number & types of employees needed in future To achieve long-term objectives, HR specialists must develop long-range HR plans that accommodate strategic plan In short run, planners find strategic plans become operational in form of budgets Sales & production forecasts are less exact than budgets but may provide even quicker notice of short-run changes in demand for HR New ventures means changing HR demands – when a new venture is begun internally from scratch, lead time may allow planners to develop short-run & long-run employment plans – merging HR group with Corporate Planning staff

25. Causes of Demand WORKFORCE FACTORS (ATTRITION): Demand is modified by employee actions such as retirements, resignations, terminations, death, & leaves of absence Analysis Technique – Markov Analysis of Attrition Rates

26. Forecasting Techniques Trend Projection Forecasts: Quickest forecasting techniques Two simplest methods – Extrapolation : involves extending past rates of change into future (if an avg of 20 production workers was hired each month for past 2 yrs, extrapolating that trend into future means that 240 production workers will be added during upcoming yr.) Indexation : a method of estimating future employment needs by matching employment growth with an index, such as ratio of production employees to sales (eg., for each million $ increase in sales, production deptt. requires 10 new assemblers) Both are crude approximations in short run because they assume that causes of demand remain constant which is seldom the case – making it very inaccurate for long-range HR projections

27. Methods of Demand Estimation TREND ANALYSIS & PROJECTION Study of firm’s past employment needs over a period of yrs. to predict future needs Appropriate business factor that relates significantly to employment levels differs across industries (University – student enrollment, Sales firm – sales volume, Manufacturing firm – total units produced) Steps: Determine & identify a business factor that relates to the number & type of people employed Identify historical trend of the relationship between this business factor & the number of people employed Determine the ratio of employees to the business factor, that is, the average output per individual employee per year – labour productivity Determine the labour productivity ratio for the past 5 yrs at least & calculate the average annual rate of change in productivity Calculate the human resource demand by dividing the business factor by the productivity ratio Project human resource demand for the target year.

28. Methods of Demand Estimation SIMPLE LONG-RANGE TREND ANALYSIS Extrapolates the volume of current business activity for the years for which the forecast is being made Since there is a correlation between volume of business activity & employment level, linear extrapolation would also indicate HR demand by job & skill category

29. Methods of Demand Estimation RATIO ANALYSIS RATIO between output & manpower deployed to achieve that output is established at a given point of time Eg., revenue per employee, sales vol. per salesperson, service contract per engineer, units produced per employee, etc., Historical ratio between: Some causal factor (sales volume) No. of employees required (number of salesperson)

30. Methods of Demand Estimation REGRESSION ANALYSIS Drawing a statistical comparison of past relationship among variables Statistical relationship between no. of patients (business factor) & employment level of nurses in a nursing home may be useful in forecasting the no. of employees that will be needed if the no. of patients increases by say 20%

31. Methods of Demand Estimation LINEAR REGRESSION ANALYSIS Relationship between two variables which is directly & precisely proportional Production output & manpower are the two variables & the relationship between these two is plotted on a graph by drawing a “line of best fit” Analysis aims at providing a measure of the extent to which changes in the values of two variables are correlated with one another X a b Y Manpower Production level x x x x x x x

32. Methods of Demand Estimation MARKOV ANALYSIS Shows the percentage (& actual no.) of employee who remain in each job from one yr. to the next, as also the proportion of those who are promoted or transferred or who exit the organization Internal mobility among different job classifications can be forecast based upon past movement patterns – past patterns of employee movements (transitions) used to project future patterns Pattern is used to establish transitional probabilities & to develop a transition matrix Transitional probabilities: Indicate what will happen to the initial staffing levels in each job category / probability that employee from one job category will move into another job category Determine the forecasted employee levels at the end of the yr

33. Forecasting & Analyzing HR Supply Internal supply forecasts relate to conditions inside the org. such as age distribution of workforce, terminations, retirements, etc. External supply forecasts relate to external labour market conditions & estimates of supply of labour to be available to the firm in the future in different categories

34. Methods of Forecasting External HR Supply INTERRELATED FACTORS THAT MUST BE CONSIDERED IN PROJECTING EXTERNAL HR SUPPLY Government estimates of population available for work Net migration into and out of the area Numbers entering the workplace Numbers leaving the workplace Numbers graduating from schools / colleges Changing workforce composition Technological shifts Industrial shifts Trends in the industry (actions of competing employers) Economic forecasts Government regulations & pressures such as job reservations for certain groups

35. Methods of Forecasting Internal HR Supply HR INVENTORY Obtains & stores information about each employee of the org. in a manner that is easily accessible because it is necessary for HRP Employee information stored in the inventory relates to KSA, experience, & career aspirations of the present workforce of the firm Contents of HR Inventory Personal identification information Biographical information Educational achievements Employment history Information about present job Present skills, abilities, & competencies Future focused data Specific actions (like training needed for achieving career goals)

36. Methods of Forecasting Internal HR Supply HR INVENTORY 2 types – Skills inventory: describes the skills & knowledge of non-managerial employees & is used primarily for making placement & promotion decisions Management inventory: contains the same information as in skills inventory, but only for managerial employees which describes the work history, strengths, weaknesses, promotion potential, career goals

37. Methods of Forecasting Internal HR Supply HR INVENTORY Can be used to develop employee replacement charts Replacement charts – lists current jobholders & identifies possible replacements should there be a vacancy for reasons such as resignations, transfers, promotions, etc. Replacement charts include the following information on possible replacements like current job performance, potential for promotion, training experience required by replacement to be ready for the key position Chart also details ‘when’ a replacement is needed for a ‘job’ – short term forecasts in nature

38. Methods of Forecasting Internal HR Supply SUCCESSION ANALYSIS & PLANNING A systematic & deliberate process of identifying, developing & tracking key individuals within the firm to prepare them for assuming senior & top-level positions in future. Eg., SAIL poaching from global players & preparing a ‘defence system’ wherein 2 nd & 3 rd line of command is being prepared; IBM, ExxonMobil, GE, etc., have already hired its CEO for 2010 Eg., Godrej, Marico (fly. owned business) in India have ‘drop dead’ succession plan which keeps the wheel moving where a promoter of the fly-owned firm may always be around to guide the company

39. Methods of Forecasting Internal HR Supply LABOUR WASTAGE ANALYSIS Traditionally LW is measured by the employee turnover index (% wastage index) (No. of empls leave in mth / avg. empls) x 100 Turnover classified into: Avoidable separations (resignations & dismissal) Unavoidable separations (retirement, death, & marriage) Turnover rate = [(S-US) / M] x 100

40. Methods of Forecasting Internal HR Supply ABSENTEEISM RATE No. of man-days lost due to absence from work during the period AR = --------------------------------------- x 100 Avg. number of Total number empls. during this pd. of days

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