Human resource planning involves forecasting future labor demand and supply to determine if surpluses or shortages will exist. The process includes: - Forecasting demand using methods like trend analysis, indicators, and simulations - Forecasting supply by assessing succession plans, skills inventories, market analyses, and personnel ratios - Creating transition matrices to analyze employee movement between roles over time - Comparing forecasts to determine if recruitment or layoffs are needed to achieve organizational goals

1. Human Resources Planning
Process
Dr Sorab Sadri and Prof. Jayashree
Sadri

2. 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

3. Overview of the Human Resource Planning
Process

4. Human Resource Forecasting
• HR Forecasting attempts
to determine the supply
and demand for various
types of human resources,
and to predict areas
within the organization
where there will be labor
shortages or surpluses.
There are three major
steps to forecasting:
1. Forecasting the demand
for labor
2. Determining labor
supply
3. Determining labor
surpluses and shortages

5. HUMAN RESOURCE PLANNING
FORECASTING HR REQUIREMENTS (DEMAND ANALYSIS)
(Trying to predict future staffing needs)
Managerial Estimates
Sales Projections
Simulations
Vacancy Analysis (projected turnover)
FORECASTING HR AVAILABILITY (SUPPLY ANALYSIS)
(Predicting worker flows and availabilities)
Succession or Replacement Charts
Skills Inventories (use of HRIS)
Labor Market Analysis
Markov Analysis (Transition Matrix)
Personnel Ratios

6. Forecasting the Demand for Labor
Trend Analysis
• Constructing and applying statistical models that predict
labor demand for the next year, given relatively objective
statistics from the previous year.
Leading Indicators
• Objective measures that accurately predict future labor
demand.

7. CORRELATIONS/PROJECTIONS
SIZE OF HOSPITAL NUMBER OF NURSES
200 240
300 260
400 470
500 500
600 620
700 660
800 820
900 860

8. SIMULATION MODEL/REGRESSION FORECAST
TARGET STORES STAFFING FORECAST
MODEL
Y = 8 + .0011(X1) + .00004(X2) + .02(X3)
Y = Number of employees needed to staff the store
X1 = Square feet of sales space
X2 = Population of metropolitan area
X3 = Projected annual disposable income in millions of dollars
Y = 8 + .0011(50,000sq ft) + .00004(150,000popul) + .00000002($850 million)
Y = 8 + 55 + 6 + 17
Y = 86 employees needed at this store

9. VACANCY ANALYSIS
Historic departures used to project turnover
LEVEL # EMPL TURN % Expected Vacancies Expected to Remain
TOP MGMT 100 20 % 20 80
MID MGMT 200 24 % 48 152
LOW MGMT 600 22 % 132 468
SKILLED W 600 16% 96 504
ASSY WKRS 2000 12 % 240 1760
TOTALS 3500 536 2964
AVERAGE TURNOVER PERCENTAGE = 536 / 3500 = .1531

10. Determining Labor Supply
Predicting Worker Flows and Availabilities
• Succession or Replacement Charts
Who has been groomed/developed and is ready for promotion right NOW?
• Human Resource Information Systems (HRIS)
An employee database that can be searched when vacancies occur.
• Transition Matrices (Markov Analysis)
A chart that lists job categories held in one period and shows the proportion of
employees in each of those job categories in a future period.
It answers two questions:
1. “Where did people in each job category go?”
2. “Where did people now in each job category come from?
• Personnel / Yield Ratios
How much work will it take to recruit one new accountant?

11. SUCCESSION PLANNING
REPLACEMENT CHART
FOR EXECUTIVE POSITIONS
POSITION REPLACEMENT CARDS
FOR EACH INDIVIDUAL POSITION
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
POSITION WESTERN DIVISION SALES MANAGER
DANIEL BEALER Western Division Sales Mgr Outstanding Ready Now
PRESENT PROMOTION
POSSIBLE CANDIDATES CURRENT POSITION PERFORMANCE POTENTIAL
SHARON GREEN Western Oregon Sales Manager Outstanding
Ready Now
GEORGE WEI N. California Sales Manager Outstanding
Needs Training
HARRY SHOW Idaho/Utah Sales Manager Satisfactory Needs Training
TRAVIS WOOD Seattle Area Sales Manager Satisfactory Questionable
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

12. HUMAN RESOURCE INFORMATION SYSTEMS
(HRIS)
PERSONAL DATA
Age, Gender, Dependents, Marital status, etc
EDUCATION & SKILLS
Degrees earned, Licenses, Certifications
Languages spoken, Specialty skills
Ability/knowledge to operate specific machines/equipment/software
JOB HISTORY
Job Titles held, Location in Company, Time in each position, etc.
Performance appraisals, Promotions received, Training & Development
MEMBERSHIPS & ACHIEVEMENTS
Professional Associations, Recognition and Notable accomplishments
PREFERENCES & INTERESTS
Career goals, Types of positions sought
Geographic preferences
CAPACITY FOR GROWTH
Potential for advancement, upward mobility and growth in the company

13. Transition Matrix
Example for an Auto Parts Manufacturer

14. MARKOV ANALYSIS
(STATISTICAL REPLACEMENT ANALYSIS)
TO:  A TRANSITION MATRIX
FROM:
TOP MID LOW SKILLED ASSY EXIT
TOP .80 .02 .18
MID .10 .76 .04 .10
LOW .06 .78 .01 .15
SKILL .01 .84 .15
ASSY .05 .88 .07
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

15. MARKOV ANALYSIS – 2
(Captures effects of internal transfers)
(Start = 3500) A TRANSITION MATRIX
FROM/ TO:  TOP MID LOW SKILLED ASSY EXIT
TOP 100 .80 .02 .18
MID 200 .10 .76 .04 .10
LOW 600 .06 .78 .01 .15
SKILL 600 .01 .84 .15
ASSY 2000 .05 .88 .07
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
END YR WITH: 100 190 482 610 1760 [358 left]
NEED RECRUITS ? 0 10 118 240* 368 tot
NEED LAYOFFS ? (10)* (10) tot
KEEP STABLE 100 200 600 600 2000 = 3500 Tot

16. MARKOV ANALYSIS – 3
(Anticipates Changes in Employment Levels)
Employment needs are changing. We need a 10% increase in skilled workers
(660), and a 15% decrease in assembly workers (1700) by year’s end.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Start = 3500) A TRANSITION MATRIX
FROM/ TO:  TOP MID LOW SKILLED ASSY EXIT
TOP 100 .80 .02 .18
MID 200 .10 .76 .04 .10
LOW 600 .06 .78 .01 .15
SKILL 600 .01 .84 .15
ASSY 2000 .05 .88 .07
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
END YR WITH: 100 190 482 610 1760 [358 left]
NEED RECRUITS ? 0 10 118 50*
NEED LAYOFFS ? (60)*
NEW LEVELS 100 200 600 600 1700 = 3260 tot

17. Determining Labor Surplus or Shortage
• Based on the forecasts for labor demand and
supply, the planner can compare the figures to
determine whether there will be a shortage or
surplus of labor for each job category.
• Determining expected shortages and surpluses
allows the organization to plan how to address
these challenges.

18. PERSONNEL / YIELD RATIOS
Past experience has developed these yield ratios for recruiting a Cost Accountant:
FOR EVERY 12 APPLICATIONS RECEIVED, ONLY 1 LOOKS
PROMISING ENOUGH TO INVITE FOR AN INTERVIEW
OF EVERY 5 PERSONS INTERVIEWED, ONLY 1 IS ACTUALLY
OFFERED A POSITION IN THE ORGANIZATION
OF EVERY 3 JOB OFFERS MADE, ONLY 2 ACCEPT THE POSITION
OF EVERY 10 NEW WORKERS WHO BEGIN THE TRAINING
PROGRAM, ONLY 9 SUCCESSFULLY COMPLETE THE PROGRAM
THUS: 100 APPLICATIONS MUST BE RECEIVED, so that
8.33 JOB INTERVIEWS CAN BE HELD, so that
1.67 JOB OFFERS CAN BE MADE, and
1.11 PEOPLE MUST BE TRAINED, so that we get
ONE NEW COST ACCOUNTANT!!!