Strategic Human Resource management And HRP planning

1. STRATEGIC HRM AND HR
PLANNING
Unit – II

2. 2.1. Nature of Strategic HRM

3. • Strategy is an action that managers take to attain one or more of the organization’s goals.
Strategy can also be defined as “A general direction set for the company and its various
components to achieve a desired state in the future.
• Strategy is the blueprint of decisions in an organization that shows its objectives and goals .
• By strategy, we mean future-oriented plan for interacting with the competitive environment.
Strategy is a framework for managerial decisions.
• A strategy is all about integrating organizational activities and utilizing and allocating the
scarce resources within the organizational environment so as to meet the present objectives.

4. • It reflects a firm’s awareness of how, when and where it should compete and for what purpose
it should compete. . It is not only define what you do but more about what you don’t do.
• According to Richard Rumelt, strategy requires three things, first a diagnosis that defines the
challenge, guiding policy to deal with challenges, a set of clear action to accomplish the policy,
• Strategic human resource management (SHRM) refers to the process of developing practices,
p rogrammes and policies that help achieve organisational objectives

5. It focuses on the following aspects of HR Operation:
• Ensure practices that foster flexibility and give competitive advantage
• Built culture fit organization
• Ensure superior business performance
• Essential to retain best talent & develop
• Focus on employee’s value & engagement

6. • Today, strategic human resource management mainly focuses on employee issues and how
they can impact an organization’s long-term plans.
• In an organisation SHRM means accepting and involving the HR function as a strategic
partner in the formulation and implementation of the company's strategies through HR
activities such as recruiting, selecting, training and rewarding personnel.
• Strategic HRM is developing and implementing , evaluating HR policies and practices that
will enable the organization to achieve its strategic objectives
• SHRM concept used in an organization to help solve problems and set long-term
objectives. It is also about how the employment relationships

7. SHRM involves that
• Human resource management is fully integrated with the strategy and the strategic needs of
the firm
• It is not that HR manager himself/herself formulates strategies. He or she will be the
member of a core team which formulates company strategies and ensures their
implementation.
• HR needs to be accountable for conducting an organizational audit. Audit helps identify
which components of the architecture should be changed in order to facilitate strategy
execution.
• HR manager should be assigned to take the lead in proposing, creating, and debating best
practices that can help implement strategies.
• Strategic human resource management focuses on analyzing employee performance and
finding ways to increase employees’ overall productivity.

9. SHRM vs. HRM
Strategic HRM
• Meaning – It is a modern and professional approach so as to manage and develop the human
resources in line with the overall strategy of the organization.
• Objectives – The objective is to improve effectiveness and efficiency of employees to achieve
organizational goals. It includes selection, training, appraisal, promotion, compensation,
motivation and retention of competent employees.
• Responsibility – All departmental managers (who deal with employees on day-today basis and
get the work done) as well as HR department work in tandem.
• Function – It functions as a strategic partner of the organization so that organizational
objectives are achieved.
• Focus – It focuses on overall result and issues of the organization.

10. Nature of Decisions – Strategic HRM takes proactive decisions relating to human resource
issues.
Nature of HR Policies – HR policies are flexible & are reviewed periodically so as to make
revisions.
Specialization – There is specialization in HR areas such as selection, training, performance
appraisal etc.
Employee Treatment – The employees are deemed to be partners in progress. They are treated
with respect & considered as internal customers.
Other Differences – The relevant employment tests and interviews are conducted during
selection. It places great importance on training and development. The modern performance
appraisal techniques (assessment centre, role analysis) are used. The promotion is based on
merit at all levels. Special measures are designed to retain employees (retention bonus, loyalty
programs).

11. • HRM
• Meaning – It is a traditional method of managing people so as to undertake organizational
activities or achieve short-term organizational goals.
• Objectives – The objective is to select and compensate employees for the activities performed
by them for the organization
• Responsibility – HR department deals with/is responsible for managing the employees.
• Function – It is a part of the organization that implements and ensures compliance of all HR
policies.
• Focus – It focuses on operational issues and needs of human resources.
• Nature of Decisions – Traditional HRM takes reactive decisions relating to human resource
issues.
• Nature of HR Policies – Generally, HR policies are rigid in nature.

12. • Specialization – One manager looks after almost all areas of HR (such as selection, training,
performance appraisal etc.)
• Employee Treatment – The employees are treated as hired workers. There is lack of deep
respect & care for employees.
• Other Differences – There is less emphasis on relevant employment tests & interviews during
selection. It places less importance on training & development. The traditional performance
appraisal techniques are used. The promotion by seniority is followed at all levels. No special
measures are taken to retain employees.

13. Basic HRM SHRM
Meaning
Human resource management (HRM)
implies the governance of manpower of
the organization in a thorough and
structured manner.
SHRM is a managerial
function which implies
framing of HR strategies in
such a way to direct
employees efforts towards the
goals of organization.
Nature Reactive Proactive
Approach Fragmented Integrated
Scop Concerned with employee relation
Concerned with internal and
external relation
Time Short Long
Basic Factors Capital & Products People & Knowledge
Change Follow Change Initiates Change
Accountability Cost center Investment Centre
Control Stringent Control over Employees It exhibits Leniency

14. Barriers to SHRM
1. Lack of Support from top management
2. Absence of long term orientation
3. Wrong Perception about Human Resource Practitioner
4. Incompatibility of Information
5. Absence of Operating Managers’ Co-Ordination
6. Resist by Labour Union
7. Perception of human assets as higher-risk investments

15. STRATEGIC
MANAGEMENT
PROCESS
Models of SHRM
Scan the
Environment
Identify the
Source of
Competitive
advantage
Identify HR
Strategies
Implement
HR Strategies
Monitor &
evaluate HR
strategies

16. • Strategic Management is all about identification and description of the strategies that
managers can carry so as to achieve better performance and a competitive advantage for the
organization.
• It can also be defined as a bundle of decisions and acts which a manager undertakes and
which decides the result of the firm’s performance. The manager must have a thorough
knowledge and analysis of the general and competitive organizational environment so as
to take right decisions.
Environment
Scanning
Strategy
Formulation
Strategy
Implementation
Strategy Evaluation

17. • Scanning the Environment: The process begins with the scanning of the environment, i.e.
both the external and internal factors of the organization.
• The external environment encompasses the political, legal, technological, economic, social
and cultural forces that have a great impact on the functioning of the business.
• The internal factors include the organizational culture, hierarchy, business processes, SWOT
analysis, industrial relations, etc. that play a crucial role in performing the business
operations.
• The role of the HR department is to collect all the information about the immediate
competitors – their strategies, vision, mission, strengths, and weaknesses.

18. HR professionals can identify the workforce, work culture, skills of the staff, compensation
levels, reasons for exit and other relevant information about the competing firm.
Strategy Formulation
It is the process of deciding best course of action for accomplishing organizational objectives and
so achieving organizational purpose. After conducting environmental scanning, manager
formulate corporate, business and functional strategy.
1. Corporate level
• This is formulated by the top management of an organization made up of more than one line of
business.
• Role is to decide vision, mission, goal of the organization
• Allocating Resources
• Provide effective leadership

19. Business-level Strategy (specific plan of action to achieve goal)
•Managers are concerned with strategies that are specific to business or function.
•Role of the manager is to translate strategies into individual business or goals.
Functional-level Strategy
•Each business unit will consist of several departments, such as manufacturing, sales, finance, and
HRD. Functional-level strategies identify the basic courses of action that each of the departments
must pursue in order to help the business unit to attain its goals.
•SWOT Analysis
Role of the HR executive in strategy formulation
He or she should evolve his or her own strategies which must be aligned with the corporate, unit,
and functional strategies.

20. • Certain key steps in HR strategy formulation are worth recollecting in this context.
• Be clear whether the HR strategy is meant for corporate, unit, or functional level strategies.
The decision is simple in as much as the same HR strategy shall be relevant for any level
strategy.
• The next step is to identify the trends in the environment. Environmental scanning helps
delineate the major trends.
• The third step is to have a SWOT analysis of the firm. Scanning the internal environment of
the business helps list out its strengths and weaknesses and that of the external environment
helps identify opportunities and threats.

21. • The fourth stage is the identification of key HR practices. Key HR practices fall into four basic
categories.
• The flow of People: Hiring, promotions, transfers, outplacement and training, and
development
• The flow of performance management: Measurement, rewards, and follow-up
• The flow of information: Keeping the organization in touch with key external realities,
managing internal communications, and designing information technology infrastructure.
• The flow of work: Organization structure, work process design, and physical arrangements

22. Strategy Implementation
It implies making the strategy work as intended or putting the organizational chosen strategy into
action. Strategy implementation includes designing the organization’s structure, distributing
resources, developing decision making process and managing human resource.
The HR function can contribute to strategic plans and actions of the firm in the following ways:
• Encouragement of Pro-active Rather than Reactive Behavior
• Explicit Communication of Goals
• Stimulation of Critical Thinking
• Productivity as an HR Based Strategy
• Quality and Service are HR-based Strategies
• Proficient Strategic Management

23. Strategy Evaluation
• Strategy evaluation helps determine the extent to which the company’s strategies are successful
in attaining its objectives. Basic activities involve in strategy evaluation are:
• Establishing performance targets, standards, and tolerance limits for the objectives, strategies,
and implementation plans.
• Measuring the performance in relation to the targets at a given time. If outcomes are outside
the limits, inform managers to take action.
• Analyze deviations from acceptable tolerance limits.
• Execute modifications where necessary and feasible.

25. • Environmental Scanning - Internal & External Analysis of Environment
•
Organizational environment consists of both external and internal factors. Environment must
be scanned so as to determine development and forecasts of factors that will influence
organizational success.
• Environmental scanning refers to possession and utilization of information about
occasions, patterns, trends, and relationships within an organization’s internal and
external environment.
• It helps the managers to decide the future path of the organization. Scanning must identify the
threats and opportunities existing in the environment. While strategy formulation, an
organization must take advantage of the opportunities and minimize the threats. A threat for
one organization may be an opportunity for another.

26. • Internal analysis of the environment is the first step of environment scanning. Organizations
should observe the internal organizational environment
• This includes employee interaction with other employees, employee interaction with
management, manager interaction with other managers, and management interaction with
shareholders, access to natural resources, brand awareness, organizational structure, main staff,
operational potential, etc. Also, discussions, interviews, and surveys can be used to assess the
internal environment
• Analysis of internal environment helps in identifying strengths and weaknesses of an
organization.
As business becomes more competitive, and there are rapid changes in the external environment,
information from external environment adds crucial elements to the effectiveness of long-term
plans.
As environment is dynamic, it becomes essential to identify competitors’ moves and actions.
Organizations have also to update the core capabilities and internal environment as per external
environment.

27. • Environmental factors are infinite, hence, organization should be agile and vigile to accept
and adjust to the environmental changes. For instance - Monitoring might indicate that an
original forecast of the prices of the raw materials that are involved in the product are no more
credible, which could imply the requirement for more focused scanning, forecasting and
analysis to create a more trustworthy prediction about the input costs.
• In a similar manner, there can be changes in factors such as competitor’s activities, technology,
market tastes and preferences.
While in external analysis, three correlated environment should be studied and analyzed —
•immediate/industry environment
•national environment
•broader socio-economic environment/macro-environment
• Examining the industry environment needs an appraisal of the competitive structure of the
organization’s industry, including the competitive position of a particular organization and it’s
main rivals. Also, an assessment of the nature, stage, dynamics and history of the industry is
essential. It also implies evaluating the effect of globalization on competition within the

28. • Analyzing the national environment needs an appraisal of whether the national framework
helps in achieving competitive advantage in the globalized environment.
• Analysis of macro-environment includes exploring macro-economic, social, government,
legal, technological and international factors that may influence the environment. The analysis
of organization’s external environment reveals opportunities and threats for an organization.
• Strategic managers must not only recognize the present state of the environment and their
industry but also be able to predict its future positions.

29. Steps in Strategy Formulation Process
• Strategy formulation refers to the process of choosing the most appropriate course of action for
the realization of organizational goals and objectives and thereby achieving the organizational
vision.
• The process of strategy formulation basically involves six main steps. Though these steps
do not follow a rigid chronological order, however they are very rational and can be easily
followed in this order.
Setting Organizations’ objectives - The key component of any strategy statement is to set the
long-term objectives of the organization. It is known that strategy is generally a medium for
realization of organizational objectives.
• Objectives stress the state of being there whereas Strategy stresses upon the process of
reaching there. Strategy includes both the fixation of objectives as well the medium to be used
to realize those objectives.

30. • Thus, strategy is a wider term which believes in the manner of deployment of resources so as
to achieve the objectives.
• While fixing the organizational objectives, it is essential that the factors which influence the
selection of objectives must be analyzed before the selection of objectives. Once the objectives
and the factors influencing strategic decisions have been determined, it is easy to take strategic
decisions.
Evaluating the Organizational Environment - The next step is to evaluate the general
economic and industrial environment in which the organization operates.
• This includes a review of the organizations competitive position. It is essential to conduct a
qualitative and quantitative review of an organizations existing product line.
• The purpose of such a review is to make sure that the factors important for competitive success
in the market can be discovered so that the management can identify their own strengths and
weaknesses as well as their competitors’ strengths and weaknesses.

31. • After identifying its strengths and weaknesses, an organization must keep a track of
competitors’ moves and actions so as to discover probable opportunities of threats to its market
or supply sources.
Setting Quantitative Targets - In this step, an organization must practically fix the quantitative
target values for some of the organizational objectives. The idea behind this is to compare with
long term customers, so as to evaluate the contribution that might be made by various product
zones or operating departments.
Aiming in context with the divisional plans - In this step, the contributions made by each
department or division or product category within the organization is identified and accordingly
strategic planning is done for each sub-unit. This requires a careful analysis of macroeconomic
trends.
Performance Analysis - Performance analysis includes discovering and analyzing the gap
between the planned or desired performance.

32. • A critical evaluation of the organizations past performance, present condition and the desired
future conditions must be done by the organization.
• This critical evaluation identifies the degree of gap that persists between the actual reality and
the long-term aspirations of the organization. An attempt is made by the organization to
estimate its probable future condition if the current trends persist.
Choice of Strategy - This is the ultimate step in Strategy Formulation.
The best course of action is actually chosen after considering organizational goals, organizational
strengths, potential and limitations as well as the external opportunities.

33. Strategy Formulation Strategy Implementation
Strategy Formulation includes planning and
decision-making involved in developing
organization’s strategic goals and plans.
Strategy Implementation involves all those means
related to executing the strategic plans.
In short, Strategy Formulation is placing the Forces
before the action.
In short, Strategy Implementation is managing
forces during the action.
Strategy Formulation is an Entrepreneurial
Activity based on strategic decision-making.
Strategic Implementation is mainly
an Administrative Task based on strategic and
operational decisions.
Strategy Formulation emphasizes on effectiveness. Strategy Implementation emphasizes on efficiency.
Strategy Formulation is a rational process. Strategy Implementation is basically an operational
process.
Strategy Formulation requires co-ordination among
few individuals.
Strategy Implementation requires co-ordination
among many individuals.
Strategy Formulation requires a great deal
of initiative and logical skills.
Strategy Implementation requires
specific motivational and leadership traits.
Strategic Formulation precedes Strategy
Implementation.
Strategy Implementation follows Strategy
Formulation.

34. Strategy Evaluation Process and its Significance
• Strategy Evaluation is as significant as strategy formulation because it throws light on the
efficiency and effectiveness of the comprehensive plans in achieving the desired results.
• The managers can also assess the appropriateness of the current strategy in todays dynamic
world with socio-economic, political and technological innovations. Strategic Evaluation is the
final phase of strategic management.
• The significance of strategy evaluation lies in its capacity to co-ordinate the task
performed by managers, groups, departments etc, through control of performance.
• Strategic Evaluation is significant because of various factors such as - developing inputs for
new strategic planning, the urge for feedback, appraisal and reward, development of the
strategic management process, judging the validity of strategic choice etc.

35. Fixing benchmark of performance - While fixing the benchmark, strategists encounter
questions such as - what benchmarks to set, how to set them and how to express them. In order to
determine the benchmark performance to be set, it is essential to discover the special
requirements for performing the main task.
• The performance indicator that best identify and express the special requirements might then
be determined to be used for evaluation.
• The organization can use both quantitative and qualitative criteria for comprehensive
assessment of performance.
• Quantitative criteria includes determination of net profit, ROI, earning per share, cost of
production, rate of employee turnover etc. Among the Qualitative factors are subjective
evaluation of factors such as - skills and competencies, risk taking potential, flexibility etc.

36. Measurement of performance - The standard performance is a bench mark with which the
actual performance is to be compared. The reporting and communication system help in
measuring the performance.
• If appropriate means are available for measuring the performance and if the standards are set in
the right manner, strategy evaluation becomes easier. But various factors such as managers
contribution are difficult to measure. Similarly divisional performance is sometimes difficult to
measure as compared to individual performance.
• Thus, variable objectives must be created against which measurement of performance can be
done.
• The measurement must be done at right time else evaluation will not meet its purpose. For
measuring the performance, financial statements like - balance sheet, profit and loss account
must be prepared on an annual basis.

37. Analyzing Variance - While measuring the actual performance and comparing it with standard
performance there may be differences which must be analyzed.
• The strategists must mention the degree of tolerance limits between which the variance
between actual and standard performance may be accepted.
• The positive deviation indicates a better performance but it is quite unusual exceeding the
target always. The negative deviation is an issue of concern because it indicates a shortfall in
performance. Thus in this case the strategists must discover the causes of deviation and must
take corrective action to overcome it.
Taking Corrective Action - Once the deviation in performance is identified, it is essential to plan
for a corrective action. If the performance is consistently less than the desired performance, the
strategists must carry a detailed analysis of the factors responsible for such performance.
• If the strategists discover that the organizational potential does not match with the performance
requirements, then the standards must be lowered.

38. • Another rare and drastic corrective action is reformulating the strategy which requires going
back to the process of strategic management, reframing of plans according to new resource
allocation trend and consequent means going to the beginning point of strategic management
process.
Nature of HRP

39. • HRP is the strategy for acquisition, utilization, improvement and preservation of the HR of
an enterprises.
• It puts the objectives on paper and plans into number and kind of personnel needed to
accomplish those objectives. HRP involves determination of future manpower needs to help
management in being upbeat. It is a proactive process.
• It aids the management to anticipate deficiencies or surplus of HR in future and correct these
imbalances, before they uncontrollable and have right number and right kind at the right place
at the right time for maximum benefit of both employees and organization.

40. • According to Coleman, HRP is the process of determining the objectives, policies and
programmes that will procure, develop and utilize HR so as to achieve the goals of the
organisation.
• Robbins, HRP is the process by which an organisation ensures that it has right number and
kind of people, at the right time and place, capable of effectively and efficiently completing
those tasks that will help the organisation to achieve its overall objectives.
• HRP is understood as the process of forecasting an organization's future demand for, and
supply of, the right type of people in the right number.
• It is only after this that the HRM department can initiate the recruitment and selection process.

41. • HRP is a sub-system in the total organizational planning.
• As an integrated part of strategic management, HRP is variously called strategic manpower
planning, or employment planning.

42. Nature of Human Resource Planning:
· Human Resource Planning deals with the manpower needs of an organization.
· It helps in discovering the unused talent presently available with the organization.
· It also tells about the present inventory of manpower of the organization.
· It projects the future manpower needs of the organization.
· It deals with the procurement, utilization, improvement and preservation of manpower.

43. IMPORTANCE OF HRP
To meet up requirements of the organization:
• To do work in the organisation, every organisation needs personnel of desired skill,
knowledge and experience.
• This human resources requirement of organisation can be effectively fulfilled through proper
human resource planning.
• It helps in defining the number of personnel as well as kind of personnel required to satisfy its
needs. It ensures the reservoir of desired human resources as and when required.
Counterbalance insecurity and change:
• There must be proper utilization of human and non-human resources in the organization.
Sometimes the organization may have adequate non-human resources
• e.g. machines, materials and money but inadequate human resources as a result, manufacturing
process/production cannot be started.

44. • Human resource planning helps to offset uncertainties and changes as far as possible and
enables to ensure availability of human resources of the right kind, at right time and at right
place.
It helps in checking labour imbalance:
• Human resource planning helps to anticipate shortages and/or surpluses of manpower in the
organization.
• The shortage of manpower as well as surplus of manpower is not good for the organisation. It
proves very expensive for the organization. In case of shortage of human resources, physical
resources of the organization cannot be properly utilized.
• In case of surplus of human resources, this resource may remain under-utilized It helps in
counter balancing the problem of shortage and surplus employees very comfortably. Human
resource planning helps in correcting this imbalance before it become unmanageable and
expensive.

45. Right-sizing the human resource requirements of the organization:
• In an existing organization, there is a constant need for right-sizing the organisation. In the
organization, some posts may fall vacant as a result of retirement, accidents, resignations,
promotions or death of employees.
• Consequently, there is constant need of replacing people. Human resource planning estimates
future requirements of the organization and helps to ensure that human resources of right kind,
right number, in right time and right place.
To meet expansion and diversification needs of the organization:
• It helps to execute future plans of the organization regarding expansion, diversification and
modernization.
• Through human resource planning it is ensured that employees in right number and of right
kind are available when required to meet these needs of the organization. It ensures that people
of desired skills and knowledge are available to handle the challenging job requirements.

46. Training and Development of Employees:
• There is constant need of training and development of employees as a result of changing
requirements of the organisation.
• It provides scope for advancement and development of employees through training and
development etc. Thus, it helps in meeting the future needs of the organisation of highly skilled
employees.
Fulfill Individual Needs of the Employees:
• It helps to satisfy the individual needs of the employees for promotions, transfer, salary
encashment, better benefits etc.
Helps Formulation of Budgets:
• It helps in anticipating the cost of human resources e.g. salary and other benefits etc. It
facilitates the formulation of human resource budget for various departments/divisions of the
organisation. So, it may also help in, the formulation of suitable budgets in an organisation.

47. To Check Joblessness:
• In the exercise of right-sizing of employees by the organisation, some of the employees may
become surplus. It means their services are no more required in the organisation.
• It tries to foresee the need for laying-off. It plans to check job loss or to provide for alternative
employment in consultation with various concerned parties and authorities.

48. Factors affecting HRP
(HRP) is influenced by several considerations. The more important of them are
(i) type and strategy of organization,
(ii) organizational growth cycles and planning,
(iii) environmental Factors,
(iv) time horizons,
(v) type and quality of forecasting information,
(vi) labour market.

49. The type of organization is an important consideration because it deter­
mines the production processes
involved, number and type of staff needed, and the supervisory and managerial personnel
required.
• The strategic plan of the organization defines the organization’s HR needs. For example, a strategy
of organic growth means that additional employees must be hired.
• Acquisitions or mergers, on the other hand, probably mean that the organization will need to plan for
layoffs, since mergers tend to create, duplicate or overlapping positions that can be handled more
efficiently with fewer employees.

50. • the organization decides either to be proactive or reactive in human resource planning. It
can either decide to carefully anticipate the needs and systematically plan them to fill them
far in advance, or it can simply react to needs as they arise
• careful planning to fill HR needs better helps ensure that the organization obtains the right
number of HR people with proper skills and competencies when they are needed.
• The organization must determine the breadth of the plan. Essentially, the organization can
choose a narrow focus by planning in only one or two HR areas, such as recruitment or
selection, or it can choose a broad focus by planning in all areas including training,
remuneration and so on.
• the organization must make a decision on flexibility- the ability of the HR plan to anticipate
and deal with contingencies. No organization likes high levels of uncertainty.

51. • The stage of an organization’s growth can have considerable influence on human resource
planning. Small organizations in the developing stage may not have personnel planning.
• Need for planning is felt when the organization enters the growth stage. HR forecasting
becomes essential.
• A mature organization experiences less flexibility and variability. Issues like retirement and
possible retrenchment dominate planning.
• Finally, in the declining stage, human resource planning takes a different focus. Planning is
done for layoff, retrenchment and retirement.
• Since decisions are often made after serious financial and sales shocks are experienced by
the organization, planning is often reactive in nature.

52. • HR managers rarely have the privilege of operating in a stable and predictable environment.
• Political, social and economic changes affect all organizations. Personnel planners deal with
environmental uncertainties by carefully formulating recruitment, selection, and training and
development policies and programs.
• Balancing mechanisms are built into the HRM programme through succession planning,
promotion channels, layoffs, flextime, job sharing, retirement, VRS and other personnel related
arrangements.
• Major factor affecting personnel planning is the time horizon. A plan cannot be for too long on
a time horizon as the operating environment itself may undergo charges.
• On one hand, there are short-term plans spanning six months to one year. On the other hand,
there are long-term plans -which spread over three to twenty years.
• The exact time span, however, depends on the degree of uncertainty prevailing in an
organization’s environment.

53. • Plans for companies operating in an unstable environment, computers for example, must be for
a short period. Plans for others where environment is fairly stable, for example a university
plan, may be long-term. In general, the greater the uncertainty, the shorter the plan’s time
horizon and vice-versa.
• A major issue in personnel planning is the type of information which should be used in
making forecasts.
• The quality and accuracy of information depend upon the clarity with which the
organizational decision makers have defined their strategy, organizational structure,
budgets, production schedules and so forth.
• In addition, the HR department must maintain well-developed job-analysis information and
HR information systems (HRIS) that provide accurate and timely data.
• Generally speaking, organizations operating in stable environments are in a better position to
obtain comprehensive, timely and accurate information because of longer planning horizons,
clearer definition of strategy and objectives, and fewer disruptions

54. Labor market comprises people with skills and abilities that can be tapped as and when the need
arises.
When one talks about labor supply, the following deserve due consideration:
• The size, age, sex and educational composition of the population
• The demand for goods and services in the country
• The nature of production technology
• Employability of the people
Kickbacks from owners of ancillary units are the cause for such ancillarisation. HRP is rarely
required in such circumstances.

55. human resource planning process

56. Environmental Scanning: It involves analysis of external and internal environment of business
to identify issues and opportunities that will influence the organization’s strategic plan. It involves
analysis of economic development, scanning of political, legal and technical changes and
competition.
Analyze organizational objectives and policies
• HR plans need to be based on organizational objectives.
• The objectives of the HR plan must be derived from organizational objectives. Specific
requirements in terms of number and characteristics of employees should be derived from the
organizational objectives.
• organizational objectives are defined by the top management and the role of HRP is to
subserve the overall objectives by ensuring availability and utilization of human resources.
• Once the organizational objectives are specified, communicated and understood by all
concerned, the HR department must specify its objectives with regard to HR utilization in the
organization.

57. • HR Demand forecast
• Demand forecasting is the process of estimating the future quantity and quality of people
required.
• The basis of the forecast must be the annual budget and long-term corporate plan, translated
into activity levels for each function and department.
• In a manufacturing company, the sales budget would be translated into a production plan
giving the number and type of products to be produced in each period
• From this information, the number of hours to be worked by each skilled category to make the
quota for each period, would be computed.
• Demand forecasting must consider several factors—both external as well as internal.

58. There are several good reasons to conduct demand forecasting. It can help:
1. quantify the jobs necessary for producing a given number of goods, or offering a given
amount of services;
2. determine what staff-mix is desirable in the future;
3. assess appropriate staffing levels in different parts of the organisation so as to avoid
unnecessary costs;
4. prevent shortages of people where and when they are needed most; and
5. monitor compliance with legal requirements with regard to reservation of jobs.

59. Forecasting Techniques
The techniques are: 1. Managerial judgement 2. Ratio-trend analysis 3. Regression analysis 4.
Work study techniques 5. Delphi technique 6. Flow models 7. Others
Managerial Judgement This technique is very simple. In this, managers sit together, discuss
and arrive at a figure which would be the future demand for labour. The technique may involve a
‘bottom-up’ or a ‘top-down’ approach.
• In the first, line managers submit their departmental proposals to top managers who arrive at
the company forecasts. In the ‘top-down’ approach, top managers prepare company and
departmental forecasts. These forecasts are reviewed with departmental heads and agreed
upon.
Ratio-trend Analysis. No of Volume = No of workers.
The technique involves studying past ratios, say, between the number of workers and sales in an
organisation and forecasting future ratios, making some allowance for changes in the organisation
or its methods.

60. Regression Analysis This is similar to ratio-trend analysis in that forecast is based on the
relationship between sales volume and employee size. However, regression analysis is more
statistically sophisticated.
• A firm first draws a diagram depicting the relationship between sales and workforce size. It
then calculates regression line—a line that cuts right through the center of the points on the
diagram.
• Work-study Techniques Work-study techniques can be used when it is possible to apply work
measurement to calculate the length of operations and the amount of labour required.
Following is a highly simplified example of this procedure:
Amount of production require = 4,00,000 Units
Time to product 1 Unit = 2 hr
Work ability per employee = 1600hr/annum
Time to produce 4,00,000 units = 4,00,000*2 = 8,00,000hr
Workers needed = 8,00,000/1600 = 500 workers

61. Delphi Technique: The HRP experts act as intermediaries, summaries the various responses and
report the findings back to the experts. The experts are surveyed again after they receive this
feedback.
Flow Models (Markov) Flow models are very frequently associated with forecasting personnel
needs
1. Determine the time that should be covered.
2. Establish categories, also called states, to which employees can be assigned.
3. Count annual movements (also called ‘flows’) among states for several time periods.
4. .Estimate the probability of transitions from one state to another based on past trends.
Other Forecasting Techniques

62. HR Supply Forecast
• The next logical step for the management is to determine whether it will be able to procure the
required number of personnel and the sources for such procurement. This information is
provided by supply forecasting, also called bench forecasting.
• Supply forecasting measures the number of people likely to be available from within and
outside an organisation, after making allowance for absenteeism, internal movements and
promotions, wastage and changes in hours, and other conditions of work
Reasons for supply forecast are that it:
(i) helps quantify number of people and positions expected to be available in future to help the
organization realize its plans and meet its objectives;
(ii) helps clarify likely staff mixes that will exist in the future;
(iii) assess existing staffing levels in different parts of the organisation;
(iv) prevents shortage of people where and when they are most needed, and
(v) monitors expected future compliance with legal requirements of job reservations.

63. The supply analysis covers:
1. Existing human resources, (skills inventories, HRIS, Management Inventories )
2. Internal sources of supply, (inflow, outflow, turnover etc )and
3. External sources of supply.(…..)
Present Inventory/ Skill / Management inventory
HRIS
Inflow/Outflow
External Supply
Methods
Trend Analysis (Past data)
Competency Model ( Knowledge, skills, ability)
Replacement Charts (Succussion Planning)
Staffing Table (Job Position)
Flow Model

64. HR Programming : Once an organisation’s personnel demand and supply are forecast, the two
must be resolved or balanced in order that vacancies can be filled by the right employees at the
right time.
HR Plan Implementation: Implementation requires converting an HR plan into action
• Some such programmes are recruitment; selection and placement; training and development;
retraining and redeployment; the retention plan; the redundance plan; and the succession plan.
Control and Evaluation: The HR plan should include budgets, targets and standards. It should
also clarify responsibilities for implementation and control, and establish reporting procedures
which will enable achievements to be monitored against the plan.

65. Barriers to HRP

66. 1. Time Consuming
2. Expensive
3. Lack of support from top management
4. Insufficient Information
5. Wrong Perception about HR practitioner
6. Uncertainty
7. Trade Unions
8. Conflicts
9. Non involvement of operating managers

67. 1.Lack of knowledge and experience: As a new HR practitioner, the individual may lack the knowledge
and experience required to effectively manage the orientation program and implement the buddy and
mentor system.
2.Limited resources: The HR practitioner may have limited resources, such as time and staff, to
effectively manage the orientation program and implement the buddy and mentor system.
3.Communication breakdown: There may be a breakdown in communication between the HR
practitioner and the new hires, resulting in misunderstandings and frustration.
4.Resistance to change: Some employees may resist the implementation of a buddy and mentor system,
viewing it as an unnecessary or burdensome process.
To address these challenges effectively, the HR practitioner can take the following steps: