Unit 1 human resource planning

MANAGING HUMAN
RESOURCE
MBA, Fall 2014
Unit 1: Human Resource
Planning
Course Instructor:
B. G. Bhattacharya

HUMAN RESOURCE PLANNING
S-1
 Human Resource is the most
important aspect of botheration in any
organization. It is rightly said as the
“life blood” of an enterprise.
 No matter how technologically
advanced an organization tries to be,
ultimately it is the human resource
which need to operate and monitor all
systems.
 It is, therefore, of immense
importance to PLAN the human
resource – right from hiring the right
people, to making arrangements for
their career development, to deciding
on their package, to properly appraise
their work.

FORECASTING AS A PART OF HR PLANNING
S-2
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

CAUSES OF DEMAND FOR HUMAN RESOURCES
S-3
 Economic
developments
 Social-
political-legal
challenges
 Technological
challenges
 Competitors
 Strategic plan
 Budgets
 Sales &
production
forecasts
 New ventures
 Organizational
& job design
 Retirements
 Resignations
 Terminations
 Deaths
 Leaves of
absence
External Organizational Workforce

FORECASTING HR REQUIREMENTS
S-4

S-5
 Estimate of numbers and kinds of employees the organization
will need to implement organizational strategies and attain
organizational objectives on future dates.
 Demand for firm’s goods or services must be forecast.
 Involves consideration of alternative ways of organizing jobs
(job design, organizational design or staffing jobs)
 Example - Peak production could be handled by temporary
workers or assigning overtime. Machine breakdowns assigned
to maintenance department or handled by machine operators
 Forecast is then converted into people requirements

ASSUMPTIONS AT THE TIME OF DEMAND
FORECASTING
S-6
DEMAND
FORECASTING
Assumptions of
Political
environment
Assumptions of
Social environment
Business Plans
Assumptions of
Technology
Conditions
Assumptions of
Labor market
Assumptions of
Economic Trends

TIME SCALE OF HRP FORECASTS
Time Frame Requirement
basis
Availability Possible action plans to
meet the requirements
Less than a
year
Annual budget
(operational plans)
Existing manpower (by
proper distribution of
workload ) +contractual
manpower
Body shoppers/contractors,
overtime , recruitment on
contractual terms, restructuring
and layoffs.
1-2 Years Forecasted budget
or forward budget
(business plans)
Current manpower less
projected attrition
Transfer, promotion,
restructuring, redundancy,
Training and development
2-5 years Long term plans Projected manpower
(including those trainees
who will be inducted
during the period)
Succession plans, recruitment,
training and development ,
restructuring , redundancy
More than 5
years
Perspective plans Labor market , education
system
Succession plans, MDP, OD,
redeployment, job restructuring

S-8

S-9
 Qualitative Forecasting Techniques
Qualitative forecasts are essentially educated guesses or estimates
by individuals who have some knowledge of previous HR
availability’s or utilization.
1. Nominal Group
A group of four or five participants is asked to present their views
regarding labor forecasts. These views are written down, with no
discussion until all of the members have advanced their positions.
The group then discusses the information presented and,
subsequently, a final ballot is taken to determine its judgment.
HR FORECASTING TECHNIQUES

S-10
2. Delphi Technique
This technique calls for a facilitator to solicit and collate written, expert
opinions on labor forecasts. After answers are received, a summary of the
information is developed and distributed to the experts, who are then
requested to submitted revised forecasts. The experts never meet face-to-
face, but rather communicate through the facilitator.
3. Replacement Planning
Forecasting estimates are based on charting techniques, which identify
current job incumbents and relevant information about each of them. This
information typically includes a brief assessment of performance and
potential, age length of time in current position, & overall length of service.
4. Allocation Planning
This technique involves judgments about labor supply or demand by
observing the movement of employees through positions at the same
organizational level.

S-11
1. Regression Model
Fluctuations in labor levels are projected using relevant variables, such as
sales.
2. Time-Series Model
Fluctuations in labor levels are projected by isolating trend, seasonal,
cyclical, and irregular effects.
3. Economic Model
Fluctuations in labor levels are projected using a specified form of the
production function.
4. Linear Programming Model
Fluctuations in labor levels are analyzed using an objective function as
well as organizational and environmental constraints.
5. Markov Model
Fluctuations in labor levels are projected using historical transition rates.
o Quantitative Forecasting Techniques

S-12
HUMAN RESOURCE SUPPLY & DEMAND
 At a more practical level, forecasting demand involves determining
the numbers and kinds of personnel that an organization will need
at some point in the future.
 Most managers consider several factors when forecasting future
personnel needs. The demand for the organization’s product or
service is paramount. Thus, in a business, markets and sales figures
are projected first. Then, the personnel needed to serve the
projected capacity is estimated.
 Other factors typically considered when forecasting the demand for
personnel include budget constraints; turnover due to resignations,
terminations, transfers, and retirement; new technology in the field;
decisions to upgrade the quality of services provided; and
minority hiring goals.

S-13
 Forecasting supply involves determining what personnel will be
available. The two sources are internal and external: people already
employed by the firm and those outside the organization.
 Factors managers typically consider when forecasting the supply of
personnel include promoting employees from within the
organization; identifying employees willing and able to be trained;
availability of required talent in local, regional, and national labor
markets; competition for talent within the field; population trends.
 Internal sources of employees to fill projected vacancies must be
monitored. This is facilitated by the use of the human resource
audit, or the systematic inventory of the qualifications of exis-
ting personnel.

S-14
o There are three important elements to consider in order to success-
fully forecast labor demand and supply: identifying stakeholders who
will be involved, determining the appropriate planning horizon, and
defining the internal and external labor force.
o The HRP team should include all relevant stakeholders across
multiple functional areas and organizational levels. Explicitly
developing a team for the HRP process helps ensure success of the
strategies within the plan and holds those who are not meeting the
goals accountable.
o Similar to the development of an organizational strategy, a human
resources strategy must have a horizon or timeline. The appropriate
planning horizon is a judgment about how far into the future
predictions can be made, taking into consideration acceptable
levels of operational, organizational, and environmental uncertainties.

S-15
o When assessing the current HR situation, it is important to define
who is included in the internal labor force. A fatal flaw in the HR
planning process is conducting a human resources audit on a
limited or non-representative sample of employees. When
determining which persons should be considered employees, a
good measure is those who perform the work or provide services
within the company under the control or supervision of the
organization’s management team.
o The external labor force refers to potential sources of human
resources outside of an organization that can affect the future
supply of employees. Evaluation of the external labor force relies
on labor market estimates based on regional and global econo-
mic, environmental, and demographic changes.

S-16
STRATEGIC HUMAN RESOURCE PLANNING
 Strategic HR management is
defined as:
“Integrating human resource
management strategies and
systems to achieve the overall
mission, strategies, and success of
the firm while meeting the needs
of employees and other
stakeholders.”
(Source: Herman Schwind, Hari Das and
Terry Wagar, Human Resource Management:
A Strategic Approach.)

S-17
 Strategic HR planning is an important component of
strategic HR management. It links HR management
directly to the strategic plan of your organization.
 Most mid- to large sized organizations have a strategic
plan that guides them in successfully meeting their
missions.
 Organizations routinely complete financial plans to
ensure they achieve organizational goals and while
workforce plans are not as common, they are just as
important.

S-18
 Even a small organization with as few as 10 staff can
develop a strategic plan to guide decisions about the
future.
 Based on the strategic plan, your organization can
develop a strategic HR plan that will allow you to make
HR management decisions now to support the future
direction of the organization.
 Strategic HR planning is also important from a
budgetary point of view so that you can factor the costs
of recruitment, training, etc. into your organization's
operating budget.

S-19

S-20
 HR strategy should aim to capture “the people elements”
of what an organization is hoping to achieve in medium
to long term, i.e -
 Right people in right place
 Right mix of skill
 Employees display the right attitudes and behaviors.
 Employees are develop in right way.

S-21

S-22
The overall purpose of strategic HR planning is to:
• Ensure adequate human resources to meet the strategic goals and
operational plans of your organization - the right people with the
right skills at the right time
• Keep up with social, economic, legislative and technological trends
that impact on human resources in your area and in the sector
• Remain flexible so that your organization can manage change if the
future is different than anticipated
Strategic HR planning predicts the future HR management needs of
the organization after analyzing the organization's current human
resources, the external labor market and the future HR environ-
ment that the organization will be operating in.

S-23

S-24
THE STRATEGIC HR PROCESS
The strategic HR planning process has four steps:
 Assessing the current HR capacity
 Forecasting HR requirements
 Gap analysis
 Developing HR strategies to support organiza-
tional strategies

S-25
1. Assessing current HR capacity
• Based on the organization's strategic plan, the first step in the
strategic HR planning process is to assess the current HR
capacity of the organization. The knowledge, skills and abilities
of your current staff need to be identified. This can be done by
developing a skills inventory for each employee.
• The skills inventory should go beyond the skills needed for the
particular position. List all skills each employee has
demonstrated. For example, recreational or volunteer activities
may involve special skills that could be relevant to the
organization. Education levels and certificates or additional
training should also be included.

S-26
2. Forecasting HR requirements
• The next step is to forecast HR needs for the future based on the
strategic goals of the organization. Realistic forecasting of human
resources involves estimating both demand and supply. Questions
to be answered include:
 How many staff will be required to achieve the strategic goals
of the organization?
 What jobs will need to be filled?
 What skill sets will people need?
 When forecasting demands for HR, you must also assess the
challenges that you will have in meeting your staffing need
based on the external environment.

S-27
3. Gap analysis
• The next step is to determine the gap between where your organization
wants to be in the future and where you are now. The gap analysis includes
identifying the number of staff and the skills and abilities required in the
future in comparison to the current situation. You should also look at all
your organization's HR management practices to identify practices that
could be improved or new practices needed to support the organization's
capacity to move forward. Questions to be answered include:
 What new jobs will we need?
 What new skills will be required?
 Do our present employees have the required skills?
 Are employees currently in positions that use their strengths?
 Do we have enough managers/supervisors?
 Are current HR management practices adequate for future needs?

S-28
4. Developing HR strategies to support organizational
strategies
• There are five HR strategies for meeting your organiza-
tion's needs in the future:
 Restructuring strategies
 Training and development strategies
 Recruitment strategies
 Outsourcing strategies
 Collaboration strategies

S-29

S-30
PREPARATION OF THE JOB ANALYSIS
Job Analysis – Defined
Job analysis is a systematic approach to defining the job role,
description, requirements, responsibilities, evaluation, etc. It helps in
finding out required level of education, skills, knowledge, training,
etc for the job position. It also depicts the job worth i.e. measurable
effectiveness of the job and contribution of job to the organization.
Thus, it effectively contributes to setting up the compensation
package for the job position.
Importance of Job Analysis
Job analysis helps in analyzing the resources and establishing the
strategies to accomplish the business goals and strategic objectives. It
forms the basis for demand-supply analysis, recruitments,
compensation management, and training need assessment and
performance appraisal.

S-31
Components of Job Analysis
Job analysis is a systematic procedure to analyze the requirements for the job
role and job profile. Job analysis can be further categorized into following sub
components:

S-32
Job Position
Job position refers to the designation of the job and
employee in the organization. Job position forms an
important part of the compensation strategy as it
determines the level of the job in the organization. For
example management level employees receive greater
pay scale than non-managerial employees. The non-
monetary benefits offered to two different levels in the
organization also vary.

S-33
Job Description
Job description refers the requirements an organization
looks for a particular job position. It states the key skill
requirements, the level of experience needed, level of
education required, etc. It also describes the roles and
responsibilities attached with the job position. The roles
and responsibilities are key determinant factor in
estimating the level of experience, education, skill, etc
required for the job. It also helps in benchmarking the
performance standards.

S-34
Job Worth
Job Worth refers to estimating the job worthiness i.e. how
much the job contributes to the organization. It is also
known as job evaluation. Job description is used to
analyze the job worthiness. It is also known as job
evaluation. Roles and responsibilities helps in
determining the outcome from the job profile. Once it is
determined that how much the job is worth, it becomes
easy to define the compensation strategy for the position.

S-35

S-36

S-37
Therefore, job analysis forms an integral part
in the formulation of compensation strategy
of an organization. Organizations should
conduct the job analysis in a systematic at
regular intervals. Job analysis can be used for
setting up the compensation packages, for
reviewing employees’ performance with the
standard level of performance, determining
the training needs for employees who are
lacking certain skills.

Unit 1 human resource planning

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