Concept of Human Resource Planning
- Human Resource Planning is the process of ensuring the right people are in the right place at the right time to handle the job.
- According to Mondy and Noe, "The analysis of future personnel requirements is referred to as human resource planning."
- Thus, Human Resource Planning is the predetermination of future human need skills and competencies that ensures in attaining the organisational goals.
Characteristics of Human Resource Planning
- Goal oriented
- Future oriented
- System oriented
- Qualitative and quantitative analysis
- Continuous process
- Sub-system of the HRM system
- Focus on meeting human demand
- Environmental influence
- Linking with corporate planning
- Having a time frame.
Need / Importance of Human Resource Planning
- Helps in getting the right people
- Human resource development
- Reduces uncertainty
- Personal growth
- Basis for employee retention
- Basis of organisational success
- Optimal use of HR
- Supports corporate planning
Human Resource Planning Process
- HR planning is an act of estimating the human requirements at the current and future in organization.
- It is a process consisting of various stages, such as assessing current human resources, forecasting human resource demand, forecasting human resource supply, comparing or matching demand and supply forecasts, anddeveloping action plans. Each of the stages is explained below:
1) Determination of organisational objectives:
The organisational objectives are the foundation of the entire Human Resource Planning Process. They guide all subsequent steps and ensure that the organisation's human capital is aligned with its strategic goals.
2) Assessment of current employees:
Human resource managers develop a profile of employees working in the organisation currently, which includesemployees's information regarding their current position, responsibility handling, qualification, skills and special capabilities.
It is prepared based on:
- a) Human Resource Inventory
- b) Human Resource Information System (Personal data, Responsibility data, Qualification and skills data, Special qualities)
- c) Job analysis
3) Forecasting HR Demand:
- In forecasting human resource demand, managers estimate the future human resource requirements to meet the future needs of the organisation. For this, the human resource department prepares details of the nature and quantity of the jobs necessary to accomplish at future employee portfolio in terms of skills, qualifications, experience, etc.
- Different techniques like quantitative techniques (trend analysis, ratio analysis, simulation models, staffing ratios, productivity factors, Markov analysis, and regression analysis) and qualitative techniques (judgmental method, rule of thumb, nominal group analysis, and scenario analysis) can be used.
4) Forecasting Human Resource Supply:
- The purpose of identifying HR supply requirements is to determine the number of employees in each job and their knowledge, skills, abilities and characteristics.
- It estimates the number of people likely to be available from within and outside an organisation, after making allowance for absenteeism, internal movement and promotions, wastage and changes in hours and other conditions of work.
5) Matching Demand and Supply Forecast:
- It is simply the comparison of the demand and supply of human resources.
- There could be three possibilities from matching HR demand and supply, i.e. zero deviation, surplus (supply more than demand), and shortage.
6) Action plan and implementation:
- An action plan is the operational plan which is prepared to direct how the required number of right employees can be acquired at the right time.
- Action plans are to be implemented to fulfill desired HR supply from the desired source at the right time at a possibly low cost.
Human Resource Information System
- Human Resource Information System is a database device for systematic and scientific human resource planning. It provides sufficient status of human resources at minimum possible time.
- What are the jobs to be done in organization and how many, of what quality employees are working, is simply known by the human resource information system.
- It contains the following information:
- a) Personal data (Name, address, DOB, marital status)
- b) Skills data (Qualification, training, skills, ability)
- c) Compensation data (Basic salary, bonus)
- d) Performance data
- e) Position data
Human Resource Inventory
- It is information or a record about the skills inventory of human resources currently employed in the organisation.
- It provides information about personal skills, what they can do and what they are lackiof.
Importance of HR inventory
- Reference for training and development planning.
- Useful to make planning for recruitment and selection.
- Helps in the promotion and transfer of employees.
- Provides guidelines for decision-making.
- Helps in the diversification and expansion of operations.
- Management of skill deficiencies of employees.
- Provides information for job appraisal.
Concept of Strategic Human Resource Planning
- Strategic Human Resource Planning is a process of forecasting human resource strategies and organising all human resource programs and functions for attaining organisational goals.
- It is the way of thinking of human resources as a strategic asset of the organisation.
Relationship between HR Planning and Strategic Planning
HR Planning and strategic planning are inseparable from each other. They have the following relationships:
a) Follower relationship:
Human resource planning should be a follower of the strategic plan. It should be prepared based on a strategic plan. A strategic plan provides the overall guidelines for attaining the organisational goals, and hence, human resource planning should be prepared to fulfil the demand or need of the strategic plan.
b) Partnership relationship:
Since the strategic plan and the human resource plan are formulated simultaneously, they can be assumed to have a partnership relationship. Both plans are prepared to attain organisational goals.Strategic planning for an organisation includes:
a) Defining philosophy (why does the organisation exist)
b) Formulating statements of purpose and objectives
c) Evaluating strengths andweaknessess
d) Determining organisational structure and design
e) Developing strategies
f) Developing implementation programs
Approaches of HR Planning:
1. Quantitative approach / Top-down approach:
- The total human skill surplus and shortage is determined by top-level management based on information provided by the top HR management system.
- Top-level management prepares human resource plans without any consultation with middle and lower-level managers.
2. Qualitative approach / Subordinate-driven or bottom-up approach:
- Total human resource demand is estimated on the basis of the lower-level management. The draft of the HR plan is prepared by lower-level management on the basis of their needs and forwarded to middle-level management. Middle-level management forwards with necessary updates to the top-level management.
3. Mixed approach / Participative approach / MBO approach:
- All level management involve proportionately. This approach is considered the best approach as the plans are formulated with joint effort and hence the responsibility of making the plan a success is realised by all level employees.
Techniques of Forecasting Human Resource Demand and Supply
A. Demand forecasting techniques:
It is the process in which total skills in terms of number and types are estimated. It can be changed with the internal and external environmental factors of the organisation. While forecasting HR demand, managers need to consider employment trends, replacement needs, productivity, growth and expansion, absenteeism, work study, etc. To forecast HR demand, the following important techniques can be used:
1. Managerial judgement techniques:
Managers and supervisors will analyse the additional need for human resources based on their own intuition. Under this technique, the following approaches are used to forecast HR demand:
a. Bottom-up approach
b. Top-down approach
c. Participative approach
2.Work study technique:
Under this technique of demand forecasting, the work to be done needs to be analysed. Total duration to complete the work, complexity of the job, chances of change in job, machinery to be used, dependency to carry out the job, etc., are studied, and the skills, ability and expertise are estimated. The following techniques are used under this method of demand forecasting:
a. Workload analysis: The workload for the employees is calculated and compared to standard norms. The shortage is the HR demand.
b. Work-force analysis: The number of employees working in the organization maynot be the same on all working days because of absenteeism and turnover. The efficiency of all workers maynot be the same. So, the workforce should be analyzed and additional force should be estimated.
3. Statistical techniques:
Managers can use computer-based, more sophisticated techniques for human resource demand forecasting. Some of the techniques are as follows:
a. Trend analysis: Forecasting can be madebased onf past records regarding the number of employees, production level, sales level, activity level, turnover ratio, etc. Based on these records, trend analysis is conducted, and the future needs of human resource is estimated.
b. Regression analysis: Regression analysis is conducted with the regression equation estimated as the effect of independent variables on dependent variables. The contribution of each independent variableton the dependent variables in terms of percentage or unit is calculated, and the number of employees required can be estimated.
c. Econometric model: It establishes the relationship between a large number of past variables that may be responsible to estimate future needs.
B. Supply forecasting techniques:
Supply forecasting is the process of estimating the source of future human resources. Major sources of human resource supply are internal sources and external sources. Some other supply forecasting techniques are as follows:
a. Labour wastage: It indicates the loss of human power in the organisation because of technological disturbance, personal attitudes, supervisory weakness, turnover effect, etc. The labour turnover index and labour stability index are the most important indicators for identifying labour wastage.
b. Length of service analysis: The ratio of the length of service of employees is estimated. This provides the idea for finding the number of employees leaving with respect to the number of employees employed.
c. Promotion and Transfer analysis: It can be a reliable internal source of supply of human resources. Management should analyse the rate and culture of promotion and transfer of employees.
d. Working environment and contract: Organizations may have different terms and conditions of working. This may also affect human resource supply forecasting.
e. Statistical analysis: It involves the collection, analysis, summarisation, and interpretation of quantitative data to discover its underlying causes, patterns, relationships, and trends. Statistical analysis consists of Markov analysis, Trend analysis and Renewal analysis.
Managing Human Resource Surplus
HR surplus is the situation when there is a larger number of employees than the actual requirement. HR surplus should be managed promptly, as this could be long term liability for the organisation. But managing HR surplus could be more challenging, especially in an organisation with a labour union.
There should be an effective HR plan to manage HR surplus. There could be various strategies to manage the HR surplus as discussed below:
1. Freezing recruitment
HR surplus can be managed easily by stopping or freezing the recruitment permanently. In this method, employees can be transferred from the department having surplus employees to the departments demanding additional manpower.
2. Layoffs:
Layoff is the technique of temporary dismissal or suspension of employees. Especially in the case of seasonal businesses like hotels, cold drinks, woollen products,s et,c. There could be seasonal demands because of whithe ch production process, or business may slow down for a certain period. For this period, under layoffs, employees can be suspended.
3. Not to replace:
Not to replace is the technique of managing HR surplus, which follows the strategy of not hiring new employees to the vacant positions,t either by retirement or resignation of employees. It is a straightforward and inexpensive method to manage HR surplus.
4. Early retirement
The organisation offers voluntary retirement with a benefit package to the employees. The method can be applied to release the over-aged workforce from the organisation.
5. Outplacement
It is the method in which organisations assist employeesin searching for employment opportunities in other organisations. In general, if the organisation has some subsidiaries in different business sectors or markets, surplus employees can be shifted to these organisations whenever they demand additional employees.
Succession Planning
Succession Planning is the process of identifying future needs of middle and top-level managers in the organisation. It is an executive report to fulfil the vacant position that may be created in the near future. It is a lengthy and continuous process. Along with potential demand, a contingency plan is also prepared to meet the needs.
Importance of succession planning
- To manage the job and managerial skills.
- Steady flow of internal talents to fulfil important vacant positions.
- Removing managerial human crisis in the organisation
- Appointing deserving candidates from the external environment.
- Career and development planning of employees for promotion, advancement, and fulfilment of vacant positions.
- Transfer of skilled, qualified and experienced managerial human resource at right job.
- Fulfilling a managerial post by one's own trusty human power.
Human Resource Planning in Nepalese organisations:
- Lack of HR inventory and HR information system.
- Lack of demand and supply forecast.
- Lack of long term horizon.
- Lack of national priority.
- Poor practice of human resource assessment.
- Political pressure is hindering human resource planning.
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