Human Resource Planning

 HRP is understood as the process of forecasting an organization future demand for and supply
of the right type of people in the right number.
 First step of human resource strategy is HRP. All other HR activities such as employee hiring,
training and development, remuneration, appraisal and labour relations are derived from HRP.
 HRP is a sub-system in the total organizational planning. Organizational planning includes
managerial activities that set the company’s objectives for the future and determines the
appropriate means for achieving those objectives.
 Human resource planning is the process by which management attempts to provide adequate
human resources to achieve organization objectives.
:-William F. Glueck
 The process by which a management determines how an organisation should make from its
current man power position to its desired manpower position.
:-E.W.Vetter
 Human resource planning is the process by which management attempts to provide adequate human resources to
achieve organization objectives.
:-William F. Glueck
 The process by which a management determines how an organisation should make from its current man power
position to its desired manpower position.
:-E.W.Vetter
 Importance of HRP
 Assessing Future Personnel Needs-Planning is significant as its helps determine future personnel needs.
Surplus or deficiency in staff strength is the result of the absence of defective planning.
A number of organization , especially public sector units in India are facing the problem of surplus labour
Schmes like VRS (Voluntary Retirement Scheme) have been introduced to eliminate surplus staff.
 Foundation of Personnel Functions-HRP provides essential information for designing and implementing
personnel functions such as recruitment, selection , transfer, promotions and training development.
 Coping with changes-Changes in the business environment like competition, technology , government
guidelines, global market etc. bring changes in the nature of the content of job, qualification and
experience needed. HRP helps the organization in adjusting to new changes.
 Expansion and diversification plans-During the expansion and diversification drives, more employees at
various levels are needed. Through proper HRP, an organisation comes to know about the exact
requirement of personnel in future plans.
 Employee Turnover-Every organization suffers from the small turnover of employee , sometime or the
other. This is high among young graduates in the private sector. This necessitates again doing manpower
planning for further recruiting and hiring.
 Factors affecting HRP
 Type and strategy of organizational- The type of organization is an important consideration because it determines
the production processes involved, number and type of staff needed and the supervisory and managerial personnel
required. The strategic plan of the organization define the organization HR needs.
Example- A strategy of organic growth means that additional employees must be hired.
 Organisational Growth Cycles and Planning- The stage of an organisation growth can have considerable influence
on HRP. Need for planning is felt when the organisation enters the growth stage. HR forecasting become
essential. Internal development of people also begins to receive attention in order to keep with the growth.
At maturity stage, organisation becomes less flexible. Growth slow down. Planning becomes more formalised and
less flexible and innovative.
 Environmental Uncertainties- Personnel planner deal with environmental uncertainties by carefully formulating
recruitment, selecting and training and development policies and programmes.
 Type and quality of forecasting information- The information used to forecast personnel needs originates from
multiple sources. A major issue in personnel planning is the type of information which should be used in making
forecast.
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 etc.
 Time-Horizon- There can be short-terms plans and long-term plans. The exact time span depends on the degree of
uncertainty prevailing in an organization’s environment. Greater the uncertainty , the shorter the plan’s time
horizon and vice- versa.
 Outsourcing-Several organization outsource part of their work to outside parties in the form of contracting. HRP
is required in some circumtances.
Planning Process
 Environmental Scanning-It refers to systematic monitoring of the external forces influencing the organization.
These factors can be:
 Economic factors including general and regional conditions
 Technological changes, including robotics and automation
 Demographic changes, including composition and literacy.

 Organisational objectives and Policies- HR plans to be based on organisational objectives. Specific requirements
in terms of number and characteristics of employees should be derived from the organisational objectives.
Once the organisational objectives are specified , communicated and understood by all concerned , the HR
department must specify its objectives with regard to HR utilisation in the organisation.
 HR Demand Forecast-Demand forecasting is the process of estimating the future quantity and quality of people
required. The basis of forecasting must be annual budget and long-term corporate plan and activity levels for each
function and department.
For example- In a manufacturing company , the sales budget would be translated into a production plan giving the
number and type of products to be produce in each period. Then, number of hours to be worked by each skilled
category to make the quota for each period would be computed. Once, the hours, are available , determining the
quality and quantity of personnel will be logical steps.
 Demand Forecasting Techniques-
 Managerial Judgement
 Work Study
 Ratio-Trend Analysis
 Delphi Technique
 Managerial Judgement- In this technique, managers sit together, discuss and arrive at a figure which would be the
future demand of employees. There can be two approaches for this. Top-down approach and Bottom-up approach
Top-down approach- Top management prepare company and departmental forecast and reviewed by departmental
heads.
Bottom-up approach-Line managers submit their departmental proposals to top managers.
Neither of this approach is accurate. A combination of the two could yield positive result. This technique is used in
smaller organization or in those companies where sufficient data base is not available.
 Work-Study Technique-This technique can be used when it is possible to apply work measurement to calculate
the length of operations and the amount of labour required.
 The budget of productive hours are then compiled using standard hours for direct labour. The standard hours per
unit of output are then multiplied by the planned volume of units to be produced to give the total number of
planned hours for the period.
 This is then divided by number of actual working hours for an individual operator to show the number of
operators required.
 For example-
Planned output for next year- 20,000 units
Standard hours per unit- 5
Planned hours of year- 1,00,000
Productive hours per man/years- 2000
Number of workers required 50
 Ratio-Trend Analysis-This technique involves studying past ratio between the number of workers and
sales/production in an organization and forecasting future ratios.
 Example-
Worker : Productivity=1:200 units
Target units in a quarter=140000
200 units produced by 1 worker
1,40,000 units by-700 workers
 Delphi Technique- It is a method of forecasting personnel needs. It estimates personnel needs from a group of
experts , usually managers. The HRP experts act as intermediaries , summaries the various responses and report
the findings back to expert. The agreement reached is the forecast of the personnel needs. There is no interaction
among experts.
HR Supply Forecast-The step for the management is to determine whether it will be able to procure the required
number of personnel and sources for such procurement. This information is provided by supply forecasting.

 Supply forecasting measures the number of people likely to be available from within and outside an organization.
 Supply Analysis covers:
 Existing human resource
 Internal sources of supply
 External sources of supply
Present Employees- Analysis of present employees is greatly facilitated by HR audits. HR audits summaries each
employee’s skills and abilities. The audits of non-managers are called skills inventories and those of the management
are called management inventories.
 Skills Inventories-It consolidate information about non-managers in the organization. Because the information
from skills inventories is used as input for transfer and promotions decisions, they should contain information
about each employee’s current job.
 Management Inventories- These include such data as:
Work History
Strengths
Weakness
Promotion potential
Career goals
Personal Data
etc
 Internal Supply- Planners can be proceed with the analysis on internal supply. Technique used for the purpose are:
 Inflows and Outflows
 Turnover rate
 Conditions of work and absenteeism
 Productivity level
 Movement among jobs.
Inflow and Outflow-The sources of losses and gains are projected for a specific time period . Total losses are
subtracted from current personnel level and total gains are added to determine the expected level of personnel at the
end of the planning period.
 Inflow and Outflow-The sources of losses and gains are projected for a specific time period . Total losses are
subtracted from current personnel level and total gains are added to determine the expected level of personnel at
the end of the planning period.
Turnover Rate- Turnover rate is the traditional and simple method of forecasting internal supply. Stated :
Number of separations during one year/ Average number number of employees during one year * 100

Example- In 2010- 30 out of an average force of 150 workers of a company left .

30/150*100= 20 % turnover
This trend continues….
In 2011-
Company recruit – 110 workers in order to hold and increase labour force at 200 ( 50 extra workers + 40 to replace
that 20 % seperations of 200 workers employes, + 20 %
 External Supply-In addition to internal supply, the organization needs to lock out for prospective employees from
external sources.
Sources vary from industry to industry. This can be recruitment from colleges, through consultancies etc.
HR Programing- Once an organization’s personnel demand and supply are forecasts, the two must be balanced in
order that vacancies can be fulfilled by the right employees at the right time.
HR Plan Implementation-Implementation requires converting HR plan into action. A series of action programme
are initiated as a part of HR plan implementation. Some such programmes are recruitment, selection and placement,
training and development etc.