HUMAN RESOURCE PLANNING

• Right number of people with right skills at

right place at right time to implement

organizational strategies in order to

achieve organizational objectives

• In light of the organization’s objectives, corporate and business level strategies, HRP is the process of analyzing an organization’s human resource needs and developing plans, policies, and systems to satisfy those needs

HUMAN RESOURCE PLANNING

• Setting human resource

objectives and deciding how to

meet them

• Ensuring HR resource supply

meets human resource

demands

HRP Process

• Interfacing with strategic planning and

scanning the environment

• Taking an inventory of the company’s

current human resources

• Forecasting demand for human

resources

• Forecasting the supply of HR from within

the organization and in the external

labor market

HRP Process Cont.

• Comparing forecasts of demand

and supply

• Planning the actions needed to

deal with anticipated shortage or

overages

• Feeding back such information

into the strategic planning

process.

Example of the Basic Human

Resources Planning Model

Organization

al Objectives

Human Resource

Requirements

Human Resource

Programs Feasibility

Analysis

HRP Model

• Strategic Human Resource Planning

– Links 1 & 5: HR objectives are linked to

organizational objectives and planning

• Designed to insure consistency between organization's strategic planning process and HRP.

– So objectives of strategic plan are feasible

and

– HR programs are designed around what

organizational objectives and strategies

require in terms of human resource goals

Example of the Basic

Human Resources Planning

Model

Organization

al Objectives Human Resource Requirements

Human Resource Programs

Feasibility

Analysis

1 2 3

4

5

HRP Model Cont.

• Operational Human Resource

Planning

–Steps 2,3, & 4

• Ensure HRP programs are

coordinated and allows the

organization to meet its human

resource requirements.

Example of the Basic Human

Resource Planning Model

Open new

product line

Open new

factory and

distribution

system

Develop staffing for

new installation

•Production

workers

•Supervisors

•Technical staff

•Other managers

Recruiting and

training

programs

feasible

Transfers

infeasible

because of lack

of managers

with right skills

Recruit skilled

workers

Develop technical

training programs

Transfer managers

from other facilities

Develop new objectives

and plans Recruit managers

from outside

Too costly to hire

from outside

1 2 3

4

5

6

Link 1: Determine Demand

(labor requirements)

• How many people need to be working and in

what jobs to implement organizational strategies

and attain organizational objectives.

• Involves forecasting HR needs based on organizational objectives

• 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

Link 2: Determine HR Supply (availability)

• Choose HRM programs (supply)

• Involves forecasting or predicting effect of various HR programs on employee flowing into, through and out various job classifications.

• First determine how well existing programs are doing then forecast what additional programs or combination of programs will do

• Need to know capabilities of various programs

and program combinations

Determine Feasibility Links 3 & 4

• Capable of being done – Requires knowledge of programs, how programs fit together and external environmental constraints (e.g., labor force, labor unions, technology created skill shortages) and internal environmental constraints (skill shortages within the organization, financial resources, managerial attitudes, culture)

• Do the benefits outweigh the costs – Difficulty in quantifying costs and benefits

Revise Organizational Objectives and Strategies Link 5

If no feasible HR program can be devised, the organization must revise strategic plans.

Shortcomings of the model - HRP in Practice

• Oversimplification of planning process -Planning does not normally proceeds till find first acceptable plan

• More than one set of HR goals to satisfy link 1 and more that one acceptable plan to satisfy link 2 so:

• Typically choose the best HR goal for the strategic plan and the best program to satisfy that HR goal

Shortcomings of the model - HRP in Practice

• Oversimplification of the benefit of planning is the specific plans that result

– Planning process has value in and of itself

• HRP in practice is usually less rational and may omit one or more of the steps

– May lack knowledge required for forecasting

– Incorrect assumptions about effectiveness of HR programs

– Does not engage in strategic planning

– Resistance to change present HR systems

HRP should be :

• Done to guide and coordinate all HR activities so they work together to support the overall strategy

• Responsive to internal and external environment

• Planning - done in advance

• Strategic - linked with higher level planning

Human Resource Forecasting

• Process of projecting the organization’s future HR needs (demand) and how it will meet those needs (supply) under a given set of assumptions about the organization’s policies and the environmental conditions in which it operates.

• Without forecasting cannot assess the disparity between supply and demand nor how effective an HR program is in reducing the disparity.

Forecasting as a Part of HRP

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

Internal Supply Forecasting Information

• Organizational features (e.g., staffing capabilities)

• Productivity - rates of productivity, productivity changes

• Rates of promotion, demotion, transfer and turnover

External Supply Forecasting Information

• External labor market factors

(retirements, mobility, education,

unemployment)

• Controllable company factors on

external factors (entry-level

openings, recruiting,

compensation)

Demand Forecasting

Information

• Organizational and unit strategic

plans

• Size of organization

• Staff and Managerial Support

• Organizational design

Considerations in Establishing

a Forecasting System

• How sophisticated

• Appropriate time frame

• Subjective versus objective

forecasting methods

System Sophistication

• Organizational size – large organizations require more complex forecasting systems and likely to have the required skilled staff

• Organizational complexity – complex career paths and diverse skill requirements lead to more complex forecasting systems

• Organizational objectives – the greater the gap between current HR situation and desired HR situation the more sophisticated the system

• Organizational plans and strategies – the complex the plans are the more complex the forecasting system

Forecasting Time Frame

Depends on degree of environmental uncertainty

Factors creating uncertainty (shortening time frame) – many new competitors, changes in technology, changes in social, political and economic climate, unstable product demand

Factors promoting stability (longer time frame) – strong competitive position, slowly developing technology, stable product demand.

Subjective VS. Objective Forecasting

Objective is inappropriate when:

– Lack expertise to use objective

methods

– Lack the historical data or HR data

base is inadequate

– Forecasting horizon is too long for

the available objective method

Demand Forecasting Methods

• Delphi Method

• Staffing Table Approach • Regression Analysis • Time Series Analysis • Linear Programming

Supply Forecasting Methods

• Skills Inventory

• Replacement Charts • Succession Planning • Flow Modeling/Markov Analysis • Computer Simulations