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Human Resource Planning: Definition, Importance, Objectives, Process & Prerequisites

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In this article we will discuss about human resource planning. Learn about:-

1. Introduction to Human Resource Planning 2. Meaning of Human Resource Planning 3. Definition 4. Need and Importance

5. Objectives 6. Organisation 7. Factors Affecting 8. Human Resource Planning at Different Levels 9. Quantitative and Qualitative Dimensions 10. Prerequisites and Other Details.

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Contents:

  1. Introduction to Human Resource Planning
  2. Meaning of Human Resource Planning
  3. Definition of Human Resource Planning
  4. Need and Importance of Human Resource Planning
  5. Objectives of Human Resource Planning
  6. Organisation of Human Resource Planning
  7. Factors Affecting Human Resource Planning
  8. Human Resource Planning at Different Levels
  9. Quantitative and Qualitative Dimensions of Human Resource Planning
  10. Prerequisites of Human Resource Planning
  11. Relationship of Human Resource Planning with Other Personnel Processes
  12. Cost-Contribution Analysis in Human Resource Planning
  13. Responsibility of Human Resource Planning
  14. Integration of Strategic Planning and Human Resource Planning
  15. Human Resource Planning and Environmental Scanning
  16. Human Resource Planning – Mapping an Organisation’s Human Capital Architecture
  17. Edgar Schein’s Human Resource Planning and Development System
  18. Human Resource Planning – Benefits
  19. Problems of Human Resource Planning
  20. Recent Implications of Human Resource Planning
  21. Recent Trends of Human Resource Planning

Human Resource Planning – Introduction:

Human resources undoubtedly play the most important part in the functioning of an organization. The term ‘resource’ or ‘hu­man resource’ signifies potentials, abilities, capacities, and skills, which can be developed through continuous interaction in an organizational setting.

The interactions, interrelationships, and activities performed all contribute in some way or other to the development of human potential. Organizational productivity, growth of companies, and economic development are to a large extent contingent upon the effective utilization of human capa­cities.

Hence, it is essential for an organization to take steps for effective utilization of these resources. In the various stages in the growth of an organization, effective planning of human resources plays a key role. Matching the requirements of the job with the individual is important at all stages, including the recruitment procedures, in this endeavour.

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When organizations contemplate diversification or expansion, or when employees have to be promoted, human resource planning plays an import­ant role. Further, the organizational plans, goals, and strategies also require effective human resource planning.


Human Resource Planning – Meaning:

E.W. Vetter viewed human resource planning as “a process by which an organisation should move from its current manpower position to its desired manpower position. Through planning, management strives to have the right number and right kind of people at the right places at the right time, doing things which result in both the organisation and the individual receiving maximum long-run benefit.”

According to Leon C. Megginson human resource planning is “an integrated approach to performing the planning aspects of the personnel function in order to have a sufficient supply of adequately developed and motivated people to perform the duties and tasks required to meet organisational objectives and satisfy the individual needs and goals of organisational members.”

Human resource planning may be viewed as foreseeing the human resource requirements of an organisation and the future supply of human resources and- (i) making necessary adjustments between these two and organisational plans; and (ii) foreseeing the possibility of developing the supply of human resources in order to match it with requirements by introducing necessary changes in the functions of human resource management. In this definition, human resource means skill, knowledge, values, ability, commitment, motivation, etc., in addition to the number/of employees.

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Human resource planning (HRP) is the first step in the HRM process. HRP is the process by which an organization ensures that it has the right number and kind of people, at the right place, at the right time, capable of effectively and efficiently completing those tasks that will help the organization achieve its overall objectives.

HRP translates the organization’s objectives and plans into the number of workers needed to meet those objectives. The actual HRM process starts with the estimation of the number and kind of people required by the organization for the coming period.

HRP is also known by other names such as ‘Manpower Planning’, ‘Employment Planning’, ‘Labour Planning’, ‘Personnel Planning’, etc. HRP is a sub-system in the total organizational planning. In other words, HRP is derived from the organizational planning just like production planning, sales planning, material planning, etc.


Human Resource Planning – Definition:

The organisation’s objectives and strategies for the future determine future requirement of human resources. It only means that the number and mix of human resources are reaction to the overall organisational strategy. If the intent is to get closer to people possessing requisite qualifications, the organisation should act quickly.

Human Resource Planning or Manpower Planning (HRP) is the process of systematically reviewing HR requirements to ensure that the required number of employees with the required skills is available when they are needed. Getting the right number of qualified people into the right job is the crux of the problem here.

In actual practice, this is not easy. Due to constant changes in labour market conditions, qualified people possessing relevant qualifications are not readily available. The organisation needs to go that extra mile, dig up every source of information and exploit every opportunity that comes its way in order to identify talent.

HRP is simply not a process of matching the supply of people (existing employees and those to be hired or searched for) with openings the organisation expects over a given timeframe. It goes a step further in order to reach out to right kind of people at right time, spending time, resources and energies. Without careful planning, advance thinking and prompt actions, it is next to impossible to get competent and talented people into the organisation.

Human resource planning is the responsibility of both the line and the staff manager. The line manager is responsible for estimating manpower requirements. For this purpose, he provides the necessary information on the basis of the estimates of the operating levels. The staff manager provides the supplementary information in the form of records and estimates.


Human Resource Planning – Need and Importance:

The following points highlight the need and importance of HRP in the organizations:

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I. Assessing Future Personnel Needs:

Whether it is surplus labour or labour shortage, it gives a picture of defective planning or absence of planning in an organization. A number of organizations, especially public sector units (PSUs) in India are facing the problem of surplus labour.

It is the result of surplus labour that the companies later on offer schemes like Voluntary Retirement Scheme (VRS) to eliminate surplus staff. Thus, it is better to plan well about employees in advance. Through HRP, one can ensure the employment of proper number and type of personnel.

II. Foundation for Other HRM Functions:

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HRP is the first step in all HRM functions. So, HRP provides the essential information needed for the other HRM functions like recruitment, selection, training and development, promotion, etc.

III. Coping with Change:

Changes in the business environment like competition, technology, government guidelines, global market, etc. bring changes in the nature of the job. This means changes in the demand of personnel, content of job, qualification and experience needed. HRP helps the organization in adjusting to new changes.

IV. Investment Perspective:

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As a result of change in the mindset of management, investment in human resources is viewed as a better concept in the long run success of the enterprise. Human assets can increase in value as opposed to physical assets. Thus, HRP is considered important for the proper planning of future employees.

V. Expansion and Diversification Plans:

During the expansion and diversification drives, more employees at various levels are needed. Through proper HRP, an organization comes to know about the exact requirement of personnel in future plans.

VI. Employee Turnover:

Every organization suffers from the small turnover of labour, 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.

VII. Conformity with Government Guidelines:

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In order to protect the weaker sections of the society, the Indian Government has prescribed some norms for organizations to follow. For example, reservations for SC/ST, BC, physically handicapped, ex-servicemen, etc. in the jobs. While planning for fresh candidates, HR manager takes into consideration all the Government guidelines.

VIII. International Expansion Strategies:

International expansion strategies of an organization depend upon HRP. Under International Human Resource Manage­ment (IHRM), HRP becomes more challenging. An organization may want to fill the foreign subsidiary’s key positions from its home country employees or from host-country or from a third country. All this demands very effective HRP.

IX. Having Highly Talented Manpower Inventory:

Due to changing business environment, jobs have become more challenging and there is an increasing need for dynamic and ambitious employees to fill the positions. Efficient HRP is needed for attracting and retaining well qualified, highly skilled and talented employees.


Human Resource Planning – Objectives:

The main objectives of HRP are:

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(i) Proper assessment of human resources needs in future.

(ii) Anticipation of deficient or surplus manpower and taking the corrective action.

(iii) To create a highly talented workforce in the organization.

(iv) To protect the weaker sections of the society.

(v) To manage the challenges in the organization due to modernization, restructuring and re-engineering.

(vi) To facilitate the realization of the organization’s objectives by providing right number and types of personnel.

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(vii) To reduce the costs associated with personnel by proper planning.

(viii) To determine the future skill requirements of the organization.

(ix) To plan careers for individual employee.

(x) Providing a better view of HR dimensions to top management.

(xi) Determining the training and development needs of employees.


Human Resource PlanningOrganisation:

Every line manager is responsible for planning manpower of the respective department and the top management is responsible for the planning of resources for the entire organisation. The personnel department supplies relevant information and data to all the line managers and helps those regarding interdepartmental transfers, promotions, demotions etc. Personnel department also helps in using the techniques and forecasting the manpower.

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Personnel department forecasts internal mobility surplus or deficit of human resources for the entire organisation, prepares action plans regarding redeployment, redundancy, employment, development and internal mobility and submits plans to the management at the top which either by its own or by appointing a committee reviews departmental plans and overall plans, make necessary adjustments and finalises the plans. Personnel department in its turn prepares modified plans for the departments based on finalised overall plan and communicates them to respective heads of department.

Personnel department may co-ordinate the control activity of human resource plan and it has to send coordinated reports to the management at the top for actual review, control and monitor the human resource system. The management at the top may appoint a committee consisting of heads of department and external identification of deviations, reasons thereof and steps to be taken to correct the deviations. The committee further helps the management in executing the programmes of corrections.


Human Resource Plan – Factors:

Several factors affect HRP. These factors can be classified into external factors and internal factors.

External Factors:

i. Government Policies – Policies of the government like labour policy, industrial relations policy, policy towards reserving certain jobs for different communities and sons-of the soil, etc. affect the HRP.

ii. Level of Economic Development – Level of economic development determines the level of HRD in the country and thereby the supply of human resources in the future in the country.

iii. Business Environment – External business environmental factors influence the volume and mix of production and thereby the future demand for human resources.

iv. Level of Technology – Level of technology determines the kind of human resources required.

v. International Factors – International factors like the demand for resources and supply of human resources in various countries.

vi. Outsourcing – Availability of outsourcing facilities with required skills and knowledge of people reduces the dependency on HRP and vice-versa.

Internal Factors:

i. Company policies and strategies – Company policies and strategies relating to expansion, diversification, alliances, etc. determines the human resource demand in terms of quality and quantity.

ii. Human resource policies – Human resources policies of the company regarding quality of human resource, compensation level, quality of work-life, etc., influences human resource plan.

iii. Job analysis – Fundamentally, human resource plan is based on job analysis. Job description and job specification determines the kind of employees required.

iv. Time horizons – Companies with stable competitive environment can plan for the long run whereas the firms with unstable competitive environment can plan for only short- term range.

v. Type and quality of information – Any planning process needs qualitative and accurate information. This is more so with human resource plan; strategic, organisational and specific information.

vi. Company’s production operations policy – Company’s policy regarding how much to produce and how much to buy from outside to prepare a final product influence the number and kind of people required.

vii. Trade unions – Influence of trade unions regarding number of working hours per week, recruitment sources, etc., affect the HRP.


Human Resource Planning at Different Levels:

Different institutions make HRP at different levels for their own purposes, of which national level, industry level, unit level, departmental level and job level are important.

i. National level – Generally, government at the centre plan for human resources at the national level. It forecasts the demand for and supply of human resource, for the entire nation.

ii. Sector level – Manpower requirements for a particular sector like agricultural sector, industrial sector or tertiary sector are projected based on the government policy, projected output/operations, etc.

iii. Industry level – Manpower needs of a particular industry like cement, textiles, chemical are predicted taking into account the output/operational level of that particular industry.

iv. Unit level – This covers the estimation of human resource needs of an organisation or company based on its corporate/business plan.

v. Departmental level – This covers the manpower needs of a particular department in a company.

vi. Job level – Manpower needs of a particular job family within department like Mechanical Engineer is forecast at this level.

vii. Information technology – The impact of information technology on business activities, human resource requirement and human resource plan is significant. It requires multi skilled experts, preferably less in number.


Human Resource Planning – Quantitative and Qualitative Dimensions:

Human resources have a dual role to play in the economic development of a country. On one hand they are the consumers of the products and services produced by the organizations while on the other hand they are one of the factors of production.

Along with capital and other factors of production, human resources can lead to increase in production and economic development. The rate of growth of human resources is determined by two aspects quantitative and qualitative.

Variables Determining the Quantity of Human Resources:

1. Population Policy:

Some population policies operate by influencing the factors responsible for growth such as fertility, marriage and mortality. These are known as population influencing policies. Another category of policies known as responsive policies are implemented to adjust to observed population trends with the help of programmes like health, nutrition, education, housing, etc. The aim of population policies is to achieve an optimum population for enhancing the country’s development.

2. Population Structure:

The structure or composition of the population is determined by two factors, sex composition and age composition.

(i) Sex Composition:

Sex ratio is the ratio of males to females in the population. It is the basic measure of the sex composition of the population of any area. Higher the number of females, higher will be the population growth rate in future.

(ii) Age Composition:

It is the distribution of population by age groups. Age composition is the result of past trends in fertility and mortality. The supply of labour depends on age composition as economically active population falls in range of 15-65 age groups.

3. Migration:

Net migration is another factor which causes changes in the population. Age and sex composition determine the natural growth in population, but for calculating the overall changes in population it is important to consider net migration also.

Net migration = total immigrants – total emigrants

A positive net migration will lead to a rise in population growth rate while negative net migration will reduce the growth rate of population. Migration can be both inter­regional and international.

4. Labour Force Participation:

The population of any country consists of workers and non-workers. The workers are the people, usually in age group of 15-65, who participate in economically productive activities by their mental or physical presence.

These include:

i. Employers,

ii. Employees,

iii. Self-employed persons, and

iv. Those engaged in family enterprises without pay.

The others in the population are the non-workers such as students, infants, elderly, beggars, retired people, inmates of jail or mental institutions, unemployed, etc. They do not contribute to any productive economic activity. It is the changes in the working population which affect the growth of human resources. The number of people who are unemployed but available for work also impacts the availability of labour.

Qualitative Aspects of Human Resource Planning:

The quantitative dimensions help to ascertain human resources in numbers while the productive power of human resources is assessed by the qualitative dimensions. For example, there may be hundreds of applicants for 20 vacancies, but out of these only a few may meet the quality standards required for the job.

Factors which determine the quality of human resources are:

1. Education and Training:

The quantity and quality of education and training received by human resources impacts their knowledge and skills. Education and training are important for the upliftment of both individual and society. It can be of two types, formal and informal.

Formal education is imparted through schools and colleges while informal education and training takes place through on-the-job training methods. Formal education stresses the transfer of theoretical knowledge, while informal education emphasizes on practical application of knowledge.

2. Health and Nutrition:

Health and nutrition along with education are vital for Human Resource Development. Health and nutrition impact the quality of life, productivity of labour and the average life expectancy.

Health status is determined by:

(i) Purchasing power of people.

(ii) Public sanitation, climate and availability of medical facilities.

(iii) People’s understanding and knowledge of health, hygiene and nutrition.

3. Equality of Opportunity:

Not all segments of people comprising human resources get equal employment opportunities. There is bound to be some discrimination.

The most common forms of discrimination are:

(i) Social discrimination – Discrimination on basis of gender, religion or social standing.

(ii) Economic discrimination – Discrimination based on financial positions or possession of wealth by the sections of workforce.

(iii) Regional discrimination – These are in form of discrimination between rural and urban population or between people belonging to different regions/ states.

Discrimination affects the quality and productivity of the human resources belonging to different sections of the population. The privileged classes get access to best education, nutrition and health facilities while underprivileged are deprived of their right share in the development process. For the overall, well rounded development of the country’s human resources, effective policies need to be implemented to deal with the problem of discrimination.


Human Resource Planning – Prerequisites:

i. There should be a proper linkage between HR plan and organizational plan.

ii. Top management support is essential.

iii. Proper balance should be kept between the qualitative and quantitative approaches to HRP.

iv. Involvement of operating managers is necessary.

v. Proper alignment between short-term HR plans and long-term HR plans should be there.

vi. HR plan should have in-built flexibility in order to adopt environmental uncertainties.

vii. Time period of HR plan should be appropriate to needs and circumstances of the organization.


Human Resource Planning – Relationship with Other Personnel Processes:

From a systems view, human resource planning is interrelated with many of the organization’s other endeavors in personnel management. The strongest relationship exists between human resource planning and selection. In fact, all selection efforts really are an integral part of the whole human resource planning process.

Organizations that have either stable or increasing human resource needs must go into the external labour market and hire employees even though they generally follow a promotion-from within policy.

In addition, human resource planning is related to both performance appraisal and training and development. Performance appraisals can pinpoint the skills that will be required for employees to move into higher-level positions via promotion, while training and development efforts may then be designed to provide these skills.

To meet organizational goals, human resource planning seeks to ensure that the organization’s demand for individuals at any particular time will be just met by available human resources. This view assumes that “stockpiling” employees at levels greater than needed and being understaffed are both undesirable.

This assumption represents a major difference between planning for human resources and planning for non-human resources. Although it is generally unacceptable to stockpile or build inventories of human resources, organizations may find it necessary or desirable to build up raw materials or finished-goods inventories.

It is unacceptable to hold human resource inventories for three reasons. First, human resources are costly and it may be difficult to justify the expense of excess personnel. There are sounder and more cost-effective options available to personnel planners in business firms. Second, excess people are not engaged in productive work, and are likely to be bored and frustrated by the lack of anything constructive to do.

Such boredom and frustration can create problems because excess people may make unnecessary work for productive people and may even inhibit the firm’s total productive efforts.

Third, since human resources, particularly skilled and professional people, may be in short supply, taking productive workers out of the economy’s labour pool may be considered socially unacceptable.

It is equally undesirable for an organization to operate with too few employees. As with “stockpiled” employees, individuals may feel frustrated, but in this case because of overwork rather than a lack of productive activity. This situation may also be dysfunctional to an organization’s goals.

Consider, for example, a department store during the holiday season with a shortage of sales personnel. In addition to the frustrations experienced by employees, such understaffing may also result in loss of employee efficiency.

Customers may respond to long lines and excessive waiting by taking their business elsewhere, with resultant loss of sales by the organization. Having too many or too few employees may create numerous problems for organizations-problems that can be reduced or eliminated through effective human resource planning.


Human Resource PlanningCost Contribution Analysis:

Cost-contribution analysis of human resources is most important in HRP with a view to plan for more effective human resource system. The human resource components necessary to maximise employee contribution to the job and the organisation, and minimise the cost, should be determined in advance with the help of human resource accounting techniques.

The optimum human resource system should be planned and determined as the human resources system is the control system in the organisation because it emphasises the human contribution which critically influences the organisational effectiveness. Planning the human resource system includes determining the type of human resource components like creative and innovative skills and abilities, dynamism, leadership qualities, commitment, identification with the organisation, etc., considering the measures to acquire those human resources through recruitment, training and development and adjusting the components.

Similarly, cost of human resource should be streamlined and it should be taken as investment on human resources and not as mere cost. These items include remuneration cost (Pay, allowances, fringe benefits, other indirect costs), recruitment cost (cost of job design, advertising cost, cost for conducting tests, interview, reference checks, medical examination and induction), training costs, etc.

Human Resource Accounting (HRA) envisages capitalisation of all expenses like cost of recruitment, training etc. One of the systems of HRA i.e., replacement cost of human asset is an important tool for the formulation of manpower budget and plan for human resources.


Human Resource PlanningResponsibility:

Human resource planning is the responsibility of the personnel department. In this task, it is aided by the industrial engineering department, the top management and the team of directors of different departments. It is mostly a staffing or personnel function.

The overall responsibility lies with the Board of Directors because, as the manpower planning scheme of Hindustan Lever indicates, “these members are in a position to direct the future course of business, set appropriate goals for the management concerned in the formulation of personnel policies.”

The personnel department’s responsibility is “to recommend relevant personnel policies in respect of manpower planning, devise methods of procedure, and determine the quantitative aspects of manpower planning.”

The responsibilities of the personnel department in regard to manpower planning have been stated by Geisler in the following words:

(i) To assist, counsel and pressurise the operating management to plan and establish objectives;

(ii) To collect and summarise data in total organisation terms and to ensure consistency with long- range objectives and other elements of the total business plan;

(iii) To monitor and measure performance against the plan and keep the top management informed about it; and

(iv) To provide the research necessary for effective manpower and organisational planning.


Integration of Strategic Planning and Human Resource Planning:

Human resource planning like production planning, financial planning and marketing planning, should be a unified, comprehensive and integrated part of the total corporation. Human resource manager provides inputs like key HR areas, HR environmental constraints and internal HR capabilities and HR capability constraints to the corporate strategists. The corporate strategists in turn communicate their needs and constraints to the HR manager. The corporate strategic plan and HR plan thus incorporates both HR and other functional plans.

Corporations formulate plans to fit four time spans:

i. Strategic plans that establish company’s vision, mission and major long-range objectives. The time span for strategic plans is usually considered to be five or more years.

ii. Intermediate – range plans covering about a three year period. These are more specific plans in support of strategic plan.

iii. Operating plans cover about one year. Plans are prepared month by month in sufficient detail for profit, human resources, budget and cost control.

iv. Activity plans are the day-by-day and week-by-week plans. These plans may not be documented presents the link between strategic plan and human resource plan.

Strategic Plan Vis-a-Vis Human Resource Plan- Corporate — Level Plan:

Top management formulates corporate-level plan based on corporate philosophy, policy, vision and mission. The HRM role is to raise the broad and policy issues relating to human resources. The HR issues are related to employment policy, HRD policies, remuneration policies, etc. The HR department prepares HR strategies, objectives and policies consistent with company strategy.

I. Intermediate – Level Plan:

Large-scale and diversified companies organise Strategic Business Units (SBU) for the related activities. SBUs prepare intermediate plans and implement them. HR managers prepare specific plans for acquiring future managers, key personnel and total number of employees in support of company requirements over the next three years.

II. Operation Plan:

Operation plans are prepared at the lowest business profit centre level. These plans are supported by the HR plans relating to recruitment of skilled personnel, developing compensation structure, designing new jobs, developing leadership, improving work-life, etc.

III. Short-Term Activities Plan:

Day-to-day business plans are formulated by the lowest level strategists. Day-to-day HR plans relating to handling employee benefits, grievances, disciplinary cases, accident reports, etc., are formulated by the HR managers.


Human Resource Planning and Environmental Scanning:

Environment influences human resource management as well as business. Environmental scanning helps to know the nature and degree of environmental influence on human resource plan as well as business plan.

Managers have to scan the following environmental factors in particular:

i. Social factors including cultural factors, religious factors, child-care, educational programmes and priorities.

ii. Technological developments including information technology, people soft, automation and robotics.

iii. Economic factors including international, national and regional factors.

iv. Political factors including legal issues, laws and administrative factors.

v. Demographic factors including gender, age and literacy.

vi. Industry growth trends, competitive trends, new products, new processes, services and innovations.

The environmental scanning will help the managers to foresee the possible changes and make the adjustments in order to prevent the possible negative effects and get ready for the positive effects.

In addition to scanning the external environmental factors, organisations like Infosys, Satyam, Volvo and Southwest Airlines scan internal environmental factors. Organisational cultures, employees’ cultures affect the human resource plan as well as other areas of HRM. Organisations conduct cultural audits to know the impact of attitudes, values and activities of employees. As observed by Sears, employee positive attitude has direct and positive impact on customer satisfaction and revenue.

Most of the companies benchmark their standing and progress against each other as environmental scanning and HR planning are aimed at competitive advantage. Benchmarking is identifying the best HR practices like training and compensation in the industry, compare them with those of the firm and take steps to improve the practices to match with those of the best practices in the industry.

Target for benchmarking need not be a competitor, but the best in the industry, or companies in other industries. ‘Human Capital Benchmarking Report’ published by the Saratoga Institute provides information of 900 companies’ practices. Companies can use this source as well as the survey report of ‘Business Today’, published every year in addition to various research reports on pay structure, return on investment per employee, turnover rates, cost per hire, etc.


Human Resource Planning – Mapping an Organisation’s Human Capital Architecture:

The linkage between strategy and HR should focus on the development of core competencies. Some of the MNCs like Sony, Starbucks, Domino’s Pizza and South-West Airlines revolutionised their companies by developing core competencies.

These competencies helped these companies to have leverage by learning faster than others. Core competency is a portfolio of employee skills. Different skills of employees can be grouped based on ‘Strategic value’ they create and their distinctiveness to the organisation.

They are as follows:

i. Core Knowledge Workers:

This group of employees possesses firm-specific skills which are linked to the company’s strategy like R&D skills for pharmaceutical company and teaching skills for university employees. Companies invest in training of these employees, provide them with freedom and autonomy and offer higher salaries.

ii. Traditional Job-Based Employees:

This group of employees possesses skills that are important to the organisation, but are not critical/unique (like accountants, finance, marketing personnel). Companies invest less in developing these employees, but provide short-term financial benefits.

iii. Contract Labour:

This category of employees possesses skills, which are of less strategic value (like clerks, receptionists, drivers, security, etc.). This category of employees is normally hired from external agencies on contact basis. Organisations do not invest in training these employees and the employment relations are transactional.

iv. Alliance/Partners:

This group of employees has unique skills, but not directly related to organisation’s core function like lawyers, auditors and consultants. Companies do not employ them on regular basis, given their tangible link to the strategy but establish long- term alliances and partnerships with them.

HR managers make decisions with regard to whom to employ internally, whom to contract externally and the type of the employment relationship to be maintained. HR manager also considers the cost-benefit approach of internal employment vs. external contract in HRP.

v. Ensuring Fit and Flexibility:

Alignment between strategic planning and programmes, policies and practices of HR is vital and need to achieve two types of fit viz., external fit and internal fit.

A. External Fit:

External fit brings alignment between the business objectives/goals and major HR initiatives/practices. Growth strategy of the company is to be aligned with recruiting people with creative and innovative skills, providing freedom to them and investing on training for developing such skills. Low cost strategy is to be aligned with employing performance/productivity oriented employees.

B. Internal Fit:

Internal fit brings alignment among various HR policies and practices in order to establish configuration that is mutually reinforcing. Efficiency and creativity come from integrated effort of job design, HR Plan, recruitment and selection, training, performance management, compensation and motivation. Therefore, there should be integration among all HR functions. In addition, management should follow either individual approach or team approach for all HR functions.

Successful external and internal strategy and HRM alignment helps the organisation to increase organisational capability and competitive advantage.

vi. Cohort Analysis:

It is an analysis of risk factors of groups in which a group having one or more similar characteristics is closely monitored over time simultaneously with another group. It is one type of clinical study design and should be compared with a cross-sectional study. Cohort studies are largely about the life histories of segments of populations, and the individual people who constitute these segments. This method is used where case study approach is not feasible, creates too many statistical problems, or generally produces unreliable results. This is also called follow up study.

Cohort analysis helps to separate growth metrics from engagement metrics and helps to measure growth and identify growth problems.


Edgar Schein’s Human Resource Planning and Development System:

In his article entitled Increasing Organizational Effectiveness through Better Human Resource Planning and Development, Edgar Schein suggests that the process of HR planning and developing staff must take into account two important sets of needs – the needs of the company, and the needs and desires of the individual employees.

In the new millennium with companies showing less concern about employee career development, it’s useful to pay attention to the idea that when both employee and corporate needs are taken into account, the results, for both parties are much superior to the situation where only one set is considered.

Schein’s approach integrates HR planning and employee development.

This approach contains the following components:

1. Strategic business planning

2. Job/Role planning

3. Manpower planning and Human Resource Inventorying.

In addition staffing processes also form a part of the model

4. Job analysis

5. Recruitment and selection

6. Induction/socialization and initial training

7. Job design and job assignment

8. Development planning

9. Inventorying of development plans

10. Follow-up of development activities

11. Career development processes and a good deal more.

When doing an internal scan for purposes of human resource planning the questions that should be addressed.

When evaluating an organization’s current human resource capabilities for the purposes of human resource planning, the following questions and issues need to be addressed:

1. Are there any key forces affecting the organization’s operations (collective agreements, staffing issues, cultural issues, work/life balance, demographics, technology requirements, budget issues, expectation of clients)?

2. What knowledge, skills, abilities and capabilities does the organization have?

3. What is the company’s current internal environment? What elements support the company’s strategic direction? What elements deter the organization from reaching its goals?

4. How has the organization changed its organizational structure? How is it likely to change in the future?

5. How has the organization changed with respect to the type and amount of work it does and how is it likely to change in the future?

6. How has the organization changed regarding the use of technology and how will it change in the future?

7. How has the company changed with respect to the way people are recruited?

8. What is the public’s (or customers’) perceptions of the quality of the organization’s products, programmes, and/or services? What is being done well? What can be done better?

9. Are current programmes, processes or services contributing to the achievement of specific organizational goals?

When doing an external scan of the environment for purposes of human resources planning (HR planning), we should look for:

In order to do human resource planning, we need to have a sense of both the current external environment, and anticipate things that may happen in the future in the labour market place. We do this via an external scan or environmental scan that can address the following issues and questions.

1. How is the current external environment? What elements of the current environment are relevant to the company? Which are likely to inhibit the company from arriving its goals?

2. What are the company’s specific issues and implications of these issues? What key forces in this environment need to be addressed and which ones are less critical?

3. What is the impact of local trends on the company (demographic, economic, political, intergovernmental, cultural, technology, etc.)?

4. Are there comparable operations that provide a similar service? How might that change? How would that affect the company?

5. Where does the work of the company come from? How might that change and how would it affect the organization?

6. How might the external environment differ in the future? What forces at work might change the external environment? What implications will this have for the organization?

7. What kinds of trends or forces affect similar work in other jurisdictions?

8. What kinds of trends or forces affect the company’s partners/stakeholders and customers?


Human Resource Planning – Benefits:

Human Resource Planning (HRP) anticipates not only the required kind and number of employees but also determines the action plan for all the functions of personnel management.

The major benefits of human resource planning are:

i. It checks the corporate plan of the organisation.

ii. HRP offsets uncertainties and changes to the maximum extent possible and enables the organisation to have right men at right time and in right place.

iii. It provides scope for advancement and development of employees through training, development, etc.

iv. It helps to anticipate the cost of salary enhancement, better benefits, etc.

v. It helps to anticipate the cost of salary, benefits and all the cost of human resources facilitating the formulation of budgets in an organisation.

vi. To foresee the need for redundancy and plan to check it or to provide alternative employment in consultation with trade unions, other organisations and government through remodeling organisational, industrial and economic plans.

vii. To foresee the changes in values, aptitude and attitude of human resources and to change the techniques of interpersonal, management, etc.

viii. To plan for physical facilities, working conditions and the volume of fringe benefits like canteen, schools, hospitals, conveyance, child care centres, quarters, company stores, etc.

ix. It gives an idea of type of tests to be used and interview techniques in selection based on the level of skills, qualifications, intelligence, values, etc., of future human resource.

x. It causes the development of various sources of human resources to meet the organisational needs.

xi. It helps to take steps to improve human resource contributions in the form of increased productivity, sales, turnover, etc.

xii. It facilitates the control of all the functions, operations, contribution and cost of human resources.


Human Resource PlanningProblems:

Though HRP is beneficial to the organisation, employees and trade unions, some problems crop up in the process of HRP.

Important among them are:

1. Resistance by Employers and Employees:

Many employers resist HRP as they think that it increases the cost of manpower as trade unions demand for employees based on the plan, more facilities and benefits including training and development. Further, employers feel that HRP is not necessary as candidates are/will be available as and when required in India due to unemployment situation. Employers’ version may be true about unskilled and clerical staff but it is not true in the case of all other categories as there is shortage for certain categories of human resources.

Trade unions and employees also resist HRP as they view that it increases the workload of employees and prepares programme for securing the human resources mostly from outside. The other reason for their resistance is that HRP aims at controlling the employees through productivity maximisation, etc.

2. Uncertainties:

Uncertainties are quite prominent in human resource practices in India due to absenteeism, seasonal employment, labour turnover, etc. Further, the uncertainties in industrial scene like technological change, marketing conditions also cause uncertainties in human resource management. The uncertainties make the HRP less reliable.

3. Inadequacies of Information System:

Information system regarding human resources has not yet fully developed in Indian industries due to low status given to personnel department and less importance attached to HRP. Further, reliable data and information about the economy, other industries, labour market, trends in human resources, etc., are not available.


Human Resource PlanningRecent Implications:

Most of the organisations, employed human resources without proper HR plans before 1990s. This was more acute in the public sector whose objective was creation of employment opportunities. The absence of human resources planning before 1990s led to the following implications in Indian companies.

(i) Overstaffing – Most of the organisations are found to be overstaffed compared to their counterparts in other countries.

(ii) VRSI Golden-handshake – The absence of human resources planning led to overstaffing. Consequently, most of the organisations announced VRS/Golden-handshake programmes in order to reduce the consequences of overstaffing.

(iii) Delayering and Downsizings Most of the organisations de-layered their organisations and announced downsizing programmes to rectify the consequences of overstaffing.


Human Resource Planning – Recent Trends:

Unfortunately, the human resource planning efforts of organizations have often been inadequate by failing to emphasize the truly systematized approach geared toward meeting overall objectives.

As Lopez and others have observed:

Some organizations have perceived manpower planning primarily in terms of budgeting to control labour costs; others have viewed it as a management development technique; still others see it as a table of back-ups and replacements for current employees; and finally, others have viewed it as a means of establishing a human resource information system and a personnel inventory.

Since each of these approaches is necessarily limited in scope, the state of the art in human resource planning has limped along quite slowly.

Toward More Sophisticated Human Resource Planning:

In recent years, both personnel practitioners and researchers emphasized some of the basic facets of personnel decision making (1) taking systems and contingency approaches, and (2) developing more sophisticated human resource forecasting and planning models. For example, the growth of equal employment opportunity regulations in recent years has increased the awareness of human resource planners of the effects of external changes on personnel systems.

The observations are in order regarding these more sophisticated approaches. First, more complex planning systems have generally been used in larger firms. Large organizations generally must undertake complex human resource planning and can afford the higher costs of such approaches.

Second, although a wide range of human resource models have been developed, some of these models have ignored so many “real life” personnel variables that they have had virtually no practical application. On the positive side, there have been numerous quantitative models that have been very useful to organizations.

There are a number of reasons for the recent increase in the use of more sophisticated human resource planning models. For example, organizations simply have been growing larger and more complex, requiring more sophisticated approaches. This has been especially true in those organizations in which interdependencies have increased.

The invention and development of the computer has made possible the analysis of complex human resource problems that would previously have been so time-consuming as to be cost prohibitive or virtually impossible to deal with by manual computations.

“The manpower mix in organizations had gradually come to focus around highly skilled managerial and technical talent.” Such personnel have at times been in short supply, and more of a lead time has been required for their training and development.

Once an integrated, well-thought-out human resource planning programme has been initiated, managers tend to appreciate its benefits and work together with the firm’s human resource specialists in developing viable programmes-“they are more willing to plan in this area, if only they are shown how to begin,”

Problems with Sophistication in Human Resource Planning:

Despite these reasons for the growth of more sophisticated human resource planning, such approaches face a number of problems:

1. There is an inherent mathematical complexity associated with efforts to model human resource systems.

2. Always there is a lack of certainty surrounding human resource needs in the future, coupled with the existence of an acquisition lead time for meeting those needs. Even if an organization’s human resource planning experts were completely uncertain about the number of operation researchers that would be needed at a point in future, the organization would face no problems if it could at that future time instantaneously obtain any number of such personnel to meet its objectives.

However, lead times are needed to recruit and train new personnel and to train and promote existing employees for new positions or assignments. Acquisition lead times have become more of a problem in recent years because of the needs for highly skilled managerial and professional personnel.

Since this trend is expected to continue in future years, the problem of acquisition lead times creates forecasting difficulties for most organizations.

Finally, human resource plans must be updated more frequently in firms (or in any of their subsystems) in which greater uncertainty exists. As one observer has observed-

“Increasing instability and the greater uncertainties associated with certain job requirements (e.g., research and development or marketing) indicate a requirement for more up-to-date information on emerging needs. This manpower data is increasingly subject to change, and organizational needs dictate timely information with appropriate systems support”.


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