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

forecastDoes 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

forecastNo

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.

THE

END

Recruiting & HR

Unit 1 human resource planning