With the expansion of business, adoption of complex technology and professional management techniques, the process of human resource planning has assumed great importance. HRP consists of the following stages:
1. Analysing organisational plans and deciding objectives.
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2. Analysing factors for manpower requirements.
(a) Demand Forecasting:
Forecasting the overall human resource requirements in accordance with the organisational plans.
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(b) Supply Forecasting:
Obtaining the data and information about the present inventory of human resources and forecasting the future changes in present human resource inventory.
3. Developing employment plans.
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4. Developing human resource plans.
Importance
1. Analysing Organisational Plans and Deciding Objectives:
Before undertaking the human resource planning of an organisation, the short-term and long-term objectives should be analysed. The process of human resource planning should start with analysing the organisational plan.
Analysis of organisational plans and programmes helps in forecasting the demand for human resources as it provides the quantum of future work activity.
According to Sikula, “the ultimate mission or purpose is to relate future human resources to future enterprise need so as to maximise the future returns on investment in human resources.
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The business plan would be a blueprint of desired objectives. This objective stated in economic terms, would incorporate the growth rate of the company, diversification plans, market opportunities and government policies. Therefore, human resource planning should meet two requirements.
(a) It should be directly related to the essential nature of the organisation.
(b) The changes in the selected factors should be proportional to changes in the human resources required in the organisation.
In a small organisation, a human resource plan could be formulated to cover the whole organisation. However in a large organisation, size may necessitate human resource planning by separate departments.
2. Analysing Factors for Manpower Requirements:
The existing job design and analysis may thoroughly be reviewed keeping in view the future capabilities, knowledge and skills of present employees.
The job generally should be designed and analysed reflecting the future human resources and based on future organisational plans. The factor for manpower requirements can be analysed by two ways:
(a) Demand Forecasting and
(b) Supply Forecasting.
(a) Demand Forecasting:
Demand forecasting is the process of estimating the future requirements of manpower, by function and by level of skills.
It has been observed that demand assessment for operative personnel is not a problem but projections’ regarding supervisory and managerial levels is difficult.
Two kinds of forecasting techniques are commonly used to determine the organisation’s projected demand for human resources. These are:
(i) Judgemental Forecasts, and
(ii) Statistical Projections.
(i) Judgemental Forecasts:
Judgemental forecasts are also known as the conventional method. The forecasts are based on the judgement of those managers and executives who have intensive and extensive knowledge of human resource requirement. Judgemental forecasts could be of two types:
A. Managerial Estimate:
Under this method, the managers or supervisors who are well-acquainted with the workload, efficiency and ability of employees, think about their future workload, future capabilities of employees and decide on the number and type of human resources to be requited.
An estimate of staffing needs is done by the lower level managers who make estimates and pass them up for further revision.
B. Delphi Method:
A survey approach can be adopted with the Delphi technique. The Delphi process requires a large number of experts who take turns to present their forecast statement and underlying assumptions to the others, who then make revisions in their forecasts. Face-to-face contact among the experts is avoided.
(ii) Statistical Projection:
Some forecasting techniques are based on statistical ‘ methods. Some of them are given below:
A. Ratio-Trend Analysis:
The ratio-trend analysis is carried out by studying past ratios and forecasting ratios for the future.
The components of internal environmental changes are considered while forecasting future ratios. – Activity level forecasts are used to determine the direct human resource requirements.
This method depends on the availability of past records and the internal environmental changes likely to occur in future.
B. Econometric Model:
Under the econometric model, the previous data is analysed and the relationship between different variables in a mathematical formula is developed.
The different variables affecting the human resource requirements are identified. The mathematical formula so developed is then applied to the forecasts of movements in the identified variables to produce human resource requirements.
C. Work-Study Techniques:
Work-study techniques are generally used to study work measurement. Under the workload analysis, the volume of workload in the coming years is analysed.
These techniques are more suitable where the volume of work is easily measurable. If the planners forecast expansion in the operations, additional operational workers may be required.
If the organisation decides to reduce its operations in a particular area, there may be decreased demand for the workers.
If there is likely to be no change, present demand for workers will continue. The work-study method also takes into account the productivity pattern for the present and future, internal mobility of the workers like promotion, transfer, external mobility, of the workers like retirement, deaths, voluntary retirements etc.
(b) Supply Forecasting:
Supply forecasting is concerned with human resources requirements from within and outside the organisation. The first step of forecasting the future supply of human resource is to obtain the data and information about the present human resource inventory.
The supply forecasting includes human resource audits; employee wastage; changes due to internal promotions; and changes due to working conditions.
Some of the steps are discussed below:
(i) Human Resource Audits:
These are analysis of each employee’s skills and abilities. This analysis facilitates the human resource planners with an understanding of the skills and capabilities available in the organisation and helps them identify manpower supply problems arising in the near future.
These inventories should be updated periodically otherwise it can lead to present employees being ignored for job openings within the organisation.
(ii) Employee Wastage:
The second step of supply forecasting is estimation of future losses of human resources of each department and of the entire organisation.
This is done to identify the employees who leave the organisation and to forecast future losses likely to occur due to various reasons.
Employees may leave the organisation for reasons like retirements, layoffs, dismissals, disablement, ill health, death etc.
Reasons for high labour turnover and absenteeism should be analysed and remedial measures taken.
Management has to calculate the rate of labour turnover, conduct exit interviews etc. This helps to forecast the rate of potential loss, reasons for loss and helps in reducing the loss.
(iii) Internal Promotions:
Analysis is undertaken regarding the vacancies likely due to retirements and transfers and the employees of particular groups and categories who are likely to be promoted.
The multiple effects of promotions and transfers on the total number of moves should be analysed and taken into consideration in forecasting changes in human resource supply of various departments.
For e.g., if the personnel officer is promoted as personnel manager, 2 more employees will also get promotion.
The senior clerk in the personnel department will become personnel officer and the junior clerk will become senior clerk. Thus there are 3 moves for one promotion.
3. Developing Employment Plans:
After determining the number of personnel for each job in the organisation, the human resource department has to determine the nature of job, i.e., job description and job specification.
(a) Job Description:
A job description will generally describe the work performed, the responsibilities involved, the skill or training required, conditions under which the job is done, relationships with other jobs and personal requirements on the job.
According to The British Institute of Management – “a job description is not intended to catalogue all duties involved with the result that an employee would feel justified in declining to perform any work not included in the description.
It should be regarded as an out-line of the minimum requirements of the job, thus preserving flexibility of operations”.
(b) Job Specification:
The job specification is an output of job description. It states the minimum acceptable qualifications that the newcomer must possess to perform the job satisfactorily and successfully.
Job specifications serve as an important tool in the selection process and evaluation. They are developed by the human resource department in consultation with different line managers. The various elements of job specification are:
(i) Minimum formal education necessary to perform the job.
(ii) Minimum experience required for performing the job.
(iii) Manual/ Mental skill required for performing the job.
(iv) Personality factors such as personal appearance, emotional stability, maturity, initiative, drive and sociability.
(v) For high-level jobs, the ability to assume responsibility is an essential prerequisite.
4. Developing a Human Resource Plan:
Net human resource requirements in terms of number and components are to be determined in relation to the overall human resource requirement. After estimating the supply and demand of human resources, the management starts adjustment.
When the internal supply of employees is more than the demand, human resource surplus exists and the external recruitment is stopped.
Besides the existing employees are encouraged to take voluntary retirement. It gradually reduces the surplus. If human resource deficit exists then the planners have to rely on the external sources.
They then proceed for scanning of the employment market for recruitment purposes. If future supply of human resources from all the external sources is estimated to be inadequate or less than the requirements, the manpower planner has to suggest to the management to alter or modify the organisational plan.
In case of shortage of certain categories of employees, the organisation has to take care not only of recruitment but also retention of existing employees.