Unit-3 Human Resource Planning Process

Forecast and Projection

Human resources (HR) forecasting involves projecting labor needs and the effects they’ll have
on a business. An HR department forecasts both short- and long-term staffing needs based on
projected sales, office growth, attrition and other factors that affect a company’s need for
labor. In addition to forecasting the number and type of workers you’ll need, HR planning
includes analyzing the various costs and administrative work that go along with adding workers
or downsizing.

Types of HR Forecasts:-

 Trend Analysis
 Ratio Analysis
 Supply Forecasting

Trend Analysis:-

Trend analysis is more appropriate for an existing business because it requires historical staffing
data to make future staffing predictions. This creates a relationship between past and future
staffing needs by linking the two using a performance or financial metric called an operational
index. A service business, for example, might base future staffing requirements on the number
of customers each customer service representative effectively handled in the past, while a retail
business might compare sales volume per sales employee.

Ratio Analysis:-

A new businesses, or one having less than five years of historical staffing data, often uses a ratio
analysis forecasting technique. Ratio analysis uses elements called causal factors that can be
linked to and help predict future staffing needs. A business might identify production or sales
volume as a causal factor and estimate, for example, that it needs one customer service
representative for every five clients or one production line worker for every 5,000 widgets. If
projections determine the business will handle 500 clients or produce 500,000 widgets over the
coming year, forecasting sets demand at 100 employees for each.

Supply Forecasting:-
Supply forecasting techniques often start internally for human resources. Replacement charts
are a visual tool for identifying internal candidates available and qualified to fill demand
estimations. Replacement charts include both a hierarchical diagram and information relating
to current employee performance, education and an assessment of how ready the employee is
to move into upward or lateral position. External supply side forecasting typically involves a
labor market analysis that also considers hiring practice legislation to avoid the possibility of
facing a discrimination lawsuit. Market analysis information such as employment and wage
trends is available on The Society for Human Resource Management website, as well as
national and state labor information websites. Information on these sites can help businesses
document the current strengths and weaknesses of the workforce, define emerging
employment trends and economic opportunities and assist businesses in finding qualified
workers.

Time Scale of Human Resource Planning Forecasts

Time Frame Requirement Availability Action Plan

Basis

1 year Annual Budget Exiting Man Contract staff, Recruitment

Power & on Contract, Promotion,
Contractual Redundancy.
Man Power
1-2years Forecast Budget Current Transfer, Promotion,
(Business Plan Manpower Redundancy
projected
Attrition
2-5 years Long Term Plan Project Succession Plan,
manpower Recruitment, Training &
including development,
Trainee Who Restructuring, Redundancy
will be inducted
during period
Above 5 Perspective Plan Labor Market, Secession Plan, Redesign
years education plan Job Restructuring, re-
deployment
Methods of HR demand forecasting at Macro and Micro Level:

 Managerial Judgment

This technique is very simple. In this managers sit together, discuses and arrive at a figure which
would be the future demand for labour. The technique may involve a “bottom-up” or a “top-
down” approach. In the first, line managers submit their department proposals to top managers
who arrive at the company forecasts. These forecasts are reviewed with departmental heads
and agreed upon. Neither of these approaches is accurate- a combination of the two could yield
positive results. In the “bottom-up” and “top-down” approaches, departmental managers can
prepare forecasts for their respective departments. Simultaneously, top HR managers prepare
company forecasts. A committee comprising departmental mangers and HR managers will
review the two sets of forecasts.

 Ratio-Trend Analysis

This is the quickest forecasting technique. The technique involves studying past ratios, say,
between the number of workers and sales in an organization and forecasting future rations,
making some allowance for changes in the organization or its methods.

 Regression Analysis

This is similar to ration-trend analysis in that forecast is based on the relationship between sales
volume and employee size. However, regression analysis is more statistically sophisticated. 

 Work-Study Techniques

Work-study techniques can be used when it is possible to apply work measurement to calculate
the length of operations and amount of labour required. The starting point in a manufacturing
company is the production budget, prepared in terms of volumes of sales able products for the
company as a whole, or volumes of output for individual departments. The budgets 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 the number of actual
working hours for an individual operator to show the number of operators required. Allowance
will have to be made for absenteeism and idle time.

 Delphi Technique

Named after the ancient Greek Oracle at the city of Delphi technique is a method of forecasting
personnel needs. It solicits estimates of personnel needs from a group of experts, usually
mangers. The HRP experts act as intermediaries, summaries the various responses and report
the findings back to the experts. The experts are surveyed again after they receive this
feedback. Summaries and surveys are repeated until the experts opinions begin to agree. The
agreement reached is the forecast of the personnel needs. The distinguishing feature of the
Delphi technique is the absence of interacting among experts.

 Flow Method

Flow Models are very frequently associated with forecasting personnel needs. The simplest one
is called the Markov model. In this technique, the forecasters will determine the time that
should be covered. Shorter lengths of time are generally more accurate than longer ones.
However the time horizon depends on the length of the HR plan which, in turn, is determined
by the strategic plan of organization.

Wastage Analysis:-

It is severance from the organization, which includes voluntary retirement, normal retirement,
resignations, deaths and dismissals. Turnover creates considerable costs for the organization,
decreases productivity, disrupts worker relationships, and can increase waste and accidents. It
also decreases with increased skill exercise and age.

Age Population Balance:-

It’s a process of balancing the ageing populating and making the workforce into the capabilities
to meet the requirement and hold the position when the employee retired after certain period
of time.

Manpower Planning Models:-

 Forecasting Staffing Needs

There are several ways to forecast your business needs in order to predict how many workers
you need to run your business and which roles these employees need to fill. Some of the
factors to consider include the situation of the economy, both local, regional and national, the
internal business finances, the demand for your products or services and the short- and long-
term growth expectations for your business.

To forecast staffing needs, take a look at your existing staff and see which current employees
are likely to transition into new position within the company. Also consider how many of
your employees may leave in search of outside opportunities.
  Evaluating Supply

Evaluating the supply of employees includes a two-prong process: evaluating internal staff, which will
occur as you are forecasting your staffing needs, as well as external staff. Externally, you need to
evaluate the demographics of the workforce that is available. This can include factors such as education,
mobility, the unemployment rate and state and federal government laws and regulations that can affect
your industry, your business, existing and potential employees. Evaluating all of these factors helps you
determine if you have access to the number and types of employees you need to fill your staffing
forecasts.

 Balance Demand and Supply

The final element of the human resources planning model is to determine how you are going to balance
the demand you have for employees with the supply of employees available. If you have a shortage of
employees, this will determine what type of recruiting efforts your business will participate in to attract
the employees it needs to fill needs within the company. It also requires you to balance your full-time
and part-time needs.

Productivity:-
Productivity is essential to the success of an organization. A productivity plan consists of a
specific plan designed to improve productivity. An effective productivity plan addresses all areas
that may potentially affect the overall productivity of an organization or individual. The
organizational productivity plan typically addresses three main elements, including operational,
tactical and strategic planning. Supervisors and managers may also choose to create
productivity plans for individual departments or employees.

Technology:-
Technology has became the life blood of today’s business organization. Technology can helps
project demand and supply levels based on realistic scenarios and support the to analysis
succession plan and career development plans. Technology enhance the real input and output
of data in real time with corrects figure and realistic phase. It helps to cut off price and makes
organization daily operation effective and efficient.