UNIT II

STRATEGIC HUMAN RESOURCE PLANNING

INTRODUCTION

Strategic HR planning is an important component of strategic HR management. It links HR

management directly to the strategic plan of the organization. Most mid- to large sized
organizations have a strategic plan that guides them in successfully meeting their missions.

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, the organization can develop a strategic HR plan
that will allow making HR management decisions to support the future direction of the
organization. The overall purpose of strategic HR planning is to:

 Ensure adequate human resources to meet the strategic goals and operational plans of the
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 the area and in the sector.

 Remain flexible so that the 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 environment that the organization will be operating in. The analysis of HR management
issues external to the organization and developing scenarios about the future are what
distinguishes strategic planning from operational planning. The basic questions to be answered
for strategic planning are:

 Where is the organization going?

 How will the organization develop HR strategies to successfully get there, given the
circumstances?

 What skill sets does the organization need?

Strategic human resource planning is the most important managerial function of an organization.
The basic characteristics should be as follows:
 (i) SHRP must incorporate the human resource needs in the light of organizational goals.
(ii) It must be directed towards clear and well-defined objectives.

(iii) It must ensure that it has the right number of people and the right kind of people at the right
time doing work for which they are economically most suitable.
(iv) It should take into account the principle of periodical reconsideration of new developments
and extending the plan to cover the changes during the given long period.

(v) It should pave the way for an effective motivational process.

(vi) Adequate flexibility must be maintained in strategic human resource planning to suit the
changing needs of the organization.
Thus SHRP is essentially concerned with the process of estimating and projecting the supply
and demand for different categories of personnel in the organization for the years to come.

NEED FOR STRATEGIC HUMAN RESOURCE PLANNING:

Strategic human resource planning is needed for foreseeing the human resource requirements of
an organization and supply of human resources. Its need can be assessed from the following
points:

1. Replacement of Persons: A large number of persons are to be replaced in the organization

because of retirement, old age, death, etc. There will be a need to prepare persons for
taking up new position in such contingencies.
2. Labour Turnover: There is always labour turnover in every organization. The degree of
labour turnover may vary from concern to concern but it cannot be eliminated altogether.
There will be a need to recruit new persons to take up the positions of those who have left
the organization. If the concern is able to forecast turnover rate precisely, then advance
efforts are made to recruit and train persons so that work does not suffer for want of
workers.

3. Expansion Plans: Whenever there is a plan to expand or diversify the concern then more
persons will be required to take up new positions. Human resource planning is essential
under these situations.

4. Technological Changes: The business is working under changing technological

environment. There may be a need to give fresh training to personnel. In addition, there
may also be a need to infuse fresh blood into the organization. Human resource planning
will help in meeting the new demands of the organization.
5. Assessing Needs: Human resource planning is also required to determine whether there is
any shortage or surplus of persons in the organization. If there are less persons than
required, it will adversely affect the work. On the other hand, if more persons are employed
than the requirement, then it will increase labor cost, etc. Human resource planning ensures
the employment of proper workforce.
OBJECTIVES OF SHRP

1. Assessing manpower needs for future and making plans for recruitment and selection.

2. Assessing skill requirement in future for the organization.

3. Determining training and the development needs of the organization.

4. Anticipating surplus or shortage of staff and avoiding unnecessary detentions or dismissals.

5. Controlling wage and salary costs.

6. Ensuring optimum use of human resources in the organization.

7. Helping the organization to cope with the technological development and modernization.

8. Ensuring career planning of every employee of the organization and making succession
programmes.
9. Ensuring higher labor productivity.

BENEFITS OF SHRP

1. The human resource planning helps in forecasting the future needs of the manpower and
not only this, but it also helps in anticipating the vacancies arising in the near future.
2. It is cost effective, i.e. the enterprise can anticipate the shortage and surplus of manpower
and can control the imbalance that may become unmanageable or expensive.
3. Better planning for the employee development. Through human resource planning, the
skills of the existing employees can be improved by giving them timely training and
development opportunities.
4. Training programs become more effective since the manpower gaps, arising out of
shortage or surplus can be determined through the manpower planning and the training
can be imparted accordingly.
5. It helps to make the strategic decisions related to the hiring and training of the manpower,
in the case of shortage and layoff, termination or replacement of the manpower, in a case
of surplus.
6. Through Human Resource planning, the idle arising out of vacancy can be reduced and
thus the overall performance of the business remains unaffected.

LEVELS OF STRATEGIC PLANNING

Human Resource Planning (HRP) may be done at different levels and for different purposes.
National planners may make a HR plan at the national level whereas the strategists at a company
may make a HR plan at the unit level. The HR Planning thus operates at five levels.

1. HRP at National Level: HRP at the national level helps to plan for educational facilities,
health care facilities, agricultural and industrial development and employment plans, etc.
 The government of the country plans for human resources at the national level. National
plans for HR forecast the demand and supply of human resources at the national level. It
also plans for occupational distribution, sectoral and regional allocation of human
resources.

2. HRP at the Sectoral Level: HRP at the sectoral level helps to plan for a particular sector
like agriculture, industry, etc. It helps the government to allocate its resources to the
various sectors depending upon the priority accorded to the particular sector

3. HRP at the Industry Level: HRP at the industry level takes into account the output/
operational level of the particular industry when manpower needs are considered.

4. HRP at the Unit Level: HR Planning at the company level is based on the estimation of
human resource needs of the particular company in question. It is based on the business
plan of the company. A manpower plan helps to avoid the sudden disruption of the
company’s production since it indicates shortages of particular types of personnel, if any,
in advance, thus enabling the management to adopt suitable strategies to cope with the
situation.

5. HRP at the Departmental Level: HRP at the departmental level looks at the manpower
needs of a particular department in an organization.

ACTIVITIES RELATED TO STRATEGIC HR PLANNING

 Assessing the current HR capacity

 Forecasting HR requirements
 Gap analysis
 Developing HR strategies to support organizational strategies

Assessing current HR capacity

Based on the organization's strategic plan, the organization needs to assess the current HR
capacity of the organization. The knowledge, skills and abilities of the current staff needs 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. An employee's
performance assessment form can be reviewed to determine if the person is ready and willing to
take on more responsibility and to look at the employee's current development plans.

Forecasting HR requirements

HR needs are to be forecasted 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, one must also assess the challenges that one will have in
meeting staffing needs, based on the external environment. To determine external impacts, one
may consider some of the following factors:

 How does the current economy affect work and ability to attract new employees?
 How do current technological or cultural shifts impact the way the company work and the
skilled labor they require?
 What changes are occurring in the country’s labor market?
 How is the community changing or expected to change in the near future?

Gap analysis

The gap between where the organization wants to be in the future and where it is right now is to
be determined. The gap analysis includes identifying the number of staff and the skills and
abilities required in the future in comparison to the current situation. Questions to be answered
include:

 What new jobs will the firm need?

 What new skills will the firm require?
 Do the present employees have the required skills?
 Are employees currently in positions that use their strengths?
 Does the firm have enough managers/supervisors?
 Are current HR management practices adequate for future needs?

Developing HR strategies to support organizational strategies

There are five HR strategies for meeting organization's needs in the future:

 Restructuring strategies
 Training and development strategies
 Recruitment strategies
 Outsourcing strategies
 Collaboration strategies

1. Restructuring strategies: This strategy includes:

 Reducing staff either by termination or attrition

 Regrouping tasks to create well designed jobs
 Reorganizing work units to be more efficient

2. Training and development strategies: This strategy includes:

  Providing staff with training to take on new roles
 Providing current staff with development opportunities to prepare them for future jobs in
the organization

3. Recruitment strategies: This strategy includes:

 Recruiting new staff with the skill and abilities that the organization will need in the
future
 Considering all the available options for strategically promoting job openings and
encouraging suitable candidates to apply

4. Outsourcing strategies: This strategy includes:

 Using external individuals or organizations to complete some tasks

Many organizations look outside their own staff pool and contract for certain skills. This is
particularly helpful for accomplishing specific, specialized tasks that don't require ongoing full-
time work.

5. Collaboration strategies

Finally, the strategic HR planning process may lead to indirect strategies that go beyond the
organization. By collaborating with other organizations one may have better success at dealing
with a shortage of certain skills.

Types of collaboration could include:

 Working together to influence the types of courses offered by educational institutions

 Working with other organizations to prepare future leaders by sharing in the development
of promising individuals

 Sharing the costs of training for groups of employees

 Allowing employees to visit other organizations to gain skills and insight.

GUIDELINES FOR MAKING SHRP EFFECTIVE

Some of the suggestions for making HR planning effective are as given below:

1. Integration with Organizational Plans. Human resource planning must be balanced with
organizational plans. It must be based on the organizational objectives and plans. This
requires development of good communication channels between organization planners and
the human resource planners.
2. Period of HR Planning. Period of the planning should be appropriate to the needs and
circumstances of the enterprise in question. The size and structure of the enterprise as well
as the anticipated changes must be taken into consideration.

3. Proper Organization. To be effective, the planning function should be properly

organized. If possible, within the human resource department. A separate cell or committee
should be constituted to provide adequate focus and to coordinate planning work at various
levels.

4. Support of Top Management. To be effective in the long run, manpower planning must
have the full support of the top management. The support from top management is
essential to ensure the necessary resources, cooperation and support for the success of the
planning.

5. Involvement of Operating Executives. Human resource planning is not a function of

manpower planners only. To be effective, it requires active participation and coordinated
efforts on the part of operating executives. Such participation will help to improve
understanding of the process and thereby reduce resistance.
6. Efficient and Reliable Information System. To facilitate human resource planning, an
adequate database must be developed for human resources.

7. Balanced Approach. The human resource experts should give equal importance to both
quantitative and qualitative aspects of manpower. Instead of matching existing people with
existing job, stress should be laid on filling future vacancies with right people. Promotion
should also be considered carefully. Career planning and development, skill levels, morale,
etc. should be given due importance by the planners.