Unit-II: Human Resource Planning: Process of Human Resource Planning, Objectives, Need and

Importance of Human Resource Planning, HR Forecasting Techniques, Problems in HRP and

Prerequisites for Successful Human Resource Planning.

HUMAN RESOURCE PLANNING

INTRODCUTION

Human resource is the most important asset of an organization. Human resources planning are
the important managerial function. It ensures the right type of people, in the right number, at the
right time and place, who are trained and motivated to do the right kind of work at the right time,
there is generally a shortage of suitable persons.

The enterprise will estimate its manpower requirements and then find out the sources from which
the needs will be met. If required manpower is not available then the work will suffer. Developing
countries are suffering from the shortage of trained managers. Job opportunities are available in
these countries but properly trained personnel are not available. These countries try to import
trained skill from other countries.

In order to cope human resource requirements, an enterprise will have to plan in advance its
needs and the sources. The terms human resource planning and manpower planning are
generally used interchangeably. Human resource planning is not a substitute for manpower
planning. Rather the latter is a part of the former i.e., manpower planning is integrated with
human resource planning.

“Manpower” or “human resource” may be thought of as “the total knowledge, skills, creative
abilities, talents and aptitudes of an organization's work, force, as well as the values, attitudes and
benefits of an individual involved it is the sum total of inherent abilities, acquired knowledge and
skills represented by the talents and aptitudes of the employed persons;”

DEFINITION HUMAN RESOURCE PLANNING

According to E.W. Vetter, human resource planning is “the process by which a management
determines how an organization should make from its current manpower position to its desired
manpower position.

Through planning a management strives to have the right number and the right kind of people at
the right places, at the right time to do things which result in both the organization and the
individual receiving the maximum long range benefit.”

Dale S. Beach has defined it as “a process of determining and assuring that the organization will
have an adequate number of qualified persons available at the proper times, performing jobs

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which meet the needs of the enterprise and which provide satisfaction for the individuals
involved.”

In the words of Leon C. Megginson, human resource planning is “an integration 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
organizational objectives and satisfy the individual’s needs and goals of organizational members.”

On the analysis of above definitions, human resource planning may be viewed as foreseeing the
human resource requirements of an organization and the future supply of human resources and
making necessary adjustments between these two and organization plans, and 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.

Here, human resource means skill, knowledge, values, ability, commitment, motivation etc., in
addition to the number of employees. Though accomplishment of organizational objectives and
goals is the primary concern of the human resource planning, concern for the aspirations of the
people and their well-being has equal importance in it. In fact, the human resources planning
must result in humanization of work environment.

PROCESS OF HUMAN RESOURCE PLANNING

Analyzing Inventory of Present Forecasting Demand

Organizational Human Resources and Supply of Human
Objectives Resource:

Analyzing Analyzing Analyzing

Organizational Organizational Organizational
Objectives Objectives Objectives

Human resource planning is a process through which the right candidate for the right job is
ensured. For conducting any process, the foremost essential task is to develop the organizational
objective to be achieved through conducting the said process.

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1. Analyzing Organizational Objectives: The objective to be achieved in future in various fields
such as production, marketing, finance, expansion and sales gives the idea about the work to be
done in the organization.

2. Inventory of Present Human Resources: From the updated human resource information
storage system, the current number of employees, their capacity, performance and potential can
be analyzed. To fill the various job requirements, the internal sources (i.e., employees from within
the organization) and external sources (i.e., candidates from various placement agencies) can be
estimated.

3. Forecasting Demand and Supply of Human Resource: The human resources required at
different positions according to their job profile are to be estimated. The available internal and
external sources to fulfill those requirements are also measured. There should be proper matching
of job description and job specification of one particular work, and the profile of the person
should be suitable to it.

4. Estimating Manpower Gaps: Comparison of human resource demand and human resource
supply will provide with the surplus or deficit of human resource. Deficit represents the number
of people to be employed, whereas surplus represents termination. Extensive use of proper
training and development programme can be done to upgrade the skills of employees.

5. Formulating the Human Resource Action Plan: The human resource plan depends on whether
there is deficit or surplus in the organization. Accordingly, the plan may be finalized either for
new recruitment, training, interdepartmental transfer in case of deficit of termination, or
voluntary retirement schemes and redeployment in case of surplus.

6. Monitoring, Control and Feedback: It mainly involves implementation of the human resource
action plan. Human resources are allocated according to the requirements, and inventories are
updated over a period. The plan is monitored strictly to identify the deficiencies and remove it.
Comparison between the human resource plan and its actual implementation is done to ensure
the appropriate action and the availability of the required number of employees for various jobs.

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The objectives of HR planning are as follows:

1. Provide Information: The information obtained through HRP is highly important for
identifying surplus and unutilised human resources. It also renders a comprehensive skill
inventory, which facilitates decision making, like, in promotions. In this way HRP provides
information which can be used for other management functions.

2. Effective Utilisation of Human Resource: Planning for human resources is the main
responsibility of management to ensure effective utilisation of present and future manpower.
Manpower planning is complementary to organisation planning.

3. Economic Development: At the national level, manpower planning is required for economic
development. It is particularly helpful in the creating employment in educational reforms and
in geographical mobility of talent.

4. Determine Manpower Gap: Manpower planning examine the gaps in existing manpower
so that suitable training programmes may be developed for building specific skills, required
in future.

5. To Forecast Human Resource Requirements: HRP to determine the future human resource
needed in an organisation. In the absence of such a plan, it would be difficult to have the
services of the right kind of people at the right time.

6. Analyse Current Workforce: HRP volunteers to assist in analysing the competency of

present workforce. It determines the current workforce strengths and abilities.

7. Effective Management of Change: Proper HR planning aims at coping with severed changes
in market conditions, technology products and government regulations in an effective way.
These changes call for continuous allocation or reallocation of skills evidently in the absence
of planning there might be underutilisation of human resource.

8. Realising Organisational Goals: HRP helps the organisation in its effectively meeting the
needs of expansion, diversification and other growth strategies.

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Importance of Human Resource Planning

Human Resource Planning is important in several aspects that revolve around working toward
organizational goals. It is the baseline for all functions related to HR like recruitment, onboarding,
reviewing, etc.

1. Increasing productivity: In HR planning, maximizing productivity is crucial. Efficient use of

resources and minimizing waste, achieved through staffing activities like training, performance
appraisal, and fair compensation, leads to higher productivity.
HR planning ensures employees are skilled, motivated, and properly rewarded, enhancing overall
efficiency and productivity in the organization.

2. Implementing managerial activities: The success of managerial tasks like planning, organizing,
directing, and controlling relies heavily on having the right people (human resources) in place.
Human resources play a crucial role in making sure these managerial activities work effectively.
So, HRP, which is about having the right staff in the right positions, is essential for all managerial
functions to succeed. In simpler terms, having the right people is vital for any business to run
smoothly.

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3. Motivating employees: HR Planning goes beyond just placing the right people in the right
roles. It also involves motivating employees through programs like incentives. These incentives
are crucial because they encourage active participation and help in retaining employees within the
organization.
So, within the scope of HR planning, designing effective incentive plans becomes extremely
important. It ensures not only hiring suitable individuals but also keeping them engaged and
motivated to contribute their best to the organization.
4. Improving employee relations: Strong human relations are vital for a company’s stability. This
strength is achieved through effective control, clear communication, and strong leadership.
Human resources planning plays a key role in this.
By focusing on training and developing the workforce, HR Planning ensures that employees are
skilled and cooperative. This in turn fosters better human relations within the organization.
Essentially, HR planning helps create a positive work environment where employees understand
their roles, communicate well, and cooperate effectively.

5. Coping with change: Human resource planning is important for organizations to cope with
changes in the external environment. It enables the development and implementation of strategies
to enhance employee and organizational performance.

6. Evaluating demand and supply of resources: Human resource planning ensures there is the
right number of employees (demand) to meet the company’s needs without overstaffing or
understaffing. It’s like finding the perfect balance, ensuring there are enough people to get the job
done efficiently without unnecessary costs or gaps.

7. Increasing quality of hire: Human resource planning impacts the quality of applicants an
organization attracts. Companies practicing HR planning know what qualities they need in
applicants, making their hiring decisions more precise and effective. This results in attracting
candidates who are better suited for the organization’s needs.

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8. Growing a competitive advantage: As discussed, organizations that invest in human resource
planning can identify and nurture the best talents. By having the right people with the right skills
in the right places, a company gains a competitive edge.

They can adapt to changes faster, innovate more effectively, and deliver superior products or
services. In essence, human resource planning helps companies stay ahead of the competition by
ensuring they have the right team to tackle challenges and seize opportunities.

NEED FOR HRP

Forecast future personnel needs: To avoid the situations of surplus or deficiency of manpower in
future, it is important to plan your manpower in advance. For this purpose a proper forecasting of
futures business needs helps you to ascertain our future manpower needs. From this angle, HRP
plays an important role to predict the right size of manpower in the organization.

Cope with change: HRP enables an enterprise to cope with changes in competitive forces,
markets, technology, products and government regulations. Such changes generate changes in job
content, skills demands and number of human resources required.

Creating highly talented personnel: Since jobs are becoming highly intellectual and incumbents
getting vastly professionalized, HRP helps prevent shortages of labor caused by attrition. Further
technology changes would further upgrade or degrade jobs and create manpower shortages. In
these situations only accurate human resource planning can help to meet the resource
requirements. Further HRP is also an answer to the problems of succession planning.

Protection of weaker sections: A well-conceived personnel planning would also help to protect
the interests of the SC/ST, physically handicapped, children of socially oppressed and backward
classes who enjoy a certain percentage of employments notwithstanding the constitutional
provisions of equal opportunity for all.

International strategies: International expansion strategies largely depend upon effective HRP.
With growing trends towards global operations, the need for HRP further becomes more

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important as the need to integrate HRP more closely into the organization keeps growing. This is
also because the process of meeting staffing needs from foreign countries grows in a complex
manner. Foundation of personnel functions: HRP provides essential information for designing
and implementing personnel functions such as recruitment, selection, personnel development,
training and development etc.

Increasing investments in HR: Another importance is the investment that an organization makes
in human capital. It is important that employees are used effectively throughout their careers.
Because human assets can increase the organization value tremendously as opposed to physical
assets

Resistance to change & move: The growing resistance towards change and move, self evaluation,
loyalty and dedication making it more difficult to assume that organization can move its
employees everywhere. Here HRP becomes very important and needs the resources to be planned
carefully.

Other benefits: Following are the other benefits of HRP.

 Upper management has a better view of HR dimensions of business

 Management can anticipate imbalances before they become unmanageable and expensive.
 More time is provided to locate talent
 Better opportunities exists to include women and minorities in future growth plans
 Better planning of assignments to develop managers
 Major and successful demands on local labor markets can be made.

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 HR FORECASTING TECHNIQUES

There are number of techniques of estimating/forecasting human resources demand:

(a) Managerial Judgment

(b) Work Study Technique
(c) Ratio-trend Analysis
(d) Econometric Models
(e) Delphi Model

(a) Managerial Judgment: Managerial judgment technique is very common technique of demand
forecasting. This approach is applied by small as well as large scale organizations. This technique
involves two types of approaches i.e. 'bottom-up approach' and 'top-down approach'. Under the
'bottom-up approach', line mangers send their departmental requirement of human resources to
top management. Top management ultimately forecasts the human resource requirement for the
overall organization on the basis of proposals of departmental heads. Under the Top-down
approach', top management forecasts the human resource requirement for the entire organization
and various departments. This information is supplied to various departmental heads for their
review and approval. However, a combination of both the approaches i.e. 'Participative Approach'
should be applied for demand forecasting. Under this approach, top management and
departmental heads meet and decide about the future human resource requirement. So, demand
of human resources can be forecasted with unanimity under this approach.

(b) Work-Study Technique: This technique is also known as 'work-load analysis'. This technique
is suitable where the estimated work-load is easily measureable. Under this method, estimated
total production and activities for a specific future period are predicted. This information is
translated into number of man-hours required to produce per units taking into consideration the
capability of the workforce. Past-experience of the management can help in translating the work-
loads into number of man-hours required. Thus, demand of human resources is forecasted on the
basis of estimated total production and contribution of each employee in producing each unit
items. The following example gives clear idea about this technique.

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Let us assume that the estimated production of an organization is 3.00.000 units. The standard
man-hours required to produce each unit are 2 hours. The past experiences show that the work
ability of each employee in man-hours is 1500 hours per annum. The work-load and demand of
human resources can be calculated as under:

 Estimated total annual production = 300000 units

 Standard man-hours needed to produce each unit = 2 hrs
 Estimated man-hours needed to meet estimated annual production (i x ii) = 600000 hrs
 Work ability/contribution per employee in terms of man-hour = 1500 units
 Estimated no. of workers needed (iii / iv) = 600000/1500 = 400 units

The above example clearly shows that 400 workers are needed for the year. Further, absenteeism
rate, rate of labor turnover, resignations, deaths, machine break-down, strikes, power-failure etc.
should also be taken into consideration while estimating future demand of human resources/
manpower.

(c) Ratio-Trend Analysis: Demand for manpower/human resources is also estimated on the basis
of ratio of production level and number of workers available. This ratio will be used to estimate
demand of human resources. The following example will help in clearly understanding this
technique.

Estimated production for next year = 1,40,000 units

Estimated no. of workers needed (on the basis of ratio-trend of 1: 200) will be = 700

(d) Econometrics Models: These models are based on mathematical and statistical techniques for
estimating future demand. Under these models relationship is established between the dependent
variable to be predicted (e.g. manpower/human resources) and the independent variables (e.g.,
sales, total production, work-load, etc.). Using these models, estimated demand of human
resources can be predicted.

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(e) Delphi Technique: Delphi technique is also very important technique used for estimating
demand of human resources. This technique takes into consideration human resources
requirements given by a group of experts i.e. mangers. The human resource experts collect the
manpower needs, summarize the various responses and prepare a report. This process is
continued until all experts agree on estimated human resources requirement.

PROBLEMS OF HRP
HRP involves predicting and preparing for the future needs of the workforce, but several factors
can complicate this process. Here are some common Problems organizations face:
1. Uncertain Future Conditions
Predicting the future accurately is challenging due to the unpredictable nature of business
environments. Economic changes, technological advancements, and shifts in market demand can
significantly impact workforce needs.
2. Changing Business Strategies
Frequent changes in business strategies can disrupt the alignment between HRP and
organizational objectives. Shifts in focus or direction may require sudden adjustments in
workforce planning.
3. Lack of Accurate Data
Inaccurate or insufficient data can lead to flawed predictions. Without reliable historical and
current data, organizations may struggle to anticipate future workforce needs accurately.
4. Rapid Technological Advances
Technological advancements can alter skill requirements rapidly. Organizations may find it
challenging to forecast the skills that will be in demand and identify gaps in their workforce.
5. Globalization and Diversity
Globalization has expanded business operations across borders, resulting in diverse workforces
with varying skill sets and cultural backgrounds. Managing such diversity presents unique
challenges.
6. Resistance to Change
Employees may resist changes that affect their roles, causing difficulties in implementing new
workforce strategies. Resistance can impact the successful execution of HRP initiatives.
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 Overcoming Challenges
Addressing these challenges requires a proactive and strategic approach:
 Continuous Monitoring and Adjustments: Regularly monitor changing conditions and update
HRP strategies accordingly to ensure alignment with business dynamics.
 Data Quality Improvement: Invest in robust data collection and analysis processes to ensure
accurate and up-to-date information for forecasting.
 Flexibility in Planning: Design flexible HRP strategies that can adapt to changing business
strategies and market conditions.
 Collaborative Decision-Making: Involve various stakeholders, including top management,
department heads, and employees, in the HRP process to gather diverse insights.
 Skill Development Initiatives: Implement training and development programs to equip
employees with the skills needed to adapt to technological changes.
 Change Management Strategies: When introducing new HRP initiatives, communicate the
benefits clearly to mitigate employee resistance and ensure successful implementation.

SUCCESSFUL HUMAN RESOURCE PLANNING ARE AS FOLLOWS

1. Integration with organizational plans: - Human resource planning must be integrated with the
organizational plans and objectives to be successful. Moreover, there should also be a good
channel of communication between the organizational planners and the human resource planners
to get a successful human resource planning.

2. Period of manpower planning: - The period of manpower planning should have a connection
with the needs and circumstances of the enterprise. The size and structure of an enterprise as well
as the anticipated changes must be taken into consideration while going for manpower planning.

3. Proper organization: - It is necessary to organize the planning function properly in order to

make it successful. It is advisable to have a separate cell or constitute a committee within the
human resource department in order to provide adequate focus and to coordinate the planning
work at various levels.

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4. Support of top management: - The top management should give full support and cooperation
to make the manpower planning effective. The support of top management facilitates the process
of getting necessary resources, cooperation and other things as per requirement to make the
planning successful.

5. Involvement of operating executives: - Human resource planning is not a function of

manpower planners only but also of the operating executives too. An effective manpower
planning highly solicits the active participation and coordination of the operating executives. Such
participation is sought to make the process of manpower planning understandable to everyone so
that chances of resistance can be rooted out in time.

6. Efficient and reliable information system: - An adequate data base must be developed for the
human resources of an organization to facilitate the process of human resource planning.

7. Balanced approach: - Both the quantitative and qualitative aspects of manpower should be
given equal weightage by the human resource experts. Emphasis should be more on filling the
future vacancies with right people rather than matching the existing jobs. The matters of
promotions, career planning and development, skill levels, morale etc. should also be given due
importance by the planners.

Suggestion for effective human resource planning

There is none but the one model to undertake human resource planning as with strategic
planning. The model relies on gap analysis and attempts to link human resource planning to the
overall business planning or strategic planning.

Workforce Analysis: The key component of HR planning is to understand the workforce and to
plan for the projected shortages and surpluses in the specific occupations and skill sets.

Internal Scan: Identification of the internal factors of the organization that may affect the capacity
of HR to meet the organizational goals.

External Scan: Determination of the most important environment factors that are likely to affect
the capacity of workforce under the known issues of operational and HR management.

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Gap Analysis: By analyzing the environmental factors and operational business goals, you have
to find out what the organization’s current and future HR needs are.

Priority Setting and Work Plan: You have to choose what the major human resources priorities
are; and what strategies will be suitable to achieve the desired outcome by considering the
organizational priorities, environmental scan and HR performance related data.

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