Human Resource
What is HRP?
It is concerned with ensuring that the
enterprise’s future needs for labor & skills
are met.
It translate the org’s objectives into terms
of the workers needed to meet these
HRP systematically forecasts an org’s future
demand for & supply of employees.
All these definitions contain similar features
A Strategic
Long term approach
A Comprehensive staffing plan
Covering all HR activities from recruitment through
training development and career mgt to the
separation of employees by retirement &
– And a close relationship with organizational strategies
& objectives
Its overall purpose is to
– ensure the effective mgt of HR by providing
the required quantity & quality of employees
where & when necessary.
Importance of Human
Resource Planning
HRP provides the foundations for establishing
an effective HRM program.
 It coordinates all the HRM functions.
 It allows the HRM functions to position itself
to take the best advantage of fluctuations in
the economy or the labor mkt.
 It saves the org from the costs of failure of
inadequate HR plan
– Like unstaffed vacancies
– Expensive replacement training
– Over-hiring
The Process of Human
Resource Planning
HRP is a systematic process.
 Three important components of HRP
model are:
– Labor Demand Forecast
– Labor Supply Analysis
– Balancing Supply & Demand
The process is cyclical & ongoing
Feedback is important for subsequent forecasts.
– It is a key component of HRP
– It involves estimating the number & type of Y
– Highly computerized method or simple ‘rule of thumb’
may be used.
– But choice depends on the specialists, complexity of
the org, mkt factors & external env.
– It is more of an art than science.
– There are two approaches to demand forecasting:
Quantitative & Qualitative
– The quantitative (or top down) approach involves
the use of statistical or mathematical techniques.
– Quantitative techniques can be divided into
indexation, trend analysis & simulation
– Forecasts of employment requirements in relation to
one or several organizational indices are known as
– The production function model: - assumes a
continuing relation between output & employment
– Therefore HR needs can be determined according to
a simple equation:
NEW HR = (New output/ Former output) * Former HR
Ghosh’s refined Production Function Model:
takes the further factor of productivity into
account, producing a slightly more complex
NEW HR = Change in productivity {(New output/
Former output) * Former HR}
– This may be suitable for small org which can easily
measure output & productivity.
Work Study Model: heavily depends on
the sales forecasts & assumes constant
standard processes.
Linear Regression , Linear
programming, aggregate forecasting:
use one or several variables seen to be
closely related to labor needs.
Trend analysis:
Based upon a past HR growth.
The simplest form in small org is – SAB (same as
before) approach.
Labor Wastage Analyses: establish the trends (rise
& falls) in employees leaving orgs (retirements,
resignations, dismissals), often by section, job category
& level using the simple equation:
Labor Wastage =(Number of leavers in a period/
Average labor force in a period) * 100%
Job Matrix Approach:
considers labor movement by dept, job categories & through
hierarchical levels.
Actuarial Approaches:
use statistical methods & models to predict future HR needs on the
basis of avg. & means.
Markov Models:
are more complex statistical method
Cohort Analyses:
Single out specialist groups (cohorts) of Y, & chart their progress
through the org, The result identifies internal Hr Movement
thorough the org & therefore likely recruitment need in future.
Highly computerized system.
Based upon multiple variable like : new venture
analyses, change/optimization/ Renewal models,
probability forecasts, cross-impact & network analyses.
Once demand is done then it must determine if the
numbers & types of employees required are available.
It must also determine when & where they will be
Supply can come from either internal or external
Internal Supply:
Begins with info from staffing establishment
This charts usually indicates actual jobs, their
present incumbents & present & future
Skill inventories are also also valuable source Y
– It represents a comprehensive picture of the level of
skills in an org
External Supply:
If an org lacks a sufficient internal supply of
employees for promotion, or at the entry level
positions it will consider the external sources.
Many factors influences the external supply –
demographic changes, national, international &
regional economies.
Balancing Labor Demand & Supply:
HRP strives for an appropriate balance between labor
demand & supply.
Supply analyses determine how employees with the
required qualifications & personal qualities can be
attracted to fill job vacancies.
Since it is difficult to attract advanced skilled employees
this phase of planning is becoming more crucial.
Other options to full time job is – part time employment
job sharing, contractual positions etc.
Appropriate balancing needs to be estb. between hiring
& firing as it affects productivity, moral, career
opportunity & other legislative requirements like EEO.
Drawbacks of Human
Resource Planning
Too difficult & time consuming
Requires HR specialists – who are rare & expensive
Complexity of internal & external environment of a
particular organization.
Culture & Structure of the org are very difficult to alter.
Political & economical conditions may change during the
long process of HRP.
Top mgt may not understand the need for change.
Benefits of Human
Resource Planning
Better use of HR.
Organizational & employee objectives can be more closely matched.
Substantial improvement in productivity & profitability can be
Recruitment at right time at right cost in line with future org
Ideal labor & under supply can be avoided.
Labor surplus can be used for development of new opportunities.
Future skill needs can be met by timely training & development
Morale can be maintained by smooth mgt of career.
Likely redundancy can be managed effectively with minimum
Overall HRP is a means of ensuring that all HRM activities are
effectively integrated with business strategies & HR functions
receive appropriate recognition
Effective Human
Resource Planning
Effective HRP depends on :
– Top mgt understanding & commitment
– Recognition of equal importance of HR & other
organizational resources.
– An understanding of the crucial link between internal
& external env. & org strategies.
– Effective link between HRP & HRM
– Provision of adequate staff, time & resources for HRP.
– Effective HRIS.
Environment of Human
Resource Planning
All org exists in broad economic environment.
This economic env may either assist or hinder HRP.
Peter Blunt has categorized env into 4 groups:
– Placid randomized – stable eco situation with separate org in clear &
traditional mkt.
– Placid, clustered – env is relatively stable & certain but comprised of
larger org.
– Disturbed, Reactive – flexible org facing greater competition
– Turbulent – the present stage of development, characterized by rapid
change, frequent mergers & takeovers.
The first three categories are largely historic.
Since dif org operates under dif env, astute mgr needs to identify
their org’s particular industry & socio-economic env & then develop
staffing plans with these aspects keeping in minds.
Organizational env consists of
– Conditions
– Circumstances
– Influences
These factors affect org’s ability to achieve its
Every org exists in an env which is both internal &
external in nature.
Both Internal & external env are composed of 5
Physical, Technological, Political, Economic & Social.
Major challenge for HR Mgr – not only to understand &
cope with the env but also to influence them.
External & Internal
Environment of Human
Resource Planning
External env – exists outside the org.
External environment can have a significant impact on
policies, strategies & plans of HRM.
By analyzing ex env. HR mgr can assess likely current &
future changes and determine possible impact on its
External env factors include: physical, technological, social,
demographic, cultural, political & economic aspects.
– Physical factors:
 Includes: climate, location, transportation facilities & general
attractiveness of the area in which org are located.
 Can have positive or negative influence on the attraction &
retention of employees.
– Technological factors:
 It provides an important basis for improving
productivity & Competitiveness.
 Challenge of HR mgr is to assess the impacts of tech on
Y numbers, work skills & career opportunities.
– Economic & Labor Market factors:
 Inflation, recession has severe impact of HRP.
 Increased international competition.
Other External Factors………..
– Political Factors
– Social Factors
– Age Distribution
– Women in Work Force
– Rising Education Level
– Increasing Service Job
Cultural Change
– Employee Rights
– Work & Leisure
Internal env – may hinder or assist in goal achievement.
– Ownership:
 May influence the nature of HRP by restricting or encouraging
proposed changes according to the practice or traditions of the
parent org.
– Size:
 Influences its degree of complexity including features such as lines
of communication, possible feelings of alienation among
– History & Structure:
 May also affects employee recruitment & maintenance plans.
Formulating Human
Resource Planning
Once Labor Demand forecasts & supply analysee have been conducted and
compared – a series of staffing plans need to be developed, in line with
corporate level strategies.
The component of HRP will include:
– integrated plans for future work & job design
– Recruitment
– Selection
– Training & Development
– Career mgt
– Succession
– Remuneration
– Separation & retirement/retrenchment
– Reward systems
– Performance mgt
An integrated approach is essential not only for good
HRM practice but also to ensure that org objectives,
structure & cultures are effectively & efficiently
Effective HRP also recognizes – that the best plan are
likely to be disrupted by internal & external changes.
So, proactive HR mgr takes care to include a series of
contingency plans.
HRP should also be cyclical, involving continuous
monitoring & review.