Human Resource Planning Crompton Greaves is a private sector company engaged in designing and manufacturing electrical products and services. It is a subsidiary of the U.S. $3 billion multinational Avantha Group. It is well known for its HR policies and programmes. In fact, it has won quite a few awards for its unique HR practices over several decades. The businesses of the company are built upon five HR values: leading-edge knowledge, nurturing, customer orientation, performance excellence, and intellectual honesty. Further, it has also developed positive and negative behavioural indicators for each of these values. The company has a well-established and standardized procedure for developing and executing its HR plans. It has a strong conviction about the necessity and significance of involving line managers in the process of HR planning. For instance, it has established an internal HR Council comprising all business heads. This high-level HR council plays an active role in all the HR planning and implementation process of the HR department. Crompton Greaves also believes firmly in goal-setting exercises for its employees as part of the HR planning process so that the performance excellence threshold improves continuously. Over a period of time, the successive HR plans of Crompton Greaves brought out several changes in the HR activities of the organization. Currently its compensation philosophy focuses on differentiation based on professionalism, performance excellence and the complexity of responsibilities. Its training policy emphasizes on a corporate training calendar for planning and conducting training programmes. Lastly, its recognitions and reward system now includes financial and non-financial performance enablers. The HR planning process of Crompton Greaves and its accomplishments clearly establish the relevance of good HR plans for the success of an organization. Let us now discuss the different aspects of HR planning in this chapter. After reading this class, you should be able to 1. 2. 3. 4. Understand the significance and character of human resource planning List the factors affecting human resources planning Elucidate the process of human resources planning List the barriers to an effective human resource planning Human Resource Planning Human resource planning is a process of identifying and then matching the human resource requirements and availability in order to determine the future HR activities of the organization on the basis of the overall organizational objective Need for Human Resource Planning Shortage of Skills: These days we find shortage of skills in people. So it is necessary to plan for such skilled people much in advance than when we actually need them. Non-availability of skilled people when and where they are needed is an important factor which prompts sound Human Resource Planning. Frequent Labor Turnover: Human Resource Planning is essential because of frequent labor turnover which is unavoidable by all means. Labor turnover arises because of discharges, marriages, promotion, transfer etc which causes a constant ebb and flow in the workforce in the organisation. Changing needs of technology: Due to changes in technology and new techniques of production, existing employees need to be trained or new blood injected into an organisation. Need for Human Resource Planning Identify areas of surplus or shortage of personnel: Manpower planning is needed in order to identify areas with a surplus of personnel or areas in which there is a shortage of personnel. If there is a surplus, it can be redeployed, or if there is a shortage new employees can be procured. Changes in organisation design and structure: Due to changes in organisation structure and design we need to plan the required human resources right from the beginning. Objective of Human Resource Planning Assessing Future Recruitment Requirements Optimum Utilization of Available Human Resource Developing Training and Retraining Programmes Formulating Compensation Policies Determining Management Development Programmes Gaining Competitive Advantage Shaping Future Plans and Strategies Factors affecting Human Resource Planning Strategy of the organization, Culture of the organization, Competitive and financial environment, Current organizational situation, and Quantity and skills levels of human resources required Human Resource Planning Process Steps in a HR planning process are: i. considering organizational objectives and strategies, ii. assessment of external environment, iii. preparation of in-house skill and competency inventory, iv. HR forecasting—need assessment, v. HR forecasting—estimation of availability, and vi. developing HR plans and programmes. Setting Organizational objectives & strategies Scanning the environment Preparing in-house skill and competency inventory HR forecasting-need assessment HR forecasting -estimation of availability Developing HR plans and Programmes Recruitment/reduction Step-1 Considering organizational objectives and strategies The organizational strategy along with the mission and vision statement clearly expresses the future intent of the organization HR plans are generally guided by the overall organizational objectives and strategies. Step-2 Assessment of external environment Step-2 Assessment of external environment-continued Organizations undertake environmental scanning to identify the changes in the external environment purpose of environmental scanning is to examine the business environment to seize the opportunities and tackle the threats. External environment are influenced by Economic situation Legislative measures Labour market scenario Technological advancement Step-3 Preparation of In-House Skills and Competency Inventory A compilation of skills, competencies and qualifications of the entire workforce is described as a skill inventory Skill Inventory can be prepared through (i) Skills Audit (assessing the current skill levels of a firm). It involves assessing the performance of the employees from the task perspective (ii) Core Competency Analysis (assessing the extra-ordinary abilities of the firm). These abilities may be its advanced technology, well-reputed management, problem-solving ability, employees’ and KSA Step-4 HR Forecasting—Need Assessment Forecasts involve estimating the future requirements of the organization in terms of the nature and the number of people Forecasting techniques commonly used for human resource forecasting are HR Forecasting—Need Assessment continued HR Forecasting— Ratio Analysis Ratio analysis is the analysis of the relationship between any two numerical variables. It presumes a certain relationship between two given variables and, using that relationship, predicts the future HR requirements HR Forecasting—Delphi Technique The Delphi technique is basically a group-based systematic forecasting method This technique does not require any face-toface participation by the experts This method aims at maximizing the benefits and minimizing the dysfunctional aspects of group decision-making as it eliminates group dynamics and individual dominance from the process HR Forecasting—Normal Group Technique It is an interactive mode of decision-making Each expert in a group independently develops HR requirements and presents it before other experts in the group Each member’s proposal is relatively graded and the top-ranked proposal is selected as the final HR forecast HR Forecasting— Managerial Judgement The forecasting in Managerial Judgement is based on the managers’ subjective views on the possible human resource requirements in the future Forecasts are made about the HR requirements usually by the senior managers of the organization based on their experience. Types of Managerial Judgement (i) Bottom-up approachIn this method, The process of HR forecasting begins with the lowest level of the managerial hierarchy and The managers in charge of each division or department forecast the HR requirements. This forecasting process is then moved up gradually to the higher levels of the management (ii) Top-down approachIn this method, experts working at the highest levels of the management forecast the HR needs of the organization on the basis of the information available and the field expertise. HR Forecasting— Work Study Technique It aims at examining the business operations to achieve the optimum utilization of the human and physical resources available. The major purpose of this technique is to improve the employees’ productivity and the organizational efficiency. This technique is normally carried out through method study and work measurement techniques HR Forecasting— Zero-Base Forecasting Zero-base forecasting requires lines managers to justify the need to continue with the positions or jobs that fall vacant in their department. It does not consider any position as eligible for routine continuance This method requires managers to conduct a comprehensive study of the utility of each vacancy before seeking replacements. This technique is derived from the widely popular concept of zero-base budgeting HR Forecasting— Simulation Model Simulation model is a mathematics-oriented, software-enabled technique This model simulate the HR requirements and availability to determine the likely gap between the demand for and the supply of human resources The working of the simulation model involves asking several what-if questions to develop alternatives in the forecasting process. HR Forecasting— Human Resource Allocation Approach HAPP method has four components: (i) employees, (ii) functions, (iii) a matching model, and (iv) a formal rule structure This method allows comprehensive modeling of the interaction among these components The matching model deals with allocation of different jobs to employees An organization would make HR forecasting based on the specific outcome of the matching model HR Forecasting—Estimation of Availability This process involves the estimation of the availability of the required number of employees The techniques for forecasting HR availability through internal sources are Replacement Charts (These are Records that contain details about the currently serving employees and the possible replacements for them in their position) Turnover Rate, Human Resource Management Information System (HRIS), Productivity Level, Overtime and absenteeism, and Succession Planning Step-5 Developing HR Plans and Programmes The estimated HR needs are matched with the estimated HR availability to identify the skill shortage or surplus Based on the outcome, an appropriate HR plans are developed The outcome of such comparisons would be either the recruitment of more employees or a reduction of the existing workforce. Prerequisite for making Human Resource Planning effective Adequate information system: The main problem faced in Human Resource Planning is the lack of information. So an adequate Human resource database should be maintained/developed for better coordinated and more accurate Human Resource Planning. Participation: To be successful, Human Resource Planning 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 from the top management. Prerequisite for making Human Resource Planning effective Adequate organisation: Human Resource Planning should be properly organised; a separate section or committee may be constituted within the human resource department to provide adequate focus and to coordinate the planning efforts at various levels. Human Resource Planning should be balanced with corporate planning: Human resource plans should be balanced with the corporate plans of the enterprise. The methods and techniques used should fit the objectives, strategies and environment of the particular organisation. Appropriate time horizon: The period of manpower plans should be appropriate according to the needs and circumstances of the specific enterprise. The size and structure of the enterprise as well as the changing aspirations of the people should be taken into consideration. Barriers to HR Planning Process Insufficient Realization of the Importance of HR Plans Glut in the Indian Labour Market Union Resistance Cost–Benefit Misconceptions Absence of Coordination Future Uncertainty Case Study: Unique Airways Unique Airways is a large airline company in India with over 300 domestic flights and 30 international flights to all the major cities. The company has a strong workforce of 10,200 employees, including 1,500 pilots and 1,100 aircraft maintenance engineers. It figured among the top-five airline companies in the country. The company has an excellent work culture and developed a high level of commitment and involvement in its workforce. It won several awards for its distinct HR practices. The HR department of the airlines is headed by HR Director Ramesh Divan, who is assisted well by a team of committed HR professionals. A year back, Unique Airways initiated an ambitious expansion scheme to double its operations. The company directed the HR department to recruit and train the required number of employees to feed its expansion scheme. Subsequently, the HR department formed a panel to scan the external environment. After extensively scanning the economic, political and labour market environment including industry performance, it prepared a detailed report and submitted it to the HR manager. The report stated that the domestic labour market conditions were difficult for jobs like pilots and maintenance engineers due to a vibrant and booming economy. Alternatively, the company could exercise the option of employing foreign pilots and maintenance engineers. Although foreign employees are readily available, their salaries and other allowances are on an average 40 per cent more than their Indian counterparts. Still, the panel was in favour of appointing foreign employees on the ground that the aviation industry was expected to perform well in the future and the expected increase in the revenue could easily compensate the wage differences. The report thus recommended the appointment of foreign pilots and flight engineers in substantial numbers. It was subsequently implemented and the company gradually appointed foreign pilots and engineers in sizable numbers. Soon after these appointments, however, the economy was gripped by recessionary conditions. The aviation industry proved to be no exception. Unique Airways witnessed a slowdown in its passenger traffic, especially on the international routes. Its sales and profits came under increasing pressure. The management found the salary bill of the foreign pilots and engineers unbearable and unreasonable. They began to blame the HR department for not assessing the external environment properly and for making extraneous recommendations. However, the HR Director resolutely defended the panel by arguing that its recommendations were highly relevant at the time of its submission. He contended that the economy turned weak suddenly and most unexpectedly. However, the management did not accept the view of the HR director and seriously pondered a future course of action. Questions for discussion 1. What is your assessment of the developments in Unique Airlines? 2. Do you agree with the view of the management that the panel misguided it? 3. If you were to be the panel member, what would be your recommendation?
