HUMAN RESOURCE PLANNING
• Right number of people with right skills at
right place at right time to implement
organizational strategies in order to
achieve organizational objectives
• In light of the organization’s objectives,
corporate and business level strategies,
HRP is the process of analyzing an
organization’s human resource needs
and developing plans, policies, and
systems to satisfy those needs
HUMAN RESOURCE PLANNING
• Setting human resource
objectives and deciding how to
meet them
• Ensuring HR resource supply
meets human resource
demands
HRP Process
• Interfacing with strategic planning and
scanning the environment
• Taking an inventory of the company’s
current human resources
• Forecasting demand for human
resources
• Forecasting the supply of HR from within
the organization and in the external
labor market
HRP Process Cont.
• Comparing forecasts of demand
and supply
• Planning the actions needed to
deal with anticipated shortage or
overages
• Feeding back such information
into the strategic planning
process.
Example of the Basic Human
Resources Planning Model
Organization
al Objectives
Human Resource
Requirements
Human Resource
Programs
Feasibility
Analysis
HRP Model
• Strategic Human Resource Planning
– Links 1 & 5: HR objectives are linked to
organizational objectives and planning
• Designed to insure consistency between
organization's strategic planning process and
HRP.
– So objectives of strategic plan are feasible
and
– HR programs are designed around what
organizational objectives and strategies
require in terms of human resource goals
Example of the Basic
Human Resources Planning
Model
Organization
al Objectives
1
2
Human Resource
Requirements
3
Human Resource
Programs
Feasibility
Analysis
4
5
HRP Model Cont.
• Operational Human Resource
Planning
– Steps 2,3, & 4
• Ensure HRP programs are
coordinated and allows the
organization to meet its human
resource requirements.
Example of the Basic Human
Resource Planning Model
Open new
product line
Open new
factory and
distribution
system
Develop staffing for
new installation
1
•Production
workers
2
Recruit skilled
workers
3
Develop technical
training programs
•Supervisors
•Technical staff
Recruiting and
training
programs
feasible
Transfers
infeasible
because of lack
of managers
with right skills
Transfer managers
from other facilities
•Other managers
4
Develop new
objectives
and plans
Recruit managers
from outside
6
5
Too costly to hire
from outside
Link 1:
Determine Demand
(labor requirements)
• How many people need to be working and in
what jobs to implement organizational strategies
and attain organizational objectives.
• Involves forecasting HR needs based on
organizational objectives
• Involves consideration of alternative
ways of organizing jobs (job design,
organizational design or staffing jobs)
• Example - Peak production could be handled by
temporary workers or assigning overtime.
Machine breakdowns assigned to maintenance
department or handled by machine operators
Link 2: Determine HR Supply (availability)
• Choose HRM programs (supply)
• Involves forecasting or predicting effect of
various HR programs on employee flowing
into, through and out various job
classifications.
• First determine how well existing programs are
doing then forecast what additional programs
or combination of programs will do
• Need to know capabilities of various programs
and program combinations
Determine Feasibility Links 3 & 4
• Capable of being done
– Requires knowledge of programs, how
programs fit together and external
environmental constraints (e.g., labor force,
labor unions, technology created skill
shortages) and internal environmental
constraints (skill shortages within the
organization, financial resources, managerial
attitudes, culture)
• Do the benefits outweigh the costs
– Difficulty in quantifying costs and benefits
Revise Organizational Objectives
and Strategies Link 5
If no feasible HR program can be
devised, the organization must
revise strategic plans.
Shortcomings of the model HRP in Practice
• Oversimplification of planning
process -Planning does not normally
proceeds till find first acceptable
plan
• More than one set of HR goals to
satisfy link 1 and more that one
acceptable plan to satisfy link 2 so:
• Typically choose the best HR goal
for the strategic plan and the best
program to satisfy that HR goal
Shortcomings of the model HRP in Practice
• Oversimplification of the benefit of planning is
the specific plans that result
– Planning process has value in and of itself
• HRP in practice is usually less rational and may
omit one or more of the steps
– May lack knowledge required for forecasting
– Incorrect assumptions about effectiveness of
HR programs
– Does not engage in strategic planning
– Resistance to change present HR systems
HRP should be :
• Done to guide and coordinate all HR
activities so they work together to support
the overall strategy
• Responsive to internal and external
environment
• Planning - done in advance
• Strategic - linked with higher level
planning
Human Resource Forecasting
• Process of projecting the
organization’s future HR needs
(demand) and how it will meet those
needs (supply) under a given set of
assumptions about the
organization’s policies and the
environmental conditions in which it
operates.
• Without forecasting cannot assess
the disparity between supply and
demand nor how effective an HR
program is in reducing the disparity.
Forecasting as a Part of HRP
Choose human
resource programs
DEMAND
FORECASTING
Determine
organizational
objectives
Internal programs
• External selection
•Transfer
• Executive
exchange
•Career planning
Aggregate
demand
forecast
External programs
• Recruiting
•Promotion
Demand
forecast for
each objective
SUPPLY
FORECASTING
•Training
•Turnover control
Internal supply forecast External supply forecast
Does aggregate
supply meet
aggregate
demand?
Aggregate
supply forecast
No
Yes
Go to feasibility analysis steps
Internal Supply Forecasting
Information
• Organizational features (e.g.,
staffing capabilities)
• Productivity - rates of
productivity, productivity
changes
• Rates of promotion, demotion,
transfer and turnover
External Supply Forecasting
Information
• External labor market factors
(retirements, mobility, education,
unemployment)
• Controllable company factors on
external factors (entry-level
openings, recruiting,
compensation)
Demand Forecasting
Information
• Organizational and unit strategic
plans
• Size of organization
• Staff and Managerial Support
• Organizational design
Considerations in Establishing
a Forecasting System
• How sophisticated
• Appropriate time frame
• Subjective versus objective
forecasting methods
System Sophistication
• Organizational size
– large organizations require more complex
forecasting systems and likely to have the
required skilled staff
• Organizational complexity
– complex career paths and diverse skill
requirements lead to more complex
forecasting systems
• Organizational objectives
– the greater the gap between current HR
situation and desired HR situation the more
sophisticated the system
• Organizational plans and strategies
– the complex the plans are the more complex
the forecasting system
Forecasting Time Frame
Depends on degree of environmental
uncertainty
Factors creating uncertainty (shortening
time frame)
– many new competitors, changes in technology,
changes in social, political and economic climate,
unstable product demand
Factors promoting stability (longer time
frame)
– strong competitive position, slowly developing
technology, stable product demand.
Subjective VS. Objective
Forecasting
Objective is inappropriate when:
– Lack expertise to use objective
methods
– Lack the historical data or HR data
base is inadequate
– Forecasting horizon is too long for
the available objective method
Demand Forecasting Methods
•
•
•
•
•
Delphi Method
Staffing Table Approach
Regression Analysis
Time Series Analysis
Linear Programming
Supply Forecasting Methods
•
•
•
•
•
Skills Inventory
Replacement Charts
Succession Planning
Flow Modeling/Markov Analysis
Computer Simulations