UNIT-III

HUMAN RESOURCE PLANNING

INTRODUCTION
Human Resource Planning is concerned with the planning
the future manpower requirement is the organization. HR
manager ensures that the company has the right type of people
in the right number at the right time and place, which are
trained and motivated to do the right kind of work at the right
time. Obviously, human resource planning primarily makes
appropriate projections for future manpower needs of the
organization envisages plan for developing the manpower to
suit the changing needs of the organization from time to time,
and foresees how to monitor and evaluate the future
performance. It also includes the replacement plans and
managerial succession plans.
Human Resource planning is the process by which a
management determines how an organization should move
from its current manpower position to its desired manpower
position. Through planning a management strives to have the
right number and the right kinds 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.
Definitions of Human Resource Planning:
1. Coleman has defined Human Resource Planning as
―the process of determining manpower requirements and the
means for meeting those requirements in order to carry out the
integrated plan of the organization.
2. According to Wikstrom, Human Resource Planning
consists of a series of activities, viz.,
(a) Forecasting future manpower requirements, either in
terms of mathematical projections of trends in the economic
environment and developments in industry, or in terms of
judgmental estimates based upon the specific future plans of a
company;
(b) Making an inventory of present manpower resources
and assessing the extent to which these resources are employed
optimally;
(c) Anticipating manpower problems by projecting present
resources into the future and comparing them with the forecast
of requirements to determine their adequacy, both
quantitatively and qualitatively; and
(d) Planning the necessary programmes of requirements,
selection, training, development, utilization, transfer,
promotion, motivation and compensation to ensure that future
 manpower requirements are properly met.
Coleman has defined Human Resource Planning as ―the
process of determining manpower requirements and the means
for meeting those requirements in order to carry out the
integrated plan of the organization.
Human resource planning is a double-edged weapon. If used properly,
it leads to the maximum utilization of human resources, reduces
excessive labor turnover and high absenteeism; improves productivity
and aids in achieving the objectives of an organization. Faultily used, it
leads to disruption in the flow of work, lower production, less job
satisfaction, high cost of production and constant headaches for the
management personnel. Therefore, for the success of an enterprise,
human resource planning is a very important function, which can be
neglected only at its own peril.
Features of Human Resource Planning:
1.  Well Defined Objectives:
Enterprise’s objectives and goals in its strategic planning and operating
planning may form the objectives of human resource planning. Human
resource needs are planned on the basis of company’s goals. Besides, human
resource planning has its own objectives like developing human resources,
updating technical expertise, career planning of individual executives and
people, ensuring better commitment of people and so on.
2. Determining Human Resource Reeds:
Human resource plan must incorporate the human resource needs of the
enterprise. The thinking will have to be done in advance so that the persons
are available at a time when they are required. For this purpose, an enterprise
will have to undertake recruiting, selecting and training process also.
3. Keeping Manpower Inventory:
It includes the inventory of present manpower in the organization. The
executive should know the persons who will be available to him for
undertaking higher responsibilities in the near future.
4. Adjusting Demand and Supply:
Manpower needs have to be planned well in advance as suitable persons are
available in future. If sufficient persons will not be available in future then
efforts should be .made to start recruitment process well in advance. The
demand and supply of personnel should be planned in advance.
5. Creating Proper Work Environment:
Besides estimating and employing personnel, human resource planning also
ensures that working conditions are created. Employees should like to work in
the organization and they should get proper job satisfaction.

NEED AND IMPORTANCE OF HUMAN RESOURCE

PLANNING
Human Resource planning is the process by which a
management determines how an organization should move
from its current manpower position to its desired manpower
position. Through planning a management strives to have the
right number and the right kinds 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.
Human resource planning is a double-edged weapon. If
used properly, it leads to the maximum utilization of human
resources, reduces excessive labor turnover and high
absenteeism; improves productivity and aids in achieving the
objectives of an organization. Faultily used, it leads to
disruption in the flow of work, lower production, less job
satisfaction, high cost of production and constant headaches for
the management personnel. Therefore, for the success of an
enterprise, human resource planning is a very important
function, which can be neglected only at its own peril.
Coleman has defined Human Resource Planning as ―the
process of determining manpower requirements and the means
for meeting those requirements in order to carry out the
integrated plan of the organization.
Objectives of HR Planning
The major objectives of Human Resource Planning in an
organization are to:
(i) Ensure optimum use of human resources currently employed;
(ii) Avoid balances in the distribution and allocation of human
resources;
(iii) Assess or forecast future skill requirements of the
organization’s overall objectives;
(iv) Provide control measure to ensure availability of necessary
resources when required;
(v) Control the cost aspect of human resources;
 (vi) Formulate transfer and promotion policies.
*** STEPS / PROCESS IN HUMAN RESOURCE PLANNING
Human resource planning refers to a process by which
companies ensure that they have the right number and kinds of
people at the right place, at the right time; capable of
performing different jobs efficiently. Planning the use of human
resources is an important function in every organization. A
rational estimate to various categories of personnel in the
organization is an important aspect of human resource planning.
HRP involves the following steps:
1. Analysis of Organizational Plans and Objectives :
Human resource planning is a part of overall plan of
organization. Plans concerning technology, production,
marketing, finance, expansion and diversification give an idea
about the volume of future work activity. Each plan can further
be analyzed into sub- plans and detailed programmes. It is also
necessary to decide the time horizon for which human resource
plans are to be prepared. The future organization structure and
job design should be made clear and changes in the
organization structure should be examined so as to anticipate its
manpower requirements.
2. Forecasting Demand for Human Resources: Human
resource planning starts with the estimation of the number and
type of personnel required at different levels and in different
departments. The main steps involved in HRP process are
(a) To determine and to identify present and prospective needs of
human resource,
(b) To discover and recruit the required number of persons.
(c) To select the right number and type from the available people.
(d) To hire and place in the positions for which they are qualified,
(e) To provide information to the selected people about the nature of
work assigned to them,
(f) To Promote or to transfer as per the needs and the performance of
employees,
(g) To denote if the employees are disinterested or their performance
is not up to the mark,
(h) To terminate if they are not needed or their performance is below
standard and shows no hopes of improvement.
It is the most crucial and critical area of HRD. These HRD managers
must pay attention to place right man to the right job through
recruitment selection Training and Placement of employees. This calls
for the adoption of a systematic procedure to complete recruitment and
selection.
3. Forecasting Supply of Human Resources: One of the
important areas of human resources planning is to deal with
allocation of persons to different departments depending upon
the work-load and requirements of the departments. While
allocating manpower to different departments, care has to be
taken to consider appointments based on promotions and
transfers. Allocation of human resource should be so planned
that available manpower is put to full use to ensure smooth
functioning of all departments.
4. Estimating Manpower Gaps: Net human resource
requirements or manpower gaps can be identified by comparing
demand and supply forecasts. Such comparison will reveal
either deficit or surplus of human resources in future. Deficits
suggest the number of persons to be recruited from outside
whereas surplus implies redundant to be redeployed or
terminated. Similarly, gaps may occur in terms of knowledge,
skills and aptitudes. Employees deficient in qualifications can
be trained whereas employees with higher skills may be given
more enriched jobs.
5. Matching Demand and Supply : It is one of the
objectives of human resource planning to assess the demand for
and supply of human resources and match both to know
shortages and surpluses on both the side in kind and in number.
This will enable the human resource department to know
overstaffing or understaffing. Once the manpower gaps are
identified, plans are prepared to bridge these gaps. Plans to
meet the surplus manpower may be redeployment in other
departments and retrenchment in consultation, with the trade
unions. People may be persuaded to quit through voluntarily
retirement. Deficit can be met through recruitment, selection,
transfer, promotion, and training plans. Realistic plans for the
procurement and development of manpower should be made
after considering the macro and micro environment which
affect the manpower objectives of the organization.

***** Forecasting Techniques in Human Resource Planning

Forecasting Basics
Forecasting is a systematic process of predicting demand and supply. Human
resources forecasting seeks to secure the necessary number and quality of
employees for a business to achieve strategic goals. Although forecasting
techniques can be complex and full of statistical calculations, a more
practical approach is just as effective and less difficult for a small business
to implement. Demand and supply forecasting techniques use sales or
production projections for the coming year as well as quantitative and
qualitative assessments.
Quantitative assessments identify “how many” and “when,” while
qualitative assessments identify desired personal qualities and role-related
qualifications.
Trend Analysis
Trend analysis is more appropriate for an existing business because it
requires historical staffing data to make future staffing predictions. This
creates a relationship between past and future staffing needs by linking the
two using a performance or financial metric called an operational index. A
service business, for example, might base future staffing requirements on the
number of customers each customer service representative effectively
handled in the past, while a retail business might compare sales volume per
sales employee.
Ratio Analysis
A new business or one having less than five years of historical staffing data,
often uses a ratio analysis forecasting technique. Ratio analysis uses
elements called causal factors that can be linked to and help predict future
staffing needs. A business might identify production or sales volume as a
causal factor and estimate, for example, that it needs one customer service
representative for every five clients or one production line worker for every
5,000 widgets. If projections determine the business will handle 500 clients
or produce 500,000 widgets over the coming year, forecasting sets demand
at 100 employees for each.
Supply Forecasting
Supply forecasting techniques often start internally for human resources.
Replacement charts are a visual tool for identifying internal candidates
available and qualified to fill demand estimations. Replacement charts
include both a hierarchical diagram and information relating to current
employee performance, education and an assessment of how ready the
employee is to move into upward or lateral position. External supply side
forecasting typically involves a labor market analysis that also considers
hiring practice legislation to avoid the possibility of facing a discrimination
lawsuit. Market analysis information such as employment and wage trends is
available on The Society for Human Resource Management website, as well
as national and state labor information websites. Information on these sites
can help businesses document the current strengths and weaknesses of the
workforce, define emerging employment trends and economic opportunities
and assist businesses in finding qualified workers.
HR Forecasting techniques vary from simple to sophisticated ones. Before
describing each technique, it may be stated that organizations generally follow
more than one technique. The techniques are:
There are number of Qualitative techniques of estimating/forecasting human
resources demand:
(a) Managerial Judgment
(b) Work Study Technique
(c) Ratio-trend Analysis (d) Econometric Models
(e) Delphi Model
(f) Other Techniques
(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.
Let us assume that the estimated production of an organisation 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.
(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.
(f) Other Techniques:
The other techniques of Human Resources demand forecasting are specified
as under:
(a) Following the techniques of demand forecasting of human resources used
by other similar organizations
(b) Organization-cum-succession-charts
(c) Estimation based on techniques of production
(d) Estimates based on historical records
(e) Statistical techniques e.g. co-relation and regression analysis.
*** FACTORS AFFECTING HUMAN RESOURCE PLANNING
Three main factors which affect human resource planning are as follows:
1. Existing Stock of Manpower:
The starting point of all the planned processes and the base of manpower
planning is taking the stock of existing manpower.
Following should be studied for this purpose:
(i) Total stock of manpower is divided into groups on the basis of function,
qualification, level of skill, occupation, etc.
(ii) A group wise detailed statement is prepared regarding the number of
workers in the group, their age, qualifications, date of retirement, etc.
2. Wastage:
Another factor affecting human resource planning is wastage. For effective
human resource planning, the adjustment of wastage should be made in the
existing manpower stock of the organization.
3. Future Manpower Requirements:
After analyzing the existing manpower stock and analyzing the various
reasons of wastage, one can easily assess the future requirements of
manpower taking into account the following considerations –
(i) Future plans of the company
(ii) Government plans and programmes
(iii) Employment policy
(iv) Demand and supply of manpower in future
(v) Productivity of labor.

TYPES OF HUMAN RESOURCE PLANNING

The objectives of Human Resource Planning in India, as in

most other developing countries at the macro level, should thus
encompass all aspects of human resource development, from
population planning on the one hand to investments in health,
education, housing and other social welfare services on the
other.
The major components of human resource planning based
on environmental analysis and adjustment are :
(a) Population Planning Employment Planning
(b) Educational Planning
(c) Other aspects of Social and Human Development
The Human Resource plan is a part of the corporate plan.
Without it there can be no Human Resource Plan for human
resources. If there are several imponderables and unpredictable
in the corporate plan, there will be difficulties in Human
Resource Planning. Whether or not the Human Resource
 Planning meets the requirements and is in tune with reality
depends on clarity of goals and the validity of the stated
assumptions. The other important point is the time frame in
defining the future. In Human Resource Planning the future can
be classified into three periods:
(i)the short-range or immediate future;
(ii) the mid-range; and
(iii)the long-range future, none of which can be spelt out in
terms of a set number of days, months or years. The immediate
future may refer to current situation and experiences and may
even concern issues such as overtime and replacements. If there
has been previous planning for human resource such plans can
serve as a guide in the immediate future. If not, a beginning
should be made at once.
The mid-range future has a different time span in various
companies. It can be as short as a few months or as long as
several years. Most would agree upon 2-3 years‘period as a
mid- range.
The long-range plan could be five years, while 10 to 15
years span could be used for a perspective plan. Long-range
plans must be made on the basis of various trends in the
economy and in the labor market, and on long-term trends of
production in the company. Long-range plans are general rather
than a specific, flexible rather than rigid.

Benefits of Human Resource Planning:

HR planning can be a long and tedious process. It involves a lot of work –

brainstorming, debate, decision, analysis, and so much more – but it is one of
the most important tasks that should help the HR team achieve their goals.
The following are the major benefits of human resource planning:
1. Retaining top talents:
Hiring is one thing. But retaining high-performing employees is another.
According to a new study, 60% of workers have quit or considered quitting
their jobs and it’s not because of how much they are paid, but how they are
treated. HR planning encompasses talent retention. The thing is, businesses
lose more money on attrition than on recruitment. So, the lower the attrition
rate, the better for companies.
A high retention rate suggests that a company is doing wrong, especially in
managing their employees. The HR department is in charge of creating
programs that promote the welfare of its employees, such as giving
them access to payday loans, health and wellness benefits, incentives, and
much more.
In addition to providing competitive compensation, planning helps the HR
team identify the factors that keep employees engaged. Employee engagement
is a critical component of talent retention. Research shows that when
employees feel valued within the organization, they are likely to stay.
2. Addressing the organization’s manpower needs:
HR departments are primarily responsible for recruitment and staffing.
Recruiting and screening employees are time-consuming processes that
require detailed attention. They involve many steps, from advertising or
creating job posts, managing application process, screening applicants based
on the qualifications set, interviewing prospective candidates, creating an
offer and contract for successful applicants, on-boarding newly hired
personnel, and training them.
With an effective planning process in place, the HR team can ensure that the
business staffing needs are met. They can prepare ahead of time for any
vacancies should an employee resigns (which can greatly affect productivity).
Also, they can effectively handle the hiring process should there be an urgent
need to ramp up and prevents potential problems that come along with
attrition.
3. Ensuring that the right people are hired:
Another benefit of a recruitment plan is ensuring that only the most qualified
individuals are hired to handle varying roles. Part of HR planning is
determining the skill sets needed for a specific role and creating an
interviewing process so that managers or interviewers can ask the right
questions to their applicants. Companies that have an effective HR planning
in place are prepared for their current and future staffing needs that ultimately
result in business growth and expansion.
4. Training employees:
HR planning also involves creating training models and procedures. After
finding the people who possess the right skill sets, the next thing that the HR
department needs to do is to ensure that they are able to perform their roles
based on the needs of the organization and the customers. Training and on
boarding are also necessary to teach new employees about the company rules
and policies, its culture, ways of working, internal databases, tools and
software, benefits and compensation, and other things they need to know.
HR planning also addresses the need for creating training programs for
current employees. Regardless of qualification and background, most
employees have some weakness in their workplace skills. A clearly defined
training program allows the organization to strengthen the skills of its
employees and equip them with the latest techniques and knowledge to
perform their roles.
5. Managing employees:
While it is the role of managers and supervisors to ensure that their staff
members are able to effectively perform their job, an effective HR planning
process also incorporates employee management, particularly performance
reviews and disciplinary procedures. Standardizing performance reviews, for
example, guide managers in rating the performance of their subordinates and
ensure that every employee is reviewed using the same set of metrics.
Furthermore, standardizing disciplinary procedures sees to it that company
rules are strictly followed and not adhering to them imply consequences.
6. Facilitating expansion programs:
These days, it is not uncommon for companies to undergo expansion
activities. Growth is the goal of every startup. Due to the technological
advances of the modern world, many companies have achieved rapid growth.
While it’s a huge leap for an organization, there is no denying that it can be a
difficult challenge for the HR department.
As a company increases in size, the demand for human resources. Whether
it’s as simple as ramping up through massive hiring, or as complex as mergers
and acquisitions, HR planning is crucial in facilitating company expansion
programs needed to address the growing manpower needs.
7. Coping with change:
In any business organization, change is inevitable. Human resource planning
is utilized to create appropriate measures to deal with change associated with
varying factors, such as customer demands, business expansion, and political
and economic conditions.
Another thing that HR has to cope with is the rapid change in technology.
With such change, job and job requirements also change. Needless to say,
technology has gotten its way into the workforce, taking over repetitive tasks
via automation and the like. Through HR planning, an organization can
forecast and meet the changing needs of manpower.

PROBLEMS IN HUMAN RESOURCE PLANNING

The main problems in the process of human resource planning are as follows:
1. Inaccuracy:
Human resource planning involves forecasting the demand for and supply of
human resources. Projecting manpower needs over a period of time is risky.
It is not possible to track the current and future trends correctly and convert
the same into meaningful action guidelines.
Longer the time horizon, greater is the possibility of inaccuracy. Inaccuracy
increases when departmental forecasts are merely aggregated without critical
review.
Factors such as absenteeism, labor turnover, seasonal trends in demand,
competitive pressures, technological changes and a host of other factors may
turn the rest of manpower plans into fashionable, decorative pieces.
2. Uncertainties:
Technological changes and market fluctuations are uncertainties, which serve
as constraints to human resource planning. It is risky to depend upon general
estimates of manpower in the face of rapid changes in environment.
3. Lack of support:
Planning is generally undertaken to improve overall efficiency. In the name of
cost cutting, this may ultimately help management weed out unwanted labour
at various levels.
The few efficient ones that survive such frequent onslaughts complain about
increased workload. Support from management is equally missing.
They are unwilling to commit funds for building an appropriate human
resource information system.
The time and effort involved – with no tangible, immediate gains – often
force them to look the ‘other way’.
Successful human resource planning flourishes slowly and gradually. In some
cases, sophisticated technologies are forcefully introduced just because
competitors have adopted them.
These may not yield fruits unless matched with the needs and environment of
the particular enterprise.
4. Numbers’ game:
In some companies, human resource planning is used as a numbers game.
There is too much focus on the quantitative aspect to ensure the flow of
people in and out of the organization. Such an exclusive focus overtakes the
more important dimension, i.e., the quality of human resources.
HR planning, in the final analysis, may suffer due to an excessive focus on the
quantitative aspects.
The quality side of the coin (consisting of employee motivation, morale,
career prospects, training avenues etc.) may be discounted thoroughly.
5. Employees Resistance:
Employees and trade unions feel that due to widespread unemployment,
people will be available for jobs as and when required. Moreover they feel
that human resource planning increases their workload and regulates them
through productivity bargaining.
6. Employers Resistance:
Employers may also resist human resource planning feeling that it increases
the cost of manpower.
7. Lack of Purpose:
Managers and human resource specialists do not fully understand human
planning process and lack a strong sense of purpose.
8. Time and Expenses:
Manpower planning is a time-consuming and expensive exercise. A good deal
of time and cost are involved in data collection and forecasting.