HRP-1

HUMAN RESOURCE PLANNING

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“HRP” is a process by which an organization move from its current manpower position to its desired manpower position. It strives to have the right number and right kind of people at the right place at the right time,

doing things which result in both the organization and the individual receiving

maximum long run benefit

Importance of HRP

• Future Personnel needs• Coping with change• Creating highly talented personnel• Protection of weaker sections• International strategies• Foundations for personnel functions• Increasing investments in human resources• Resistance to change and move

Other Benefits

• Top management has a better view of the ‘HR’ dimensions of business decisions.

• Personnel costs could be downsized.

• Availing more time for talent search

• Opportunities exist to include women and minority groups in future growth plans.

• Better planning of assignments to develop mangers can be done.

Objectives of ‘HRP’

• Recruit and retain the human resources of required quantity and quality.

• To foresee the employee turnover and make the arrangements for minimizing turnover and filling up consequent vacancies.

• To meet the programs of expansion, diversification etc.

• To foresee the impact of technology on work, existing employees and future human resource requirements.

• To improve the standards, skill, knowledge,ability,discipline etc.

• To assess the surplus or shortage of human resources and take measures accordingly.

• To maintain congenial industrial relations by maintaining structure and optimum level of human resources.

• To minimize imbalances caused due to non availability of human resources of the right kind ,right number, in right time and right place.

• To make the best use of its human resources.• To estimate the cost of human resources.

Types Of ‘HRP’

Corporate philosophy, policy, vision and mission

The Corporate Level Plan

Integrated Corporate Strategic planning

Production Planning

FinancialPlanning

Human ResourcePlanning

MarketingPlanning

• HR planning like other plans should be an unified, comprehensive and integrated part of the total corporation.

• HR manager provides varieties of inputs to the corporate strategists like :-

1. Key ‘HR’ areas2. ‘HR’ environmental constraints3. Internal ‘HR’ capabilities4. ‘HR’ capability constraints

• The corporate strategists in return communicate their needs and constraints to the human resource manager.

• The corporate strategic plan incorporates both ‘HR ‘and other functional plans.

Types of HR Plans

Planning

Level

Business Planning Process

Link HRP

Process

Strategic Planning(5 or more years)

Corporate philosophy, value system and policies, goals and objectives, key success factors, Product market scope, competitive edge, allocation of resources

Issues Analysis

Analysis of issues raised by external factors, employment demand projections, manpower supply analysis and projection.

Intermediate range Planning(3 to 5 years)

Organization evolution, programs required to implement strategy, deployment of resources,acquisitions,divestments,and internal development of product lines.

Programming requirements

Forecasting total staffing level, forecasting number of managers and key personnel-year by year, planning HR support programs.

Operational planning –(for 12 months)

Detailing programs to specify actions, responsibilities, cost-time schedule, and organizational profitability.

Integrated Control Requirement

Detailing of HR activities that are incorporated in the one year business plan.

Activities Planning (daily and weekly)

Day to day and week to week plans and work schedules decentralized throughout the company.

Implementation Actions

Day to day and week to week HR assignments in support of the objectives and plans of the HR department

Types of HR Plan

Recruitment PlanRedeployment PlanRedundancy PlanTraining PlanProductivity PlanRetention Plan

Short term Plan :-To find a temporary match between the existing individuals and existing jobs.

Long-term plan :- To find a proper match between the future jobs and their future incumbents.

Corporate Planning & HRP Labor Cost Cost of Production Total cost

Marketability of the product

Overall Profitability of the Organization

Achievement of Organization Goal

DIMENSIONS OF HRP

• ‘Human resources’ act as participants as well as beneficiaries of economic development.

• ‘HR’ stand on the demand as well as the supply side of production of goods and services in the economy.

• On the supply side ‘HR’ and ‘capital’ form the essential ingredients of production system. Optimal economic growth is not possible through increases in one of them.

• As an living entity ‘HR’ could really accelerate growth process besides capital and material resources. Disproportionate growth in ‘HR’ against capital and other material resources could hinder development.

• Rate of growth in ‘HR’ is determined by two dimensions like:-

1. Quantity

2. Quality

Quantity aspect of ‘HR’ is determined by variables like:-

• Population policy

• Population structure

• Migration and

• Labor force participation.

Quality of human resources is influenced by variables like:-

• Education and training

• Health and Nutrition

• Equality of opportunity

Quantitative Dimensions of ‘HR’ Planning

• Population may be categorized into ‘de-facto’ and ‘de-jure’.

• De-facto (present in area) involves complete count of all persons both residents and non-residents.

• De-jure involves complete count of all normal residents irrespective of where they located at the time of census.

• None of the concepts are fully authentic because of difficulties in counting ,administrative difficulties, and the greater number.

• Growth of ‘HR’ depends on the growth of population which ultimately determined by three factors like:- population policies, population structure and migration.

Population Policy• Population policies include :influencing

policies and reactive policies and are complimentary in nature.

Population Structure• Composition of population reveals two

things :factors causing population growth in the past reveals the potential for future growth in population.

• There are two aspects of population composition : sex and age.

• Sex ratio= Number of male in the population X100

Number of female in the population • Sex ratio generally vary between 95 to

102.• Ratios outside the range 90-105 to be

viewed with suspicion.

• Age composition projects distribution of population by age groups (usually ‘5’ years) and it is the result of past trends in demography and could be the basis for future.

• Age composition also helps in calculation the labor supply (15 to 65 years is economically active group).

Migration• It causes changes in natural growth in

population and are of two types :international and internal.

• Rate of net migration = Total immigrants -Total emigrants X 100 Mid year population• Rate of population increase at point of time =the

rate of natural increase + the rate of net migration.

• Positive net migration occurs where population grows faster than indicated by natural growth.

• Negative net migration occurs where population growth declines than indicated by the natural growth.

• Internal migration =out migration and in-migration movement between regions.

• Internal migration data helps in knowing:-

1. Population changes at provincial level

2. Population changes at administrative level

3. Inter-regional and inter-sector rates of growth and wage differentials.

Labor force Participation• How many involved in economically productive work by

their mental and physical presence.• So, the worker and non-worker category of either sex

together formed the labor force in the productive age group (15-65 years) like:-

1. Employers and employees2. Self-employed persons3. Those employed in family enterprises without pay4. Unemployed but available for work.• Labor force participation rate =labor force X 100 total population

Qualitative Dimensions of HR Planning

• It facilitates assessment of productive power in human resources in three areas.

1. Education and training

2. Health and nutrition

3. Equality of opportunity

Education and training• It is classified into formal and informal. It serves both

individual and social ends. As a means of HRP it identified priorities like :

Choice between levels of education Choice between quality and quantity Choice between science, technology , humanities and

liberal arts. Choice between market forces and incentives to attract

people into some occupation. Choice between the aspiration of individuals and needs

of the society.

Health and nutrition• It is one of the important indicators that build and

maintain a productive HR which improves the average expectation of life and quality of life.

There are three determinants of health status :- Purchasing power of people Public sanitation, climate and availability of

medical facilities. People’s knowledge and understanding of health

hygiene and nutrition.

Equality of Opportunity

Discriminations arise irrespective of investments in HRD. Three forms of

discriminations generally found :-

• Social discrimination

• Economic discrimination

• Regional discrimination

The above discriminations leads to inequality of opportunity like:-

• It causes differential access to education & training, health & nutrition.

• It brought differences in quality and productivity of human resources.

• Opportunity cost of discrimination are very high.

Appropriate & deliberate socio-economic policy interventions can decrease the degree of

inequality and hence improves productivity.

Labor Market Behavior

Quantitative & qualitative dimensions of HR only deals with the supply part, where as

the demand or utilization part of HR depends on the flexibility of labor markets,

which in turn determines the level of employment/unemployment.

• In an extreme rigid form, where employers are dominating may result in involuntary unemployment & reduced demand for human resources.

• If employees are dominating, it may result in disguised unemployment that increases demand for HR.

The structure of labor market is determined by:-

• Internal & external economic environment.• Technological progress & technology

absorption.• Degree of labor mobility (sectorial, spatial,

& occupations).• Wage structure with reference to

productivity differentials.

In developing countries labor markets are segmented due to labor market imperfections. Important forms of

segmentations are :-

Agricultural and non-agricultural Formal and informal Male and female Skilled and unskilled

Labor market analysis is the principal instrument of ‘HRP’, but is not becoming effective due to lack of information's

on labor markets.

APPROACHES TO ‘HRP’

‘HRP’ as a process of HRD involves investment decisions on three aspects which are

complimentary to each other. These are :-

Health and nutritionSocial and economic equityEducation and training

HRP is considered as synonymous with educational planning because of it’s dominancy

over the other two.

Three Approaches to Educational Planning

Social demand approach

Rate of return approach

Manpower requirement approach

Social Demand Approach

It deals with assessment of society’s demand for education and is based upon

the projection of past trends in demographic aspects of population and

the enrolment at different level of education.

Projection of social demand for education depends on the following aspects :-

Income of educated people Tastes and preferences of house holds for

education Demographic characteristics such as fertility and

mortality Direct costs of education Student’s grants Existing standards of admissions to various

levels of education.

Besides the above following perennial problems are also associated with the data base :-

Demographic aspects at district, block, and village level.

Data on wastage and stagnation in education, and intensity of utilization of existing educational facilities.

This approach suffers from difficulties associated with any futurological exercise.

Rate of Return Approach

• ‘Social demand approach’ has been criticized because aggregate of individuals demand for education should be based on aggregate of individuals assessment of benefit of education (the social benefit).

• But this approach looks upon education as a contributor to productivity and must facilitate investment decisions in education irrespective of whether state should invest more and expand educational facilities or not.

Role of return on investment in education will expand its educational facilities until

schooling equalizes :-Yield of investment in different type of

educationYield of investment in education compared

to other sectors of the economy.

Three parameters are involved in estimating the rate of return like :-

1. Cost of education2. Return to education3. Discount rate

1- Cost of education includes :- Direct cost + indirect cost Direct cost=private expenditure on education +

public expenditure on education. Public expenditure =recurring + non-recurring

expenditure

Indirect cost may be viewed from two angles Private view of indirect cost - All

possible avenues of employment and possible earnings and an assessment of money value of fore gone leisure.

Social view of indirect cost – involves estimation of opportunity cost of public expenditure on education.

2-Return to Education includes :-Direct monetary benefitsIndirect monetary benefits Non-monetary benefits

Direct monetary benefits –is the extra life –time earnings received. Total life-time monetary gain of an individual is measured by his disposable income.

Indirect monetary benefits include :-Earnings from subsequent jobs may not

always depends on initial education.Human capital in an educated worker

often enhance the productivity of co-workers.

Benefits received by the recipient's family

Non-monetary benefits include :-Many alluring psychological returns other

than monetary returns of white collar jobs put them under special category.

‘Externalities’ also provides non-monetary benefits.

Education causes quality improvement in labor.

3- Discount rateTo compute internal rate of return, there is need

to discount future returns from the total life time earnings to arrive at their present value.

For computing private returns the discount rate could be- either the rate of interest at which an individual borrows for financing education or the rate of return from the best possible alternatives to investment in education.

For computing social returns choosing a discount rate is more complicated.

Limitations of rate of return approach Difficult to make decision on how much to invest

at each level purely based on rate of return analysis without any reference to backward and forward linkages of the level of education.

This analysis does not consider supply and demand of skills in the labor market.

It is doubtful that this analysis could be an effective tool in making investment decisions with in education sector.

LimitationsLack of substitution among the various

categories of educated manpower.It projects a definite link between an

industrial task and an educational level.Assumption about the distant unknown

future.

Man Power Requirement Approach

• This approach deals with forecasting future requirement of educated manpower to meet the future target of gross national Product (GNP) or specific target of industrial production.

Steps involved in manpower requirement approachAnticipate the directions and magnitude of

development in each sectors of the economy.Designing norms of employing manpower in

each sector considering the technological options - present as well as future.

Translating the physical targets of development in each sector into manpower requirements having sector specific manpower norms.

Estimating the educational equivalents of the manpower requirements.

Analyze the implication of estimates of educated manpower requirements for educational development based on the assumptions regarding : enrolment rates, transition probabilities, wastage and stagnation rates at each level of education.