Human Resource Planning

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

Organizational Objectives

Human Resource Requirements

Human Resource Programs

Feasibility Analysis

1 2 3

4

5

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

Organizational Objectives

Human Resource Requirements

Human Resource Programs

Feasibility Analysis

1 2 3

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

•Production workers

•Supervisors

•Technical staff

•Other managers

Recruiting and training programs feasible

Transfers infeasible because of lack of managers with right skills

Recruit skilled workers

Develop technical training programs

Transfer managers from other facilities

Develop new objectives and plans

Recruit managers from outside

Too costly to hire from outside

1 2 3

4

3

5

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 5If 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 Human Resource PlanningDEMAND FORECASTING

SUPPLY FORECASTING

Determine organizational

objectives

Demand forecast for

each objective

Aggregate demand forecast

Does aggregate supply meetaggregatedemand?

Go to feasibility analysis steps

Choose human resource programs

External programs

•Recruiting

•External selection

•Executive exchange

Internal programs

•Promotion

•Transfer

•Career planning

•Training

•Turnover control

Internal supply forecast External supply forecast

Aggregate supply forecast

No

Yes

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 ForecastingInformation

• External labor market factors (retirements, mobility, education, unemployment)

• Controllable company factors on external factors (entry-level openings, recruiting, compensation)

Demand ForecastingInformation

•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 FrameDepends 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