Table of Contents:-
- Process of Human Resource Planning
- Process of Human Resource Planning Problems
- Process of Human Resource Planning Model
- Making Process of Human Resource Planning Effective
Process of Human Resource Planning – HRM
The process of human resource planning is based on analysing the various aspects of the business environment in which it operates. HRP was traditionally restricted to responding to only business needs. However, with the business growth, up-gradation in technology and innovation in the management system, the HRP has become proactive and important in the current scenario of business. HRP is the method of forecasting human resource requirements and availability as well as bridging the gap between supply and demand. The Process of Human Resource Planning is shown in the image:
- Environmental Scanning
- Organisational Objectives and Policies
- Demand Forecasting
- Supply Forecasting
Environmental Scanning
The human resource planning process is based on analysing the various aspects of the business environment in which it is operating. It provides a clearer picture of the expected problems, threats, and opportunities of the organisation and thereby is the basic step for HRP.
Related Article:- Challenges of HRM
HRP requires scanning of all the factors existing in the internal (technology, culture, strategy, etc.) as well as external environment (competitors, regulations, etc.) of the firm. The analysis of the internal factors helps in identifying the strengths and weaknesses of the firm and on the other hand, external factors highlight the threats and opportunities for the firm.
Organisational Objectives and Policies
After analysis of the environment, plans and policies regarding the different aspects (which may include marketing, production, finance, technology, diversification and expansion) are examined, to forecast the labour movement shortly. The time-bound schedule for human resource planning is to be prepared accordingly. Exact manpower requirements can only be assessed after considering the changes in the organizational structure and job design. A comprehensive study of the plans of business is essential as all the human resource plans originate from business plans which are associated with the nature, level and organisational activities.
Demand Forecasting
HR demand forecasting is a procedure of defining the expected manpower requirements in terms of specified quantity and quality within the organisation. It is required to meet the expected manpower needs of the organisation so that the desired level of performance can be achieved. The expected requirement of human resources is assessed based on the current human resources and the analysis of the organisational plans and procedures. It is true to a large extent that in particular time duration, demand forecasting is dependent on the scale of operations in the company.
However, human resource requirements are not directly proportional to the size of the company’s operations. While conducting an HR requirements forecast, those components should be considered that influence the relationship between the size of the operation and the number of employees. Human resource planning gives an accurate figure of personnel needed in future.
Demand Forecasting Techniques
Various demand forecasting techniques are as follows:
- Managerial Judgement
- Ratio Analysis
- Trend Analysis
- Scatter Plot
- Computerised Forecast
- Work-Study Techniques
- Delphi Technique
- Econometric Models
1) Managerial Judgement
In this technique, the managers of different departments sit together to assess the demand for labour in the future. It may follow the bottom-up or top-down approach. In the bottom-up approach, the departmental heads submit their requirements to the top management and estimates are prepared by them only.
Whereas, as in the top-down approach, top managers determine the manpower requirement. After that, forecasts are analysed with departmental heads for joint approval. However, none of these approaches is a perfect combination of these two approaches that produce effective results.
2) Ratio Analysis
It is the procedure of computing the ratio between a particular business factor and the number of required employees. For example, the requirement of faculty in an educational institute will depend upon the number of students. Suppose, a university has 20,000 students and 1000 lecturers; the student-lecturer ratio is 20,000:1000 or 20:1.
This ratio shows that the university needs 1 lecturer for every 20 students. If it is expected that 500 additional students will be enrolled in the next year, then the university would be required to recruit 25 (500/20) additional lecturers (assuming that all the 1000 current lecturers will not leave before next year), It gives a clearer picture than trend analysis.
Despite being a good technique for forecasting demand, it has the demerit of avoiding some crucial elements such as upgraded technology and improved employee effectiveness.
3) Trend Analysis
The requirement for manpower resources is based on the trends of the organisation in the past. The past relationship between a business factor and manpower requirement is analysed. The proper business factor that relates considerably to employment levels varies across industries.
For example, for an educational institution, the suitable factor can be the total number of students enrolled; for a marketing company, it can be sales volume; and for a manufacturing company, it can be the total units produced. The trend analysis method is best for the preliminary assessment of human resource demand. The reason for this is that human resource forecasting is affected by some factors and the past trend is one of them.
4) Scatter Plot
It is a method that uses graphs to find out the relationship between the two variables. The human resource planner can make use of this method to determine the relationship between the two factors, i.e., the degree of business actions and the requirement of the staff to handle them. If there is a relationship, then the question arises, if an HR planner can predict the measure of business activity and forecast human resources requirements.
5) Computerised Forecast
Computerised forecasting uses computers and software packages to determine the prospective manpower needed, by estimating sales of the firm, production volume and the human resources required to keep up the estimated quantity of output.
6) Work-Study Techniques
This technique analyses the relationship between the volume of the work and the efficiency of the employees. The data regarding the volume of the work are derived from the organisational documents and an increase/decrease in operations can be determined. Efficiency level is measured by time and motion study which ensures standard output per unit of time or per hour.
Thus, the number of operatives required to complete a specified volume of operations is Planned OutputStandard Output per Hour Standard Hours per Person. Therefore, standard output per hour is not at all times a stable factor, but it increases with time due to learning, which may be through examination, observing others and communication.
7) Delphi Technique
It is the technique that focuses on the qualitative aspect and also tries to reduce subjectivity by involving the people from the group already chosen for it and defining the judgements for the same. Therefore, a collective decision making procedure is necessary which in turn, requires a commitment towards growth to increase cooperation and coordination for reasonable forecasts.
This technique is best in situations where the environment is subjected to various changes on account of technological upgrades. Here, there is very minimum scope for subjectivity in the decision-making because experts do not meet face-to-face. This would be more cost-effective if they were assigned to diverse locations. It can recover the decision-making class by reducing personality conflicts and restricting the dominating group members from controlling the decision process.
8) Econometric Models
In this model, the statistical data related to the history of the organisation is analysed. It is expected to figure out the relationship between the different variables in statistical or mathematical terms, Variables like measures of profits, investments, complexity, quality, and sales of the product are correlated with the manpower requirements to draw a single equation, which describes the exact relationship between the manpower requirement and other variables (measurable by econometric models) within the organization.
Process of Human Resource Planning Problems
The main problems in the process of Human Resource Planning (HRP) are as follows:
a) Employee resistance: Employees and their unions feel that HRP increases their workload, leading to resistance against the process.
b) Inaccuracy: HRP relies entirely on HR forecasting and supply, which cannot be a completely accurate process.
c) Inefficient information system: In Indian industries, the Human Resource Information System (HRIS) is not robust. Without reliable data, it is challenging to develop effective HRP.
d) Time and expense: HRP is a time-consuming and expensive exercise, so industries tend to avoid it.
e) Uncertainties: Labour absenteeism, turnover, seasonal employment, technological changes, and market fluctuations are uncertainties that the HRP process might face.
Process of Human Resource Planning Model
Human resource planning is assessing the need for manpower, considering the overall organizational objectives and policies, forecasting manpower supply, and matching the demand and supply with the help of various manpower programs. It also involves overseeing the implementation and evaluation of the plan, finally integrating it with other human resource plans. Refer to the image given below, which illustrates the steps required in manpower planning:
1. Examining Organizational Objectives and Policies
2. Assessing Manpower Demand
3. Forecasting the Supply of Manpower
4. Gap Analysis
5. Designing Manpower Programs
6. Manpower Plan Implementation
7. Evaluation and Feedback
Let us learn each step in detail:
1. Examining Organizational Objectives and Policies
Manpower planning commences with thoroughly examining the organization’s overall objectives and integrating the manpower plan into these broader goals. The number of employees required for various operations is derived directly from the organization’s objectives. A comprehensive understanding of the overall objectives is crucial for developing an effective manpower plan.
2. Assessing Manpower Demand
Manpower demand signifies the number of individuals required to fulfill existing job roles. Forecasting the demand for manpower involves estimating the future quantity and quality of employees needed. In a Retail Organization, for instance, forecasting manpower demand is based on the work expected in each retail store. Corporate plans, budgets, and annual plans serve as the foundation for forecasting labor demand. Existing job design and job analysis provide valuable information, and the forecast should consider internal and external factors, such as political, economic, technological, legal, ecological, governmental, social, and ethical factors, influencing the required manpower.
3. Forecasting Supply of Manpower
The supply forecast, or manpower inventory, determines the number and quality of manpower available for various identified jobs. Developing a supply of manpower data involves considering potential losses, such as voluntary retirements, deaths, terminations, layoffs, and other factors affecting manpower supply, like transfers, promotions, and changes in work conditions.
4. Gap Analysis
Gap analysis involves identifying the disparity between the estimated number of employees and the number available in the organization. This analysis reveals the quantity and quality of manpower needed, highlighting the personnel required to fill the identified gaps.
5. Designing Manpower Programs:
Following gap analysis, the next step in manpower planning is designing various programs. Considerations should include changes in products or services, competition, and internal union pressures. The plan details the required number of employees, and based on this, recruitment and selection programs are designed. Training and development programs are crucial for existing personnel to ensure productivity and satisfaction. The plan should also address retention strategies, which are critical in the current globalization scenario.
6. Manpower Plan Implementation
Implementation involves converting the plan into action through various designed programs. Close coordination with other sections of the human resource management department is essential during the implementation process.
7. Evaluation and Feedback
After the implementation of plans and programs, evaluating their effectiveness is crucial. This evaluation considers the objectives of the manpower plan, assessing the extent of objective attainment within the specified time frame. Critical feedback is necessary to identify and rectify any shortcomings, ensuring continuous improvement in manpower planning over time.
Making Process of Human Resource Planning Effective
Manpower planning is the threshold of human resource management. Please plan appropriately to avoid critical functions of human resource management faltering. Nevertheless, research indicates that very little attention is given to manpower planning in Indian corporate settings. One vital reason for this lack of awareness is the absence of a robust information system in Indian organizations.
In addition to uncertainties in the employment market, technological challenges, economic uncertainties, and unique socio-cultural value systems further complicate the situation. In the face of such volatility in the environment, having a sound manpower forecast becomes challenging.
The following are some guidelines to be followed for making the process of human resource planning effective:
Corporate Objectives: An essential element in manpower planning is the integration of overall corporate objectives with workforce planning objectives. In most organizations, conflicts arise between economic and welfare purposes.
Coordination: The critical objective of workforce planning is to use available human resources optimally. Therefore, large organizations create a separate division for comprehensive human resource planning. However, in some organizations, manpower plans are developed within the human resource division. Thus, coordination between personnel in the human resource department and other departments is critical to the success of the manpower plan. Today, organizations prefer outsourcing human resource functions. Therefore, coordination with external agencies involved in outsourcing also becomes crucial in manpower planning.
Top Management Support: Unstinted support from top management is crucial for the success of manpower planning activities. However, in many organizations, top management fails to realize the importance of manpower planning. It should be emphasized that maximum management support makes a significant difference in the practical design of manpower planning.
Conclusion
The process of human resource planning comprises:
– Anticipating manpower needs.
– Planning job requirements and descriptions.
– Analyzing skills to determine the nature of manpower needed.
– Choosing adequate sources of recruitment.
Four methods are generally used in determining personnel requirements:
– Fixed minimum man specification requirements.
– Annual estimation of vacancies.
– Long-range estimates of vacancies.
– Specific position estimates.
Porocess of human resource planning requires in-depth knowledge of how the human resource system/manpower system operates, with an emphasis on the flow (supply and demand) of people into, through, and out of the organization. On the supply side, manpower planning requires accurate and current information regarding qualitative and quantitative factors such as skills invention and public policy toward manpower resources. On the demand side, attention is paid to factors such as productivity, technological changes, and sales forecasts. Supply and demand are continuously balanced within organizational goals and priorities.