Human Resource Planning (HRP)

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Human Resource Planning(HRP)
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HRP An Overview

• HRP is a process of analyzing identifying the
  need for availability of human resources (HR)
  so that organization can meet its objectives

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Defining HR Planning

• Strategy Oriented DEFINITION
• A strategy for the acquisition, utilization,
  improvement retention of an organizations
  human resources
• AIMS of HRP
• to ensure the optimum use of the people currently
  employed
• to provide for the future staffing needs of the
  organization in terms of skills, number, ages
  of people
• HRP establish control planner work as a
  policeman who checks whether staffing levels
  are optimum
• Process Oriented DEFINITION
• HRP is as a continuous process of analyzing an
  organizations HR needs under the changing
  conditions developing the activities necessary
  to satisfy these needs like staffing,
  recruitment, selection, training, etc.
• Process aimed at assisting management to
  determine how the organization should move from
  its current staffing position to its desired
  staffing position

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Business Strategy HRP
Business strategy focus (Porter) HR strategy HRP activities
Cost leadership
Cost control Stable business environment Efficiency quality Job employee specialization Employee efficiency Long HR planning scope Internal promotions Emphasis on training Hiring training for specific capabilities
Differentiation
Long term focus Growth Creativity in job behaviour Decentralization Shorter HR planning scope Hire HR capabilities required Flexible jobs employees External staffing Hire train for broad competencies
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Business Strategy HRP
Business strategy focus (Miles Snow) HR strategy HRP activities
Defender
Finds change threatening Favors strategies which encourage continuity security Bureaucratic approach Planned regularly maintained policies to provide for lean HR Build HR Likely to emphasize training programs internal promotion
Prospector
Succeed on change Favors strategies of product / or market development Creative flexible management style Have high quality HR Emphasize redeployment flexibility of HR Little opportunity for long-term HRP Acquire HR Likely to emphasize recruitment, selection performance base compensation
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Perspectives of HRP

• MACRO HRP
• Assessing forecasting demand for availability
  of skills at national / global level
• Predict the kinds of skills that will be required
  in future compare these with what is / will be
  available in the country
• Eg.
• Gillette merger with PG whereby decided to
  restructure move from business units based on
  geographic regions to global business units based
  on product lines which resulted in redundancy of
  some employees (Relocation to Singapore VRS for
  others)
• MICRO HRP
• Process of forecasting demand for supply of HR
  for specific organization
• Eg.
• Wipro (a software giant in India) raising wages /
  short-listing students in their 2nd yr. of
  college for future employment in India
• Genpact (an IT solution company in India)
  launching an associate trainee program with
  Osmania University in India

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JOB ANALYSIS
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Terminology commonly used in JA literature

• JOB group of positions that have similar
  duties, tasks, responsibilities
• POSITION set of duties responsibilities
  performed by one person
• A job is a general term, a position is more
  specific.
• Eg. as my job, I am a teacher. But to be
  specific, my position is Elementary Gifted
  Specialist.Eg. someone might work at the
  grocery store as their job, but specifically,
  their position is produce assistant.
• JOB FAMILY group of 2 / more jobs that have
  similar duties / characteristics
• TASK separate, distinct identifiable work
  activity
• DUTY several tasks that are performed by an
  individual

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Terminology commonly used in JA literature

• RESPONSIBILITIES obligations to perform certain
  tasks duties
• DUTYBEHAVIOR SHOWING A PROPER REGARD / SENSE OF
  OBLIGATION, JUSTICE MORALITY, OCCUPATION OR
  POSITION.
• RESPONSIBILITYOBLIGATION,TO DO WHAT IS ASK,IF
  YOU SAY YOUR GOING TO DO SOMEHTHING DO
  IT,TRUST,HONEST, TO CARE FOR ANOTHER WHEN ONE
• JOB DESIGN process to ensure that individuals
  have meaningful work one that fits in
  effectively with other jobs
• JOB DESCRIPTION written summary of the content
  context of the job, outlining the tasks,
  duties, responsibilities of a job, as well as
  performance standards of each job
• JOB SPECIFICATION written statement of the KSA
  other characteristics (human requirements) that
  are necessary for performing the job effectively
  satisfactorily

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Information obtained from JA

• What is to be done? How is to be done? (CONTENT)
• Under what conditions is the job to be done
  (CONTEXT)
• What KSA other characteristics are required to
  perform the job (HUMAN REQUIREMENTS)

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Information obtained from JA

• JOB CONTENT
• Duties responsibilities
• Job demands
• Machines, tools, equipment
• Performance standards
• JOB CONTEXT
• Physical, organizational social context
• Work conditions, work schedule
• HUMAN REQUIREMENTS
• KSA,
• Education, Experience personal attributes
  (personality, interests, etc.)

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Components of a JA

• JOB DESCRIPTION
• Statement of tasks, duties, responsibilities,
  context of the job
• JOB SPECIFICATION
• KSA required to perform the job satisfactorily
• JOB EVALUATION
• Comparison of relative value of jobs in
  organization for making compensation decisions

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Methods of collecting information for JA

• Number of ways may be used in combination or in
  isolation
• METHODS
• Interviews
• Questionnaires
• Observations
• Participant diary

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JA Process

• Determine purpose of JA
• Review organization chart
• OC shows the division of work in organization,
  how the job in question related to other jobs,
  how the job fits into the overall organization,
  who reports to whom, whom the incumbent reports
  to
• Select representative jobs for analysis
• Analyze jobs using data gathering methods
• Check information for accuracy
• Write JD JS for use in HR activities

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Writing JDs

• Job title identification
• Job summary
• Relationships
• Responsibilities duties
• Standards of performance working conditions
• Equipment tools
• Working conditions

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HRP Process

• HRP PROCESS
• Environmental scanning
• Forecasting analyzing demand for HR
• Forecasting analyzing supply of HR
• Developing action plans to match HR demand
  supply

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Environmental Scanning

• Systematic process of studying monitoring the
  external environment of the organization in order
  to pinpoint opportunities threats
• Involves long range analysis of employment
• Factors include economic factors, competitive
  trends, technological changes, socio-cultural
  changes, politico-legal considerations, labour
  force composition supply, demographic trends

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Environmental Scanning

• Eg., competitive pressures are likely to increase
  resulting in enhanced productivity requirements
  HRP objective may be to increase employee
  productivity by 5 in 2 yrs. which will require
  the firm to determine current employee
  productivity (output / employees)
• Attempts to answer 2 questions
• Which jobs need to be filled (or vacated) during
  the next 12 months?
• How where will we get people to fill (or
  vacate) these jobs?
• Demand supply of labour in loose tight labour
  market
• Major impact of the shortage of skilled workforce
  (tight labour market) in India has been on staff
  cost (increased by 35 in 2005)
• Fast growing sectors like retail, ITeS, telecom
  are new do not have historical talent to bank
  on hence they are hiring from other sectors
  with skill sets that are relevant to their
  industries

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Forecasting HR Demand

• FORECASTING makes use of information from the
  past present to identify expected future
  conditions.
• Forecasts are not perfectly accurate as the
  planning scope becomes shorter the accuracy of
  forecasts increases
• HR demand forecasts may be internal / external

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Qualitative Methods of Demand Forecasting
Method Advantages Disadvantages
Estimation People in position estimate the number of people the firm will require in the next yr. Incorporates knowledge of corporate plans in making estimates May be subjective
Expert opinion Panel of experts forecast HR requirements for particular future business scenarios. For this method, there may be a single expert, or estimates of several experts may be pooled together Panel of experts forecast HR requirements for particular future business scenarios. For this method, there may be a single expert, or estimates of several experts may be pooled together Panel of experts forecast HR requirements for particular future business scenarios. For this method, there may be a single expert, or estimates of several experts may be pooled together
Delphi Experts go through several rounds of estimates with no face-to-face meeting Incorporates future plans knowledge of experts related to mkt., industry technical development Subjective, time consuming may ignore data
Group brainstorming Face-to-face discussion based on multiple assumptions about future business direction Generates lot of ideas Does not lead to conclusion
Nominal group technique Face-to-face discussion Group exchanges facilitate plans Subjective which may ignore data
Simple averaging Simple averaging of viewpoints Diverse view points taken Extremes views are masked when averaged
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Quantitative Methods of Demand Forecasting
Method Advantages Disadvantages
Trend analysis projection Based on past relationship between a business factor related to employment employment level itself Based on past relationship between a business factor related to employment employment level itself Based on past relationship between a business factor related to employment employment level itself
Simple long-run trend analysis Extrapolates past relationship between volume of business activity employment levels into the future Recognizes linkage between employment business activity Assumes that volume of business activity of firm for forecast period will continue at same rate as previous yrs Ignores multiplicity of factors influencing employment levels
Regression analysis Regresses employment needs onto key variables Data driven Uses multiple business factors Difficult to use apply
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Quantitative Methods of Demand Forecasting
Method Advantages Disadvantages
Simulation models Uses probabilities of future events to estimate future employment levels Makes several assumptions about the future regarding external internal environment Simultaneously examines several factors Costly complicated
Workload analysis Based on actual content of work HR requirements based on expected output of the firm Productivity changes taken into account Job analysis may not be accurate Difficult to apply
Markov analysis Probabilistic Based on past relationship between business factor related to employment employment level itself Data driven Assumes that nature of jobs has not changed over time Applicable to stable environment
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Causes of Demand

• EXTERNAL CHALLENGES
• Economic developments noticeable effect but are
  difficult to estimate (Inflation, unemployment,
  changing workforce patterns)
• Social, political legal challenges easier to
  predict, but their implications are not very
  clear (Implication of abolishing mandatory
  retirement age in US may not be known until a
  generation has lived without 65 out
  tradition)
• Technology changes difficult to predict
  assess but may radically alter strategic HR
  plans (PC would cause mass unemployment vis-à-vis
  IT field as a large one employing millions of
  people directly / indirectly complicates HR,
  because it tends to reduce employment in one
  dept. while increasing it in another)

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Causes of Demand

• ORGANIZATIONAL DECISIONS
• As orgs. respond to changes in their environment,
  decisions are made to modify the strategic plan,
  which commits firm to long-range objectives
  growth rates new products, markets / services
  these objectives dictate number types of
  employees needed in future
• To achieve long-term objectives, HR specialists
  must develop long-range HR plans that accommodate
  strategic plan
• In short run, planners find strategic plans
  become operational in form of budgets
• Sales production forecasts are less exact than
  budgets but may provide even quicker notice of
  short-run changes in demand for HR
• New ventures means changing HR demands when a
  new venture is begun internally from scratch,
  lead time may allow planners to develop short-run
  long-run employment plans merging HR group
  with Corporate Planning staff

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Causes of Demand

• WORKFORCE FACTORS (ATTRITION)
• Demand is modified by employee actions such as
• retirements,
• resignations,
• terminations,
• death,
• leaves of absence
• Analysis Technique Markov Analysis of Attrition
  Rates

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Forecasting Techniques

• Trend Projection Forecasts
• Quickest forecasting techniques
• Two simplest methods
• Extrapolation involves extending past rates of
  change into future (if an avg of 20 production
  workers was hired each month for past 2 yrs,
  extrapolating that trend into future means that
  240 production workers will be added during
  upcoming yr.)
• Indexation a method of estimating future
  employment needs by matching employment growth
  with an index, such as ratio of production
  employees to sales (eg., for each million
  increase in sales, production deptt. requires 10
  new assemblers)
• Both are crude approximations in short run
  because they assume that causes of demand remain
  constant which is seldom the case making it
  very inaccurate for long-range HR projections

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Methods of Demand Estimation

• TREND ANALYSIS PROJECTION
• Study of firms past employment needs over a
  period of yrs. to predict future needs
• Appropriate business factor that relates
  significantly to employment levels differs across
  industries (University student enrollment,
  Sales firm sales volume, Manufacturing firm
  total units produced)
• Steps
• Determine identify a business factor that
  relates to the number type of people employed
• Identify historical trend of the relationship
  between this business factor the number of
  people employed
• Determine the ratio of employees to the business
  factor, that is, the average output per
  individual employee per year labour
  productivity
• Determine the labour productivity ratio for the
  past 5 yrs at least calculate the average
  annual rate of change in productivity
• Calculate the human resource demand by dividing
  the business factor by the productivity ratio
• Project human resource demand for the target
  year.

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Methods of Demand Estimation

• SIMPLE LONG-RANGE TREND ANALYSIS
• Extrapolates the volume of current business
  activity for the years for which the forecast is
  being made
• Since there is a correlation between volume of
  business activity employment level, linear
  extrapolation would also indicate HR demand by
  job skill category

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Methods of Demand Estimation

• RATIO ANALYSIS
• RATIO between output manpower deployed to
  achieve that output is established at a given
  point of time
• Eg., revenue per employee, sales vol. per
  salesperson, service contract per engineer, units
  produced per employee, etc.,
• Historical ratio between
• Some causal factor (sales volume)
• No. of employees required (number of salesperson)

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Methods of Demand Estimation

• REGRESSION ANALYSIS
• Drawing a statistical comparison of past
  relationship among variables
• Statistical relationship between no. of patients
  (business factor) employment level of nurses in
  a nursing home may be useful in forecasting the
  no. of employees that will be needed if the no.
  of patients increases by say 20

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Methods of Demand Estimation

• LINEAR REGRESSION ANALYSIS
• Relationship between two variables which is
  directly precisely proportional
• Production output manpower are the two
  variables the relationship between these two is
  plotted on a graph by drawing a line of best
  fit
• Analysis aims at providing a measure of the
  extent to which changes in the values of two
  variables are correlated with one another

x
X
x
x
a
x
x
x
x
Manpower
b
Y
Production level
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Methods of Demand Estimation

• MARKOV ANALYSIS
• Shows the percentage ( actual no.) of employee
  who remain in each job from one yr. to the next,
  as also the proportion of those who are promoted
  or transferred or who exit the organization
• Internal mobility among different job
  classifications can be forecast based upon past
  movement patterns past patterns of employee
  movements (transitions) used to project future
  patterns
• Pattern is used to establish transitional
  probabilities to develop a transition matrix
• Transitional probabilities
• Indicate what will happen to the initial staffing
  levels in each job category / probability that
  employee from one job category will move into
  another job category
• Determine the forecasted employee levels at the
  end of the yr

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Forecasting Analyzing HR Supply

• Internal supply forecasts relate to conditions
  inside the org. such as age distribution of
  workforce, terminations, retirements, etc.
• External supply forecasts relate to external
  labour market conditions estimates of supply of
  labour to be available to the firm in the future
  in different categories

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Methods of Forecasting External HR Supply

• INTERRELATED FACTORS THAT MUST BE CONSIDERED IN
  PROJECTING EXTERNAL HR SUPPLY
• Government estimates of population available for
  work
• Net migration into and out of the area
• Numbers entering the workplace
• Numbers leaving the workplace
• Numbers graduating from schools / colleges
• Changing workforce composition
• Technological shifts
• Industrial shifts
• Trends in the industry (actions of competing
  employers)
• Economic forecasts
• Government regulations pressures such as job
  reservations for certain groups

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Methods of Forecasting Internal HR Supply

• HR INVENTORY
• Obtains stores information about each employee
  of the org. in a manner that is easily accessible
  because it is necessary for HRP
• Employee information stored in the inventory
  relates to KSA, experience, career aspirations
  of the present workforce of the firm
• Contents of HR Inventory
• Personal identification information
• Biographical information
• Educational achievements
• Employment history
• Information about present job
• Present skills, abilities, competencies
• Future focused data
• Specific actions (like training needed for
  achieving career goals)

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Methods of Forecasting Internal HR Supply

• HR INVENTORY
• 2 types
• Skills inventory describes the skills
  knowledge of non-managerial employees is used
  primarily for making placement promotion
  decisions
• Management inventory contains the same
  information as in skills inventory, but only for
  managerial employees which describes the work
  history, strengths, weaknesses, promotion
  potential, career goals

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Methods of Forecasting Internal HR Supply

• HR INVENTORY
• Can be used to develop employee replacement
  charts
• Replacement charts lists current jobholders
  identifies possible replacements should there be
  a vacancy for reasons such as resignations,
  transfers, promotions, etc.
• Replacement charts include the following
  information on possible replacements like current
  job performance, potential for promotion,
  training experience required by replacement to be
  ready for the key position
• Chart also details when a replacement is needed
  for a job short term forecasts in nature

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Methods of Forecasting Internal HR Supply

• SUCCESSION ANALYSIS PLANNING
• A systematic deliberate process of identifying,
  developing tracking key individuals within the
  firm to prepare them for assuming senior
  top-level positions in future.
• Eg., SAIL poaching from global players
  preparing a defence system wherein 2nd 3rd
  line of command is being prepared IBM,
  ExxonMobil, GE, etc., have already hired its CEO
  for 2010
• Eg., Godrej, Marico (fly. owned business) in
  India have drop dead succession plan which
  keeps the wheel moving where a promoter of the
  fly-owned firm may always be around to guide the
  company

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Methods of Forecasting Internal HR Supply

• LABOUR WASTAGE ANALYSIS
• Traditionally LW is measured by the employee
  turnover index ( wastage index)
• (No. of empls leave in mth / avg. empls) x 100
• Turnover classified into
• Avoidable separations (resignations dismissal)
• Unavoidable separations (retirement, death,
  marriage)
• Turnover rate (S-US) / M x 100

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Methods of Forecasting Internal HR Supply

• ABSENTEEISM RATE
• No. of man-days lost due to absence
• from work during the period
• AR --------------------------------------- x
  100
• Avg. number of Total number
• empls. during this pd. of days

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Thank You