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Human Resource Planning (HRP)

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Title: Human Resource Planning (HRP)


1
Human Resource Planning (HRP)
2
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

3
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

4
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
5
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
6
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

7
JOB ANALYSIS
8
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

9
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

10
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)

11
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.)

12
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

13
Methods of collecting information for JA
  • Number of ways may be used in combination or in
    isolation
  • METHODS
  • Interviews
  • Questionnaires
  • Observations
  • Participant diary

14
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

15
Writing JDs
  • Job title identification
  • Job summary
  • Relationships
  • Responsibilities duties
  • Standards of performance working conditions
  • Equipment tools
  • Working conditions

16
HRP Process
  • HRP PROCESS
  • Environmental scanning
  • Forecasting analyzing demand for HR
  • Forecasting analyzing supply of HR
  • Developing action plans to match HR demand
    supply

17
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

18
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

19
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

20
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
21
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
22
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
23
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)

24
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

25
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

26
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

27
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.

28
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

29
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)

30
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

31
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
32
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

33
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

34
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

35
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)

36
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

37
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

38
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

39
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

40
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

41
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