HUMAN RESOURCE PLANNING (HRP)
After studying this chapter, students should be able to understand the following
A. Human Resource Planning (HRP)
We will examine the human resource planning process and some human resource forecasting
Next, we discuss forecasting human resource requirements and availability and
describe what actions could
be taken should either a surplus or a shortage of workers exist.
A. Human Resources Planning (HRP)
To understand the Human Resource Planning First, we will see what is Planning?
and why is it needed?
What is planning? Plans are methods for achieving a desired result.
Goals or objectives are specific results
you want to achieve. Planning is thus “the process of establishing objectives
and courses of action prior to
What is planning concerned with? Planning provides a sense of purpose
and direction. It is a
comprehensive framework for making decisions in advance. It also facilitates
the organizing, leading, and
controlling functions of management. Planning: allows you to make your decisions
ahead of time, it helps
you to anticipate the consequences of various courses of action, it provides
direction and a sense of
purpose, it provides a unifying framework against which to measure decisions,
and thus helps you avoid
piecemeal decision making. Planning also helps identify potential opportunities
and threats, and facilitates
control. It is concerned with the end (what is to be done) as well as with means
(how it is to be done).
Is planning really needed? If… organizations… never faced changes
in the environment, there would
have been no need for planning. Planning is one of the functional areas of HR.
B. Strategic Planning And The Human Resource Planning Process
is the process by which top management determines overall organizational
and objectives and how they are to be achieved.
Human resource planning (HRP): is the process of systematically reviewing
requirements to ensure that the required number of employees, with the required
skills, is available when
they are needed. After an organization’s strategic plans have been formulated,
human resource planning can
be undertaken. Human resource planning has two components: requirements and availability.
human resource requirements involves determining the number and type of employees
needed by skill level
and location. In order to forecast availability, the human resource manager looks
to both internal sources
(presently employed employees) and external sources (the labor market). When
employee requirements and
availability have been analyzed, the firm can determine whether it will have
a surplus or shortage of
employees. Ways must be found to reduce the number of employees if a surplus
is projected. Some of these
methods include restricted hiring, reduced hours, early retirements, and layoffs.
If a shortage is forecasted,
the firm must obtain the proper quantity and quality of workers from outside
the organization. In this case,
external recruitment and selection is required.
The process of anticipating an organization’s future human resource needs and
then developing action plans
for fulfilling identified needs. The systematic review of human resource requirements
getting the right
people at the right place at the right time.
i. Objectives of Human Resource Planning
Enable organizations to anticipate their future HR needs to identify practices
that will help them meet those
ii. Benefits of HR Planning
• Helps in planning job assignments
• Helps cope with fluctuations in staffing
• Identifies recruiting needs
• Provides other useful information
iii. Planning Includes Forecasting
Forecasting is carried out in two basic areas which are demand forecast of workforce
for organization and
supply forecast for the organization
Following approaches are used to perform this function or activity:
• Statistical approaches
a) Trend analysis
b) Ratio analysis
c) Regression analysis
• Judgmental methods
a) Managerial judgment
Forecasting Involves Two Activities
• Monitoring current HR programs and personnel staffing levels
• Investigating future HR needs and concerns
Forecasting Human Resource Requirements
A requirements forecast is an estimate of the numbers and kinds of employees
the organization will need at
future dates in order to realize its goals. Several techniques of forecasting
human resource requirements and
availability are currently being used by organizations.
a. Zero-Base Forecasting
This method uses the organization’s current level of employment as the starting
point for determining
future staffing needs. The key to zero-base forecasting is a thorough analysis
of human resource needs.
b. Bottom-Up Approach
A forecasting method in which each successive level of the organization, starting
with the lowest, and
forecasts its employee requirements in order to, ultimately, provide an aggregate
forecast of employment
c. Use Of Mathematical Models
Mathematical models can assist in forecasting HR requirements. The relationship
between sales demand and
the number of employees needed is a positive one.
It is a technique for experimenting with a real-world situation through a mathematical
that situation. A model is an abstraction of the real world.
Forecasting Human Resource Availability
Determining whether the firm will be able to secure employees with the necessary
skills and from what
sources these individuals may be obtained is called an availability forecast.
Surplus of Employees Forecasted
When a comparison of requirements and availability indicates a worker surplus
will result, restricted hiring,
reduced hours, early retirements, or layoffs may be required to correct the situation.
a. Restricted Hiring
When a firm implements a restricted hiring policy, it reduces the workforce by
not replacing employees who
b. Reduced Hours
Reaction to a declining demand can also be made by reducing the total number
of hours worked. Instead of
continuing a 40-hour week, management may decide to cut each employee’s time
to 30 hours.
c. Early Retirement
Early retirement of some present employees is another means of reducing the supply
At times, the firm has no choice but to actually lay off part of its workforce.
Shortage of Workers Forecasted
Faced with a shortage of workers, many organizations had to intensify their efforts
to recruit the necessary
people to meet the needs of the firm. Some actions that were taken included:
a. Creative Recruiting
A shortage of personnel often means that new approaches to recruiting must be
used. The organization may
have to recruit in different geographical areas than in the past, explore new
methods, and seek different
kinds of candidates.
b. Compensation Incentives
Firms competing for workers in a high-demand situation may have to rely on compensation
Premium pay is one obvious method. However, this approach may trigger a bidding
war that the
organization cannot sustain for an extended period. More subtle forms of rewards
may be required to
attract employees to a firm, such as four-day workweeks, flexible working hours,
employment, and child care centers.
c. Training Programs
Special training programs may be needed to prepare previously unemployable individuals
for positions with
a firm. Remedial education and skills training are two types of programs that
may help attract individuals to
a particular company.
d. Different Selection Standards
Another approach for dealing with shortages of workers is the lowering of employment
criteria that screen out certain workers may have to be altered to ensure that
enough people are available to
fill jobs. For instance, instead of desiring extensive work experience, a firm
may be willing to hire an
inexperienced worker and train him or her to do the job.
Succession Planning and Development
a. Succession Planning
The process of ensuring that a qualified person is available to assume a managerial
position once the
position is vacant.
b. Succession Development
The process of determining a comprehensive job profile of the key positions and
then ensuring that key
prospects are properly developed to match these qualifications.
c. THE GOAL OF HR PLANNING
The goal of forecasting and planning is to keep a stable workforce that meets
needs of the organization.
d. STEPS IN HRP PROCESS
• Determine the impact of organizational objectives on specific organizational
• Define the skills required to meet objectives (demand for Human Resource)
• Determine additional human resource requirements in light of current
HR (net HR
• Develop action plan to meet the anticipated HR needs
e. Importance Of Hrp
HRP has become more important in recent years for a number of reasons like:
• Globalisation of Business
• New Technologies
• The changing skill levels in the Workforce
• The changing demographics of the workforce
• Mergers and Acquisitions
• Legal developments
f. Requirements for effective HR planning
Successful HR planning requires:
• HR personnel understand the HR planning process
• Top management is supportive
• The communications between HR staff and line management are healthy
• The HR plan is integrated with the organization’s strategic business
Linking HR planning practices to competitive advantage
Effective HR planning provides best options for supply of workforce of the organization
and s stated in
earlier chapters if organization is able to have efficient and effective workforce
it will be have competitive
Plans Plans are methods for achieving a desired result.
Simulation A technique for experimenting with a real-world situation
mathematical model representing that situation. A model is an abstraction of
the real world.
Strategic planning is the process by which top management determines
purposes and objectives and how they are to be achieved.
Layoffs At times, the firm has no choice but to actually lay off part
of its workforce.