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Manpower Planning
Structure 1.1 Introduction Objectives 1.2 Effective Manpower Planning 1.3 Need for Manpower Planning 1.4 Five Steps in Manpower Planning Evaluate Present Manpower Inventory Manpower Forecasting Develop a Manpower Sourcing Plan or Retrenchment Plan Manpower Allocation & Retention Building Requisite Competencies 1.5 Importance of Manpower Planning 1.6 Obstacles in Manpower Planning 1.7 Advantages of Manpower Planning 1.8 Successful Manpower Planning 1.9 Consolidated Demand Forecast Development 1.10 Effective Decision Making 1.11 Gaining Senior Management Support 1.12 Meeting the Organization's Goals and Objectives 1.13 Summary 1.14 Glossary 1.15 Terminal Questions 1.16 Answers
1.1 Introduction
According to Eric W. Vetter, manpower planning is a very vital process where the management determines how the organization should move from its present manpower position to a desired manpower position. According to Stainer, manpower planning may be defined as a strategy for the procurement, development, allocation and utilization of an enterprises human resources. We all know that organizations are made up of people. Manufacturing industries need people to operate machines, maintain machines and ensure desired output quality. Service industries need people to serve customers.
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People are the most important part of any organization. It is the people working in an organization who individually and collectively contribute to the achievement of the business objectives. One cannot ever overstress the importance of people to make an organization successful. Manpower planning managers need to estimate the total number of resources required for each position or job role correctly. This is no easy task. If you are the manpower planning manager, you may not know so many things that will unfold over the course of the year at the beginning of the year like: How many people will get promoted? How many people will attrite? How many people are additionally required to expand the business? Which part of the business will grow by what percentage? Which part of the business will decline by what percentage? Which specific skills sets are going to be short in the market? Will the manpower budget be adequate? Manpower planning managers need to estimate the requirement as close to reality as possible and also ensure hiring for the job role requirements in the shortest possible time so that the business is not impacted negatively due to the shortage or absence of resources. And this is what makes manpower planning an interesting subject. Definitions According to K. F. Turkman manpower planning can be defined as an attempt to match the supply of people with the jobs available in an organization. Statistical techniques have been used to match the supply of people with the jobs available. Bruce Coleman has defined manpower planning has been defined as the process of determining manpower requirements and the means for meeting those requirements in order to carry out the integrated plan of the organization. The website www.businessdictionary.com defines manpower planning as: Estimating or projecting the number of personnel with different skills required over time or for a project, and detailing how and when they will be acquired.
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A business definition according to www.bnet.com for manpower planning is The development of strategies to match the supply of workers, and the availability of jobs at organizational, regional or national level. Objectives After studying this unit you will be able to: Describe the need for manpower planning State the steps in manpower planning Summarize the obstacles of manpower planning Recognize a consolidated demand forecast for manpower
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Therefore, effective manpower planning is hiring the right number of people and the right kind of people at the right place and at the right time for doing the right things.
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It helps in the growth and diversification of a firm or an organization. Through manpower planning, human re-sources/man/employees can be readily available and they can be utilized in the best manner. It helps the organization to realize the importance of manpower management which ultimately helps in the stability of an organization.
Self Assessment Questions 1. Manpower planning may be defined as a ____________ for the procurement, development, allocation and utilization of an enterprises human resources. 2. Effective manpower planning is hiring the right __________ of people and the right kind of people at the right place and at the right time for doing the right things.
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quantitative analysis. Another analysis on the qualitative side conducted similarly shows the competencies required versus competencies available for each of the job roles. This provides the present manpower inventory. There may be excess or deficit or in extremely few cases just the right number quantitatively. The report on the qualitative front may rarely have a 100% match between required competencies versus available competencies. 1.4.2 Manpower Forecasting Manpower planning is done based on the manpower forecasts. The common manpower forecasting techniques are: (i) Expert Forecasts: This includes formal expert surveys, informal decisions and the Delphi technique. (ii) Trend Analysis: Manpower needs can be seen through the past practice of the firm or organization keeping the principle year as a basis and a central tendency of measure (iii) Work Load Evaluation: This depends on the nature of the work load in a branch, department, or a division in a firm or organization. (iv) Work Force Evaluation: As production and the time duration are to be kept in mind, allotments have to be made for getting the total manpower requirements. (v) Other Methods: A few mathematical models with the help of computers are also used to forecast manpower needs. You will learn more about forecasting in unit 2. 1.4.3 Develop a Manpower Sourcing Plan or Retrenchment Plan Once the current inventory is compared with the future manpower forecasts then the manpower sourcing or retrenchment plan is drawn. The sourcing plan includes recruitment, selection, placement, hiring temporary staff and outsourcing. You will learn more about the sourcing plan in unit 6. The retrenchment plan involves sending show-cause notices to bottom performers called bottom scraping, asking people to leave the organization by providing the requisite severance allowance, allowing employees to go on a sabbatical and finally out-placing employees in other organizations to reduce the manpower. It is harder to retrench manpower. The need for
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retrenchment could also be minimized by very objectively approving any additional manpower. 1.4.4 Manpower Allocation & Retention Manpower allocation helps in managing the impact of deficits and excess in manpower supply through promotions, transfers and job-rotations. Enhancing manpower utilization requires managing the dynamics of leadership and motivation. Manpower retention would mean taking necessary steps to ensure that the organization provides a conducive-atmosphere to the employees to perform and keeps each employee engaged. 1.4.5 Building Requisite Competencies Once the future manpower forecasts are compared to the current inventory, there may be some gaps in competencies amongst the available internal resources for them to qualify for the future manpower forecasts. In such cases organizations may choose to develop resources through training programs. A training calendar is designed to ensure competencies of existing staff are enhanced to meet the future manpower forecasts. Additional training programs may be designed when organizations are diversifying or expanding. Training programs may be designed to train existing resources on the latest improvements and advancements in technology or the related business subject. Training is provided to improve the knowledge, skill and capability of the employee. Self Assessment Questions 3. Manpower allocation is a step in the __________ planning process. 4. Expert forecasts and trend analysis are two types of _____________ techniques. 5. ________ and ________ can be identified and quick action can be taken in planning. 6. Manpower planning reduces ______ costs as excess staff can be identified thereby avoid _______.
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the business to become profitable and increases the profit margin. All the business plans can be achieved only by manpower planning. Else business plans will never turn into a reality. Manpower planning is done for: Successful execution of plans Efficient utilization of resources Motivating employees Better human relations Higher productivity
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Lack of Employable Labor People are not employable. The slow pace of acquiring business required competencies by people at large also result in low employee productivity. All manpower planning is done basis a certain productivity level considered as a benchmark. And low productivity has negative implications for manpower planning. Modern Manpower Control and Review Processes Any increase in manpower is to be approved by the top most levels of the management today. Manpower budgets created on the basis of manpower planning act as control mechanisms to keep the manpower cost and headcount under certain defined limits. Usually the productivity of any organization is calculated using the formula: Productivity = Output / Input. Example: 5 products are sold during the day/ 8 hours of effort put in during the day. i.e., the sales productivity of the employee is 5 products per day. But a rough guide of employee productivity used today is: Employee Productivity = Total Production / Total no. of employees Example: 50 products are sold during the day/12 employees were responsible for selling 50 products during the day. i.e., the sales productivity of each employee is 4.17 products per day. The rate of manpower turnover, exit interviews and absenteeism are sources of measuring dissatisfaction level of manpower. To eliminate employee dissatisfaction and to ensure better utilization of resources a study of the reasons causing the dissatisfaction level is required. Overtime is paid to employees due to real shortage of manpower, inefficient management or improper utilization of manpower. Manpower planning requires a study of the overtime statistics.
The current pace at which business is done today is very fast. Many organizations either do not have data or are overwhelmed with data. Non availability and non utilization of the data are also reasons for complicating the situation. In some organization even the existing technologies available for manpower planning are not optimally used. This also creates obstacles in manpower planning.
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Example: Business Scenario for Obstacles in Manpower Planning (Lack of employable labor) The entire BPO industry is suffering with this scenario of lack of employable labor. In a dynamic business scenario, manpower planning is critical to organizational growth and stability. It is integral to recruiting, retaining, retraining and redeployment of talent. Linked to business needs of the organization, the process of manpower planning is much more complicated than it seems. Manpower planning involves developing skills and competencies of existing employees to meet market demands which can change with time. Manpower planning also requires having a contingent plan in place in case of any eventuality (talent shortage). Out of every 100 candidates interviewed only 10 of them are employable. Majority of them are unemployable by the BPO industry. Its a known fact in the BPO industry. The manpower planning exercise requires BPO companies to budget for travel to the interiors of the state, travel to other states. It also needs to budget for providing new joiners with relocation allowance. It has to make provision for some joining bonuses as well when the hiring by all companies was at its peak. It decided to lower the level of hiring and spend additional time on training candidates. It needed to engage external organizations to evaluate the voice and accent capability or the potential of the candidate in order to validate its own findings with that of an independent agency, so that no potential candidate was rejected and no candidate who was not trainable was hired. The manpower planning required inclusion of non standard practices to ensure that the hiring targets were met so as to ensure that migration of client business processes from other countries to India was as per committed timelines. In fact some of the BPOs in India also have operations in countries like Philippines. Due to the inability of the India BPOs to hire in some cases, work is split up between India and Philippines.
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Activity 1: Meet 2-3 employees of 3 BPOs. Ask these employees how many times, they have been asked to work overtime. What kinds of incentives are offered to work over time? Do employees really like to work over time or would they prefer their weekends or holidays instead?
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develop the manpower demand forecast. This demand forecast is then sent by the representatives of each of the departments to the department head for approval. The department ahead approves the demand forecast based on the business needs and the budgets available. The department head may consult the compensation and benefits team to understand the salaries or the cost to the company for employees at different levels. Once the department head approves the demand forecast which can be met from a budgetary perspective, then the demand forecasts are forwarded to the manpower planning function. The manpower planning functions consolidates the demand forecast for manpower received from different departments. Figure 1.1 illustrates the consolidated demand forecast development.
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than the provided demand forecast. This forces the representatives to think out of the box to cut down the demand forecast. Usually this happens by departments identifying the non value-added tasks that were being performed by different people in the department. The processes are redrafted to eliminate non value-added tasks; this reduces the total workload across the department and hence allows for reduction of manpower demand forecast. Additionally some companies insist that the demand forecast should be provided month wise. Should the manpower not be recruited within that month or the quarter even when additional workload has been created, then those manpower requirements lapse. This is because the department has possibly found a way to work without the resource requirement forecasted earlier. In this manner, organizations ensure the actual manpower level remains lesser than the demand forecast levels if there is no negative impact to the business. We all would have heard that work stretches itself to fit into the available time frame. If a person is provided 20 minutes to send an email with some information, it is usually sent within 20 minutes. If a person is provided 1 day to send an email with some information, it usually is sent just 20 minutes before the 1 day ends. Therefore manpower planning exercises engage employees in some effective decision making for generating demand forecasts.
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Hence when generating a demand forecast each manpower requirement must be generated after due consideration to all possible questions that maybe asked. Proper justification can be kept ready for gaining the senior management support. Once the representatives undergo this exercise two or three times then it becomes easy to gain the support of the senior management because they understand the preparation required for generating the demand forecast for manpower.
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1.13 Summary
Manpower planning is a very vital process where the management determines how the organization should move from its present manpower position to a desired manpower position. Manpower planning may be defined as a strategy for the procurement, development, allocation and utilization of an enterprises human resources. Human beings alone have the ability to think, grow, feel, show pleasure at achievements, show displeasure or dissatisfaction etc. There are five steps in the manpower planning process. They are: Evaluate present manpower inventory Manpower forecasting Develop a manpower sourcing plan or retrenchment plan Manpower allocation Building requisite competencies The main purpose of the manpower planning is to increase the productivity of the organization and the total value created by the organization in a given unit of time. The major obstacles in manpower planning are non optimal utilization of manpower; absenteeism; lack of employable labor; and modern manpower control and review processes. Successful manpower planning involves only two critical steps. Estimating the demand forecast for manpower accurately and ensuring that the supply forecast for manpower meets the demand forecast.
1.14 Glossary
Term Attrite Competency Description Employees leaving the organization are said to be attritions. Employees attrite from an organization. Competencies are the measurable or observable knowledge, skills, abilities, and behaviours (KSABs) critical to successfully perform a job. Estimate of expected demand for a product, service or resource over a specified future period. Forecasting is estimating the value of a variable/s at some future point in time. Page No.: 16
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Manpower Inventory
The term inventory is often used in relation to counting of physical objects like raw materials, work in progress, finished products etc. It may also include the qualities and the abilities of persons working a company and is then called as manpower inventory. The process of acquisition of goods or services required for a company or a person is called procurement. A cutting down or cutting back of manpower in this context. Reduction of manpower in this context.
Procurement Retrenchment
1.16 Answers
Answers to Self Assessment Questions 1. Strategy 2. Number 3. Manpower 4. Forecasting 5. Shortages, Surpluses 6. Labor, Overstaffing 7. Productivity 8. Obstacles 9. Advantages 10. Department representatives Answers to Terminal Questions 1. Refer section 1.2 2. Refer section 1.4 3. Refer section 1.6 4. Refer section 1.7
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Mini Case - Keeping Good People: Staffing Given the current labor market, the costs of recruiting and hiring are becoming more apparent than ever to organizations. After going through the difficulty of attracting and hiring talented people, businesses do not want to lose them to competitions. Difficulty is staffing has created an emphasis on retaining human resources. Applied Industries Technologies, a Cleveland-based business, has taken steps to reduce turnover. Specifically, they have made self-fulfillment - the process of helping each person reach their full potential - a central value in the organization. According to CEO John Dannemiller, the company views its self-fulfillment mission as important as salary and benefits in motivating talented employees. He attributes a doubling in revenues over the past eight years and a turnover rate below the industry average to self-fulfillment programs. Here is a summary of Applied Industrials self-fulfillment strategy: The company commits to 40 hours of training each year-a significant amount. Applied Industrial conducts regular leadership and personality testing. The test results are used to identify areas of personal improvement and to measure growth. The company offers reading lists of management books. Employees are reimbursed for education expenses. (Source: Dannemiller, J. C. (1998). How we keep good people. Across the Board, 35, 21.) Case Study Questions 1. Assume that you are Applied Industrial Technologies manager working to orient and hire new employees. a) How would you orient an employee who accepts a position at Applied but does not care about the self improvement program? So far, the employee has met job requirements but does not exceed higher than the job requirements. b) What steps could you take in selection to assess whether prospects would respond effectively to the self-fulfillment program? (Hint: As a start, consider individual characteristics that might affect a prospects response to this type of program).
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2. Applied Industrial views its self-fulfillment programs as a retention effort. It is also a recruitment tool? What, if any, do you think are the differences between tactics designed to improve retention versus those designed to improve attraction and recruitment? Hint: 1. a) By genuinely questioning how much am I interested in my personal and professional growth in terms of competencies, position and most of all the respect I get from all stakeholders. b) Hire people who are keen to learn. Their goal for learning should supersede their other goals. 2. Retention is attracting at an internal level, recruitment is attracting at an external level. Recommended Reading Prakash A. V. (2000). Manpower Planning and Development. India: ABD Publishers. Details of these books are available at www.sapnaonline.com and www.infibeam.com. References Books Rao S. P. (2010). Personnel and Human Resource Management. Mumbai: Himalaya Publishing House Tripathi P. C. (2009). Human Resource Development. New Delhi: Sultan Chand and Sons Mahapatro B. B. (2010). Human Resource Management. New Delhi: New Age International Publishers Aggarwala D. V., (2008) Manpower: Planning, Selection, Training and Development. India: Deep and Deep. E-references http://www.managementstudyguide.com/manpower-planning.htm (Retrieved on 13 May 2010) http://www.buzzle.com/editorials/9-12-2004-59200.asp (Retrieved on 13 May 2010) http://www.chrmglobal.com/Replies/1680/1/Manpower-planning.html (Retrieved on 13 May 2010)
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