MANPOWER PLANNING RECRUITMENT AND SELECTION

Unit-I:
Introduction to Man Power Planning- Concept, objectives, Need
and Importance, Process of Human Resource Planning, Levels of
Human Resource Planning, Corporate Planning, Structure and
Strategy for man power planning, Micro and macro human
resource planning, Environmental influences on human resources
management.

The Concept of Human Resource Planning

Introduction:

Human resources undoubtedly play the most important part in the functioning of an
organization. The term ‘resource’ or ‘human resource’ signifies potentials, abilities,
capacities, and skills, which can be developed through continuous interaction in an
organizational setting.

The interactions, interrelationships, and activities performed all contribute in some way or
other to the development of human potential. Organizational productivity, growth of
companies, and economic development are to a large extent contingent upon the effective
utilization of human capacities.

Hence, it is essential for an organization to take steps for effective utilization of these
resources. In the various stages in the growth of an organization, effective planning of human
resources plays a key role. Matching the requirements of the job with the individual is
important at all stages, including the recruitment procedures, in this endeavour.

When organizations contemplate diversification or expansion, or when employees have to be

promoted, human resource planning plays an important role. Further, the organizational
plans, goals, and strategies also require effective human resource planning.

Human Resource Planning – Meaning and Definition:

E.W. Vetter viewed human resource planning as “a process by which an organisation should
move from its current manpower position to its desired manpower position. Through
planning, management strives to have the right number and right kind of people at the right
places at the right time, doing things which result in both the organisation and the individual
receiving maximum long-run benefit.”
According to Leon C. Megginson human resource planning is “an integrated approach to
performing the planning aspects of the personnel function in order to have a sufficient supply
of adequately developed and motivated people to perform the duties and tasks required to
meet organisational objectives and satisfy the individual needs and goals of organisational
members.”

Human resource planning may be viewed as foreseeing the human resource requirements of
an organisation and the future supply of human resources and- (i) making necessary
adjustments between these two and organisational plans; and (ii) foreseeing the possibility of
developing the supply of human resources in order to match it with requirements by
introducing necessary changes in the functions of human resource management. In this
definition, human resource means skill, knowledge, values, ability, commitment, motivation,
etc., in addition to the number/of employees.

Human resource planning (HRP) is the first step in the HRM process. HRP is the process by
which an organization ensures that it has the right number and kind of people, at the right
place, at the right time, capable of effectively and efficiently completing those tasks that will
help the organization achieve its overall objectives.

HRP translates the organization’s objectives and plans into the number of workers needed to
meet those objectives. The actual HRM process starts with the estimation of the number and
kind of people required by the organization for the coming period.

HRP is also known by other names such as ‘Manpower Planning’, ‘Employment Planning’,
‘Labour Planning’, ‘Personnel Planning’, etc. HRP is a sub-system in the total organizational
planning. In other words, HRP is derived from the organizational planning just like
production planning, sales planning, material planning, etc.

The organisation’s objectives and strategies for the future determine future requirement of
human resources. It only means that the number and mix of human resources are reaction to
the overall organisational strategy. If the intent is to get closer to people possessing requisite
qualifications, the organisation should act quickly.

Human Resource Planning or Manpower Planning (HRP) is the process of systematically

reviewing HR requirements to ensure that the required number of employees with the
required skills is available when they are needed. Getting the right number of qualified
people into the right job is the crux of the problem here.

In actual practice, this is not easy. Due to constant changes in labour market conditions,
qualified people possessing relevant qualifications are not readily available. The organisation
needs to go that extra mile, dig up every source of information and exploit every opportunity
that comes its way in order to identify talent.

HRP is simply not a process of matching the supply of people (existing employees and those
to be hired or searched for) with openings the organisation expects over a given timeframe. It
goes a step further in order to reach out to right kind of people at right time, spending time,
resources and energies. Without careful planning, advance thinking and prompt actions, it is
next to impossible to get competent and talented people into the organisation.

Human resource planning is the responsibility of both the line and the staff manager. The line
manager is responsible for estimating manpower requirements. For this purpose, he provides
the necessary information on the basis of the estimates of the operating levels. The staff
manager provides the supplementary information in the form of records and estimates.

Human Resource Planning – Need and Importance

The following points highlight the need and importance of HRP in the organizations:

I. Assessing Future Personnel Needs:

Whether it is surplus labour or labour shortage, it gives a picture of defective planning or

absence of planning in an organization. A number of organizations, especially public sector
units (PSUs) in India are facing the problem of surplus labour.

It is the result of surplus labour that the companies later on offer schemes like Voluntary
Retirement Scheme (VRS) to eliminate surplus staff. Thus, it is better to plan well about
employees in advance. Through HRP, one can ensure the employment of proper number and
type of personnel.

II. Foundation for Other HRM Functions:

HRP is the first step in all HRM functions. So, HRP provides the essential information
needed for the other HRM functions like recruitment, selection, training and development,
promotion, etc.

III. Coping with Change:

Changes in the business environment like competition, technology, government guidelines,

global market, etc. bring changes in the nature of the job. This means changes in the demand
of personnel, content of job, qualification and experience needed. HRP helps the organization
in adjusting to new changes.

IV. Investment Perspective:

As a result of change in the mindset of management, investment in human resources is

viewed as a better concept in the long run success of the enterprise. Human assets can
increase in value as opposed to physical assets. Thus, HRP is considered important for the
proper planning of future employees.

V. Expansion and Diversification Plans:

During the expansion and diversification drives, more employees at various levels are
needed. Through proper HRP, an organization comes to know about the exact requirement of
personnel in future plans.
VI. Employee Turnover:

Every organization suffers from the small turnover of labour, sometime or the other. This is
high among young graduates in the private sector. This necessitates again doing manpower
planning for further recruiting and hiring.

VII. Conformity with Government Guidelines:

In order to protect the weaker sections of the society, the Indian Government has prescribed
some norms for organizations to follow. For example, reservations for SC/ST, BC, physically
handicapped, ex-servicemen, etc. in the jobs. While planning for fresh candidates, HR
manager takes into consideration all the Government guidelines.

VIII. International Expansion Strategies:

International expansion strategies of an organization depend upon HRP. Under International

Human Resource Management (IHRM), HRP becomes more challenging. An organization
may want to fill the foreign subsidiary’s key positions from its home country employees or
from host-country or from a third country. All this demands very effective HRP.

IX. Having Highly Talented Manpower Inventory:

Due to changing business environment, jobs have become more challenging and there is an
increasing need for dynamic and ambitious employees to fill the positions. Efficient HRP is
needed for attracting and retaining well qualified, highly skilled and talented employees.

The Objectives of Human Resource Planning

The main objectives of HRP are:

(i) Proper assessment of human resources needs in future.

(ii) Anticipation of deficient or surplus manpower and taking the corrective action.

(iii) To create a highly talented workforce in the organization.

(iv) To protect the weaker sections of the society.

(v) To manage the challenges in the organization due to modernization, restructuring and re-
engineering.

(vi) To facilitate the realization of the organization’s objectives by providing right number
and types of personnel.

(vii) To reduce the costs associated with personnel by proper planning.

(viii) To determine the future skill requirements of the organization.

(ix) To plan careers for individual employee.

(x) Providing a better view of HR dimensions to top management.

(xi) Determining the training and development needs of employees.

Human Resource Planning – Benefits:

Human Resource Planning (HRP) anticipates not only the required kind and number of
employees but also determines the action plan for all the functions of personnel management.

The major benefits of human resource planning are:

i. It checks the corporate plan of the organisation.

ii. HRP offsets uncertainties and changes to the maximum extent possible and enables the
organisation to have right men at right time and in right place.

iii. It provides scope for advancement and development of employees through training,
development, etc.

iv. It helps to anticipate the cost of salary enhancement, better benefits, etc.

v. It helps to anticipate the cost of salary, benefits and all the cost of human resources
facilitating the formulation of budgets in an organisation.

vi. To foresee the need for redundancy and plan to check it or to provide alternative
employment in consultation with trade unions, other organisations and government through
remodelling organisational, industrial and economic plans.

vii. To foresee the changes in values, aptitude and attitude of human resources and to change
the techniques of interpersonal, management, etc.

viii. To plan for physical facilities, working conditions and the volume of fringe benefits like
canteen, schools, hospitals, conveyance, child care centres, quarters, company stores, etc.

ix. It gives an idea of type of tests to be used and interview techniques in selection based on
the level of skills, qualifications, intelligence, values, etc., of future human resource.

x. It causes the development of various sources of human resources to meet the organisational
needs.

xi. It helps to take steps to improve human resource contributions in the form of increased
productivity, sales, turnover, etc.

xii. It facilitates the control of all the functions, operations, contribution and cost of human
resources.
 The Process of Human Resource Planning
Human resources are one of the most important assets for any business organization. In order
to take maximum benefit of the available human resources, an organization must have a
Human Resources Planning process (HRP). Human Resources planning is a continuous
process that should carry out by the Human resources department of an organization to ensure
systematic planning to accomplish maximum benefits from the available human resources.
the process of Human resources planning ensures the creation of the best fit of the employees
to the job roles as well as to the organizational culture. This helps the organization to operate
without any manpower surpluses or shortages in the organization.

Seven steps can be identified in the process of human resources planning.

1.  Analyze Objectives

The human resources planning process starts with the identification of the objectives of the
different departments in the organization. each department such as management, marketing,
production, finance, sales, etc. can have different objectives and they have specific
expectations related to human resources. The objectives can include recruiting new
employees for the process, reducing the number of employees by automating processes or
improving the knowledge and skill levels of existing employees.
By analyzing the objectives of each department of the organization, the human resources
planning team can identify the changes that will be necessary for the future of the
organization.

2. Inventory current human resources

Once the necessary changes are identified, the Human resources planning team should create
an inventory of the current human resources available in the organization. This should
include the current number of employees available in the organization, their capacities,
capabilities, and performance abilities. This helps the human resources team to identify the
methods of filling the upcoming job requirements and to create estimates for internal and
external recruitments that will be necessary.

3. Forecast the demand and the supply of employees

Based on the objectives of the different departments of the organization and the inventory of
the available resources, the Human resources planning team can forecast the demand of the
employees. Apart from that, based on the availability in the organization and the employee
market, the supply of the employees should be forecasted.

4. Estimate Gaps

Conducting a comparison between the demand and the supply of the employee availability
can help the human resources team to identify the gaps that can arise in the foreseeable
future. The gaps can arise as employment deficits as well as employment surpluses. 
Employment deficits indicate the number of employees that need to be recruited and the
employment surpluses indicates the job terminations or transfers between departments. Apart
from that, the gaps can be used as an indication of the training and development requirements
for the employees.

5. Formulate Plan

Once the employment gaps are estimated, the Human resources planning team should
formulate a plan for the recruitment, training, development, termination, interdepartmental
transfers, promotion, or early retirement of employees based on the requirements of the
organization. The employment plan can vary based on the deficit or the surplus estimated in
forecasting the demand and supply stage.

6. Implement Plan

Once the human resources plan is formulated, the human resources department should
implement the plan in the organization. This should be aligned with the goals and
objectives of the organization as well as the goals and objectives of each department of the
organization.

7. Monitor, Control, and feedback

Once the human resources plan is implemented, the plan should be monitored continuously to
ensure the alignment of the plan to the objectives of the departments. The necessary controls
should be put in place and the feedback at each level should be obtained to measure any
defects in the implemented human resources plan.  The necessary changes should be
implemented according to the feedback obtained in the ongoing process in order to make the
human resources plan a success.

Human Resource Planning at Different Levels:

Different institutions make HRP at different levels for their own purposes, of which national
level, industry level, unit level, departmental level and job level are important. Human
resource planning is done at various levels for their own purposes by various institutions.

There are various levels of human resource planning in an industrial enterprise:

1. National Level

2. Sectoral Level

3. Industry Level

4. Unit Level

5. Departmental Level

6. Job Level

i. National level – Generally, government at the centre plan for human resources at the
national level. It forecasts the demand for and supply of human resource, for the entire nation.
Generally, central government plans for human resources for the entire nation. It anticipates
the demand for and supply of human requirements at the national level.

ii. Sector level – Manpower requirements for a particular sector like agricultural sector,
industrial sector or tertiary sector are projected based on the government policy, projected
output/operations, etc. Central and state governments also plan human resource requirements
at sectoral level. It tries to satisfy needs of some particular sectors like Agriculture Sector,
Industrial Sector and Service Sector.

iii. Industry level – Manpower needs of a particular industry like cement, textiles, chemical
are predicted taking into account the output/operational level of that particular industry. This
level of planning is done to suit manpower needs of a particular industry such as Engineering,
Heavy Industries, Paper Industry, Consumer Goods Industries. Public Utility Industries,
Textile, Cement/Chemical Industries etc.

iv. Unit level – This covers the estimation of human resource needs of an organisation or
company based on its corporate/business plan.
v. Departmental level – This covers the manpower needs of a particular department in a
company. This level of planning is done to suit the manpower needs of a particular
department in a company e.g. Marketing Department, Production Department. Finance
Department, etc.

vi. Job level – Manpower needs of a particular job family within department like Mechanical
Engineer is forecast at this level. This level of planning fulfills the human resource needs of a
particular job family within department. For example, the requirement of number of sales
executes in the marketing department.

Micro and Macro Human Resource Planning

Micro and macro level human resource planning are two different major aspects of human
resource planning. A micro level planning mean the planning, which is done at a smaller
level, say at an organizational level. Whereas, macro-level planning is considered to be a
planning conducted in the view of a whole industry or country. Therefore, both type of
planning are distinctive in nature based on their scopes only. Broadly speaking HRP is
formulated at two levels: Macro and Micro. Macro level plans include the planning made at
International, national, sectoral level and industry level. Micro level planning refers to the
planning made at organizational planning. The organizational planning includes corporate
level planning, intermediate level planning, operations planning, planning short term
activities. Both macro and micro level of HRP are, indeed, closely interlinked.

A. Macro Level Plan

International level Plan: After World War II, United Nation Organization (UNO) came into
being with the objective of saving the mankind from the scourge of war. It has been doing
many developmental works in the areas of health and education in member nations. For
examples, United Nations International Children Emergency Funds (UNICEF) has been
aiding to improve the health, nutrition, education and general welfare of children. Similarly,
World Health Organization (WHO) is a specialized agency of the United Nations responsible
for International Public Health.

National level plan: National level plans are prepared by the central governments. Plans at
this level include population projection, program of economic development, educational and
health facilities, occupational distribution and growth, mobility of personnel across industries
and geographical regions.

Sector level plan: This would cover manpower requirements of a particular sector like the
agricultural sector, industrial sector and service sector. Different sectors require different
quality of people.

Industry level: This would forecast man power requirement for specific industries, such as
engineering, heavy industries, textile industries, plantation industries, etc. For example,
software industries need IT professional where as heavy industry requires more number of
management professional. Depending in the Job trends, several courses may be designed by
the educational institutions to cater to the manpower requirement of the particular industry.
During Industry 4.0, for example, jobs relating to data science, business analytics,
Technology, robotics, artificial intelligence are trending. Many of the academic institutions
across nation are offering these courses, so that the industry stays competitive.

B. Micro Level Plan

Micro level plans are formulated at organization level. It relates to the manpower
requirement of a particular enterprise. Like Nalco, Reliance etc.

a) Corporate level planning: Corporate level HRP takes into consideration the changing
market situation, strategic plans of the organization, the technological changes anticipated
etc., at the macro level. The role of HRP at this level is to identify the broad policy issues
relating to human resources. The various issues discussed at this stage are the employment
policy, the welfare policy, development policy etc.

b) Intermediate planning: This plan is done at Strategic Business Unit level (SBU). A SBU
is a single business or a collection of businesses that is independent and formulates its own
strategy. The HR planning at this level is based on the corporate level HR plan. The decision
here should complement the decisions at the higher level and help the SBU achieve its goals
and objectives. HR planning at this level includes determining the recruitment/lay off
strategy, retaining strategy etc.

c) Operation Planning: These plans are made at the operational level and as in the case of
planning at other levels, are made in pursuit of the organizational objectives. These include
simple plans like plans for training and development of resources; recruitment etc. to match
the requirements lay down at a broader level.

d) Planning short-term activities: Planning at this level includes management of day-to-day

activities like grievance handling. Planning at this level and operations level are very critical
because these plans practically ensure the success or failure of the corporate plans. If these
plans fail, the corporate plans are likely to fail.

However, in both the cases i.e., Micro and Macro level manpower planning, it revolves
around estimation of human requirements in a futuristic situation. Following are some of the
similarities and differences of micro and macro level planning.

1) Macro-level planning is the process, where requirement of manpower at the industry,

sector or national level are estimated. Whereas, it’s mainly an organization, where planning is
concentrated in case of micro-level planning.

2) At the macro-level planning, factors such as future economic trends, social priorities etc.
are taken into consideration and accordingly skill mapping is done, where futuristic skill
needs are taken care of. Based on such prediction of future trend, the supply and demand
related aspects are considered. Whereas, at micro-level planning, forecasting is concentrated
in an industry. However, in micro-planning, factors like internal availability of surplus human
resources, supervisory skills etc. are taken into consideration.

3) Both macro and micro-level planning needs accuracy in outcomes. However, the chance of
accuracy in forecasting of manpower at the micro-level planning has always remained high.

4) Macro-level planning is a more decentralized process than micro-level planning, though an

element of central coordination is required for both type of planning

Environmental Influence on Human Resource Management

Human resource management is a subsystem of an organization as a system. However, when
a subsystem is taken for analysis, it is treated as a system because it has the features of a
system. A system works in the context of its environment. Environment of a system consists
of all those factors which lie outside the system but affects working of the system. In the case
of human resource management, there are two categories of environmental factors-external
and internal. External factors are all those factors which lie outside an organization and affect
its working, including human resource management. Internal factors are all those factors
which lie within the organization and affect human resource management.

Classification of various environmental factors affecting human resource management into

two categories is important because an organization cannot control external factors but it can
control internal factors.

Both types of factors are:

A. External Factors:

External factors affecting human resource management are economic, socio-cultural,

technological, political-legal, and professional association. These factors have different types
of influences on human resource management.

I. Economic Factors:

Economic factors are those factors which give shape and form to the development of
economic activities and include factors like nature of economic system, general economic
conditions, various economic policies, and various factors of production including human
resources.

Out of these, factors that influence human resource management practices are population and
workforce, workforce market conditions, national income, and inflationary pressures.

Influence of these factors on human resource management practices are as follows:

i. Population and Workforce:

Population and workforce influence human resource management because these form the
basis for an organizations’ external supply of human resources. While considering population
and workforce as a means for supply of external human resources, organizations should
differentiate between workforce and population because only a part of the population is
eligible to work.

Further, eligible workforce can be divided into two groups- the workforce reserve (those not
working for economic gain, for example, homemakers, students, etc., and those who
constitute workforce. Out of this workforce, organizations can choose their employees.

ii. Workforce Market Condition:

Workforce market condition shows demand and supply of workforce. It influences human
resource management practices relating to recruitment and selection. Exchanges between
employers and potential employees occur in the workforce market. Since workforce market
includes all types of workforce, only relevant workforce market is taken into account for
searching potential employees.

Three factors usually define the relevant workforce market- (a) occupation — qualifications
and skills required, (b) geography — potential employees are willing to relocate or commute,
and (c) other employers that compete with similar products and services.

These three factors define the part of the workforce that is of interest to a particular employer.
In fact, human resource professionals consider workforce market in terms of all three factors.

iii. National Income:

National income, particularly measured in terms of per capita income, affects wage/salary
structure at the macro level. Each employer has to align wage/salary structure with that
operating at the macro level. This is the reason for difference between wage/salary structure
of economically advanced countries and developing countries.

iv. Inflationary Pressures:

Besides the national income, inflationary pressures in a country also affect the payment to be
made to employees. In most of the countries, payment to employees is linked to cost of living
either directly or indirectly. As a result, when a country faces inflationary pressures, its cost
of living index goes up forcing employers to pay more to employees.

For example, in India, dearness allowance, a part of the payment made to employees, is
linked with cost of living index. When this index goes up, there is proportionate increase in
the amount of dearness allowance.

II. Socio-Cultural Factors:

Socio-cultural factors are quite comprehensive and affect various aspects of organizational
operations, including human resource management. From human resource management point
of view, attitudes, beliefs, desires, expectations, and customs of the society at a given point of
time are important.
These factors determine- (i) expectations of the society from organizations, (ii) views towards
social status of jobs, (iii) views towards achievement of work, (iv) views towards authority
structure, responsibility, and organizational positions, (v) workforce mobility, and (vi) role of
unions in managing human resources. In the light of various socio- cultural factors,
organizations can do better if they follow human resource management practices in
accordance with the needs of these factors.

The socio-cultural factors affect human resource management practices in the following
ways:

a. Socio-cultural factors have direct impact on organizational culture. If the organizational

culture is not in accordance with socio-cultural characteristics, it will not be effective even if
organizations offer higher monetary benefits. Since human resource management practices
are one of the prime constituents of organizational culture, these practices have to be aligned
to social expectations. In this context, the role of human resource professionals is very
important.

b. Socio-cultural factors determine what kind of role is to be, played by unions in managing
human resources. If the society views that unions are the champions of employee cause, their
bargaining position increases and their role in managing human resources becomes more
important. In alternative situation, the role of unions in managing human resources decreases.

III. Technological Factors:

Technological factors consist of sum total of knowledge providing ways to do things. These
include inventions and techniques which affect the ways of doing things, that is, designing,
producing, and distributing products and services. Technology affects an organization in two
ways- (i) defining nature of jobs and (ii) affecting human resource management practices.

(i) Defining Nature of Jobs:

Technology is a major source of productivity increase. Various jobs in an organization being

performed by individuals are determined by the technology being used for conversion
process. Thus, technology determines the type of skills to be possessed by job performers.

As the level of technology improves in an organization, skill requirement also increases. For
example, in knowledge-based companies like in information technology, skill requirement is
quite different as compared to industrial companies. For knowledge-based companies,
knowledge workers are required.

Even in industrial companies, those opting for highly automated technology require human
resources with different skill set as compared to companies opting for non-automated
technology. HR professionals have to select and train human resources accordingly.

Technology not only affects the internal operations of organizations but it also affects how
human resource professionals work. By linking computers, fax machines, copiers, printers,
and the likes, information related to human resources can be disseminated more quickly.
With that information, human resource planning can be better facilitated, decisions can be
made faster, and communication with employees and external community can be enhanced.

(ii) Affecting Human Resource Management Practices:

Technology has changed human resource management practices in the following areas:

a. In recruitment and selection, the total process has been reduced to such an extent that the
entire process can be completed within a very short time. By posting jobs on the Internet,
required information is assimilated quickly; applications from prospective candidates can be
received quickly; even interviews can be conducted through telephone; result of selection
process can be communicated electronically.

It may be mentioned that most of the IT companies and many of the forward-looking
companies in other sectors send appointment letters to the selected candidates through the
Internet.

b. In training and development, technology is dramatically changing how HR professionals

are training and developing employees. The Internet has provided opportunities to deliver
specific information to employees on demand; visual display terminal (VDT) is being used to
make training programmes more effective.

In fact, various training media are also making it possible to send employees for training
without having them to physically transport from one location to another.

c. In communication, technology has paved the way for open door policy, a policy which is
must in the present business environment. Open door policy implies that anyone can
communicate with anyone in the organization without being limited because of hierarchical
pressures.

Organization’s websites and the Internet have made open door system workable. Human
resource professionals use these media to share information with employees.

d. In the surveillance of employee behaviour, technology is playing crucial role. Instead of

monitoring employee behaviour physically, this can be done through technology whether the
employees are located at a single place or dispersed across the globe. In fact, many
multinational companies adopt this mode of monitoring the behaviour of their employees.

e. In today’s environment, a major concern before HR professionals is to maintain proper

work-life balance for employees. Organizational jobs have become demanding. This feature
takes lot of employee time. If time taken in commuting to and from office is added to this,
employees have no time to their personal life.

Technology has paved the way for emergence of virtual office which is devoid of a central
place, known as office; no commuting of employees is required; they are linked through
information technology. Therefore, they can work from any place. This helps them to
maintain proper work-life balance.
IV. Political-Legal Factors:

Political-legal factors include political system, role of government in business, various

government policies related to business operations, laws formulated by governments, both
central and state levels.

Political-legal factors affect human resource management practices in the following

ways:

i. Governments prescribe policies from time to time related to management of human

resources. These policies have to be adhered by all the organizations which are covered by
these policies.

ii. There cannot be discrimination among employees on the basis of sex, caste, religion, or
place of origin.

iii. In certain sectors, at least prescribed percentage of total employees must be selected from
personnel belonging to backward classes, scheduled castes/tribes, and physically
handicapped.

iv. Employee remuneration, safety, working conditions, and industrial relations systems must
conform to various legal prescriptions. In India, there are various Acts passed by Parliament
and State legislatures, relevant to management of human resources. Organizations have to
adopt their human resource management practices according to prescriptions of these Acts as
these Acts leave very little discretion for adopting different human resource management
practices.

Professional Association:

For every major profession, there is a professional association. A professional association

consists of organizations and individuals whose membership is based on common
professional, scientific, or technical aims. The representative body of professionals is needed
to regulate and develop the professional activities.

For this purpose, the association prescribes code of ethics to ensure adoption of ethical
practices of its members. For example, in India, there is National Institute of Personnel
Management which has provided a code of ethics to its members that aims at governing their
behaviour in performing their duties related to managing human resources.

B. Internal Factors:

Internal factors (also known as organizational factors) lie within the organization and affect
human resource management practices. In an organization, human resource management
works within the overall perspective provided by the organization.

Overall perspective for the functioning of human resource management is provided by

numerous organizational factors, the more relevant being the following- organization’s
strategy, organizational culture, trade unions, and organization’s financial position.
Besides the above organizational factors, organization’s technology also affects human
resource management practices by defining nature of jobs. Now let us see how the above
internal factors affect human resource management practices.

I. Organization’s Strategy:

Human resource management issues are not independent issues but these are derived; these
are derived from organization’s strategy. Every organization sets its strategy either explicitly
or implicitly. Strategy is a way in which an organization, reacting to its environment, deploys
its principal resources and marshals its main efforts in pursuit of its purpose.

Human resource is one of the principal resources of any organization. Therefore, it must be
deployed and utilized keeping in view the requirements of the strategy. Its implication is that
HR strategy should be chalked out in the light of organization strategy.

How strategy affects human resource management practices can be seen by analyzing how
strategy works in an organization. Strategy operates at three levels- corporate level, business
level, and functional level. At the corporate level, strategic decision involves deciding ‘what
business should we be in’.

Such a decision sets the long-term direction for the whole organization. Such a decision is
made by top management of the organization. Business level strategy is relevant to different
business areas, often called strategic business units (SBUs). Each SBU formulates its own
strategy within the overall framework provided by corporate level strategy.

Business level strategy primarily deals with the question- ‘how do we compete in the given
businesses’? Functional level strategy is relevant to each functional area like production,
marketing, finance, and, of course, human resource. Functional level strategy primarily deals
with the question- ‘how do we contribute to business unit and corporate objectives’?

Thus, HR strategy is formulated within the overall framework provided by corporate level
and business level strategy. Depending on the nature of corporate strategy, human resource
management practices are followed.

II. Organizational Culture:

Organizational culture is another factor that shapes human resource management practices.
Organizational culture is the set of assumptions, beliefs, values, and norms that are shared by
an organization’s members. There are two types of elements which define the culture of an
organization- abstract elements and material elements. Abstract elements are internally-
oriented and include values, beliefs, attitudes, and feelings.

Material elements are externally- focussed and include buildings, personnel dresses, products,
etc. Every organization, being a social entity, develops within it a cultural system with some
unique modes of behaviour. These unique modes distinguish an organization from others.

Organizational culture is very important factor which affects organizational processes and
practices including human resource management practices. To understand the differences in
human resource management practices in different types of organizational culture, it can be
divided into two groups- high-performing culture and low-performing culture.

Human resource management practices differ in these two cultures on the following
dimensions:

i. In high-performing culture, HR practices are intricately linked to the strategic management

of the organization. In low-performing culture, there is lack of such a linkage.

ii. In high-performing culture, human resource is treated as a strategic resource. In low-

performing culture, human resource is treated just like any other organizational resource.

iii. In high-performing culture, human resource function establishes business partnership with
line managers who have a direct interest and involvement in delivering human resource.

Human resource functionaries become integral part of strategic business units and customize
human resource solutions to provide fast and efficient service. In low-performing culture,
human resource functionaries and line managers have independent status and way of
working.

iv. In high performing culture, the focus is on growing new managers internally by promotion
from within. Therefore, training and development activities have very high importance in
HRM. In low-performing culture, training and development is not accorded high importance.

v. In high-performing culture, performance management is based on the person rather than

the job. Assessment is done frequently and relies on multi-rater feedback. In low-performing
culture, performance management is based on job result. Assessment is done after a fixed
interval of time and assesses immediate superior plays significant role in assessment.

III. Trade Unions:

Though a trade union in an organization is a separate entity, it has been treated as an internal
factor because organization’s employees (particularly operatives) are members of the trade
union. Trade union affects recruitment of employees, their development, compensation,
maintenance, and industrial relations.

Generally, agreement between management and labour is reached through collective

bargaining. Outcome of the collective bargaining depends on the relative bargaining position
of the management and labour. If trade union is in relatively better bargaining position,
outcome of the collective bargaining goes in its favour.

In such a situation, the organization has to adopt human resource management practices
according to wishes of the trade union though such practices may have adverse impact on the
organization. Bargaining position of a trade union depends on the strength of its members as
well as support of trade unions of other organizations at the same location and apex body of
trade unions at national level.

IV. Organization’s Financial Position:

While the above factors are enduring in shaping human resource management practices,
organization’s financial position affects human resource management practices, particularly
those having substantial financial implications. The ability to pay the wages and salaries,
funds for retraining human resources, etc., are affected by an organization’s financial position
and its cash flow.

Generally, highly profitable periods bring higher bonus while unprofitable periods may not
result in any bonus (except the statutory bonus). Though many organizations tend to profess
that employees are their most important asset, they manage their human resources as if
employees are the most important expense.

Therefore, when financial difficulty is experienced, the axe falls first on the employees. This
is evident by substantial employee layoff during the economic slowdowns. On the other hand,
employee stock option, profit sharing, performance incentives, etc. are the result of sound
financial position.

Factors affecting the Quantitative and Qualitative Dimension of Human Resource

Planning.

Human resources have a dual role to play in the economic development of a country. On one
hand they are the consumers of the products and services produced by the organizations while
on the other hand they are one of the factors of production.

Along with capital and other factors of production, human resources can lead to increase in
production and economic development. The rate of growth of human resources is determined
by two aspects quantitative and qualitative.

Variables Determining the Quantity of Human Resources:

1. Population Policy:

Some population policies operate by influencing the factors responsible for growth such as
fertility, marriage and mortality. These are known as population influencing policies. Another
category of policies known as responsive policies are implemented to adjust to observed
population trends with the help of programmes like health, nutrition, education, housing, etc.
The aim of population policies is to achieve an optimum population for enhancing the
country’s development.

2. Population Structure:

The structure or composition of the population is determined by two factors, sex composition
and age composition.

(i) Gender Composition:

Gender ratio is the ratio of males to females in the population. It is the basic measure of the
sex composition of the population of any area. Higher the number of females, higher will be
the population growth rate in future.
(ii) Age Composition:

It is the distribution of population by age groups. Age composition is the result of past trends
in fertility and mortality. The supply of labour depends on age composition as economically
active population falls in range of 15-65 age groups.

3. Migration:

Net migration is another factor which causes changes in the population. Age and sex
composition determine the natural growth in population, but for calculating the overall
changes in population it is important to consider net migration also.

Net migration = total immigrants – total emigrants

A positive net migration will lead to a rise in population growth rate while negative net
migration will reduce the growth rate of population. Migration can be both interregional and
international.

4. Labour Force Participation:

The population of any country consists of workers and non-workers. The workers are the
people, usually in age group of 15-65, who participate in economically productive activities
by their mental or physical presence.

These include:

i. Employers,

ii. Employees,

iii. Self-employed persons, and

iv. Those engaged in family enterprises without pay.

The others in the population are the non-workers such as students, infants, elderly, beggars,
retired people, inmates of jail or mental institutions, unemployed, etc. They do not contribute
to any productive economic activity. It is the changes in the working population which affect
the growth of human resources. The number of people who are unemployed but available for
work also impacts the availability of labour.

Qualitative Aspects of Human Resource Planning:

The quantitative dimensions help to ascertain human resources in numbers while the
productive power of human resources is assessed by the qualitative dimensions. For example,
there may be hundreds of applicants for 20 vacancies, but out of these only a few may meet
the quality standards required for the job.

Factors which determine the quality of human resources are:

1. Education and Training:

The quantity and quality of education and training received by human resources impacts their
knowledge and skills. Education and training are important for the upliftment of both
individual and society. It can be of two types, formal and informal.

Formal education is imparted through schools and colleges while informal education and
training takes place through on-the-job training methods. Formal education stresses the
transfer of theoretical knowledge, while informal education emphasizes on practical
application of knowledge.

2. Health and Nutrition:

Health and nutrition along with education are vital for Human Resource Development. Health
and nutrition impact the quality of life, productivity of labour and the average life
expectancy.

Health status is determined by:

(i) Purchasing power of people.

(ii) Public sanitation, climate and availability of medical facilities.

(iii) People’s understanding and knowledge of health, hygiene and nutrition.

3. Equality of Opportunity:

Not all segments of people comprising human resources get equal employment opportunities.
There is bound to be some discrimination.

The most common forms of discrimination are:

(i) Social discrimination – Discrimination on basis of gender, religion or social standing.

(ii) Economic discrimination – Discrimination based on financial positions or possession of

wealth by the sections of workforce.

(iii) Regional discrimination – These are in form of discrimination between rural and urban
population or between people belonging to different regions/ states.

Discrimination affects the quality and productivity of the human resources belonging to
different sections of the population. The privileged classes get access to best education,
nutrition and health facilities while underprivileged are deprived of their right share in the
development process. For the overall, well rounded development of the country’s human
resources, effective policies need to be implemented to deal with the problem of
discrimination.