Human Resource Planning

What is Human Resource Planning

Characteristics Of Human Resource Planning
Significance Or Importance Of Human Resource Planning

Human Resource Planning Approaches

Factors Affecting Human Resource Planning

Problem in Human Resources Planning

Process of Human Resources Planning
Guidelines for making HRP effective
 What is Human Resource Planning

Human resource planning is the process of anticipating and carrying out

the movement of people into, within, and out of the organization. Human
resources planning is done to achieve the optimum use of human
resources and to have the correct number and types of employees
needed to meet organizational goals.

Thus, it is a double-edged weapon. If used properly, it leads not only to proper

utilization, but also reduces excessive labor turnover and high absenteeism,
and improves productivity. It can also be defined as the task of assessing and
anticipating the skill, knowledge and labor time requirements of the
organization, and initiating action to fulfill or ‘source” those requirements.
Human resource planning is the most important managerial function of an
organization. It ensures three main things:
• It ensures adequate supply of human resources.
• It ensures proper quality of human resources.
• It ensures effective utilization of human resources

E.W Vetter viewed human resources planning as ―a process by which an

organization 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 organization and the individual receiving
maximum long-run benefit
According to Leon C Megginson human resources 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 organizational
objectives and satisfy the individual needs and goals of organizational
members.
According to Geisler, “Manpower planning is the process – including
forecasting, developing and controlling by which a firm ensures that it has
• The right number of people,
• The right kind of people,
• At the right places,
• At the right time, doing work for which they are economically most useful
(i) Human resource planning must incorporate the human resource needs in the
light of organizational goals.
(ii) Human resource planning must be directed towards clear and well-defined
objectives.
(iii) Human resource plan must ensure that it has the right number of people and
the right kind of people at the right time doing work for which they are
economically most suitable.
(iv) Human resource planning should take into account the principle of periodical
reconsideration of new developments and extending the plan to cover the changes
during the given long period.
(v) Human resource planning should pave the way for an effective motivational
process.
(vi) Adequate flexibility must be maintained in human resource planning to suit the
changing needs of the organization.
HRP or MPP is essentially concerned with the process of estimating and projecting
the supply and demand for different categories of personnel in the organization for
the years to come.
Characteristics Of Human Resource Planning

Characteristics of effective human resource planning are as follows:

1. Future Oriented
Human resource planning is prepared to assess the future requirement of
manpower in the organization. It helps identify the size and composition of
resources for future purpose.

2. Continuous Process

Human resource planning is a continuous process. The human resource

planning prepared today may not be applicable for future due to ever
changing external forces of the environment. Hence, to address such
changing factors, the human resource planning needs to be revised and
updated continuously.
3. Optimum Utilization Of Human Resources
Human resource planning focuses on optimum utilization of resources in the
organization. It checks how the employees are utilized in a productive manner. It
also identifies employees' existing capabilities and future potentialities to
perform the work.

4. Right Kinds And Numbers

Human resource planning determines the right number and kind of people at
the right time and right place who are capable of performing the required jobs. It
also assesses the future requirement of manpower for organizational objective.

5. Determination Of Demand And Supply

Human resource planning is a process of determining demand for and supply of
human resources in the organization. Then a match between demand and
supply estimates the optimum level of manpower
6. Environmental Influence
Human resource planning is influenced by environmental changes, hence, it is
to be updated as per the change occupied in the external environment.

7. Related To Corporate Plan

Human resource planning is an integral part of overall corporate plan of the
organization. It can be formulated at strategic, tactical and operational levels.

8. A Part Of Human Resource Management System

As a part of total human resource management system, human resource
planning is regarded as a component or element of HRM which is concerned
with acquisition and assessment of manpower. It serves as a foundation for the
management of human resource in an effective and efficient manner.
Significance Or Importance Of Human Resource Planning

Human resource planning aims at fulfilling the objectives of manpower

requirement. It helps to mobilize the recruited resources for the productive
activities. The human resource planning is and important process aiming to link
business strategy and its operation. The importance of human resource planning
are as follows:
1. Future Manpower Needs
Human resource planning ensures that people are available to provide the
continued smooth operation of an organization. It means, human resource
planning is regarded as a tool to assure the future availability of manpower to
carry on the organizational activities. It determines the future needs of
manpower in terms of number and kind.

2. Coping With Change

Human resource planning is important to cope with the change associated with
the external environmental factors. It helps assess the current human resources
through HR inventory and adapts it to changing technological, political, socio-
cultural, and economic forces.
3. Recruitment Of Talented Personnel
Another purpose of HR planning is to recruit and select the most capable
personnel to fill job vacancies. It determines human resource needs, assesses the
available HR inventory level and finally recruit the personnel needed to perform
the job.

4. Development Of Human Resources

Human resource planning identifies the skill requirements for various levels of
jobs. Then it organizes various training and development campaigns to impart the
required skill and ability in employees to perform the task efficiently and
effectively.

5. Proper Utilization Of Human Resources

Human resource planning measures that the organization acquires and utilizes
the manpower effectively to achieve objectives. Human resource planning helps
in assessing and recruiting skilled human resource .It focuses on the optimum
utilization of human resource to minimize the overall cost of production.
6. Uncertainty Reduction
This is associated with reducing the impact of uncertainty which are brought
by un sudden changes in processes and procedures of human resource
management in the organization.
 Human Resource Planning Approaches
HR planning is a mechanism created to forecast the required human resource to
perform a specific task. It also assesses the skill requirement of employees for
each job. It is a complex task which estimates the future demand and supply
position of HR in the organization. Hence, it gives a picture of infinite future in
advance in terms of human resource requirement for the company. Here, the
approaches to HR planning are as follows:

1. Quantitative Approach
It is also known as top down approach of HR planning under which top level
make and efforts to prepare the draft of HR planning. It is a management-driven
approach under which the HR planning is regarded as a number's game. It is
based on the analysis of Human Resource Management Information System and
HR Inventory Level. On the basis of information provided by HRIS, the demand of
manpower is forecasted using different quantitative tools and techniques such
as trend analysis, mathematical models, economic models, market analysis, and
so on. The focus of this approach is to forecast human resource surplus and
shortages in an organization. In this approach major role is played by top
management
2. Qualitative Approach
This approach is also known as bottom up approach of HR planning under which the
subordinates make an effort to prepare the draft of HR planning. Hence, it is also
called sub-ordinate-driven approach of HR planning. It focuses on individual
employee concerns. It is concerned with matching organizational needs with
employee needs. Moreover, it focuses on employee's training, development and
creativity. Similarly, compensation, incentives, employee safety, welfare, motivation
and promotion etc. are the primary concerns of this approach. In this approach,
major role is played by lower level employees.

3. Mixed Approach
This is called mixed approach because it combines both top-down and bottom-up
approaches of HR planning. In fact, the effort is made to balance the antagonism
between employees and the management. Hence, it tends to produce the best
result that ever produced by either of the methods. Moreover, it is also regarded as
an Management By Objective(MBO) approach of HR planning. There is a equal
participation of each level of employees of the organization.
Factors Affecting Human Resource Planning
Human Resource Planning (HRP) is influenced by several considerations. The more
important of them are
Type and Strategy of Organization
The type of organization is an important consideration because it determines the
production processes involved, number and type of staff needed, and the
supervisory and managerial personnel required. Manufacturing organizations are
more complex in this respect than those that render services.
The strategic plan of the organization defines the organization’s HR needs. For
example, a strategy of organic growth means that additional employees must be
hired. Acquisitions or mergers, on the other hand, probably mean that the
organization will need to plan for layoffs, since mergers tend to create, duplicate
or overlapping positions that can be handled more efficiently with fewer
employees.
Primarily, the organization decides either to be proactive or reactive in human
resource planning. It can either decide to carefully anticipate the needs and
systematically plan them to fill them far in advance, or it can simply react to needs as
they arise. Of course, careful planning to fill HR needs better helps ensure that the
organization obtains the right number of HR people with proper skills and
competencies when they are needed.

Similarly, the organization must determine the breadth of the plan. Essentially, the
organization can choose a narrow focus by planning in only one or two HR areas,
such as recruitment or selection, or it can choose a broad focus by planning in all
areas including training, remuneration and so on.
The organization must also decide upon the formality of the plan. It can decide to
have an informal plan that lies mostly in the minds of the managers and
personnel staff. Alternatively, the organization can have a formalized plan which
is clearly spell out in writing, backed by documentation and data.

Finally, the organization must make a decision on flexibility- the ability of the HR
plan to anticipate and deal with contingencies. No organization likes high levels of
uncertainty. Organizations seek to reduce uncertainty by planning, which includes
forecasting and predicting possible future conditions and events. Human
resource planning can contain many contingencies, which reflect different
scenarios thereby assuring that the plan is flexible and adaptable.
Organizational Growth Cycles and Planning

The stage of an organization’s growth can have considerable influence on human

resource planning. Small organizations in the embryonic stage may not have
personnel planning.
Need for planning is felt when the organization enters the growth stage. HR
forecasting becomes essential. Internal development of people also begins to receive
attention in order to keep up with the growth.
A mature organization experiences less flexibility and variability. Growth slows down.
The workforce becomes old as few younger people are hired. Planning becomes
more formalized and less flexible and innovative. Issues like retirement and possible
retrenchment dominate planning.
Finally, in the declining stage, human resource planning takes a different focus.
Planning is done for layoff, retrenchment and retirement. Since decisions are
often made after serious financial and sales shocks are experienced by the
organization, planning is often reactive in nature.

Environmental Uncertainties
HR managers rarely have the privilege of operating in a stable and predictable
environment. Political, social and economic changes affect all organizations.
Personnel planners deal with environmental uncertainties by carefully
formulating recruitment, selection, and training and development policies and
programmes. Balancing mechanisms are built into the HRM programme
through succession planning, promotion channels, layoffs, flexitime, job
sharing, retirement, and other personnel related arrangements
Time Horizons
Yet another major factor affecting personnel planning is the time horizon. A plan
cannot be for too long on a time horizon as the operating environment itself may
undergo charges. On one hand, there are short-term plans spanning six months
to one year. On the other hand, there are long-term plans -which spread over
three to twenty years. The exact time span, however, depends on the degree of
uncertainty prevailing in an organization’s environment.

Plans for companies operating in an unstable environment, computers for

example, must be for a short period. Plans for others where environment is fairly
stable, for example a university plan, may be long-term. In general, the greater
the uncertainty, the shorter the plan’s time horizon and vice-versa.
Type and Quality of Information
The information used to forecast personnel needs originates from a multitude
of sources. A major issue in personnel planning is the type of information which
should be used in making forecasts.
Closely related to the type of information is the quality of data used. The quality
and accuracy of information depend upon the clarity with which the
organizational decision makers have defined their strategy, organizational
structure, budgets, production schedules and so forth.
In addition, the HR department must maintain well-developed job-analysis
information and HR information systems (HRIS) that provide accurate and
timely data.
Generally speaking, organizations operating in stable environments are in a
better position to obtain comprehensive, timely and accurate information
because of longer planning horizons, clearer definition of strategy and
objectives, and fewer disruptions.
Labor Market
Labor market comprises people with skills and abilities that can be tapped as
and when the need arises.

When one talks about labor supply, the following deserve due consideration:
• The size, age, sex and educational composition of the population
• The demand for goods and services in the country
• The nature of production technology
• Employability of the people
 Problem in Human Resources Planning
All human resource management activities start with human resource planning. So
we can say that human resource planning is the principle/primary activity of human
resource management. Although HRP is a very advantageous method it has some
limitations which can be explained as below:

Accuracy of forecasts
Human Resources planning involves forecasting the demand and supply of
human resources. Thus, the effectiveness of planning depends upon the
accuracy of forecasts.
Identity crisis
Many human resources specialist and the managers do not understand the
whole manpower planning process. Because of this, there is generally and
identity crisis. Till the specialists develop a strong sense of purpose,
planning cannot be effective.
Support of Top Management:
Manpower planning requires full and wholehearted support from the top
management. In the absence of this support and commitment, it would not
be possible to ensure the necessary resources, cooperation and support for
the success of the manpower planning.

Resistance from Employees:

Employees and trade unions resist manpower planning. They feel that this
planning increase their overall workload and regulates them through
productivity bargaining.
Insufficient Initial Efforts:
Successful human resource planning flourishes slowly and gradually. Sometimes
sophisticated technologies are forcefully introduces just because competitors have
adopted them. There may not be successful unless matched with the needs and
environment of the particular enterprise.

Management Information System:

Effectiveness of planning depends upon the reliability of the information system.
In most of local industries, human resource information system has not fully
developed. In the absence of reliable data it would not be possible to have
effective planning.
Uncertainties:
It is risky to depend upon general estimates of manpower in the face of
rapid changes in the environment. Absenteeism, turnover, seasonal
employment, technological changes and market fluctuations are the
uncertainties which serve as constraints to manpower planning. Although
discounts are made for these factors while preparing the plan, but these
factors cannot be estimated correctly.
Expensive and Time Consuming:
Manpower planning is an expansive and time consuming process.
Employers may resist manpower planning feeling that it increases the cost
of manpower
Coordination with other Managerial Functions:
There is generally a tendency on the part of the manpower planners
to remain aloof from other operating managers and to become totally
absorbed in their own world.
Unbalanced Approach
Many human resource experts give more importance on the
quantitative aspect of manpower to ensure that there is adequate
flow of people in and out of the organisation. They overlook the
qualitative aspects like career development and planning, skill levels,
morale etc
Human Resource Planning Process

The Human Resource Planning is a process of forecasting the organization’s

demand for and supply of manpower needs in the near future.
Determining the Objectives of Human Resource Planning:
The foremost step in every process is the determination of the objectives
for which the process is to be carried on. The objective for which the
manpower planning is to be done should be defined precisely, so as to
ensure that a right number of people for the right kind of job are selected.
The objectives can vary across the several departments in the organization
such as the personnel demand may differ in marketing, finance, production,
HR department, based on their roles or functions.
Analyzing Current Manpower Inventory:
The next step is to analyze the current manpower supply in the organization
through the stored information about the employees in terms of their
experience, proficiency, skills, etc. required to perform a particular job. Also, the
future vacancies can be estimated, so as to plan for the manpower from both
the internal (within the current employees) and the external (hiring candidates
from outside) sources. Thus, it is to be ensured that reservoir of talent is
maintained to meet any vacancy arising in the near future
Forecasting Demand and Supply of Human Resources:
Once the inventory of talented manpower is maintained; the next step is to
match the demand for the manpower arising in the future with the supply or
available resources with the organization.
Here, the required skills of personnel for a particular job are matched with the
job description and specification.

Analyzing the Manpower Gaps:

After forecasting the demand and supply, the manpower gaps can be easily
evaluated. In case the demand is more than the supply of human resources, that
means there is a deficit, and thus, new candidates are to be hired.
Whereas, if the Demand is less than supply, there arises a surplus in the human
resources, and hence, the employees have to be removed either in the form of
termination, retirement, layoff, transfer, etc.
Employment Plan/Action Plan:
Once the manpower gaps are evaluated, the action plan is to be formulated
accordingly. In a case of a deficit, the firm may go either for recruitment,
training, interdepartmental transfer plans whereas in the case of a surplus, the
voluntary retirement schemes, redeployment, transfer, layoff, could be
followed.

Training and Development:

The training is not only for the new joinees but also for the existing employees
who are required to update their skills from time to time.
After the employment plan, the training programmes are conducted to equip
the new employees as well as the old ones with the requisite skills to be
performed on a particular job.
Appraisal of Manpower Planning:
Finally, the effectiveness of the manpower planning process is to be evaluated.
Here the human resource plan is compared with its actual implementation to
ensure the availability of a number of employees for several jobs. At this stage,
the firm has to decide the success of the plan and control the deficiencies, if
any.
Thus, human resource planning is a continuous process that begins with the
objectives of Human Resource planning and ends with the appraisal or
feedback and control of the planning process.
GUIDELINES FOR MAKING HRP EFFECTIVE

Some of the suggestions for making HR planning effective are as given below:
1. Integration with Organizational Plans.
Human resource planning must be balanced with organizational plans. It
must be based on the organizational objectives and plans. This requires
development of good communication channels between organization
planners and the human resource planners.
2. Period of HR Planning.
Period of the planning should be appropriate to the needs and circumstances
of the enterprise in question. The size and structure of the enterprise as well
as the anticipated changes must be taken into consideration.
3. Proper Organization.
To be effective, the planning function should be properly organized. If possible,
within the human resource department. A separate cell or committee should be
constituted to provide adequate focus and to coordinate planning work at various
levels.
4. Support of Top Management.
To be effective in the long run, manpower planning must have the full support of
the top management. The support from top management is essential to ensure
the necessary resources, cooperation and support for the success of the planning.
5. Involvement of Operating Executives.
Human resource planning is not a function of manpower planners only. To be
effective, it requires active participation and coordinated efforts on the part of
operating executives. Such participation will help to improve understanding of the
process and thereby reduce resistance.
6. Efficient and Reliable Information System.
To facilitate human resource planning, an adequate database must be
developed for human resources.
7. Balanced Approach.
The human resource experts should give equal importance to both
quantitative and qualitative aspects of manpower. Instead of matching
existing people with existing job, stress should be laid on filling future
vacancies with right people.
Promotion should also be considered carefully. Career planning and
development, skill levels, morale, etc. should be given due importance by the
planners.