Human Resources Management

Lecture Two
Human Resources Planning (HRP)
 Definitions
Human resources: are main factors or components of Production. It is the process
for ensuring that the human resource requirements of an organization is identified and
plans are made for satisfying those requirements.
Planning: is a process of forecasting, anticipating and preparing to accomplish or
achieve certain objective.
HRP Definition 1: “HRP includes estimation of how many qualified people are
necessary to carry out the assigned activities, how many people will be available, and
what, if anything, must be done to ensure personnel supply equals personnel demand
at the appropriate point in the future.”
HRP Definition 2: “HRP is a 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.”

 Human Resource planning what does it means?

• HRP was earlier called man power planning, but the use of that term declined
because it gave the impression that all the people employed in the organization were
men. So, it is because people become gender sensitive, that this term ‘HRP’ was
developed.

• The prime goal of HRP is to achieve efficiency and profit, and to establish
strong competitive grounds in the national and international markets. Without the
human resources the organization cannot operate.

• HRP is the process of determining and assuring that the organization will have
an adequate number of qualified persons available at the proper time performing jobs

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which meet the need of enterprise and which provide satisfaction for the individual
involved.

• HRP is the process of determining future human resources needs relative to an

organization's plan and developing steps necessary to meet those needs.

• HRP is based on the believe that people are an organizations most important
strategic resources.

• HRP address human resources needs in both qualitative and quantitative

technique which means answering two basic questions, how many people? And what
the sort of people?

 HRP combines three important activities:

1. Identify and acquiring right number of people
2. Motivating them to achieve high performance
3. Create interactive links between business objectives and people planning
activities

The activities of HRP are controlled by top management because they are responsible
for formulating strategies and plans. And in order to formulate strategies and plans,
they must know the number of employees required because if they do not know they
can not develop training programs, employee appraisal techniques and recruitment
programs.

 Achieving Aims of HRP:

In order to achieve this aims we always look for the following
consideration:
• Forecasting future needs
• Analyzing the availability and supply of people
• Drawing up plans to match supply to demand
• Monitoring the implementation of the plans.

 The Labor Market

Labor Market is the main source of Human Resource, it consists of two segments:

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The internal market: where the needed employees may be obtained from within the
company. It refers to the internal stock available and the flow of people within the
organization. It can be the main source of future labor requirements through policies of
development, training. When matching qualification with position requirements a
computerized information system can be used to utilize anticipation.
The external market: where the needed employees may be obtained from outside the
organization. Includes the local, regional, national and international labor markets.
Many employment agencies are able to track suitable candidates for positions from the
external market.

 HRP SYSTEM

HRP System as such includes following elements or sets for planning.

 Overall Organization Objectives

 Business Environment
 Forecasting HR Needs
 Assessing HR Supply
 Matching HR Demand-Supply factors

Based on these elements we can draw “HRP System Architecture” as under.

Business
Environment

Organization Objectives &

Goals

HR Forecast HR Supply Assessment

HR Programming
HR Implementation
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Control & HR Evaluation
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Surplus HR Shortage of HR
  Human resources Forecast:

The human resource forecast is the determination of demand for people of the
appropriate type and skill for selected periods. The forecast also requires the
preparation of an estimate of supply of people who will be available for selected period.
To forecast the number of employees needed in the future, we can do two types of
forecasts.
1/ Demand forecast

2/ Supply forecast

 Demand Forecasting
It is the process of estimating the future quantity and quality of people required.
Demand forecasting should be based on following factors.
Internal Factors
• Budget constraints
• Production levels
• New products and services
• Organizational structure
• Employee separation

External Factors: -
• Competition environment
• Economic climate
• Laws and regulatory bodies
• Technology changes
• Social Factors

Objective Methods of Demand Forecasting:

1. Regression Analysis
2. Trend Ratio Analysis

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The objective of both means is to measure the number of people who will be needed in
the future. In both means how to from the needed number of employees is passed on
past evidence.

1) Regression Analysis:

No. of employees Machines

12 4
20 6
24 ?

Here there is no correlation between the two variables, for so a graph is plated, and
from the graph it is easy to identify / forecast the needed number of employees.

2) Trend Ratio Analysis:

It is concerned usually with longitudinal time, passed on past information
Year No. of employees
2000 150
2oo5 180
2oo6 ?

 Supply Forecasting
This process measures the number of people likely to be available from within and
outside the organization after making allowance for absenteeism, internal movements
and promotions, wastages, changes in hours and other conditions of work.
The internal supply of labor is not always constant. Some people retire which is easily
to predict them, but it is not easy to predict who will leave suddenly and who get
discharged by the organization. For so we need to examine the turnover rate of the
employees, which is the movement of employees in and out of the organization.
Supply forecasts Estimates the availability and qualifications of current employees now
and in the future, as well as the supply of qualified workers in the external labor market.

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 Internal Supply: -
Internal supply techniques help to assess the following

- Inflows and outflows (transfers, promotions, separations,

resignations, retirements etc.)
- Turnover rate (No. Of separations p.a. / Average employees p.a. X
100)
- Conditions of work (working hours, overtime, etc.)
- Absenteeism (leaves, absences)
- Job movements (Job rotations or cross functional utilizations)

External Supply: -
External sources are required for following reasons

- New blood,
- New experiences
- Organizational growth
- Diversification
External sources can be colleges and universities, consultants,
competitors and unsolicited applications.

 The turnover rate:

Turnover rate is defined as the ratio of the number of workers that had to be
replaced in a given time period to the average number of workers.

Turnover rate is due to employees not receiving the benefits that they
deserve.

Improve Turnover Rate:

• Increase wages

• Offer a better compensation package

Calculation of turnover rate:

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 Number of employees leaving the job in the particular year x 100

Average number of employees during the year

Example:

In the year 2000, the number of employees who left the job was 25 employees.

The average number of employees was 500 employees.

Find the Turnover rate?

The turnover rate = 25 / 500 X 100 = 5%

 Cohort Analysis:
It measures the type of leavers by length of time and it shows the specification
of the job, for so it is more specific than the turnover rate.

Position ( less than ( 1- 2) (2- 4 ) ( 4 –6) (more than

1 years) 6 years)

Manager

Clerk

Skilled
worker
Unskilled
worker

Then the information is presented in a graph which shows the stability rate.

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