HUMAN RESOURCE PLANNING

Right number of people with right skills at right place at right time to implement organizational strategies in order to achieve organizational objectives In light of the organizations objectives, corporate and business level strategies, HRP is the process of analyzing an organizations human resource needs and developing plans, policies, and systems to satisfy those needs

HUMAN RESOURCE PLANNING

Setting human resource objectives and deciding how to meet them

Ensuring HR resource supply meets human resource demands

HRP Process
Interfacing with strategic planning and scanning the environment Taking an inventory of the companys current human resources Forecasting demand for human resources Forecasting the supply of HR from within the organization and in the external labor market

HRP Process Cont.

Comparing forecasts of demand and supply Planning the actions needed to deal with anticipated shortage or overages Feeding back such information into the strategic planning process.

Example of the Basic Human Resources Planning Model

1
Organizational Objectives Human Resource Requirements

2
Human Resource Programs

3
Feasibility Analysis

4 5

HRP Model
Strategic Human Resource Planning
Links 1 & 5: HR objectives are linked to organizational objectives and planning

Designed to insure consistency between organization's strategic planning process and HRP.
So objectives of strategic plan are feasible and HR programs are designed around what organizational objectives and strategies

Example of the Basic Human Resources Planning Model

1
Organizational Objectives Human Resource Requirements

2
Human Resource Programs

3
Feasibility Analysis

4 5

HRP Model Cont.

Operational Human Resource Planning Steps 2,3, & 4
Ensure HRP programs are coordinated and allows the organization to meet its human resource requirements.

Example of the Basic Human Resource Planning Model

Open new product line Open new factory and distribution system

Develop staffing for new installation Production workers Supervisors Technical staff Other managers

Recruit skilled workers Develop technical training programs Transfer managers from other facilities

Recruiting and training programs feasible

4
Develop new objectives and plans

Transfers infeasible because of lack of managers with right skills

Recruit managers 3 Too costly to hire from outside from outside

Link 1: Determine Demand (labor requirements)

How many people need to be working and in what jobs to implement organizational strategies and attain organizational objectives. Involves forecasting HR needs based on organizational objectives Involves consideration of alternative ways of organizing jobs (job design, organizational design or staffing jobs)
Example - Peak production could be handled by temporary workers or assigning overtime. Machine breakdowns assigned to maintenance department or handled by machine operators

Link 2: Determine HR Supply

(availability)
Choose HRM programs (supply) Involves forecasting or predicting effect of various HR programs on employee flowing into, through and out various job classifications. First determine how well existing programs are doing then forecast what additional programs or combination of programs will do

Need to know capabilities of various programs and program combinations

Determine Feasibility
Links 3 & 4
Capable of being done
Requires knowledge of programs, how programs fit together and external environmental constraints (e.g., labor force, labor unions, technology created skill shortages) and internal environmental constraints (skill shortages within the organization, financial resources, managerial attitudes, culture)

Do the benefits outweigh the costs

Difficulty in quantifying costs and benefits

Revise Organizational Objectives and Strategies Link 5

If no feasible HR program can be devised, the organization must revise strategic plans.

Shortcomings of the model - HRP in Practice

Oversimplification of planning process Planning does not normally proceeds till find first acceptable plan
More than one set of HR goals to satisfy link 1 and more that one acceptable plan to satisfy link 2 so:
Typically choose the best HR goal for the strategic plan and the best program to satisfy that HR goal

Shortcomings of the model HRP in Practice

Oversimplification of the benefit of planning is the specific plans that result
Planning process has value in and of itself

HRP in practice is usually less rational and may omit one or more of the steps
May lack knowledge required for forecasting Incorrect assumptions about effectiveness of HR programs Does not engage in strategic planning

HRP should be:

Done to guide and coordinate all HR activities so they work together to support the overall strategy
Responsive to internal and external environment Planning - done in advance

Strategic - linked with higher level

Human Resource Forecasting

Process of projecting the organizations future HR needs (demand) and how it will meet those needs (supply) under a given set of assumptions about the organizations policies and the environmental conditions in which it operates.
Without forecasting cannot assess the disparity between supply and demand nor how effective an HR program is in reducing the disparity.

Forecasting as a Part of Human Resource Planning

DEMAND FORECASTING

Choose human resource programs

Internal programs

SUPPLY FORECASTING

Determine organizational objectives

External programs

Promotion
Transfer Career planning

Recruiting
External selection Executive exchange

Demand forecast for each objective Aggregate demand forecast

Training

Turnover control
Internal supply forecast External supply forecast

Does aggregate supply meet aggregate No demand? Yes

Aggregate supply forecast

Go to feasibility analysis steps

Internal Supply Forecasting Information

Organizational features (e.g., staffing capabilities)
Productivity - rates of productivity, productivity changes Rates of promotion, demotion, transfer and turnover

External Supply Forecasting Information

External labor market factors (retirements, mobility, education, unemployment)
Controllable company factors on external factors (entry-level openings, recruiting, compensation)

Demand Forecasting Information Organizational and unit strategic plans Size of organization Staff and Managerial Support Organizational design

Considerations in Establishing a Forecasting System

How sophisticated Appropriate time frame Subjective versus objective forecasting methods

System Sophistication
Organizational size
large organizations require more complex forecasting systems and likely to have the required skilled staff complex career paths and diverse skill requirements lead to more complex forecasting systems

Organizational complexity Organizational objectives

Organizational plans and strategies

the greater the gap between current HR situation and desired HR situation the more sophisticated the system
the complex the plans are the more complex the forecasting system

Forecasting Time Frame

Depends on degree of environmental uncertainty Factors creating uncertainty (shortening time frame) Factors promoting stability (longer time frame)
strong competitive position, slowly developing technology, stable product demand.

many new competitors, changes in technology, changes in social, political and economic climate, unstable product demand

Subjective VS. Objective Forecasting

Objective is inappropriate when: Lack expertise to use objective methods Lack the historical data or HR data base is inadequate Forecasting horizon is too long for the available objective method

Demand Forecasting Methods

Delphi Method Staffing Table Approach Regression Analysis Time Series Analysis Linear Programming

Supply Forecasting Methods

Skills Inventory Replacement Charts Succession Planning Flow Modeling/Markov Analysis Computer Simulations