Unit II: Human Resource Planning

Concept and Meaning of Human Resource Planning

HRP is the process of forecasting the future human resource needs and
choosing the courses of actions to satisfy those needs. It involves estimating
the size and composition of future workforce to ensure survival and
organizational growth.It is, in fact, a part of the total organizational lanning. It
is a continuous process rather than a single shot attain. It tries to keep the
organization supplied with required and capable people when they are
demanded.

According to Decenzo and Robbins, HRP is the process of determining an

organizations human resource needs. According to Torrington and Hall,
HRP is fundamental in developing and implementing the organizations human
resource strategy, which in turn, enables the organization to meet its goals.

According to C. F. Rulss, Human Resource Planning, also referred to as

manpower planning or personnel planning, can be defined as the process of
getting the right number of qualified people into the right jobs and the right
time. HRP is variously called manpower planning, personnel planning or
employment planning. In a nutshell, HRP includes the estimation of how many
qualified people are needed to perform the various organizational jobs, how
many people will be available, and what must be done to ensure that HR
supply equals HR demand at the appropriate point in future. It is an integral
part of corporate planning that can be formulated at national, industry and unit
levels.

Characteristic of HRP

The above discussion reveals the following key characteristics of HRP.

Goal oriented

Related to future HR needs

Concerned with quantity and quality of human resource needed

Part of total organizational planning

Part of Acquisition Function

It can be both short or long term

Objectives of HRP
The main objectives of HRP as follows:

To ensure optimum use of human resources currently employed.

To assess or forecast future skill requirements.

To provide control measures to ensure that necessary human resources are

available as

when required.

To support the company management to minimize operational costs.

To gain a competitive advantage in the market.

Importance of Human Resources Planning

HR planning is very important to any type of organization since Human

resources are those resources who monitor the other resources. HR planning
also determines the success of the organization.

1) Helps to implement the business strategy: Without proper planning of

human resources business strategies cannot be implemented. They are the
people who have to work to implement the strategies of an organization.

2) Minimizes future risk and uncertainty : By forecasting the demand and

supply of technical and other manpower for the future, human resources
planning minimize future risk and uncertainty.

3) Helps to cope with changing situation : HRP enables an enterprise to cope

with changes in competitive forces, markets, technology, products, and
government regulations. It is important to cope with change associated with
the external environment factors. It helps to assess the current human
resources through HR inventory and adapts it to changing, socio cultural and
economic forces.

4) It promotes awareness of human resources activities: Human resource

planning promotes awareness that human resource activities are equally
important at every level of the organization.

5 Personnel costs may be less : Personnel costs may be less because the
management can anticipate imbalances before they become unmanageable
and expensive.

6) It ensures the Development of HR : HRP planning identifies the skills

requirement 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.

7) It ensures the Proper utilization of HR : HR planning measures that the

organization acquires and utilizes the manpower effectively to achieve
organizational objectives. HR planning helps in assessing and recruiting skilled
human resources. Moreover, it focuses on the optimum utilization of HR to
minimize the overall cost of production.

Major Activities of HRP (HRP Process/ Components

of HRP)
Human Resource Planning is an important function to meet the future
organizational needs and & environmental challenges. Indeed, HRP is the
process of anticipating future human resource needs & choosing course of
action needed to satisfy those needs. The major activities of HRP process can
be discussed under the following five steps.

Step I Step II Step III

Step IV Step V

Assessi Forecasti Forecastin Formulatin

Environm ng ng HR g HR g Action
ental Current demand Supply Plan
Analysis HR

Evaluation and Feedback

Fig: HR Planning Process

Step I: Environmental Analysis : Before planning about future human
resources, the foremost step is to make analysis of environmental forces and
possible impact on organizational activities. Only after an analysis of internal &
external environment, it is possible for HR managers to find out the internal
strength and weaknesses as well as external opportunity & threats of an
organization that have direct influence on performance.

Step II: Assessing Current Human Resources : With the help of line managers,
HR managers begin to prepare HRP by developing a profile of the current
status of employees working in organization. More specifically this phase
includes the following steps.

i. HR inventory/ knowing existing HR details through HRIS or MIS

ii. Succession Planning (Assessing the succession potential)
iii. Analysis of existing jobs

Step III: Forecasting Human Resources Demand : Organizational objectives

and the activities involved to meet those objectives are the basis for
estimating future human resources needs. Once the activities are determined,
forecasting of human resources is done. Usually organization may adopt
following two methods for this purpose.

a) Judgmental Techniques (Delphi technique, Group discussion technique and

Managerial
judgmental technique)

b) Statistical techniques (Regression analysis and Time series analysis)

Step IV: Forecasting Human Resources Supply : Forecasting human resource

demand worth only when if it is systematically located the sources from where
the perspective candidates can be achieved. Therefore estimation of supply of
human resources on the basis of demand forecasting is another important
function. The projection of human resource supply can be based on following
sources:

i. Internal source (job rotation, succession, optimum utilization of available

resources)
ii. External source (educational institutions, T&D institutions, career
counseling institutions, open market etc.)

Step V: Preparing Action Plan : After forecasting human resource demand

and supply, a proper matching between demand and supply forecasting is
desirable. The shortage and surplus of forecasting employees is to be treated
accordingly. If there is surplus, HRD should focus on only needy manpower
whereas if the case is shortage of manpower, reassessment of existing
resource and their potential, and even re-forecasting of HR supply by
identifying new sources is desirable. After this, action plan is prepared.
This is the phase of implementation where usually following plans are
developed.

a) Recruitment, selection and socialization plan

b) Training & Development plan

c) Job Analysis & Evaluation

d) Transfer & Promotion plan

e) Career Development plan etc.

Since HRP is a continuous process, it also involves evaluation and feedback. If

any changes occur

in the internal as well as external factors or the process did not produce
desired results, then

necessary adjustment is made in the next cycle of HRP.

Factors Affecting HRP

The HRP process is influenced by several considerations. The more important

of them are shown in the figure below:
 Figure showing the factors affecting HRP

I) Type and strategy of organization : The type of organization is an important

consideration because it determines the production process involved, number
and type of staff needed, and the supervisory and managerial personnel
required. The strategic plan of the organization defines the organizations HR
needs. Primarily, the organization decides either to be proactive or reactive in
HRP. It can either decide to carefully anticipate the needs and systematically
plan them to feel them far in advance, or it can simply react to needs as they
arise.

II) Organizational growth cycles and planning : The stage of an organizations

growth can have considerable influence on HRP. Small organizations in the
embryonic stage may not have personnel planning. Need foe planning is felt
when the organization enters the growth stage. A mature organization
experiences less flexibility and variability. Issues like retirement and possible
retrenchment dominate planning. Finally, in the declining stage planning is
done for layoff, retrenchment and retirement.

III) 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 programs.

IV) Time horizon :

Another major factor affecting HRP is time horizon. 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 overthree to twenty years. The exact time
span, however, depends on the degree of uncertainty prevailing in an
organizations environment. The greater the uncertainty, the shorter the plans
time horizon and vice versa.

V ) Type and quality of information

The information used to forecast HR needs originates from a multitude of

sources. A major issue in HR 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 HR departments must maintain well- developed job-
analysis information and HR information system (HRIS) that provide accurate
and timely data.
 VI) Nature of the jobs being filled : For HR planners must consider the
nature of jobs being filled in the organization. Job vacancies arise because of
separations, promotions and expansion strategies. It is easy to employ shop-
floor workers, but a lot of sourcing is necessary for hiring managerial
personnel. It is, therefore, necessary for the HR department to anticipate
vacancies, as far in advance as possible, to provide sufficient lead time to
ensure that suitable candidates are recruited.

VII) Outsourcing

Several organizations outsource part of their work to outside parties either in

the form of sub- contracting or ancillarisation. Outsourcing is a regular feature
both in the public sectors as well as in private sectors. Most organizations
have surplus labor and they do not want to worsen the problem by hiring
more people. Hence, the need for off-loading. However, these all factors have
to be properly considered while formulating the Human Resources planning in
the organization.

Barriers to Human Resource Planning (HRP)

The major barriers to HRP are listed below:

1. Conflicts between short-term and long-term HR needs There can be conflict

between short-term and long-term HR needs. While fulfilling the short-term
needs it may be possible that long-term needs can be ignored which will create
lots of conflict. For example, there arises a conflict between the pressure to
get the work done on time and long-term needs, such as preparing people for
assuming greater responsibilities.

2. HR information incompatible with strategy formulation : HR information

often is incompatible with the information used in strategy formulation.
Strategic planning efforts have been long oriented towards financial
forecasting often to the exclusion of other types of information. Financial
forecasting takes precedence over HRP.

3. HR practitioners have expertise only in personnel matters : HR

practitioners are only experts in handling personnel matters, they cannot
focus on the overall management. The personnel plan conceived and
formulated by the HR practitioners when enmeshed with organizational plan,
might make the overall strategic plan itself defective.

4. Conflicts between quantitative and qualitative approaches to HRP : The

quantitative approaches to HRP focus on how to get organization achievement
and qualitative approaches focus on individual employee concerns such as
promotability and career development. These two approaches can create a
conflict while planning for HR.

5. No co-ordination among operating mangers and HR personnel. : There is

no co-ordination among the operating managers and HR personnel. HRP is not
strictly an HR department function. HR personnel only focus in the human
resource management, where as operating managers are responsible for the
work relating to their departments.

HRP Practices in Nepal

Human Resource Planning (HRP) is one of the most important tasks in
successful human resources management program. Nepal is an
underdeveloped country. Industrialization is the key factor to develop the
country, for development of industries and to make proper management in
organization the HRM practices should be sound and proper. So, it shows that
how important is Human Resources Planning for HRM or for whole
organization. There are the following features of Human Resources Planning
in Nepal.

1. Poor tradition of Human Resource planning

Nepal has a poor tradition of human resource planning. The education system
is not friendly to need the needs of the labour market. The country lacks
comprehensive human resources surveys. Nepalese managers regard human
resource planning as an area of low priority. Nepalese organizations lack right
number and kinds of people at the right places and at right time. Most
organizations lack human resources planning. HRP is not linked with overall
corporate plan.

2. Lack of Assessment of Current Human Resources :

Most Nepalese organization lack up-to-date human resource inventory which

describes the skills currently available. They also lack effective Human
Resource Information System. Effective job analysis is lacking in Nepalese
organization to lay down proper job descriptions and pecifications. This has
constrained proper assessment of current human resources.

3. Poor Demand Forecasts :

Nepalese organizations lack proper demand forecasting in term of number

and skills of people required. Business organizations lack reliable revenue
forecasts which serve as the basis for the forecast of human resource
demand.

4. Poor Supply Forecasts

Nepalese organizations lack proper supply forecasts of human resources from

inside and outside sources. Promotion and transfer are not planned in
advance. Supply outstrips demand for human resources in Nepal. Nepalese
labour market is supply-driven. Even the professionals and skilled technicians
are suffering from unemployment.
5.Mismatch of Demand and Supply

Nepalese organizations do not give proper attention to matching Demand and

Supply forecasts to determine future shortages and surplus. Succession
planning is not done by Nepalese managers. They seem to be afraid of this
concept. They fear that the persons being developed for succession may oust
them from their jobs.

6. Short term horizon

Human Resources Planning in Nepal has generally a one year horizon.

Strategic human resource planning is lacking. Human resources planning are
not regarded as a overall strategic planning.

7. Overstaffing in Government and public Enterprises

Most government agencies and public enterprises in Nepal suffer from

overstaffing. The number one priority of Nepalese politicians is to provide
employment to their political worker. Human Resource Planning is utterly
neglected by Politically appointed managers of public enterprises.
Overstaffing has made human resource planning irrelevant in government and
public enterprises. Such organization can function effectively by cutting half
of their employee strength.

8. Private Sector Neglect

The family owned and managed private sector organizations do not bother
about human resource planning. They prefer to hire their relatives, friends and
near and dear. Even the big houses in the private sector lack proper human
resource planning.

9. Future Perspective :

The global organizations in banking, hospitality and manufacturing sectors in

Nepal prepare systematic human resource plan. They also implement them.
This will definitely have a positive impact for human resource planning in
Nepalese organizations in coming years. Therefore, the human resource
planning function in Nepalese organizations needs strengthening.