MODULE - 2

HUMAN RESOURCE PLANNING AND DEVELOPMENT (HRP & HRD)

Syllabus:-
Concept of Human Capital-The Economic Principle of Labour Theory of Value -The
trend of working age population in India ( in relation to other countries) and Future potential
in global scenario
Human Resource Development- Distinction between HRD and HRM
Human Resource Planning-Meaning and Objectives- Need for HRP at Macro level
Methods of Recruitment, Selection and Placement-Defining Training-Need and Benefits
of Training-Training Methods
CONCEPT OF HUMAN CAPITAL
Human capital is a collection of resources such as the knowledge, talents, skills,
abilities, experience, intelligence, training, and wisdom possessed individually and
collectively by individuals in a population. It is the knowledge and skills of a person that an
organization can use to accomplish its goals. In other words it is the ability of a person to
perform labour so as to produce economic value
Human capital can be defined as the knowledge, skills, competencies, and attributes
embodied in individuals that facilitate the creation of personal, social and economic well-
being.
Characteristics of Human Capital
1. Self-generating and expandable
2. Transportable and shareable
3. Increases income and output
4. Multi-dimensional
5. Influences economic growth

THE ECONOMIC PRINCIPLE OF LABOUR THEORY OF VALUE (LTV)

The basic principle of labour theory of value is that the value of a commodity should
be determined on the basis of the average number of labour hours necessary to produce it.
The number of labour hours is exclusive basis for determining the market price of a
commodity. As per this theory, any two goods requiring the same number of labour hours to
produce them should have the same market price. For example, if a mobile phone and a
calculator each require 10 labour hours to complete, both should have the same price. Adam
Smith, David Ricardo and Karl Marx were the advocates of the labour theory.
The major criticism of labour theory of value is that it is not practical because it fails
to consider materials costs, worker’s skill levels, capital usage and depreciation costs while
determining the price of a commodity. The theory ignores the effect of varying consumer
demand for different types of goods.
THE TREND OF WORKING-AGE POPULATION IN INDIA.
The working-age population refers to the portion of the total population in a country
belonging to certain predetermined age range that is considered to be able and likely to
perform work. It is determined by estimating the number of people in a country that fall
into a specified age range capable of doing work. Different regions use different range of
ages, based on differences in local employment law and other considerations. Working age
typically includes working people between the ages of 18 to 64. Working-age population is
different from working population. The former includes anyone within the specified age
range, but the latter is based on the number of people who are actually employed regardless
of age.
FUTURE POTENTIAL OF INDIAN HR IN THE GLOBAL SCENARIO
India enjoys a competitive advantage over the human resources compared to other
nations. Indian workforce demonstrated their capabilities in various fields across the world.
The talents of Indian manpower continue to increasingly attract the attention of global
Multinational Corporations (MNCs). They require employees who can adapt to different
cultures, customs, social practices, values, economic and political systems and management
approaches, who can work with other employees from differing backgrounds. One of the
important qualities of Indian work force is their skill to adapt with diversities. This quality
helps them to easily move and migrate to other places.
India has the largest youth population in the world. 70% of Indian population is below
the age of 35 years. Thus we are in a better position to utilize this demographic dividend and
channelize the youth and their creative energy for nation building. In addition to this,India
would become the largest supplier of skilled workforce to the rest of the world.
HUMAN RESOURCE DEVELOPMENT (HRD)
Human Resource Development is a formally organized man making mechanism in an
organization. All the activities conducted for the processing of human skills and abilities in
an organization come under the banner HRD. HRD can be defined as “those learning
experiences which are organized for a specific time and designed to bring about the
possibility of behavioral change”.
HRD is the sum total of all kinds of employee, managerial and organizational
development plans and programmes. HRD is the integrated application of Training,
Management development and Organisation development efforts to improve individual,
group, and organizational effectiveness.
Objectives of HRD
1. To help people in acquiring competencies to meet present and future challenges.
2. To identify and enrich the hidden talents and skills of people for the benefit of the
organization.
3. To transform organization into a learning system.
4. To create a development friendly environment in the organization because
development requires supportive relationships, encouragement, empowering
leadership etc.
Distinction between HRD and HRM
1. HRM represents the whole system of HR management and it is the parent system.
HRD represents the system of HR development and it is the sub system of HRM.
2. HRM as the parent system aims at the overall effectiveness of the HRM process
and practices in an organization.
HRD as a subsystem aims at the overall development of its people.
3. HRM is a multi dimensional process, including HRD as one of its dimensions.
Development of people is the sole dimension of HRD.
4. HRM in totality is a process of mobilization and management of human
resources.
 HRD in its entirely is a process of maximization of these resources by way of its
planned, continuous empowerment programmes.
5. HR managers and executives are responsible for the operation and maintenance
of HRM system.
All managers and executives in an organization are responsible for HRD.
HUMAN RESOURCE PLANNING (HRP)
Meaning and Definition.
Human Resource Planning shortly referred to as HRP is the term used to describe
how companies ensure that their people are the best of do the jobs. It covers planning for
HR search, retention, training, performance analysis and compensation. HRP is the
development of strategies for matching the size and skills of the workforce to organization
needs. Human resource planning assists organizations to recruit, retain, and optimize the
deployment of the people needed to meet business objectives and to respond to changes in the
external environment. Human Resource Planning is also known as Manpower Planning (MP).
The most common definition of HRP is “having the right people, in the right
capabilities at the right time.” It involves a gap analysis between current HR supply and
future demand.
According to Society for Human Resource Management (SHRM), “Human Resource
Planning is the process of anticipating future staffing needs and ensuring that a sufficient pool
of talent possessing the skills and experience needed will be available to meet those needs.”
HRP consists of the following activities:-
1. Forecasting future man power requirements
2. Preparing an inventory of the present man power
3. Anticipating manpower requirements-qualitative as well as quantitative
adequacy of manpower in future.
4. Meeting manpower requirements-through planning, recruitment, selection,
training and development, induction and placement, promotion, transfer,
motivation, compensation etc.
Objectives of HRP
1. To estimate the future HR requirements of the organization.
2. To compare the organisation’s future demand for, and current supply of HR.
3. To analyse and understand the caliber and skill of the current workforce
through a SWOT analysis (Strength, Weaknesses, Opportunities and Threat
analysis).
4. To determine the necessary skills required by the workforce to achieve
strategic and operational goals in the future and
5. To develop policies and strategies that will assist in achieving these goals.
6. HRP contributes to the career development of people and succession planning
of the organisation..
Barriers to effective HRP
1. HRP strategy not in conformity with corporate strategy.
2. Lack of professional touch.
3. Stereotyped approach of the management.
4. Uncertain environment
5. Imperfect Human Resource Information System.
 NEED FOR HRP AT MACRO LEVEL
Human Resource Planning is a mandatory part of every organization’s annual
planning process. Every organization that plans for its business goals for the year also plans
for how it will go about achieving them, and prepares the plans for the human resource at the
macro level.
Major reasons for the emphasis on HRP at macro level include:
1. Skill Shortage:-In the current employment-unemployment situation, though in
general the number of educated unemployed is on the rise, there is acute shortage for a
variety of skills. This emphasizes the need for more effective recruitment and retaining
people.
2. Technological Changes:-The changes in production technologies, marketing
methods and management techniques have been extensive and rapid. These changes effect
job contents and job contexts and cause problems relating to retraining and redeployment.
All these suggest the need to plan manpower needs intensively and systematically.
3. Organizational Changes:-In the volatile environment marked by cyclical
fluctuations and discontinuities, the nature and pace of changes in organizational
environment, activities and structures affect manpower requirements and require strategic
considerations.
4. Demographic Changes:-The changing profile of the work force in terms of age,
sex, literacy, technical inputs and social background have implications for HRP.
5. Need for special Skills:- Organizations have generally become more complex and
require a wide range of specialist skills that are rare and scarce. Problems arise when such
employees leave.
6. Governmental Influences:-Government control and changes in legislation with
regard to consideration for disadvantaged groups, working conditions and hours of work,
restrictions on women and child employment, casual and contract labout, etc. have stimulated
the organizations to become involved in systematic HRP.
7. Legislative Controls:- Those responsible for managing manpower must consider
legislative controls and attempt to foresee manpower problems.
8. Impact of Pressure Groups:- Pressure groups such as unions, politicians and
persons displaced from land by location of giant enterprises have been raising pressures on
management for internal recruitment and promotions, preference to employees’ children,
displaced persons, sons of the soil etc.
9. Systems Concept:-The advent of the macro-computer as part of the on-going
revolution in information technology emphasizes planning and newer ways of handling
voluminous personnel records.
10 Lead Time(The time between design or plan and implementation):-Long lead time
is necessary in the selection process and for training and deployment of the employee to
handle new knowledge and skills successfully.

RECRUITMENT
Recruitment is the process of searching for prospective employees and stimulating
them to apply for jobs in the organisation. This step involves locating the potential candidate.
The essential objective is to create a pool of prospective job candidates.
Sources of Recruitment
 A company may use Internal source or Eternal source or both for the recruitment of
candidates.
A. Internal Sources
Under Internal source of recruitment the vacant job positions are filled from within the
organisation. There are two important sources of internal recruitment. They are:
i. Transfer: It involves shifting of an employee from one job or department to another
without a significant change in the responsibilities, salary and status of the employee.
Transfer is a horizontal movement of employees. For example, transfer of clerk from
one branch to another branch.
ii. Promotion: Promotion involves shifting of an employee from a lower position to a
higher position with a significant increase in the responsibilities, pay, and status. It is
a vertical shifting of employees. This practice helps to improve the motivation,
loyalty and satisfaction level of employees. For example, promotion, of clerk to the
post of Accounts officer.
Merits or Benefits of Internal Sources
i. Better Performance ,loyalty and more commitment.
ii. More Reliable Method:
iii. No need for induction training
iv. Stability
v. Economical and Less Time consuming
Limitations of Internal sources
i. The scope of induction of fresh talent is reduced. There is danger of blocking of
innovative ideas from external sources.
ii. The employees may become lethargic if they are sure of time bound promotions.
iii. Not complete Solution- No organisation can fill all its vacancies from internal
sources.
iv. The spirit of competition among employees may be hampered since employees are
selected from within.
v. Frequent transfers of employees may often reduce the productivity of the
organisation.
B. External Sources
Under external source of recruitment the vacant job positions are filled from outside
the organisation. External recruitment provides wide choice and brings new blood in
the organisation. The common methods of external source of recruitment are:
1. Direct Recruitment: In this method, a notice is put up on the company’s notice
board specifying the details of the vacant jobs. Job seekers assemble at the
company’s office on the specified date and selection is done on the spot. This
method is used for filling casual vacancies of unskilled or semi-skilled jobs. This
method is very inexpensive and used when there is a rush of work or when some
permanent workers are absent.
2. Casual callers: Sometimes unsolicited applicants visit offices in search of jobs.
A database or list of such applicants can be prepared and screened to fill
temporary vacancies in the future. This is an inexpensive source of recruitment
compared to other sources.
3. Advertisements: Job vacancies are advertised in newspapers, journals , television
etc. Most of the senior positions are filled by this method. A new trend of external
recruitment is telecast on various channels regarding vacant job position. The
main advantage of advertising vacancies is that more information about the
organisation and job can be given. Its disadvantages is that it may bring a lot of
unnecessary responses and many applicants could be unsuitable for the post.
 4. Employment Exchange: Employment exchange run by the government can be
used to fill unskilled and skilled operative jobs. These exchanges help to match
demand and supply of personnel by linking job seekers and employers. The
records of employment exchanges are often not updated and hence candidates
referred by them many not be found suitable for the job.
5. Placement Agencies and Management consultants: Placement agencies provide
nation-wide service of matching demand and supply of work force. These
agencies compile bio-data and records from various job seekers and send suitable
names to their clients. These agencies charge fees for providing such services.
This method is good to fill vacancies which arise in technical and professional
areas.
6. Campus Recruitment: Colleges and institutes of management and technology
have become a popular source of recruitment for technical, professional and
managerial jobs. Many big organisations maintain a close contact with these
colleges and institutes. This type of recruitment is more common for Engineers,
Computer programmers, Management professionals, Accountants, etc. This is
referred to as campus recruitment.
7. Recommendations by Employees: Applicants introduced by present employees,
or their friends and relatives may prove to be a good source of recruitment. Such
applicants are likely to be good employees because their background is
sufficiently known.
8. Labour Contractors: Labour contractors can provide unskilled workers at a short
notice because they maintain close contacts with labourers. However, if there
arises any disagreement with the existing contractor, there is a chance of
withdrawal of all the workers employed by him. This may adversely affect the
smooth running of the organisation.
9. Web Publishing: In internet there are certain websites specifically designed to
provide information regarding job seekers and companies having vacancies.
These websites can be visited by job seekers as well as companies. The common
websites are: Naukri.com, Monster.com, jobstreet.com, etc.
10. Other sources-Walk-in-interview, Outsourcing, E-recruitment, Poaching or
Raiding (Buying talent from rival companies0
Merits or benefits of External Sources
1. Through external sources, the organisation can attract qualified and trained people.
2. External recruitment attracts a large number of job seekers. Therefore, the
organisation has a wider choice while selecting employees.
3. When vacancies are filled through external sources, the scope of induction of fresh
talent is more. There is no danger of ‘inbreeding’.
4. The spirit of competition among employees may be very high because existing staff
will have to compete with the outsiders.
Limitations of External sources
1. Dissatisfaction among existing staff
2. Lengthy process- Recruitment from external sources takes a long time.
3. Costly Process
Differences between Internal and External Sources of Recruitment

Basis Internal Source External Source

1. Meaning It means filling vacant job It means filling vacant job positions
positions from within the from outside the organisation.
organisation.
 2. Objective Objective is to give more Objective is to induct fresh talent
opportunities to existing staff. and get new ideas.
3. Quality/ Since the choice is limited It provides a wider choice and hence
Scope chances of getting personnel personnel with better quality can be
with required quality may be obtained.
less.
4. Time It is less time-consuming It is more time-consuming
5. Economy It is less expensive It is more expensive as job vacancy
has to be advertised

SELECTION
Selection is the process of choosing the most suitable candidate to fill the vacant job
position from among the pool of applicants. It is negative process because unsuitable
candidates are rejected.
Steps in the process of Selection
i. Preliminary Screening: This is the first step in the process of selection. Preliminary
screening helps in eliminating unqualified and unfit candidates on the basis of
information from application forms
ii. Selection Tests: The important tests used for selection of employees are: (a)
Intelligence Tests (b) Aptitude Test (c) Personality Test (d) Trade test (e) Interest
Tests.
iii. Employment Interview: Interview is a formal conversation conducted to judge the
candidate’s suitability for the job. The role of the interviewer is to seek information
and that of the interviewee is to provide the same.
iv. Reference and Background checks: Many employers request names, addresses and
telephone numbers of references for the purpose of verifying information about
applicants. Previous employers, known persons, teachers and professors can act as
referees.
v. Selection Decision: The final choice is made from among the candidates who pass
the tests, interview and reference checks positively. The views of the concerned
manager will be generally considered in the final selection.
vi. Medical Examination: The selected candidates are required to undergo a medical
fitness test. The job offer is given to the candidate being declared fit after the medical
examination.
vii. Job Offer: The candidates who have passed all the previous hurdles will be given
job offer. Job offer is made through a letter of appointment which contains a date by
which the appointee must report on duty.
viii. Contract of Employment: When candidate accepts the job offer it leads to
signing of contract of employment. The common contents of contract of employment
are job title, duties, responsibilities, pay, allowances, leave rules, probation period,
etc.
Important Tests Used for Selection of Employees
The common types of tests conducted by the organisations are:
a. Intelligence tests: This is one of the important psychological tests used to determine
the relative mental capacity of a person. It is an indicator of a person’s ability to
make judicious decisions and judgements.
b. Aptitude Tests: It measures an individual’s potential for learning new skills. This
test helps to know how the candidates will perform in the future. For example, Pilot
Aptitude Test, Management Aptitude Test etc.
c. Personality Tests: This test is conducted to know the temperament of a person such as
emotions, reactions and maturity, etc. These tests probe the overall personality.
d. Trade Tests: These tests are used to measure and discover the knowledge and skill of
the applicant pertaining to the job. These tests measure the job knowledge and skills
 acquired through training or job experience. For example, test conducted for
electricians, plumbers, drivers, etc.
e. Interest Tests: Interest tests are used to know the pattern of interests or involvement
of a person in a particular job.
PLACEMENT
The selection procedure ends with the placement of a worker to the job. Placement is
the process of assigning a specific job to each one of the selected candidates. It involves
assigning a specific rank and responsibility to an individual.
TRAINING
Meaning
Training is the process of increasing the knowledge and skills for doing a particular
job. It is an organised procedure by which people learn knowledge and skills for a
definite purpose. The purpose of training is basically to bridge the gap between job
requirements and present competence of an employee.
Definition
Training is defined as an organised procedure by which people learn knowledge and / or
skills for a definite purpose. According to Edwin B. Flippo, “Training is the act of
increasing the knowledge and skill of an employee for doing a particular job”.
Need and importance of Training
1. Increased Productivity-Training improves the performance of employees. Increased
skills and efficiency results in better quantity and quality of production.
2. Low supervision.-The degree of supervision required for a trained worker will be less
than that of an untrained worker. He will not depend on the supervisor for minute
details of work and some times he may carry on his work himself.
3. Less wastage-Untrained workers may waste more materials, damage machines and
equipment and may cause accidents than trained workers. Trained workers use the
materials and other equipments in a systematic way causing less wastage.
4. Better quality of work-In formal training the employees are taught the best methods of
work. This helps to improve the quality of products or services.
5. East adaptability-A trained worker can be more adaptable to change than an untrained
one. The former can easily learn new work techniques with a little bit of guidance.
6. Low absenteeism-Labour turnover and absenteeism are mainly due to job
dissatisfaction. Training helps in reducing labour absenteeism by increasing job
satisfaction among them.
7. Employee development-Training also helps in the development of employees. The
adaptability of a worker will help him in working on new and improved jobs.
8. High morale-Proper training develops positive attitudes among employees. Job
satisfaction and morale are improved due to rise in the earnings and job securities of
employees. Training reduces the grievances of the employees.
Benefits of Training to Employees
Training is highly useful to the employees in the following ways:
1. Self confidence
Training helps to improve the self confidence of an employee. It helps him to
perform his job in a better way.
2. Higher earnings
Trained employees perform better without causing any wastage of any resources and
so they earn more than the untrained employees.
3. Safety
Training helps an employee to use various safety devices. He handles the machines
safely.
4. Adaptability
Training enables an employee develops himself and there are more chances for
promotion.
5. Additional skills
 Training helps to develop additional skills and knowledge among employees.
Types of Training
There are different types of training programmes.
1. Orientation training
Orientation or induction training seeks to adjust newly appointed employees to the
work environment. It is also known as pre-job training. Every new employee needs
to be made fully familiar with the job, his superiors and subordinates and with the
rules and regulations of the organisation.
2. Job training
Job training is the training provided with a view to increase the knowledge and skills
of an employee for improving his performance on the job. Such training helps to
reduce accidents, waste and inefficiency in the performance of the job.
3. Safety training
Training provided to the employees to minimise accidents and damage to machinery
is known as safety training.
4. Promotional training
It involves training of existing employees to enable them to perform higher level jobs.
This type of training helps the employees to shoulder higher responsibilities of new
positions to which they are promoted.
5. Refresher training
Refresher training is the training provided to the employees to revive and refresh the
knowledge and to update the skills of the existing employees.
6. Remedial training
This type of training is provided to existing employees to overcome the short coming
in their behaviour and performance. Remedial training is usually conducted by
psychological experts.
Methods of Training
The various methods of training are:
1. On the job training
Under this method, the worker is given training, at the work place by his immediate
supervisor. It is based on the principle of ‘learning by doing’.
2. Vestibule training
Under vestibule training, a training centre called vestibule is set up and actual job
conditions are duplicated or stimulated in it. Expert trainers are employed to provide
training with the help of equipments and machines which are identical with those in
use at the work place. This is mainly used to designate training for semi skilled jobs.
3. Of the job training
Under this method, the worker has to undergo training for a specific period away from
the work place. This method helps in improving the knowledge and skill of
employees in doing jobs.

Other methods of raining are Coaching, Mentoring, Role Playing, Management

games, Outdoor training, Case studies etc.