Human Resource Planning

HUMAN RESOURCE
PLANNING PGDHR-202
BLOCK 1:
INTRODUCTION TO
HUMAN RESOURCE
Dr. Babasaheb Ambedkar Open University

Ahmedabad
HUMAN RESOURCE PLANNING
Knowledge Management and

Research Organization
Pune
Editorial Panel
Author
Mr. Pradeep Kumar Vannarath
Language Editor
Prof. Jaipal Gaikwad
Graphic and Creative Panel

Ms. K. Jamdal
Ms. Lata
Dawange Ms.
Pinaz Driver
Ms. Tejashree Bhosale
Mr. Kiran Shinde
Mr. Prashant
Tikone Mr. Akshay
Mirajkar
Copyright© 2015 Knowledge Management and Research Organization.

All rights reserved. No part of this book may be reproduced, transmitted or
utilized in any form or by a means, electronic or mechanical, including
photocopying, recording or by any information storage or retrieval system
without written permission fromus.
Acknowledgment
Every attempt has been made to trace thecopyright holdersof material
reproduced in this book. Should an infringement have occurred, we apologize for
the same and will be pleased to make necessary correction/amendment in future
edition of this book.
The content is developed by taking reference of online and print publications that
are mentioned in Bibliography. The content developed represents the breadth of
research excellence in this multidisciplinary academic field. Some of the
information, illustrations and examples are taken "as is" and as available in the
references mentioned in Bibliography for academic purpose and better
understanding by learner.'
ROLE OF SELF INSTRUCTIONAL MATERIAL IN DISTANCE LEARNING
The need to plan effective instruction is imperative for a successful

distance teaching repertoire. This is due to the fact that the instructional
designer, the tutor, the author (s) and the student are often separated by
distance and may never meet in person. This is an increasingly common
scenario in distance education instruction. As much as possible, teaching
by distance should stimulate the student's intellectual involvement and
contain all the necessary learning instructional activities that are capable
of guiding the student through the course objectives. Therefore, the
course / self-instructional material are completely equipped with
everything that the syllabus prescribes.
To ensure effective instruction, a number of instructional design
ideas are used and these help students to acquire knowledge, intellectual
skills, motor skills and necessary attitudinal changes. In this respect,
students' assessment and course evaluation are incorporated in the text.
The nature of instructionalactivities used in distance education
self- instructional materials depends on the domain of learning that they
reinforce in the text, that is, the cognitive, psychomotor and affective.
These are further interpreted in the acquisition of knowledge, intellectual
skills and motor skills. Students may be encouraged to gain, apply and
communicate (orally or in writing) the knowledge acquired. Intellectual-
skills objectives may be met by designing instructions that make use of
students' prior knowledge and experiences in the discourse as the
foundation on which newly acquired knowledge is built.
The provision of exercises in the form of assignments, projects and
tutorialfeedback is necessary. Instructionalactivities thatteach motor
skills need to be graphically demonstrated and the correct practices
provided during tutorials. Instructional activities for inculcating change in
attitude and behavior should create interest and demonstrate need and
benefits gained by adopting the required change. Information on the
adoption and procedures for practice of new attitudes may then be
introduced.
Teaching and learning at a distance eliminates interactive
communication cues, such as pauses, intonation and gestures, associated
with the face-to-face method of teaching. This is particularly so with the
exclusive use of print media. Instructional activities built into the
instructional repertoire provide this missing interaction between the
student and the teacher. Therefore, the use of instructional activities to
affect better distance teaching is not optional, but mandatory.
Our teamof successfulwriters and authors has tried to reduce this.
Divide and to bring this Self Instructional Material as the best teaching
and communication tool. Instructional activities are varied in order to assess
the different facets of the domains of learning.
Distance education teaching repertoire involves extensive use of self-
instructional materials, be they print or otherwise. These materials are
designed to achieve certain pre-determined learning outcomes, namely goals
and objectives that are contained in an instructional plan. Since the teaching
process is affected over a distance, there is need to ensure that students
actively participate in their learning by performing specific tasks that help
them to understand the relevant concepts. Therefore, a set of exercises is
built into the teaching repertoire in order to link what students and tutors do
in the framework of the course outline. These could be in the form of
students' assignments, a research project or a science practical exercise.
Examples of instructional activities in distance education are too numerous
to list. Instructional activities, when used in this context, help to motivate
students, guide and measure students' performance (continuous assessment)
PREFACE
We have put in lots of hard work to make this book as user-
friendly as possible, but we have not sacrificed quality. Experts were
involved in preparing the materials. However, concepts are explained in
easy language for you. We haveincluded may tables and examplesfor easy
understanding.
We sincerely hope this bookwillhelp you in every
wayyouexpect. All the bestfor your studies fromourteam!
Contents
BLOCK 1: INTRODUCTION TO HUMAN RESOURCE
UNIT 1 HUMAN RESOURCES: AN INTRODUCTION

Introduction, Human Resource Development, Modern concept of
Human Resources, Some Definitions for Human Resources, Human
Resource Management (HRM), Academic theory, Critical Academic
Theory, Business Practice, Careers, Professional Organizations,
Outsource Human Resource Management, The Changing HR Role,
New HR Role, HR Role: Business and Strategic Partner, HR Role:
Employee Advocate, HR Role: Change Champion, Job Tasks for
Human Resources Managers
UNIT 2 HUMAN RESOURCES AND BUSINESS GROWTH
Human Resource in Small Business, Literature Review and
Hypotheses Development, Recruitment and Selection, Training and
Performance Appraisal, HR Agenda in Company’s Growth, The
Growth Gap, Four Roles of HR
BLOCK 2: BASICS OF HUMAN RESOURCE PLANNING
UNIT 1 AN INTRODUCTION TO HUMAN RESOURCE PLANNING

Introduction, Practical benefits of HR Planning, Why human
resource planning?, Determining the numbers to be employed at a
new location, Retaining your highly skilled staff, Managing an
effective downsizing programme, Where will the next generation of
managers come from?, How can HRP be applied?, Strategic human
resource planning, Making the HR Strategy integral to the
organization,
A strategic human resource planning model, Designing the Human
Resource Management System, Planning the total workforce,
Generating the required human resources, Investing in human
resource development and performance, Assessing and sustaining
organizational competence and performance, The HRP Process
UNIT 2 SCOPE AND IMPORTANCE OF HUMAN RESOURCE PLANNING
Introduction, Why a Human Resources Diagnostic?, Scope of HR
Planning, The Inputs in Human Resource Planning, HR Planning:
Purpose and Goals, Planning ahead for Recruitment: The basic
process of HR Planning, Strategies in the HR Plan: Process Analysis,
Planning Process Tasks and Activities, Why a HR Planning Process
for Corporates?, Strategic Advantages for HR Planning, Micro/Macro
Level Advantages, Key Points for Successful HR Planning
UNIT 3 PROCESS OF HUMAN RESOURCE PLANNING
Introduction, Workforce planning process - within the annual
planning and budget review process, Preparation Questions for the
Meeting, Developing the Annual Workforce Plan, Changes to the
Staffing Profile outside the Planning Process, HR Planning: Tom
Casey Model, CEO Compensation, Present Scenario of HR Planning
Process, Building Human Resources Strategic Planning, Process and
Measurement Capability: Using Six Sigma as a Foundation, Gartner
EXP Says a Strategic Workforce Planning Process is Key to
Improving an IT Organization's Effectiveness
BLOCK 3: HUMAN RESOURCE IN INDUSTRIES
UNIT 1 HUMAN RESOURCES IN SMALL SCALE INDUSTRY

Introduction to Small Industry, Human Resource in Small Business
Organization, General Interview Guidelines, Human Resource
Planning in Your Business Plan, Outsourcing HR Reaps Benefits for
Small Business, Changing Organizational Structures/Work Patterns
in “SHAMROCK ORGANISATIONS”, Training in Small Industries
UNIT 2 HUMAN RESOURCES IN LARGE INDUSTRY
Introduction, Purpose of Human Resource Planning, The Basic unit
of Human Resource Planning, Human Resource Planning Inputs,
Human Resource Planning Results, Manpower Forecasting, HR
Planning: Purposes and Goals, Stages in HR Planning : Process
Analysis, Planning Process Tasks and Activities, Why a HR Planning
for Corporate, Strategic Advantages for HR Planning, Key Points for
successful HR Planning, The Drivers for Human Resource Planning,
Meeting the challenge of HR Planning using Clarity 6.0
UNIT 3 MODERN METHODS OF HUMAN RESOURCE PLANNING
Introduction to Modern Manpower Planning, Role and Content of
Manpower Planning, Forecasting future manpower movements,
Control and Evaluation, Environmental scanning, Human Resources
Environmental Scan
BLOCK 4: COMPENSATION MANAGEMENT
UNIT 1 BASICS OF COMPENSATION MANAGEMENT

Objectives, Introduction, Compensation Management, Components
of Compensation System, Types of Compensation, Compensation
Process, Techniques of Job Evaluation, Motivation and Fringe
Benefits
UNIT 2 ISSUES RELATED TO COMPENSATION
Dearness Allowance Concept, Emergence and Growth in India. The
role of fringe benefits in reward systems Retirement Plans including
VRS/Golden Handshake Schemes
Dr. Babasaheb PGDHR-202
Ambedkar
Open
University
UNIT 1
HUMAN RESOURCES: AN INTRODUCTION 03
UNIT 2
HUMAN RESOURCES AND BUSINESS GROWTH 38
BLOCK 1: INTRODUCTION TO
HUMAN RESOURCE
Block Introduction
Human resource applies to the workforce managed by any employer. As an
important asset for any business leader, employees need to be properly managed,
in order for optimal efficacy to be achieved. HRP is a deliberate strategy for
acquisition, improvement and preservation of enterprise‘s human resources. It is a
managerial function aimed at coordinating the requirements, for and availability
of different types of employees.
The block will explain all the concepts related to the Human Resource
Development along with theories such as Academic theory and Critical Academic
Theory. The usage of HRM in the Business Practice and the careers related to it
will also be explained. The block also comprises the changing role of HR and the
job tasks for the HR managers. Further the block explains the various concepts of
Human Resources in small businesses like the recruitment and selection, training
and performance appraisal etc. The role of HR in a Company‘s growth and the
benefits of HR planning are also included in this block.
Unit 1 provides an introduction to human resource development. The
modern concepts of human resources and definitions for human resources are
discussed in this unit. What is Human resource management and what is academic
theory and critical academic theory have been described in this unit. Business
practices, careers and professional organizations related to the Human resource
management is included in this unit .The concept of outsourcing of human
resources, the changing HR role and new HR roles such as business and strategic
partner, employee advocate and change champion are discussed in detail. The unit
ends up with the description of the job tasks for human resources managers. Unit
2 provides the information about the Human Resources in Small Business. The
literature review and hypotheses development is also included in this unit. The
unit also provides the knowledge about the recruitment and selection, training and
performance appraisal. The importance of HR agenda in a company‘s growth is
also discussed in detail. The concept of growth gap and the four roles of HR are
also enclosed in this unit.
1
Introduction to
Block Objective
Human
Resource After learning this block, you will be able to understand:
 Human Resource Development
 The Definitions for Human Resources.
 The Changing HR Role.
 The role of HR as a Business and Strategic Partner, Employee Advocate,

and change Champion.
 The role of Human Resource in Small Business.
 The concept of Recruitment, Selection, Training and Performance appraisal.
 The role HR Agenda in Company‘s Growth.
 What is the Growth Gap?
Block Structure
Unit 1: Human Resources: An Introduction
Unit 2: Human Resources and Business
Growth
2
UNIT 1: HUMAN RESOURCES:
AN
INTRODUCTION
Unit Structure
1.0 Learning Objectives
1.1 Introduction
1.2 Human Resource Development
1.3 Modern Concept of Human Resources
1.4 Some Definitions for Human Resources
1.5 Human Resource Management (HRM)
1.5.1 Features
1.6 Academic theory
1.7 Critical Academic Theory
1.8 Business Practice
1.9 Careers
1.10 Professional Organizations
1.11 Outsource Human Resource Management
1.12 The Changing HR Role

1.13 New HR Role
1.14 HR Role: Business and Strategic Partner
1.15 HR Role: Employee Advocate
1.16 HR Role: Change Champion
1.17 Job Tasks for Human Resources Managers
1.18 Let Us Sum Up
1.19 Answers for Check Your Progress
1.20 Glossary
1.21 Assignment
1.22 Activities
3
1.23 Case Study
4
Introduction to 1.24 Further Readings
Human
Resource

After learning this unit, you will be able to understand:
 Modern Concept of Human Resources.
 Academic Theory and Critical Academic Theory.
 Business Practice and Careers.
 Outsourcing of Human Resource Management.
 Major aspects of HR role.
1.1 Introduction
Human Resource Management is the study of activities about the workforce
in an organization. It involves an administrative function that attempts to go with
the organizational wants and the skills and abilities of its employees. Let us see
what is meant by the three key terms: Human, resource and management.
 The word ‗Human‘ means Homo-sapiens or Social Animal
 Resources mean assets such as Human, Physical, Financial, and Technical,

Informational etc.
 Management is related to the function of Planning organizing, leading and

controlling of organizational resources to accomplish goals efficiently and
effectively
To put it simply, human resource management is responsible for how people
are managed in the organizations. It is responsible for bringing people in an
organization and helps them perform their work, compensating them for their
work and solving problems that arise.
Human resource applies to the workforce managed by any employer. A
business of any size needs employees in order for it to run. As an important – the
most important – asset for any business leader, employees need to be properly
managed, in order for optimal efficacy to be achieved.
That‘s why the application of human resources management focuses largely
on a more sensitive and human analysis to determine what really works with
5
employees. One of the major aspects of HR maintenance involves employee Human
recruitment, training and development as a function of human capital Resources: An
management. Making sure that employees‘ abilities are optimally nurtured is Introduction
essential to seeing a worthwhile return on investment come from their
contribution to the company, once their training period is over. Along with
employee training, human resources departments also delve into the area of
applicant tracking. How to find the best talent available on the global market place
is often a problem that the human resources department strives to tackle.
In addition, human resources departments take care of a variety of concerns
such as crucial and highly sensitive negotiations between employees and
management and job descriptions. They also monitor the interplay between
employees in order to design a more efficient employee management system, the
compilation of benefits packages as well as a variety of other vital functions that
relate directly to the employee workforce of the company.
Basic functions that all managers perform are planning, organizing, staffing,
leading and controlling. HR management involves policies and practices needed
to carry out the staffing (or people) function of management.
Fig 1.1 Business management
Human resources are an increasingly prominent field that is taking shape

throughout industries and workplaces worldwide. Recognizing the fact that people
are a company‘s greatest asset, business leaders across the globe are coming to
rely more and more upon an effective management policy that applies
specifically to the area of human resources.
6
Introduction to
Human 1.2 Human Resource Development
Resource Human Resource Development or HRD is defined as "organised learning
activities arranged within an organisation in order to improve performance and/or
personal growth for the purpose of improving the job, the individual and/or the
organisation‖.
Human Resources Development is the composition that facilitates individual
development, prospectively fulfilling the organisational or country goals. It‘s
obvious that the personal development adds value to the person, and ultimately
benefits the organisation and the country as a whole. In the context of business,
the Human Resources Development consider workforce as an asset, whose worth
is improved by development.
Human Resource Development (HRD) provides the basic foundation for

helping the employees in developing their personal and organisational skills and
knowledge. Human Resource Development includes such opportunities as
 Employee training
 Career development
 Performance management and development
 Coaching
 Mentoring
 Succession planning
 Key employee identification
 Organization development
Human Resource Development lays emphasis on developing a superior
workforce so that the organisation and individual employees can work on
achieving their work goals. There are many opportunities in an organisation for
human resources or employee development, both within and outside of the
workplace. Human Resource Development can have both formal and informal
aspects. It can be formal such as in classroom training, a college course or an
organisational planned effort or it can be informal as in employee coaching by a
manager. Human Resource Development covers all these activities to excel as a
healthy organisation.
HRD includes the areas of training and development, career development
and organisation development. This is related to Human Resource Management -
7
a field that includes HR research and information systems, employee-employer Human
relations, employee assistance, compensation/benefits, selection and staffing, Resources: An
performance management systems, and HR planning and organisation/job design. Introduction
Check your progress 1

1. HRD includes the areas of training and development, career
development and organization development.
a. true
b. false
2. Human Resource Development (HRD) employees in developing

their personal and organizational skills
a. Employee training
b. Career development
c. Performance management and development
d. All the above
3. Personal development adds value to the person, but does not benefit
the organisation
a. true
b. false
1.3 Modern Concept of Human Resources

Modern conception of human resources maintain the view that the human
beings are social beings and not ‗commodities‘ or ‗resources‘. It essentially
emphasises and incorporates those expectations, which are not fulfilled through
the traditional personnel management. It integrates the various sub-systems like
performance appraisal, potentiality appraisal and development, career planning,
training and organisation development, research and systems development,
rewards, employee welfare and quality of work life, industrial relations and
human resource information in a meaningful way.
8
Introduction to Under the modern HRM approach, some basic assumptions about human
Human
resources are also different from the traditional approach. The important
Resource
assumptions of modern concept of HRM are as follows:
 The members of an organization are reservoirs of untapped resources.
 There is scope for unlimited development of these resources.
 It is more in the nature of self-development than development thrust from

outside.
 The organization also undergoes development with the overall benefits

along with the development of its members.
In its essence, modern concept of HRM is the qualitative improvement of
human beings who are considered the most valuable assets of an organisation-the
sources, resources and end-users of all products and services. Modern HRM is, no
doubt, an outgrowth of the older process and approach.

1. Modern concept of human resources emphasizes that human beings are
‗commodities‘
a. True
b. false
2. The important assumption of modern concept of HRM is that the members

of an organisation have a nature of self-development than development
thrust from outside.
a. true
b. false
1.4 Some Definitions for Human Resources

Business Dictionary defines Human Resources as, ―A human resource is
a person or employee who staffs and operates a function within your organisation‖.
According to Investopedia, Human Resources can be defined as,

―As companies reorganize to gain competitive edge, human resources plays a key
role
9
in helping companies deal with a fast-changing competitive environment and Human
the greater demand for quality employees‖. Resources: An
Introduction
Wikipedia says, ―Human resources are a term used to describe
the individuals who comprise the workforce of an organisation‖.

1. Which book states that ―A human resource is a person or employee who staffs and operates a
Business Dictionary c. Wikipedia

Investopedia
1.5 Human Resource Management (HRM)

Human Resource Management (HRM) mainly focuses on recruitment and
management of employees. It also takes care of the people who work in the
organisation, by efficiently guiding them in various disciplines. It deals with
issues related to people such as compensation, hiring, performance management,
organisation development, safety, wellness, benefits, employee motivation,
communication, administration and training.
HRM is a progressive function, which works by bringing people and

organisations together so that the business goals of each of them are met. It is that
part of the management process, which is concerned, with the management of
human resources in an organisation. It tries to secure the best from people by
winning their wholehearted cooperation. Alternatively, it may be defined as the art
of organising, developing and maintaining efficient resources to achieve the goals
of an organisation in the best possible manner.
HRM ease the workplace management with techniques that facilitates the
managers of an enterprise to express their goals with specificity and thus enabling
the workforce to understand it easily. It also helps to the managers to provide the
resources needed for the work force to successfully accomplish their assignments.
As such, HRM techniques, when properly practiced, are expressive of the goals
and operating practices of the enterprise overall. HRM is also seen by many to
have a key role in risk reduction within organisations.
1
Introduction to
Human
Resource
Fig 1.2 Human Resource Management
Torrington and Hall (1987) define personnel management as being, ―a

series of activities which: first enable working people and their employing
organisations to agree about the objectives and nature of their working
relationship and, secondly, ensures that the agreement is fulfilled".
While Miller (1987) suggests that HRM relates to, "those decisions and
actions which concern the management of employees at all levels in the business
and which are related to the implementation of strategies directed towards creating
and sustaining competitive advantage".
Human resource management is the business oriented, logical and consistent
approach to the management of an organisation's most valued assets, and which
are the people working there. It guides them to contribute individually and
collectively to the achievement of objectives of the business. The terms ‗human
resource management‘ and ‗human resources‘ (HR) have largely replaced the
term ‗personnel management‘ as a description of the processes involved in
managing people in organisations. Human resource management is evolving
rapidly. It is both an academic theory and a business practice that addresses the
theoretical and practical techniques of managing a workforce.
1.5.1 Features
HRM aims at bringing together expertise and skills in a scientific way. It
helps in creating attitudes that motivate a group to achieve organisational goals
effectively and economically. Analysis of definitions of human resource
management reveals the following features of HRM:
1. People Oriented: Human resource management is concerned with
employees both as individuals and as a group and how these employees
achieve goals. It is also concerned with behavioural, emotional and social
aspects of personnel. It is the process of bringing people and organisations
together so that the goals of each are met.
11
2. Individual Oriented: Under human resource management, every employee Human
is considered an individual to provide services and programmes, to facilitate Resources: An
employee satisfaction and growth. In other words, it is concerned with the Introduction
development of human resources, i.e., knowledge, capability, skill,
potentialities and attaining and achieving employee goals.
3. Continuous Function: Human resource management is a continuous
process. George R Terry says: ―It cannot be turned on and off like
water from a faucet; it cannot be practiced only one hour each day or one
day each week. Personnel management requires a constant alertness and
awareness of human relations and their importance in everyday
operations‖.
4. Staff Function: Human resource management is a responsibility of all line
managers and it is a function of staff managers in an organisation. Human
resource managers do not manufacture or sell goods but they do contribute
to the success and growth of an organisation by advising the operating
departments on personnel matters.
5. Pervasive Function: HRM pervades the organisation. Every person in an
organisation is involved with personnel decisions. We can say that whether
or not individuals plan to go into HR work, they become involved with
human resource management decisions. It is the central sub-function of an
organisation and it permeates through all types of functional management
viz. production management, marketing management and financial
management. Every manager is involved with human resource function. It is
the responsibility of all line managers and a function of staff managers in an
organisation.
6. Challenging Function: Managing human resources is a challenging job due
to the dynamic nature-of people. Human resource management aims at
securing unreserved co-operation from all employees in order to attain pre-
determined goals.
7. Development Oriented: Individual employee-goals consist of job
satisfaction, job-security, high salary, attractive fringe benefits, challenging
work, pride, status, recognition, opportunity for development etc. Human
resource management is concerned with developing the potential of
employees, so that they derive maximum satisfactions from their work and
give their best efforts to the organisation.
1
Introduction to
Human Check your progress 4
Resource HRM is a progressive function, which works by bringing people and organisations together so th
true
false
Who related HRM to "those decisions and actions which concern the management of employees
competitive advantage".
While Miller c. Torrington and Hall

Henry Fayol
Human resource management is people oriented as it‘s concerned with employees both as indivi
true
false
1.6 Academic Theory

Academic theory focuses on HRM. It emphasizes on the thought that
humans are not machines and there should be an interdisciplinary examination of
people in the workplace. Psychology, industrial engineering, industrial and
organisational psychology, industrial relations, and sociology along with critical
theories such as postmodernism and post-structuralism play a major role in
developing the academic theory.
Dave Ulrich defines 4 fields for the HRM function which are widely used
for describing the role of HRM in business. They are:
 Strategic business partner
 Change agent
 Employee champion
 Administration
13
All these HR schemes have a specific role to play in the organisations. Human
However, many HR functions are limited to the roles of administration and Resources: An
employee champion. They are seen more as a reactive partner than a strategically Introduction
proactive partner for the top management. In addition, HR organisations also have
difficulty in proving how their activities and processes add value to the company.
In modern times, HR practitioners and HR professionals have shifted their focus
on developing models that can measure whether HR adds value.

1. The theory that emphasizes on the thought that humans are not machines and there should be an interdi
Academic theory c. None of these

Critical Academic Theory
2. Who defined the fourfields for the HRM function as strategic business
partner, change agent ,employee champion and administration
Dave Ulrich c. Torrington and Hall

William R. Tracey
1.7 Critical Academic Theory

In 1937, Max Horkheimer of the Frankfurt School of sociology defined
Critical theory in his essay ―Traditional and Critical Theory‖. Critical
theory is a social theory oriented toward critiquing and changing society as a
whole, in contrast to traditional theory oriented only to understanding or
explaining it. Horkheimer wanted to distinguish critical theory as a radical and
liberating form of Marxist theory. He critically appraised both the model of
science put forward by logical positivism and studied the covert positivism and
authoritarianism of orthodox Marxism and Communism.
Core concepts of Horkheimer‘s Critical Academic Theory are:
1. The theory should be aimed at acting at the totality of society in its historical
perspective (i.e. how it came to be configured at a specific point in time)
2. That critical theory should act in a way to improve the understanding of
society by integrating all the major units of social sciences, which includes
bit of geography, economics, sociology, history, political science etc. to
strengthen its premise.
1
Introduction to A criticism of the Critical theory reveals that HRM itself is an attempt to
Human
move away from the modernist traditions of personnel (man as machine) towards
Resource
a postmodernist view of HRM (man as individuals). Many HR scholars debate
this argument. Critiques include the notion that because 'human beings' are the
subject, we should recognise that people are complex and that it is only through
various discourses that we understand the world. Critical Theory questions
whether HRM is in the pursuit of ‗attitudinal shaping‘ (Wilkinson 1998),
particularly when considering empowerment or perhaps more precisely pseudo-
empowerment- as the critical perspective notes. It must be noted down here that
the move away from Man as Machine is more of a Linguistic (discursive) move
away, than a real effort to recognise the Human in Human Resource Management.
Critical Theory, in particular acknowledges that because the subject deals

with the people in the workplace, it is a very complex one. Therefore, a simplistic
approach of 'the best way' or unitary perspectives on the subject doesn‘t bring out
a good result.

Critical theory is a social theory oriented toward critiquing and changing society as a whole, in
true
false
Who wanted to distinguish critical theory as a radical and liberating form of Marxist theory?
William R. Tracey c. Max Horkheimer

While Miller
15
Human
1.8 Business Practice Resources: An
Introduction
Business practices can be defined as, methods, processes, procedures and
rules employed or followed by a firm in the pursuit of its objectives. Human
resources management comprises of these processes that can be performed in an
HR department, outsourced or performed by line-managers or other departments.
 Workforce planning
 Recruitment
 Induction and Orientation
 Skills management
 Training and development
 Personnel administration
 Wage or salary Administration
 Time management
 Travel management (sometimes assigned to accounting rather than HRM)
 Payroll (sometimes assigned to accounting rather than HRM)
 Administration of Employee‘s benefits
 Personnel cost planning
 Performance appraisal
Business practices in India are undergoing major changes. The common
man today is expecting something more from huge business houses and he is not
willing to compromise on quality and promptness of services. For example, let us
talk about how real estate business is practiced in India. Changing aspirations and
higher disposable incomes have caused a sea change in the kind of homes
available in India.
The property market in India has undergone a tremendous change in recent

times because of considerable growth in this sector. With the growth extending
not just to real estate, but into the cities and towns itself, these areas have come
alive. They offer lifestyles opportunities that the average homebuyer could not
have even dreamed of some years ago. There has been exponential growth in the
areas of cityscape and its corresponding infrastructure. The need for better
infrastructure began to be felt and is gradually beginning to take shape. For
1
Introduction to example, many flyovers that have already been made have certainly improved
Human
travel within cities.
Resource
The newest upmarket addresses are those places that were once considered
underdeveloped areas of the city. Today builders provide complex's with gardens,
pool and a gym. Everyone these days it seems is looking for a lifestyle home and
every builder today is promising and providing exactly this. Estate developers
have kept their focus on providing better facilities, which keeps on improving
with the new projects. Many factors play a key role in this demand for lifestyle
homes. Some of them may be the fact that people are buying homes at younger
ages than ever before; their exposure to international trends; and higher spending
power of buyers.
Luxury has gained prominence along with comfortable living. Builders and
developers have grabbed these opportunities and are cashing on this idea. In the
Indian market, where the basic product is similar; it is ultimately the ability to
understand the customers need completely, which helps in business growth. It is
with this thought in mind that developers try to innovate constantly, based on
constant interaction with the customer. In order to succeed in business, the
developers offer not only the best possible service available but also provide
value-added features and benefits.

1.can be defined as, methods, processes, and procedures and rules employed or followed by
Business development c. Business practice

HR development
17
1.9 Careers Human
Resources: An
In the globalised era, organisations have realized that the need of the hour is Introduction
to have skilled, well- trained and highly motivated staff to help the growth of the
company. Organizations invest time and money in the welfare and benefit of the
employees because they see merit in such activities. All this and more has led this
part of an organisation's activity to be called ‗Human Resource Management‘.
However, there is more to HRM than just being the internal function of a
corporate. Some options open for professionals interested in career in Human
Resource are given below.
 Corporate HRM
Corporate HR has a rich array of roles in the organisation. The role of an
HR manager in the corporate sector is not only to search, select and recruit
suitable and qualified staff for his organisation, but is also concerned with the
development, motivation and training of this staff. This is required in order to
maximise satisfaction and minimize turnover.
 Training and development

Some companies specialise in training and development as a business. Their
job is broadly to ‗Train the Trainer‘. In the other words, they train HR managers
so that they in turn, train employees of their organisation and equip them with
certain skill sets.
Fig 1.3 Train the trainer
 Recruitment consulting
Recruitment as a career is the job of helping people find jobs of their own
and find employees for companies. Recruitment consultants work with companies
to help them find the right people for their positions. They also work for
candidates to find a role that is suitable for them. The key skill of a recruitment
consultant is to meet the needs of both the client and the candidate to ensure the
best mutual fit; this is not simply a case of skills matching but of truly
1
Introduction to understanding the business and its culture, as well as the aspirations of the
Human
candidate.
Resource
 HR Consulting
Human resources consulting involve advising organizations on how to make
the most out of their human capital. Most companies seek the services of a human
resources consulting firm in order to help them realize competitive advantages by
enhancing their human capital and by making their human resource processes
more effective. In addition, organisations employ services of HR consultants to
either find solutions or help them tide over issues relating to people in the
organisation.
 Career Counselling
Career counselling advisors assess people's interests, personality, values and
skills, and also help them explore career options and research options. Career
counselling provides one-on-one or group professional assistance in exploration
and decision making tasks related to choosing a major/occupation, transitioning
into the world of work or further professional training. The field is vast and
includes career placement, career planning, learning strategies and student
development.
HR is a fast developing field, which was considered the domain of women
until a few decades ago.
Since a variety of roles are available today, more people are pursuing HR as
a viable career option.

1.as a career is the job of helping people find jobs of their own and find employees for com
Human resources consulting c. Career counseling

Recruitment
2.involves advising organizations on how to make the most

out of their human capital.
Recruitment c. Human resources consulting

Career counseling
19
3.advisorsassesspeople'sinterests,personality,valuesand Human
skills, and also help them explore career options and research options. Resources: An
Introduction
Career counseling c. Recruitment
Human resources consulting
1.10 Professional Organizations

Professional organisations in HRM include the -
 One of the leading organisations of the HR related professionals is the

Society for Human Resource Management (SHRM).
 The Australian Human Resources Institute (AHRI) - The Australian Human

Resources Institute (AHRI) is the national association representing human
resource and people management professionals and currently has in excess
of 14,000 members.
 The Chartered Institute of Personnel and Development (CIPD)
 The International Public Management Association for HR (IPMA-HR),
 Management Association of Nepal (MAN)
 The International Personnel Management Association of Canada (IPMA-

Canada).
 The American Council on International Personnel (ACIP) - It is a leading

voice and resource for employers working worldwide to advance
employment-based immigration of highly educated professionals.
In India, National Institute of Personnel Management is the premier all-
India Institute of professionals engaged in personnel management, industrial
relations, labour welfare and human resources development. NIPM is a
professional, non-profit-making society registered under Societies Registration
Act, 1960. It has a nation-wide membership of over 11,500 Individual Members
and over 300 institutional members, spread over 52 chapters.
2
Introduction to
Resource
1. Full form of the abbreviation SHRM , one of the leading organisation of
the HR related professionals is
a. Society for Human Resource Management
b. Society for Human resource Manager
c. Social Human resource management

2. Full form of the abbreviation AHRI
is
a. Associate of Human Resource Institute
b. All India Human Resources Institute
c. Australian Human Resources Institute
1.11 Outsource Human Resource Management

Outsourcing of human resource operations has become a very common
practice today. Some of the services on offer are payroll operations, benefits
administration, employee data records and management, asset management
services.
Why outsource HR operations?
HR operations become a streamlined process when they are outsourced. It

makes them more transparent to employees too. Technology is usually a key
enabler in achieving this transparency. It also helps preserve the sanctity of
information between employee and employer.
IT enabled service companies (software and web developers) are considered
a viable outsourcing option. They offer strategic initiative to cut costs and provide
access to intellectual capital to the organisations that is not available in-house.
Customer response activities and other such initiatives in the West have
made Indian outsourcing service providers emphasise on reinventing themselves
and extend their web development activities to high-end outsourcing solutions.
Comprehensive HR outsourcing services
 Maintenance of HR personnel‘s records
 Annual review and revision of employee handbook
 Audit of HR strategies, policies and procedures
21
 Employment/termination procedures implementation Human
Resources: An
 Job description process
Introduction
 Exit interviews
 Employee development initiative
 Performance management process
 On-site support
 Employee retention initiatives
 Long term incentive/equity stock option programs
 Employee morale building
 Review of compensation plan

Recruiting services
 Retained search
 Job description development process
 Ad placement
 Applicant screening
 Reference and background check of applicants
 Candidate interviews and recommendations
 Development and coordination of offer
 Induction of new hire

HR management services
 Review and analysis of compensation plan
 Culture development
 Acquisition planning
 Incentive and retention programs
 Succession planning
Benefits administration
 Services, which ensure commission
 Custom benefit, plan strategies and design
2
Introduction to
 Analysis of benefit, cost control and reduction recommendations
Human
Resource  Development of employee communications
 Eligibility and enrolment services
 On-line access to benefits information to the employees
Payroll services
 Employee self-service features
 Processing of payroll
 Payroll tax reporting
 Time off tracking

Measures of Successful Outsourcing
Traditionally, the HR department has been a cost-consuming function, but it

has slowly shifted towards contributing significantly to a company's bottom line.
This has led to outsourcing tasks like payroll, benefits, education and training,
recruiting, HR administration, organizational development and resource
management.
For effective outsourcing of HR, it is imperative that senior management is

involved right from the beginning of the process and it drives the initiative.
Technology compatibility, confidentiality and cost are other challenges that both
sides must work on. Mutual trust is critical, as it is a long haul commitment. For
building a strong relationship, a clear understanding of requirements and
expectations from both sides is an important platform. Compatibility in culture
and values, along with an open and flexible approach go a long way in ensuring
that the organisation‘s decision on outsourcing its HR is a successful one.
A few measures that would help the outsourcing relationship remain
contemporary and relevant are:
 Improved processes
 Levels of satisfaction
 Regular updates on mandatory practices
 Effective implementation of workflow and policy changes
 Continuous feedback mechanisms from both the parties
23
Human
Check your progress 10 Resources: An
Introduction
1. Payroll operations, benefits administration, employee data records and
management, asset management services are some of the outsourced human
resource operations.
a. true
b. false
2. Compatibility in culture and values, along with an open and flexible
approach go a long way in ensuring that the organisation‘s decision on
outsourcing its HR is a successful one.
a. true
b. false
3. The measure that would help the outsourcing relationship remain

contemporary and relevant are -
a. Improved processes
b. Levels of satisfaction
c. Regular updates on mandatory practices
d. All the above
1.12 The Changing HR Role

The challenge of HR managers today is to recognise talent, nurture the same
carefully and achieve significant productivity gains, over a period of time. The
enterprise is nothing but people. Some will be intelligent, others not so intelligent;
some are committed to jobs, others are not; some will be outgoing, others reserved
and so on. The point is that these differences demand attention, so that each
person can maximise his effectiveness and society as a whole can make the wisest
use of its human resources.
Technological advances, globalised competition, demographic changes, the
information revolution and trends toward a service society have changed the rules
of the game significantly. In such a scenario, organisations with similar set of
resources, gain competitive advantage only through effective and efficient
management of human resources.
2
Introduction to The role of HR manager is shifting from a protector and screener to the
Human
planner and change agent. In the present day competitive world, highly trained
Resource
and committed employees are often a firm‘s best bet. HR professionals can help
an organisation select and train employees for emerging roles. Only people who
are involved and thinking can make a difference. In the past, HR managers were
often viewed as the systematizing, policing arm of executive management. Their
role was more closely aligned with personnel and administration functions that
were viewed by the organisation as paperwork.
Charles Creer, has pointed out, ―In a growing number of
organisations human resources are now viewed as a source of competitive
advantage. Increasingly it is being recognised that competitive advantage can be
obtained with a high quality workforce that enables organisations to compete on
the lines of market responsiveness, product and service quality, differentiated
products and technological innovations‖. HR professionals play a key role in
planning and implementing downsizing, restructuring and other cost-cutting
activities. They enable a firm to be more responsive to product innovations and
technological changes.
Organisations will need to be concerned with extending their recruiting
efforts, developing careful screening procedures, training employees to help them
adapt to change, providing appropriate and sufficient educational programmes and
accounting for their investment in recruiting, selecting and training employees
considering the changing times of business.

1. The role of HR manager is shifting from a protector and screener to the
planner and change agent.
a. true
b. false
2. ―In a growing number of organisations human resources are now

viewed as a source of competitive advantage. Increasingly it is being
recognized that competitive advantage can be obtained with a high quality
workforce that enables organizations to compete on the lines of market
responsiveness, product and service quality, differentiated products and
technological innovations‖ who stated this?
a. Charles Creer c. Torrington and Hall
b. William R. Tracey
25
Human
1.13 New HR Role Resources: An
Introduction
There are an incredible number of pressures on today's organizations. To
name a few: environmental pressures such as increasing globalization, rapid
technological change, and tougher competition; organizational changes such as
new organizational alliances, new structures and hierarchies, new ways of
assigning work, and a very high rate of change; changes in the workforce,
including employees' priorities, capabilities, and demographic characteristics.
Within these pressured organizations, there is a need for (and opportunity for) the
human resource function to play a critical role in helping organizations to navigate
through these transitions. In order to play this role, however, HR will have to
increase its real and perceived value.
Making the move to a new HR role will elevate exceptional issues for every
HR who tries it, but there are some universal steps and behaviours that will add to
the possibility of achievement.
Some of these steps and actions are:
Strong HR leadership: As with any most important change attempt, a

strong leader can build up an apparent vision, encourage others to contribute to
that vision, and help them make effort together toward attaining it. For the change
of the role of HR in a business, the HR manager will need to work together within
the HR department and with the organizational leaders to redesign the prospects
of that HR can and will finally convey. The achievement of the change will
depend upon HR's capability to gather the actual desires of the business and the
reliability it develops.
Sharp prospective orientation: One of the methods that HR can offer
value is to recognize how varying environmental, managerial, and labour force
factors will likely manipulate the business, foresee the related HR requirements,
and be ready to convey suitable answer to get together those needs. By preserving
a focus on workplace development, HR can organize to assess the impact that
demanding modifications are probable on an organization's people and processes,
and be ready to toil with the business.
Flexibility and Inspiration: An HR which will be unbeaten in the future
will likely be one that is receptive to the varying requirements of its clients
business. Receptiveness in the varying world of labour will necessitate being
flexible as the business alters, so will their wants and precedence. Growing
globalization will generate a call for both flexibility and inspiration as businesses
will attempt to thrive in new places, with new workers, and with new consumers.
2
Introduction to Delivering value: Though this is not an innovative confront for HR, it
Human
remains as a vital one. HR is still alleged by many inside the present business as
Resource
merely non-revenue creating function. It is vital to make clear the worth provided
by functioning with the executive team to employ the exact people, administer
them well, compensate them suitably, and put up an effective environment that
give confidence to success.
The three new HR roles are:
a) Strategic Partner
In the modern organizations, to assure their capability and aptitude to
contribute, HR managers have to consider of themselves as strategic partners. In
this role, the HR person adds to the progress and achievement of the organization
according to its business plan and objectives.
The HR business goals are customary to maintain the achievement of the
entire strategic business plan and objectives. The deliberate HR delegate is
extremely conversant regarding the plan of work structure in which individuals
achieve.
This intentional partnership reshape the HR services such as the plan of
work positions, recruitment, compensation, performance, career and succession
plan and employee development. When HR professionals are associated with the
business, the workforce element of the business is considered as a strategic
provider to business accomplishment.
To be victorious business partner, every HR staff associate have to act like
business people, identify economics and book-keeping, and be responsible and in
charge for cost diminution and the dimension of all HR programs and methods.
The HR persons will have to establish that they encompass the business know-
how and that‘s the reason that they are in the position.
b) Employee Advocate
As an employee advocate, the HR manager plays an important role in
managerial accomplishment by using his knowledge concerning and support to
the work force. This advocacy comprise know-how in how to generate a employ
favourable work environment in which individuals will decide to be encouraged,
and tend to contribute for the development of the organisation.
Promoting efficient techniques of target setting, communication
and authority through delegation, creates an outcome of employee ownership of
the business. The HR experts help to set up the organizational ethnicity and
atmosphere in which individuals have the ability, apprehension and obligation to
serve customers.
27
In this responsibility, the HR manager generally offer capacity management Human
plans, worker development prospects, worker support programs , gain sharing and Resources: An
income sharing schemes, business expansion intervention, owing course of action Introduction
towards employee grievances and crisis resolving, and frequently planned
communication prospects.
c) Change Champion
The invariable assessment of the efficiency of the business results in the call
for the HR proficient to frequently champion change. Both acquaintance about
and the aptitude to carry out successful alteration strategies formulate the HR
professional unusually esteemed. Perceptive how to connect modification to the
strategic desires of the organization will reduce employee discontent and conflict
to change.
Organization development, the authority for change administration
strategies, gives the HR professional supplementary defy. The HR professional
add to the organization by continually considering the efficiency of the HR
function. To endorse the overall success of the organization, it champions the
classification of the organizational mission, vision, principles, objectives and
action plans.

The new HR role will add to the possibility of achievement by strong hr leadership, sharp prospective orie
true
false
HR manager as anplays an important role in managerial accomplishment by using his knowledge conc
Strategic Partner c. Change champion

Employee Advocate
Growing globalization will generate a call for both flexibility and inspiration as businesses will attempt to t
true
false
2
Introduction to
Human 1.14 HR Role: Business and Strategic Partner
Resource The Strategic Business Partner model is a way to make sure the human
system suggestions and needed change policies as a part of business management
decisions. The growth of the strategic business partnership role appears from a
combination of having proficiency and information in the regions of human
resources, organization development, business insight, and individual partnership.
A well-designed Strategic Business Partnership role coupled with excellent
delivery of operational HR functions can help in performing the HR functions.
Human resources, with its varied internal and external customer base, the
ability to touch all levels of the organisation and the legendary understanding of
the organisation's environment could not be more suited for the critical role of a
strategic business partner.
To take on the responsibility of a strategic business partner, it‘s essential for
the HR managers to know the organization's business. And for this they should be
aware of the environment in which the business functions along with the
competition and the conditions that might persuade the development of the
organization.
The HR in a business can no longer focus on its own domestic errands. It
must be accountable to guarantee that HR's plans, objectives and precedence are
obsessed by and associated with the general business requirements. Hence it‘s
necessary to set up key business joint ventures with higher level management, as
well as important posts in other functions inside the organization. Though the
functional part of HR, the everyday responsibilities needed to run an organization
are not intended in character, the responsibilities must reflect the objectives of the
organization.
Organisations that consider their employees to be the most valuable asset
prefer to have its human resources functioning in a true strategic business partner
role. Human Resource professionals are equipped with the knowledge, skills and
the talent to collaborate with senior leadership. These qualities help them to not
only be involved in the strategic management of the organisation but drive its
implementation too.
HR leaders must understand the organisation's business to fulfil a strategic
business partner role. In addition to fully understanding the business, HR must
understand the environment in which it operates the competition and the
circumstances that could influence the progress of the organisation. It can no
longer focus on its own internal tasks. HR must be responsible for ensuring that
29
the strategies, goals and priorities put forth are driven by and aligned with overall Human
business needs. It must establish key business partnerships with senior Resources: An
management and key figures of management in other functions within the Introduction
organisation.
To be successful business partners, the thought-process of HR team
members have to be like business people. They should know finance and
accounting, be accountable and responsible for cost reductions and the
measurement of all HR programs and processes.

1. The Strategic Business Partner model is a way to make sure the human
system suggestions and needed change policies as a part of business
management decisions.
a. true
b. false
2. Organisations that consider their employees to be the most valuable asset

prefer to have its human resources functioning in a true strategic business
partner role.
a. true
b. false
3. To take on the responsibility of a strategic business partner, it‘s not

essential for the HR managers to know about the organization's business.
a. true
b. false
1.15 HR Role: Employee Advocate

Being the HR Employee Advocate is the hardest of HR Roles. The HR
Employee Advocate‘s role is to know the employees of the organisation and their
main interests. HR manager as employee advocate is best placed to mediate
between senior management and the workforce when relations break down.
This responsibility concentrates fundamentally on maintaining the rights and

requests of the workforce and can be confirmed by inventive policies and
programs in the region of work-related health and security, complaints, work-life
3
Introduction to equilibrium, multiplicity, and employee support. To be an efficient employee
Human
advocate, HR must be familiar with the workers and find out time to meet with
Resource
and listen to employees. HR should encourage communication; including
employee assessments; employee submission programs, all-employee summit,
progress of communication of the business eminence, and any program that can
make employees experience themselves as a part of the team. This role also
comprises the assurance of the employees with troubles to obtain a just
consideration.
To be a proper employee advocate, a HR professional can relate conclusions
to external customs that evidently do well to the workforce in other organizations.
An employee advocate must keep up equilibrium between the desires of
management and the wants of workforce. The role of the HR Employee Advocate
needs a clear knowledge about the preferences and interests of the employees to
make employees satisfied and motivated. The role of the HR Employee advocate
for the employees in the organisation is to make a clear alignment between the
interest of the organisation and the business goals and objectives.
The employee advocate helps to get better conditions for employees at an
affordable price for the company. When the organisation plans to reduce
headcount, the employee advocate represents the employees and knows what the
employer can afford to pay. The employee advocate proposes the plan, which is
socially responsible and the employees can trust the employer that the offer for
them will be fair enough. In this role, the HR manager provides employee
development opportunities, employee assistance programs, gain sharing and
profit-sharing strategies, organisation development interventions, due process
approaches to problem solving and regularly scheduled communication
opportunities.

1. The HR Employee Advocate‘s role is to know the employees of the
organization and their main interests
a. true
b. false
2. HR professional cannot relate conclusions to external customs that
evidently do well to the workforce in other organizations
a. true
b. false
31
Human
1.16 HR Role: Change Champion
Resources: An
The constant evaluation of the effectiveness of the organisation, demands Introduction
the need to frequently champion changes in the business. Both knowledge about
and the ability to execute successful change strategies make the HR professional
exceptionally valued.
HR has knowledge of employees and it can help provide many useful tips,
when the management is trying to usher in changes. These tips are of great value
to the project and its implementation. Human Resources can include several
actions that influence project charter and project plan to help the employees
understand the impact of the project on their lives in the organisation. The HR
professional contributes to the organisation by constantly assessing the
effectiveness of the HR function. He/she sponsors change in other departments
and in work practices. HR is able to align different projects together and imagine
their impact on employees. Employees are not able to absorb many changes at one
time and the change agent can prepare a proper communication plan. To promote
the overall success of his organisation, he champions identification of the
organisational mission, vision, values, goals and action plans. Finally, he helps
determine the measures that will tell his organisation, how well it is succeeding in
all of this

1. The constant evaluation of the effectiveness of the organisation, demands
the need to frequently champion changes in the business.
a. true
b. false
2. Though HR professional contributes to the organisation by constantly

assessing the effectiveness of the HR function they do not sponsor change
in other departments.
a. true
b. false
3
Introduction to
Human 1.17 Job Tasks for Human Resources Managers
Resource
Following are the tasks of Human Resource Managers:-
 Administration of compensation, benefits and performance management

systems.
 Implementation of safety and recreation programs.
 Identification of staff vacancies and recruitment and taking care of interview

and selection of applicants.
 Allocation of human resources and ensuring appropriate matches between

personnel.
 Providing current and prospective employees with information about

policies, job duties, working conditions, wages and opportunities for
promotion and employee benefits.
 Performing difficult staffing duties, which include dealing with

understaffing and refereeing disputes, firing employees and administering
disciplinary procedures.
 Advising managers on organizational policy matters such as equal

employment opportunity and sexual harassment and making
recommendations of needed changes.
 Analyzing and modifying compensation and benefits policies to establish

competitive programs and ensuring compliance with legal requirements.
 Planning and conducting new employee orientation to foster positive

attitude toward organizational objectives.
 Serving as a link between management and employees by handling

questions, interpreting and implementing contracts and helping resolve
work-related problems.
 Analyzing training needs to design employee development, language

training and health and safety programs.
 Maintaining records and compiling statistical reports concerning personnel-

related data, which includes information on hires, transfers, performance
appraisals and absenteeism rates.
 Analyzing statistical data and reports to identify and determine causes of

personnel problems.
33
 Recommending improvement of organization‘s personnel policies Human
and practices. Resources: An
Introduction
 Conducting exit interviews to identify reasons for employee termination.
 Investigating and reporting on industrial accidents for insurance carriers.
 Representing the concerned organisation at personnel-related hearings and

investigations.
 Negotiating bargaining agreements and helping to interpret labor contracts.
 Preparation of personnel forecast to project employment needs of future.
 Preparation and execution of budget related activities for personnel

operations.
 Development, administration and evaluation of applicant tests.
 Overseeing the evaluation, classification and rating of occupations and job

positions.
 Studying about the legislation, arbitration decisions and

collective bargaining contracts to have information about industry trends.
 Development of special projects in areas such as pay equity, savings bond

programs, child-care and employee awards.
 Providing terminated employees with outplacement or relocation assistance
 Holding contract with vendors to provide important services, such as food

service, transportation or relocation service etc.

1. Preparation and execution of budget related activities for
personnel operations can be considered as job tasks for Human Resources
a. true
b. false
2. Investigating and reporting on industrial accidents for insurance carriers

is not the job of Human Resources.
a. true
b. false
3
Introduction to 3. Providing terminated employees with outplacement or relocation
Human assistance
Resource
is not the job of Human Resources.
a. true
b. false
1.18 Let Us Sum Up

To conclude, Human Resource Management can be considered as the study
of actions and behaviors of the workforce in an organization. Hence, it is
responsible for how people are managed in the organizations. Moreover, it is
accountable to bring people in a business and help them to do their work,
reimburse them for their work and solving problems that arise. That‘s the reason
why human resources management is considered as more and more exceptional
field that is forming all through the industries and workplaces internationally.
Human Resources Development is the structure that enables individual
development, eventually satisfying the organisations or the country goals. Modern
perception of human resources is that human beings are creative social beings. It
basically fulfils those prospects, which are not fulfilled through the traditional
personnel management. So the modern concept of HRM gives priority to the
qualitative improvement of human beings. It is apparent that human resource
management is changing rapidly. It is both an academic theory and a business
practice that addresses the theoretical and practical techniques of managing a
workforce.
Outsourced HR operations become a more efficient process and make them
more apparent to employees with the help of technology. The involvement of the
senior management is very important for the effective outsourcing of HR. Roles
are often talked about as an body, which act as a strategic and business partner, an
advocate of employees or an agent that brings about transformations in the HR.
An elegant Strategic Business Partnership role together with excellent delivery of
operational HR functions can help in performing the HR functions. The HR
manager plays an important role as an employee advocate with his knowledge of
HR processes and advocacy of people creating a work environment which helps to
motivate the employees. The HR manager with his knowledge and ability to
execute successful change strategies in organisation performs the role of the
change champion. The Human Resource Department‘s main objective is to bring
out the best in their employees and thus contribute to the success of the Company.
35
1.19 Answers for Check Your Progress Human
Resources: An
Introduction
Answers: (1-a), (2-a), (3-b)
Answers: (1-b), (2-a)

Answers: (1-a)
Answers: (1-a), (2-a), (3-a)
Answers: (1-a), (2-a)
Answers: (1-a), (2-c)
Answers: (1-c)
Answers: (1-b), (2-c), (3-a)
Answers: (1-a), (2-c)
Answers: (1-a), (2-a), (3-d)
Check your progress
10
Check your progress
11
3
Introduction to
Human Check your progress
Resource 12
Answers: (1-a), (2-b), (3-a)
Answers: (1-a), (2-a), (3-b)
Check your progress
13
Check your progress
14
Answers: (1-a), (2-b)

Check your progress
15
Answers: (1-a), (2-b), (3-b)
Check your progress
16
1.20 Glossary
1. Nurture - Look after
2. Delve - look into
3. Assumption - statement
4. Proactive - practical
5. Pursuit - search
6. Compromise - negotiation
7. Prominence - importance
8. Sanctity - holiness
9. Elevate - raise
10. Receptiveness - openness
11. Obsessed - passionate
12. Multiplicity - wealth
13. Foster - promote
37
Human
1.21 Assignment
Resources: An
Describe the concept of HRD and its need in the present industrial scenario. Introduction
1.22 Activities
Visit a company and observe the roles and responsibilities of HR. Discuss
the changing role with HR and write a detailed note.
1.23 Case Study

Due to persistent change in the business environment, the role of the Human
Resource Manager is also changing rapidly. And hence, it‘s significant that every
HR expert has to get used to the new roles such as the strategic partner, an
employee sponsor or advocate, and a change champion within the organization.
If you are the HR manager, describe the functions you will perform in the
above given roles.
1.24 Further Readings

1. Competitive Advantage through People, Pfeffer, P, Harvard Business
School, 1994.
2. Designing and Managing Human Resources Systems, Pareek, Udai and T.V.
Rao, 3rd Edition 3. Human Resource Management, Bob Mathis and John
Jackson 2004.
3
Introduction to
Human UNIT 2: HUMAN RESOURCES
Resource
AND BUSINESS
GROWTH
Unit Structure
2.1 Introduction
2.2 Human Resource in Small Business
2.3 Literature Review and Hypotheses Development
2.4 Recruitment and Selection
2.5 Training and Performance Appraisal

2.6 HR Agenda in Company’s Growth
2.7 The Growth Gap
2.7.1 Closing the Growth Gap
2.8 Four Roles of HR
2.9 Let Us Sum Up
2.11 Glossary
2.12 Assignment
2.13 Activities
2.14 Case Study

 Role of Human Resource in Small Business.
 Recruitment and Selection.
 Training and Performance Appraisal.
 Agenda of Human Resource in Company‘s Growth.

39
 Various
Roles
of HR
and HR
Manage
rs.
4
Human
2.1 Introduction Resources and
Business
Many small businesses operate with no employees. One person handles the
Growth
whole business with perhaps occasional help from family or friends. Hiring
someone to help is a big decision as one has to worry about payroll and benefits.
Employers are also worried about a host of problems that can arise from
personality conflicts and loss-of-control of all the processes in running the
business.
A survey of personnel functions of smaller firms found that functions like
finance, accounting, production, and marketing all take priority over personnel
management. Personnel management is considered as a second most important
management activity next to general management/organizational work. Most
small business owners manage the personnel functions themselves as the work
force is small. They do not develop sophisticated personnel systems. But as a
small business grows, personnel practices begin to emerge in importance and
more systems and process are being developed.
2.2 Human Resource in Small Business

Substantial work has been undertaken in the field of human resource
management (HRM), as it applies to large organisations. However, for small
businesses same thought-process cannot be frequently applied. A small business
lacks adequate systems to ensure efficient management of human resources.
Further, most small businesses are the product of their owners, whose personality
and personal involvement dominate. From the experiences of various small
business owners who have experienced growth in their business, it was found that
motivating and retaining good staff was a critical bottleneck in their business
growth. The point of awareness for many came from managerial training
programs. However, this was tempered by their beliefs and the growth cycles of
their companies. Prior to change being possible these owner-managers needed to
develop skills and competencies in leadership, coaching and management before
effective delegation and team building could take place. These findings are linked
to the existing body of knowledge relating to HRM.
Human resource management function of a small business is not of the same

size or complexity as those of a large firm. A business that has only two or three
employees may face important personnel management issues. Indeed, the stakes
are very high in the world of small business when it comes to employee
41
Introduction to recruitment and management. A business cannot run with an employee who is
Human
lazy, incompetent or dishonest in nature or dealings. A small business with a work
Resource
force of half a dozen people will have a worse impact on its process by such an
incompetent employee as compared to a company with a work force that numbers
in the hundreds (or thousands). It is rightly said that, ―most small
business employers have no formal training in how to make hiring decisions".
Though, SMEs (Small and Medium Enterprises) include organisations of
different sizes with changing extent of intricacy in executive practices they
habitually are considered as one unit. The small business owner should take into
account many factors prior to the hiring of a fresh employee. Katzell (1962)
argued its difficult generalise the case of one organisation and expect that it‘s
applicable to all the other organisations. He recognized definite proportions, such
as size of the firm and the degree of relations of organisational associates, which
determine the difference and intricacy in organisational practice and conducts.
Going after Katzell's (1962) proposal, organisational size along with the strategic
inference of growing size should be taken into account while considering suitable
stages of proper HRM practices appropriate to every organisation .Blau (1970,
1972) pointed out two wider tendencies as organisations enlarge in size. The first
is growing allotment of labour, resulting to more horizontal and vertical
separation. The second is –according to the increase in size, at first quickly and
then slowly the differentiation enhances.
Talents of prospective employees should be matched with the company's

needs of a small business. Efforts to manage this can be accomplished in a much
more effective fashion if the small business owner devotes energy to defining the
job and actively taking part in the recruitment process. However, human resource
management task does not end with the creation of a detailed job description and
the selection of a suitable employee. The hiring process signals the start of HRM
functions for the small business owner.
Fig 2.1 Small business owner
4
Small business consultants strongly urge that even the most modest of Human
business enterprises should implement and document policies regarding human Resources and
resource issues and functioning. In order to manage their enterprise's employees, Business
Growth
some small business owners also need to consider training and other development
needs. The need for such educational supplements can range dramatically. A
bakery owner, for instance, may not need to devote much of his resources to
employee training, but a firm that provides electrical wiring services to
commercial clients may need to implement a system of continuing education for
its workers in order to remain viable.
To establish and maintain a productive working atmosphere for the
employees of the company, the small business owner needs to work on developing
the same. Employees only become a productive asset to the company when they
feel that they are treated in a fair and professional way. The small business owner,
who communicates business expectations and company goals to his employees,
provides adequate compensation offers meaningful opportunities for career
advancement and anticipates work force training and developmental needs have
better chances to prosper in his business. These practices help in providing
meaningful feedback to his or her employees too, which leads him to be more
successful than that owner who is neglectful in any of these areas.

1. recognized definite proportions, such as size of the firm and the degreeofrelationsoforganisationalassoc
difference and intricacy in organisational practice and conducts.
Hornsby and Kuratko c. Wilkinson

Katzell
Human resource management function of a small business is of the same size or complexity as those of a
true
false
Employees only become a productive asset to the company when they feel that they are treated in a fair
true
false
43
Introduction to
Human 2.3 Literature Review and Hypotheses Development
Resource Formal practices of HRM process are important for the organisational
functions. Here, the word formal refers to suggested or prescribed practices where
the emphasis is on those practices, which are generally approved in the literature
as appropriate for the various HRM areas examined. In this regard, it can be said
that this hypothesis extends beyond documentation and standardisation of
procedures, roles and instructions to include legitimate sources of recruitment and
the use of specialists for training. From Katzell's (1962) contention, SMEs (small
and medium enterprises) of varying sizes should demonstrate various levels of
formality in their HRM practices.
Hornsby and Kuratko (1990) examined HRM practices of small firms
keeping their studies consistent with Katzell's (1962) propositions. They examined
three size categories and reported increased sophistication in practices with firm‘s
growth. Roberts, Sawbridge and Bamber (1992) argued that the limits of
informality become apparent in firms with 20 or more employees when informal
networks of recruitment dry up and when informal styles of management
communication are stretched. Jennings and Beaver (1997) noted that at this size
the owner becomes overextended and needs to delegate responsibility to more
professional management. Wilkinson (1999) studied relations of employees in the
business and argued that employment relations in SMEs are characterised by
informality. They insisted that formal control systems and communication
strategies are almost non-existent in this set up. He maintained that emphasis on
rules and procedures is out-dated in an environment where owners have to make
speedy decisions in response to market pressures.
Several similarities were found among small and large firms in many areas
of HRM practices by Golhar and Deshpande (1997). These contrasting views
make it difficult to understand existing HRM practices in SMEs and to prescribe
appropriate practices for these firms. The result derived from these contrasting
studies gives an approach, which is a "one-size-fits-all" approach to HRM training
and advice for SMEs.
Following hypotheses are suggested; keeping in line with the argument that
HRM, practices will become formal with firm‘s growth;
H1: As the firm grows a greater variety of formal recruitment sources are
introduced.
H2: As the firm‘s size increases, multiple selection methods intensify the
screening of candidates.
4
H3: The application of formal employment procedures at the managerial Human
level lags behind those processes at the operational level for smaller firms. Resources and
Business
Growth

1.examined HRM practices of small firms keeping their studies consistent with Katzell‘s propositions.
Katzell c. Wilkinson
Hornsby and Kuratko
2.argued that the limits of informality become apparent in firms with 20 or more employees when informa
stretched.
Wilkinson c. Hornsby and Kuratko

Roberts, Sawbridge and Bamber
3..studied relations of employees in the business and argued that

employment relations in SMEs are characterised by informality
Katzell c. Hornsby and Kuratko

Wilkinson
2.4 Recruitment and Selection

With the changing times, the recruitment of employees has become both
easier and at the same time more challenging too. The advent of the online world
of job boards, recruitment websites and social media increases the likelihood of
finding world-class candidates. The online world supported by our matching
criterion also gives so many candidates to consider for a position that weeding
through applications becomes time consuming and hectic activity.
Fig 2.2 Online world
45
Introduction to
Human
Resource
Fig 2.3 Recruitment
Recruitment is the absolute method of making out of the potential applicants

in this manner motivating and persuading them to submit an application for a
specific job or jobs in the establishment. It is an encouraging act as it entails
attracting individuals to apply. The idea of application calling procedure is to
create an inventory of suitable candidates from whom, appropriate choice of the
most apt person is done.
After identifying the sources of human resources, finding out the potential
candidates and persuading them to submit an application for the vacancies in the
organisation, the management has to perform the function of selecting the right
employees at the right time.
Fig 2.4 Selection
The selection process involves judging candidates on a variety of

dimensions, ranging from the concrete, measurable like years of experience to the
abstract, and personal like leadership potential. To do this organisations rely on
one or more of a number of selection devices, including application forms, initial
interviews, reference checks, tests, physical examinations and interviews.
All selection activities, from the initial screening interview to the physical
examination if required, exist for the purpose of making effective selection
decisions. Each activity is a step in the process that forms a predictive exercise,
which managerial decision makers seek to predict which job applicant will be
successful if hired. ―Successful‖ in this case means performing well on the
criteria the organisation uses to evaluate personnel.
4
Finding the best possible people who can fit within the culture and Human
contribute within the organisation is a challenge and an opportunity. Once we Resources and
find, retaining the best people is easy if we do the right things right. It is important Business
Growth
to have a good organisation structure, but it is even more important to fill the jobs
with the right people. Staffing includes several sub-functions:
a. Recruitment or getting applications for the jobs as they open up
b. Selection of the best qualified from those who seek the jobs
c. Transfers and promotion
d. Training those who need further instruction to perform their work

effectively or to qualify for promotions
Owner-manager of small firms prefer informal sources of recruitment and as
the firms grow, the skills and abilities required for various functions and processes
may not be available from the familiar and informal recruitment sources leading
them to look for alternative sources. Thus, a greater variety of formal recruitment
sources would be used to attract suitable candidates. Hornsby and Kuratko (1990)
reported extensive use of newspaper advertisements, government and private
employment agencies, employee referrals and unsolicited applications among
small firm recruitment practices. Barber et al. (1999) also did the same research
and found that his findings were consistent with the earlier studies where there
was increased use of formal hiring procedures as firms grow.
As firms grow, multiple selection techniques were introduced along with
taking interviews in order to reduce errors in selecting employees recruited from
sources, which were unfamiliar to the owner-manager. Golhar and Deshpande
(1997) demonstrated that one-to-one interviews are the most popular selection
techniques in both small and large firms, with large firms also likely to use written
tests and panel interviews in the selection process. Hornsby and Kuratko (1990)
reported extensive use of application forms and reference checks in the selection
process as firms increased in size. Barber et al. (1999) found from his studies that
larger SMEs tend to rely on objective qualifications and they also use a greater
number of different selection procedures in making hiring decisions. Rowden
(2002) found that technical skills and positive work ethics received high priority
in the selection processes of several of the successful small manufacturing and
processing firms.
The adoption of formal employment procedures at the managerial level will

lag behind that at the operational level for small firms, as owner-managers prefer
to employ the few managers that are required from amongst family and friends.
47
Introduction to As these familiar sources become no longer able to cater to the specialist skills
Human
required this difference is expected to diminish with further growth of business.
Resource

1.is the complete process of identifying the prospective applicants thereby stimulating and enco
care of.
Recruitment c. Employment
Training
Organisations rely on one or more of a number of selection devices, including application form
true
false
2.5 Training and Performance Appraisal

According to Dunn and Stephens, Training refers to the organisation‘s
efforts to improve an individual‘s ability to perform a job or organisational role
whereas Development refers to the organisation‘s efforts (and the individual‘s
own effort) to enhance an individual‘s abilities to advance in his organisation to
perform additional job duties. Thus, training provides knowledge & skills and
development provides efforts required to perform the job.
Fig 2.5 Training
Organisations and individuals should develop and progress simultaneously

for their survival and attainment of mutual goals. Employee training is a
specialised function and is one of the fundamental operative functions of human
4
resource management too. Training improves changes and moulds the employee‘s Human
knowledge, skill, behaviour, aptitude and attitude towards the requirements of the Resources and
job and the organisation. It also bridges the difference between job requirements Business
Growth
and employee‘s present specifications.
Management development is a systematic process of growth and
development by which managers develop their abilities to manage. It is a planned
effort to improve current or future managerial performance.
MacMahon and Murphy (1999) found out that SMEs rarely carry out formal
training-needs analysis and have no systematic approach to training. Training
often is perceived as an unaffordable luxury involving not only course fees but
also the cost of unproductive labor. Owner-managers are of the view that that
training results in highly specialized staff, whereas, multi-skilled workforce is
required to cope with the highly flexible nature of jobs (MacMahon and Murphy
1999). In contrast, Hornsby and Kuratko (1990) reported the use of a variety of
training methods in small firms with on-the-job training being the predominant
method. Most of the owner-managers of small business firm perform almost all
business activities by themselves or they honestly administer the performance of
these actions (Timmons 1999). And hence, they encompass the responsibility of
all the key business actions, like employee training, where they instruct their
workers in the manner they want their work to be carried out.
People differ in their abilities and their aptitudes. There is always some
difference between the quality and quantity of the same work on the same job
being done by two different people. Performance appraisals of Employees are
necessary to understand each employee‘s abilities, competencies and relative
merit and worth for the organisation. Performance appraisal rates the employees
in terms of their performance.
These appraisals are widely used in the society. The history of performance
appraisal can be dated back to the 20th century and then to the second world war
when the merit rating was used for the first time. An employer evaluating their
employees is a very old concept. These are an indispensable part of performance
measurement and they check the progress of employees towards the desired goals
and aims.
Fig 2.6 Appraisal
49
Introduction to The modern view of the organisations to compensate according to the work
Human
delivered, points out their concentration on individual performance leading to
Resource
effective performance management. If the process of performance appraisals is
formal and properly structured, it helps the employees to clearly understand their
roles and responsibilities and give direction to the individual‘s performance. It
helps to align the individual performances with organisational goals and also
review their performance. Performance appraisal takes into account the past
performance of the employees and focuses on the improvement of the future
performance of the employees.
Hornsby and Kuratko (1990) identified narrative descriptions of employee
performance, assessment of their ability to meet targets. They suggested use of
rating scales as appraisal methods that increased in prominence with firm size and
found that performance appraisal varies by firm size and industry sector. In
contrast, MacMohan and Murphy (1999) argued that owner-managers usually lack
the skills necessary to perform effective performance reviews and may perceive
formal system of performance appraisal as time consuming.
Mintzerg, Quinn and Voyer 1995 suggested that in very small firms,
performance appraisal would be informal and continuous as owner-managers
directly control all activities. As the span of control increases, it is expected that
appraisals would be more formal and occur at longer intervals.
As firms grow, middle managers mostly perform training and performance

appraisal of their operational staff. For exercising control over performance
effectively, owner-managers are supposed to shift their emphasis from operational
staff to middle managers. This means they need to pay greater attention to
training, development and performance appraisal of managers to levels ahead.
Human resource management (HRM) practices, support systems and

personnel profiles were examined in urban and rural enterprises and it was found
that urban and rural small and medium sized enterprises (SMEs) differ
significantly in HRM practices, support systems and personnel profiles.

1. According totraining refers to the organisation‘s efforts to improve an individual‘s ability t
Dunn and Stephens c. Hornsby and Kuratko

MacMahon and Murphy
5
2. Management development is a systematic process of growth Human
and Resources and
Business
development by which managers develop their abilities to manage.
Growth
a. true
b. false
2.6 HR Agenda in Company’s Growth

Throughout much of the 1990s and early 2000s, CEOs were rewarded for
cost reduction end cost containment. To compete in the global arena, Boards
demanded dramatic improvement in efficiencies. Companies such as General
Electric, Motorola etc. fuelled the trend by reporting 10 times or higher returns on
investments (ROI) from their Six Sigma programs. With a clear focus on the
bottom line and tantalizing ROIs, companies invested heavily to get lean,
outsource nonstrategic work, improve quality and introduce better products.
HR demonstrated in the earlier period that it could be a strategic player in
efficiency initiatives by sourcing work and talent for better advantage, outsourcing
routine work and moving some talent engagement costs from fixed to variable. A
sensible but attentive concept of connecting the HR strategy to the development
strategies of the business must be carried out together by the HR groups and their
department equivalents, with the intimate concern of line leaders. Improvement in
business plan has produced fresh demands to relocate HR efforts, roles and
precedence in order to discover new basis of development.
In minor industrial firms, it turns into the liability of the CEO or owner to
draw attention, maintain and inspire brilliant juvenile and precisely able
individuals. In big multinational companies, the influence of individuals on the
aggressiveness of businesses has become clear and HR professionals are made to
help in creating strategic clarity across the organisation.
Over the past 20 years, human resources strategy has evolved through
various forms. Twenty years ago respected companies like IBM, Microsoft and
Tata pioneered early efforts to create HR strategies, which aimed to link HR
functional strategies with the business priorities. As companies seek new ways to
define pragmatic but innovative people strategies, another transition is underway
that will directly support business agendas, which work towards driving stock
prices and expectations for growing shareholder value. A short list of items that
receive management attention over the period of time is termed as an agenda. For
an HR Agenda to be effective, business challenges demand focus on its
51
Introduction to perception. To close the gap between the ‗strategic-HR haves‘ and ‗have-nots‘,
Human
practitioners need a thoughtful but practical approach to achieve the following:
Resource
1. There has to be a set of clear choices, to connect the people priorities to
business priorities
2. The line ownership for HR outcomes should have a detailed clarification
and a contract specifying the responsibility that HR people will have is
necessary.
3. People should be guided, so that a proper allocation is done to the most
important activities of the business.
4. The energy of the workforce should be driven upstream towards the things
that produce more impact.
5. The organisational and systems framework should be defined for the HR

function across all its business units.
6. People should be encouraged and energised with a sense of purpose.

1. Improvement in business plan has produced fresh demands to relocate
HR efforts, roles and precedence in order to discover new basis of
development.
a. true
b. false
2. People should be guided, so that a proper allocation is done to the

most important activities of the business.
a. true
b. false
2.7 The Growth Gap

Growth can transform the market valuation of a company because it attracts
talent, which creates the capital to grow faster. Yet many companies have a
significant enterprise growth gap: the difference between the sum of the
forecasted business units' growth goals and the overall enterprise target.
In other words, it is the difference between the actual delivery of core
businesses and the expectations of the CEO and top management team about the
5
business growth. This is generally described as a financial shortfall, but the root Human
cause is a gap in the enterprise's capabilities and processes to identify and exploit Resources and
new opportunities beyond the reach of the core businesses. For example, in a Business
10Billion multi-business chemical company, its core businesses were able to Growth
generate 5 percent growth though current expertise, but the board of directors and
CEO desired 10 percent growth in order to increase stock price and market
capitalization. To bridge the 500Million revenue gap, the prime responsibility of
the CEO and Executive Team was to create new families of products and services
by generating new businesses as per the size and reach of company. Most
companies believe that closing of revenue gap will be achieved by doing better at
and more of the same things. However, good strategy, understanding of markets
and technologies and analytical support will not ensure that the growth gap will be
closed. The most significant pillars of success rest in resolving the following:
1. Existence of an enterprise growth gap.
2. Planning of the leadership team unified around growth goals and their
leading path.
3. Designing of an organisation so as to achieve the growth that has been
identified.
4. Keeping the source of growth clear.
5. Finding out whether the innovation process can deliver new businesses that
will achieve the growth goals.
When HR is actively involved in driving the organisation to achieve a
positive answer for these questions, it will be aligned closely to the CEO growth
agenda too. This will require HR to adapt to the new vision by adding the
development of leaders who can identify and execute new ideas in new spaces.
This will also lead to the realignment of the organisation systems and structures
for growth to its strategic competencies.
2.7.1 Closing the Growth Gap

After studying high growth companies such as Procter & Gamble, UPS and
Medtronic, Oyster International two major success factors in closing the growth
gap were identified.
First, these companies identified New Growth Platforms (NGPs). From
there they went on successfully creating New Growth Platforms (NGP), which
53
Introduction to were basically the material for new families of products and services typically
Human
outside the reach of the current businesses.
Resource
Second, the companies exhibited a common set of characteristics in business
innovation, leadership and organisational design to sustain the flow of NGPs.
These characteristics include:
1. Efficient and credible chief growth officer who acts as the in-charge of the
new unit
2. Believing and acting on the fact that the team is more important than the
idea
3. NGP units are independent units but with a strong interdependency to the
core businesses
4. Having a disciplined, systematic and repeatable process for screening,

selecting and building NGPs
This process guides and leads HR to the forefront. The HR advances to grab
the opportunity to be a player in the company‘s growth agenda and not just sit on
the sidelines. HR can help design and build a more agile organisation capable of
identifying, designing and iterating a pipeline of NGPs. We can say that, HR can
really help in creating a culture and organisation that is focused, innovative and
highly disciplined.

1. The difference between the sum of the forecasted business units' growth goals and the over
generation gap c. innovation

growth gap
Significant pillars of success rest in resolving is realising the existence of an enterprise growt
true
false
5
Human
2.8 Four Roles of HR Resources and
HR Role in the organisation is quickly changing. HRM has been developing Business
Growth
them for several decades but the function is not that mature, as many people
would expect. The real concept of Human Resources responsible for the human
capital inside the organisation evolved in the early 70s of the 20th century.
HR Role in the organisation is changing from the industry to the industry
and it also depends a lot on the country, in which the organisation operates. The
dream position of every HRM Department is to become an important deciding
authority. It gets more and more responsibilities and participates on strategic
initiatives in the organisation.
David Ulrich‘s HR Model is well known for introducing mainly the aspects
of human resources with the highest value added. The main contribution of the
David Ulrich‘s HR Model was the start of the movement from the functional HR
orientation to the more partnership-oriented organisation in HRM Function.
Business Partnering is not possible to implement without a major shift in the HR
organisation. The benefit was a more responsible and flexible organisation of
Human Resources, which allowed many HR Professionals to become real
respected business partners.
We may discuss the 4 Roles of HR according to David Ulrich:
Strategic Partner Change Agent

Processes People
Administrative Expert Employee Champion
Strategic Partner: is about alignment of HR activities and initiatives with

the global business strategy and it is the task of the HR. Sometimes, it sounds easy
to implement Strategic Partnership, but it needs a lot of effort from Human
Resources.
Change Agent: is a very important area of the Ulrich‘s HR Model. Change
agent is about supporting the change and transition of the business in the area of
the human resources in the organisation. The role of Human Resources is to
support for change activities in the change effort area and ensuring the capacity
for the changes.
55
Introduction to Administrative Expert: changes over the period of time. In the beginning,
Human
it was just about ensuring the maximum possible quality of delivered services, but
Resource
nowadays the stress is put on the possibility to provide quality service at the
lowest possible costs to the organisation.
Employee advocate: is a very important role of Human Resources. The
employee advocate knows what employees need and HRM should know it. The
employee advocate is able to take care of the interest of employees and protect
them during the process of the change in the organisation.
All the HR Roles defined by Ulrich are essential for the success of the
whole HRM Function. The world around us is changing and the HR Roles have to
change as well. In the past, the HRM was responsible only for developing the
processes, which assure the top quality delivered to the organisation. Nowadays,
the HRM has to deliver even more. The HR roles and responsibilities have to take
the high-level recognition of the organisation and they need to be adjusted to
make a full fit.
The HR Roles have to be adjusted to:
 Keep HRM function focused on tracking and implementing new trends in

the industry.
 Keep HRM function focused on helping the line management to implement
improvements.
 Keep HRM function focused on operational excellence.
 Keep HRM function responsible for developing the human capital potential
in the organisation.

HR Role in the organisation has no change from the industry to the industry even though it dep
true
false
The main contribution of thewas the start of the movement from the functional HR orientation
Dunn and Stephens c. David Ulrich‘s HR Model

Hornsby and Kuratko
5
3.is about supporting the change and transition of the business in Human
the area of the human resources in the organisation. Resources and
Business
Strategic Partner c. Change agent Growth
Employee Champion
2.9 Let Us Sum Up

To conclude, it‘s the fact that the small business often lacks sufficient
systems to implement the efficient management of human resources. Moreover,
most of the small businesses are under a single owner and his personality and
innovative attitudes will reflect in the business. But, successful businesses were
managed by those owners who became aware of the need for team building and
delegation within their companies. It was found that motivating and retaining
good staff was a critical bottleneck in their business growth. Human resource
management function of a business varies according to its size. Evidently, the
business that has only two or three employees may not face important personnel
management issues. Moreover, in the initial stages the owners of the small firms
will prefer easy methods of recruitment according to the growth of the firm they
will be under pressure to adopt other methods. Thus, a greater variety of formal
recruitment sources would be used to attract suitable candidates. For this the
organisations use selection devices such as application forms, initial interviews,
reference checks, tests, physical examinations and interviews. Training methods
are adopted by the organisations for improving the individual‘s ability to perform
a job or organisational role. Performance appraisals help the organisation to
understand the employee ability and competency. The innovative strategy of many
businesses has led to its restructuring of their HR work, roles and priorities in an
attempt to find new sources of growth.

Answers: (1-b), (2-b), (3-a)
Answers: (1-b), (2-b), (3-b)
57
Introduction to
Resource

Answers: (1-b), (2-c), (3-c)
2.11 Glossary
1. Sophisticated - complicated
2. Adequate - sufficient
3. Predictive - projecting
4. Aptitude - skill
5. Perception - awareness
6. Unified - combined
7. Competency - capability
8. Agile - responsive
2.12 Assignment
As an HR manager what are the new roles that you will have to perform in
an organisation?
5
Human
2.13 Activities
Resources and
Visit any one of the organisations in your city. Find out the HR Planning Business
Growth
process, if any, exclusively for the growth of the organisation. Explain the same.
2.14 Case Study

The case study given below is not in the regular question–answer format,
rather it persuades the readers to ponder upon the situation. The story narrated
below is study of a situation where an individual‘s career was at stake because of
an improper HR system in the organisation. Students are advised to read the story
and understand the neglected areas of HR system highlighted in the story, which
affected the career-path of the individual and in turn badly affected the business
too.
Amish Dubey‘s story is a typical case of neglected career development by
both the company and the individual. Channey Singhall, CEO of Prima, turned out
to be poor at managing operations and even worse at managing high-performing
individuals. Whether it was losing the Teffer India account, working out a vision
for Dvi — Prima‘s second agency and Amish‘s domain — or chalking out a
career path for high-potential executives like Amish, he prolonged decision-
making till matters went out of hand.
When organisations grow big, establish a name and revenues begin to pour
in, it is common for CEOs like Channey to ignore critical people issues and to
leave matters unstructured and vague. Inevitably, they start losing talent. When
they wake up to the need to brush up their HR management, it is too late.
Few HR issues had changed as much in the past two decades as the role of
the organisation in employee‘s career development. The organisation took almost
complete responsibility of managing careers, to supporting individuals as they
take personal responsibility for their future Organisations regard career
development as much their responsibility as that of the employee. The essence of
an effective career development programme lies in support to employees to keep
adding to their skills, abilities and knowledge. This can be done by
communicating the organisation‘s goals and strategies to employees, creating
growth opportunities for high-potential candidates, offering financial assistance if
they wish to undergo an academic programme and providing employees the time
off to learn.
59
Introduction to Most organisations‘ HR policies include periodic career counselling. This
Human
involves getting a senior executive to chat with an employee to find out his career
Resource
path. It is followed by a reality check to determine if the employee is capable of
playing the role he aspires. Capable managers are then helped towards achieving
this goal. Note that the career counsellor need not be the employee‘s boss. In this
case, Mark Stacey, Prima‘s regional head, could have acted as career counsellor to
Amish and guided his career development.
This approach goes a long way in lowering attrition rates and retaining high-
potential managers. In today‘s fast-paced business environment, managers are not
ready to sit on the learning curve for longer than required. That is why they need a
vision, a plan, a direction and above all, empowerment.
First, Channey did not communicate Prima‘s goals and strategies to its
senior managers like Amish. (Prima knew it would lose the Teffer India account
to its global agency). Neither did he share his vision for DVI with its CEO. He did
hand out a growth opportunity to high-potential professionals by giving Amish
and Tulsi (another senior employee) charge of DVI, but that came with many
strings attached: a bad set of clients, hopeless employees, no financial freedom
and poor infrastructure. Prima had put its bad eggs in DVI‘s basket. In addition,
Amish were promoted to the role of a CEO, but with a leash.
In today‘s world of business, where globalisation, Mergers & Acquisitions
and hostile takeovers are facts, career planning for executives is vital. Take an
example of any large Indian corporate house that recently saw an ownership split
for example Reliance Group. After the split, it methodically chalked out roles for
all its senior managers. Similarly, a large FMCG multinational has career paths
drawn out for its 100 high-potential managers.
Even individuals need to take charge of developing their own learning and
careers for many reasons. For one, there is an ever-increasing need to keep
learning and to keep abreast of the rapid growth in knowledge and the rate of
change in our environments. Second, involvement in one‘s development fosters
greater commitment to the process than through activities directed by others. In
addition, three, job security has almost become out-dated. Just as the
responsibility for employee retirement planning is no longer just a corporate
function, companies have partially downloaded learning and career development
responsibilities to employees.
This responsibility also brings increased control over one‘s career
development and a more stimulating work life. Managers can take charge of their
careers by self-assessment, identifying their goals and bridging gaps between their
6
current situation and the desired outcome by upgrading their skills. First, Human
managers should assess their current skill set and identify a new one, the Resources and
knowledge and experiences they would like to acquire. Then, they must assess if Business
their professional goals are coordinated with the organisation‘s goals, mission and Growth
vision. Had Amish done that, his career would have surely touched new heights.
In many organisations, employees draft their development plans,
individually and after consulting with the leadership. The individual development
planning process is focused on personal development and career growth and is
kept separate from other HR management functions like reviews for salary.
In time, Amish realised that DVI was like the dining table in his old home
that was used as a dump-yard for laundry, groceries, and bills and so on. These
items were attended to only when someone found the inclination to deal with
them. Surely, Amish could not have let his career be treated the same way. He
made the right decision by unleashing himself and walking out of Channey‘s
clutches. He may or may not find a master who has faith in his own training.
However, he has certainly realised that he needs to be the master of his own
destiny.

1. Alienation and Freedom: The Factory Worker and His Industry, Bedeian
A.G., University of Chicago Press, 1980.
2. Organisation Theory and Analysis, Blauner. R., Dryden Press, 1964.
3. Managing Change: A Strategic Approach to Organisational Dynamics,
Burnes Bernard., 3rd Edition, Financial Times, Prentice Hall, 2000.
4. The Return Of The Repressed: Dissonance Theory Makes A Comeback,

Psychological Theory, Aronson. E., 1992.
61
Introduction to
Human Block Summary
Resource The block explained the modern concepts of human resources along with
different definitions related to it. It also gave a detailed description of academic
theory and critical academic theory along with the business practices, careers and
professional organizations related to the Human resource management. The block
also gave information about the concept of outsourcing of human resources and
the changing HR role. Another important topic covered in this block is the role of
Human Resources in Small Business and its function such as recruitment and
selection, training and performance appraisal etc.
The Human Resource Management is responsible for how people or work
force is to be managed in the organizations. It attracts the workforce to a business
and employ them compensate them and solve their problems related to the
employment. The function of the human resource planning is to contribute in the
decision process by giving the information and outlook on each option and to
support line managers dealing with the work force costs of implementing the
decision. Moreover, resources must be organized and allocated to carry out
organizational goals in an effectual and well-organized method. It‘s well known
that the modern concept of HRM gives priority to the qualitative improvement of
human beings and for keeping pace with this attitude the human resource
management is changing rapidly. The modern concept of outsourcing HR
operations has been successfully adopted by most of the companies and has
become a more efficient process with the help of technology. The various HR
roles act as a strategic and business partner, an advocate of employees or an agent
that brings about transformations in the organisation. The Human Resource
Department‘s key function is to bring out the best in their employees and thus
contribute to the success of the organisation. The small business often lacks
sufficient systems to implement the efficient management of human resources. As
the small business will be owned by an individual innovative attitudes will reflect
in the business. But most of the successful businesses have awareness about the
need for team building and delegation. Human resource management function of a
business varies according to its size. The small firms will prefer easy methods of
recruitment but according to the growth of the firm they will be under pressure to
adopt a greater variety of formal recruitment sources would be used to attract
suitable candidates. As a part of adopting a practical approach many organisations
have taken steps to link its HR strategy to the growth plans which should be
practised together by HR teams and other departments of the organisation with the
involvement of line leaders. HRP helps to coordinate the needs and availability of
different types of employees, identify the skills and competencies and
subsequently develops plans for correcting deficient skills.
6
Block Assignment
Short Answer Questions
1. Describe the features of HRM?
2. Explain Human Resource Development?
3. What is outsourcing of Human Resource?
5. Explain Academic Theory and Critical Theory of HRM?
6. What are the new HR Roles?
7. Explain Recruitment & Selection?
8. Explain Training and Performance Appraisal?

9. Describe the role of HR‘s Agenda in company‘s growth?
10. What is Growth gap?
Long Answer Questions

1. Illustrate modern concept of human resources?
2. Discuss about Human Resource Management in detail?
3. Do you think that HR Manager‘s role is changing? Explain
4. Do you think that HR has to play a major role in organisational growth? If

so, why?
5. Discuss in detail about HR in small business.
6. Explain four roles of HR.
63
Introduction to
Enrolment No.
Human
Resource
1. How many hours did you need for studying the units?
Unit No 1 2 3 4
Nos of Hrs.
2. Please give your reactions to the following items based on your reading of the
block:
3. Any Other Comments
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
6
Education is something
which ought to be
brought within
the reach of every one.
- Dr. B. R. Ambedkar

‘Jyotirmay Parisar’, Opp. Shri Balaji Temple, Sarkhej-Gandhinagar Highway,
Chharodi,
Ahmedabad-382 481.
6
HUMAN RESOURCE
PLANNING PGDHR-202
BLOCK 2:
BASICS OF HUMAN
RESOURCE PLANNING

Ahmedabad

Pune
Editorial Panel
Author
Language Editor

Ms. K. Jamdal
Ms. Lata
Dawange Ms.
Pinaz Driver
Mr. Kiran Shinde
Mr. Prashant
Tikone Mr. Akshay
Mirajkar

Acknowledgment

introduced.
PREFACE
understanding.
Contents


organization,

Environmental Scan

Benefits
Ambedkar
Open
University
UNIT 1
AN INTRODUCTION TO HUMAN RESOURCE PLANNING 04
UNIT 2
SCOPE AND IMPORTANCE OF HUMAN RESOURCE PLANNING 38
UNIT 3
PROCESS OF HUMAN RESOURCE PLANNING 62
BLOCK 2: BASICS OF HUMAN
RESOURCE PLANNING
Block Introduction
The basic purpose of conducting Human Resource Planning is to have an
accurate estimate of the number of employees required with the matching skills to
meet the organizational goals. So it is a database where one can easily identify the
existing skills and matching positions held. A part from this it‘s a flow chart
wherein we also try to estimate the future requirements of human resource and the
existing movement of the workforce towards it. This prediction has a great
importance because this quantity and cost plays an important role in the
productivity of every business. It‘s not sure that the forecast will be always
correct. Workforce planning is an organized procedure to recognize the human
capital essential to convene organization‘s objectives and developing the policies
to fulfil these requirements. Workforce planning is a medium to long term strategy
and its processes are expected to align planning, risk and budgets to integrate
these into both annual and longer-term planning cycles. This planning lets you
strike the right balance in workforce deployment, aligning strategic objectives
with cost predictability and maximizing efficiencies within budgetary constraints.
This block explains how to design the human resource management system
and plan the total workforce by generating the required human resources and also
assessing and sustaining the organisational competence and performance. The
block also explains the different aspects of HR Planning such as its scope, purpose
and goal. The need for planning recruitment in advance which is the basic process
of HR planning is also discussed in this block. The HR Process analysis and the
tasks and activities involved in it are also discussed in detail. The requisites of a
successful HR planning are also discussed in this block. The procedures adopted
in development of annual work force plan and the changes that are often made
outside the annual workforce plan are also discussed in detail. The block will also
have a detailed discussion on the topics such as Tom Casey model of HR
planning, CEO Compensation and the process and measurement capability using
Six Sigma as a Foundation.
Unit 1 provides an introduction to human resource planning. The practical

benefits of HR planning and the need for human resource planning are enclosed in
this unit. The concepts like determining the numbers to be employed at a new
location, retaining highly skilled staff, managing an effective downsizing
1
Basics of Human program, the source of next generation managers are discussed separately in this
Resource
unit. The strategic human resource planning model, designing the human resource
Planning
management system and planning the total workforce is also discussed in this unit.
The methods generating the required human resources and the advantages of
investing in human resource development and performance, is provided in this
unit. The unit gives knowledge about how to assess and sustain the organizational
competence and performance. The unit ends up with discussion on the HRP
process.
Unit 2 provides an introduction to the HR planning and a brief description
of its Scope, Inputs, Purpose and Goals. The unit provides the information of the
basic process of HR planning, its strategies, process analysis, planning process
tasks and activities. This unit also helps us to find out the strategic advantages for
HR planning and the key points for successful HR planning.
Unit 3 provides an introduction the workforce planning process within the

annual planning and budget review process. It gives an idea about the preparation
of questions for the Meeting. The unit also comprises the method of developing
the annual workforce plan and the changes to the staffing profile outside the
planning process. The unit have a short description on the Tom Casey Model of
HR planning, CEO Compensation and the present scenario of HR planning
process. The method of building human resources through strategic planning and
the usage of Six Sigma as the foundation to measure the capability is also detailed
in this unit. The unit ends up with a discussion on Gartner‘s opinion on strategic
Workforce Planning Process for improving an IT organization's effectiveness.
Block Objective
After learning this block, you will be able to understand:
 What are Human Resource Planning and its need?
 How to retain your highly skilled staff?
 How to manage an effective downsizing program?
 What is Strategic human resource planning?
 The strategic human resource planning model.
 To Assess and sustain the organizational competence and performance.
 The strategies, process tasks and activities in HR planning.
 The basics of successful HR Planning.

2
 What workforce planning process is?
 How the annual workforce plan is developed?
 The current circumstances of HR Planning Process.
 Tom Casey Model for HR Planning.
 The usage of Six Sigma in HR planning.
Block Structure
Unit 1: An Introduction to Human Resource Planning
Unit 2: Scope and Importance of Human Resource Planning

Unit 3: Process of Human Resource Planning
3
Basics of Human
Resource UNIT 1: AN INTRODUCTION TO HUMAN
Planning
RESOURCE PLANNING
Unit Structure
1.1 Introduction
1.2 Practical Benefits of HR Planning
1.3 Why Human Resource planning?
1.4 Determining the Numbers to be Employed at a New Location
1.5 Retaining your Highly Skilled Staff
1.6 Managing an Effective Downsizing Programme
1.7 Where will the Next Generation of Managers come from?
1.8 How can HRP be applied?
1.9 Strategic Human Resource Planning
1.10 Making the HR Strategy Integral to the Organisation
1.11 A Strategic Human Resource Planning Model
1.12 Designing the Human Resource Management System
1.13 Planning the Total Workforce

1.14 Generating the Required Human Resources
1.15 Investing in Human Resource Development and Performance
1.16 Assessing and Sustaining Organisational Competence and Performance
1.17 The HRP Process
1.18 Let Us Sum Up
1.20 Glossary
1.21 Assignment
1.22 Activities
1.23 Case Study
4
An Introduction
1.0 Learning Objectives to Human
Resource
Planning
 The practical benefits of HR Planning.
 Strategic human resource planning model.
 Planning of total workforce.
 Investment in human resource development and performance.
 Assessment and sustenance of organisational competence and performance.
 HRP Process.
1.1 Introduction
Assigning the right man for right job and developing him into an effective
team member is an important function of every manager. It is because HR is an
important corporate asset and performance of organizations‘ depends upon the
way it is put in use. HRP is a deliberate strategy for acquisition, improvement and
preservation of enterprise‘s human resources. It is a managerial function aimed at
coordinating the requirements, for and availability of different types of
employees. HRP is a forward-looking function and an organizational tool to
identify skill and competency gaps and subsequently develop plans for
development of deficient skills and competencies in human resources to remain
competitive.
1.2 Practical Benefits of HR Planning

Most of the criticism about the HR planning arises due to its inclination
towards the quantity features rather than qualitative attributes. So it‘s clear that the
planning should not be focused on how many should be the work force but should
be concentrated on the skills and capability. Moreover needed skills should be
identified and proper plans should be prepared and included in the HR planning,
to acquire it. But there are people who still believe that the HR planning should
be based on the quantities. Human resource planning is considered as an integral
part of business planning. Even though neither organizations nor employees can
look into the future, making predictions can be quite helpful, even if they are not
always accurate.
5
Basics of Human The basic goal of human resource planning, then, is to predict the future and
Resource
based on these predictions, implement programs to avoid anticipated problems.
Planning
Very briefly, humans resource planning is the process of examining an
organisation‘s or individual‘s future human resource needs (for instance, what
types of skills will be needed for jobs of the future) compared to future human
resource capabilities (such as the types of skills among employees to be recruited
or you already have). It also caters to developing human resource policies and
practices to address potential problems for example, implementing training
program to avoid skill deficiencies.

1. The basic goal of human resource planning, then, is to predict the future
and based on these predictions, implement programs to avoid anticipated
problems.
a. true
b. false
2. The HR planning should be focused on how many should be the work force
but should not be concentrated on the skills and capability.
a. true
b. false
1.3 Why Human Resource Planning?

When companies are global, an important challenge in garnering success is
to respect other cultures and workforce environments and start forming a global
profile or social consciousness.
There are a number of reasons for the incorporation of human resource
planning in an organisation. These are as under:
a. It helps in discovering talented and competent workers and developing them

to move up the corporate ladder.
b. It ensures greater production by putting the right man in the right job.
c. It helps to avoid a sudden disruption of an enterprises‘ production run by

indicating shortages of personnel, if any, in advance.
6
d. It helps to prevent under-utilisation of personnel because of over-manning An Introduction
and the resultant high labour cost and low profit margins. to Human
Resource
e. It provides information to management for the internal succession of Planning
managerial personnel in the event of an unanticipated occurrence.
Fig 1.1 HR planning

1. HR planning helps in discovering talented and competent workers and
developing them to move up the corporate ladder.
a. true
b. false
2. HR planning does not prevent under-utilisation of personnel because of

over- manning and the resultant high labour cost and low profit margins.
a. true
b. false
1.4 Determining the Numbers to be employed at a

New Location
If the size of the employees recruited in more than which is required there
will be a severe loss for the management. Even after not being used, the staff will
have to be paid. However, if a miscalculation is made, resulting in the shortage of
workers the company will be in all sorts of problems as it will struggle to meet
deadlines for both sales and production.
Hence, the issues that come into the mind of an HR manager during the
formulation of an HR plan can be pointed out as follows.
7
Basics of Human
 What are the methods to be adopted to improve the efficiency by
Resource
Planning
introducing a unique combination production, labor administration, and
technological progress?
 How can be this correlated to the number of staff to be employed?
 What methods can be adopted to ascertain labour requirements?
 Is there any scope of adding more flexibility in work schedules?
 What are the methods that can be adopted for proper acquisition of needed
workers?
These standards can be useful to any effort to identify labor necessities, for a
new business venture, relocation, or rejuvenation of a plant or workplace.

1. If the size of the employees recruited in more than which is required
there will be a no loss for the management
a. true
b. false
2. By the shortage of workers the company will be in all sorts of problems as

it will struggle to meet deadlines for both sales and production.
a. true
b. false
1.5 Retaining your Highly Skilled Staff

Human resource planning is the process by which an organisation 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 tasks that will help the
organisation achieve its overall objective. Human resource planning provides the
organisation with a detailed plan of action designed to achieve the organisation‘s
objectives and comes up with the information about the number of workers
needed to meet those objectives. Without a clear cut planning, estimation of
human resource need remains nothing but a guessing game on papers.
8
An Introduction
to Human
Resource
Planning
Fig 1.2 Skilled staff
Though issues about retention were not in the forefront any discussions in
recently, every business were keen to learn about the progression of resignation
and assist itself in retaining its highly skilled staff. Thus, every business should:
 observe the degree of resignation
 determine the motive for it
 Find out the cost that the business will have to forfeit due to resignations.
 Evaluate this cost with other resembling businesses
 Devoid of this perceptive, organization may be oblivious of the eminence of

workers lost.
This expenditure will be rendered by the organisation through the invoice
for separation, recruitment and induction and also by a loss of enduring
competence.
By understanding the character and degree of resignation, methods can be
adopted to correct the condition. Comparatively inexpensive and easy remedies
can be sought out after finding out the reasons for the exit of employees.

1. Human resource planning is the 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 tasks that will
help the organization achieve its overall objective.
a. true
b. false
9
Basics of Human 2. The costs that the business will have to forfeit due to resignations have
Resource
nothing to do with the future HR planning and retaining of skilled workers.
Planning
a. true
b. false
1.6 Managing an Effective Downsizing Programme

Downsizing of labor force is a frequent matter of concern for managers.
Safeguarding of enduring benefit of the business organisation and lessening the
strength of the workforce without affecting the business is a responsive matter. It
happens to be more complicated along with the pressure of production and sales
targets on the management attached with employee apprehensions.
Fig 1.3 Downsizing
HRP facilitates the business by taking into account:
 The kind of labour force predicted till the conclusion of the exertion.
 The merits and demerits of the diverse routes which enables success of the
precise long-term plans of the business.
 The effectiveness of retraining, posting and reassignment.
 Pointing out the suitable recruitment levels that will be required.

The result of such an assessment can be put forward to the senior managers,
so that the expenditure advantage of different means of reduction can be
considered and the period taken to congregate the objectives can be recognized.
1
An Introduction
Check your progress 5 to Human
Resource
1. Downsizing of labor force has become more complicated along with the Planning
pressure of production and sales targets on the management attached with
employee apprehensions.
a. true
b. false
1.7 Where will the Next Generation of Managers

come from?
Efficient managers can foresee the problems likely to occur and try to
prevent them. As pointed by Terry, successful managers deal with foreseen
problems and unsuccessful managers struggle with unforeseen problems. The
difference lies in planning. Managers have to foresee to make the future favorable
to the organisation in order to achieve the goals effectively. They introduce
action, overcome current problems, prevent future uncertainties, adjust the goals
with the unforeseen environmental conditions, and exert all their resources to
achieve their goals.
According to Megginson et al, ―To have an organisation that looks
forward to the future and tries to stay alive and prosper in a changing world, there
must be active, vigorous, continuous and creative planning‖.
The phenomenon of the disappearance of the conventional career paths has
brought a serious concern among the senior managers. The situation leads to the
import of managers from other organisations. Though the import ends up the
crisis, many of them realize that this is only a short time relief and the situation
will reoccur. The longer-term problem of managerial supply: what kind, how
many and from which source is still a question in front of them.
In order to find the solution for the issue of the availability of next
generation managers, following factors should be identified.
 The current occupational structure of the business(such as promotion criteria
and retirements)
 The features of personnel who occupy the senior posts in the business.
 Prospect of developing talented and skilled workers from the existing
employees. This number can be compared with the future requirements to
get an accurate prediction of the workforce needed.
1
Basics of Human
Resource Check your progress 6
Planning 1. Successfulmanagers‘dealwithforeseenproblemsandunsuccessful managers struggle with unfore
recruitment c. planning
selection
Disappearance of the conventional career paths has led to the import of managers from oth
true
false
1.8 How can HRP be applied?

Human resource planning constitutes an integral part of corporate plan and
serves the organisational purposes in many ways. For example, it helps
organisations to:
a. Capitalise on the strengths of their human resources.
b. Determine recruitment level.
c. Anticipate redundancies.
d. Determine optimum training levels.
e. Serve as a basis for management development programs.
f. Assess cost of manpower for new projects.
g. Assist productivity bargaining.
h. Assess future requirements.
i. Study the cost of overheads and value of service functions.
j. Decide whether certain activities need to be subcontracted In order to cope

with such business needs:
 Suitable demand outline
 Excellent supervising and remedial measures
 Complete information about existing workforce and the

external employment market.
1
 A perceptive about the resourcing functions in the business. An Introduction
to Human
Applying a Human Resources Planning program would require sound
Resource
preparatory work and comprehensive personnel records, which give accurate and Planning
objective data on all employees. We cannot make judgments on the supply of
particular skills unless we have sufficient data on the skills possessed by existing
employees. Building up full records requires both an effective system and
determination to ensure the data is complete, up-to-date, and accurate. In addition,
the information must be in a form that facilitates easy access during a review.
Plans should be set out with schedules of associated work force
requirements, giving precise categories, skills, and levels for every function.
These details will be necessary as a starting point when the questions of supply
planning are tackled.
The decisions in an organisation can be made without considering HRP, but
these decisions will devoid of the advantage of perceptive their inference. More
over quantity of workers to be recruited will be laid down in unawareness of
labour demand or management progression issues will be ignored.

1. Human resource planning constitutes an integral part of corporate plan and
serves the organizational purposes by-
a. Assessing cost of manpower for new projects.
b. Assisting productivity bargaining.
c. Determining recruitment level.
d. all the above
2. Applying a Human Resources Planning program would require sound

preparatory work and comprehensive personnel records, which give
accurate and objective data on all employees.
a. true
b. false
1
Basics of Human
Resource 1.9 Strategic Human Resource Planning
Planning
Strategic Human resource planning is a significant part of strategic human
resource management. It connects Human resource management straight away to
the strategic plan of the business. Most middle to big sized businesses generally
has a strategic plan that directs it in the fruitful combination of its tasks.
Organisations regularly fulfill the financial plans to make sure that they
accomplish organizational objectives and but the labor force plans are not given
predominance.
Even a tiny business with as little as 10 employees can build up a strategic
plan to make judgments about the opportunities. Depending upon the strategic
plan, a business can put up a strategic HR plan that will enable it to create HR
management choices to maintain its bright future path. Strategic HR planning is
also significant for the financial planning such as yearly budgets as the business
can predetermine operational expenditures of staffing, training, etc.
A complete human resource strategy has a crucial part to play in the success
of an organization‘s general strategic plans, clearly demonstrate that the human
resources function completely appreciates, and sustain the course in which the
business is advancing. It also maintains extra precise strategic aims undertaken by
different departments such as marketing, financial, operational, etc.
Essentially, Strategic HR Planning give importance to intelligent use of the
workforce, if a business looking forward to attain standard to long term
objectives. This can be achieved by:
 Retaining the precise people in specific positions
 observance of the exact combination of skills and aptitudes
 Encouraging the employees with factual approaches and performances
 Attitudes and behaviour is developed in the right way

Strategic HR planning predicts the future HR management needs of the
organisation, after analyzing the organisation's current human resources and the
future HR environment of the organisation. The analysis of HR management
issues external to the organisation and developing scenarios about the future are
what make strategic planning a distinguished activity. The basic questions to be
answered for strategic planning are:
1
 Where are we going? An Introduction
to Human
 How will we develop HR strategies to get there successfully, given the
Resource
circumstances? Planning
 What skill sets do we need?
The overall purpose of strategic HR planning is to:
 Ensure adequate human resources to meet the strategic goals and operational
plans of your organisation - the right people with the right skills at the right
time
 Keep up with social, economic, legislative and technological trends that

impact on human resources in your area and in the sector
 Remain flexible so that your organisation can manage change if the future is
different than anticipated
The HRP strategy should demonstrate that effectual planning of workforce
matters will make the business easier accomplish its wider intentional and
organized goals.

1. Strategic Human resource planning connects Human resource management
straight away to the strategic plan of the business.
a. true
b. false
2. A tiny business with 10 employees cannot build up a strategic plan to

make judgments about the opportunities.
a. true
b. false
3. Strategic HR planning predicts the future HR management needs of the

organisation, after analysing the organisation's current human resources
and the future HR environment of the organisation.
a. true
b. false
1
Basics of Human
Resource 1.10 Making the HR Strategy Integral to the
Planning Organisation
Strategic human resource planning consists of a number of objectives, but
all the objectives must be closely aligned to overall business goals in order to be
effective. Human resources executives must demonstrate the employer's return on
investment through strategic activities. Strategic activities are forward-thinking
processes that support business growth through recognition of the value of human
capital.
It‘s the prime objective of the HR manager to make sure that the HR
Strategies in the business are incorporated with the wider organizational goals.
Moreover it should be taken care that it the strategies implemented are acceptable
to others also. In order to attain these objectives, HR mangers should
 Communicate with all the stakeholders and detail them about the proposed
strategy.
 Promote and build up supporters of the strategy through effective

communication.
 While communicating with others concentrate on the benefits that are going
to be achieved by implementing the strategy and illustrate examples for the
same.
 Assessment of the extent of commitment to the strategy across the business

will increase the success rate.
 Customary response of the plans should be given with the help of employee
newsletters, presentations, etc.
 Wherever applicable, put together the strategy proven results, as that is easy
to be monitored and evaluated.
 Implement the strategy in the orientation process for the work force - in
particular for the senior level.

1. It‘s not essential that the HR mangers should communicate with all the
stakeholders and detail them about the proposed HR strategy.
a. true
b. false
1
An Introduction
2. Assessment of the extent of commitment to the strategy across the
to Human
business
Resource
will increase the success rate. Planning
a. true
b. false
1.11 A Strategic Human Resource Planning Model

The strategic HR planning has to undergo the following steps:
1. Evaluate the present HR competence
2. Predicting the future HR needs
3. Gap assessment
4. Initiating HR strategies to prop up the business objectives.
1. Evaluation of the present HR competence
In accordance with the approved strategic plan of the business, the

evaluation of the present HR competence of the business is the first and
foremost step of the HR planning. The awareness, proficiency and aptitude
of the present work force are to be determined .The method involves the
preparation of an index according to the skills of each worker. The
willingness of the employee to accept more duties and responsibilities
according to his personal career development plans should be acknowledged
and motivated.
2. Predicting the future HR needs
The second step is to predict the future HR requirements according to

the strategic objectives of the business. Practical prediction of human
resource needs involve the assessment of the labour demand and supply. To
deal with the related issues an HR manager should find out the answer
following:
 The number of workers needed to meet the strategic objectives of the

business?
 The specific employment vacancies that are to be filled in the recent
future?
 The aptitudes that the workers should possess?
 Influence of the external environment on the HR requirements of the
business?
1
Basics of Human 3. Gap analysis
Resource
Planning The subsequent step is to decide the gap between vision of the business
about its future and the present condition. The gap analysis comprises making out
the quantity of workforce, expertise and aptitude obligatory in the future in
contrast to the existing condition. HR management practices must be observed
strictly to recognize conducts that can be enhanced or the innovative practices that
are essential to sustain the organisation's capability to progress.
To deal with the related issues an HR manager should find out the answer
for the following:
a. What are the innovative jobs that should be created?

b. What are the innovative skills that will be compulsory?
c. Does the present work force have these innovative skills?
d. Are the personnel‘s in various positions posted according to their strengths?
e. Does the business have the adequate managers?
f. Are the existing HR management practices sufficient for

future requirements?
4. Creating HR strategies to maintain organisational strategies
The HR strategies which help the gathering of the future business needs are
a. Restructuring strategies
These strategies include the-
 Dropping the strength of the work force by termination or attrition.
 Reorganizing the jobs to generate perfectly designed jobs.
 Reorganizing job divisions to be more competent.

Termination of employees provides instant outcomes. Usually, there
will be expenses related to this approach according to the service contracts.
Attrition is another method to lessen staff strength. The feasibility of this
alternative relies on how much instantly the reduction of staff is essential.
The jobs executed in the business are essentially restructured so that work of
the leaving employee is also done.
b. Training and development strategies
These strategies include-
 Giving proper training for the workers to do the consigned new roles.
1
 Giving the existing employees the opportunity for development to set An Introduction
up them for upcoming jobs in the business. to Human
Resource
Training and development wants can be conferred in different ways.
Planning
One method is by the business paying the employees to improve their
expertise. This may entail the sending the worker to receive training or
certificates or it may be able by means of on-the-job training.
c. Recruitment strategies
These strategies include-
 Recruiting fresh personnel‘s with the talent and aptitude that the
business shall require in the future.
 Bearing in mind all the accessible options for purpose fully supporting
employment openings and encouraging appropriate aspirants to
submit an application.
For strategic HR planning, every recruitment process the organisation
should be looking at the needs from a strategic viewpoint. The recruitment
strategy must be to discover somebody who will be capable to align with the
modifications that the business will plan for the future.
d. Outsourcing strategies
This strategy includes-
 The usage of employees outside the organization to do the work.

Several organisations rely upon the external staffs by engaging them
for certain skilled jobs. This is above all supportive for carrying out definite,
expert responsibilities which does not require a permanent work. So a
number of organisations subcontract HR conducts, assignment work or
accounting. For instance, payroll could be prepared by an outside
organisation rather than a organization staff, a temporary assignment may be
completed by a professional or particular expertise. For example a legal
guidance may be acquired from an external legal firm.
e. Alliance strategies
These strategies include
 Functioning jointly to persuade the kinds of courses presented by

educational establishments.
1
Basics of Human
 Functioning with other organisations to organize future managers by
Resource
giving out in the growth of talented personnel‘s.
Planning
 Allocation of the costs of training for the team of workers.
 Permitting workers to trip to other organizations to

increase proficiency and skill.
Ultimately, the strategic HR planning process could guide to indirect
strategies that go ahead of the business.

1. The awareness, proficiency and aptitude of the present work force are to
be determined in
a. Evaluation of the present HR competence

b. Predicting the future HR needs
c. Gap assessment
2. comprises making out the quantity of workforce, expertise

and aptitude obligatory in the future in contrast to the existing condition.
a. Evaluation of the present HR competence
b. Predicting the future HR needs
c. Gap assessment
3. Outsourcing strategies comprise with the usage of employees outside

the organisation to do the work.
a. true
b. false
2
An Introduction
1.12 Designing the Human Resource Management to Human
System Resource
Planning
Fig 1.4 HRM designing
HRM is proactive rather than reactive, i.e., always looking forward to what
needs to be done and then doing it, rather than waiting to be told what to do about
recruiting, paying or training people or dealing with employee relations problems
as they arise. The techniques for the application of HRM will include many
familiar functions of personnel managers, such as manpower planning, selection,
performance appraisal, salary administration, training and management
development. These will be overlaid by special programmes designed to improve
communication systems, involvement, commitment and productivity.
Broadly, there are three meanings attached to the concept of HRM. In the
first place, persons working in an organisation are regarded as a valuable source,
implying that there is a need to invest time and effort in their development.
Secondly, they are human resources which means that they have their own special
characteristics and therefore, cannot be treated like material resources. The
approach focuses on the need to humanise organisational life and introduce human
values in the organisation. And thirdly, human resources do not merely focus on
employees as individuals, but also on other social realities, units and processes in
the organisation. These include the role or the job a person has in the organisation,
team processes, etc.
The HRM model is characterised as being employee-oriented with an
emphasis on the maximisation of individual skills and motivation through
consultation with the workforce so as to produce high levels of commitment to
company strategic goals. It is a resource to be used to its fullest capacity. It is an
asset to be invested in. HRM is concerned with both the structure of work in a
firm and with all the related employment practices that are needed to carry out the
work. HRM is not simply about HR or ‗people practices‘, it is about the
2
Basics of Human management of work and people in the firm. Managing people includes both
Resource
individual and collective dimensions
Planning

1. The HRM model is characterised as being employee-oriented .
a. true
b. false
2. The concept of HRM is that the persons working in an organisation are

regarded as a valuable source, implying that there is a need to invest time
and effort in their development.
a. true
b. false
1.13 Planning the Total Workforce
Fig 1.5 Planning of total workforce
Planning the entire workforce is an exceptionally significant action, which

finally aim to implement the HR functions of succession planning, training and
development effortlessly since they turnabout the existing labor force. There are
normal transformations in the existing work group as fresh applicants adhere and
older ones depart.
Shaping upcoming business necessities, mainly those concerning to work
force necessities, symbolize one of the most demanding responsibilities human
resource managers have to face.
2
The sketching out of a workforce plan is an important element of every An Introduction
human resource strategy and one of the anticipated products of human resource to Human
manager‘s actions. In spite of this, manpower or labor force planning, along with Resource
succession planning, has only newly had the benefit of revival in reputation. The Planning
failure of several businesses to build up and execute labor force planning is
somewhat problem-solving of the need of strategic planning itself.
Strategic goals of each business are most important for its success and labor
force planning works according to it. In order to convene the company‘s strategic
goals the procedure should be ingenious and should identify the employee‘s
individual and expert features. This preparation is also accomplished to build up
the strategies of fulfilling the business needs. It is a systematic progression that
gives the manager a representation for taking human resource decisions in
accordance to the business functions, strategic plan, allocated funds and a set of
preferred labor force proficiencies. So the workforce planning can be stated as an
organized process that is incorporated, arranged, enduring and reliable in
character.
According the requirement of the businessman workforce plan shall vary
from easy to intricate. It makes out the necessity of the business in terms of
prospective workers to meet organizational objectives. This brings out the
determination of quantity and skills needed along with the time schedule they will
be required. Workforce planning might be for a division or subdivision or for the
entire business to offer productive out comes to the business; the success of these
plans rely upon its assimilation with much broader management strategies. The
labour force planning also initializes the improvement of strategies to fulfill the
business needs and it includes the taking appropriate actions to magnetize and
maintain workers of mandatory skills along with upholding most favorable figures
according to the organization‘s needs.
Besides the labor force planning, it has to be guaranteed that organizational
structure along with the jobs guarantee the proficient rendering of services and
administration of the organization as a whole.
Suggested proceedings:
 Shaping of proper organisational structure to maintain the strategic goals.

 Arrangement of the employment according to the key activities.
 Preparing a workforce plan proposed to maintain the organisations strategic
goals.
 Bring together workforce profiles, discovering the designated groups, an
record of existing workers competencies, competencies needed in the future
and acknowledged gaps in competencies.
2
Basics of Human
Planning
1. There are no transformations in the existing work group as fresh applicants
adhere and older ones depart.
a. true
b. false
2. In order to convene the company‘s strategic goals the procedure should be

ingenious and should identify the employee‘s individual and expert
features.
a. true
b. false
3. Workforce planning might be for a division or subdivision or for the entire

business to offer productive out comes to the business; the success of these
plans rely upon its assimilation with much broader management strategies.
a. true
b. false
1.14 Generating the Required Human Resources
Fig 1.6 Generating required human resource
This method concentrates on selection, employment, arrangement,

preparation, and allocation of the workers on the basis of strategic essentials of the
organization‘s workforce plan.
An ample workplace expertise plan will recognize suitable guidance
precedence in accordance with the organization‘s workforce requirements in the
2
present and the future. The new recruitment schemes might me be An Introduction
implemented or the description of selected groups or obtaining necessary skills in to Human
the business. Resource
Planning
Suggested proceeding
 Assessment of recruitment and selection procedures with accordance to the

organisation‘s strategic goals
 Augmentation and execution of a complete workplace skills plan.
 Acceptance or explanation of professional levels and grouping.

1. An ample workplace expertise plan will recognize suitable guidance
precedence in accordance with the organization‘s workforce requirements
in the present and the future.
a. true
b. false
2. Generating required human resource needs the assessment of recruitment

and selection procedures with accordance to the organisation‘s strategic
goals.
a. true
b. false
2
Basics of Human
Resource 1.15 Investing in Human Resource Development
Planning and Performance
Fig 1.7 Investing in HRD and performance
Conventional concepts of career planning, performance appraisals,

compensation management and workman development should be restructured
according to the idea, features and assignment conclusions as in the HR plans,
strategies and procedures.
Development reactions will intend to amplify business skills. The appliances
of business skills and the behavioral essentials are all add to an organization for
successful performance. New perception such as ultimate learning and identifying
previous learning should shape an important constituent of the way of investing in
employees.
Strategies for diverse organization differ according to its development pace.
Workers retention strategy also follows identical procedure.
At the time of workforce planning process if there are indications of limited

encouragement or career progress in an organization and the development features
are also limited, organizational strategies proposing the retaining of the workers
will be advisable. But in organizations which have significant growth and
expansion will have an opposite strategy. Every significant proposal is taken for
the person, group and organization for ensuring maximum performance levels and
business development.
It is vital that at a personal level, mainly for superior staff, that they
experience that their growth desires are approved and they be encouraged by
providing the skills to do their works. At a group level, it characterizes the
2
personal capability to coordinate his work with others and support personal and An Introduction
group skills to facilitate the business goals. to Human
Resource
Compensation strategies have an objective to support the functions of the Planning
organization with the method of giving compensation to its people, giving the
obligatory incentives and enthusiasm to the workers. Its elements are the blend of
the basic pay, bonus, revenue sharing, share preferences, and a variety of suitable
benefits, generally according to the market or competitor rules and the
organization‘s capacity to compensate.
Suggested actions:-
Sufficient investment in HR guarantees a sturdy base for the business and

contented employees. This can be achievable by accurate exposure of suitable
measures, policies, and procedures according to employment development and
learning, promotion and employment assignments, compensation management,
retirement, etc.

1. New perception such as ultimate learning and identifying previous learning
should shape an important constituent of the way of investing in employees.
a. true
b. false
2. At the time of workforce planning process if there are indications of limited

encouragement or career progress in an organization and the development
features are also limited, organizational strategies proposing the retaining
of the workers will not be advisable.
a. true
b. false
3. Every significant proposal is taken for the person, group and organization
for ensuring maximum performance levels and business development.
a. true
b. false
2
Basics of Human
Resource 1.16 Assessing and Sustaining Organisational
Planning Competence and Performance
Fig 1.8 Competence and performance assessment
Only small number of businesses successfully quantifies how well their

diverse input influence performance. Actually no methods accurately measure the
contribution of the workers to make desired organisational outcomes or assess
how changes in procedure and practice, schemes or practices will influence that
involvement.
Applying understandable proven measures along with recognizing targets in
the accomplishment of precise organisational goals, will clearly express the results
of the HR Strategic Plan in quantifiable expressions. Customary assessment of the
plan will also support in self-improvement of the HR strategic plan.
Suggested actions:-
 Assessment of the business culture and climate
 Execution of succession planning
 Assessment of HR strategy using established measures
 Review and alteration of HR strategy
While HR strategies should be made to support the success organisation‘s

goals, it is a two-way process. HR strategies could themselves be important inputs
in assessing the strategic plans for the organization. A critical mistake, however, is
to build up and execute HR strategies devoid of consideration for the aims and
objectives which the organisation has clearly or completely recognized. A familiar
error is the development of workplace expertise policy which is not connected to
2
any strategic objectives or intentions or which have no positive achievement An Introduction
elements. Likewise, setting up of a quantities target with no workforce and to Human
succession planning work out is in most occasions, basically insignificant. Resource
Planning
Human resource planning (or HRP for short) is the absolute vital function
that look firstly at strategy and then deploys the necessary human capital (people)
where it is called for designing strategy in the organisation.
HRP therefore falls into the wider area of employee resourcing (planning
for, acquiring and allocating the desired human resources for the organisation).
HRP entails by knowing in advance, what the staffing needs of the organisation
will be, assessing the supply of the relevant workers in the organisation and labour
market and finding ways to fulfil the staffing needs of the organisation.
Organisations are greatly affected by their demand for labour and therefore
by the supply of labour. Firstly, formulating a strategy can only happen after you
have knowledge of the strengths and weaknesses of the workforce, which will
include these issues. Imagine, for example, if you are going to attempt a growth
strategy into more rural areas. You may need a marketing workforce that has far
more experience and contact with the customer base.
Secondly, strategic plans can only be implemented successfully if the
organisation is staffed with the right number and type of human resources to
provide the necessary skills, knowledge, abilities, etc. Successfully planning for
and handling labour needs can thus be a competitive advantage or disadvantage.
Companies who make and implement better HRP strategies than others will adjust
better to environmental changes and have the most suitable workforces.

1. There are methods to measure accurately the contribution of the workers to
make desired organisational outcomes.
a. true
b. false
2. HR strategies could themselves be important inputs in assessing the

strategic plans for the organisation
a. true
b. false
2
Basics of Human 3. Strategic plans can only be implemented successfully if the organisation
Resource is
Planning
staffed with the right number and type of human resources to provide
the necessary skills, knowledge, abilities, etc.
a. true
b. false
1.17 The HRP Process

The three broad keys to HRP are roughly, to:
1. Know the strengths and weaknesses of the current workforce, both with
regard to number and skills, etc.
2. Have a clear strategic plan for the future and an idea of how the current
staff fit in (i.e. fulfil) that plan.
3. If the current staff do not fit it in any way, a plan to alter it to do so.
These keys are achieved through the HRP process. The process of HRP is
entirely based on the corporate plans and objectives. HRP is a continuous process
of review, control and assessment.
HRP consists of the following stages.
1. Analysing organisational plans and deciding objectives.
2. Analysing factors for manpower requirements.
3. Developing employment plans.
4. Developing human resource plans.
1. Analysing Organisational Plans and Deciding Objectives
The business plan would be a blueprint of desired objectives. This objective

stated in economic terms, would incorporate the growth rate of the company,
diversification plans, market opportunities and government policies. Therefore,
human resource planning should meet two requirements.
a. It should be directly related to the essential nature of the organisation.
b. The changes in the selected factors should be proportional to changes

in the human resources required in the organisation.
3
In a small organisation, a human resource plan could be formulated to cover An Introduction
the whole organisation. However, in a large organisation, size may necessitate to Human
human resource planning by separate departments. Resource
Planning
2. Analysing Factors for Manpower Requirements
The existing job design and analysis may thoroughly be reviewed keeping in
view the future capabilities, knowledge and skills of present employees. The job
generally should be designed and analysed reflecting the future human resources
and based on future organisational plans. The factor for manpower requirements
can be analysed by two ways:
a. Demand Forecasting
b. Supply Forecasting
a. Demand Forecasting: Demand forecast is based on the annual budget and

long term corporate plan. It is the procedure to estimate the predictable
number and feature of people essential for performing diverse jobs in each
occupation and department.
Demand forecasting should consider numerous factors — both
external and internal. The external factors are contest, monetary ambiance,
laws and regulatory organizations, transformation in technology and societal
factors. Internal factors include budget constraints, production levels, new
products, and services organisational structure and employee separations.
b. Supply Forecasting: Analysis of the manpower requirements of the
company provides the manager with the means of estimating the quantity
and quality of employees that will be required in future. The next step for
the management is to determine whether it will be able to procure the
required number of personnel and the sources for such procurement. This
information is provided by supply forecasting. Supply forecasting is method
of assessment, which measures the number of people who may be available
from within and outside an organisation, after considering sufficient gaps,
which may be caused due to absenteeism, internal movements and
promotions, wastage and changes in other conditions of work.
3. Developing Employment Plans
After determining the number of personnel for each job in the organisation,
the human resource department has to determine the nature of job, i.e., job
description and job specification.
3
Basics of Human a. Job Description: A job description will generally describe the work
Resource
performed, the responsibilities involved, the skill or training required,
Planning
conditions under which the job is done, relationships with other jobs and
personal requirements on the job. According to The British Institute of
Management, ―A job description is not intended to catalogue all
duties involved with the result that an employee would feel justified in
declining to perform any work not included in the description. It should be
regarded as an outline of the minimum requirements of the job, thus
preserving flexibility of operations‖.
b. Job Specification: The job specification is the result of job description. It
specifies the least satisfactory credentials that the fresher must hold to
execute the job acceptably and productively. Job specifications provide an
imperative way in the selection process and assessment. They are
formulated by the human resource department in discussion with diverse
line managers. The different essentials of job specification are:
 Minimum formal education necessary to perform the job.
 Minimum experience required for performing the job.
 Manual/Mental skill required for performing the job.
 Personality factors such as personal appearance, emotional stability,

maturity, initiative, drive and sociability.
 For high-level jobs, the ability to assume responsibility is an essential

prerequisite.
4. Developing a Human Resource Plan
Net Human Resource requirements in terms of number and components are

to be determined in relation to the overall human resource requirement. After
estimating the supply and demand of human resources, the management starts
adjustment. When the internal supply of employees is more than the demand,
human resource surplus exists and external recruitment is stopped. Besides,
existing employees are encouraged to take voluntary retirement. It gradually
reduces the surplus.
If human resource deficit exists then the planners have to rely on the
external sources. They then proceed for scanning of the employment market for
recruitment purposes. If future supply of human resources from all the external
sources is estimated to be inadequate or less than the requirements, the manpower
planner has to suggest to the management to alter or modify the organisational
3
plan. In case of shortage of certain categories of employees, the organisation has An Introduction
to take care not of recruitment alone but also retention of existing employees. to Human
Resource
Planning

1. Analysisof the manpower requirements of the company provides the
manager with the means of estimating the quantity and quality of employees that will be required in futu
Supply Forecasting c. Job Specification

Demand Forecasting
2. The procedure to estimate the predictable number and feature of people

essential for performing diverse jobs in each occupation and department.

Demand Forecasting
3. Specifies the least satisfactory credentials that the fresher must hold to
execute the job acceptably and productively.

Demand Forecasting
1.18 Let Us Sum Up

To conclude, HRP is a managerial function which helps to coordinate the
needs and availability of different types of employees. Along with this, it also
helps the identification of the skills and competencies and subsequently develops
plans for correcting deficient skills. To avoid criticism without concentrating on
the quantity features, HRP should be concentrated on the skills and capability.
Human resource planning is considered as an integral part of business planning as
it helps both organizations and employees to get ready for the future. If the size of
the employees recruited is more than which is required there will be a severe loss
for the management. Miscalculations about of the work force needed often lead to
loss. Human resource planning is the process by which an organisation 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 tasks that will help the
organisation achieve its overall objective.
3
Basics of Human Downsizing of labor force maintaining the benefits of the organization and
Resource
without affecting the business is a responsible and complicated task .It increases
Planning
the pressure on managers dealing with production and sale. Efficient managers
can foresee the problems likely to occur and try to prevent them. The difference
lies in planning to overcome current problems, prevent upcoming threats and alter
the goals with the unforeseen environmental conditions. Strategic Human resource
planning, the significant part of strategic human resource management connects
the human resource management to the business plan. The total work force plan
facilitates the succession planning, training and development as they help to rotate
around the available workforce.
The HRP shapes the future work force needs and represents the most
demanding responsibilities of human resource management. The HRP works in
accordance with the strategic goals of the business which are most important for
the success of the business. Hence, it helps the manager to take human resource
decisions relating to the business functions, strategic planning, allocated funds and
a set of preferred labor force proficiencies.

Answers: (1-a)
3
An Introduction
Check your progress 6 to Human
Resource
Answers: (1-c), (2-a)
Planning
Answers: (1-d), (2-a)
Answers: (1-a), (2-b), (3-a)

Answers: (1-a), (2-c), (3-a)
Check your progress
10
Check your progress
11
Answers: (1-b), (2-a), (3-a)
Check your progress
12
Check your progress
13
Answers: (1-a), (2-b), (3-a)
Check your progress
14
Answers: (1-b), (2-a), (3-a)
Check your progress
15
Answers: (1-a), (2-b), (3-c)
Check your progress
16
3
Basics of Human
Resource 1.20 Glossary
Planning 1. Deliberate - intentional
2. Anticipated - predictable
3. Competent - capable
4. Ascertain - Learn
5. Progression - Development
6. Apprehension - worry
7. Precise - accurate
8. Demonstrate - show
9. Effectual - effective
10. Augmentation - growth
11. Obligatory - compulsory
12. Quantifiable - proven
13. Customary - normal
14. Procure - obtain
1.21 Assignment
Visit any one organisation and collect as much information as possible on
retention policies of the organisation.
1.22 Activities
Assuming you are a HRD Manager in an organisation, you need to create an
HR staffing plan. Briefly explain what criteria will be considered and why?
1.23 Case Study

M.B.S Books one of the biggest book companies in South India with its
headquarters at Cochin (Kerala) started a branch at Kannur one of the district
headquarters in Kerala. Though earlier they operated the sales from their Cochin
branch starting a retail unit at Kannur increased their sales in the district. They had
3
a lot educational institutional sales and the whole unit was managed by a retired An Introduction
government officer who was appointed as the manager of the branch. There were to Human
total 15 employees all of them appointed were fresh entrant for retail sales. Resource
Planning
Things changed after 7 months, the manager had a severe heart attack and
was admitted to hospital. Though he recovered from the illness, he just resigned
from the job. The management appointed one of the sales people as a caretaker to
manage the book shop. Though not qualified, and he was a distant relative of the
managing director. Things went worst as the employees seldom heard the
manager‘s words. The sales declined and the management had to send a
supervisor from the head office to take charge. But that too was in vain and the
company had to wind up their operations.
1. What are the defects that you find in the HRP of MBS Books?
2. Do you think that the implementation of an effective Succession Plan would

have helped MBS?

1. A Strategic Human Resource Management System for the 21st Century,
Naval Personnel Task Force, US Department of Navy, September 2000
2. Developing a Human Resources Strategy: A Good Practice Guide, South

East Employers, June 1999
3. Human Resource Planning: An Introduction, Reilly P. Report 312, Institute
for Employment
3
Basics of Human
Resource UNIT 2: SCOPE AND IMPORTANCE OF
Planning
Unit Structure
2.1 Introduction
2.2 Why a Human Resources Diagnostic?
2.3 Scope of HR Planning
2.4 The Inputs in Human Resource Planning
2.5 HR Planning: Purpose and Goals

2.6 Planning ahead for Recruitment: The Basic Process of HR Planning
2.7 Strategies in the HR Plan: Process Analysis
2.8 Planning Process Tasks and Activities
2.9 Why a HR Planning Process for Corporate?
2.10 Strategic Advantages for HR Planning
2.11 Micro/Macro Level Advantages
2.12 Key Points for Successful HR Planning
2.13 Let Us Sum Up
2.15 Glossary
2.16 Assignment
2.17 Activities
2.18 Case Study

 Requirement for Human Resources Diagnostic studies.
 Scope, Purpose and Goals of HR Planning.
3
 Strategies in the HR Plan: Process Analysis. Scope and
Importance of
 Planning Process Tasks and Activities.
Human Resource
 Emphasis of HRP at Micro/macro level. Planning
 Elements of Successful HR Planning.
2.1 Introduction
Planning is an integral element of our everyday activities. Different writers
have studied and written extensively about planning and its importance in
achieving objectives. Those organizations that lack in planning for the future have
fewer opportunities to survive the competition ahead. This part will discuss the
importance of HR planning; the six steps of HR planning that is: forecasting;
inventory, audit, HR resource plan; acting on plan; monitoring and control.
Human resource planning is the process by which the deciding and guiding
members of an organisation manage and lead those people who will be
responsible for implementing the strategies necessary to fulfill the company‘s
mission and reach its vision.
2.2 Why a Human Resources Diagnostic?

In today's marketplace, every organisation is under pressure to outperform
an increasingly sophisticated group of competitors. Leaders have been diligent in
learning from other's successes and failures. It is rare to find an organisation that
has not been affected by the latest quality initiatives, customer service programs
and administrative improvements so prevalent in the last decade.
According to expert opinion one of the final area in which an organisation
can attain vital development is in Human Resources. Making use of the resources
to its preeminent benefit is a method to exploit the efficiency of all of the other
systems and procedures which already exist.
It‘s the dream of each organisation to acquire a sufficient quantity of
competent work force with the expertise, awareness, know-how and wish required
to fulfil its objectives. However, the effective use of the work force in an
organisation is a difficult procedure. The first step is to pinpoint exactly where
your strengths and weaknesses lie in this area of the business.
3
Basics of Human The key objective of the Human Resources Diagnostics is to re-examine the
Resource
policy, composition and services needed for the HR Department in accordance to
Planning
the requirements of the organisation. The diagnostics shall facilitate decision if the
prevailing HR practices convene improved revelation brought on by HR in fields
like recruitment, retention and recognition.
A methodical, complete-examination will give the base and validation for
the HR Strategy. It will help to decide what is needed and the sequence of
precedence, as well as the limitation of each. Major benefits are:
1. The diagnostics will point out and enumerate any risks faced by the
organisation or inadequate policy protection.
2. Identifies policies/programs, which can assist with employee
retention/engagement.
3. Helps to rationalise the HR staffing structure.
4. Ensures human resource strategies are integrated with business plans.
5. Establishes improvement in activities for the human resource department.
6. Monitor the effectiveness of Human Resource initiatives.
This Diagnostic has been developed to assist in auditing an organisation's

Human Resource practices and procedures. It consists of:
1. Interactive Diagnostic Questionnaire: A comprehensive series of questions

covering best practices in all aspects of human resources management.
2. Reference Section: Literature related to the questionnaire and references to
innovative solutions/best practices, which other service and manufacturing
organisations have engaged in.
The development of strategies is for matching the size and skills of the
workforce to organisational needs. Human resource planning assists organisations
to recruit, retain and optimize the deployment of the personnel needed to meet
business objectives and to respond to changes in the external environment. The
process involves carrying out a skills analysis of the existing workforce, carrying
out manpower forecasting and taking action to ensure that supply meets demand.
This may include the development of training and retraining strategies.
4
Scope and
Check your progress 1 Importance of
It‘s the dream of each organisation to competent work force with the expertise, required fulfilling its object
Human Resource
true acquire a sufficient quantity of
Planning
false awareness, know-how and wish
The key objective of Human Resources
Diagnostics is tore-examine the

policies composition and services needed for the HR Department.
true
false
Human resource planning assists organisations to:
recruit
retain
optimize the deployment of the personnel
all the above
2.3 Scope of HR Planning

HR Planning is a process, which anticipates and maps out the consequences
of business strategy on an organization‘s human resources. This is reflected in
planning of skill and competence needs as well as total headcounts.
Fig 2.1 HR planning
For resourcing strategies to be implemented, they must be translated into

practical action. The strategic process can be organized logically. For these
decisions to be taken, information must be obtained, consequences gauged,
political soundings taken and preferences assessed. It is clear that many of these
4
Basics of Human decisions are fundamental to an organisation. If the implications are major,
Resource
strategic decisions are taken at the center of the business. The role and scope of
Planning
the human resource planning function is two-fold:
1. To participate in the decision process by providing information and opinion
on each option, including:
 Redundancy or recruitment costs.
 Consequences on morale.
 Redeployment/outplacement opportunities.
 Availability of skilled staff within the organisation.
 Availability of suitable people in the job market.
 Time constraints.
 Development/training needs/schedules.
 Management requirements.
This forms part of the information collated from the organisation as a whole.
2. To support line managers dealing with the people consequences of

implementing the decision; information already gathered provides basis for
a human resource plan.
a. People as Numbers: The manpower planning approach, which
addresses questions such as:
 How many staff do we have/need?
 How are they distributed?
 What is the age profile?
 How many will leave in each of the next five years?
 How many will be required in one, five, ten years?

Human Resource Information Systems are invaluable in
answering these questions.
b. Forecasting Methods: Human resource planners have a choice of
techniques open to them, including extrapolation (of past trends);
projected production/sales; employee analysis, scenario building to
predict future manpower requirement.
4
c. Employee Turnover: Turnover covers the whole input-output o
process from recruitment to dismissal or retirement and takes the r
consequences of promotion and transfer into account. g
d. Soft Planning: HRM implies that planning has to go beyond the a
numbers game into the softer areas of employee attitudes, behavior n
and commitment. These aspects are critical to HR development, i
performance assessment and the management of change. z
a
e. Resourcing Strategies: Most large organizations employ human
t
resource or personnel specialists to conduct or at least, coordinate
i
employee resourcing. This is a role that has long been regarded as
o
part of the domain of personnel management. In fact, successful
n
recruitment must be proactive.
s
Organizations can take one of three actions to fulfill their
employee resourcing: t
o
 Reallocate tasks between employees, so that existing staff take
on more or different work. The emphasis is on flexible working
practices, requiring multi-skilled workers and sophisticated t
assessment and development program. h
e
 Reallocate people within the company.
c
Traditionally organizations fill their supervisory and management o
posts from existing staff.
n
 Recruit new staff from the external job market. Countries in the c
free-market tradition have focused most of their resourcing e
activities on bringing in people from outside the organisation. p
Effectual internal resourcing needs precise and complete t
knowledge. Policies and work force strategies should be interpreted to
the real employment and individuals should be marked out and o
motivated to carry out these tasks. f
f. Exploring the Job opportunity: Job analysis is a study of specific

f
job by offering the thorough information on the necessary and
l
obligatory features of the existing vacancy. The methods used for the
e
study vary from the elementary to the complicated. It necessitates
x
high-quality ability wherever the identical prospect exists. Though it
i
was earlier considered as a tiresome part of study, job analysis is now
b
a day‘s put forward as a helpful method. Similarly, the drift of the
l
4
e working is nowadays Scope and
Importance of
Human Resource
Planning
4
Basics of Human preventing the organisation from strictly defining the job.
Resource
Planning h. Describing the Job: The final result of the analysis of a job is called
the job definition or description. Earlier the descriptions provided a
specific way of performing the task and the results expected. But due
to the changing status of jobs stipulations employers are unwilling to
concur to a firm list of responsibilities, favoring the worker to be
prepared to carry on any necessary task.
i. Do research on individuals: Though Job analysis give the complete
knowledge of the task to done by the worker it does not provide
information of his proficiency, aptitude or ability to accomplish it.
Personnel specifications facilitate to explain the individual traits
important to accomplish the task related to the jobs. In several modern
methods of job analysis which is based on proficiency, normally
create personnel specifications as part of the analysis itself.
Human Resource Planning defines project roles, responsibilities and
reporting relationships. One key result of Human Resource Planning is the
Staffing management plan, which depicts how and when team members are added
to the team and how the team members are released from the project, the training
needs of the team and several other key components.

1. HR Planning is a process, which anticipates and maps out the
consequences of business strategy on an organisation's human resources.
a. true
b. false
2. Job analysis is a study of specific job by offering the thorough

information on the necessary and obligatory features of the existing
vacancy.
a. true
4
Scope and
2.4 The Inputs in Human Resource Planning Importance of
Human Resource
The inputs to Human Resource Planning are:
Planning
Enterprise Environmental Factors: The Enterprise Environmental Factors
that comprise individuals of an organisation interacting and relating with one
another, is an input into Human Resource Planning. Items to consider about
enterprise environmental factors involving organisational culture and structure
are:
 Organisational: Gather information about the organisations or departments

engaged in the project and determine whether they have any existing
working arrangements between them. It also tries to find out the formal and
informal relationships between the departments.
 Technical: Gather information about the areas of expertise needed to

complete the project successfully.
 Interpersonal: Collect information about the relationships that existed

between the team members and find out whether they are formal or
informal. Interpersonal inputs also try to give current job descriptions of
members along with an insight into their supervisor-subordinate
relationships and levels of trust and respect between them.
 Political: This input reveals individual goals and agendas of the

stakeholders. This also gave information on the informal power base and
influences on the business.
With the help of proper inputs, the results in HRP surely have a good foundation.

The Enterprise Environmental Factors that comprise individuals of an organisation interacting and relating
true
false
The input reveals individual goals and agendas of the stakeholders
Interpersonal c. Technical
Political
4
Basics of Human
Resource 2.5 HR Planning: Purpose and Goals
Planning Human resource (HR) planning is a conglomeration of various activities of
business such as selecting, choosing and appointing of fresh aspirants,
administration of workers, scrutinizing existing and upcoming personnel
necessities and training the employees and fresher‘s. Because of these features, it
is possibly the most essential business practice in an organisation.
The purposes of HR planning are:
1. Forecasting Human resource requirement: HRP is indispensable to

decide the potential human resource requirements in a business. In the
nonexistence a plan this manner, it shall be hard to get the services of the
correct sort of people at the point of necessity.
2. Successful administration of change: Planning is required to cope up with
the changes in the demand conditions, expertise, goods and government
policies in an effectual means. These changes call for continuous allocation
and reallocation of skills and the lack of planning might create the under
exploitation of human resources.
3. Realizing organizational goals: In order to meet the need of organization
and its goals like expansion, effective planning is required.
4. Promoting /repositioning employees: The database of HRP provides

comprehensive skill repertoire, which helps the organization to take decision
in terms of promotion, demotion, transfer, etc. of employees.
5. Effective utilization of human resource: The database helps to identify the
underutilized or surplus human resource.
Corporate goals that appending the importance of HR planning are:
1. To decide recruitment mode and precise action procedure related to it.

2. To expect unemployment.
3. To drop off the situations like downsize, surplus, and premature retirements.
4. To chart the most favourable training intensity.
5. To deal with organization development programs.
6. Innovative assignment prediction and planning recruitment according to it.
7. To plan the expenditure for manpower in new projects.
8. To support output bargaining.
9. To measure upcoming space requirements.
4
Scope and
Human Resource
1. HRP is indispensable to decide the potential human resource requirements Planning
in a business.
a. true
b. false
2. Planning does not help to cope up with the changes in the demand
conditions, expertise, goods and government policies in an effectual
means.
a. true
b. false
3. HR planning helps to decide recruitment mode and precise action

procedure related to it.
a. true
b. false
2.6 Planning ahead for Recruitment: The basic

process of HR Planning
HR Planning is a collection of a series of actions and procedures. As
recruitment is the most important activity of the HR Planning process it needs a
comprehensive action plan. This starts with:
1. Evaluation of the history of operations of the organisations and its
environment.
2. Individual assessment of HR development, educational transformations,
literacy rates and demographic evolution.
3. Assessment of learning, passing out rates from the schools and colleges,
professional courses competence, intensity of economic liberalisation,
accessibility of effortless finance for professional education, etc.
4. Assessment of the rate of relocation of people, geographic activities, natural
disaster control, etc.
5. Ascertain corporate policies, targets, goals and action procedures.
6. Connecting the corporate schemes to the HR policies and operations.
4
Basics of Human 7. Illustration up a demand forecast for the work force in the future.
Resource
Planning 8. Scheming of HR procedures for retention and effective career scheduling of
high performers.
9. Incorporation of HR procedures with variable desires of the workers and the

prospective demand.
10. Ascertain manpower goals in short, average and long term, keeping
litheness on the outline.
11. Initiating of an intensive plan, endorsing the responsibility of attaining

recruitment objectives on individuals and groups and revising the manpower
data frequently.
Check you progress 5

1. As recruitment is the most important activity of the HR Planning process
it needs a comprehensive action plan.
a. true
b. false
2. Evaluation of the history of operations of the organisations and

its environment is not needed for HR planning.
a. true
b. false
3. Incorporation of HR procedures with variable desires of the workers and

the prospective demand is essential for recruitment planning
a. true
b. false
2.7 Strategies in the HR Plan: Process Analysis

Effective decision-making will be usually based on sturdy planning. As a
step towards the success every organisation should formulate long term and short
term plans. These are called strategic and tactical plans. Moreover, resources must
be organised and allocated to carry out organisational goals in an effectual and
well-organized method.
4
Human Resources planning professionals should make use of appropriate Scope and
business approaches for deliberate planning and business expansion practices. Importance of
Every organisation has a promotion scheme to market the product or services. Human Resource
Planning
Same way every organisation must have a human resources plan that summarize
their work force strategy.
The Business Case for HR Plans
The plan for the implementation of Human resource functions in an

organisation should be derived from the common strategic plan of the
organisation. This should offer the future requirements and accessibility of human
resources for the establishment.
Strategic decisions need continuing obligations. A strategic inaccuracy will
lead to employee‘s know-how deficiency, further affecting client service and
productivity. While an appropriate plan can facilitate the upholding of corporate
goals and look after the company‘s assets.
Main phases in the Planning Process
Phase 1: Corporate goals / Policy Formulation and Structuring

Phase 2: Supplies and Market assessment prediction
Phase 3: Demands and Competitive
prediction Phase 4: HR Planning
Components of a HR Plan
The human resource plan can be developed by using the same elements used
for common strategic plan of the organisation. The primary stage comprises the
conducting of a systematic study of the present environment of the organisation.
The outcome of this environmental analysis shall convey appropriate data in the
form of information, interactions, reviews and evaluation systems. This method
will raise features that will influence the divisions of the business, both at the
present and in the future. Usually HR professionals will be eager to observe these
inclinations and think about their influence in the workplace.
The environmental analysis must think about a number of aspects such as
government authority, financial environment, business rivalry and labour force
demographics.
After the completion of the analysis HR planning can be initiated. HR
planning comprises of four stages that are summarized below:
5
Basics of Human 1. Formulation: The implemented HR culture should support organisational
Resource
goals. The vision statement must correspond to the general guidelines of the
Planning
HR department. It is the eventual manifestation of victory for the human
resources department. The mission statement will state about the actions the
human resources department proposes to practise for achieving their vision.
A definite mission and vision shall maintain the human resources team
indomitable and converse an organisational rationale that will inspire the
group.
2. Development: Recognizing the course for the development of the HR Plan
is very essential. Finding out the answers for the questions below is the
effortless and useful method is to achieve a clear image of the present status
of the HR department.
1. Find out the strength of the department?
2. Find out the weaknesses of the department?
3. Find out the external opportunities that will facilitate growth of the
department?
4. Find out the external threats that will hamper the growth of the
department?
There are distinct results that a business will seek to attain their
fundamental operation. The principles of an organisation must be considered
while initialising these strategies.
3. Implementation: For the successful completion of the long-term strategies,
short-term objectives should be instituted. These goals which are considered
as the landmarks are called short term as it can be completed in a short
period of six months to a year. These objectives permit for permanent
obligation and common assessment of the long-term strategy. One of the
most significant elements throughout this stage is to inspire workers or
clarify, what is their role in these objectives. Relating the short-term goals to
the long-term plans of the organisation generate employee dedication and
positive output.
4. Evaluation: Customary reassessment of the HR department strategies is
essential to the accomplishment of the plan. Unexpected issues can be
rapidly brought to decision with customary monitoring.
A human resource plan must replicate outcomes in assessable
stipulations. Time and Budget are considered two common dimensions.
5
Scope and
Human Resource
1. A strategic inaccuracy will lead to employee‘s know-how deficiency, Planning
further affecting client service and productivity.
a. true
b. false
2. The primary stage comprises the conducting of a systematic study of

the present environment of the organisation.
a. true
b. false
3. In the implementation stage of the HR planning it‘s not needful to

inspire workers or clarify, what is their role in these objectives.
a. true
b. false

It is essential to categorise the existing employees into various groups. The
extent to which such segmentation is done will depend on how the planners intend
to utilise the data.
The responsibilities and actions concerned in the planning process are:
 The evaluation of the number employees, working in various levels of

occupation that will quit the organisation and leave their present jobs
throughout the forecasting affair.
 Restructuring the organisation and scheduling for wants and surpluses
 Assessing the number of people who should be trained or retrained to take

the place of the personnel‘s who will quit the company.
 Influential overall objectives and goals for a particular time in advance
 Conversion of these goals to manpower needs of the organisation.
 Recognising forecast for recuperating manpower exploitation and its

effective usage.
5
Basics of Human
 Evaluate the potential of additional workforce recruitment to cover the
Resource
losses due to wastage and to convene extra demands.
Planning
 Find out the point at which the crucial manpower deficiency is likely to
occur.
 Choose a plan to be implemented in the organisation in advance, to

overcome these scarcities.

1. The evaluation of the number employees, working in various levels of
occupation that will quit the organisation and leave their present jobs
throughout the forecasting affair is the part of an HR planning activity.
a. true
b. false
2. Assessing the number of people who should be trained or retrained to

take the place of the personnel‘s who will quit the company is a part of HR
planning.
a. true
b. false
3. Choosing a plan to be implemented in the organisation in advance, to

overcome these scarcities is not a part of HR planning.
a. true
b. false
2.9 Why a HR Planning Process for Corporate?

The management tool used for the prediction and forecasting of the quantity
and cost of the work force in an organisation is called HR planning. This
prediction has a great importance because this quantity and cost plays an
important role in the productivity of every business. It‘s not sure that the forecast
will be always correct .So a scientific basis for the forecasting will create
perfection in the whole process .The competency of an organisation will be
effected by the scarcity of labour and labour surplus. If the key roles in an
organisation are not properly occupied by efficient personnel it will negatively
affect the production schedules and efficiency of an organisation.
5
HR planning helps to organisation to recognize the crucial points in the Scope and
labour force in the early stage itself, enabling them to be corrected timely. The Importance of
crucial points such as shortage of labour, improper usage of workforce, etc. can be Human Resource
Planning
identified. It also facilitates the organisational management in formulating precise
and elaborate service policies or reassessing the active policies in order to make
use of the man power effectively.
HR Planning process takes care of a number of responsibilities in business
world. Some of them may be enlisted as:
a. To ensure optimum utilization of human resources currently employed.
b. To assess or forecast future requirements.

c. To cope up with the changing scenario.
d. To attach with business plans of organisation.
e. To anticipate redundancies.
f. To provide basis for human resource development (HRD).
g. To assist in productivity bargaining.

1. HR Planning process does not help to anticipate redundancies.
a. true
b. false
2. If the key roles in an organisation are not properly occupied by efficient

personnel it will negatively affect the production schedules and efficiency
of an organisation.
a. true
b. false
3. The management tool used for the prediction and forecasting of the
quantity and cost of the work force in an organisation is called HR
planning.
a. true
5
Basics of Human
Resource 2.10 Strategic Advantages for HR Planning
Planning A complete and precise human resource strategy plays a very important part
in the success of the organisations goals and objectives. The HR planning gives
information of the overall human resource activities, and also facilitates the HR
to understand and support the organisation towards its objectives. A precise HR
strategy implemented in an organisation will also support the other departments of
the organisation.
Normally the strategic planning gives priority to the intelligent exploitation
of human resources to achieve short term to long term objectives. This is achieved
by:
 Retaining the exact persons in exact place.
 Maintaining the correct composition of skills.
 Keeping an eye on the employees to monitor that they are displaying. The
correct approaches and performances.
 Budding the work force in a correct way

The HR policy will create a competitive advantage to the business if it:
 Evidently define the goals, that should be attained through the successful
implementation of other business plans and policies and which have not
been completely recognized.
 Identifies fundamental issues which have been neglected for a long time but
which also require an action in order to ensure that its people are motivated,
committed and operate effectively
The HR strategy will be needed to illustrate that vigilant scheduling of
problems related to people will make it significantly easier for the organisation to
attain its wider strategic and operational objectives. The motive for resorting HR
planning exercises at the level of responsibility are
1. To ascertain the equilibrium between the tasks and manpower deployment.
2. To decide staffing, level wise and profession wise.
3. To make sure that individuals do not surrogate systems and process.
4. To expect unemployment and evade avoidable dismissals or desires.
5. To choose most favourable training levels.
6. To choose on employee training courses.
5
7. To offer a foundation for management development programs. Scope and
Importance of
Human Resource
Planning
1. A complete and precise human resource strategy plays a very important
part in the success of the organisations goals and objectives.
a. true
b. false
2. Retaining the exact persons in exact place helps to achieve short term to
long term objectives.
a. true
b. false
3. HR planning does make sure that individuals do not surrogate systems and
process.
a. tr
ue b
false
2.11 Micro/Macro Level Advantages

Human resource planning is aligned with strategic and business planning.
The first generation of integrated business and human resource plans were little
more than a human resource plan attached to a corporate business plan. At the
micro-level, corporate need to realise that manpower is a pricey and an extremely
precious reserve to be used as efficiently as possible. At micro level, HR Planning
involved process of forecasting demand for and supply of HR for future
employment.
The reason for the importance on implementation of HRP at a large-scale
includes:
Employment-Unemployment conditions: Even though there is a hike in
the percentage of unemployed educated youths, it can be noted that there is a
scarcity of variety of skills in the job market. The above stated fact stress upon the
need for an efficient recruitment system and retaining policy.
5
Basics of Human Technological Changes: The various innovations in manufacturing
Resource
expertise, selling methods and administration techniques have been widespread
Planning
and hasty. And their influence has been reflective on all jobs. All these
recommend the call for planning labour needs thoroughly and methodically.
Organizational Changes: The character and speed of business
transformations in organisational background due to fresh conducts and
formations influence labour needs and necessitate strategic considerations.
Demographic Changes: The varying outline of the labours according to
age, gender, literacy, technological inputs and social environment has inference
for HRP.
Skill Shortages: Joblessness is not an indication of labour market being a
buyer‘s market.
They need an extensive variety of expertise that is exceptional and limited.
And thus the exertion starts when such workers depart.
Effectual manpower forecast will guarantee that the human resources are
accessible in both degree and excellence for the deliberate development of the
monetary growth.

1. Scarcity of variety of skills in the job market stress upon the need for an
efficient recruitment system and retaining policy.
a. true
b. false
2. The changing outline of the labours according to age, gender, literacy,

technological inputs and social environment does not have any inference
for HRP.
a. true
b. false
3. Effectual manpower forecast will guarantee that the human resources are
accessible in both degree and excellence for the deliberate development of
the monetary growth.
a. true
b. false
5
Scope and
2.12 Key Points for Successful HR Planning Importance of
Human Resource
HR planning ought to be accepted as a basic element of overall business
Planning
planning. The CEO of the organisation is to guide the HR planning in an
organisation and it‘s considered as one his prime duties. The person who prepares
the plan of the work force in an organisation should be aware of the companies
goals set in terms of different functions and to be performed; such as sales,
marketing, etc. Top management support and participation in the workforce
planning is essential and must get its equitable position hierarchically. The HR
planning duty must be developed in discussion with line managers and their
representatives. The prediction phase must be arranged by ability intensity rather
than by number of the work force. Both the prediction system and the forecasts
itself is to be regularly altered and enhanced according to the experience.
Human resource is a key financial reserve. It consequently needs the

identical consideration which a business offers on planning trade, investment or
returns. Keeping this in mind many organisations have started the perfection of
manpower planning. From the organisations point of view the profit gained from
the man power planning can be quantified in terms of high competence and output
due to enhanced exploitation of its labour force and the eradication of mishandling
in staffing, training and other workforce plans.
It is obvious that a business cannot expect to predict correctly regarding its
future labour force needs if not connected to future production and sale quantities.
The topmost result is therefore attained as soon as the business has incorporated
HR planning with its general business plan to understand the estimations for
production and sales and also the labour restrictions on account of the upcoming
business strategy. The initial duty of a business should be to make sure that the
estimate is as consistent as possible.
HR planning is uninterrupted, going on process; and business that take care
of it as a five-year troublesome assignment will be totally frustrated. Even the
most cautiously designed predictions are likely to be overtaken by unrespectable
alterations.
For an appealing HRP, following procedures may be considered:
 Tailor made: HRP should be balanced with corporate objectives.
 Appropriate time: The period of HRP process should be appropriate to the

needs and circumstances of an organisation.
5
Basics of Human
 Adequate organisation: HRP process should be adequately/properly
Resource
organized.
Planning
 Top management support: Before starting the HRP process, the support
and commitment of top management should be ensured.
 Participation: HRP will be successful if all the departments in an

organisation participate in the process.
 Information system: An adequate database should be developed for

facilitating HRP.
 Balanced focus: The quantity and quality should be stressed in a balanced

manner.

1. A business can predict its future labour force needs without being aware
of future production and sale quantities.
a. true
b. false
2. The period of HRP process should be appropriate to the needs and

circumstances of an organisation.
a. true
b. false
2.13 Let Us Sum Up

To conclude, the planning is an integral element of our everyday activities.
Those organisations that lack in planning for the future have fewer opportunities
to survive the competition ahead. Human Resource HR planning is a strategic
process that forecasts the demand for jobs in the organisation and anticipates the
supply of workers. Moreover, HR planning helps the hiring managers and
recruiters to obtain the ‗best‘ fit among the candidates. The function of the Human
Resources Diagnostics is to re-examine the policy, composition and services
needed for the HR Department in according to the organisational needs.
5
HR Planning predicts the consequences of business strategy on an Scope and
organisation's human resources and also reflects the planning skills and Importance of
competence needed along with the total strengths. The process make possible easy Human Resource
Planning
hiring and maintaining the right profile of people at diverse jobs, positions, places
and time frames according to the organisational need. Hence it‘s evident that
effective decision-making is based on sound planning. So in order to be successful
organisations must implement and develop long-range (strategic) and short-range
(tactical) plans. In addition to this, resources must be managed and allocated to
meet organisational objectives in an effective and efficient way. Human
Resources planning professionals need to make use of suitable business
approaches to strategic planning and business development processes.
We all know that most of the organisations will have a marketing plan to
guide their product and service strategy and in the same way every organisation
should also have a human resources plan that outlines their work force strategy.
It‘s mandatory that the organisation‘s human resource plan must be in accordance
with the overall strategic plan of the organisation plan. The Strategic decisions
require long-term commitments and also a strategic error may result in workforce
skills deficiencies, which can affect customer service and profitability. A
scientific basis for the HR forecast would make substantive improvement over the
current scenario. This is because a competitiveness of a firm will obviously be
affected both by shortage of manpower, labour or surplus of labour.

Answers: (1-a), (2-d), (3-a)
Answers: (1-a), (2-b), (3-a)
6
Basics of Human
Resource
Planning
Answers: (1-a), (2-b), (3-b)
Answers: (1-a), (2-a), (3-b)

Answers: (1-a), (2-a), (3-b)
Answers: (1-b), (2-a), (3-a)
Answers: (1-a), (2-b), (3-a)
Answers: (1-a), (2-b), (3-b)
Check your progress
10
Check your progress
11
2.15 Glossary
1. Sophisticated - Difficult
2. Parameter - Limitation
3. Gauge - Estimate
4. Redundancy - Joblessness
5. Reallocate - Transfer
6. Stipulation - condition
7. Indispensable - essential
8. Inaccuracy - inexactness
6
Scope and
2.16 Assignment Importance of
Human Resource
Observe and find out the various aspects of Human Resource Diagnosis in
Planning
any of your nearby organisations? Write a detail report on the same.
2.17 Activities
Identify and tabulate the present position of human resources and future
requirement in the organisation visited.
2.18 Case Study

First we should focus on the quantitative size of the necessary workforce
essential to enhance productivity, perk up service excellence and to address wider
plans in the organisation concerning the delivery of services. The review may
indicate the need to build up new roles and new talents by improved targeted
workforce enlargement.
The second component is to focus on the structure necessary to maintain
this
‗new‘ workforce. In particular, it points out the significance of the efficient
combination of workforce planning and learning investment, with the service
aspiration of the organisation.
Finally, the structure suggests a number of alterations to management
processes, with a demanding focus on encouragement of an environment of
worker commitment and empowering.
1. Point out the responses that outline the workforce planning process in the
above case?

for Employment Studies, 1996.
2. Human Resource Management, Biswajeet Pattanayak, Prentice Hall of India

Pvt. Ltd., 2001.
3. Human Resource and Personnel Management, Aswathappa .K., 2nd Edition,
Tata McGraw-Hill Publishing Company Ltd., 1999.
6
Basics of Human
Resource UNIT 3: PROCESS OF HUMAN RESOURCE
Planning
PLANNING
Unit Structure
3.1 Introduction
3.2 Workforce Planning Process - within the Annual Planning and Budget
Review Process
3.3 Preparation Questions for the Meeting
3.4 Developing the Annual Workforce Plan

3.5 Changes to the Staffing Profile Outside the Planning Process
3.6 HR Planning: Tom Casey Model
3.7 CEO Compensation
3.8 Present Scenario of HR Planning Process
3.9 Building Human Resources Strategic Planning
3.10 Process and Measurement Capability: Using Six Sigma as a Foundation
3.11 Gartner EXP Says a Strategic Workforce Planning Process is Key to

3.12 Let Us Sum Up
3.14 Glossary
3.15 Assignment
3.16 Activities
3.17 Case Study
6
Process of
3.0 Learning Objectives Human
Resource
Planning
 Workforce planning process.
 Developing the Annual Workforce Plan.
 Present Scenario of HR Planning Process.
 Building Human Resources Strategic Planning.
3.1 Introduction
An effective workforce plan is an essential tool to identify appropriate
workload, staffing levels and justify budget allocations so that organisations can
meet their objectives.
Workforce planning is an organized procedure to recognize the human
capital essential to convene organisation‘s objectives and developing the policies
to fulfil these requirements.
Workforce planning entails:
 A methodical procedure that is incorporated, systematic and continuous.
 Realising of the human assets needed to acquire the organisation‘s

objectives that encompass the estimation of the quantity and competencies
of employees and the period they will be needed.
 Initiating policies that is needed to fulfil the requirements which contains

making out activities that ought to be taken to maintain the quantity and
types of employees that the business requires.
 It can be said that the effectual work force planning is the going on process
ensuring the exact number of people in precise jobs at the exact time.
6
Basics of Human
Resource 3.2 Workforce Planning Process - within the Annual
Planning Planning and Budget Review Process
Workforce planning enables the HR manager to cope with capacity
insufficiency and excess. By studying the business cycles and responding in
accordance with the customary workforce, HR can act instead of just react.
Human Resources planners have different reasons for making and executing
their business plans. Two major reasons can be:
 The first reason is to take care of the adverse impact of the boom-and-bust
cycle on the management of organisation and operation of the HR
department itself.
 The second and perhaps more important reason for future planning are to
manage the talent pipeline for the organisation in a better way. It is crucial
to maintain both that pipeline and the talent ‗inventory‘ at the right levels,
because an imbalance can hamper business growth.
Workforce planning is a medium to long term strategy and its processes are
expected to align planning, risk and budgets to integrate these into both annual
and longer-term planning cycles. This planning lets you strike the right balance in
workforce deployment, aligning strategic objectives with cost predictability and
maximizing efficiencies within budgetary constraints. In preparation for the
planning and budget meetings held each year, the HR planner creates a workforce
plan to outline the projected human resource issues that will be encountered in the
next 1-3 years and describes the strategies selected to respond to these issues.
Major activities, which are taken care of during this annual process are:
 Preparing for the annual meeting
 Developing the Annual Plan, according to the business goals
 Changes to HR staffing profile, as per business requirements

1. Work force planning takes care of the adverse impact of the boom-and-bust
cycle on the management of organisation and operation of the HR
department itself.
a. true
b. false
6
Process of
2. The HR planner creates a workforce plan to outline the projected
human Human
Resource
resource issues that will be encountered in the next 1-3 years.
Planning
a. true
b. false
3.3 Preparation Questions for the Meeting

Annual planning and budget meeting are the significant activities of HR
planning process. The questions below will direct the debate at the annual
Planning and Budget Meeting to determine the anticipated future necessities:
 In which phase of the business the planning of HR is required?
 How will the business evaluate the development of the organisation in the
last year?
 What is the additional support that the organisation needs?
 What are the differentiated plans for the coming year?
 How will the business outline of the staff pattern in the coming 3 years?
 What are the methods adopted by the HR to accomplish its goals?
 The strategies and planning in progress for developing workforce?
 The professional growth and management development strategy that the

organisation is going to consign from the next year?

1. The question, how will the business outline the staff pattern in the coming 3
years, will direct the debate at the annual Planning and Budget Meeting?
a. true
b. false
2. The question, how will the business evaluate the development of the
organisation in the last year, will direct the debate at the annual Planning
and Budget Meeting.
a. true
b. false
6
Basics of Human
Resource 3.4 Developing the Annual Workforce Plan
Planning An annual workforce plan is every business‘s requirement. To develop such
plan, certain procedural steps need to be followed. They are:
1. Audit of the current workforce: Identify the number of staff, job roles,
work patterns, grades, etc. as well as workforce characteristics, such as
length of service and stability, gender, ethnicity and disability, linguistic
profile, skills and qualification profile.
2. Investigation: Investigate if workforce is looking at the longer-term context

of service and organisation is making strategic and business plans. The most
successful organisations concentrate on a manageable number of key issues
and address them in sequence rather than all at once. In addition, there can
be resource implications that will constraint the choices available. For this
reason, prioritisation is sometimes a difficult but necessary step.
3. Forecasting: The forecasting process consists of two halves: forecasting the

future demand for staff and forecasting the staff team that the business will
inherit.
The process of forecasting future demand is about specifying the
numbers of staff and the skills, knowledge or competencies needed or
required within the workforce in order to deliver the services of the future.
This is closely linked with the process of workforce development.
The other part is forecasting the future staff team inherited by
business. HR will be required to identify total numbers and a look at staffing
movements such as retirement and natural wastage such as death.
6
4. Planning: Having identified gaps and surpluses, HR comes in a position to Process of
develop a workforce plan that will help it travel from the present to the Human
future scenario. This is a long-term plan rather than an annual plan as it is Resource
not possible to get where the business wants, in a short time. It should Planning
complement and support the long-term plans for service and put into
practice corporate values and objectives of the organisation.
5. Implementation: The workforce plan should be incorporated into annual

plans for teams or workgroups and should also be incorporated into their
individual plans. When implementing staffing plans, the planner will be
needed to ensure that right results are achieved. The results will be
measured in terms of efficiency (doing the job right) and effectiveness
(doing the right job). As the strategies, plans and actions will be
implemented, following them to ensure that things take place according to
the plans and that anticipated gaps and surpluses are being addressed is very
important.
Workforce planning, because it provides a framework for shorter-term
decisions, should precede the annual planning and budgeting process, which
generally starts at the beginning of the calendar year. It is best done as part of a
regular planning cycle that involves service planning and budgeting.

1. Identifying the number of staff, job roles, work patterns, grades, etc. as well as workforce characteristic
Investigation c. Forecasting
Audit of the current workforce
The most successful organisations concentrate on a manageable number of key issues and address them in
true
false
6
Basics of Human 3. The forecasting process consists of two halves: forecasting the future
Resource demand
Planning
for staff and forecasting the staff team that the business will inherit.
a. true
b. false
3.5 Changes to the Staffing Profile Outside the

Planning Process
Recently many of the organisations have started to promote the project form
of work in order to fulfil their objectives. So it becomes important that the usage
of scarce resources and alignment of initiatives should be effectively coordinated.
This coordination needs should be done over comparatively extensive stages of
time to provide the chance to the business to guide itself into the opportunities.
Every staffing profile illustrates two things:
1. How the entire work in each project is distributed in accordance with the
competency or authority
2. How the sum of work distributed to an authority is distributed over time.
The staffing profile is a combination of the project team at any specified

point in the project life cycle. Formation of the staffing profile involves the
association and documentation of the project team. It involves planning the tasks
according to the workforce availability. It evidently describes the role of every
associate in the project. Several occasions come when the skills required to
complete the project will not be available within the organisation and was not
included in the HR planning. By allowing proper resources when and where
needed, the staffing profile has to help the critical paths of the project to go on. So
the tasks which are struggling without adequate and skilled human resources are
changed according to the present requirement. This is done by ensuring that the
manner of utilising the staff for the completion of the project abides by the
conventional rules, regulations and policies.

1. Formation of the staffing profile involves the association and documentation
of the project team.
a. true
b. false
6
Process of
2. By allowing proper resources when and where needed, the staffing profile Human
has
Resource
to help the critical paths of the project to go on. Planning
a. true
b. false
3.6 HR Planning: Tom Casey Model

According to Tom Casey rather than leading to a situation of unrest in any
organisation, human resource managers must be practical and should identify how
significant it is to take care of all employees well and consider whether convinced
employee groups are being taken for granted.
Tom Casey points out numerous precise challenges in relation to the human
capital management. He further states that the company‘s declaration that they are
the preeminent place to work does not make it a company that is most preferred.
Casey believes that top edged organisations are concentrating on generate a
positive landmark in segments like recruitment, worker growth, appreciation and
rewards, and talent back-up. The popular strategy is the hiring of the team, which
concentrate on alliance and exposes employees from diverse generations to the
hirepractice. These diverse generations are
Traditionalists
The generation Traditionalists are those born between 1928 and 1945, which
lived in homogeneous family unit and neighbourhood. This generation is well-
known for its increase in white collar jobs and a strong obligation to advanced
learning.
Boomers
This generation are the individuals born between 1946 and 1964, in the era
of the Civil Rights movement, the Vietnam War; assassinations of the leaders like
John F Kennedy Robert Kennedy and Martin Luther King .Boomers are more
doubtful of power and are aggressive by character, but have a strong commitment
of creating a better world.
Generation X
Those born between 1964 and 1980 are called as Generation X. They
witnessed the Cold War and the collapse of the Berlin Wall. The most noted
7
Basics of Human element of this generation is their experience of high divorce rates between their
Resource
parents and losing of employment of their parents due to recession period.
Planning
Generation Y
The individuals born after 1980 come under the Generation Y, which is
characterised by challenging conventional hiring and recruiting practices. The
companies are struggling to manage these generation groups and it is the largest
group. Gen Y's are very family-oriented, and the way to increase their
involvement is to engage their family in the recruitment process. As Tom Casey
stated formerly, companies are still outlining to find out a correct method to
manage Gen Y employees. He points out that the 1990s stock options were an
attempt in this direction to attract these employees. Tom Casey advises that HR
experts require looking at this subject openly and admitting that their organisation
will need to get into the education of their employees. Hence the Companies will
require filling up a greater education role by teaching skills to its employees by
means of training and development.
According to Casey the workforce planning is a main concern for HR as it‘s

very difficult to deal with multigenerational work force. The HR requirements
will be ahead of the employee shortages by focusing on the workforce planning.
The organisations will be on a risk if their HR departments are not taking it
seriously. According to Casey, HR must be spotlighting on crucial parts such as:
education and growth, appreciation and compensation, ability achievement, and
workforce planning. Gen Y workers will not have the identical intensity of
obligation to occupation that Traditional and Boomers have. Whereas Boomers
take effort and perceive work as a wing of their existence, Gen Y workers don‘t
have any aim of defining themselves through their jobs. Organizations have to get
used to new workplace approaches regarding the role of work. Many Boomer
parents are intensely conscious that their own kids have selected careers that
permit an enhanced stability among the work and life. Gen X and Gen Y workers
usually are not inactive; they just have a dissimilar set of precedence than their
fathers with respect to the work. Gen Y shall come into occupations like
consulting and investment banking that have usually insisted whole assurance and
extended hours. But still the financial rewards that attracted the employees into
similar fields are perhaps not sufficient to acquire Gen Y to sign over their
existence. Gen Y needs to do an excellent job for their company, but employment
is not the only thing they want to do.
7
Tom Casey states that the management of Human assets is the challenge that Process of
the HR managers are facing now. He provides three conditions that are significant Human
constituents of upcoming workforce planning programme: Resource
Planning
1. Distinguish all four generations of group in the workforce.
2. Admit that one-size-suits-all organization is not going to work.
3. Accept logic of importance - choose for "snow" and "elegance later‖.

Casey believes that top edged organisations are concentrating on generate a positive landmark in segments
true
false
The generationare those born between 1928 and 1945, which lived in homogeneous family unit and neig
traditionalists c. generation x
boomers
3. The generationare the individuals born between 1946 and 1964, in

the era of the Civil Rights movement, the Vietnam War.
boomers
4. The individuals born after 1980 come under thewhich is

characterised by challenging conventional hiring and recruiting practices.
boomers d. generation y
7
Basics of Human
Resource 3.7 CEO Compensation
Planning Compensation of a CEO often depends upon the level of responsibility
bestowed upon him.
Though the large companies have a fixed policy of the remuneration of the
CEO, startup companies may struggle to meet the compensation of the CEO as for
them it‘s a matter of existence. But a capable CEO will be obligatory for their
organizational development. The development of the business will be depending
upon the ability and management skill of the CEO to attain the organizational
goals. So the compensation will be based on the individual‘s inherent value and
capability. So the startup companies also will have to include the basic
compensation that corresponds with the already established ones. The common
constituents of the CEO compensation may comprise the basic salary, bonus,
equity participation if any, separation arrangements and perks. Most of the startup
companies offer bonus or equity participation to motivate the employees including
the CEO of the company. Now days the equity awards are taking up a major part
of the CEO compensation.
In smaller entrepreneurial firms, it becomes the responsibility of the
CEO/founder to attract, retain and motivate bright, young and technically able
people. In large multinational companies, the impact of people on the
competitiveness of businesses has become increasingly clear and HR
professionals are made to help in creating strategic clarity across the organisation.
The Long- and short-term compensations are often converted into stock
awards, or stock options. The performance based and target based restricted shares
are also prevailing in the CEO compensation packages. The company often offers
CEOs the equity ownership percentages (after an IPO) to attract and retain
executive talent during the development stage.
Established objectives can be biased to replicate goals that are most
significant to the monetary benefits of the business and qualifiable objectives to
the CEO performance .Relying upon the policies of the company, priority can be
given to the bonus plans to promote accomplishment of various business policies.
While proposing the compensation scheme of the CEO, it is very important
that a customized composition that exclusively suits the organisation should be
selected. As the profession of CEO has developed into more and more complex,
the mission of determining the structure of compensation packages of the CEO
that will be aggressive has a significant role in the success of every business. This
compensation package should have a significant retention feature and should help
to drive the business performance.
7
Process of
Check your progress 6 Human
Resource
1. Compensation of a CEO is not fixed according to the level of responsibility Planning
bestowed upon him.
a. true
b. false
2. The development of the business will be depending upon the ability and
management skill of the CEO to attain the organizational goals.
a. true
b. false
3. While proposing the compensation scheme of the CEO, it is very important

that a customized composition that exclusively suits the organisation should
be selected.
a. true
b. false
3.8 Present Scenario of HR Planning Process

Recently many of the start-up companies had a fate to wind up their
business. The reasons pointed out were the lack of measures to ensure the
effective hiring process.
It shows that the human resource professionals also must be a part of the
strategic planning process of the business. This is because they help to enhance
the business image and contributing their time to incorporate easy processes that
can offer higher management with important data which can make prospective
impacts on decisions that may be taken. Very few organisations find out time to
classify qualifications for people and link these qualifications to their business
objectives.
Globally the study of the work force is done to plan the decisions related to
service potentials, situation of the unemployment rate, type, diversity,
demographics, and recommendation related to how the human resource needs of
the diverse areas can be sustained along with the quality and quantity.
7
Basics of Human The concept of HR planning is new and innovative and hence there is a
Resource
scope of extensive study and research. Tremendous increase in the world
Planning
population has made this study more complex as it also increased the proportion
of unemployment, monetary recession and decline and labour cost. This has made
the business to rethink about the HR planning to make more scientific.
Due to the rapid change in the economics there is a continuous demand for
here is a huge demand for up to date employees. And thus the significance of the
HR planning is not limited to the traditional recruitment, staffing and retaining of
the work force. The know-how of the earlier period is neither existing nor being
required by the current generation. A study even shows that even the productivity
between the people is different. It‘s relevant that the management should be well
aware of the existing staff pattern. Resources Information System will help the
management to predict these phenomenons. The software used for online data
entry, data tracking and which fulfils the statistical information requirements of
the Human Resources, payroll management and accounting jobs in a business is
called Human Resource Information System (HRIS).The modern HR rely upon
the succession planning to forecast transfers and promotions further taking
adequate measures to maintain and replace the existing organisational talents.

Tremendous increase in the world population has made the study of HR planning more comple
true
false
Theis a software or online solution for the record entry, information tracking and statistical inf
administration and accounting jobs in a business.
HRMS c. HIRS
HRIS
7
Process of
3.9 Building Human Resources Strategic Planning Human
Resource
To be most effectual, the planning procedure for an HR group should be
Planning
generally inclusive of domestic clients and stakeholders. An elegant
comprehensive planning process can achieve quite a lot of things. Grouping is the
generally understood significance of strategic planning. The plan gives an idea
how the functions of HR are grouped to sustain the organization‘s policies and
objectives. The plan also makes certain that the individuals and roles within
human resources are grouped efficiently to achieve same objectives. But to
improve the credibility of the organization, it‘s essential to invite the business into
the companies work instead of keeping them out. A comprehensive planning
process that involves clients will help to educate them about the company‘s
objectives and the significance of the HR department of the company will be
appreciated.
There are numerous accurate methods to execute strategic planning and it

will differ according to the organisation. In spite of the definite approach chosen
by an organisation to achieve the objectives the process must comprise the
subsequent factors.
 Wide-ranging participation of the individuals inside the organisation. The

information can be gathered by one to one discussion or an internal survey.
Depending upon the capability of the HR department of the organisation, it
can also use an external consultant for the data collection.
 Response from the HR personnel on the strengths and weaknesses of the

department. This also can be handled in many ways. The important factor is
to make sure that the HR personnel‘s mainly those who work on the front
lines with workers all the day has a contribution in the planning and feels
that he is heard.
 Strategic data from every business unit or department/division about their

upcoming plans, and the key challenges the workers expect for their
company in common and regarding their individual aptitude. It‘s significant
to utilize time on individual discussions on the circulated written strategic
plans. The discussions are a different way to build an experience that the
workers too are incorporated in the development and to make sure that the
plan replicates the significant needs of the organisation.
7
Basics of Human
 Effective communication of the plan back to those who took part in the
Resource
Planning development and other important stakeholders. In the communication, it
should be repeated how the plan reveal their contributions and is intended to
maintain their accomplishment.
Though the HR process is time consuming and tedious, if executed

perfectly, a comprehensive strategic planning method can guide the HR team from
being alleged as a secondary in the business to an up-and-coming strategic leader.

1. Effective communication of the plan back to those who took part in the
development is not so helpful.
a. true
b. false
2. Wide-ranging participation of the individuals inside the organisation

is helpful for HR planning.
a. true
b. false
3. The HR plan gives an idea how the functions of HR are grouped to sustain
the organization‘s policies and objectives.
a. true
b. false
3.10 Process and Measurement Capability: Using Six

Sigma as a Foundation
The need for an efficient quality management is very essential in this era of
consumer responsiveness. Thus the Six Sigma and lean strategies have turn out to
be implanted in both the public and private sectors. Reports connecting lean and
Six Sigma hybrids to competence and output attainment are a basis of inspiration
for setting up the lean revolution. The main obstacle of the success of Six Sigma
is the unwillingness to encourage a nonstop development state of mind right
through an organization. The senior management will have a main role in
7
supporting the process of combination Six Sigma strategies with the business Process of
culture. To learn to expand Six Sigma applications can aid leaders to add a Human
broader perceptive of the general functioning of an business and assist to compel Resource
Planning
enhanced business results as they achieve talent at discriminating the comparative
worth of some Six Sigma dimensions.
Six Sigma is a set of system and tools for course development. Six Sigma
seek out to perk up the quality production of process by recognizing and
eliminating the reasons of mistakes and reducing inconsistency in the industry and
business processes. The important modernism of Six Sigma entails the complete
"professionalizing" of quality management tasks. Before the introduction of Six
Sigma, quality management prevailing in the organisations were consigned to the
production level and to statisticians in a detached quality department. The roles
that the Six Sigma identifies for its successful functioning are:
 Executive Leadership comprises the CEO and other associates of top

management. These people are accountable for the effective
implementation of Six Sigma. They also authorize the other responsibility
possessor with the independence and assets to explore new ideas to advance
developments by exceeding departmental obstacles and overcoming inbuilt
conflict against change.
 Supporters take accountability for Six Sigma execution across the business
in an incorporated way. The managerial leadership represent them from
upper management. Champions also operate as guides to Black Belts.
 Master Black Belts, accepted by Champions, execute as home tutors on Six

Sigma. They give 100% of their endeavour to Six Sigma. They facilitate
Champions and direct Black Belts and Green Belts. Collectively with the
statistical everyday jobs, they use their time on make sure reliable function
of Six Sigma across diverse tasks and departments.
 Black Belts function below Master Black Belts to pertain Six Sigma method
to definite projects. They dedicate 100% of their esteemed effort to Six
Sigma. They principally focus on Six Sigma project implementation and
individual leadership with exceptional tasks, whereas Champions and
Master Black Belts centre to decide projects or functions for Six Sigma.
 Green Belts are the workers who perform Six Sigma execution along with
their other work responsibilities, functioning below the direction of Black
Belts.
7
Basics of Human
Planning
1. The main obstacle of the success of Six Sigma is the unwillingness to
encourage a continuous development state of mind right through an
organization.
a. true
b. false
2. Six Sigma is a set of system and tools for course development to perk up
the quality production of process by recognizing and eliminating the
reasons of mistakes and reducing inconsistency in the industry and
business processes
a. true
b. false
3.11 Gartner EXP Says a Strategic Workforce

Planning Process is Key to Improving an IT
Organization's Effectiveness
Gartner, Inc. (NYSE: IT) is the number one, international information
technology research and consultative company. The company conveys the insight
which is technology oriented which enables its clients to make necessary and
accurate decisions. Starting with CEOs and senior IT leaders in business and
government agencies, to the business managers in telecom companies and
professional services firms, to expertise investor, Gartner is a precious partner to
clientele in just about 10,000 diverse enterprises internationally. Throughout the
resources of Gartner Research, Gartner Events Gartner Executive Programs and
Gartner Consulting, Gartner works with each client to explore, evaluate and
appreciate the industry of IT inside the perspective of their individual
responsibility. Gartner was founded in 1979, and has its headquarters at Stamford,
Connecticut, USA, and with over 6,800 associates, who include consultants and
more than 1,500 research analysts and clientele, spread in 90 countries.
Chief information officers (CIOs) are facing a lot of work pressure in order
to enhance the overall efficiency and contribute to the project development and
productivity. In order to achieve this, it is essential that the organisations should
implement a strategic workforce planning process to support IT based human
resources and execute business and IT policies, in accordance with Gartner
7
Executive Programs (EXP), a unit of Gartner, Inc. A strategic workforce planning Process of
procedure that coordinates the business and IT strategies make sure that the IT Human
organizations have the accurate number of personnel with accurate skills and Resource
Planning
aptitudes in the precise responsibility at the accurate time.
According to Lily Mok, the research director of Gartner EXP‘s Human
capital management capital content development team, the workforce supply
challenge, along with the frequent change in demand of IT workforce competence
give an ultimate prospect for CIOs and human resources (HR) managers to start
the strategic workforce planning focusing on long-term.
Ms. Mok further stated that the Workforce planning is more and more
identical to organizational strategic planning in the organizations where human
capital is realised as a crucial factor for success.
An effectual strategic workforce planning process converts the organisation

and IT objectives into the present and upcoming IT labour force needs and
strategies to accomplish them. It facilitates business to be practical against being
thoughtless in deal with business needs. The method naturally comprises of four
main steps:
 Align labour force policy with IT policy – The workforce plan‘s first
focus is on core competencies and ensuring that the labour force plan gives
support to the strategic goals of the business. Its subsequent focal point is on
organising the practical goals or the capability to assign the precise resource
in the accurate place at the correct time to maintain the IT strategy. The
third focal point is on forecast for the future, and the final focal point is on
assuring that the labour planning done on a proper level in accordance with
the organization.
 Carry out Workforce Analysis to establish the Gap – Workforce analysis
is the procedure of studying the supply and demand of the labour force and
finding out the gap or difference between the two. There are diverse
methods which can be used to predict the labour force supply and demand.
It is significant to recognize the advantages and disadvantages of every
method before spending the time and effort on it. The different levels of
managers and stakeholder related to IT finance and HR should be occupied
right through this process to make sure higher level of dedication and
possessions.
8
Basics of Human  Execution of a Workforce Plan to seal the Gap – By means of the
Resource
conclusions of the workforce analysis, the first step is to prepare methods
Planning
for staffing, retention, organising change, growth, outsourcing, balancing
the supply and demand, taking steps to maximize the worth of employee.
 Develop the efficiency of Workforce Planning – The successful workforce
planning is not only just having a good plan; but also the ability to regularly
monitor the progress and modify the work force plans accordingly where
it‘s essential. IT and HR managers can enhance their workforce planning
capability and aptitudes by making sure that; they get management
dedication from the beginning , they describe collective tasks, and they
frequently measure, authenticate, account and execute the in progress
developments.

1.is more and more identical to organizational strategic planning in
the organizations where human capital is realised as a crucial factor for success.
Workforce planning c. Succession planning

Recruitment planning
2. According to whom the workforce analysis is the procedure of studying the

supply and demand of the labour force and finding out the gap or difference between the two
Tom Casey c. Lily sam

Lily Mok
3.12 Let Us Sum Up

To conclude, the workforce planning recognizes the human capital that is
needed to fulfil the organisation‘s objectives and formulating the policies to fulfil
these requirements. Workforce planning is a medium to long term strategy and its
processes are expected to align planning, risk and budgets to integrate these into
both annual and longer-term planning cycles. This planning helps to maintain the
accurate balance in workforce deployment, aligning strategic objectives with cost
predictability and maximizing efficiencies within budgetary constraints.
8
An annual workforce plan which is a mandatory need for every business is Process of
developed by following certain procedural steps such as the audit of the current Human
workforce, investigation forecasting, planning and implementation. According to Resource
Planning
Tom Casey top edged organisations are now a day‘s concentrating on segments
like recruitment, worker growth, appreciation and rewards, and talent back-up.
And the most popular strategy in hiring is to concentrate on a composition of
diverse generations. These diverse generations are Traditionalists born between
1928 and 1945, Boomers born between 1946 and 1964, Generation x born
between 1964 and 1980; and Generation y born after 1980.Compensation of a
CEO often depends upon the level of responsibility bestowed upon him. Though
the large companies have a fixed policy of the remuneration of the CEO, start-up
companies may struggle to meet the compensation of the CEO as for them it‘s a
matter of existence. So many start-up companies offer bonus or equity
participation to motivate the employees including the CEO of the company and
recently the equity awards have become the part of the CEO compensation.
It‘s evident that the human resource also must be a part of the strategic
planning process of the business. The concept of HR planning is new and
innovative and hence there is a scope of extensive study and research. Moreover
the increase in the world population has made this study more complex due to the
increase in the proportion of unemployment, monetary recession and decline and
labour cost.

Answers: (1-b), (2-a), (3-a)
8
Basics of Human
Planning
Answers: (1-a), (2-a), (3-b), (4-d)
Answers: (1-b), (2-a), (3-a)

Answers: (1-b), (2-a), (3-a)
check your progress 10
Check your progress
11
3.14 Glossary
1. Adverse - Unfavourable
2. Anticipate - Expect
3. Ethnicity - Traditions
4. Conventional - Conservative
5. Inherent - Natural
6. Aggressive - Hostile
7. Incorporated - Integrated
8. Reveal - Disclose
9. Implanted - Fixed
8
10. Obstacle - Barrier Process of
Human
11. Clientele - Customer
Resource
12. Precise - Exact Planning
3.15 Assignment
As an HR Manager, what factors would you like to consider for workforce
planning?
3.16 Activities
Give sample questions for annual planning meeting.
3.17 Case Study

Excellent Academy for Technical Studies a newly started technical
education institute at Ernakulum was successfully stepping towards its second
academic year. Of the nine total faculties needed, the management appointed only
four permanent faculties and there were five part time faculties. The principal and
the course coordinator, Dr Hameed had an experience of 35 years in the technical
education field and was a retired Deputy Director for technical education of
Kerala Government.
The management had to pay one lakh per month as his remuneration and
this was often a discussion in the management meetings. Many members in the
management committee used to argue that any one from the permanent faculty
should be appointed as the course director and save at least 75000 per month. But
the majority were against it and advocated about the good- will they institution is
getting from Dr Hammed is far more than his remuneration.
1. Was the decision of appointing Dr Hammed a wise one? As a start-up

institution comment on the HR planning made?
8
Basics of Human
Resource 3.18 Further Readings
Planning 1. Human Resource Planning: An Introduction, Reilly P. Report 312, Institute
2. Human Resource Management, Biswajeet Pattanayak, Prentice Hall of India
Pvt. Ltd., 2001.
3. Human Resource and Personnel Management, Aswathappa. K., 2nd Edition,

8
Block Summary
A detailed discussion on the practical benefits of the HR planning which
helps to determine the strength of the work force to be employed, retaining the
skilled staff pattern and formulating an effective downsizing program was
included in this block. The HRP process, the strategic human resource planning
model and the methods to plan the total workforce is also discussed in this unit.
The block explained the strategies, process analysis, planning process along with
the tasks and activities related to the HR planning. It also helped to understand the
importance of the workforce planning process which is included by the
organisations in their annual planning. The method for developing the annual
workforce plan was also discussed in detail. Different topics such as Tom Casey
Model of HR planning, CEO compensation and using Six Sigma in order to
measure the capability of the work force helped to add knowledge of the subject.
Human resource planning is considered as an integral part of business

planning as apt work force size often determines the efficiency of an organisation.
Strategic Human resource planning helps to connect the human resource
management to the business plan. The key objective of the purpose of Human
Resources Diagnostics is to reconsider the plans, composition and services
required of the HR Department in accordance to the needs of the organisation.
The database of HRP provides comprehensive skill inventory, which facilitates
the organization to take decision in terms of promotion, demotion, transfer, etc. of
employees. It also helps to identify the underutilized or surplus workforce. As a
step towards the success every organisation should formulate long term and short
term plans. HR planning goes through four stages which are formulation,
Development, Implementation and Evaluation.
HR planning helps the organisation to determine the critical areas that

should be focussed in the labour force deployment in the early stage itself,
enabling them to be corrected timely. Hence the HR planning gives the data of the
overall human resource activities, and also facilitates the HR to understand and
support the organisation towards its objectives. Top management support and
participation in the workforce planning is essential and must get its equitable
position hierarchically. An effective workforce plan is an essential tool to identify
appropriate workload, staffing levels and justify budget allocations so that
organisations can meet their objectives. According to Tom Casey many
organisations concentrate on recruitment, employee development, appreciation
and rewards. Moreover the diverse hired team will be a combination of the
generations called Traditionalists, Boomers, Generation X, and Generation Y. It‘s
8
Basics of Human often seen that the start-up companies may struggle to meet the compensation of
Resource
the CEO as for them it‘s a matter of existence.
Planning
But a capable CEO will be obligatory for their organizational development.
So the CEO compensation package should have a significant retention feature and
should help to drive the business performance. Tremendous increase in the world
population has made the research on HR planning more complex as it also
increased the proportion of unemployment, monetary recession and decline and
labour cost. Six Sigma helps to improve the quality production of process by
recognizing and eliminating the reasons of errors and dropping unpredictability
rate in the industry and business processes.
8
Block Assignment
1. What is an HR Management System?
2. What are the Benefits of HR Planning?
3. What is Strategic HR Planning?
4. Explain the concept of Integrating HR Strategy to the organisation?

Describe HRP Process?
5. Human Resource Diagnosis.
6. Micro/Macro Level Advantages of Human Resource Planning.

7. Key Points for Successful HR Planning.
8. Strategic Advantages of HR Planning.
9. Activities included in HR Planning process.
10. Annual HR Plan development.
11. Strategic Workforce planning process.
12. Question preparation for the meeting.
13. Role of Gartner, Inc. in workforce planning.

1. Explain how Annual planning and budget meeting is one of the key
activities of HR Planning process.
2. Give a brief account of present scenario of HR Planning Process.
3. Do you think that planning is very much important in our everyday
activities? Justify your answer in detail.
4. Explain the process and measurement capability using the Six Sigma as a
foundation?
5. Explain in detail HR Planning Process for Corporate.
6. Describe about the present scenario of HR Planning process?
7. How should an organisation determine the number of employees at a new

location and retain the highly skilled one?
8. How are effective downsizing programs managed?
8
Basics of Human
Enrolment No.
Resource
Planning 1. How many hours did you need for studying the units?
Unit No 1 2 3 4
Nos of Hrs.
block:

………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
8
which ought to be
brought within
9
Chharodi,
Ahmedabad-382 481.
HUMAN RESOURCE
PLANNING PGDHR-202
BLOCK 3:
HUMAN RESOURCE IN
INDUSTRIES

Ahmedabad

Pune
Editorial Panel
Author
Language Editor

Ms. K. Jamdal
Ms. Lata
Dawange Ms.
Pinaz Driver
Mr. Kiran Shinde
Mr. Prashant
Tikone Mr. Akshay
Mirajkar

Acknowledgment

introduced.
PREFACE
understanding.
Contents


organization,

Environmental Scan

Benefits
Ambedkar
Open
University
UNIT 1
HUMAN RESOURCES IN SMALL SCALE INDUSTRY 03
UNIT 2
HUMAN RESOURCES IN LARGE INDUSTRY 33
UNIT 3
MODERN METHODS OF HUMAN RESOURCE PLANNING 62
BLOCK 3: HUMAN RESOURCES IN
INDUSTRIES
Block Introduction
International pressure on corporates has lead for the demand of a new
model of work culture further leading to rethink, improve and reform the
organizations to withstand rigid competition or risk from the business. Current
business organizations are rigorously determined to create themselves and receive
utmost share in the international market. Large scale businesses are giving
enhanced HR practices than middle scale or small scale businesses. The cause for
this verdict may be due to the reasons like disparity in the assets, know-how
available, number of trained personnel. Human resource procedures of a business
are relevant for its survival. So they should be competently thought of and firmly
implemented. Whether large, medium or small businesses all of them need to
assign proportionately sufficient budget for the accomplishment of HR practices.
Primarily HR was seen as a support function and used to majorly concentrate on
hiring and managing the exit of an employee. HR‘s key performance indicators
were based purely on hiring numbers. Now, with the changing business
environment and more exposure to HR functions via education, the role has
emerged to be a business partner.
This block will provide the awareness about the HR practices that are to be
implemented in the small scale business. Role of HR planning and the methods to
overcome or reduce the cost of HR practices such as outsourcing is discussed in
detail in this block. The block also gives the information about the essentials of
an effective HR planning. The block also will give a description about the
concept of manpower forecasting. The block also comprises with the modern man
power planning methods.
Unit1 explains about the small industry and the role human resources in it.
General interview guidelines and the how to include the human resource
planning in a business Plan is discussed in detail. The benefits outsourcing the
HR functions in small businesses are also included in this block. The unit also
provides knowledge about the changing Organisational Structures and work
patterns in ―SHAMROCK ORGANISATIONS‖.
Unit 2 explains the purpose of human resource planning in detail. It also

provides the results and inputs of human resource planning. Purposes and Goals
1
Human in HR planning along with the process analysis, tasks and activities are discussed
Resource in
industries in detail. The topics such as HR planning for corporates, advantages for HR
planning, key points for successful HR planning and the drivers for human
resource planning are included in this unit. The unit ends up with a discussion on
meeting the challenge of HR Planning using Clarity 6.0.Unit 3 explain about the
modern manpower planning and the role and content of manpower planning. The
unit also comprises of the forecasting future manpower movements and the topics
such as environmental scanning and human resources environmental scan.
Block Objective
 Small scale industry.
 The need to include human resource planning in your business plan.
 Manpower forecasting.
 What is HR planning process analysis?
 The tasks and activities related to HR planning.
 The need for the HR planning for corporates.
 HR Environmental Scan
Block Structure
Unit 1: Human Resources in Small Scale
Industry Unit 2: Human Resources in Large
Industry
Unit 3: Modern Methods of Human Resource Planning
2
UNIT 1: HUMAN RESOURCES IN SMALL
SCALE INDUSTRY
Unit Structure
1.1 Introduction
1.2 Introduction to Small Industry
1.3 Human Resource in Small Business Organisation
1.3.1 Staffing
1.3.2 Training and Development
1.3.3 Policies and Procedures

1.3.4 Recordkeeping
1.3.5 Wage and Salary Administration
1.4 General Interview Guidelines
1.5 Human Resource Planning in Your Business Plan
1.6 Outsourcing HR Reaps Benefits for Small Business
1.7 Changing Organisational Structures/Work Patterns in “SHAMROCK

ORGANISATIONS”
1.8 Training in Small Industries
1.9 Let Us Sum Up
1.11 Glossary
1.12 Assignment
1.13 Activities
1.14 Case Study
3
Human
Resource in 1.0 Learning Objectives
industries
 Training and development in small industries.
 The guidelines for interview.
 The work patterns in shamrock organizations.
 What is the benefit outsourcing of human resource in small scale

industries?
 The role of human resources in small business organisations.
1.1 Introduction
The small-scale business sector has been a major contributor to our
country‘s growth. Since the time of independence, this sector has huge growth
prospect in India with its wide range of products. With 40 percent share in total
industrial output and 35 percent share in exports, the small-scale industrial sector
in India has a bigger role to play in increasing the country‘s Gross Domestic
Product (GDP).
1.2 Introduction to Small Industry

A very basic definition of small-scale industrial classified it into two
categories- first one used power with less than 50 employees and second was the
other group, which did not use power and had an employee strength of more
than
50 but less than 100. However, over the time, other criterions were introduced
like capital resources invested on plant and machinery buildings. They became
the primary criteria to differentiate the small-scale industries from the large and
medium scale industries. An industrial unit can be categorized as a small- scale
unit if it fulfils the capital investment limit fixed by the Government of India for
the small-scale sector.
The latest definition, which is effective since December 21, 1999, describes
small-scale industries as the functional unit of a business which satisfies the
following conditions:
―There should be a limit of Rs. 10 million on the investment in fixed
assets like plants and equipment‘s either held on ownership terms on lease or
4
o
n
h
i
r
e
5
purchase basis‖. These units cannot be owned or controlled by any other
Human Resources
industrial unit.
in Small Scale
Some of the traditional small scale industries in India are – Industry
 Khadi and handloom
Fig 1.1 Khadi and Handloom
 Sericulture
Fig 1.2 Sericulture
 Handicrafts
Fig 1.3 Handicrafts
6
Human
 Village Industries
Resource in
industries
Fig 1.4 Village industries
 Coir
Fig 1.5 Coir
 Bell Metal
Fig 1.6 Bell Metal
These traditional small-scale industries differ from their modern

counterparts in many respects such as the basic way of operations. The traditional
units are highly labour consuming with their age-old machineries and
conventional techniques of production. Traditional machines result in poor
productivity rate whereas the modern small-scale units are much more productive
and utilise lesser manpower and more sophisticated equipment‘s.
7
The modern small industries have a wider array of products to offer. Their Human Resources
products range from simple items like Hosiery Products Garments Leather in Small Scale
products, etc. to more sophisticated items like television sets Electronics Control Industry
System and Various Engineering Products.
Hosiery Products
Garments
Electronics Control System
television sets
Various Engineering Products
Leather products
In recent times, Indian small-scale industries (SSIs) are mostly modern

small-scale industries, which have a broader list of products to be offered and
have bigger budgets to work. Common items manufactured in modern Small-
scale industries & Business enterprises in India includes rubber products, plastic
products, chemical products, glass and ceramics, mechanical engineering items,
hardware, electrical items, transport equipment, electronic components and
8
Human equipment‘s, automobile parts, bicycle parts, instruments, sports goods,
Resource in
industries stationery items and clocks and watches, etc.

1. An industrial unit can be categorized as a small- scale unit if it fulfills the
capital investment limit fixed by the Government of India for the small-
scale sector.
a. True
b. False
1.3 Human Resource in Small Business Organisation

Many small businesses operate only with an owner. They cannot justify a
dedicated HR resource. As a result, the owners manage their business obligations
internally. These obligations can include anything from writing a new contract to
tackling health and safety issues. To maintain a competitive business, it is vital
that the owners not only understand these obligations but also know how to
manage them efficiently.
The business environment today is more competitive than ever, so having a
dedicated workforce is an invaluable asset to any business. Getting the right team
in place starts with the recruitment process – it has to be ensured that the
management really understands the role that has to be filled and the type person
both the boss and the team can work with. By getting this right, the team gels so
well that not only they work hard for themselves, they work for each other too.
Once the selections are made, it is good to spend time getting to know the
employees and letting them to know the boss too. It has to be found out what
makes them tick and learn how to work with them to get the best results. The
employees should have the leadership that they require with a set of achievable
goal backed up with great motivation and training; thus giving them all the tools
they need to make their own contribution to the success of the business.
The boss sets the strategy for the business and works with the teams to
deliver on this strategy whilst constantly keeping an eye on the bottom line.
Complying with employment obligations on top of all that can sometimes just
feel like an added job to do on the list.
9
It is not surprising when it comes to managing obligations - whether it is Human Resources
calculating an employee's maternity leave or providing them with a work contract in Small Scale
- some bosses believe they need to draw in external help. They find employment Industry
obligations to be complicated and time consuming. But it can be made much
simpler by taking control of the obligations personally. That would not only save
time and money but also ensure much more control and confidence in running the
business day-to-day.
The most critical challenges faced by today's small business owners in the
management of their human resources fall within the following three categories:
1. Retention of qualified staff.

2. Prioritizing on becoming an administrative organisation instead of being a
craft or a promotional organisation.
3. Taking proper care of the special needs of a diverse workforce.
Following are the factors that increase the complexity of this
challenge
 First, a number of small businesses are experiencing a limited number of

available local applicants.
 Second, there is frequently a lack of accessibility due to limited or non-

existent transportation options to reach the workplace (mostly situated in
rural or far-flung urban areas).
 Third, small businesses are often limited in terms of the wage and benefit
packages they can offer, particularly as they compete with larger
businesses.
 Fourth, small businesses often lack advancement possibilities for existing

staff. There are either no growth opportunities or the existing staff lacks the
necessary technical expertise or administrative experience to fill the
positions when they become available.
 Fifth, the transient nature of applicants with limited qualifications may

make it difficult to retain them.
The administration of human resources in SSI involves:
1
Human
Resource in 1.3.1 Staffing
industries
The Human Resources Management (HRM) function includes a variety of
activities and key among them are:
 Developing personnel sources
 Recruiting potential employees
 Equal Employment Opportunity
 Hiring Issues
 Interview Guidelines
 New employee orientation
 Termination
Fig 1.7 Staffing
Thus, HR is involved in deciding what staffing needs are and whether to

use independent contractors or hire employees to fill these needs. Recruiting and
training the best employees, ensuring they are high performers, dealing with
hiring and new employee orientation issues and ensuring that, personnel and
management practices conform to various regulations are also important
objectives to be taken care of.
1.3.2 Training and Development

Taking staff out of work for a training course can be difficult in a small
business where people usually fulfil more than one role. But in most industries
training is essential if you want to keep up with your competitors.
1
Human Resources
in Small Scale
Industry
Fig 1.8 Training
The best training for a small business is short sessions focused on a specific
need. It usually keeps its focus upon the following,
 Initial Training.
 Training Needs Analysis.
 Preparation of training programs.
 Management and supervisory development.
1.3.3 Policies and Procedures

HR is involved in managing the approach to employee benefits and
compensation, employee records and personnel policies. Usually small businesses
have to carry out these activities by themselves because they cannot yet afford
part-time or full-time help.
Fig 1.9 Policies and Procedures
However, they should always ensure that their employees are aware of
personnel policies, which conform to current regulations. These policies are often
in the form of employee manuals, which all employees have.
1
Human
 Instituting health and safety standards
Resource in
industries
 Privacy Issues
 Handling of employee grievances
 Preparing employee handbooks
 Setting employee work hours
 Union relations
1.3.4 Recordkeeping
For many small businesses, the biggest problem is, not knowing where to
start with business records-so none are kept. An appropriate record-keeping
system can determine the survival or failure of a new business.
Fig 1.10 Recordkeeping
For small business, good record-keeping systems can increase the chances
of staying in business and the opportunity to earn larger profits. Complete records
will keep in touch with business's operations and obligations and help to see
problems before they occur. This includes;
 Maintaining individual employee files
 Maintaining all of the department records
 Preparing departmental reports for top management
1
1.3.5 Wage and Salary Administration Human Resources
in Small Scale
Industry
Fig 1.11 Salary
Wage and salary administration management is about a range of

interconnected processes that aim through both financial and non-financial
means to address what employees value in the employment relationship. It
includes:
 Job analysis
 Preparation of job descriptions
 Pay surveys
 Compensation
 Employment Taxes
 Fringe benefits

1. In the small businesses, the boss sets the strategy for the business and
works with the teams to deliver on this strategy whilst constantly keeping
an eye on the bottom line.
a. true
b. false
2. Human Resources Management (HRM) function includes
a. Developing personnel sources
b. Recruiting potential employees

c. Equal Employment Opportunity
d. All the above
1
Human
3. Taking staff out of work for a training course can be difficult in a
Resource in
small
industries
business where people usually fulfill more than one role.
a. true
b. false
4. is about a range of interconnected processes that aim

through both financial and non-financial means to address what employees
value in the employment relationship.
a. Recruitment
b. Wage and salary administration
c. Training
1.4 General Interview Guidelines

Interview is a common method of probing a potential candidate. It is
particularly useful for knowing a participant's experiences in detail. The
interviewer can pursue in-depth information around a topic and the process can
be particularly useful as in following-up certain responses in the questionnaires,
e.g., like past job experiences. Interviews are effective when they have many
open-ended questions.
Fig 1.12 Interview
Before starting to design the interview questions and process, it is important

to focus on problems or needs to be addressed using the information to be
gathered by the interviews. This helps in keeping clear focus on the intent of each
question.
1
Interviewing candidates for a position within the company is one of the Human Resources
final steps in the hiring process. Before getting to this step, HR should make sure in Small Scale
that it has completed all of the preceding steps, since each of these steps will have Industry
a direct impact on how effective the interview process will be. Below is a list of
the steps involved in the hiring process.
1. Determining the need to hire a new employee.
2. Conducting a thorough job analysis.
3. Writing a job description and job specification for the position based on the
job analysis.
4. Determining the salary for the position, based on comparison and
proportion with the salaries and responsibilities of other positions inside the
company as well as similar positions out in the marketplace.
5. Deciding on the recruitment techniques to be used for the process and the
time frame for conducting the search.
6. Collecting and reviewing a fair amount of applications and resumes and

then selecting the most qualified candidates for further consideration.
7. Interviewing the most qualified candidates for the position, based on the
job's description and specification.
8. Checking references.
9. Hiring the best person for the job.
Some of the important factors to be taken care of by HR during interview

are:
 Advance preparation for the interview.
 Collection of pertinent information during the interview.
 Acting professionally during the interview.
 All candidates to be treated fairly.
 Facilitation of open communication.
1
Human
Resource in Check your progress 3
industries
1. is a common method of probing a potential candidate. It is
particularly useful for knowing a participant's experiences in detail.
a. Planning
b. Interview
c. Staffing
2. Interviewing candidates for a position within the company is one of the
final steps in the hiring process.
a. true
b. false
1.5 Human Resource Planning in Your Business

Plan
Human resource planning is a key activity in business. It includes
workforce planning, employee development plans, building basic employee
benefits and salary programs, training and development, hiring and firing of
employees, etc. Even though it‘s a corporation of one right now and the growth
may not necessarily include additional employees in the near future, there are the
steps one will want to start while planning HR needs. These steps will also work
for a growing business that already has employees. It has to be ensured that one
spends enough time and effort to develop strong human resource planning that
clearly identifies the present and future needs, policies, gaps, goals and actions.
Fig 1.13 Planning
1
 Step One: Preparation of a forecast: This is where HR anticipates how Human Resources
many employees it will need in the future. The longer it remains in in Small Scale
business, the more accurate the number will be because it can look at the Industry
growth in the past and forecast based on those numbers. For example, if the
business has grown by 25% in the past three years, there is a good chance
that it'll need at least one employee in the very near future. However, if the
experience in the industry suggests that this could be a quiet year, it may
include that in its planning, too. So the business's history and industry
experience can be a guide in Step One as the considerations are made for
the supply and demand of the products.
 Step Two: Develop an HR inventory: This is fairly easy for most small
businesses. However, if it‘s a growing business with a couple of employees
already on board, then that should figure into the planning, too. As the
business grows, this step becomes more important as the HR takes into
account the employee turnover factor into the calculations, too.
 Step Three: Develop a job analysis: This could be the toughest part of the
process; HR will be needed to figure out what each person will do even
though they haven‘t been hired. It will give an idea about what the people
on board will be getting to do and it can also help in training the current
employees if their job description does not match the job description that
they'll have when the business will have more employees. It should be kept
in mind that any current employees will be managing the ones hired after
them so they should be included in the job analysis.
 Step Four: Prepare a comprehensive plan: For hiring the employees

advertising the job and interviewing the applicants is the most important
thing to do. There needs to be comprehensive plan for that. This is going to
be the most time consuming of the steps, but it is the most critical. This step
will give the path the HR Plan will take in order to integrate new employees
into the business successfully. It should include budgeting for future wages
and it should also include training techniques to bring current employees up
to the upgraded skill level.
These 4 steps will help in planning the small business HR to achieve
success. A good human resource planning and management process results
in creating good rapport and better communications levels between
employees and the management. It also results in individual employee
development plans and ensures that there is low employee turn-over, low
absenteeism and low safety incidents. Well-designed and competitive
1
Human employee compensation programs (including basic employee benefits),
Resource in
industries results in high morale, good quality output and efficient operations by well
trained employees and also ensures satisfied customers.

1. Human resource planning includes the workforce planning, employee
development plans, building basic employee benefits and salary programs,
training and development, hiring and firing of employees.
a. true
b. false
2. As the business grows, the step that becomes more important as the HR
takes into account the employee turnover factor into the calculations, too.
a. Develop an HR inventory
b. Develop a job analysis
c. Prepare a comprehensive plan
3. What will give an idea about what the people onboard will be getting to do
and which will also help in training the current employees if their job
description does not match the job description that they'll have when the
business will have more employees
a. Develop an HR inventory
b. Develop a job analysis
c. Prepare a comprehensive plan
1.6 Outsourcing HR Reaps Benefits for Small

Business
A study on small business organisations show that their owners spend
between seven and 25 percent of their time in handling employee-related
activities which mostly comprise of paperwork. This results in a lot of
unproductive use of their time. But by opting for outsourcing of some or all of
their employee-related functions — such as payroll, benefits, healthcare or
recruitment and retention — these business owners can look forward on
focusing
1
other important matters of business, which ultimately helps them to improve their Human Resources
productivity and even save some money. in Small Scale
Industry
Fig 1.14 Benefits for Small Business
One would imagine that outsourcing is something that concerns only large
companies. Well there is some truth in it, but small businesses too can reap the
benefits of outsourcing by understanding that the benefits that accrue are
substantial. This has been well appreciated by many small-scale companies.
Estimates suggest that about 47% such companies are actively considering
outsourcing administration, 44% are looking at outsourcing IT services and
another 23% at distribution and logistics facilities. Rising costs and vendor
pricing are the primary reason for even smaller companies to be favourably
disposed towards outsourcing.
There are in fact a number of advantages that accrue to a small business
when it decides to outsource. For one there is a marked decrease in your capital
costs as your fixed costs get converted to variable costs. At the same time it
enables more efficient use of scarce capital.
Outsourcing frees up time and resources, which can be better utilized in
providing value to customer. Moreover, new projects can be taken up far more
easily. That enables small firms to benefit from technology and cost advantage
which would otherwise be unavailable to them. Not only that, the companies that
one outsources to are far more adept and managing the risks involved in their
areas expertise, a great relief for harried small firm owners.
However, there is a great deal of apprehension among small firms
particularly those that outsource to countries like India about quality control. The
way to deal with this is to check if all-important processes are in place. An
important reason why outsourcing has become the new mantra for many small
firms is that the spread of internet and broadband has led to a proliferation of
2
Human small firms employing fewer than 100 people. The fact that they are strapped for
Resource in
industries time makes outsourcing almost a matter of no choice for them.
The prime mover in small companies having a serious look at outsourcing
is the fact that technology has brought the price of outsourcing down and the
sheer convenience and consequently economy that it offers have convinced the
most tightly managed firms to wake up and act accordingly.
Outsourcing as a matter of fact is being intertwined in everybody‘s life. It
helps them cut costs, get access to great coverage plans at competitive rates and
thereby keep employees motivated, attract skilled and experienced professionals
and bring about streamlined functioning of their business.
Outsourcing of HR services of small and medium-sized companies leads to
long term benefits for the company. They can benefit enormously from the
services of a service provider, as it helps these companies by securing
competitive rates for some comprehensive and attractive coverage plans for the
employees and the business itself. The expertise of the outsourcing agency in all
aspects of HR management helps the client organisations to focus purely on their
core responsibilities by keeping the burdens of outsourced HR functions away
from their owners. The areas in which an outsourcing service provider can help
with respect to employee benefits include:
 Life Insurance
 Initiating good work/life program
 Personal accident cover
 Risk coverage due to long term and short-term disability
 Designing a flexible spending account plan
 Credit Union
 Educational assistance for employee up gradation
 Appropriate retirement services

Reliable service provider review the current benefit plans to see if any
improvement is necessary, thereby ensuring employee satisfaction.
2
Human Resources
Check your progress 5 in Small Scale
Vendor pricing cannot be considered as the primary reason for the decision of smaller companies to outsou
Industry
true
false
Outsourcing frees up time and resources, which can be better utilized in providing value to customer
true
false
The areas in which an outsourcing service provider can help
a. life Insurance c. personal accident cover

b initiating good work/life program d. all the above
1.7 Changing Organisational Structures/Work

Patterns in “SHAMROCK ORGANISATIONS”
Another development is the Changing organisational structures and work
patterns. The upcoming companies, according to Charles Handy, will be a
shamrock organisation (Charles Handy 1990). The shamrock organisations will
have the following three elements:
Fig 1.15 Shamrock Organisations
2
Human 1. A few and important core group of experts, professionals and managers
Resource in
industries 2. A collection of sub-contractors who manufacture goods and services that
the core group does not
3. An emergent group of provisional and part-time employees who are hired

to give specialised services or to assist at maximum workloads.
Industries in many industrialised nations are more and more becoming
shamrock organisations. Shamrock organisations will come out in budding
countries in Asia and the Pacific. This is by now occurring in the NIEs. For
example the Singapore National Trades Union Congress (NTUC) in a research on
service structure and its effect on union membership (NTUC 1996) has proved
that the shamrock organisation is by now forming in Singapore. The diminutive
core of experts, professionals and managers will necessitate being the centre for
human resource management. More ventures in the administration and teaching
of part-time and casual labours will also be compulsory.
Technical change, particularly information technology and
telecommunications and rivalry in the quick moving aggressive international
market have transformed work organisations and work patterns. The manufacture
of goods and services has turned into flexible and modified in spite of being bulk
produced in extensive production lines. Unchanging mechanization relating
recurring tasks is being substituted by flexible mechanization. On-line quality
control is substituted by end-of-line checking. As an alternative of breakup of
responsibilities, rising utilization is made of groups and multi-skilled employees.
Managerial decisions are being decentralised to point of manufacturing and sale.
The organisational ladder is restructured with centre layers of management
removed. The gap linking those in management of the organisational leadership
and those accountable for production and delivery of goods or services is
lessened. Due to these transformations in working models; the role of employees
has widened with a resulting necessitate for a wider variety of skills. For example
the cellular manufacturing operators (CMOs) in Motorola in the United States are
likely to carry out their own jobs along with gathering the knowledge of variety
of extra assembly functions. This is to take full advantage of the flexibility of the
groups. Moreover, they ought to be largely self-overseeing. CMOs toil jointly in
comfortable teams and are in charge for planning their job, controlling excellence
and discovering innovative conducts to get better work procedures, diminish
imperfection and cut down succession time. On the other hand in the banking
sector the job of customer service representative (CSR) has been extended further
than a sequence of recurring errands of approving cheques, responding to usual
2
questions and serving customers to resolve the account balance. CSRs currently Human Resources
also suggest a suitable blend of products and services of the bank such as mutual in Small Scale
funds and allowances to clients. Workers at present require a lot of broader Industry
balance of skills than in the earlier case of the conventional slower moving
hierarchical establishment with apparent chains of order with the "thinkers" at the
apex and "doers" at the base.
The workforce has turn out to be more mobile. The major impact on work
patterns is the upcoming relationship organisations or virtual organisations. A
virtual organisation is a business, which with help of information technology
connects different industries, vendors, consumers and sometimes the competitors
and helps them to share technology and the expenditure and entrée to each other‘s
markets. The virtual organisation has an exceptionally minute core with a lot of
resources supported from outside and having no physical set up. Virtual offices
are upcoming as companies and are promoting the cyberspace and electronic
expertise to reduce expenses like rentals and to enhance efficiency. In these
offices the employees don‘t attend the offices but keep in touch through the
technology by using the devices which can send and receive messages, faxes and
emails. Telecommuting is a type of the virtual office in which the employees do
their job at home or any place other than the office. According to Richard Nolan,
a Professor of Business Administration from Harvard University forecasts that
there is a possibility that the virtual office will become conventional rather than
atrial within three years' time (Asia week 1995).
The growth of virtual organisations has HRD inference. Virtual
organisation needs employees that are extremely consistent and skilled, talented
to appreciate and acknowledge the novel types of information, flexible and can
work resourcefully with others. The workers should not only need the technical
aptitudes but also the aptitude to learn how deal with uninterrupted and
fundamental transformation of virtual businesses. New types of training that are
flexible, according to the demand and interactive should be made for the workers
of virtual organisations.
The changes in work pattern are occurring in the industrial nations. The
developing countries of the Asia pacific region are also being influenced by these
work pattern changes. Human resource development guidelines and program will
have to be altered according to these changes.
The ASTD's 1990 report listed out the seven groups of skills that the
employer desires.
2
Human 1. Knowing How to Learn:
Resource in
industries This can be considered as the fundamental skill. By virtue of this skill the
workers can rapidly learn more skills easily. This skill comprises the ability to
gather, examine, arrange and implement the information. It includes the methods,
approaches and information that ease dispensation of information. It is also the
skill to use suitable knowledge as well as the ability to relate it in new
circumstances at work. This talent consequently facilitate the workforce to get
used to fresh demands at work.
Now, the learning has become an element of working life with aggressive
work pressures and varying technology. Moreover, the accessibility, quantity and
density of data have amplified. Employers perceive the aptitude of acquiring the
knowledge as the solution to retrain and regular learning. Above all the skills
helps the effective usage of the innovative know-how and work in accordance
with the organisations strategic goals and competitive challenges.
2. Reading, Writing and calculation:
The conventional working styles often a routine process or continuous

interaction with machines. So there are chances of Illiteracy and innumeracy in
the work force as this cannot be determined easily. But in the modern workplace
there is a need for high interaction with modern computerised machines that need
a good reading skills and computation. Advanced numerical skills are needed
with the implementation of different statistical approaches. We all know that
writing is preliminary step for the communication with consumers, to document
competitive dealings or effectively moving new ideas into the workplace.
It has been seen that most of the workers spent many hours during their
working hours in reading different charts, graphs manuals, etc. for handling
different tasks. Then also the writing stays as the fundamental method of
communicating policies, procedures and concepts. Moreover different tabulations
are made every day in order check upon inventories, organize report on
production levels, compute machine parts or provisions, etc.
In adequate skills will lead to low productivity, high disaster rates and
pricey production faults. All above the employer's capability to fulfil the strategic
goals and the effort to become competitive will be weakened.
3. Communication Skills:
Communication is the centre heart of the even functioning of any

organisation. These skills are so important because they help to win the heart of
customers and help to retain them. Plunging novelty, contributing to quality
2
circles, settle on conflicts and giving significant advice all pivot on effectual Human Resources
communication skills. in Small Scale
Industry
The communication consumes a lot of hours of the workers and their
success on the job is related to their communication skills. It‘s evident by the
recent studies that only job knowledge comes above the communication skills as
an aspect for workplace accomplishment.
Most of the business heads have a perspective that a deficit in these skills
will result in a cost of millions for the employers every year in the form of low
productivity and errors.
4. Adaptability Skills:
Most of the business organisations are now a day‘s giving an extra
importance for the employee who is problem solvers and an innovative thinker.
Competitive advantage is commonly attached to a company's capability to
innovate rapidly. This capability is according to the quantity of skills that
employees have to free themselves from ordinary thoughts for a creative leap.
To be a successful problem solver one should possess aptitude to solve an
individual problem along with aptitude to solve existing in a group problem.
Above all he should possess the practical capability to relate these individual and
group problems and solve them. Hence the Cognitive skills, group
communication skills and problem handing out skills are critical to victorious
problem solving.
Creative thinking is the skill to make use of variety of thoughts, ending up
with something different and new in order to envisage, anticipate or shape new
grouping of ideas to accomplish a requirement. Usually the creative thinking in
the workplace is related to creative problem solving. This requires an effective
team work and the assessment of the problems in an innovative way and the
finding out of fresh solutions to active problems. The organisations capability to
attain its strategic goals depends upon the capability of the work force in problem
solving.
5. Developmental Skills:
Personal management skills are base for the building up of a good self-
esteem, a determined work life and even organisational efficiency. Now often the
workers are increasingly called upon in order to take decisions regarding the
production or sales or any function related to them which increases the positive
sense of self-worth. This also helps the employees to be motivated. Individual
2
Human employee's not having proper motivation or goal setting aptitudes will create
Resource in
industries recurring errors and quality issues or it can delay change.
6. Group Effectiveness:
It‘s seen that while doing work the employee will have to interact with
people and hence will require excellent interpersonal, teamwork and negotiation
skills.
The interpersonal skills is the ability to umpire and poise proper behaviour,
manage with unwanted behaviour in others, soak up stress, deal with uncertainty,
listen, encourage self-confidence in others, delegate the responsibility and cordial
interaction. It‘s obvious that these aptitudes are needful for the effective
conciliation of conflicts, which can be considered as the part of the work life. The
negotiating capacity can be considered as the skill to detach the people from the
crisis, to concentrate on benefits not positions, to work out compromise for a
common achievement.
Interpersonal and arbitration skills are the foundation of a winning
teamwork. Teams, which are more and more being used, are prearranged in the
workplace so that suitable aptitudes and talents can be shared to achieve vital
responsibilities and goals. A featured teamwork is an outcome when the team
members distinguish and deal with various distinctive behaviours and when each
has an idea of the customs and approaches that former group members symbolize.
Above all the team members also should be aware of group dynamics that
develop and transform as the team move towards its goals.
7. Influencing Skills:
At its most basic level, leadership means that an individual can persuade
others to act in a definite way. Often the employees are required to persuade his
work group and to give an idea of what the entire establishment or the specific
task necessitates.

1. The shamrock organizations‘ will have a few and important core group
of experts, professionals and managers.
a. True
b. False
2
Human Resources
2. is a business, which with help of information technology in Small Scale
connects
Industry
different industries, vendors, consumers and sometimes the competitors and
helps them to share technology and the expenditure and entrée to each
other‘s markets.
a. Virtual organisation
b. Actual organisation
c. small scale organisation
3. is a type of the virtual office in which the employees do their job

at home or any place other than the office.
a. Telecommuting
b. Computing
c. Home computing
1.8 Training in Small Industries

Training provision varies considerably in small businesses with size being a
significant factor. The British small business sector has a long-standing
reputation for poor training levels but West head and Storey found considerable
variations between the smallest (micro-enterprises) and larger SMEs. Smaller
firms conducted their training internally with a focus on informal skills learning.
Larger SMEs tended to obtain more external, formal training with a goal of
obtaining recognised qualifications. A bakery owner, for instance, may not need
to devote much of his resources to employee training, but a firm that provides
electrical wiring services to commercial clients may need to implement a system
of continuing education for its workers in order to remain viable.
 Small industries need to consider training and other development needs in

managing their enterprise's employees. The need for such educational
supplements can range dramatically.
 In a survey of 6000 randomly selected SMEs in Great Britain, Matlay

(2002) found significant differences in owner/manager attitudes and
approaches towards training needs of family and non-family employees in
their businesses. The needs of family members were seen in terms of firm-
specific HRD issues such as succession planning whereas training for non-
family employees was focused on individual career needs.
2
Human
 Owner/managers were mostly positive towards training but did not regard it
Resource in
industries as a critical element in overall business strategy. Matlay (2002) studied
about medium sized businesses and observed that in over two-thirds (68 per
cent) of the sample, their owner/managers were heavily involved in HRD
issues. But, despite the increasing levels of complexity and formality found
in such organisations, there was still a big number which overlooked HRD
issues. HR managers took charge of training and HRD decisions in only 26
per cent of cases. All respondents claimed that they used training plans
according to the decided budgets and saw a strong link between their firms'
specific training needs and sustainable competitive advantage. However, in
spite of taking interest in training of employees, most owner/managers did
not accept the importance of this approach in their overall business strategy.
Instead, they took an alternate approach perceiving the HRD needs of their
workforces as an expensive affair and believed that the training of non-
family members was an organisational expense which would affect the
company‘s profit.
 On the other hand, in family businesses, HRD was found to be proactive for
family members as a part of medium to long-term development and
succession strategies for designing future business plans. The small
business owner needs to establish and maintain a productive working
atmosphere for his or her work force. Employees only become a productive
asset to the company when they feel that they are treated in a fair and
professional way. The small business owner, who communicates business
expectations and company goals to his employees, provides adequate
compensation offers meaningful opportunities for career advancement and
anticipates work force training and developmental needs have better
chances to prosper in his business. These practices help in providing
meaningful feedback to his or her employees too, which leads him to be
more successful than that owner who is neglectful in any of these areas.
2
Human Resources
Check your progress 7 in Small Scale
Industry
1. Smaller firms conducted their training .
a. Internally
b. Externally
c. Both a & b
d. None of the above
1.9 Let Us Sum Up

To conclude, small-scale industries can be classified into two categories,
one which with less than 50 employees and the second group with strength of
more than 50 but less than 100.Though other criterions were also introduced like
the capital resources invested on plant and machinery buildings by course of time
they became the main criteria to differentiate the small-scale industries from the
large and medium scale industries. The Indian small-scale industries (SSIs) are
considered as the most modern small-scale industries as their rejuvenation has
widened the list of products offered by this industry. It‘s seen that many of the
small businesses are being operated by a single owner with no other employee.
So in order to maintain a competency in the business, it is important that these
owners should not only understand the HR obligations but also know how to
manage them efficiently. One of the most critical challenges faced by today's
small business owners is the retention of qualified staff and the taking good heed
of the special requirements of a diverse workforce.
It‘s often noted that an appropriate human resource planning and

management often results in the formulation of a better relationship and
interactions between employees and the management. Moreover the HR planning
often leads to the individual employee growth plans and make sure that there is
minimum employee turn-over, low rate of absenteeism and rare incidents of
safety lapse. Well formulated and competitive employee reimbursement
programs results in high morale, good quality output and competent operations by
well trained employees and also ensures contented customers. Outsourcing helps
the small scale businesses to gather the benefits and these methods are accepted
by many small-scale companies. So they adopt strategies to outsource various
functions such as payroll, recruitment and retention.
3
Human
Resource in 1.10 Answers for Check Your Progress
industries
Answers: (1-a)
Answers: (1-a), (2-d), (3-a), (4-b)

Answers: (1-a), (2-a), (3-b)
Answers: (1-b), (2-a), (3-d)
Answers: (1-a), (2-a), (3-a)
Answers: (1-a)
1.11 Glossary
1. Harried - anxious
2. Comply - obey
3. Termination - stop
4. Intertwined - tangled
5. Onboard - involved
6. Accrue - accumulate
7. Scarce - limited
3
8. Emergent - devolving Human Resources
in Small Scale
9. Diminutive - little
Industry
10. Imperfection - defect
1.12 Assignment
Describe the practices of human resource planning of any small scale
business you are acquainted with. List out the reasons, why this practice is being
adopted.
1.13 Activities
Visit your nearby small organization and observe the various methods
adopted to carry out the HR functions. Write a brief note on the same.
1.14 Case Study

For smaller firms, period and resource restrictions not only hamper the
recruitment of the individual, but also affect the selection of the qualified persons.
The small business owner is not expected to keenly follow background and
reference checks. They tend to use performance tests like typing and driving,
aptitude or skill, and physical performance. Smaller businesses with small
training and development budgets often use informal training methods and are
done on a deliberate basis by other workers within the company. On the other
hand, larger businesses have additional time, space, money, and staff to instruct
their workers; they may have training experts who train employees by means of
on-the-job training.
Whenever an HR department is incapable to cover all its main concern, it is
time to think for a help, exterior to the organization. Training and developing
workforce using external consultants has been an accepted custom for years. Both
large and small organizations have started to seek the outside for help functions
such as training its staff, retaining and hiring, analyzing reasonable
reimbursement systems, etc.
1. After reading the above text point out the advantage of outsourcing of HR
functions in a small scale business unit.
3
Human
Resource in 1.15 Further Readings
industries
1. Students Find Some Courses One Degree Under The Week-End Australian,
Armitage.C, 11-12 May, 1996.
2. Asia Pacific Economic Cooperation (APEC) and Institute of Developing
Economies (1995), Proceedings of the International Seminar on Industrial
Structural Change and Human Resource Development in the Asia and
Pacific Region 7-8 Dec 1994.
3. Asian Development Outlook, Asian Development Bank, (1996 & 1997),

1995.
3
UNIT 2: HUMAN RESOURCES IN
LARGE INDUSTRY
Unit Structure
2.1 Introduction
2.2 Purpose of Human Resource Planning
2.3 The Basic Unit of Human Resource Planning
2.4 Human Resource Planning Inputs
2.5 Human Resource Planning Results

2.6 Manpower Forecasting
2.7 HR Planning: Purposes and Goals
2.8 Stages in HR Planning: Process Analysis
2.10 Why a HR Planning for Corporates
2.13 The Drivers for Human Resource Planning
2.14 Meeting the Challenge of HR Planning using Clarity 6.0
2.15 Let Us Sum Up
2.17 Glossary
2.18 Assignment
2.19 Activities
2.20 Case Study
3
Human
Resource in 2.0 Learning Objectives
industries
 The purpose of human resource planning.
 The basic unit of human resource planning.
 The human resource planning inputs and results.
 The drivers for human resource planning.
 How to meet the challenges of HR planning?
2.1 Introduction
HR planning is a deliberately formulated business strategy on the basis of
current and future business predictions related to the acquirement, operation,
growth and maintenance of the human resources mostly in large organisations.
The process helps in recruitment of apt people and retaining them in the right
profile of varying jobs, positions and places according to the organisational
needs.
HR Planning process ensures that the organisation, which implements its
plans, has the right number and kinds of people, at the right places and at the right
time. This planning process finds appropriate people who are capable of
performing the assigned tasks effectively and efficiently. This helps the
organisation to achieve its planned objectives. Prevailing business and societal
trends affect the planning process in two major ways. One is through consumer
markets, which affect the demand for goods and services and the other is through
labor markets, which affect the supply of people needed to produce goods and
services.
One of the major challenges of the HR department is to maintain a flexible
workforce. HR Planning helps by handling this challenge. HRP is done at
different levels – corporate, intermediate, operations levels and for short-term
activities too. A good and suitable human resource planning exercise should
always consider the inputs of all the departments in the organisation. HRP always
has the support of the top management.
A good human resource professional must have a good understanding of the
market dynamics, changes in the economy organisational processes and
technological developments. That would make be better equipped for human
3
resource planning. The process of HRP involves three key steps – assessing and Human
making an inventory of the current human resources, forecasting the Resources in
organisation‘s human resource needs and matching the demand and supply of Large Industry
human resources.
Forecasting process involves the study and estimation of various factors
that affect the business. Assessment of an overall human resource requirements
involves studying the factors affecting the supply and estimating the increase or
decrease in the external and internal supply of human resources. Every movement
in and out of the organisation is calculated such as, new hires, transfers-in,
individuals returning from leave, etc. that increases the internal supply of human
resources, while retirements, dismissals, transfers-out of the unit, lay-offs,
voluntary quits, sabbaticals, prolonged illness and deaths that reduces the supply.
HR Planning process identifies particular areas of the organisation where
shortages and surpluses exist. When there is a need for downsizing the
organisation, common strategies that are opted for retrenchment may be lay-offs,
outplacements and leave of absence without pay, giving off loan, work-sharing,
reduced work hours, early retirement and attrition to reduce the number of
employees. An effective HRP keeps a check on the pressures on both the
management and the employees, by maintaining a well-planned employment and
retrenchment process, which remains phased out over a comfortable time span,
avoiding unpleasant consequences.
Manpower function is one of the newer areas to be brought under the
mantle of systematic planning. Human Resource Planning helps in better
allocation and control of the organisation‘s manpower resources. A concept
closely tied to HRP is that of manpower forecasting. Human Resource Planning
is a process by which an organisation prepares an inventory of skills and potential
available in the organisation. It involves the use of the concept of planning to
visualize how the organisation can go through the allocation and control of its
manpower resources in better fashion. In other words, it is a tool in the hands of
higher management to equip themselves with the necessary data on human
resources available immediately within the organisation and from outside.
HRP in Large Industry
With the changing time, the approaches to human resources planning in

work organisations also changes considerably. Human resource planning plays a
central role in the core strategies of large organisations and in turn invites too
much of debate, which reflects the changes in business, approaches. Human
resource planners study about different aspects of human resource planning and
3
Human management and after considerable deliberation they decide upon what aspect of
Resource in
industries planning should be among the priority considering the ongoing changes in almost
all aspect of life. Managing large work organisations has become more complex
due to several key considerations about the supply and demand of HR
practitioners and skilled personnel in the different industries.
Human Resource Planning (HRP) for large organisations differs from that
in smaller organisations owing to different contexts and aspects. While the
structure and size of organisations does not govern the choices about human
resources, researches show that they can have a very strong influence on the way
human resources are managed, regulated and planned. Important activities of
Human Resource Management (HRM) like recruitment, promotion, performance
appraisal, compensation, training and development, labour relations, job designs
and career development have a big impact because of the major differences
Caused due to the size of organisation.
2.2 Purpose of Human Resource Planning

Human resource planning is about managing the most important area of
all, the effective employment of people. The changes and pressures brought about
by economic, technological and social factors compel organisations of all kinds to
study the costs and human aspects of labour much more seriously and carefully
than ever before.
The general purpose of human resource planning has been described as:
 Determining recruitment needs: An important prerequisite to the process
of recruitment is to avoid problems of unexpected shortages, wastage,
blockages in the promotion flow and needless redundancies. Determining
these needs of large businesses, help them maintain a smooth flow of
activities.
 Determining training needs: Training programs should be properly
planned. These programs not only improve quantity but also quality of
employees in terms of the skills required by the organisation.
 Management development: For maintaining the effectiveness of an
organisation, it is very essential to have a succession of trained and
experienced managers. This hugely depends on having accurate information
about present and future requirements of the company in all management
posts. Large industries cannot risk their decision making and execution
3
process by lacking in management development Human
initiatives. Resources in
Large Industry
 Balancing the cost between the utilization of plant and workforce: Cost
balancing includes comparison of costs between these two resources in
different combinations of HR processes and selecting the optimum. While
costing projects cost balancing plays an important role thus enabling large
industries to utilize the finances available in a better way.
 Industrial relation: All the businesses plan and make assumptions about
their growth by considering the productivity of their human resource. This
giver a broader picture about the business situation in large industries and
also have an impact on the organisation's industrial relations strategies.
Practically, HR planning is mostly concerned with the demand and supply
of labour and problems arising from the process of reconciling these factors.

1. The process of HRP involves three key steps – assessing and making an
inventory of the current human resources, forecasting the organisation‘s
human resource needs and matching the demand and supply of human
resources.
a. True
b. False
2. The key objective of human resource planning is:
a. Determining recruitment needs
b. Determining training needs
c. Management development
d. all the above
2.3 The Basic unit of Human Resource Planning

Sound human resource planning needs to be based on the principles and
actions of effective human resource management. In the practical world, an
external human resource consultant or employment agency plays an important
role in planning the basic requirements for human resource. Basic units required
to put an HR planning process in place are,
3
Human 1. Human Resource Planning must be finally incorporated into the other parts
Resource in
industries of the organisation‘s strategy and planning.
2. There should be an emphasis on HR Planning by senior management
stressing on its importance throughout the organisation.
3. Larger organisations require a central human resource-planning unit, which
is responsible to senior management. The main objectives of this unit are to
co-ordinate and reconcile the demands for human resources from different
departments. It also works to standardize and supervise departmental
assessments of requirements and to produce a comprehensive
organisational plan. Practically, the Human Resource Development
department plays a leading role in the assigned task in large organisations,
whereas in smaller organisations these responsibilities would probably be
carried out by a senior manager or even the managing director.
4. The HR Plan should have a defined time-span for execution. For example,
if the system is operated as a continuous, rolling plan, the five-year period
of general forecasting is maintained and each first year is used in turn for
purpose of review and revision for the future.
5. An extensive text on the scope and details of the plan has to be in place. For
large organisations, separate human resource plans and forecasts may be
needed for various subsidiary units and functions, whereas, in smaller
organisations one comprehensive plan will probably suffice for all
employees. Human resource planning approves of special provisions in the
cases where particular skills or occupations may pose future problems in
recruitment or training of its employees.
6. Source of information for Human resource planning is very important. The
process of planning is then based on the most comprehensive and accurate
information that is possible. For example, sometimes personnel information
becomes essential in any case for the effective management of the
organisation. It then requires information on personal details of employees
which include details of age, sex, qualifications and experience and of
trends which are likely to affect future forecasts, such as labor wastage,
charges in jobs, salaries, etc. Apart from the routine collection of data for
personnel records, a special analysis of the collected data poses to be
necessary in providing particular information.
7.
3
Human
Check your progress 2 Resources in
Large Industry
1. External human resource consultant or employment agency plays
an important role in planning the basic requirements for human resource.
a. true
b. false
2. It‘s not compulsory that the HR plan should have a have a defined time-
span for execution.
a. true
b. false
2.4 Human Resource Planning Inputs

Three important inputs in Human Resource Planning may be identified as,
1. Sufficiently accurate information about the level of present manpower

resources, such as the types of skills on the present payroll and current
capabilities of the organisation.
2. Information about the manpower environment, namely labour markets,
current and forecast manpower supply and demand, past and anticipated
manpower trends, present training levels in the organisation, development
potential of untrained employees and expenses that will be incurred in
training and development of skills.
Information about overall organisational objectives in terms of sales,
markets and growth in the future is necessary. This also becomes the objectives
against which manpower plans and forecasts are structured. With the proper
inputs, the results of HR Planning process will surely have a good foundation.
1. The information about the level of present manpower resources, such as the
types of skills on the present payroll and current capabilities of the
organisation are the inputs in Human Resource Planning.
a. true
b. false
4
Human
2. Information about overall organisational objectives in terms of sales,
Resource in
markets
industries
and growth in the future is necessary for HR planning.
a. true
b. false
2.5 Human Resource Planning Results

Human Resource Planning results in formulation of general long-range
manpower objectives. These objectives influence current policies and programs
in areas such as recruiting and hiring, manpower development and training, the
transfer and relocation of employees, salary administration and labour relations.
If HR planning is carried out properly, it results in the following benefits:
 It provides a better view of the human resource dimensions of business

decisions to upper management.
 It helps in lowering down the HR costs because management can anticipate

imbalances because of HR planning before they become unmanageable and
expensive.
 It provides sufficient time to search for talent because organisational needs

are anticipated and identified before the actual staffing is required.
 Due to a good HR plan, better opportunities exist to include women and

minority groups in future growth plans.
 Development of managers can be planned in a better way when a planning

process exists in HR department.
The results of HR planning process form the basis for evaluating the
success of projected business plans. Another approach is to measure projected
levels of demand against actual levels at some point in the future. However, the
most important evidence of successful HR planning is that organisation in which
the human resources are consistently aligned with the needs of the business over
a period of time.
4
Human
Large Industry
1. HR planning provides a better view of the human resource dimensions
of business decisions to upper management.
a. true
b. false
2. HR planning provides sufficient time to search for talent.
a. true
b. false
3. HR planning does not help in lowering down the HR costs.
a. true
b. false
2.6 Manpower Forecasting

Manpower forecasting is one aspect or subpart of the overall Human
Resource Planning activity. While Human Resource Planning attempts to identify
general directions and trends anticipated for manpower resources in the future,
forecasting is concerned with quantitative predictions of manpower trends for
specific periods of time. Generally, quantitative predictions are attempted for one
or five years in the future.
The most important thing in forecasting is to apply a basic model to certain
important quantitative data in specified areas of Human Resource Planning. Such
a model should be able to:
a. Define skill categories in the organisation in terms of kind and amount.
b. Identify areas of the organisations operations, which are relatively self-

contained units in terms of manpower and areas where separate forecast of
manpower resources are desired.
c. Identity dynamic factors, which determine whether the right skills are at the
right places at the right time.
Taking such elements, one has to apply to them known or estimated values
to arrive at a calculated prediction of future manpower resources.
4
Human Forecasting should also take into account major input and outflow factors.
Resource in
industries The input factors are:
a) Skill developments resulting in upgrading and promotion into the

skill-forecasting category.
b) Lateral transfers into the job position required by a particular skill.
c) New hires, both new college graduates and experienced personnel.

The outflow factors are:
a) Skills development, leading to promotion and upgrading to other skill
categories.
b) Lateral transfers to other locations.
c) Voluntary resignations.
d) Involuntary attrition due to discharge, layoff or demotion.
e) Retirement.
f) Death.
A significant aspect of forecasting is that the predictions can be evaluated

against the trends as they emerge in future years. In the process, any identified
gaps in predictions have to be revised to conform to actual experience.
Forecasting involves two activities:
1) Monitoring current HR programs and personnel staffing levels
2) Investigating future HR needs and concerns

These processes are carried out in two basic areas, which are demand
forecast of workforce for organisation and supply forecast for the organisation.
Following approaches are used to perform this function or activity:
Statistical approaches, which are based upon the fact and figures available
with the HR planners to serve the purpose. Majority of demand and supply
forecasting is done by:
a. Trend analysis
b. Ratio analysis
Judgmental methods are the forecasting approaches, which are based upon
the logical and analytical capabilities of HR personnel when they arrive at
forecasting decisions. It is based on the following:
4
a. Managerial judgment Human
Resources in
Human resource planning and forecasting, thus, are of great practical
Large Industry
application in the field of personnel management. It allows the managers to take
day-to-day decisions consistent with the organisation‘s long run goals seen in an
integrated fashion. It is based on present day managerial thinking that manpower
resources have to be controlled and allocated in a way that serves the total
organisational objectives in the business. In fact, proper human resource planning
helps in getting the right skills and persons into the right position at the right
time. It would also avoid many grievances and industrial relations problems
arising from layoffs, retrenchments, technology up gradations, transfer,
promotions, etc. It would allow for sufficient time to meet the repercussions of
such changes in a planned way. Such planning can also ensure smooth careers for
the employees of an organisation and thereby enhance their sense of security and
motivation to work for the organisation.
At the international level, the study on the work force are regularly
organized more to decide employment prospective, the unemployment rate, type
and kind of demographics of the existing workforce. Basically, the market has
transformed. HR Planning no longer can attach itself only to the conventional
sources dealing with hiring and retaining. The present human acknowledge that
their roles have altered from that of adore to that of a philosopher and in most
situations a philosopher who achieves.
Check your Progress 5

Manpower forecasting is one aspect or subpart of the overall Human Resource Planning activity
True
False
The predictions cannot be evaluated against the trends as they emerge in future years with help of forecas
True
False
Majority of demand and supply forecasting is done by
Trend analysis c. both

Ratio analysis
4
Human
Resource in 2.7 HR Planning: Purposes and Goals
industries
Human resource planning is about the administration of the most significant
area of all, the successful employment of people. The alteration and stress
brought about by economic, technological and social factors oblige organisations
of all kinds to learn about the costs and human aspects of labour much more
critically and cautiously than ever before.
Some of the purposes of HR planning are:
 To make sure the maximum use of accessible Human Resource
 To predict the upcoming need for Human Resources.
 To offer control methods to make sure that needed Human Resource is

obtainable as and when needed
 To evaluate the surplus and shortage of HR.
 To give suggestions for all HR activities and systems.
 To bring together the potential of line managers and staff.

Objectives of HR Planning
 To predict the influence of technology on the jobs and HR.
 To find out the cost of HR.
 To find out the level of Recruitment and Training.
 To convene the requirement of growth and diversification programs.

The key objective of implementing the human resource planning is to
obtain a correct number of employees needed, with corresponding skill
necessities to achieve organisational goals.
According to Sikula ―the final aim of human resource planning
is to communicate upcoming human resources to potential enterprise
requirement so as to get maximum future returns on investment in human
resources‖. Practically, HR planning is generally apprehensive with the demand
and supply of labour and problems arising from the process of integration of
these factors.
4
Human
Large Industry
1. The HR planning does not give any help in predicting the upcoming need
for Human resources.
a. True
b. False
2. HR planning helps to evaluate the surplus and shortage of HR.

a. True
b. False
2.8 Stages in HR Planning: Process Analysis

The different stages of HR planning are:
1. Assessing Human Resources
The assessment of HR starts with the analysis of environment, under which

the external (PEST) and internal (objectives, resources and structure) are
evaluated in order to find out the present HR inventory level. This assessment of
the internal and external forces of the organization will facilitate the HR manager
to reveal the internal strengths and weakness of the organization along with the
opportunities and threats. Above all, it includes a record of the workers and their
skills that are existing at present in the organization and a complete job analysis.
2. Demand Forecasting
HR forecasting is the procedure of measuring the demand and supply of HR

in an organization. Demand forecasting is a procedure of finding out the future
requirements for HR according to the required quantity and quality. It is done to
congregate the upcoming staff requirements of the organization to attain the
required level of output. Upcoming human resource requirements can be
evaluated with the aid of the organization's present human resource condition and
study of organizational strategy and measures. It will be obligatory to execute a
year-by-year study for each important stage and category.
3. Supply Forecasting
Supply is a different side of human resource assessment. It deals with the

estimation of supply of manpower, given the estimate of the present resource and
upcoming availability of human resource in the organization. It gives an idea of
4
Human the future resources of HR that are probably to be accessible from inside and
Resource in
industries outside the organization. The insides resources are promotion, job enlargement
and while the outside resources are selection and recruitment of employees who
have the capability of doing the prescribed tasks in the organization.
4. Matching Demand and Supply
This step of human resource planning comprises the forecast of future

demand and supply of HR. The matching method refers to convey demand and
supply in a symmetry situation so that scarcity and excess staffing position will
be resolved. In a stage scarcity the organization has to recruit according to the
required quantity of employees. On the other hand, in a stage of excess staffing
the organisation has to reduce the level of present employment.
5. Action Plan
The final phase of human resource planning that deals with the surplus and
scarcity of human resource. By the virtue of it, the HR plan is implemented with
the help of varied HR activities. The key activities which are needed to
implement the HR plan are recruitment and selection, placement, training and
development, socialization, etc. In the last stage is the control and assessment of
performance of HR to ensure that the HR planning coincides with the HR
objectives and policies. Moreover this action plan must be updated in accordance
with the change in time and conditions.

1. Stages of HR planning are assessing human resources, demand forecasting,
supply forecasting, matching demand and supply and action plan
a. true
b. false
2. is the assessment of the internal and external forces of the

organization, will facilitate the HR manager to reveal the internal
strengths and weakness of the organization along with the opportunities
and threats
b. Assessing Human Resources
c. Supply Forecasting
d. Action Plan
4
Human
3. deal with the estimation of supply of manpower and Resources in
upcoming
Large Industry
availability of human resource in the organization.
d. Action Plan
4. deal with the surplus and scarcity of human resource.
d. Action Plan

It is necessary to classify the existing employees into various groups. The
degree to which such segmentation is done will depend on how the planners aim
to use the data.
The responsibilities and activities concerned in the planning process are:
1. Estimating how many of the existing labours and management force in

diverse occupations or grades, levels, positions will leave the company or
their present job during the forecast period.
2. Restructure the organisation composition, planning for needs and surpluses.
3. Estimating how many will have be taught or retrained to administer the HR

people‘s eminence to replace exits.
4. Articulate in general objectives and goals for a specific period ahead.
5. Changing these objectives to manpower (man/hour or man/day) needs
6. Recognising prospects for getting better manpower consumption and its

exploitation with effective usage.
7. Assessing the potential of staffing of additional workforce to make high

losses from surplus and to convene additional demands.
8. Conclude where and when significant manpower deficiency is expected to
arise.
4
Human 9. Deciding how those shortages can best be conquered or how the company
Resource in
industries should regulate to them.

1. Manpower planning should comprise the task to decide how those
shortages can best be conquered or how the company should control to
them.
a. true
b. false
2. Estimating the number of existing labour and management force in diverse

occupations or grades, levels, positions will leave the company does not
come under the scope of man power planning.
a. true
b. false
2.10 Why a HR Planning for Corporates

Current business challenges insist an agenda of human resources, which is
focused to close up the opening between the ‗strategic-HR haves‘ and ‗have-
nots‘. To attach people priority to business priorities, the HR practitioners require
a considerate, but sensible move towards to HR planning process thereby
clarifying line possession for HR outcomes and document a contract for those
responsibilities that HR people will have across all divisions in (large)
organisations. The conflict in the planning process is to attain intensity of
thinking without difficulty in a way that engages line management in the process.
HR planning makes sure that usage of man power and takes advantage of
the strength of HR in that organisation. The organization often will have a pool of
aptitude at any point of time. People‘s capabilities are instantly available to
perform the assigned tasks, if the information is composed and arranged in
advance. Suppose the organization needs an increase its range of operation, it can
go ahead easily. The advance planning makes sure that constant supply of people
with mandatory skills who can handle tough jobs easily. It also helps to determine
the recruitment and induction levels. If there is a ready HR plan, it will help to
give a fairly good idea about the type of people are being employed and at what
position. Thus the induction level can be successfully planned according to the
4
anticipated redundancies, surpluses and obsolescence. HR planning also helps to Human
determine the training levels as the base for the management development Resources in
programmes. Moreover the knowledge of the cost of manpower according to a Large Industry
new project is also determined and hence a budgetary allocation can be made in
advance for this upcoming corporate premeditated move.

1. If the organization needs an enhancement in its range of operation, it can
go in advance easily with help of HR planning.
a. true
b. false
2. HR planning helps to determine the recruitment and induction levels.
a. true
b. false

Strategic HR planning is an important part of strategic HR management as
it helps to link the HR management directly to the strategic plan of your
organization. Most of the medium to large sized organizations have a
premeditated plan that directs the organization to success. The organizations
usually complete financial plans to make sure that they attain the organizational
goals and while workforce plans are not as frequent, they are just as essential. It‘s
to be noted that a small organization with as few as 10 staff can build up a
strategic plan to direct decisions about the future.
On the basis of the strategic plan, an organization can build up a strategic
HR plan that will permit to make HR management choice to maintain the
expectations of the organization. Strategic HR planning is also vital from a
budgetary point of view so that you can factor the costs of recruitment, training,
etc. into the organizational budget.
5
Human
industries
1. Strategic HR planning is an important part of strategic HR management
a. true
b. false
2. Strategic HR planning is also vital from a budgetary point of view so that

you can factor the costs of recruitment, training, etc. into the organizational
budget
a. true
b. false

HR planning must be recognised as an integral part of overall business
planning. HR planning should be led by the CEO as his core responsibility. The
manpower planner needs to know the company‘s objectives in terms of sales,
marketing and growth. Top management backing and involvement for manpower
planning is essential and should receive its rightful place hierarchically. The HR
planning responsibility should be developed in consultation with line managers
and their representatives. The forecast period should be prepared by skill levels
rather than by aggregates of workers. Both the forecasting techniques and the
forecasts themselves need to be constantly revised and improved in the light of
experience.
Human resource is a key economic resource. It therefore demands the same
attention a company gives to planning sales, investment or profits. It is this fact
that has led to the development of manpower planning among an increasing
number of business organisations. For the company, the returns from manpower
planning can be measured in term of higher efficiency and productivity as a result
of better utilization of its manpower resources and the elimination of waste in
recruitment, training and other personnel schemes.
It is clear that a company cannot hope to forecast accurately about its future
manpower requirements unless these are related to future production and sales
levels. The best result therefore is two-fold, which is achieved when a company
has integrated HR planning with overall business plan to interpret the forecasts
for production and sales along with labour constraints on account of company
5
policy for the future. The first task of a company must be to ensure that the Human
estimate is as reliable as possible. Resources in
Large Industry
HR planning is continuous, on-going process; and companies that treat it as
a five-year burdensome task will be deeply disappointed. In fact, it is preferable
that they do start this task as it may turn into a ritual. Even the most carefully
calculated forecasts are liable to be overtaken by unforeseeable changes.
For a successful HRP, following guidelines may be considered as key
points,
a. Tailor made: HRP should be balanced with corporate objectives.
b. Proper time: The period of HRP process should be appropriate to the

needs and circumstances of an organisation.
c. Adequate management: HRP process should be adequately/properly

organized.
d. Top management support: Before starting the HRP process, the support
and commitment of top management should be ensured.
e. Participation: HRP will be successful if all the departments in an
organisation participate in the process.
f. Information system: An adequate database should be developed for
facilitating HRP.
g. Unbiased focus: The quantity and quality should be stressed in a balanced
manner.

1. Top management backing and involvement for manpower planning
is essential for HRP.
a. true
b. false
2. It‘s not necessary that the company should give same priority to HR
planning as it gives to planning sales, investment or profits.
a. true
b. false
5
Human
Resource in
industries 3. Which of the following is essential for a successful HRP
a. Appropriate time
b. Top management
c. support Information system
d. Adequate management
e. all the above
2.13 The Drivers for Human Resource Planning

Business oriented HR professionals can help design a HR plan that balances
the needs of the organisation, its employees and other stakeholders. It can help
align the efforts of the various functions in the organisation with the plan's
strategic goals and it can support those functions by ensuring that they can
recruit, develop and retain the necessary company team members. HR, as
strategic business partners should be the drivers of the organisations values thus
being the drivers of the strategic plan.
Realising the cost base:
The expenses that are incurred due to the employment in an organisation

extend well beyond the salary paid. Apart from this various health benefits,
personal and family insurance contributions, pensions, vehicle schemes, holidays,
maternity leave and training are some of the extra expenses that will be added to
the cost of employment. Moreover the legislative, qualified and contractual
obligations have to be added to the cost of infrastructure. An added cost known as
the ‗opportunity cost' of lost productivity due to unexpected inoperative time or
sickness also must be added to the costing calculations.
Even though the ‗people' are not accounted in the balance sheet as an asset
they contribute a lot to the profit and loss account. So perceptive of the
expenditure base and its compassion to changes, recruitment models, workforce
composition and other factors are important for success.
Harmonizing supply and demand:
Human Resource planning in a business which is service oriented

concentrate on the procedure of harmonizing the accessibility of skilled and
unskilled resources according to the market demands. By planning the
5
constitution of employees in the business, it becomes easy to adjust the number of Human
individuals in every band of seniority or grade, which is significant for a healthy Resources in
business. A proper blend of the staff pattern which comprises an equal mixture of Large Industry
talent, knowledge and seniority, helps to increase the profitability and also is
necessary for effective customer satisfaction. A disparity in the organisation‘s
manpower is by no means entertained.
Succession Planning:
The Planning of the staff resources in a long term can be specifically

demanding for the sustainability of every business. The Human Resource
planning is generally a precisely tuned balancing act, where the abundance of
senior personnel can influence the profitability in the short term and generate
extensive term staff retention issues as the new generation staffs will feel as if
their careers are stopped up, with a little room for promotion. On the other hand,
if the business planning process does not concentrate on the future leadership, it
will result in the scarcity of proper leaders as senior managers will retire and
nobody will be trained to take up their position in succession.
Succession planning process ensures that employees are recruited and
developed to fill all the important roles within the company. Through the
succession, planning process, recruitment of superior employees happen and it
also work towards retention of superior employees because they appreciate the
time, attention and development that the company is investing in them. To carry
out succession planning in the organisation effectively, it must identify with the
organisation‘s long-term goals.
Performance management:
In spite of the burden of observance, all the modern organisations should

uphold a near watch on HR performance matrices. A superior performance
management system of an organisation disclose the real and the future state of the
accessible labour force which enables the HR system to perform usefully in
planning an competent workforce.
In actuality, Human resource planning is in accordance with the theory
about the rate of hiring fresh employees, attrition rates, training goals and
international salary increases that are believed to be determined by its enduring
plans. The planning process makes sure of the nature of the organisation is
deliberately associated along with other fundamental resources such as
information technology, production capacity, sales and promotion.
5
Human
industries
1. The expenses that are incurred due to the employment in an organisation
are only the salary paid.
a. true
b. false
2. A proper blend of the staff pattern which comprises an equal mixture

of talent, knowledge and seniority, helps to increase the profitability.
a. true
b. false
3. Succession planning process ensures that employees are recruited and

developed to fill all the important roles within the company.
a. true
b. false
2.14 Meeting the challenge of HR Planning using

Clarity 6.0
In the present varying business environment, the work force is considered
as the most precious assets. There has been an outstanding alteration in
expressions of work-force as the ―Personnel‖ function of the 80's which
was converted into ―Human Resources‖ and further ultimately phrased as
―Human Capital‖ thus demonstrating the factual worth of individuals in creating
prosperity.
For most of the organisations, encouragement, maintaining and attracting
the most excellent ‗talent' is still a high business priority. Keeping up the accurate
quantity of resources, at a right time and in the right place is always essential. For
this, a thorough Human Resources planning and forecasting is also essential
which should coincide with supply and demand, optimise staff composition, take
advantage of employee efficiency, comprehend the expenditure base and produce
appropriate profits for shareholders.
The importance of a comprehensive HR budget and forecast necessitate to
be reflected in the monetary and other functioning plans of the business.
Likewise, all the previous expenditure plans, capital expenses and income
5
forecasts required to be associated with the monetary plans, permitting the Human
organisation to build up clearness on the intended performance across the Resources in
business. Large Industry
How the Clarity 6 Human Resource Planning, an integral part of the

Clarity 6 CPM Suite meets these challenges is stated below.
The Application
Clarity's Web/Excel interface permits the organisations to allocate common

Excel style-planning templates at reasonable price on the web to an extensive
array of budget holders. Several organisations are conducting their human
resource planning practices with the help of a many spreadsheet templates. But,
over the years these spread sheets are having a number of limitations such as the
lack of process maintain, the incapability to rapidly combine and report effects, as
well as the need of audit pursue and a elevated preservation burden.
One of the main advantages of Clarity 6 is that it permits the customer to
unlock a budget entry template in Excel and toil offline with the data. It offers
with the property of re-importing the data with complete protection and
auditability of the information.
A fine HR plan has the distinctive property to occupy a larger number of
budget holders from a broader selection of functional areas across the business. It
ease the organisations in building up a more precise image of predict
performance. In addition to this, managers related to cost centre who are not
accustomed to accountancy can be lead through the conception of an HR forecast
using common organisational terms and perceptions though being set aside away
from the accounting complication. For instance, a division manager, can prepare
for ―new hires‖ and ―leavers‖ by creating easy modification in the
quantity of employees in each calendar period. These modifications also permit
the system to estimate the inference for tax, reimbursement, infrastructure and
other spending according to the business regulations customary in the basic
design. But, the accountants can also sketch according to the conventional lines
by using work sheets and illustrate a range of charts of accounts, preparing costs,
line by line. An organisation can jointly chart and compute its planned costs with
the aid of any of the concepts. By confirming the calculations as the budget data
is entered, the budget holders can be protected within planning assumptions that
are formulated centrally for the organisation. In the excel–worksheet setting, an
observation can be added or a file may be linked to a cell. Moreover the input
plan or entity facilitates the flow of information and support association while
creating a HR plan.
5
Human HR Planning is not restricted to the knowledge of the cost base. Clarity 6
Resource in
industries module allows a driver based concept towards the scheduling which remove
intricacy thereby permitting non-specialist budget controller to generate a budget
based on uncomplicated hypothesis about accepted consumption of capital and
work type.
Clarity 6 module maintains planning process at any of the stages of
organisation or a diverse approach by permitting some section to prepare in more
detail than the others. A complex HR planning point towards the standardised
approaches to the practice are often hard to attain. To suit the way and culture of
the organisation, the fundamental regulations of the business must be modified as
per the organisation‘s necessity. Clarity 6 is mainly appropriate for large
organisations because it can take in the diverse terms and conditions laid out by
diverse business units.
6 module of HR planning is designed to congregate the challenging
conditions directly. As this module for the congregation of challenges is on the
basis of excelling work-sheet format, they have an aptitude to administer lofty
data volumes, several data sources and a huge number of budget controller.
Similarly, the ability of connecting the challenges of the process data to each
other and to the HR process too, throughout strongly administered workflows
give confidence and enhanced quality forecasts. Clarity 6 HR planning module is
also designed to get advantage from the full potential of the broader program so
that the business consequences of an HR plan are firmly joined to monetary and
longer-term plans. Design of the Clarity 6 module permits an organisation to
build up the best practice presentation of management system. A single data
model acts as a financial summary and reporting applications besides measuring,
planning, budgeting and forecasting processes too.
Above all, the standardized architecture of the module permits authorised

access to allocate information and business views, accessed during an easy
web/excel interface or more detailed exposure methods if mandatory. By doing
so, Clarity 6 permits the organisation to have long-range planned goals in its
functioning plans, converse its HR strategy and observe its accomplishment.
5
Human
Large Industry
1. Clarity's Web/Excel interface permits the organisations to allocate common
Excel style-planning templates at reasonable price on the web to a extensive
array of budget holders.
a. true
b. false
2. One of the main advantages of Clarity 6 is that it permits the customer to
unlock a budget entry template in Excel and work offline with the data.
a. true
b. false
3. Clarity 6 module allows a driver based concept towards the scheduling

which remove intricacy thereby permitting non-specialist budget controller
to generate a budget.
a. true
b. false
4. Clarity 6 HR planning module is also designed to get advantage from the

full potential of the broader program so that the business consequences of
an HR plan are firmly joined to monetary and longer-term plans.
a. true
b. false
2.15 Let Us Sum Up

To conclude, the HR planning is a well expressed business strategy on the
basis of present and upcoming business forecast and are mostly used in large
industries. The strategy articulates the need as it exists in the present and the
preparation necessitates formulation of the goals and action plan for achievement
of the workforce plan. Hence HRP can be denoted as the process by which an
organisation make sure that it has the right number and kinds of people, at the
right places, at the right time and that these people are capable of performing
their tasks efficiently and competently. This helps the organisation to achieve its
overall objectives.
5
Human The HRP prepares the organisation for the upcoming in provisions of
Resource in
industries development of its manpower necessity and utilizing them appropriately in order
to convene the impact of quick practical and monetary changes and uphold its
viable position. Moreover it permits for advance planning to fill predictable skill
requirements as well as permit for desirable flexibility in day-to-day utilization of
manpower. It permits the adaption to unexpected changes such as technological
advances, novel markets, supporting and economic pressures and sharp
competition.
Effective human resource planning needs to be based on the ideology and
proceedings of effective human resource management. In the realistic world, an
outside human resource consultant or service agency plays a significant role in
forecast of the fundamental necessities for human resource. Basic units‘
compulsory to locate an HR planning process in place make sure that the
organisation do extremely.
Above all the Human resource leaders must take initiative for an action
related approach to essential a planned HR agenda in a method that describe
apparent roles and relationships amongst the standard players. This can be easily
completed by relating line leaders in realistic, healthy conversation and finalizing
agreements that are attainable inside the aptitude limitation that exist today and
supportive what is desirable for the future.

Answers: (1-a), (2-d)
Answers: (1-b), (2-b)
Answers: (1-a), (2-a), (3-a)
5
Human
Large Industry
Answers: (1-a), (2-b), (3-c)
Answers: (1-a), (2-b), (3-c), (4-d)

Answers: (1-a), (2-b), (3-e)
Answers: (1-b), (2-a), (3-a)
Answers: (1-a), (2-a), (3-a), (4-a)
2.17 Glossary
1. Assign - allocate
2. Voluntary - deliberate
3. Retrenchment - cutback
4. Visualize - envisage
6
Human 5. Regulated - in time
Resource in
industries 6. Comprehensive - complete
7. Anticipated - probable
8. Relocation - transfer
9. Aligned - associated
10. Emerge - come out
11. Conventional - predictable
12. Obligatory - compulsory
13. Aggregate - cumulative
14. Tailor - modify
2.18 Assignment
Study Human Resource planning process in an organisation and discuss the
inputs provided and the results achieved from the processes.
2.19 Activities
Visit any of the organisations you know and collect the details of the
methods used there in manpower forecasting.
2.20 Case Study

Conventionally, succession planning has occasionally taken a replacement
approach, habitually concentrating on the executive-level positions. One or two
successors are recognized and chosen, may be on the basis of the limited input of
their direct supervisor, and then positioned on into a senior position.
1. According to you, is this a correct way of succession planning? If not, what
are your suggestions in this regard?
6
Human
2.21 Further Readings Resources in
Large Industry
2. Human Resource Management, Biswajeet Pattanayak, Prentice Hall of
India Pvt. Ltd., 2001.
3. Human Resource and Personnel Management, Aswathappa .K. 2nd Edition,

6
Human
Resource in UNIT 3: MODERN METHODS OF HUMAN
industries
RESOURCE PLANNING
Unit Structure
3.1 Introduction
3.2 Introduction to Modern Manpower Planning
3.3 Role and Content of Manpower Planning
3.3.1 The Present Position and the Analysis of Trends
3.4 Forecasting Future Manpower Movements
3.5 Control and Evaluation
3.6 Environmental Scanning
3.7 Human Resources Environmental Scan
3.8 Let Us Sum Up
3.10 Glossary
3.11 Assignment
3.12 Activities
3.13 Case Study

 The importance of Modern Manpower Planning.
 Forecasting future manpower movements.
 Control and Evaluation of manpower planning.
 Environmental scanning.
6
Modern
3.1 Introduction Methods of
The success of an organization mainly relies upon the capacity and Human
Resource
excellence of Human Resources that it is able to attract and preserve. Human
Planning
resources are one of the mainly imperative assets of an organization. It is the
people who create other resources moving. The assignment of accurate type of
people in right numbers, at the right place and right time is the basic function of
Human Resources management. Human Resource Planning (HRP) is a footstep
in Human Resource Management.
The progression of identifying how many people to choose, at what job and
at what occasion is called Human Resource planning. Human Resource Planning
is to get the right number of employees with the right skills, experience, and
competencies in the right jobs at the right time and at the minimum cost. This
Human Resource part of an organization makes sure that the business production
requirements are met in an efficient and effective manner. Having too many
employees is challenging due to the risk of high labour expenses, downsizing, or
layoffs.
3.2 Introduction to Modern Manpower Planning

In modern times, the need for companies to take a look at their future
manpower requirements has become more and more evident and manpower
planning is more important for management than it has ever been. There are three
main arguments in favour of manpower planning. Firstly, there is considerable
evidence to indicate that for some time to come there will be a shortage of quality
manpower, particularly technological and scientific manpower, the demand for
which is steadily increasing. Secondly, changes in manpower requirements in
skill terms are likely to be much more rapid in the future, than they have been in
the past. Thirdly, the ever increasing costs of manpower. Demands for higher
standards of living and increased leisure are tending to push these up at an even
faster rate.
While machinery depreciates and eventually becomes obsolete, properly

developed manpower can continue to grow in usefulness and capacity. The view
that there is likely to be a shortage of quality staff over the longer term is not
universally shared. Some take the view that there is considerable under-use of
talents and abilities and that there is a large, as yet untapped and potential for the
exercise of higher skills if only adequate training and education can be made
6
Human available. This, in itself, is a very large subject. The objective of manpower
Resource in
industries planning is and must be, to improve manpower utilisation and to ensure that there
is available manpower of the right number and the right quality to meet the
present and future needs of the organisation. It must, therefore, produce a realistic
recruitment policy and plan and must be very much concerned with costs and
productivity.
A business is able to place most suitable number of employees, at the most
apt jobs in the most appropriate time frame, only because of Manpower planning.
This is an exercise that is very critical to the survival of a business.
Human resources department of an organisation prepares lists of manpower
available and working across all its functional departments. This activity aims
toward analyzing whether each department has the correct number of employees
and to estimate the manpower required in the future. Without an efficient set of
employees, no organisation can make any kind of progress. The manpower
requirements need to be planned for and managed well.

1. A business is able to consign most suitable number of employees, at the
most apt jobs in the most appropriate time frame, only because of
Manpower planning.
a. true
b. false
2. It‘s seen that the machinery depreciates and eventually becomes obsolete,
properly developed manpower can continue to grow in usefulness and
capacity.
c. true
d. false
6
Modern
3.3 Role and Content of Manpower Planning Methods
of Human
Manpower planning is essential to the company as long as it is in business.
Resource
The HR department chalks out detailed and intricate plans for the same. Planning
Maintaining ideal staffing levels is the premise and rationale for this exercise
Manpower planning is a very important component of HR management. A
thorough assessment of the present resources and the future estimated resources
is done because staffing has to be optimum.
With understaffing, the organisation loses orders, customers, sales and
profits. Overstaffing results in losses in terms of salaries and competence.
Manpower planning means developing strategies to match the requirement of the
staff and the available positions. The people making the plans must have a full
know-how of the organisation's goals.
Manpower planning, in its broadest sense, covers all those activities

traditionally associated with the management of personnel – records, recruitment,
selection, training and development, appraisal, career planning, management
succession and so on. However, it is important, both for analytical purposes and
ultimately for executive purposes, to disentangle these activities and to think of
them as a number of sequential phases. To plan staffing, the HR department
makes an evaluation of the past and future. The present needs and resources are
contrasted with future needs and resources. The three main phases are:
Phase 1: The development of manpower objectives:
This is concerned with the development of forecasts of the manpower

necessary to fulfil the company‘s corporate objectives, with looking at the totality
of situations rather than at individuals. It is concerned with detailed analysis in
order to identify and foresee problem areas, to assess future demands and to
establish how those demands may be met. It is directed towards the development
of manpower strategy as an integral part of company strategy.
Phase 2: The management of manpower:
In this phase, the motive is to manage manpower resources to meet

objectives and development, in more specific and individual terms, of recruitment
plans, training and development plans, succession plans, appraisal systems, etc.
Phase 3: Control and evaluation:
This concerns the continual evaluation and amendment of plans in the light
of achievement and changing circumstances. Planning starts from a given factual
position and tries to look ahead through a range of possibilities. Evaluation in this
6
Human context means thoroughly checking forecasts, forecasting methods against what
Resource in
industries eventually happens, and making such revisions as may prove necessary. Any
planning activity must have a system for this regular checking built into it. In
other words, planning must be a continuing process.
It is the ultimate aim of any complete system of manpower planning that all
three phases should be fully integrated with the company‘s plan. Without a
company‘s plan, there can be no realistic manpower planning.
3.3.1 The Present Position and the Analysis of Trends

In manpower planning there are three basic elements to be considered, the
present stock of manpower, wastage and future requirements for manpower.
Information will be needed in a series of permutations and combinations
according to the needs of the company. The following are the basic ‗building
blocks‘ that will probably be needed in most circumstances:
1. Present total manpower.
2. Manpower resources by appropriate planning groups, for example, sex,

grade, function/department, profession/skill, qualification, age group and
length of service.
3. Total manpower costs.
4. Total costs by appropriate component elements, for example, salaries,

wages, pension contributions, welfare, canteen, etc.
5. Costs by functions/departments.
6. Total numbers related to sales, production or such other criteria as may be
appropriate, in physical and financial terms.
7. Attrition and retention rates by appropriate groups, that is, overall, by
function/department, profession, sex, age group, etc.
8. Recruitment patterns by age, education, etc. for each function/department.
9. Resources of promotable staff.
6
Modern
Check your progress 2 Methods
of Human
1. The activities traditionally associated with the management of personnel – Resource
records, recruitment, selection, training and development, appraisal, career Planning
planning and are called Manpower Planning.
a. true
b. false
2. Basic elements to be considered in manpower planning are
a. the present stock of manpower
b. wastage
c. future requirements for manpower.
d. all the above
3.4 Forecasting Future Manpower Movements

Future manpower requirements are self-evidently governed by the
company‘s corporate plan and they can only be considered in that context.
Indeed, without a corporate plan there can be no realistic manpower plan. It
follows that no forecast for the forward demand of manpower can be more
precise than the formulation of the company‘s overall objectives. Clearly, it is
also important that a company‘s objectives should be so stated as to be
interpretable in terms of manpower involvement. The factors affecting manpower
demand fall into two main groups: trading, production patterns and technological
change.
Forecasts of future labour demand will be of little value unless they are
related to the current and future supply position. For an optimum manpower
forecasting, the manpower planner should have a complete and accurate picture
of the company‘s existing manpower stock. He should be able to estimate in what
areas and to what degree this stock will change by the end of the forecasting
period. The obvious way of meeting manpower requirements is from people
currently employed. With this method, the company gets a rough idea of
available resources and executes an internal recruitment policy wherever
possible. However, the manpower stock is never static and is constantly subject to
outflow and inflows, which pose as the main problem area.
6
Human For a company to survive, long-term manpower planning remains one of
Resource in
industries the most important activities. Succession planning is a large part of this type of
manpower planning. It involves judging what kinds of skills managers will need
in the future and figuring out how to provide people with the chance to build
these skills. In long-term manpower, planning, competitive strategy, which
ensures action, planned around business competitors, play a very important role.

1. Forecasts of future labour demand are related only to the future supply
position and not to present supply.
a. true
b. false
2. Succession planning is a large part of manpower planning
a. true
b. false
3. Succession planning involves judging what kinds of skills managers will

need in the future and figuring out how to provide people with the chance to
build these skills.
a. true
b. false
3.5 Control and Evaluation

In order to ensure effectiveness and efficiency of business process, control
and evaluation of manpower planning is very essential. It is not only necessary to
monitor the process constantly, but it is also equally important to provide
feedback.
Budgets, targets and standards of performance should be always included in
a good HR plan. It should also clarify responsibilities for implementation and
control and establishment of reporting procedures, which enables monitoring the
achievements against the plan. These may simply report on the numbers
employed against establishment and on the numbers recruited against the
6
recruitment targets. They should also report employment costs against budget and Modern
trends in wastage and employment ratios. Methods of
Human
Two broad and complementary approaches to the control and evaluation of Resource
the manpower plan focuses, one in terms of numerical trends and the other in Planning
terms of costs criteria. This normally takes the form of a package of expectations
and objectives, all of which are considered mutually consistent and feasible. The
strategy for achieving these objectives determines the form of organisation to be
used and the amount and form of resources required, including manpower.
In this review, management watches the degree to which the various
specific goals of the manpower plan were achieved. This can be shown by the use
of a number of numerical controls and gauges, such as change in numbers by
total/department/function, changes in wastage (turnover) rates and the reasons for
wastage, changing age structures and their implications, all related to the original
targets set.
Another approach, which has been found useful in giving a comparative
picture of the contribution being made by personnel to the operation of the
company, is the development of cost ratios.
In a world of rapidly changing technology with an ever-growing demand
for more and different skills, the need to plan manpower is as great as the need to
plan any other resource. The prosperity and growth of any company rests, in the
end, on the quality of its manpower and the extent to which their talents are
utilized to the full.
Manpower planning is concerned with safeguarding the future, with
preventing the loss of opportunities to the business. It emphasizes the need for
rationalization by keeping in terms with modern needs, technological capabilities
and the development of organisation structures to match.
The penalties for not being correctly staffed are costly.
 Understaffing results in loss of business cost advantage and specialisation

orders, customers and profits.
 Overstaffing is wasteful and expensive. Very importantly, overstaffing

reduces competitive efficiency of the business.
Planning manpower numbers require an assessment of present and future
needs of the organisation, which should be compared with present resources and
future predicted resources to derive some conclusion. Appropriate steps then be
planned to bring demand and supply into balance.
7
Human Thus, the first step is to have a superficial view of the existing workforce
Resource in
industries profile (includes numbers, skills, ages, flexibility, gender, experience, forecast
capabilities, character, potential, etc. of existing employees) and then to study and
project the same for 1, 3 and 10 years ahead. This activity also includes
amendments for normal turnover, planned staff movements, retirements, etc. in
line with the business plan for the corresponding time frames.
Major contributors to provide numbers for future staffing needs are:
 Sales and production forecasts.
 The effects of technological change on task needs.
 Variations in the efficiency, productivity, flexibility of resources because of

training, work study organisational change, new motivations, other
movements, etc.
 Changes in employment practices (e.g. use of subcontractors or agency

staffs, substitution, etc.)
 Effect of new laws on the available resources e.g. payroll taxes or their
abolition, new health and safety requirements, etc.
 Changes in Government policies (investment incentives, regional or trade

grants, etc.)
Based on the data obtained by the above scenarios, a logical staffing
demand schedule for varying dates in the future can then be compared with the
supply schedules. The comparisons will then indicate what steps must be taken to
achieve a balance. That, in turn, will involve the further planning of such
recruitment, training, retraining, labour reductions (early retirement/redundancy)
or changes in workforce utilisation so as to bring supply and demand into
equilibrium, as a continuing workforce planning exercise.

1. The control and evaluation of the manpower plan should focus on the terms
of numerical trends and costs criteria.
a. true
b. false
7
Modern
2. Budgets, targets and standards of performance should be always included in Methods
a of Human
good HR plan. Resource
Planning
a. true
b. false
3.6 Environmental Scanning

A research process, in which businesses collect all types of relevant
information that helps them in making decisions regarding their survival,
expansion or entrance into new markets, is termed as Environmental scanning. In
simple words, it can be described as keeping a close eye on external or internal
happenings and analyzing this information to know how it can be detrimental or
beneficial for the business. The information thus gathered must be collected,
arranged and disseminated among the company directors and managers.
Mostly, businesses carry out environmental scanning which is limited to
external factors; but some businesses also carry out internal scanning (factors
within the business). Environmental scanning is critical for the management or
decision makers, as this information helps in making well informed decisions and
that too, at the right time. These decisions include expansion, innovation,
entering or leaving a market at the most appropriate time.
Small businesses usually carry out environmental scanning when they start
the business. This is because their resources do not allow them to perform
environmental scanning on continual basis. However, big corporations are always
scanning the macro environment factors to gain competitive advantage over their
competitors. At the end of the day, it is all about spotting the opportunities (or
threats) before our competitors do. It is important to take immediate actions
according to the situation or information gathered by the scanning process,
because environmental scanning is useful only when followed by appropriate
responses.
A business is affected by many external factors and monitoring these
factors all the time becomes very important for its growth. Business expansion
(or contraction) decisions should be based on the economic growth, income level
or employment rate in the market. When introducing a new product or
technology, one should have to have an idea of all the legal and functional
aspects of the business. Union laws, environmental protection or minimum wage
laws, etc. are some of the legal factors, which have an impact on the business.
7
Human Similarly, functional aspect may include observing the demographic factors like
Resource in
industries population distribution, income or education level. They can help to identify the
future trends and eventually help in opening up various new opportunities for the
business. Internal scanning can include the identification of resources in terms of
workforce, capital, technology, strength and weaknesses.
Alternatively, Environmental Scanning may also be put down as,
 Environmental scanning identifies factors and trends that will influence the
future of an organisation.
 It identifies risks and implications associated with these trends.
 It looks at the present situation as well as future potential developments.
 It looks at the situation outside the organisation as well as within it.
 It looks at opportunities as well as threats.
 Environmental scanning is a key component of the integrated human

resources and business planning process.
 Information gathered through the scan is combined with that derived from
workforce analysis. Then the impact of these on business goals is analysed
to determine current and future human resources needs.
What it is not
 A scan is not an action plan, a business plan or an HR plan.
 A scan does not tell what to do or how to address issues.
 A scan does not analyse issues in-depth.
 It is important to manage stakeholders' expectations about what they will be

able to do with the results of the scan.
What it includes
 A review of the external environment (outside the organisation).
 Demographics, economics, society and culture, environment, government

and politics, etc.
 A review of the internal environment (inside the organisation).
 Demographics, legislation and regulations, strategic goals and plans, etc.
 A review of key internal or external stakeholders.
 External stakeholders could include members of the public, non-Public
7
Service institutions organisations, businesses, etc. Modern
Methods
 Internal stakeholders could include specific occupational groups or of Human
functional communities. Resource
Planning
Sources of information
 Best sources will vary depending on the nature and purpose of the scan, but
typically include:
o Written documents (books, news providers, strategic plans, trade
publications, professional literature, government policies, etc.
o Expert opinion obtained from interviews, focus groups, etc.
Environmental scans are organisation-specific
Some issues are common to most organisations, but many key issues are
driven by the mandate, activities and nature of the organisation.

1. A research process, in which businesses collect all types of relevant
information that helps them in making decisions regarding their survival,
expansion or entrance into new markets, is termed as
a. Business scanning
b. Environmental scanning.
c. Market scanning
2. Environmental scanning looks only at the situation outside the organisation

and not inside it.
a. true
b. false
3.7 Human Resources Environmental Scan

Human Resources Environmental Scan is designed to help an organisation
and its departments with better understanding of their operating environment. It
improves their human resources planning by facilitating the identification of their
current and future human resources needs. Through a review of recent human-
resources-related developments and trends, this report outlines the main issues
7
Human and challenges that are expected to affect human resources management over the
Resource in
industries coming years. HR Environmental scanning provides information on what is
happening around a business's environment and how this could impinge upon the
business. With environmental scanning, the business needs to look at trends that
are shaping its industry, including:
 Social and political trends ( some political and social issues may get a lot of
attention that might end up in government policy or legislation, which
could influence the business)
 Market and competition trends

 Technological trends
Contents of the scan
The scan of the external environment explored 6 areas:
 Population
 Economy and Labour Market
 Society and Culture
 Science and Technology
 Physical Environment
 Politics and Governance

These areas appear in many scans and are referred to as STEEP (Socio-
cultural, Technological, Economic, Environmental and Political) or STEP (when
Environmental is omitted).
The scan of the internal environment examined:
 Public Service workforce (demographics, employment equity,

official languages, etc.)
 Goals and objectives of the organisation

Important aspects of HR Environmental Scan
 HR should be aware of the impact of personal opinions on the information

gathered.
 HR should not include a trend that cannot be backed up with relevant

information.
 The goals of environmental scanning are to provide a useful and objective
7
input into the HR planning process. Modern
Methods of
 Issues addressed in the scan must be relevant to the planning exercise and Human
the information gathered must support the work of planners and decision- Resource
makers. Scanning is about providing planners with the information they Planning
need.
 Information gathering and analysis must be as objective as possible in its

search for facts, trends and impacts. Scanning is not about telling people
what they want to hear.
 It is also important to facilitate the sharing and review of issues and trends
identified by individual team members.
 HR should ensure that the findings and conclusions of the scan are worded
in a manner that makes them accessible to the widest audience possible.
 HR should also simplify terminology whenever possible; take time to

explain concepts, etc.
HR Scanning improves an organisation‘s abilities to deal with a rapidly
changing environment in a number of ways:
 An organisation capitalizes on early opportunities rather than losing these

to competitors with the help of scan.
 Impending problems can be defused if they are recognised well in advance

because of scanning result.
 It sensitizes an organisation to the changing needs and wishes of its

customers along with taking care of employees and their benefits.
 To have an objective qualitative information about the environment, HR

scan provides a base that strategist can utilize.
 Strategists attain intellectual stimulation in their decision making by this

scan.
 It improves the image of the organisation by showing that it is sensitive to

its environment and responsive to it as well.
 HR scan helps the resources by continuing broad-based education for

executives, especially for strategy developers.
7
Human
industries
1. What helps to improve the organisations human resources planning by
facilitating the identification of their current and future human resources
needs
a. Business scanning
b. Environmental scanning
c. Human Resources Environmental Scan
2. Human Resource Environmental scan provides information on what is

happening around a business's environment and how this could impinge
upon the business.
a. true
b. false
3.8 Let Us Sum Up

To conclude, every business is capable of placing the most suitable number
of employees‘ at appropriate jobs in the proper time frame with the help of
Manpower planning. Moreover this action is the most essential element in the
existence of the business. Human resources department of an organisation
organize the record of manpower accessible and functioning across all its
departments. This action aims toward analyzing whether every department has
the accurate figure of workers and to approximate the manpower essential in the
future. Maintaining perfect employment levels is the basis and motivation for this
exercise. Manpower planning is a very significant constituent of HR
management. A methodical estimation of the current resources and the upcoming
resources is done as staffing has to be most favourable. Manpower planning, in
its broadest sense, covers all those actions conventionally connected with the
administration of workers – records, recruitment, selection, training and
development, appraisal, career planning, management succession and so on. It‘s
often seen that the future manpower needs are self-evidently administered by the
company‘s corporate plan. So the forecast for the upcoming demand of
manpower can be more accurate if it‘s in accordance with the company‘s overall
objectives. The forecasts of upcoming labour demand will be of modest worth
except they are associated to the current and future supply position. For a most
7
favourable manpower forecasting, the manpower planner must have an absolute Modern
and precise picture of the company‘s active manpower supply. Methods
of Human
The main approaches taken in order to control and evaluation of the Resource
manpower plan are numerical trends and costs criteria. Moreover the HR plan Planning
must comprise budgets, targets and standards and explain tasks for the execution,
administration, and reporting procedures, which will facilitate attainment to be
observed adjacent to the plan.

Answers: (1-a), (2-d)
Answers: (1-b), (2-a), (3-a)
Answers: (1-b), (2-b)
3.10 Glossary
1. Depreciate - decline
2. Obsolete - outdated
3. Sequential - in order
7
Human 4. Static - still
Resource in
industries 5. Consistent - steady
6. Feasible - possible
7. Terminology - terms
3.11 Assignment
As a HR Manager, what factors would you like to consider for
Environmental scanning? Explain how these factors contribute in the planning
process.
3.12 Activities
Express your view, whether all organizations should conduct an
environmental scan or not?
3.13 Case Study

Environmental scanning could endow with a before time caution sign for
organizations, up-and-coming from environmental qualms, risks, threats and
opportunities. It could help companies expand and alter business strategies to
gather varying outside circumstances and therefore perk up their competitiveness
and performance.
1. Read the above passage and write about the importance of the
environmental scanning in formulating HR plans?

1. Planning and Managing Human Resources, William J. Rothwell, H. C.
Kazanas, Second Edition.
2. Strategic Staffing: Tom Bechet.
7
Block Summary
The block provides the thorough knowledge about the small industry and
the role human resources in it. Moreover the induction of a human resource
planning in a business plan and the benefits outsourcing the HR functions in
small businesses are discussed in detail. The purpose of human resource planning
along with its results and inputs added knowledge about the topic. The process
analysis, tasks and activities related to the HR planning were also provided in this
block. The block also provided a detailed description on the challenges of HR
Planning using Clarity 6.0. The modern manpower planning and environmental
scanning along with human resources environmental scanning were also enclosed
in this block.
To conclude, it‘s apparent that most of the small businesses are managed by
a single owner without an employee. But if it has an employee working in it, it
will be significant the owners should understand the HR obligations. The main
challenge the small business owners are facing is the maintenance of competent
staff. It‘s seen that a suitable human resource planning and management results in
formulation of an enhanced rapport and communications between employees and
the management. Above all the HR planning habitually direct to the individual
employee growth plans and resulting a minimum employee turn-over, low rate of
absenteeism and rare incidents. If the employee reimbursement programs are well
prepared and competitive it will result in the increase of morale, good quality
output and competent operations. It has been proven that outsourcing helps the
small scale businesses to gather the benefits. And hence the small-scale
companies adopt strategies in order to outsource various HR functions such as
payroll, recruitment and retention. HR planning is a business strategy by which
an organisation makes sure that it has the right number and kinds of people, at the
right places, at the right time and that these people are capable of performing
their tasks efficiently and competently. The HRP organize the business for future
development of its manpower needs and utilising them suitably in order to
organize the impact of rapid realistic and financial changes by upholding its
feasible situation. Moreover it allows for planning ahead in order to fill expected
ability necessities as well as allow for enviable suppleness in day-to-day
exploitation of manpower. It allows the cope with the unexpected changes such
as technological advances, new markets, sustaining monetary pressures and
intelligent competition.
The significance of an inclusive HR budget and prediction demand is to be

reproduced in the financial and other implementation plans of the business. A
8
Human very well HR plan has the characteristic assets to inhabit a better number of
Resource in
industries budget controllers from a wider selection of functional area along the business.
Now a day the human resource consultant or service agency plays a vital role in
prediction of the basic necessities for human resource in an organisation. But the
manpower planner should be fully aware of the company‘s objectives in terms of
sales, marketing and growth. So the involvement of the top management in
manpower planning is essential. Moreover it should be developed in discussion
with line managers and their representatives. Man power planning which the part
of HR management helps to maintain the perfect employment levels A systematic
assessment of the existing human resources and the forthcoming human resources
is prepared as staffing has to be largely constructive. So manpower planning
covers all those actions traditionally associated with the supervision of workers
their selection training and development, performance appraisal, succession
planning. The forecast for the upcoming demand of manpower can be more
accurate if it‘s in accordance with the company‘s overall objectives.
8
Block Assignment
1. Explain the process of Training and development in Small Scale industries?
2. Explain the meaning of Interview?
3. List the important factors to be taken care of by HR during Interview?
4. Define Outsourcing?
5. Write a note on Clarity 6?
6. What is the basic unit of HR planning?
7. Describe HR planning results?

8. Describe HR planning inputs?
9. What is human resources environmental scan?
10. Describe the forecasting of future man power requirements
11. Describe the control and evaluation of man power planning?

1. Discuss the challenges faced by small business organizations with regards
to human resource planning?
2. Explain the steps to be followed in Human resource planning?
3. In which areas can an outsourcing service provider help with respect to

employee benefits?
4. What are the major challenges faced by the HR department?
5. What does the results of human resource planning help to evaluate? Define
Manpower forecasting.
6. Discuss the new age HR planning with examples?
7. Write in detail about the various aspects of HR planning in retail business?
8. Analyze the attrition rates and compensation offered in the retail

business sector.
9. What do you understand from the modern manpower planning? How is it
different from the old manpower planning?
10. Explain the importance of Man Power Planning?
11. Elaborate Environmental Scanning process.
8
Human
Resource in Enrolment No.
industries
Unit No 1 2 3 4
Nos of Hrs
block:

……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
8
which ought to be
brought within
8
Chharodi,
Ahmedabad-382 481.
HUMAN RESOURCE
PLANNING PGDHR-202
BLOCK 4:
COMPENSATION
MANAGEMENT

Ahmedabad

Pune
Editorial Panel
Author
Language Editor

Ms. K. Jamdal
Ms. Lata
Dawange Ms.
Pinaz Driver
Mr. Kiran Shinde
Mr. Prashant
Tikone Mr. Akshay
Mirajkar

Acknowledgment

introduced.
PREFACE
understanding.
Contents


organization,

Environmental Scan

Benefits
Ambedkar
Open
University
UNIT 1
BASICS OF COMPENSATION MANAGEMENT 30
UNIT 2
ISSUES RELATED TO COMPENSATION 23
BLOCK 4: COMPENSATION
MANAGEMENT
Block Introduction
Compensation management is a common policy, implemented in the
organisations intended to support the business to take advantage of the returns on
accessible talent. The eventual goal is to compensate exact individuals or
personals to the greatest degree for the most significant reasons. The ultimate
compensation management policy make sure that the most excellent talent will
linger with the organization whereas attracting fresh talent and reducing the
employee turnover. In combination with benefits management and workforce
analytics, a successful compensation management policy guides workers toward
behaviours that improve individual well-being and reduce the menace of burnout.
Compensation system entails the entire rewards that are offered to the workers for
the exertion and services they give to the organization. Compensation comprises
with the direct monetary benefits as well as indirect monetary benefits. Wages and
salaries are the direct financial benefits that a worker receives from his or her
organisation. In addition to the wages and salaries, bonuses and commissions are
also a part of the direct monetary benefits. The indirect monetary benefits
comprise paid leave and other leave benefits, retirement plans, workers health
insurance, health plans, education benefits, etc. A definite and unbiased
compensation system offers the organization a benefit of preserving impartiality
and fairness in wages. It is a powerful method to attract the workers, motivate
them to achieve the planned organizational objectives, and maintaining them in
the long run.
This block explains about the compensation management and its role in the
work force management in organisation. Different types of compensations and its
benefits are also explained. The block also gives an information regarding issues
related to the compensation and various retirement plans.
Unit 1 comprises with an introduction to the Compensation Management.
The Components of Compensation System are explained in detail in this unit. The
unit also provides the information regarding the different types of compensation
and the compensation Process. The different techniques used in job evaluation and
the relation between the motivation and fringe benefits are also detailed in this
unit.
1
Compensation
Unit 2 explains the concept of Dearness Allowance related to the
Management
compensation and its emergence and Growth in India. It also comprises a study on
the role of fringe benefits in reward systems. Different retirement plans including
VRS and Golden Handshake Schemes are discussed in detail in this unit.
Block Objective
 What is compensation management?
 The components of a compensation system.
 The different types of compensations.

 The issues associated to compensation.
 Emergence and growth of dearness allowance in India.
Block Structure
Unit 1: Basics of Compensation Management
Unit 2: Issues Related To Compensation
2
UNIT 1: BASICS OF COMPENSATION
MANAGEMENT
Unit Structure
1.1 Introduction
1.2 Compensation Management
1.2.1 Importance of Compensation Management
1.2.2 Features of Compensation Management
1.3 Components of Compensation System
1.4 Types of Compensation

1.4.1 Direct Forms of Compensation
1.4.2 Indirect Forms of Compensation
1.5 Compensation Process
1.6 Techniques of Job Evaluation
1.7 Motivation and Fringe Benefits
1.8 Let Us Sum Up

1.10 Glossary
1.11 Assignment
1.12 Activities
1.13 Case Study

 The importance of compensation management
 Direct form of compensations
 Indirect form of compensations
3
Compensation
 Different methods of job evaluation
Management
 The motivation and fringe benefits
1.1 Introduction
Compensation may accomplish several functions helping the recruitment,
job performance, and job satisfaction etc. Compensation management is also
known as wage and salary administration, remuneration management, or reward
management, deals with the scheming and executing the entire compensation
package. The conventional perception of wage and salary management highlight
on only purpose of wage and salary composition in organizational settings.
However, over the course of time, many more form of compensation, come into
the business field which imposed to take wage and salary administration in
inclusive way with an appropriate change in its arrangement. According to Beach
Wage and salary administration or compensation management is the establishment
and implementation of sound policies and practices of employee compensation. It
comprises the areas as job assessment, surveys of wages and salaries, analysis of
appropriate organizational problems, progress and upholding of wage structure,
establishing rules to manage wages.
1.2 Compensation Management

Compensation is a device used by management for attracting and retaining
the most capable employees and ensuring a competitive structure of the
organisation. So compensation is usually adjusted in accordance with the business
needs, goals, and available resources.The factual meaning of compensation is to
counter-balance. In the context of human resource management, compensation
can be denoted as the monetary and other benefits which are received by an
employee in return to his services to the organisation or the employer. These may
be in diverse forms – like the base compensation in money form and a variety of
benefits, which might be related with employee's service to the company like
provident fund, gratuity, and insurance scheme etc.
According to Cascio "Compensation includes direct cash payments, indirect
payments in the form of employee benefits and incentives to motivate employees
to strive for higher levels of productivity”
4
Compensation management comprises the scheming of the lowest cost pay Compensation
structure that will attract, retain, and inspire the competent employees and which Management
is supposed as a reasonable by the employee satisfaction. The key purposes of
compensation management are as follows:
1. An ideal compensation system will have constructive impact on the
competency and outcomes related to employees. It will support the
employees to accomplish better and attain the preset standards.
2. Compensation will elevate the confidence, competence and teamwork
among the workers.
3. Good compensation and rewards system fetch accord in the rapport of

manager and employees, collective bargaining usually focus on
compensation matters.
4. The perfect compensation system offers cheerful and satisfied personnel.
This reduces the labour turnover. The organization becomes steady in
marketplace.
5. The industry can develop compensation policy and progress if it has the
support of expert, endowed and contented workforce.
6. The efficient compensation system is an essential feature for the

organization success and wealth.
7. The achievement and faithfulness of the organization is considered with
pay-package it provides to its employees.
Fig 1.1 Compensation Management
5
Compensation The modern organisations have realized that thriving compensation and
Management
benefits plans are significant to success in present highly aggressive business
environment. The lack of capable aptitude and demands for more rigorous
executive accountability and long-term obligation has led to the requirement for a
more resourceful approach as well as new compensation practices. Compensation
Management is a planned practice that helps in harmonizing the work-employee
relation by offering monetary and non-monetary benefits to employees. This
includes payments such as bonuses, over time pays, profit sharing, appreciation
rewards and sales commission. The compensation can also comprise non-
monetary benefits like company-paid car, company-paid housing and stock
options. It helps to motivate the employees and improves the organizational
effectiveness. Is often seen that compensation discontentment leads to
absenteeism, job dissatisfaction, low performance, strikes and grievances etc.
1.2.1 Importance of Compensation Management

Lots of studies have confirmed that a first-class compensation package is
indispensable for each industry and it facilitates the management to give
appropriate return to the employees for their offerings to the organization. It
converses a constructive control on the capability of workers and support them to
offer their best and achieve the precise standards. It outlines the basis of
contentment and satisfaction for the employees that reduces the labour turnover
and put forward a stable organization. It augments the job evaluation process
which successively helps to establish more reasonable and possible standards. It is
designed to observe with the diverse labour acts and consequently does not result
in dissimilarity among the labour union and the management. This put together a
harmonious rapport between the employer and the employees. It generates an
environment of self-respect, competence and teamwork among the employees and
endow with contentment to the employees. It inspires the employees to amplify
competence and show their merit. It offers development and improvement
opportunities to the worthy employees. Recruitment and retention of qualified
employees is a universal objective shared by many employers. To some extent,
the accessibility and expenditure of qualified candidates for the vacant positions is
regulated by market factors which are not under the control of the employer.
While an employer may fix the compensation levels for fresh recruits and
advertise those wage ranges, which will be in accordance with the employers who
are in search of aspirants from the same applicant pool. It‟s often realised that the
employee morale and job satisfaction are inflated by compensation. So it‟s
obligatory that there should be a balance between the financial value the employer
6
is prepared to pay and the feeling of value experienced by the employee. In an Compensation
effort to reduce the expenditure, employers might decide on to congeal wages or Management
wage levels at the cost of employee satisfaction and morale. On the other hand, an
employer who desire to lessen employee turnover may try to enhance wage and
wage levels. Compensation is also considered as remuneration for outstanding job
performance.
1.2.2 Features of Compensation Management

An attractive compensation structure helps to
 Recruit and retain skilled employees.
 Increase or sustain morale and contentment.
 Reward and support peak performance.
 Attain internal and external equity.
 Reduce turnover and encourage company loyalty.
 Revise practices of unions.

1. The method used by management for attracting and retaining the most
capable employees and ensuring a competitive structure of the organisation.
a. Work force planning
b. production planning
c. Compensation
2. Compensation management comprises the scheming of the lowest cost pay

structure that will attract, retain, and inspire the competent employees and
which is supposed as a reasonable by the employee satisfaction.
a. true
b. false
3. Good compensation and rewards system does not help to build up ancordial
employee employer relation.
a. true
b. false
7
Compensation
1.3 Components of Compensation System
Management
Compensation will be perceived by employees as reasonable if it‟s based
on systematic components. Various compensation systems have developed to
determine the value of positions. These systems utilize many similar components
including job descriptions, salary ranges/structures, and written procedures.
The components of a compensation system include
 Job Descriptions: A significant component of both compensation and

selection systems, job descriptions characterize in writing the
responsibilities, necessities, functions, duties, position, environment,
conditions, and other features of jobs. Descriptions may be developed for
jobs individually or for complete job families.
 Job analysis: The method of scrutinizing jobs from which job descriptions
are developed. Job analysis methods include the use of interviews,
questionnaires, and examination.
 Job evaluation: A system for comparing jobs for the intention of shaping
suitable compensation levels for individual jobs or job elements. There are
four main techniques: Ranking, Classification, Factor Comparison,
and Point Method.
 Pay Structures: This component is helpful for normalizing compensation
practices. Most pay structures comprise numerous grades with each grade
having a minimum salary or wage and moreover step increment or grade
range. Step increments are frequent with union positions where the pay for
every job is preset by means of collective bargaining.
 Salary Surveys: This comprises the data relating to the average salaries,
inflation indicators, cost of living indicators, salary budget averages.
Companies may acquire results of surveys carried out by survey vendors or
may conduct salary surveys. While purchasing the results of salary surveys
conducted by others it should be noted that the surveys may be carried out
inside a specific industry or across industries and moreover within one
geographical regions.
8
Compensation
Check your progress 2 Management
1. A significant component of both compensation and selection systems, job

descriptions characterize in writing the responsibilities, necessities,
functions, duties, position, environment, conditions, and other features of
jobs.
a. Job Descriptions
b. Job analysis
c. Job evaluation
d. Pay Structures
2. The method of scrutinizing jobs from which job descriptions are developed.
a. Job Descriptions
b. Job analysis
c. Job evaluation
d. Pay Structures
3. A system for comparing jobs for the intention of shaping suitable

compensation levels for individual jobs or job elements.
a. Job Descriptions
b. Job analysis
c. Job evaluation
d. Pay Structures
1.4 Types of Compensation

An employee's total compensation includes four components. The
comparative proportion of every constituent in the total compensation differs from
firm to firm. The major components are:-
 The base compensation which is the fixed pay an employee obtain on a

usual basis, either in the form of a salary or as wages.
 The payments such as house rent allowance (HRA), dearness allowances

(DA) etc.
9
Compensation
 The incentive pay intended to reward employees for excellent performance,
Management
such as performance-linked bonus, share in profit, etc.
 The benefits or indirect compensation or benefits such as company

accommodation, paid holiday, club membership, company car, stock
preferences etc.
Compensation is consistently significant for the employee as it determines
life standard and position in society. In other words, compensation has great
impact on employees economically, socially and psychologically. There are
major types of compensation offered to employees are direct and indirect.
The Direct compensation has a large number of types or methods, from
salaries to bonuses. Indirect compensation is mainly the diverse types of
benefits and long term incentives.
1.4.1 Direct Forms of Compensation

Direct compensation refers to monetary benefits offered and provided to
employees in return of the services they provide to the organization. The monetary
benefits include basic salary, house rent allowance, conveyance, leave travel
allowance, medical reimbursements, special allowances, bonus, PF or Gratuity,
etc. They are given at a regular interval at a definite time.
Fig 1.2 Direct compensation
1
a) Basic Salary Compensation
Management
This type of wage is usually a set amount of remuneration for a definite
period of time. The most customary form is a cash amount over a period of one
year. The regularity of payment is a different part of the compensation and is
according to the organisational standards. Mostly, it‟s monthly or twice in a
month.
b) Conveyance Allowance
Organizations provide for cab facilities to their employees. Few

organizations also provide vehicles and petrol allowances to their employees to
motivate them.
c) Commission
When compensation is according to the volume or is based on the

performance, it‟s known as commission based remuneration. The other terms used
include piecework or piecemeal. Several industries use this kind of remuneration
to get a minimum standard of production in exchange for compensation. It is used
to shift risk from the employer to the employee. There are two methods to
calculate commission. One is based on volume of services and the other is based
on sales.
d) Bonuses
Bonuses are used to augment the performance of the employee. This is a

variable type of remuneration and is more generally found with salaried staff as an
incentive for a particular objective related to time or volume. Other purposes of
bonuses are the enhancement, maintenance and retention of certain skills or the
group of skillsets needed in the organisation. At times when the organisation
attains some financial standards or goals over a period of time, the bonuses are
paid. Bonuses are not commonly used with hourly or commission based
employees due to the nature of the type of compensation already established.
However, in small businesses it is used as a tool to incentivize these two types of
remuneration to meet certain goals. The other form of compensation is indirect in
value. This includes benefits and equity based programs.
f) Special Allowance
Special allowance such as overtime, mobile recharges, meal coupons, travel

reduced interest loans are given to employees in order to provide them social
security and inspire them which will help to perk up the organizational
productivity.
1
Compensation
1.4.2 Indirect Forms of Compensation
Management
Fig 1.3 Indirect Compensation
a) Benefits
This particular group of non-monetary benefits and this type of

compensation is conventionally thought of in the form of health, dental, life,
disability and vision insurances and at the time of retirement. It‟s often noted that
only a few number small businesses offer these benefits to their employees as a
high cost is involved. When small businesses commence providing benefits, they
usually begin out with retirement because of simplicity and small cost. As they
develop the business, they attach the health insurance and carry on to develop the
benefit package according to the work force strength and the risk of business
performance. Some of the benefits are-
 Leave Policy: It is the right of employee to get adequate number of

leave while working with the organization. The organizations provide
for paid leaves such as, casual leaves, medical leaves and maternity
leaves, statutory pay, etc.
 Overtime Policy: Employees should be provided with the sufficient

allowances and amenities during their overtime, such as transport
facilities, overtime pay, etc.
 Hospitalization: The workers ought to be provided allowances to get

their usual check-ups in a fixed interval. Even their dependents should
1
be suitable for the medi-claims that offer them emotional and social Compensation
security. Management
 Insurance: Organizations also endow with for accidental insurance

and life insurance for employees. This gives them an expressive
security and they experience themselves valued in the organization.
 Leave Travel: The employees are offered with leave and travel
allowances to go for holiday with their families.
 Retirement Benefits: organizations endow with for pension plans and

further benefits for their employees which help them after they retire
from the organization at the prescribed age.
 Holiday Homes: Organizations offer for holiday homes and guest

house for their employees at diverse locations. These holiday homes
will generally be in a hill station or a most desired holiday spots.
 Flexible Timings: Organizations give for flexible timings to the

employees who cannot come to work during usual shifts due to their
individual problems and legitimate reasons.
b) Equity Based Programs
The Equity based programs mostly prevail in modern organisation and are
rarely found in the small business world. These types of indirect compensation
attach the worker to the organisation via ownership. Due to the complication and
the legal issues implicated, very small number of organisations uses this method.

1. Compensation is consistently significant for the employee as it
determines life standard and position in society.
a. true
b. false
2. Which one below is an Direct compensation
a. Insurance
b. Holiday Homes
c. basic salary
1
Compensation 3. Which one below is an indirect compensation
Management
a. Insurance
b. bonus
c. basic salary
1.5 Compensation Process

The Employee's Compensation process -
The key purpose of set up employee compensation system is the assessment

and evaluation each and every job. The ways to be pursued for the establishment
of compensation are as follows:
1. Job Analysis
Job analysis is known as a procedure of gathering essential information

describing to the job and its specifications. The essential information can be
gathered by means of various techniques such as surveys, examination,
consultations, and so on. The information is gathered for the groundwork of job
description and job specification statements.
2. Job Evaluation
Job evaluation is a methodical approach of assessing or ranking or rating the

job in provisions of its merit. It place jobs in a hierarchy and allocate a
comparative value of every job so that a pay structure can be unwavering. It
means a methodical comparison of job is prepared in order to establish the value
of one job comparatively to another. Job evaluation offers a purposeful ranking of
jobs so that a reasonable and suitable rate of compensation can be determined for
every job. This provides a fundamental ground for the purpose of a competent pay
structure through the recognition of compensation factors.
3. Compensation surveys
Compensation surveys help in gathering the information on existing market
rates through diverse channels. The data can be gathered by means of formal or
informal surveys. Generally employers in comparatively small organisation use
informal telephone calls to bring together data on a comparatively small number
of basically identified jobs. This informal telephone call is also an excellent
technique for examining divergence in the wage rate. Under this method, the data
and information describing to other organisations pay structure are attained so that
1
the composed data can provide a criterion or benchmark for devising
Compensation
compensation plans and policies. The essential data and information are composed Management
through diverse resources such as published surveys, consultants and agencies,
advertisements, informal communication etc.
4. Pricing Jobs
Under-pricing jobs technique, diverse pay levels are found out based on the
status of each job. Initially the jobs are set into pay grades, and then, the pay rates
are allocated to every individual pay grade, rather than conveying rate to every
individual job. A pay grade include of jobs of just about equal difficulty or
significance. That is, the jobs having identical nature can be assembled under a
job grade as determined by job evaluation.

1. The steps involved in the compensation process are job analysis, job
evaluation, compensation surveys and pricing of the jobs.
a. true
b. false
2. Compensation surveys help in gathering the information on existing

market rates through diverse channels.
a. true
b. false
3. Under the technique, diverse pay levels are found out based
on the status of each job.
a. Job analysis
b. Job evaluation
c. pricing jobs
1.6 Techniques of Job Evaluation

The issue of comparable worth has important implications for an employer‟s
job evaluation procedures. In virtually every comparable worth case that reached a
court, the claim revolved around the use of the point method of job evaluation.
Here each job is evaluated in terms of several factors (like effort, skill, and
responsibility) and then assigned points based on the degree of each factor present
1
Compensation in the job. Inflation and how to cope with it has been another important issue in
Management
compensation management. For example, salary compression means that longer-
term employees‟ salaries are lower than those for workers entering the firm today,
and it is a result of inflation.
a) Ranking Method
The jobs are arranged in rank order of their comparative duties,

responsibilities, qualification requirements, that is, in accordance to their
“significance” to the organization. The method is best used for smaller
organizations with fewer jobs and it may be uncomfortable and unmanageable for
big companies with a large number of different jobs.
Features of this technique are
 Jobs are set from the highest to lowest, accoring to their values or
merit to the organization
 They can also be prearranged according to the comparative

complexity in performing them.
 The job uppermost in the list will have the highest value and job at
the lowest has the lowest value.
 Jobs are arranged in each section or department and then this section
ranking are joined to build up an organization ranking
Ranking method
Rank Job position Monthly salary
1 ACCOUNTANT 6000
2 ACCOUNT CLERK 3600
3 PURCHASE ASSISTANT 3400
4 MACHINE OPERATOR 2800
5 TYPIST 1800
6 OFFICE BOY 1200
1
b) Classification Method Compensation
Management
The classification method is a different non-quantifiable technique which
can generate job grades with “generic” point descriptions. The original positions
are fitted into the “best” fit position, based on duty. The features of this method
are
 Job classification method generates and sustains pay grades for

similar work across your organization.
 It uses job classes or job groups to offer more customization in the

assessment.
 This method also makes use of scales to measure performance rather than
comparing and ranking employees.
Classification Method
Class 1 Class II Class III Class IV

(Executives) (Skilled workers) (Semi-skilled) (Less-skilled)
Office manager, Purchasing workers Steno workers File

Deputy Office Assistant, Cashier, typists, Clerks, Office
manager, Office Receipts Clerk, etc. Machineoperators, boys, etc.
Superintendent, etc.
etc.
c) Factor Comparison Method
In this method similar ranks are given to jobs that have similar
responsibilities and tasks. The evaluators examine jobs in the external labour
market. The jobs prevailing in the organization are then compared to the
benchmark jobs in accordance to the market rate of every job‟s compensable
feature to decide job salaries. Some of the features are given below.
 Under this method, instead of ranking complete jobs, each job is ranked
according to a series of factors.
 These factors comprise mental effort, physical effort, expertise needed,

liability, working conditions, etc.
 Pay will be allocated in this method by evaluating the weights of factors

required for each job.
 Pay is allocated to the job in association to its ranking on each job factor.
1
Compensation d) Point Method
Management
The point method is a proven approach that is extensively used in the
private sector. It‟s easy to use once implemented, but it is time-consuming and
therefore costly to develop. After developing the compensable job factors, job
positions are evaluated to the factors and the suitable number of points is
assigned. The total points slot the position to a grade.
In this method of job evaluation, the organization recognizes the
compensable factors and split them down into degrees. The organization must also
weight the factors, determine the number of complexity levels or degrees for each
factor, and assign points. The result is that the evaluator allocates a numeric score
to a job for each factor based on how much of that factor appears in the job. The
job's entire value is then determined by totalling up the numeric scores across all
factors. This process, when carried out across all jobs, will result in a comparative
list of jobs according to the number of points that every job earns.

1. In jobs are arranged in rank order of their comparative duties,
responsibilities, and qualification requirements.
a. Classification Method c. Factor Comparison Method
b. Ranking Method d. Point Method
2. .is a different non-quantifiable technique which can generate job

grades with “generic” point descriptions.
3. In similar ranks are given to jobs that have similar responsibilities

and tasks.
4. In the after developing the compensable job factors, job positions

are evaluated to the factors and the suitable number of points is assigned.
1
Compensation
1.7 Motivation and Fringe Benefits Management
Fringe benefits are types of compensation that are provided to workers in
addition to the prescribed wage or salary. Familiar examples of fringe benefits
comprise medical and dental insurance, use of a company car, housing allowance,
educational assistance, vacation pay, sick pay, meals and employee discounts.
It‟s often seen that the fringe benefits are considered as foremost by
employees while evaluating the total compensation package. Salaries are vital, but
employees often agree to or disagree to take up a job based on the eminence of
fringe benefits. Health insurance costs have turn out to be very expensive and
employees that may have formerly left a job more likely stay for these benefits.
Some employers offer exclusive fringe benefits as a way to build an employee-
friendly atmosphere and to attract definite category of employees.
People work for various reasons. Many people work as they require being
paid in order to survive, while others work willingly for other reasons. Motivation
is the basis why people work, and it compel them to perform better. Therefore,
most of the present managers try to find out what motivate workers and
implement them in their organisation to encourage workers to work more
efficiently. This result is elevated in efficiency, augmented output and finally
higher profits. It‟s seen that High-tech companies may offer employees with i-
Pads, cell phones and other equipment are normally used for work. Some offer
coffee bars and complimentary snacks to make a more homelike office feel.
Usually, the more aggressive the industry, the more fringe benefits you have to
put forward to attract top talent. If the employee pool is big, there is more
suppleness in offer that is considered as motivating benefits. Fringe benefits are
methods used by human resources to hire and retain top talent and to help form a
motivated workforce.

1. types of compensation that is provided to workers in
addition to the prescribed wage or salary.
a. Basic salary
b. Bonus
c. Fringe benefit
1
Compensation 2. The fringe benefits may comprise of use of a company car, housing
Management
allowance, educational assistance, vacation pay, sick pay, meals
and employee discounts.
a. true
b. false
1.8 Let Us Sum Up

To conclude, the compensation and benefits processes go with the most
significant HR Processes, which are also significant for the organization and
modern HR practices. The compensation management is about management the
workforce expenses budget, putting the performance standards, setting the
apparent compensation policies and initiating the competitive benefits for
employees. The organization with a successful compensation and remuneration
oblige its personnel costs, administers the performance of employees and rewards
the unexpected performances.
The compensation management is a planned practice that aids the HR
department to facilitate and improve the employee relations by giving monetary
and non-monetary benefits to employees. The compensation given are in diverse
forms from the base compensation in the form of money to a diverse benefits,
that is related with employee's service to the organisation such as provident fund,
gratuity, and insurance scheme etc. The direct compensation is the monetary
benefits provided to workers for their services. The indirect compensation is the
non-monetary benefit which is given to the workers in the form of health, dental,
life, disability and vision insurances and at the time of retirement.
The Employee's Compensation process involves the job analysis, job
evaluation, compensation surveys and pricing of the jobs. The main methods of
Job Evaluation are Ranking Method, Classification method, Factor Comparison
Method and Point Method. In the Ranking method the jobs are arranged in rank
order of their relative duties, tasks, condition and requirements. The classification
method is a dissimilar non-quantifiable method which can create job grades with
“generic” point descriptions. In Factor Comparison Method alike ranks are given
to jobs that have a like responsibilities and tasks. And in Point Method, after
developing the compensable job factors, job positions are evaluated to the factors
and the appropriate number of points is allocated. It‟s evident that individuals
work due to motivation and it induce them to achieve better. Hence, most of the
2
modern organisations try to find out the reasons for the motivation of workers and Compensation
apply them in their organisation to persuade workers to work more professionally. Management
Answers: (1-c), (2-a), (3-b)

Answers: (1-a), (2-b), (3-c)
Answers: (1-a), (2-c), (3-a)
Answers: (1-a), (2-a), (3-c)
Answers: (1-b), (2-c), (3-d)
1.10 Glossary
1. Inspire - Motivate
2. Factual - truthful
3. Impartiality- fairness
4. Rapport - relationship
5. Groundwork - Base
6. Unwavering - Steady
7. Benchmark - Standard
2
Compensation 8. Inflation - Rise
Management
1.11 Assignment
Describe the four job evaluation methods with examples?
1.12 Activities
Develop a compensation chart for a business consisting of 8 employees
including a manager and two assistant managers.
1.13 Case Study

The HR Manager of Keletron components Ltd a public sector company
located in a village of Kannur district in Kerala, got a memorandum on behalf of
the trade unions to arrange a company vehicle to the nearest town taliparamba, 10
Km away. Though situated on National highway the location was a lonely area
and the employees of Keltron were suffering from the lack of conveyance. The
majority of the employees who did not have their own vehicles had to rely on
local buses from taliparamba, and the long distance buses seldom stopped in front
of the company. More over during night shifts the travel was more miserable.But
some of the employees mostly men thought it was good not to have a company
conveyance as they monthly got an amount of Rs 500 as conveyance from the
company. Those who had their own vehicle also were against the company
vehicle.
1. Evaluate the demand of the workers and provide the justification for
execution or non-execution this demand?

1. Paying for Performance: A Guide to Compensation Management by Peter
T.Chingos
2
UNIT 2: ISSUES RELATED TO
COMPENSATION
Unit Structure
2.1 Introduction
2.2 Dearness Allowance Concept
2.3 Emergence and Growth in India
2.4 The Role of Fringe Benefits in Reward Systems
2.4.1 Need for Extending Benefits to Employees
2.5 Retirement Plans Including VRS/Golden Handshake Schemes
2.5.1 Qualified and Non-qualified Retirement Plan
2.5.2 National Pension System in India
2.5.3 Retirement Plans and Insurance Companies
2.6 Let Us Sum Up
2.8 Glossary
2.9 Assignment
2.10 Activities
2.11 Case study

 The concept of Dearness Allowance.
 The Fringe benefits and its importance.
 The retirement plans.
 VRS or Golden shake hand schemes.
2
Compensation
Management 2.1 Introduction
As the employees play a significant role in your business‟s achievement, it
is important that the human resource practices should be carefully planned. It
should match up with your business plan.
The employees are to be motivated to develop with the company by
considering the adding up of profit-sharing, customary performance reviews and
employee awards programs. Even if the businesses have few people scheduled in
their payroll they still need to be considerate how to motivate satisfy and content
their employees. The theories abound how to raise workforce productivity and job
satisfaction. But still various small business owners may be unenthusiastic with
the thoughts that they do not have sufficient funds or capital to satisfactorily
convene the desires of their employees. On the contrary, a lot of employee
motivation and appreciation schemes necessitate small to no monetary investment,
and might be merely a subject of changing the management practices. Others need
a few investments, but that is often paid back by enhancing the company's output.
2.2 Dearness Allowance Concept

Dearness allowance (D.A.) is part of a person's salary. It is offered
according to the basic salary. A percentage of basic salary is taken and this
amount is then added to the basic salary along with house rent allowance to get
the total salary. In other words the Dearness Allowance is a component of the total
compensation a person gets for having performed his or her job.
Rate for Dearness allowance (D.A.) can differ in rural and urban areas. In
the case of pensioners the Dearness Allowance is calculated on the original
pension without commutation. It is compensation according to the rise in cost of
living, which is calculated based on „Cost of Living Index‟. Dearness Allowance
is a non-statutory payment that is paid to the employee on a monthly basis. The
payment of this allowance is in accordance with the changes in the cost of living
in a particular location. So the Dearness Allowance is related to the Consumer
Price Index (CPI) for a given location, and the state authorities generally revise
the CPI on a quarterly basis. A change in employee status, such as a transfer or a
promotion, may affect Dearness Allowance. The allowance consists of a fixed and
a variable portion.
2
Issues Related
Check your progress 1 To
Compensation
1. Dearness allowance has no relation with the basic salary.
a. true
b. false
2. Dearness Allowance is a non-statutory payment that is paid to the

employee on a
a. yearly basis
b. monthly basis
c. weekly basis
3. In the case of pensioners the Dearness Allowance is calculated on the basis

of original pension without commutation.
a. true
b. false
4. The Dearness Allowance is related to the Consumer Price Index (CPI) for
a given location
a. true
b. false
2.3 Emergence and Growth in India

Dearness Allowance is compensatory part of wages. In India, the payment
of DA was started since the Second World War. During the War, different cities
had different cost of living costs and to cope with this difference the DA was
introduced in India. The first one to introduce DA in India was the textile industry
in Bombay, which introduced DA scheme by the means of a bipartite settlement.
Later on they took the shape of arbitration, adjudication and finally through the
industrial courts, got into award. Globally DA is paid according to the rise in the
cost of consumer goods prices. Within duration of 5‐10 years, the method of DA
became a familiar system internationally but the fundamental principles remained
identical. The Supreme Court of India had laid down general principles for
fixation of DA grant and the linked it with cost of living index. Bombay is the
most high-priced city in the country. The DA in India is based on the city price
2
Compensation indexes such as Bombay Price Index, Delhi Price Index, Kolkata Price Index,
Management
Ahmedabad Price Index etc.
Fig 2.1 Dearness allowance
Government of India have constituted six pay commissions at normal

intervals to reconsider and propose wage structure for all civil and military
divisions including Railways. These Pay commissions inspect various topics such
as pay and allowances, retirement benefits, conditions of service promotion
policies etc and submit recommendations. The first pay commission was
constituted in 1946 with Srinivasa Varadacharia as Chairman. The commission
recommendations were in accordance with the idea of “living wages” to the
workers. The Commission has set Rs. 55/- as minimum wage (Rs. 30 + Rs. 25 as
Dearness Allowance).The second pay commission was constituted in August 1957
with Justice Jagannadha Das as Chairman. The Commission modified the pay
scales by merging 50% of the Dearness Allowance with basic Pay and it
recommended Rs. 80 as the minimum remuneration(Basic Pay Rs. 70 + DA
Rs.10/-) owed to a Government employee. Constituted in June 1983, chairman of
fourth pay commission was P N Singhal, which recommended that there must be a
permanent machinery to take on periodical reassessment of pay and allowances of
Central Government employees.
Each pay commissions appointed by the Government of India have

increased dearness allowance of the Central Government. The state governments
also have compensated their employees in accordance with the price rise in the
form of dearness allowance, which is offered by them more or less in the similar
pattern as followed by the central government. It‟s seen that the pay scales of state
government employees are linked to different index levels related to each state
and by this reason the dearness allowance paid by the state is different from those
paid to the central government employees. Above all the Government of India
also takes into consideration the level of inflation for the purpose of giving the
2
dearness allowance to Central Government Employees on the basis of the All Issues Related
India Consumer Price index Number for the Industrial Workers. To
Compensation

1. Dearness Allowance is compensatory part of wages. In India, the payment
of DA was started since the .
a. India China war
b. Second World War
c. First world war
2. The Chairman of the Pay Commission which modified the pay scales
by merging 50% of the Dearness Allowance with basic Pay.
a. Srinivasa Varadacharia
b. Justice Jagannadha Das
c. P N Singhal
3. Government of India have constituted six pay commissions at normal

intervals to reconsider and propose wage structure.
a. true
b. false
2.4 The Role of Fringe Benefits in Reward Systems

Fringe benefits are the indirect form of compensations given to the
employees in addition to a variety of forms of pay. They come under the indirect
form of pay because they are not related to the performance and are granted to the
employee for just being the member of the business. According to most of the
employers the fringe benefits constitute an important element of employee
incentives to attain their trustworthiness and help in retaining them. The
significant objectives of fringe benefits are:
1. To generate and perk up sound industrial relations
2. To enhance employee self-esteem.
3. To motivate the employees by making out and fulfilling their

unconvinced needs.
2
Compensation 4. To offer qualitative job environment and work life.
Management
5. To safeguard the employees from the social risks.
6. To look after the health of the employees and to offer safety to the
employees against accidents.
7. To support worker welfare by giving the welfare measures like recreation

facilities.
8. To create a sense of belongingness amongst employees and to maintain
them. That‟s why the fringe benefits are called golden hand-cuffs.
9. To convene needs of various legislations relating to fringe benefits.
Fig 2.2 Fringe Benefits
2.4.1 Need for Extending Benefits to Employees

1. Increasing prices and cost of living has brought about never-ending demand
for condition of additional benefit to the employees.
2. Employers too have realised that fringe benefits put forward striking areas
of conciliation when large wage and salary increases are not practicable.
3. As organizations have developed complex fringe benefits programs for their

workers, greater demands has been positioned upon challenging
organizations to go with these benefits for attracting and retaining
employees.
4. Recognition of the fact that fringe benefits are non-taxable rewards has been
key motivation to their growth.
5. Speedy industrialization, more and more intense urbanization and the
development of a capitalistic economy have made it complex for the
majority of the employees to defend themselves from the unfavourable
impact of these developments.
2
6. The rising number of labour legislation, mainly social security legislation, Issues Related
made it very important for employers to share uniformly with their To
employees the expenditure of old age, survivor and disability benefits. Compensation
7. The development and power of trade unions has significantly inclined the
intensification of company benefits and services.
8. Labour shortage and rivalry for competent human resources has led to the
commencement, progression and execution of a number of compensation
plans.
9. The management has more and more recognized its duty towards its
employees and has arrived to the winding up that the benefits of increase in
efficiency resulting from growing industrialization should go, at least
partially, to the employees who are accountable for it, so that they might be
protected from the uncertainty happening from redundancy, illness, injury
and old age. The organisational benefits and services programs are among
some of the methods which managers use to provide this security to the
employees.

1. Fringe benefits related to the performance of the employees.
a. true
b. false
2. Fringe benefits safe guard the employees from the social risks
a. true
b. false
3. Recognition of the fact that fringe benefits are non-taxable rewards has
been key motivation to their growth.
a. true
b. false
2
Compensation
Management 2.5 Retirement Plans including VRS/Golden
Handshake Schemes
Pension plans offer financial security and permanence throughout the old
age once individuals don't have any regular income source. Retirement plan make
sure that individuals live with arrogance and without compromising on their
standard of living throughout advancing years. Retirement pension scheme gives a
chance to put in and amass savings and get lump sum amount as customary
income through pension plan on retirement.
According to United Nations Population Division World's life expectancy is
likely to reach 75 years by 2050 from current level of 65 years. The enhanced
wellbeing and sanitation conditions in India have augmented the life span. As an
outcome of these facts the number of post-retirement years has also raised. Thus,
going up cost of living, inflation and life expectancy put together the retirement
planning indispensable part of today's life.
Fig 2.3 Retirement plans
The four main types of retirement plans are:
1. Government-sponsored Plans: The main government-sponsored

retirement plan is the Social Security plan.
2. Personal Plans: The most accepted example is the Individual Retirement
Agreement or IRA, which can come in diverse types according to their tax
behaviour.
3. Annuities: These are bonds set up with an insurance company; there are
fixed and variable annuities.
4. Employer-sponsored Plans: The two types of employer-sponsored

retirement plans are qualified and non-qualified retirement plans.
3
2.5.1 Qualified and Non-qualified Retirement Plan Issues Related
To
a. Qualified retirement plan Compensation
This retirement plan is established by an employer for the advantage of the
employees. Qualified retirement plans offer employers a tax break for the
contributions they make for their employees. Qualified plans that permit
employees to put back a fraction of their salaries into the plan also lessen
employees‟ current income-tax burden by reducing taxable income. Qualified
retirement plans facilitate employers attract and retain high-quality employees.
Qualified plans simply allow assured types of investments, which vary by plan but
usually comprise public securities, mutual funds and money market funds etc.
They also denote when distributions can be furnished, normally when the
employee reaches the plan‟s definite retirement age, when the employee turn out
to be disabled, when the plan is concluded and not replaced by a new competent
plan, or when the employee expires.
b. Non-qualified retirement plans
Non-qualified plans are those that are not qualified for tax-exemption
benefits. Therefore, remitted contributions for non-qualified plans will be taxed
when income is acknowledged. This usually refers to when employees ought to
pay income taxes on benefits related with their employment.
Examples for retirement plans are:
1) Defined benefit plans are company retirement plans, like pension plans, in
which a retired employee gets an exact amount based on wage history and
years of service, and in which the employer accepts the investment risk. The
worker, the employer, or both may make the contributions. These plans are
advisable for people who have 20 years for retirement or less, as the annual
contributions will be bigger.
2) Defined-contribution plan: A retirement plan in which a definite sum or

percentage of money is put aside each year by a company for the advantage
of the employee. There are limitations as to when and how you can take out
these funds without fines. Defined contribution plans permit the
employer and employee to make deposits, so that the ultimate
reimbursement depend on how much was in the account and the rate earned
by the account's investments.
3
Compensation Different types of defined contribution plans are:
Management
 Profit sharing: An employer alone put together contributions
according to the employee's current-year compensation. Employers
can choose what sum and whether to contribute to the plan each year.
Employees are qualified to contribute in the plan directly or after one
or two years of employment and the vesting plan are up to six years.
 Stock bonus plan: A type of profit sharing plan, where contributions

are made in the form of company stock.
 Money purchase pension plan: A retirement plan with fixed-

percentage compensations by the employers. Unlike profit sharing
plans, these contributions are mandatory every year, regardless of
profits.
 Combination plans: The profit sharing and money purchase plans are
regularly pooled by companies that have diverse earnings from one
year to the next.
 Employee stock ownership plan (ESOP): The employer offers

shares of the company's stock to employees in exchange for
exceptional tax benefits.
3) Advanced funded pension plan
A pension plan that is funded concurrently with the employee's
accrued benefits; such that the funds are set aside well before the employee's
retirement. Advanced funded pension plans are generally defined
contribution plans, and are fully funded. They can be funded by the
employer alone, or by some combination of the employer and the employee.
4) 401(k) plan
By definition, a 401(k) plan is an arrangement that permits an

employee to decide between captivating compensation in cash or put back a
percentage of it to an account in the plan. The amount put back is generally
not taxable to the employee till it is withdrawn from the plan.
5) VRS or the Golden Handshake
VRS or Golden Handshake is a plan by which the employee is offered

to willingly retire from his services before his retirement date, subject to
certain conditions. It‟s a compassionate technique to retrench the employees
in the company. As the name denotes the VRS is exactingly intentional and
3
one can neither induce the workers to neither admit it nor apply it Issues Related
selectively to any definite individuals. To
Compensation
Fig 2.4 Golden Handshake
The only choice of the employer is the levels, division and age groups
among whom the company wants to offer VRS. The company has the right to
accept or reject the application for the VRS. The Voluntary Retirement Scheme is
a lawful way to down size the work force of an organisation. The VRS candidates
must be employed in the organization for minimum of 10 years and also the age of
the worker must be minimum of 40.Those not complying with these conditions
still can apply VRS but will not get the benefit of tax exemption. The employees
opting for the VRS will get a tax exemption for the amount of Rs. 5 lacks lump
sum.
2.5.2 National Pension System in India

Government of India established Pension Fund Regulatory and
Development Authority (PFRDA) to build up and control pension sector in the
country. The National Pension System (NPS) was commenced on 1st January,
2004 with the purpose of giving retirement income to all the citizens. NPS aspire
to institute pension restructuring and to introduce the habit of saving for
retirement between the citizens.
2.5.3 Retirement Plans and Insurance Companies

Retirement plans offered by life insurance companies are package products,
presenting the payback of both insurance and investment. A characteristic
retirement plan has two phases. The first is the accumulation phase, during which
3
Compensation the premiums are paid by the individuals and the money mount up through the
Management
term of the plan. The accumulated funds are then invested in securities accepted
by the Insurance Regulatory and Development Authority (IRDA), the insurance
regulator. These products are intended to look after the worth of the principal and
also to give steady returns. The accumulation period is followed by the vesting
age; payouts from the fund will be started. The vesting age is mostly between 40
to 70 years. The time when an individual gets pension is also called the annuity
phase. In the instant annuity option, an individual can disburse in lump-sum, as an
alternative of years of payment and start off getting income instantly.
Check you progress 4

1. are company retirement plans, like pension plans, in which a
retired employee gets an exact amount based on wage history and years of
service, and in which the employer accepts the investment risk.
a. Defined benefit plans
b. Defined-contribution plan
c. Combination plans
2. Qualified retirement plans offer employers a tax break for the contributions
they make for their employees.
a. true
b. false
3. A retirement plan in which a definite sum or percentage of money is put

aside each year by a company for the advantage of the employee.
a. Defined benefit plans
b. Defined-contribution plan
c. Combination plans
4. A type of profit sharing plan, where contributions are made in the form of
company stock.
a. Stock bonus plan
b. Profit sharing
c. Money purchase pension plan
3
Issues Related
5. VRS or Golden Handshake is a plan by which the employee is offered
to To
Compensation
willingly retire from his services before his retirement date, subject to
certain conditions
a. true
b. false
2.6 Let Us Sum Up

To conclude, Dearness allowance (D.A.) is component of individual‟s
salary. It is calculated as a percent of the basic salary. This sum is then added to
the basic salary along with house rent allowance to get the total salary. Rates vary
as per rural and urban regions. Pensioners and family pensioners are also offered
D.A. against the price rise. In India also Dearness Allowance is calculated as a
percentage of an Indian citizen's basic salary to ease the impact of inflation on
public. A retirement plan is an arrangement by an employer to offer their
employees with earnings when they longer have a regular income from working.
Retirement plans may be set up by in a range of means but normally will have a
form of a definite payment. Frequently retirement plans necessitate both the
employer and employee to donate money into a fund while employed so that they
will receive benefits upon retirement. Pension plans are judged as a form of
deferred income. The defined benefit plan guarantees an expected monthly
payment at retirement, planned by using a customary formula with some
permutation of the employee salary, years of service and age. A defined
contribution plan will give compensation at retirement that will be determined by
the sum of funds contributed during the time period of the plan and the
performance of the stock or investments used.
Voluntary retirement scheme is a system used by companies to decrease

excess staff. This method has been implemented in India as labour laws do not
allow straight retrenchment of unionized employees. VRS is relevant to an
employee who has finished 10 years of service or is above 40 years of age. The
VRS results in overall reduction of the existing strength of employees. The
vacancy caused by voluntary retirement is not to be filled up.
3
Compensation
Management
Answers: (1-b), (2-b) (3-a), (4-a)
Answers: (1-b), (2-b) (1-a)
Answers: (1-b), (2-a) (1-a)
Answers: (1-a), (2-a) (1-b), (2-a) (1-a)
2.8 Glossary
1. Contrary - different
2. Unenthusiastic - indifferent
3. Adjudication - mediation
4. Redundancy - joblessness
5. Arrogance - pride
6. Amass - collect
7. Annuity - pension
8. Induce - persuade
9. Aspire - seek
2.9 Assignment
Visit an organisation a find out the pension plan implemented in there?
3
Issues Related
2.10 Activities To
Compensation
Choose 5 employees from the organisation you have visited and Calculate
the current DA according to their basic salary?
2.11 Case study

For years, the employees have a perception that a good job accompany with
a good pension plan, promising them regular monthly payments from their retired
company until their death. Due to the increase in the pressure of two other factors,
the pension plans have often been abandoned by most of the companies. First one
is the increase in the life expectancy, which adds to the length of time the
companies have to pay the pension. Second are the interest rates that have fallen
to historic lows, rising the funding that companies must keep apart due to the
lower yield on the assets already in place. So the final option is to "de-risk" their
pension plan. It‟s the demand put forward by the millions of new retirees.
1. Comment on the above passage and give a suggestion of your own to
implement a risk free pension plan?

1. Committees and Commissions in India: 1947 - 73; a Concept's Project.
1979; Part A, Volume 17.
2. An Estate Planner's Guide to Qualified Retirement Plan Benefits, Louis A.
Mezzullo.
3
Compensation
Block Summary
Management The block
gave introductory information to the topic of Compensation Management.
Components of compensation system and different types of
compensation along with the compensation process were discussed in detail. The
methods adopted by the organisation in the process of job evaluation were also
discussed. A detailed study on the relation between the motivation and fringe
benefits was also included in this block. The Dearness Allowance its emergence
and Growth in India was explained. The block also comprised a study on the role
of fringe benefits in reward systems. A detailed study on the retirement plans
including VRS Schemes helped to add knowledge in this topic.
Compensation and Rewards are methods used by employers to successfully
attract, retain and motivate employees. The plan ends up in the fair payment for
performance of a service, in exchange for the work of an employee. While
determining what the organization will disburse as the wages and salaries, it is
significant to know the economic conditions of the region in which the
organisation functions, the quantity of prospective employees and the legislative
needs in place. When determining what should be paid, first consideration is
assignment of the role organizationally which can be determined in the course of
job evaluation and classification. The second consideration is the job significant
talent and skill the aspirant possesses which may impact their appointment in the
salary range upon hire. The compensation management is the management of the
workforce costs, putting the performance standards, setting the clear
compensation strategies and commencing the reasonable benefits for employees.
The compensation given are in varied forms from the base compensation in the
type of money to different benefits, that is associated with workers service to the
organisation such as provident fund, gratuity, and insurance scheme etc. The
direct compensation is the financial benefits given to the employees for their
services. The indirect compensation is the non-financial benefit which is provided
to the workers in the form of health, dental, life, disability and vision insurances
and at the time of retirement. The Dearness Allowance is calculated as a
percentage of an individual‟s basic salary to relieve the impact of inflation on
common people. A retirement plan is an agreement by an employer to give their
employees with an income when they longer have regular earnings from working
mainly in the old age. Retirement plans may be choose by the organisation in a
variety of methods but usually will have a form of a specific payment. VRS or
Golden Handshake is a scheme by which the employee is offered to retire on his
will, from his services before his retirement date, subject to certain conditions. It‟s
a compassionate method to retrench the employees in the business.
3
Block Assignment
1. Describe Job Descriptions.
2. Describe Job analysis.
3. Describe Job evaluation.
4. Direct Forms of Compensation.
5. Basic Salary.
6. Bonuses.
7. Ranking Method.
8. Classification Method.
9. Dearness allowance (D.A.).
10. Fringe benefits.

1. Describe Compensation management.
2. Write a note on an ideal compensation system.
3. What is the importance of Compensation Management in an organisation?
4. What are the Components of Compensation System?
5. Explain different types of Compensation.
6. Describe the process of compensation?
7. Explain what are Retirement Plans?

8. Describe the VRS or Golden Handshake scheme of retirement?
3
Compensation
Enrolment No.
Management
Unit No 1 2 3 4
Nos of Hrs
block:

………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
4
which ought to be
brought within

Chharodi,
Ahmedabad-382 481.

Human Resource Planning

Uploaded by

Copyright:

Available Formats

Human Resource Planning

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Human Resource Planning

Uploaded by

Copyright:

Available Formats

HUMAN RESOURCE

Dr. Babasaheb Ambedkar Open University

Knowledge Management and

Graphic and Creative Panel

Copyright© 2015 Knowledge Management and Research Organization.

The need to plan effective instruction is imperative for a successful

BLOCK 1: INTRODUCTION TO HUMAN RESOURCE

UNIT 1 HUMAN RESOURCES: AN INTRODUCTION

BLOCK 2: BASICS OF HUMAN RESOURCE PLANNING

UNIT 1 AN INTRODUCTION TO HUMAN RESOURCE PLANNING

BLOCK 3: HUMAN RESOURCE IN INDUSTRIES

UNIT 1 HUMAN RESOURCES IN SMALL SCALE INDUSTRY

BLOCK 4: COMPENSATION MANAGEMENT

UNIT 1 BASICS OF COMPENSATION MANAGEMENT

HUMAN RESOURCE PLANNING

BLOCK 1: INTRODUCTION TO HUMAN RESOURCE

 Human Resource Development

 The Definitions for Human Resources.

 The Changing HR Role.

 The role of HR as a Business and Strategic Partner, Employee Advocate,

 The role of Human Resource in Small Business.

 The concept of Recruitment, Selection, Training and Performance appraisal.

 The role HR Agenda in Company‘s Growth.

 What is the Growth Gap?

1.3 Modern Concept of Human Resources

1.4 Some Definitions for Human Resources

1.5 Human Resource Management (HRM)

1.6 Academic theory

1.7 Critical Academic Theory

1.8 Business Practice

1.10 Professional Organizations

1.11 Outsource Human Resource Management

1.12 The Changing HR Role

1.14 HR Role: Business and Strategic Partner

1.15 HR Role: Employee Advocate

1.16 HR Role: Change Champion

1.17 Job Tasks for Human Resources Managers

1.18 Let Us Sum Up

1.19 Answers for Check Your Progress

1.0 Learning Objectives

 Modern Concept of Human Resources.

 Academic Theory and Critical Academic Theory.

 Business Practice and Careers.

 Outsourcing of Human Resource Management.

 Major aspects of HR role.

 The word ‗Human‘ means Homo-sapiens or Social Animal

 Resources mean assets such as Human, Physical, Financial, and Technical,

 Management is related to the function of Planning organizing, leading and

Fig 1.1 Business management

Human resources are an increasingly prominent field that is taking shape

Human Resource Development (HRD) provides the basic foundation for

 Performance management and development

 Key employee identification

Check your progress 1

2. Human Resource Development (HRD) employees in developing

c. Performance management and development

d. All the above

1.3 Modern Concept of Human Resources

 The members of an organization are reservoirs of untapped resources.

 There is scope for unlimited development of these resources.