HUMAN RESOURCE

PLANNING AND AUDITING

Human Resource Planning
(HRP)
 Forward looking functions

 Assess Human Resource requirements in advance

keeping the production schedule, market
fluctuations, demand forecasts etc

 Right number of qualified people into right job at the

right time so that an organisation can meet its
objectives.

 Subjected to revision

 Short term ( 2 Year)/ Long term (5 or more years)

Importance Of HRP

 People bank
 Creating High Talented Personnel
 Foundation of personnel function
 Expand and contract
 Cut Cost
 Succession Planning
 Resistance to change
Factors affecting HRP

 Type and strategy of organisation.

 Organisational growth cycle and planning
 Environmental uncertainties
 Type and quality of Information
 Nature of jobs being field
 Outsourcing.
Planning process
1. Environmental Scanning
1. Economic
2. Technological changes
3. Demographic Changes
4. Political Changes
5. Social Concern

• Organisational objective and policies

• Vacancies filled by promotion/ external recruitment.
• Training and Development objectives
• Job Enrichment
• Creative and new jobs
• Ensure continuous availability and flexible workforce.
3. HR Needs forecast
• Estimating future quantity and quality of people require .
Basis of forecast: Annual Budget, Long term corporate plans, activities of
different deptt.

4. HR supply Forecast

5. HR programming

6. HRP implementation

7. Control & Evaluation

8. Surplus
1. Restricted hiring
2. Reduce hours
3. VRS, Lay off etc.

9. Shortage
1. Recruitment and Selection
2. Outsourcing
Target for next lecture

 Case study : Toto Company

Tentative Lecture Schedule
Lecture Topics to be covered Case studies
No.
1. Introduction to HRP Fueling the process.

2. HRP as integral part of Toto company

business planning,
Forecasting
3. Supply of manpower and Tutorials
Integrated budget for
manpower planning
4. System and analysis Case studie
approach, Controlling
manpower of manpower
5. HR Forum Presentation by
groups
 HUMAN RESOURCE
PLANNING AND AUDITING

Session 2
Semester 3
Batch 2009-2010
Lecture Map

 HRP as integrated part of business planning

 Setting man power standards
 Manpower forecasting for managerial staff,
technical staff, office staff, skilled and
unskilled labour.
Role of HRP Professionals
 Strategic role
 Formulating the strategies
 Managing relationship with managers
 Administrative role
 Managing the organisational resources
 Employees welfare activities
 Specialized role
 Collecting and analyzing data
 Designing and analyzing forecasting system
 Managing the career development
Ways to make HRP more effective
 Vertical integration
 Serve stakeholders
 Understand organisation thoroughly
 Structure
 Management/ worker
 Mission
 Issues etc.
 Understand demography
 Data
 Projection
 Profile
 Measurable outcomes
Element of system & their integration
Stakeholder
Interest
______________
Stakeholder
Management
Employee Group
Govt. Long – Term
Community HRM Policies HRM Outcome
Consequences
Union ----------- -----------
Employee Influences Commitment ------------
HR Flow Competencies Industrial wellbeing
Reward System Congruency Organisational
Situational Effectiveness
Work System Cost-effectiveness
Factor Societal Welbeing
______________
Work force
Business strategy
Labour Mkt
Union
Task technology
Laws and societal
values
Harvard Analytical Framework of HRM
HR & Business Planning Process
Strategic Planning
-------------------------------------
1. Define corporate Philosophy
2. Scan environmental conditions
3. Evaluate corporate strategy

Link Corporate and Staff Planning

Strategic Operational Budget

____________ ____________ ____________
Long Middle Annual
(5 Years) (1-5 Year)

Issue Analysis Forecasting Action Plan

require
Sources of information
 Social
 Census information,HR Journals, News, media, Social trends, Employment
sections in papers

 Demographics
 Census information, Local committees

 Political and Legislative

 News, media, Labour Relations Commission, Parliament Proceedings.

 Industrial and Technological

 Journals specific to each industry, Trade associations, Employers
associations.

 Competitors
 Annual reports, Market research, News, MediaNetworking
Strategic Direction- HR Linkages
 Mission Determines business of
organisation
 Obj & Goals Setting Goals and Objective
 Strategies Determine how goals and
objectives will be attain
 Structure Determine what jobs need to
be done by whom
 People Matching Skills, Knowledge
and ability to required job
Levels of Planning

Strategic Level Capabilities required to meet organisation’s long term objectives

Location Level Best required location qualification & labour cost

Group behavior / Unit Level Capabilities of employees to meet Units objectives

Personal Level Specific requirement for specific job

HRP Model

 Strategic Human Resource planning

 Designed to insure consistency between
organisation’s Strategic Planning process
and HRP.
 Objectives of HR Planning are feasible
 HR programmes are designed around
organisational Objectives and strategies require in
terms of human resource goals.
 Basic Human Resource Planning Model

1
Organisational 1 2 Human Resource 3
Objectives HR Requirement Feasibility Analysis
Programme

Link 1 & 5: SHRP: HR Objectives are linked to organisational objectives

Example
Open New Developing new Recruiting
Recruit and trng
Prdt line staff for new
Skilled
1 Installation 2 3
Workers Feasible
Open new
factory and Prdtn Worker Transfer infeasible
Develop because of
distribution Supervisor
technical managers with
system Technical Staff
trang prg right skills
Other managers

4
Develop new
Objectives Recruit Managers 3 Too costly to
And Plan from outside hire from outside

5
Link 1: Determine Demand ( labour
requirement)
 How many people are working and in what
jobs to implement organisational strategies
and attain organisational goals.
 Involve forecasting HR needs based on
organisational objectives
 Involve consideration of alternative ways of
organizing jobs (Job design, organisational
design or staffing jobs)
 Example : Peak production
Link 2: Determine HR Supply
(availability)
 Choose HRM programmes (supply)
 Involves forecasting or predicting effect of
various HR programmes through various job
classification.
 Determine how well existing programme is
doing , then forecast additional programme or
combine the programmes.
 Needs to know various HR programmes and
their combinations.
Link 3 & 4: Determine Feasibility

 Capable of being done

 Requires knowledge of programmes
 Synchronization of programmes with business
environment
 Do the benefits outweigh the costs???
 Difficulty in quantifying cost & benefits.
Link 5: Revise organisational objectives
and strategies.
 If no feasible programme is devised,
organisation should revise the strategic
plans.
Practical shortcomings of HRP
Model
 Oversimplification
 Less rational
 May omit one step because of:
 Lack of knowledge
 Incorrect assumptions
 Poor strategic planning
 Resistance to change
ANALYSIS OF THE WORKFORCE
 INVENTORIES OF THE EXISTING WORKFORCE

 SUCCESSION PLANS-to determine the type and calibre of

managers available to succeed senior or middle managers who
retire or leave

 MOVEMENT OF EMPLOYEES-promotions and transfers

 USE OF STAFF-overtime working, Absenteeism, ineffective or

wasted time or efficiency in the use of labour

 LABOUR TURNOVER-an analysis of the rates at which staff are

leaving employment 7 of trends of such turnover

 COSTS-to know at which point recruitment becomes most cost-

effective than increased overtime working.
Forecasting of Human
Resources
Forecasting Demand for Employees

 Consider the firm’s strategic plan’s likely impact on the

demand for the firm’s products or services.

 Assumptions on which the forecast is predicated should

be written down and revisited when conditions change.

 Unit forecasting (bottom-up planning) involves “point of

contact” estimation of the future demand for employees.

 Top-down forecasting involves senior managers allocating

a fixed payroll budget across the organizational hierarchy.
Time Scale of HRP forecast
Time - Requirement Manpower Possible action plan to
Frame basis Availability meet requirement

Less than Annual budget Existing + Contractors, Overtime,

a year (Operational Plans) Contractual retirement on contractual
basis, restructuring and
layoffs
1- 2 Years Forecasted budgets Current – projected Transfers, Promotion,
(business Plans) attrition recruitment, restructuring,
redundancy, Trg & Devpt

2- 5 Years Long term plans Projected Succession plans,

(includes Trainees) recruitment, restructuring,
redundancy, Trg & Devpt

More than Perspective plans Labour mkt, Succession Plans, MDP,

5 Years education system OD, redeployment, job
restructuring
Forecasting Demand for Employees

 Budgeting
 Statistical Techniques
 Trend analysis

 Regression

 Probability models

 Qualitative Techniques
 Ask the experts / Delphi Technique

 Needs are then compared to current workforce to identify gaps

and decide staffing actions.
 Take into account:
 Productivity and FTE employees

 Scheduling and shifts

 High volume / traffic times

 Statistical methods for forecasting
manpower
 Quantitative techniques
 Workload analysis
 Time series analysis
 Exponential smoothing
 Analysis of productivity and other ratios
 Managerial judgment
 Qualitative techniques
 Delphi technique
 Nominal group technique
Workload analysis

 Classification of work
 Forecasting the no. of Job
 Converting projected jobs in man-hour
 Converting man-hour requirement into
manpower requirement.
Tutorial 1
Planned operation during year 2008 = 2,00,000 units
Standard man-hour needed to perform each unit in 2008= 0.25
Working ability of employee = 4%
Calculate manpower needed for year 2008.
Ans: 25 person
Tutorial 2 : Workload analysis
Job Hrs. Per Year Year Year Year
catagory job forecast forecast forecast forecast
2002 2003 2004 2005
Related to 0.75 15 13 11 8
meter

Related to 2.50 85 95 110 125

installation

Related to 1.50 27 35 41 45
maintenance

Related to 1.10 10 8 6 4
emergency
calls

Assumptions:
1. 20% fatigue allowance
2. 20% leave reserve
Time series analysis

 Components
 Trend
 Cyclic variation
 Seasonality
 Random fluctuations
Trend Analysis

 Study of firms’s past employment needs over

a period of years to predict future needs.
 Initial estimate of future staffing need
 Scatter diagram

Tutorial : HRP of an hospital

No.of beds : 200, 300, 400, 500, 600, 700, 800, 900
No. of nurses
require: 240 260 470 500 620 660 820 860
Trend Analysis of HR Demand
BUSINESS  LABOR = HUMAN RESOURCES
FACTOR PRODUCTIVITY DEMAND
YEAR (SALES IN THOUSANDS) (SALES/EMPLOYEE) (NUMBER OF EMPLOYEES)

1997 $2,351 14.33 164

1998 $2,613 11.12 235
1999 $2,935 8.34 352
2000 $3,306 10.02 330
2001 $3,613 11.12 325
2002 $3,748 11.12 337
2003 $3,880 12.52 310
2004* $4,095 12.52 327
2005* $4,283 12.52 342
2006* $4,446 12.52 355
*Projected figures
Moving average method

Tutorial Year Manpower

Godrej has following level (in Nos.)
manpower data form 2001 500
their health care
division for past 6 2002 600
years. 2003 800
Forecast their manpower 2004 1000
for year 2006, using 6
period and 4 period 2005 1100
moving average 2006 1300
method
Exponential Smoothing
 Weighted factor (α) is used to avoid random
errors
 Fm =Ft- α(At-1-Ft-1)
 Fm = Forecasted Manpower
 Ft = Forecasted Demand for previous period
 α = Smoothing constant
 At-1 = Actual manpower required for the previous year

Tutorial:
Forecasted manpower requirement for an organisation was 500,
while their actual requirement was 480. Considering the alpha value of 0.4,
Compute the manpower requirement for the current period
Ratio Analysis
 Productivity ratio
 Average number of unit produced per direct labor
employee per year.
 Staffing ratio
 Number of individual required in other jobs.
Tutorial: Cafeteria
Assumptions: 1) Guest /day = 200 2)Guest/table = 3
3) Hours/day = 15 4)Drink/guest = 2
5) Indirect tasks
Breaks =5 %
Administration = 10 %
Miscellaneous = 20 %
Judgmental methods
 Suitable
 Quantitative methods
 Small organizations without database
 State of transition.
Methods
 Bottom-up / unit forecasting
 Each unit/ branch estimates own need
 Combine overall needs (current and estimated)
 Top-bottom forecasting
 Experiences of top management and executives
 Delphi Technique
 Achieve group consensus for forecast
 Steps
1. develop questionnaire
2. Complilation of views
3. Return to expert with another questionnaire
4. Repeat until one consensus is achieved.
Supply of Human Resources
 What is Supply forecasting?
Measures the number of people likely to be available form
within and outside the organisation , after making
allowance for absenteeism internal movements and
promotions, wastage and changes in hour and other
conditions of work.
 Reasons for supply forecasting:
 Estimates no. of people and positions in future for plan
execution
 Clarify staff mix
 Assess existing staff level
 Prevents shortage of personnel
 Monitor expected future compliances with legal
requirement.
Forecasting Internal Labor Supply

Staffing Tables
 Graphic representations of the number of
employees currently occupying certain jobs and
future (monthly or yearly) employment
requirements.

Markov Analysis
 A method for tracking the pattern of employee
promotions up through and organization.
Markov Analysis for a Retail Company
Forecasting Internal Labor Supply

Skill Inventories
 Databases of employee KSA’s, education, and used to
match job openings with employee backgrounds.

Succession Planning
 The process of identifying, developing, and tracking key
individuals for executive positions.
 Listings of current jobholders and persons who are potential
replacements if an opening occurs.
Succession Planning
Forecasting External Labor Supply
1. The external labour market
2. Demographic change
3. Labour immobility
4. Early retirement
5. Changing employment patterns (e.g robotics
in car manufacture, computer aided
design/manufacture,JIT, e-commerce)
6. Changing patterns of work (e.g part-time
workers, flexible workforce etc)
Planning Human Resources
Programmes
• Staff/skill shortages
promoting existing staff, Redeployment of staff, training
getting more from existing staff, Job design
External recruitment

• Staff surpluses
stopping recruitment
Natural wastage, transfer, early retirements, Reducing
overtime
Short-time working, redundancy, reducing subcontracted
work
• Managerial succession planning
• Career planning
• Organisation and structure plans
• Performance planning
IMPLEMENTATION OF THE PLAN
ACQUISITION STRATEGIES:
Which define how the resources required to meet forecast needs will
be obtained
RETANTION STRATEGIES:
Which indicate how the organisation intends to keep the people it
wants.
DEVELOPMENT STRATEGIES:
Training and development programmes
UTILISATION STRATEGIES:
which indicate intentions to improve productivity and cost-
effectiveness.
FLEXIBILITY STRATEGIES:
` How the organisation can develop more flexible work arrangements.
DOWNSIZING STRATEGIES:
Which define what needs to be done to reduce the numbers
employed
Staffing Actions
 Recruiting new employees
 Developing existing employees
 Retaining key employees
 Restructuring or redeployment
 Outsourcing functions
 Using contingent employees
 Reassigning shifts