CHAPTER – 2

HUMAN RESOURCE
PLANNING
Slide 6.2

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
 Human Resource Planning Process
External Environment
Internal Environment
Strategic Planning

Human Resource Planning

Forecasting Comparing Forecasting

Human Requirements Human Resource
Resource Availability
Requirements and Availability

Demand = Surplus of Shortage of

Workers Workers

No Action Restricted Hiring, Recruitment

Reduced Hours,
Early Retirement, Selection
Layoff, Downsizing
Slide 6.4

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.5

Linking Employer’s Strategy to Plans

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.6

HRP - four-step process

1. analyze current human
resources,
2. forecasts future requirements,
3. identifies areas where there are
gaps, and then
4. implement a plan to tighten up
those gaps. 

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.7

Strategies for Managing Shortages

 Recruit new permanent  Work current staff overtime

employees  Subcontract work out
 Offer incentives to  Hire temporary employees
postpone retirement
 Redesign job processes so
 Rehire retirees part-time
fewer employees are
 Attempt to reduce turnover needed

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.8

Strategies for Managing Surpluses

 Hiring freezes  Across-the-board pay cuts

 Do not replace those who  Layoffs
leave  Reduce outsourced work
 Offer early retirement  Employee training
incentives
 Switch to variable pay plan
 Reduce work hours
 Expand operations

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Human Resource Planning (HRP)
 First component of HRM strategy
 All other functional HR activities are derived from & flow out
of HRP process
 Basis in considerations of future HR requirements in light of
present HR capabilities & capacities
 Proactive in anticipating & preparing flexible responses to
changing HR requirements
 Both internal & external focus
 Key Objectives of HR Planning
 Prevent overstaffing & understaffing
 Ensure organization has right employees with right
skills in right places at right times
 Ensure organization is responsive to changes in
environment
 Provide direction & coherence to all HR activities &
systems
 Unite perspectives of line & staff managers
Types of Planning

 Aggregate Planning
 Anticipating needs for groups of employees in specific, usually lower
level jobs & general skills employees will need to ensure sustained high
performance
 Succession Planning
 Focuses on ensuring key critical management positions in organization
remain filled with individuals who provide best fit
 Four main components of HRP activity
1. Investigation and analysis – internal and external.

2. Forecasting to determine an HR imbalance or ‘people gap’.

3. Planning, resourcing and retention activities.

4. Utilisation and control through HR techniques, policies and IT.

Forecasting Demand for Employees

Quantitative
QuantitativeMethods
Methods

Forecasting
Forecasting Demand
Demand

Qualitative
QualitativeMethods
Methods
Slide 6.14

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.15

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.16

Forecasting Personnel Needs:

Quantitative

Forecasting
Tools

Trend Analysis Ratio Analysis Scatter Plotting

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.17

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.18

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.19

Ratio Analysis
HR Metric* How to Calculate It

Absence rate # of days absent in month

× 100
Average # of employees during month × # of workdays

Cost per hire Advertising + agency fees + employee referrals + travel cost of
applicants and staff + relocation costs + recruiter pay and benefits
Number of hires

HR expense HR expense
factor Total operating expense

Time to fill Total days elapsed to fill job requisitions

Number hired

Turnover rate Number of separations during month

× 100
Average number of employees during month

1–19

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.20

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.21

FIGURE Scatter Plot Diagram

Determining the
Relationship
Between Hospital
Size and Number
of Nurses

Note: After fitting the

line, you can project
how many employees
you’ll need, given your
projected volume.

Size of Hospital Number of

(Number Registered
of Beds) Nurses
200 240
300 260
400 470
500 500
600 620
700 660
800 820
900 860

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.22

Other Techniques…
 Managerial Judgement
 Top down and bottom up approach
 Participative approach

 Delphi Technique

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.23

Work-Study Technique: also

called work load analysis
Estimated total annual production = 300,000 units
Standard man-hours needed to produce each unit = 2 hrs
Estimated man-hours needed to meet estimated
annual production
(i x ii) = 600000 hrs

 Work ability/contribution per employee in terms of

man-hour = 1500 units
 Estimated no. of workers needed (iii / iv) =
600000/1500 = 400 units

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.24

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.25

Drawbacks to Traditional Forecasting

Techniques
 They focus on projections and historical relationships.
 They do not consider the impact of strategic initiatives
on future staffing levels.
 They support compensation plans that reward
managers for managing ever-larger staffs.
 They “bake in” the idea that staff increases are
inevitable.
 They validate and institutionalize present planning
processes and the usual ways of doing things.

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.26

Using Computers to Forecast

Personnel Requirements
 Computerized Forecasts
 Software that estimates future staffing needs by:
 Projecting sales, volume of production, and personnel required to
maintain different volumes of output.
 Forecasting staffing levels for direct labor, indirect staff, and exempt
staff.
 Creating metrics for direct labor hours and three sales projection
scenarios—minimum, maximum, and probable.

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.27

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.28

FIGURE
Management
Replacement Chart
Showing
Development
Needs of
Potential Future
Divisional Vice
Presidents

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Forecasting the Supply of Employees:
Internal Labor Supply
 Staffing Tables
 Skill Inventories
 Replacement Charts
 Succession Planning
Slide 6.30

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.31

Human Resource Inventory

 also known as the skills inventory
 comprehensively lists down the basic
information on all the employees, like their
education, experience, skills, age, gender,
salary related data, job preference and
special achievements through HRIS.
a vital tool used in HR planning and policy
making.

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.32

Use of HR Inventory
 Hiring qualified staff for meeting current as well
as future needs of various business departments
 Allocation of right employee to the right job
 Ensuring organizational success by efficient
staffing
 Analyzing current deficits and taking up the right
training programs to bridge the skill gaps
 Strategizing a workforce plan for future needs of
business.

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.33

HRIS – Human Resource

Information System
 isbasically an intersection of human
resources and information
technology through HR software.
This allows HR activities and
processes to occur electronically.

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008
Slide 6.34

Human resource management systems enabled

higher administrative control of such systems.
Currently human resource management systems
encompass

 Payroll
 Time and Attendance
 Performance Appraisal
 Benefits
 HR Management Information System
 Recruiting/Learning management
 Performance record
 Employee self-service
 scheduling
 Absence management
 HR Analytics

Eugene McKenna and Nic Beech, Human Resource Management, 2nd Edition, © Pearson Education Limited 2008