The Human Resource Planning Process usually followed in a large organisation, consists of the following steps:
Forecasting the Demand for Human Resources
Most firms estimate how many employees they require in future. The demand for human talent at various levels is primarily due to the following factors:
1. External challenges: Human Resource Planning Process
These challenges arise from three important sources:
(a) Economic developments: Liberalisation, opening up of the banking sector, capital market reforms, the on-line trading systems have created a huge demand for finance professionals during 1990-1995 in India. (b) Political, legal, social and technical changes: The demand for certain categories of employees and skills is also influenced by changes in political, legal and social structure in an economy. (c) Competition:Companies operating in fields where a large number of players are bent upon cutting each other’s throat (with a view to enhancing their market shares) often reduce their workforce. Competition is beneficial to customers but suicidal for companies operating on thin margins.
2. Organisational decisions: Human Resource Planning Process
The organisation’s strategic plan, sales and production forecasts and new ventures must all be taken into account in employment planning.
3. Workforce factors: Human Resource Planning Process
Demand is modified by retirements, terminations, resignations, deaths and leaves of absence. Past experience, however, makes the rate of occurrence of these actions by employees fairly predictable.
4. Forecasting techniques: Human Resource Planning Process
The manpower forecasting techniques commonly employed by modern organisations are given below:
(a) Expert forecasts: In this method, managers estimate future human resource requirements, using their experiences and judgements to good effect. (b) Trend analysis: HR needs can be estimated by examining past trends. Past rates of change can be projected into the future or employment growth can be estimated by its relationship with a particular index.
2001-02 Production of Units: 5,000
2002-03 No. of Workers: 100
2003-04 Estimated Production: 8,000
No. of Workers required: 8000 × 100/5000 = 160
If supervisors have a span of 20 workers, 8 supervisors are also needed in 2003-04.
5. Other methods: Human Resource Planning Process
Several mathematical models, with the aid of computers, are also used to forecast HR needs, e.g., regression, optimisation models, budget and planning analysis.
Preparing Manpower Inventory
The basic purpose of preparing manpower inventory is to find out the size and quality of personnel available within the organisation to man various positions. Every organisation will have two major sources of supply of manpower: internal and external.
1. Internal labour supply: A profile of employees in terms of age, sex, education, training, experience, job level, past performance and future potential should be kept ready for use whenever required. Requirements in terms of growth/ diversification, internal movement of employees (transfer, promotions, retirement, etc.) must also be assessed in advance.
The possibilities of absenteeism and turnover should be kept in mind while preparing the workforce analysis. Through replacement charts or succession plans, the organisation can even find out the approximate date(s) by which important positions may fall vacant. Frequent manpower audits may be carried out to find out the available talent in terms of skills,
performance and potential.
2. External labour supply: When the organisation grows rapidly, diversifies into newer areas of operations (merchant banking, capital market operations, mutual funds, etc. in the case of a bank) or when it is not able to find the people internally to fill the vacancies, it has to look into outside sources. To the extent an organisation is able to anticipate its
outside recruitment needs and looks into the possible sources of supply keeping the market trends in mind, its problem in finding the right personnel with appropriate skills at the required time would become easier. Organisations, nowadays, do not generally track the qualifications of thousands of employees manually. Details of employees in terms of knowledge, skills, experience, abilities etc., are computerised, using various packaged software systems. [There are over 300 computerised human resource information systems now available].
Determining Manpower Gaps
The existing number of personnel and their skills (from human resource inventory) are compared with the forecasted manpower needs (demand forecasting) to determine the quantitative and qualitative gaps in the workforce. A reconciliation of demand and supply forecasts will give us the number of people to be recruited or made redundant as the case may be. This forms the basis for preparing the HR plan.
Formulating HR Plans
Organisations operate in a changing environment. Consequently, Human resource requirements also change continually. Changes in product mix, union agreements, competitive actions are some of the important things that need special attention. The human resource requirements identified along the procedure outlined in the above box need to be translated into a concrete HR plan, backed up by detailed policies, programmes and strategies (for recruitment, selection, training, promotion, retirement, replacement, etc.).