Human Resource Planning - Nature, Objectives, Need, Importance and Barriers

Human Resource Planning (HRP)

Table of Contents

The Human Resource Planning Process describes how management determines how to move the organization from its current manpower position to its desired manpower position. By planning, management aims to improve both the organization and the individual’s long-term success, by putting in place the right actions at the right time. HRP simply refers to forecasting an organization’s future demand for and supply of the right type and number of people. The HRP process is therefore concerned with identifying manpower needs and formulating a plan to meet them.

Phases of Human Resource Planning

In the first phase, data is collected and analyzed through inventories and forecasts of manpower,
During the second phase, manpower objectives and policies are established and approved by top management.
The third phase is the design and implementation of plans and promotions that allow the organization to meet its manpower objectives.
A fourth phase is concerned with controlling and evaluating manpower plans in order to facilitate progress both for the organization and the individual. Taking a long-term view means sacrificing short-term gains for future gains. Through the planning process, the organization can identify its manpower needs as well as what potential manpower problems need immediate attention. As a result, the organization is more effective and efficient.

Nature of Human Resource Planning

Human resource planning analyzes and identifies the available and necessary human resources in order for an organization to accomplish its objectives. A key objective of HR planning is to ensure that the organization has the appropriate number of human resources, with the appropriate skills, at the appropriate time, and in the right place. A human resource planning process must examine the availability and allocation of people to jobs over a long period of time, which does not just apply to the next month or to the next year.

Human resource planning is an integral part of an organization’s overall planning. There are a variety of ways to reduce employee numbers, including shifting employees to other jobs within the organization, laying off employees, developing current employees, or increasing the number of employees in certain areas. There should be a consideration of the knowledge, skills, and abilities of the current employees, as well as the anticipated vacancies resulting from retirements, promotions, transfers, and discharges. HR professionals working with managers and executives must work together to accomplish HR planning.

Objectives of Human Resource Planning

1) To ensure optimal utilization of existing human resources in the organization.
2) To assess or forecast the organization’s future skill requirements.
3) To ensure the availability of necessary resources when and where they are needed.
4) There are a number of specific reasons why manpower planning and forecasting are important. Here are some of them:

To link organizational planning with manpower planning
To determine the recruitment level.
To anticipate redundancies.
To determine optimum training levels.
To provide a basis for management development programs.
To cost the manpower.
To assist productivity bargaining.
To assess future accommodation requirement.
To determine the cost of overheads and the value of service functions.
To determine whether certain activities should be subcontracted.

Need for HRP in Organizations

1) Employment-Unemployment Situation

Although the number of educated unemployed is on the rise, there is an acute shortage for a variety of skills. Therefore, recruitment and retention efforts must become more effective.

2) Technological Change

There has been an extensive and rapid change in manufacturing technologies, marketing methods, and management methods. These changes have profoundly affected job content and context. There have been problems with redundancy, retention, and redeployment as a result of these changes. These factors suggest that manpower needs should be planned intensively and systematically.

3) Demographic Change

HRP is affected by the changing profile of the work force in terms of age, gender, literacy, technical inputs, and social background.

4) Skill Shortage

In the absence of unemployment, the labour market does not become a buyer’s market. The complexity and scarcity of specialist skills in organizations tend to increase as organizations become more complex. Leaving employees with such specialized skills creates a problem for an organization.

5) Governmental Influences

Organizations have become involved in systematic HRP as the result of government control and regulatory changes addressing affirmative action for disadvantageous groups, working conditions and hours, child labor restrictions, causal employment, etc.

6) Legislative Control

“Hire and fire” policies have been abolished. In the present day, legislation makes it difficult for an organization to reduce its size quickly and cheaply. As a result of recent changes in labour law relating to layoffs and closures, it is easy to increase but difficult to decrease the number of employees. The person responsible for managing manpower must look ahead and try to anticipate manpower problems.

7) Impact of the Pressure Group

In recent years, pressure groups such as unions, politicians, and displaced persons have raised opposing demands on enterprise management, such as internal recruitment and promotion, preference to personnel’s children, displaced persons, and sons of soil.

8) Systems Approach

It has been noted that the dissemination of system thinking and the advent of the macro computer are part of the ongoing revolution in information technology that emphasizes planning and newer ways of handling voluminous personnel records.

9) Lead Time

In order for the employee to successfully handle new knowledge and skills, the log lead time is needed in the selection process, training, and deployment.

Importance of Human Resource Planning

Human resource planning is a subsystem of organizational planning. The purpose of organizational planning is to establish the company’s goals for the future and determine the appropriate means by which to reach those goals. On the basis of the key roles HRP plays in the organization, we examine the importance of HRP within the organization.

1. Future Personnel Needs

An organization’s future personnel needs can be determined through human resource planning. Whenever an organization is experiencing either a surplus or deficit of staff strength, it is the result of an ineffective human resource plan. Due to the fact that the public sector enterprises never planned their staffing requirement and went on a hiring spree until the late 1980’s, all public sector enterprises are now overstaffed. Many companies in the private sector are resorting to VRS ‘voluntary retirement scheme’ because of excess staff. There would have been an excess of labor problem if the organization had a good HRP system. A good HRP system will also enable the organization to plan its succession.

2. Part of Strategic Planning

The Human Resource Planning process has become a key component of the strategic planning process. When formulating a strategic plan, HRP gives input into whether the organization has the appropriate human resources to execute the strategy. Human resources are also necessary during the implementation stage in order to determine how to allocate resources based on organizational structure, process, and human resources. A substantial role is played by HRP in some organizations, and HR issues are seen as an inherent part of business management.

3. Creating Highly Talented Personnel

Although India has a significant number of educated unemployed, it is the HR manager’s discretion that will allow the organization to hire the right person with the right skills. Even existing employees hope for the job so frequently that the organization frequently faces manpower shortages. In order to cope with this shortage of skilled manpower, skilled manpower planning in the form of skill development is required.

4. International Strategies

Human resources planning plays a key role in facilitating an organization’s international expansion strategy. Recruiting foreign nationals to fill key positions and reassigning employees within or across borders is a major challenge that international business faces. Due to the trend towards globalization, the need for HRP will increase as well as the need to better integrate HRP with a company’s strategic plans. With the growing competition for foreign executives, there may be costly and strategic turnover among key decision makers without an effective HRP and subsequent attention to recruitment, selection, placement, training, and career planning.

5. Foundation for Personnel Functions

HRPs provide valuable information about designing, selecting, training and developing personnel, transferring, promoting, and laying off employees.

6. Increasing Investments in Human Resources

HRP is becoming increasingly important as organizations invest more in human resources development. The value of human assets can increase more than that of physical assets, organizations are realizing. Employees who develop their skills and abilities gradually become valuable assets to the organization. A trained, flexible, motivated, and productive workforce is difficult to value in terms of rupees due to the fact that it can be acquired either directly or through job assignments. There has been a growing recognition that the quality of the workforce is responsible for both short- and long-term organizational performance.

7. Resistance to Change

When employees hear about change or even job rotation, they are always reluctant to accept it. It is impossible for organizations to transfer employees from one department to another without prior planning. The planning of job rotation (moving an employee from one department to another) involves matching the skills required and the existing skills of the employees.

8. Uniting the Viewpoint of Line and Staff Managers

Line and staff managers can work together through HRP. The HRP is initiated and executed by the organization’s staff, but everyone within an organization is expected to participate and cooperate. Managers are the most knowledgeable about the challenges their departments face. The success of HR Planning and Development depends on effective communication between HR staff and line managers.

9. Succession Planning

People are prepared for future challenges through Human Resource Planning. Employees are identified, trained, assessed, and assisted continuously so they can quickly assume the responsibilities and positions of their boss or seniors as and when the need arises.

10. Other Benefits:

HRP contributes to the evaluation of manpower policies and management programs.
It develops awareness of the importance of using human resources effectively for the organization’s growth.
It facilitates the selection and training of employees with the necessary knowledge, experience, and skills to meet the organization’s objectives.
HRP suggests that the company review and modify its human resource policies and practices, as well as examining the way in which human resources are utilized.

Factors Affecting HRP

HRP is influenced by several factors. The most important of the factors that affect HRP are

(1) type and strategy of organization
(2) organizational growth cycles and planning
(3) environmental uncertainties
(4) time horizons
(5) type and quality of forecasting information
(6) nature of jobs being filled and
(7) off loading the work.

1. Type and Strategy of the Organization

Organization type determines what production processes are involved, how many and what type of employees are needed, and what supervisory and managerial personnel are required. Human resources are also determined by the organization’s strategic plan. The organization would require additional employees if it is planning organic growth. Alternatively, if the company is planning on merging and acquiring, they must prepare for layoffs. Mergers can create, duplicate or overlap positions that are more efficiently handled with fewer people.

It is up to the organization to decide whether it will be reactive or proactive in HRP. Either organizations anticipate the needs in advance and plan to fill them systematically (proactive), or they react to the needs as they arise (reactive). HR plans must similarly be designed to meet the needs of the organization. It is possible for an organization to select one or two HR areas like recruitment and selection to plan for, or it can plan for all HR functions including training and compensation. The formality of the HR plan is also determined by the nature of the HR plan. A company can choose to have a formal HR plan that is written down or to have an informal HR plan that is created by the managers and human resources staff. The type of HR plan also depends upon how flexible the company is. It should be able to anticipate and deal with unforeseen events. HRPs are designed so that they can be flexible and adaptable to many circumstances, ensuring that the plan is flexible and adaptable.

2. Organizational Growth Cycles and Planning

Every organization goes through different stages of growth from the day it is founded. Organizational growth determines the nature and extent of human resources planning. The personnel planning in smaller organizations may not be well defined in the early stages of growth. Yet the organization feels the need to plan its human resources as it enters its growth stage. It emphasizes employee development at this stage. However, as the organization reaches the mature stage, it experiences less flexibility and variability, which results in a low growth rate. As HR planning becomes more formalized and less flexible, and as issues such as retirement and retrenchment become more problematic, it becomes less innovative. During the declining stage of the organization, HRP focuses on planning layoffs, retrenchments, and retirement. Whenever a company is experiencing financial or sales distress, the planning process becomes reactive in nature.

3. Environmental Uncertainties

Changes in political, social, and economic environments impact all organizations greatly, and the fluctuations that happen in these environments have a drastic effect on organizations. Recruitment, selection, training, and development policies and programmes are formulated carefully by personnel planners in order to deal with such environmental uncertainties. We achieve balance in our organization through succession planning, promotions, layoffs, flexitime, job sharing, retirement, VRS, and other arrangements pertaining to personnel.

4. Time Horizons

There are short-term and long-term HR plans. Generally, short term plans last six months to a year, whereas long term plans last between three and twenty years. Depending on the level of uncertainty in an organization’s environment, the period of time required may vary. In general, longer time horizons are required for more uncertain circumstances.

5. Type and Quality of information

Various sources of information are used to forecast personnel requirements. Personnel planners depend to a large extent on the quality and type of information they have available to them. Information quality and accuracy are directly related to the clarity with which the decision makers in the organization have defined their strategy, structure, budgets, and production schedules.

6. Nature of Jobs Being Filled

A person in charge of staffing within an organization should be very particular about the types of positions being filled. Employees at lower levels who need very limited skills can be hired quickly. However, when it comes to hiring employees for higher positions, discretion is needed. It is necessary that organizations anticipate vacancies as far in advance as possible, in order to provide sufficient time to recruit suitable candidates.

7. Outsourcing

Subcontracting is a practice in which organizations outsource a part of their work to outside parties. It is common in both the public and private sectors to outsource services and activities. There are many companies that have surplus labor, so instead of hiring more people, they outsource. Companies typically outsource noncritical tasks. HRP is determined by outsourcing non-critical activities through subcontracting.

Human Resource Planning Process

Human Resource Planning involves forecasting human needs, assessing human supply, and matching demand with supply factors through personnel management programmes. Organizational objectives and the business environment influence the HR planning process.

1) Environmental Scanning

The term refers to the systematic monitoring of the external forces influencing the organization. Organizations can anticipate and adjust to the impact of changes by scanning the environment for those that will impact them. The following forces are essential for pertinent HRP.
• Economic factors, including general and regional conditions.
• Technological changes
• Demographic changes including age, composition and literacy,
• Political and legislative issues, including laws and administrative rulings
• Social concerns, including child care, educational facilities and priorities.

2) Organizational Objectives and Policies

An HR plan typically derives from organizational objectives. From organizational objectives, specific requirements about the number and characteristics of employees can be derived. All stakeholders must agree on the organizational objectives, communicate them and understand them before the HR department can specify its objectives with regards to HR utilization in the organization.

3) HR Demand Forecast

A demand forecast estimates the amount and quality of people that will be necessary to meet future organizational needs. HR forecasts are derived from the annual budget and long-term corporate plan, which are translated into activity into activity.

For example, When a company manufactures products, the sales budget is used as the basis for putting together the production plan that shows the number and type of products to be produced in each period. The organization will use this to determine the number of hours each skilled category of worker will be required to work. A company can determine the quality and quantity of personnel required for a particular task based on the number of hours needed.
There are external factors that affect demand forecasting, as well as internal factors. External factors include competition, economic climate, laws, regulations, technological advances and social trends. Internal factors include budget constraints, production levels, new product and service offerings, organizational structure and employee separations.
Demand forecasting is essential because it helps the organization to

1. Quantify the jobs, necessary for producing a given number of goods.
2. To determine the nature of staff mix required in the future.
3. To assess appropriate levels in different parts of organization so as to avoid unnecessary costs to the organization.
4. To prevent shortages of personnel where and when, they are needed by the organization.
5. To monitor compliances with legal requirements with regard to reservation of jobs.

Organizations employ methods such as managerial judgment, ratio-trend analysis, regression analysis, work study techniques, and Delphi techniques to forecast demand.

4) HR Supply Forecast

The supply forecast determines whether or not the HR department will be able to procure the required number of workers. After allowing for absences, internal movements and promotions, waste and changes in hours, as well as other work conditions, the supply forecast measures the number of people estimated to be available within and outside an organization.

Supply forecast is required because it is needed as it

It allows the organization to quantify the number of people and positions expected to be available in the future to achieve its goals.
Helps to clarify the staff mixes that will arise in future.
It assesses existing staffing in different parts of the organization.
The organization will be able to prevent shortages of personnel where and when they are most needed.
Job reservations are also monitored to ensure future compliance with the law.

Supply analysis covers the existing human resources, internal sources of supply and external sources of supply.

5) HR Programming

In order for vacancies to be filled by the right employees at the right time, an organization’s personnel demand and supply must be forecasted and balanced.

6) HR Plan Implementation

A HR plan must be turned into action in order to be implemented. Implementation of HR plans involves a series of actions. When an HR plan is formulated, programs such as recruitment, selection, training, and placement, retraining, and redeployment, retention, and succession plans are all used.

7) Control and Evaluation

Evaluation and control are the final phases of the HRP process. HR plans include budgets, targets, and standards. Performance will be evaluated and monitored against the plan. The organizations will evaluate the number of people they employ (both those currently employed and those on the pipeline) and the number recruited against their recruitment targets. The employment cost of employees is also assessed against the budget and wastage accrued in order to take corrective action in the future. Read More……..

Requisites for Successful HRP

1. Human resource planning should be integrated into corporate planning.
2. Top management’s support is crucial
3. There should be some centralization of HRP responsibilities to ensure coordination between the different levels of management.
4. Organizational records need to be accessible, complete, and up to date.
5. HR planning should be performed using methods that are most appropriate for the data available and the level of accuracy required.
6. The data collection, analysis, planning techniques and the plans themselves must be continually revised and improved based on experience.

Barriers to Human Resource Planning (HRP)

When formulating an HRP, Human Resource Planners face significant challenges. Following are some of the key obstacles:

HR practitioners are believed to be experts in personnel matters, but people do not perceive them to be experts in business issues. HR practitioners should formulate a personnel plan that integrates with the organizational plan to ensure that the overall strategic plan of the organization is effective.
HR information is often incompatible with other information used in strategy formulation. Financial forecasting has long dominated strategic planning efforts, often to the exclusion of other types of information. Human resource planning takes a back seat to financial forecasting.
There may be conflicts between short-term and long-term HR needs. As an example, there can be a conflict between the pressure to get the work done on time and long-term needs, such as preparing people to assume more responsibility. It is widely believed that managers can meet HR needs immediately if wages and salaries are competitive since skills are available on the market. Therefore, short-term planning is not necessary since skills are available on the market.
There are conflicting approaches to HRP, both quantitative and qualitative. HRP is seen by some as a number game involving tracking the flow of people within a department. There are also organizations that take a qualitative approach and focus on individual employee concerns including promotion and career advancement. A balance between quantitative and qualitative approaches is needed to achieve the best results.
Human resource planning is rendered ineffective if operating managers are not involved. HRP is not solely the responsibility of HR departments. HR staff and operating managers must coordinate their efforts in order for planning to be successful.

Human Resource Planning Quiz/ MCQs

Human resource planning is the term used to describe how companies

(A) ensure that their staff is the right staff to carry out the jobs
(B) planning for candidate search training and skills analysis
(C) planning for staff retention
(D) all of the above

Human Resource Planning consists of the following activities.

(A) Planning the necessary programmes of requirement, selection, training, development, utilization, transfer, promotion, motivation and compensation
(B) Making an inventory of the present manpower resources
(C) Forecasting future manpower requirements
(D) all of the above

The following can affect the Manpower Planning

(A) Seasonal trends in demands
(B) Competitive pressure
(C) Technological changes
(D) all of the above

The correct order of steps in HR Planning is

(A) Investigation – Forecasting – Inventory – Audit – HR Resource Plan – Action of Plan – Utilization
(B) Forecasting – Investigation – Inventory – Audit – HR Resource Plan – Action of Plan – Utilization
(C) Investigation – Inventory – Forecasting – Audit – HR Resource Plan – Action of Plan – Utilization
(D) Investigation – Forecasting – Inventory – HR Resource Plan – Audit – Action of Plan – Utilization

In ___ analysis of demand and supply of manpower is done

(A) Investigation
(B) Forecasting
(C) HR Resource Plan
(D) Actioning of Plan

Human resources planning should serve as a link between human resources management and the overall ___ of an organization.

(A) budget
(B) cost of capital
(C) strategic plan
(D) growth

Supply forecasting measures the number of people likely to be available from within and outside the organization, after making allowance for

(A) promotion
(B) internal movements
(C) absenteeism
(D) all of the above

Supply analysis covers

(A) External source of supply
(B) Existing human supply
(C) Internal source of supply
(D) all of the above

The audits of non-managers are called

(A) skill inventories
(B) management inventories
(C) both (A) and (B)
(D) none of the above

Turnover rate =

(A) Number of separations during one year / Average number of employees during the year
(B) Number of joining during one year / Average number of employees during the year
(C) Number of joining during one year / Total number of employees during the year
(D) None of the above

Following is (are) the requisites for successful Human Resource Planning

(A) Support from employees
(B) Organization culture
(C) Training
(D) all of the above

The 3C principle consists of

(A) clarity, classification, and coherence
(B) clarity, conciseness, and coherence
(C) clarity, conciseness, and cohesiveness
(D) none of the above

The correct order which the human resource professionals generally follow, is

(A) Workforce Analysis – Work load Analysis – Job Analysis
(B) Work load Analysis – Workforce Analysis –Job Analysis
(C) Job Analysis – Workforce Analysis – Work load Analysis
(D) none of the above

Job analysis includes two things:

(A) Job design and job specification
(B) Job description and job specification
(C) Job description and job design
(D) none of the above

The HR Planning process, should be tuned to

(A) organizational objectives
(B) organizational strategies
(C) both (A) and (B)
(D) none of the above

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Smirti

(Founder of Management Notes)
MBA,BBA.

I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.

I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,