Human Resource Planning

 Significance and factors affecting HR planning

An organization first establishes its strategic goals such as competitive advantage, expansion
plans, improved organizational efficiency and satisfaction of employees. It develops and
executes HR plans and programmes in accordance with the objectives selected. These
programmes include recruitment and selection, training, compensation and management of
performance. In general, HR planning is now an effective way of implementing the
organization's business strategies.
1. Assessing Future Recruitment Requirements
The fundamental aim of HR planning is to determine how much staff an organization needs to
successfully achieve its goals and strategies. The identification of a company's future employee
needs is thus a key element in an enterprise's HR planning process. Over a certain time period
HR plans can provide precise information on an organization's personnel requirements.
Thus, HR planning helps in analysing the use of existing human resources, estimating the future
surplus or shortage, planning the reallocation of employees, and then finalizing the recruitment
requirements of the organization.
2. Optimum Utilization of Available Human Resource
The employees are an organization's precious asset. The use of this asset helps HR planning to
achieve cost efficiency. The lack of human resources planning, by contrast, often leads to under-
use of human resources and thus to higher labour costs. In fact, the reduction of staff costs and
maximisation of employee efficiency and involvement are a major purpose for HR planning.
3. Developing Training and Retraining Programmes
The planning of human resources facilitates training programmes for organisations to meet
employees various needs. It determines the skills and skills of the necessary staff. The nature and
duration of workouts for employees can be determined in advance. It also helps to identify the
retraining needs of excess staff to be redeployed in some other organisational positions. At some
time, organizations have advanced their training approach and carry out outreach programmes
such as summer stays to train future candidates before they join the company.
4. Compensation Policy Formulation
In the implementation of an organizational competitive strategy, compensation is always
considered as a key variable. An organisation must ensure necessary alignment of its
compensation plan with the HR plan and organizational strategy. For this purpose, the HR plan
provides the necessary information on the conditions of the organisation externally and
internally. This information will then be used for the design of compensation programmes as
critical input.
5. Determining Management Development Programmes
In the long run, an organization's success depends on its managers' ability to cope with changes
both within and outside the organisation. Therefore, it is the company's responsibility in the near
and distant future to recognize the skills and requirements of its managers. It should also help
managers to identify opportunities in their field to obtain relevant and recent knowledge. In all
management development programmes, HR planning will be key to that.
6. Gaining Competitive Advantage
In a changing external environment, many organizations have begun to view HR as a substitute
for technology and cost leadership in gaining a definite competitive advantage
7. Develop future strategies and plans
In the lean seasons or economic recessions, the survival capacity of large enterprises is usually
much greater than that of small business units. Thus an enterprise is obliged to develop plans and
strategies continuously to improve its business operations and to achieve the necessary stature
and size. Of course, no company can develop its strategy for growth independently of the HR
strategy. A vertical or horizontal increase in business may be part of the growth strategy.

 Factors Affecting Human Resource Planning

Human resource planning is influenced by a variety of factors. Some of these are external in
nature while others are internal. These factors are: the strategy of the organization, the culture of
the organization, the competitive and financial environment, the current organizational situation,
and the need for human resources including skills levels and quality.
1. Strategy of the Organization
The formulation of strategies indicates the organization's response to external developments. The
type and nature of the response would indicate the company's strategy. These strategies are
certainly capable of giving an organisation a new direction. For example, a corporate strategy
can focus on fusion, acquisitions, expansion of the product line and new market entry or product
re-establishment. The organisational strategies should be aligned with functional strategies such
as markets, financial strategies and human resource strategies for effective accomplishment.
2. Culture of the Organization
A group's culture is a set of beliefs, values, ideas, assumptions and traditional practices shared by
a group members—company or region. The corporate culture is also the common beliefs,
attitudes and values which exist for a relatively long time within an organisation and are shared
between its members. Subcultures may also exist within a culture based on age, ethnicity, sex
and region. These cultures and subcultures form the personality and influence the thinking,
emotions, motives, attitudes and patterns of the members. Their attitudes are also influenced.
 3. Competitive and Financial Environment
The external environment of the company was relatively stable and definite before the advent of
globalisation and complex technologies. Environmental factors were not taken into account by
the organisations during their HR plans. HR actions and policies have, in fact, been mainly
guided by organisational questions and goals. These organisations are no longer comfortable in
such stable environments. In the exterior environment the changes in technology, competition,
finance and labour markets have created acute uncertainty and unpredictability.
4. Current Organizational Situation
Organizations may seem common, but in fact every organisation is distinct and unlike others.
The capabilities, adaptability, stage of development, management styles, acquisition order,
changing management processes and workforce skills of organisations, all differ.  therefore it
is important for HR managers to take account of the current situation and capacity of each
organisation and design HR plans.
5. Quantity and capabilities Human Resources Required levels
In determining the company HR plans, the number and nature of vacancies in the company
should also be taken into account. In developing the HR plan, it must be taken into account
factors such as the need for human resources, the position of these vacancies in the
organisational structure, qualifications and competence requirements and the difficulty of
obtaining appropriate persons.

 Human Resource Planning Process

Human resource planning is the ongoing process for an organization to manage the changes in its
internal and external environment on a sustained basis. The basic elements involved in human
resource planning process are jobs, time, persons and funds.
The steps in a general HR planning process are: (i) considering organizational objectives and
strategies, (ii) assessment of external environment, (iii) preparation of an in-house skill and
competency inventory, (iv) HR forecasting—need assessment, (v) HR forecasting—estimation
of availability, and (vi) developing HR plans and programs.
1. Considering the Organizational Objectives and Strategies
The first step in the HR planning process is the consideration of organizational objectives and
strategies. The organizational strategy along with the mission and vision statement clearly
expresses the future intent of the organization. The examination of the organizational strategy
would provide a clear indication about the future HR requirements of the firm. Thus, HR plans
are guided by the overall organizational objectives and strategies.
 2. Scanning the Environment
Environmental scanning organisations undertake to identify changes to the external environment.
The effects of these changes on the present and future activities of the organisation will be
analysed. Environmental forces are defined as events that can lead to or fail to achieve business
goals by a company. Any environmental scan has the basic purpose of investigating the business
environment, taking advantage of the opportunities and addressing threats.
The important external environment factors that usually affect the HR plans of the organization
are:
 Economic Situation
 Legislative Measures
 Labour Market Scenario
 Technological Advancements

3. Preparation of In-house Skills and Competency Inventory

The organisation must evaluate the strength of its workforce in the next phase of HR planning by
preparing a skills inventory. A skills inventory is described as a compilation of skills,
competencies and qualities of the whole employee. It may include determining the sum of the
experience, knowledge, education and skills of employees. Actually, an organization's business
strategy and HR plans are decisively influenced by the quality and size of the capacity inventory.
4. HR Forecasting Need Assessment
The success of the HR plans depends on the exactness of the HR projections necessary for the
implementation of the organisational strategies. These predictions involve estimating the future
nature and number of people of the organisation. In order to determine future HR needs of the
organisation, the information gathered through external environmental scans and internal skill
evaluations are used. The HR prediction, however, usually depends on an organisation's estimate
of future demand for its market products or services and the resulting profit. An organization
may use one or more of the forecasting techniques available to assess the future HR requirements
Trend analysis, Ratio analysis, Delphi technique, Normal group technique, HR allocation model,
Managerial judgement, Work study, Zero-base forecasting, Simulation model.

5. HR Forecasting Estimation of Availability

The next critical process is the estimation of the availability of the required number of
employees, once the needs of human resources are assessed by the organisation. The company
gets a pretty good idea of employee availability with the needed KSA through supply prediction.
It also identifies the sources of people for work. Organizations usually have two prominent
recruitment sources: internally and externally. Four scenarios may be identified for HR
projection of staff availability:
(i) Receiving an adequate number of staff from internal sources;
(ii) Collecting them from external sources
(iii) Combining the two sources to obtain an adjustable number
(vi)Failing to obtain from these sources the required number of appropriate staff.

6. Developing HR Plans and Programmes

Once the organization completes the process of forecasting HR requirements and availability, the
next step is its comparison. The estimated HR needs are matched with the estimated HR
availability to identify the skill shortage or surplus. Comparisons of the HR availability with the
requirements help the organization in determining the viability of the strategic business plans.

 HR forecasting Techniques
1. Trend Analysis
Analysis of trends Trend analysis is a simple technique used to predict HR needs based on past
events. It involves a comparison of any factor which has an effect on the demands for HR (for
example, the average number of resignations in a given year). The general trend in this factor is
used to determine the future direction and the HR requirements of that factor. Therefore, trend
analysis is a tool that examines the factors related to employment over a period of time to predict
future needs. It is, however, a tool that can only be used for a preliminary HR assessment.
2. Ratio Analysis
Analysis of ratio The analysis of the relation between the two numerical variables is ratio
analysis. As a forecasting technique it assumes that two variables are related and predicts future
requirements for HR using that relationship. For example, an organisation can predict how many
more people are needed in order for demand for a product to increase.
3. Delphi Technique
The Delphi technique is basically a group-based systematic forecasting method. This technique
does not require any face-to-face participation by the experts. In fact, the identity of the experts
remains anonymous till the end of the whole process. In the first phase of the Delphi technique, a
group of independent experts forecast the HR requirement of the organization on the basis of the
input provided by the organization.
 4. Normal Group Technique
This is also a method of group prediction. It's an interactive way of making decisions with a
distinction. Each group expert develops HR demands independently and presents them to other
group experts. The group assesses the submission of each member and, if so, removes
duplication. The proposal of each member is then relatively graduated and is chosen as the final
HR forecast as the top proposal. This is an ideal technique to make a quick choice.
5. Managerial Judgment
In this method, forecasts are made about the HR requirements, usually by the senior managers of
the organization. The forecasting here is based on the managers’ subjective views on the possible
human resource requirements in the future.
6. Work Study
Technique The work study technique aims at examining the business operations to achieve the
optimum utilization of the human and physical resources available. The major purpose of this
technique is to improve the employees’ productivity and the organizational efficiency.
7. Zero-base Forecasting
This approach is a new entrant into the current range of techniques to predict an organization's
HR requirements. It requires line managers to justify the need to continue the vacancies in their
department for positions or jobs. No position is considered eligible for routine continuation. Line
managers should logically indicate why the vacancy should not be removed and why it should
continue. Null-base forecasts require managers to conduct a thorough study.
8. Simulation Model
Simulation model is a mathematics-oriented, software-enabled technique with growing
applications in HR forecasting. It is a team-based approach towards HR forecasting. It helps the
organizations in determining the current and future HR requirements of their business.
Human Resource Allocation Approach
It is an HR forecasting method based on object-oriented simulation model. This method has four
components:
(i) Employees, including their education, experience and competencies
(ii) Functions, including job structure and the changes in them
(iii) A matching model
(iv) A formal rule structure comprising the policy of the organization towards job allocation.
 Barriers of HR planning process
Although many organisations have demonstrated a strong interest in carrying out the HR
planning, they have faced some serious problems. This problem affects the success of
human resources planning.

1. Importance of HR Plans Insufficient realisation

Top management has failed to achieve a coherent approach to HR planning in several
organisations. It follows outdated human resources management practises. In addition,
many small and medium-sized organisations do not take their future HR requirements
into consideration. Those companies are more concerned than with their future HR
requirements about their immediate business problems.

2. Indian Labor Market Glut

The surplus labour market conditions in India did not contribute to the HR planning
cause. In view of the over supply in the labour market, many organisations, rather than a
long-term, strategic approach, prefer to adopt an approach based on short-term necessity
to managing human resources.

3. Union Resistance
Employees and their unions often view HR planning as an anti-labour measure. They
perceive HR planning as an attempt by the management to overburden them with
increased workload.

4. Misconceptions of cost-benefit
Many employers refuse to introduce HR planning within their organisations, as the cost
of labour associated with HR provision and the implementation of the plan increases.
Increased training requirements under the HR plan can also boost an organization's labour
costs.

5. Lack of coordination
Failure of line managers' support can also affect the effectiveness of HR planning. HR
planning is in fact an integrated organisational activity, and therefore all line managers
need to be fully cooperating and involved. However, these managers regard human
resources planning as a distraction and also as the responsibility of human resources
managers.