Unit 3: Human Resource Planning BBS 130 Human Resource Management

HUMAN RESOURCE PLANNING

1.0. INTRODUCTION
Human Resource Planning (HRP) is essentially a systematic approach to ensure that the right
people will be in the right place at the right time. It may be looked upon, as Chatterjee (2009)
argues, as a strategy for the acquisition, utilization, improvement and preservation of an
enterprise’s human resources. The purpose is to evolve a process by which an organisation
can move from its current human resources position to its desired human resources position,
doing things which result in both the organisation and the individual receiving maximum
long-run benefit. This has to be an integrated approach.

This unit (i.e., Unit three) looks at processes and activities designed to make available the
necessary number of people with the necessary qualifications in order to realise the
organisation’s goals along with the interests of individual employees. It brings into
perspective the concept of planning in so far as Human Resource Management is concerned.
It addresses the rationale behind planning for HR personnel. Human Resource Planning
(HRP), also called Manpower planning or Workforce planning is about ascertaining the kind
of employees the organisation shall need at some future point in terms of quantity, quality,
and cost of hiring, etc.

At the end of this unit, therefore, students should be able to do the following:
 Define Human Resource Planning;
 Analyse the concept Human Resource Planning;
 Evaluate the aims of Human Resource Planning;
 Illustrate the benefits of Human Resource Planning;
 Explain the difference between strategic planning and Human Resource Planning;
 Describe human resource strategies;
 Outline the strategic Human Resource Planning process; and
 Analyse the challenges / problems of Human Resource Planning.

2.0. NATURE AND CONCEPT OF HUMAN RESOURCE PLANNING

2.1. Definition of Human Resource Planning
The following are some of the definitions of HRP:
(a) Cole (2002), quoting the Department of Employment (1974), regards HRP as a strategy
for the acquisition, utilization, improvement and retention of an enterprise’s human
resources.
(b) Beach (1985) defines HRP as a process for determining and assuring that the
organization will have an adequate number of qualified people, available at the proper
times, performing jobs that meet the needs of the enterprise and that provide
satisfaction for the individuals involved;

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(c) Robbins (1994) sees HRP as a way to ensure that the organization has the right number
and right kind of people, in the right places, at the right times, who are capable of
effectively and efficiently completing those tasks that will help the organization
achieve its overall objectives;
(d) Andrews (1993) regards HRP as predicting the demand for human resources and
drawing up programmes to supply in the demand;
(e) Human Resource Planning is the process by which an organisation ensures that it has
the right number and kinds of people at the right time, in the right places capable of
performing the tasks necessary to achieve the organisations objectives (Armstrong,
2001: 357).
(f) Human Resource Planning is the process for ensuring that the human resource
requirements of an organisation are identified and plans are made for satisfying those
requirements. Human resource planning is based on the belief that people are an
organisation’s most important strategic resource and matches resources to business
needs (Bulla and Scott: 1994).

Thus, it may be stated that HRP is the process by which management identifies current and
future human resources needs for an organization to achieve its goals. Through HRP an
organisation’s management ensures that the right numbers of employees, who are of the right
kind, and obtained at the right cost are available to the organization. Therefore, HRP is a
systematic and rational process employed by organizations in order to ensure that:
 Sufficient and suitable staff are recruited;
 Staff are retained in the organization;
 Staff are utilized to optimum levels;
 Staff performance is constantly improved;
 Staff are disengaged from the organization as and when need arises.

It is clear from these points that HRP is not just about quantity; above all it is about the
quality of personnel that are engaged in order for organizations to attain set objectives now
and in the future. This assertion is supported by Stone and Meltz (1983) who describe HRP as
‚the process that estimates future demands for employees, both in quality and in quantity
terms; compares the expected demand with the current work force, and determines the
employee shortages or surplus based on the organization’s strategies and objectives‛.
Furthermore, it is clear from these views that successful HRP is related to the effective
realization of the goals and objectives of the organization. It is on this account that it is argued
that HRP is part of the strategic plan of an organization. Perhaps this idea can be appreciated
more clearly if the purposes of HRP are studied.

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2.2. Purpose of Human Resource Planning:

The purposes of HRP are many; but two stand out. Firstly, the purpose of HRP is to assess
where the organisation is, where it is going, and what implications these assessments have on
future supplies and demands for human resources. Attempts must be made to match the
DEMAND for, and SUPPLY of the human resources, making it compatible with the
achievement of the organisation’s future objectives.

Secondly, the purpose of HRP constitutes forecasting the organization’s labour requirements
for the future; and devising strategies to ensure that the right number and type of personnel
will be available at the right time, right place and right cost to enable the organization achieve
its objectives. Hence, the role of HRP is to ensure that an organization has the right quality
and quantity of employees doing the right things in the right place at the right time and at the
right costs to the organization. Thus, HRP seeks to determine the number and kinds of people
the organisation needs now and may need in the foreseeable future and seeks ways to satisfy
those needs - perhaps even to anticipate them.

One of the implications of the above arguments is that the numerical flow and outflow of
individuals in an organization must be kept in check so as to reduce disturbances in the
employment patterns. To this end, management requires information on the expected
number of turnovers of staff within the organization. This information is used to establish
recruitment needs, as well as succession and development plans. If management lacks this
kind of information it may find that some of its departments are over-staffed while others are
understaffed.

2.3. Uses of Human Resource Planning:

Besides these purposes, HRP has the following uses:
 it is essential for determining future human resource needs;
 it enables the organization to adapt to changes in markets, competitors, technology,
products and government regulations (such changes often generate changes in job
content skill requirements and the number and type of employees required);
 it is an important component of corporate and strategic planning; and
 It provides important information for the design and implementation of activities such
as recruitment, selection, training, transfers, promotion and dismissal of personnel.

2.4. Aims of Human Resource Planning

The main aims of HRP can be summarized as follows:
 Obtains and retains the number of people it needs with the skills, expertise and
competencies required;
 Makes the best use of its resources;

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 Anticipates the problems of potential surpluses or deficits of people;

 Develops a well-trained and flexible workforce; and
 Reduces its dependence on external recruitment when key skills are in short supply by
having a reservoir of its own employees.

2.5. Benefits of Human Resource Planning

The benefits of Human Resource Planning include the following:
(a) HRP ensures a smooth supply of THE right type and right number of employees with
adequate knowledge, experience and aptitudes at all levels and at all time;
(b) HRP identifies Human Resource gaps, if any, and helps in the implementation of
corrective action plans to avoid any loss of work or money to the organisation;
(c) HRP helps in the optimum utilization of the available Human Resource & helps reduce
any wastage;
(d) HRP anticipates any future manpower gaps & motivates the employees by identifying
plans like a career planning & succession planning.
(e) HRP also facilitates the provision of infrastructure in the organization by giving an
estimate of the future head count.

3.0. HUMAN RESOURCE PLANNING AND STRATEGIC PLANNING

HRP is a product of strategic planning. HR Directors are usually members of the board of
Directors. This enables them to participate in the strategic planning process which seeks to
ensure that the organization continues to survive in a changing environment.

The essence of HRP lies in the fact that an organization cannot function without people. HRP
seeks to forecast the number and kinds of people that will be needed to achieve the strategic
goals of the enterprise. The general direction of the enterprise is an important element of the
human resource planning process. The outcome of the strategic planning process can
influence many human resource decisions such as recruitment and training and development.

3.1. Framework For Strategic Human Resource Planning

The strategic Human Resource Planning process can be captured in a conceptual model such
as the one shown below.

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Organizational Strategic
Planning Process

Business Unit

HR Supply and Demand Strategic Planning Process

Analysis

 Environmental HR function
Scanning
 Forecasting Strategic Planning
 Succession Planning Process

Human Resource Plan

Implementation

Career planning and development activities are also elements of human resources planning.
These two activities go a long way to ensure that the right people with the right skills are at
the right place at the right time.

3.2. The Human Resource Strategy

A strategy is a game plan that is used to interact with the environment and make the firm
achieve a competitive advantage. Due to the changing dynamics of the Human Resource
function, there is greater need for a Human Resource strategy. Companies that are successful
are those that begin as early as possible to define and include in their activities a unique
competitive position including the human resources.

The Human Resource strategy enables an organisation to remain effective and efficient in
managing people in line with the changing business and environment. It is a comprehensive
approach covering the vital issues such as Change Management, Competence Building, and
Cultural Change, and so on.

The list of Personnel strategies is endless. They range from tightly controlling labour costs,
encouraging sales and production performance, to enhancing employee creativity. Ultimately

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each is designed to help the organisation fulfil its mission and objectives. Examples of the
range of Personnel/ Human Resource strategies include:
(i) Recruitment and Selection Strategies: - Some firms wish to promote from within
by looking first at their current employees when filling managerial positions. Other
companies seek managers from outside the company.

(ii) Personnel Planning Strategies: - Some companies do little planning for future
personnel needs. Others use succession planning and computer simulations to
determine the type and number of employees needed.

(iii) Training and Development Strategies: - Some companies allow employees to learn
their skills on the job. Others spend thousands of dollars carefully training
employees before they are allowed to assume job responsibilities.

(iv) Performance Appraisal Strategies: - Some companies use very informal

Performance Appraisal systems such as occasionally telling an employee how he/
she is doing over a cup of coffee. Others use carefully developed appraisals and
formal appraisal interviews.

(v) Compensation Strategies: - Some companies pay below the market rate, whereas
others pay above. A number of companies offer liberal medical, dental, and
hospitalisation insurance plans whereas others do not. Some companies use
incentive pay, sales commissions, and profit sharing; others pay a flat hourly rate or
salary regardless of individual productivity.

(vi) Employment Relations Strategies: - Some companies adapt an antagonistic

posture toward unions; others do not. A Company may use a well-defined
progressive discipline system or leave disciplinary actions entirely up to the
supervisor.

4.0. THE STRAGEGIC HUMAN RESOURCE PLANNING PROCESS

Human Resource Planning involves matching the available employees with the jobs to be
performed and taking care of the shortages and overloads that might be detected. This can be
shown in a figure as below.

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Strategic Planning

Human Resource Planning

Find out what is available Compare Forecast the HR Requirement

Demand = Supply Demand > Supply Demand < Supply

(No action) (Action). (Action)

4.1. Steps in Human Resource Planning

The Human Resource Planning process has basically seven (7) steps, namely: Assessing the
current human resources of the organisation; Assessing where the organization is going
(objectives); Forecasting the supply and demand for human resources; Matching demand and
supply; Dealing with overloads; Outplacement services; and Dealing with Shortages.

(i) Assessing the current human resources in the organization

The Human Resource Manager begins by developing a profile of the current human
resources in the organisation (auditing skills) and the jobs that exist in the organisation
(auditing jobs). This will be done after the human resource manager is clear of the human
resources available in the organisation. This is done by scanning the internal environment to
know what has been happening to human resource for instance the labour turnover, training
levels, absenteeism and death of employees.

Assessing the current human resources can be done by auditing skills and jobs as detailed
below:

(a) Auditing skills

Once planners obtain an understanding of the current jobs and the new jobs that will be
necessary to carry out the organisation’s plans, they can make a detailed audit of current
employees and their skills. The basic source of data on employees and their skills is the
Human Resource records of the organisation.

This auditing of skills would include developing and analyzing a databank containing the
following information.
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 A list of names of the employees;

 Their level of education and training;
 Prior employment and time in each job;
 Current position;
 Performance ratings;
 Salary level;
 Languages spoken;
 Capabilities; and
 Specialised skills for each employee in the organisation.

From a Human Resource Planning viewpoint, this input is valuable in determining what
skills are currently available in the organisation. It can act as a guide for considering new
pursuits for the organisation and can take advantage of opportunities to expand or alter the
organisation’s strategies. This report also has value in other personnel activities, such as
selecting individuals for training and executive development, promotion and also for
transfers.

This analysis also helps an organisation to take advantage of opportunities and take decisions
such as:
 Training of employees;
 Development of managers;
 Employment of more workers; and
 Separation of unwanted staff.

(b) Auditing jobs

The current jobs in the organisation are analysed in terms of the following:-
 The jobs that exist currently;
 The number of individuals performing each job;
 The reporting relationships of jobs;
 How essential each job is;
 The jobs that will be needed to implement the organisational strategy; and
 The characteristics of anticipated jobs.

The combination of a skills audit and jobs audit will enable the human resource managers to:
 Determine whether there are any imbalances in the ages or gender of the
employees.
 Highlight areas of skills shortages which can be filled through training or
recruitment of more staff.
 Work out a succession plan for the organization

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 Decide how to use the existing staff. It may be necessary to work out overtime
schedules.
 Analyse the rates and reasons for labour turnover.
 Identify the cost implications of any HR decision taken.

(ii) Assessing where the organisation is going

The organisation’s objectives and strategies for the future determine future human resource
needs. Demand for human resources is a derived demand in the sense that it results from the
demand for the products or services of the organization. Based on estimates of total revenue,
the organisation can attempt to establish the number and mix of resources needed to reach
these revenues.

In some situations, however, particular skills may be necessary and these skills may be scarce.
The satisfactory availability of such skills can determine revenue. An example would be a
data processing consulting firm that finds it has more business opportunities than it can
handle. Thus, in order to forecast future human needs, it is necessary to forecast the sales or
revenues.

(iii) Forecasting the supply of human resources in the future

The human resource manager should forecast the future supply of human resources from
both internal and external sources. The internal supply of human resource will depend on
the following factors:-
 training and development;
 transfer;
 promotion;
 Retirement policies, etc.

The external supply of human resource will depend on the following factors:-
(i) Net migration into or out of an area. Where the net migration is into a certain
area the implication is that there will be plenty of workers to employ in the
future. The opposite also holds;
(ii) Individuals entering or leaving the workforce. In many developing countries,
there are many individuals entering the workforce;
(iii) Individuals graduating from schools, colleges and universities;
(iv) Changing workforce compensation patterns;
(v) Economic forecasts for next few years;
(vi) Technological developments;
(vii) Actions of competing employees;
(viii) Government regulations and pressures;

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(ix) Factors affecting people entering or leaving workforce.

Demand forecasting is the process of estimating the future numbers of people required and
the likely skills and competencies they will need. The demand forecasting techniques that
can be used to produce quantitative estimates of future requirements are:

(a) Managerial or Expert Judgment

This method simply requires managers to sit down, think about future workloads, and decide
how many people will be needed to efficiently undertake the workloads. This can be no more
than guesswork unless there is reliable evidence available of forecast increases in activity
levels or new demands for skills. Either a ‚top down‛ or ‚bottom up‛ approach can be used.

(b) Ratio-trend Analysis

This is carried out by studying past ratios between, say, the number of direct (production)
workers and indirect (support) workers in a manufacturing plant, and forecasting future
ratios, having made some allowance for changes in organisation or methods. Activity level
forecasts are then used to determine direct labour requirements, and the forecast ratio of
indirect to direct would be used to calculate the number of indirect workers needed.

(c) Work Study Techniques

Work study techniques can be used when it is possible to apply work measurement to
calculate how long operations should take and the number of people required. Work-study
techniques for direct workers can be combined with ratio-trend analysis to calculate the
number of indirect workers needed.

(iv) Matching demand and supply of human resources

The objective of human resource planning is to bring together the forecast of the future
demand and supply. The result of this effort will be to pinpoint shortages both in number and
kind; to highlight areas where overstaffing may exist (now or in the future); and to keep
informed of the opportunities that exist in the labour market to hire good people, either to
satisfy current needs or to stock pile for the future.

The most important concern must be given to the determination of shortages which forces
organisations to hire additional staff or to transfer people within the organisation. Thus
comparisons are done on what is available and what is required. This comparison assists the
human resource manager to identify any gaps that may exist and to come up with the
necessary plans to fill in the gaps.

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Ideally the demand for human resource is equal to supply. If the demand is equal to supply
then no action needs to be taken. However, there are cases where the demand is greater than
the supply. The organisation should employ more people if the demand is greater than the
supply. However, if the supply is greater than demand, the organisation should reduce its
workforce.

(v) Dealing with overloads or surplus

A surplus means that the organisation has more people than it requires. An organisation with
more people than it needs could do the following in order to downsize:-
(a) Stop recruitment:
(b) Natural wastage- it is also known as attrition. This implies that individuals who quit,
die, or retire are not replaced. Those who remain must handle the same workload with
fewer people;
(c) Early retirement/ buyouts – this is a means of encouraging more senior workers to
leave the organisation early. It can be an expensive way of reducing staff;
(d) Layoffs – these can be temporary or permanent. A temporary layoff (like in Tourism,
Agriculture and seasonal industries) occurs where workers are recalled during the
peak periods and laid off, occurs during off peak periods when the demand is low.
Layoffs may be an appropriate downsizing strategy if there is a temporary down turn
in an industry. Companies have no legal obligation to provide a financial cushion to
laid-off employees.
(e) Leaves of absence without pay – this gives workers the opportunity to take leaves of
absence without pay. This may provide time for an employee who is financially
capable to leave the organisation temporarily in pursuit of personal interests such as
attending college so as to increase marketability and mobility. Individuals offered this
leave are usually employees whose jobs may be eliminated in the future;
(f) Redeployment/transfer- in some cases, the employer can seek to transfer the affected
employees to a different branch of the same firm or of a different firm;
(g) Reducing overtime- this is logical in situations where some employees are likely to be
made redundant;
(h) Short-time working- a manufacturing firm may opt to put the workforce on a reduced
working week for a limited period in the hope that business will improve and
redundancies can be avoided;
(i) Redundancy- this should be the last resort;
(j) Reducing sub-contracted work- organizations which subcontract some of their work
can use their staff to do it rather than giving it to outsiders.

Other methods of getting rid of excess workers, although subject to ethical tests, include:

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 Requiring employees to have certain academic qualifications within unreasonably

short periods of time;
 Sacking employees for minor mistakes;
 Terminating contracts of employment after expiry of the contracts;
 Retrenchment – This is when an organisation reduces its workforce because they do
not need them;
 Setting unrealistic work targets.

5.0. OUTPLACEMENT SERVICES

Outplacement services can be referred to as a group of services offered to displaced workers
especially those who lost their jobs involuntarily (th4ough no fault of theirs) due to reasons
such as plant closures and organsiational restructuring.
The range of outplacement services include:
 Personal career guidance and counselling;
 Resume’ preparation;
 Typing services;
 Training on interviewing workshops; and
 Referral assistance.

The reasons for Outplacement include the following:

(a) Cost: - Helping workers find jobs more quickly can cut down on unemployment
benefits. This is especially the case in situations where the law requires displaced
workers to be paid until they get other jobs.
(b) Company image: - Outplacement efforts typically project the image of the company as
a caring employer. Such a firm may not experience a lot of difficulties in future when it
wants to get new employees.
(c) Legal issues: - The longer employees are out of work, the more likely they are to
consider suing for damages.
(d) Social responsibility: - Some people believe that employers have a moral or ethical
obligation to former employees. Typically, outplacement is done using outside firms
that specialise in providing such assistance.

6.0. TOOLS USED IN HUMAN RESOURCE PLANNING:

As stated earlier, HRP is mainly concerned with the average number of employees that leave
the organization, and therefore need replacing in order to maintain a constant number of
employee resources in the enterprise. In large enterprises with many departments and
demarcated lines of responsibility this can be quite a difficult statistical task requiring
considerable time and effort in the collection, synthesis and analysis of data. In smaller
organizations it can be calculated quite simply because the informality and personal nature of

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the organization creates a climate where everybody knows everyone else and when someone
leaves it is a visible event. In other words, HRP is about calculating and analyzing wastage
and /or survival in regard to employees in organizations. This task is often carried out with
the aid of specific tools/ techniques of which the following stand out.

6.1. Cohort Wastage Analysis

Cohort Wastage Analysis involves taking a homogeneous group of people who join an
organization at or during a fixed period of time and tracing their leaving pattern over time.
For example students enroll at the Evelyn College in first year in 2009. This group is
homogeneous. Some students might drop out at the end of the 1st year, others at the end of
the 2nd year, etc. This analysis is concerned only with this category of students. This approach
also addresses the issue of the survival rate.

6.1.1. Variables used in Cohort Wastage Analysis

The variables used in Cohort Wastage Analysis are identified below:
 Completed length of service (CLS)
 Number of people at the beginning of the period/year (Xo). This is original
cohort.
 Number of leavers during the unit period beginning at time (Li)
 New cohort taking into account previous losses (Xi). This is later cohort
 Cohort Wastage Rate = Li__
Xo

 Survival Rate = Xi
Xo
See example below:

CLS 0- 1- 2- 3- 4- 5-

Number at 1200 1050 970 920 890 870 860

start of period

Number of 150 80 50 30 20 10
leavers

Cohort 0.125 (12.5%) 0.076 (7.6%)

wastage rate

Survival rate 1 (100%) 0.88 (88%)

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6.2. Census Wastage Analysis

Age Bands 20 – 25 26 – 30 31 – 35 36 – 40 41 – 45 46 - + Total

This method takes a snap-shot of the different cohorts at a point in time and then combines
them to give an indication of both wastage as and survival across variables such age and/ or
length of service. For example, on 31st December 2004 your company had a labour force of
2440. During the year 177 staff left service. Calculate the wastage rate by age bands.

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Number of 500 750 445 315 220 210 2,440
employees (y)
by age
Unitband at Resource Planning
3: Human BBS 130 Human Resource Management
time (i)

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Number of 45 76 24 15 10 7 177
leavers (L) in the
age band at time
(i)

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Wastage rate 9% 10%

age band

Survival rate by 91% 89.8%

age band

 Y = Number of Employees
 L = Number of Leavers
 Formulae: Census Wastage Rate = Li_
Yi

Survival rate = (Yi – Li)_

Yi

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The census wastage analysis approach can also be used to show or to calculate the wastage
and survival rates by departments and by units.

6.3. Labour Turnover

In day-to-day parlance people use the term ‘turnover’ to refer to the number of workers
leaving an organization. One hears of expressions like: ‘the company experienced a high
turnover last year’ in reference to the number of employees that left their jobs for various
reasons. Different authors have defined Labour Turnover variously.

Labour Turnover refers to the number of employees leaving an enterprise in comparison with
the number of employees employed over a specified period of time. It also means the ratio of
the number of employees that leave a company through attrition, dismissal, or resignation during a
period to the number of employees on payroll during the same period. It is also called
staffing turnover. It is a parameter that is used to measure the retention of employees. Each
country has its own value of labour turnover; for example the United Kingdom has 13.5%.

There are four types of turnovers:

 Voluntary - This type of turnover happens when an employee leaves the organization
on his own. It might include resignation, retirement, voluntarily giving up of service;
 Involuntary - In this type of turnovers, the employees are terminated from their
services which can be due to misconduct on their part.
 Functional – This is to enhance the performance of the company where low
performing employees are sent off from the company;
 Dysfunctional - This is just the opposite of the functional turnover. Here employees
who are good performing leave the organization. This leaves the organization in a bad
shape and the organization should try its best to stop it from happening. So companies
should try to offer benefits like health care, medical facilities, good leaves, good culture and job
opportunities to keep their employees engaged.

Turnovers are also internal and external. Internal turnovers happen when employees leave
one position and go to another like job transfers or internal department change. External
turnovers on the other hand happen when the employee leaves the organization and joins
some other one.

There are basically two ways in which labour turnover is expressed, namely, Labour
Turnover Index, and Labour Turnover stability Index.

6.3.1. Labour Turnover Index (LTI)

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Labour turnover Index is more commonly used in organizations than any other tools. It
provides information about the ratio of leavers to the average numbers employed during the
course of a year or period of time. It is expressed mathematically as follows:
Number of employees leaving during the period X 100
Average numbers employed during the period

It must be noted that though LTI is useful, it has a number of demerits of which the following
standout:
 It does not show the areas where the enterprise has the highest rate of leavers;
 It does not tell the length of service of the concerned leavers;
 It does not illustrate whether the organization has experienced any sudden changes in
the numbers of workers employed from one period or year to the next.
The implication of these shortfalls is that further questions will have to be asked in order to
address the gaps left if this method is used.

6.3.2. Labour Turnover Stability Index (LTSI)

This method or tool attempts to show a link between the rates of leaving with the length of
service. This is normally expressed in the following formula:

Number of employees leaving who have served for more than one year X 100
Number of staff employed one year ago

In terms of demerits LTSI, like LTI, does not indicate in which areas of the enterprise the rate
of leavers is high or low.

7.0. OBSERVATIONS ON LABOUR WASTAGE ANALYSES AND LABOUR

TURNOVER:

7.1. What rate or percentage of turnover is acceptable?

The methods or tools identified above are meant to help organizations assess the number of
employees that are leaving them at specified periods of time. But in terms of percentage of
leavers, the question mainly asked is ‘what rate of leavers would be acceptable’? O’Doherty
in Beardwell and Holden (1995) and Cole (2002) are in agreement that a 25% turnover rate is
‚perfectly respectable in modern large-scale organizations‛. This means, however, that
anything approaching 30 – 35% may well start alarm bells ringing because it suggests that a
large amount of money is being directed into advertising and recruiting employees who are
more likely to leave than in an average 25% turnover organization.

7.2. Advantages of labour turnover:

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Labour turnover has the following advantages:

 It provides an incentive to recruit fresh staff;
 It enables enterprises to shed workers more easily when redundancies are planned;
 It opens up promotion channels for longer-serving employees;
 It introduces an element of ‘self-selection’ among new employees, which may save
dismissals at a later date.

7.3. Disadvantages of labour turnover:

Labour turnover has the following disadvantages:
 Additional costs of replacement recruitment;
 Disruptions to production of goods or services caused by leavers;
 Additional training costs, especially induction and initial job training;
 Wasted investment in people;
 May lead to difficulties in attracting new staff.

7.4. Sources of labour:

Once labour wastage analyses are carried out and the shortfalls in labour-force are identified,
it is inevitable that vacancies are filled. The question though is, ‘what sources are available to
the management in so far as filling these positions is concerned?’ This question is about the
labour market. A labour market is defined as the place where workers and employees
interact with each other. In the labour market, employers compete to hire the best, and the
workers compete for the best satisfying job. In an economy, a labour market functions with
demand and supply of labour. In this market, labour demand is the firm's demand for labour
and supply is the worker's supply of labour. The supply and demand of labour in the market
is influenced by changes in the bargaining power.

Furthermore, the question as to ‘what sources are available to the management in so far as
filling these positions is concerned’ is about the policies of a given organization as to whether
or not to recruit from the internal or external forum. Internal recruitment involves attracting
applicants for vacant positions from within the organization. External recruitment on the
other hand involves attracting applicants from the external labour market. The labour market
is influenced by a number of factors including economic, social, political and technological.
Above all, the external labour market can sometimes be very competitive. This happens when
certain skills suddenly become highly sought after. In such cases enterprises are challenged to
sharpen their recruitment and selection techniques.

8.0. DEALING WITH SHORTAGES AND SURPLUSES

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Often times the results of Human Resource Planning might indicate either a shortage or a
surplus in staffing levels. The question that arises is: what must the organization do in
whichever case?

8.1. If HRP Indicates Shortages:

If the results of HRP indicate a shortage the following steps should be taken:
 Outsourcing;
 Use of temporary employees;
 Careful use of overtime;
 Part-time employees;
 Recruitment- this should be the last resort because it has serious consequences. Thus
before an organisation commits itself to employing people on long term basis, it
should consider all alternatives to full time employment.
 Freeze normal attritions like retirement – the employer can come up with a scheme of
extending the contracts of employment to those falling due in the period that requires
enough manpower. The employer must be willing to offer an attractive package for
this scheme.
 Technology – the firm (employer) may roll out the use of modern technologies or
capital intensive production processes. Machines and other technological equipment
may be employed in place where extra employees could have been recruited.
 Engage teleworkers – with technology, these can work from a different location using
technology such as internet.
 Training / development – the firm may opt to undertake a vigorous training /
retraining/ development exercises to ensure that the efficiency and effectiveness
required for the firm to maintain sustainability is offset and filled in by highly trained
staff.

8.2. If HRP Indicates Surpluses

8.3. Alternatives to full time employment

Organisations normally employ full time, permanent or ‚core‛ employees and the peripheral
employees. The core employees are essential for the direction, coordination, and
development of the firm’s activities. They include:
 Managers;
 Team leaders;
 Professional staffs in fields such as finance, legal, and personnel;
 Knowledge workers involved in the development and management of new
technologies;

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 Technicians and highly skilled workers in laboratories, design offices, and

manufacturing departments who play key roles in projects or work teams.

The other kinds of employees organisations might employ include the following:

(a) Peripheral: - or contingent employees can be categorised into temporary workers,

part- time workers, job sharing, new technology (home working & teleworking), and
sub-contracting.

(b) Temporary workers: - also known as ‚temps‛ are used to reduce the cost of employing
people on permanent basis. Besides providing cover for staff shortages, sicknesses, or
holidays, they can be used to match fluctuations in the level of business activity.

(c) Part-time workers: - are paid for the period they are engaged. The employment of
part-time employees has a number of advantages. They can be cheaper and more
flexible. The firm can lay off part-time workers more easily during slack periods. Such
employees have fewer rights to statutory redundancy payments. Moreover the plant
and equipment of the firm can be utilized better and for longer, leading to higher
productivity.

Some of the disadvantages of part-time workers are stated as below:

 They may be less willing to work at certain times and they may be less mobile;
 High rates of employee turnover;
 Less commitment compared to full time workers.

(d) Job sharing: - occurs where two or more employees share the work, pay and benefits
of one full time position. Advantages of this include reduced employee turnover and
absenteeism. Greater continuity of work occurs because even if one person is absent,
the other(s) will be present. Those who cannot occupy full time positions will also fit
into the organisation. Disadvantages include the administrative costs involved and the
risk of responsibility being divided.

(e) New Technology (teleworking and home working): - involves people working at home
with a terminal linked to the main company and possibly networked with other
outworkers. It enables an organisation to achieve greater flexibility, rapid access to
skills and the retention of skilled employees who would otherwise be lost to the
company. Teleworkers can be used in functions such as marketing, finance, personnel,
and management services. Telecommuting enables a firm to have its work done in low
labour cost areas and to have its employees located anywhere on the globe.

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(f) Subcontracting is advantageous since it enables an organisation to concentrate its

resources on the core business activities. Employment costs are also reduced while
flexibility and productivity is increased. Job security for the core employees is
enhanced. The drawbacks include clarifying the legal status of subcontractors for
income tax, national insurance, and employment legislation purposes. It may be
difficult to control the quality and delivery of the goods and services of subcontractors.
At the same time, some employees and trade unions may react negatively to the use of
subcontractors since they may want all the work to be kept within the company.

9.0. CHALLENGES / PROBLEMS OF HUMAN RESOURCE PLANNING

Effective HRP is a pre requisite for successful HRM practices. However, there are certain
factors - internal to organization and external to it - which affect the effectiveness of HRM
adversely. Below are some of the factors that affect HRM.

9.1. Improper linkage between HRP and Corporate Strategy

In the absence of proper linkage between HRP and corporate strategy, neither HRM nor any
of its subsystem will contribute effectively. HRP is the basis of further activities for HRM and
therefore must be linked to corporate strategic management process at the initial stage.

9.2. Inadequate appreciation of Human Resource Management

Another problem that comes in the way of effective human resource planning is the lack of
adequate realization of HRP. Many organizations which have not realized the importance of
human assets in this competitive environment believe that people are available when they are
needed because of increasing unemployment.

9.3. Rigidity of attitudes

The third factor responsible for ineffective HRP is the rigidity of attitudes on the part of top
management as well as human resource managers. In the old culture human resources have
been considered as subordinate factors.

(a) Conflict between short term and long term plan: - Another source from where in
effectiveness in HRP emerges is the conflict between long term and short term plans.
Long term planning offers more flexibility at the same time short term planning is
more subjected to inflexibility.

(b) Inappropriate human resource information system: - The effectiveness of human

resource information depends on the timely availability of relevant information

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regarding contingent factors which are considered while formulating HRP. If the
human resources information has not been well developed in an organization the
projections for the future may at best be in the form of some pluses and minuses.

10.0. CONCLUSION

HRP is a necessary activity in the HR department of every organization. This is in the

backdrop of eventualities in workplaces related to the movements associated with employees,
such as movements into the organisation (i.e., recruitments), movements within the
organization (promotions, demotions, and transfers, etc.), and movements out of the
organization (i.e., resignations, retirements, etc.). Responses to these unavoidable – and at
times inevitable - challenges, lie in utilizing HRP. Through HRP firms are able to ensure that
they acquire personnel of the right caliber, right kind, and in right number, capable of
efficiently completing the tasks that will help them (organisations) achieve their objectives.

HRP translates the organisation’s objectives and plans into the number of workers needed to
meet those objectives. This ensures that the management of the HR is not left to guesswork.
HRP attempts to address the shortfalls of personnel created by the identified causes such as
employee turnover. However, the process takes into account both the internal and external
factors which have a bearing on the HRP process. Above all, the function relies on a wide
range of tools or methods which include cohort wastage analysis, census wastage analysis,
Labour Turnover Index, and Labour Turnover Stability Index.

BIBLIOGRAPHY

ARMSTRONG, Michael (2009) Handbook of Human Resource Management Practice. (11th

Edition). London: Kogan Page.

BEARDWELL, I. (2002) Human Resource Management, London: Longman Group UK,

Ltd.

CHATTERJEE, B. (2009) Human Resource Management: A Contemporary Text. New Delhi:

Sterling Publishers Private Ltd.

COLE, A. Gerald (2002) Personnel and Human Resource Management. (5th Edition).
London: Book Power.

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DESSLER, Gary (2008) Human Resource Management. (11th Edition). London:

Pearson Education Ltd.

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