HR Planning Notes
HR Planning Notes
WHAT IS HR PLANNING?
• HRM planning is a process by which an organization ensures that it has the right number and
kinds of people, at the right time, capable of effectively and efficiently completing those tasks
that will help the organization to achieve its overall strategic objectives.
• Human resource planning ultimately translates the organization’s overall goals into number
and types of employees needed to meet those goals.
• HR planning cannot exist in isolation. It must be linked to the organization’s overall strategy.
• HR Planning, therefore, is best thought of as an integral part of the firm’s strategic & HR
planning process. For example, plans to enter new businesses, to build new plants, or to
reduce the level of activities all influence the number of and types of positions to be filled.
Techniques External
• Staffing Table Considerations: (Surplus)
• Markov analysis • Demographic changes Reductions:
• Personnel inventories • Education of the • Restricted Hiring
• Replacement charts workforce • Early Retirement
• Succession Planning • Labor Mobility • Retrenchment
• Government policies
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• Unemployment rate
Forecasting Supply
1. INDEX/TREND ANALYSIS:
• The historical relationship between an operational index and the number of employees
required by the organization.
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Plot the business factor in relation to the number of employees to determine the labor
productivity ratio.
Compute the productivity ratio for the past five years.
Calculate human resources demand by multiplying the business factor by the productivity
ratio.
Project human resources demand out to the target year(s).
Example: Index/Trend Analysis
Year BUSINESS LABOR = HUMAN RESOURCES
FACTOR PRODUCTIVITY DEMAND
(Sales in Thousands) (Sales/Employee) (Number of Employees)
2000 $2,351 14.33 164
2001 $2,613 11.12 235
2002 $2,935 8.34 352
2003 $3,306 10.02 330
2004 $3,613 11.12 325
2005 $3,748 11.12 337
2006 $3,880 12.52 310
2007* $4,095 12.52 327
2008* $4,283 12.52 342
2009* $4,446 12.52 355
*Projected figures
The index used to calculate future demand (number of employees) can be the most recent figure,
or an average of the up-to-date period (e.g., the past seven years, for which the average is
11.22). In this index analysis, the most recent index (12.52) for the year 2007 was used for
forecasting.
2. RATIO ANALYSIS:
• A forecasting technique for determining future staff needs by using ratios between sales
volume and number of employees needed.
• For example, a salesperson traditionally generates Tk. 5,00,000 in sales and that in each of
the last two years you required ten salespeople to generate Tk. 5 million in sales. Also
assume that your plans call for increasing your firm’s sales to Tk. 8 million next year and to
Tk. 10 million two years hence. Then, if the sales revenue – salesperson ratio remains the
same, you would require six new salesperson next year (each of whom produces an extra Tk.
5,00,000 in sales.) In the following year, you would need an additional four sales people to
generate the extra Tk. 2 million in sales.
3. REGRESSION ANALYSIS:
Regression Analysis refers to statistical relationship between business activity and employees.
The simple regression prediction model is as follows:
Y = A + BX
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Y = the dependent variable (HR demand/number of personnel required)
A = constant (intercept)
B = the slope of the linear relationship between X and Y
X = the independent/causal variable (e.g., level of sales, production output)
Regression Exercise
As HR manager for Rahim Kontainer Ltd., a dynamic, fast-growing company located in Tongi,
Gazipur, you have an important task to fulfil. To continue the company’s history o f successful
growth, you need to forecast the number of marketing personnel required for $8
million of sales activity. You have the following historical information available to
guide your regression analysis and HR demand forecast:
X Y
Sales Level ($ Millions) (Number of Marketing Personnel)
2.0 20
3.5 32
4.5 42
6.0 55
7.0 66
Please refer to solution: page no. 195 of “Strategic Human Resources Planning”,
Kenneth J. McBey and Monica Belcourt.
4. MANAGERIAL JUDGMENT:
• The opinions (judgments) of supervisors, department managers, experts, or others
knowledgeable about the organization’s future employment needs.
• It’s rare that any historical trend, ratio, or relationship will continue unchanged into the
future. Judgment is thus needed to modify the forecast based on factors you believe
will change in the future.
1. STAFFING TABLES
• Graphic representations of all organizational jobs, along with the numbers of employees
currently occupying those jobs and future (monthly or yearly) employment requirements.
2. SKILLS INVENTORY
• A skills inventory is a computerized or manual system designed to take stock of information
about current employees’ experience, education, interests, skills, and/or unique abilities. A
skills inventory can be useful in revealing what skills are immediately available in an
organization by providing a snapshot view of the existing talent in an organization.
3. MARKOV ANALYSIS
• A method for tracking the pattern of employee movements through various jobs.
• A Markov analysis extends beyond the staffing table to help predict internal employee
movement from one year to another by identifying percentages of employees who remain in
their jobs, get promoted or demoted, transfer, and exit out of the organization. By tracking
and predicting employment movement within an organization, the Markov analysis allows for
the development of a transition matrix to forecast internal labour supply.
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4. REPLACEMENT CHARTS
• A replacement chart is used to estimate vacancies in higher-level jobs and identify how
potential HR supply can fill these vacancies via internal movements from lower levels jobs. A
comprehensive replacement chart will include information regarding possible replacements
for vertical or horizontal movement. Generally, a replacement chart includes information
about employees’ present performance and readiness to fill the position.
5. SUCCESSION PLANNING
• While replacement charts provide identification of potential replacements for vacancies within
an organization, succession planning focuses on identifying, developing, and tracking future
leaders for executive positions or positions that are critical to the success of the organization.
Succession planning is a longer-term process of grooming a successor (selected from a pool
of candidates on the basis of perceived competency) for management or critical positions.
• An organization can use the skills inventory, HR audit, or a succession summary to help
identify potential successors and skill gaps that can be addressed through succession
planning.
HYPOTHETICAL MARKOV ANALYSIS FOR A RETAIL COMPANY
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PRESIDENT/CEO
Possible Replacements
L. Moffat E/2
J. Bennett S/2
R. Ellis E/3
M. Manoy S/1
VICE PRESIDENT
VICE PRESIDENT VICE PRESIDENT FINANCE VICE PRESIDENT
HUMAN RESOURCES SALES & MARKETING R. Ellis PRODUCTION
L. Moffat T. Bennett Possible Replacements M. Manoy
Possible Replacements Possible Replacements L. Anderson S/2 Possible Replacements
K. Nagra S/1 M. Sanghera E/3 M. Harding N/1 S. Mayer E/3
J. Lee S/2 T. Mitchell N/1 R. Allen S/2 L. Bonett E/2
T. Cox E/1 F. Hewer S/2 N. Fernandez N/2
Key:
Present Performance: E =Excellent; S =Satisfactory; and N =Needs Improvement
Promotional Potential: 1 =Ready Now; 2 =Training Required; and 3 =Questionable
EMPLOYEE TURNOVER RATES
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JOB ANALYSIS
"Job Analysis is a procedure, by which pertinent information is obtained about a job, i.e., it is a
detailed and systematic study of information relating to the operations and responsibilities of a
specific job."1 In other words, It is the determination of the tasks which comprise the job and of the
skills, knowledge, abilities, and responsibilities required of the worker for a successful
performance and which differentiate one job from another.
JOB DESCRIPTION:
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Flippo, E.B. Principles of Personnel Managment
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Job specification is a written record of the requirements sought in an individual worker for
a given job.
It is a statement of minimum acceptable human qualities necessary for the proper
performance of a job. In other words, it refers to a summary of the personal
characteristics required for a job
It is a standard of personnel and designates the qualities required for an acceptable
performance.
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USES (BENEFITS) OF JOB ANALYSIS:
A comprehensive programme of job analysis is an essential element of sound human resource
management. It provides valuable information for taking right decisions about the organization's
human resources. Most functions of human resource management can be carried out with the
help of information generated by job analysis. The specific uses of job analysis are given below:
1. Organisational Design: job analysis is useful in classifying jobs and interrelationship among
them. Responsibility commonsurate with authority and accountability for various jobs can be
specified so as to minimize duplication or overlapping. In order to improve organisational
efficiency, sound decisions concerning hierarchical positions and functional differentiation can
be taken on the basis of information obtained through job analysis.
2. Human Resource Planning: Job analysis provides useful information for forecasting
manpower requirements in terms of knowledge and skills. It also helps in planning for
promotions and transfers by indicating lateral and vertical relationships between different
jobs. Job analysis helps in determining quality of human resources required in an
organization. It also facilitates division of work. Therefore, job analysis is an essential element
of effective human resource planning.
3. Recruitment and Selection: Information relating to the tasks, responsibilities, knowledge
and skills serves as a realistic basis for hiring people. Job vacancy is advertised on the basis
of job description and job specification. Job analysis provides understanding of what an
employee is expected to do on the job. Such understanding serves as the basis for
meaningful forecast of job performance. Selection methods are based upon such forecasts.
4. Placement and Orientation: A clear understanding of job requirements helps in matching
these requirements with the abilities, interests and aptitudes of people. Each job can be
assigned to the person who is best suited for it. Similarly, the orientation programme can be
geared towards helping the employee learn the activities, tasks and duties that are required
to perform a given job more effectively.
5. Training and Development: Job analysis provides valuable information required to identify
training needs, to design training programmes and to evaluation training effectiveness. A
clear idea of what is required on a job helps in deciding what is to be learnt and how.
Similarly, employee development programmes such as job rotation, job enlargement and job
enrichment are based an analysis of job requirements.
6. Performance Appraisal: Job analysis helps in determining performance standards in critical
parts of a job. Employee performance can then be evaluated against known standards and
critical activities. The superior can compare actual performance with the standards set with
the help of job analysis.
7. Career Path Planning: Job analysis provides a clear idea of opportunities in terms of career
paths and jobs available in the organization. With the help of such understanding, employees
and the organization both can make efforts for career planning and career development.
8. Job Evaluation: Job analysis serves as the basis for determining the relative worth of
different jobs. It therefore helps in developing appropriate wage and salary structures, with
internal pay equity between jobs.
9. Labour Relations: Information obtained through job analysis is helpful to both management
and trade unions for collective bargaining. It can also be used to resolve disputes and
grievances relating to work load, work procedures, etc.
10. Employee Counselling: Job analysis provides information about career choices and
personnel limitations. Such information is helpful in vocational guidance and rehabilitation
counselling. Employees who are unable to cope with the hazards and demands of given jobs
may be advised to opt for subsidiary jobs or to seek premature retirement.
11. Health and Safety: Job analysis reveals unhealthy and hazardous environmental and
operational conditions in various jobs. Heat, noise, dust, fumes, etc. are examples of such
conditions. On the basis of such information management can develop measures to ensure
the health and safety of employees.
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SOURCES OF INFORMATION FOR JOB ANALYSIS
According to George R. Terry, "the make-up of a job, its relation to other jobs, and its
requirements for competent performance are essential information needed for a job analysis."
Information on a job may be obtained from three principal sources:
(a) From the employees who actually perform a job;
(b) From other employees such as supervisors and foremen who watch the workers doing a job
and thereby acquire knowledge about it; and
(c) From outside observers specially appointed to watch employees performing a job. Such
outside persons are called the trade job analyst. Sometimes, special job reviewing
committees are also established.
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JOB ANALYSIS FORM
1. Job Identification
Organization
Job title
I. D. No.
Incumbent
Analyst
Date
2. Job Summary
3. Duties Performed
4. Supervision Given
5. Supervision Received
Promoted from
Promoted To
7. Working Conditions
8. Job Specifications
Physical requirements:
Educational requirements:
Special skills:
Experience required:
9. Unusual Terms
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EMPLOYMENT TEST AND INTERVIEW
EMPLOYMENT TEST
A test is a standardized objective measure of a sample of behavior. It is standardized because
the procedure of administering the test, the environment in which the test is taken, and the
method of evaluating the individual score are uniformally applied.
TYPES OF TESTS
1. Aptitude Tests: These tests measure the ability or potential of a candidate to learn a new job
or skill. Peculiarities or defects in a person’s sensory or intellectual capacity can be detected
through these tests. It indicates how a person would be able to perform after training and not
what he has done or will necessarily do. It is thus used to predict the future achievement and
not the past achievement.
The best-known and widely used aptitude test is general intelligence test. Special aptitude
tests are also developed to measure special ability, such as clerical aptitude test, mechanical
aptitude test, musical aptitude test, etc.
2. Achievement Tests: These tests measure what a person can do. These determine the skill
or knowledge already acquired through training and on the job experience. These tests are of
two kinds: Knowledge Test or trade test, and work sample test or proficiency test.
3. Personality Tests: These probe deeply to discover clues to an individual’s value system,
emotional reactions and maturity, and his or her characteristic mode. These help in assessing
a person’s motivation and interests, his or her ability to adjust himself or herself to the stress
of everyday life, his or her capacity for interpersonal relations and for projecting an impressive
image of himself or herself.
4. Interest Tests: These tests are inventories of a candidate’s like and dislikes in relation to
work. They are designed to discover a person’s area of interest and to identify the kind of
work that will satisfy him. A well-designed questionnaire is used to assess the likes and
dislikes.
1. Test of
Validity Content Validity: It implies the extent to which the contents of a test are
related to the job requirements.
Criterion Validity: It implies the degree to which test scores are related
to job performance.
2. Test of It implies the characteristic that refers to the consistency of scores obtained
Reliability by the same person when retested with the identical or equivalent tests.
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Analyzing Jobs: Jobs are analyzed to identify the characteristics considered necessary for job
success. These characteristics are defined in terms of human skills and traits.
Choosing Tests: Appropriate tests are chosen to measure the identified characteristics. The
choice is usually based on experience, previous research and guesswork. Tests may be
chosen keeping in view the reliability, validity, ease of administration, level of difficulty and the
cost involved in different tests.
Administering The Tests: The chosen tests are applied on the desired group of persons to
measure the predetermined traits.
Analyzing Results: The test scores are carefully analyzed in the light of success criteria. After
the analysis, decision concerning the candidate is taken. The candidate is either selected for
further processing or is rejected.
INTERVIEW………………………………………………………………………………………………….
Employment interview is a selection procedure designed to predict future job performance on the
basis of applicant’s oral responses to oral inquiries.
In the selection process, interviews serve the following purposes:
1. To cross-check or verify the information obtained in earlier steps, i.e. application blank
and tests.
2. To judge the candidate’s qualifications and characteristics so as to find whether or not
to select him or her.
3. To give a candidate essential facts about the company and the job to enable him or her
to decide intelligently whether he or she should or should not accept the employment.
4. To establish a rapport or mutual understanding between the company and the
candidate and to promote the company’s goodwill.
Finally, interview makes unique contributions to the selection process in several ways:
First, it is the only way to judge the candidate in action-his or her looks, manners and
bearing.
Secondly, it is the only way to judge how the candidate interacts and responds; and
Thirdly, it is one of the best ways to predict the candidate’s job performance.
Thus, interview is by far the most widely used personnel selection procedure.
TYPES OF INTERVIEW
Interviews can be classified in four ways according to (a) the structure of the interview, (b) the
content of the interview, (c) the purpose of the interview, and (d) the ways of administering the
interview.
A. Classification of Interviews according to their Structure:
1. Unstructured interview: In an unstructured interview, questions are not planned in advance.
There is no set format to follow, and the interview can take various directions. Interviewees
for the same job thus may or may not be asked the same or similar questions, and the
interviews’ unstructured nature allows the interviewer to ask questions based on the
candidate’s last statements and to pursue points of interest as they come up in response to
questions.
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2. Structured Interview: In a structured interview, questions are planned in advance and are
asked of each candidate in the same way. The only difference between interviews with
different candidates might be in the probes, or follow-up questions, if a candidate has not
answered a question fully. Interviews that feature structured questions usually also provide
structured rating scales on which to evaluate applicants after the interview.
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GUIDELINES FOR CONDUCTING AN INTERVIEW
1. Review the candidate’s application and resume, and note any areas that are vague or that
may indicate strengths or weaknesses.
2. Convert job descriptions into interview questions and prepare a structured guideline or
checklist of what to look for in a candidate.
3. Develop benchmark answers and a five-point rating scale for each question.
Physical setting
Rapport building
7. Try to follow structured guideline or the questions wrote out ahead of time.
8. Start by asking simple questions and slowly graduate to more difficult ones. If the applicant is
not able to answer at a certain level, stop, because he or she has reached his highest level of
competence.
9. Ask open-ended questions instead of those that lead to yes-no answers. Follow these
explanatory questions by probing and seeking illustrative or hypothetical situation and related
replies.
10. Avoid asking leading or loaded questions that might lead to debate instead of dialogue.
11. Listen carefully to what the applicant has to say without interruption. Provide positive
feedback to encourage him or her to talk.
12. Ensure that sufficient time is taken by the applicant while replying to questions.
13. After the candidate leaves, review your interview notes and fill in the structured interview
guide (if this was not done during the interview).
14. First rate independent ratings on the applicant and then discuss them.
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