Course manager : Dr.

Assefa Balda
 HUMAN RESOURCE PLANNING (HRP)

LEARNING OBJECTIVES
After completing this session, you will be able to:
Define human resource planning
Describe the human resource planning process
Explain the importance of HRP in efficient
utilization of organizations workforce
Identify what an organization can do when a
surpluses shortages of employees exists.
Describe the major HR forecasting techniques.
 3.1CONCEPT OF HR PLANNING

HRP is a process by which an organization ensures that:

 It has the right number and kinds of people, at the right place, at
the right time
 who is capable of effectively and efficiently completing those
tasks that will help the organization achieve its overall strategic
objectives

Today acquiring a right person is a challenging task

But retaining the person in the organization is more challenging.
Because for a skilled person the industry is open and any
organization prefers to possess the right mix of people to improve
the productivity and profitability.
 contd...

 It is the process of predetermining future human resource

needs and courses of actions needed to satisfy those needs
to achieve organizational objectives.
 It involves estimating the size and composition of future work
force to ensure survival and growth of an organization.
 It systematically forecasts an organization's future supply of,
and demand for, employees.

Who is responsible for HRP?

 Top managers, line managers and HR department are the prior
responsible for HRP process.
 HR department undertakes coordinative functions
 3.2 Human Resource Planning (HRP) Process
Organizational
policies…

HRP

Forecasting HR Forecasting HR
needs supply
Identification of
HR gap
HR shortage
DD = SS HR surplus
No action
HR planning
Restricted hiring Early
Recruitment and
retirement
Selection will
Layoffs Downsizing
follow
 3.3 DEFINE ORGANIZATION MISSION

HR planning must be:

 linked to the organization’s overall strategy to compete

domestically and globally

 translated into the number and types of workers needed

Senior HRM staff need to lead top management in planning
for HRM issues.
 contd...

A mission statement defines what business the

organization is in, including:
 why it exists
 who its customers are
 strategic goals set by senior management to
establish targets for the organization to achieve

Goals are generally defined for the next 5-10 years.

 contd...

During a corporate assessment,

 SWOT(Strengths-Weaknesses-Opportunities-Threats)
analysis determines what is needed to meet
objectives .
 Strengths and weaknesses and core competencies
are identified.
HRM determines what Knowledge, skills and abilities
(kSA) are needed by the organization’s HRs through a
job analysis.
contd...
 3.4 Assessing Current HRs

This step looks at jobs currently being done and

the people doing those jobs. It is based on:
HR Inventory
 Describes skills currently available in the
organization.
 Human resource information system (HRIS)
serves as the database for skills information.
Job Analysis
Provides information about jobs currently being
done
 contd...

HR Inventory
 Skills inventory of human resources currently
employed in the organization.
 Tells management what individual employees can
do.
 Computers are generally used to generate such
inventory.
Contents of HR Inventory
 Forms completed by employees serve as the
source of information for developing Human
resource Inventory.
 contd...

The main information included in the HR inventory are:

 Name of the employee/age/gender/marital status

 Qualifications of the employee
 Training undertaken by the employee
 Prior employment experience of the employee
 Current position held by the employee
 Performance ratings of the employee
 Salary level of the employee
 Capabilities of the employee
 Specialized skills of the employee
 Job and location preferences.
 contd...

Benefits of HR Inventory:
 It enables management to assess what skills are
currently available in the organization.
 It is useful for planning the selection, training,
promotion and transfer of employees.
 It serves as a decision making tool for
deploying/ arranging and effectively utilizing
existing HRs.
 It serves as a guide for considering opportunities
for diversification and expansion of operations.
 It provides crucial information for identifying HR-
related threats to the organization.
3.5 Human Resource Information System (HRIS)

 HRIS is a database device for tracking Human

Resource Inventory Information.

 It is designed to store information about

employees and jobs.
 3.5.1 Contents of HRIS

HRIS contains the following data about each employee:

 Personal Data: name, address, date of birth, marital status,

children, etc.
 Skills Data: Educational qualifications, training received,
languages spoken, capabilities, special skills, etc

 Position Data: Current position, occupational history,

various jobs held in the organization, work location, etc.

 Compensation Data: Current salary, salary history, bonus,

overtime payments, deductions from salary, tax information
etc.
 3.5.2 Benefits of HRIS
Benefits of HRIS are:
 Analysis of HRIS data facilitates preparation of HR
Inventory by providing the following information:
 Number of current employees by departments, service,
skills level, age, etc.
 Number of employees joining and leaving, including
reasons for leaving.
 Staff turnover rates (or labor wastage rate), including
its trend
 Sickness and absenteeism rates
 Salary bill, including overtime payments etc.
 HRIS data can be useful for forecasting future human resource
requirements.
 HRIS data can be used for identifying persons for training,
promotion or transfer or succession planning.
 3.6 Job analysis

Job analysis is:

 The systematic investigation of a job's content
 Provides information about jobs currently being
done.
 Defines the jobs and the behaviors necessary to
perform those jobs.
Job analysis consists of defining:
 Tasks that make up the job
 Knowledge, skills and abilities needed to
accomplish the job.
 contd...

Job analysis information is used to develop:

 Job Description: A profile of what the jobholder does.

 Job specification: A profile of the qualifications
needed by the person performing the job.
 Job Evaluation: Used in developing a compensation
package.
 Job Analysis is important for recruitment,
selection, development, performance appraisal and
compensation management purposes.
 3.7 Demand Forecasting

 It estimates future human resource needs in terms

of quality and quantity based on:
 Organization's objectives and strategies: Provide
future direction to the organization.
 Revenue forecasts
 Based on demand forecasts for the
products/services
 Translated into a forecast of demand for
human resources.
 The demand is expressed in terms of number
of people required and the skills needed.
 3.7.1 Factors that affect HR demand forecast

The main factors that affect HR demand forecast are:

 External Environmental Forces: Economic, technological,

political, legal, social and cultural forces.
 Overall Organizational Objectives: Indicate the courses that
the organization plans to take in future.
 Expansion or contraction of activities; new ventures.
 Planned Technological changes, for example
computerization.
 Planned organizational changes, for example
restructuring.
 New product lines
 Budgetary ceilings etc.
 contd...

Projected HR Inventory
 Demand forecasting for HR consists of
preparing a pro-forma HR inventory for
specified future years.
 A year-by-year analysis for every job level and
type is done.
 Jobs are redesigned as needed. Both
qualitative and quantitative estimates for future
demand are made.
 3.7.2 Demand Forecasting Techniques

1.Management Judgment (Executive Judgment): The demand

forecast for future HRs is based on the judgment of the managers.
The estimates of HR needs can be based on:
 Top-down approach: Top management prepares the
estimates of requirements and sends the information to lower
level managers.
 Bottom-up approach: Sectoral managers prepare the
estimates of requirements and send the information to top
management.
 Participative approach: Management and supervisors
estimate requirements through joint consultation.
 contd...

2. Statistical Analysis:
 Trend Analysis: Technique projects past trends into the
future.
The methods can be:
 Extrapolation: Past rates of change are extended
into the future.
 Indexation: A particular index is used to forecast
future needs
 Econometric Models: Based on analysis of
variables such as sales, production, workload
 contd...
3. Work Study Techniques: which is based on work measurement.
 It indicates how much time an operation should take to complete work.
 Standards are laid down which are used to calculate human resource needs
for a given volume of work.
For example:
 Planned production units …… 40,000 units
 Standard hours per unit…….. 2 hours
 Yearly standard hours………… 80,000 hours
 Productive hours of a person per year….. 2,000 hours
 Number of workers required ………….. 40
 3.8 Supply Forecasting

 It estimates future sources of supply of human

resources from inside and outside the organization.
 Internal sources that increase supply can be:
promotion and transfer.
 Internal sources that decrease supply can be:
resignation, retirement, dismissal, prolonged illness
or death.
 External sources can be: graduates from schools
and colleges, people entering job market, and other
job seekers in the labor market.
 contd...

Therefore from Internal sources:

 Potential additions to HR inventory:
 Promotion, Transfers, Demotions
 People returning from leave of absence and
study leaves.
 Succession planning
 Potential losses to HR inventory
 retirement, resignation, termination, death,
disablement and Labor turnover
 HR Audit: it an important technique to estimate internal
supply of human resources. Because it summarizes
each employee's skills and abilities
 contd...

External Sources Forecasts

 External sources consist of human resources who
currently do not work for the organization.
The sources can be:
 Educational and training Institutes
 Labor market
 Employment exchanges
 3.9 Matching Demand and Supply

 This step matches demand and supply forecasts

to determine future shortages or surpluses of
human resources in terms of quality and quantity.

 Additional staff will be needed to meet the shortages

 Retrenchment/cut down will be needed for surplus

staff. Such as: early retirement, lay-offs, leave of
absence, work sharing, reduced work hours, etc. can
be used here.
 3.10 ACTION PLANS

Action plans should be prepared to deal with shortages

and surpluses of human resources.
They can be:
 Recruitment plan,
 Development plan
 Retention plan
 Redeployment plan
 Redundancy/ lay-off, dismissal, termination plan
 3.11 Types of HR Planning

A. Aggregate Planning
 Anticipating the needs for groups of employees in specific,
usually lower level jobs and the general skills employees will
need to ensure sustained high performance.
B. Succession Planning:
 Succession planning refers to the process of identifying and
developing the future leadership of the company
Purposes of Succession Planning
 Facilitates transition when an employee leaves.
 Identifies the development needs of high-potential employees and
assists in their career planning.
 contd...
 It is a career development activity prepares people to
fill management/executive positions
 Preparing successors is useful because people leave
organizations for various reasons such as retirement,
disability, death, resignation, quit etc.

There are three main elements of succession planning

1. Position for which succession is needed
2. Identification successors
3. Grooming successors

31
 contd...
Succession plan uses a replacement analysis with a replacement
chart

 The replacement chart depicts the current job holder, and the
potential candidates with two dimensions, Promote ability and
Current performance.
 Candidates are placed in ranking order based on promote ability
 Promote ability candidate can be rated as
A: Ready now
B: Needs Training
C: Questionable
 Current Performance of candidates can be rated as
1. Outstanding
2. Satisfactory
3. Needs improvement
32
 contd...
“Replacement chart” identifies
 Key positions
 Possible successors for each of these positions
 Whether each potential successor currently has the background
to assume the job responsibilities
 The expected amount of time it will take for the potential
successor to be ready
Tewolde Gebremariam, Ex (ECO) Mesfin Tasew, New (ECO)
3.12 IMPORTANCE OF HUMAN RESOURCE PLANNING

1. Uncertainty Reduction:

 HRP offsets/ balances uncertainty by predetermining

future HR requirements
 Demand and supply forecasts to determine future
shortages and surpluses of HRs in terms of
quantity and quality.
 Action plans are developed to deal with the
problems arising from shortages and surpluses.
 contd...

2.Objectives achievement
 Focuses on the achievement of organizational goals.
 Demand forecasts for HRs are based on the
objectives, strategies and revenue plans of the
organization

3. Environmental Adaptation
 Assesses current HRs through HR Inventory and
job analysis.
 Existing HRs can be quickly adapted to changing
technology, markets, competition as well as political,
legal, economic, social and cultural forces.
 contd...

4. Effective and Efficient Utilization of HRs

It ensures that the organization acquires and retains the
quality and quantity of HRs it requires.
 Existing HRs can be properly placed and deployed
to ensure their effective utilization.
 HR costs can be controlled to achieve efficiency
through planning.
 It ensures the availability of the right number and
type of HRs at the right time doing the right job.
 contd...

HR utilization analysis consists

– Underutilization- HR cost
– Full utilization
– Overutilization-beneficial in short term,
dysfunctional over the long term, employee
burnout.
Therefore, HRP used for linking
employee need to organizational strategy
 contd...

5. HR Development
 HRP anticipates skill requirements for various levels of
human resources
 HRP provides adequate lead-time for planning of training and
development programs
 Training and development experiences often lead to greater
employee satisfaction, lower turnover and lower
absenteeism.

6. Facilitates Control
 HRP sets standards for control purposes.
 HRP serves as a standard for controlling the quantity and
quality of employees actually deployed.
 Therefore, HR control is not possible without HRP
 3.13 Barriers to HRP
Improper linkage between HRP and
corporate strategy
Type and quality of forecasting
Environmental uncertainty
Conflict between short and long term HRP
Inappropriate HRIS

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